[Federal Register Volume 75, Number 155 (Thursday, August 12, 2010)]
[Notices]
[Pages 49005-49010]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-19852]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-62657; File No. 4-274]
Program for Allocation of Regulatory Responsibilities Pursuant to
Rule 17d-2; Notice of Filing of an Amended 17d-2 Plan Between the
Financial Industry Regulatory Authority, Inc. and the Chicago Stock
Exchange, Inc.
August 5, 2010.
Pursuant to Section 17(d) of the Securities Exchange Act of 1934
[[Page 49006]]
(``Act''),\1\ and Rule 17d-2 thereunder,\2\ notice is hereby given that
on July 21, 2010, the Financial Industry Regulatory Authority, Inc.
(``FINRA'') and the Chicago Stock Exchange, Inc. (``CHX'') (together
with FINRA, the ``Parties'') filed with the Securities and Exchange
Commission (``Commission'' or ``SEC'') an amendment to their September
16, 1977 Agreement Between the National Association of Securities
Dealers, Inc. (n/k/a FINRA) and the Midwest Stock Exchange Incorporated
(n/k/a CHX) (``17d-2 Plan'' or the ``Plan'') for the allocation of
regulatory responsibilities. The Commission is publishing this notice
to solicit comments on the amendment to the 17d-2 Plan from interested
persons.
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\1\ 15 U.S.C. 78q(d).
\2\ 17 CFR 240.17d-2.
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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) or Section 19(g)(2) of the Act.\4\ 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.
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\3\ 15 U.S.C. 78s(g)(1).
\4\ 15 U.S.C. 78q(d) and 15 U.S.C. 78s(g)(2), respectively.
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Section 17(d)(1) of the Act \5\ was intended, in part, to eliminate
unnecessary multiple examinations and regulatory duplication.\6\ With
respect to a common member, Section 17(d)(1) authorizes the Commission,
by rule or order, to relieve an SRO of the responsibility to receive
regulatory reports, to examine for and enforce compliance with
applicable statutes, rules, and regulations, or to perform other
specified regulatory functions.
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\5\ 15 U.S.C. 78q(d)(1).
\6\ 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).
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To implement Section 17(d)(1), the Commission adopted two rules:
Rule 17d-1 and Rule 17d-2 under the Act.\7\ 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.\8\ When an SRO has been named as a common member's DEA, all
other SROs to which the common member belongs are relieved of the
responsibility to examine the firm for compliance with the applicable
financial responsibility rules. On its face, Rule 17d-1 deals only with
an SRO's obligations to enforce member compliance with financial
responsibility requirements. Rule 17d-1 does not relieve an SRO from
its obligation to examine a common member for compliance with its own
rules and provisions of the federal securities laws governing matters
other than financial responsibility, including sales practices and
trading activities and practices.
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\7\ 17 CFR 240.17d-1 and 17 CFR 240.17d-2, respectively.
\8\ See Securities Exchange Act Release No. 12352 (April 20,
1976), 41 FR 18808 (May 7, 1976).
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To address regulatory duplication in these and other areas, the
Commission adopted Rule 17d-2 under the Act.\9\ Rule 17d-2 permits SROs
to propose joint plans for the allocation of regulatory
responsibilities with respect to their common members. Under paragraph
(c) of Rule 17d-2, the Commission may declare such a plan effective if,
after providing for appropriate notice and comment, it determines that
the plan is necessary or appropriate in the public interest and for the
protection of investors; to foster cooperation and coordination among
the SROs; to remove impediments to, and foster the development of, a
national market system and a national clearance and settlement system;
and is in conformity with the factors set forth in Section 17(d) of the
Act. Commission approval of a plan filed pursuant to Rule 17d-2
relieves an SRO of those regulatory responsibilities allocated by the
plan to another SRO.
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\9\ See Securities Exchange Act Release No. 12935 (October 28,
1976), 41 FR 49091 (November 8, 1976).
