[Federal Register Volume 85, Number 247 (Wednesday, December 23, 2020)]
[Notices]
[Pages 84040-84045]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-28308]



[[Page 84040]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-90703; File No. 4-697]


Program for Allocation of Regulatory Responsibilities Pursuant to 
Rule 17d-2; Notice of Filing and Order Approving and Declaring 
Effective an Amended Plan for the Allocation of Regulatory 
Responsibilities Between the Financial Industry Regulatory Authority, 
Inc. and Nasdaq MRX, LLC

December 17, 2020.
    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 November 19, 2020, pursuant to Rule 
17d-2 of the Act,\2\ by the Financial Industry Regulatory Authority, 
Inc. (``FINRA'') and Nasdaq MRX, LLC (``MRX'') (collectively, 
``Participating Organizations'' or ``parties''). This agreement amends 
and restates the agreement entered into between FINRA and ISE Mercury, 
LLC (n/k/a MRX) on February 8, 2016, entitled ``Agreement Between 
Financial Industry Regulatory Authority, Inc. and ISE Mercury, LLC 
Pursuant to Rule 17d-2 under the Securities Exchange Act of 1934,'' and 
any subsequent amendments thereafter.
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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) \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 appropriate notice and opportunity for 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 March 8, 2016, the Commission declared effective the Plan 
entered into between FINRA and MRX for allocating regulatory 
responsibility pursuant to Rule 17d-2.\11\ The Plan is intended to 
reduce regulatory duplication for firms that are common members of 
FINRA and MRX by allocating regulatory responsibility with respect to 
certain applicable laws, rules, and regulations that are common among 
them. Included in the Plan is an exhibit that lists every MRX rule for 
which FINRA bears responsibility under the Plan for overseeing and 
enforcing with respect to MRX members that are also members of FINRA 
and the associated persons therewith (``Certification'').
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    \11\ See Securities Exchange Act Release No. 77321 (March 8, 
2016), 81 FR 13434 (March 14, 2016).
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III. Proposed Amendment to the Plan

    On November 19, 2020, the parties submitted a proposed amendment to 
the Plan (``Amended Plan''). The primary purpose of the Amended Plan is 
to allocate surveillance, investigation, and enforcement 
responsibilities for Rule 14e-4 under the Act and to reflect the name 
change of ISE Mercury, LLC to Nasdaq MRX, LLC. The text of the proposed 
Amended Plan is as follows (additions are italicized; deletions are 
[bracketed]):
* * * * *

AGREEMENT BETWEEN

FINANCIAL INDUSTRY REGULATORY AUTHORITY, INC. AND [ISE MERCURY]NASDAQ 
MRX, LLC PURSUANT TO RULE 17d-2 UNDER THE SECURITIES EXCHANGE ACT OF 
1934

    This Agreement, by and between Financial Industry Regulatory 
Authority, Inc. (``FINRA'') and [ISE Mercury]Nasdaq MRX, LLC (``[ISE 
Mercury]MRX''), is made this [8th]16th day of [February]November, 
20[16]20 (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 [ISE Mercury]MRX may be referred to

[[Page 84041]]

