83 FR 52243 - Program for Allocation of Regulatory Responsibilities Pursuant to Rule 17d-2; Notice of Filing and Order Approving and Declaring Effective an Amendment to the Plan for the Allocation of Regulatory Responsibilities Among Cboe BZX Exchange, Inc., Cboe BYX Exchange, Inc., Chicago Stock Exchange, Inc., Cboe EDGA Exchange, Inc., Cboe EDGX Exchange, Inc., Financial Industry Regulatory Authority, Inc., Nasdaq BX, Inc., Nasdaq PHLX LLC, The Nasdaq Stock Market LLC, NYSE National, Inc., New York Stock Exchange LLC, NYSE American LLC, NYSE Arca, Inc., and Investors Exchange LLC Relating to the Surveillance, Investigation, and Enforcement of Insider Trading Rules
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 83, Issue 200 (October 16, 2018)
Federal Register Volume 83, Issue 200 (October 16, 2018)
| Page Range | 52243-52253 | |
| FR Document | 2018-22412 |
[Federal Register Volume 83, Number 200 (Tuesday, October 16, 2018)] [Notices] [Pages 52243-52253] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2018-22412] ======================================================================= ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-84392; File No. 4-566] Program for Allocation of Regulatory Responsibilities Pursuant to Rule 17d-2; Notice of Filing and Order Approving and Declaring Effective an Amendment to the Plan for the Allocation of Regulatory Responsibilities Among Cboe BZX Exchange, Inc., Cboe BYX Exchange, Inc., Chicago Stock Exchange, Inc., Cboe EDGA Exchange, Inc., Cboe EDGX Exchange, Inc., Financial Industry Regulatory Authority, Inc., Nasdaq BX, Inc., Nasdaq PHLX LLC, The Nasdaq Stock Market LLC, NYSE National, Inc., New York Stock Exchange LLC, NYSE American LLC, NYSE Arca, Inc., and Investors Exchange LLC Relating to the Surveillance, Investigation, and Enforcement of Insider Trading Rules October 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 September 21, 2018, pursuant to Rule 17d-2 of the Act,\2\ by Cboe BZX Exchange, Inc. (``BZX''), Cboe BYX Exchange, Inc. (``BYX''), Chicago Stock Exchange, Inc. (``CHX''), Cboe EDGA Exchange, Inc. (``EDGA''), Cboe EDGX Exchange, Inc. (``EDGX''), Financial Industry Regulatory Authority, Inc. (``FINRA''), Nasdaq BX, Inc. (``BX''), Nasdaq PHLX LLC (``PHLX''), The Nasdaq Stock Market LLC (``Nasdaq''), NYSE National, Inc. (``National''), New York Stock Exchange LLC (``NYSE''), NYSE American LLC (``American''), NYSE Arca, Inc. (``NYSE Arca''), and Investors Exchange LLC (``IEX'') (collectively, ``Participating Organizations'' or ``Parties''). --------------------------------------------------------------------------- \1\ 15 U.S.C. 78q(d). \2\ 17 CFR 240.17d-2. --------------------------------------------------------------------------- I. Introduction Section 19(g)(1) of the Act,\3\ among other things, requires every self-regulatory organization (``SRO'') registered as either a national securities exchange or national securities association to examine for, and enforce compliance by, its members and persons associated with its members with the Act, the rules and regulations thereunder, and the SRO's own rules, unless the SRO is relieved of this responsibility pursuant to Section 17(d) \4\ or Section 19(g)(2) \5\ of the Act. Without this relief, the statutory obligation of each individual SRO could result in a pattern of multiple examinations of broker-dealers that maintain memberships in more than one SRO (``common members''). Such regulatory duplication would add unnecessary expenses for common members and their SROs. --------------------------------------------------------------------------- \3\ 15 U.S.C. 78s(g)(1). \4\ 15 U.S.C. 78q(d). \5\ 15 U.S.C. 78s(g)(2). --------------------------------------------------------------------------- Section 17(d)(1) of the Act \6\ was intended, in part, to eliminate unnecessary multiple examinations and regulatory duplication.\7\ With respect to a common member, Section 17(d)(1) authorizes the Commission, by rule or order, to relieve an SRO of the responsibility to receive regulatory reports, to examine for and enforce compliance with applicable statutes, rules, and regulations, or to perform other specified regulatory functions. --------------------------------------------------------------------------- \6\ 15 U.S.C. 78q(d)(1). \7\ See Securities Act Amendments of 1975, Report of the Senate Committee on Banking, Housing, and Urban Affairs to Accompany S. 249, S. Rep. No. 94-75, 94th Cong., 1st Session 32 (1975). --------------------------------------------------------------------------- To implement Section 17(d)(1), the Commission adopted two rules: Rule 17d-1 and Rule 17d-2 under the Act.\8\ Rule 17d-1 authorizes the Commission to name a single SRO as the designated examining authority (``DEA'') to examine common members for compliance with the financial responsibility requirements imposed by the Act, or by Commission or SRO rules.\9\ When an SRO has been named as a common member's DEA, all other SROs to which the common member belongs are relieved of the responsibility to examine the firm for compliance with the applicable financial responsibility rules. On its face, Rule 17d-1 deals only with an SRO's obligations to enforce member compliance with financial responsibility requirements. Rule 17d-1 does not relieve an SRO from its obligation to examine a common member for compliance with its own rules and provisions of the federal securities laws governing matters other than financial responsibility, including 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 [[Page 52244]] regulatory responsibilities with respect to their common members. Under paragraph (c) of Rule 17d-2, the Commission may declare such a plan effective if, after providing for notice and comment, it determines that the plan is necessary or appropriate in the public interest and for the protection of investors, to foster cooperation and coordination among the SROs, to remove impediments to, and foster the development of, a national market system and a national clearance and settlement system, and is in conformity with the factors set forth in Section 17(d) of the Act. Commission approval of a plan filed pursuant to Rule 17d-2 relieves an SRO of those regulatory responsibilities allocated by the plan to another SRO. --------------------------------------------------------------------------- \10\ See Securities Exchange Act Release No. 12935 (October 28, 1976), 41 FR 49091 (November 8, 1976). --------------------------------------------------------------------------- II. The Plan On September 12, 2008, the Commission declared effective the Participating Organizations' Plan for allocating regulatory responsibilities pursuant to Rule 17d-2.\11\ The Plan is designed to eliminate regulatory duplication by allocating regulatory responsibility over Common FINRA Members \12\ (collectively ``Common Members'') for the surveillance, investigation, and enforcement of common insider trading rules (``Common Rules'').\13\ The Plan assigns regulatory responsibility over Common FINRA Members to FINRA for surveillance, investigation, and enforcement of insider trading by broker-dealers, and their associated persons, with respect to Listed Stocks (as defined in the Plan), irrespective of the marketplace(s) maintained by the Participating Organizations on which the relevant trading may occur. --------------------------------------------------------------------------- \11\ See Securities Exchange Act Release No. 58536 (September 12, 2008), 73 FR 54646 (September 22, 2008). See also Securities Exchange Act Release Nos. 58806 (October 17, 2008), 73 FR 63216 (October 23, 2008); 61919 (April 15, 2010), 75 FR 21051 (April 22, 2010); 63103 (October 14, 2010), 75 FR 64755 (October 20, 2010); 63750 (January 21, 2011), 76 FR 4948 (January 27, 2011); 65991 (December 16, 2011), 76 FR 79714 (December 22, 2011); and 78473 (August 3, 2016), 81 FR 52722 (August 9, 2016). \12\ Common FINRA Members include members of FINRA and at least one of the Participating Organizations. \13\ Common rules are defined as: (i) Federal securities laws and rules promulgated by the Commission pertaining to insider trading, and (ii) the rules of the Participating Organizations that are related to insider trading. See Exhibit A to the Plan. --------------------------------------------------------------------------- III. Proposed Amendment to the Plan On September 21, 2018, the Parties submitted a proposed amendment to the Plan. The proposed amendment was submitted to: (i) reflect name changes of certain Participating Organizations; (ii) update the SRO rules that are covered by the Agreement; and (iii) provide that, for purposes of determining a Participant's Percentage of Publicly Reported Trades in the calculation of quarterly fees, total trades will be adjusted to separate out bunched or bundled trades by a Participating Organization.\14\ In addition, the Participating Organizations entered into a regulatory services agreement that addresses investigation and enforcement in situations involving Insider Trading by non-Common FINRA Members. The text of the proposed amended 17d-2 plan is as follows (additions are italicized; deletions are [bracketed]): --------------------------------------------------------------------------- \14\ The Commission notes that trades during a single-priced opening, reopening or closing auction will not be adjusted. See Exhibit B, Section 1(b) of the Plan. --------------------------------------------------------------------------- * * * * * Agreement for the Allocation of Regulatory Responsibility of Surveillance, Investigation and Enforcement for Insider Trading Pursuant to Sec. 17(d) of the Securities Exchange Act of 1934, 15 U.S.C. Sec. 78q (d), and Rule 17d-2 Thereunder This agreement (the ``Agreement'') by and among [Bats]Cboe BZX Exchange, Inc. (``BZX''), [Bats]Cboe BYX Exchange, Inc. (``BYX''), Chicago Stock Exchange, Inc. (``CHX''), [Bats]Cboe EDGA Exchange, Inc. (``EDGA''), [Bats]Cboe EDGX Exchange, Inc. (``EDGX''), Financial Industry Regulatory Authority, Inc. (``FINRA''), [NASDAQ]Nasdaq BX, Inc. (``[NASDAQ] BX''), [NASDAQ]Nasdaq PHLX LLC (``[NASDAQ]PHLX''), The [NASDAQ]Nasdaq Stock Market LLC (``[NASDAQ]Nasdaq''), NYSE National [Stock Exchange], Inc. (``[NSX]NYSE National''), New York Stock Exchange LLC (``NYSE''), NYSE [MKT]American LLC (``NYSE [MKT]American''), NYSE Arca, Inc. (``NYSE Arca'') and Investors' Exchange LLC (``IEX'') (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''), 15 U.S.C. 78q(d), and Securities and Exchange Commission (``SEC'') Rule 17d-2, which allow for plans to allocate regulatory responsibility among self-regulatory organizations (``SROs''). Upon approval by the SEC, this Agreement shall amend and restate the agreement among the Participating Organizations approved by the SEC on [December 16, 2011] August 3, 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 regulatory surveillance, investigation and enforcement of insider trading; Whereas, the Participating Organizations are interested in allocating to FINRA regulatory responsibility for Common FINRA Members (as defined below) for surveillance, investigation and enforcement of Insider Trading (as defined below) in NMS Stocks (as defined below) irrespective of the marketplace(s) maintained by the Participating Organizations on which the relevant trading may occur in violation of Common Insider Trading Rules (as defined below); Whereas, the Participating Organizations will request regulatory allocation of these regulatory responsibilities by executing and filing with the SEC a plan for the above stated purposes (this Agreement, also known herein as the ``Plan'') pursuant to the provisions of Sec. 17(d) of the Act, and SEC Rule 17d-2 thereunder, as described below; and Whereas, the Participating Organizations will also enter into a Regulatory Services Agreement (the ``Insider Trading RSA''), of even date herewith, to provide for the investigation and enforcement of suspected Insider Trading against broker-dealers, and their associated persons, that are not Common FINRA Members in the case of Insider Trading in NMS Stocks. 