57998 Federal Register / Vol. 75, No. 184 / Thursday, September 23, 2010 / Notices 

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

2 17 CFR 240.17d–2. 

3 15 U.S.C. 78s(g)(1). 

4 15 U.S.C. 78q(d) and 15 U.S.C. 78s(g)(2), 

respectively. 

5 15 U.S.C. 78q(d)(1). 

6See 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). 7 17 CFR 240.17d–1 and 17 CFR 240.17d–2, 

respectively. 8See Securities Exchange Act Release No. 12352 

(April 20, 1976), 41 FR 18808 (May 7, 1976). 9See Securities Exchange Act Release No. 12935 

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

1976). 

10The proposed 17d–2 Plan refers to these 

common members as ‘‘Dual Members.’’ See 

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

11See 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 BYX 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 BYX shall furnish FINRA with 

a list of Dual Members, and shall update the list no 

less frequently than once each calendar quarter. 

12See Securities Exchange Act Release No. 58350 

(August 13, 2008), 73 FR 48247 (August 18, 2008) 

(File No. 4–566) (notice of filing of proposed plan). 

See also Securities Exchange Act Release No. 58536 

(September 12, 2008) (File No. 4–566) (order 

approving and declaring effective the plan). The 

(Catalog of Federal Domestic Assistance 

Numbers 59002 and 59008) 

James E. Rivera, 

Associate Administrator for Disaster 

Assistance. 

[FR Doc. 2010–23801 Filed 9–22–10; 8:45 am] 

BILLING CODE 8025–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–62935; File No. 4–613] 

Program for Allocation of Regulatory 

Responsibilities Pursuant to Rule 17d– 

2; Notice of Filing of Proposed Plan for 

the Allocation of Regulatory 

Responsibilities Between the Financial 

Industry Regulatory Authority, Inc. and 

BATS–Y Exchange, Inc. 

September 17, 2010. 

Pursuant to Section 17(d) of the 

Securities Exchange Act of 1934 

(‘‘Act’’),1 and Rule 17d–2 thereunder,2

notice is hereby given that on 

September 3, 2010, BATS–Y Exchange, 

Inc. (‘‘BYX’’) and the Financial Industry 

Regulatory Authority, Inc. (‘‘FINRA’’) 

(together with BYX, the ‘‘Parties’’) filed 

with the Securities and Exchange 

Commission (‘‘Commission’’ or ‘‘SEC’’) a 

plan for the allocation of regulatory 

responsibilities, dated September 3, 

2010 (‘‘17d–2 Plan’’ or the ‘‘Plan’’). The 

Commission is publishing this notice to 

solicit comments on the 17d–2 Plan 

from interested persons. 

I. Introduction 

Section 19(g)(1) of the Act,3 among 

other things, requires every selfregulatory organization (‘‘SRO’’) 

registered as either a national securities 

exchange or national securities 

association to examine for, and enforce 

compliance by, its members and persons 

associated with its members with the 

Act, the rules and regulations 

thereunder, and the SRO’s own rules, 

unless the SRO is relieved of this 

responsibility pursuant to Section 17(d) 

or Section 19(g)(2) of the Act.4 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 5 was 

intended, in part, to eliminate 

unnecessary multiple examinations and 

regulatory duplication.6 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.7

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.8 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.9

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 

BYX and FINRA.10 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 

‘‘BATS–Y Exchange Rules Certification 

for 17d–2 Agreement with FINRA,’’ 

referred to herein as the ‘‘Certification’’) 

that lists every BYX 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 

BYX 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 BYX that are substantially 

similar to the applicable rules of 

FINRA,11 as well as any provisions of 

the federal securities laws and the rules 

and regulations thereunder delineated 

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

Common Rules would not include the 

application of any BYX 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–2.12 In the event that a Dual 


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Federal Register / Vol. 75, No. 184 / Thursday, September 23, 2010 / Notices 57999 

Certification identifies several Common Rules that 

may also be addressed in the context of regulating 

insider trading activities pursuant to the proposed 

separate multiparty agreement. 

13See paragraph 6 of the proposed 17d–2 Plan. 

14See paragraph 2 of the proposed 17d–2 Plan. 

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

16The Commission notes that the Proposed 17d– 

2 Plan does not contain a paragraph number 18 and 

skips from 17 to 19. 

Member is the subject of an 

investigation relating to a transaction on 

BYX, the plan acknowledges that BYX 

may, in its discretion, exercise 

concurrent jurisdiction and 

responsibility for such matter.13

Under the Plan, BYX would retain full 

responsibility for surveillance and 

enforcement with respect to trading 

activities or practices involving BYX’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 BYX rules that are not Common 

Rules, except for BYX rules for any 

broker-dealer subsidiary of BYX’s parent 

company, BATS Global Markets, Inc.14

Apparent violations of any BYX rules by 

any broker-dealer subsidiary of BATS 

Global Markets will be processed by, 

and enforcement proceedings in respect 

thereto will be conducted by, FINRA.15

The text of the proposed 17d–2 Plan 

is as follows:16

AGREEMENT BETWEEN FINANCIAL 

INDUSTRY REGULATORY AUTHORITY, 

INC. AND BATS Y–EXCHANGE, INC. 

