[Federal Register Volume 84, Number 137 (Wednesday, July 17, 2019)]
[Notices]
[Pages 34225-34230]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-15144]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-86356; File No. 4-747]
Program for Allocation of Regulatory Responsibilities Pursuant to
Rule 17d-2; Notice of Filing of Proposed Plan for the Allocation of
Regulatory Responsibilities Between the Financial Industry Regulatory
Authority, Inc. and the Long-Term Stock Exchange, Inc.
July 11, 2019.
Pursuant to Section 17(d) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 17d-2 thereunder,\2\ notice is hereby given that
on July 11, 2019, the Financial Industry Regulatory Authority, Inc.
(``FINRA'') and the Long-Term Stock Exchange, Inc. (``LTSE'') (together
with FINRA, the ``Parties'') filed with the Securities and Exchange
Commission (``Commission'' or ``SEC'') a plan for the allocation of
regulatory responsibilities, dated July 11, 2019 (``17d-2 Plan'' or the
``Plan''). The Commission is publishing this notice to solicit comments
on 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. Proposed Plan
The proposed 17d-2 Plan is intended to reduce regulatory
duplication for firms that are common members of both LTSE and
FINRA.\10\ 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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\10\ The proposed 17d-2 Plan refers to these common 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 ``LTSE Certification of Common Rules,''
referred to herein as the ``Certification'') that lists every LTSE
rule, and select federal securities laws, rules, and regulations, for
which FINRA would bear responsibility under the Plan for overseeing and
enforcing with respect to LTSE 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 LTSE that are substantially similar to the applicable
rules of FINRA,\11\ as well as any provisions of the federal securities
laws and the rules and regulations thereunder delineated in the
Certification (``Common Rules''). In the event that a Dual Member is
the subject of an investigation relating to a transaction on LTSE, the
plan acknowledges that LTSE may, in its discretion, exercise concurrent
jurisdiction and responsibility for such matter.\12\
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\11\ 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 LTSE 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 LTSE shall furnish FINRA with a list of
Dual Members, and shall update the list no less frequently than once
each calendar quarter.
\12\ See paragraph 6 of the proposed 17d-2 Plan.
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Under the Plan, LTSE would retain full responsibility for
surveillance and
[[Page 34226]]
enforcement with respect to trading activities or practices involving
LTSE's own marketplace, including, without limitation, registration
pursuant to its applicable rules of associated persons (i.e.,
registration rules that are not Common Rules); its duties as a DEA
pursuant to Rule 17d-1 under the Act; and any LTSE rules that are not
Common Rules.\13\
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\13\ 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
Long-Term 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 Long-Term Stock Exchange, Inc.
(``LTSE''), is made this 11th day of July, 2019 (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 LTSE may
be referred to individually as a ``party'' and together as the
``parties.''
Whereas, FINRA and LTSE desire to reduce duplication in the
examination and surveillance of their Dual Members (as defined herein)
and in the filing and processing of certain registration and membership
records; and
Whereas, FINRA and LTSE 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 LTSE 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) ``LTSE Rules'' or ``FINRA Rules'' shall mean: (i) The rules of
LTSE, 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 LTSE 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
or surveillance for compliance with such provisions and rules would not
require FINRA to develop one or more new examination or surveillance
standards, modules, procedures, or criteria in order to analyze the
application of the provision or rule, or a Dual Member's activity,
conduct, or output in relation to such provision or rule; provided,
however, Common Rules shall not include the application of the SEC,
LTSE or FINRA rules as they pertain to violations of insider trading
activities, which is covered by a separate 17d-2 Agreement by and 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 effective October 10, 2018, as may be amended from time to
time. Common Rules shall not include any provisions regarding (i)
notice, reporting or any other filings made directly to or from LTSE,
(ii) incorporation by reference of LTSE Rules that are not Common
Rules, (iii) exercise of discretion in a manner that differs from
FINRA's exercise of discretion including, but not limited to exercise
of exemptive authority, by LTSE, (iv) prior written approval of LTSE
and (v) payment of fees or fines to LTSE.
(c) ``Dual Members'' shall mean those LTSE 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 FINRA's 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 FINRA's Code of Procedure and sanctions
guidelines.
