9970 Federal Register / Vol. 75, No. 42 / Thursday, March 4, 2010 / Notices 

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). 

RETENTION AND DISPOSAL: 

These records will be maintained 

until they become inactive, at which 

time they will be retired or destroyed in 

accordance with records schedules of 

the United States Securities and 

Exchange Commission and as approved 

by the National Archives and Records 

Administration. 

SYSTEM MANAGER(S) AND ADDRESS: 

FOR SEC HEADQUARTERS

U. S. Securities and Exchange 

Commission, 100 F Street, NE., 

Washington, DC 20549. Components: 

Office of the Chairman and 

Commissioners, Division of Corporation 

Finance, Division of Trading and 

Markets, Division of Investment 

Management, Division of Enforcement, 

Office of the General Counsel, Office of 

the Chief Accountant, Office of 

Economic Analysis, Office of 

Compliance Inspections and 

Examinations, Office of International 

Affairs, Office of Investor Education and 

Advocacy, Office of Information 

Technology, Office of the Executive 

Director, Office of Human Resources, 

Office of Financial Management, Office 

of Administrative Services, Office of 

Risk Assessment, Office of the Inspector 

General, Office of Legislative and 

Intergovernmental Affairs, Office of 

Public Affairs, Office of the Secretary, 

Office of Equal Employment 

Opportunity, and Office of 

Administrative Law Judges. 

FOR REGIONAL OFFICES

New York Regional Office, Regional 

Director, 3 World Financial Center, 

Suite 400, New York, NY 10281–1022; 

Boston Regional Office, Regional 

Director, 33 Arch Street, 23rd Floor, 

Boston, MA 02110–1424; Philadelphia 

Regional Office, Regional Director, The 

Mellon Independence Center, 701 

Market Street, Suite 2000, Philadelphia, 

PA 19106–1532; Miami Regional Office, 

Regional Director, 801 Brickell Avenue, 

Suite 1800, Miami, FL 33131–4901, 

Atlanta Regional Office, Regional 

Director, 3475 Lenox Road, NE, Suite 

1000, Atlanta, GA 30326–1232; Chicago 

Regional Office, Regional Director, 175 

West Jackson Boulevard, Suite 900, 

Chicago, IL 60604–2908; Denver 

Regional Office, Regional Director, 1801 

California Street, Suite 1500, Denver, 

CO 80202–2656; Fort Worth Regional 

Office, Regional Director, Burnett Plaza, 

Suite 1900, 801 Cherry Street, Unit #18, 

Fort Worth, TX 76102–6882; Salt Lake 

Regional Office, Regional Director, 15 

West South Temple Street, Suite 1800, 

Salt Lake City, UT 84101–1573; Los 

Angeles Regional Office, Regional 

Director, 5670 Wilshire Boulevard, 11th 

Floor, Los Angeles, CA 90036–3648; San 

Francisco Regional Office, Regional 

Director, 44 Montgomery Street, Suite 

2600, San Francisco, CA 94104–4716. 

NOTIFICATION PROCEDURE: 

All requests to determine whether this 

system of records contains a record 

pertaining to the requesting individual 

may be directed to the FOIA/PA Officer, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–5100. 

RECORD ACCESS PROCEDURES: 

Persons wishing to obtain information 

on the procedures for gaining access to 

or contesting the contents of these 

records may contact the FOIA/PA 

Officer, Securities and Exchange 

Commission, 100 F Street, NE., 

Washington, DC 20549–5100. 

CONTESTING RECORD PROCEDURES: 

See Record Access Procedures above. 

RECORD SOURCE CATEGORIES: 

The information is supplied by the 

individual and/or company making the 

request; or the individual who has 

registered for an SEC-related event such 

as a seminar, training program or 

compliance meeting. Data may also be 

added pertaining to the fulfillment of 

the request. Information may also be 

obtained from other SEC records 

systems. 

EXEMPTIONS CLAIMED FOR THE SYSTEM: 

None. 

Dated: February 25, 2010. 

By the Commission. 

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. 2010–4529 Filed 3–3–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–61588; File No. 4–551] 

Program for Allocation of Regulatory 

Responsibilities Pursuant to Rule 17d– 

2; Notice of Filing and Order 

Approving and Declaring Effective an 

Amendment to the Plan for the 

Allocation of Regulatory 

Responsibilities Among the NYSE 

Amex LLC, BATS Exchange, Inc., C2 

Options Exchange, Incorporated, the 

Chicago Board Options Exchange, 

Incorporated, the International 

Securities Exchange, LLC, Financial 

Industry Regulatory Authority, Inc., the 

NYSE Arca, Inc., The NASDAQ Stock 

Market LLC, NASDAQ OMX BX, Inc., 

and NASDAQ OMX PHLX, Inc. 

Concerning Options-Related Market 

Surveillance 

February 25, 2010. 

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 pursuant to Rule 17d–2 of 

the Act,2 by the NYSE Amex LLC 

(‘‘Amex’’), BATS Exchange, Inc. 

(‘‘BATS’’), C2 Options Exchange, 

Incorporated (‘‘C2’’), the Chicago Board 

Options Exchange, Incorporated 

(‘‘CBOE’’), the International Securities 

Exchange LLC (‘‘ISE’’), Financial 

Industry Regulatory Authority, Inc. 

