[Federal Register Volume 78, Number 148 (Thursday, August 1, 2013)]
[Notices]
[Pages 46644-46652]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-18477]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-70051; File No. S7-966]


Program for Allocation of Regulatory Responsibilities Pursuant to 
Rule 17d-2; Notice of Filing and Order Approving and Declaring 
Effective an Amendment to the Plan for the Allocation of Regulatory 
Responsibilities Among NYSE MKT LLC, BATS Exchange, Inc., BOX Options 
Exchange LLC, C2 Options Exchange, Incorporated, the Chicago Board 
Options Exchange, Incorporated, the International Securities Exchange 
LLC, Financial Industry Regulatory Authority, Inc., NYSE Arca, Inc., 
The NASDAQ Stock Market LLC, NASDAQ OMX BX, Inc., the NASDAQ OMX PHLX, 
Inc., Miami International Securities Exchange, LLC, and Topaz Exchange, 
LLC (the ``parties'') Concerning Options-Related Sales Practice Matters

July 26, 2013.
    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 June 21, 2013, pursuant to Rule 17d-
2 of the Act,\2\ by Financial Industry Regulatory Authority, Inc. 
(``FINRA'') and Topaz Exchange, LLC (``Topaz'') (the ``Participating 
Organizations'').
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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'')

[[Page 46645]]

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.
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    \3\ 15 U.S.C. 78s(g)(1).
    \4\ 15 U.S.C. 78q(d).
    \5\ 15 U.S.C. 78s(g)(2).
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    Section 17(d)(1) of the Act \6\ was intended, in part, to eliminate 
unnecessary multiple examinations and regulatory duplication.\7\ With 
respect to a common member, Section 17(d)(1) authorizes the Commission, 
by rule or order, to relieve an SRO of the responsibility to receive 
regulatory reports, to examine for and enforce compliance with 
applicable statutes, rules, and regulations, or to perform other 
specified regulatory functions.
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    \6\ 15 U.S.C. 78q(d)(1).
    \7\ See Securities Act Amendments of 1975, Report of the Senate 
Committee on Banking, Housing, and Urban Affairs to Accompany S. 
249, S. Rep. No. 94-75, 94th Cong., 1st Session 32 (1975).
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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.\8\ Rule 17d-1 authorizes the 
Commission to name a single SRO as the designated examining authority 
(``DEA'') to examine common members for compliance with the financial 
responsibility requirements imposed by the Act, or by Commission or SRO 
rules.\9\ When an SRO has been named as a common member's DEA, all 
other SROs to which the common member belongs are relieved of the 
responsibility to examine the firm for compliance with the applicable 
financial responsibility rules. On its face, Rule 17d-1 deals only with 
an SRO's obligations to enforce member compliance with financial 
responsibility requirements. Rule 17d-1 does not relieve an SRO from 
its obligation to examine a common member for compliance with its own 
rules and provisions of the federal securities laws governing matters 
other than financial responsibility, including sales practices and 
trading activities and practices.
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    \8\ 17 CFR 240.17d-1 and 17 CFR 240.17d-2, respectively.
    \9\ See Securities Exchange Act Release No. 12352 (April 20, 
1976), 41 FR 18808 (May 7, 1976).
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    To address regulatory duplication in these and other areas, the 
Commission adopted Rule 17d-2 under the Act.\10\ Rule 17d-2 permits 
SROs to propose joint plans for the allocation of regulatory 
responsibilities with respect to their common members. Under paragraph 
(c) of Rule 17d-2, the Commission may declare such a plan effective if, 
after providing for notice and comment, it determines that the plan is 
necessary or appropriate in the public interest and for the protection 
of investors, to foster cooperation and coordination among the SROs, to 
remove impediments to, and foster the development of, a national market 
system and a national clearance and settlement system, and is in 
conformity with the factors set forth in Section 17(d) of the Act. 
Commission approval of a plan filed pursuant to Rule 17d-2 relieves an 
SRO of those regulatory responsibilities allocated by the plan to 
another SRO.
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    \10\ 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 8, 1983, the Commission approved the SRO participants' 
plan for allocating regulatory responsibilities pursuant to Rule 17d-
2.\11\ On May 23, 2000, the Commission approved an amendment to the 
plan that added the ISE as a participant.\12\ On November 8, 2002, the 
Commission approved another amendment that replaced the original plan 
in its entirety and, among other things, allocated regulatory 
responsibilities among all the participants in a more equitable 
manner.\13\ On February 5, 2004, the parties submitted an amendment to 
the plan, primarily to include the BSE, which was establishing a new 
options trading facility to be known as the Boston Options Exchange 
(``BOX''), as an SRO participant.\14\ On December 5, 2007, the parties 
submitted an amendment to the plan to, among other things, provide that 
the National Association of Securities Dealers (``NASD'') (n/k/a the 
Financial Industry Regulatory Authority, Inc. or ``FINRA'') and NYSE 
are Designated Options Examining Authorities under the plan.\15\ On 
June 5, 2008, the parties submitted an amendment to the plan primarily 
to remove the NYSE as a Designated Options Examining Authority, leaving 
FINRA as the sole Designated Options Examining Authority for all common 
members that are members of FINRA.\16\ On February 9, 2010, the parties 
submitted a proposed amendment to the plan to add BATS and C2 as SRO 
participants and to reflect the name changes of the American Stock 
Exchange LLC to the NYSE Amex LLC, the Boston Stock Exchange, Inc., to 
the NASDAQ OMX BX, Inc. and the Philadelphia Stock Exchange, Inc. to 
the NASDAQ OMX PHLX, Inc.\17\ On May 22, 2012, the parties submitted a 
proposed amendment to add BOX as an SRO participant, and to amend 
Section XIII of the plan to set forth a revised procedure for adding 
new participants to the plan.\18\ On November 20, 2012, the parties 
submitted a proposed amendment to add MIAX as an SRO participant, and 
to change the name of NYSE Amex LLC to NYSE MKT LLC.\19\
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    \11\ See Securities Exchange Act Release No. 20158 (September 8, 
1983), 48 FR 41256 (September 14, 1983).
    \12\ See Securities Exchange Act Release No. 42816 (May 23, 
2000), 65 FR 34759 (May 31, 2000).
    \13\ See Securities Exchange Act Release No. 46800 (November 8, 
2002), 67 FR 69774 (November 19, 2002).
    \14\ See Securities Exchange Act Release No. 49197 (February 5, 
2004), 69 FR 7046 (February 12, 2004).
    \15\ See Securities Exchange Act Release No. 55532 (March 26, 
2007), 72 FR 15729 (April 2, 2007).
    \16\ See Securities Exchange Act Release No. 57987 (June 18, 
2008), 73 FR 36156 (June 25, 2008).
    \17\ See Securities Exchange Act Release No. 61589 (February 25, 
2012), 75 FR 9976 (March 4, 2010).
    \18\ See Securities Exchange Act Release No. 66974 (May 11, 
2012), 77 FR 29705 (May 18, 2012).
    \19\ See Securities Exchange Act Release No. 68363 (December 5, 
2012), 77 FR 73711 (December 11, 2012).
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    The plan reduces regulatory duplication for a large number of firms 
currently members of two or more of the SRO participants by allocating 
regulatory responsibility for certain options-related sales practice 
matters to one of the SRO participants. Generally, under the plan, the 
SRO participant responsible for conducting options-related sales 
practice examinations of a firm, and investigating options-related 
customer complaints and terminations for cause of associated persons of 
that firm, is known as the firm's ``Designated Options Examining 
Authority'' (``DOEA''). Pursuant to the plan, any other SRO of which 
the firm is a member is relieved of these responsibilities during the 
period in which the firm is assigned to another SRO acting as that 
firm's DOEA.

