Federal Register / Vol. 74, No. 9 / Wednesday, January 14, 2009 / Notices 2143 

1See Securities Exchange Act Release No. 59101 

(December 15, 2008), 73 FR 78402. 

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). 

ADDRESSES: Inquiries may be mailed, 

delivered, or faxed to Caroyl Miller, 

Deputy Special Textile Negotiator, 

Office of the United States Trade 

Representative, 600 17th Street, NW., 

Washington, DC 20508, fax number, 

(202) 395–5639. 

FOR FURTHER INFORMATION CONTACT: 

Caroyl Miller, Office of the United 

States Trade Representative, 202–395– 

3026. 

SUPPLEMENTARY INFORMATION: Section 

205(a) of the Act (Pub. L. 109–53; 119 

Stat. 462, 483; 19 U.S.C. 4034) provides 

that certain entries of textile or apparel 

goods of designated eligible countries 

that are parties to the Dominican 

Republic-Central America-United States 

Free Trade Agreement (CAFTA–DR) 

made on or after January 1, 2004 may be 

liquidated or reliquidated at the 

applicable rate of duty for those goods 

established in the Schedule of the 

United States to Annex 3.3 of the 

CAFTA–DR. Section 205(b) of the Act 

requires the USTR to determine, in 

accordance with Article 3.20 of the 

CAFTA–DR, which CAFTA–DR 

countries are eligible countries for 

purposes of Section 205(a). Article 3.20 

provides that importers may claim 

retroactive duty treatment for imports of 

certain textile or apparel goods entered 

on or after January 1, 2004 and before 

the entry into force of CAFTA–DR from 

those CAFTA–DR countries that will 

provide reciprocal retroactive duty 

treatment or a benefit for textile or 

apparel goods that is equivalent to 

retroactive duty treatment. 

Pursuant to Section 205(b) of the Act, 

I have determined that Costa Rica will 

provide an equivalent benefit for textile 

or apparel goods of the United States 

within the meaning of Article 3.20 of 

the CAFTA–DR. I therefore determine 

that Costa Rica is an eligible country for 

purposes of Section 205 of the Act. 

Susan C. Schwab, 

U.S. Trade Representative. 

[FR Doc. E9–493 Filed 1–13–09; 8:45 am] 

BILLING CODE 3190–W9–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–59218; File No. 4–575] 

Program for Allocation of Regulatory 

Responsibilities Pursuant to Rule 17d– 

2; Order Approving and Declaring 

Effective a Plan for the Allocation of 

Regulatory Responsibilities Between 

the Financial Industry Regulatory 

Authority, Inc. and the Boston Stock 

Exchange, Incorporated 

January 8, 2009. 

On December 8, 2008, the Financial 

Industry Regulatory Authority, Inc. 

(‘‘FINRA’’) and the Boston Stock 

Exchange, Incorporated (‘‘BX’’) (together 

with FINRA, the ‘‘Parties’’) filed with 

the Securities and Exchange 

Commission (‘‘Commission’’) a plan for 

the allocation of regulatory 

responsibilities, dated December 5, 2008 

(‘‘17d–2 Plan’’ or the ‘‘Plan’’). The Plan 

was published for comment on 

December 22, 2008.1 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. 


sroberts on PROD1PC70 with NOTICES
2144 Federal Register / Vol. 74, No. 9 / Wednesday, January 14, 2009 / Notices 

9See Securities Exchange Act Release Nos. 58927 

(November 10, 2008), 73 FR 69685 (November 19, 

2008) (SR–BSE–2008–48) (notice of proposed rule 

change); and 59154 (December 23, 2008), 73 FR 

80468 (December 31, 2008) (SR–BSE–2008–48) 

(order approving proposed rule change). 

10See Securities Exchange Act Release No. 58927 

(November 10, 2008), 73 FR at 69686 (November 19, 

2008) (SR–BSE–2008–48) (notice of proposed rule 

change). 

11See Securities Exchange Act Release No. 54136 

(July 12, 2006), 71 FR 40759 (July 18, 2006) (File 

No. 4–517) (order approving and declaring effective 

the plan between the NASDAQ Exchange and 

NASD (n/k/a FINRA)). 

12The proposed 17d–2 Plan refers to these 

common members as ‘‘Dual Members.’’ See 

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

13See 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 BX rules or FINRA rules, the 

parties shall review and update, if necessary, the 

list of Common Rules. Further, paragraph 3 of the 

Plan provides that BX shall furnish FINRA with a 

list of Dual Members, and shall update the list no 

less frequently than once each calendar quarter. 

14See Securities Exchange Act Release No. 58806 

(October 17, 2008), 73 FR 63216 (October 23, 2008) 

(File No. 4–566) (notice of filing and order 

approving and declaring effective the plan). The 

Certification identifies two Common Rules that may 

also be addressed in the context of regulating 

insider trading activities pursuant to the separate 

multiparty agreement. 