(f) ``Regulatory Responsibilities'' shall mean the examination
responsibilities, surveillance 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,
LTSE furnished FINRA with a current list of Common Rules and certified
to FINRA that such rules that are LTSE Rules are substantially similar
to the corresponding FINRA Rules (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 LTSE or FINRA, LTSE shall submit an updated list of Common
Rules to FINRA for review which shall add LTSE Rules not included in
the current list of Common Rules that qualify as Common Rules as
defined in this Agreement; delete LTSE 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 LTSE 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 LTSE shall retain full responsibility for (unless
otherwise addressed by separate agreement or rule) (collectively, the
``Retained Responsibilities'') the following:
(a) Surveillance, examination, investigation and enforcement with
respect to trading activities or practices involving LTSE's own
marketplace for rules that are not Common Rules;
(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; and
(d) any LTSE Rules that are not Common Rules.
3. Dual Members. Prior to the Effective Date, LTSE shall furnish
FINRA with a current list of Dual
[[Page 34227]]
Members, which shall be updated no less frequently than once each
quarter.
4. No Charge. There shall be no charge to LTSE by FINRA for
performing the Regulatory Responsibilities and Enforcement
Responsibilities under this Agreement except as otherwise agreed by the
parties, either herein or in a separate 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 this Agreement, the
statute, rule or order shall supersede the provision(s) hereof to the
extent necessary for them 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 LTSE Rules, which are not listed as Common Rules, discovered
pursuant to the performance of the Regulatory Responsibilities assumed
hereunder, FINRA shall notify LTSE of those apparent violations for
such response as LTSE deems appropriate.
(b) In the event that LTSE becomes aware of apparent violations of
any Common Rules, discovered pursuant to the performance of the
Retained Responsibilities, LTSE 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
LTSE, LTSE 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 LTSE 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 LTSE any information it obtains about Dual Members which
reflects adversely on their financial condition. LTSE 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 LTSE advised of its actions in this regard for such subsequent
proceedings as LTSE may initiate.
9. Customer Complaints. LTSE shall forward to FINRA copies of all
customer complaints involving Dual Members received by LTSE 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 LTSE or FINRA
at any time upon the approval of the Commission after six (6) month's
written notice to the other party.
13. Arbitration. In the event of a dispute between the parties as
to the operation of this Agreement, LTSE and FINRA hereby agree that
any such dispute shall be settled by arbitration in Washington, DC in
accordance with the rules of the American Arbitration Association then
in effect, or such other procedures as the parties may mutually agree
upon. Judgment on the award rendered by the arbitrator(s) may be
entered in any court having jurisdiction. 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. LTSE 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 LTSE 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 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 LTSE 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 LTSE 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 LTSE
join in requesting the Commission, upon its approval of this Agreement
or any part thereof, to relieve LTSE 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.
[[Page 34228]]
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.
* * * * *
Exhibit 1
LTSE Certification of Common Rules
LTSE hereby certifies that the requirements contained in the rules
listed below for LTSE 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
LTSE Rule Provision, SEC Rule
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Rule 2.140 Prohibited Conditions FINRA Rule 2081 Prohibited
Relating to Expungement of Customer Conditions Relating to
Dispute. Expungement of Customer
Dispute.
Rule 2.160(p) Registration Requirements FINRA Rule 1240(a)(1)-(4), (6)-
and Restrictions on Membership-- (7) and (b) Continuing
Continuing Education Requirements . Education Requirements.
Rule 2.240 Fidelity Bonds ............ FINRA Rule 4360 Fidelity Bonds.
Rule 3.110 Business Conduct of Members FINRA Rule 2010 Standards of
[supcaret]. Commercial Honor and
Principles of Trade.[supcaret]
Rule 3.120 Violations Prohibited 1 FINRA Rule 2010 Standards of
[supcaret] . Commercial Honor and
Principles of Trade [supcaret]
and FINRA Rule 3110
Supervision.
Rule 3.130 Use of Fraudulent Devices FINRA Rule 2020 Use of
[supcaret]. Manipulative, Deceptive or
Other Fraudulent
Devices.[supcaret]
Rule 3.150 Know Your Customer.......... FINRA Rule 2090 Know Your
Customer.
Rule 3.160 Fair Dealing with Customers. FINRA Rule 2020 Use of
Manipulative, Deceptive or
Other Fraudulent Device,
[supcaret] FINRA Rule 2010
Standards of Commercial Honor
and Principles of
Trade,[supcaret] FINRA Rule
2111(a) and SM .06
Suitability, FINRA Rule
2150(a) Improper Use of
Customers' Securities or
Funds; Prohibition Against
Guarantees and Sharing in
Accounts, and FINRA Rule
3240(a) Borrowing From or
Lending to Customers.
Rule 3.170 Suitability................. FINRA Rule 2111 Suitability.