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. Definitions. Unless otherwise defined in this Agreement, or the context otherwise requires, the terms used in this Agreement will have the same meaning they have under the Act, and the rules and regulations thereunder. As used in this Agreement, the following terms will have the following meanings: a. ``Rule'' of an ``exchange'' or an ``association'' shall have the meaning defined in Section 3(a)(27) of the Act. b. ``Common FINRA Members'' shall mean members of FINRA and at least one of the Participating Organizations. c. ``Common Insider Trading Rules'' shall mean (i) the federal securities laws and rules thereunder promulgated by the SEC pertaining to insider trading, and (ii) the rules of the Participating Organizations that are related to insider [[Page 52245]] trading, as provided on Exhibit A to this Agreement. d. ``Effective Date'' shall have the meaning set forth in paragraph 27. e. ``Insider Trading'' shall mean any conduct or action taken by a natural person or entity related in any way to the trading of securities by an insider or a related party based on or on the basis of material non-public information obtained during the performance of the insider's duties at the corporation, or otherwise misappropriated, that could be deemed a violation of the Common Insider Trading Rules. f. ``Intellectual Property'' will mean any: (1) processes, methodologies, procedures, or technology, whether or not patentable; (2) trademarks, copyrights, literary works or other works of authorship, service marks and trade secrets; or (3) software, systems, machine-readable texts and files and related documentation. g. ``Plan'' shall mean this Agreement, which is submitted as a Plan for the allocation of regulatory responsibilities of surveillance for insider trading pursuant to Sec. 17(d) of the Act, 15 U.S.C. 78q(d), and SEC Rule 17d-2. h. ``NMS Stock(s)'' shall have the meaning set forth in Rule 600(b)(47) of SEC Regulation NMS. i. ``Listing Market'' shall mean an exchange that lists NMS stocks. 2. Assumption of Regulatory Responsibilities. On the Effective Date of the Plan, FINRA will assume regulatory responsibilities for surveillance, investigation and enforcement of Insider Trading by broker-dealers, and their associated persons, for Common FINRA Members with respect to NMS Stocks, irrespective of the marketplace(s) maintained by the Participant Organizations on which the relevant trading may occur in violation of the Common Insider Trading Rules (``Regulatory Responsibilities''). 3. Certification of Insider Trading Rules. a. Initial Certification. By signing this Agreement, the Participating Organizations, other than FINRA, hereby certify to FINRA that their respective lists of Common Insider Trading Rules contained in Exhibit A hereto are correct, and FINRA hereby confirms that such rules are Common Insider Trading Rules as defined in this Agreement. b. Yearly Certification. Each year following the commencement of operation of this Agreement, or more frequently if required by changes in the rules of the Participating Organizations, each Participating Organization shall submit a certified and updated list of Common Insider Trading Rules to FINRA for review, which shall (i) add Participating Organization rules not included in the then-current list of Common Insider Trading Rules that qualify as Common Insider Trading Rules as defined in this Agreement; (ii) delete Participating Organization rules included in the current list of Common Insider Trading Rules that no longer qualify as Common Insider Trading Rules as defined in this Agreement; and (iii) confirm that the remaining rules on the current list of Common Insider Trading Rules continue to be Participating Organization rules that qualify as Common Insider Trading Rules as defined in this Agreement. FINRA shall review each Participating Organization's annual certification and confirm whether FINRA agrees with the submitted certified and updated list of Common Insider Trading Rules by each of the Participating Organizations. 4. 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 FINRA under the terms of this Agreement. 5. Fees. FINRA shall charge Participating Organizations for performing the Regulatory Responsibilities, as set forth in the Schedule of Fees, attached as Exhibit B. 6. 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. 7. Exchange Committee; Reports. a. Exchange Committee. The Participating Organizations shall form a committee (the ``Exchange Committee''), which shall act on behalf of all of Participating Organizations in receiving copies of the reports described below and in reviewing issues that arise under this Agreement. Each Participating Organization shall appoint a representative to the Exchange Committee. The Exchange Committee representatives shall report to their respective executive management bodies regarding status or issues under this Agreement. The Participating Organizations agree that the Exchange Committee will meet regularly up to four (4) times a year, with no more than one meeting per calendar quarter. At these meetings, the Exchange Committee will discuss the conduct of the Regulatory Responsibilities and identify issues or concerns with respect to this Agreement, including matters related to the calculation of the cost formula and accuracy of fees charged and provision of information related to the same. The SEC shall be permitted to attend the meetings as an observer. b. Reports. FINRA shall provide the reports set forth in Exhibit C hereto and any additional reports related to this Agreement reasonably requested by a majority vote of all representatives to the Exchange Committee at each Exchange Committee meeting, or more often as the Participating Organizations deem appropriate, but no more often than once every quarterly billing period. 8. Customer Complaints. If a Participating Organization receives a copy of a customer complaint relating to Insider Trading or other activity or conduct that is within FINRA's Regulatory Responsibilities as set forth in this Agreement, the Participating Organization shall promptly forward to FINRA, as applicable, a copy of such customer complaint. 9. Parties to Make Personnel Available as Witnesses. Each Participating Organization shall make its personnel available to FINRA to serve as testimonial or non-testimonial witnesses as necessary to assist FINRA in fulfilling the Regulatory Responsibilities allocated under this Agreement. FINRA 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 FINRA requires such employees to serve as witnesses, and provide information or other assistance pursuant to this Agreement. 10. Market Data; Sharing of Work-Papers, Data and Related Information. a. Market Data. FINRA shall obtain raw market data necessary to the performance of regulation under this Agreement from (a) the Consolidated Tape Association (``CTA'') and (b) the NASDAQ Unlisted Trading Privileges Plan. b. Sharing. A Participating Organization shall make available to FINRA information necessary to assist FINRA in fulfilling the Regulatory Responsibilities assumed under the terms of this Agreement. Such information shall include any information collected by a Participating Organization in the course of [[Page 52246]] 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 FINRA solely for the purposes of fulfilling its Regulatory Responsibilities. c. 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. d. Intellectual Property. (i) Existing Intellectual Property. FINRA is and will remain the owner of all right, title and interest in and to the proprietary Intellectual Property it employs in the provision of regulation hereunder (including the SONAR system), and any derivative works thereof. To the extent certain elements of FINRA's systems, or portions thereof, may be licensed or leased from third parties, all such third party elements shall remain the property of such third parties, as applicable. Likewise, any other Participating Organization is and will remain the owner of all right, title and interest in and to its own existing proprietary Intellectual Property. (ii) Enhancements to Existing Intellectual Property or New Developments. In the event FINRA (a) makes any changes, modifications or enhancements to its Intellectual Property for any reason, or (b) creates any newly developed Intellectual Property for any reason, including as a result of requested enhancements or new development by the Exchange Committee (collectively, the ``New IP''), the Participating Organizations acknowledge and agree that FINRA shall be deemed the owner of the New IP created by it (and any derivative works thereof), and shall retain all right, title and interest therein and thereto, and each other Participating Organization hereby irrevocably assigns, transfers and conveys to FINRA without further consideration all of its right, title and interest in or to all such New IP (and any derivative works thereof). (iii) Fees for New IP. FINRA will not charge the Participating Organizations any fees for any New IP created and used by FINRA; provided, however, that FINRA will be permitted to charge fees for software maintenance work performed on systems used in the discharge of its duties hereunder. 11. Special or Cause Examinations. Nothing in this Agreement shall restrict or in any way encumber the right of a party to conduct special or cause examinations of Common FINRA Members as any party, in its sole discretion, shall deem appropriate or necessary. 12. Dispute Resolution Under this Agreement. a. Negotiation. The parties to this Agreement 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 parties shall refer the dispute to binding arbitration. b. Binding Arbitration. All claims, disputes, controversies, and other matters in question between the parties to this Agreement arising out of or relating to this Agreement or the breach thereof that cannot be resolved by the parties will be resolved through binding arbitration. Unless otherwise agreed by the parties, a dispute submitted to binding arbitration pursuant to this paragraph shall be resolved using the following procedures: (i) The arbitration shall be conducted in the city of New York 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. 13. 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, (c) in instances of a breach of confidentiality obligations owed to another Participating Organization, or (d) in the case of any Participating Organization paying fees hereunder, for any payments due. 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. 14. SEC Approval. a. The parties 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 this Agreement and of its impact on their members. 15. 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. 16. Assignment. No Participating Organization may assign this Agreement without the prior written consent of all the other Participating Organizations, which consent shall not be unreasonably withheld, conditioned or delayed; provided, however, that any Participating Organization may assign this Agreement to a corporation controlling, controlled by or under common control with the Participating Organization without the prior written consent of any other party. 17. Severability. Any term or provision of this Agreement that is invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction. 18. Termination. a. Any Participating Organization may cancel its participation in this Agreement at any time, provided that it [[Page 52247]] has given 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), and provided that such termination has been approved by the SEC. The cancellation of its participation in this Agreement by any Participating Organization shall not terminate this Agreement as to the remaining Participating Organizations. b. The Regulatory Responsibilities assumed under this Agreement by FINRA may be terminated by FINRA against any Participating Organization as follows. The Participating Organization will have thirty (30) days from receipt to satisfy the invoice. If the Participating Organization fails to satisfy the invoice within thirty (30) days of receipt (``Default''), FINRA will notify the Participating Organization of the Default. The Participating Organization will have thirty (30) days from receipt of the Default notice to satisfy the invoice. c. FINRA will have the right to terminate the Regulatory Responsibilities assumed under this Agreement if a Participating Organization has Defaulted in its obligation to pay the invoice on more than three (3) occasions in any rolling twenty-four (24) month period. 19. Intermarket Surveillance Group (``ISG''). In order to participate in this Agreement, all Participating Organizations to this Agreement must be members of the ISG. 20. 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. 