III. Proposed Amendment to the Plan

    On June 21, 2013, FINRA and Topaz submitted a proposed amendment to 
the Plan. The purpose of the amendment is to add Topaz as a Participant 
to the Plan. The text of the proposed amended

[[Page 46646]]

17d-2 plan is as follows (additions are italicized; deletions are 
[bracketed]):
* * * * *
    Agreement by and among BATS Exchange, Inc., BOX Options Exchange, 
LLC, the Chicago Board Options Exchange, Incorporated, C2 Options 
Exchange, Incorporated, the International Securities Exchange, LLC, 
Financial Industry Regulatory Authority, Inc., Miami International 
Securities Exchange, LLC, the New York Stock Exchange LLC, the NYSE MKT 
LLC, the NYSE Arca, Inc., The NASDAQ Stock Market LLC, NASDAQ OMX BX, 
Inc. [and], the NASDAQ OMX PHLX LLC, and Topaz Exchange, LLC Pursuant 
to Rule 17d-2 under the Securities Exchange Act of 1934.
    This agreement (``Agreement''), by and among BATS Exchange, Inc., 
BOX Options Exchange, LLC, the Chicago Board Options Exchange, 
Incorporated, C2 Options Exchange, Incorporated, the International 
Securities Exchange, LLC, Financial Industry Regulatory Authority, Inc. 
(``FINRA''), Miami International Securities Exchange, LLC, The NASDAQ 
Stock Market LLC (``NASDAQ''), NASDAQ OMX BX, Inc., the New York Stock 
Exchange LLC (``NYSE''), the NYSE MKT LLC, the NYSE Arca, Inc., [and] 
the NASDAQ OMX PHLX LLC, and Topaz Exchange, LLC, hereinafter 
collectively referred to as the Participants, is made this [19th] 21st 
day of [November, 2012] June, 2013, pursuant to the provisions of Rule 
17d-2 under the Securities Exchange Act of 1934 (the ``Exchange Act''), 
which allows for plans among self-regulatory organizations to allocate 
regulatory responsibility. This Agreement shall be administered by a 
committee known as the Options Self-Regulatory Council (the 
``Council'').
    This Agreement amends and restates the agreement entered into among 
the Participants on [April 25] November 19, 2012, entitled ``Agreement 
by and among BATS Exchange, Inc., BOX Options Exchange, LLC, the 
Chicago Board Options Exchange, Incorporated, C2 Options Exchange, 
Incorporated, the International Securities Exchange, LLC, Financial 
Industry Regulatory Authority, Inc., Miami International Securities 
Exchange, LLC, the New York Stock Exchange LLC, NYSE [Amex] MKT LLC, 
the NYSE Arca, Inc., the NASDAQ Stock Market LLC, NASDAQ OMX BX, Inc. 
and the NASDAQ OMX PHLX, Inc., Pursuant to Rule 17d-2 under the 
Securities Exchange Act of 1934.''
    Whereas, the Participants are desirous of allocating regulatory 
responsibilities with respect to broker-dealers, and persons associated 
therewith, that are members \1\ of more than one Participant (the 
``Common Members'') and conduct a public business for compliance with 
Common Rules (as hereinafter defined) relating to the conduct by 
broker-dealers of accounts for listed options, index warrants, currency 
index warrants and currency warrants (collectively, ``Covered 
Securities''); and
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    \1\ In the case of BOX Options Exchange, LLC (``BOX''), NASDAQ 
OMX BX, Inc. (``BX'') and NASDAQ members are those persons who are 
options participants (as defined in the BOX, BX and NASDAQ Options 
Market Rules).
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    Whereas, the Participants are desirous of executing a plan for this 
purpose pursuant to the provisions of Rule 17d-2 and filing such plan 
with the Securities and Exchange Commission (``SEC'' or the 
``Commission'') for its approval;
    Now, Therefore, in consideration of the mutual covenants contained 
hereafter, the Participants agree as follows:
    I. As used herein the term Designated Options Examining Authority 
(``DOEA'') shall mean: (1) FINRA insofar as it shall perform Regulatory 
Responsibility (as hereinafter defined) for its broker-dealer members 
that also are members of another Participant or (2) the Designated 
Examination Authority (``DEA'') pursuant to SEC Rule 17d-1 under the 
Securities Exchange Act (``Rule 17d-1'') for a broker-dealer that is a 
member of a more than one Participant (but not a member of FINRA).
    II. As used herein, the term ``Regulatory Responsibility'' shall 
mean the examination and enforcement responsibilities relating to 
compliance by Common Members with the rules of the applicable 
Participant that are substantially similar to the rules of the other 
Participants (the ``Common Rules''), insofar as they apply to the 
conduct of accounts for Covered Securities. A list of the current 
Common Rules of each Participant applicable to the conduct of accounts 
for Covered Securities is attached hereto as Exhibit A. Each year 
within 30 days of the anniversary date of the commencement of operation 
of this Agreement, each Participant shall submit in writing to FINRA 
and each DEA performing as a DOEA for any members of such Participant 
any revisions to Exhibit A reflecting changes in the rules of the 
Participant, and confirm that all other rules of the Participant listed 
in Exhibit A continue to meet the definition of Common Rules as defined 
in this Agreement. Within 30 days from the date that FINRA and each DEA 
performing as a DOEA has received revisions and/or confirmation that no 
change has been made to Exhibit A from all Participants, FINRA and each 
DEA performing as a DOEA shall confirm in writing to each Participant 
whether the rules listed in any updated Exhibit A are Common Rules as 
defined in this Agreement. Notwithstanding anything herein to the 
contrary, it is explicitly understood that the term ``Regulatory 
Responsibility'' does not include, and each of the Participants shall 
(unless allocated pursuant to Rule 17d-2 otherwise than under this 
Agreement) retain full responsibility for, each of the following:
    (a) Surveillance and enforcement with respect to trading activities 
or practices involving its own marketplace, including without 
limitation its rules relating to the rights and obligations of 
specialists and other market makers;
    (b) Registration pursuant to its applicable rules of associated 
persons;
    (c) Discharge of its duties and obligations as a DEA; and
    (d) Evaluation of advertising, responsibility for which shall 
remain with the Participant to which a Common Member submits same for 
approval.
    III. Apparent violations of another Participant's rules discovered 
by a DOEA, but which rules are not within the scope of the discovering 
DOEA's Regulatory Responsibility, shall be referred to the relevant 
Participant for such action as the Participant to which such matter has 
been referred deems appropriate. Notwithstanding the foregoing, nothing 
contained herein shall preclude a DOEA in its discretion from 
requesting that another Participant conduct an enforcement proceeding 
on a matter for which the requesting DOEA has Regulatory 
Responsibility. If such other Participants agree, the Regulatory 
Responsibility in such case shall be deemed transferred to the 
accepting Participant and confirmed in writing by the Participants 
involved. Each Participant agrees, upon request, to make available 
promptly all relevant files, records and/or witnesses necessary to 
assist another Participant in an investigation or enforcement 
proceeding.
    IV. The Council shall be composed of one representative designated 
by each of the Participants. Each Participant shall also designate one 
or more persons as its alternate representative(s). In the absence of 
the representative of a Participant, such alternate representative 
shall have the same powers, duties and responsibilities as the 
representative. Each Participant may, at any time, by notice to the 
then Chair of the Council, replace its representative and/or its 
alternate