individually as a ``party'' and together as the ``parties.''
    This Agreement amends and restates this agreement entered into 
between FINRA and MRX on February 8, 2016, entitled ``Agreement between 
Financial Industry Regulatory Authority, Inc. and ISE Mercury, LLC 
Pursuant to Rule 17d-2 under the Securities Exchange Act of 1934,'' and 
any subsequent amendments thereafter.
    Whereas, FINRA and [ISE Mercury]MRX 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 [ISE Mercury]MRX 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 [ISE Mercury]MRX 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) ``[ISE Mercury]MRX Rules'' or ``FINRA Rules'' shall mean the 
rules of [ISE Mercury]MRX or 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 [ISE Mercury]MRX Rules that are 
substantially similar to the applicable FINRA Rules set forth in 
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 
the rule, or a Dual Member's activity, conduct, or output in relation 
to such rule. Common Rules shall not include any provisions regarding 
(i) notice, reporting or any other filings made directly to or from 
MRX, (ii) incorporation by reference of MRX 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 MRX, (iv) prior written approval of MRX and 
(v) payment of fees or fines to MRX.
    (c) ``Dual Members'' shall mean those [ISE Mercury]MRX members that 
are also members of FINRA and the associated persons therewith.
    (d) ``Effective Date'' shall have the meaning set forth in 
paragraph 13.
    (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's 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. The term ``Regulatory Responsibilities'' shall also 
include the surveillance, investigation and Enforcement 
Responsibilities relating to compliance by Common Members with Rule 
14e-4 of the Securities Exchange Act (``Rule 14e-4''), with a focus on 
the standardized call option provision of Rule 14e-4(a)(1)(ii)(D).
    2. Regulatory and Enforcement Responsibilities. FINRA shall assume 
Regulatory Responsibilities and Enforcement Responsibilities for Dual 
Members. Attached as Exhibit 1 to this Agreement and made part hereof, 
[ISE Mercury]MRX 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 [ISE 
Mercury]MRX Rules or FINRA Rules, [ISE Mercury]MRX shall submit an 
updated list of Common Rules to FINRA for review which shall add [ISE 
Mercury]MRX Rules not included in the current list of Common Rules that 
qualify as Common Rules as defined in this Agreement; delete [ISE 
Mercury]MRX 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 [ISE Mercury]MRX 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 [ISE Mercury]MRX shall retain full responsibility for 
(unless otherwise addressed by separate agreement or rule) the 
following (collectively, the ``Retained Responsibilities''):
    (a) surveillance and enforcement with respect to trading activities 
or practices involving [ISE Mercury's]MRX's own marketplaces, including 
without limitation [ISE Mercury's]MRX's Rules relating to the rights 
and obligations of market makers;
    (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 [ISE Mercury]MRX Rules that are not Common Rules.
    3. Dual Members. Prior to the Effective Date, [ISE Mercury]MRX 
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 [ISE Mercury]MRX by FINRA 
for performing the Regulatory Responsibilities and Enforcement 
Responsibilities under this Agreement except as hereinafter provided. 
FINRA shall provide [ISE Mercury]MRX with ninety (90) days advance 
written notice in the event FINRA decides to impose any charges to [ISE 
Mercury]MRX for performing the Regulatory Responsibilities under this 
Agreement. If FINRA determines to impose a charge, [ISE Mercury]MRX 
shall have the right at the time of the imposition of such charge to 
terminate this Agreement; provided, however, that FINRA's Regulatory 
Responsibilities under this Agreement shall continue until the 
Commission approves the termination of this Agreement.
    5. Reassignment of Regulatory Responsibilities. Notwithstanding any 
provision hereof, this Agreement shall be subject to any statute, or 
any rule or order of the Commission. To the extent such action is 
inconsistent with this Agreement, such action shall supersede the 
provisions hereof to the extent necessary for them to be properly 
effectuated and the provisions hereof in that respect shall be null and 
void.

[[Page 84042]]

