82_FR_9839 82 FR 9814 - 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 Between Bats BZX Exchange, Inc., Bats BYX Exchange, Inc., BOX Options Exchange LLC, Chicago Board Options Exchange, Incorporated, C2 Options Exchange, Incorporated, Chicago Stock Exchange, Inc., Bats EDGA Exchange, Inc., Bats EDGX Exchange, Inc., Financial Industry Regulatory Authority, Inc., International Securities Exchange, LLC, Investors Exchange LLC, ISE Gemini, LLC, ISE Mercury, LLC, Miami International Securities Exchange, LLC, MIAX PEARL, LLC, The NASDAQ Stock Market LLC, NASDAQ BX, Inc., NASDAQ PHLX, Inc., National Stock Exchange, Inc., New York Stock Exchange LLC, NYSE MKT LLC, and NYSE Arca, Inc.

82 FR 9814 - 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 Between Bats BZX Exchange, Inc., Bats BYX Exchange, Inc., BOX Options Exchange LLC, Chicago Board Options Exchange, Incorporated, C2 Options Exchange, Incorporated, Chicago Stock Exchange, Inc., Bats EDGA Exchange, Inc., Bats EDGX Exchange, Inc., Financial Industry Regulatory Authority, Inc., International Securities Exchange, LLC, Investors Exchange LLC, ISE Gemini, LLC, ISE Mercury, LLC, Miami International Securities Exchange, LLC, MIAX PEARL, LLC, The NASDAQ Stock Market LLC, NASDAQ BX, Inc., NASDAQ PHLX, Inc., National Stock Exchange, Inc., New York Stock Exchange LLC, NYSE MKT LLC, and NYSE Arca, Inc.

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 25 (February 8, 2017)

Page Range9814-9819
FR Document2017-02546

Federal Register, Volume 82 Issue 25 (Wednesday, February 8, 2017)
[Federal Register Volume 82, Number 25 (Wednesday, February 8, 2017)]
[Notices]
[Pages 9814-9819]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-02546]



[[Page 9814]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79928; File No. 4-618]


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 Between Bats BZX Exchange, Inc., Bats BYX Exchange, 
Inc., BOX Options Exchange LLC, Chicago Board Options Exchange, 
Incorporated, C2 Options Exchange, Incorporated, Chicago Stock 
Exchange, Inc., Bats EDGA Exchange, Inc., Bats EDGX Exchange, Inc., 
Financial Industry Regulatory Authority, Inc., International Securities 
Exchange, LLC, Investors Exchange LLC, ISE Gemini, LLC, ISE Mercury, 
LLC, Miami International Securities Exchange, LLC, MIAX PEARL, LLC, The 
NASDAQ Stock Market LLC, NASDAQ BX, Inc., NASDAQ PHLX, Inc., National 
Stock Exchange, Inc., New York Stock Exchange LLC, NYSE MKT LLC, and 
NYSE Arca, Inc.

February 2, 2017.
    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 January 25, 2017, pursuant to Rule 
17d-2 of the Act,\2\ by Bats BZX Exchange, Inc. (``BATS''), Bats BYX 
Exchange, Inc. (``BATS Y''), BOX Options Exchange LLC (``BOX''), 
Chicago Board Options Exchange, Incorporated (``CBOE''), C2 Options 
Exchange, Incorporated (``C2''), Chicago Stock Exchange, Inc. 
(``CHX''), Bats EDGA Exchange, Inc. (``EDGA''), Bats EDGX Exchange, 
Inc. (``EDGX''), Financial Industry Regulatory Authority, Inc. 
(``FINRA''), International Securities Exchange, LLC (``ISE''), 
Investors Exchange LLC (``IEX''), ISE Gemini, LLC (``ISE Gemini''), ISE 
Mercury, LLC (``ISE Mercury''), Miami International Securities 
Exchange, LLC (``MIAX''), MIAX PEARL, LLC (``MIAX PEARL''), The NASDAQ 
Stock Market LLC (``NASDAQ''), NASDAQ BX, Inc. (``BX''), NASDAQ PHLX, 
Inc. (``Phlx''), National Stock Exchange, Inc. (``NSX''), New York 
Stock Exchange LLC (``NYSE''), NYSE MKT LLC (``NYSE MKT''), and NYSE 
Arca, Inc. (``NYSE Arca'') (each, a ``Participating Organization,'' 
and, together, the ``Participating Organizations'' or the ``Parties''). 
As further discussed in Section III, below, this Agreement amends and 
restates the agreement by and among the Participating Organizations 
approved by the Commission on August 11, 2016.\3\
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    \1\ 15 U.S.C. 78q(d).
    \2\ 17 CFR 240.17d-2.
    \3\ See Securities Exchange Act Release No. 78552, 81 FR 54905 
(August 17, 2016).
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I. Introduction

    Section 19(g)(1) of the Act,\4\ 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) or Section 19(g)(2) of the Act.\5\ 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.
---------------------------------------------------------------------------

    \4\ 15 U.S.C. 78s(g)(1).
    \5\ 15 U.S.C. 78q(d) and 15 U.S.C. 78s(g)(2), respectively.
---------------------------------------------------------------------------

    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.
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    \6\ 15 U.S.C. 78q(d)(1).
    \7\ See Securities Act Amendments of 1975, Report of the Senate 
Committee on Banking, Housing, and Urban Affairs to Accompany S. 
249, S. Rep. No. 94-75, 94th Cong., 1st Session 32 (1975).
---------------------------------------------------------------------------

    To implement Section 17(d)(1), the Commission adopted two rules: 
Rule 17d-1 and Rule 17d-2 under the Act.\8\ Rule 17d-1 authorizes the 
Commission to name a single SRO as the designated examining authority 
(``DEA'') to examine common members for compliance with the financial 
responsibility requirements imposed by the Act, or by Commission or SRO 
rules.\9\ When an SRO has been named as a common member's DEA, all 
other SROs to which the common member belongs are relieved of the 
responsibility to examine the firm for compliance with the applicable 
financial responsibility rules. On its face, Rule 17d-1 deals only with 
an SRO's obligations to enforce member compliance with financial 
responsibility requirements. Rule 17d-1 does not relieve an SRO from 
its obligation to examine a common member for compliance with its own 
rules and provisions of the federal securities laws governing matters 
other than financial responsibility, including sales practices and 
trading activities and practices.
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    \8\ 17 CFR 240.17d-1 and 17 CFR 240.17d-2, respectively.
    \9\ See Securities Exchange Act Release No. 12352 (April 20, 
1976), 41 FR 18808 (May 7, 1976).
---------------------------------------------------------------------------

    To address regulatory duplication in these and other areas, the 
Commission adopted Rule 17d-2 under the Act.\10\ Rule 17d-2 permits 
SROs to propose joint plans for the allocation of regulatory 
responsibilities with respect to their common members. Under paragraph 
(c) of Rule 17d-2, the Commission may declare such a plan effective if, 
after providing for appropriate notice and comment, it determines that 
the plan is necessary or appropriate in the public interest and for the 
protection of investors; to foster cooperation and coordination among 
the SROs; to remove impediments to, and foster the development of, a 
national market system and a national clearance and settlement system; 
and is in conformity with the factors set forth in Section 17(d) of the 
Act. Commission approval of a plan filed pursuant to Rule 17d-2 
relieves an SRO of those regulatory responsibilities allocated by the 
plan to another SRO.
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    \10\ See Securities Exchange Act Release No. 12935 (October 28, 
1976), 41 FR 49091 (November 8, 1976).
---------------------------------------------------------------------------

II. The Plan

    On December 3, 2010, the Commission approved the SRO participants' 
plan for allocating regulatory responsibilities pursuant to Rule 17d-
2.\11\ On October 29, 2015, the Commission approved an amended plan 
that added Regulation NMS Rules 606, 607, and 611(c) and (d) and added 
additional Participating Organizations that are options markets to the 
Plan.\12\ On August 11, 2016, the Commission approved an amended plan 
that added IEX and ISE Mercury as Participants to the Plan.\13\
---------------------------------------------------------------------------

    \11\ See Securities Exchange Act Release No. 63430, 75 FR 76758 
(December 9, 2010).
    \12\ See Securities Exchange Act Release No. 76311, 80 FR 68377 
(November 4, 2015).
    \13\ See Securities Exchange Act Release No. 78552, 81 FR 54905 
(August 17, 2016).
---------------------------------------------------------------------------

    The proposed 17d-2 Plan is intended to reduce regulatory 
duplication for firms that are members of more than one

[[Page 9815]]

Participating Organization.\14\ The Plan provides for the allocation of 
regulatory responsibility according to whether the covered rule 
pertains to NMS stocks or NMS securities. For covered rules that 
pertain to NMS stocks (i.e., Rules 607, 611, and 612), FINRA serves as 
the ``Designated Regulation NMS Examining Authority'' (``DREA'') for 
common members that are members of FINRA, and assumes certain 
examination and enforcement responsibilities for those members with 
respect to specified Regulation NMS rules. For common members that are 
not members of FINRA, the member's DEA serves as the DREA, provided 
that the DEA exchange operates a national securities exchange or 
facility that trades NMS stocks and the common member is a member of 
such exchange or facility. Section 1(c) of the Plan contains a list of 
principles that are applicable to the allocation of common members in 
cases not specifically addressed in the Plan. An exchange that does not 
trade NMS stocks would have no regulatory authority for covered 
Regulation NMS rules pertaining to NMS stocks. For covered rules that 
pertain to NMS securities, and thus include options (i.e., Rule 606), 
the Plan provides that the DREA will be the same as the DREA for the 
rules pertaining to NMS stocks. For common members that are not members 
of an exchange that trades NMS stocks, the common member would be 
allocated according to the principles set forth in Section 1(c) of the 
Plan.
---------------------------------------------------------------------------

    \14\ The proposed 17d-2 Plan refers to these members as ``Common 
Members.''
---------------------------------------------------------------------------

