[Federal Register Volume 90, Number 88 (Thursday, May 8, 2025)]
[Notices]
[Pages 19579-19584]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-08065]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-102972; File No. 4-854]
Program for Allocation of Regulatory Responsibilities Pursuant to
Rule 17d-2; Notice of Filing of Proposed Plan for the Allocation of
Regulatory Responsibilities Between the Financial Industry Regulatory
Authority, Inc. and 24X National Exchange LLC
May 2, 2025.
Pursuant to Section 17(d) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 17d-2 thereunder,\2\ notice is hereby given that
on April 24, 2025, the Financial Industry Regulatory Authority, Inc.
(``FINRA'') and 24X National Exchange LLC (``24X'') (together with
FINRA, the ``Parties'') filed with the Securities and Exchange
Commission (``Commission'' or ``SEC'') a plan for the allocation of
regulatory responsibilities, dated April 17, 2025 (``17d-2 Plan'' or
the ``Plan''). The Commission is publishing this notice to solicit
comments on the 17d-2 Plan from interested persons.
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\1\ 15 U.S.C. 78q(d).
\2\ 17 CFR 240.17d-2.
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I. Introduction
Section 19(g)(1) of the Act,\3\ among other things, requires every
self-regulatory organization (``SRO'') registered as either a national
securities exchange or national securities association to examine for,
and enforce compliance by, its members and persons associated with its
members with the Act, the rules and regulations thereunder, and the
SRO's own rules, unless the SRO is relieved of this responsibility
pursuant to Section 17(d) or Section 19(g)(2) of the Act.\4\ Without
this relief, the statutory obligation of each individual SRO could
result in a pattern of multiple examinations of broker-dealers that
maintain memberships in more than one SRO (``common members''). Such
regulatory duplication would add unnecessary expenses for common
members and their SROs.
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\3\ 15 U.S.C. 78s(g)(1).
\4\ 15 U.S.C. 78q(d) and 15 U.S.C. 78s(g)(2), respectively.
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Section 17(d)(1) of the Act \5\ was intended, in part, to eliminate
unnecessary multiple examinations and regulatory duplication.\6\ With
respect to a common member, Section 17(d)(1) authorizes the Commission,
by rule or order, to relieve an SRO of the responsibility to receive
regulatory reports, to examine for and enforce compliance with
applicable statutes, rules, and regulations, or to perform other
specified regulatory functions.
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\5\ 15 U.S.C. 78q(d)(1).
\6\ See Securities Act Amendments of 1975, Report of the Senate
Committee on Banking, Housing, and Urban Affairs to Accompany S.
249, S. Rep. No. 94-75, 94th Cong., 1st Session 32 (1975).
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To implement Section 17(d)(1), the Commission adopted two rules:
Rule 17d-1 and Rule 17d-2 under the Act.\7\ Rule 17d-1 authorizes the
Commission to name a single SRO as the designated examining authority
(``DEA'') to examine common members for compliance with the financial
responsibility requirements imposed by the Act, or by Commission or SRO
rules.\8\ When an SRO has been named as a common member's DEA, all
other SROs to which the common member belongs are relieved of the
responsibility to examine the firm for compliance with the applicable
financial responsibility rules. On its face, Rule 17d-1 deals only with
an SRO's obligations to enforce member compliance with financial
responsibility requirements. Rule 17d-1 does not relieve an SRO from
its obligation to examine a common member for compliance with its own
rules and provisions of the federal securities laws governing matters
other than financial responsibility, including sales practices and
trading activities and practices.
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\7\17 CFR 240.17d-1 and 17 CFR 240.17d-2, respectively.
\8\ See Securities Exchange Act Release No. 12352 (April 20,
1976), 41 FR 18808 (May 7, 1976).
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To address regulatory duplication in these and other areas, the
Commission adopted Rule 17d-2 under the Act.\9\ Rule 17d-2 permits SROs
to propose joint plans for the allocation of regulatory
responsibilities with respect to their common members. Under paragraph
(c) of Rule 17d-2, the Commission may declare such a plan effective if,
after providing for appropriate notice and comment, it determines that
the plan is necessary or appropriate in the public interest and for the
protection of investors; to foster cooperation and coordination among
the SROs; to remove impediments to, and foster the development of, a
national market system and a national clearance and settlement system;
and is in conformity with the factors set forth in Section 17(d) of the
Act. Commission approval of a plan filed pursuant to Rule 17d-2
relieves an SRO of those regulatory responsibilities allocated by the
plan to another SRO.
