Federal Register / Vol. 89, No. 5 / Monday, January 8, 2024 / Notices 975 

10 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

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

4 17 CFR 240.19b–4(f)(2). 

5Each capitalized term not otherwise defined 

herein has its respective meaning as set forth the 

Rules, By-Laws and Organization Certificate of DTC 

(the ‘‘Rules’’), available at www.dtcc.com/legal/ 

rules-and-procedures.aspx. 

6Available at www.dtcc.com/-/media/Files/ 

Downloads/legal/fee-guides/DTC-Fee-Schedule.pdf. 

7Pursuant to Rule 2, Section 1, each Participant 

shall pay to DTC the compensation due it for 

services rendered to the Participant based on DTC’s 

fee schedules. See Rule 2, supra note 5. 8See Fee Guide, supra note 6 at 20. 

will be available for inspection and 

copying at the principal office of the 

Exchange. Do not include personal 

identifiable information in submissions; 

you should submit only information 

that you wish to make available 

publicly. We may redact in part or 

withhold entirely from publication 

submitted material that is obscene or 

subject to copyright protection. All 

submissions should refer to file number 

SR–MEMX–2023–42 and should be 

submitted on or before January 29, 2024. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.10

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2024–00079 Filed 1–5–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–99264; File No. SR–DTC– 

2023–014] 

Self-Regulatory Organizations; The 

Depository Trust Company; Notice of 

Filing and Immediate Effectiveness of 

a Proposed Rule Change to the DTC 

Fee Schedule To Revise Certain Fees 

Charged to Participants for (i) 

Participants Fund Maintenance; (ii) 

Underwriting Services; (iii) Asset 

Services; and (iv) Settlement Services 

January 2, 2024. 

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

Securities Exchange Act of 1934 

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

notice is hereby given that on December 

21, 2023, The Depository Trust 

Company (‘‘DTC’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I, II and III 

below, which Items have been prepared 

by the clearing agency. DTC filed the 

proposed rule change pursuant to 

Section 19(b)(3)(A) of the Act 3 and Rule 

19b–4(f)(2) thereunder.4 The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Clearing Agency’s Statement of the 

Terms of Substance of the Proposed 

Rule Change 

The proposed rule change 5 would 

modify the DTC Fee Schedule 6 (‘‘Fee 

Guide’’) to revise certain fees charged to 

Participants for (i) Participants Fund 

Maintenance; (ii) Underwriting 

Services; 7 (iii) Asset Services; and (iv) 

Settlement Services, as described below. 

II. Clearing Agency’s Statement of the 

Purpose of, and Statutory Basis for, the 

Proposed Rule Change 

In its filing with the Commission, the 

clearing agency included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

clearing agency has prepared 

summaries, set forth in sections A, B, 

and C below, of the most significant 

aspects of such statements. 

(A) Clearing Agency’s Statement of the 

Purpose of, and Statutory Basis for, the 

Proposed Rule Change 

Purpose 

The proposed rule change would 

modify the Fee Guide to revise certain 

fees charged to Participants for (i) 

Participants Fund Maintenance; (ii) 

Underwriting Services; (iii) Asset 

Services; and (iv) Settlement Services, 

as described below. 

Overview 

DTC operates a ‘‘low cost’’ pricing 

model and has in place procedures to 

control costs and to regularly review 

pricing levels against costs of operation. 

It reviews pricing levels against its costs 

of operation during the annual budget 

process. The budget is approved 

annually by the Board. DTC’s fees are 

cost-based plus a low-margin markup, 

as approved by the Board or 

management (pursuant to authority 

delegated by the Board), as applicable. 

The markup is applied to recover 

development costs and operating 

expenses, and to accumulate capital 

sufficient to meet regulatory and 

economic requirements. When 

estimating expected revenues and costs, 

DTC typically uses historical, current, 

and expected usage and market trends 

to determine revenue outlook and apply 

current budgeted assumptions on costs. 