    The text of the Plan delineates the proposed regulatory 
responsibilities with respect to the Parties. Included in the proposed 
Plan is an exhibit (the ``Covered Regulation NMS Rules'') that lists 
the federal securities laws, rules, and regulations, for which the 
applicable DREA would bear examination and enforcement responsibility 
under the Plan for common members of the Participating Organization and 
their associated persons.
    Specifically, the applicable DREA assumes examination and 
enforcement responsibility relating to compliance by common members 
with the Covered Regulation NMS Rules. Covered Regulation NMS Rules do 
not include the application of any rule of a Participating 
Organization, or any rule or regulation under the Act, to the extent 
that it pertains to violations of insider trading activities, because 
such matters are covered by a separate multiparty agreement under Rule 
17d-2.\15\ Under the Plan, Participating Organizations retain full 
responsibility for surveillance and enforcement with respect to trading 
activities or practices involving their own marketplace.\16\
---------------------------------------------------------------------------

    \15\ See Securities Exchange Act Release No. 58350 (August 13, 
2008), 73 FR 48247 (August 18, 2008) (File No. 4-566) (notice of 
filing of proposed plan). See also Securities Exchange Act Release 
No. 58536 (September 12, 2008), 73 FR 54646 (September 22, 2008) 
(File No. 4-566) (order approving and declaring effective the plan).
    \16\ See paragraph 1(d) of the proposed 17d-2 Plan.
---------------------------------------------------------------------------

III. Proposed Amendment to the Plan

    On January 25, 2017, the parties submitted a proposed amendment to 
the Plan. The primary purpose of the amendment is to add MIAX PEARL as 
a Participant to the Plan.
    The text of the proposed amended 17d-2 Plan is as follows 
(additions in italics; deletions are in brackets):
* * * * *

Agreement for the Allocation of Regulatory Responsibility for the 
Covered Regulation NMS Rules Pursuant to Sec.  17(d) of the Securities 
Exchange Act of 1934, 15 U.S.C. 78q(d), and Rule 17d-2 Thereunder

    This agreement (the ``Agreement'') by and among Bats BZX Exchange, 
Inc. (``BATS''), Bats BYX Exchange, Inc. (``BATS Y''), BOX Options 
Exchange LLC (``BOX''), Chicago Board Options Exchange, Incorporated 
(``CBOE''), C2 Options Exchange, Incorporated (``C2''), Chicago Stock 
Exchange, Inc. (``CHX''), Bats EDGA Exchange, Inc. (``EDGA''), Bats 
EDGX Exchange, Inc. (``EDGX''), Financial Industry Regulatory 
Authority, Inc. (``FINRA''), International Securities Exchange, LLC 
(``ISE''), ISE Gemini, LLC (``ISE Gemini''), ISE Mercury, LLC (``ISE 
Mercury''), Investors Exchange LLC (``IEX''), Miami International 
Securities Exchange, LLC (``MIAX''), MIAX PEARL, LLC (``MIAX PEARL''), 
The NASDAQ Stock Market LLC (``NASDAQ''), NASDAQ BX, Inc. (``BX''), 
NASDAQ PHLX, Inc. (``PHLX''), National Stock Exchange, Inc. (``NSX''), 
New York Stock Exchange LLC (``NYSE''), NYSE MKT LLC (``NYSE MKT''), 
and NYSE Arca, Inc. (``NYSE Arca'') (each, a ``Participating 
Organization,'' and, together, the ``Participating Organizations''), is 
made pursuant to Sec.  17(d) of the Securities Exchange Act of 1934 
(the ``Act'' or ``SEA''), 15 U.S.C. 78q(d), and Rule 17d-2 thereunder, 
which allow for plans to allocate regulatory responsibility among self-
regulatory organizations (``SROs''). Upon approval by the Securities 
and Exchange Commission (``Commission'' or ``SEC''), this Agreement 
shall amend and restate the agreement by and among the Participating 
Organizations approved by the SEC on [October 29, 2015] August 11, 
2016.
    Whereas, the Participating Organizations desire to: (a) Foster 
cooperation and coordination among the SROs; (b) remove impediments to, 
and foster the development of, a national market system; (c) strive to 
protect the interest of investors; and (d) eliminate duplication in 
their examination and enforcement of SEA Rules 606, 607, 611 and 612 
(the ``Covered Regulation NMS Rules'');
    Whereas, the Participating Organizations are interested in 
allocating regulatory responsibilities with respect to broker-dealers 
that are members of more than one Participating Organization (the 
``Common Members'') relating to the examination and enforcement of the 
Covered Regulation NMS Rules; and
    Whereas, the Participating Organizations will request regulatory 
allocation of these regulatory responsibilities by executing and filing 
with the SEC this plan for the above stated purposes pursuant to the 
provisions of Sec.  17(d) of the Act, and Rule 17d-2 thereunder, as 
described below.
    Now, therefore, in consideration of the mutual covenants contained 
hereafter, and other valuable consideration to be mutually exchanged, 
the Participating Organizations hereby agree as follows:
    1. Assumption of Regulatory Responsibility. The Designated 
Regulation NMS Examining Authority (the ``DREA'') shall assume 
examination and enforcement responsibilities relating to compliance by 
Common Members with the Covered Regulation NMS Rules to which the DREA 
is allocated responsibility (``Regulatory Responsibility''). A list of 
the Covered Regulation NMS Rules is attached hereto as Exhibit A.
    a. For Covered Regulation NMS Rules Pertaining to ``NMS stocks'' 
(as defined in Regulation NMS) (i.e., Rules 607, 611 and 612): FINRA 
shall serve as DREA for Common Members that are members of FINRA. The 
Designated Examining Authority (``DEA'') pursuant to SEA Rule 17d-1 
shall serve as DREA for Common Members that are not members of FINRA, 
provided that the DEA operates a national securities exchange or 
facility that trades NMS stocks and the Common Member is a member of 
such exchange or facility. For all other Common Members, the 
Participating Organizations shall allocate Common Members among the 
Participating Organizations (other than FINRA) that

[[Page 9816]]

operate a national securities exchange that trades NMS stocks based on 
the principles outlined below and the Participating Organization to 
which such a Common Member is allocated shall serve as the DREA for 
that Common Member. (A Participating Organization that operates a 
national securities exchange that does not trade NMS stocks has no 
regulatory responsibilities related to Covered Regulation NMS Rules 
pertainining to NMS stocks and will not serve as DREA for such Covered 
Regulation NMS Rules.)
    b. For Covered Regulation NMS Rules Pertaining to ``NMS 
securities'' (as defined in Regulation NMS) (i.e., Rule 606), the DREA 
shall be same as the DREA for Covered Regulation NMS Rules pertaining 
to NMS stocks. For Common Members that are not members of a national 
securities exchange that trades NMS stocks and thus have not been 
appointed a DREA under paragraph a., the Participating Organizations 
shall allocate the Common Members among the Participating Organizations 
(other than FINRA) that operate a national securities exchange that 
trades NMS securities based on the principles outlined below and the 
Participating Organization to which such a Common Member is allocated 
shall serve as the DREA for that Common Member with respect to Covered 
Regulation NMS Rules pertaining to NMS securities. The allocation of 
Common Members to DREAs (including FINRA) for all Covered Regulation 
NMS Rules is provided in Exhibit B.
    c. For purposes of this paragraph 1, any allocation of a Common 
Member to a Participating Organization other than as specified in 
paragraphs a. and b. above shall be based on the following principles, 
except to the extent all affected Participating Organizations consent 
to one or more different principles and any such agreement to different 
principles would be deemed an amendment to this Agreement as provided 
in paragraph 22:
    i. The Participating Organizations shall not allocate a Common 
Member to a Participating Organization unless the Common Member is a 
member of that Participating Organization.
    ii. To the extent practicable, Common Members shall be allocated 
among the Participating Organizations of which they are members in such 
a manner as to equalize, as nearly as possible, the allocation among 
such Participating Organizations.
    iii. To the extent practicable, the allocation will take into 
account the amount of NMS stock activity (or NMS security activity, as 
applicable) conducted by each Common Member in order to most evenly 
divide the Common Members with the largest amount of activity among the 
Participating Organizations of which they are a members. The allocation 
will also take into account similar allocations pursuant to other plans 
or agreements to which the Participating Organizations are party to 
maintain consistency in oversight of the Common Members.\1\
---------------------------------------------------------------------------

    \1\ For example, if one Participating Organization was allocated 
responsibility for a particular Common Member pursuant to a separate 
Rule 17d-2 Agreement, that Participant Organization would be 
assigned to be the DREA of that Common Member, unless there is good 
cause not to make that assignment.
---------------------------------------------------------------------------

    iv. The Participating Organizations may reallocate Common Members 
from time-to-time and in such manner as they deem appropriate 
consistent with the terms of this Agreement.
    v. Whenever a Common Member ceases to be a member of its DREA 
(including FINRA), the DREA shall promptly inform the Participating 
Organizations, who shall review the matter and reallocate the Common 
Member to another Participating Organization.
    vi. The DEA or DREA (including FINRA) may request that a Common 
Member be reallocated to another Participating Organization (including 
the DEA or DREA (including FINRA)) by giving 30 days written notice to 
the Participating Organizations. The Participating Organizations shall 
promptly consider such request and, in their discretion, may approve or 
disapprove such request and if approved, reallocate the Common Member 
to such Participating Organization.
    vii. All determinations by the Participating Organizations with 
respect to allocations shall be by the affirmative vote of a majority 
of the Participating Organizations that, at the time of such 
determination, share the applicable Common Member being allocated; a 
Participating Organization shall not be entitled to vote on any 
allocation related to a Common Member unless the Common Member is a 
member of such Participating Organization.
    d. The Participating Organizations agree that they shall conduct 
meetings among them as needed for the purposes of ensuring proper 
allocation of Common Members and identifying issues or concerns with 
respect to the regulation of Common Members.