15See paragraph 6 of the proposed 17d–2 Plan. 

16See paragraph 2 of the proposed 17d–2 Plan. 

17 15 U.S.C. 78q(d). 

18 17 CFR 240.17d–2(c). 

19The proposed new BX rules are based to a 

substantial extent on the rules of the NASDAQ 

Exchange which, in turn, are based to a substantial 

extent on the comparable rules of FINRA. The 

NASDAQ Exchange currently is party to a 17d–2 

plan with FINRA. See Securities Exchange Act 

Release No. 54136 (July 12, 2006), 71 FR 40759 

(July 18, 2006) (File No. 4–517) (order approving 

and declaring effective the plan between the 

NASDAQ Exchange and NASD (n/k/a FINRA)). 

20See paragraph 2 of the proposed 17d–2 Plan. 

II. Proposed Plan 

On August 29, 2008, BX was acquired 

by The NASDAQ OMX Group, Inc. 

(‘‘NASDAQ OMX’’). At the time of this 

acquisition, BX was not operating a 

venue for trading cash equities. BX has 

since adopted a new rulebook with rules 

governing membership, the regulatory 

obligations of members, listing, and 

equity trading.9 The new BX rules, in 

particular the member conduct rules 

that would be the Common Rules under 

the proposed Plan, are based to a 

substantial extent on the rules of the 

NASDAQ Stock Market LLC (‘‘NASDAQ 

Exchange’’),10 which, in turn, are based 

to a substantial extent on the 

comparable rules of FINRA. 

The NASDAQ Exchange currently is 

party to a 17d–2 plan with FINRA.11

The proposed Plan would allocate 

regulatory responsibility between BX 

and FINRA in a manner similar to the 

allocation of regulatory responsibility 

that currently exists between the 

NASDAQ Exchange and FINRA. 

Accordingly, the proposed 17d–2 Plan 

is intended to reduce regulatory 

duplication for firms that are common 

members of both FINRA and BX.12

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 

‘‘Rules Certification for 17d–2 

Agreement with FINFA,’’ referred to 

herein as the ‘‘Certification’’) that lists 

every BX 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 

BX 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 

compliance by Dual Members with the 

rules of BX that are substantially similar 

to the applicable rules of FINRA, as well 

as any provisions of the federal 

securities laws and the rules and 

regulations thereunder delineated in the 

Certification (‘‘Common Rules’’).13

Common Rules would not include the 

application of any BX rule or FINRA 

rule, or any rule or regulation under the 

Act, to the extent that it pertains to 

violations of insider trading activities, 

because such matters are covered by a 

separate multiparty agreement under 

Rule 17d–2.14 In the event that a Dual 

Member is the subject of an 

investigation relating to a transaction on 

BX, the plan acknowledges that BX may, 

in its discretion, exercise concurrent 

jurisdiction and responsibility for such 

matter.15

Under the Plan, BX would retain full 

responsibility for surveillance, 

examination, investigation, and 

enforcement with respect to trading 

activities or practices involving BX’s 

own marketplace; registration pursuant 

to its applicable rules of associated 

persons (i.e., registration rules that are 

not Common Rules); its duties and 

obligations as a DEA pursuant to Rule 

17d–1 under the Act; and any BX rules 

that are not Common Rules.16

III. Discussion 

The Commission finds that the 

proposed Plan is consistent with the 

factors set forth in Section 17(d) of the 

Act 17 and Rule 17d–2(c) thereunder 18

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 Dual 

Members that would otherwise be 

performed by both BX and FINRA. 

Accordingly, the proposed Plan 

promotes efficiency by reducing costs to 

Dual Members. Furthermore, because 

BX and FINRA will coordinate their 

regulatory functions in accordance with 

the Plan, the Plan should promote 

investor protection. The Commission 

notes that the proposed Plan would 

allocate regulatory responsibility 

between BX and FINRA in a manner 

similar to the allocation of regulatory 

responsibility that currently exists 

between the NASDAQ Exchange and 

FINRA.19

The Commission notes that, under the 

Plan, BX and FINRA have allocated 

regulatory responsibility for those BX 

rules, set forth on 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 

Dual 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, BX will review 

the Certification, at least annually, or 

more frequently if required by changes 

in either the rules of BX or FINRA, and, 

if necessary, submit to FINRA an 

updated list of Common Rules to add 

BX rules not included on the thencurrent list of Common Rules that are 

substantially similar to FINRA rules; 

delete BX rules included in the thencurrent 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 BX rules that are 

substantially similar to FINRA rules.20


sroberts on PROD1PC70 with NOTICES
Federal Register / Vol. 74, No. 9 / Wednesday, January 14, 2009 / Notices 2145 

21See paragraph 3 of the proposed 17d–2 Plan. 