(‘‘FINRA’’), NYSE Arca, Inc. (‘‘Arca’’), 

The NASDAQ Stock Market LLC 

(‘‘NASDAQ’’), NASDAQ OMX BX, Inc. 

(‘‘BX’’) and NASDAQ OMX PHLX, Inc. 

(‘‘Phlx’’) (collectively, ‘‘SRO 

participants’’). 

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 

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Federal Register / Vol. 75, No. 42 / Thursday, March 4, 2010 / Notices 9971 

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. 56941 

(December 11, 2007), 72 FR 71723 (December 18, 

2007) (File No. 4–551). 

12See Securities Exchange Act Release No. 57649 

(April 11, 2008), 73 FR 20976 (April 17, 2008) (File 

No. 4–551). 

13See Securities Exchange Act Release No. 58765 

(October 9, 2008), 73 FR 62344 (October 20, 2008) 

(File No. 4–551). 

14The Plan is wholly separate from the 

multiparty options agreement made pursuant to 

Rule 17d–2 by and among Amex, BSE, CBOE, ISE, 

FINRA, New York Stock Exchange LLC, NASDAQ, 

NYSE Arca, and Phlx involving the allocation of 

regulatory responsibilities with respect to common 

members for options-related sales practice matters 

relating to the conduct of broker-dealers of accounts 

for listed options or index warrants. See Securities 

Exchange Act Release Nos. 57987 (June 18, 2008), 

73 FR 36156 (June 25, 2008) (File No. S7–966). 

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 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. 

II. The Plan 

On December 11, 2007, the 

Commission declared effective the SRO 

participants’ Plan for allocating 

regulatory responsibilities pursuant to 

Rule 17d–2.11 On April 11, 2008, the 

Commission approved an amendment to 

the Plan to include NASDAQ as a 

participant.12 On October 9, 2008, the 

Commission approved an amendment to 

the Plan to clarify that the term 

Regulatory Responsibility for options 

position limits includes examination 

responsibilities for the delta hedging 

exemption.13 The Plan is designed to 

reduce regulatory duplication for 

common members by allocating 

regulatory responsibility for certain 

options-related market surveillance 

matters among the SRO Participants.14

Generally, under the current Plan, an 

SRO Participant will serve as the 

Designated Options Surveillance 

Regulator (‘‘DOSR’’) for each common 

member assigned to it and will assume 

regulatory responsibility with respect to 

that common member’s compliance 

with applicable common rules for 

certain accounts. When an SRO has 

been named as a common member’s 

DOSR, all other SROs to which the 

common member belongs will be 

relieved of regulatory responsibility for 

that common member, pursuant to the 

terms of the Plan, with respect to the 

applicable common rules specified in 

Exhibit A to the Plan. 

III. Proposed Amendment to the Plan 

On February 4, 2010, the parties 

submitted a proposed amendment to the 

Plan. The primary purpose of the 

amendment is to add BATS Exchange, 

Inc. and C2 Options Exchange, 

Incorporated as SRO participants and to 

reflect the name changes of the 

American Stock Exchange LLC to the 

NYSE Amex LLC, and the Boston Stock 

Exchange, Inc. to the NASDAQ OMX 

BX, Inc. The amended agreement 

replaces the previous agreement in its 

entirety. The text of the proposed 

amended 17d–2 plan is as follows 

(additions are italicized; deletions are 

[bracketed]): 

* * * * * 

AGREEMENT BY AND AMONG 

NYSE AMEX LLC [THE AMERICAN 

STOCK EXCHANGE], BATS 

EXCHANGE, INC., NASDAQ OMX BX, 

INC. [THE BOSTON STOCK 

EXCHANGE], C2 OPTIONS 

EXCHANGE, INCORPORATED, THE 

CHICAGO BOARD OPTIONS 

EXCHANGE, INCORPORATED, THE 

INTERNATIONAL SECURITES 

EXCHANGE LLC, FINANCIAL 

INDUSTRY REGULATORY 

AUTHORITY, INC, NYSE ARCA, INC., 

THE NASDAQ STOCK MARKET LLC, 

AND NASDAQ OMX PHLX, INC., 

PURSUANT TO RULE 17D–2 UNDER 

THE SECURITIES EXCHANGE ACT OF 

1934 

This agreement (this ‘‘Agreement’’), by 

and among the NYSE Amex LLC 

[American Stock Exchange] (‘‘Amex’’), 

BATS Exchange, Inc., (‘‘BATS’’), the 

[Boston Stock Exchange, Inc. (‘‘BSE’’)] 