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\9\ See Securities Exchange Act Release No. 12935 (October 28,
1976), 41 FR 49091 (November 8, 1976).
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II. Proposed Plan
The proposed 17d-2 Plan is intended to reduce regulatory
duplication for firms that are common members of both 24X and
FINRA.\10\ Pursuant to the proposed 17d-2 Plan, FINRA would assume
certain examination and enforcement responsibilities for common members
with respect to certain applicable laws, rules, and regulations.
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\10\The proposed 17d-2 Plan refers to these common members as
``Dual Members.'' See Paragraph 1(c) of the proposed 17d-2 Plan.
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The text of the Plan delineates the proposed regulatory
responsibilities with respect to the Parties. Included in the proposed
Plan is an exhibit (the ``24X Certification of Common Rules,'' referred
to herein as the ``Certification'') that lists every 24X rule, and
select federal securities laws, rules, and regulations, for which FINRA
would bear responsibility under the Plan for overseeing and enforcing
with respect to 24X members that are also members of FINRA and the
associated persons therewith (``Dual Members'').
Specifically, under the 17d-2 Plan, FINRA would assume examination
and enforcement responsibility relating to compliance by Dual Members
with the rules of 24X that are substantially similar to the applicable
rules of FINRA,\11\ as well as any provisions of the federal securities
laws and the rules and regulations thereunder delineated in the
Certification (``Common Rules''). In the event that a Dual Member is
the subject of an investigation relating to a transaction on 24X, the
plan acknowledges that 24X may, in its discretion, exercise concurrent
jurisdiction and responsibility for such matter.\12\
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\11\ See paragraph 1(b) of the proposed 17d-2 Plan (defining
Common Rules). See also paragraph 1(f) of the proposed 17d-2 Plan
(defining Regulatory Responsibilities). Paragraph 2 of the Plan
provides that annually, or more frequently as required by changes in
either 24X rules or FINRA rules, the parties shall review and
update, if necessary, the list of Common Rules.
\12\ See paragraph 5 of the proposed 17d-2 Plan.
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Under the Plan, 24X would retain full responsibility for
surveillance and enforcement with respect to trading activities or
practices involving 24X's own marketplace, including, without
limitation, registration pursuant to its
[[Page 19580]]
applicable rules of associated persons (i.e., registration rules that
are not Common Rules); its duties as a DEA pursuant to Rule 17d-1 under
the Act; and any 24X rules that are not Common Rules.\13\
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\13\ See paragraph 2 of the proposed 17d-2 Plan.
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The text of the proposed 17d-2 Plan is as follows:
Agreement Between Financial Industry Regulatory Authority, Inc. and 24X
National Exchange LLC Pursuant to Rule 17d-2 Under the Securities
Exchange Act of 1934
This Agreement, by and between the Financial Industry Regulatory
Authority, Inc. (``FINRA'') and 24X National Exchange LLC (``24X''),
is made this 17th day of April, 2025 (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 24X may be referred to individually as a ``party'' and together
as the ``parties.''
Whereas, the parties desire to reduce duplication in the
examination, surveillance and investigation of their Dual 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 U.S. 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:
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:
``24X Rules'' or ``FINRA Rules'' shall mean the rules of 24X or
FINRA, respectively, as the rules of an exchange or association are
defined in Exchange Act Section 3(a)(27).
``Common Rules'' shall mean the 24X 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, surveillance or investigation for compliance with such
provisions and rules would not require FINRA to develop one or more
new examination, surveillance or investigation 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 provision or rule; provided, however, Common Rules shall not
include the application of the SEC, 24X or FINRA rules as they
pertain to violations of insider trading activities, which is
covered by a separate 17d-2 Agreement by and among Cboe BZX
Exchange, Inc., Cboe BYX Exchange, Inc., Chicago Stock Exchange,
Inc., Cboe EDGA Exchange, Inc., Cboe EDGX Exchange, Inc., Financial
Industry Regulatory Authority, Inc., 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. 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 24X, (ii) incorporation by reference of other
24X 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 24X, (iv)
prior written approval of 24X and (v) payment of fees or fines to
24X.