    6. Notification of Violations. In the event that FINRA becomes 
aware of apparent violations of any [ISE Mercury]MRX Rules, which are 
not listed as Common Rules, discovered pursuant to the performance of 
the Regulatory Responsibilities assumed hereunder, FINRA shall notify 
[ISE Mercury]MRX of those apparent violations for such response as [ISE 
Mercury]MRX deems appropriate. In the event [ISE Mercury]MRX becomes 
aware of apparent violations of the Common Rules, discovered pursuant 
to the performance of the Retained Responsibilities, [ISE Mercury]MRX 
shall notify FINRA of those apparent violations and such matters shall 
be handled by FINRA as provided in this Agreement. Apparent violations 
of all the 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 [ISE 
Mercury]MRX, [ISE Mercury]MRX may in its discretion assume concurrent 
jurisdiction and responsibility. Each party agrees to make available 
promptly all files, records and witnesses necessary to assist the other 
in its investigation or proceedings.
    7. Continued Assistance. FINRA shall make available to [ISE 
Mercury]MRX all information obtained by FINRA in the performance by it 
of the Regulatory Responsibilities hereunder in respect to the Dual 
Members subject to this Agreement. In particular, and not in limitation 
of the foregoing, FINRA shall furnish [ISE Mercury]MRX any information 
it obtains about Dual Members which reflects adversely on their 
financial condition. It is understood that such information is of an 
extremely sensitive nature and, accordingly, [ISE Mercury]MRX 
acknowledges and agrees to take all reasonable steps to maintain its 
confidentiality. [ISE Mercury]MRX 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.
    8. Dual Member Applications.
    (a) Dual Members subject to this Agreement shall be required to 
submit, and FINRA shall be responsible for processing and acting upon 
all applications submitted on behalf of allied persons, partners, 
officers, registered personnel and any other person required to be 
approved by the [ISE Mercury]MRX Rules and FINRA Rules or associated 
with Dual Members thereof. Upon request, FINRA shall advise [ISE 
Mercury]MRX of any changes of allied members, partners, officers, 
registered personnel and other persons required to be approved by the 
[ISE Mercury]MRX Rules and FINRA Rules.
    (b) Dual Members shall be required to send to FINRA all letters, 
termination notices or other material respecting the individuals listed 
in paragraph 8(a).
    (c) When as a result of processing such submissions FINRA becomes 
aware of a statutory disqualification as defined in the Exchange Act 
with respect to a 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 [ISE Mercury]MRX advised of its 
actions in this regard for such subsequent proceedings as [ISE 
Mercury]MRX may initiate.
    (d) Notwithstanding the foregoing, FINRA shall not review the 
membership application, reports, filings, fingerprint cards, notices, 
or other writings filed to determine if such documentation submitted by 
a broker or dealer, or a person associated therewith or other persons 
required to register or qualify by examination: (i) meets the [ISE 
Mercury]MRX requirements for general membership or for specified 
categories of membership or participation in [ISE Mercury]MRX, such as 
(A) Primary Market Maker Membership (``PMM''); (B) Competitive Market 
Maker Membership (``CMM''); (C) Electronic Access Membership (``EAM'') 
(or any similar type of [ISE Mercury]MRX membership or participation 
that is created after this Agreement is executed); or (ii) meets the 
[ISE Mercury]MRX requirements to be associated with, or employed by, a 
[ISE Mercury]MRX member or participant in any capacity, such a 
Designated Trading Representative (``DTR'') (or any similar type of 
participation, employment category or title, or associate-person 
category or class that is created after this Agreement is executed). 
FINRA shall not review applications or other documentation filed to 
request a change in the rights or status described in this paragraph 
8(d), including termination or limitation on activities, of a member or 
a participant of [ISE Mercury]MRX, or a person associated with, or 
requesting association with, a member or participant of [ISE 
Mercury]MRX.
    9. Branch Office Information. FINRA shall also be responsible for 
processing and, if required, acting upon all requests for the opening, 
address changes, and terminations of branch offices by Dual Members and 
any other applications required of Dual Members with respect to the 
Common Rules as they may be amended from time to time. Upon request, 
FINRA shall advise [ISE Mercury]MRX of the opening, address change and 
termination of branch and main offices of Dual Members and the names of 
such branch office managers.
    10. Customer Complaints. [ISE Mercury]MRX shall forward to FINRA 
copies of all customer complaints involving Dual Members received by 
[ISE Mercury]MRX relating to FINRA's Regulatory Responsibilities under 
this Agreement. It shall be FINRA's responsibility to review and take 
appropriate action in respect to such complaints.
    11. 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 [ISE 
Mercury]MRX or FINRA at any time upon the approval of the Commission 
after one (1) year's written notice to the other party (or such shorter 
time as may be agreed by the parties), except as provided in paragraph 
4.
    13. Effective Date. This Agreement shall be effective upon approval 
of the Commission.
    14. Arbitration. In the event of a dispute between the parties as 
to the operation of this Agreement, [ISE Mercury]MRX 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.
    15. Separate Agreement. This Agreement is wholly separate from (1) 
the multiparty Agreement made pursuant to Rule 17d-2 of the Exchange 
Act 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,

[[Page 84043]]

