[Federal Register Volume 89, Number 151 (Tuesday, August 6, 2024)]
[Notices]
[Pages 64025-64035]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-17275]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-100623; File No. 4-678]
Program for Allocation of Regulatory Responsibilities Pursuant to
Rule 17d-2; Notice of Filing and Order Approving and Declaring
Effective an Amended Proposed Plan for the Allocation of Regulatory
Responsibilities Among the Financial Industry Regulatory Authority,
Inc., Miami International Securities Exchange, LLC, MIAX Pearl, LLC,
MIAX Emerald, LLC, and MIAX Sapphire, LLC
July 31, 2024.
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 July 22, 2024, pursuant to Rule 17d-
2 of the Act,\2\ by the Miami International Securities Exchange, LLC
(``MIAX''), MIAX Pearl, LLC (``MIAX Pearl''), MIAX Emerald, LLC (``MIAX
Emerald''), MIAX Sapphire, LLC (``MIAX Sapphire'') and the Financial
Industry Regulatory Authority, Inc. (``FINRA'') (together, the
``Parties''). The Plan replaces and supersedes the agreement entered
into between FINRA, MIAX, MIAX Pearl, and MIAX Emerald on September 2,
2020, entitled ``Agreement among Financial Industry Regulatory
Authority, Inc., Miami International Securities Exchange, LLC, MIAX
PEARL, LLC, and MIAX Emerald, LLC Pursuant to Rule 17d-2 under the
Securities Exchange Act of 1934.'' \3\
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\1\ 15 U.S.C. 78q(d).
\2\ 17 CFR 240.17d-2.
\3\ See Securities Exchange Act Release No. 56645 (September 8,
2020), 85 FR 56645 (September 14, 2020).
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I. Introduction
Section 19(g)(1) of the Securities Exchange Act of 1934
(``Act''),\4\ 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.\5\ 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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\4\ 15 U.S.C. 78s(g)(1).
\5\ 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 \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 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 November 19, 2014, the Commission declared effective the Plan
entered into between FINRA and MIAX 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 both
MIAX and FINRA. The plan reduces regulatory duplication for firms that
are members of MIAX and FINRA by allocating regulatory responsibility
with respect to certain applicable laws, rules, and regulations.
Included in the Plan is an exhibit that lists every MIAX rule for which
FINRA bears responsibility under the Plan for overseeing and enforcing
with respect to MIAX members that are also members of FINRA and the
associated persons therewith. On January 12, 2017, the parties
submitted a proposed amendment to the Plan to add MIAX
[[Page 64026]]
Pearl as a Participant to the Plan.\12\ On June 28, 2018, the parties
submitted a proposed amendment to the Plan to allocate surveillance,
investigation, and enforcement responsibilities for Rule 14e-4 under
the Act, as well as certain provisions of Regulation SHO.\13\ On
December 20, 2018, the parties submitted a proposed amendment to the
Plan to add MIAX Emerald as a Participant to the Plan.\14\ On September
2, 2020, the parties submitted a proposed amendment to the Plan to add
MIAX Pearl equities rules and certain federal securities laws.\15\
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\11\ See Securities Exchange Act Release No. 73641 (November 19,
2014), 79 FR 70230 (November 25, 2014).
\12\ See Securities Exchange Act Release No. 79974 (February 6,
2017), 82 FR 10417 (February 10, 2017).
\13\ See Securities Exchange Act Release No. 83696 (July 24,
2018), 83 FR 35682 (July 27, 2018).
\14\ See Securities Exchange Act Release No. 85189 (February 25,
2019), 84 FR 7153 (March 1, 2019).
\15\ See Securities Exchange Act Release No. 56645 (September 8,
2020), 85 FR 56645 (September 14, 2020).
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III. Proposed Amendment to the Plan
On July 22, 2024, the parties submitted a proposed amendment to the
Plan (``Amended Plan''). The primary purpose of the Amended Plan is to
add MIAX Sapphire as a Participant to the Plan. The text of the
proposed Amended Plan is as follows (additions are italicized;
deletions are [bracketed]):
AGREEMENT AMONG FINANCIAL INDUSTRY REGULATORY AUTHORITY, INC.,
MIAMI INTERNATIONAL SECURITIES EXCHANGE, LLC, MIAX PEARL, LLC MIAX
EMERALD, LLC AND MIAX [EMERALD]SAPPHIRE, LLC PURSUANT TO RULE 17d-2
UNDER THE SECURITIES EXCHANGE ACT OF 1934
This Agreement, by and among the Financial Industry Regulatory
Authority, Inc. (``FINRA''), Miami International Securities Exchange,
LLC (``MIAX''), MIAX PEARL, LLC (``MIAX Pearl[EARL]''), [and] MIAX
Emerald, LLC (``MIAX Emerald'') and MIAX Sapphire, LLC (``MIAX
Sapphire'') is made this [2nd] 17th day of [September, 2020] July, 2024
(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, MIAX, MIAX Pearl[EARL], MIAX Emerald and MIAX [Emerald] Sapphire
may be referred to individually as a ``party'' and together as the
``parties.''
