84074 Federal Register / Vol. 85, No. 247 / Wednesday, December 23, 2020 / Notices 

22 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78q(d). 

2 17 CFR 240.17d–2. 

3 15 U.S.C. 78s(g)(1). 

4 15 U.S.C. 78q(d). 

5 15 U.S.C. 78s(g)(2). 

6 15 U.S.C. 78q(d)(1). 

7See 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). 

8 17 CFR 240.17d–1 and 17 CFR 240.17d–2, 

respectively. 

9See Securities Exchange Act Release No. 12352 

(April 20, 1976), 41 FR 18808 (May 7, 1976). 

10See Securities Exchange Act Release No. 12935 

(October 28, 1976), 41 FR 49091 (November 8, 

1976). 

11See Securities Exchange Act Release No. 70228 

(August 19, 2013), 78 FR 52587 (August 23, 2013). 

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number SR–NYSECHX–2020–32, and 

should be submitted on or before 

January 13, 2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.22

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2020–28313 Filed 12–22–20; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–90704; File No. 4–663] 

Program for Allocation of Regulatory 

Responsibilities Pursuant to Rule 17d– 

2; Notice of Filing and Order 

Approving and Declaring Effective an 

Amended Plan for the Allocation of 

Regulatory Responsibilities Between 

the Financial Industry Regulatory 

Authority, Inc. and Nasdaq GEMX, LLC 

December 17, 2020. 

Notice is hereby given that the 

Securities and Exchange Commission 

(‘‘Commission’’) has issued an Order, 

pursuant to Section 17(d) of the 

Securities Exchange Act of 1934 

(‘‘Act’’),1 approving and declaring 

effective an amendment to the plan for 

allocating regulatory responsibility 

(‘‘Plan’’) filed on November 19, 2020, 

pursuant to Rule 17d–2 of the Act,2 by 

the Financial Industry Regulatory 

Authority, Inc. (‘‘FINRA’’) and Nasdaq 

GEMX, LLC (‘‘GEMX’’) (collectively, 

‘‘Participating Organizations’’ or 

‘‘parties’’). This agreement amends and 

restates the agreement entered into 

between FINRA and Topaz Exchange, 

LLC (n/k/a GEMX) on June 21, 2013, 

entitled ‘‘Agreement Between Financial 

Industry Regulatory Authority, Inc. and 

Topaz Exchange Pursuant to Rule 17d– 

2 under the Securities Exchange Act of 

1934,’’ and any subsequent amendments 

thereafter. 

I. Introduction 

Section 19(g)(1) of the Act,3 among 

other things, requires every selfregulatory organization (‘‘SRO’’) 

registered as either a national securities 

exchange or national securities 

association to examine for, and enforce 

compliance by, its members and persons 

associated with its members with the 

Act, the rules and regulations 

thereunder, and the SRO’s own rules, 

unless the SRO is relieved of this 

responsibility pursuant to Section 

17(d) 4 or Section 19(g)(2) 5 of the Act. 

Without this relief, the statutory 

obligation of each individual SRO could 

result in a pattern of multiple 

examinations of broker-dealers that 

maintain memberships in more than one 

SRO (‘‘common members’’). Such 

regulatory duplication would add 

unnecessary expenses for common 

members and their SROs. 

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. 

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. 

To address regulatory duplication in 

these and other areas, the Commission 

adopted Rule 17d–2 under the Act.10

Rule 17d–2 permits SROs to propose 

joint plans for the allocation of 

regulatory responsibilities with respect 

to their common members. Under 

paragraph (c) of Rule 17d–2, the 

Commission may declare such a plan 

effective if, after providing for 

appropriate notice and opportunity for 

comment, it determines that the plan is 

necessary or appropriate in the public 

interest and for the protection of 

investors, to foster cooperation and 

coordination among the SROs, to 

remove impediments to, and foster the 

development of, a national market 

system and a national clearance and 

settlement system, and is in conformity 

with the factors set forth in Section 

17(d) of the Act. Commission approval 

of a plan filed pursuant to Rule 17d–2 

relieves an SRO of those regulatory 

responsibilities allocated by the plan to 

another SRO. 

II. The Plan 

On August 19, 2013, the Commission 

declared effective the Plan entered into 

between FINRA and GEMX for 

allocating regulatory responsibility 

pursuant to Rule 17d–2.11 The Plan is 

intended to reduce regulatory 

duplication for firms that are common 

members of FINRA and GEMX by 

allocating regulatory responsibility with 

respect to certain applicable laws, rules, 

and regulations that are common among 

them. Included in the Plan is an exhibit 

that lists every GEMX rule for which 

FINRA bears responsibility under the 

Plan for overseeing and enforcing with 

respect to GEMX members that are also 

members of FINRA and the associated 

persons therewith (‘‘Certification’’). 