21. Liaison and Notices. All questions regarding the implementation of this Agreement shall be directed to the persons identified below, as applicable. All notices and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given upon (i) actual receipt by the notified party or (ii) constructive receipt (as of the date marked on the return receipt) if sent by certified or registered mail, return receipt requested, to the following addresses: For [Bats]Cboe BZX Exchange, Inc.: [Tamara Schademann]Greg Hoogasian, Chief Regulatory Officer, [Bats]Cboe BZX Exchange, Inc., [8050 Marshall Drive], [Suite 120], [Lenexa, KS 66214], [Telephone: (913) 815-7113], [Facsimile: (913) 815-7119], [Email: [email protected]], 400 S. LaSalle Street, Chicago, IL 60605, Telephone: (312) 786-7844, Facsimilie: (312) 786-7982, Email: [email protected]. For [Bats]Cboe BYX Exchange, Inc.: [Tamara Schademann]Greg Hoogasian, Chief Regulatory Officer, [Bats]Cboe BYX Exchange, Inc., [8050 Marshall Drive], [Suite 120], [Lenexa, KS 66214], [Telephone: (913) 815-7113], [Facsimile: (913) 815-7119], [Email: [email protected]], 400 S. LaSalle Street, Chicago, IL 60605, Telephone: (312) 786-7844, Facsimilie: (312) 786-7982, Email: [email protected]. For Chicago Stock Exchange, Inc.: [Peter D. Santori]Anthony Albanese, [Executive Vice President and] Chief Regulatory Officer, [Chicago Stock Exchange, Inc.]NYSE Group, Inc., [440 S. LaSalle Street]11 Wall Street, [Chicago, IL 60605]New York, NY 10005, Telephone: [(312) 663-2402](212) 656-8297, Facsimile:[(312) 663- 2231](212) 656-2027, Email: [[email protected]][email protected]. For [Bats]Cboe EDGA Exchange, Inc.: [Tamara Schademann]Greg Hoogasian, Chief Regulatory Officer, [Bats]Cboe EDGA Exchange, Inc., [8050 Marshall Drive], [Suite 120], [Lenexa, KS 66214], [Telephone: (913) 815-7113], [Facsimile: (913) 815-7119], [Email: [email protected]], 400 S. LaSalle Street, Chicago, IL 60605, Telephone: (312) 786-7844, Facsimilie: (312) 786-7982, Email: [email protected]. For [Bats]Cboe EDGX Exchange, Inc.: [Tamara Schademann]Greg Hoogasian, Chief Regulatory Officer, [Bats]Cboe EDGX Exchange, Inc., [8050 Marshall Drive], [Suite 120], [Lenexa, KS 66214], [Telephone: (913) 815-7113], [Facsimile: (913) 815-7119], [Email: [email protected]], 400 S. LaSalle Street, Chicago, IL 60605, Telephone: (312) 786-7844, Facsimilie: (312) 786-7982, Email: [email protected]. For Financial Industry Regulatory Authority, Inc.: Cameron Funkhouser, Executive Vice President, [Market Regulation]Office of Fraud Detection and Market Intelligence, FINRA, 1735 K Street NW, Washington, DC 20006, Telephone: (240) 386-5021, Facsimile: (301) 407- 4635, Email:[email protected]. For [NASDAQ]Nasdaq BX, Inc.: John A. Zecca, Senior Vice President, The [NASDAQ]Nasdaq Stock Market LLC, 9600 Blackwell Road, Rockville, MD 20850, Telephone: (301) 978-8498, Facsimile: (301) 978-8472, Email: [email protected]. For [NASDAQ]Nasdaq PHLX LLC: Joseph Cusick, Chief Regulatory Officer, [NASDAQ]Nasdaq PHLX LLC, 1900 Market Street, Philadelphia, PA 19103, Telephone: (215) 496-1576, Facsimile: (215) 496-5104, Email:[email protected]. For The [NASDAQ]Nasdaq Stock Market LLC: John A. Zecca, Senior Vice President, The [NASDAQ]Nasdaq Stock Market LLC, 9600 Blackwell Road, Rockville, MD 20850, Telephone: (301) 978-8498, Facsimile: (301) 978- 8472, Email: [email protected]. For NYSE National [Stock Exchange], Inc.: [James G. Buckley] Anthony Albanese, Chief Regulatory Officer, NYSE National [Stock Exchange], Inc., [101 Hudson Street, Suite 1200], [Jersey City, NJ 07302], [Telephone: (201) 499-3698], [Facsimile: (201) 499-0727], [Email: [email protected]], 11 Wall Street, New York, NY 10005, Telephone: (212) 656-8927, Facsimile: (212) 656-2027, Email: [email protected]. For New York Stock Exchange LLC: Anthony Albanese, Chief Regulatory Officer, NYSE, 11 Wall Street, New York, NY 10005, Telephone: (212) 656-8927, Facsimile: (212) 656-[2223]2027, Email: [email protected]. For NYSE [MKT]American LLC: Anthony Albanese Chief Regulatory Officer, NYSE [MKT]American, 11 Wall Street, New York, NY 10005, Telephone: (212) 656-8927, Facsimile: (212) 656-[2223]2027, Email: [email protected]. For NYSE Arca, Inc.: Anthony Albanese, Chief Regulatory Officer, NYSE Arca, 11 Wall Street, New York, NY 10005, Telephone: (212) 656- 8927, Facsimile: (212) 656-[2223]2027, Email: [email protected]. For Investors' Exchange LLC.: Claudia Crowley, Chief Regulatory Officer, IEX, 4 World Trade Center, 150 Greenwich Street, 44th Floor, New York, NY 10007, Telephone: (646) 343-2041, Facsimile: (646) 365- 6862, Email: [email protected]. 22. Confidentiality. The parties agree that documents or information shared shall be held in confidence, and used only for the purposes of carrying out their respective regulatory obligations under this Agreement. No party 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, as defined by paragraph 10, above. 23. Regulatory Responsibility. Pursuant to Section 17(d)(1)(A) of the Act, and Rule 17d-2 thereunder, the Participating Organizations jointly and severally request the SEC, upon its approval of this Agreement, to relieve the Participating Organizations, jointly and severally, of any and all responsibilities with respect to the matters allocated to FINRA pursuant to [[Page 52248]] this Agreement for purposes of Sec. Sec. 17(d) and 19(g) of the Act. 24. 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 parties 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. 25. Survival of Provisions. Provisions intended by their terms or context to survive and continue notwithstanding delivery of the regulatory services by FINRA, the payment of the Fees by the Participating Organizations, and any expiration of this Agreement shall survive and continue. 26. Amendment. a. This Agreement may be amended to add a new Participating Organization, provided that such Participating Organization does not assume regulatory responsibility, solely by an amendment executed by FINRA and such new Participating Organization. All other Participating Organizations expressly consent to allow FINRA to add new Participating Organizations to this Agreement as provided above. FINRA 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, must be filed with and approved by the SEC before they become effective. 27. 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 SEC Rule 17d-2 thereunder. 28. 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 between the parties. In Witness Whereof, the parties hereto have each caused this Agreement for the Allocation of Regulatory Responsibility of Surveillance, Investigation and Enforcement for Insider Trading to be signed and delivered by its duly authorized representative. * * * * * Exhibit A: Common Insider Trading Rules 1. Securities Exchange Act of 1934 Section 10(b), and rules and regulations promulgated there under in connection with insider trading, including SEC Rule 10b-5 (as it pertains to insider trading), which states that: Rule 10b-5--Employment of Manipulative and Deceptive Devices It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce, or of the mails or of any facility of any national securities exchange, a. To employ any device, scheme, or artifice to defraud, b. To make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, or c. To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person, in connection with the purchase or sale of any security. 2. Securities Exchange Act of 1934 Section 17(a), and rules and regulations promulgated there under in connection with insider trading, including SEC Rule 17a-3 (as it pertains to insider trading). 3. The following SRO Rules as they pertain to violations of insider trading: FINRA Rule 2010 (Standards of Commercial Honor and Principles of Trade) FINRA Rule 2020 (Use of Manipulative, Deceptive or Other Fraudulent Devices) FINRA Rule 3110 (Supervision) FINRA Rule 4511 (General Requirements) FINRA Rule 4512 (Customer Account Information) NYSE Rule 440 (Books and Records) NYSE Rule 476(a) (Disciplinary Proceedings Involving Charges Against Members, Member Organizations, Principal Executives, Approved Persons, Employees, or Others) NYSE Rule 2010 (Standards of Commercial Honor and Principles of Trade) NYSE Rule 2020 (Use of Manipulative, Deceptive or Other Fraudulent Devices) NYSE Rule 3110 (Supervision) NYSE [MKT]American General and Floor Rule 3(j) (General Prohibitions and Duty to Report) NYSE [MKT]American [Equities] Rule [440]2.24-E (ETP Books and Records) NYSE [MKT]American [Equities] Rule 476(a) (Disciplinary Proceedings Involving Charges Against Members, Member Organizations, Principal Executives, Approved Persons, Employees, or Others) NYSE [MKT]American [Equities] Rule 2010 (Equities. Standards of Commercial Honor and Principles of Trade) NYSE [MKT]American [Equities] Rule 2020 (Equities. Use of Manipulative, Deceptive or Other Fraudulent Devices) NYSE [MKT]American [Equities] Rule 3110 (Equities. Supervision) [NASDAQ]Nasdaq Rule [2110]2010A (Standards of Commercial Honor and Principles of Trade) [NASDAQ]Nasdaq Rule 2120 (Use of Manipulative, Deceptive or Other Fraudulent Devices) [NASDAQ]Nasdaq Rule 3010 (Supervision) [NASDAQ]Nasdaq Rule 4511A (General Requirements [NASDAQ]Nasdaq Rule 4512A (Customer Account Information) CHX Article 8, Rule 3 (Fraudulent Acts) CHX Article 9, Rule 2 (Just & Equitable Trade Principles) CHX Article 11, Rule 2 (Maintenance of Books and Records) CHX Article 6, Rule 5 (Supervision of Registered Persons and Branch and Resident Offices) [NASDAQ] PHLX Rule 707 (Conduct Inconsistent with Just and Equitable Principles of Trade) [NASDAQ] PHLX Rule 748 (Supervision) [NASDAQ] PHLX Rule 760 (Maintenance, Retention and Furnishing of Books, Records and Other Information) [NASDAQ] PHLX Rule 761 (Supervisory Procedures Relating to ITSFEA and to Prevention of Misuse or Material Nonpublic Information) [NASDAQ] PHLX Rule 782 (Manipulative Operations) NYSE Arca [Equities] Rule [2.24]2.28 ([ETP] Books and Records) NYSE Arca [Equities] Rule 5.1-E(a)(2)(v)(D) (General Provisions and Unlisted Trading Privileges) NYSE Arca Rule 11.1 (Adherence to Law NYSE Arca Rule 11.2(b) (Prohibited Acts (J&E)) NYSE Arca [Equities] Rule [6.3]11.3 (Prevention of the Misuse of Material, Nonpublic Information) [NYSE Arca Equities Rule 6.2(b) (Prohibited Acts (J&E))] [NYSE Arca Equities Rule 6.1 (Adherence to Law)] NYSE Arca [Equities] Rule [6.18]11.18 (Supervision) NYSE Arca [Equities] Rule 9.1-E(c) (Office Supervision) [[Page 52249]] NYSE Arca [Equities] Rule 9.2-E(b) (Account Supervision) NYSE Arca [Equities] Rule 9.2-E(c) (Customer Records) NYSE Arca [Equities] Rule 9.2010-E (Standards of Commercial Honor and Principles of Trade) NYSE Arca [Equities] Rule 9.2020-E (Use of Manipulative, Deceptive or Other Fraudulent Devices) NYSE National Rule 5.1(a)(2)(D)(iv) (Unlisted Trading Privileges) [NSX]NYSE National Rule 11.3.1 (Business Conduct of ETP Holders) [NSX]NYSE National Rule 11.3.2 (Violations Prohibited) [NSX]NYSE National Rule 11.3.3 (Use of Fraudulent Devices) [NSX]NYSE National Rule 11.4.1 (Requirements) [NSX]NYSE National Rule 11.5.1 (Written Procedures) [NSX]NYSE National Rule 11.5.3 (Records) [NSX]NYSE National Rule 11.5.5 ([Chinese Wall Procedures]Prevention of the Misuse of Material, Nonpublic Information) [NSX]NYSE National Rule 11.12.4 (Manipulative Transactions) [NASDAQ] BX Rule 2110 (Standards of Commercial Honor and Principles of Trade) [NASDAQ] BX Rule 2120 (Use of Manipulative, Deceptive or Other Fraudulent Devices) [NASDAQ] BX Rule 3010 (Supervision) [NASDAQ] BX Rule 3110 (a) and (c) (Books and Records; Financial Condition) BZX Rule 3.1 (Business Conduct of Members) BZX Rule 3.2 (Violations Prohibited) BZX Rule 3.3 (Use of Fraudulent Devices) BZX Rule 4.1 (Requirements) BZX Rule 5.1 (Written Procedures) BZX Rule 5.3 (Records) BZX Rule 5.5 (Prevention of the Misuse of Material, Non-Public Information) BZX Rule 12.4 (Manipulative Transactions) BYX Rule 3.1 (Business Conduct of ETP Holders) BYX Rule 3.2 (Violations Prohibited) BYX Rule 3.3 (Use of Fraudulent Devices) BYX Rule 4.1 (Requirements) BYX Rule 5.1 (Written Procedures) BYX Rule 5.3 (Records) BYX Rule 5.5 (Prevention of the Misuse of Material, Non-Public Information) BYX Rule 12.4 (Manipulative Transactions) EDGA Rule 3.1 (Business Conduct of Members) EDGA Rule 3.2 (Violations Prohibited) EDGA Rule 3.3 (Use of Fraudulent Devices) EDGA Rule 4.1 (Requirements) EDGA Rule 5.1 (Written Procedures) EDGA Rule 5.3 (Records) EDGA Rule 5.5 (Prevention of Misuse of Material, Nonpublic Information) EDGA Rule 12.4 (Manipulative Transactions) EDGX Rule 3.1 (Business Conduct of Members) EDGX Rule 3.2 (Violations Prohibited) EDGX Rule 3.3 (Use of Fraudulent Devices) EDGX Rule 4.1 (Requirements) EDGX Rule 5.1 (Written Procedures) EDGX Rule 5.3 (Records) EDGX Rule 5.5 (Prevention of Misuse of Material, Nonpublic Information) EDGX Rule 12.4 (Manipulative Transactions) IEX Rule 3.110 (Business Conduct of Members) IEX Rule 3.120 (Violations Prohibited) IEX Rule 3.130 (Use of Fraudulent Devices) IEX Rule 4.511 (General Requirements) IEX Rule 4.512 (Customer Account Information) IEX Rule 5.110 (Supervision) IEX Rule 5.150 (Prevention of Misuse of Material, Non-Public Information) IEX Rule 10.140 (Manipulative Transactions) Exhibit B: Fee Schedule 1. Fees. FINRA shall charge each Participating Organization a Quarterly Fee in arrears for the performance of FINRA's Regulatory Responsibilities under the Plan (each, a ``Quarterly Fee,'' and together, the ``Fees''). a. Quarterly Fees. (1) Quarterly Fees for each Participating Organization will be charged by FINRA according to the Participating Organization's ``Percentage of Publicly Reported Trades'' occurring over three-month billing periods. The ``Percentage of Publicly Reported Trades'' shall equal a Participating Organization's total number of reported NMS Stock trades during the relevant period as specified in paragraph 1b. (the ``Numerator''), divided by the total number of all NMS Stock trades for the same period as specified in paragraph 1b.