C2 Options Exchange, Incorporated 

(‘‘C2’’), the Chicago Board Options 

Exchange, Incorporated (‘‘CBOE’’), the 

International Securities Exchange LLC 

(‘‘ISE’’), Financial Industry Regulatory 

Authority, Inc. (‘‘FINRA’’), NYSE Arca, 

Inc. (‘‘Arca’’), The NASDAQ Stock 

Market LLC (‘‘Nasdaq’’), the NASDAQ 

OMX BX, Inc. (‘‘BX’’) and the NASDAQ 

OMX PHLX, Inc. (‘‘PHLX’’), is made this 

10th day of October 2007, and as 

amended the 31st day of March 2008, 

the 1st day of October 2008, and this 3rd 

day of February 2010 pursuant to 

Section 17(d) of the Securities Exchange 

Act of 1934, as amended (the ‘‘Exchange 

Act’’), and Rule 17d–2 thereunder (‘‘Rule 

17d–2’’), which allows for a joint plan 

among self-regulatory organizations 

(‘‘SROs’’) to allocate regulatory 

obligations with respect to brokers or 

dealers that are members of two or more 

of the parties to this Agreement 

(‘‘Common Members’’). The Amex, 

BATS, C2, [BSE,] CBOE, ISE, FINRA, 

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9972 Federal Register / Vol. 75, No. 42 / Thursday, March 4, 2010 / Notices 

1 In the case of [the BSE]BX, members are those 

persons who are Options Participants (as defined in 

the Boston Options Exchange LLC Rules). 

2Certain accounts shall include customer (‘‘C’’ as 

classified by the Options Clearing Corporation 

(‘‘OCC’’)) and firm (‘‘F’’ as classified by OCC) 

accounts, as well as other accounts, such as market 

maker accounts as the Participants shall, from time 

to time, identify as appropriate to review. 

Arca, Nasdaq, BX, and PHLX are 

collectively referred to herein as the 

‘‘Participants’’ and individually, each a 

‘‘Participant.’’ This Agreement shall be 

administered by a committee known as 

the Options Surveillance Group (the 

‘‘OSG’’ or ‘‘Group’’), as described in 

Section V hereof. Unless defined in this 

Agreement or the context otherwise 

requires, the terms used herein shall 

have the meanings assigned thereto by 

the Exchange Act and the rules and 

regulations thereunder. 

Whereas, the Participants desire to 

eliminate regulatory duplication with 

respect to SRO market surveillance of 

Common Member 1 activities with 

regard to certain common rules relating 

to listed options (‘‘Options’’); and 

Whereas, for this purpose, the 

Participants desire to execute and file 

this Agreement with the Securities and 

Exchange Commission (the ‘‘SEC’’ or 

‘‘Commission’’) pursuant to Rule 17d–2. 

Now, therefore, in consideration of 

the mutual covenants contained in this 

Agreement, the Participants agree as 

follows: 

I. Except as otherwise provided in this 

Agreement, each Participant shall 

assume Regulatory Responsibility (as 

defined below) for the Common 

Members that are allocated or assigned 

to such Participant in accordance with 

the terms of this Agreement and shall be 

relieved of its Regulatory Responsibility 

as to the remaining Common Members. 

For purposes of this Agreement, a 

Participant shall be considered to be the 

Designated Options Surveillance 

Regulator (‘‘DOSR’’) for each Common 

Member that is allocated to it in 

accordance with Section VII. 

II. As used in this Agreement, the 

term ‘‘Regulatory Responsibility’’ shall 

mean surveillance, investigation and 

enforcement responsibilities relating to 

compliance by the Common Members 

with such Options rules of the 

Participants as the Participants shall 

determine are substantially similar and 

shall approve from time to time, insofar 

as such rules relate to market 

surveillance (collectively, the ‘‘Common 

Rules’’). For the purposes of this 

Agreement the list of Common Rules is 

attached as Exhibit A hereto, which may 

only be amended upon unanimous 

written agreement by the Participants. 

The DOSR assigned to each Common 

Member shall assume Regulatory 

Responsibility with regard to that 

Common Member’s compliance with the 

applicable Common Rules for certain 

accounts.2 A DOSR may perform its 

Regulatory Responsibility or enter an 

agreement to transfer or assign such 

responsibilities to a national securities 

exchange registered with the SEC under 

Section 6(a) of the Exchange Act or a 

national securities association registered 

with the SEC under Section 15A of the 

Exchange Act. A DOSR may not transfer 

or assign its Regulatory Responsibility 

to an association registered for the 

limited purpose of regulating the 

activities of members who are registered 

as brokers or dealers in security futures 

products. 

The term ‘‘Regulatory Responsibility’’ 

does not include, and each Participant 

shall retain full responsibility with 

respect to: 

(a) Surveillance, investigative and 

enforcement responsibilities other than 

those included in the definition of 

Regulatory Responsibility; 

(b) Any aspects of the rules of a 

Participant that are not substantially 

similar to the Common Rules or that are 

allocated for a separate surveillance 

purpose under any other agreement 

made pursuant to Rule 17d–2. Any such 

aspects of a Common Rule will be noted 

as excluded on Exhibit A. 

With respect to options position 

limits, the term Regulatory 

Responsibility shall include 

examination responsibilities for the 

delta hedging exemption. Specifically, 

the Participants intend that FINRA will 

conduct examinations for delta hedging 

for all Common Members that are 

members of FINRA notwithstanding the 

fact that FINRA’s position limit rule is, 

in some cases, limited to only firms that 

are not members of an options exchange 

(i.e., access members). In such cases, 

FINRA’s examinations for delta hedging 

options position limit violations will be 

for the identical or substantively similar 

position limit rule(s) of the other 

Participant(s). Examinations for delta 

hedging for Common Members that are 

non-FINRA members will be conducted 

by the same Participant conducting 

position limit surveillance. The 

allocation of Common Members to 

DOSRs for surveillance of compliance 

with options position limits and other 

agreed to Common Rules is provided in 

Exhibit B. The allocation of Common 

Members to DOSRs for examinations of 

the delta hedging exemption under the 

options position limits rules is provided 

in Exhibit C. 

