84034 Federal Register / Vol. 85, No. 247 / Wednesday, December 23, 2020 / Notices 

20 15 U.S.C. 78s(b)(3)(A). 

21 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

4(f)(6) requires a self-regulatory organization to give 

the Commission written notice of its intent to file 

the proposed rule change at least five business days 

prior to the date of filing of the proposed rule 

change, or such shorter time as designated by the 

Commission. The Exchange has satisfied this 

requirement. 

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). 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will result in 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. The 

Exchange notes that the proposed rule 

changes are consistent with the 

Allocation Exemption, and are designed 

to assist the Exchange in meeting its 

regulatory obligations pursuant to the 

Plan. The Exchange also notes that the 

proposed rule changes will apply 

equally to all Industry Members. In 

addition, all national securities 

exchanges and FINRA are proposing 

this amendment to their Compliance 

Rules. Therefore, this is not a 

competitive rule filing and does not 

impose a burden on competition. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

Written comments were neither 

solicited nor received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Because the foregoing proposed rule 

change does not: (i) Significantly affect 

the protection of investors or the public 

interest; (ii) impose any significant 

burden on competition; and (iii) become 

operative for 30 days after the date of 

the filing, or such shorter time as the 

Commission may designate, it has 

become effective pursuant to 19(b)(3)(A) 

of the Act 20 and Rule 19b–4(f)(6) 21

thereunder. 

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is necessary or appropriate in the 

public interest, for the protection of 

investors, or otherwise in furtherance of 

the purposes of the Act. If the 

Commission takes such action, the 

Commission shall institute proceedings 

to determine whether the proposed rule 

should be approved or disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

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 SR– 

MIAX–2020–38 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 SR–MIAX–2020–38. 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 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 

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–MIAX–2020–38, 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. 2020–28316 Filed 12–22–20; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–90702; File No. 4–529] 

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 ISE, 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 

ISE, LLC (‘‘ISE’’) (collectively, 

‘‘Participating Organizations’’ or 

‘‘parties’’). This agreement amends and 

restates the agreement entered into 

between FINRA and International 

Securities Exchange, LLC on December 

16, 2006, entitled ‘‘Agreement Between 

Financial Industry Regulatory 

Authority, Inc. and International 

Securities Exchange, LLC 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 


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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. 55367 

(February 27, 2007), 72 FR 9983 (March 6, 2007). 

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 February 27, 2007, the 

Commission declared effective the Plan 

entered into between FINRA and ISE 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 ISE 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 ISE rule for which 

FINRA bears responsibility under the 

Plan for overseeing and enforcing with 

respect to ISE 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 International Securities 

Exchange, LLC to Nasdaq ISE, LLC. The 

text of the proposed Amended Plan is as 

follows (additions are italicized; 

deletions are [bracketed]): 

* * * * * 

AGREEMENT BETWEEN 

[NASD]FINANCIAL INDUSTRY 

REGULATORY AUTHORITY, INC. AND 

[INTERNATIONAL SECURITIES 

EXCHANGE]NASDAQ ISE, LLC 

PURSUANT TO RULE 17d–2 UNDER 

THE SECURITIES EXCHANGE ACT OF 

1934 

This Agreement, by and between the 

[National Association of Securities 

Dealers, Inc. (‘‘NASD’’)]Financial 

Industry Regulatory Authority, Inc. 

(‘‘FINRA’’) and the [International 

Securities Exchange]Nasdaq ISE, LLC 

(‘‘ISE’’), is made this [20th] 16th day of 

[December] November, 20[06]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. 

[NASD]FINRA and ISE may be referred 

to individually as a ‘‘party’’ and together 

as the ‘‘parties.’’ 

This Agreement amends and restates 

the agreement entered into between the 

parties on April 3, 2000 and amended 

on April 27, 2000 and December 20, 

2006, entitled ‘‘Agreement Between the 

National Association of Securities 

Dealers, Inc., NASD [Regulation, Inc.] 

and the International Securities 

Exchange LLC Pursuant to Section 17(d) 

and Rule 17d–2,’’ and any subsequent 

amendments thereafter. 