(the ``Denominator''). For purposes of clarification, ADF and Trade Reporting Facility (``TRF'') activity will be included in the Denominator. Additionally, with regard to TRFs, TRF trade volume will be charged to FINRA. Consequently, for purposes of calculating the Quarterly Fees, the volume for each Participant Organization's TRF will be calculated separately (that is, TRF volume will be broken out from the Participating Organization's overall Percentage of Publicly Reported Trades) and the fees for such will be billed to FINRA in accordance with paragraph 1a.(2), rather than to the applicable Participating Organization. (2) The Quarterly Fees shall be determined by FINRA in the following manner for each Participating Organization: (a) Less than 1.0%: If the Participating Organization's Percentage of Publicly Reported Trades for the relevant three-month billing period is less than 1.0%, the Quarterly Fee shall be $6,250, per quarter (``Static Fee''); (b) Less than 2.0% but No Less than 1.0%: If the Participating Organization's Percentage of Publicly Reported Trades for the relevant three-month billing period is less than 2.0% but no less than 1.0%, the Quarterly Fee shall be $18,750, per quarter (``Static Fee''); (c) 2.0% or Greater: If the Participating Organization's Percentage of Publicly Reported Trades for the relevant three-month billing period is 2.0% or greater, the Quarterly Fee shall be the amount equal to the Participating Organization's Percentage of Publicly Reported Trades multiplied by FINRA's total charge (``Total Charge'') for its performance of Regulatory Responsibilities for the relevant three-month billing period. (3) Increases in Static Fees. FINRA will re-evaluate the Quarterly Fees on an annual basis during the annual budget process outlined in paragraph 1.c. below. During each annual re-evaluation, FINRA will have the discretion to increase the Static Fees by a percentage no greater than the percentage increase in the Final Budget over the preceding year's Final Budget. Any changes to the Static Fees shall not require an amendment to this Agreement, but rather shall be memorialized through the budget process. (4) Increases in Total Charges. Any change in the Total Charges (whether a Final Budget increase or any mid year change) shall not require an amendment to this Agreement, but rather shall be memorialized through the budget process. b. Source of Data. For purposes of calculation of the Percentage of Publicly Reported Trades for each Participating Organization, FINRA [shall]will use trades reported to the two SIPs (a) the Consolidated Tape Association (``CTA''), and (b) the Unlisted Trading Privileges Plan. In each case, FINRA will use the total trades as may be adjusted by the Participating Organization. Adjustments will include any separation or breakup of the number of trades as a result of reporting of bunched or bundled trades by a [[Page 52250]] Participating Organization but will not include any adjustments resulting from single-priced opening, reopening or closing auction trades. Each Participating Organization that reports bunched or bundled trades will report to FINRA any adjustments to its total number of NMS Stock trades on the 15th of the month following the end of the quarter. c. Annual Budget Forecast. FINRA will notify the Participating Organizations of the forecasted costs of its insider trading program for the following calendar year by close of business on October 15 of the then-current year (the ``Forecasted Budget''). FINRA shall use best efforts to provide as accurate a forecast as possible. FINRA shall then provide a final submission of the costs following approval of such costs by its Board of Governors (the ``Final Budget''). Subject to paragraph 1d. below, in the event of a difference between the Forecasted Budget and the Final Budget, the Final Budget will govern. d. Increases in Fees over Five Percent. (1) In the event that any proposed increase to Fees by FINRA for a given calendar year (which increase may arise either during the annual budgetary forecasting process or through any mid-year increase) will result in a cumulative increase in such calendar year's Fees of more than five percent (5%) above the preceding calendar year's Final Budget (a ``Major Increase''), then senior management of any Participating Organization (a) that is a Listing Market or (b) for which the Percentage of Publicly Reported Trades is then currently twenty percent (20%) or greater, shall have the right to call a meeting with the senior management of FINRA in order to discuss any disagreement over such proposed Major Increase. By way of example, if FINRA provides a Final Budget for 2011 that represents an 4% increase above the Final Budget for 2010, the terms of this paragraph 1.d.(1) shall not apply; if, however, in April of 2011, FINRA notifies the Exchange Committee of an increase in Fees that represents an additional 3% increase above the Final Budget for 2010, then the increase shall be deemed a Major Increase, and the terms of this paragraph 1.d.(1) shall become applicable (i.e., 4% and 3% represents a cumulative increase of 7% above the 2010 Final Budget). (2) In the event that senior management members of the involved parties are unable to reach an agreement regarding the proposed Major Increase, then the matter shall be referred back to the Exchange Committee for final resolution. Prior to the matter being referred back to the Exchange Committee, nothing shall prohibit the parties from conferring with the SEC. Resolution shall be reached through a vote of no fewer than all Participating Organizations seated on the Exchange Committee, and a simple majority shall be required in order to reject the proposed Major Increase. e. Time Tracking. FINRA shall track the time spent by staff on insider trading responsibilities under this Agreement; however, time tracking will not be used to allocate costs. 2. Invoicing and Payment. FINRA shall invoice each Participating Organization for the Quarterly Fee associated with the regulatory activities performed pursuant to this Agreement during the previous three-month billing period within forty five (45) days of the end of such previous 3-month billing period. A Participating Organization shall have thirty (30) days from date of invoice to make payment to FINRA on such invoice. The invoice will reflect the Participating Organization's Percentage of Publicly Reported Trades for that billing period. 3. Disputed Invoices; Interest. In the event that a Participating Organization disputes an invoice or a portion of an invoice, the Participating Organization shall notify FINRA in writing of the disputed item(s) within fifteen (15) days of receipt of the invoice. In its notification to FINRA of the disputed invoice, the Participating Organization shall identify the disputed item(s) and provide a brief explanation of why the Participating Organization disputes the charges. FINRA may charge a Participating Organization interest on any undisputed invoice or the undisputed portions of a disputed invoice that a Participating Organization fails to pay within thirty (30) days of its receipt of such invoice. Such interest shall be assessed monthly. Interest will mean one and one half percent per month, or the maximum allowable under applicable law, whichever is less. 4. Taxes. In the event any governmental authority deems the regulatory activities allocated to FINRA to be taxable activities similar to the provision of services in a commercial context, the other Participating Organizations agree that they shall bear full responsibility, on a joint and several basis, for the payment of any such taxes levied on FINRA, or, if such taxes are paid by FINRA directly to the governmental authority, the other Participating Organizations agree that they shall reimburse FINRA for the amount of any such taxes paid. 5. Audit Right; Record Keeping. a. Audit Right. (i) Once every rolling twelve (12) month period, FINRA shall permit no more than one audit (to be performed by one or more Participating Organizations) of the Fees charged by FINRA to the Participating Organizations hereunder and a detailed cost analysis supporting such Fees (the ``Audit''). The Participating Organization or Organizations that conduct this Audit will select a nationally-recognized independent auditing firm (or may use its regular independent auditor, providing it is a nationally-recognized auditing firm) (``Auditing Firm'') to act on its, or their behalf, and will provide reasonable notice to other Participating Organizations of the Audit. FINRA will permit the Auditing Firm reasonable access during FINRA's normal business hours, with reasonable advance notice, to such financial records and supporting documentation as are necessary to permit review of the accuracy of the calculation of the Fees charged to the Participating Organizations. The Participating Organization, or Organizations, as applicable, other than FINRA, shall be responsible for the costs of performing any such audit. (ii) If, through an Audit, the Exchange Committee determines that FINRA has inaccurately calculated the Fees for any Participating Organization, the Exchange Committee will promptly notify FINRA in writing of the amount of such difference in the Fees, and, if applicable, FINRA shall issue a reimbursement of the overage amount to the relevant Participating Organization(s), less any amount owed by the Participating Organization under any outstanding, undisputed invoice(s). If such an Audit reveals that any Participating Organization paid less than what was required pursuant to the Agreement, then that Participating Organization shall promptly pay FINRA the difference between what the Participating Organization owed pursuant to the Agreement and what that Participating Organization originally paid FINRA. If FINRA disputes the results of an Audit regarding the accuracy of the Fees, it will submit the dispute for resolution pursuant to the dispute resolution procedures in paragraph 12 of the Agreement. (iii) In the event that through the review of any supporting documentation provided during the Audit, any one or more Participating Organizations desire to discuss with FINRA the supporting documentation and any questions arising therefrom with regard to the manner in which regulation was conducted, the Participating Organization(s) shall call a [[Page 52251]] meeting with FINRA. FINRA shall in turn notify the Exchange Committee of this meeting in advance, and all Participating Organizations shall be welcome to attend (the ``Fee Analysis Meeting''). The parties to this Agreement acknowledge and agree that while FINRA commits to discuss the supporting documentation at the Fee Analysis Meeting, FINRA shall not be subject, by virtue of the above Audit rights or any discussions during the Fee Analysis Meeting or otherwise, to any limitation whatsoever, other than the Increase in Fee provisions set forth in paragraph 1.d. of this Exhibit, on its discretion as to the manner and means by which it conducts its regulatory efforts in its role as the SRO primarily liable for regulatory decisions under this Agreement. To that end, no disagreement among the Participating Organizations as to the manner or means by which FINRA conducts its regulatory efforts hereunder shall be subject to the dispute resolution procedures hereunder, and no Participating Organization shall have the right to compel FINRA to alter the manner or means by which it conducts its regulatory efforts. Further, a Participating Organization shall not have the right to compel a rebate or reassessment of fees for services rendered, on the basis that the Participating Organization would have conducted regulatory efforts in a different manner than FINRA in its professional judgment chose to conduct its regulatory efforts. b. Record Keeping. In anticipation of any audit that may be performed by the Exchange Committee under paragraph 5.a. above, FINRA shall keep accurate financial records and documentation relating to the Fees charged by it under this Agreement. Exhibit C: Reports FINRA shall provide the following information in reports to the Exchange Committee, which information covers activity occurring under this Agreement: 1. Alert Summary Statistics: Total number of surveillance system alerts generated by quarter along with associated number of reviews and investigations. In addition, this paragraph shall also reflect the number of reviews and investigations originated from a source other than an alert. A separate table would be presented for the trading activity of the NMS Stocks listed on each Participating Organization's exchange. ---------------------------------------------------------------------------------------------------------------- Surveillance 2008 alerts Investigations ---------------------------------------------------------------------------------------------------------------- 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter ------------------------------- 2008 Total ---------------------------------------------------------------------------------------------------------------- 2. Aging of Open Matters: Would reflect the aging for all currently open matters for