``Dual Members'' shall mean those 24X members that are also
members of FINRA and the associated persons therewith.
``Effective Date'' shall be the date this Agreement is approved
by the Commission.
``Enforcement Responsibilities'' shall mean the conduct of
appropriate proceedings, in accordance with the FINRA Code of
Procedure (the Rule 9000 Series) and other applicable FINRA
procedural rules, to determine whether violations of Common Rules
have occurred, and if such violations are deemed to have occurred,
the imposition of appropriate sanctions as specified under the FINRA
Code of Procedure and FINRA's sanction guidelines.
``Regulatory Responsibilities'' shall mean the examination,
surveillance and investigation 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.
Regulatory Responsibilities. FINRA shall assume Regulatory
Responsibilities for Dual Members. Attached as Exhibit 1 to this
Agreement and made part hereof, 24X furnished FINRA with a current
list of Common Rules and certified to FINRA that such rules are
substantially similar to the corresponding FINRA Rules (the
``Certification''). FINRA hereby agrees that the rules listed in the
Certification are Common Rules as defined in this Agreement. Each
year following the Effective Date of this Agreement, or more
frequently if required by changes in either 24X Rules or FINRA
Rules, 24X shall submit an updated list of Common Rules to FINRA for
review which shall add 24X Rules not included in the current list of
Common Rules that qualify as Common Rules as defined in this
Agreement; delete 24X 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 24X 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 24X shall retain full responsibility for
(unless otherwise addressed by separate agreement or rule) the
following (collectively, the ``Retained Responsibilities''):
surveillance, examination, investigation and enforcement with
respect to trading activities or practices involving 24X's own
marketplace except as otherwise specified in the list of Common
Rules in Exhibit 1; registration pursuant to its applicable rules of
associated persons (i.e., registration rules that are not Common
Rules); discharge of its duties and obligations as a Designated
Examining Authority pursuant to Rule 17d-1 under the Exchange Act;
and any 24X Rules that are not Common Rules, except for 24X Rules
for any 24X member that operates a facility (as defined in Section
3(a)(2) of the Exchange Act), acts as an outbound router for 24X and
is a member of FINRA (``Router Member'') as provided in paragraph 5.
No Charge. There shall be no charge to 24X by FINRA for
performing the Regulatory Responsibilities and Enforcement
Responsibilities under this Agreement except as hereinafter
provided. FINRA shall provide 24X with ninety (90) days advance
written notice in the event FINRA decides to impose any changes to
24X for performing the Regulatory Responsibilities under this
Agreement. If FINRA determines to impose a charge, 24X shall have
the right at the time of 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.
Applicability of Certain Laws, Rules, Regulations or Orders.
Notwithstanding any provision hereof, this Agreement shall be
subject to any statute, or any rule or order of the Commission. To
the extent such statute, rule or order is inconsistent with this
Agreement, the statute, rule or order shall supersede the
provision(s) hereof to the extent necessary for them to be properly
effectuated and the provision(s) hereof in that respect shall be
null and void.
Notification of Violations.
In the event that FINRA becomes aware of apparent violations of
any 24X Rules, which are not listed as Common Rules, discovered
pursuant to the performance of the Regulatory Responsibilities
assumed hereunder, FINRA shall notify 24X of those apparent
violations for such response as 24X deems appropriate. With respect
to apparent violations of any 24X Rules by any Router Member, FINRA
shall not make referrals to 24X pursuant to this paragraph 5. Such
apparent violations shall be processed by, and enforcement
proceedings in respect thereto will be conducted by, FINRA as
provided in this Agreement.
In the event that 24X becomes aware of apparent violations of
any Common Rules, discovered pursuant to the performance of the
Retained Responsibilities, 24X shall
[[Page 19581]]
notify FINRA of those apparent violations and such matters shall be
handled by FINRA consistent with the provisions 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 Dual Member is the subject of an investigation relating to a
transaction on 24X, 24X 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.
Continued Assistance. FINRA shall make available to 24X all
information obtained by FINRA in the performance by it of the
Regulatory Responsibilities hereunder with respect to the Dual
Members subject to this Agreement. In particular, and not in
limitation of the foregoing, FINRA shall furnish 24X any information
it obtains about Dual Members which reflects adversely on their
financial condition. 24X 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.