Rule 3.180(a) The Prompt Receipt and FINRA Rule 11860 COD Orders.
Delivery of Securities.
Rule 3.180(b) The Prompt Receipt and SEA Regulation SHO.
Delivery of Securities.
Rule 3.190 Charges for Services FINRA Rule 2122 Charges for
Performed. Services Performed.
Rule 3.200 Use of Information Obtained FINRA Rule 2060 Use of
in a Fiduciary Capacity. Information Obtained in
Fiduciary Capacity.
Rule 3.210 Publication of Transactions FINRA Rule 5210 Publication of
and Quotations. Transactions and Quotations.
Rule 3.220 Offers at Stated Prices..... FINRA Rule 5220 Offers at
Stated Prices.
Rule 3.230 Payments Involving FINRA Rule 5230 Payments
Publications that Influence the Market Involving Publications that
Price of a Security. Influence the Market Price of
a Security.
Rule 3.240 Customer Confirmations...... FINRA Rule 2232(a) Customer
Confirmations and SEC Rule 10b-
10 Confirmation of
Transactions.
Rule 3.250 Disclosure of Control FINRA Rule 2262 Disclosure of
Relationship with Issuer. Control Relationship with
Issuer.
Rule 3.260 Discretionary Accounts...... NASD Rule 2510 Discretionary
Accounts.
Rule 3.270 Improper Use of Customers' FINRA Rule 2150(a)-(c) and SM
Securities or Funds; Prohibition .03 Improper Use of Customers'
Against Guarantees and Sharing in Securities or Funds;
Accounts. Prohibition Against Guarantees
and Sharing in Accounts.
Rule 3.280 Communications with FINRA Rule 2210 Communications
Customers and the Public. with the Public.
Rule 3.290 Customer Disclosures........ FINRA Rule 2265 Extended Hours
Trading Risk Disclosure.
Rule 3.291 Influencing or Rewarding FINRA Rule 3220 Influencing or
Employees of Others; Gratuities. Rewarding Employees of Others.
Rule 3.292 Telemarketing............... FINRA Rule 3230 Telemarketing.
Rule 3.293 Short-Interest Reporting.... FINRA Rule 4560 Short Interest
Reporting.
Rule 4.511 General Requirements........ FINRA Rule 4511 General
Requirements.
Rule 4.512 Customer Account Information FINRA Rule 4512 Customer
Account Information.
Rule 4.513 Record of Written Customer FINRA Rule 4513 Record of
Complaints. Written Customer Complaints.
Rule 4.550 Disclosure of Financial FINRA Rule 2261 Disclosure of
Condition. Financial Condition.
Rule 5.110 Supervision ............... FINRA Rule 3110 Supervision.
Rule 5.120 Supervisory Control System FINRA Rule 3120 Supervisory
Control System.
Rule 5.130 Annual Certification of FINRA Rule 3130 Annual
Compliance and Supervisory Processes . Certification of Compliance
and Supervisory Processes.
Rule 5.160 Anti-Money Laundering FINRA Rule 3310 Anti-Money
Compliance Program . Laundering Compliance Program.
Rule 5.170 Transactions for or by FINRA Rule 3210 Accounts At
Associated Persons. Other Broker-Dealers and
Financial Institutions.
Rule 6.120 Failure to Deliver and Regulation SHO Rules 200 and
Failure to Receive. 203.
Rule 6.130(a), (b), (d) and (e) FINRA Rule 2251 Forwarding of
Forwarding of Proxy and Other Issuer- Proxy and Other Issuer-Related
Related Materials; Proxy Voting. Materials.
Rule 10.110(a) Market Manipulation..... FINRA Rule 6140 Other Trading
Practices.
Rule 10.110(b) Market Manipulation..... FINRA Rule 5210 Publication of
Transactions and Quotations,
FINRA Rule 2020 Use of
Manipulative, Deceptive or
Other Fraudulent Devices,
FINRA Rule 2010 Standards of
Commercial Honor and
Principles of Trade, and FINRA
Rule 6140(a) Other Trading
Practices.
Rule 10.120 Fictitious Transactions.... FINRA Rule 6140 Other Trading
Practices and FINRA Rule 5210
Supplementary Material .02
Self-Trades.
Rule 10.130 Excessive Sales By A Member FINRA Rule 6140(c) Other
Trading Practices.
Rule 10.140 Manipulative Transactions.. FINRA Rule 6140 Other Trading
Practices.
[[Page 34229]]
Rule 10.150 Dissemination of False FINRA Rule 6140(e) Other
Information. Trading Practices.