This Agreement amends and restates the agreement entered into
between FINRA, MIAX, MIAX Pearl and MIAX [PEARL] Emerald on [December
19, 2018] September 2, 2020, entitled ``Agreement [between] among
Financial Industry Regulatory Authority, Inc., Miami International
Securities Exchange, LLC, MIAX PEARL, LLC and MIAX [PEARL] Emerald, LLC
Pursuant to Rule 17d-2 under the Securities Exchange Act of 1934,'' and
any subsequent amendments thereafter.
WHEREAS, the parties desire to reduce duplication in the
examination and surveillance of their Common Members (as defined
herein) and in the filing and processing of certain registration and
membership records; and
WHEREAS, the parties 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, the parties 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) ``MIAX Rules,'' ``MIAX Pearl[EARL] Rules'', ``MIAX Emerald
Rules'' ``MIAX Sapphire Rules'' or ``FINRA Rules'' shall mean: (i) the
rules of MIAX, MIAX Pearl[EARL], MIAX Emerald or MIAX [Emerald]
Sapphire, respectively, 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 MIAX Rules, MIAX Pearl[EARL] Rules
[and], MIAX Emerald Rules and MIAX Sapphire 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
Common 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, MIAX Pearl[EARL] 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., NYSE Chicago [Stock Exchange], Inc., Cboe EDGA
Exchange, Inc., Cboe EDGX Exchange, Inc., Financial Industry Regulatory
Authority, Inc., MEMX, LLC, MIAX PEARL, LLC, 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., Investors'
Exchange LLC and Long-Term Stock Exchange, Inc. [effective May 26]
approved by the Commission on September 23, 2020, 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 MIAX, MIAX Pearl[EARL], MIAX Emerald or MIAX [Emerald,]
Sapphire (ii) incorporation by reference of other MIAX, MIAX
Pearl[EARL] Rules [or], MIAX Emerald Rules or MIAX Sapphire 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 MIAX, MIAX Pearl[EARL], MIAX
Emerald or MIAX [Emerald,] Sapphire (iv) prior written approval of
MIAX, MIAX Pearl[EARL], MIAX Emerald or MIAX [Emerald] Sapphire and (v)
payment of fees or fines to MIAX, MIAX Pearl[EARL], MIAX Emerald or
MIAX [Emerald] Sapphire.
(c) ``Common Members'' shall mean members of FINRA and at least one
of MIAX, MIAX Pearl[EARL], MIAX Emerald or MIAX [Emerald] Sapphire.
(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 Common Members with the
Common Rules and the provisions of the Exchange Act and the rules and
regulations thereunder, and
[[Page 64027]]
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 Common
Members. Attached as Exhibit 1 to this Agreement and made part hereof,
MIAX, MIAX Pearl[EARL] [and], MIAX Emerald and MIAX Sapphire furnished
FINRA with a current list of Common Rules and certified to FINRA that
such rules that are MIAX Rules, MIAX Pearl[EARL] Rules, MIAX Emerald
Rules and MIAX [Emerald] Sapphire 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 the rules
of the parties, MIAX, MIAX Pearl[EARL], MIAX Emerald and MIAX [Emerald]
Sapphire shall submit an updated list of Common Rules to FINRA for
review which shall add MIAX Rules, MIAX Pearl[EARL] Rules, MIAX Emerald
Rules or MIAX [Emerald] Sapphire Rules not included in the current list
of Common Rules that qualify as Common Rules as defined in this
Agreement; delete MIAX Rules, MIAX Pearl[EARL] Rules, MIAX Emerald
Rules or MIAX [Emerald] Sapphire 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 MIAX Rules, MIAX Pearl[EARL] Rules, MIAX
Emerald Rules or MIAX [Emerald] Sapphire 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 MIAX, MIAX Pearl[EARL], MIAX Emerald and MIAX [Emerald]
Sapphire 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 MIAX's, MIAX
Pearl[EARL]'s, MIAX Emerald's and MIAX [Emerald's] Sapphire's own
marketplace;
(b) registration pursuant to their applicable rules of associated
persons (i.e., registration rules that are not Common Rules);
(c) discharge of their duties and obligations as a Designated
Examining Authority pursuant to Rule 17d-1 under the Exchange Act; and
(d) any MIAX Rules, MIAX Pearl[EARL] Rules [or], MIAX Emerald
Rules, or MIAX Sapphire Rules that are not Common Rules as provided in
paragraph 6.
3. Common Members. Prior to the Effective Date, MIAX, MIAX
Pearl[EARL], MIAX Emerald and MIAX [Emerald] Sapphire shall furnish
FINRA with a current list of Common Members, which shall be updated no
less frequently than once each quarter.
4. No Charge. There shall be no charge to MIAX, MIAX Pearl[EARL],
MIAX Emerald and MIAX [Emerald] Sapphire by FINRA for performing the
Regulatory Responsibilities and Enforcement Responsibilities under this
Agreement except as hereinafter provided. FINRA shall provide MIAX,
MIAX Pearl[EARL], MIAX Emerald and MIAX [Emerald] Sapphire with ninety
(90) days advance written notice in the event FINRA decides to impose
any charges to MIAX, MIAX Pearl[EARL], MIAX Emerald and MIAX [Emerald]
Sapphire for performing the Regulatory Responsibilities under this
Agreement. If FINRA determines to impose a charge, MIAX, MIAX
Pearl[EARL], MIAX Emerald and MIAX [Emerald] Sapphire shall have the
right at the time of the imposition of such charge to terminate this
Agreement; provided, however, that FINRA's Regulatory Responsibilities
under this Agreement shall continue until the Commission approves the
termination of this Agreement.