III. Proposed Amendment to the Plan 

On November 19, 2020, the parties 

submitted a proposed amendment to the 

Plan (‘‘Amended Plan’’). The primary 

purpose of the Amended Plan is to 

allocate surveillance, investigation, and 

enforcement responsibilities for Rule 

14e–4 under the Act and to reflect the 

name change of Topaz Exchange, LLC to 

Nasdaq GEMX, LLC. The text of the 

proposed Amended Plan is as follows 


jbell on DSKJLSW7X2PROD with NOTICES
Federal Register / Vol. 85, No. 247 / Wednesday, December 23, 2020 / Notices 84075 

(additions are italicized; deletions are 

[bracketed]): 

* * * * * 

AGREEMENT BETWEEN FINANCIAL 

INDUSTRY REGULATORY 

AUTHORITY, INC. AND [TOPAZ 

EXCHANGE]NASDAQ GEMX, LLC 

PURSUANT TO RULE 17d–2 UNDER 

THE SECURITIES EXCHANGE ACT OF 

1934 

This Agreement, by and between 

Financial Industry Regulatory 

Authority, Inc. (‘‘FINRA’’) and [Topaz 

Exchange, LLC (‘‘Topaz’’)]Nasdaq 

GEMX, LLC (‘‘GEMX’’), is made this 

[21st] 16th day of [June]November, 

20[13]20 (the ‘‘Agreement’’), pursuant to 

Section 17(d) of the Securities Exchange 

Act of 1934 (the ‘‘Exchange Act’’) and 

Rule 17d–2 thereunder which permits 

agreements between self-regulatory 

organizations to allocate regulatory 

responsibility to eliminate regulatory 

duplication. FINRA and [Topaz]GEMX 

may be referred to individually as a 

‘‘party’’ and together as the ‘‘parties.’’ 

This Agreement amends and restates 

this agreement entered into between 

FINRA and GEMX on June 21, 2013, 

entitled ‘‘Agreement between Financial 

Industry Regulatory Authority, Inc. and 

Topaz Exchange, LLC Pursuant to Rule 

17d–2 under the Securities Exchange 

Act of 1934,’’ and any subsequent 

amendments thereafter. 

Whereas, FINRA and [Topaz]GEMX 

desire to reduce duplication in the 

examination of their Dual Members (as 

defined herein) and in the filing and 

processing of certain registration and 

membership records; and 

Whereas, FINRA and [Topaz]GEMX 

desire to execute an agreement covering 

such subjects pursuant to the provisions 

of Rule 17d–2 under the Exchange Act 

and to file such agreement with the 

Securities and Exchange Commission 

(the ‘‘SEC’’ or ‘‘Commission’’) for its 

approval. 

Now, therefore, in consideration of 

the mutual covenants contained 

hereinafter, FINRA and [Topaz]GEMX 

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) ‘‘[Topaz]GEMX Rules’’ or ‘‘FINRA 

Rules’’ shall mean the rules of 

[Topaz]GEMX or FINRA, respectively, 

as the rules of an exchange or 

association are defined in Exchange Act 

Section 3(a)(27). 

(b) ‘‘Common Rules’’ shall mean the 

[Topaz]GEMX Rules that are 

substantially similar to the applicable 

FINRA Rules in that examination for 

compliance with such rules would not 

require FINRA to develop one or more 

new examination standards, modules, 

procedures, or criteria in order to 

analyze the application of the rule, or a 

Dual Member’s activity, conduct, or 

output in relation to such rule. 

(c) ‘‘Dual Members’’ shall mean those 

[Topaz]GEMX members that are also 

members of FINRA and the associated 

persons therewith. 

(d) ‘‘Effective Date’’ shall have the 

meaning set forth in paragraph 13. 

(e) ‘‘Enforcement Responsibilities’’ 

shall mean the conduct of appropriate 

proceedings, in accordance with the 

FINRA Code of Procedure (the Rule 

9000 Series) and other applicable 

FINRA procedural rules, to determine 

whether violations of pertinent laws, 

rules or regulations have occurred, and 

if such violations are deemed to have 

occurred, the imposition of appropriate 

sanctions as specified under the 

FINRA’s Code of Procedure and 

sanctions guidelines. Common Rules 

shall not include any provisions 

regarding (i) notice, reporting or any 

other filings made directly to or from 

GEMX, (ii) incorporation by reference of 

GEMX 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 GEMX, (iv) prior written 

approval of GEMX and (v) payment of 

fees or fines to GEMX. 