Notwithstanding anything herein to the contrary, it is explicitly 
understood that the term ``Regulatory Responsibility'' does not 
include, and each of the Participating Organizations shall retain full 
responsibility for, examination, surveillance and enforcement with 
respect to trading activities or practices involving its own 
marketplace unless otherwise allocated pursuant to a separate Rule 17d-
2 Agreement.
    2. No Retention of Regulatory Responsibility. The Participating 
Organizations do not contemplate the retention of any responsibilities 
with respect to the regulatory activities being assumed by the DREA 
under the terms of this Agreement. Nothing in this Agreement will be 
interpreted to prevent a DREA from entering into Regulatory Services 
Agreement(s) to perform its Regulatory Responsibility.
    3. No Charge. A DREA shall not charge Participating Organizations 
for performing the Regulatory Responsibility under this Agreement.
    4. Applicability of Certain Laws, Rules, Regulations or Orders. 
Notwithstanding any provision hereof, this Agreement shall be subject 
to any statute, or any rule or order of the SEC. To the extent such 
statute, rule, or order is inconsistent with one or more provisions of 
this Agreement, the statute, rule, or order shall supersede the 
provision(s) hereof to the extent necessary to be properly effectuated 
and the provision(s) hereof in that respect shall be null and void.
    5. Customer Complaints. If a Participating Organization receives a 
copy of a customer complaint relating to a DREA's Regulatory 
Responsibility as set forth in this Agreement, the Participating 
Organization shall promptly forward to such DREA a copy of such 
customer complaint. It shall be such DREA's responsibility to review 
and take appropriate action in respect to such complaint.
    6. Parties to Make Personnel Available as Witnesses. Each 
Participating Organization shall make its personnel available to the 
DREA to serve as testimonial or non-testimonial witnesses as necessary 
to assist the DREA in fulfilling the Regulatory Responsibility 
allocated under this Agreement. The DREA shall provide reasonable 
advance notice when practicable and shall work with a Participating 
Organization to accommodate reasonable scheduling conflicts within the 
context and demands as the entity with ultimate regulatory 
responsibility. The Participating Organization shall pay all reasonable 
travel and other expenses incurred by its employees to the extent that 
the DREA requires such employees to serve as witnesses, and provide 
information or other assistance pursuant to this Agreement.

[[Page 9817]]

    7. Sharing of Work-Papers, Data and Related Information.
    a. Sharing. A Participating Organization shall make available to 
the DREA information necessary to assist the DREA in fulfilling the 
Regulatory Responsibility assumed under the terms of this Agreement. 
Such information shall include any information collected by a 
Participating Organization in the course of performing its regulatory 
obligations under the Act, including information relating to an on-
going disciplinary investigation or action against a member, the amount 
of a fine imposed on a member, financial information, or information 
regarding proprietary trading systems gained in the course of examining 
a member (``Regulatory Information''). This Regulatory Information 
shall be used by the DREA solely for the purposes of fulfilling the 
DREA's Regulatory Responsibility.
    b. No Waiver of Privilege. The sharing of documents or information 
between the parties pursuant to this Agreement shall not be deemed a 
waiver as against third parties of regulatory or other privileges 
relating to the discovery of documents or information.
    8. Special or Cause Examinations and Enforcement Proceedings. 
Nothing in this Agreement shall restrict or in any way encumber the 
right of a Participating Organization to conduct special or cause 
examinations of a Common Member, or take enforcement proceedings 
against a Common Member as a Participating Organization, in its sole 
discretion, shall deem appropriate or necessary.
    9. Dispute Resolution Under this Agreement.
    a. Negotiation. The Participating Organizations will attempt to 
resolve any disputes through good faith negotiation and discussion, 
escalating such discussion up through the appropriate management levels 
until reaching the executive management level. In the event a dispute 
cannot be settled through these means, the Participating Organizations 
shall refer the dispute to binding arbitration.
    b. Binding Arbitration. All claims, disputes, controversies, and 
other matters in question between the Participating Organizations to 
this Agreement arising out of or relating to this Agreement or the 
breach thereof that cannot be resolved by the Participating 
Organizations will be resolved through binding arbitration. Unless 
otherwise agreed by the Participating Organizations, a dispute 
submitted to binding arbitration pursuant to this paragraph shall be 
resolved using the following procedures:
    (i) The arbitration shall be conducted in a city selected by the 
DREA in which it maintains a principal office or where otherwise agreed 
to by the Participating Organizations in accordance with the Commercial 
Arbitration Rules of the American Arbitration Association and judgment 
upon the award rendered by the arbitrator may be entered in any court 
having jurisdiction thereof; and
    (ii) There shall be three arbitrators, and the chairperson of the 
arbitration panel shall be an attorney. The arbitrators shall be 
appointed in accordance with the Commercial Arbitration Rules of the 
American Arbitration Association.
    10. Limitation of Liability. As between the Participating 
Organizations, no Participating Organization, including its respective 
directors, governors, officers, employees and agents, will be liable to 
any other Participating Organization, or its directors, governors, 
officers, employees and agents, for any liability, loss or damage 
resulting from any delays, inaccuracies, errors or omissions with 
respect to its performing or failing to perform regulatory 
responsibilities, obligations, or functions, except: (a) As otherwise 
provided for under the Act; (b) in instances of a Participating 
Organization's gross negligence, willful misconduct or reckless 
disregard with respect to another Participating Organization; or (c) in 
instances of a breach of confidentiality obligations owed to another 
Participating Organization. The Participating Organizations understand 
and agree that the regulatory responsibilities are being performed on a 
good faith and best effort basis and no warranties, express or implied, 
are made by any Participating Organization to any other Participating 
Organization with respect to any of the responsibilities to be 
performed hereunder. This paragraph is not intended to create liability 
of any Participating Organization to any third party.
    11. SEC Approval.
    a. The Participating Organizations agree to file promptly this 
Agreement with the SEC for its review and approval. FINRA shall file 
this Agreement on behalf, and with the explicit consent, of all 
Participating Organizations.
    b. If approved by the SEC, the Participating Organizations will 
notify their members of the general terms of the Agreement and of its 
impact on their members.
    12. Subsequent Parties; Limited Relationship. This Agreement shall 
inure to the benefit of and shall be binding upon the Participating 
Organizations hereto and their respective legal representatives, 
successors, and assigns. Nothing in this Agreement, expressed or 
implied, is intended or shall: (a) Confer on any person other than the 
Participating Organizations hereto, or their respective legal 
representatives, successors, and assigns, any rights, remedies, 
obligations or liabilities under or by reason of this Agreement, (b) 
constitute the Participating Organizations hereto partners or 
participants in a joint venture, or (c) appoint one Participating 
Organization the agent of the other.
    13. Assignment. No Participating Organization may assign this 
Agreement without the prior written consent of the DREAs performing 
Regulatory Responsibility on behalf of such Participating Organization, 
which consent shall not be unreasonably withheld, conditioned or 
delayed; provided, however, that any Participating Organization may 
assign the Agreement to a corporation controlling, controlled by or 
under common control with the Participating Organization without the 
prior written consent of such Participating Organization's DREAs. No 
assignment shall be effective without Commission approval.
    14. Severability. Any term or provision of this Agreement that is 
invalid or unenforceable in any jurisdiction shall, as to such 
jurisdiction, be ineffective to the extent of such invalidity or 
unenforceability without rendering invalid or unenforceable the 
remaining terms and provisions of this Agreement or affecting the 
validity or enforceability of any of the terms or provisions of this 
Agreement in any other jurisdiction.
    15. Termination. Any Participating Organization may cancel its 
participation in the Agreement at any time upon the approval of the 
Commission after 180 days written notice to the other Participating 
Organizations (or in the case of a change of control in ownership of a 
Participating Organization, such other notice time period as that 
Participating Organization may choose). The cancellation of its 
participation in this Agreement by any Participating Organization shall 
not terminate this Agreement as to the remaining Participating 
Organizations.
    16. General. The Participating Organizations agree to perform all 
acts and execute all supplementary instruments or documents that may be 
reasonably necessary or desirable to carry out the provisions of this 
Agreement.

[[Page 9818]]

    17. Written Notice. 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 Participating Organization entitled to receipt 
thereof, to the attention of the Participating Organization's 
representative at the Participating Organization's then principal 
office or by email.
    18. Confidentiality. The Participating Organizations agree that 
documents or information shared shall be held in confidence, and used 
only for the purposes of carrying out their respective regulatory 
obligations under this Agreement, provided, however, that each 
Participating Organization may disclose such documents or information 
as may be required to comply with applicable requlatory requirements or 
requests for information from the SEC. Any Participating Organization 
disclosing confidential documents or information in compliance with 
applicable regulatory or oversight requirements will request 
confidential treatment of such information. No Participating 
Organization shall assert regulatory or other privileges as against the 
other with respect to Regulatory Information that is required to be 
shared pursuant to this Agreement.
    19. Regulatory Responsibility. Pursuant to Section 17(d)(1)(A) of 
the Act, and Rule 17d-2 thereunder, the Participating Organizations 
request the SEC, upon its approval of this Agreement, to relieve the 
Participating Organizations which are participants in this Agreement 
that are not the DREA as to a Common Member of any and all 
responsibilities with respect to the matters allocated to the DREA 
pursuant to this Agreement for purposes of Sec. Sec.  17(d) and 19(g) 
of the Act.
    20. Governing Law. This Agreement shall be deemed to have been made 
in the State of New York, and shall be construed and enforced in 
accordance with the law of the State of New York, without reference to 
principles of conflicts of laws thereof. Each of the Participating 
Organizations hereby consents to submit to the jurisdiction of the 
courts of the State of New York in connection with any action or 
proceeding relating to this Agreement.
    21. Survival of Provisions. Provisions intended by their terms or 
context to survive and continue notwithstanding delivery of the 
regulatory services by the DREA and any expiration of this Agreement 
shall survive and continue.
    22. Amendment.
    a. This Agreement may be amended to add a new Participating 
Organization, provided that such Participating Organization does not 
assume regulatory responsibility, by an amendment executed by all 
applicable DREAs and such new Participating Organization. All other 
Participating Organizations expressly consent to allow such DREAs to 
jointly add new Participating Organizations to the Agreement as 
provided above. Such DREAs will promptly notify all Participating 
Organizations of any such amendments to add a new Participating 
Organization.
    b. All other amendments must be approved by each Participating 
Organization. All amendments, including adding a new Participating 
Organization but excluding changes to Exhibit B, must be filed with and 
approved by the Commission before they become effective.
    23. Effective Date. The Effective Date of this Agreement will be 
the date the SEC declares this Agreement to be effective pursuant to 
authority conferred by Sec.  17(d) of the Act, and Rule 17d-2 
thereunder.
    24. Counterparts. This Agreement may be executed in any number of 
counterparts, including facsimile, each of which will be deemed an 
original, but all of which taken together shall constitute one single 
agreement among the Participating Organizations.
* * * * *

Exhibit A

Covered Regulation NMS Rules

    SEA Rule 606--Disclosure of Order Routing Information.*
    SEA Rule 607--Customer Account Statements.
    SEA Rule 611--Order Protection Rule.
    SEA Rule 612--Minimum Pricing Increment.