In addition to assessing the overall 

impact of fee changes at DTC, the Board 

also considers impacts of fee changes 

from an individual product/service 

category (e.g., Underwriting, Asset 

Services, Participants Fund 

Maintenance) perspective, taking cost 

and capital considerations relating to a 

given category into account. After 

evaluation of DTC’s short-term and 

long-term financial position in 

consideration of expected Participant 

activity, revenues, cost of funding, 

market volatility, and the financial 

markets more broadly, DTC has 

determined that it should increase the 

overall amount it collects from 

Participants through fees. In this regard, 

the proposed rule change would 

increase certain fees relating to 

Participants Fund maintenance and 

Underwriting Services, and it would 

eliminate and consolidate other Asset 

Services fees included in the Fee Guide, 

to better align cost and revenue, as 

described below. 

Participant Fund Maintenance Fee 

Increase 

DTC maintains a pool of funds used 

for liquidity purposes consisting of 

mandatory and voluntary contributions 

by Participants (‘‘Participants Fund’’). 

The Participants Fund creates liquidity 

and collateral resources to support the 

business of DTC and to cover losses and 

liabilities incident to that business. For 

this purpose, every Participant has a 

Required Participants Fund Deposit 

based on the Participant’s activity at 

DTC. The Participants Fund is held in 

cash at DTC and is used in the event a 

Participant fails to settle. 

In support of maintaining the 

Participants Fund, DTC charges a 

Participants Fund Maintenance Fee, 

which is a monthly fee calculated, in 

arrears, as the product of (A) 0.25 

percent and (B) the average of each 

Participant’s Actual Participants Fund 

Deposit, as of the end of each day, for 

the month, multiplied by the number of 

days for that month and divided by 

360.8 DTC proposes to increase the rate 

used to calculate the Participants Fund 

Maintenance Fee by 10 basis points 

from 0.25 percent to 0.35 percent. DTC 

is proposing this increase in order to 

cover its costs for servicing the fund and 

to maintain the appropriate low-margin 

markup above costs. 

All 193 Participants are projected to 

incur a 40 percent increase to their 


ddrumheller on DSK120RN23PROD with NOTICES1
976 Federal Register / Vol. 89, No. 5 / Monday, January 8, 2024 / Notices 

individual Participants Fund 

Maintenance Fee as a result of the 

increase. Of these Participants, six 

would see an increase between $100,000 

and $130,000; 27 would see an increase 

between $10,000 and $100,000; and 160 

would see an increase of less than 

$10,000. 

Underwriting Fee Increase 

DTC, through its Underwriting 

Department, serves the financial 

industry by making securities eligible 

for depository services. Through DTC, 

Participants have the ability to 

distribute new and secondary offerings 

quickly and economically by electronic 

book-entry delivery and settlement. 

These securities are then available for 

depository services. 

Due to decreasing issuance volumes 

since 2021, strategic investments in 

modernization, and continued 

inflationary headwinds, DTC’s 

Underwriting fees, which have not 

changed in 10 years, are not covering its 

costs. DTC proposes to amend the Fee 

Guide to increase the Underwriting 

eligibility fees charged to Participants to 

better align costs and revenue. 

Specifically, DTC proposes to increase 

eligibility fees by approximately 20 

percent across the following 

Underwriting fees (bold, underlined text 

indicates additions and bold, 

strikethrough text indicates deletions): 

Sixty-five Participants would see an 

increase in Underwriting fees. Of these 

Participants, 14 would see an increase 

between $100,000 and $800,000; 26 

would see an increase between $10,000 

and $100,000; and 25 would see an 

increase of less than $10,000. 

Asset Services—Simplification and 

Consolidation of Fees 

Asset Services is comprised of diverse 

asset events outside of clearance and 

settlement. It encompasses over 1.3 

million DTC-eligible equity and debt 

securities, and provides efficient and 

effective centralization, simplification, 

and automation in the handling of 

physical securities. It also processes 

principal, income, and corporate actions 

for these instruments. 

DTC conducted an extensive review 

of the current DTC Fee Schedule to 

ensure alignment with current practice 

and to streamline DTC’s fee structure for 

a better client experience. The proposed 

changes to both eliminate and 

consolidate several Asset Services fees 

would improve customer billing 

transparency and provide clearer 

guidance on when fees are applied. The 

proposed changes also further reduce 

the complexity of tiered fee structures 

and eliminate fees for outdated and nonvalue-add services. These changes will 

not have a material impact on the total 

dollar amount of Asset Services fees 

charged to Participants. 