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II. The Plan
On September 26, 1978, the Commission approved the Plan allocating
regulatory responsibilities pursuant to Rule 17d-2 on a provisional
basis.\10\ Under the Plan, FINRA was responsible, in part, for
conducting on-site examination of each dual member for which it was the
DEA. On February 20, 1980, the Commission noticed for comment an
amendment to the Plan, which provided, in part, for the handling of
customer complaints, the review of dual members' advertising, and the
arbitration of disputes under the Plan.\11\ On May 30, 1980, the
Commission approved the Plan, as amended.\12\
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\10\ See Securities Exchange Act Release No. 15191 (September
26, 1978), 43 FR 46093 (October 5, 1978).
\11\ See Securities Exchange Act Release No. 16591 (February 20,
1980), 45 FR 12573 (February 26, 1980).
\12\ See Securities Exchange Act Release No. 16858 (May 30,
1980), 45 FR 37927 (June 5, 1980).
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III. Proposed Amendment to the Plan
On July 21, 2010, the Parties submitted a proposed amendment to the
Plan. The amended agreement would replace the previous Plan in its
entirety. Accordingly, the proposed 17d-2 Plan is intended to reduce
the duplication in the examination of common members \13\ and in the
filing and processing of certain registration and membership records.
Pursuant to the proposed 17d-2 Plan, FINRA would assume certain
examination and enforcement responsibilities for common members with
respect to certain applicable laws, rules, and regulations.
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\13\ The proposed 17d-2 Plan refers to these members as ``Dual
Members.'' See Paragraph 1(c) of the proposed 17d-2 Plan.
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The text of the Plan delineates the proposed regulatory
responsibilities with respect to the Parties. Included in the proposed
Plan is an exhibit (the ``CHX Certification of Common Rules'' referred
to herein as the ``Certification'') that lists every CHX rule, and
select federal securities laws, rules, and regulations, for which FINRA
would bear responsibility under the Plan for examine and enforcing with
respect to CHX members that are also members of FINRA and the
associated persons therewith (``Dual Members'').
Specifically, under the 17d-2 Plan, FINRA would assume examination
and enforcement responsibility relating to compliance by Dual Members
with the rules of CHX that are substantially similar to the applicable
rules of FINRA, as well as certain provisions of the federal securities
laws and the rules and regulations thereunder delineated in the
Certification (``Common Rules'').\14\ Common Rules would not include
the application of any CHX rule or FINRA rule, or any rule or
regulation under the Act, to the extent that it pertains to
[[Page 49007]]
violations of insider trading activities, because such matters are
covered by a separate multiparty agreement under Rule 17d-2.\15\ In the
event that a Dual Member is the subject of an investigation relating to
a transaction on CHX, the plan acknowledges that CHX may, in its
discretion, exercise concurrent jurisdiction and responsibility for
such matter.\16\
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\14\ See paragraph 1(b) of the proposed 17d-2 Plan (defining
Common Rules). See also paragraph 1(f) of the proposed 17d-2 Plan
(defining Regulatory Responsibilities). Paragraph 2 of the Plan
provides that annually, or more frequently as required by changes in
either CHX rules or FINRA rules, the parties shall review and
update, if necessary, the list of Common Rules. Further, paragraph 3
of the Plan provides that CHX shall furnish FINRA with a list of
Dual Members, and shall update the list no less frequently than once
each quarter.
\15\ See Securities Exchange Act Release No. 61919 (April 15,
2010), 75 FR 21051 (April 22, 2010) (File No. 4-566) (notice of
filing and order approving and declaring effective the plan).
\16\ See paragraph 6 of the proposed 17d-2 Plan.
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Under the Plan, CHX would retain full responsibility for
surveillance, examination, investigation, and enforcement with respect
to trading activities or practices involving CHX's own marketplace;
registration pursuant to its applicable rules of associated persons
(i.e., registration rules that are not Common Rules); its duties and
obligations as a DEA pursuant to Rule 17d-1 under the Act; and any CHX
rules that are not Common Rules.\17\
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\17\ See paragraph 2 of the proposed 17d-2 Plan.
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The text of the proposed 17d-2 Plan is as follows:
AGREEMENT BETWEEN FINANCIAL INDUSTRY REGULATORY AUTHORITY, INC. AND
CHICAGO STOCK EXCHANGE, INC. PURSUANT TO RULE 17d-2 UNDER THE
SECURITIES EXCHANGE ACT OF 1934
This Agreement, by and between the Financial Industry Regulatory
Authority, Inc. (``FINRA'') and the Chicago Stock Exchange, Inc.
