5858 Federal Register / Vol. 80, No. 22 / Tuesday, February 3, 2015 / Notices 

16 15 U.S.C. 78s(b)(3)(A). 

17 17 CFR 240.19b–4(f). 

18 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

non-discriminatory in that they apply 

uniformly to all Members. 

The Exchange believes that the nonsubstantive clarifying changes to its Fee 

Schedule are reasonable because they 

are designed to provide greater 

transparency to Members with regard to 

how the Exchange assesses fees and 

provides rebates. The Exchange notes 

that none of the proposed nonsubstantive clarifying changes are 

designed to amend any fee or rebate, nor 

alter the manner in which it assesses 

fees or calculates rebates. In particular, 

the proposed amendments to Step-Up 

Tiers 1 and 2 are reasonable and 

equitable because they conform to 

existing practice and do not modify the 

fees that the Exchange charges its 

Members that satisfy the tier’s criteria. 

The Exchange has historically in 

practice and will continue to require a 

Member’s added ADV be more than the 

Member’s added ADV as a percentage of 

TCV during the month indicated in the 

tier when determining the Member 

satisfied the tier’s criteria. The Exchange 

believes that Members would benefit 

from clear guidance in its Fee Schedule 

that describes the manner in which the 

Exchange would assess fees and 

calculate rebates. The proposed rule 

change is also designed, in part, to align 

terminology and definitions with that 

included in the current BATS fee 

schedules in order to use consistent fee 

schedules across the BGM Affiliated 

Exchanges. These changes to the Fee 

Schedule are intended to provide 

greater harmonization between 

Exchange, BYX, and BZX fee schedules 

and make the Fee Schedule clearer and 

less confusing for investors, thereby 

eliminating potential investor 

confusion. As such, the proposed rule 

change would remove impediments to 

and perfect the mechanism of a free and 

open market and a national market 

system, and, in general, protect 

investors and the public interest. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will result in 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act, as amended. 

The Exchange reiterates that the 

proposed rule change is being proposed 

in the context of the technology 

integration of the BGM Affiliated 

Exchanges and that the changes are 

entirely non-substantive. The proposed 

changes are not designed to have any 

impact on competition. Rather, they are 

intended to provide greater 

harmonization between Exchange, BYX, 

and BZX fee schedules and make the 

Fee Schedule clearer and less confusing 

for investors. As stated above, the 

Exchange notes that it operates in a 

highly competitive market in which 

market participants can readily direct 

order flow to competing venues if the 

deem fee structures to be unreasonable 

or excessive. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

The Exchange has not solicited, and 

does not intend to solicit, comments on 

this proposed rule change. The 

Exchange has not received any 

unsolicited written comments from 

Members or other interested parties. 

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 16 and paragraph (f) of Rule 

19b–4 thereunder.17 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 (http://www.sec.gov/

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

EDGA–2015–04 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–EDGA–2015–04. 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 Web site (http://www.sec.gov/

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

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

available for 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 

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

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change; 

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 SR–EDGA– 

2015–04, and should be submitted on or 

before February 24, 2015. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.18

Jill M. Peterson, 

Assistant Secretary. 

[FR Doc. 2015–02016 Filed 2–2–15; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–74164; File No. SR–BYX– 

2015–04] 

Self-Regulatory Organizations; BATS 

Y-Exchange, Inc.; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Amend Chapter IX of 

Its Rulebook To Incorporate Certain 

Rules of NASDAQ and FINRA Relating 

to Arbitration and Mediation 

January 28, 2015. 

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

Securities Exchange Act of 1934 (the 

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

notice is hereby given that on January 

14, 2015, BATS Y-Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘BYX’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I and II 

below, which Items have been 

substantially prepared by the Exchange. 


rljohnson on DSK3VPTVN1PROD with NOTICES
Federal Register / Vol. 80, No. 22 / Tuesday, February 3, 2015 / Notices 5859 

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

4 17 CFR 240.19b–4(f)(6)(iii). 

5See Securities Exchange Act Release No. 56148 

(Jul. 26, 2007), 72 FR 42146 (Aug. 1, 2007) (File No. 

4–544) (Notice of Filing and Order Approving and 

Declaring Effective a Plan for the Allocation of 

Regulatory Responsibilities). 