5. Applicability of Certain Laws, Rules, Regulations or Orders.
Notwithstanding any provision hereof, this Agreement shall be subject
to any statute, or any rule or order of the SEC. To the extent such
statute, rule or order is inconsistent with one or more provisions of
this Agreement, the statute, rule or order shall supersede the
provision(s) hereof to the extent necessary to be properly effectuated
and the provision(s) hereof in that respect shall be null and void.
6. Notification of Violations. In the event that FINRA becomes
aware of apparent violations of any MIAX Rules, MIAX Pearl[EARL] Rules
[or], MIAX Emerald Rules[,] or MIAX Sapphire Rules which are not listed
as Common Rules, discovered pursuant to the performance of the
Regulatory Responsibilities assumed hereunder, FINRA shall notify MIAX,
MIAX Pearl[EARL], MIAX Emerald and MIAX [Emerald] Sapphire of those
apparent violations for such response as MIAX, MIAX Pearl[EARL], MIAX
Emerald and MIAX [Emerald] Sapphire deem appropriate. In the event that
MIAX, MIAX Pearl[EARL], MIAX Emerald or MIAX [Emerald] Sapphire becomes
aware of apparent violations of any Common Rules, discovered pursuant
to the performance of the Retained Responsibilities, MIAX, MIAX
Pearl[EARL], MIAX Emerald and MIAX [Emerald] Sapphire shall notify
FINRA of those apparent violations and such matters shall be handled by
FINRA as provided in this Agreement. 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 Common Member is the subject of an
investigation relating to a transaction on MIAX, MIAX Pearl[EARL], MIAX
Emerald or MIAX [Emerald] Sapphire, MIAX, MIAX Pearl[EARL], MIAX
Emerald and MIAX [Emerald] Sapphire may in their 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.
(a) FINRA shall make available to MIAX, MIAX Pearl[EARL], MIAX
Emerald and MIAX [Emerald] Sapphire all information obtained by FINRA
in the performance by it of the Regulatory Responsibilities hereunder
with respect to the Common Members subject to this Agreement. In
particular, and not in limitation of the foregoing, FINRA shall furnish
MIAX, MIAX Pearl[EARL], MIAX Emerald and MIAX [Emerald] Sapphire any
information it obtains about Common Members which reflects adversely on
their financial condition. MIAX, MIAX Pearl[EARL], MIAX Emerald and
MIAX [Emerald] Sapphire shall make available to FINRA any information
coming to its attention that reflects adversely on the financial
condition of Common 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. No party shall assert
regulatory or other privileges as against any other with respect to
documents or information that is required to be shared pursuant to this
Agreement.
[[Page 64028]]
(c) The sharing of documents or information among 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 Common 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 MIAX, MIAX Pearl[EARL], MIAX Emerald and MIAX [Emerald] Sapphire
advised of its actions in this regard for such subsequent proceedings
as MIAX, MIAX Pearl[EARL], MIAX Emerald and MIAX [Emerald] Sapphire may
initiate.
9. Customer Complaints. MIAX, MIAX Pearl[EARL], MIAX Emerald and
MIAX [Emerald] Sapphire shall forward to FINRA copies of all customer
complaints involving Common Members received by MIAX, MIAX Pearl[EARL],
MIAX Emerald and MIAX [Emerald] Sapphire 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 Common 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 any party
to conduct its own independent or concurrent investigation, examination
or enforcement proceeding of or against Common Members, as any party,
in its sole discretion, shall deem appropriate or necessary.
12. Termination. This Agreement may be terminated by any party at
any time upon the approval of the Commission after one (1) year's
written notice to the other parties (or such shorter time as agreed by
the parties), except as provided in paragraph 4.
13. Arbitration. In the event of a dispute among the parties as to
the operation of this Agreement, the parties 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 parties. In the
event of a dispute among 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. Separate Agreement. This Agreement is wholly separate from the
following agreement: (1) the multiparty Agreement made pursuant to Rule
17d-2 of the Exchange Act among Cboe BZX Exchange, Inc., BOX [Options]
Exchange, LLC, Cboe Exchange, Inc., Cboe C2 Exchange, Inc., Nasdaq ISE,
LLC, [FINRA, MIAX, NYSE] Financial Industry Regulatory Authority, Inc.,
Miami International Securities Exchange, LLC, NYSE American LLC, NYSE
Arca, Inc., The Nasdaq Stock Market LLC, Nasdaq BX, Inc., [the] Nasdaq
PHLX LLC, Nasdaq GEMX, LLC, Cboe EDGX Exchange, Inc., Nasdaq MRX, LLC,
MIAX PEARL, LLC [and], MIAX Emerald, LLC and MEMX LLC 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 entered
as approved by the SEC on [February 12, 2019] October 18, 2022, and as
may be amended from time to time; and (2) the multiparty Agreement made
pursuant to Rule 17d-2 of the Exchange Act among NYSE American LLC,
Cboe BZX Exchange, Inc., [BOX Options Exchange, LLC,] Cboe EDGX
Exchange, Inc., Cboe C2 Exchange, Inc., Cboe Exchange, Inc., Nasdaq
ISE, LLC, [FINRA, MIAX, NYSE American LLC,]Financial Industry
Regulatory Authority, Inc., NYSE Arca, Inc., The Nasdaq Stock Market
LLC, BOX Exchange LLC, Nasdaq BX, Inc., [the] Nasdaq PHLX LLC, Miami
International Securities Exchange, LLC, Nasdaq GEMX, LLC, [Cboe EDGX
Exchange, Inc.,] Nasdaq MRX, LLC, MIAX PEARL, LLC [and], MIAX Emerald,
LLC and MEMX LLC involving the allocation of regulatory
responsibilities with respect to SRO market surveillance of common
members activities with regard to certain common rules relating to
listed options approved by the SEC on [February 11, 2019] November 23,
2022, and as may be amended from time to time.