    * Covered Regulation NMS Rules with asterisks (*) pertain to NMS 
securities. Covered Regulation NMS Rules without asterisks pertain to 
NMS stocks

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number 4-618 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.

All submissions should refer to File Number 4-618. 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 the Participating Organizations. 
All comments received will be posted without change; the Commission 
does not edit personal identifying information from submissions. You 
should submit only information that you wish to make available 
publicly. All submissions should refer to File Number 4-618 and should 
be submitted on or before March 1, 2017.

V. Discussion

    The Commission finds that the Plan, as amended, is consistent with 
the factors set forth in Section 17(d) of the Act \17\ and Rule 17d-
2(c) thereunder \18\ in that the proposed amended Plan is necessary or 
appropriate in the public interest and for the protection of investors, 
fosters cooperation and coordination among SROs, and removes 
impediments to and fosters the development of the national market 
system. In particular, the Commission believes that the proposed 
amended Plan should reduce unnecessary regulatory duplication by 
allocating to the applicable DREA certain examination and enforcement 
responsibilities for Common Members that would otherwise be performed 
by multiple Parties. Accordingly, the proposed amended Plan promotes 
efficiency by reducing costs to Common Members. Furthermore, because 
the Parties will coordinate their regulatory functions in accordance 
with the

[[Page 9819]]

proposed amended Plan, the amended Plan should promote investor 
protection.
---------------------------------------------------------------------------

    \17\ 15 U.S.C. 78q(d).
    \18\ 17 CFR 240.17d-2(c).
---------------------------------------------------------------------------

    The Commission is hereby declaring effective a plan that allocates 
regulatory responsibility for certain provisions of the federal 
securities laws, rules, and regulations as set forth in Exhibit A to 
the Plan. The Commission notes that any amendment to the Plan must be 
approved by the relevant Parties as set forth in Paragraph 22 of the 
Plan and must be filed with and approved by the Commission before it 
may become effective.\19\
---------------------------------------------------------------------------

    \19\ See Paragraph 22 of the Plan. The Commission notes, 
however, that changes to Exhibit B to the Plan (the allocation of 
Common Members to DREAs) are not required to be filed with, and 
approved by, the Commission before they become effective.
---------------------------------------------------------------------------

    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. In particular, the purpose of the amendment is to add MIAX 
PEARL as a Participating Organization. The Commission notes that the 
most recent prior amendment to the Plan was published for comment and 
the Commission did not receive any comments thereon.\20\ The Commission 
believes that the current amendment to the Plan does not raise any new 
regulatory issues that the Commission has not previously considered, 
and therefore believes that the amended Plan should become effective 
without any undue delay.
---------------------------------------------------------------------------

    \20\ See Securities Exchange Act Release No. 78552 (August 11, 
2016), 81 FR 54905 (August 17, 2016).
---------------------------------------------------------------------------

VI. Conclusion

    This order gives effect to the amended Plan filed with the 
Commission that is contained in File No. 4-618.
    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 January 25, 2017, is hereby approved and declared effective.
    It is further ordered that those SRO participants that are not the 
DREA as to a particular common member are relieved of those regulatory 
responsibilities allocated to the common member's DREA under the 
amended Plan to the extent of such allocation.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\21\
---------------------------------------------------------------------------

    \21\ 17 CFR 200.30-3(a)(34).
---------------------------------------------------------------------------

Robert W. Errett,
Deputy Secretary.
[FR Doc. 2017-02546 Filed 2-7-17; 8:45 am]
 BILLING CODE 8011-01-P



                                                    9814                        Federal Register / Vol. 82, No. 25 / Wednesday, February 8, 2017 / Notices

                                                    SECURITIES AND EXCHANGE                                  Organization,’’ and, together, the                    SROs to which the common member
                                                    COMMISSION                                               ‘‘Participating Organizations’’ or the                belongs are relieved of the responsibility
                                                                                                             ‘‘Parties’’). As further discussed in                 to examine the firm for compliance with
                                                    [Release No. 34–79928; File No. 4–618]
                                                                                                             Section III, below, this Agreement                    the applicable financial responsibility
                                                    Program for Allocation of Regulatory                     amends and restates the agreement by                  rules. On its face, Rule 17d–1 deals only
                                                    Responsibilities Pursuant to Rule 17d–                   and among the Participating                           with an SRO’s obligations to enforce
                                                    2; Notice of Filing and Order                            Organizations approved by the                         member compliance with financial
                                                    Approving and Declaring Effective an                     Commission on August 11, 2016.3                       responsibility requirements. Rule 17d–1
                                                    Amendment to the Plan for the                                                                                  does not relieve an SRO from its
                                                                                                             I. Introduction
                                                    Allocation of Regulatory                                                                                       obligation to examine a common
                                                                                                                Section 19(g)(1) of the Act,4 among                member for compliance with its own
                                                    Responsibilities Between Bats BZX
                                                                                                             other things, requires every self-                    rules and provisions of the federal
                                                    Exchange, Inc., Bats BYX Exchange,
                                                                                                             regulatory organization (‘‘SRO’’)                     securities laws governing matters other
                                                    Inc., BOX Options Exchange LLC,
                                                                                                             registered as either a national securities            than financial responsibility, including
                                                    Chicago Board Options Exchange,
                                                                                                             exchange or national securities                       sales practices and trading activities and
                                                    Incorporated, C2 Options Exchange,
                                                                                                             association to examine for, and enforce               practices.
                                                    Incorporated, Chicago Stock
                                                                                                             compliance by, its members and persons                   To address regulatory duplication in
                                                    Exchange, Inc., Bats EDGA Exchange,
                                                                                                             associated with its members with the                  these and other areas, the Commission
                                                    Inc., Bats EDGX Exchange, Inc.,
                                                                                                             Act, the rules and regulations                        adopted Rule 17d–2 under the Act.10
                                                    Financial Industry Regulatory
                                                                                                             thereunder, and the SRO’s own rules,                  Rule 17d–2 permits SROs to propose
                                                    Authority, Inc., International Securities
                                                                                                             unless the SRO is relieved of this                    joint plans for the allocation of
                                                    Exchange, LLC, Investors Exchange
                                                                                                             responsibility pursuant to Section 17(d)              regulatory responsibilities with respect
                                                    LLC, ISE Gemini, LLC, ISE Mercury,
                                                                                                             or Section 19(g)(2) of the Act.5 Without              to their common members. Under
                                                    LLC, Miami International Securities
                                                                                                             this relief, the statutory obligation of              paragraph (c) of Rule 17d–2, the
                                                    Exchange, LLC, MIAX PEARL, LLC,
                                                                                                             each individual SRO could result in a                 Commission may declare such a plan
                                                    The NASDAQ Stock Market LLC,
                                                                                                             pattern of multiple examinations of                   effective if, after providing for
                                                    NASDAQ BX, Inc., NASDAQ PHLX, Inc.,
                                                                                                             broker-dealers that maintain                          appropriate notice and comment, it
                                                    National Stock Exchange, Inc., New
                                                                                                             memberships in more than one SRO                      determines that the plan is necessary or
                                                    York Stock Exchange LLC, NYSE MKT
                                                                                                             (‘‘common members’’). Such regulatory                 appropriate in the public interest and
                                                    LLC, and NYSE Arca, Inc.
                                                                                                             duplication would add unnecessary                     for the protection of investors; to foster
                                                    February 2, 2017.                                        expenses for common members and                       cooperation and coordination among the
                                                       Notice is hereby given that the                       their SROs.                                           SROs; to remove impediments to, and
                                                    Securities and Exchange Commission                          Section 17(d)(1) of the Act 6 was                  foster the development of, a national
                                                    (‘‘Commission’’) has issued an Order,                    intended, in part, to eliminate                       market system and a national clearance
                                                    pursuant to Section 17(d) of the                         unnecessary multiple examinations and                 and settlement system; and is in
                                                    Securities Exchange Act of 1934                          regulatory duplication.7 With respect to              conformity with the factors set forth in
                                                    (‘‘Act’’),1 approving and declaring                      a common member, Section 17(d)(1)                     Section 17(d) of the Act. Commission
                                                    effective an amendment to the plan for                   authorizes the Commission, by rule or                 approval of a plan filed pursuant to Rule
                                                    allocating regulatory responsibility                     order, to relieve an SRO of the                       17d–2 relieves an SRO of those
                                                    (‘‘Plan’’) filed on January 25, 2017,                    responsibility to receive regulatory
                                                                                                                                                                   regulatory responsibilities allocated by
                                                    pursuant to Rule 17d–2 of the Act,2 by                   reports, to examine for and enforce
                                                                                                                                                                   the plan to another SRO.
                                                    Bats BZX Exchange, Inc. (‘‘BATS’’), Bats                 compliance with applicable statutes,
                                                    BYX Exchange, Inc. (‘‘BATS Y’’), BOX                     rules, and regulations, or to perform                 II. The Plan
                                                    Options Exchange LLC (‘‘BOX’’),                          other specified regulatory functions.                    On December 3, 2010, the
                                                    Chicago Board Options Exchange,                             To implement Section 17(d)(1), the                 Commission approved the SRO
                                                    Incorporated (‘‘CBOE’’), C2 Options                      Commission adopted two rules: Rule                    participants’ plan for allocating
                                                    Exchange, Incorporated (‘‘C2’’), Chicago                 17d–1 and Rule 17d–2 under the Act.8                  regulatory responsibilities pursuant to
                                                    Stock Exchange, Inc. (‘‘CHX’’), Bats                     Rule 17d–1 authorizes the Commission                  Rule 17d–2.11 On October 29, 2015, the
                                                    EDGA Exchange, Inc. (‘‘EDGA’’), Bats                     to name a single SRO as the designated                Commission approved an amended plan
                                                    EDGX Exchange, Inc. (‘‘EDGX’’),                          examining authority (‘‘DEA’’) to                      that added Regulation NMS Rules 606,
                                                    Financial Industry Regulatory                            examine common members for                            607, and 611(c) and (d) and added
                                                    Authority, Inc. (‘‘FINRA’’), International               compliance with the financial                         additional Participating Organizations
                                                    Securities Exchange, LLC (‘‘ISE’’),                      responsibility requirements imposed by                that are options markets to the Plan.12
                                                    Investors Exchange LLC (‘‘IEX’’), ISE                    the Act, or by Commission or SRO                      On August 11, 2016, the Commission
                                                    Gemini, LLC (‘‘ISE Gemini’’), ISE                        rules.9 When an SRO has been named as                 approved an amended plan that added
                                                    Mercury, LLC (‘‘ISE Mercury’’), Miami                    a common member’s DEA, all other                      IEX and ISE Mercury as Participants to
                                                    International Securities Exchange, LLC                                                                         the Plan.13
                                                                                                               3 See Securities Exchange Act Release No. 78552,
                                                    (‘‘MIAX’’), MIAX PEARL, LLC (‘‘MIAX                                                                               The proposed 17d–2 Plan is intended
                                                                                                             81 FR 54905 (August 17, 2016).
                                                    PEARL’’), The NASDAQ Stock Market                          4 15 U.S.C. 78s(g)(1).                              to reduce regulatory duplication for
                                                    LLC (‘‘NASDAQ’’), NASDAQ BX, Inc.                          5 15 U.S.C. 78q(d) and 15 U.S.C. 78s(g)(2),         firms that are members of more than one
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                                                    (‘‘BX’’), NASDAQ PHLX, Inc. (‘‘Phlx’’),                  respectively.
                                                    National Stock Exchange, Inc. (‘‘NSX’’),                   6 15 U.S.C. 78q(d)(1).                                10 See Securities Exchange Act Release No. 12935