6 17 CFR 240.17d–2. 

7See FINRA Rule 12000 Series (Code of 

Arbitration Procedure for Customer Disputes) and 

FINRA Rule 13000 Series (Code of Arbitration 

Procedure for Industry Disputes). 

8They would be defined as ‘‘every claim, dispute 

or controversy arising out of or in connection with 

matters eligible for submission under Rule 9.2.’’ 

9See also FINRA Rule 12000 Series, FINRA Rule 

13000 Series. 

10See FINRA Rule 14000 Series (Code of 

Mediation Procedure). 

The Exchange has designated this 

proposal as a ‘‘non-controversial’’ 

proposed rule change pursuant to 

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

19b–4(f)(6)(iii) thereunder,4 which 

renders it effective upon filing with the 

Commission. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange filed a proposal to 

amend Chapter IX of its rulebook to 

incorporate certain rules of the 

NASDAQ Stock Market LLC 

(‘‘NASDAQ’’) and the Financial 

Industry Regulatory Authority, Inc. 

(‘‘FINRA’’) relating to arbitration and 

mediation. The text of the proposed rule 

change is available at the Exchange’s 

Web site at http:// 

www.batstrading.com/, at the principal 

office of the Exchange, and at the 

Commission’s Public Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange 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 

Exchange has prepared summaries, set 

forth in Sections A, B, and C below, of 

the most significant parts of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

On July 30, 2007, the National 

Association of Securities Dealers, Inc. 

(‘‘NASD’’), the Exchange, and NYSE 

Regulation, Inc. consolidated their 

member firm regulation operations into 

a combined organization, FINRA, and 

entered into a plan to allocate to FINRA 

certain regulatory responsibilities for 

common rules and common members 

(‘‘17d–2 Agreement’’).5 The 17d–2 

Agreement was entered into in 

accordance with the requirements of 

Rule 17d–2 promulgated pursuant to the 

Act,6 which permits self-regulatory 

organizations (‘‘SROs’’) to allocate 

certain regulatory responsibilities with 

respect to common members and 

common rules. On September 5, 2012, 

the Exchange and FINRA entered into a 

Regulatory Services Agreement 

(‘‘RSA’’), whereby FINRA was retained 

to perform certain regulatory services on 

behalf of the Exchange pertaining to 

dispute resolution. On February 1, 2014, 

the Exchange and FINRA terminated 

their 2012 RSA and entered into a new 

RSA that covers the services contained 

in the 2012 RSA plus additional 

regulatory services. Today, FINRA 

performs all arbitration, mediation, and 

other dispute resolution services, as 

may be needed from time to time, on 

behalf of the Exchange. 

To facilitate FINRA’s performance of 

these functions under the 2014 RSA and 

to further harmonize the rules of FINRA 

and the Exchange generally, the 

Exchange is proposing to conform the 

text of its rules governing arbitration 

and mediation (Chapter IX) to the 

FINRA Code of Arbitration Procedure 

for Customer Disputes (12000 Series), 

FINRA Code of Arbitration Procedure 

for Industry Disputes (13000 Series), 

and the FINRA Code of Mediation 

(14000 Series). 

The Exchange proposes to amend 

Chapter IX (Arbitration) of its rulebook 

to incorporate certain rules of NASDAQ 

and FINRA relating to arbitration and 

mediation, and to make certain nonsubstantive changes. The Exchange 

proposes to make the following changes 

to its current rules in Chapter IX of its 

rulebook. 

Proposed Amendments to Current Rules 

The Exchange proposes to amend 

current Rule 9.1 (Code of Arbitration) to 

make the rule substantially similar to 

NASDAQ Rule 10100. The Exchange 

proposes to replace the reference to 

NASD Code of Arbitration with FINRA 

Code of Arbitration,7 clarify the 

meaning of ‘‘Exchange arbitrations,’’ 8

and add a sentence stating that Members 

must comply with FINRA arbitration 

rules as if they were rules of the 

Exchange. 