[[Page 46647]]

representative on such Council. A majority of the Council shall 
constitute a quorum and, unless specifically otherwise required, the 
affirmative vote of a majority of the Council members present (in 
person, by telephone or by written consent) shall be necessary to 
constitute action by the Council. The representative from FINRA shall 
serve as Chair of the Council. All notices and other communications for 
the Council shall be sent to it in care of the Chair or to each of the 
representatives.
    V. The Council shall determine the times and locations of Council 
meetings, provided that the Chair, acting alone, may also call a 
meeting of the Council in the event the Chair determines that there is 
good cause to do so. To the extent reasonably possible, notice of any 
meeting shall be given at least ten-business days prior thereto. 
Notwithstanding anything herein to the contrary, representatives shall 
always be given the option of participating in any meeting 
telephonically at their own expense rather than in person.
    VI. FINRA shall have Regulatory Responsibility for all Common 
Members that are members of FINRA. For the purpose of fulfilling the 
Participants' Regulatory Responsibilities for Common Members that are 
not members of FINRA, the Participant that is the DEA shall serve as 
the DOEA. All Participants shall promptly notify the DOEAs no later 
than the next scheduled meeting of any change in membership of Common 
Members. A DOEA may request that a Common Member that is allocated to 
it be reallocated to another DOEA by giving thirty days written notice 
thereof. The DOEAs in their discretion may approve such request and 
reallocate such Common Member to another DOEA.
    VII. Each DOEA shall conduct an examination of each Common Member. 
The Participants agree that, upon request, relevant information in 
their respective files relative to a Common Member will be made 
available to the applicable DOEA. At each meeting of the Council, each 
DOEA shall be prepared to report on the status of its examination 
program for the previous quarter and any period prior thereto that has 
not previously been reported to the Council.
    VIII. Each DOEA will promptly furnish a copy of the Examination 
report, relating to Covered Securities, of any examination made 
pursuant to the provisions of this Agreement to each other Participant 
of which the Common Member examined is a member.
    IX. Each DOEA's Regulatory Responsibility shall for each Common 
Member allocated to it include investigations into terminations ``for 
cause'' of associated persons relating to Covered Securities, unless 
such termination is related solely to another Participant's market. In 
the latter instance, that Participant to whose market the termination 
for cause relates shall discharge Regulatory Responsibility with 
respect to such termination for cause. In connection with a DOEA's 
examination, investigation and/or enforcement proceeding regarding a 
Covered Security-related termination for cause, the other Participants 
of which the Common Member is a member shall furnish, upon request, 
copies of all pertinent materials related thereto in their possession. 
As used in this Section, ``for cause'' shall include, without 
limitation, terminations characterized on Form U5 under the label 
``Permitted to Resign,'' ``Discharge'' or ``Other.''
    X. Each DOEA shall discharge the Regulatory Responsibility for each 
Common Member allocated to it relative to a Covered Securities-related 
customer complaint \2\ unless such complaint is uniquely related to 
another Participant's market. In the latter instance, the DOEA shall 
forward the matter to that Participant to whose market the matter 
relates, and the latter shall discharge Regulatory Responsibility with 
respect thereto. If a Participant receives a customer complaint for a 
Common Member related to a Covered Security for which the Participant 
is not the DOEA, the Participant shall promptly forward a copy of such 
complaint to the DOEA.
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    \2\ For purposes of complaints, they can be reported pursuant to 
Form U4, Form U5 or RE-3 and any amendments thereto.
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    XI. Any written notice required or permitted to be given under this 
Agreement shall be deemed given if sent by certified mail, return 
receipt requested, or by a comparable means of electronic communication 
to each Participant entitled to receipt thereof, to the attention of 
the Participant's representative on the Council at the Participant's 
then principal office or by email at such address as the representative 
shall have filed in writing with the Chair.
    XII. The Participants shall notify the Common Members of this 
Agreement by means of a uniform joint notice approved by the Council.
    XIII. This Agreement may be amended to add a new Participant 
provided that such Participant does not assume Regulatory 
Responsibility, solely by an amendment by FINRA and such new 
Participant. All other Participants expressly consent to allow FINRA to 
add new Participants to this Agreement as provided above. FINRA will 
promptly notify all Participants of any such amendments to add new 
Participants. All other amendments to this Agreement must be approved 
in writing by each Participant. All amendments, including adding a new 
Participant, must be filed with and approved by the SEC before they 
become effective.
    XIV. Any of the Participants may manifest its intention to cancel 
its participation in this Agreement at any time by giving the Council 
written notice thereof at least 90 days prior to the effective date of 
such cancellation. Upon receipt of such notice the Council shall 
allocate, in accordance with the provisions of this Agreement, any 
Common Members for which the petitioning party was the DOEA. Until such 
time as the Council has completed the reallocation described above; the 
petitioning Participant shall retain all its rights, privileges, duties 
and obligations hereunder.
    XV. The cancellation of its participation in this Agreement by any 
Participant shall not terminate this Agreement as to the remaining 
Participants. This Agreement will only terminate following notice to 
the Commission, in writing, by the then Participants that they intend 
to terminate the Agreement and the expiration of the applicable notice 
period. Such notice shall be given at least six months prior to the 
intended date of termination, provided that in the event a notice of 
cancellation is received from a Participant that, assuming the 
effectiveness thereof, would result in there being just one remaining 
member of the Council, notice to the Commission of termination of this 
Agreement shall be given promptly upon the receipt of such notice of 
cancellation, which termination shall be effective upon the 
effectiveness of the cancellation that triggered the notice of 
termination to the Commission.
    XVI. No Participant nor the Council nor any of their respective 
directors, governors, officers, employees or representatives shall be 
liable to any other Participant in this Agreement for any liability, 
loss or damage resulting from or claimed to have resulted from any 
delays, inaccuracies, errors or omissions with respect to the provision 
of Regulatory Responsibility as provided hereby or for the failure to 
provide any such Responsibility, except with respect to such liability, 
loss or damages as shall have been suffered by one or more of the 
Participants and caused by the willful misconduct of one or more of the