                                                    New York Stock Exchange LLC                                7 See Securities Act Amendments of 1975, Report     (October 28, 1976), 41 FR 49091 (November 8,
                                                    (‘‘NYSE’’), NYSE MKT LLC (‘‘NYSE                         of the Senate Committee on Banking, Housing, and      1976).
                                                                                                             Urban Affairs to Accompany S. 249, S. Rep. No. 94–      11 See Securities Exchange Act Release No. 63430,
                                                    MKT’’), and NYSE Arca, Inc. (‘‘NYSE                      75, 94th Cong., 1st Session 32 (1975).                75 FR 76758 (December 9, 2010).
                                                    Arca’’) (each, a ‘‘Participating                           8 17 CFR 240.17d–1 and 17 CFR 240.17d–2,              12 See Securities Exchange Act Release No. 76311,

                                                                                                             respectively.                                         80 FR 68377 (November 4, 2015).
                                                      1 15   U.S.C. 78q(d).                                    9 See Securities Exchange Act Release No. 12352       13 See Securities Exchange Act Release No. 78552,
                                                      2 17   CFR 240.17d–2.                                  (April 20, 1976), 41 FR 18808 (May 7, 1976).          81 FR 54905 (August 17, 2016).



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                                                                               Federal Register / Vol. 82, No. 25 / Wednesday, February 8, 2017 / Notices                                             9815

                                                    Participating Organization.14 The Plan                  2.15 Under the Plan, Participating                      the agreement by and among the
                                                    provides for the allocation of regulatory               Organizations retain full responsibility                Participating Organizations approved by
                                                    responsibility according to whether the                 for surveillance and enforcement with                   the SEC on [October 29, 2015] August
                                                    covered rule pertains to NMS stocks or                  respect to trading activities or practices              11, 2016.
                                                    NMS securities. For covered rules that                  involving their own marketplace.16                         Whereas, the Participating
                                                    pertain to NMS stocks (i.e., Rules 607,                                                                         Organizations desire to: (a) Foster
                                                                                                            III. Proposed Amendment to the Plan                     cooperation and coordination among the
                                                    611, and 612), FINRA serves as the
                                                    ‘‘Designated Regulation NMS Examining                      On January 25, 2017, the parties                     SROs; (b) remove impediments to, and
                                                    Authority’’ (‘‘DREA’’) for common                       submitted a proposed amendment to the                   foster the development of, a national
                                                    members that are members of FINRA,                      Plan. The primary purpose of the                        market system; (c) strive to protect the
                                                    and assumes certain examination and                     amendment is to add MIAX PEARL as                       interest of investors; and (d) eliminate
                                                    enforcement responsibilities for those                  a Participant to the Plan.                              duplication in their examination and
                                                    members with respect to specified                          The text of the proposed amended                     enforcement of SEA Rules 606, 607, 611
                                                    Regulation NMS rules. For common                        17d–2 Plan is as follows (additions in                  and 612 (the ‘‘Covered Regulation NMS
                                                    members that are not members of                         italics; deletions are in brackets):                    Rules’’);
                                                    FINRA, the member’s DEA serves as the                   *     *      *    *      *                                 Whereas, the Participating
                                                    DREA, provided that the DEA exchange                                                                            Organizations are interested in
                                                                                                            Agreement for the Allocation of                         allocating regulatory responsibilities
                                                    operates a national securities exchange                 Regulatory Responsibility for the
                                                    or facility that trades NMS stocks and                                                                          with respect to broker-dealers that are
                                                                                                            Covered Regulation NMS Rules                            members of more than one Participating
                                                    the common member is a member of                        Pursuant to § 17(d) of the Securities
                                                    such exchange or facility. Section 1(c) of                                                                      Organization (the ‘‘Common Members’’)
                                                                                                            Exchange Act of 1934, 15 U.S.C. 78q(d),                 relating to the examination and
                                                    the Plan contains a list of principles that             and Rule 17d–2 Thereunder
                                                    are applicable to the allocation of                                                                             enforcement of the Covered Regulation
                                                    common members in cases not                                This agreement (the ‘‘Agreement’’) by                NMS Rules; and
                                                    specifically addressed in the Plan. An                  and among Bats BZX Exchange, Inc.                          Whereas, the Participating
                                                    exchange that does not trade NMS                        (‘‘BATS’’), Bats BYX Exchange, Inc.                     Organizations will request regulatory
                                                    stocks would have no regulatory                         (‘‘BATS Y’’), BOX Options Exchange                      allocation of these regulatory
                                                    authority for covered Regulation NMS                    LLC (‘‘BOX’’), Chicago Board Options                    responsibilities by executing and filing
                                                    rules pertaining to NMS stocks. For                     Exchange, Incorporated (‘‘CBOE’’), C2                   with the SEC this plan for the above
                                                    covered rules that pertain to NMS                       Options Exchange, Incorporated (‘‘C2’’),                stated purposes pursuant to the
                                                    securities, and thus include options                    Chicago Stock Exchange, Inc. (‘‘CHX’’),                 provisions of § 17(d) of the Act, and
                                                    (i.e., Rule 606), the Plan provides that                Bats EDGA Exchange, Inc. (‘‘EDGA’’),                    Rule 17d–2 thereunder, as described
                                                    the DREA will be the same as the DREA                   Bats EDGX Exchange, Inc. (‘‘EDGX’’),                    below.
                                                    for the rules pertaining to NMS stocks.                 Financial Industry Regulatory                              Now, therefore, in consideration of
                                                    For common members that are not                         Authority, Inc. (‘‘FINRA’’), International              the mutual covenants contained
                                                    members of an exchange that trades                      Securities Exchange, LLC (‘‘ISE’’), ISE                 hereafter, and other valuable
                                                    NMS stocks, the common member                           Gemini, LLC (‘‘ISE Gemini’’), ISE                       consideration to be mutually exchanged,
                                                    would be allocated according to the                     Mercury, LLC (‘‘ISE Mercury’’),                         the Participating Organizations hereby
                                                    principles set forth in Section 1(c) of the             Investors Exchange LLC (‘‘IEX’’), Miami                 agree as follows:
                                                    Plan.                                                   International Securities Exchange, LLC                     1. Assumption of Regulatory
                                                       The text of the Plan delineates the                  (‘‘MIAX’’), MIAX PEARL, LLC (‘‘MIAX                     Responsibility. The Designated
                                                    proposed regulatory responsibilities                    PEARL’’), The NASDAQ Stock Market                       Regulation NMS Examining Authority
                                                    with respect to the Parties. Included in                LLC (‘‘NASDAQ’’), NASDAQ BX, Inc.                       (the ‘‘DREA’’) shall assume examination
                                                    the proposed Plan is an exhibit (the                    (‘‘BX’’), NASDAQ PHLX, Inc. (‘‘PHLX’’),                 and enforcement responsibilities
                                                    ‘‘Covered Regulation NMS Rules’’) that                  National Stock Exchange, Inc. (‘‘NSX’’),                relating to compliance by Common
                                                    lists the federal securities laws, rules,               New York Stock Exchange LLC                             Members with the Covered Regulation
                                                    and regulations, for which the                          (‘‘NYSE’’), NYSE MKT LLC (‘‘NYSE                        NMS Rules to which the DREA is
                                                    applicable DREA would bear                              MKT’’), and NYSE Arca, Inc. (‘‘NYSE                     allocated responsibility (‘‘Regulatory
                                                    examination and enforcement                             Arca’’) (each, a ‘‘Participating                        Responsibility’’). A list of the Covered
                                                    responsibility under the Plan for                       Organization,’’ and, together, the                      Regulation NMS Rules is attached
                                                    common members of the Participating                     ‘‘Participating Organizations’’), is made               hereto as Exhibit A.
                                                    Organization and their associated                       pursuant to § 17(d) of the Securities                      a. For Covered Regulation NMS Rules
                                                    persons.                                                Exchange Act of 1934 (the ‘‘Act’’ or                    Pertaining to ‘‘NMS stocks’’ (as defined
                                                       Specifically, the applicable DREA                    ‘‘SEA’’), 15 U.S.C. 78q(d), and Rule                    in Regulation NMS) (i.e., Rules 607, 611
                                                    assumes examination and enforcement                     17d–2 thereunder, which allow for                       and 612): FINRA shall serve as DREA
                                                    responsibility relating to compliance by                plans to allocate regulatory                            for Common Members that are members
                                                    common members with the Covered                         responsibility among self-regulatory                    of FINRA. The Designated Examining
                                                    Regulation NMS Rules. Covered                           organizations (‘‘SROs’’). Upon approval                 Authority (‘‘DEA’’) pursuant to SEA
                                                    Regulation NMS Rules do not include                     by the Securities and Exchange                          Rule 17d–1 shall serve as DREA for
                                                    the application of any rule of a                        Commission (‘‘Commission’’ or ‘‘SEC’’),                 Common Members that are not members
                                                                                                                                                                    of FINRA, provided that the DEA
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                                                    Participating Organization, or any rule                 this Agreement shall amend and restate
                                                    or regulation under the Act, to the                                                                             operates a national securities exchange
                                                    extent that it pertains to violations of                  15 See Securities Exchange Act Release No. 58350      or facility that trades NMS stocks and
                                                    insider trading activities, because such                (August 13, 2008), 73 FR 48247 (August 18, 2008)        the Common Member is a member of
                                                    matters are covered by a separate                       (File No. 4–566) (notice of filing of proposed plan).   such exchange or facility. For all other
                                                                                                            See also Securities Exchange Act Release No. 58536      Common Members, the Participating
                                                    multiparty agreement under Rule 17d–                    (September 12, 2008), 73 FR 54646 (September 22,
                                                                                                            2008) (File No. 4–566) (order approving and             Organizations shall allocate Common
                                                     14 The proposed 17d–2 Plan refers to these             declaring effective the plan).                          Members among the Participating
                                                    members as ‘‘Common Members.’’                            16 See paragraph 1(d) of the proposed 17d–2 Plan.     Organizations (other than FINRA) that