LLC] NYSE American LLC, Cboe BZX Exchange, Inc., the Cboe EDGX 
Exchange, Inc., Cboe C2 Exchange, Inc., Cboe Exchange, Inc., Nasdaq 
ISE, LLC, Financial Industry Regulatory Authority, Inc., NYSE Arca, 
Inc., The NASDAQ Stock Market LLC, BOX Exchange LLC, NASDAQ BX, Inc., 
NASDAQ PHLX LLC, Miami International Securities Exchange, LLC, Nasdaq 
GEMX, LLC, Nasdaq MRX, LLC, MIAX PEARL, LLC, and MIAX Emerald, LLC 
approved by the Commission on [December 5, 2012]February 12, 2019 
involving the allocation of regulatory responsibilities with respect to 
common members for compliance with common rules relating to the conduct 
by broker-dealers of accounts for listed options or index warrants or 
(2) the multiparty Agreement made pursuant to Rule 17d-2 of the 
Exchange Act among [NYSE MKT LLC, BATS Exchange, Inc., BOX Options 
Exchange, LLC, C2 Options Exchange, Incorporated, Chicago Board Options 
Exchange, Incorporated, International Securities Exchange LLC, 
Financial Industry Regulatory Authority, Inc., NYSE Arca, Inc., The 
NASDAQ Stock Market LLC, NASDAQ OMX BX, Inc., NASDAQ OMX PHLX, Inc. and 
Miami International Securities Exchange, LLC,] NYSE American LLC, Cboe 
BZX Exchange, Inc., the Cboe EDGX Exchange, Inc., Cboe C2 Exchange, 
Inc., Cboe Exchange, Inc., Nasdaq ISE, LLC, Financial Industry 
Regulatory Authority, Inc., NYSE Arca, Inc., The NASDAQ Stock Market 
LLC, BOX Exchange LLC, NASDAQ BX, Inc., NASDAQ PHLX LLC, Miami 
International Securities Exchange, LLC, Nasdaq GEMX, LLC, Nasdaq MRX, 
LLC, MIAX PEARL, LLC, and MIAX Emerald, LLC approved by the Commission 
on [December 5, 2012]February 11, 2019 involving options-related market 
surveillance matters and such agreements as may be amended from time to 
time.
    16. Notification of Members. [ISE Mercury]MRX and FINRA shall 
notify Dual Members of this Agreement after the Effective Date by means 
of a uniform joint notice.
    17. 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.
    18. Limitation of Liability. Neither FINRA nor [ISE Mercury]MRX 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 [ISE Mercury]MRX 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 [ISE 
Mercury]MRX with respect to any of the responsibilities to be performed 
by each of them hereunder.
    19. 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.
    20. Relief From Responsibility. Pursuant to Sections 17(d)(1)(A) 
and 19(g) of the Exchange Act and Rule 17d-2 thereunder, FINRA and [ISE 
Mercury]MRX join in requesting the Commission, upon its approval of 
this Agreement or any part thereof, to relieve [ISE Mercury]MRX of any 
and all responsibilities with respect to matters allocated to FINRA 
pursuant to this Agreement; provided, however, that this Agreement 
shall not be effective until the Effective Date.
    21. Counterparts. This Agreement may be executed in one or more 
counterparts, each of which shall be deemed an original, and such 
counterparts together shall constitute one and the same instrument.
    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.

FINANCIAL INDUSTRY REGULATORY AUTHORITY, INC.

By---------------------------------------------------------------------
Name:
Title:

[ISE MERCURY]NASDAQ MRX, LLC

By---------------------------------------------------------------------
Name:
Title:

    Note: The entire existing table of rules should be deleted and 
replaced with the table below.

EXHIBIT 1

[ISE MERCURY]MRX CERTIFICATION OF COMMON RULES
    [ISE Mercury]MRX hereby certifies that the requirements contained 
in the rules listed below for [ISE Mercury]MRX are identical to, or 
substantially similar to, the comparable FINRA Rules or SEC Rules 
identified.
    # Common Rules shall not include provisions regarding (i) notice, 
reporting or any other filings made directly to or from MRX, (ii) 
incorporations by reference to other MRX 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 MRX, (iv) prior written approval of MRX, and 
(v) payment of fees or fines to MRX.

------------------------------------------------------------------------
              MRX Rule                        FINRA or SEC Rule
------------------------------------------------------------------------
General 3, Section 3(b)--Persons     FINRA Rule 1010 Electronic Filing
 Associated with Members; General     Requirements for Uniform Forms;
 4--Nasdaq Stock Market General 4,    FINRA By-Laws Article IV, Sec.
 Rule 1.1250 Electronic Filing        1(c) Application for Membership;
 Requirements for Uniform Forms       FINRA By-Laws, Article V, Section
 incorporated by reference .         1 Qualification Requirements;
                                      FINRA By-Laws, Article V, Sec. 2
                                      Application for Registration; and
                                      FINRA By-Laws Article V, Section 3
                                      Notification by Member to the
                                      Corporation and Associated Person
                                      of Termination; Amendments to
                                      Notification.
General 4--Nasdaq Stock Market       FINRA Rule 1240 Continuing
 General 4, Section 1.1240            Education Requirements.
 Continuing Education Requirements
 incorporated by reference .
Options 9--Nasdaq ISE Options 9,     FINRA Rule 2010 Standards of
 Section 1 Just and Equitable         Commercial Honor and Principles of
 Principles of Trade incorporated     Trade; FINRA Rule 0140(a)
 by reference \1\.                    Applicability.
Options 9--Nasdaq ISE Options 9,     Section 15(g) of the Securities
 Section 9(a)(1)Prevention of the     Exchange Act of 1934, and FINRA
 Misuse of Material, Nonpublic        Rule 3110(b)(1), (d) Supervision.
 Information incorporated by
 reference .