(``CHX''), is made this 9th day of July, 2010 (the ``Agreement''),
pursuant to Section 17(d) of the Securities Exchange Act of 1934 (the
``Exchange Act'') and Rule 17d-2 thereunder which permits agreements
between self-regulatory organizations to allocate regulatory
responsibility to eliminate regulatory duplication. FINRA and CHX may
be referred to individually as a ``party'' and together as the
``parties.''
This Agreement amends and restates the agreement entered into
between the parties on September 16, 1977, entitled ``Agreement Between
the National Association of Securities Dealers, Inc. and the Midwest
Stock Exchange Incorporated Pursuant to SEC Rule 17d-2 Under the
Securities Exchange Act of 1934,'' and any subsequent amendments
thereafter.
WHEREAS, FINRA and CHX desire to reduce duplication in the
examination of their Dual Members (as defined herein) and in the filing
and processing of certain registration and membership records; and
WHEREAS, FINRA and CHX desire to execute an agreement covering such
subjects pursuant to the provisions of Rule 17d-2 under the Exchange
Act and to file such agreement with the Securities and Exchange
Commission (the ``SEC'' or ``Commission'') for its approval.
NOW, THEREFORE, in consideration of the mutual covenants contained
hereinafter, FINRA and CHX hereby agree as follows:
1. Definitions. Unless otherwise defined in this Agreement or the
context otherwise requires, the terms used in this Agreement shall have
the same meaning as they have under the Exchange Act and the rules and
regulations thereunder. As used in this Agreement, the following terms
shall have the following meanings:
(a) ``CHX Rules'' or ``FINRA Rules'' shall mean: (i) the rules of
the CHX, or (ii) the rules of FINRA, respectively, as the rules of an
exchange or association are defined in Exchange Act Section 3(a)(27).
(b) ``Common Rules'' shall mean the CHX Rules that are
substantially similar to the applicable FINRA Rules and certain
provisions of the Exchange Act and SEC rules set forth on Exhibit 1 in
that examination for compliance with such rules would not require FINRA
to develop one or more new examination standards, modules, procedures,
or criteria in order to analyze the application of such provisions or
rule, or a Dual Member's activity, conduct, or output in relation to
such rule; provided, however, Common Rules shall not include the
application of SEC, CHX or FINRA rules as they pertain to violations of
insider trading activities, which is covered by a separate 17d-2
Agreement by and among the American Stock Exchange LLC, BATS Exchange,
Inc., Chicago Board Options Exchange, Inc., Chicago Stock Exchange,
Inc., EDGA Exchange, Inc., EDGX Exchange, Inc., Financial Industry
Regulatory Authority, Inc., International Securities Exchange, LLC, The
NASDAQ Stock Market LLC, National Stock Exchange, Inc., New York Stock
Exchange, LLC, NYSE Arca Inc., NYSE Regulation, Inc., NASDAQ OMX BX,
Inc. and NASDAQ OMX PHLX, Inc. effective April 15, 2010, as may be
amended from time to time.
(c) ``Dual Members'' shall mean those CHX members that are also
members of FINRA and the associated persons therewith.
(d) ``Effective Date'' shall be the date this Agreement is approved
by the Commission.
(e) ``Enforcement Responsibilities'' shall mean the conduct of
appropriate proceedings, in accordance with the FINRA Code of Procedure
(the Rule 9000 Series) and other applicable FINRA procedural rules, to
determine whether violations of Common Rules have occurred, and if such
violations are deemed to have occurred, the imposition of appropriate
sanctions as specified under the FINRA Code of Procedure and sanctions
guidelines.
(f) ``Regulatory Responsibilities'' shall mean the examination
responsibilities and Enforcement Responsibilities relating to
compliance by the Dual Members with the Common Rules and the provisions
of the Exchange Act and the rules and regulations thereunder, and other
applicable laws, rules and regulations, each as set forth on Exhibit 1
attached hereto.