[[Page 46648]]

other participants or their respective directors, governors, officers, 
employees or representatives. No warranties, express or implied, are 
made by any or all of the Participants or the Council with respect to 
any Regulatory Responsibility to be performed by each of them 
hereunder.
    XVII. Pursuant to Section 17(d)(1)(A) of the Securities Exchange 
Act of 1934 and Rule 17d-2 promulgated pursuant thereto, the 
Participants join in requesting the Securities and Exchange Commission, 
upon its approval of this Agreement or any part thereof, to relieve 
those Participants which are from time to time participants in this 
Agreement which are not the DOEA as to a Common Member of any and all 
Regulatory Responsibility with respect to the matters allocated to the 
DOEA.
* * * * *

Exhibit A

Rules Enforced Under 17d-2 Agreement

    Pursuant to Section II of the Agreement by and among BATS Exchange, 
Inc. (``BATS''), BOX Options Exchange, LLC (``BOX''), the Chicago Board 
Options Exchange, Incorporated (``CBOE''), C2 Options Exchange, 
Incorporated (``C2''), the International Securities Exchange, LLC 
(``ISE''), Financial Industry Regulatory Authority, Inc. (``FINRA''), 
Miami International Securities Exchange, LLC (``MIAX''), The NASDAQ 
Stock Market LLC (``NASDAQ''), NASDAQ OMX BX, Inc. (``BX''), the New 
York Stock Exchange LLC (``NYSE''), the NYSE MKT LLC (``NYSE MKT''), 
the NYSE Arca, Inc. (``NYSE ARCA''), [and] the NASDAQ OMX PHLX LLC 
(``PHLX''), and Topaz Exchange, LLC (``Topaz'') pursuant to Rule 17d-2 
under the Securities Exchange Act of 1934 dated June 21, 2013 (the 
``Agreement''), a revised list of the current Common Rules of each 
Participant, as compared to those of FINRA, applicable to the conduct 
of accounts for Covered Securities is set forth in this Exhibit A.

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                           OPENING OF ACCOUNTS
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NYSE MKT......................  Rules 411, 921 and 1101.
BATS..........................  Rule 26.2.
BOX...........................  Rule 4020.\1\
CBOE..........................  Rule 9.7.
C2*...........................  CBOE Rule 9.7.
ISE...........................  Rule 608.
FINRA.........................  Rules 2360(b)(16) and 2352.
MIAX..........................  Rule 1307.
NYSE..........................  Rule 721.\2\
Topaz.........................  Rule 608.
PHLX..........................  Rule 1024(b) and (c).\3\
NYSE ARCA.....................  Options Rules 9.2(a) and 9.18(b) and
                                 Equities Rules 9.18(b) and 8.4.
BX............................  Chapter XI, Section 9.
NASDAQ........................  Chapter XI, Section 7.
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                               SUPERVISION
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NYSE MKT......................  Rules 411, 922 and 1104.
BATS..........................  Rule 26.3.
BOX...........................  Rule 4030.
CBOE..........................  Rule 9.8.
C2............................  CBOE Rule 9.8.
ISE...........................  Rule 609.
FINRA.........................  Rules 2360(b)(20), 2360(b)(17)(B),
                                 2360(b)(16)(E), 2355 and 2358.
MIAX..........................  Rule 1308.
Topaz.........................  Rule 609.
NYSE..........................  N/A.
PHLX..........................  Rule 1025.
NYSE ARCA.....................  Options Rules 9.2(b) and 9.18(d)(2)(G)
                                 and Equities Rules 9.18(d)(2)(G) and
                                 8.7.
BX............................  Chapter XI, Section 10.
NASDAQ........................  Chapter XI, Section 8.
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                               SUITABILITY
------------------------------------------------------------------------
NYSE MKT......................  Rules 923 and 1102.
BATS..........................  Rule 26.4.
BOX...........................  Rule 4040.
CBOE..........................  Rule 9.9.
C2............................  CBOE Rule 9.9.
ISE...........................  Rule 610.
FINRA.........................  Rules 2360(b)(19) and 2353.
MIAX..........................  Rule 1309.
Topaz.........................  Rule 610.
NYSE..........................  Rule 723.
PHLX..........................  Rule 1026.
NYSE ARCA.....................  Options Rule 9.18(c) and Equities Rules
                                 9.18(c) and 8.5.
BX............................  Chapter XI, Section 11.
NASDAQ........................  Chapter XI, Section 9.
------------------------------------------------------------------------
                         DISCRETIONARY ACCOUNTS
------------------------------------------------------------------------
NYSE MKT......................  Rules 421, 924 and 1103.
BATS..........................  Rule 26.5.\4\
BOX...........................  Rule 4050.\4\