Rule 10.160 Prohibition Against Trading FINRA Rule 5320 Prohibition
Ahead of Customer Orders **. Against Trading Ahead of
Customer Orders.**
Rule 10.180 Influencing the FINRA Rule 6140(a) Other
Consolidated Tape. Trading Practices and FINRA
Rule 5210 Publication of
Transactions and Quotations.
Rule 10.190 Trade Shredding............ FINRA Rule 5290 Order Entry and
Execution Practices.
Rule 10.220 Best Execution and FINRA Rule 5310 Best Execution
Interpositioning **. and Interpositioning.**
Rule 10.240 Trading Ahead of Research FINRA Rule 5280 Trading Ahead
Reports **. of Research Reports.**
Rule 10.260 Front Running of Block FINRA Rule 5270 Front Running
Transactions. of Block Transactions.**
Rule 11.280(e)(3) & (4) Limit Up-Limit FINRA Rule 6190(a)(1) & (2)
Down Plan and Trading Halts--Limit Up- Compliance with Regulation NMS
Limited Down Mechanism. Plan to Address Extraordinary
Market Volatility.
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Common Rules shall not include any provisions regarding (i) notice,
reporting or any other filings made directly to or from LTSE, (ii)
incorporation by reference of LTSE Rules that are not Common Rules,
(iii) exercise of discretion in a manner that differs from FINRA's
exercise of discretion including, but not limited to exercise of
exemptive authority, by LTSE, (iv) prior written approval of LTSE and
(v) payment of fees or fines to LTSE.
\1\ FINRA shall only have Regulatory Responsibilities for Rule 3.120(a)
regarding conduct in violation of the Act, or the rules or regulations
thereunder.
[supcaret] 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 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 effective October 10, 2018, as may be amended from time
to time.
** FINRA shall perform the surveillance responsibilities for the double
star rules. These rules may be cited by FINRA in both the context of
this Agreement and the Regulatory Services Agreement.
In addition, the following provisions shall be part of this 17d-2
Agreement:
SEA Rules:
SEA Rule 200 of Regulation SHO--Definition of Short Sales
and Marking Requirements **
SEA Rule 201 of Regulation SHO--Circuit Breaker **
SEA Rule 203 of Regulation SHO--Borrowing and Delivery
Requirements **
SEA Rule 204 of Regulation SHO--Close-Out Requirement **
SEA Rule 101 of Regulation M--Activities by Distribution
Participants **
SEA Rule 102 of Regulation M--Activities by Issuers and
Selling Security Holders During a Distribution **
SEA Rule 103 of Regulation M--Nasdaq Passive Market Making
**
SEA Rule 104 of Regulation M--Stabilizing and Other
Activities in Connection with an Offering **
SEA Rule 105 of Regulation M--Short Selling in Connection
With a Public Offering **
SEA Rule 604 of Regulation NMS--Display of Customer Limit
Orders **
SEA Rule 606 of Regulation NMS--Disclosure of Routing
Information **
SEA Rule 610(d) of Regulation NMS--Locking or Crossing
Quotations **
SEA Rule 611 of Regulation NMS--Order Protection Rule **
SEA Rule 10b-5 Employment of Manipulative and Deceptive
Devices [supcaret]
SEA Rule 17a-3/17a-4--Records to Be Made by Certain
Exchange Members, Brokers, and Dealers/Records to Be Preserved by
Certain Exchange Members, Brokers, and Dealers [supcaret]
III. Date of Effectiveness of the Proposed Plan and Timing for
Commission Action
Pursuant to Section 17(d)(1) of the Act \14\ and Rule 17d-2
thereunder,\15\ after August 1, 2019, the Commission may, by written
notice, declare the plan submitted by LTSE and FINRA, File No. 4-747,
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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\14\ 15 U.S.C. 78q(d)(1).
\15\ 17 CFR 240.17d-2.
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IV. Solicitation of Comments
In order to assist the Commission in determining whether to approve
the proposed 17d-2 Plan and to relieve LTSE 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 email to [email protected]. Please include
File Number 4-747 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, Station Place, 100 F Street NE, Washington, DC
20549-1090.
All submissions should refer to File Number 4-747. 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/other.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change 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 LTSE and FINRA. All comments
received will be posted without change.
[[Page 34230]]
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 4-747 and should be submitted
on or before August 1, 2019.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(34).
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Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-15144 Filed 7-16-19; 8:45 am]
BILLING CODE 8011-01-P