2. Regulatory and Enforcement Responsibilities. FINRA shall assume
Regulatory Responsibilities and Enforcement Responsibilities for Dual
Members. Attached as Exhibit 1 to this Agreement and made part hereof,
CHX furnished FINRA with a current list of Common Rules and certified
to FINRA that such rules are substantially similar to the corresponding
FINRA Rule (the ``Certification''). FINRA hereby agrees that the rules
listed in the Certification are Common Rules as defined in this
Agreement. Each year following the Effective Date of this Agreement, or
more frequently if required by changes in either the rules of CHX or
FINRA, CHX shall submit an updated list of Common Rules to FINRA for
review which shall add CHX Rules not included in the current list of
Common Rules that qualify as Common Rules as defined in this Agreement;
delete CHX Rules included in the current list of Common Rules that no
longer qualify as Common Rules as defined in this Agreement; and
confirm that the remaining rules on the current list of Common Rules
continue to be CHX Rules that qualify as Common Rules as defined in
this Agreement. Within 30 days of receipt of such updated list, FINRA
shall confirm in writing whether the rules listed in any updated list
are Common Rules as defined in this Agreement. Notwithstanding anything
herein to the contrary, it is explicitly understood that the term
``Regulatory Responsibilities'' does not include, and CHX shall retain
full responsibility for (unless otherwise addressed by separate
agreement or rule) the following (collectively, the ``Retained
Responsibilities''):
(a) surveillance, examination, investigation and enforcement with
respect to trading activities or practices involving CHX's own
marketplace;
[[Page 49008]]
(b) registration pursuant to its applicable rules of associated
persons (i.e., registration rules that are not Common Rules);
(c) discharge of its duties and obligations as a Designated
Examining Authority pursuant to Rule 17d-1 under the Exchange Act, if
applicable; and
(d) any CHX Rules that are not Common Rules.
3. Dual Members. Prior to the Effective Date, CHX shall furnish
FINRA with a current list of Dual Members, which shall be updated no
less frequently than once each quarter.
4. No Charge. There shall be no charge to CHX by FINRA for
performing the Regulatory Responsibilities and Enforcement
Responsibilities under this Agreement except as hereinafter provided.
FINRA shall provide CHX with ninety (90) days advance written notice in
the event FINRA decides to impose any charges to CHX for performing the
Regulatory Responsibilities under this Agreement. If FINRA determines
to impose a charge, CHX shall have the right at the time of the
imposition of such charge to terminate this Agreement; provided,
however, that FINRA's Regulatory Responsibilities under this Agreement
shall continue until the Commission approves the termination of this
Agreement.
5. 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 Commission. 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.
6. Notification of Violations.
(a) In the event that FINRA becomes aware of apparent violations of
any CHX Rules, which are not listed as Common Rules, discovered
pursuant to the performance of the Regulatory Responsibilities assumed
hereunder, FINRA shall notify CHX of those apparent violations for such
response as CHX deems appropriate.
(b) In the event that CHX becomes aware of apparent violations of
any Common Rules, discovered pursuant to the performance of the
Retained Responsibilities, CHX shall notify FINRA of those apparent
violations and such matters shall be handled by FINRA as provided in
this Agreement.
(c) Apparent violations of Common Rules shall be processed by, and
enforcement proceedings in respect thereto shall be conducted by FINRA
as provided hereinbefore; provided, however, that in the event a Dual
Member is the subject of an investigation relating to a transaction on
the CHX, CHX may in its discretion assume concurrent jurisdiction and
responsibility.
(d) Each party agrees to make available promptly all files, records
and witnesses necessary to assist the other in its investigation or
proceedings.
7. Continued Assistance.
(a) FINRA shall make available to CHX all information obtained by
FINRA in the performance by it of the Regulatory Responsibilities
hereunder with respect to the Dual Members subject to this Agreement.
In particular, and not in limitation of the foregoing, FINRA shall
furnish CHX any information it obtains about Dual Members which
reflects adversely on their financial condition. CHX shall make
available to FINRA any information coming to its attention that
reflects adversely on the financial condition of Dual Members or
indicates possible violations of applicable laws, rules or regulations
by such firms.
(b) 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. Neither party shall assert
regulatory or other privileges as against the other with respect to
documents or information that is required to be shared pursuant to this
Agreement.