[[Page 46649]]

 
CBOE..........................  Rule 9.10.
C2............................  CBOE Rule 9.10.
ISE...........................  Rule 611.
FINRA.........................  Rules 2360(b)(18) and 2354.
MIAX..........................  Rule 1310.
Topaz.........................  Rule 611.
NYSE..........................  N/A.
PHLX..........................  Rule 1027.
NYSE ARCA.....................  Options Rule 9.18(e) and Equities Rules
                                 9.18(e) and 8.6.
BX............................  Chapter XI, Section 12.
NASDAQ........................  Chapter XI, Section 10.
------------------------------------------------------------------------
                  CUSTOMER COMMUNICATIONS (ADVERTISING)
------------------------------------------------------------------------
NYSE MKT......................  Rules 991 and 1106.
BATS..........................  Rule 26.16.
BOX...........................  Rule 4170.
CBOE..........................  Rule 9.21.\5\
C2............................  CBOE Rule 9.21.\5\
ISE...........................  Rule 623.\6\
FINRA.........................  Rules 2220 and 2357.
MIAX..........................  Rule 1322.
Topaz.........................  Rule 623.\6\
NYSE..........................  N/A.
PHLX..........................  N/A.
NYSE ARCA.....................  Options Rules 9.21(a) and 9.21(b).
BX............................  Chapter XI, Section 24.
NASDAQ........................  Chapter XI, Section 22.
------------------------------------------------------------------------
                           CUSTOMER COMPLAINTS
------------------------------------------------------------------------
NYSE MKT......................  Rules 932 and 1105.
BATS..........................  Rule 26.17.
BOX...........................  Rule 4190.
CBOE..........................  Rule 9.23.
C2............................  CBOE Rule 9.23.
ISE...........................  Rule 625.
FINRA.........................  FINRA Rules 2360(b)(17)(A) and 2356.
MIAX..........................  Rule 1324.
Topaz.........................  Rule 625.
NYSE..........................  Rules 732.
PHLX..........................  Rule 1070.
NYSE ARCA.....................  Options Rule 9.18(I) and Equities Rules
                                 9.18(l) and 8.8.
BX............................  Chapter XI, Section 26.
NASDAQ........................  Chapter XI, Section 24.
------------------------------------------------------------------------
                           CUSTOMER STATEMENTS
------------------------------------------------------------------------
NYSE MKT......................  Rules 419 and 930.
BATS..........................  Rule 26.7.
BOX...........................  Rule 4070.
CBOE..........................  Rule 9.12.
C2............................  CBOE Rule 9.12.
ISE...........................  Rules 613.
FINRA.........................  Rule 2360(b)(15).
MIAX..........................  Rule 1312.
Topaz.........................  Rule 613.
NYSE..........................  Rule 730.
PHLX..........................  Rule 1032.
NYSE ARCA.....................  Options Rule 9.18(j) and Equities Rule
                                 9.18(j).
BX............................  Chapter XI, Sections 14.
NASDAQ........................  Chapter XI, Section 12.
------------------------------------------------------------------------
                              CONFIRMATIONS
------------------------------------------------------------------------
NYSE MKT......................  Rule 925.
BATS..........................  Rule 26.6.
BOX...........................  Rule 4060.\7\
CBOE..........................  Rule 9.11.
C2............................  CBOE Rule 9.11.
ISE...........................  Rule 612.
FINRA.........................  Rule 2360(b)(12).
MIAX..........................  Rule 1311.
Topaz.........................  Rule 612.
NYSE..........................  Rules 725.\8\
PHLX..........................  Rule 1028.
NYSE ARCA.....................  Options Rule 9.18(f) and Equities Rule
                                 9.18(j).

[[Page 46650]]

