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 


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

10See paragraph 1(b) of the proposed 17d–2 Plan 

(defining Common Rules). See also paragraph 1(f) 

of the proposed 17d–2 Plan (defining Regulatory 

Responsibilities). Paragraph 2 of the Plan provides 

that annually, or more frequently as required by 

changes in either PHLX rules or FINRA rules, the 

parties shall review and update, if necessary, the 

list of Common Rules. 

11See paragraph 5 of the proposed 17d–2 Plan. 

12See paragraph 2 of the proposed 17d–2 Plan. 

13 15 U.S.C. 78q(d). 

14 17 CFR 240.17d–2(c). 15See paragraph 2 of the Plan. 

16The Commission also notes that the addition to 

or deletion from the Certification of any federal 

securities laws, rules, and regulations for which 

FINRA would bear responsibility under the Plan for 

examining, and enforcing compliance by, common 

members, also would constitute an amendment to 

the Plan. 

17 17 CFR 200.30–3(a)(34). 

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

2 17 CFR 240.19b–4. 

compliance by Dual Members with the 

rules of PHLX that are substantially 

similar to the applicable rules of 

FINRA,10 as well as any provisions of 

the federal securities laws and the rules 

and regulations thereunder delineated 

in the Certification (‘‘Common Rules’’). 

In the event that a Dual Member is the 

subject of an investigation relating to a 

transaction on PHLX, the plan 

acknowledges that PHLX may, in its 

discretion, exercise concurrent 

jurisdiction and responsibility for such 

matter.11

Under the Plan, PHLX would retain 

full responsibility for surveillance, 

examination, investigation and 

enforcement with respect to trading 

activities or practices involving PHLX’s 

own marketplace, including, without 

limitation, registration pursuant to its 

applicable rules of associated persons 

(i.e., registration rules that are not 

Common Rules); its duties as a DEA 

pursuant to Rule 17d–1 under the Act; 

and any PHLX rules that are not 

Common Rules.12

III. Discussion 

The Commission finds that the 

proposed Plan is consistent with the 

factors set forth in Section 17(d) of the 

Act 13 and Rule 17d–2(c) thereunder 14

in that the proposed 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 

Plan should reduce unnecessary 

regulatory duplication by allocating to 

FINRA certain examination and 

enforcement responsibilities for 

common members that would otherwise 

be performed by PHLX and FINRA. 

Accordingly, the proposed Plan 

promotes efficiency by reducing costs to 

common members. Furthermore, 

because PHLX and FINRA will 

coordinate their regulatory functions in 

accordance with the Plan, the Plan 

should promote investor protection. 

The Commission notes that, under the 

Plan, PHLX and FINRA have allocated 

regulatory responsibility for those PHLX 

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 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 Plan are specifically 

listed in the Certification, as may be 

amended by the Parties from time to 

time. 

According to the Plan, PHLX will 

review the Certification, at least 

annually, or more frequently if required 

by changes in either the rules of PHLX 

or FINRA, and, if necessary, submit to 

FINRA an updated list of Common 

Rules to add PHLX rules not included 

on the then-current list of Common 

Rules that are substantially similar to 

FINRA rules; delete PHLX rules 

included in the then-current list of 

Common Rules that are no longer 

substantially similar to FINRA rules; 

and confirm that the remaining rules on 

the list of Common Rules continue to be 

PHLX rules that are substantially similar 

to FINRA rules.15 FINRA will then 

confirm in writing whether the rules 

listed in any updated list are Common 

Rules as defined in the Plan. 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 a Plan that, among other 

things, allocates regulatory 

responsibility to FINRA for the 

oversight and enforcement of all PHLX 

rules that are substantially similar to the 

rules of FINRA for common members of 

PHLX and FINRA. Therefore, 

modifications to the Certification need 

not be filed with the Commission as an 

amendment to the Plan, provided that 

the Parties are only adding to, deleting 

from, or confirming changes to PHLX 

rules in the Certification in conformance 

with the definition of Common Rules 

provided in the Plan. However, should 

the Parties decide to add a PHLX rule 

to the Certification that is not 

substantially similar to a FINRA rule; 

delete a PHLX rule from the 

Certification that is substantially similar 

to a FINRA rule; or leave on the 

Certification a PHLX rule that is no 

longer substantially similar to a FINRA 

rule, then such a change would 

constitute an amendment to the Plan, 

which must be filed with the 

Commission pursuant to Rule 17d–2 

under the Act.16

IV. Conclusion 

This Order gives effect to the Plan 

filed with the Commission in File No. 

4–818. The Parties shall notify all 

members affected by the Plan of their 

rights and obligations under the Plan. 

It is therefore ordered, pursuant to 

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

in File No. 4–818, between FINRA and 

PHLX, filed pursuant to Rule 17d–2 

under the Act, is approved and declared 

effective. 

It is further ordered that PHLX is 

relieved of those responsibilities 

allocated to FINRA under the Plan in 

File No. 4–818. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.17

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2024–00081 Filed 1–5–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–99265; File No. SR–MEMX– 

2023–40] 

Self-Regulatory Organizations; MEMX 

LLC; Notice of Withdrawal of Proposed 

Rule Change To Establish Fees for 

Industry Members Related to Certain 

Historical Costs of the National Market 

System Plan Governing the 

Consolidated Audit Trail 

January 2, 2024. 

On December 26, 2023, MEMX LLC 

(the ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(the ‘‘Commission’’), pursuant to 

Section 19(b)(1) of the Securities 

Exchange Act of 1934 (‘‘Act’’) 1 and Rule 

19b–4 thereunder,2 a proposed rule 

change to establish fees for industry 

members related to certain historical 

costs of the National Market System 

plan governing the Consolidated Audit 


ddrumheller on DSK120RN23PROD with NOTICES1