83 FR 22732 - Program for Allocation of Regulatory Responsibilities Pursuant To Rule 17d-2; Notice of Filing and Order Approving and Declaring Effective an Amended Plan for the Allocation of Regulatory Responsibilities Between the Financial Industry Regulatory Authority, Inc., Cboe Exchange, Inc., and Cboe C2 Exchange, Inc.
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 83, Issue 95 (May 16, 2018)
Federal Register Volume 83, Issue 95 (May 16, 2018)
| Page Range | 22732-22738 | |
| FR Document | 2018-10369 |
[Federal Register Volume 83, Number 95 (Wednesday, May 16, 2018)] [Notices] [Pages 22732-22738] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2018-10369] [[Page 22732]] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-83208; File No. 4-536] Program for Allocation of Regulatory Responsibilities Pursuant To Rule 17d-2; Notice of Filing and Order Approving and Declaring Effective an Amended Plan for the Allocation of Regulatory Responsibilities Between the Financial Industry Regulatory Authority, Inc., Cboe Exchange, Inc., and Cboe C2 Exchange, Inc. May 10, 2018. 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 May 4, 2018, pursuant to Rule 17d-2 of the Act,\2\ by the Financial Industry Regulatory Authority, Inc. (``FINRA''), Cboe Exchange, Inc. (``Cboe''), and Cboe C2 Exchange, Inc. (``C2'') (collectively, ``Participating Organizations'' or ``parties''). This Agreement amends and restates the agreement entered into between FINRA, Cboe, and C2 on March 21, 2014, entitled ``Agreement Among Financial Industry Regulatory Authority, Inc., Chicago Board Options Exchange, Incorporated, and C2 Options Exchange, Incorporated Pursuant to Rule 17d-2 under the Securities Exchange Act of 1934,'' and any subsequent amendments thereafter. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78q(d). \2\ 17 CFR 240.17d-2. --------------------------------------------------------------------------- I. Introduction Section 19(g)(1) of the Act,\3\ among other things, requires every self-regulatory organization (``SRO'') registered as either a national securities exchange or national securities association to examine for, and enforce compliance by, its members and persons associated with its members with the Act, the rules and regulations thereunder, and the SRO's own rules, unless the SRO is relieved of this responsibility pursuant to Section 17(d) \4\ or Section 19(g)(2) \5\ of the Act. Without this relief, the statutory obligation of each individual SRO could result in a pattern of multiple examinations of broker-dealers that maintain memberships in more than one SRO (``common members''). Such regulatory duplication would add unnecessary expenses for common members and their SROs. --------------------------------------------------------------------------- \3\ 15 U.S.C. 78s(g)(1). \4\ 15 U.S.C. 78q(d). \5\ 15 U.S.C. 78s(g)(2). --------------------------------------------------------------------------- Section 17(d)(1) of the Act \6\ was intended, in part, to eliminate unnecessary multiple examinations and regulatory duplication.\7\ With respect to a common member, Section 17(d)(1) authorizes the Commission, by rule or order, to relieve an SRO of the responsibility to receive regulatory reports, to examine for and enforce compliance with applicable statutes, rules, and regulations, or to perform other specified regulatory functions. --------------------------------------------------------------------------- \6\ 15 U.S.C. 78q(d)(1). \7\ See Securities Act Amendments of 1975, Report of the Senate Committee on Banking, Housing, and Urban Affairs to Accompany S. 249, S. Rep. No. 94-75, 94th Cong., 1st Session 32 (1975). --------------------------------------------------------------------------- To implement Section 17(d)(1), the Commission adopted two rules: Rule 17d-1 and Rule 17d-2 under the Act.\8\ Rule 17d-1 authorizes the Commission to name a single SRO as the designated examining authority (``DEA'') to examine common members for compliance with the financial responsibility requirements imposed by the Act, or by Commission or SRO rules.\9\ When an SRO has been named as a common member's DEA, all other SROs to which the common member belongs are relieved of the responsibility to examine the firm for compliance with the applicable financial responsibility rules. On its face, Rule 17d-1 deals only with an SRO's obligations to enforce member compliance with financial responsibility requirements. Rule 17d-1 does not relieve an SRO from its obligation to examine a common member for compliance with its own rules and provisions of the federal securities laws governing matters other than financial responsibility, including sales practices and trading activities and practices. --------------------------------------------------------------------------- \8\ 17 CFR 240.17d-1 and 17 CFR 240.17d-2, respectively. \9\ See Securities Exchange Act Release No. 12352 (April 20, 1976), 41 FR 18808 (May 7, 1976). --------------------------------------------------------------------------- To address regulatory duplication in these and other areas, the Commission adopted Rule 17d-2 under the Act.\10\ Rule 17d-2 permits SROs to propose joint plans for the allocation of regulatory responsibilities with respect to their common members. Under paragraph (c) of Rule 17d-2, the Commission may declare such a plan effective if, after providing for notice and comment, it determines that the plan is necessary or appropriate in the public interest and for the protection of investors, to foster cooperation and coordination among the SROs, to remove impediments to, and foster the development of, a national market system and a national clearance and settlement system, and is in conformity with the factors set forth in Section 17(d) of the Act. Commission approval of a plan filed pursuant to Rule 17d-2 relieves an SRO of those regulatory responsibilities allocated by the plan to another SRO. --------------------------------------------------------------------------- \10\ See Securities Exchange Act Release No. 12935 (October 28, 1976), 41 FR 49091 (November 8, 1976). --------------------------------------------------------------------------- II. The Plan On May 14, 2007, the Commission declared effective the Plan entered into between NASD (n/k/a FINRA) and Cboe for allocating regulatory responsibility pursuant to Rule 17d-2.\11\ On May 9, 2014, the Commission declared effective an amendment to the Plan to add C2 as a Participant to the Plan.\12\ The Plan is intended to reduce regulatory duplication for firms that are common members of FINRA and at least one of Cboe or C2 by allocating regulatory responsibility with respect to certain applicable laws, rules, and regulations that are common among them. Included in the Plan is an exhibit that lists every Cboe and C2 rule for which FINRA bears responsibility under the Plan for overseeing and enforcing with respect to CBOE or C2 members that are also members of FINRA and the associated persons therewith. --------------------------------------------------------------------------- \11\ See Securities Exchange Act Release No. 55755 (May 14, 2007), 72 FR 28087 (May 18, 2007). \12\ See Securities Exchange Act Release No. 72137 (May 9, 2014), 79 FR 27965 (May 15, 2014). --------------------------------------------------------------------------- III. Proposed Amendment to the Plan On May 4, 2018, the parties submitted a proposed amendment to the Plan (``Amended Plan''). The primary purposes of the Amended Plan are to (1) remove Cboe's former equities trading facility, CBSX, from the Plan; (2) to the extent that it becomes a member of either exchange, allocate regulatory responsibility to FINRA for Cboe's and C2's affiliated routing broker-dealer, Cboe Trading, Inc.; and (3) allocate surveillance, investigation, and enforcement responsibilities for Rule 14e-4 under the Act . The text of the proposed Amended Plan is as follows (additions are italicized; deletions are [bracketed]): * * * * * Agreement Among Financial Industry Regulatory Authority, Inc., [Chicago Board Options Exchange, Incorporated] CBOE Exchange, Inc., and CBOE C2 [Options] Exchange, [Incorporated] Inc. Pursuant to Rule 17d-2 Under the Securities Exchange Act of 1934 This Agreement, by and among Financial Industry Regulatory Authority, Inc. (``FINRA''), [the Chicago [[Page 22733]] Board Options Exchange, Incorporated]Cboe Exchange, Inc. (``[CBOE]Cboe''), and Cboe C2 [Options] Exchange, [Incorporated]Inc. (``C2'') is made this [21st]4th day of [March, 2014] May, 2018 (the ``Agreement''), pursuant to Section 17(d) of the Securities Exchange Act of 1934 (the ``Exchange Act'') and Rule 17d-2 thereunder which permits agreements between self-regulatory organizations to allocate regulatory responsibility to eliminate regulatory duplication. FINRA, [CBOE]Cboe and C2 may be referred to individually as a ``party'' and together as the ``parties.'' This Agreement amends and restates the agreement entered into between [NASD (n/k/a] FINRA[) and], [CBOE]Cboe and C2 on [April 4, 2007]March 21, 2014, entitled ``Agreement [between NASD and CBOE]Among Financial Industry Regulatory Authority, Inc., Chicago Board Options Exchange, Incorporated, and C2 Options Exchange, Incorporated Pursuant to Rule 17d-2 under the Securities Exchange Act of 1934,'' and any subsequent amendments thereafter. WHEREAS, the parties desire to reduce duplication in the examination of their Common Members (as defined herein) and in the filing and processing of certain registration and membership records as it relates to [the CBOE]Cboe [options exchange,]and C2 [options exchange and the CBOE equity exchange facility operated by CBOE Stock Exchange, LLC (``CBSX'')]; and WHEREAS, the parties desire to execute an agreement covering such subjects pursuant to the provisions of Rule 17d-2 under the Exchange Act and to file such agreement with the Securities and Exchange Commission (the ``SEC'' or ``Commission'') for its approval. NOW, THEREFORE, in consideration of the mutual covenants contained hereinafter, the parties hereby agree as follows: 1. Definitions. Unless otherwise defined in this Agreement or the context otherwise requires, the terms used in this Agreement shall have the same meaning as they have under the Exchange Act and the rules and regulations thereunder. As used in this Agreement, the following terms shall have the following meanings: (a) ``Rule'' of an ``exchange'' or an ``association'' shall have the meaning defined in Exchange Act Section 3(a)(27). (b) ``Common Rules'' shall mean the [CBOE]Cboe Rules and C2 Rules that are substantially similar to the applicable FINRA Rules in that examination for compliance with such Rules would not require FINRA to develop one or more new examination standards, modules, procedures, or criteria in order to analyze the application of the rule, or a Common Member's activity, conduct, or output in relation to such rule[; provided, however, Common Rules shall not include the application of SEC, CBOE, C2 or FINRA Rules as they pertain to violations of insider trading activities, which is covered by a separate 17d-2 Agreement by and among the BATS Exchange, Inc., BATS-Y Exchange, Inc., CBOE, Chicago Stock Exchange, Inc., EDGA Exchange, Inc., EDGX Exchange, Inc., FINRA, NASDAQ OMX BX, Inc., NASDAQ OMX PHLX LLC, The NASDAQ Stock Market LLC, National Stock Exchange, Inc., New York Stock Exchange, LLC, NYSE Amex LLC, and NYSE Arca Inc., effective December 16, 2011, as may be amended from time to time]. Common Rules shall not include any provisions regarding: (i) Notice, reporting or any other filings made directly to or from C2 or Cboe; (ii) incorporation by reference of other C2 or Cboe Rules that are not Common Rules; (iii) exercise of discretion in a manner that differs from FINRA's exercise of discretion including, but not limited to exercise of exemptive authority by C2 or Cboe; (iv) prior written approval of C2 or Cboe; and (v) payment of fees or fines to C2 or Cboe. (c) ``Common Members'' shall mean members of FINRA and at least one of [CBOE]Cboe or C2. (d) ``Effective Date'' shall be the date this Agreement is approved by the Commission. (e) ``Enforcement Responsibilities'' shall mean the conduct of appropriate proceedings, in accordance with FINRA's Code of Procedure (the Rule 9000 Series) and other applicable FINRA procedural Rules, to determine whether violations of pertinent laws, rules or regulations have occurred, and if such violations are deemed to have occurred, the imposition of appropriate sanctions as specified under FINRA's Code of Procedure and sanctions guidelines. (f) ``Regulatory Responsibilities'' shall mean the examination responsibilities and Enforcement Responsibilities relating to compliance by the Common Members with the Common Rules and the provisions of the Exchange Act and the rules and regulations thereunder, and other applicable laws, rules and regulations, each as set forth on Exhibit 1 attached hereto. The term ``Regulatory Responsibility'' shall also include the surveillance, investigation and Enforcement Responsibilities relating to compliance by Common Members with the Rule 14e-4 of the Securities Exchange Act (``Rule 14e-4''), with a focus on the standardized call option provision of Rule 14e- 4(a)(1)(ii)(D). 2. Regulatory and Enforcement Responsibilities. FINRA shall assume Regulatory Responsibilities and Enforcement Responsibilities for Common Members. Attached as Exhibit 1 to this Agreement and made part hereof, [CBOE]Cboe and C2 furnished FINRA with a current list of Common Rules and certified to FINRA that such Rules are substantially similar to the corresponding FINRA Rule (the ``Certification''). FINRA hereby agrees that the Rules listed in the Certification are Common Rules as defined in this Agreement. Each year following the Effective Date of this Agreement, or more frequently if required by changes in the Rules of the parties, [CBOE]Cboe and C2 shall submit an updated list of Common Rules to FINRA for review which shall add [CBOE]Cboe or C2 Rules not included in the current list of Common Rules that qualify as Common Rules as defined in this Agreement; delete [CBOE]Cboe or C2 Rules included in the current list of Common Rules that no longer qualify as Common Rules as defined in this Agreement; and confirm that the remaining Rules on the current list of Common Rules continue to be [CBOE]Cboe or C2 Rules that qualify as Common Rules as defined in this Agreement. Within 30 days of receipt of such updated list, FINRA shall confirm in writing whether the Rules listed in any updated list are Common Rules as defined in this Agreement. Notwithstanding anything herein to the contrary, it is explicitly understood that the term ``Regulatory Responsibilities'' does not include, and [CBOE]Cboe and C2 shall retain full responsibility for (unless otherwise addressed by separate agreement or rule) the following (collectively, the ``Retained Responsibilities''): (a) Surveillance and enforcement with respect to trading activities or practices involving [CBOE]Cboe's or C2's own marketplace, including without limitation [CBOE]Cboe's or C2's Rules relating to the rights and obligations of market makers; (b) registration pursuant to their applicable Rules of associated persons (i.e., registration rules that are not Common Rules); (c) discharge of their duties and obligations as a Designated Examining Authority pursuant to Rule 17d-1 under the Exchange Act; and (d) any [CBOE]Cboe Rules and C2 Rules that are not Common Rules, except Cboe Rules or C2 Rules for any Cboe or C2 affiliate that is a member [[Page 22734]] that operates as a facility (as defined in Section 3(a)(2) of the Exchange Act), acts as a router for Cboe or C2 and is a member of FINRA (``Router Member'') as provided in paragraph 6. As of the date of this Agreement, Cboe Trading, Inc. is the only Router Member. 3. Common Members. Prior to the Effective Date, [CBOE]Cboe and C2 shall furnish FINRA with a current list of Common Members, which shall be updated no less frequently than once every six months. 4. No Charge. There shall be no charge to [CBOE]Cboe and C2 by FINRA for performing the Regulatory Responsibilities and Enforcement Responsibilities under this Agreement except as hereinafter provided. FINRA shall provide[CBOE]Cboe and C2 with ninety (90) days advance written notice in the event FINRA decides to impose any charges to [CBOE]Cboe and C2 for performing the Regulatory Responsibilities under this Agreement. If FINRA determines to impose a charge, [CBOE]Cboe and C2 shall have the right at the time of the imposition of such charge to terminate this Agreement; provided, however, that FINRA's Regulatory Responsibilities under this Agreement shall continue until the Commission approves the termination of this Agreement. 5. Reassignment of Regulatory Responsibilities. Notwithstanding any provision hereof, this Agreement shall be subject to any statute, or any rule or order of the Commission, or industry agreement, restructuring the regulatory framework of the securities industry or reassigning Regulatory Responsibilities between self-regulatory organizations. To the extent such action is inconsistent with this Agreement, such action shall supersede the provisions hereof to the extent necessary for them to be properly effectuated and the provisions hereof in that respect shall be null and void. 6. Notification of Violations. In the event that FINRA becomes aware of apparent violations of any [CBOE]Cboe or C2 Rules, which are not listed as Common Rules, discovered pursuant to the performance of the Regulatory Responsibilities assumed hereunder, FINRA shall notify [CBOE]Cboe and C2 of those apparent violations for such response as [CBOE]Cboe and C2 deems appropriate. In the event, [CBOE]Cboe or C2 becomes aware of apparent violations of any Common Rules, discovered pursuant to the Retained Responsibilities, [CBOE]Cboe and C2 shall notify FINRA of those apparent violations and such matters shall be handled by FINRA as provided in this Agreement. Apparent violations of Common Rules shall be processed by, and enforcement proceedings in respect thereto shall be conducted by FINRA as provided hereinbefore; provided, however, that in the event a Common Member is the subject of an investigation relating to a transaction on [the CBOE]Cboe or C2 options exchanges, [or the CBSX, CBOE]Cboe and C2 may in their discretion assume concurrent jurisdiction and responsibility. With respect to apparent violations of any Cboe or C2 Rules by any Router Member, FINRA shall not make referrals to Cboe or C2 pursuant to this paragraph 6. Such apparent violations shall be processed and enforcement proceedings in respect thereto will be conducted, by FINRA as provided in this Agreement. Each party agrees to make available promptly all files, records and witnesses necessary to assist the other in its investigation or proceedings. 7. Continued Assistance. FINRA shall make available to [CBOE]Cboe and C2 all information obtained by FINRA in the performance by it of the Regulatory Responsibilities hereunder in respect to the Common Members subject to this Agreement. In particular, and not in limitation of the foregoing, FINRA shall furnish [CBOE]Cboe and C2 any information it obtains about Common Members which reflects adversely on their financial condition. It is understood that such information is of an extremely sensitive nature and, accordingly, [CBOE]Cboe and C2 acknowledge and agree to take all reasonable steps to maintain its confidentiality. [CBOE]Cboe and C2 shall make available to FINRA any information coming to their attention that reflects adversely on the financial condition of Common Members or indicates possible violations of applicable laws, rules or regulations by such firms. 