III. Each year within 30 days of the 

anniversary date of the commencement 

of operation of this Agreement, or more 

frequently if required by changes in the 

rules of a Participant, each Participant 

shall submit to the other Participants, 

through the Chair of the OSG, an 

updated list of Common Rules for 

review. This updated list may add 

Common Rules to Exhibit A, shall delete 

from Exhibit A rules of that Participant 

that are no longer identical or 

substantially similar to the Common 

Rules, and shall confirm that the 

remaining rules of the Participant 

included on Exhibit A continue to be 

identically or substantially similar to 

the Common Rules. Within 30 days 

from the date that each Participant has 

received revisions to Exhibit A from the 

Chair of the OSG, each Participant shall 

confirm in writing to the Chair of the 

OSG whether that Participant’s rules 

listed in Exhibit A are Common Rules. 

IV. Apparent violation of another 

Participant’s rules discovered by a 

DOSR, but which rules are not within 

the scope of the discovering DOSR’s 

Regulatory Responsibility, shall be 

referred to the relevant Participant for 

such action as is deemed appropriate by 

that Participant. 

Notwithstanding the foregoing, 

nothing contained herein shall preclude 

a DOSR in its discretion from requesting 

that another Participant conduct an 

investigative or enforcement proceeding 

(‘‘Proceeding’’) on a matter for which the 

requesting DOSR has Regulatory 

Responsibility. If such other Participant 

agrees, the Regulatory Responsibility in 

such case shall be deemed transferred to 

the accepting Participant and confirmed 

in writing by the Participants involved. 

Additionally, nothing in this Agreement 

shall prevent another Participant on 

whose market potential violative 

activity took place from conducting its 

own Proceeding on a matter. The 

Participant conducting the Proceeding 

shall advise the assigned DOSR. Each 

Participant agrees, upon request, to 

make available promptly all relevant 

files, records and/or witnesses necessary 

to assist another Participant in a 

Proceeding. 

V. The OSG shall be composed of one 

representative designated by each of the 

Participants (a ‘‘Representative’’). Each 

Participant shall also designate one or 

more persons as its alternate 

representative(s) (an ‘‘Alternate 

Representative’’). In the absence of the 

Representative, the Alternate 

Representative shall assume the powers, 

duties and responsibilities of the 

Representative. Each Participant may at 

any time replace its Representative and/ 

or its Alternate Representative to the 

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Federal Register / Vol. 75, No. 42 / Thursday, March 4, 2010 / Notices 9973 

3A Participant must give notice to the Chair of 

the Group of such a change. 

4For example, if one Participant was allocated a 

Common Member by another regulatory group that 

Participant would be assigned to be the DOSR of 

that Common Member, unless there is good cause 

not to make that assignment. 

Group.3 A majority of the OSG shall 

constitute a quorum and, unless 

otherwise required, the affirmative vote 

of a majority of the Representatives 

present (in person, by telephone or by 

written consent) shall be necessary to 

constitute action by the Group. 

The Group will have a Chair, Vice 

Chair and Secretary. A different 

Participant will assume each position 

on a rotating basis for a one-year term. 

In the event that a Participant replaces 

a Representative who is acting as Chair, 

Vice Chair or Secretary, the newly 

appointed Representative shall assume 

the position of Chair, Vice Chair, or 

Secretary (as applicable) vacated by the 

Participant’s former Representative. In 

the event a Participant cannot fulfill its 

duties as Chair, the Participant serving 

as Vice Chair shall substitute for the 

Chair and complete the subject 

unfulfilled term. All notices and other 

communications for the OSG are to be 

sent in care of the Chair and, as 

appropriate, to each Representative. 

VI. The OSG shall determine the 

times and locations of Group meetings, 

provided that the Chair, acting alone, 

may also call a meeting of the Group in 

the event the Chair determines that 

there is good cause to do so. To the 

extent reasonably possible, notice of any 

meeting shall be given at least ten 

business days prior to the meeting date. 

Representatives shall always be given 

the option of participating in any 

meeting telephonically at their own 

expense rather than in person. 

VII. No less frequently than every two 

years, in such manner as the Group 

deems appropriate, the OSG shall 

allocate Common Members that conduct 

an Options business among the 

Participants (‘‘Allocation’’), and the 

Participant to which a Common Member 

is allocated will serve as the DOSR for 

that Common Member. Any Allocation 

shall be based on the following 

principles, except to the extent all 

affected Participants consent to one or 

more different principles: 

(a) The OSG may not allocate a 

Common Member to a Participant 

unless the Common Member is a 

member of that Participant. 

(b) To the extent practicable, Common 

Members that conduct an Options 

business shall be allocated among the 

Participants of which they are members 

in such manner as to equalize as nearly 

as possible the allocation among such 

Participants, provided that no Common 

Members shall be allocated to FINRA. 