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                                                    9816                       Federal Register / Vol. 82, No. 25 / Wednesday, February 8, 2017 / Notices

                                                    operate a national securities exchange                  security activity, as applicable)                     does not include, and each of the
                                                    that trades NMS stocks based on the                     conducted by each Common Member in                    Participating Organizations shall retain
                                                    principles outlined below and the                       order to most evenly divide the                       full responsibility for, examination,
                                                    Participating Organization to which                     Common Members with the largest                       surveillance and enforcement with
                                                    such a Common Member is allocated                       amount of activity among the                          respect to trading activities or practices
                                                    shall serve as the DREA for that                        Participating Organizations of which                  involving its own marketplace unless
                                                    Common Member. (A Participating                         they are a members. The allocation will               otherwise allocated pursuant to a
                                                    Organization that operates a national                   also take into account similar                        separate Rule 17d–2 Agreement.
                                                    securities exchange that does not trade                 allocations pursuant to other plans or                   2. No Retention of Regulatory
                                                    NMS stocks has no regulatory                            agreements to which the Participating                 Responsibility. The Participating
                                                    responsibilities related to Covered                     Organizations are party to maintain                   Organizations do not contemplate the
                                                    Regulation NMS Rules pertainining to                    consistency in oversight of the Common                retention of any responsibilities with
                                                    NMS stocks and will not serve as DREA                   Members.1                                             respect to the regulatory activities being
                                                    for such Covered Regulation NMS                            iv. The Participating Organizations                assumed by the DREA under the terms
                                                    Rules.)                                                 may reallocate Common Members from                    of this Agreement. Nothing in this
                                                       b. For Covered Regulation NMS Rules                  time-to-time and in such manner as they               Agreement will be interpreted to
                                                    Pertaining to ‘‘NMS securities’’ (as                    deem appropriate consistent with the                  prevent a DREA from entering into
                                                    defined in Regulation NMS) (i.e., Rule                  terms of this Agreement.                              Regulatory Services Agreement(s) to
                                                    606), the DREA shall be same as the                        v. Whenever a Common Member                        perform its Regulatory Responsibility.
                                                    DREA for Covered Regulation NMS                         ceases to be a member of its DREA                        3. No Charge. A DREA shall not
                                                    Rules pertaining to NMS stocks. For                     (including FINRA), the DREA shall                     charge Participating Organizations for
                                                    Common Members that are not members                     promptly inform the Participating                     performing the Regulatory
                                                    of a national securities exchange that                  Organizations, who shall review the                   Responsibility under this Agreement.
                                                    trades NMS stocks and thus have not                     matter and reallocate the Common                         4. Applicability of Certain Laws,
                                                    been appointed a DREA under                             Member to another Participating                       Rules, Regulations or Orders.
                                                    paragraph a., the Participating                         Organization.                                         Notwithstanding any provision hereof,
                                                    Organizations shall allocate the                           vi. The DEA or DREA (including                     this Agreement shall be subject to any
                                                    Common Members among the                                FINRA) may request that a Common                      statute, or any rule or order of the SEC.
                                                    Participating Organizations (other than                 Member be reallocated to another                      To the extent such statute, rule, or order
                                                    FINRA) that operate a national                          Participating Organization (including                 is inconsistent with one or more
                                                    securities exchange that trades NMS                     the DEA or DREA (including FINRA)) by                 provisions of this Agreement, the
                                                    securities based on the principles                      giving 30 days written notice to the                  statute, rule, or order shall supersede
                                                    outlined below and the Participating                    Participating Organizations. The                      the provision(s) hereof to the extent
                                                    Organization to which such a Common                     Participating Organizations shall                     necessary to be properly effectuated and
                                                    Member is allocated shall serve as the                  promptly consider such request and, in                the provision(s) hereof in that respect
                                                    DREA for that Common Member with                        their discretion, may approve or                      shall be null and void.
                                                    respect to Covered Regulation NMS                       disapprove such request and if                           5. Customer Complaints. If a
                                                    Rules pertaining to NMS securities. The                 approved, reallocate the Common                       Participating Organization receives a
                                                    allocation of Common Members to                         Member to such Participating                          copy of a customer complaint relating to
                                                    DREAs (including FINRA) for all                         Organization.                                         a DREA’s Regulatory Responsibility as
                                                    Covered Regulation NMS Rules is                            vii. All determinations by the                     set forth in this Agreement, the
                                                    provided in Exhibit B.                                  Participating Organizations with respect              Participating Organization shall
                                                       c. For purposes of this paragraph 1,                 to allocations shall be by the affirmative            promptly forward to such DREA a copy
                                                    any allocation of a Common Member to                    vote of a majority of the Participating               of such customer complaint. It shall be
                                                    a Participating Organization other than                 Organizations that, at the time of such               such DREA’s responsibility to review
                                                    as specified in paragraphs a. and b.                    determination, share the applicable                   and take appropriate action in respect to
                                                    above shall be based on the following                   Common Member being allocated; a                      such complaint.
                                                    principles, except to the extent all                    Participating Organization shall not be                  6. Parties to Make Personnel Available
                                                    affected Participating Organizations                    entitled to vote on any allocation related            as Witnesses. Each Participating
                                                    consent to one or more different                        to a Common Member unless the                         Organization shall make its personnel
                                                    principles and any such agreement to                    Common Member is a member of such                     available to the DREA to serve as
                                                    different principles would be deemed                    Participating Organization.                           testimonial or non-testimonial witnesses
                                                    an amendment to this Agreement as                          d. The Participating Organizations                 as necessary to assist the DREA in
                                                    provided in paragraph 22:                               agree that they shall conduct meetings                fulfilling the Regulatory Responsibility
                                                       i. The Participating Organizations                   among them as needed for the purposes                 allocated under this Agreement. The
                                                    shall not allocate a Common Member to                   of ensuring proper allocation of                      DREA shall provide reasonable advance
                                                    a Participating Organization unless the                 Common Members and identifying                        notice when practicable and shall work
                                                    Common Member is a member of that                       issues or concerns with respect to the                with a Participating Organization to
                                                    Participating Organization.                             regulation of Common Members.                         accommodate reasonable scheduling
                                                       ii. To the extent practicable, Common                Notwithstanding anything herein to the                conflicts within the context and
                                                    Members shall be allocated among the                                                                          demands as the entity with ultimate
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                                                                                                            contrary, it is explicitly understood that
                                                    Participating Organizations of which                    the term ‘‘Regulatory Responsibility’’                regulatory responsibility. The
                                                    they are members in such a manner as                                                                          Participating Organization shall pay all
                                                    to equalize, as nearly as possible, the                   1 For example, if one Participating Organization    reasonable travel and other expenses
                                                    allocation among such Participating                     was allocated responsibility for a particular         incurred by its employees to the extent
                                                    Organizations.                                          Common Member pursuant to a separate Rule 17d–        that the DREA requires such employees
                                                                                                            2 Agreement, that Participant Organization would
                                                       iii. To the extent practicable, the                  be assigned to be the DREA of that Common
                                                                                                                                                                  to serve as witnesses, and provide
                                                    allocation will take into account the                   Member, unless there is good cause not to make that   information or other assistance pursuant
                                                    amount of NMS stock activity (or NMS                    assignment.                                           to this Agreement.


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                                                                               Federal Register / Vol. 82, No. 25 / Wednesday, February 8, 2017 / Notices                                             9817