8. Common Member Applications. (a) Common Members subject to this Agreement shall be required to submit, and FINRA shall be responsible for processing and acting upon all applications submitted on behalf of allied persons, partners, officers, registered personnel and any other person required to be approved by the Rules of the parties or associated with Common Members thereof. Upon request, FINRA shall advise [CBOE]Cboe and C2 of any changes of allied members, partners, officers, registered personnel and other persons required to be approved by the Rules of the parties. (b) Common Members shall be required to send to FINRA all letters, termination notices or other material respecting the individuals listed in paragraph 8(a). (c) When as a result of processing such submissions FINRA becomes aware of a statutory disqualification as defined in the Exchange Act with respect to a Common Member, FINRA shall determine pursuant to Sections 15A(g) and/or Section 6(c) of the Exchange Act the acceptability or continued applicability of the person to whom such disqualification applies and keep [CBOE]Cboe and C2 advised of its actions in this regard for such subsequent proceedings as [CBOE]Cboe and C2 may initiate. (d) Notwithstanding the foregoing, FINRA shall not review the membership application, reports, filings, fingerprint cards, notices, or other writings filed to determine if such documentation submitted by a broker or dealer, or a person associated therewith or other persons required to register or qualify by examination meets [the CBOE]Cboe or C2 requirements for general membership or for specified categories of membership or participation in the [CBOE]Cboe or C2. FINRA shall not review applications or other documentation filed to request a change in the rights or status described in this paragraph 8(d), including termination or limitation on activities, of a member or a participant of [the CBOE]Cboe or C2, or a person associated with, or requesting association with, a member or participant of [the CBOE]Cboe or C2. 9. Branch Office Information. FINRA shall also be responsible for processing and, if required, acting upon all requests for the opening, address changes, and terminations of branch offices by Common Members and any other applications required of Common Members with respect to the Common Rules as they may be amended from time to time. Upon request, FINRA shall advise [CBOE]Cboe and C2 of the opening, address change and termination of branch and main offices of Common Members and the names of such branch office managers. 10. Customer Complaints. [CBOE]Cboe and C2 shall forward to FINRA copies of all customer complaints involving Common Members received by [CBOE]Cboe and C2 relating to FINRA's Regulatory Responsibilities under this Agreement. It shall be FINRA's responsibility to review and take appropriate action in respect to such complaints. 11. Advertising. FINRA shall assume responsibility to review the advertising of Common Members subject to the Agreement, provided that such material is filed with FINRA in accordance with FINRA's filing procedures and is [[Page 22735]] accompanied with any applicable filing fees set forth in FINRA Rules. Such review shall be made in accordance with then applicable FINRA Rules and interpretations. The advertising of Common Members shall be subject only to compliance with appropriate FINRA Rules and interpretations. 12. No Restrictions on Regulatory Action. Nothing contained in this Agreement shall restrict or in any way encumber the right of any party to conduct its own independent or concurrent investigation, examination or enforcement proceeding of or against Common Members, as any party, in its sole discretion, shall deem appropriate or necessary. 13. Termination. This Agreement may be terminated by any party at any time upon the approval of the Commission after one (1) year's written notice (or such shorter time as may be agreed by the parties) to the other parties, except as provided in paragraph 4. 14. Effective Date. This Agreement shall be effective upon approval of the Commission. 15. Arbitration. In the event of a dispute among the parties as to the operation of this Agreement, the parties hereby agree that any such dispute shall be settled by arbitration in Washington, DC in accordance with the rules of the American Arbitration Association then in effect, or such other procedures as the parties may mutually agree upon. Judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction. 16. Separate Agreement. This Agreement is wholly separate from the following agreements: (1) The multiparty Agreement made pursuant to Rule 17d-2 of the Exchange Act among [BATS]Bats BZX Exchange, Inc., BOX Options Exchange, LLC, [CBOE]Cboe, C2, [the International Securities Exchange]Nasdaq ISE, LLC, FINRA, Miami International Securities Exchange, LLC, MIAX PEARL, LLC, [the New York Stock Exchange, LLC,] NYSE [Amex]American LLC, the NYSE Arca, Inc., The NASDAQ Stock Market LLC, NASDAQ [OMX] BX, Inc., [and] NASDAQ [OMX] PHLX LLC, Nasdaq GMX, LLC, Nasdaq MRX, LLC, and Bats EDGX Exchange, Inc. involving the allocation of regulatory responsibilities with respect to common members for compliance with common rules relating to the conduct by broker-dealers of accounts for listed options or index warrants entered into on [April 25, 2012]January 13, 2017, and as may be amended from time to time; and (2) the multiparty Agreement made pursuant to Rule 17d-2 of the Exchange Act among NYSE [Amex]American LLC, [BATS]Bats BZX Exchange, Inc., C2, [CBOE]Cboe, [International Securities Exchange]Nasdaq ISE, LLC, FINRA, NYSE Arca, Inc., The NASDAQ Stock Market LLC, the BOX Options Exchange, LLC, NASDAQ [OMX] BX, Inc., [and] NASDAQ [OMX] PHLX LLC, Nasdaq GMX, LLC, Nasdaq MRX, LLC, Bats EDGX Exchange, Inc., Miami International Securities Exchange, LLC, and MIAX PEARL, LLC, involving the allocation of regulatory responsibilities with respect to SRO market surveillance of common members activities with regard to certain common rules relating to listed options entered into on [April 25, 2012]January 23, 2017, and as may be amended from time to time. 17. Notification of Members. The parties shall notify Common Members of this Agreement after the Effective Date by means of a uniform joint notice. 18. Amendment. This Agreement may be amended in writing duly approved by each party. All such amendments must be filed with and approved by the Commission before they become effective. 19. Limitation of Liability. None of the parties nor any of their respective directors, governors, officers or employees shall be liable to any other party to this Agreement for any liability, loss or damage resulting from or claimed to have resulted from any delays, inaccuracies, errors or omissions with respect to the provision of Regulatory Responsibilities as provided hereby or for the failure to provide any such responsibility, except with respect to such liability, loss or damages as shall have been suffered by any party and caused by the willful misconduct of another party or their respective directors, governors, officers or employees. No warranties, express or implied, are made by any party hereto with respect to any of the responsibilities to be performed by them hereunder. 20. Relief from Responsibility. Pursuant to Sections 17(d)(1)(A) and 19(g) of the Exchange Act and Rule 17d-2 thereunder, FINRA, C2 and [CBOE]Cboe join in requesting the Commission, upon its approval of this Agreement, to relieve [CBOE]Cboe and C2 of any and all responsibilities with respect to matters allocated to FINRA pursuant to this Agreement; provided, however, that this Agreement shall not be effective until the Effective Date. 21. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, and such counterparts together shall constitute one and the same instrument. * * * * * Exhibit 1 Exhibit 1 is deleted in its entirety and replaced with the following: CBOE and C2 Certification of Common Rules Cboe and C2 hereby certify that the requirements contained in the Rules listed below are identical to, or substantially similar to, the NASD/FINRA or SEC Rules identified. # Common Rules shall not include any provisions regarding (i) notice, reporting or any other filings made directly to or from C2 or Cboe; (ii) incorporation by reference of other C2 or Cboe Rules that are not Common Rules; (iii) exercise of discretion in a manner that differs from FINRA's exercise of discretion including, but not limited to exercise of exemptive authority by C2 or Cboe; (iv) prior written approval of C2 or Cboe; and (v) payment of fees or fines to C2 or Cboe. ------------------------------------------------------------------------ NASD/FINRA or SEC C2 rule(s) CBOE rule(s) rule(s) ------------------------------------------------------------------------ 3.4 Foreign Trading NASD Rule 1090 Permit Holders. Foreign Members. 3.4(a) Qualification and 3.6A(a) NASD Rule 1031(a) Registration. Qualification and Registration Registration of Requirements and Trading Permit NASD Rule Holders and 1060(a)(1)-(4)(A), Associated Persons (C) and (D) Persons #. Exempt from Registration. 3.4(b) Qualification and 3.6A(b) NASD Rule 1022(b) Registration. Qualification and Categories of Registration of Principal Trading Permit Registration. Holders and Associated Persons #. 3.4(c) Qualification and 3.6A(c) NASD Rule Registration. Qualification and 1022(a)(1)(C) Registration of Categories of Trading Permit Principal Holders and Registration. \1\ Associated Persons. 3.4(e) Qualification and 3.6A(e) NASD Rule 1021(c) Registration. Qualification and Registration Registration of Requirements. Trading Permit Holders and Associated Persons. [[Page 22736]] 3.4 Qualification and 3.6A Qualification FINRA Rule 1010(c) Registration, and Registration of Electronic Filing Interpretation and Policy Trading Permit Requirements for .01. Holders and Uniform Forms and Associated Persons, FINRA Bylaws Interpretations and Article V, Sec. 2. Policies .01 and .02. 