Whereas, [NASD]FINRA and ISE 

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, [NASD]FINRA and ISE 

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, [NASD]FINRA and ISE 

hereby agree as follows: 

1. Definitions. Unless otherwise 

defined in this Agreement or the context 

otherwise requires, the terms used in 

this Agreement shall have the same 

meaning as they have under the 

Exchange Act and the rules and 

regulations thereunder. As used in this 

Agreement, the following terms shall 

have the following meanings: 

(a) ‘‘ISE Rules’’ or ‘‘[NASD]FINRA Rules’’ 

shall mean the rules of the ISE or 

[NASD]FINRA, respectively, as the rules of 

an exchange or association are defined in 

Exchange Act Section 3(a)(27). 

(b) ‘‘Common Rules’’ shall mean the ISE 

Rules that are substantially similar to the 

applicable [NASD]FINRA Rules in that 

examination for compliance with such rules 

would not require [NASD]FINRA to develop 

one or more new examination standards, 

modules, procedures, or criteria in order to 

analyze the application of the rule, or a Dual 

Member’s activity, conduct, or output in 

relation to such rule. Common Rules shall 

not include any provisions regarding (i) 


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notice, reporting or any other filings made 

directly to or from ISE, (ii) incorporation by 

reference of ISE 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 ISE, (iv) 

prior written approval of ISE and (v) payment 

of fees or fines to ISE. 

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

members that are also members of 

[NASD]FINRA and the associated persons 

therewith. 

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

set forth in paragraph 14. 

(e) ‘‘Enforcement Responsibilities’’ shall 

mean the conduct of appropriate 

proceedings, in accordance with the 

[NASD]FINRA Code of Procedure (the Rule 

9000 Series) and other applicable 

[NASD]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 [NASD]FINRA’s Code of 

Procedure and sanctions guidelines. 

(f) ‘‘Regulatory Responsibilities’’ shall 

mean the examination responsibilities and 

Enforcement Responsibilities relating to 

compliance by the Dual Members with the 

Common Rules and the provisions of the 

Exchange Act and the rules and regulations 

thereunder, and other applicable laws, rules 

and regulations, each as set forth on Exhibit 

1 attached hereto. The term ‘‘Regulatory 

Responsibilities’’ shall also include the 

surveillance, investigation and Enforcement 

Responsibilities relating to compliance by 

Common Members with Rule 14e–4 of the 

Securities Exchange Act (‘‘Rule 14e–4’’), with 

a focus on the standardized call option 

provision of Rule 14e–4(a)(1)(ii)(D). 

2. Regulatory and Enforcement 

Responsibilities. [NASD]FINRA shall 

assume Regulatory Responsibilities and 

Enforcement Responsibilities for Dual 

Members. Attached as Exhibit 1 to this 

Agreement and made part hereof, ISE 

furnished [NASD]FINRA with a current 

list of Common Rules and certified to 

[NASD]FINRA that such rules are 

substantially similar to the 

corresponding [NASD]FINRA rule (the 

‘‘Certification’’). [NASD]FINRA hereby 

agrees that the rules listed in the 

Certification are Common Rules as 

defined in this Agreement. Each year 

following the Effective Date of this 

Agreement, or more frequently if 

required by changes in either the rules 

of ISE or [NASD]FINRA, ISE shall 

submit an updated list of Common 

Rules to [NASD]FINRA for review 

which shall add ISE rules not included 

in the current list of Common Rules that 

qualify as Common Rules as defined in 

this Agreement; delete ISE rules 

included in the current list of Common 

Rules that no longer qualify as Common 

Rules as defined in this Agreement; and 

confirm that the remaining rules on the 

current list of Common Rules continue 

to be ISE rules that qualify as Common 

Rules as defined in this Agreement. 

Within 30 days of receipt of such 

updated list, [NASD]FINRA shall 

confirm in writing whether the rules 

listed in any updated list are Common 

Rules as defined in this Agreement. 