The parties agree that documents or information shared shall be
held in confidence, and used only for the purposes of carrying out
their respective regulatory obligations. Neither party shall assert
regulatory or other privileges as against the other with respect to
documents or information that is required to be shared pursuant to
this Agreement. The sharing of documents or information between the
parties pursuant to this Agreement shall not be deemed a waiver as
against third parties of regulatory or other privileges relating to
the discovery of documents or information.
Dual Member Applications. 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
partners, officers, registered personnel and any other person
required to be approved by the 24X Rules and FINRA Rules or
associated with Dual Members thereof. Upon request, FINRA shall
advise 24X of any changes of allied members, partners, officers,
registered personnel and other persons required to be approved by
the 24X Rules and FINRA Rules. Dual Members shall be required to
send to FINRA all letters, termination notices or other material
respecting the individuals listed in paragraph 7(a).
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 24X advised of its actions in this
regard for such subsequent proceedings as 24X may initiate.
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 an associated person therewith
or other persons required to register or qualify by examination
meets the 24X requirements for general membership or for specified
categories of membership or participation in 24X. FINRA shall not
review applications or other documentation filed to request a change
in the rights or status described in this paragraph 7(d), including
termination or limitation on activities, of a member or a
participant of 24X, or a person associated with, or requesting
association with, a member or participant of 24X.
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 24X of the opening, address
change and termination of branch and main offices of Dual Members
and the names of such branch office managers.
Customer Complaints. 24X shall forward to FINRA copies of all
customer complaints involving Dual Members received by 24X 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.
Advertising. FINRA shall assume responsibility to review the
advertising of Dual Members subject to the Agreement, provided that
such material is filed with FINRA in accordance with FINRA's filing
procedures and is accompanied with any applicable filing fees set
forth in FINRA Rules.
No Restrictions on Regulatory Action. Notwithstanding anything
else herein and to the contrary, except for paragraph 5(a), 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.
Termination. This Agreement may be terminated by 24X or FINRA at
any time upon the approval of the Commission after one (1) year's
written notice to the other party, except as provided in paragraph
3.
Arbitration. In the event of a dispute between the parties as to
the operation of this Agreement, 24X and FINRA hereby agree that any
such dispute shall be settled by arbitration in Washington, DC in
accordance with the rules of the American Arbitration Association
then in effect, or such other procedures as the parties may mutually
agree upon. Judgment on the award rendered by the arbitrator(s) may
be entered in any court having jurisdiction. Each party acknowledges
that the timely and complete performance of its obligations pursuant
to this Agreement is critical to the business and operations of the
other party. In the event of a dispute between the parties, the
parties shall continue to perform their respective obligations under
this Agreement in good faith during the resolution of such dispute
unless and until this Agreement is terminated in accordance with its
provisions. Nothing in this paragraph 13 shall interfere with a
party's right to terminate this Agreement as set forth herein.
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.
Limitation of Liability. Neither FINRA nor 24X 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 24X 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 24X with respect to any of the responsibilities
to be performed by them hereunder.
Relief from Responsibility. Pursuant to Sections 17(d)(1)(A) and
19(g) of the Exchange Act and Rule 17d-2 thereunder, the parties
join in requesting the Commission, upon its approval of this
Agreement or any part thereof, to relieve 24X 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.
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.
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.
[Remainder of page intentionally left blank.]
Exhibit 1
24X Certification of Common Rules
24X hereby certifies that the requirements contained in the
rules listed below for 24X are identical to, or substantially
similar to, the comparable FINRA Rules, Exchange Act provision or
Securities Exchange Act Rule (SEA) rule identified (``Common
Rules''). # Common Rules shall not include any provisions regarding
(i) notice, reporting or any other filings made directly to or from
24X, (ii) incorporation by reference of 24X Rules that are not
Common Rules, (iii) exercise of discretion in a manner that differs
from FINRA's exercise of discretion
[[Page 19582]]
including, but not limited to exercise of exemptive authority, by
24X, (iv) prior written approval of 24X and (v) payment of fees or
fines to 24X.
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FINRA Rule, Exchange Act
24X Rule provision or SEC rule
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Rule 2.5.01(j) Lapse of Registration FINRA Rule 1210.08--
and Expiration of SIE#. Registration Requirements--
Lapse of Registration and
Expiration of SIE.