Specifically, the following entries in 

the Asset Services section of the Fee 

Guide would be revised (bold, 

underlined text indicates additions and 

bold, strikethrough text indicates 

deletions): 


ddrumheller on DSK120RN23PROD with NOTICES1EN08JA24.000</GPH>

FEE NAME AMOUNT($) CONDITIONS 

Eligibility Fees 

**** 

Per new issue with one 

Equity Eligibility Fee 7§0.00 900.00 CUSIP plus Additional 

CUSIP Fee 728 

  

Equity Eligibility -Additional CUSIP Fee 2§0.00 300.00 Per additional CUSIP 

Per new issue with one 

Debt Eligibility Fee J§0.00 425.00 CUSIP plus Additional 

CUSIP Fee 729 

Debt Eligibility - Additional CUSIP Fee 2§0.00 300.00 Per additional CUSIP 

Municipal Eligibility Fee - Single CUSIP J§0.00 425.00 Per new issue with one 

CUSIP 

Municipal Eligibility Fee - Multi CUSIP 800.00 975.00 Per new issue with two or 

more CUSIPs 

Certificate of Deposit (CD) 17§.00 225.00 Per CUSIP 

Municipal and corporate insured custodial 200.00 250.00 Per CUSIP receipt 

Unit Investment Trust (UIT) ~40.00 Per CUSIP 

Small Business Administration (SBA) 200.00 250.00 Per issue loan pool 
Federal Register / Vol. 89, No. 5 / Monday, January 8, 2024 / Notices 977 


ddrumheller on DSK120RN23PROD with NOTICES1EN08JA24.001</GPH>

FEE NAME AMOUNT($) CONDITIONS 

Securities Processing 

** ** 

General Asset Services 

  

PeF hauF &F peF CUSIP, &ese&Fehieg l'ee 100.00 ,I - --1·------~ ~ - ... --. .~ --- -----· --- . _.., --- ---

Ie~•itatiae ta Caiv:eF ShaFt &eEfuest aoo.oo PeF submissiae I I 'I...' I_.\. 

' -

** ** 

Corporate Actions 

  

Allocation Fees 

** ** 
978 Federal Register / Vol. 89, No. 5 / Monday, January 8, 2024 / Notices 


ddrumheller on DSK120RN23PROD with NOTICES1EN08JA24.002</GPH>

Mandatory exchanges, including 

Mandatory Corporate Actions +S.0080.00 mandatory puts, name 

changes/swings and sale of Rights 

per participant position 

  

Agent Fees 

** ** 

Caeseet Qely Base :PFaeessieg Fee 

Consent2 Voting or Blocking base 2,000.00 Per election 

orocessin2 fee 

Caeseet Qely }.,Elditiaeal Eleetiaes 

ae INeet Add Election on Event - 1,000.00 Per election 

Consent. Votin2 or Blockin2 

Caeseet Qely Paymeet PFaeessieg 

Paiment Processing - Consent2 200.00 Per election 

Votin2 or Blockin2 

Caeseet Qely E¥eet E~eesiae 

Event Extension - Consent2 Voting2 200.00 Per election 

Blockin2 

Late Natifieatiae af ¥al11et&Fy Notification received within 5 to 9 INeets, tieF 1 Late Notice of Vol 2,000.00 days of the expiration Events received 5-9 davs 

Late Natifieatiae af Vol11et&Fy Notification received less than 5 INeets, tieF l Late Notice of Vol 5,000.00 days of the expiration Events received <5 davs 

Nae StaedaFEI CaFpaFate Aetiaes 

Asset Services Exce)!tion Processing Varies Based on structure of the offer 

& Research 

Rate Ghaege (:Past :Payahle) ,~...:REI 

Mfte11al Allaeatiaes Rate Change 2,000.00 Per CUSIP 

and Manual Allocations 

Deposit Services 

  

Deposit Automation Management 

(DAM) 

** ** 

ChaFgehaelE at: fees ehaFgeEI hy 

the tFaesfeF ageet, pl11s $1.00 

TFeesfeF Ageet CheFges ¥ttFies tFeeseet:iae fee; Applies ta 

eeeeellatiae aed issuaeee af 

eeFtifieetes at: eeFteie issues 

  

New York Window Services 

(including Envelope Settlement 

Service, futercity Envelope Settlement 

Service, Funds-Only Settlement 

Service, Dividend Settlement Service) 