(c) The sharing of documents or information between the parties
pursuant to this Agreement shall not be deemed a waiver as against
third parties of regulatory or other privileges relating to the
discovery of documents or information.
8. Statutory Disqualifications. When FINRA becomes aware of a
statutory disqualification as defined in the Exchange Act with respect
to a Dual Member, FINRA shall determine pursuant to Sections 15A(g)
and/or Section 6(c) of the Exchange Act the acceptability or continued
applicability of the person to whom such disqualification applies and
keep CHX advised of its actions in this regard for such subsequent
proceedings as CHX may initiate.
9. Customer Complaints. CHX shall forward to FINRA copies of all
customer complaints involving Dual Members received by CHX relating to
FINRA's Regulatory Responsibilities under this Agreement. It shall be
FINRA's responsibility to review and take appropriate action in respect
to such complaints.
10. Advertising. FINRA shall assume responsibility to review the
advertising of Dual Members subject to the Agreement, provided that
such material is filed with FINRA in accordance with FINRA's filing
procedures and is accompanied with any applicable filing fees set forth
in FINRA Rules.
11. No Restrictions on Regulatory Action. Nothing contained in this
Agreement shall restrict or in any way encumber the right of either
party to conduct its own independent or concurrent investigation,
examination or enforcement proceeding of or against Dual Members, as
either party, in its sole discretion, shall deem appropriate or
necessary.
12. Termination. This Agreement may be terminated by CHX or FINRA
at any time upon the approval of the Commission after one (1) year's
written notice to the other party, except as provided in paragraph 4.
13. Arbitration. In the event of a dispute between the parties as
to the operation of this Agreement, CHX and FINRA hereby agree that any
such dispute shall be settled by arbitration in Washington, D.C. in
accordance with the rules of the American Arbitration Association then
in effect, or such other procedures as the parties may mutually agree
upon. Judgment on the award rendered by the arbitrator(s) may be
entered in any court having jurisdiction. Each party acknowledges that
the timely and complete performance of its obligations pursuant to this
Agreement is critical to the business and operations of the other
party. In the event of a dispute between the parties, the parties shall
continue to perform their respective obligations under this Agreement
in good faith during the resolution of such dispute unless and until
this Agreement is terminated in accordance with its provisions. Nothing
in this Section 13 shall interfere with a party's right to terminate
this Agreement as set forth herein.
14. Notification of Members. CHX and FINRA shall notify Dual
Members of this Agreement after the Effective Date by means of a
uniform joint notice.
15. Amendment. This Agreement may be amended in writing duly
approved by each party. All such amendments must be filed with and
approved by the Commission before they become effective.
16. Limitation of Liability. Neither FINRA nor CHX nor any of their
respective directors, governors, officers or employees shall be liable
to the other party to this Agreement for any liability, loss or damage
resulting from or claimed to have resulted from any delays,
inaccuracies, errors or omissions
[[Page 49009]]
with respect to the provision of Regulatory Responsibilities as
provided hereby or for the failure to provide any such responsibility,
except with respect to such liability, loss or damages as shall have
been suffered by one or the other of FINRA or CHX and caused by the
willful misconduct of the other party or their respective directors,
governors, officers or employees. No warranties, express or implied,
are made by FINRA or CHX with respect to any of the responsibilities to
be performed by each of them hereunder.
17. Relief from Responsibility. Pursuant to Sections 17(d)(1)(A)
and 19(g) of the Exchange Act and Rule 17d-2 thereunder, FINRA and CHX
join in requesting the Commission, upon its approval of this Agreement
or any part thereof, to relieve CHX of any and all responsibilities
with respect to matters allocated to FINRA pursuant to this Agreement;
provided, however, that this Agreement shall not be effective until the
Effective Date.
18. 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.
19. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and such
counterparts together shall constitute one and the same instrument.
IN WITNESS WHEREOF, each party has executed or caused this Agreement to
be executed on its behalf by a duly authorized officer as of the date
first written above.
EXHIBIT 1
CHX CERTIFICATION OF COMMON RULES
CHX hereby certifies that the requirements contained in the rules
listed below for CHX are identical to, or substantially similar to, the
comparable FINRA (NASD) Rules, Exchange Act provision or SEC rule
identified (``Common Rules'').