Rule 2.5.02 Continuing Education FINRA Rule 1240 Continuing
Requirements#. Education Requirements.
Rule 2.5 Restrictions, Interpretations FINRA By-Laws of the
and Policies .04 Termination of Corporation, Article V,
Employment. Section 3 Notification by
Member to the Corporation and
Associated Person of
Termination; Amendments to
Notification; FINRA Rule
1010(e) Electronic Filing
Requirements for Uniform
Forms.
Rule 2.6(b) and (g) Application FINRA By-Laws of the
Procedures for Membership or to become Corporation, Article IV,
an Associated Person of a Member#. Section 1(c) Application for
Membership and Article V, Sec.
2(c); FINRA Rule 1010(c)
Electronic Filing Requirements
for Uniform Forms.
Rule 3.1 Business Conduct of Members *. FINRA Rule 2010 Standards of
Commercial Honor and
Principles of Trade *.
Rule 3.2 Violations Prohibited *#...... FINRA Rule 2010 Standards of
Commercial Honor and
Principles of Trade and FINRA
Rule 3110 Supervision *.
Rule 3.3 Use of Fraudulent Devices *... FINRA Rule 2020 Use of
Manipulative, Deceptive or
Other Fraudulent Devices *.
Rule 3.5 Communications with the Public FINRA Rule 2210 Communications
with the Public.
Rule 3.6 Fair Dealing with Customers... FINRA Rule 2020 Use of
Manipulative, Deceptive or
Other Fraudulent Devices *\1\,
FINRA Rule 2111 Suitability.
Rule 3.7(a) Recommendations to FINRA Rule 2111(a) and SM .03
Customers. Suitability.
Rule 3.8(a) The Prompt Receipt and FINRA Rule 11860 COD Orders.
Delivery of Securities.
Rule 3.8(b) The Prompt Receipt and SEC Regulation SHO.
Delivery of Securities.
Rule 3.9 Charges for Services Performed FINRA Rule 2122 Charges for
Services Performed.
Rule 3.10 Use of Information........... FINRA Rule 2060 Use of
Information Obtained in
Fiduciary Capacity.
Rule 3.11 Publication of Transactions FINRA Rule 5210 Publication of
and Quotations#. Transactions and Quotations.
Rule 3.12 Offers at Stated Prices...... FINRA Rule 5220 Offers at
Stated Prices.
Rule 3.13 Payments Involving FINRA Rule 5230 Payments
Publications that Influence the Market Involving Publications that
Price of a Security. Influence the Market Price of
a Security.
Rule 3.14 Disclosure on Confirmations.. FINRA Rule 2232(a) Customer
Confirmations and SEC Rule 10b-
10 Confirmation of
Transactions.
Rule 3.15 Disclosure of Control........ FINRA Rule 2262 Disclosure of
Control Relationship With
Issuer.
Rule 3.16 Discretionary Accounts....... FINRA Rule 3260 Discretionary
Accounts.
Rule 3.17 Customer's Securities or FINRA Rule 2150(a) Improper Use
Funds. of Customers' Securities or
Funds; Prohibition Against
Guarantees and Sharing in
Accounts--Improper Use.
Rule 3.18 Prohibition Against FINRA Rule 2150(b) Improper Use
Guarantees. of Customers' Securities or
Funds; Prohibition Against
Guarantees and Sharing in
Accounts--Prohibition Against
Guarantees.
Rule 3.19 Sharing in Accounts; Extent FINRA Rule 2150(c)(1) Improper
Permissible. Use of Customers' Securities
or Funds; Prohibition Against
Guarantees and Sharing in
Accounts--Sharing in Accounts;
Extent Permissible.
Rule 3.20 Influencing or Rewarding FINRA Rule 3220 Influencing or
Employees of Others. Rewarding Employees of Others.
Rule 3.21 Customer Disclosures......... FINRA Rule 2265 Extended Hours
Trading Risk Disclosure.
Rule 3.22 Telemarketing and FINRA Rule 3230 Telemarketing.
Interpretations and Policies .01.
Rule 4.1 Requirements *#............... Section 17 of the Exchange Act
and rules thereunder and FINRA
Rule 4511(a) and (c) General
Requirements \2\*.