the quarterly period being reported. A separate table would be presented for the trading activity of the NMS Stocks listed on each Participating Organization's exchange. Example: ---------------------------------------------------------------------------------------------------------------- Surveillance alerts Investigations ---------------------------------------------------------------------------------------------------------------- 0-6 months 6-9 months 9-12 months 12+ months ------------------------------- Total ---------------------------------------------------------------------------------------------------------------- 3. Timeliness of Completed Matters: Would reflect the total age of those matters that were completed or closed during the quarterly period being reported. FINRA will provide total referrals to the SEC. Example: ---------------------------------------------------------------------------------------------------------------- Surveillance alerts Investigations ---------------------------------------------------------------------------------------------------------------- 0-6 months 6-9 months 9-12 months 12+ months ------------------------------- Total ---------------------------------------------------------------------------------------------------------------- 4. Disposition of Closed Matters: Would reflect the disposition of those matters that were completed or closed during the quarterly period being reported. A separate table would be presented for the trading activity of the NMS Stocks listed on each Participating Organization's exchange. Example: [[Page 52252]] ---------------------------------------------------------------------------------------------------------------- Surveillance Investigations YTD YTD ---------------------------------------------------------------------------------------------------------------- No Further Review Letter of Caution/Admonition Fine Referred to Legal/Enforcement Referred to SEC/SRO Merged ------------------------------- Other Total ---------------------------------------------------------------------------------------------------------------- 5. Pending Reviews. In addition to the above reports, the Chief Regulatory Officer (CRO) (or his or her designee) of any Participating Organization that is also a Listing Market may inquire about pending reviews involving stocks listed on that Participating Organization's market. FINRA will respond to such inquiries from a CRO; provided, however, that (a) the CRO must hold any information provided by FINRA in confidence and (b) FINRA will not be compelled to provide information in contradiction of any mandate, directive or order from the SEC, US Attorney's Office, the Office of any State Attorney General or court of competent jurisdiction. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing. Comments may be submitted by any of the following methods: Electronic CommentsUse the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or Send an email to [email protected]. Please include File Number 4-566 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 4-566. 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 the Participating Organizations. 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 4-566 and should be submitted on or before November 6, 2018. V. Discussion The Commission finds that the Plan, as proposed to be amended, is consistent with the factors set forth in Section 17(d) of the Act \15\ and Rule 17d-2 thereunder \16\ in that it 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. The Commission continues to believe that the Plan, as amended, should reduce unnecessary regulatory duplication by allocating regulatory responsibility for the surveillance, investigation, and enforcement of Common Rules to FINRA. Accordingly, the proposed amendment to the Plan promotes efficiency by consolidating these regulatory functions in a single SRO. --------------------------------------------------------------------------- \15\ 15 U.S.C. 78q(d). \16\ 17 CFR 240.17d-2. --------------------------------------------------------------------------- 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 amendment provides for the adjustment of total trades by separating out bunched or bundled trades by a Participating Organization when determining a Participant's Percentage of Publicly Reported Trades in the calculation of quarterly fees.\17\ According to the Participants, the adjustment is designed to allocate among the Parties expenses reasonably incurred by the SRO having regulatory responsibilities under the Plan. The amendment also updates the information about certain Participating Organizations.\18\ Therefore, the Commission believes that the amended Plan should become effective without any undue delay. --------------------------------------------------------------------------- \17\ According to the Participant Organizations, trades during a single-priced opening, reopening or closing auction will not be adjusted because a majority of the Participant Organizations use bunched or bundled trades during these periods and, therefore, adjustment would have only a minimal impact on each Participant Organization's fee under the Plan. See Exhibit B, Section 1(b) of the Plan. \18\ The Commission notes that the most recent prior amendment to the Plan, which, among other things, reflected the addition of IEX as a Listing Market, was published for comment and the Commission did not receive any comments thereon. See supra note 11. --------------------------------------------------------------------------- VI. Conclusion This order gives effect to the amended Plan submitted to the Commission that is contained in File No. 4-566. It is therefore ordered, pursuant to Section 17(d) of the Act,\19\ that the Plan, as amended, filed with the Commission pursuant to Rule 17d-2 on September 21, 2018, is hereby approved and declared effective. --------------------------------------------------------------------------- \19\ 15 U.S.C. 78q(d). --------------------------------------------------------------------------- It is further ordered that the Participating Organizations are relieved of those regulatory responsibilities allocated to FINRA under the amended Plan to the extent of such allocation. [[Page 52253]] For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\20\ --------------------------------------------------------------------------- \20\ 17 CFR 200.30-3(a)(34). --------------------------------------------------------------------------- Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2018-22412 Filed 10-15-18; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 83, No. 200 / Tuesday, October 16, 2018 / Notices 52243
comments from interested persons on SECURITIES AND EXCHANGE responsibility pursuant to Section
whether the Postal Service’s filing is COMMISSION 17(d) 4 or Section 19(g)(2) 5 of the Act.
consistent with the applicable statutory Without this relief, the statutory
[Release No. 34–84392; File No. 4–566]
and regulatory requirements, including obligation of each individual SRO could
39 U.S.C. 3622 and 39 CFR part 3010. Program for Allocation of Regulatory result in a pattern of multiple
Comments are due no later than October Responsibilities Pursuant to Rule 17d– examinations of broker-dealers that
30, 2018. 2; Notice of Filing and Order maintain memberships in more than one
Approving and Declaring Effective an SRO (‘‘common members’’). Such
The public portions of the Postal regulatory duplication would add
Service’s filing are available for review Amendment to the Plan for the
Allocation of Regulatory unnecessary expenses for common
on the Commission’s website (http:// members and their SROs.
www.prc.gov). Comments and other Responsibilities Among Cboe BZX
Exchange, Inc., Cboe BYX Exchange, Section 17(d)(1) of the Act 6 was
material filed in this proceeding will be intended, in part, to eliminate
Inc., Chicago Stock Exchange, Inc.,
available for review on the unnecessary multiple examinations and
Cboe EDGA Exchange, Inc., Cboe
Commission’s website, unless the EDGX Exchange, Inc., Financial regulatory duplication.7 With respect to
information contained therein is subject Industry Regulatory Authority, Inc., a common member, Section 17(d)(1)
to an application for non-public Nasdaq BX, Inc., Nasdaq PHLX LLC, authorizes the Commission, by rule or
treatment. The Commission’s rules on The Nasdaq Stock Market LLC, NYSE order, to relieve an SRO of the
non-public materials (including access National, Inc., New York Stock responsibility to receive regulatory
to documents filed under seal) appear in Exchange LLC, NYSE American LLC, reports, to examine for and enforce
39 CFR part 3007. NYSE Arca, Inc., and Investors compliance with applicable statutes,
Exchange LLC Relating to the rules, and regulations, or to perform
Pursuant to 39 U.S.C. 505, the other specified regulatory functions.
Commission appoints Kenneth R. Surveillance, Investigation, and
To implement Section 17(d)(1), the
Moeller to represent the interests of the Enforcement of Insider Trading Rules
Commission adopted two rules: Rule
general public (Public Representative) October 10, 2018. 17d–1 and Rule 17d–2 under the Act.8
in this proceeding. Notice is hereby given that the Rule 17d–1 authorizes the Commission
Securities and Exchange Commission to name a single SRO as the designated
III. Ordering Paragraphs
(‘‘Commission’’) has issued an Order, examining authority (‘‘DEA’’) to
It is ordered: pursuant to Section 17(d) of the examine common members for
Securities Exchange Act of 1934 compliance with the financial
1. The Commission establishes Docket responsibility requirements imposed by
(‘‘Act’’),1 approving and declaring
No. R2019–1 to consider the planned the Act, or by Commission or SRO
effective an amendment to the plan for
price adjustments for market dominant allocating regulatory responsibility rules.9 When an SRO has been named as
postal products and services, as well as (‘‘Plan’’) filed on September 21, 2018, a common member’s DEA, all other
the related classification changes, pursuant to Rule 17d–2 of the Act,2 by SROs to which the common member
identified in the Postal Service’s Cboe BZX Exchange, Inc. (‘‘BZX’’), Cboe belongs are relieved of the responsibility
October 10, 2018 Notice. BYX Exchange, Inc. (‘‘BYX’’), Chicago to examine the firm for compliance with
2. Comments on the planned price Stock Exchange, Inc. (‘‘CHX’’), Cboe the applicable financial responsibility
adjustments and related classification EDGA Exchange, Inc. (‘‘EDGA’’), Cboe rules. On its face, Rule 17d–1 deals only
changes are due no later than October EDGX Exchange, Inc. (‘‘EDGX’’), with an SRO’s obligations to enforce
30, 2018. Financial Industry Regulatory member compliance with financial
Authority, Inc. (‘‘FINRA’’), Nasdaq BX, responsibility requirements. Rule 17d–1
3. Pursuant to 39 U.S.C. 505, Kenneth does not relieve an SRO from its
Inc. (‘‘BX’’), Nasdaq PHLX LLC
R. Moeller is appointed to serve as an obligation to examine a common
(‘‘PHLX’’), The Nasdaq Stock Market
officer of the Commission (Public LLC (‘‘Nasdaq’’), NYSE National, Inc. member for compliance with its own
Representative) to represent the (‘‘National’’), New York Stock Exchange rules and provisions of the federal
interests of the general public in this LLC (‘‘NYSE’’), NYSE American LLC securities laws governing matters other
proceeding. (‘‘American’’), NYSE Arca, Inc. (‘‘NYSE than financial responsibility, including
4. The Commission directs the Arca’’), and Investors Exchange LLC sales practices and trading activities and
Secretary of the Commission to arrange (‘‘IEX’’) (collectively, ‘‘Participating practices.
Organizations’’ or ‘‘Parties’’). To address regulatory duplication in
for prompt publication of this notice in
these and other areas, the Commission
the Federal Register. I. Introduction adopted Rule 17d–2 under the Act.10
Stacy L. Ruble, Section 19(g)(1) of the Act,3 among Rule 17d–2 permits SROs to propose
Secretary. other things, requires every self- joint plans for the allocation of
[FR Doc. 2018–22492 Filed 10–15–18; 8:45 am] regulatory organization (‘‘SRO’’)
4 15 U.S.C. 78q(d).
BILLING CODE 7710–FW–P
registered as either a national securities
5 15 U.S.C. 78s(g)(2).
exchange or national securities 6 15 U.S.C. 78q(d)(1).
association to examine for, and enforce 7 See Securities Act Amendments of 1975, Report
compliance by, its members and persons of the Senate Committee on Banking, Housing, and
associated with its members with the
amozie on DSK3GDR082PROD with NOTICES1
Urban Affairs to Accompany S. 249, S. Rep. No. 94–
Act, the rules and regulations 75, 94th Cong., 1st Session 32 (1975).
8 17 CFR 240.17d–1 and 17 CFR 240.17d–2,
thereunder, and the SRO’s own rules,
respectively.
unless the SRO is relieved of this 9 See Securities Exchange Act Release No. 12352
(April 20, 1976), 41 FR 18808 (May 7, 1976).
1 15 U.S.C. 78q(d). 10 See Securities Exchange Act Release No. 12935
2 17 CFR 240.17d–2. (October 28, 1976), 41 FR 49091 (November 8,
3 15 U.S.C. 78s(g)(1). 1976).