(f) ‘‘Regulatory Responsibilities’’ shall 

mean the examination responsibilities 

and Enforcement Responsibilities 

relating to compliance by the Dual 

Members with the Common Rules and 

the provisions of the Exchange Act and 

the rules and regulations thereunder, 

and other applicable laws, rules and 

regulations, each as set forth on Exhibit 

1 attached hereto. The term ‘‘Regulatory 

Responsibilities’’ shall also include the 

surveillance, investigation and 

Enforcement Responsibilities relating to 

compliance by Common Members with 

Rule 14e–4 of the Securities Exchange 

Act (‘‘Rule 14e–4’’), with a focus on the 

standardized call option provision of 

Rule 14e–4(a)(1)(ii)(D). 

2. Regulatory and Enforcement 

Responsibilities. FINRA shall assume 

Regulatory Responsibilities and 

Enforcement Responsibilities for Dual 

Members. Attached as Exhibit 1 to this 

Agreement and made part hereof, 

[Topaz]GEMX furnished FINRA with a 

current list of Common Rules and 

certified to FINRA that such rules are 

substantially similar to the 

corresponding FINRA Rule (the 

‘‘Certification’’). FINRA hereby agrees 

that the rules listed in the Certification 

are Common Rules as defined in this 

Agreement. Each year following the 

Effective Date of this Agreement, or 

more frequently if required by changes 

in either the [Topaz]GEMX Rules or 

FINRA Rules, [Topaz]GEMX shall 

submit an updated list of Common 

Rules to FINRA for review which shall 

add [Topaz]GEMX Rules not included in 

the current list of Common Rules that 

qualify as Common Rules as defined in 

this Agreement; delete [Topaz]GEMX 

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 

[Topaz]GEMX 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 [Topaz]GEMX 

shall retain full responsibility for 

(unless otherwise addressed by separate 

agreement or rule) the following 

(collectively, the ‘‘Retained 

Responsibilities’’): 

(a) Surveillance and enforcement with 

respect to trading activities or practices 

involving [Topaz]GEMX’s own 

marketplaces, including without 

limitation [Topaz]GEMX’s Rules relating 

to the rights and obligations of market 

makers; 

(b) registration pursuant to its 

applicable rules of associated persons 

(i.e., registration rules that are not 

Common Rules); 

(c) discharge of its duties and 

obligations as a Designated Examining 

Authority pursuant to Rule 17d–1 under 

the Exchange Act; and 

(d) any [Topaz]GEMX Rules that are 

not Common Rules. 

3. Dual Members. Prior to the 

Effective Date, [Topaz]GEMX shall 

furnish FINRA with a current list of 

Dual Members, which shall be updated 

no less frequently than once each 

quarter. 

4. No Charge. There shall be no 

charge to [Topaz]GEMX by FINRA for 

performing the Regulatory 

Responsibilities and Enforcement 

Responsibilities under this Agreement 

except as hereinafter provided. FINRA 

shall provide [Topaz]GEMX with ninety 

(90) days advance written notice in the 


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84076 Federal Register / Vol. 85, No. 247 / Wednesday, December 23, 2020 / Notices 

event FINRA decides to impose any 

charges to [Topaz]GEMX for performing 

the Regulatory Responsibilities under 

this Agreement. If FINRA determines to 

impose a charge, [Topaz]GEMX shall 

have the right at the time of the 

imposition of such charge to terminate 

this Agreement; provided, however, that 

FINRA’s Regulatory Responsibilities 

under this Agreement shall continue 

until the Commission approves the 

termination of this Agreement. 

5. Reassignment of Regulatory 

Responsibilities. Notwithstanding any 

provision hereof, this Agreement shall 

be subject to any statute, or any rule or 

order of the Commission, or effective 

industry agreement, restructuring the 

regulatory framework of the securities 

industry or reassigning Regulatory 

Responsibilities between self-regulatory 

organizations. To the extent such action 

is inconsistent with this Agreement, 

such action shall supersede the 

provisions hereof to the extent 

necessary for them to be properly 

effectuated and the provisions hereof in 

that respect shall be null and void. 