The Exchange proposes to replace 

current Rule 9.2 (Jurisdiction) with 

amended Rule 9.2 (Matters Eligible for 

Submission), which is substantially 

similar to NASDAQ Rule 10101.9

Amended Rule 9.2 would state that the 

Exchange adopts the FINRA Code of 

Arbitration for any dispute, claim, or 

controversy arising out of or in 

connection with the business of any 

Member, or arising out of the 

employment or termination of 

employment of associated person(s) 

with any Member: Between or among 

Members; between or among Members 

and associated persons; and between or 

among Members or associated persons 

and public customers, or others, except 

for any type of dispute, claim, or 

controversy that is not permitted to be 

arbitrated under the FINRA Code of 

Procedure. 

The Exchange proposes to amend 

current Rule 9.3 (Predispute Arbitration 

Agreements) to incorporate FINRA Rule 

2268 by reference, instead of restating 

the predispute arbitration agreement 

rules in full. 

The Exchange proposes to amend 

current Rule 9.5 (Payment of Awards), 

to re-name its tile as ‘‘Failure to Act 

under Provisions of FINRA Code of 

Arbitration,’’ to expand the rule to 

include additional conduct deemed 

inconsistent with just and equitable 

principles of trade and a violation of 

Rule 3.1 (Business Conduct of 

Members), using the language of 

NASDAQ IM–10100, and FINRA IM– 

12000 and IM–13000. These prohibited 

acts include: Failure to submit a dispute 

for arbitration under the FINRA Code of 

Arbitration as required by the FINRA 

Code of Arbitration; failure to comply 

with any injunctive order issued 

pursuant to the FINRA Code of 

Arbitration; failure to appear or to 

produce any document in his or her or 

its possession or control as directed 

pursuant to provisions of the FINRA 

Code of Arbitration; failure to honor an 

award, or comply with a written and 

executed settlement agreement, 

obtained in connection with an 

arbitration submitted for disposition 

under the FINRA Code of Arbitration 

where timely motion has not been made 

to vacate or modify such award 

pursuant to applicable law; or, failure to 

comply with a written and executed 

agreement obtained in connection with 

a mediation submitted for disposition 

pursuant to the FINRA Code of 

Mediation.10 The Exchange proposed to 

add Rule 9.5(b) to provide that action by 

Members requiring associated persons 

to waive the arbitration of disputes 

contrary to the provisions of the FINRA 


rljohnson on DSK3VPTVN1PROD with NOTICES
5860 Federal Register / Vol. 80, No. 22 / Tuesday, February 3, 2015 / Notices 

11 15 U.S.C. 78f(b). 

12 15 U.S.C. 78f(b)(5). 

13 15 U.S.C. 78s(b)(3)(A). 

14 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

4(f)(6) requires a SRO to give the Commission 

written notice of its intent to file the proposed rule 

change at least five business days prior to the date 

of filing of the proposed rule change, or such 

shorter time as designated by the Commission. The 

Exchange has satisfied this requirement. See 17 CFR 

240.19b–4(f)(6)(iii). 

Code of Arbitration is a violation of 

Exchange Rule 3.1. 

The Exchange proposes to amend 

current Rule 9.6 to extend the 

application of the rule (currently 

applicable to arbitration) to mediation. 

The Exchange proposes to add 

proposed Rule 9.7 (Mediation) to state 

that FINRA’s mediation services, as 

governed by the 14000 Series of 

FINRA’s Manual (the Code of Mediation 

Procedure), are also available to 

Members who voluntarily agree to 

submit matters for mediation. The 

Exchange also proposes to incorporate 

by reference the FINRA Code of 

Mediation into its rules so that Members 

have the same obligations with which to 

comply as if such rules and 

interpretations were part of the 

Exchange’s rules. 

The Exchange proposes to add Rule 

9.8 (Regulatory Services Agreement) to 

state, among other things, that FINRA 

staff will perform arbitrations and 

mediations on behalf of the Exchange 

pursuant to an RSA with FINRA in 

accordance with the FINRA Codes of 

Arbitration and Mediation. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

Section 6(b) of the Act,11 in general, and 

furthers the objectives of Section 6(b)(5) 

of the Act,12 in particular, in that it is 

designed to prevent fraudulent and 

manipulative acts and practices, to 

promote just and equitable principles of 

trade, to foster cooperation and 

coordination with persons engaged in 

facilitating transactions in securities, 

and to remove impediments to and 

perfect the mechanism of a free and 

open market and a national market 

system and, in general, to protect 

investors and the public interest. 