[[Page 84044]]

 
Options 9--Nasdaq ISE Options 9,     FINRA Rule 4530(a)(1)(A) and (2)
 Section 10 Disciplinary Action by    Reporting Requirements; FINRA By-
 Other Organizations incorporated     Laws, Article V, Section 2(c); and
 by reference .                      FINRA By-Laws, Article V, Section
                                      3.
Options 9--Nasdaq ISE Options 9,     FINRA Rule 3310 Anti-Money
 Section 21 Anti-Money Laundering     Laundering Compliance Program.
 Compliance Program incorporated by
 reference .
Options 10--Nasdaq ISE Options 10,   Rule 17a-5 of the Securities
 Section 12 Statements of Financial   Exchange Act of 1934.
 Condition to Customers
 incorporated by reference.
Options 10--Nasdaq ISE Options 10,   FINRA Rule 11870 Customer Account
 Section 19 Transfer of Accounts      Transfer Contracts.
 incorporated by reference .
Options 10--Nasdaq ISE Options 10,   FINRA Rule 3230 Telemarketing.
 Section 23. Telemarketing
 incorporated by reference.
Options 6E--Nasdaq ISE Options 6E,   FINRA Rule 4511(a) Books and
 Section 1 Maintenance, Retention,    Records--Requirements.
 and Furnishing of Books, Records
 and Other Information incorporated
 by reference .
------------------------------------------------------------------------
\1\ FINRA shall not have Regulatory Responsibilities with respect to the
  Supplementary Material to Nasdaq ISE Options 9, Section 1.
  Responsibility for such shall remain with MRX.

    In addition, the following provisions shall be part of this 17d-2 
Agreement:
    SEA Rule 14e-4--Prohibited Transactions in Connection with Partial 
Tender Offers [supcaret]
    [supcaret] FINRA shall perform surveillance, investigation, and 
Enforcement Responsibilities for SEA Rule 14e-4(a)1)(ii)(D).
    [# FINRA shall not have Regulatory Responsibilities 
regarding notification or reporting to ISE Mercury. In addition, FINRA 
shall only have Regulatory Responsibilities to the extent the exercise 
of discretion by ISE Mercury is the same as FINRA.]

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 4-697 on the subject line.

Paper Comments

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

All submissions should refer to File Number 4-697. This file number 
should be included on the subject line if email is used. To help the 
Commission process and review your comments more efficiently, please 
use only one method. The Commission will post all comments on the 
Commission's internet website (http://www.sec.gov/rules/sro.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed plan that are filed with the 
Commission, and all written communications relating to the proposed 
plan between the Commission and any person, other than those that may 
be withheld from the public in accordance with the provisions of 5 
U.S.C. 552, will be available for website viewing and printing in the 
Commission's Public Reference Room, 100 F Street NE, Washington, DC 
20549, on official business days between the hours of 10:00 a.m. and 
3:00 p.m. Copies of the plan also will be available for inspection and 
copying at the principal offices of FINRA and MRX. All comments 
received will be posted without change. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number 4-697 and should be submitted on or before 
January 13, 2021.