For example, if sixteen Common 

Members that conduct an Options 

business are members only of three 

Participants, none of which is FINRA, 

those Common Members shall be 

allocated among the three Participants 

such that no Participant is allocated 

more than six such members and no 

Participant is allocated less than five 

such members. If, in the previous 

example, one of the three Participants is 

FINRA, the sixteen Common Members 

would be allocated evenly between the 

remaining Participants, so that the two 

non-FINRA Participants would be 

allocated eight Common Members each. 

(c) To the extent practicable, 

Allocation shall take into account the 

amount of Options activity conducted 

by each Common Member in order to 

most evenly divide the Common 

Members with the largest amount of 

activity among the Participants of which 

they are members. Allocation will also 

take into account similar allocations 

pursuant to other plans or agreements to 

which the Common Members are party 

to maintain consistency in oversight of 

the Common Members.4

(d) To the extent practicable, 

Allocation of Common Members to 

Participants will be rotated among the 

applicable Participants such that a 

Common Member shall not be allocated 

to a Participant to which that Common 

Member was allocated within the 

previous two years. The assignment of 

DOSRs pursuant to the Allocation is 

attached as Exhibit B hereto, and will be 

updated from time to time to reflect 

Common Member Allocation changes. 

(e) The Group may reallocate 

Common Members from time-to-time, as 

it deems appropriate. 

(f) Whenever a Common Member 

ceases to be a member of its DOSR, the 

DOSR shall promptly inform the Group, 

which shall review the matter and 

allocate the Common Member to 

another Participant. 

(g) A DOSR may request that a 

Common Member to which it is 

assigned be reallocated to another 

Participant by giving 30 days written 

notice to the Chair of the OSG. The 

Group, in its discretion, may approve 

such request and reallocate the Common 

Member to another Participant. 

(h) All determinations by the Group 

with respect to Allocation shall be made 

by the affirmative vote of a majority of 

the Participants that, at the time of such 

determination, share the applicable 

Common Member being allocated; a 

Participant shall not be entitled to vote 

on any Allocation relating to a Common 

Member unless the Common Member is 

a member of such Participant. 

VIII. Each DOSR shall conduct routine 

surveillance reviews to detect violations 

of the applicable Common Rules by 

each Common Member allocated to it 

with a frequency (daily, weekly, 

monthly, quarterly, semi-annually or 

annually as noted on Exhibit A) not less 

than that determined by the Group. The 

other Participants agree that, upon 

request, relevant information in their 

respective files relative to a Common 

Member will be made available to the 

applicable DOSR. In addition, each 

Participant shall provide, to the extent 

not otherwise already provided, 

information pertaining to its 

surveillance program that would be 

relevant to FINRA or the Participant(s) 

conducting routine examinations for the 

delta hedging exemption. 

At each meeting of the OSG, each 

Participant shall be prepared to report 

on the status of its surveillance program 

for the previous quarter and any period 

prior thereto that has not previously 

been reported to the Group. In the event 

a DOSR believes it will not be able to 

complete its Regulatory Responsibility 

for its allocated Common Members, it 

will so advise the Group in writing 

promptly. The Group will undertake to 

remedy this situation by reallocating the 

subject Common Members among the 

remaining Participants. In such 

instance, the Group may determine to 

impose a regulatory fee for services 

provided to the DOSR that was unable 

to fulfill its Regulatory Responsibility. 

IX. Each Participant will, upon 

request, promptly furnish a copy of the 

report or applicable portions thereof 

relating to any investigation made 

pursuant to the provisions of this 

Agreement to each other Participant of 

which the Common Member under 

investigation is a member. 

X. Each Participant will routinely 

populate a common database, to be 

accessed by the Group relating to any 

formal regulatory action taken during 

the course of a Proceeding with respect 

to the Common Rules concerning a 

Common Member. 

XI. Any written notice required or 

permitted to be given under this 

Agreement shall be deemed given if sent 

by certified mail, return receipt 

requested, to any Participant to the 

attention of that Participant’s 

Representative, to the Participant’s 

principal place of business or by e-mail 

at such address as the Representative 

shall have filed in writing with the 

Chair. 

XII. The costs incurred by each 

Participant in discharging its Regulatory 

Responsibility under this Agreement are 

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9974 Federal Register / Vol. 75, No. 42 / Thursday, March 4, 2010 / Notices 

not reimbursable. However, any of the 

Participants may agree that one or more 

will compensate the other(s) for costs 

incurred. 

XIII. The Participants shall notify the 

Common Members of this Agreement by 

means of a uniform joint notice 

approved by the Group. Each 

Participant will notify the Common 

Members that have been allocated to it 

that such Participant will serve as DOSR 

for that Common Member. 

XIV. This Agreement shall be effective 

upon approval of the Commission. This 

Agreement may only be amended in 

writing duly approved by each 

Participant. All amendments to this 

Agreement, excluding changes to 

Exhibits A, B and C, must be filed with 

and approved by the Commission. 