Rule 4.3 Record of Written Complaints.. FINRA Rule 4513 Records of
Written Customer Complaints.
Rule 5.1 Written Procedures *#......... FINRA Rule 3110(b)(1)
Supervision-Written Procedures
*.
Rule 5.2 Responsibility of Members..... FINRA Rule 3110 (a)(4), (b)(4)
and (b)(7) Supervision--
Supervisory System/Written
Procedures--Review of
Correspondence and Internal
Communications *.
Rule 5.3 Records *..................... FINRA Rule 3110 Supervision *.
Rule 5.4 Review of Activities.......... FINRA Rule 3110(c) and (d)
Supervision--Internal
Inspections/Transaction Review
and Investigation *.
Rule 5.5 Prevention of the Misuse of FINRA Rule 3110 Supervision
Material, Non-Public Information *. (b)(1) and (d) *.
Rule 5.6 Anti-Money Laundering FINRA Rule 3310 Anti-Money
Compliance Program#. Laundering Compliance Program.
Rule 9.3 Predispute Arbitration FINRA Rule 2268 Requirements
Agreements. When Using Predispute
Arbitration Agreements for
Customer Accounts.
Rule 11.9(a)(5) Order Execution# *..... FINRA Rule 6182 Trade Reporting
of Short Sales.
Rule 11.9(f) Locking Quotation or FINRA Rule 6240 Prohibition
Crossing Quotations in NMS Stocks * *. from Locking or Crossing
Quotations in NMS Stocks * *.
Rule 11.22(b)(1)(A)(i)(c) and(d) Limit FINRA Rule 6190(a)& (b)
Up-Limit Down Plan and Trading Halts Compliance with Regulation NMS
on the Exchange. Plan to Address Extraordinary
Market Volatility.
Rule 11.21 Trading Halts Due to FINRA Rule 6190(a)& (b)
Extraordinary Market Volatility/Market- Compliance with Regulation NMS
Wide Circuit Breakers#. Plan to Address Extraordinary
Market Volatility.
Rule 12.1 Market Manipulation.......... FINRA Rule 6140(a) Other
Trading Practices.
Rule 12.2 Fictitious Transactions...... FINRA Rule 6140 Other Trading
Practices and FINRA Rule 5210
Supplementary Material .02
Self-Trades.
Rule 12.3 Excessive Sales by a Member.. FINRA Rule 6140(c) Other
Trading Practices.
Rule 12.4 Manipulative Transactions *.. FINRA Rule 6140 Other Trading
Practices.
Rule 12.5 Dissemination of False FINRA Rule 6140(e) Other
Information. Trading Practices.
[[Page 19583]]
Rule 12.6 Prohibition Against Trading FINRA Rule 5320 Prohibition
Ahead of Customer Orders # **. Against Trading Ahead of
Customer Orders **.
Rule 12.9 Trade Shredding.............. FINRA Rule 5290 Order Entry and
Execution Practices.
Rule 12.11 Best Execution**............ FINRA Rule 5310 Best Execution
and Interpositioning **.
Rule 12.13 Trading Ahead of Research FINRA Rule 5280 Trading Ahead
Reports. of Research Reports.
Rule 12.14 Front Running of Block FINRA Rule 5270 Front Running
Transactions**. of Block Transactions **.
Rule 13.3(a), (b)(i), (d) and FINRA Rule 2251 Processing and
Interpretation and Policy .01 Forwarding of Proxy and Other
Forwarding of Proxy and Other Issuer- Issuer-Related Materials.
Related Materials; Proxy Voting.
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\1\ FINRA shall not have Regulatory Responsibilities regarding .01 of
24X Rule 3.6.
\2\ FINRA shall not have Regulatory Responsibilities regarding
requirements to keep records ``in conformity with . . . Exchange
Rules;'' responsibility for such requirement remains with 24X.