15. Notification of Members. The parties shall notify Common
Members of this Agreement after the Effective Date by means of a
uniform joint notice.
16. Amendment. This Agreement may be amended in writing provided
that the changes are approved by each party. All such amendments must
be filed with and approved by the Commission before they become
effective.
17. Limitation of Liability. None of the parties nor any of their
respective directors, governors, officers or employees shall be liable
to any 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 any party and caused by
the willful misconduct of another party or their respective directors,
governors, officers or employees. No warranties, express or implied,
are made by any party hereto with respect to any of the
responsibilities to be performed by them hereunder.
18. Relief from Responsibility. Pursuant to Sections 17(d)(1)(A)
and 19(g) of the Exchange Act and Rule 17d-2 thereunder, FINRA, MIAX,
MIAX Pearl[EARL], MIAX Emerald and MIAX [Emerald] Sapphire join in
requesting the Commission, upon its approval of this Agreement or any
part thereof, to relieve MIAX, MIAX Pearl[EARL], MIAX Emerald and MIAX
[Emerald] Sapphire 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.
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. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and such
[[Page 64029]]
counterparts together shall constitute one and the same instrument.
Exhibit 1
Miami International Securities Exchange, LLC, MIAX PEARL, LLC, MIAX
Emerald, LLC and MIAX [Emerald] Sapphire, LLC Rules Certification for
17d-2 Agreement with FINRA Miami International Securities Exchange, LLC
(``MIAX''), MIAX PEARL, LLC (``MIAX [PEARL] Pearl''), [and] MIAX
Emerald, LLC (``MIAX Emerald'') and MIAX Sapphire, LLC (``MIAX
Sapphire'') hereby certify that the requirements contained in the rules
listed below are identical to, or substantially similar to, the
comparable FINRA [(NASD)] Rule, Exchange Act provision or SEC rule
identified (``Common Rules'').
# Common Rules shall not include any provisions
regarding (i) notice, reporting or any other filings made directly to
or from MIAX, MIAX [PEARL] Pearl [or], MIAX Emerald or MIAX Sapphire,
(ii) incorporation by reference of other MIAX, MIAX [PEARL] Pearl, MIAX
Emerald or MIAX [Emerald] Sapphire 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 MIAX, MIAX [PEARL] Pearl [or], MIAX Emerald or
MIAX Sapphire, (iv) prior written approval of MIAX, MIAX [PEARL] Pearl
[or], MIAX Emerald or MIAX Sapphire, and (v) payment of fees or fines
to MIAX, MIAX [PEARL] Pearl Options, MIAX Emerald or MIAX [Emerald]
Sapphire.
----------------------------------------------------------------------------------------------------------------
FINRA [(NASD)
RULES EXCHANGE ACT
MIAX [PEARL] MIAX [EMERALD PROVISION OR SEC
MIAX [RULES] Rules RULES] Pearl Rules RULES] Emerald MIAX Sapphire RULE] Rules,
Rules Rules Exchange Action
Provisions, or SEC
Rules
----------------------------------------------------------------------------------------------------------------
Rule 301 Just and Equitable MIAX Rule 301 MIAX Rule 301 MIAX Rule 301 is FINRA Rule 2010
Principles of Trade \1\. [Just and [Just and incorporated by Standards of
Equitable Equitable reference into Commercial Honor
Principles of Principles of Chapter III of and Principles of
Trade] is Trade] is the MIAX Sapphire Trade.
incorporated by incorporated by Options Rulebook
reference into reference into \1\.
Chapter III of Chapter III of
the MIAX Pearl the MIAX Emerald
Rulebook \1\. Rulebook \1\.
Rule 303 Prevention of the MIAX Rule 303 MIAX Rule 303 MIAX Rule 303 is Section 15(g) of
Misuse of Material Nonpublic [Prevention of [Prevention of incorporated by the Exchange Act
Information 1 . the Misuse of the Misuse of reference into and FINRA Rule
Material Material Chapter III of 3110(b)(1)
Nonpublic Nonpublic the MIAX Sapphire Supervision.
Information] is Information] is Rulebook 1 .
incorporated by incorporated by
reference into reference into
Chapter III of Chapter III of
the MIAX Pearl the MIAX Emerald
Rulebook 1 . Rulebook 1 .
Rule 315 Anti-Money Laundering MIAX Rule 315 MIAX Rule 315 MIAX Rule 315 is FINRA Rule 3310
Compliance Program . [Anti-Money [Anti-Money incorporated by Anti-Money
Laundering Laundering reference into Laundering
Compliance Compliance Chapter III of Compliance
Program] is Program] is the MIAX Sapphire Program.
incorporated by incorporated by Rulebook .
reference into reference into
Chapter III of Chapter III of
the MIAX Pearl the MIAX Emerald
Rulebook . Rulebook .