XV. Any Participant may manifest its 

intention to cancel its participation in 

this Agreement at any time upon 

providing written notice to (i) the Group 

six months prior to the date of such 

cancellation, or such other period as all 

the Participants may agree, and (ii) the 

Commission. Upon receipt of the notice 

the Group shall allocate, in accordance 

with the provisions of this Agreement, 

those Common Members for which the 

canceling Participant was the DOSR. 

The canceling Participant shall retain its 

Regulatory Responsibility and other 

rights, privileges and duties pursuant to 

this Agreement until the Group has 

completed the reallocation as described 

above, and the Commission has 

approved the cancellation. 

XVI. The cancellation of its 

participation in this Agreement by any 

Participant shall not terminate this 

Agreement as to the remaining 

Participants. This Agreement will only 

terminate following notice to the 

Commission, in writing, by the then 

Participants that they intend to 

terminate the Agreement and the 

expiration of the applicable notice 

period. Such notice shall be given at 

least six months prior to the intended 

date of termination, or such other period 

as all the Participants may agree. Such 

termination will become effective upon 

Commission approval. 

XVII. Participation in the Group shall 

be strictly limited to the Participants 

and no other party shall have any right 

to attend or otherwise participate in the 

Group except with the unanimous 

approval of all Participants. 

Notwithstanding the foregoing, any 

national securities exchange registered 

with the SEC under Section 6(a) of the 

Act or any national securities 

association registered with the SEC 

under section 15A of the Act may 

become a Participant to this Agreement 

provided that: (i) Such applicant has 

adopted rules substantially similar to 

the Common Rules, and received 

approval thereof from the SEC; (ii) such 

applicant has provided each Participant 

with a signed statement whereby the 

applicant agrees to be bound by the 

terms of this Agreement to the same 

effect as though it had originally signed 

this Agreement and (iii) an amended 

agreement reflecting the addition of 

such applicant as a Participant has been 

filed with and approved by the 

Commission. 

XVIII. This Agreement is wholly 

separate from the multiparty Agreement 

made pursuant to Rule 17d–2 by and 

among the [Amex, BSE, CBOE, ISE, 

NASD, the New York Stock Exchange, 

LLC, Arca and PHLX] American Stock 

Exchange, LLC, the Boston Stock 

Exchange, Inc., the Chicago Board 

Options Exchange, Inc., the 

International Securities Exchange, LLC, 

Financial Industry Regulatory 

Authority, The NASDAQ Stock Market 

LLC, Inc., the New York Stock 

Exchange, LLC, the NYSE Arca, Inc., 

and the Philadelphia Stock Exchange, 

Inc. 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 [December 1, 2006] June 

5, 2008, and as may be amended from 

time to time. 

Limitation of Liability 

No Participant nor the Group nor any 

of their respective directors, governors, 

officers, employees or representatives 

shall be liable to any other Participant 

in 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 

Responsibility as provided hereby or for 

the failure to provide any such 

Regulatory Responsibility, except with 

respect to such liability, loss or damages 

as shall have been suffered by one or 

more of the Participants and caused by 

the willful misconduct of one or more 

of the other Participants or its respective 

directors, governors, officers, employees 

or representatives. No warranties, 

express or implied, are made by the 

Participants, individually or as a group, 

or by the OSG with respect to any 

Regulatory Responsibility to be 

performed hereunder. 

Relief From Responsibility 

Pursuant to Section 17(d)(1)(A) of the 

Exchange Act and Rule 17d–2, the 

Participants join in requesting the 

Commission, upon its approval of this 

Agreement or any part thereof, to relieve 

the Participants that are party to this 

Agreement and are not the DOSR as to 

a Common Member of any and all 

Regulatory Responsibility with respect 

to the matters allocated to the DOSR. 

Common Rules 

VIOLATION I—EXPIRING EXERCISE DECLARATIONS (EED)—FOR LISTED EQUITY OPTIONS EXPIRING: THE THIRD SATURDAY

FOLLOWING THE THIRD FRIDAY OF A MONTH, QUARTERLY, AND FOR LISTED FLEX OPTIONS

SRO Description of rule Exchange rule number Frequency of 

review 

NYSE Amex ............. Exercise of Options Contracts ............................................... Rule 980 ................................................. At Expiration. 

BATS ........................ Exercise of Options Contracts ............................................... Rule 23.1 ................................................ At Expiration. 

BOX .......................... Exercise of Options Contracts ............................................... Chapter VII, Section 1 ........................... At Expiration. 

C2 ............................. Exercise of Options Contracts ............................................... Rule 11.1 ................................................ At Expiration. 

CBOE ....................... Exercise of Options Contracts ............................................... Rule 11.1 ................................................ At Expiration. 

FINRA ....................... Exercise of Options Contracts ............................................... Rule 2360(b)(23) .................................... At Expiration. 

ISE ............................ Exercise of Options Contracts ............................................... Rule 1100 ............................................... At Expiration. 

Nasdaq ..................... Exercise of Options Contracts ............................................... Nasdaq Chapter VIII, Sec.1 ................... At Expiration. 

NYSE Arca ............... Exercise of Options Contracts ............................................... Rule 6.24 ................................................ At Expiration. 