Notwithstanding anything herein to the 

contrary, it is explicitly understood that 

the term ‘‘Regulatory Responsibilities’’ 

does not include, and ISE shall retain 

full responsibility for (unless otherwise 

addressed by separate agreement or 

rule) the following: 

(a) Surveillance and enforcement with 

respect to trading activities or practices 

involving ISE’s own marketplace, 

including without limitation ISE’s rules 

relating to the rights and obligations of 

market makers; 

(b) registration pursuant to its 

applicable rules of associated persons 

(i.e., registration rules that are not 

Common Rules); 

(c) discharge of its duties and 

obligations as a Designated Examining 

Authority pursuant to Rule 17d–1 under 

the Exchange Act; and 

(d) any ISE Rules that are not 

Common Rules, except for ISE Rules for 

any ISE member that operates as a 

facility (as defined in Section 3(a)(2) of 

the Exchange Act), acts as an outbound 

router for the ISE and is a member of 

[NASD]FINRA (‘‘Router Member’’) as 

provided in paragraph 6. As of the date 

of this Agreement, ISE Route LLC is the 

only Router Member. 

3. Dual Members. Prior to the 

Effective Date, ISE shall furnish 

[NASD]FINRA with a current list of 

Dual Members, which shall be updated 

no less frequently than once each 

quarter. 

4. No Charge. There shall be no 

charge to ISE by [NASD]FINRA for 

performing the Regulatory 

Responsibilities and Enforcement 

Responsibilities under this Agreement 

except as hereinafter provided. 

[NASD]FINRA shall provide ISE with 

ninety (90) days advance written notice 

in the event [NASD]FINRA decides to 

impose any charges to ISE for 

performing the Regulatory 

Responsibilities under this Agreement. 

If [NASD]FINRA determines to impose a 

charge, ISE shall have the right at the 

time of the imposition of such charge to 

terminate this Agreement; provided, 

however, that [NASD]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 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 [NASD]FINRA becomes 

aware of apparent violations of any ISE 

Rules, which are not listed as Common 

Rules, discovered pursuant to the 

performance of the Regulatory 

Responsibilities assumed hereunder, 

[NASD]FINRA shall notify ISE of those 

apparent violations for such response as 

ISE deems appropriate. Apparent 

violations of all other applicable rules, 

including violations of the Common 

Rules, various securities acts, and rules 

and regulations thereunder, shall be 

processed by, and enforcement 

proceedings in respect thereto shall be 

conducted by [NASD]FINRA as 

provided hereinbefore; provided, 

however, that in the event a Dual 

Member is the subject of an 

investigation relating to a transaction on 

the ISE, ISE may in its discretion 

assume concurrent jurisdiction and 

responsibility. With respect to apparent 

violations of any ISE Rules by any 

Router Member, [NASD]FINRA shall not 

make referrals to ISE pursuant to this 

paragraph 6. Such apparent violations 

shall be processed by, and enforcement 

proceedings in respect thereto will be 

conducted by, [NASD]FINRA as 

provided in this Agreement. 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. 

[NASD]FINRA shall make available to 

ISE all information obtained by 

[NASD]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, [NASD]FINRA shall furnish 

ISE any information it obtains about 

Dual Members which reflects adversely 

on their financial condition. It is 

understood that such information is of 

an extremely sensitive nature and, 

accordingly, ISE acknowledges and 

agrees to take all reasonable steps to 

maintain its confidentiality. ISE shall 

make available to [NASD]FINRA any 

information coming to its attention that 

reflects adversely on the financial 

condition of Dual Members or indicates 


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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 [NASD]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 

rules of both ISE and [NASD]FINRA or 

associated with Dual Members thereof. 

Upon request, [NASD]FINRA shall 

advise ISE of any changes of allied 

members, partners, officers, registered 

personnel and other persons required to 

be approved by the rules of both ISE and 

[NASD]FINRA. 

(b) Dual Members shall be required to 

send to [NASD]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 [NASD]FINRA 

becomes aware of a statutory 

disqualification as defined in the 

Exchange Act with respect to a Dual 

Member, [NASD]FINRA shall determine 

pursuant to Sections 15A(g) and/or 

Section 6(c) of the Exchange Act the 

acceptability or continued applicability 

of the person to whom such 

disqualification applies and keep ISE 

advised of its actions in this regard for 

such subsequent proceedings as ISE 

may initiate. 