6. Notification of Violations. In the 

event that FINRA becomes aware of 

apparent violations of any 

[Topaz]GEMX Rules, which are not 

listed as Common Rules, discovered 

pursuant to the performance of the 

Regulatory Responsibilities assumed 

hereunder, FINRA shall notify 

[Topaz]GEMX of those apparent 

violations for such response as 

[Topaz]GEMX deems appropriate. In the 

event [Topaz]GEMX becomes aware of 

apparent violations of the Common 

Rules, discovered pursuant to the 

performance of the Retained 

Responsibilities, [Topaz]GEMX shall 

notify FINRA of those apparent 

violations and such matters shall be 

handled by FINRA as provided in this 

Agreement. Apparent violations of all 

the Common Rules shall be processed 

by, and enforcement proceedings in 

respect thereto shall be conducted by 

FINRA as provided hereinbefore; 

provided, however, that in the event a 

Dual Member is the subject of an 

investigation relating to a transaction on 

[Topaz]GEMX, [Topaz]GEMX may in its 

discretion assume concurrent 

jurisdiction and responsibility. Each 

party agrees to make available promptly 

all files, records and witnesses 

necessary to assist the other in its 

investigation or proceedings. 

7. Continued Assistance. FINRA shall 

make available to [Topaz]GEMX all 

information obtained by FINRA in the 

performance by it of the Regulatory 

Responsibilities hereunder in respect to 

the Dual Members subject to this 

Agreement. In particular, and not in 

limitation of the foregoing, FINRA shall 

furnish [Topaz]GEMX any information it 

obtains about Dual Members which 

reflects adversely on their financial 

condition. It is understood that such 

information is of an extremely sensitive 

nature and, accordingly, [Topaz]GEMX 

acknowledges and agrees to take all 

reasonable steps to maintain its 

confidentiality. [Topaz]GEMX shall 

make available to FINRA any 

information coming to its attention that 

reflects adversely on the financial 

condition of Dual Members or indicates 

possible violations of applicable laws, 

rules or regulations by such firms. 

8. Dual Member Applications. 

(a) Dual Members subject to this 

Agreement shall be required to submit, 

and FINRA shall be responsible for 

processing and acting upon all 

applications submitted on behalf of 

allied persons, partners, officers, 

registered personnel and any other 

person required to be approved by the 

[Topaz]GEMX Rules and FINRA Rules 

or associated with Dual Members 

thereof. Upon request, FINRA shall 

advise [Topaz]GEMX of any changes of 

allied members, partners, officers, 

registered personnel and other persons 

required to be approved by the 

[Topaz]GEMX Rules and FINRA Rules. 

(b) Dual Members shall be required to 

send to FINRA all letters, termination 

notices or other material respecting the 

individuals listed in paragraph 8(a). 

(c) When as a result of processing 

such submissions FINRA becomes 

aware of a statutory disqualification as 

defined in the Exchange Act with 

respect to a Dual Member, FINRA shall 

determine pursuant to Sections 15A(g) 

and/or Section 6(c) of the Exchange Act 

the acceptability or continued 

applicability of the person to whom 

such disqualification applies and keep 

[Topaz]GEMX advised of its actions in 

this regard for such subsequent 

proceedings as [Topaz]GEMX may 

initiate. 

(d) Notwithstanding the foregoing, 

FINRA shall not review the membership 

application, reports, filings, fingerprint 

cards, notices, or other writings filed to 

determine if such documentation 

submitted by a broker or dealer, or a 

person associated therewith or other 

persons required to register or qualify by 

examination: (i) Meets the 

[Topaz]GEMX requirements for general 

membership or for specified categories 

of membership or participation in 

[Topaz]GEMX, such as (A) Primary 

Market Maker Membership (‘‘PMM’’); 

(B) Competitive Market Maker 

Membership (‘‘CMM’’); (C) Electronic 

Access Membership (‘‘EAM’’) (or any 

similar type of [Topaz]GEMX 

membership or participation that is 

created after this Agreement is 

executed); or (ii) meets the 

[Topaz]GEMX requirements to be 

associated with, or employed by, a 

[Topaz]GEMX member or participant in 

any capacity, such a Designated Trading 

Representative (‘‘DTR’’) (or any similar 

type of participation, employment 

category or title, or associate-person 

category or class that is created after this 

Agreement is executed). FINRA shall 

not review applications or other 

documentation filed to request a change 

in the rights or status described in this 

paragraph 8(d), including termination or 

limitation on activities, of a member or 

a participant of [Topaz]GEMX, or a 

person associated with, or requesting 

association with, a member or 

participant of [Topaz]GEMX. 