3.4 Qualification and 3.6A Qualification FINRA Rule 1250 Registration, and Registration of Continuing Interpretations and Trading Permit Education Policies .03. Holders and Requirements. Associated Persons, Interpretations and Policies .04. 3.4 Qualification and 3.6A Qualification NASD Rule 1070(d) Registration, and Registration of Qualifications Interpretation and Trading Permit Examinations and Policy.04. Holders and Waiver Associated Persons, Requirements. Interpretation and Policy .05 #. 3.4 Qualification and 3.6A Qualification NASD Rule 1021(a) Registration, and Registration of and (b) Interpretation and Policy Trading Permit Registration .06. Holders and Requirements, NASD Associated Persons, Rule 1022(a)(6), Interpretation and and 1032(f) Policy .07 #. Categories of Representative Registration. 3.4 Qualification and 3.6A Qualification NASD Rule 1022(a)(6) Registration, and Registration of Categories of Interpretation and Policy Trading Permit Principal .07. Holders and Registration. Associated Persons, Interpretation and Policy .08. 3.4 Qualification and 3.6A Qualification NASD Rule 1031(a) Registration, and Registration of Registration Interpretation and Policy Trading Permit Requirements and .08. Holders and FINRA Bylaws Associated Persons, Article V., Sec. 1. Interpretation and Policy .09. 3.7(c) Certain Exchange Act Rule Documents Required 17f-2. of Trading Permit Holders, Applicants and Associated Persons. 3.7(d) Certain NASD Rule 1013(a)(2) Documents Required New Member of Trading Permit Application and Holders, Applicants Interview, and and Associated FINRA Bylaws Persons. Article IV, Sec. 1. Chapter 4 Business Conduct-- 4.1 Just and FINRA Rule 2010 CBOE Rule 4.1 incorporated Equitable Standards of by reference. Principles of Trade. Commercial Honor and Principles of Trade. Chapter 4 Business Conduct-- 4.7 Manipulation.... FINRA Rule 2020 Use CBOE Rule 4.7 incorporated of Manipulative, by reference. Deceptive or Other Fraudulent Devices and FINRA Rule 6140 Other Trading Practices. Chapter 4 Business Conduct-- 4.18 Prevention of Section 15(g) of the CBOE Rule 4.18 is the Misuse of Securities Exchange incorporated by reference. Material, Nonpublic Act of 1934 Information #. (Exchange Act) and FINRA Rule 3110(b)(1) and (d) Supervision. Chapter 4 Business Conduct-- 4.20 Anti-Money FINRA Rule 3310 Anti- CBOE Rule 4.20 is Laundering Money Laundering incorporated by reference. Compliance Program. Compliance Program. \2\ Chapter 9 Doing Business 9.3A Continuing FINRA Rule 1250 with the Public--CBOE Rule Education For Continuing 9.3A is incorporated by Registered Persons Education reference. #. Requirements. Chapter 9 Doing Business 9.4(a) Other FINRA Rule 3270 with the Public--CBOE Rule Affiliations of Outside Business 9.4(a) is incorporated by Registered Activities of reference. Associated Persons. Registered Persons. \3\ Chapter 9 Doing Business 9.13 Statement of Exchange Act Rule with the Public--CBOE Rule Financial Condition 17a-5. 9.13 is incorporated by to Customers. reference. Chapter 9 Doing Business 9.16 Restrictions on FINRA Rule 4330 with the Public--CBOE Rule Pledge and Lending Customer 9.16 is incorporated by of Customers' Protection--Permiss reference. Securities. ible Use of Customers' Securities. Chapter 9 Doing Business 9.20 Transfer of FINRA Rule 11870 with the Public--CBOE Rule Accounts #. Customer Account 9.20 is incorporated by Transfer Contracts. reference. Chapter 9 Doing Business 9.24 Telemarketing.. FINRA Rule 3230 with the Public--CBOE Rule Telemarketing. 9.24 is incorporated by reference. Chapter 9 Doing Business 9.25 Borrowing From FINRA Rule 3240 with the Public--CBOE Rule or Lending to Borrowing From or 9.25 is incorporated by Customers. Lending to reference. Customers. ------------------------------------------------------------------------ \1\ FINRA shall have Regulatory Responsibilities to the extent the heighted qualification exam requirement of the Cboe and C2 rule is satisfied by the Series 24. \2\ FINRA shall not have any Regulatory Responsibilities regarding the requirement to conduct independent testing during the first calendar year of a broker-dealer becoming a Trading Permit Holder or TPH organization; responsibility for such requirement remains with Cboe and C2, as applicable. \3\ FINRA shall not have any Regulatory Responsibilities regarding the requirement that the Trading Permit Holder provide prior written consent to the TPH organization; responsibility for such requirement remains with Cboe and C2, as applicable. The following provisions are covered:Rule 200 of Regulation SHO--Definition of Short Sales and Marking Requirements Rule 203 of Regulation SHO--Borrowing and Delivery Requirements Rule 204 of Regulation SHO--Close-Out Requirement Rule 105 of Regulation M--Short Selling in Connection with a Public Offering Section 14(e) of the Exchange Act Rule 14e-4 of the Exchange Act--Prohibited Transactions in Connection with Partial Tender Offers [caret] Regulation ATS Regulation S-P [caret] FINRA shall perform surveillance, investigation and Enforcement Responsibilities for SEA Rule 14e-4(a)(1)(ii)(D). 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 [[Page 22737]] Send an email to [email protected]. Please include File Number 4-536 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 4-536. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's internet website (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 website viewing and printing in the Commission's Public Reference Room, 100 F Street NE, Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the plan also will be available for inspection and copying at the principal offices of FINRA, Cboe, and C2. All comments received will be posted without change. Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number 4-536 and should be submitted on or before June 6, 2018. V. Discussion The Commission finds that the proposed Amended Plan is consistent with the factors set forth in Section 17(d) of the Act \13\ and Rule 17d-2(c) thereunder \14\ in that the proposed Amended Plan is necessary or appropriate in the public interest and for the protection of investors, fosters cooperation and coordination among SROs, and removes impediments to and fosters the development of the national market system. In particular, the Commission believes that the proposed Amended Plan should reduce unnecessary regulatory duplication by allocating to FINRA certain examination and enforcement responsibilities for Common Members that would otherwise be performed by Cboe, C2, and FINRA. Accordingly, the proposed Amended Plan promotes efficiency by reducing costs to Common Members. Furthermore, because Cboe, C2, and FINRA will coordinate their regulatory functions in accordance with the Amended Plan, the Amended Plan should promote investor protection. --------------------------------------------------------------------------- \13\ 15 U.S.C. 78q(d). \14\ 17 CFR 240.17d-2(c). --------------------------------------------------------------------------- The Commission notes that, under the Amended Plan, Cboe, C2, and FINRA have allocated regulatory responsibility for those Cboe and C2 rules, set forth in the Certification, that are substantially similar to the applicable FINRA rules in that examination for compliance with such provisions and rules would not require FINRA to develop one or more new examination standards, modules, procedures, or criteria in order to analyze the application of the rule, or a Common Member's activity, conduct, or output in relation to such rule. In addition, under the Amended Plan, FINRA would assume regulatory responsibility for certain provisions of the federal securities laws and the rules and regulations thereunder that are set forth in the Certification. The Common Rules covered by the Amended Plan are specifically listed in the Certification, as may be amended by the Parties from time to time. According to the Amended Plan, Cboe and C2 will review the Certification, at least annually, or more frequently if required by changes in either the rules of Cboe, C2, or FINRA, and, if necessary, submit to FINRA an updated list of Common Rules to add Cboe and C2 rules not included on the then-current list of Common Rules that are substantially similar to FINRA rules; delete Cboe and C2 rules included in the then-current list of Common Rules that no longer qualify as common rules; and confirm that the remaining rules on the list of Common Rules continue to be Cboe and C2 rules that qualify as common rules.\15\ FINRA will then confirm in writing whether the rules listed in any updated list are Common Rules as defined in the Amended Plan. Under the Amended Plan, Cboe and C2 will also provide FINRA with a current list of Common Members and shall update the list no less frequently than once every six months.\16\ The Commission believes that these provisions are designed to provide for continuing communication between the Parties to ensure the continued accuracy of the scope of the proposed allocation of regulatory responsibility. --------------------------------------------------------------------------- \15\ See paragraph 2 of the Amended Plan. \16\ See paragraph 3 of the Amended Plan. --------------------------------------------------------------------------- The Commission is hereby declaring effective an Amended Plan that, among other things, allocates regulatory responsibility to FINRA for the oversight and enforcement of all Cboe and C2 rules that are substantially similar to the rules of FINRA for Common Members of Cboe and FINRA, and C2 and FINRA. Therefore, modifications to the Certification need not be filed with the Commission as an amendment to the Amended Plan, provided that the Parties are only adding to, deleting from, or confirming changes to Cboe or C2 rules in the Certification in conformance with the definition of Common Rules provided in the Amended Plan. However, should the Parties decide to add a Cboe or C2 rule to the Certification that is not substantially similar to a FINRA rule; delete a Cboe or C2 rule from the Certification that is substantially similar to a FINRA rule; or leave on the Certification a Cboe or C2 rule that is no longer substantially similar to a FINRA rule, then such a change would constitute an amendment to the Amended Plan, which must be filed with the Commission pursuant to Rule 17d-2 under the Act.