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![52244 Federal Register / Vol. 83, No. 200 / Tuesday, October 16, 2018 / Notices
regulatory responsibilities with respect update the SRO rules that are covered SROs; (b) remove impediments to, and
to their common members. Under by the Agreement; and (iii) provide that, foster the development of, a national
paragraph (c) of Rule 17d–2, the for purposes of determining a market system; (c) strive to protect the
Commission may declare such a plan Participant’s Percentage of Publicly interest of investors; and (d) eliminate
effective if, after providing for notice Reported Trades in the calculation of duplication in their regulatory
and comment, it determines that the quarterly fees, total trades will be surveillance, investigation and
plan is necessary or appropriate in the adjusted to separate out bunched or enforcement of insider trading;
public interest and for the protection of bundled trades by a Participating Whereas, the Participating
investors, to foster cooperation and Organization.14 In addition, the Organizations are interested in
coordination among the SROs, to Participating Organizations entered into allocating to FINRA regulatory
remove impediments to, and foster the a regulatory services agreement that responsibility for Common FINRA
development of, a national market addresses investigation and enforcement Members (as defined below) for
system and a national clearance and in situations involving Insider Trading surveillance, investigation and
settlement system, and is in conformity by non-Common FINRA Members. The enforcement of Insider Trading (as
with the factors set forth in Section text of the proposed amended 17d–2 defined below) in NMS Stocks (as
17(d) of the Act. Commission approval plan is as follows (additions are defined below) irrespective of the
of a plan filed pursuant to Rule 17d–2 italicized; deletions are [bracketed]): marketplace(s) maintained by the
relieves an SRO of those regulatory * * * * * Participating Organizations on which
responsibilities allocated by the plan to the relevant trading may occur in
another SRO. Agreement for the Allocation of violation of Common Insider Trading
Regulatory Responsibility of Rules (as defined below);
II. The Plan Surveillance, Investigation and Whereas, the Participating
On September 12, 2008, the Enforcement for Insider Trading Organizations will request regulatory
Commission declared effective the Pursuant to § 17(d) of the Securities allocation of these regulatory
Participating Organizations’ Plan for Exchange Act of 1934, 15 U.S.C. § 78q responsibilities by executing and filing
allocating regulatory responsibilities (d), and Rule 17d–2 Thereunder with the SEC a plan for the above stated
pursuant to Rule 17d–2.11 The Plan is This agreement (the ‘‘Agreement’’) by purposes (this Agreement, also known
designed to eliminate regulatory and among [Bats]Cboe BZX Exchange, herein as the ‘‘Plan’’) pursuant to the
duplication by allocating regulatory Inc. (‘‘BZX’’), [Bats]Cboe BYX Exchange, provisions of § 17(d) of the Act, and SEC
responsibility over Common FINRA Inc. (‘‘BYX’’), Chicago Stock Exchange, Rule 17d–2 thereunder, as described
Members 12 (collectively ‘‘Common Inc. (‘‘CHX’’), [Bats]Cboe EDGA below; and
Members’’) for the surveillance, Exchange, Inc. (‘‘EDGA’’), [Bats]Cboe Whereas, the Participating
investigation, and enforcement of EDGX Exchange, Inc. (‘‘EDGX’’), Organizations will also enter into a
common insider trading rules Financial Industry Regulatory Regulatory Services Agreement (the
(‘‘Common Rules’’).13 The Plan assigns Authority, Inc. (‘‘FINRA’’), ‘‘Insider Trading RSA’’), of even date
regulatory responsibility over Common [NASDAQ]Nasdaq BX, Inc. herewith, to provide for the
FINRA Members to FINRA for (‘‘[NASDAQ] BX’’), [NASDAQ]Nasdaq investigation and enforcement of
surveillance, investigation, and PHLX LLC (‘‘[NASDAQ]PHLX’’), The suspected Insider Trading against
enforcement of insider trading by [NASDAQ]Nasdaq Stock Market LLC broker-dealers, and their associated
broker-dealers, and their associated (‘‘[NASDAQ]Nasdaq’’), NYSE National persons, that are not Common FINRA
persons, with respect to Listed Stocks [Stock Exchange], Inc. (‘‘[NSX]NYSE Members in the case of Insider Trading
(as defined in the Plan), irrespective of National’’), New York Stock Exchange in NMS Stocks.
the marketplace(s) maintained by the LLC (‘‘NYSE’’), NYSE [MKT]American Now, Therefore, in consideration of
Participating Organizations on which LLC (‘‘NYSE [MKT]American’’), NYSE the mutual covenants contained
the relevant trading may occur. Arca, Inc. (‘‘NYSE Arca’’) and Investors’ hereafter, and other valuable
Exchange LLC (‘‘IEX’’) (each a consideration to be mutually exchanged,
III. Proposed Amendment to the Plan the Participating Organizations hereby
‘‘Participating Organization’’ and
On September 21, 2018, the Parties together, the ‘‘Participating agree as follows:
submitted a proposed amendment to the 1. Definitions. Unless otherwise
Organizations’’), is made pursuant to
Plan. The proposed amendment was defined in this Agreement, or the
§ 17(d) of the Securities Exchange Act of
submitted to: (i) reflect name changes of context otherwise requires, the terms
1934 (the ‘‘Act’’), 15 U.S.C. 78q(d), and
certain Participating Organizations; (ii) used in this Agreement will have the
Securities and Exchange Commission
same meaning they have under the Act,
(‘‘SEC’’) Rule 17d–2, which allow for
11 See Securities Exchange Act Release No. 58536 and the rules and regulations
plans to allocate regulatory
(September 12, 2008), 73 FR 54646 (September 22, thereunder. As used in this Agreement,
2008). See also Securities Exchange Act Release responsibility among self-regulatory
the following terms will have the
Nos. 58806 (October 17, 2008), 73 FR 63216 organizations (‘‘SROs’’). Upon approval
following meanings:
(October 23, 2008); 61919 (April 15, 2010), 75 FR by the SEC, this Agreement shall amend a. ‘‘Rule’’ of an ‘‘exchange’’ or an
21051 (April 22, 2010); 63103 (October 14, 2010), and restate the agreement among the
75 FR 64755 (October 20, 2010); 63750 (January 21, ‘‘association’’ shall have the meaning
2011), 76 FR 4948 (January 27, 2011); 65991 Participating Organizations approved by defined in Section 3(a)(27) of the Act.
(December 16, 2011), 76 FR 79714 (December 22, the SEC on [December 16, 2011] August b. ‘‘Common FINRA Members’’ shall
2011); and 78473 (August 3, 2016), 81 FR 52722 3, 2016. mean members of FINRA and at least
amozie on DSK3GDR082PROD with NOTICES1
(August 9, 2016). Whereas, the Participating
12 Common FINRA Members include members of one of the Participating Organizations.
FINRA and at least one of the Participating
Organizations desire to: (a) foster c. ‘‘Common Insider Trading Rules’’
Organizations. cooperation and coordination among the shall mean (i) the federal securities laws
13 Common rules are defined as: (i) Federal
and rules thereunder promulgated by
securities laws and rules promulgated by the 14 The Commission notes that trades during a
Commission pertaining to insider trading, and (ii) single-priced opening, reopening or closing auction
the SEC pertaining to insider trading,
the rules of the Participating Organizations that are will not be adjusted. See Exhibit B, Section 1(b) of and (ii) the rules of the Participating
related to insider trading. See Exhibit A to the Plan. the Plan. Organizations that are related to insider
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![Federal Register / Vol. 83, No. 200 / Tuesday, October 16, 2018 / Notices 52247
has given 180 days written notice to the Tami@batstrading.com], 400 S. LaSalle Telephone: (215) 496–1576, Facsimile:
other Participating Organizations (or in Street, Chicago, IL 60605, Telephone: (215) 496–5104, Email:joeseph.cusick@
the case of a change of control in (312) 786–7844, Facsimilie: (312) 786– nasdaqomx.com.
ownership of a Participating 7982, Email: hoogasian@cboe.com. For The [NASDAQ]Nasdaq Stock
Organization, such other notice time For [Bats]Cboe BYX Exchange, Inc.: Market LLC: John A. Zecca, Senior Vice
period as that Participating Organization [Tamara Schademann]Greg Hoogasian, President, The [NASDAQ]Nasdaq Stock
may choose), and provided that such Chief Regulatory Officer, [Bats]Cboe Market LLC, 9600 Blackwell Road,
termination has been approved by the BYX Exchange, Inc., [8050 Marshall Rockville, MD 20850, Telephone: (301)
SEC. The cancellation of its Drive], [Suite 120], [Lenexa, KS 66214], 978–8498, Facsimile: (301) 978–8472,
participation in this Agreement by any [Telephone: (913) 815–7113], Email: John.Zecca@nasdaqomx.com.
Participating Organization shall not [Facsimile: (913) 815–7119], [Email: For NYSE National [Stock Exchange],
terminate this Agreement as to the Tami@batstrading.com], 400 S. LaSalle Inc.: [James G. Buckley] Anthony
remaining Participating Organizations. Street, Chicago, IL 60605, Telephone: Albanese, Chief Regulatory Officer,
b. The Regulatory Responsibilities (312) 786–7844, Facsimilie: (312) 786– NYSE National [Stock Exchange], Inc.,
assumed under this Agreement by 7982, Email: hoogasian@cboe.com. [101 Hudson Street, Suite 1200], [Jersey
FINRA may be terminated by FINRA For Chicago Stock Exchange, Inc.: City, NJ 07302], [Telephone: (201) 499–
against any Participating Organization [Peter D. Santori]Anthony Albanese, 3698], [Facsimile: (201) 499–0727],
as follows. The Participating [Executive Vice President and] Chief [Email: james.buckley@nsx.com], 11
Organization will have thirty (30) days Regulatory Officer, [Chicago Stock Wall Street, New York, NY 10005,
from receipt to satisfy the invoice. If the Exchange, Inc.]NYSE Group, Inc., [440 Telephone: (212) 656–8927, Facsimile:
Participating Organization fails to S. LaSalle Street]11 Wall Street, (212) 656–2027, Email:
satisfy the invoice within thirty (30) [Chicago, IL 60605]New York, NY Anthony.albanese@theice.com.
days of receipt (‘‘Default’’), FINRA will 10005, Telephone: [(312) 663– For New York Stock Exchange LLC:
notify the Participating Organization of 2402](212) 656–8297, Facsimile:[(312) Anthony Albanese, Chief Regulatory
the Default. The Participating 663–2231](212) 656–2027, Email: Officer, NYSE, 11 Wall Street, New
Organization will have thirty (30) days [psantori@chx.com]Anthony.Albanese@ York, NY 10005, Telephone: (212) 656–
from receipt of the Default notice to theice.com. 8927, Facsimile: (212) 656–[2223]2027,
satisfy the invoice. For [Bats]Cboe EDGA Exchange, Inc.: Email: Anthony.albanese@theice.com.
c. FINRA will have the right to [Tamara Schademann]Greg Hoogasian, For NYSE [MKT]American LLC:
terminate the Regulatory Chief Regulatory Officer, [Bats]Cboe Anthony Albanese Chief Regulatory
Responsibilities assumed under this EDGA Exchange, Inc., [8050 Marshall Officer, NYSE [MKT]American, 11 Wall
Agreement if a Participating Drive], [Suite 120], [Lenexa, KS 66214], Street, New York, NY 10005, Telephone:
Organization has Defaulted in its [Telephone: (913) 815–7113], (212) 656–8927, Facsimile: (212) 656-
obligation to pay the invoice on more [Facsimile: (913) 815–7119], [Email: [2223]2027, Email: Anthony.albanese@
than three (3) occasions in any rolling Tami@batstrading.com], 400 S. LaSalle theice.com.
twenty-four (24) month period. Street, Chicago, IL 60605, Telephone: For NYSE Arca, Inc.: Anthony
19. Intermarket Surveillance Group (312) 786–7844, Facsimilie: (312) 786– Albanese, Chief Regulatory Officer,
(‘‘ISG’’). In order to participate in this 7982, Email: hoogasian@cboe.com. NYSE Arca, 11 Wall Street, New York,
Agreement, all Participating For [Bats]Cboe EDGX Exchange, Inc.: NY 10005, Telephone: (212) 656–8927,
Organizations to this Agreement must [Tamara Schademann]Greg Hoogasian, Facsimile: (212) 656–[2223]2027, Email:
be members of the ISG. Chief Regulatory Officer, [Bats]Cboe Anthony.albanese@theice.com.