9. Branch Office Information. FINRA 

shall also be responsible for processing 

and, if required, acting upon all requests 

for the opening, address changes, and 

terminations of branch offices by Dual 

Members and any other applications 

required of Dual Members with respect 

to the Common Rules as they may be 

amended from time to time. Upon 

request, FINRA shall advise 

[Topaz]GEMX of the opening, address 

change and termination of branch and 

main offices of Dual Members and the 

names of such branch office managers. 

10. Customer Complaints. 

[Topaz]GEMX shall forward to FINRA 

copies of all customer complaints 

involving Dual Members received by 

[Topaz]GEMX relating to FINRA’s 

Regulatory Responsibilities under this 

Agreement. It shall be FINRA’s 

responsibility to review and take 

appropriate action in respect to such 

complaints. 

11. No Restrictions on Regulatory 

Action. Nothing contained in this 

Agreement shall restrict or in any way 

encumber the right of either party to 

conduct its own independent or 

concurrent investigation, examination 

or enforcement proceeding of or against 

Dual Members, as either party, in its 

sole discretion, shall deem appropriate 

or necessary. 

12. Termination. This Agreement may 

be terminated by [Topaz]GEMX or 

FINRA at any time upon the approval of 

the Commission after one (1) year’s 

written notice to the other party (or such 

shorter time as may be agreed by the 

parties), except as provided in 

paragraph 4. 

13. Effective Date. This Agreement 

shall be effective upon approval of the 

Commission. 

14. Arbitration. In the event of a 

dispute between the parties as to the 

operation of this Agreement, 


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[Topaz]GEMX and FINRA hereby agree 

that any such dispute shall be settled by 

arbitration in Washington, DC in 

accordance with the rules of the 

American Arbitration Association then 

in effect, or such other procedures as the 

parties may mutually agree upon. 

Judgment on the award rendered by the 

arbitrator(s) may be entered in any court 

having jurisdiction. 

15. Separate Agreement. This 

Agreement is wholly separate from (1) 

the multiparty Agreement made 

pursuant to Rule 17d–2 of the Exchange 

Act among [BATS Exchange, Inc., BOX 

Options Exchange, LLC, the Chicago 

Board Options Exchange, Incorporated, 

C2 Options Exchange, Incorporated, the 

International Securities Exchange, LLC, 

Financial Industry Regulatory 

Authority, Inc., Miami International 

Securities Exchange, LLC, the New York 

Stock Exchange, LLC, the NYSE MKT 

LLC, the NYSE Arca Inc., The NASDAQ 

Stock Market LLC, NASDAQ OMX BX, 

Inc., and the NASDAQ OMX PHLX, 

LLC] NYSE American LLC, Cboe BZX 

Exchange, Inc., the Cboe EDGX 

Exchange, Inc., Cboe C2 Exchange, Inc., 

Cboe Exchange, Inc., Nasdaq ISE, LLC, 

Financial Industry Regulatory 

Authority, Inc., NYSE Arca, Inc., The 

NASDAQ Stock Market LLC, BOX 

Exchange LLC, NASDAQ BX, Inc., 

NASDAQ PHLX LLC, Miami 

International Securities Exchange, LLC, 

Nasdaq GEMX, LLC, Nasdaq MRX, LLC, 

MIAX PEARL, LLC, and MIAX Emerald, 

LLC approved by the Commission on 

[December 5, 2012]February 12, 2019 

involving the allocation of regulatory 

responsibilities with respect to common 

members for compliance with common 

rules relating to the conduct by brokerdealers of accounts for listed options or 

index warrants or (2) the multiparty 

Agreement made pursuant to Rule 17d– 

2 of the Exchange Act among [NYSE 

MKT LLC, BATS Exchange, Inc., BOX 

Options Exchange, LLC, C2 Options 

Exchange, Incorporated, Chicago Board 

Options Exchange, Incorporated, 

International Securities Exchange LLC, 

Financial Industry Regulatory 

Authority, Inc., NYSE Arca, Inc., The 

NASDAQ Stock Market LLC, NASDAQ 

OMX BX, Inc., NASDAQ OMX PHLX, 

Inc. and Miami International Securities 

Exchange, LLC,] NYSE American LLC, 

Cboe BZX Exchange, Inc., the Cboe 

EDGX Exchange, Inc., Cboe C2 

Exchange, Inc., Cboe Exchange, Inc., 

Nasdaq ISE, LLC, Financial Industry 

Regulatory Authority, Inc., NYSE Arca, 

Inc., The NASDAQ Stock Market LLC, 

BOX Exchange LLC, NASDAQ BX, Inc., 

NASDAQ PHLX LLC, Miami 

International Securities Exchange, LLC, 

Nasdaq GEMX, LLC, Nasdaq MRX, LLC, 

MIAX PEARL, LLC, and MIAX Emerald, 

LLC approved by the Commission on 

[December 5, 2012]February 11, 2019 

involving options-related market 

surveillance matters and such 

agreements as may be amended from 

time to time. 