\17\ --------------------------------------------------------------------------- \17\ The Commission also notes that the addition to or deletion from the Certification of any federal securities laws, rules, and regulations for which FINRA would bear responsibility under the Amended Plan for examining, and enforcing compliance by, Common Members, also would constitute an amendment to the Amended Plan. --------------------------------------------------------------------------- Under paragraph (c) of Rule 17d-2, the Commission may, after appropriate notice and comment, declare a plan, or any part of a plan, effective. In this instance, the Commission believes that appropriate notice and comment can take place after the proposed amendment is effective. The primary purposes of the amendment are to remove Cboe's former equities trading facility, CBSX, from the Plan; (2) to the extent that it becomes a member of either exchange, allocate regulatory responsibility to FINRA for Cboe's and C2's affiliated routing broker- dealer, Cboe Trading, Inc.; and (3) allocate surveillance, investigation, and enforcement responsibilities for Rule 14e-4 under the Act . By declaring it effective today, the Amended Plan can become effective and be implemented without undue delay. The Commission notes that the prior version of this plan immediately prior to this proposed amendment was published for comment and the Commission did not receive any comments thereon.\18\ Furthermore, the Commission does not believe that the amendment to the plan raises any new [[Page 22738]] regulatory issues that the Commission has not previously considered. --------------------------------------------------------------------------- \18\ See supra note 12 (citing to Securities Exchange Act Release No. 72137). --------------------------------------------------------------------------- VI. Conclusion This order gives effect to the Amended Plan filed with the Commission in File No. 4-536. The Parties shall notify all members affected by the Amended Plan of their rights and obligations under the Amended Plan. It is therefore ordered, pursuant to Section 17(d) of the Act, that the Amended Plan in File No. 4-536, between the FINRA, Cboe, and C2, filed pursuant to Rule 17d-2 under the Act, hereby is approved and declared effective. It is further ordered that Cboe and C2 are relieved of those responsibilities allocated to FINRA under the Amended Plan in File No. 4-536. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\19\ --------------------------------------------------------------------------- \19\ 17 CFR 200.30-3(a)(34). --------------------------------------------------------------------------- Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2018-10369 Filed 5-15-18; 8:45 am] BILLING CODE 8011-01-P
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SECURITIES AND EXCHANGE unnecessary expenses for common development of, a national market
COMMISSION members and their SROs. system and a national clearance and
Section 17(d)(1) of the Act 6 was settlement system, and is in conformity
[Release No. 34–83208; File No. 4–536] intended, in part, to eliminate with the factors set forth in Section
Program for Allocation of Regulatory unnecessary multiple examinations and 17(d) of the Act. Commission approval
Responsibilities Pursuant To Rule regulatory duplication.7 With respect to of a plan filed pursuant to Rule 17d–2
17d–2; Notice of Filing and Order a common member, Section 17(d)(1) relieves an SRO of those regulatory
Approving and Declaring Effective an authorizes the Commission, by rule or responsibilities allocated by the plan to
Amended Plan for the Allocation of order, to relieve an SRO of the another SRO.
Regulatory Responsibilities Between responsibility to receive regulatory
reports, to examine for and enforce II. The Plan
the Financial Industry Regulatory
Authority, Inc., Cboe Exchange, Inc., compliance with applicable statutes, On May 14, 2007, the Commission
and Cboe C2 Exchange, Inc. rules, and regulations, or to perform declared effective the Plan entered into
other specified regulatory functions. between NASD (n/k/a FINRA) and Cboe
May 10, 2018. To implement Section 17(d)(1), the for allocating regulatory responsibility
Notice is hereby given that the Commission adopted two rules: Rule pursuant to Rule 17d–2.11 On May 9,
Securities and Exchange Commission 17d–1 and Rule 17d–2 under the Act.8 2014, the Commission declared effective
(‘‘Commission’’) has issued an Order, Rule 17d–1 authorizes the Commission an amendment to the Plan to add C2 as
pursuant to Section 17(d) of the to name a single SRO as the designated a Participant to the Plan.12 The Plan is
Securities Exchange Act of 1934 examining authority (‘‘DEA’’) to intended to reduce regulatory
(‘‘Act’’),1 approving and declaring examine common members for duplication for firms that are common
effective an amendment to the plan for compliance with the financial members of FINRA and at least one of
allocating regulatory responsibility responsibility requirements imposed by Cboe or C2 by allocating regulatory
(‘‘Plan’’) filed on May 4, 2018, pursuant the Act, or by Commission or SRO responsibility with respect to certain
to Rule 17d–2 of the Act,2 by the rules.9 When an SRO has been named as applicable laws, rules, and regulations
Financial Industry Regulatory a common member’s DEA, all other that are common among them. Included
Authority, Inc. (‘‘FINRA’’), Cboe SROs to which the common member in the Plan is an exhibit that lists every
Exchange, Inc. (‘‘Cboe’’), and Cboe C2 belongs are relieved of the responsibility Cboe and C2 rule for which FINRA
Exchange, Inc. (‘‘C2’’) (collectively, to examine the firm for compliance with bears responsibility under the Plan for
‘‘Participating Organizations’’ or the applicable financial responsibility overseeing and enforcing with respect to
‘‘parties’’). This Agreement amends and rules. On its face, Rule 17d–1 deals only CBOE or C2 members that are also
restates the agreement entered into with an SRO’s obligations to enforce members of FINRA and the associated
between FINRA, Cboe, and C2 on March member compliance with financial persons therewith.
21, 2014, entitled ‘‘Agreement Among responsibility requirements. Rule 17d–1
does not relieve an SRO from its III. Proposed Amendment to the Plan
Financial Industry Regulatory
Authority, Inc., Chicago Board Options obligation to examine a common On May 4, 2018, the parties submitted
Exchange, Incorporated, and C2 Options member for compliance with its own a proposed amendment to the Plan
Exchange, Incorporated Pursuant to rules and provisions of the federal (‘‘Amended Plan’’). The primary
Rule 17d–2 under the Securities securities laws governing matters other purposes of the Amended Plan are to (1)
Exchange Act of 1934,’’ and any than financial responsibility, including remove Cboe’s former equities trading
subsequent amendments thereafter. sales practices and trading activities and facility, CBSX, from the Plan; (2) to the
practices. extent that it becomes a member of
I. Introduction To address regulatory duplication in either exchange, allocate regulatory
Section 19(g)(1) of the Act,3 among these and other areas, the Commission responsibility to FINRA for Cboe’s and
other things, requires every self- adopted Rule 17d–2 under the Act.10 C2’s affiliated routing broker-dealer,
regulatory organization (‘‘SRO’’) Rule 17d–2 permits SROs to propose Cboe Trading, Inc.; and (3) allocate
registered as either a national securities joint plans for the allocation of surveillance, investigation, and
exchange or national securities regulatory responsibilities with respect enforcement responsibilities for Rule
association to examine for, and enforce to their common members. Under 14e-4 under the Act . The text of the
compliance by, its members and persons paragraph (c) of Rule 17d–2, the proposed Amended Plan is as follows
associated with its members with the Commission may declare such a plan (additions are italicized; deletions are
Act, the rules and regulations effective if, after providing for notice [bracketed]):
thereunder, and the SRO’s own rules, and comment, it determines that the
plan is necessary or appropriate in the * * * * *
unless the SRO is relieved of this
responsibility pursuant to Section public interest and for the protection of Agreement Among Financial Industry
17(d) 4 or Section 19(g)(2) 5 of the Act. investors, to foster cooperation and Regulatory Authority, Inc., [Chicago
Without this relief, the statutory coordination among the SROs, to Board Options Exchange, Incorporated]
obligation of each individual SRO could remove impediments to, and foster the CBOE Exchange, Inc., and CBOE C2
result in a pattern of multiple [Options] Exchange, [Incorporated] Inc.
6 15 U.S.C. 78q(d)(1).
examinations of broker-dealers that Pursuant to Rule 17d–2 Under the
7 See Securities Act Amendments of 1975, Report
maintain memberships in more than one of the Senate Committee on Banking, Housing, and
Securities Exchange Act of 1934
sradovich on DSK3GMQ082PROD with NOTICES
SRO (‘‘common members’’). Such Urban Affairs to Accompany S. 249, S. Rep. No. 94– This Agreement, by and among
regulatory duplication would add 75, 94th Cong., 1st Session 32 (1975).
8 17 CFR 240.17d–1 and 17 CFR 240.17d–2,
Financial Industry Regulatory
respectively. Authority, Inc. (‘‘FINRA’’), [the Chicago
1 15 U.S.C. 78q(d). 9 See Securities Exchange Act Release No. 12352
2 17 CFR 240.17d–2. 11 See Securities Exchange Act Release No. 55755
(April 20, 1976), 41 FR 18808 (May 7, 1976).