                                                       7. Sharing of Work-Papers, Data and                  resolved using the following                          binding upon the Participating
                                                    Related Information.                                    procedures:                                           Organizations hereto and their
                                                       a. Sharing. A Participating                             (i) The arbitration shall be conducted             respective legal representatives,
                                                    Organization shall make available to the                in a city selected by the DREA in which               successors, and assigns. Nothing in this
                                                    DREA information necessary to assist                    it maintains a principal office or where              Agreement, expressed or implied, is
                                                    the DREA in fulfilling the Regulatory                   otherwise agreed to by the Participating              intended or shall: (a) Confer on any
                                                    Responsibility assumed under the terms                  Organizations in accordance with the                  person other than the Participating
                                                    of this Agreement. Such information                     Commercial Arbitration Rules of the                   Organizations hereto, or their respective
                                                    shall include any information collected                 American Arbitration Association and                  legal representatives, successors, and
                                                    by a Participating Organization in the                  judgment upon the award rendered by                   assigns, any rights, remedies,
                                                    course of performing its regulatory                     the arbitrator may be entered in any                  obligations or liabilities under or by
                                                    obligations under the Act, including                    court having jurisdiction thereof; and                reason of this Agreement, (b) constitute
                                                    information relating to an on-going                        (ii) There shall be three arbitrators,             the Participating Organizations hereto
                                                    disciplinary investigation or action                    and the chairperson of the arbitration                partners or participants in a joint
                                                    against a member, the amount of a fine                  panel shall be an attorney. The                       venture, or (c) appoint one Participating
                                                    imposed on a member, financial                          arbitrators shall be appointed in                     Organization the agent of the other.
                                                    information, or information regarding                   accordance with the Commercial                          13. Assignment. No Participating
                                                    proprietary trading systems gained in                   Arbitration Rules of the American                     Organization may assign this Agreement
                                                    the course of examining a member                        Arbitration Association.                              without the prior written consent of the
                                                    (‘‘Regulatory Information’’). This                         10. Limitation of Liability. As between            DREAs performing Regulatory
                                                                                                            the Participating Organizations, no                   Responsibility on behalf of such
                                                    Regulatory Information shall be used by
                                                                                                            Participating Organization, including its             Participating Organization, which
                                                    the DREA solely for the purposes of
                                                                                                            respective directors, governors, officers,            consent shall not be unreasonably
                                                    fulfilling the DREA’s Regulatory
                                                                                                            employees and agents, will be liable to               withheld, conditioned or delayed;
                                                    Responsibility.
                                                                                                            any other Participating Organization, or              provided, however, that any
                                                       b. No Waiver of Privilege. The sharing
                                                                                                            its directors, governors, officers,                   Participating Organization may assign
                                                    of documents or information between                     employees and agents, for any liability,
                                                    the parties pursuant to this Agreement                                                                        the Agreement to a corporation
                                                                                                            loss or damage resulting from any                     controlling, controlled by or under
                                                    shall not be deemed a waiver as against                 delays, inaccuracies, errors or omissions
                                                    third parties of regulatory or other                                                                          common control with the Participating
                                                                                                            with respect to its performing or failing             Organization without the prior written
                                                    privileges relating to the discovery of                 to perform regulatory responsibilities,               consent of such Participating
                                                    documents or information.                               obligations, or functions, except: (a) As             Organization’s DREAs. No assignment
                                                       8. Special or Cause Examinations and                 otherwise provided for under the Act;                 shall be effective without Commission
                                                    Enforcement Proceedings. Nothing in                     (b) in instances of a Participating                   approval.
                                                    this Agreement shall restrict or in any                 Organization’s gross negligence, willful                14. Severability. Any term or
                                                    way encumber the right of a                             misconduct or reckless disregard with                 provision of this Agreement that is
                                                    Participating Organization to conduct                   respect to another Participating                      invalid or unenforceable in any
                                                    special or cause examinations of a                      Organization; or (c) in instances of a                jurisdiction shall, as to such
                                                    Common Member, or take enforcement                      breach of confidentiality obligations                 jurisdiction, be ineffective to the extent
                                                    proceedings against a Common Member                     owed to another Participating                         of such invalidity or unenforceability
                                                    as a Participating Organization, in its                 Organization. The Participating                       without rendering invalid or
                                                    sole discretion, shall deem appropriate                 Organizations understand and agree that               unenforceable the remaining terms and
                                                    or necessary.                                           the regulatory responsibilities are being             provisions of this Agreement or
                                                       9. Dispute Resolution Under this                     performed on a good faith and best                    affecting the validity or enforceability of
                                                    Agreement.                                              effort basis and no warranties, express               any of the terms or provisions of this
                                                       a. Negotiation. The Participating                    or implied, are made by any                           Agreement in any other jurisdiction.
                                                    Organizations will attempt to resolve                   Participating Organization to any other                  15. Termination. Any Participating
                                                    any disputes through good faith                         Participating Organization with respect               Organization may cancel its
                                                    negotiation and discussion, escalating                  to any of the responsibilities to be                  participation in the Agreement at any
                                                    such discussion up through the                          performed hereunder. This paragraph is                time upon the approval of the
                                                    appropriate management levels until                     not intended to create liability of any               Commission after 180 days written
                                                    reaching the executive management                       Participating Organization to any third               notice to the other Participating
                                                    level. In the event a dispute cannot be                 party.                                                Organizations (or in the case of a change
                                                    settled through these means, the                           11. SEC Approval.                                  of control in ownership of a
                                                    Participating Organizations shall refer                    a. The Participating Organizations                 Participating Organization, such other
                                                    the dispute to binding arbitration.                     agree to file promptly this Agreement                 notice time period as that Participating
                                                       b. Binding Arbitration. All claims,                  with the SEC for its review and                       Organization may choose). The
                                                    disputes, controversies, and other                      approval. FINRA shall file this                       cancellation of its participation in this
                                                    matters in question between the                         Agreement on behalf, and with the                     Agreement by any Participating
                                                    Participating Organizations to this                     explicit consent, of all Participating                Organization shall not terminate this
                                                    Agreement arising out of or relating to                                                                       Agreement as to the remaining
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                                                                                                            Organizations.
                                                    this Agreement or the breach thereof                       b. If approved by the SEC, the                     Participating Organizations.
                                                    that cannot be resolved by the                          Participating Organizations will notify                  16. General. The Participating
                                                    Participating Organizations will be                     their members of the general terms of                 Organizations agree to perform all acts
                                                    resolved through binding arbitration.                   the Agreement and of its impact on their              and execute all supplementary
                                                    Unless otherwise agreed by the                          members.                                              instruments or documents that may be
                                                    Participating Organizations, a dispute                     12. Subsequent Parties; Limited                    reasonably necessary or desirable to
                                                    submitted to binding arbitration                        Relationship. This Agreement shall                    carry out the provisions of this
                                                    pursuant to this paragraph shall be                     inure to the benefit of and shall be                  Agreement.


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                                                    9818                       Federal Register / Vol. 82, No. 25 / Wednesday, February 8, 2017 / Notices

                                                       17. Written Notice. Any written notice               provided that such Participating                      Commission, 100 F Street NE.,
                                                    required or permitted to be given under                 Organization does not assume                          Washington, DC 20549–1090.
                                                    this Agreement shall be deemed given if                 regulatory responsibility, by an                      All submissions should refer to File
                                                    sent by certified mail, return receipt                  amendment executed by all applicable                  Number 4–618. This file number should
                                                    requested, or by a comparable means of                  DREAs and such new Participating                      be included on the subject line if email
                                                    electronic communication to each                        Organization. All other Participating                 is used. To help the Commission
                                                    Participating Organization entitled to                  Organizations expressly consent to                    process and review your comments
                                                    receipt thereof, to the attention of the                allow such DREAs to jointly add new                   more efficiently, please use only one
                                                    Participating Organization’s                            Participating Organizations to the                    method. The Commission will post all
                                                    representative at the Participating                     Agreement as provided above. Such                     comments on the Commission’s Internet
                                                    Organization’s then principal office or                 DREAs will promptly notify all                        Web site (http://www.sec.gov/rules/
                                                    by email.                                               Participating Organizations of any such               sro.shtml). Copies of the submission, all
                                                       18. Confidentiality. The Participating               amendments to add a new Participating                 subsequent amendments, all written
                                                    Organizations agree that documents or                   Organization.                                         statements with respect to the proposed
                                                    information shared shall be held in                        b. All other amendments must be                    plan that are filed with the Commission,
                                                    confidence, and used only for the                       approved by each Participating                        and all written communications relating
                                                    purposes of carrying out their respective               Organization. All amendments,                         to the proposed plan between the
                                                    regulatory obligations under this                       including adding a new Participating                  Commission and any person, other than
                                                    Agreement, provided, however, that                      Organization but excluding changes to                 those that may be withheld from the
                                                    each Participating Organization may                     Exhibit B, must be filed with and                     public in accordance with the
                                                    disclose such documents or information                  approved by the Commission before                     provisions of 5 U.S.C. 552, will be
                                                    as may be required to comply with                       they become effective.                                available for Web site viewing and
                                                    applicable requlatory requirements or                      23. Effective Date. The Effective Date             printing in the Commission’s Public
                                                    requests for information from the SEC.                  of this Agreement will be the date the                Reference Room, 100 F Street NE.,
                                                    Any Participating Organization                          SEC declares this Agreement to be                     Washington, DC 20549, on official
                                                    disclosing confidential documents or                    effective pursuant to authority conferred             business days between the hours of
                                                    information in compliance with                          by § 17(d) of the Act, and Rule 17d–2                 10:00 a.m. and 3:00 p.m. Copies of the
                                                    applicable regulatory or oversight                      thereunder.                                           plan also will be available for inspection
                                                    requirements will request confidential                     24. Counterparts. This Agreement                   and copying at the principal offices of
                                                    treatment of such information. No                       may be executed in any number of                      the Participating Organizations. All
                                                    Participating Organization shall assert                 counterparts, including facsimile, each               comments received will be posted
                                                    regulatory or other privileges as against               of which will be deemed an original, but              without change; the Commission does
                                                    the other with respect to Regulatory                    all of which taken together shall                     not edit personal identifying
                                                    Information that is required to be shared               constitute one single agreement among                 information from submissions. You
                                                    pursuant to this Agreement.                             the Participating Organizations.                      should submit only information that
                                                       19. Regulatory Responsibility.                       *      *     *    *     *                             you wish to make available publicly. All
                                                    Pursuant to Section 17(d)(1)(A) of the                                                                        submissions should refer to File
                                                    Act, and Rule 17d–2 thereunder, the                     Exhibit A
                                                                                                                                                                  Number 4–618 and should be submitted
                                                    Participating Organizations request the                 Covered Regulation NMS Rules                          on or before March 1, 2017.
                                                    SEC, upon its approval of this
                                                                                                              SEA Rule 606—Disclosure of Order                    V. Discussion
                                                    Agreement, to relieve the Participating
                                                                                                            Routing Information.*
                                                    Organizations which are participants in                   SEA Rule 607—Customer Account                          The Commission finds that the Plan,
                                                    this Agreement that are not the DREA as                 Statements.                                           as amended, is consistent with the
                                                    to a Common Member of any and all                         SEA Rule 611—Order Protection Rule.                 factors set forth in Section 17(d) of the
                                                    responsibilities with respect to the                      SEA Rule 612—Minimum Pricing                        Act 17 and Rule 17d–2(c) thereunder 18
                                                    matters allocated to the DREA pursuant                  Increment.                                            in that the proposed amended Plan is
                                                    to this Agreement for purposes of                         * Covered Regulation NMS Rules with                 necessary or appropriate in the public
                                                    §§ 17(d) and 19(g) of the Act.                          asterisks (*) pertain to NMS securities.              interest and for the protection of
                                                       20. Governing Law. This Agreement                    Covered Regulation NMS Rules without                  investors, fosters cooperation and
                                                    shall be deemed to have been made in                    asterisks pertain to NMS stocks                       coordination among SROs, and removes
                                                    the State of New York, and shall be                                                                           impediments to and fosters the
                                                    construed and enforced in accordance                    IV. Solicitation of Comments                          development of the national market
                                                    with the law of the State of New York,                    Interested persons are invited to                   system. In particular, the Commission
                                                    without reference to principles of                      submit written data, views, and                       believes that the proposed amended
                                                    conflicts of laws thereof. Each of the                  arguments concerning the foregoing.                   Plan should reduce unnecessary
                                                    Participating Organizations hereby                      Comments may be submitted by any of                   regulatory duplication by allocating to
                                                    consents to submit to the jurisdiction of               the following methods:                                the applicable DREA certain
                                                    the courts of the State of New York in                                                                        examination and enforcement
                                                    connection with any action or                           Electronic Comments                                   responsibilities for Common Members
                                                    proceeding relating to this Agreement.                    • Use the Commission’s Internet                     that would otherwise be performed by
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                                                       21. Survival of Provisions. Provisions               comment form (http://www.sec.gov/                     multiple Parties. Accordingly, the
                                                    intended by their terms or context to                   rules/sro.shtml); or                                  proposed amended Plan promotes
                                                    survive and continue notwithstanding                      • Send an email to rule-comments@                   efficiency by reducing costs to Common
                                                    delivery of the regulatory services by the              sec.gov. Please include File Number                   Members. Furthermore, because the
                                                    DREA and any expiration of this                         4–618 on the subject line.                            Parties will coordinate their regulatory
                                                    Agreement shall survive and continue.                                                                         functions in accordance with the
                                                       22. Amendment.                                       Paper Comments
                                                       a. This Agreement may be amended to                    • Send paper comments in triplicate                   17 15   U.S.C. 78q(d).
                                                    add a new Participating Organization,                   to Secretary, Securities and Exchange                   18 17   CFR 240.17d–2(c).