** ** 

Other Services 
Federal Register / Vol. 89, No. 5 / Monday, January 8, 2024 / Notices 979 

Settlement Services 

The following entries in the 

Settlement Services section of the Fee 

Guide would be revised (bold, 

underlined text indicates additions and 

bold strikethrough text indicates 

deletions): 

Participant Outreach 

DTC has conducted ongoing outreach 

to each Participant in order to provide 

them with notice of the proposed 

changes and the anticipated impact for 

the Participant. The impact of the 

proposed changes was provided to 

Participants using year to date July 2023 

annualized data. Participants asked 

clarifying questions but did not express 

concerns. 

Implementation Timeframe 

DTC would implement this proposal 

on January 1, 2024. To that effect, a 

legend would be added to the Fee Guide 

stating there are changes that have 

become effective upon filing with the 

but have not yet been implemented. The 


ddrumheller on DSK120RN23PROD with NOTICES1EN08JA24.003</GPH> EN08JA24.004</GPH>

  -n .. _ . ().JO ..,. . -- -- - .. ~ -- .. _, 'T' . .L! H.oo ..,. . ~- ~-- ~ -- .. ** ** 

Reorganization Services 

Reorganization 

  

PFaeessieg af disseet letteF PeF disseet letteF aF shaFehaldeF 400.00 shaFehaldeF demaed _. .I _. 

- - -

** ** 

Per issue; fee is assessed at request 

Seeaedaey maFli,et issue eligihility for eligibility of an issue 

FeseaFeh (aldeF issues➔ Secondary 2,000.00 that is currently in the secondary 

Market Issue Eligibilitt market and does not depend 

on success of request 

Suhmissiae af a LOR ie lieu af a 300.00 PeF letteF BLOR 

Madifieatiae ta MMI 300.00 PeF CIJ:SIP 

E'lli:peeses Felated ta eligihility 

'.f&-he FeEf uests that FettuiFe 

Caesultatiae/ ReseaFeh Fee eegatiated eaesultatiae, FeseaFeh, use af 

thiFd paFties aF ae1 atheF deal •~- L _ ... ~~ ··-   

Settlement Services 

** ** 

Other 

  

Per month; Calculated, in arrears, as the 

product of (A) 0.:2-J,5 and (B) the average 

Participants Fund Varies of each Participant's Actual Participants 

Maintenance Fee Fund Deposit, as of the end of each day, 

for the month, multiplied by the number 

of days for that month and divided by 360. 

** ** 
980 Federal Register / Vol. 89, No. 5 / Monday, January 8, 2024 / Notices 

9 15 U.S.C. 78q–1(b)(3)(D). 

10 17 CFR.17Ad–22(e)(23)(ii). 

11 15 U.S.C. 78q–1(b)(3)(D). 

12 Id. 

13 17 CFR 240.17Ad–22(e)(23)(ii). 

14See supra note 6. 

15 17 CFR 240.17Ad–22(e)(23)(ii). 

16 15 U.S.C. 78q–1(b)(3)(I). 

proposed legend also would include a 

date on which such changes would be 

implemented and the file number of this 

proposal, and state that, once this 

proposal is implemented, the legend 

would automatically be removed from 

the Fee Guide. 

2. Statutory Basis 

DTC believes this proposal is 

consistent with the requirements of the 

Act and the rules and regulations 

thereunder applicable to a registered 

clearing agency. Specifically, DTC 

believes the proposed changes to modify 

fees charged to Participants for (i) 

Participants Fund Maintenance; (ii) 

Underwriting Services; (iii) Asset 

Services; and (iv) Settlement Services, 

as described above, are consistent with 

Section 17A(b)(3)(D) of the Act,9 for the 

reasons described below. DTC also 

believes that the proposed changes to 

update the Fee Guide with the new fees 

are consistent with Rule 17Ad– 

22(e)(23)(ii),10 as promulgated under the 

Act, for the reasons described below. 