Rule 318(a) Manipulation........ MIAX Rule 318(a) MIAX Rule 318(a) MIAX Rule 318(a) FINRA Rule 2020
[Manipulation] is [Manipulation] is is incorporated Use of
incorporated by incorporated by by reference into Manipulative,
reference into reference into Chapter III of Deceptive or
Chapter III of Chapter III of the MIAX Sapphire [o]Other
the MIAX Pearl the MIAX Emerald Rulebook. Fraudulent
Rulebook. Rulebook. Devices.
Rule 318(b) Manipulation........ MIAX Rule 318(b) MIAX Rule 318(b) MIAX Rule 318(b) FINRA Rule 6140(d)
[Manipulation] is is incorporated is incorporated Other Trading
incorporated by by reference into by reference into Practices.
reference into Chapter III of Chapter III of
Chapter III of the MIAX Emerald the MIAX Sapphire
the MIAX Pearl Rulebook. Rulebook.
Rulebook.
Rule 319 Forwarding of Proxy and MIAX Rule 319 MIAX Rule 319 MIAX Rule 319 is FINRA Rule 2251
Other Issuer-Related Materials. [Forwarding of [Forwarding of incorporated by Processing and
Proxy and Other Proxy and Other reference into Forwarding of
Issuer-Related Issuer-Related Chapter III of Proxy and Other
Materials] is Materials] is the MIAX Sapphire Issuer-Related
incorporated by incorporated by Rulebook. Materials.
reference into reference into
Chapter III of Chapter III of
the MIAX Pearl the MIAX Emerald
Rulebook. Rulebook.
Rule 320 Trading Ahead of MIAX Rule 320 MIAX Rule 320 MIAX Rule 320 is FINRA Rule 5280
Research Reports. [Trading Ahead of [Trading Ahead of incorporated by Trading Ahead of
Research Reports] Research Reports] reference into Research Reports.
is incorporated is incorporated Chapter III of
by reference into by reference into the MIAX Sapphire
Chapter III of Chapter III of Rulebook.
the MIAX Pearl the MIAX Emerald
Rulebook. Rulebook.
[[Page 64030]]
Rule 800(a), (b) and (d) MIAX Rule 800(a), MIAX Rule 800(a), MIAX Rule 800(a), FINRA Rule 4511
Maintenance, Retention and (b) and (d) (b) and (d) (b) and (d) is General
Furnishing of Books, Records [Maintenance, [Maintenance, incorporated by Requirements *
and Other Information 1 . Retention and Retention and reference into and Section 17 of
Furnishing of Furnishing of Chapter VIII of the Exchange Act
Books, Records Books, Records the MIAX Sapphire and the rules
and Other and Other Rulebook 1 . thereunder.
Information] is Information] is
incorporated by incorporated by
reference into reference into
Chapter VIII of Chapter VIII of
the MIAX Pearl the MIAX Emerald
Rulebook 1 . Rulebook 1 .
Rule 1900 Registration Rule 3100 Rule 1900 Rule 1900 FINRA Rule 1210
Requirements . Registration Registration Registration Registration
Requirements . Requirements . Requirements . Requirements;
FINRA By-Laws
Article V, Sec. 2
Application for
Registration; and
FINRA By-Laws
Article V, Sec. 3
Notification by
Member to the
Corporation and
Association
Person of
Termination;
Amendments to
Notification.
Rule 1901 Registration Rule 3101 Rule 1901 Rule 1901 Rule 1220
Categories . Registration Registration Registration Registration
Categories . Categories . Categories . Categories.\2\
Rule 1902(a), (b)(1)-(4) and Rule 3102(a), Rule 1902(a), Rule 1902(a), FINRA Rule 1230
Interpretations and Policies (b)(1)-(4) and (b)(1)-(4) and (b)(1)-(4) and Associated
.01 Associated Persons Exempt Interpretations Interpretations Interpretations Persons Exempt
from Registration. and Policies .01 and Policies .01 and Policies .01 from
Associated Associated Associated Registration.
Persons Exempt Persons Exempt Persons Exempt
from Registration. from Registration. from Registration.
Rule 1903 Continuing Education Rule 3103 Rule 1903 Rule 1903 FINRA Rule 1240
3. Continuing Continuing Continuing Continuing
Education 3. Education Education Education
Requirements 3. Requirements 4. Requirements.
Rule 1904 Electronic Filing Rule 3104. Rule 1904. Rule 1904. FINRA Rule 1010
Requirements for Uniform Forms Electronic Filing Electronic Filing Electronic Filing Electronic Filing
. Requirements for Requirements for Requirements for Requirements for
Uniform Forms . Uniform Forms . Uniform Forms . Uniform Forms.
Rule 1321 Transfer of Accounts.. MIAX Rule 1321 MIAX Rule 1321 MIAX Rule 1321 FINRA Rule 11870
[Transfer of [Transfer of Transfer of Customer Account
Accounts] is Accounts] is Accounts is Transfer
incorporated by incorporated by incorporated by Contracts.
reference into reference into reference into
Chapter XIII of Chapter XIII of Chapter XIII of
the MIAX Pearl the MIAX Emerald the MIAX Sapphire
Rulebook. Rulebook. Rulebook.