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                                                                               Federal Register / Vol. 82, No. 25 / Wednesday, February 8, 2017 / Notices                                                        9819

                                                    proposed amended Plan, the amended                        For the Commission, by the Division of               II. Self-Regulatory Organization’s
                                                    Plan should promote investor                            Trading and Markets, pursuant to delegated             Statement of the Purpose of, and
                                                    protection.                                             authority.21                                           Statutory Basis for, the Proposed Rule
                                                       The Commission is hereby declaring                   Robert W. Errett,                                      Change
                                                    effective a plan that allocates regulatory              Deputy Secretary.                                         In its filing with the Commission, the
                                                    responsibility for certain provisions of                [FR Doc. 2017–02546 Filed 2–7–17; 8:45 am]             self-regulatory organization included
                                                    the federal securities laws, rules, and                 BILLING CODE 8011–01–P                                 statements concerning the purpose of,
                                                    regulations as set forth in Exhibit A to                                                                       and basis for, the proposed rule change
                                                    the Plan. The Commission notes that                                                                            and discussed any comments it received
                                                    any amendment to the Plan must be                       SECURITIES AND EXCHANGE                                on the proposed rule change. The text
                                                    approved by the relevant Parties as set                 COMMISSION                                             of these statements may be examined at
                                                    forth in Paragraph 22 of the Plan and                                                                          the places specified in Item IV below.
                                                    must be filed with and approved by the                  [Release No. 34–79932; File No. SR–BOX–                The self-regulatory organization has
                                                    Commission before it may become                         2017–07]                                               prepared summaries, set forth in
                                                                                                                                                                   Sections A, B, and C below, of the most
                                                    effective.19
                                                                                                            Self-Regulatory Organizations; BOX                     significant aspects of such statements.
                                                       Under paragraph (c) of Rule 17d–2,                   Options Exchange LLC; Notice of
                                                    the Commission may, after appropriate                                                                          A. Self-Regulatory Organization’s
                                                                                                            Filing of a Proposed Rule Change To                    Statement of the Purpose of, and
                                                    notice and comment, declare a plan, or                  Adopt the Rule 16000 Series To
                                                    any part of a plan, effective. In this                                                                         Statutory Basis for, the Proposed Rule
                                                                                                            Implement the Compliance Rule                          Change
                                                    instance, the Commission believes that                  Regarding the National Market System
                                                    appropriate notice and comment can                      Plan Governing the Consolidated Audit                  1. Purpose
                                                    take place after the proposed                           Trail                                                     Bats BYX Exchange, Inc., Bats BZX
                                                    amendment is effective. In particular,                                                                         Exchange, Inc., Bats EDGA Exchange,
                                                    the purpose of the amendment is to add                  February 2, 2017.                                      Inc., Bats EDGX Exchange, Inc., BOX
                                                    MIAX PEARL as a Participating                              Pursuant to Section 19(b)(1) of the                 Options Exchange LLC, C2 Options
                                                    Organization. The Commission notes                      Securities Exchange Act of 1934                        Exchange, Incorporated, Chicago Board
                                                    that the most recent prior amendment to                 (‘‘Act’’),1 and Rule 19b–4 thereunder,2                Options Exchange, Incorporated,
                                                    the Plan was published for comment                      notice is hereby given that on January                 Chicago Stock Exchange, Inc., Financial
                                                    and the Commission did not receive any                  31, 2017, BOX Options Exchange LLC                     Industry Regulatory Authority, Inc.,
                                                    comments thereon.20 The Commission                      (‘‘SRO’’ or the ‘‘Exchange’’) filed with               International Securities Exchange, LLC,
                                                    believes that the current amendment to                                                                         Investors’ Exchange LLC, ISE Gemini,
                                                                                                            the Securities and Exchange
                                                    the Plan does not raise any new                                                                                LLC, ISE Mercury, LLC, Miami
                                                                                                            Commission (‘‘Commission’’) the
                                                    regulatory issues that the Commission                                                                          International Securities Exchange LLC,
                                                                                                            proposed rule change as described in
                                                    has not previously considered, and                                                                             MIAX PEARL, LLC, NASDAQ BX, Inc.,
                                                                                                            Items I and II below, which Items have                 NASDAQ PHLX LLC, The NASDAQ
                                                    therefore believes that the amended                     been prepared by the self-regulatory
                                                    Plan should become effective without                                                                           Stock Market LLC, National Stock
                                                                                                            organization.3 The Commission is                       Exchange, Inc., New York Stock
                                                    any undue delay.                                        publishing this notice to solicit                      Exchange LLC, NYSE MKT LLC, and
                                                    VI. Conclusion                                          comments on the proposed rule change                   NYSE Arca, Inc. (collectively, the
                                                                                                            from interested persons.                               ‘‘Participants’’) filed with the
                                                       This order gives effect to the amended                                                                      Commission, pursuant to Section 11A of
                                                    Plan filed with the Commission that is                  I. Self-Regulatory Organization’s
                                                                                                            Statement of the Terms of Substance of                 the Exchange Act 4 and Rule 608 of
                                                    contained in File No. 4–618.                                                                                   Regulation NMS thereunder,5 the CAT
                                                                                                            the Proposed Rule Change
                                                       It is therefore ordered, pursuant to                                                                        NMS Plan.6 The Participants filed the
                                                    Section 17(d) of the Act, that the Plan,                  The Exchange proposes to adopt Rule                  Plan to comply with Rule 613 of
                                                    as amended, filed with the Commission                   16000 Series to implement the                          Regulation NMS under the Exchange
                                                    pursuant to Rule 17d–2 on January 25,                   compliance rule (‘‘Compliance Rule’’)                  Act. The Plan was published for
                                                    2017, is hereby approved and declared                   regarding the National Market System                   comment in the Federal Register on
                                                    effective.                                              Plan Governing the Consolidated Audit                  May 17, 2016,7 and approved by the
                                                                                                            Trail (the ‘‘CAT NMS Plan’’ or ‘‘Plan’’).              Commission, as modified, on November
                                                       It is further ordered that those SRO
                                                                                                            The text of the proposed rule change is                15, 2016.8
                                                    participants that are not the DREA as to                                                                          The Plan is designed to create,
                                                    a particular common member are                          available from the principal office of the
                                                                                                                                                                   implement and maintain a consolidated
                                                    relieved of those regulatory                            Exchange, at the Commission’s Public
                                                    responsibilities allocated to the common                Reference Room and also on the                           4 15  U.S.C. 78k–1.
                                                    member’s DREA under the amended                         Exchange’s Internet Web site at http://                  5 17  CFR 242.608.
                                                    Plan to the extent of such allocation.                  boxexchange.com.                                          6 See Letter from the Participants to Brent J.

                                                                                                                                                                   Fields, Secretary, Commission, dated September 30,
                                                                                                                                                                   2014; and Letter from Participants to Brent J. Fields,
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                                                                                                                                                                   Secretary, Commission, dated February 27, 2015.
                                                       19 See Paragraph 22 of the Plan. The Commission        21 17 CFR 200.30–3(a)(34).                           On December 24, 2015, the Participants submitted
                                                                                                              1 15 U.S.C. 78s(b)(1).                               an amendment to the CAT NMS Plan. See Letter
                                                    notes, however, that changes to Exhibit B to the
                                                                                                                                                                   from Participants to Brent J. Fields, Secretary,
                                                    Plan (the allocation of Common Members to                 2 17 CFR 240.19b–4.
                                                                                                                                                                   Commission, dated December 23, 2015.
                                                    DREAs) are not required to be filed with, and             3 The Exchange originally filed this proposed rule      7 Securities Exchange Act Rel. No. 77724 (Apr.
                                                    approved by, the Commission before they become          change on January 17, 2017 under File No. SR–          27, 2016), 81 FR 30614 (May 17, 2016).
                                                    effective.                                              BOX–2017–04, and the Exchange subsequently                8 Securities Exchange Act Rel. No. 79318 (Nov.
                                                       20 See Securities Exchange Act Release No. 78552     withdrew that filing on January 31, 2017 and filed     15, 2016), 81 FR 84696 (Nov. 23, 2016) (‘‘Approval
                                                    (August 11, 2016), 81 FR 54905 (August 17, 2016).       this proposed rule change.                             Order’’).



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Document Created: 2017-02-08 02:59:23
Document Modified: 2017-02-08 02:59:23
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionNotices
FR Citation82 FR 9814 

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