In particular, the Exchange believes 

that the proposed rule change will 

provide greater harmonization between 

Exchange and FINRA rules of similar 

purpose, resulting in less burdensome 

and more efficient regulatory 

compliance for members of both the 

Exchange and FINRA (‘‘dual members’’). 

As previously noted, in many instances 

the proposed rule text is substantially 

similar to FINRA’s and NASDAQ’s 

respective rule texts, which have 

already been approved by the 

Commission. As such, the Exchange 

believes that the proposed rule change 

will foster cooperation and coordination 

with persons engaged in facilitating 

transactions in securities and will 

remove impediments to and perfect the 

mechanism of a free and open market 

and a national market system. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. The 

proposed rule change is not designed to 

address any competitive issues but 

rather is designed to provide greater 

harmonization between Exchange and 

FINRA rules of similar purpose for 

arbitration and mediation matters, 

resulting in less burdensome and more 

efficient regulatory compliance for dual 

members and facilitating FINRA’s 

performance of its regulatory functions 

under the 2014 RSA. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants or Others 

The Exchange has neither solicited 

nor received written comments on the 

proposal. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The Commission believes that 

because the proposed rule change does 

not: (i) Significantly affect the 

protection of investors or the public 

interest; (ii) impose any significant 

burden on competition; and (iii) become 

operative prior to 30 days from the date 

on which it was filed, or such shorter 

time as the Commission may designate, 

if consistent with the protection of 

investors and the public interest, it has 

become effective pursuant to Section 

19(b)(3)(A) of the Act 13 and Rule 19b– 

4(f)(6) thereunder.14

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: (1) Necessary or appropriate in 

the public interest; (2) for the protection 

of investors; or (3) otherwise in 

furtherance of the purposes of the Act. 

If the Commission takes such action, the 

Commission shall institute proceedings 

to determine whether the proposed rule 

should be approved or disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposal is 

consistent with the Act. Comments may 

be submitted by any of the following 

methods: 

Electronic Comments 

• Use the Commission’s Internet 

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

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File No. SR– 

BYX–2015–04 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 No. 

SR–BYX–2015–04. 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 Web site (http://www.sec.gov/

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

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

available for 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 

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

filing will also be available for 

inspection and copying at the principal 

office of the Exchange. 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 No. SR–BYX–2015– 

04 and should be submitted on or before 

February 24, 2015. 


rljohnson on DSK3VPTVN1PROD with NOTICES
Federal Register / Vol. 80, No. 22 / Tuesday, February 3, 2015 / Notices 5861 

15 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)(6)(iii). 

5See Securities Exchange Act Release No. 56148 

(Jul. 26, 2007), 72 FR 42146 (Aug. 1, 2007) (File No. 

4–544) (Notice of Filing and Order Approving and 

Declaring Effective a Plan for the Allocation of 

Regulatory Responsibilities). 

6 17 CFR 240.17d–2. 

7See FINRA Rule 12000 Series (Code of 

Arbitration Procedure for Customer Disputes) and 

FINRA Rule 13000 Series (Code of Arbitration 

Procedure for Industry Disputes). 

8They would be defined as ‘‘every claim, dispute 

or controversy arising out of or in connection with 

matters eligible for submission under Rule 9.2.’’ 

9See also FINRA Rule 12000 Series, FINRA Rule 

13000 Series. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.15

Jill M. Peterson, 

Assistant Secretary. 

[FR Doc. 2015–02014 Filed 2–2–15; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–74160; File No. SR–BATS– 

2015–05] 

Self-Regulatory Organizations; BATS 

Exchange, Inc.; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Amend Chapter IX of 

Its Rulebook To Incorporate Certain 

Rules of NASDAQ and FINRA Relating 

to Arbitration and Mediation 

January 28, 2015. 

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

Securities Exchange Act of 1934 (the 

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

notice is hereby given that on January 

14, 2015, BATS Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘BATS’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I and II 

below, which Items have been 

substantially prepared by the Exchange. 

The Exchange has designated this 

proposal as a ‘‘non-controversial’’ 

proposed rule change pursuant to 

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

19b–4(f)(6)(iii) thereunder,4 which 

renders it effective upon filing with the 

Commission. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange filed a proposal to 

amend Chapter IX of its rulebook to 

incorporate certain rules of the 

NASDAQ Stock Market LLC 

(‘‘NASDAQ’’) and the Financial 

Industry Regulatory Authority, Inc. 