(d) Notwithstanding the foregoing, 

[NASD]FINRA shall not review the 

membership application, reports, 

filings, fingerprint cards, notices, or 

other writings filed to determine if such 

documentation submitted by a broker or 

dealer, or a person associated therewith 

or other persons required to register or 

qualify by examination: (i) Meets the 

ISE requirements for general 

membership or for specified categories 

of membership or participation in the 

ISE, such as (A) Primary Market Maker 

Membership (‘‘PMM’’); (B) Competitive 

Market Maker Membership (‘‘CMM’’); 

(C) Electronic Access Membership 

(‘‘EAM’’) (or any similar type of ISE 

membership or participation that is 

created after this Agreement is 

executed); or (ii) meets the ISE 

requirements to be associated with, or 

employed by, an ISE 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). [NASD]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 the ISE, or a person 

associated with, or requesting 

association with, a member or 

participant of the ISE. 

9. Branch Office Information. 

[NASD]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. [NASD]FINRA shall advise 

ISE monthly of the opening, address 

change and termination of branch and 

main offices of Dual Members and the 

names of such branch office managers. 

10. Customer Complaints. ISE shall 

forward to [NASD]FINRA copies of all 

customer complaints involving Dual 

Members received by ISE relating to 

[NASD]FINRA’s Regulatory 

Responsibilities under this Agreement. 

It shall be [NASD]FINRA’s 

responsibility to review and take 

appropriate action in respect to such 

complaints. 

11. Advertising. [NASD]FINRA shall 

assume responsibility to review the 

advertising of Dual Members subject to 

the Agreement, provided that such 

material is filed with [NASD]FINRA in 

accordance with [NASD]FINRA’s filing 

procedures and is accompanied with 

any applicable filing fees set forth in 

[NASD]FINRA Rules. Such review shall 

be made in accordance with then 

applicable [NASD]FINRA rules and 

interpretations. The advertising of Dual 

Members shall be subject only to 

compliance with appropriate 

[NASD]FINRA rules and interpretations. 

12. 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. 

13. Termination. This Agreement may 

be terminated by ISE or [NASD]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 4. 

14. Effective Date. This Agreement 

shall be effective upon approval of the 

Commission. 

15. Arbitration. In the event of a 

dispute between the parties as to the 

operation of this Agreement, ISE and 

[NASD]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. 

16. Separate Agreement. This 

Agreement is wholly separate from (1) 

the multiparty Agreement made 

pursuant to Rule 17d–2 of the Exchange 

Act between the [American Stock 

Exchange LLC, the Boston Stock 

Exchange, Inc., the Chicago Board 

Options Exchange, Inc., the 

International Securities Exchange LLC, 

the National Association of Securities 

Dealers, Inc., the New York Stock 

Exchange, Inc., the Pacific Exchange, 

Inc., and the Philadelphia Stock 

Exchange, Inc.] 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 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 into on [January 14, 

2004]February 12, 2019, and as may be 

amended from time to time or (2) the 

multiparty Agreement made pursuant to 

Rule 17d–2 of the Exchange Act among 

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 

February 11, 2019 involving optionsrelated market surveillance matters and 

such agreements as may be amended 

from time to time. 

17. Notification of Members. ISE and 

[NASD]FINRA shall notify Dual 

Members of this Agreement after the 

Effective Date by means of a uniform 

joint notice. 

18. Amendment. This Agreement may 

be amended in writing duly approved 


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84038 Federal Register / Vol. 85, No. 247 / Wednesday, December 23, 2020 / Notices 

by each party. All such amendments 

must be filed with and approved by the 

Commission before they become 

effective. 

19. Limitation of Liability. Neither 

[NASD]FINRA nor ISE 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 [NASD]FINRA or ISE 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 [NASD]FINRA or ISE with respect to 

any of the responsibilities to be 

performed by each of them hereunder. 

20. Relief from Responsibility. 

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

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

2 thereunder, [NASD]FINRA and ISE 

join in requesting the Commission, 

upon its approval of this Agreement or 

any part thereof, to relieve ISE of any 

and all responsibilities with respect to 

matters allocated to [NASD]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. 