3 15 U.S.C. 78s(g)(1). 10 See Securities Exchange Act Release No. 12935 (May 14, 2007), 72 FR 28087 (May 18, 2007).
4 15 U.S.C. 78q(d). 12 See Securities Exchange Act Release No. 72137
(October 28, 1976), 41 FR 49091 (November 8,
5 15 U.S.C. 78s(g)(2). 1976). (May 9, 2014), 79 FR 27965 (May 15, 2014).
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![Federal Register / Vol. 83, No. 95 / Wednesday, May 16, 2018 / Notices 22733
Board Options Exchange, require FINRA to develop one or more the Rule 14e–4 of the Securities
Incorporated]Cboe Exchange, Inc. new examination standards, modules, Exchange Act (‘‘Rule 14e–4’’), with a
(‘‘[CBOE]Cboe’’), and Cboe C2 [Options] procedures, or criteria in order to focus on the standardized call option
Exchange, [Incorporated]Inc. (‘‘C2’’) is analyze the application of the rule, or a provision of Rule 14e–4(a)(1)(ii)(D).
made this [21st]4th day of [March, 2014] Common Member’s activity, conduct, or 2. Regulatory and Enforcement
May, 2018 (the ‘‘Agreement’’), pursuant output in relation to such rule[; Responsibilities. FINRA shall assume
to Section 17(d) of the Securities provided, however, Common Rules Regulatory Responsibilities and
Exchange Act of 1934 (the ‘‘Exchange shall not include the application of SEC, Enforcement Responsibilities for
Act’’) and Rule 17d–2 thereunder which CBOE, C2 or FINRA Rules as they Common Members. Attached as Exhibit
permits agreements between self- pertain to violations of insider trading 1 to this Agreement and made part
regulatory organizations to allocate activities, which is covered by a hereof, [CBOE]Cboe and C2 furnished
regulatory responsibility to eliminate separate 17d–2 Agreement by and FINRA with a current list of Common
regulatory duplication. FINRA, among the BATS Exchange, Inc., Rules and certified to FINRA that such
[CBOE]Cboe and C2 may be referred to BATS–Y Exchange, Inc., CBOE, Chicago Rules are substantially similar to the
individually as a ‘‘party’’ and together Stock Exchange, Inc., EDGA Exchange, corresponding FINRA Rule (the
as the ‘‘parties.’’ Inc., EDGX Exchange, Inc., FINRA, ‘‘Certification’’). FINRA hereby agrees
This Agreement amends and restates NASDAQ OMX BX, Inc., NASDAQ that the Rules listed in the Certification
the agreement entered into between OMX PHLX LLC, The NASDAQ Stock are Common Rules as defined in this
[NASD (n/k/a] FINRA[) and], Market LLC, National Stock Exchange, Agreement. Each year following the
[CBOE]Cboe and C2 on [April 4, Inc., New York Stock Exchange, LLC, Effective Date of this Agreement, or
2007]March 21, 2014, entitled NYSE Amex LLC, and NYSE Arca Inc., more frequently if required by changes
‘‘Agreement [between NASD and effective December 16, 2011, as may be in the Rules of the parties, [CBOE]Cboe
CBOE]Among Financial Industry amended from time to time]. Common and C2 shall submit an updated list of
Regulatory Authority, Inc., Chicago Rules shall not include any provisions Common Rules to FINRA for review
Board Options Exchange, Incorporated, regarding: (i) Notice, reporting or any which shall add [CBOE]Cboe or C2
and C2 Options Exchange, Incorporated other filings made directly to or from C2 Rules not included in the current list of
Pursuant to Rule 17d–2 under the or Cboe; (ii) incorporation by reference Common Rules that qualify as Common
Securities Exchange Act of 1934,’’ and of other C2 or Cboe Rules that are not Rules as defined in this Agreement;
any subsequent amendments thereafter. Common Rules; (iii) exercise of delete [CBOE]Cboe or C2 Rules included
WHEREAS, the parties desire to discretion in a manner that differs from in the current list of Common Rules that
reduce duplication in the examination FINRA’s exercise of discretion no longer qualify as Common Rules as
of their Common Members (as defined including, but not limited to exercise of defined in this Agreement; and confirm
herein) and in the filing and processing exemptive authority by C2 or Cboe; (iv) that the remaining Rules on the current
of certain registration and membership prior written approval of C2 or Cboe; list of Common Rules continue to be
records as it relates to [the CBOE]Cboe and (v) payment of fees or fines to C2 [CBOE]Cboe or C2 Rules that qualify as
[options exchange,]and C2 [options or Cboe. Common Rules as defined in this
exchange and the CBOE equity (c) ‘‘Common Members’’ shall mean Agreement. Within 30 days of receipt of
exchange facility operated by CBOE members of FINRA and at least one of such updated list, FINRA shall confirm
Stock Exchange, LLC (‘‘CBSX’’)]; and [CBOE]Cboe or C2. in writing whether the Rules listed in
WHEREAS, the parties desire to (d) ‘‘Effective Date’’ shall be the date any updated list are Common Rules as
execute an agreement covering such this Agreement is approved by the defined in this Agreement.
subjects pursuant to the provisions of Commission. Notwithstanding anything herein to the
Rule 17d–2 under the Exchange Act and (e) ‘‘Enforcement Responsibilities’’ contrary, it is explicitly understood that
to file such agreement with the shall mean the conduct of appropriate the term ‘‘Regulatory Responsibilities’’
Securities and Exchange Commission proceedings, in accordance with does not include, and [CBOE]Cboe and
(the ‘‘SEC’’ or ‘‘Commission’’) for its FINRA’s Code of Procedure (the Rule C2 shall retain full responsibility for
approval. 9000 Series) and other applicable (unless otherwise addressed by separate
NOW, THEREFORE, in consideration FINRA procedural Rules, to determine agreement or rule) the following
of the mutual covenants contained whether violations of pertinent laws, (collectively, the ‘‘Retained
hereinafter, the parties hereby agree as rules or regulations have occurred, and Responsibilities’’):
follows: if such violations are deemed to have (a) Surveillance and enforcement with
1. Definitions. Unless otherwise occurred, the imposition of appropriate respect to trading activities or practices
defined in this Agreement or the context sanctions as specified under FINRA’s involving [CBOE]Cboe’s or C2’s own
otherwise requires, the terms used in Code of Procedure and sanctions marketplace, including without
this Agreement shall have the same guidelines. limitation [CBOE]Cboe’s or C2’s Rules
meaning as they have under the (f) ‘‘Regulatory Responsibilities’’ shall relating to the rights and obligations of
Exchange Act and the rules and mean the examination responsibilities market makers;
regulations thereunder. As used in this and Enforcement Responsibilities (b) registration pursuant to their
Agreement, the following terms shall relating to compliance by the Common applicable Rules of associated persons
have the following meanings: Members with the Common Rules and (i.e., registration rules that are not
(a) ‘‘Rule’’ of an ‘‘exchange’’ or an the provisions of the Exchange Act and Common Rules);
the rules and regulations thereunder,
sradovich on DSK3GMQ082PROD with NOTICES
‘‘association’’ shall have the meaning (c) discharge of their duties and
defined in Exchange Act Section and other applicable laws, rules and obligations as a Designated Examining
3(a)(27). regulations, each as set forth on Exhibit Authority pursuant to Rule 17d–1 under
(b) ‘‘Common Rules’’ shall mean the 1 attached hereto. The term ‘‘Regulatory the Exchange Act; and
[CBOE]Cboe Rules and C2 Rules that are Responsibility’’ shall also include the (d) any [CBOE]Cboe Rules and C2
substantially similar to the applicable surveillance, investigation and Rules that are not Common Rules,
FINRA Rules in that examination for Enforcement Responsibilities relating to except Cboe Rules or C2 Rules for any
compliance with such Rules would not compliance by Common Members with Cboe or C2 affiliate that is a member
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that operates as a facility (as defined in and enforcement proceedings in respect respecting the individuals listed in
Section 3(a)(2) of the Exchange Act), thereto shall be conducted by FINRA as paragraph 8(a).
acts as a router for Cboe or C2 and is provided hereinbefore; provided, (c) When as a result of processing
a member of FINRA (‘‘Router Member’’) however, that in the event a Common such submissions FINRA becomes
as provided in paragraph 6. As of the Member is the subject of an aware of a statutory disqualification as
date of this Agreement, Cboe Trading, investigation relating to a transaction on defined in the Exchange Act with
Inc. is the only Router Member. [the CBOE]Cboe or C2 options respect to a Common Member, FINRA
3. Common Members. Prior to the exchanges, [or the CBSX, CBOE]Cboe shall determine pursuant to Sections
Effective Date, [CBOE]Cboe and C2 shall and C2 may in their discretion assume 15A(g) and/or Section 6(c) of the
furnish FINRA with a current list of concurrent jurisdiction and Exchange Act the acceptability or
Common Members, which shall be responsibility. With respect to apparent continued applicability of the person to
updated no less frequently than once violations of any Cboe or C2 Rules by whom such disqualification applies and
every six months. any Router Member, FINRA shall not keep [CBOE]Cboe and C2 advised of its
4. No Charge. There shall be no charge make referrals to Cboe or C2 pursuant actions in this regard for such
to [CBOE]Cboe and C2 by FINRA for to this paragraph 6. Such apparent subsequent proceedings as [CBOE]Cboe
performing the Regulatory violations shall be processed and and C2 may initiate.