 
BX............................  Chapter XI, Section 13.
NASDAQ........................  Chapter XI, Section 11.
------------------------------------------------------------------------
                ALLOCATION OF EXERCISE ASSIGNMENT NOTICES
------------------------------------------------------------------------
NYSE MKT......................  Rule 981.
BATS..........................  Rule 23.2.
BOX...........................  Rule 9010.
CBOE..........................  Rule 11.2.
C2............................  CBOE Rule 11.2.
ISE...........................  Rule 1101.
FINRA.........................  Rule 2360(b)(23)(C).
MIAX..........................  Rule 701.
Topaz.........................  Rule 1101.
NYSE..........................  Rule 781.
PHLX..........................  Rule 1043.
NYSE ARCA.....................  Options Rule 6.25(a).
BX............................  Chapter VII, Section 2.
NASDAQ........................  Chapter VIII, Section 2.
------------------------------------------------------------------------
                          DISCLOSURE DOCUMENTS
------------------------------------------------------------------------
NYSE MKT......................  Rules 921 and 926.
BATS..........................  Rule 26.10.
BOX...........................  Rule 4100.
CBOE..........................  Rule 9.15.
C2............................  CBOE Rule 9.15.
ISE...........................  Rule 616.
FINRA.........................  Rule 2360(b)(11).
MIAX..........................  Rule 1315.
Topaz.........................  Rule 616.
NYSE..........................  Rule 726(a) and (c).
PHLX..........................  Rules 1024(b)(v), 1029.
NYSE ARCA.....................  Options Rule 9.18(g) and Equities Rule
                                 9.18(g).
BX............................  Chapter XI, Section 17.
NASDAQ........................  Chapter XI, Section 15.
------------------------------------------------------------------------
                 BRANCH OFFICES OF MEMBER ORGANIZATIONS
------------------------------------------------------------------------
NYSE MKT......................  Rule 922(d).\9\
BOX...........................  Rule 4010(b).
CBOE..........................  Rule 9.6.
C2............................  CBOE Rule 9.6.
ISE...........................  Rule 607.
FINRA.........................  Rules 2360(b)(20)(B) and 2355.
MIAX..........................  Rule 1306.
Topaz.........................  Rule 607.
NYSE..........................  N/A.
PHLX..........................  N/A.
NYSE ARCA.....................  Options Rule 9.18(m) and Equities Rule
                                 9.18(m).
BX............................  Chapter XI, Section 8.
NASDAQ........................  Chapter XI, Section 6.
------------------------------------------------------------------------
                     PROHIBITION AGAINST GUARANTEES
------------------------------------------------------------------------
NYSE MKT......................  Rule 390.
BATS..........................  Rule 26.13.
BOX...........................  Rule 4130.
CBOE..........................  Rule 9.18.
C2............................  CBOE Rule 9.18.
ISE...........................  Rule 619.
FINRA.........................  Rule 2150(b).
MIAX..........................  Rule 1318.
Topaz.........................  Rule 619.
NYSE..........................  Rule 2150(b).
PHLX..........................  Rule 777.
NYSE ARCA.....................  Options Rule 9.1(e).
BX............................  Chapter XI, Sections 20 and 21.
NASDAQ........................  Chapter XI, Sections 18 and 19.
------------------------------------------------------------------------
                           SHARING IN ACCOUNTS
------------------------------------------------------------------------
NYSE MKT......................  Rule 390.
BATS..........................  Rule 26.14.
BOX...........................  Rule 4140.
CBOE..........................  Rule 9.18(b).
C2............................  CBOE Rule 9.18(b).

[[Page 46651]]

 
ISE...........................  Rule 620.\10\
FINRA.........................  Rule 2150(c).
MIAX..........................  Rule 1319.
Topaz.........................  Rule 620.\10\
NYSE..........................  Rules 2150(c).
PHLX..........................  N/A.
NYSE ARCA.....................  Options Rule 9.1(f).
BX............................  Chapter XI, Section 21.