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FINRA (NASD) rule, Exchange Act
CHX rule provision, SEC rule
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Article 6, Rule 2 Registration and NASD Rule 1021(a) and (b)
Approval of Participant Personnel \18\. Registration Requirements;
NASD Rule 1031(a) and (b)
Registration Requirements;
NASD Rule 1060(a)(1) and (2)
Persons Exempt from
Registration; and NASD Rule
3070 (a) Reporting
Requirements.
Article 6, Rule 3 Training and NASD Rules 1031(a) and (b)
Examination of Registrants \19\. Registration Requirements and
1032 Categories of
Representative Registration.
Article 6, Rule 5(a) Supervision of NASD Rule 3010(a)(2) and (b)(3)
Registered Persons and Branch and Supervision.*
Resident Offices.
Article 6, Rule 5(b) Supervision of NASD Rule 3010(a)(2), (b)(1),
Registered Persons and Branch and (b)(4), and (d) Supervision.*
Resident Offices.
Article 6, Rule 5(c) Supervision of NASD Rule 3010(a)(7)
Registered Persons and Branch and Supervision.*
Resident Offices.
Article 6, Rule 10(a) Fingerprinting... Exchange Act Rule 17f-2.
Article 6, Rule 11 Continuing Education NASD Rule 1120(a)(1)-(5),
for Registered Persons \20\. 1120(b) Continuing Education
Requirements.
Article 6, Rule 12 Anti-Money FINRA Rule 3310 Anti-Money
Laundering Compliance Program \21\. Laundering Compliance Program.
Article 8, Rule 3 Fraudulent Acts...... FINRA Rules 2010 Standards of
Commercial Honor and
Principles of Trade, 2020 Use
of Manipulative, Deceptive or
Other Fraudulent Devices and
NASD IM 2310-2(b)(4) Fair
Dealing with Customers.
Article 8, Rule 10 Customer Dealings-- NASD Rule 11870(a)(1) Customer
Account Transfers. Account Transfer Contracts.
Article 8, Rule 11 Customer Dealings-- NASD Rule 2310 Recommendations
Suitability. to Customers (Suitability) and
IM-2310-2(b) Fair Dealing with
Customers.
Article 8, Rule 12 Interest in Customer FINRA Rule 2150(b) Customers'
Accounts \22\. Securities or Funds.
Article 8, Rule 13(a) Advertising and NASD Rule 2210(d)(1)(B)
Promotion. Communications with the
Public.
Article 8, Rule 13(b) Advertising and NASD Rule 2210(a)
Promotion. Communications with the
Public.
Article 9, Rule 2 Just and Equitable FINRA Rule 2010 Standards of
Trade Principles. Commercial Honor and
Principles of Trade.
Article 9, Rule 10 Prearranged Trades.. Exchange Act Sections 9(a);
10(b) and Rule 10b-5
thereunder.*
Article 9, Rule 11 Price Manipulation.. Exchange Act Sections 9(a);
10(b) and Rule 10b-5
thereunder.*
Article 9, Rule 12 Manipulative Exchange Act Sections 9(a);
Operations. 10(b) and Rule 10b-5
thereunder.*
Article 9, Rule 21 Discretion of NASD Rule 2510(b), (c) and
Employees Prohibited \23\. (d)(1) Discretionary Accounts.
Article 9, Rule 23(a) Short Sales...... Regulation SHO.
Article 11, Rule 2 Maintenance of Books NASD Rule 3110(a) Books and
and Records \24\. Records.*
Article 21, Rule 2 Book-Entry NASD Rule 11310 Book-Entry
Settlement Requirements. Settlement.
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* FINRA shall not have any Regulatory Responsibilities for these rules
as they pertain to violations of insider trading activities, which is
covered by a separate 17d-2 Agreement by and among the American Stock
Exchange LLC, BATS Exchange, Inc., Chicago Board Options Exchange,
Inc., Chicago Stock Exchange, Inc., EDGA Exchange, Inc., EDGX
Exchange, Inc., Financial Industry Regulatory Authority, Inc.,
International Securities Exchange, LLC, The NASDAQ Stock Market LLC,
National Stock Exchange, Inc., New York Stock Exchange, LLC, NYSE Arca
Inc., NYSE Regulation, Inc., NASDAQ OMX BX, Inc. and NASDAQ OMX PHLX,
Inc. effective April 15, 2010, as may be amended from time to time.