(‘‘FINRA’’) relating to arbitration and 

mediation. The text of the proposed rule 

change is available at the Exchange’s 

Web site at http:// 

www.batstrading.com/, at the principal 

office of the Exchange, and at the 

Commission’s Public Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange 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 

Exchange has prepared summaries, set 

forth in Sections A, B, and C below, of 

the most significant parts of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

On July 30, 2007, the National 

Association of Securities Dealers, Inc. 

(‘‘NASD’’), the Exchange, and NYSE 

Regulation, Inc. consolidated their 

member firm regulation operations into 

a combined organization, FINRA, and 

entered into a plan to allocate to FINRA 

certain regulatory responsibilities for 

common rules and common members 

(‘‘17d–2 Agreement’’).5 The 17d–2 

Agreement was entered into in 

accordance with the requirements of 

Rule 17d–2 promulgated pursuant to the 

Act,6 which permits self-regulatory 

organizations (‘‘SROs’’) to allocate 

certain regulatory responsibilities with 

respect to common members and 

common rules. On September 5, 2012, 

the Exchange and FINRA entered into a 

Regulatory Services Agreement 

(‘‘RSA’’), whereby FINRA was retained 

to perform certain regulatory services on 

behalf of the Exchange pertaining to 

dispute resolution. On February 1, 2014, 

the Exchange and FINRA terminated 

their 2012 RSA and entered into a new 

RSA that covers the services contained 

in the 2012 RSA plus additional 

regulatory services. Today, FINRA 

performs all arbitration, mediation, and 

other dispute resolution services, as 

may be needed from time to time, on 

behalf of the Exchange. 

To facilitate FINRA’s performance of 

these functions under the 2014 RSA and 

to further harmonize the rules of FINRA 

and the Exchange generally, the 

Exchange is proposing to conform the 

text of its rules governing arbitration 

and mediation (Chapter IX) to the 

FINRA Code of Arbitration Procedure 

for Customer Disputes (12000 Series), 

FINRA Code of Arbitration Procedure 

for Industry Disputes (13000 Series), 

and the FINRA Code of Mediation 

(14000 Series). 

The Exchange proposes to amend 

Chapter IX (Arbitration) of its rulebook 

to incorporate certain rules of NASDAQ 

and FINRA relating to arbitration and 

mediation, and to make certain nonsubstantive changes. The Exchange 

proposes to make the following changes 

to its current rules in Chapter IX of its 

rulebook. 

Proposed Amendments to Current Rules 

The Exchange proposes to amend 

current Rule 9.1 (Code of Arbitration) to 

make the rule substantially similar to 

NASDAQ Rule 10100. The Exchange 

proposes to replace the reference to 

NASD Code of Arbitration with FINRA 

Code of Arbitration,7 clarify the 

meaning of ‘‘Exchange arbitrations,’’ 8

and add a sentence stating that Members 

must comply with FINRA arbitration 

rules as if they were rules of the 

Exchange. 

The Exchange proposes to replace 

current Rule 9.2 (Jurisdiction) with 

amended Rule 9.2 (Matters Eligible for 

Submission), which is substantially 

similar to NASDAQ Rule 10101.9

Amended Rule 9.2 would state that the 

Exchange adopts the FINRA Code of 

Arbitration for any dispute, claim, or 

controversy arising out of or in 

connection with the business of any 

Member, or arising out of the 

employment or termination of 

employment of associated person(s) 

with any Member: Between or among 

Members; between or among Members 

and associated persons; and between or 

among Members or associated persons 

and public customers, or others, except 

for any type of dispute, claim, or 

controversy that is not permitted to be 

arbitrated under the FINRA Code of 

Procedure. 

The Exchange proposes to amend 

current Rule 9.3 (Predispute Arbitration 

Agreements) to incorporate FINRA Rule 

2268 by reference, instead of restating 

the predispute arbitration agreement 

rules in full. 

The Exchange proposes to amend 

current Rule 9.5 (Payment of Awards), 

to re-name its title as ‘‘Failure to Act 


rljohnson on DSK3VPTVN1PROD with NOTICES