NASDAQ........................  Chapter XI, Section 19.\11\
------------------------------------------------------------------------
                           REGISTRATION OF ROP
------------------------------------------------------------------------
NYSE MKT......................  Rule 920.
BATS..........................  Rule 17.2(g)(1), (2), (6) and (7).
BOX...........................  Rule 2020(c)(1), (e)(1) and IM-2040-4
                                 and IM-2040-5(b).
CBOE..........................  Rule 9.2.
C2............................  CBOE Rule 9.2.
ISE...........................  Rule 601.
FINRA.........................  NASD Rules 1022(f) & IM-1022-1.
MIAX..........................  Rule 1301.
Topaz.........................  Rule 601.
NYSE..........................  N/A.
PHLX..........................  Rule 1024(a)(i).
NYSE ARCA.....................  Options Rule 9.26 and Equities Rule
                                 9.26.
BX............................  Chapter XI, Section 2.
NASDAQ........................  Chapter XI, Section 2.
------------------------------------------------------------------------
                  CERTIFICATION OF REGISTERED PERSONNEL
------------------------------------------------------------------------
NYSE MKT......................  Rule 920.
BATS..........................  Rule 2.5 Interpretation .01(c) and
                                 11.4(e).
BOX...........................  IM-2040-3.
CBOE..........................  Rule 9.3.
C2............................  CBOE Rule 9.3.
ISE...........................  Rule 602.
FINRA.........................  NASD Rule 1032(d).
MIAX..........................  Rule 1302.
Topaz.........................  Rule 602.
NYSE..........................  N/A.
PHLX..........................  Rule 1024.
NYSE ARCA.....................  Options Rule 9.27(a).
BX............................  Chapter XI, Section 3.
NASDAQ........................  Chapter XI, Section 3.
------------------------------------------------------------------------
\1\ FINRA shall not have any Regulatory Responsibility regarding the
  requirement for designation of Senior Options Principal and Compliance
  Options Principal.
\2\ FINRA shall not have any Regulatory Responsibility regarding opening
  short uncovered option accounts requirements.
\3\ FINRA shall not have any Regulatory Responsibility regarding foreign
  currency option requirements specified in any of the PHLX rules in
  this Exhibit A.
\4\ FINRA shall not have any Regulatory Responsibility to enforce this
  rule as to time and price discretion in institutional accounts. In
  addition FINRA shall not have any Regulatory Responsibility regarding
  BOX Rule 4050(a)(2).
\5\ FINRA shall not have any Regulatory Responsibility regarding CBOE's
  and C2's requirements to the extent that a customer would meet FINRA's
  definition of Institutional Investor and Institutional Sales Material
  but would not meet the requirements for such definitions in under
  CBOE's and C2's rule.
\6\ FINRA shall not have any Regulatory Responsibility regarding ISE's
  and Topaz's requirements to the extent that a customer would meet
  FINRA's definition of Institutional Investor and Institutional Sales
  Material but would not meet the requirements for such definitions in
  under such rule. In addition, FINRA shall not have any Regulatory
  Responsibility regarding ISE's and Topaz's requirements regarding
  approval of all market letters.
\7\ FINRA shall not have any Regulatory Responsibility regarding the
  requirement in confirmations to distinguish between BOX option
  transactions and other transactions in option contracts.
\8\ FINRA shall not have any Regulatory Responsibility regarding the
  requirement in confirmations to distinguish between NYSE option
  transactions and other transactions in option contracts.
\9\ FINRA shall only have Regulatory Responsibility for the first
  paragraph and shall not have any Regulatory Responsibility regarding
  the requirements for debt options.
\10\ FINRA shall not have any Regulatory Responsibility regarding ISE's
  and Topaz's requirements to the extent its rule does not contain an
  exception to permit sharing in the profits and losses of an account.
\11\ FINRA shall not have any Regulatory Responsibility regarding
  NASDAQ's requirements to the extent such rules do not contain an
  exception addressing immediate family.