Rule 1325 Telemarketing......... MIAX Rule 1325 MIAX Rule 1325 MIAX Rule 1325 is FINRA Rule 3230
[Telemarketing] [Telemarketing] incorporated by Telemarketing.
is incorporated is incorporated reference into
by reference into by reference into Chapter XIII of
Chapter XIII of Chapter XIII of the MIAX Sapphire
the MIAX Pearl the MIAX Emerald Rulebook.
Rulebook. Rulebook.
Rule 2100 Business FINRA Rule 2010
Conduct of Standards of
Members *. Commercial Honor
and Principles of
Trade.*
Rule 2101 FINRA Rule 2010
Violations Standards of
Prohibited * . Commercial Honor
* and Principles
of Trade and
FINRA Rule 3110
Supervision.*
Rule 2102 Use of FINRA Rule 2020
Fraudulent Use of
Devices *. Manipulative,
Deceptive or
Other Fraudulent
Devices.*
Rule 2104 FINRA Rule 2210
Communications Communications
with the Public. with the Public.
Rule 2105 Know FINRA Rule 2090
Your Customer. Know Your
Customer.
[[Page 64031]]
Rule 2106 Fair FINRA Rule 2020
Dealing with Use of
Customers. Manipulative,
Deceptive or
Other Fraudulent
Device,* FINRA
Rule 2010
Standards of
Commercial Honor
and Principles of
Trade,* 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 2107 FINRA Rule 2111
Suitability. Suitability.
Rule 2108(a) The FINRA Rule 11860
Prompt Receipt COD Orders.
and Delivery of
Securities.
Rule 2108(b) The SEC Regulation
Prompt Receipt SHO.
and Delivery of
Securities.
Rule 2109 Charges FINRA Rule 2122
for Services Charges for
Performed. Services
Performed.
Rule 2110 Use of FINRA Rule 2060
Information Use of
Obtained in a Information
Fiduciary Obtained in
Capacity. Fiduciary
Capacity.
Rule 2111 FINRA Rule 5210
Publication of Publication of
Transactions and Transactions and
Quotations . Quotations.
Rule 2112 Offers FINRA Rule 5220
at Stated Prices. Offers at Stated
Prices.
Rule 2113 Payments FINRA Rule 5230
Involving Payments
Publications that Involving
Influence the Publications that
Market Price of a Influence the
Security. Market Price of a
Security.
Rule 2114 Customer FINRA Rule 2232(a)
Confirmations. Customer
Confirmations and
SEC Rule 10b-10
Confirmation of
Transactions.
Rule 2115 FINRA Rule 2262
Disclosure of Disclosure of
Control Control
Relationship with Relationship with
Issuer. Issuer.
Rule 2116 FINRA Rule 3260
Discretionary Discretionary
Accounts. Accounts.
Rule 2117 Improper FINRA Rule 2150
Use of Customer's Improper Use of
Securities or Customers'
Funds; Securities or
Prohibition Funds;
Against Prohibition
Guarantees and Against
Sharing in Guarantees and
Accounts. Sharing in
Accounts.
Rule 2118 FINRA Rule 3220
Influencing or Influencing or
Rewarding Rewarding
Employees of Employees of
Others. Others.
Rule 2119 FINRA Rule 3230
Telemarketing. Telemarketing.
Rule 2200 General Section 17 of the
Requirements . Exchange Act and
rules thereunder
and FINRA Rule
4511[(a) and (c)]
General
Requirements.\5\
Rule 2201 Customer Rule 4512 Customer
Account Account
Information. Information.
[[Page 64032]]
Rule 2203 Record FINRA Rule 4513
of Written Records of
Complaints. Written Customer
Complaints.
Rule 2204 FINRA Rule 2261
Disclosure of Disclosure of
Financial Financial
Condition. Condition.
Rule 2300 FINRA Rule 3110
Supervision . Supervision.*
Rule 2301 FINRA Rule 3120
Supervisory Supervisory
Control System. Control System.*
Rule 2302 Annual FINRA Rule 3130
Certification of Annual
Compliance and Certification of
Supervisory Compliance and
Processes. Supervisory
Processes.
Rule 2303 Section 15(g) of
Prevention of the the Exchange Act
Misuse of * and FINRA Rule
Material, Non- 3110(b)(1)
Public Supervision.*
Information * .
Rule 2304 Anti- FINRA Rule 3310
Money Laundering Anti-Money
Compliance Laundering
Program \6\ . Compliance
Program.
Rule 2305 FINRA Rule 3210
Transactions for Accounts At Other
or by Associated Broker-Dealers
Persons. and Financial
Institutions.
Rule 2622[(e)(3) & FINRA Rule 6190(a)
(4)] & (b) Compliance
(h)(2)(A)(i)(c) with Regulation
and (d) Limit Up- NMS Plan to
Limit Down Plan Address
and Trading Halts. Extraordinary
Market
Volatility.
Rule 2623 Short FINRA Rule 6182
Sales . Trade Reporting
of Short Sales.
Rule 2624. Locking FINRA Rule 6240
or Crossing Prohibition from
Quotations in NMS Locking or
Stocks **. Crossing
Quotations in NMS
Stocks **.