Responsibilities and Enforcement enforcement proceedings in respect (d) Notwithstanding the foregoing,
Responsibilities under this Agreement thereto will be conducted, by FINRA as FINRA shall not review the membership
except as hereinafter provided. FINRA provided in this Agreement. Each party application, reports, filings, fingerprint
shall provide[CBOE]Cboe and C2 with agrees to make available promptly all cards, notices, or other writings filed to
ninety (90) days advance written notice files, records and witnesses necessary to determine if such documentation
in the event FINRA decides to impose assist the other in its investigation or submitted by a broker or dealer, or a
any charges to [CBOE]Cboe and C2 for proceedings. person associated therewith or other
performing the Regulatory 7. Continued Assistance. FINRA shall persons required to register or qualify by
Responsibilities under this Agreement. make available to [CBOE]Cboe and C2 examination meets [the CBOE]Cboe or
If FINRA determines to impose a charge, all information obtained by FINRA in C2 requirements for general
[CBOE]Cboe and C2 shall have the right membership or for specified categories
the performance by it of the Regulatory
at the time of the imposition of such of membership or participation in the
Responsibilities hereunder in respect to
charge to terminate this Agreement; [CBOE]Cboe or C2. FINRA shall not
the Common Members subject to this
provided, however, that FINRA’s review applications or other
Agreement. In particular, and not in
Regulatory Responsibilities under this documentation filed to request a change
limitation of the foregoing, FINRA shall
Agreement shall continue until the in the rights or status described in this
furnish [CBOE]Cboe and C2 any
Commission approves the termination paragraph 8(d), including termination or
information it obtains about Common
of this Agreement. limitation on activities, of a member or
5. Reassignment of Regulatory Members which reflects adversely on
a participant of [the CBOE]Cboe or C2,
Responsibilities. Notwithstanding any their financial condition. It is
or a person associated with, or
provision hereof, this Agreement shall understood that such information is of requesting association with, a member
be subject to any statute, or any rule or an extremely sensitive nature and, or participant of [the CBOE]Cboe or C2.
order of the Commission, or industry accordingly, [CBOE]Cboe and C2 9. Branch Office Information. FINRA
agreement, restructuring the regulatory acknowledge and agree to take all shall also be responsible for processing
framework of the securities industry or reasonable steps to maintain its and, if required, acting upon all requests
reassigning Regulatory Responsibilities confidentiality. [CBOE]Cboe and C2 for the opening, address changes, and
between self-regulatory organizations. shall make available to FINRA any terminations of branch offices by
To the extent such action is inconsistent information coming to their attention Common Members and any other
with this Agreement, such action shall that reflects adversely on the financial applications required of Common
supersede the provisions hereof to the condition of Common Members or Members with respect to the Common
extent necessary for them to be properly indicates possible violations of Rules as they may be amended from
effectuated and the provisions hereof in applicable laws, rules or regulations by time to time. Upon request, FINRA shall
that respect shall be null and void. such firms. advise [CBOE]Cboe and C2 of the
6. Notification of Violations. In the 8. Common Member Applications. opening, address change and
event that FINRA becomes aware of (a) Common Members subject to this termination of branch and main offices
apparent violations of any [CBOE]Cboe Agreement shall be required to submit, of Common Members and the names of
or C2 Rules, which are not listed as and FINRA shall be responsible for such branch office managers.
Common Rules, discovered pursuant to processing and acting upon all 10. Customer Complaints.
the performance of the Regulatory applications submitted on behalf of [CBOE]Cboe and C2 shall forward to
Responsibilities assumed hereunder, allied persons, partners, officers, FINRA copies of all customer
FINRA shall notify [CBOE]Cboe and C2 registered personnel and any other complaints involving Common
of those apparent violations for such person required to be approved by the Members received by [CBOE]Cboe and
response as [CBOE]Cboe and C2 deems Rules of the parties or associated with C2 relating to FINRA’s Regulatory
appropriate. In the event, [CBOE]Cboe Common Members thereof. Upon Responsibilities under this Agreement.
or C2 becomes aware of apparent request, FINRA shall advise It shall be FINRA’s responsibility to
violations of any Common Rules, [CBOE]Cboe and C2 of any changes of
sradovich on DSK3GMQ082PROD with NOTICES
review and take appropriate action in
discovered pursuant to the Retained allied members, partners, officers, respect to such complaints.
Responsibilities, [CBOE]Cboe and C2 registered personnel and other persons 11. Advertising. FINRA shall assume
shall notify FINRA of those apparent required to be approved by the Rules of responsibility to review the advertising
violations and such matters shall be the parties. of Common Members subject to the
handled by FINRA as provided in this (b) Common Members shall be Agreement, provided that such material
Agreement. Apparent violations of required to send to FINRA all letters, is filed with FINRA in accordance with
Common Rules shall be processed by, termination notices or other material FINRA’s filing procedures and is
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accompanied with any applicable filing NASDAQ [OMX] PHLX LLC, Nasdaq to such liability, loss or damages as
fees set forth in FINRA Rules. Such GMX, LLC, Nasdaq MRX, LLC, and Bats shall have been suffered by any party
review shall be made in accordance EDGX Exchange, Inc. involving the and caused by the willful misconduct of
with then applicable FINRA Rules and allocation of regulatory responsibilities another party or their respective
interpretations. The advertising of with respect to common members for directors, governors, officers or
Common Members shall be subject only compliance with common rules relating employees. No warranties, express or
to compliance with appropriate FINRA to the conduct by broker-dealers of implied, are made by any party hereto
Rules and interpretations. accounts for listed options or index with respect to any of the
12. No Restrictions on Regulatory warrants entered into on [April 25, responsibilities to be performed by them
Action. Nothing contained in this 2012]January 13, 2017, and as may be hereunder.
Agreement shall restrict or in any way amended from time to time; and (2) the 20. Relief from Responsibility.
encumber the right of any party to multiparty Agreement made pursuant to Pursuant to Sections 17(d)(1)(A) and
conduct its own independent or Rule 17d–2 of the Exchange Act among 19(g) of the Exchange Act and Rule 17d–
concurrent investigation, examination NYSE [Amex]American LLC, 2 thereunder, FINRA, C2 and
or enforcement proceeding of or against [BATS]Bats BZX Exchange, Inc., C2, [CBOE]Cboe join in requesting the
Common Members, as any party, in its [CBOE]Cboe, [International Securities Commission, upon its approval of this
sole discretion, shall deem appropriate Exchange]Nasdaq ISE, LLC, FINRA, Agreement, to relieve [CBOE]Cboe and
or necessary. NYSE Arca, Inc., The NASDAQ Stock C2 of any and all responsibilities with
13. Termination. This Agreement may Market LLC, the BOX Options respect to matters allocated to FINRA
be terminated by any party at any time Exchange, LLC, NASDAQ [OMX] BX, pursuant to this Agreement; provided,
upon the approval of the Commission Inc., [and] NASDAQ [OMX] PHLX LLC, however, that this Agreement shall not
after one (1) year’s written notice (or Nasdaq GMX, LLC, Nasdaq MRX, LLC, be effective until the Effective Date.
such shorter time as may be agreed by Bats EDGX Exchange, Inc., Miami 21. Counterparts. This Agreement
the parties) to the other parties, except International Securities Exchange, LLC, may be executed in one or more
as provided in paragraph 4. and MIAX PEARL, LLC, involving the counterparts, each of which shall be
14. Effective Date. This Agreement
allocation of regulatory responsibilities deemed an original, and such
shall be effective upon approval of the
with respect to SRO market surveillance counterparts together shall constitute
Commission.
15. Arbitration. In the event of a of common members activities with one and the same instrument.
dispute among the parties as to the regard to certain common rules relating * * * * *
operation of this Agreement, the parties to listed options entered into on [April
25, 2012]January 23, 2017, and as may Exhibit 1
hereby agree that any such dispute shall
be settled by arbitration in Washington, be amended from time to time. Exhibit 1 is deleted in its entirety and
DC in accordance with the rules of the 17. Notification of Members. The replaced with the following:
American Arbitration Association then parties shall notify Common Members
of this Agreement after the Effective CBOE and C2 Certification of Common
in effect, or such other procedures as the Rules
parties may mutually agree upon. Date by means of a uniform joint notice.