NASDAQ OMX PHLX Exercise of Equity Options Contracts .................................... Rule 1042 ............................................... At Expiration 

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Federal Register / Vol. 75, No. 42 / Thursday, March 4, 2010 / Notices 9975 

VIOLATION II—POSITION LIMITS (PL)—FOR LISTED EQUITY OPTIONS EXPIRING: THE THIRD SATURDAY FOLLOWING THE

THIRD FRIDAY OF A MONTH, QUARTERLY

SRO Description of rule (for review as they apply to PL) Exchange rule number Frequency of 

review 

NYSE Amex ..................................... Position Limits ............................................................ Rule 904 ......................................... Daily. 

Liquidating Positions .................................................. Rule 907 ......................................... As Needed. 

BOX .................................................. Position Limits ............................................................ Chapter III, Section 7 ..................... Daily. 

Exemptions from Position .......................................... Chapter III, Section 8 ..................... As Needed. 

Liquidation Positions .................................................. Chapter III, Section 11 ................... As Needed. 

BATS ................................................ Position Limits ............................................................ Rule 18.7 ........................................ Daily. 

Exemptions from Position Limits ................................ Rule 18.8 ........................................ As Needed. 

Liquidation Positions .................................................. Rule 18.11 ...................................... As Needed. 

C2 ..................................................... Position Limits ............................................................ Rule 4.11 ........................................ Daily. 

Liquidation of Positions .............................................. Rule 4.14 ........................................ As Needed. 

CBOE ............................................... Position Limits ............................................................ Rule 4.11 ........................................ Daily. 

Liquidation of Positions .............................................. Rule 4.14 ........................................ As Needed. 

FINRA ............................................... Position Limits ............................................................ Rule 2360(b)(3) .............................. Daily. 

Liquidation of Positions and Restrictions on Access Rule 2360(b)(6) .............................. As Needed. 

ISE .................................................... Position Limits ............................................................ Rule 412 ......................................... Daily. 

Exemptions from Position Limits ................................ Rule 413 ......................................... As Needed. 

Liquidating Positions .................................................. Rule 416 ......................................... As Needed. 

Nasdaq ............................................. Position Limits ............................................................ Nasdaq Rule Chapter III Section 7 Daily. 

Exemptions from Position Limits ................................ Nasdaq Rule Chapter III Section 8 As Needed. 

Liquidating Positions .................................................. Nasdaq Rule Chapter III Section 

11.

As Needed. 

NYSE Arca ....................................... Position Limits ............................................................ Rule 6.8 .......................................... Daily. 

Liquidation of Position ................................................ Rule 6.7 .......................................... As Needed. 

NASDAQ OMX PHLX ...................... Position Limits ............................................................ Rule 1001 ....................................... Daily. 

Liquidation of Positions .............................................. Rule 1004 ....................................... As Needed. 

VIOLATION III—LARGE OPTIONS POSITION REPORT (LOPR)—FOR LISTED EQUITY AND ETF OPTIONS

SRO Description of rule (for review as they apply to 

LOPR) Exchange rule number Frequency of review 

NYSE Amex ..................................... Reporting of Options Positions .................................. Rule 906 ......................................... Yearly. 

BATS ................................................ Reports Related to Position Limits ............................. Rule 18.10 ...................................... Yearly. 

BOX .................................................. Reports Related to Position Limits ............................. Chapter III, Section 10 ................... Yearly. 

C2 ..................................................... Reports Related to Position Limits ............................. Rule 4.13(a), .................................. Yearly. 

Reports Related to Position Limits ............................. Rule 4.13(b) ................................... Yearly. 

Reports Related to Position Limits ............................. Rule 4.13(d) ................................... Yearly. 

CBOE ............................................... Reports Related to Position Limits ............................. Rule 4.13(a), .................................. Yearly. 

Reports Related to Position Limits ............................. Rule 4.13(b) ................................... Yearly. 

Reports Related to Position Limits ............................. Rule 4.13(d) ................................... Yearly. 

FINRA ............................................... Options ....................................................................... Rule 2360(b)(5) .............................. Yearly. 

ISE .................................................... Reports Related to Position Limits ............................. Rule 415 ......................................... Yearly. 

Nasdaq ............................................. Reports Related to Position Limits ............................. Chapter III Section 10 .................... Yearly. 

NYSE Arca ....................................... Reporting of Options Positions .................................. Rule 6.6 .......................................... Yearly. 

NASDAQ OMX PHLX ...................... Reporting of Options Positions .................................. Rule 1003 ....................................... Yearly. 

VIOLATION IV—OPTIONS CLEARING CORPORATION (OCC) ADJUSTMENT PROCESS

SRO Description of rule (as they apply to OCC Adjustments/By-laws Article VI, Section 1 .01(a) and .02)) Exchange rule number Frequency of 

review 

NYSE Amex ..................................... Contract made on Acceptance of Bid or Offer .......... Rule 965NY .................................... Yearly. 

BATS ................................................ Adherence to Law ...................................................... Rule 18.1 ........................................ Yearly. 

BOX .................................................. Adherence to Law ...................................................... Chapter III, Section 1 ..................... Yearly. 

C2 ..................................................... Adherence to Law ...................................................... Rule 4.2 .......................................... Yearly. 