Section 17A(b)(3)(D) of the Act 

requires, inter alia, that the Rules 

provide for the equitable allocation of 

reasonable dues, fees, and other charges 

among Participants.11 DTC believes the 

proposed rule change to revise fees 

charged to Participants for (i) 

Participants Fund Maintenance; (ii) 

Underwriting Services; (iii) Asset 

Services; and (iv) Settlement Services, 

would provide for the equitable 

allocation of reasonable fees. Because all 

193 Participants would see an increase 

in fees, and those increases are equally 

shared (e.g., in the case of the 

Participants Fund Maintenance with a 

consistent 40 percent increase per 

Participant) and directly proportional to 

the Participants’ use of DTC’s services 

(e.g., in the case of the Underwriting 

and Asset Service fees), DTC believes 

the fees continue to be equitably 

allocated. 

DTC also believes that the proposed 

fees would continue to be reasonable 

under the described changes. As 

described above, DTC’s fees are costbased plus a low-margin markup. As 

such the proposed fee changes are 

simply designed to better align to the 

projected operating costs and expenses 

of DTC relating to its services. For this 

reason, DTC believes that the proposed 

fee changes, as described above, are 

reasonable and consistent with Section 

17A(b)(3)(D) of the Act.12

Rule 17Ad–22(e)(23)(ii) under the 

Act 13 requires DTC to establish, 

implement, maintain, and enforce 

written policies and procedures 

reasonably designed to provide 

sufficient information to enable 

participants to identify and evaluate the 

risks, fees, and other material costs they 

incur by participating in the covered 

clearing agency. The proposed fees 

would be clearly and transparently 

published in the Fee Guide, which is 

available on a public website,14 thereby 

enabling Participants to identify the fees 

and costs associated with participating 

in DTC. As such, DTC believes the 

proposed rule change is consistent with 

Rule 17Ad–22(e)(23)(ii) under the Act.15

(B) Clearing Agency’s Statement on 

Burden on Competition 

The proposed rule change may impact 

competition and that impact may be a 

burden because it would result in 

increased fees paid by Participants, as 

described above. However, DTC does 

not believe such a burden would be 

significant because the fees would be 

charged equally to all Participants that 

utilize DTC’s services and would merely 

reflect the Participants’ activity at DTC. 

Regardless, DTC believes any burden 

would be necessary and appropriate in 

furtherance of the purposes of the Act, 

as permitted by Section 17A(b)(3)(I) of 

the Act.16

DTC believes any such burden would 

be necessary because the proposed fee 

increases would better align the fees 

with DTC’s associated costs, helping 

DTC to achieve and maintain its net 

income margin. Meanwhile, DTC also 

believes that any such burden would be 

appropriate because the fees would 

continue to be equitably and reasonably 

allocated among all Participants, as 

described above. 

(C) Clearing Agency’s Statement on 

Comments on the Proposed Rule 

Change Received From Members, 

Participants, or Others 

DTC has not received or solicited any 

written comments relating to this 

proposal. If any written comments are 

received, they would be publicly filed 

as an Exhibit 2 to this filing, as required 

by Form 19b–4 and the General 

Instructions thereto. 

Persons submitting comments are 

cautioned that, according to Section IV 

(Solicitation of Comments) of the 

Exhibit 1A in the General Instructions to 

Form 19b–4, the Commission does not 

edit personal identifying information 

from comment submissions. 

Commenters should submit only 

information that they wish to make 

available publicly, including their 

name, email address, and any other 

identifying information. 

All prospective commenters should 

follow the Commission’s instructions on 

how to submit comments, available at 

www.sec.gov/regulatory-actions/how-tosubmit-comments. General questions 

regarding the rule filing process or 

logistical questions regarding this filing 

should be directed to the Main Office of 

the Commission’s Division of Trading 

and Markets at tradingandmarkets@

sec.gov or 202–551–5777. 

III. Date of Effectiveness of the 

Proposed Rule Change, and Timing for 

Commission Action 

The foregoing rule change has become 

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

of the Act and paragraph (f) of Rule 

19b–4 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. 

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 (https://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include file number SR– 

DTC–2023–014 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–DTC–2023–014. This file 

number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

internet website (https://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 


ddrumheller on DSK120RN23PROD with NOTICES1
Federal Register / Vol. 89, No. 5 / Monday, January 8, 2024 / Notices 981 

17 17 CFR 200.30–3(a)(12). 

1See Securities Exchange Act Release No. 99065 

(December 1, 2023), 88 FR 85338. 