Judgment on the award rendered by the 18. Amendment. This Agreement may Cboe and C2 hereby certify that the
arbitrator(s) may be entered in any court be amended in writing duly approved requirements contained in the Rules
having jurisdiction. by each party. All such amendments listed below are identical to, or
16. Separate Agreement. This must be filed with and approved by the substantially similar to, the NASD/
Agreement is wholly separate from the Commission before they become FINRA or SEC Rules identified.
following agreements: (1) The effective. # Common Rules shall not include
multiparty Agreement made pursuant to 19. Limitation of Liability. None of any provisions regarding (i) notice,
Rule 17d–2 of the Exchange Act among the parties nor any of their respective reporting or any other filings made
[BATS]Bats BZX Exchange, Inc., BOX directors, governors, officers or directly to or from C2 or Cboe; (ii)
Options Exchange, LLC, [CBOE]Cboe, employees shall be liable to any other incorporation by reference of other C2
C2, [the International Securities party to this Agreement for any liability, or Cboe Rules that are not Common
Exchange]Nasdaq ISE, LLC, FINRA, loss or damage resulting from or Rules; (iii) exercise of discretion in a
Miami International Securities claimed to have resulted from any manner that differs from FINRA’s
Exchange, LLC, MIAX PEARL, LLC, [the delays, inaccuracies, errors or omissions exercise of discretion including, but not
New York Stock Exchange, LLC,] NYSE with respect to the provision of limited to exercise of exemptive
[Amex]American LLC, the NYSE Arca, Regulatory Responsibilities as provided authority by C2 or Cboe; (iv) prior
Inc., The NASDAQ Stock Market LLC, hereby or for the failure to provide any written approval of C2 or Cboe; and (v)
NASDAQ [OMX] BX, Inc., [and] such responsibility, except with respect payment of fees or fines to C2 or Cboe.
C2 rule(s) CBOE rule(s) NASD/FINRA or SEC rule(s)
3.4 Foreign Trading Permit Holders .............. NASD Rule 1090 Foreign Members.
3.4(a) Qualification and Registration .................. 3.6A(a) Qualification and Registration of Trad- NASD Rule 1031(a) Registration Require-
ing Permit Holders and Associated Per- ments and NASD Rule 1060(a)(1)–(4)(A),
sons #. (C) and (D) Persons Exempt from Registra-
sradovich on DSK3GMQ082PROD with NOTICES
tion.
3.4(b) Qualification and Registration .................. 3.6A(b) Qualification and Registration of Trad- NASD Rule 1022(b) Categories of Principal
ing Permit Holders and Associated Per- Registration.
sons #.
3.4(c) Qualification and Registration .................. 3.6A(c) Qualification and Registration of Trad- NASD Rule 1022(a)(1)(C) Categories of Prin-
ing Permit Holders and Associated Persons. cipal Registration. 1
3.4(e) Qualification and Registration .................. 3.6A(e) Qualification and Registration of Trad- NASD Rule 1021(c) Registration Require-
ing Permit Holders and Associated Persons. ments.
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![22738 Federal Register / Vol. 83, No. 95 / Wednesday, May 16, 2018 / Notices
regulatory issues that the Commission SUPPLEMENTARY INFORMATION: Notice is Incident Period: 04/13/2018 through
has not previously considered. hereby given that as a result of the 04/16/2018.
President’s major disaster declaration on DATES: Issued on 05/08/2018.
VI. Conclusion
04/26/2018, Private Non-Profit Physical Loan Application Deadline
This order gives effect to the organizations that provide essential Date: 07/09/2018.
Amended Plan filed with the services of a governmental nature may Economic Injury (EIDL) Loan
Commission in File No. 4–536. The file disaster loan applications at the Application Deadline Date: 02/08/2019.
Parties shall notify all members affected address listed above or other locally
by the Amended Plan of their rights and ADDRESSES: Submit completed loan
announced locations. applications to: U.S. Small Business
obligations under the Amended Plan.
The following areas have been Administration, Processing and
It is therefore ordered, pursuant to
determined to be adversely affected by Disbursement Center, 14925 Kingsport
Section 17(d) of the Act, that the
Amended Plan in File No. 4–536, the disaster: Road, Fort Worth, TX 76155.
between the FINRA, Cboe, and C2, filed Primary Counties: Boyd, Bullitt, Butler, FOR FURTHER INFORMATION CONTACT: A.
pursuant to Rule 17d–2 under the Act, Caldwell, Campbell, Carlisle, Escobar, Office of Disaster Assistance,
hereby is approved and declared Carroll, Carter, Crittenden, Fulton, U.S. Small Business Administration,
effective. Gallatin, Grant, Graves, Greenup, 409 3rd Street SW, Suite 6050,
It is further ordered that Cboe and C2 Hancock, Hardin, Henderson, Washington, DC 20416, (202) 205–6734.
are relieved of those responsibilities Henry, Hickman, Jefferson, Kenton, SUPPLEMENTARY INFORMATION: Notice is
allocated to FINRA under the Amended Lawrence, Livingston, McCracken, hereby given that as a result of the
Plan in File No. 4–536. McLean, Metcalfe, Ohio, Owen, President’s major disaster declaration on
For the Commission, by the Division of Spencer, Trigg, Trimble, Union, 05/08/2018, Private Non-Profit
Trading and Markets, pursuant to delegated Washington, Webster. organizations that provide essential
authority.19 The Interest Rates are: services of a governmental nature may
Eduardo A. Aleman, file disaster loan applications at the
Assistant Secretary. Percent address listed above or other locally
[FR Doc. 2018–10369 Filed 5–15–18; 8:45 am]
For Physical Damage:
announced locations.
BILLING CODE 8011–01–P Non-Profit Organizations with The following areas have been
Credit Available Elsewhere ... 2.500 determined to be adversely affected by
Non-Profit Organizations with- the disaster:
SMALL BUSINESS ADMINISTRATION out Credit Available Else- Primary Areas: The City and County of
where ..................................... 2.500 Honolulu and Kaua’i County.
[Disaster Declaration #15520 and #15521; For Economic Injury:
KENTUCKY Disaster Number KY–00068] Non-Profit Organizations with- The Interest Rates are:
out Credit Available Else-
Presidential Declaration of a Major where ..................................... 2.500 Percent
Disaster for Public Assistance Only for
the Commonwealth of Kentucky For Physical Damage:
The number assigned to this disaster Non-Profit Organizations with
AGENCY: U.S. Small Business for physical damage is 155206 and for Credit Available Elsewhere ... 2.500
Administration. economic injury is 155210. Non-Profit Organizations with-
ACTION: Notice. (Catalog of Federal Domestic Assistance out Credit Available Else-
Number 59008) where ..................................... 2.500
SUMMARY: This is a Notice of the For Economic Injury:
Presidential declaration of a major James Rivera, Non-Profit Organizations with-
disaster for Public Assistance Only for Associate Administrator for Disaster out Credit Available Else-
the Commonwealth of Kentucky Assistance. where ..................................... 2.500
(FEMA–4361–DR), dated 04/26/2018. [FR Doc. 2018–10368 Filed 5–15–18; 8:45 am]
Incident: Severe Storms, Tornadoes, BILLING CODE 8025–01–P The number assigned to this disaster
Flooding, Landslides, and Mudslides. for physical damage is 155186 and for
Incident Period: 02/21/2018 through economic injury is 155190.
03/21/2018. SMALL BUSINESS ADMINISTRATION (Catalog of Federal Domestic Assistance
DATES: Issued on 04/26/2018. Number 59008)
Physical Loan Application Deadline [Disaster Declaration #15518 and #15519;
HAWAII Disaster Number HI–00046] James Rivera,
Date: 06/25/2018.
Economic Injury (EIDL) Loan Associate Administrator for Disaster
Application Deadline Date: 01/28/2019. Presidential Declaration of a Major Assistance.
Disaster for Public Assistance Only for [FR Doc. 2018–10372 Filed 5–15–18; 8:45 am]
ADDRESSES: Submit completed loan
the State of Hawaii BILLING CODE 8025–01–P
applications to: U.S. Small Business
Administration, Processing and AGENCY: U.S. Small Business
Disbursement Center, 14925 Kingsport Administration.
Road, Fort Worth, TX 76155. DEPARTMENT OF STATE
ACTION: Notice.
sradovich on DSK3GMQ082PROD with NOTICES
FOR FURTHER INFORMATION CONTACT: [Public Notice 10409]
A. Escobar, Office of Disaster SUMMARY: This is a Notice of the
Assistance, U.S. Small Business Presidential declaration of a major Overseas Security Advisory Council
Administration, 409 3rd Street SW, disaster for Public Assistance Only for (OSAC) Meeting Notice
Suite 6050, Washington, DC 20416, the State of Hawaii (FEMA–4365–DR),
dated 05/08/2018. Closed Meeting
(202) 205–6734.
Incident: Severe Storms, Flooding, The Department of State announces a
19 17 CFR 200.30–3(a)(34). Landslides, and Mudslides. meeting of the U.S. State Department
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Document Created: 2018-11-02 09:13:22
Document Modified: 2018-11-02 09:13:22
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Notices | |
| FR Citation | 83 FR 22732 |
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