CBOE ............................................... Adherence to Law ...................................................... Rule 4.2 .......................................... Yearly. 

FINRA ............................................... Violation of By-Laws and Rules of FINRA or The 

OCC.

Rule 2360(b)(21) ............................ Yearly. 

ISE .................................................... Adherence to Law ...................................................... Rule 401 ......................................... Yearly. 

Nasdaq ............................................. Adherence to Law ...................................................... Chapter III, Section 1 ..................... Yearly. 

NYSE Arca ....................................... Adherence to Law and Good Business Practice ....... Rule 11.1 ........................................ Yearly. 

NASDAQ OMX PHLX ...................... Violation of By-Laws and Rules of OCC .................... Rule 1050 ....................................... Yearly. 

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9976 Federal Register / Vol. 75, No. 42 / Thursday, March 4, 2010 / Notices 

15See supra note 13 (citing to Securities 

Exchange Act Release No. 58765). 

16 15 U.S.C. 78q(d). 

17 17 CFR 200.30–3(a)(34). 

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). 

* * * * * 

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 e-mail to rulecomments@sec.gov. Please include File 

Number 4–551 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Elizabeth M. Murphy, Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–1090. 

All submissions should refer to File 

Number 4–551. This file number should 

be included on the subject line if e-mail 

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 

Web site (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 Web site 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 

a.m. and 3 p.m. Copies of the plan also 

will be available for inspection and 

copying at the principal offices of 

Amex, BATS, C2, CBOE, ISE, FINRA, 

Arca, NASDAQ, BX and Phlx. All 

comments received will be posted 

without change; the Commission does 

not edit personal identifying 

information from submissions. You 

should submit only information that 

you wish to make available publicly. All 

submissions should refer to File 

Number 4–551 and should be submitted 

on or before March 25, 2010. 

V. Discussion 

The Commission continues to believe 

that the Plan, as proposed to be 

amended, is an achievement in 

cooperation among the SRO 

participants, and will reduce 

unnecessary regulatory duplication by 

allocating to the designated SRO the 

responsibility for certain options-related 

market surveillance matters that would 

otherwise be performed by multiple 

SROs. The Plan promotes efficiency by 

reducing costs to firms that are members 

of more than one of the SRO 

participants. In addition, because the 

SRO participants coordinate their 

regulatory functions in accordance with 

the Plan, the Plan promotes, and will 

continue to promote, investor 

protection. 

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 purpose of 

the amendment is to add BATS 

Exchange, Inc. and C2 Options 

Exchange, Incorporated as SRO 

participants and to reflect the name 

changes of Amex and BX. By declaring 

it effective today, the amended Plan can 

become effective and be implemented 

without undue delay. In addition, the 

Commission notes that the prior version 

of this Plan was published for comment, 

and the Commission did not receive any 

comments thereon.15 Finally, 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 submitted to the Commission that 

is contained in File No. 4–551. 

It is therefore ordered, pursuant to 

Section 17(d) of the Act,16 that the Plan, 

as amended by and between the Amex, 

BATS, C2, CBOE, ISE, FINRA, Arca, 

NASDAQ, BX and Phlx filed with the 

Commission pursuant to Rule 17d–2 on 

February 4, 2010 is hereby approved 

and declared effective. 

It is further ordered that those SRO 

participants that are not the DOSR as to 

a particular common member are 

relieved of those regulatory 

responsibilities allocated to the common 

member’s DOSR under the amended 

Plan to the extent of such allocation. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.17

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–4455 Filed 3–3–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–61589; File No. S7–966] 

Program for Allocation of Regulatory 

Responsibilities Pursuant to Rule 17d– 

2; Notice of Filing and Order 

Approving and Declaring Effective an 

Amendment to the Plan for the 

Allocation of Regulatory 

Responsibilities Among the BATS 

Exchange, Inc., the Chicago Board 

Options Exchange, Incorporated, C2 

Options Exchange, Incorporated, the 

International Securities Exchange, 

LLC, Financial Industry Regulatory 

Authority, Inc., the New York Stock 

Exchange LLC, NYSE Amex LLC, 

NYSE Arca, Inc., The NASDAQ Stock 

Market LLC, NASDAQ OMX BX, Inc., 

and NASDAQ OMX PHLX, Inc. 

Concerning Options-Related Sales 

Practice Matters 

February 25, 2010. 

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 filed 

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

the BATS Exchange, Inc. (‘‘BATS’’), the 

Chicago Board Options Exchange, 

Incorporated (‘‘CBOE’’), C2 Options 

Exchange, Incorporated (‘‘C2’’), the 

International Securities Exchange, LLC 

(‘‘ISE’’), Financial Industry Regulatory 

Authority, Inc. (‘‘FINRA’’), the New York 

Stock Exchange LLC (‘‘NYSE’’), NYSE 

Amex LLC (‘‘Amex’’), NYSE Arca, 

Inc.(‘‘Arca’’), The NASDAQ Stock 

Market LLC (‘‘NASDAQ’’), NASDAQ 

OMX BX, Inc. (‘‘BX’’), and NASDAQ 

OMX PHLX, Inc. (‘‘Phlx’’) (collectively, 

‘‘SRO participants’’). 

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. 

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