22The 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, Dual 

Members, also would constitute an amendment to 

the Plan. 

23See paragraph 13 of the proposed 17d–2 Plan. 

24The Commission notes that paragraph 13 of the 

Plan reflects the fact that FINRA’s responsibilities 

under the Plan will continue in effect until the 

Commission approves any termination of the Plan. 

25 17 CFR 200.30–3(a)(34). 

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

2 17 CFR 240.19b–4. 

3 17 CFR 240.19b–4(f)(6). 

4See Securities Exchange Act Release No. 59126 

(December 19, 2008), 73 FR 79948 (December 30, 

2008) (notice of filing and immediate effectiveness 

of SR–FINRA–2008–060). 

FINRA will then confirm in writing 

whether the rules listed in any updated 

list are Common Rules as defined in the 

Plan. Under the Plan, BX will also 

provide FINRA with a current list of 

Dual Members and shall update the list 

no less frequently than once each 

quarter.21 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 BX 

rules that are substantially similar to the 

rules of FINRA for Dual Members of BX 

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 BX rules in the Certification 

in conformance with the definition of 

Common Rules provided in the Plan. 

However, should the Parties decide to 

add a BX rule to the Certification that 

is not substantially similar to a FINRA 

rule; delete a BX rule from the 

Certification that is substantially similar 

to a FINRA rule; or leave on the 

Certification a BX 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 and noticed 

for public comment.22

The Plan also permits BX and FINRA 

to terminate the Plan, subject to 

notice.23 The Commission notes, 

however, that while the Plan permits 

the Parties to terminate the Plan, the 

Parties cannot by themselves reallocate 

the regulatory responsibilities set forth 

in the Plan, since Rule 17d–2 under the 

Act requires that any allocation or reallocation of regulatory responsibilities 

be filed with the Commission.24

IV. Conclusion 

This Order gives effect to the Plan 

filed with the Commission in File No. 

4–575. 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. 4–575, between FINRA and 

BX, filed pursuant to Rule 17d–2 under 

the Act, is approved and declared 

effective. 

It is further ordered that BX is 

relieved of those responsibilities 

allocated to FINRA under the Plan in 

File No. 4–575. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.25

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–613 Filed 1–13–09; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–59222; File No. SR–FINRA– 

2009–002] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Make Conforming 

Changes to FINRA Rules 6380B and 

6730 To Reflect Amendments 

Proposed Pursuant to SR–FINRA– 

2008–060 

January 8, 2009. 

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 January 8, 

2009, Financial Industry Regulatory 

Authority, Inc. (‘‘FINRA’’) (f/k/a 

National Association of Securities 

Dealers, Inc. (‘‘NASD’’)) (‘‘FINRA’’ or 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I and II 

below, which Items have been prepared 

by FINRA. FINRA has designated the 

proposed rule change as constituting a 

‘‘non-controversial’’ rule change under 

paragraph (f)(6) of Rule 19b–4 under the 

Act,3 which renders the proposal 

effective upon receipt of this filing by 

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 

FINRA is proposing to make 

conforming changes to Rules 6380B and 

6730 to reflect amendments that were 

proposed pursuant to proposed rule 

change SR–FINRA–2008–060, but were 

superseded by an intervening rule 

change. 

The text of the proposed rule change 

is available on FINRA’s Web site at 

http://www.finra.org, at the principal 

office of FINRA, 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, 

FINRA 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 those 

statements may be examined at the 

places specified in Item IV below. 

FINRA 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 December 11, 2008, FINRA filed 

proposed rule change SR–FINRA–2008– 

060 to amend FINRA rules to clarify the 

trade reporting requirements relating to 

transfers of securities pursuant to an 

asset purchase agreement (‘‘APA’’). In 

that filing, FINRA proposed to amend 

Rule 6380C(e) relating to trade reporting 

to the FINRA/NYSE Trade Reporting 

Facility (the ‘‘FINRA/NYSE TRF’’) and 

Rule 6730(e) relating to trade reporting 

to the Trade Reporting and Compliance 

Engine (‘‘TRACE’’). SR–FINRA–2008– 

060 was filed for immediate 

effectiveness with an operative date of 

January 12, 2009.4

On December 18, 2008, FINRA filed 

proposed rule change SR–FINRA–2008– 

065 to extend the pilot program in Rule 

6730(e)(4). SR–FINRA–2008–065 was 

filed for immediate effectiveness with 

an operative date of January 8, 2009. 

The underlying text of SR–FINRA– 

2008–065 did not reflect the 

amendments to Rule 6730(e) that were 

proposed pursuant to SR–FINRA–2008– 


sroberts on PROD1PC70 with NOTICES