16. Notification of Members. 

[Topaz]GEMX and FINRA shall notify 

Dual Members of this Agreement after 

the Effective Date by means of a uniform 

joint notice. 

17. Amendment. This Agreement may 

be amended in writing duly approved 

by each party. All such amendments 

must be filed with and approved by the 

Commission before they become 

effective. 

18. Limitation of Liability. Neither 

FINRA nor [Topaz]GEMX 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 

[Topaz]GEMX 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 

[Topaz]GEMX with respect to any of the 

responsibilities to be performed by each 

of them hereunder. 

19. Severability. Any term or 

provision of this Agreement that is 

invalid or unenforceable in any 

jurisdiction shall, as to such 

jurisdiction, be ineffective to the extent 

of such invalidity or unenforceability 

without rendering invalid or 

unenforceable the remaining terms and 

provisions of this Agreement or 

affecting the validity or enforceability of 

any of the terms or provisions of this 

Agreement in any other jurisdiction. 

20. Relief From Responsibility. 

Pursuant to Sections 17(d)(1)(A) and 

19(g) of the Exchange Act and Rule 17d– 

2 thereunder, FINRA and [Topaz]GEMX 

join in requesting the Commission, 

upon its approval of this Agreement or 

any part thereof, to relieve 

[Topaz]GEMX 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. 

In witness whereof, each party has 

executed or caused this Agreement to be 

executed on its behalf by a duly 

authorized officer as of the date first 

written above. 

FINANCIAL INDUSTRY REGULATORY 

AUTHORITY, INC. 

By lllllllllllllllll

Name: 

Title: 

[TOPAZ EXCHANGE]NASDAQ GEMX, 

LLC 

By lllllllllllllllll

Name: 

Title: 

NOTE: The entire existing table of 

rules should be deleted and replaced 

with the table below. 

EXHIBIT 1 

[TOPAZ]GEMX CERTIFICATION OF 

COMMON RULES 

[Topaz]GEMX hereby certifies that the 

requirements contained in the rules 

listed below for [Topaz]GEMX are 

identical to, or substantially similar to, 

the comparable FINRA Rules or SEC 

Rules identified. 

# Common Rules shall not include 

provisions regarding (i) notice, reporting 

or any other filings made directly to or 

from GEMX, (ii) incorporations by 

reference to other GEMX 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 GEMX, (iv) prior 

written approval of GEMX, and (v) 

payment of fees or fines to GEMX. 

GEMX RULE FINRA or SEC RULE 

General 3, Section 3(b)—Persons Associated with Members; General 

4—Nasdaq Stock Market General 4, Rule 1.1250 Electronic Filing 

Requirements for Uniform Forms incorporated by reference #.

FINRA Rule 1010 Electronic Filing Requirements for Uniform Forms; 

FINRA By-Laws Article IV, Sec. 1(c) Application for Membership; 

FINRA By-Laws, Article V, Section 1 Qualification Requirements; 

FINRA By-Laws, Article V, Sec. 2 Application for Registration; and 

FINRA By-Laws Article V, Section 3 Notification by Member to the 

Corporation and Associated Person of Termination; Amendments to 

Notification 


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84078 Federal Register / Vol. 85, No. 247 / Wednesday, December 23, 2020 / Notices 

12 15 U.S.C. 78q(d). 13 17 CFR 240.17d–2(c). 

GEMX RULE FINRA or SEC RULE 

General 4—Nasdaq Stock Market General 4, Section 1.1240 Continuing Education Requirements incorporated by reference #.FINRA Rule 1240 Continuing Education Requirements 

Options 9, Nasdaq ISE Options 9, Section 1 Just and Equitable Principles of Trade incorporated by reference 1.FINRA Rule 2010 Standards of Commercial Honor and Principles of 

Trade; FINRA Rule 0140(a) Applicability 

Options 9—Nasdaq ISE Options 9, Section 9(a)(1) Prevention of the 

Misuse of Material, Nonpublic Information incorporated by reference #.