In addition, the following provisions shall be part of this 17d-2
Agreement:
SEA Rules:
SEA Rule 200 of Regulation SHO--Definition of Short Sales and Marking
Requirements **
SEA Rule 201 of Regulation SHO--Circuit Breaker **
SEA Rule 203 of Regulation SHO--Borrowing and Delivery Requirements **
SEA Rule 204 of Regulation SHO--Close-Out Requirement **
SEA Rule 101 of Regulation M--Activities by Distribution Participants **
SEA Rule 102 of Regulation M--Activities by Issuers and Selling Security
Holders During a Distribution **
SEA Rule 103 of Regulation M--Nasdaq Passive Market Making **
SEA Rule 104 of Regulation M--Stabilizing and Other Activities in
Connection with an Offering **
SEA Rule 105 of Regulation M--Short Selling in Connection With a Public
Offering **
SEA Rule 604 of Regulation NMS--Display of Customer Limit Orders **
SEA Rule 606 of Regulation NMS--Disclosure of Routing Information
**[supcaret]
SEA Rule 610(d) of Regulation NMS--Locking or Crossing Quotations **
SEA Rule 611 of Regulation NMS--Order Protection Rule **[supcaret]
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 *
* 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., NYSE Chicago, 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 the Long-Term Stock Exchange, Inc. as approved by the
SEC on September 23, 2020, as may be amended from time to time.
** In addition to performing examinations and Enforcement
Responsibilities as provided in this Agreement for the double star
rules, FINRA shall also perform the surveillance and investigation
responsibilities for the double star rules. These rules may be cited
by FINRA in both the context of this Agreement and the Regulatory
Services Agreement between FINRA and 24X.
[supcaret] FINRA shall perform the surveillance and investigation
responsibilities for these rules. The examination responsibility for
these rules is covered by a separate 17d-2 Agreement by and among Cboe
BZX Exchange, Inc., Cboe BYX Exchange, Inc., BOX Exchange LLC, Cboe
Exchange, Inc., Cboe C2 Exchange, Inc., NYSE Chicago, Inc., Cboe EDGA
Exchange, Inc., Cboe EDGX Exchange, Inc., Financial Industry
Regulatory Authority, Inc., MEMX LLC, Nasdaq ISE, LLC, Nasdaq GEMX,
LLC, Nasdaq MRX, LLC, Investors Exchange LLC, Miami International
Securities Exchange, LLC, MIAX PEARL, LLC, MIAX Emerald, LLC, MIAX
Sapphire, LLC, The Nasdaq Stock Market LLC, Nasdaq BX, Inc., Nasdaq
PHLX LLC, NYSE National, Inc., New York Stock Exchange LLC, NYSE
American LLC, NYSE Arca, Inc. and Long-Term Stock Exchange, Inc. as
approved by the SEC on August 1, 2024 concerning covered Regulation
NMS and Consolidated Audit Trail Rules, as may be amended from time to
time.
III. Date of Effectiveness of the Proposed Plan and Timing for
Commission Action
Pursuant to Section 17(d)(1) of the Act \14\ and Rule 17d-2
thereunder,\15\ after May 23, 2025, the Commission may, by written
notice, declare the plan submitted by 24X and FINRA, File No. 4-854, to
be effective if the Commission finds that the plan is necessary or
appropriate in the public interest and for the protection of investors,
to foster cooperation and coordination among self-regulatory
organizations, or to remove impediments to and foster the development
of the national market system and a national system for the clearance
and settlement of securities transactions and in conformity with the
factors set forth in Section 17(d) of the Act.
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\14\ 15 U.S.C. 78q(d)(1).
\15\ 17 CFR 240.17d-2.
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IV. Solicitation of Comments
In order to assist the Commission in determining whether to approve
the proposed 17d-2 Plan and to relieve 24X of the responsibilities
which would be assigned to FINRA, interested persons are invited to
submit written data, views, and arguments concerning the foregoing.
Comments may be submitted by any of the following methods:
Electronic Comments
Use the Commission's internet comment form (http://www.sec.gov/rules/other.shtml); or
Send an email to [email protected]. Please include
File Number 4-854 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, Station Place, 100 F Street NE, Washington, DC
20549-1090.
All submissions should refer to File Number 4-854. This file number
should be included on the subject line if email is used. To help the
Commission process and review your comments more efficiently, please
use only one method. The Commission will post all comments on the
Commission's internet website (http://www.sec.gov/rules/other.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549 on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the plan also will be available for inspection and
copying at the principal offices of
[[Page 19584]]
24X and FINRA. 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 4-854 and
should be submitted on or before May 23, 2025.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(34).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-08065 Filed 5-7-25; 8:45 am]
BILLING CODE 8011-01-P