20. General. The Participating EDGX Exchange, Inc., [8050 Marshall For Investors’ Exchange LLC.: Claudia
Organizations agree to perform all acts Drive], [Suite 120], [Lenexa, KS 66214], Crowley, Chief Regulatory Officer, IEX,
and execute all supplementary [Telephone: (913) 815–7113], 4 World Trade Center, 150 Greenwich
instruments or documents that may be [Facsimile: (913) 815–7119], [Email: Street, 44th Floor, New York, NY 10007,
reasonably necessary or desirable to Tami@batstrading.com], 400 S. LaSalle Telephone: (646) 343–2041, Facsimile:
carry out the provisions of this Street, Chicago, IL 60605, Telephone: (646) 365–6862, Email:
Agreement. (312) 786–7844, Facsimilie: (312) 786– Claudia.crowley@iextrading.com.
21. Liaison and Notices. All questions 7982, Email: hoogasian@cboe.com. 22. Confidentiality. The parties agree
regarding the implementation of this For Financial Industry Regulatory that documents or information shared
Agreement shall be directed to the Authority, Inc.: Cameron Funkhouser, shall be held in confidence, and used
persons identified below, as applicable. Executive Vice President, [Market only for the purposes of carrying out
All notices and other communications Regulation]Office of Fraud Detection their respective regulatory obligations
required or permitted to be given under and Market Intelligence, FINRA, 1735 K under this Agreement. No party shall
this Agreement shall be in writing and Street NW, Washington, DC 20006, assert regulatory or other privileges as
shall be deemed to have been duly given Telephone: (240) 386–5021, Facsimile: against the other with respect to
upon (i) actual receipt by the notified (301) 407–4635, Regulatory Information that is required
party or (ii) constructive receipt (as of Email:Cameron.Funkhouser@finra.org. to be shared pursuant to this Agreement,
the date marked on the return receipt) For [NASDAQ]Nasdaq BX, Inc.: John as defined by paragraph 10, above.
if sent by certified or registered mail, A. Zecca, Senior Vice President, The 23. Regulatory Responsibility.
return receipt requested, to the [NASDAQ]Nasdaq Stock Market LLC, Pursuant to Section 17(d)(1)(A) of the
following addresses: 9600 Blackwell Road, Rockville, MD Act, and Rule 17d–2 thereunder, the
amozie on DSK3GDR082PROD with NOTICES1
For [Bats]Cboe BZX Exchange, Inc.: 20850, Telephone: (301) 978–8498, Participating Organizations jointly and
[Tamara Schademann]Greg Hoogasian, Facsimile: (301) 978–8472, Email: severally request the SEC, upon its
Chief Regulatory Officer, [Bats]Cboe John.Zecca@nasdaqomx.com. approval of this Agreement, to relieve
BZX Exchange, Inc., [8050 Marshall For [NASDAQ]Nasdaq PHLX LLC: the Participating Organizations, jointly
Drive], [Suite 120], [Lenexa, KS 66214], Joseph Cusick, Chief Regulatory Officer, and severally, of any and all
[Telephone: (913) 815–7113], [NASDAQ]Nasdaq PHLX LLC, 1900 responsibilities with respect to the
[Facsimile: (913) 815–7119], [Email: Market Street, Philadelphia, PA 19103, matters allocated to FINRA pursuant to
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![52248 Federal Register / Vol. 83, No. 200 / Tuesday, October 16, 2018 / Notices
this Agreement for purposes of §§ 17(d) Exhibit A: Common Insider Trading Involving Charges Against Members,
and 19(g) of the Act. Rules Member Organizations, Principal
24. Governing Law. This Agreement 1. Securities Exchange Act of 1934 Executives, Approved Persons,
shall be deemed to have been made in Section 10(b), and rules and regulations Employees, or Others)
the State of New York, and shall be promulgated there under in connection NYSE [MKT]American [Equities] Rule
construed and enforced in accordance with insider trading, including SEC 2010 (Equities. Standards of
with the law of the State of New York, Rule 10b–5 (as it pertains to insider Commercial Honor and Principles of
without reference to principles of trading), which states that: Trade)
conflicts of laws thereof. Each of the Rule 10b–5—Employment of NYSE [MKT]American [Equities] Rule
parties hereby consents to submit to the Manipulative and Deceptive Devices It 2020 (Equities. Use of Manipulative,
jurisdiction of the courts of the State of shall be unlawful for any person, Deceptive or Other Fraudulent
New York in connection with any action directly or indirectly, by the use of any Devices)
or proceeding relating to this means or instrumentality of interstate NYSE [MKT]American [Equities] Rule
Agreement. commerce, or of the mails or of any 3110 (Equities. Supervision)
facility of any national securities [NASDAQ]Nasdaq Rule [2110]2010A
25. Survival of Provisions. Provisions (Standards of Commercial Honor and
intended by their terms or context to exchange,
a. To employ any device, scheme, or Principles of Trade)
survive and continue notwithstanding [NASDAQ]Nasdaq Rule 2120 (Use of
delivery of the regulatory services by artifice to defraud,
b. To make any untrue statement of a Manipulative, Deceptive or Other
FINRA, the payment of the Fees by the Fraudulent Devices)
Participating Organizations, and any material fact or to omit to state a
material fact necessary in order to make [NASDAQ]Nasdaq Rule 3010
expiration of this Agreement shall (Supervision)
survive and continue. the statements made, in the light of the
circumstances under which they were [NASDAQ]Nasdaq Rule 4511A (General
26. Amendment. made, not misleading, or Requirements
a. This Agreement may be amended to c. To engage in any act, practice, or [NASDAQ]Nasdaq Rule 4512A
add a new Participating Organization, course of business which operates or (Customer Account Information)
provided that such Participating would operate as a fraud or deceit upon CHX Article 8, Rule 3 (Fraudulent Acts)
Organization does not assume any person, in connection with the CHX Article 9, Rule 2 (Just & Equitable
regulatory responsibility, solely by an purchase or sale of any security. Trade Principles)
amendment executed by FINRA and 2. Securities Exchange Act of 1934 CHX Article 11, Rule 2 (Maintenance of
such new Participating Organization. Section 17(a), and rules and regulations Books and Records)
All other Participating Organizations promulgated there under in connection CHX Article 6, Rule 5 (Supervision of
expressly consent to allow FINRA to with insider trading, including SEC Registered Persons and Branch and
add new Participating Organizations to Rule 17a–3 (as it pertains to insider Resident Offices)
this Agreement as provided above. trading). [NASDAQ] PHLX Rule 707 (Conduct
FINRA will promptly notify all 3. The following SRO Rules as they Inconsistent with Just and Equitable
Participating Organizations of any such pertain to violations of insider trading: Principles of Trade)
[NASDAQ] PHLX Rule 748
amendments to add a new Participating FINRA Rule 2010 (Standards of
(Supervision)
Organization. Commercial Honor and Principles of
[NASDAQ] PHLX Rule 760
b. All other amendments must be Trade)
FINRA Rule 2020 (Use of Manipulative, (Maintenance, Retention and
approved by each Participating Furnishing of Books, Records and
Organization. All amendments, Deceptive or Other Fraudulent
Devices) Other Information)
including adding a new Participating [NASDAQ] PHLX Rule 761 (Supervisory
Organization, must be filed with and FINRA Rule 3110 (Supervision)
FINRA Rule 4511 (General Procedures Relating to ITSFEA and to
approved by the SEC before they Prevention of Misuse or Material
become effective. Requirements)
FINRA Rule 4512 (Customer Account Nonpublic Information)
27. Effective Date. The Effective Date Information) [NASDAQ] PHLX Rule 782
of this Agreement will be the date the NYSE Rule 440 (Books and Records) (Manipulative Operations)
SEC declares this Agreement to be NYSE Rule 476(a) (Disciplinary NYSE Arca [Equities] Rule [2.24]2.28
effective pursuant to authority conferred Proceedings Involving Charges ([ETP] Books and Records)
by § 17(d) of the Act, and SEC Rule 17d– Against Members, Member NYSE Arca [Equities] Rule 5.1–
2 thereunder. Organizations, Principal Executives, E(a)(2)(v)(D) (General Provisions and
28. Counterparts. This Agreement Approved Persons, Employees, or Unlisted Trading Privileges)
may be executed in any number of Others) NYSE Arca Rule 11.1 (Adherence to
counterparts, including facsimile, each NYSE Rule 2010 (Standards of Law
of which will be deemed an original, but Commercial Honor and Principles of NYSE Arca Rule 11.2(b) (Prohibited
all of which taken together shall Trade) Acts (J&E))
constitute one single agreement between NYSE Rule 2020 (Use of Manipulative, NYSE Arca [Equities] Rule [6.3]11.3
the parties. Deceptive or Other Fraudulent (Prevention of the Misuse of Material,
Devices) Nonpublic Information)
In Witness Whereof, the parties hereto NYSE Rule 3110 (Supervision) [NYSE Arca Equities Rule 6.2(b)
amozie on DSK3GDR082PROD with NOTICES1
have each caused this Agreement for the NYSE [MKT]American General and (Prohibited Acts (J&E))]
Allocation of Regulatory Responsibility Floor Rule 3(j) (General Prohibitions [NYSE Arca Equities Rule 6.1
of Surveillance, Investigation and and Duty to Report) (Adherence to Law)]
Enforcement for Insider Trading to be NYSE [MKT]American [Equities] Rule NYSE Arca [Equities] Rule [6.18]11.18
signed and delivered by its duly [440]2.24–E (ETP Books and Records) (Supervision)
authorized representative. NYSE [MKT]American [Equities] Rule NYSE Arca [Equities] Rule 9.1–E(c)
* * * * * 476(a) (Disciplinary Proceedings (Office Supervision)
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NYSE Arca [Equities] Rule 9.2–E(b) EDGA Rule 4.1 (Requirements) for such will be billed to FINRA in
(Account Supervision) EDGA Rule 5.1 (Written Procedures) accordance with paragraph 1a.(2), rather
NYSE Arca [Equities] Rule 9.2–E(c) EDGA Rule 5.3 (Records) than to the applicable Participating
(Customer Records) EDGA Rule 5.5 (Prevention of Misuse of Organization.
NYSE Arca [Equities] Rule 9.2010–E Material, Nonpublic Information) (2) The Quarterly Fees shall be
(Standards of Commercial Honor and EDGA Rule 12.4 (Manipulative determined by FINRA in the following
Principles of Trade) Transactions) manner for each Participating
NYSE Arca [Equities] Rule 9.2020–E EDGX Rule 3.1 (Business Conduct of Organization:
(Use of Manipulative, Deceptive or Members) (a) Less than 1.0%: If the Participating
Other Fraudulent Devices) EDGX Rule 3.2 (Violations Prohibited) Organization’s Percentage of Publicly
NYSE National Rule 5.1(a)(2)(D)(iv) EDGX Rule 3.3 (Use of Fraudulent Reported Trades for the relevant three-
(Unlisted Trading Privileges) Devices) month billing period is less than 1.0%,
[NSX]NYSE National Rule 11.3.1 EDGX Rule 4.1 (Requirements) the Quarterly Fee shall be $6,250, per
(Business Conduct of ETP Holders) EDGX Rule 5.1 (Written Procedures) quarter (‘‘Static Fee’’);
[NSX]NYSE National Rule 11.3.2 EDGX Rule 5.3 (Records) (b) Less than 2.0% but No Less than
(Violations Prohibited) EDGX Rule 5.5 (Prevention of Misuse of 1.0%: If the Participating Organization’s
[NSX]NYSE National Rule 11.3.3 (Use Material, Nonpublic Information) Percentage of Publicly Reported Trades
of Fraudulent Devices) EDGX Rule 12.4 (Manipulative for the relevant three-month billing
[NSX]NYSE National Rule 11.4.1 Transactions) period is less than 2.0% but no less than
(Requirements) IEX Rule 3.110 (Business Conduct of 1.0%, the Quarterly Fee shall be
[NSX]NYSE National Rule 11.5.1 Members) $18,750, per quarter (‘‘Static Fee’’);
(Written Procedures) IEX Rule 3.120 (Violations Prohibited) (c) 2.0% or Greater: If the
[NSX]NYSE National Rule 11.5.3 IEX Rule 3.130 (Use of Fraudulent Participating Organization’s Percentage
(Records) Devices) of Publicly Reported Trades for the
[NSX]NYSE National Rule 11.5.5 IEX Rule 4.511 (General Requirements) relevant three-month billing period is
([Chinese Wall Procedures]Prevention IEX Rule 4.512 (Customer Account 2.0% or greater, the Quarterly Fee shall
of the Misuse of Material, Nonpublic Information) be the amount equal to the Participating
Information) IEX Rule 5.110 (Supervision) Organization’s Percentage of Publicly
[NSX]NYSE National Rule 11.12.4 IEX Rule 5.150 (Prevention of Misuse of Reported Trades multiplied by FINRA’s
(Manipulative Transactions) Material, Non-Public Information) total charge (‘‘Total Charge’’) for its
[NASDAQ] BX Rule 2110 (Standards of IEX Rule 10.140 (Manipulative performance of Regulatory
Commercial Honor and Principles of Transactions) Responsibilities for the relevant three-
Trade) month billing period.