* * * * *

 IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number S7-966 on the subject line.

Paper Comments

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


[[Page 46652]]


All submissions should refer to File Number S7-966. This file number 
should be included on the subject line if email is used. To help the 
Commission process and review your comments more efficiently, please 
use only one method. The Commission will post all comments on the 
Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed plan that are filed with the 
Commission, and all written communications relating to the proposed 
plan between the Commission and any person, other than those that may 
be withheld from the public in accordance with the provisions of 5 
U.S.C. 552, will be available for Web site viewing and printing in the 
Commission's Public Reference Room, 100 F Street NE., Washington, DC 
20549, on official business days between the hours of 10:00 a.m. and 
3:00 p.m. Copies of the plan also will be available for inspection and 
copying at the principal offices of FINRA and Topaz. All comments 
received will be posted without change; the Commission does not edit 
personal identifying information from submissions. You should submit 
only information that you wish to make available publicly. All 
submissions should refer to File Number S7-966 and should be submitted 
on or before August 22, 2013.

V. Discussion

    The Commission continues to believe that the proposed plan is an 
achievement in cooperation among the SRO participants. The Plan, as 
amended, will reduce unnecessary regulatory duplication by allocating 
to the designated SRO the responsibility for certain options-related 
sales practice matters that would otherwise be performed by multiple 
SROs. The plan promotes efficiency by reducing costs to firms that are 
members of more than one of the SRO participants. In addition, because 
the SRO participants coordinate their regulatory functions in 
accordance with the plan, the plan promotes, and will continue to 
promote, investor protection.
    Under paragraph (c) of Rule 17d-2, the Commission may, after 
appropriate notice and comment, declare a plan, or any part of a plan, 
effective. In this instance, the Commission believes that appropriate 
notice and comment can take place after the proposed amendment is 
effective. The primary purpose of the amendment is to add Topaz as an 
SRO participant. By declaring it effective today, the amended Plan can 
become effective and be implemented without undue delay.\20\ The 
Commission notes that the prior version of this plan immediately prior 
to this proposed amendment was published for comment and the Commission 
did not receive any comments thereon.\21\ Furthermore, the Commission 
does not believe that the amendment to the plan raises any new 
regulatory issues that the Commission has not previously considered.
---------------------------------------------------------------------------

    \20\ On July 26, 2013, the Commission granted Topaz's 
application for registration as a national securities exchange. See 
Securities Exchange Act Release No. 70050 (July 26, 2013) (File No. 
10-209).
    \21\ See supra note 19 (citing to Securities Exchange Act 
Release No. 68363).
---------------------------------------------------------------------------

VI. Conclusion

    This order gives effect to the amended Plan submitted to the 
Commission that is contained in File No. S7-966.
    It is therefore ordered, pursuant to Section 17(d) of the Act, that 
the Plan, as amended by and between FINRA and Topaz, filed with the 
Commission pursuant to Rule 17d-2 on June 21, 2013 is hereby approved 
and declared effective.
    It is further ordered that those SRO participants that are not the 
DOEA as to a particular common member are relieved of those regulatory 
responsibilities allocated to the common member's DOEA under the 
amended Plan to the extent of such allocation.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\22\
---------------------------------------------------------------------------

    \22\ 17 CFR 200.30-3(a)(34).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-18477 Filed 7-31-13; 8:45 am]
BILLING CODE 8011-01-P