Rule 2700 Market FINRA Rule 5210
Manipulation. 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 2701 FINRA Rule 6140
Fictitious Other Trading
Transactions. Practices and
FINRA Rule 5210
Supplementary
Material .02 Self-
Trades.
Rule 2702 FINRA Rule 6140(c)
Excessive Sales Other Trading
By an Equity Practices.
Member.
Rule 2703 FINRA Rule 6140
Manipulative Other Trading
Transactions. Practices.
Rule 2704 FINRA Rule 6140(e)
Dissemination of Other Trading
False Information. Practices.
Rule 2705 FINRA Rule 5320
Prohibition Prohibition
Against Trading Against Trading
Ahead of Customer Ahead of Customer
Orders **. Orders.**
Rule 2708 Trade FINRA Rule 5290
Shredding. Order Entry and
Execution
Practices.
[[Page 64033]]
Rule 2710 Best FINRA Rule 5310
Execution and Best Execution
Interpositioning and
**. Interpositioning.
**
Rule 2712 Trading FINRA Rule 5280
Ahead of Research Trading Ahead of
Reports **. Research
Reports.**
Rule 2714 Front FINRA Rule 5270
Running of Block Front Running of
Transactions **. Block
Transactions.**
Rule 2802 FINRA Rule 2251
Forwarding of Processing and
Proxy and Other Forwarding of
Issuer-Related Proxy and Other
Materials. Issuer-Related
Materials.
----------------------------------------------------------------------------------------------------------------
\1\ FINRA shall only have Regulatory Responsibilities regarding the rule and not the interpretations and
policies.
\2\ FINRA shall only have Regulatory Responsibilities regarding MIAX [and], MIAX Emerald, MIAX Sapphire Rules
1901 or MIAX Pearl Rule 3101 to the extent that MIAX, MIAX Pearl, MIAX Emerald or MIAX [Emerald] Sapphire
recognize the same categories of principal and representative registration.
\3\ FINRA Rule 1240.01 allows for eligible persons to make their election to participate in the continuing
education program under Rule 1240(c) either (1) between January 31, 2022, and March 15, 2022; or (2) between
March 15, 2023, and December 31, 2023. In contrast, Interpretations and Policies .01 to MIAX and MIAX Emerald
Rules 1903 and Interpretations and Policies .01 to MIAX Pearl Rule 3103 allows for eligible persons to make
their election to participate in the continuing education programs under MIAX and MIAX Emerald Rules 1903(c)
and MIAX Pearl Rule 3103(c) by July 1, 2022 or (2) between September 18, 2023, and December 31, 2023.
Therefore, FINRA will not accept Regulatory Responsibilities for Interpretations and Policies .01 to MIAX and
MIAX Pearl Rules 1903 or Interpretations and Policies .01 to MIAX Emerald Rule 1903 between March 16, 2022 and
September 17, 2023. In addition, Interpretations and Policies .01 to MIAX and MIAX Emerald Rules 1903 and
Interpretations and Policies .01 to MIAX Pearl Rule 3103 require eligible persons who elect to participate in
the continuing education programs under MIAX and MIAX Emerald Rules 1903(c), or MIAX Pearl Rule 3103(c),
between September 18, 2023, and December 31, 2023, to complete any prescribed 2022 and 2023 continuing
education content by March 31, 2024. In contrast, FINRA Rule 1240.01 requires individuals enrolled in the
continuing education program under FINRA Rule 1240(c) in both 2022 and 2023 to complete their prescribed 2022
and 2023 continuing education content by: (1) March 31, 2024; or (2) between May 22, 2024, and July 1, 2024
(where such individuals did not complete their prescribed 2022 and 2023 continuing education content as of
March 31, 2024). In addition, FINRA Rule 1240.01 provides that individuals enrolled in the continuing
education program under FINRA Rule 1240(c) who will have completed their prescribed 2022 and 2023 continuing
education content between March 31, 2024 and May 22, 2024 will be deemed to have completed such content by
July 1, 2024. As a result, FINRA shall not have Regulatory Responsibilities for Interpretations and Policies
.01 to MIAX or MIAX Emerald Rules 1903 and Interpretations and Policies .01 to MIAX Pearl Rule 3103 beyond
March 31, 2024 as it relates to eligible persons (who participate in the continuing education programs under
MIAX or MIAX Emerald Rules 1903(c), or MIAX Pearl Rule 3103(c)) completion of the prescribed 2022 and 2023
continuing education content.
\4\ FINRA shall not have Regulatory Responsibilities for Interpretations and Policies .01 of MIAX Sapphire Rule
1903.
\5\ FINRA shall not have Regulatory Responsibilities regarding requirements to keep records ``in conformity with
. . . Exchange Rules;'' responsibility for such requirement remains with MIAX [PEARL] Pearl.
\6\ FINRA shall only have Regulatory Responsibilities regarding the rule and not the interpretations and
policies.
In addition, the following provisions shall be part of this 17d-2
Agreement:
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 *
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 *
SEA Rule 14e-4--Prohibited Transactions in Connection with
Partial Tender Offers [supcaret]
[supcaret] FINRA shall perform surveillance for SEA Rule 14e-
4(a)(1)(ii)(D).
* 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., MEMX, LLC, MIAX PEARL, LLC, 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 and the Long-Term Stock Exchange, Inc.
[effective May 26, 2020,] as approved by the SEC on September 23, 2020,
as may be amended from time to time.