2 15 U.S.C. 78s(g)(1). 

3 15 U.S.C. 78q(d) and 15 U.S.C. 78s(g)(2), 

respectively. 4 15 U.S.C. 78q(d)(1). 

5See 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). 

6 17 CFR 240.17d–1 and 17 CFR 240.17d–2, 

respectively. 

7See Securities Exchange Act Release No. 12352 

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

8See Securities Exchange Act Release No. 12935 

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

1976). 

9The proposed 17d–2 Plan refers to these 

common members as ‘‘Dual Members.’’ See 

Paragraph 1(c) of the proposed 17d–2 Plan. 

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 

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

will be available for inspection and 

copying at the principal office of DTC 

and on DTCC’s website (https://

www.dtcc.com/legal/sec-rule-filings). Do 

not include personal identifiable 

information in submissions; you should 

submit only information that you wish 

to make available publicly. We may 

redact in part or withhold entirely from 

publication submitted material that is 

obscene or subject to copyright 

protection. All submissions should refer 

to file number SR–DTC–2023–014 and 

should be submitted on or before 

January 29, 2024. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.17

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2024–00078 Filed 1–5–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–99260; File No. 4–818] 

Program for Allocation of Regulatory 

Responsibilities Pursuant to Rule 17d– 

2; Order Approving and Declaring 

Effective a Proposed Plan for the 

Allocation of Regulatory 

Responsibilities Between the Financial 

Industry Regulatory Authority, Inc. and 

Nasdaq PHLX LLC 

January 2, 2024. 

On November 17, 2023, the Financial 

Industry Regulatory Authority, Inc. 

(‘‘FINRA’’) and Nasdaq PHLX LLC 

(‘‘PHLX’’) (together with FINRA, the 

‘‘Parties’’) filed with the Securities and 

Exchange Commission (‘‘Commission’’ 

or ‘‘SEC’’) a plan for the allocation of 

regulatory responsibilities, dated 

November 12, 2023 (‘‘17d–2 Plan’’ or 

the ‘‘Plan’’). The Plan was published for 

comment on December 7, 2023.1 The 

Commission received no comments on 

the Plan. This order approves and 

declares effective the Plan. 

I. Introduction 

Section 19(g)(1) of the Securities 

Exchange Act of 1934 (‘‘Act’’),2 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) 

or Section 19(g)(2) of the Act.3 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 4 was 

intended, in part, to eliminate 

unnecessary multiple examinations and 

regulatory duplication.5 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.6

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.7 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.8

Rule 17d–2 permits SROs to propose 

joint plans for the allocation of 

regulatory responsibilities with respect 

to their common members. Under 

paragraph (c) of Rule 17d–2, the 

Commission may declare such a plan 

effective if, after providing for 

appropriate notice and comment, it 

determines that the plan is necessary or 

appropriate in the public interest and 

for the protection of investors; to foster 

cooperation and coordination among the 

SROs; to remove impediments to, and 

foster the development of, a national 

market system and a national clearance 

and settlement system; and is in 

conformity with the factors set forth in 

Section 17(d) of the Act. Commission 

approval of a plan filed pursuant to Rule 

17d–2 relieves an SRO of those 

regulatory responsibilities allocated by 

the plan to another SRO. 

II. Proposed Plan 

The proposed 17d–2 Plan is intended 

to reduce regulatory duplication for 

firms that are common members of both 

PHLX and FINRA.9 Pursuant to the 

proposed 17d–2 Plan, FINRA would 

assume certain examination and 

enforcement responsibilities for 

common members with respect to 

certain applicable laws, rules, and 

regulations. 

The text of the Plan delineates the 

proposed regulatory responsibilities 

with respect to the Parties. Included in 

the proposed Plan is an exhibit (the 

‘‘PHLX Certification of Common Rules,’’ 

referred to herein as the ‘‘Certification’’) 

that lists every PHLX rule, and select 

federal securities laws, rules, and 

regulations, for which FINRA would 

bear responsibility under the Plan for 

overseeing and enforcing with respect to 

PHLX members that are also members of 

FINRA and the associated persons 

therewith (‘‘Dual Members’’). 

Specifically, under the 17d–2 Plan, 

FINRA would assume examination and 

enforcement responsibility relating to 


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