[NATIONAL ASSOCIATION OF 

SECURITIES DEALERS]FINANCIAL 

INDUSTRY REGULATORY 

AUTHORITY, INC. 

By lllllllllllllllll

Name: 

Title: 

[INTERNATIONAL SECURITIES 

EXCHANGE]NASDAQ ISE, LLC 

By lllllllllllllllll

Name: 

Title: 

Note: The entire existing table of rules 

should be deleted and replaced with the 

table below. 

EXHIBIT 1 

ISE CERTIFICATION OF COMMON 

RULES 

ISE hereby certifies that the 

requirements contained in the rules 

listed below for ISE are identical to, or 

substantially similar to, the comparable 

[NASD]FINRA rules identified. 

# Common Rules shall not include 

provisions regarding (i) notice, reporting 

or any other filings made directly to or 

from ISE, (ii) incorporations by 

reference to other ISE 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 ISE, (iv) prior 

written approval of ISE, and (v) 

payment of fees or fines to ISE. 

ISE RULE(S) FINRA RULE(S) 

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. 

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

Options 9, Section 1 Just and Equitable Principles of Trade 1 ................ FINRA Rule 2010 Standards of Commercial Honor and Principles of 

Trade; FINRA Rule 0140(a) Applicability. 

Options 9, Section 9(a)(1) Prevention of the Misuse of Material, Nonpublic Information #.Section 15(g) of the Securities Exchange Act of 1934, and FINRA Rule 

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

Options 9, Section 10 Disciplinary Action by Other Organizations # ....... 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, Section 21 Anti-Money Laundering Compliance Program # ... FINRA Rule 3310 Anti-Money Laundering Compliance Program. 

Options 10, Section 12 Statements of Financial Condition to Customers Rule 17a–5 of the Securities Exchange Act of 1934. 

Options 10, Section 19 Transfer of Accounts # ........................................ FINRA Rule 11870 Customer Account Transfer Contracts. 

Options 10, Section 23 Telemarketing ..................................................... FINRA Rule 3230 Telemarketing. 

Options 6E, Section 1 Maintenance, Retention, and Furnishing of 

Books, Records and Other Information #.

FINRA Rule 4511(a) Books and Records—Requirements. 

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

such shall remain with ISE. 

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– 

529 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 4–529. 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 


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Federal Register / Vol. 85, No. 247 / Wednesday, December 23, 2020 / Notices 84039 

12 15 U.S.C. 78q(d). 

13 17 CFR 240.17d–2(c). 

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. 55367). 

18 17 CFR 200.30–3(a)(34). 

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 ISE. 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 4–529 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 ISE. Accordingly, the proposed 

Amended Plan promotes efficiency by 

reducing costs to Common Members. 

Furthermore, because ISE 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, ISE and FINRA have 

allocated regulatory responsibility for 

those ISE 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, ISE 

will review the Certification at least 

annually, or more frequently if required 

by changes in either the rules of ISE or 

FINRA, and, if necessary, submit to 

FINRA an updated list of Common 

Rules to add ISE rules not included on 

the then-current list of Common Rules 

that are substantially similar to FINRA 

rules; delete ISE 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 ISE 

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, ISE 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 ISE 

rules that are substantially similar to the 

rules of FINRA for Common Members of 

ISE 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 ISE 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 ISE rule to the 

Certification that is not substantially 

similar to a FINRA rule; delete a ISE 

rule from the Certification that is 

substantially similar to a FINRA rule; or 

leave on the Certification a ISE 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 International Securities 

Exchange, LLC to Nasdaq ISE, 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. 4–529. 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. 4–529, 

between the FINRA and ISE, filed 

pursuant to Rule 17d–2 under the Act, 

hereby is approved and declared 

effective. 

It is further ordered that ISE is 

relieved of those responsibilities 

allocated to FINRA under the Amended 

Plan in File No. 4–529. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.18

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2020–28307 Filed 12–22–20; 8:45 am] 

BILLING CODE 8011–01–P 


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