** FINRA shall perform the surveillance responsibilities for the
double star rules for MIAX [PEARL] Pearl Equities. These rules may be
cited by FINRA in both the context of this Agreement and the Regulatory
Services Agreement.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing.
[[Page 64034]]
Comments may be submitted by any of the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number 4-678 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 4-678. 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 (https://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, MIAX, MIAX Pearl, MIAX
Emerald, and MIAX Sapphire. Do not include personal identifiable
information in submissions; you should submit only information that you
wish to make available publicly. We may redact in part or withhold
entirely from publication submitted material that is obscene or subject
to copyright protection. All submissions should refer to File Number 4-
678 and should be submitted on or before August 27, 2024.
V. Discussion
The Commission finds that the proposed Amended Plan is consistent
with the factors set forth in Section 17(d) of the Act \16\ and Rule
17d-2(c) thereunder \17\ 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 FINRA and at least one of MIAX, MIAX Pearl, MIAX Emerald, or MIAX
Sapphire. Accordingly, the proposed Amended Plan promotes efficiency by
reducing costs to common members. Furthermore, because MIAX, MIAX
Pearl, MIAX Emerald, MIAX Sapphire and FINRA will coordinate their
regulatory functions in accordance with the Amended Plan, the Amended
Plan should promote investor protection.
---------------------------------------------------------------------------
\16\ 15 U.S.C. 78q(d).
\17\ 17 CFR 240.17d-2(c).
---------------------------------------------------------------------------
The Commission notes that, under the Amended Plan, MIAX, MIAX
Pearl, MIAX Emerald, MIAX Sapphire and FINRA have allocated regulatory
responsibility for those MIAX, MIAX Pearl, MIAX Emerald, and MIAX
Sapphire 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, MIAX, MIAX Pearl, MIAX Emerald, and
MIAX Sapphire will review the Certification at least annually, or more
frequently if required by changes in either the rules of MIAX, MIAX
Pearl, MIAX Emerald, MIAX Sapphire, or FINRA, and, if necessary, submit
to FINRA an updated list of common rules to add MIAX, MIAX Pearl, MIAX
Emerald, or MIAX Sapphire rules not included on the then-current list
of common rules that are substantially similar to FINRA rules; delete
MIAX, MIAX Pearl, MIAX Emerald, or MIAX Sapphire 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 MIAX, MIAX Pearl, MIAX Emerald, or MIAX Sapphire rules
that qualify as common rules.\18\ FINRA will then confirm in writing
whether the rules listed in any updated list are common rules as
defined in the Amended Plan. Under the Amended Plan, MIAX, MIAX Pearl,
MIAX Emerald, MIAX Sapphire also will provide FINRA with a current list
of common members and shall update the list no less frequently than
once each quarter.\19\ 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.
---------------------------------------------------------------------------
\18\ See paragraph 2 of the Amended Plan.
\19\ See paragraph 3 of the Amended Plan.
---------------------------------------------------------------------------
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 MIAX, MIAX Pearl, MIAX Emerald,
and MIAX Sapphire rules that are substantially similar to the rules of
FINRA for common members of FINRA and MIAX, FINRA and MIAX Pearl, FINRA
and MIAX Emerald, and FINRA and MIAX Sapphire. 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 MIAX, MIAX Pearl,
MIAX Emerald, or MIAX Sapphire 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 MIAX, MIAX Pearl,
MIAX Emerald, or MIAX Sapphire rule to the Certification that is not
substantially similar to a FINRA rule; delete a MIAX, MIAX Pearl, MIAX
Emerald, or MIAX Sapphire rule from the Certification that is
substantially similar to a FINRA rule; or leave on the Certification a
MIAX, MIAX Pearl, MIAX Emerald, or MIAX Sapphire 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.\20\
---------------------------------------------------------------------------
\20\ 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.
---------------------------------------------------------------------------
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
[[Page 64035]]
appropriate notice and comment can take place after the proposed
amendment is effective. In particular, the purpose of the amendment is
to add MIAX Sapphire as a Participant to the Plan. The Commission notes
that the most recent prior amendment to the Plan was published for
comment and the Commission did not receive any comments thereon.\21\
The Commission believes that the current amendment to the Plan does not
raise any new regulatory issues that the Commission has not previously
considered, and therefore believes that the amended Plan should become
effective without any undue delay.
---------------------------------------------------------------------------
\21\ See Securities Exchange Act Release No. 56645 (September 8,
2020), 85 FR 56645 (September 14, 2020).
---------------------------------------------------------------------------
IV. Conclusion
This order gives effect to the Amended Plan filed with the
Commission in File No. 4-678. 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. 4-678, between the FINRA, MIAX, MIAX
Pearl, MIAX Emerald, and MIAX Sapphire, filed pursuant to Rule 17d-2
under the Act, hereby is approved and declared effective.
IT IS FURTHER ORDERED that MIAX, MIAX Pearl, MIAX Emerald, and MIAX
Sapphire are each relieved of those responsibilities allocated to FINRA
under the Amended Plan in File No. 4-678.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\22\
---------------------------------------------------------------------------
\22\ 17 CFR 200.30-3(a)(34).
---------------------------------------------------------------------------
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-17275 Filed 8-5-24; 8:45 am]
BILLING CODE 8011-01-P