Section 15(g) of the Securities Exchange Act of 1934, and FINRA Rule 

3110(b)(1), (d) Supervision 

Options 9—Nasdaq ISE Options 9, Section 10 Disciplinary Action by 

Other Organizations incorporated by reference #.

FINRA Rule 4530(a)(1)(A) and (2) Reporting Requirements; FINRA ByLaws, Article V, Section 2(c); and FINRA By-Laws, Article V, Section 

3 

Options 9—Nasdaq ISE Options 9, Section 21 Anti-Money Laundering 

Compliance Program incorporated by reference #.

FINRA Rule 3310 Anti-Money Laundering Compliance Program 

Options 10—Nasdaq ISE Options 10, Section 12 Statements of Financial Condition to Customers incorporated by reference.Rule 17a–5 of the Securities Exchange Act of 1934 

Options 10—Nasdaq ISE Options 10, Section 19 Transfer of Accounts 

incorporated by reference #.

FINRA Rule 11870 Customer Account Transfer Contracts 

Options 10—Nasdaq ISE Options 10, Section 23 Telemarketing incorporated by reference.FINRA Rule 3230 Telemarketing 

Options 6E—Nasdaq ISE Options 6E, Section 1 Maintenance, Retention, and Furnishing of Books, Records and Other Information incorporated by reference #.FINRA Rule 4511(a) Books and Records—Requirements 

1FINRA shall not have Regulatory Responsibilities with respect to the Supplementary Material to Nasdaq ISE Options 9, Section 1. Responsibility for such shall remain with GEMX. 

In addition, the following provisions 

shall be part of this 17d–2 Agreement: 

SEA Rule 14e–4—Prohibited 

Transactions in Connection with Partial 

Tender Offers ∧

∧ FINRA shall perform surveillance, 

investigation, and Enforcement 

Responsibilities for SEA Rule 14e– 

4(a)1)(ii)(D). 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number 4– 

663 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 4–663. This file number should 

be included on the subject line if email 

is used. To help the Commission 

process and review your comments 

more efficiently, please use only one 

method. The Commission will post all 

comments on the Commission’s internet 

website (http://www.sec.gov/rules/ 

sro.shtml). Copies of the submission, all 

subsequent amendments, all written 

statements with respect to the proposed 

plan that are filed with the Commission, 

and all written communications relating 

to the proposed plan between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549, on official 

business days between the hours of 

10:00 a.m. and 3:00 p.m. Copies of the 

plan also will be available for inspection 

and copying at the principal offices of 

FINRA and GEMX. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number 4–663 and should be submitted 

on or before January 13, 2021. 

V. Discussion 

The Commission finds that the 

proposed Amended Plan is consistent 

with the factors set forth in Section 

17(d) of the Act 12 and Rule 17d–2(c) 

thereunder 13 in that the proposed 

Amended Plan is necessary or 

appropriate in the public interest and 

for the protection of investors, fosters 

cooperation and coordination among 

SROs, and removes impediments to and 

fosters the development of the national 

market system. In particular, the 

Commission believes that the proposed 

Amended Plan should reduce 

unnecessary regulatory duplication by 

allocating to FINRA certain examination 

and enforcement responsibilities for 

Common Members that would 

otherwise be performed by both FINRA 

and GEMX. Accordingly, the proposed 

Amended Plan promotes efficiency by 

reducing costs to Common Members. 

Furthermore, because GEMX and FINRA 

will coordinate their regulatory 

functions in accordance with the 

Amended Plan, the Amended Plan 

should promote investor protection. 

The Commission notes that, under the 

Amended Plan, GEMX and FINRA have 

allocated regulatory responsibility for 

those GEMX 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, 

GEMX will review the Certification at 

least annually, or more frequently if 

required by changes in either the rules 

of GEMX or FINRA, and, if necessary, 

submit to FINRA an updated list of 

Common Rules to add GEMX rules not 

included on the then-current list of 

Common Rules that are substantially 

similar to FINRA rules; delete GEMX 


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Federal Register / Vol. 85, No. 247 / Wednesday, December 23, 2020 / Notices 84079 

14See paragraph 2 of the Amended Plan. 

15See paragraph 3 of the Amended Plan. 

16The 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. 

17See supra note 11 (citing to Securities 

Exchange Act Release No. 70228). 

18 17 CFR 200.30–3(a)(34). 

1 15 U.S.C. 78a. 