Exhibit B: Fee Schedule
[NASDAQ] BX Rule 2120 (Use of (3) Increases in Static Fees. FINRA
Manipulative, Deceptive or Other 1. Fees. FINRA shall charge each will re-evaluate the Quarterly Fees on
Fraudulent Devices) Participating Organization a Quarterly an annual basis during the annual
[NASDAQ] BX Rule 3010 (Supervision) Fee in arrears for the performance of budget process outlined in paragraph
[NASDAQ] BX Rule 3110 (a) and (c) FINRA’s Regulatory Responsibilities 1.c. below. During each annual re-
(Books and Records; Financial under the Plan (each, a ‘‘Quarterly Fee,’’ evaluation, FINRA will have the
Condition) and together, the ‘‘Fees’’). discretion to increase the Static Fees by
BZX Rule 3.1 (Business Conduct of a. Quarterly Fees. a percentage no greater than the
Members) (1) Quarterly Fees for each percentage increase in the Final Budget
BZX Rule 3.2 (Violations Prohibited) Participating Organization will be over the preceding year’s Final Budget.
BZX Rule 3.3 (Use of Fraudulent charged by FINRA according to the Any changes to the Static Fees shall not
Devices) Participating Organization’s ‘‘Percentage require an amendment to this
BZX Rule 4.1 (Requirements) of Publicly Reported Trades’’ occurring Agreement, but rather shall be
BZX Rule 5.1 (Written Procedures) over three-month billing periods. The memorialized through the budget
BZX Rule 5.3 (Records) ‘‘Percentage of Publicly Reported process.
BZX Rule 5.5 (Prevention of the Misuse Trades’’ shall equal a Participating (4) Increases in Total Charges. Any
of Material, Non-Public Information) Organization’s total number of reported change in the Total Charges (whether a
BZX Rule 12.4 (Manipulative NMS Stock trades during the relevant Final Budget increase or any mid year
Transactions) period as specified in paragraph 1b. (the change) shall not require an amendment
BYX Rule 3.1 (Business Conduct of ETP ‘‘Numerator’’), divided by the total to this Agreement, but rather shall be
Holders) number of all NMS Stock trades for the memorialized through the budget
BYX Rule 3.2 (Violations Prohibited) same period as specified in paragraph process.
BYX Rule 3.3 (Use of Fraudulent 1b.(the ‘‘Denominator’’). For purposes of b. Source of Data. For purposes of
Devices) clarification, ADF and Trade Reporting calculation of the Percentage of Publicly
BYX Rule 4.1 (Requirements) Facility (‘‘TRF’’) activity will be Reported Trades for each Participating
BYX Rule 5.1 (Written Procedures) included in the Denominator. Organization, FINRA [shall]will use
BYX Rule 5.3 (Records) Additionally, with regard to TRFs, TRF trades reported to the two SIPs (a) the
BYX Rule 5.5 (Prevention of the Misuse trade volume will be charged to FINRA. Consolidated Tape Association
of Material, Non-Public Information) Consequently, for purposes of (‘‘CTA’’), and (b) the Unlisted Trading
amozie on DSK3GDR082PROD with NOTICES1
BYX Rule 12.4 (Manipulative calculating the Quarterly Fees, the Privileges Plan. In each case, FINRA
Transactions) volume for each Participant will use the total trades as may be
EDGA Rule 3.1 (Business Conduct of Organization’s TRF will be calculated adjusted by the Participating
Members) separately (that is, TRF volume will be Organization. Adjustments will include
EDGA Rule 3.2 (Violations Prohibited) broken out from the Participating any separation or breakup of the
EDGA Rule 3.3 (Use of Fraudulent Organization’s overall Percentage of number of trades as a result of reporting
Devices) Publicly Reported Trades) and the fees of bunched or bundled trades by a
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![Federal Register / Vol. 83, No. 200 / Tuesday, October 16, 2018 / Notices 52253
For the Commission, by the Division of forth in sections A, B, and C below, of Complex Orders
Trading and Markets, pursuant to delegated the most significant aspects of such
authority.20 C2 does not currently offer Post Only
statements. complex orders. Like in the Simple
Eduardo A. Aleman,
A. Self-Regulatory Organization’s Book, execution of a complex order
Assistant Secretary. taking liquidity from the COB is subject
Statement of the Purpose of, and
[FR Doc. 2018–22412 Filed 10–15–18; 8:45 am] to a taker fee and execution of an order
Statutory Basis for, the Proposed Rule
BILLING CODE 8011–01–P
Change adding liquidity is subject to a maker
rebate. For example, a Public Customer
1. Purpose order that adds liquidity to the COB in
SECURITIES AND EXCHANGE a non-penny class receives a rebate of
C2 recently adopted the Post Only
COMMISSION $0.75, whereas a Public Customer order
order instruction on simple orders that
[Release No. 34–84399; File No. SR–C2– route to its electronic book (‘‘Simple that removes liquidity from the COB in
2018–021] Book’’),3 and C2 now proposes to adopt a non-penny class incurs a fee of $0.83.
the Post Only order instruction on Unlike in the Simple Book, however, a
Self-Regulatory Organizations; Cboe complex orders that route to its TPH that intends to submit a complex
C2 Exchange, Inc.; Notice of Filing of electronic book (‘‘COB’’). order to add liquidity to the COB is not
a Proposed Rule Change To Amend given the same flexibility to avoid
C2’s Rulebook To Allow the Post Only Background incurring a taker fee. Accordingly, C2 is
Order Instruction on Complex Orders Pursuant to C2 Rule 1.1, ‘‘[a] ‘‘Post proposing to add Post Only to the
That Route to Its Electronic Book Only’’ order is an order the System permissible types of complex orders
October 10, 2018. ranks and executes pursuant to Rule submitted to the Exchange in C2 Rule
6.12, subjects to the Price Adjust 6.13(b).
Pursuant to Section 19(b)(1) of the
process pursuant to Rule 6.12, or Proposed C2 Rule 6.13(b)(2) states
Securities Exchange Act of 1934 (the
cancels or rejects (including if it is not that upon receipt of a Post Only
‘‘Act’’),1 and Rule 19b–4 thereunder,2
subject to the Price Adjust process and complex order with any Time-in-Force,
notice is hereby given that on October
locks or crosses a Protected Quotation of the System does not initiate a complex
1, 2018, Cboe C2 Exchange, Inc. (the
another exchange), as applicable (in order auction (‘‘COA’’), and if a User
‘‘Exchange’’ or ‘‘C2’’) filed with the
accordance with User instructions), marks the Post Only complex order to
Securities and Exchange Commission
except the order may not remove initiate a COA, the System cancels the
(the ‘‘Commission’’) the proposed rule
liquidity from the [Simple] Book or order. Not permitting a Post Only
change as described in Items I, II, and
route away to another Exchange.’’ In complex order to COA is consistent
III below, which Items have been
other words, if a Post Only order is with the purposes of a Post Only order,
prepared by the Exchange. The
entered into C2’s automated trading which as discussed above is to add
Commission is publishing this notice to
system (‘‘System’’), it will not execute liquidity to the COB. Proposed C2 Rule
solicit comments on the proposed rule
against an order resting in the Simple 6.13(g)(4) states that Post Only complex
change from interested persons.
Book or route to another exchange. The orders may not Leg into the Simple
I. Self-Regulatory Organization’s purpose of the Post Only order is to add Book and proposed C2 Rule 6.13(h)(3)
Statement of the Terms of Substance of liquidity to the Simple Book. states that the System cancels or rejects
the Proposed Rule Change Because C2 has a maker-taker fee a Post Only complex order if it locks or
Cboe C2 Exchange, Inc. (the structure, pursuant to which an crosses a resting complex order in the
‘‘Exchange’’ or ‘‘C2’’) proposes to amend execution taking liquidity from the COB or the then-current opposite side
C2’s rulebook to allow the Post Only Simple Book is subject to a taker fee, the synthetic best bid or offer (‘‘SBBO’’). For
order instruction on complex orders that Post Only order instruction provides example, assume there are no orders for
route to its electronic book. Trading Permit Holders (‘‘TPHs’’ or a specific strategy resting on the COB,
The text of the proposed rule change ‘‘Users’’) with the flexibility to avoid the synthetic national best bid or offer
is available on the Exchange’s website incurring a taker fee if the TPH’s intent (‘‘SNBBO’’) is $3.00 by $3.15, and the
(http://www.c2exchange.com/Legal/), at is to submit an order to add liquidity to SBBO is $2.95 by $3.15. Assume next
the Exchange’s Office of the Secretary, the Simple Book. Additionally, under that Complex Order 1 enters the COB to
and at the Commission’s Public C2’s maker-taker fee structure, if a TPH sell 10 contracts of that strategy at $3.14
Reference Room. submits an order that adds liquidity to and such order is posted to the COB. If
the Simple Book (for both penny and Complex Order 2 then enters the COB
II. Self-Regulatory Organization’s non-penny classes of options), it to buy 10 contracts of that strategy at
Statement of the Purpose of, and receives a rebate in connection with the $3.14, but Complex Order 2 also
Statutory Basis for, the Proposed Rule execution of that order. For example, a contains the Post Only instruction,
Change Public Customer order that adds Complex Order 2 is rejected since it
In its filing with the Commission, the liquidity to the Simple Book in a non- locks the resting contra order. Similarly,
Exchange included statements penny class receives a rebate of $0.80, assume there are no orders for a specific
concerning the purpose of and basis for whereas a Public Customer order that strategy resting on the COB, the SNBBO
the proposed rule change and discussed removes liquidity from the Simple Book is $3.00 by $3.15, and the SBBO is $2.95
any comments it received on the in a non-penny class incurs a fee of by $3.20. If a two-leg Complex Order
proposed rule change. The text of these $0.85. Similar rebates and fees are also with the Post Only instruction enters
amozie on DSK3GDR082PROD with NOTICES1
statements may be examined at the applied to Professional Customers, the COB to buy 10 contracts of that
places specified in Item IV below. The Firms, and Broker/Dealers orders, strategy at $3.20, that Complex Order is
Exchange has prepared summaries, set among others. rejected since it cannot leg in to the
Simple Book and it locks the contra side
20 17 CFR 200.30–3(a)(34). 3 See Securities Exchange Act Release No. 83214 SBBO. This proposed functionality is
1 15 U.S.C. 78s(b)(1). (May 11, 2018), 83 FR 22796 (May 16, 2018) (SR– consistent with the purpose of the Post
2 17 CFR 240.19b–4. C2–2018–005). Only instruction and ensures a Post
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Document Created: 2018-10-15 23:42:32
Document Modified: 2018-10-15 23:42:32
| 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 52243 |
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