V. Discussion

    The Commission finds that the proposed Amended Plan is consistent 
with the factors set forth in Section 17(d) of the Act \12\ and Rule 
17d-2(c) thereunder \13\ in that the proposed Amended Plan is necessary 
or appropriate in the public interest and for the protection of 
investors, fosters cooperation and coordination among SROs, and removes 
impediments to and fosters the development of the national market 
system. In particular, the Commission believes that the proposed 
Amended Plan should reduce unnecessary regulatory duplication by 
allocating to FINRA certain examination and enforcement 
responsibilities for Common Members that would otherwise be performed 
by both FINRA and MRX. Accordingly, the proposed Amended Plan promotes 
efficiency by reducing costs to Common Members. Furthermore, because 
MRX and FINRA will coordinate their regulatory functions in accordance 
with the Amended Plan, the Amended Plan should promote investor 
protection.
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    \12\ 15 U.S.C. 78q(d).
    \13\ 17 CFR 240.17d-2(c).
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    The Commission notes that, under the Amended Plan, MRX and FINRA 
have allocated regulatory responsibility for those MRX rules, set forth 
in the Certification, that are substantially similar to the applicable 
FINRA rules in that examination for compliance with such provisions and 
rules would not require FINRA to develop one or more new examination 
standards, modules, procedures, or criteria in order to analyze the 
application of the rule, or a Common Member's activity, conduct, or 
output in relation to such rule. In addition, under the Amended Plan, 
FINRA would assume regulatory responsibility for certain provisions of 
the federal securities laws and the rules and regulations thereunder 
that are set forth in the Certification. The Common Rules covered by 
the Amended Plan are specifically listed in the Certification, as may 
be amended by the Parties from time to time.
    According to the Amended Plan, MRX will review the Certification at 
least annually, or more frequently if required by changes in either the 
rules of MRX or FINRA, and, if necessary, submit to FINRA an updated 
list of Common Rules to add MRX rules not included on the then-current 
list of Common Rules that are substantially similar to FINRA rules; 
delete MRX rules included in the then-current list of Common Rules that 
no longer qualify as common rules; and confirm that the remaining rules 
on the list of Common Rules continue to be MRX rules that qualify as 
common rules.\14\ FINRA will then confirm in writing whether the rules 
listed in any

[[Page 84045]]

updated list are Common Rules as defined in the Amended Plan. Under the 
Amended Plan, MRX also will provide FINRA with a current list of Common 
Members and will update the list no less frequently than once each 
quarter.\15\ The Commission believes that these provisions are designed 
to provide for continuing communication between the Parties to ensure 
the continued accuracy of the scope of the proposed allocation of 
regulatory responsibility.
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    \14\ See paragraph 2 of the Amended Plan.
    \15\ See paragraph 3 of the Amended Plan.
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    The Commission is hereby declaring effective an Amended Plan that, 
among other things, allocates regulatory responsibility to FINRA for 
the oversight and enforcement of all MRX rules that are substantially 
similar to the rules of FINRA for Common Members of MRX and FINRA. 
Therefore, modifications to the Certification need not be filed with 
the Commission as an amendment to the Amended Plan, provided that the 
Parties are only adding to, deleting from, or confirming changes to MRX 
rules in the Certification in conformance with the definition of Common 
Rules provided in the Amended Plan. However, should the Parties decide 
to add a MRX rule to the Certification that is not substantially 
similar to a FINRA rule; delete a MRX rule from the Certification that 
is substantially similar to a FINRA rule; or leave on the Certification 
a MRX rule that is no longer substantially similar to a FINRA rule, 
then such a change would constitute an amendment to the Amended Plan, 
which must be filed with the Commission pursuant to Rule 17d-2 under 
the Act.\16\
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    \16\ The addition to or deletion from the Certification of any 
federal securities laws, rules, and regulations for which FINRA 
would bear responsibility under the Amended Plan for examining, and 
enforcing compliance by, Common Members, also would constitute an 
amendment to the Amended Plan.
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    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 allocate 
surveillance, investigation, and enforcement responsibilities for Rule 
14e-4 under the Act, to reflect the name change of ISE Mercury, LLC to 
Nasdaq MRX, LLC. By declaring it effective today, the Amended Plan can 
become effective and be implemented without undue delay. The Commission 
notes that the prior version of this plan immediately prior to this 
proposed amendment was published for comment and the Commission did not 
receive any comments thereon.\17\ Furthermore, the Commission does not 
believe that the amendment to the plan raises any new regulatory issues 
that the Commission has not previously considered.
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    \17\ See supra note 11 (citing to Securities Exchange Act 
Release No. 77321).
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VI. Conclusion

    This order gives effect to the Amended Plan filed with the 
Commission in File No. 4-697. The Parties shall notify all members 
affected by the Amended Plan of their rights and obligations under the 
Amended Plan.
    It is therefore ordered, pursuant to Section 17(d) of the Act, that 
the Amended Plan in File No. 4-697, between the FINRA and MRX, filed 
pursuant to Rule 17d-2 under the Act, hereby is approved and declared 
effective.
    It is further ordered that MRX is relieved of those 
responsibilities allocated to FINRA under the Amended Plan in File No. 
4-697.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(34).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-28308 Filed 12-22-20; 8:45 am]
BILLING CODE 8011-01-P