2 17 CFR 240.19b–4. 

3Unless otherwise specified, capitalized terms 

used in this rule filing are defined as set forth in 

the Compliance Rule. 

4See Securities Exchange Act Rel. No. 90223 

(October 19, 2020), 85 FR 67576 (October 23, 2020) 

(‘‘Allocation Exemptive Order’’). 

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 GEMX rules that 

qualify as common rules.14 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, GEMX also will provide FINRA 

with a current list of Common Members 

and will update the list no less 

frequently than once each quarter.15 The 

Commission believes that these 

provisions are designed to provide for 

continuing communication between the 

Parties to ensure the continued accuracy 

of the scope of the proposed allocation 

of regulatory responsibility. 

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 GEMX 

rules that are substantially similar to the 

rules of FINRA for Common Members of 

GEMX and FINRA. Therefore, 

modifications to the Certification need 

not be filed with the Commission as an 

amendment to the Amended Plan, 

provided that the Parties are only 

adding to, deleting from, or confirming 

changes to GEMX 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 GEMX rule to the 

Certification that is not substantially 

similar to a FINRA rule; delete a GEMX 

rule from the Certification that is 

substantially similar to a FINRA rule; or 

leave on the Certification a GEMX rule 

that is no longer substantially similar to 

a FINRA rule, then such a change would 

constitute an amendment to the 

Amended Plan, which must be filed 

with the Commission pursuant to Rule 

17d–2 under the Act.16

Under paragraph (c) of Rule 17d–2, 

the Commission may, after appropriate 

notice and comment, declare a plan, or 

any part of a plan, effective. In this 

instance, the Commission believes that 

appropriate notice and comment can 

take place after the proposed 

amendment is effective. The primary 

purpose of the amendment is to allocate 

surveillance, investigation, and 

enforcement responsibilities for Rule 

14e–4 under the Act, to reflect the name 

change of Topaz Exchange, LLC to 

Nasdaq GEMX, LLC. By declaring it 

effective today, the Amended Plan can 

become effective and be implemented 

without undue delay. The Commission 

notes that the prior version of this plan 

immediately prior to this proposed 

amendment was published for comment 

and the Commission did not receive any 

comments thereon.17 Furthermore, the 

Commission does not believe that the 

amendment to the plan raises any new 

regulatory issues that the Commission 

has not previously considered. 

VI. Conclusion 

This order gives effect to the 

Amended Plan filed with the 

Commission in File No. 4–663. 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. 4–663, 

between the FINRA and GEMX, filed 

pursuant to Rule 17d–2 under the Act, 

hereby is approved and declared 

effective. 

It is further ordered that GEMX is 

relieved of those responsibilities 

allocated to FINRA under the Amended 

Plan in File No. 4–663. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.18

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2020–28309 Filed 12–22–20; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–90709; File No. SR– 

NYSEARCA–2020–108] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Amend the Rule 

11.6800 Series 

December 17, 2020. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that, on December 

4, 2020, NYSE Arca, Inc. (‘‘NYSE Arca’’ 

or the ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III below, which Items have been 

prepared by the self-regulatory 

organization. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend the 

Rule 11.6800 Series, the Exchange’s 

compliance rule (‘‘Compliance Rule’’) 

regarding the National Market System 

Plan Governing the Consolidated Audit 

Trail (the ‘‘CAT NMS Plan’’ or ‘‘Plan’’) 3

to be consistent with a conditional 

exemption granted by the Commission 

from certain allocation reporting 

requirements set forth in Sections 

6.4(d)(ii)(A)(1) and (2) of the CAT NMS 

Plan (‘‘Allocation Exemption’’).4 The 

proposed rule change is available on the 

Exchange’s website at www.nyse.com, at 

the principal office of the Exchange, and 

at the Commission’s Public Reference 

Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

self-regulatory organization included 

statements concerning the purpose of, 

and basis for, the proposed rule change 

and discussed any comments it received 

on the proposed rule change. The text 

of those statements may be examined at 

the places specified in Item IV below. 

The Exchange has prepared summaries, 

set forth in sections A, B, and C below, 

of the most significant parts of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The purpose of this proposed rule 

change is to amend the Rule 11.6800 

Series to be consistent with the 

Allocation Exemption. The Commission 

granted the relief conditioned upon the 

Participants’ adoption of Compliance 

Rules that implement the alternative 

approach to reporting allocations to the 

Central Repository described in the 

Allocation Exemption (referred to as the 

‘‘Allocation Alternative’’). 


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