\18\ FINRA shall not have any Regulatory Responsibilities for CHX
Article 6 Rule 2 (a), (b)(7), (b)(10), (f), interpretation .01 or
interpretation .03 and such sections shall not be considered Common
Rules for purposes of this Agreement; responsibility for such
requirements remain with CHX.
\19\ FINRA shall not have any Regulatory Responsibilities for CHX
Article 6 Rule 3 requirement regarding completion of a training course
and interpretation .01 and such provisions shall not be considered
Common Rules for purposes of this Agreement; responsibility for such
requirements remain with CHX.
\20\ FINRA shall not have any Regulatory Responsibilities for exercise
of exemptive or other discretionary authority by CHX to the extent it
makes the rule inconsistent with the corresponding FINRA rule.
\21\ FINRA shall not have any Regulatory Responsibilities regarding the
CHX rule to the extent it does not contain an exception to independent
testing and requires notice to CHX.
\22\ FINRA shall only have Regulatory Responsibilities for the first
phrase of CHX Article 8 Rule 12 regarding guaranteeing customers
against loss in their account and only the first phrase shall be
considered a Common Rule for purposes of this Agreement;
responsibility for the remainder of the CHX rule remains with CHX.
[[Page 49010]]
\23\ FINRA shall not have any Regulatory Responsibilities regarding the
CHX rule to the extent it does not contain an exception for time and
price discretion.
\24\ FINRA shall not have any Regulatory Responsibilities regarding
maintaining books and records in conformity with CHX rules.
IV. Date of Effectiveness of the Proposed Plan and Timing for
Commission Action
Pursuant to Section 17(d)(1) of the Act \25\ and Rule 17d-2
thereunder,\26\ after September 2, 2010, the Commission may, by written
notice, declare the plan submitted by FINRA and CHX, File No. 4-274, to
be effective if the Commission finds that the plan is necessary or
appropriate in the public interest and for the protection of investors,
to foster cooperation and coordination among self-regulatory
organizations, or to remove impediments to and foster the development
of the national market system and a national system for the clearance
and settlement of securities transactions and in conformity with the
factors set forth in Section 17(d) of the Act.
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\25\ 15 U.S.C. 78q(d)(1).
\26\ 17 CFR 240.17d-2.
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V. Solicitation of Comments
In order to assist the Commission in determining whether to approve
the proposed 17d-2 Plan and to relieve CHX of the responsibilities
which would be assigned to FINRA, interested persons are invited to
submit written data, views, and arguments concerning the foregoing.
Comments may be submitted by any of the following methods:
Electronic Comments
Use the Commission's Internet comment form (http://www.sec.gov/rules/other.shtml); or
Send an e-mail to [email protected]. Please include
File Number 4-274 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, Station Place, 100 F
Street, NE., Washington, DC 20549-1090.
All submissions should refer to File Number 4-274. This file number
should be included on the subject line if e-mail is used. To help the
Commission process and review your comments more efficiently, please
use only one method. The Commission will post all comments on the
Commission's Internet Web site (http://www.sec.gov/rules/other.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed plan that are filed with the
Commission, and all written communications relating to the proposed
plan between the Commission and any person, other than those that may
be withheld from the public in accordance with the provisions of 5
U.S.C. 552, will be available for Web site viewing and printing in the
Commission's Public Reference Room, on official business days between
the hours of 10 a.m. and 3 p.m. Copies of the plan also will be
available for inspection and copying at the principal offices of CHX
and FINRA. All comments received will be posted without change; the
Commission does not edit personal identifying information from
submissions. You should submit only information that you wish to make
available publicly. All submissions should refer to File Number 4-274
and should be submitted on or before September 2, 2010.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\27\
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\27\ 17 CFR 200.30-3(a)(34).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-19852 Filed 8-11-10; 8:45 am]
BILLING CODE 8010-01-P