PURSUANT TO RULE 17d–2 UNDER THE 

SECURITIES EXCHANGE ACT OF 1934 

This Agreement, by and between the 

Financial Industry Regulatory Authority, Inc. 

(‘‘FINRA’’) and BATS Y–Exchange, Inc. 

(‘‘BYX’’), is made this 3rd day of September, 

2010 (the ‘‘Agreement’’), pursuant to Section 

17(d) of the Securities Exchange Act of 1934 

(the ‘‘Exchange Act’’) and Rule 17d–2 

thereunder, which permits agreements 

between self-regulatory organizations to 

allocate regulatory responsibility to eliminate 

regulatory duplication. FINRA and BYX may 

be referred to individually as a ‘‘party’’ and 

together as the ‘‘parties.’’ 

Whereas, FINRA and BYX desire to reduce 

duplication in the examination of their Dual 

Members (as defined herein) and in the filing 

and processing of certain registration and 

membership records; and 

Whereas, FINRA and BYX desire to 

execute an agreement covering such subjects 

pursuant to the provisions of Rule 17d–2 

under the Exchange Act and to file such 

agreement with the Securities and Exchange 

Commission (the ‘‘SEC’’ or ‘‘Commission’’) for 

its approval. 

Now, therefore, in consideration of the 

mutual covenants contained hereinafter, 

FINRA and BYX hereby agree as follows: 

1. Definitions. Unless otherwise defined in 

this Agreement or the context otherwise 

requires, the terms used in this Agreement 

shall have the same meaning as they have 

under the Exchange Act and the rules and 

regulations thereunder. As used in this 

Agreement, the following terms shall have 

the following meanings: 

(a) ‘‘BYX Rules’’ or ‘‘FINRA Rules’’ shall 

mean: (i) the rules of BYX, or (ii) the rules 

of FINRA, respectively, as the rules of an 

exchange or association are defined in 

Exchange Act Section 3(a)(27). 

(b) ‘‘Common Rules’’ shall mean BYX Rules 

that are substantially similar to the 

applicable FINRA Rules and certain 

provisions of the Exchange Act and SEC rules 

set forth on Exhibit 1 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 provision or rule, or a Dual 

Member’s activity, conduct, or output in 

relation to such provision or rule; provided, 

however, Common Rules shall not include 

the application of the SEC, BYX or FINRA 

rules as they pertain to violations of insider 

trading activities, which is covered by a 

separate 17d–2 Agreement by and among the 

American Stock Exchange, LLC, BATS 

Exchange, Inc., Chicago Board Options 

Exchange, Inc., Chicago Stock Exchange, Inc., 

EDGA Exchange, Inc., EDGX Exchange, Inc., 

Financial Industry Regulatory Authority, 

Inc., International Securities Exchange, LLC, 

The NASDAQ Stock Market LLC, National 

Stock Exchange, Inc., New York Stock 

Exchange, LLC, NYSE Arca Inc., NYSE 

Regulation, Inc., NASDAQ OMX BX, Inc. and 

NASDAQ OMX PHLX, Inc. approved by the 

SEC on April 15, 2010 as the same may be 

amended from time to time. 

(c) ‘‘Dual Members’’ shall mean those BYX 

members that are also members of FINRA 

and the associated persons therewith. 

(d) ‘‘Effective Date’’ shall be the date this 

Agreement is approved by the Commission. 

(e) ‘‘Enforcement Responsibilities’’ shall 

mean the conduct of appropriate 

proceedings, in accordance with FINRA’s 

Code of Procedure (the Rule 9000 Series) and 

other applicable FINRA procedural rules, to 

determine whether violations of Common 

Rules have occurred, and if such violations 

are deemed to have occurred, the imposition 

of appropriate sanctions as specified under 

FINRA’s Code of Procedure and sanctions 

guidelines. 

(f) ‘‘Regulatory Responsibilities’’ shall mean 

the examination responsibilities and 

Enforcement Responsibilities relating to 

compliance by the Dual Members with the 

Common Rules and the provisions of the 

Exchange Act and the rules and regulations 

thereunder, and other applicable laws, rules 

and regulations, each as set forth on Exhibit 

1 attached hereto. 

2. Regulatory and Enforcement 

Responsibilities. FINRA shall assume 

Regulatory Responsibilities and Enforcement 

Responsibilities for Dual Members. Attached 

as Exhibit 1 to this Agreement and made part 

hereof, BYX furnished FINRA with a current 

list of Common Rules and certified to FINRA 

that such rules that are BYX Rules are 

substantially similar to the corresponding 

FINRA Rules (the ‘‘Certification’’). FINRA 

hereby agrees that the rules listed in the 

Certification are Common Rules as defined in 

this Agreement. Each year following the 

Effective Date of this Agreement, or more 

frequently if required by changes in either 

the rules of BYX or FINRA, BYX shall submit 

an updated list of Common Rules to FINRA 

for review which shall add BYX Rules not 

included in the current list of Common Rules 

that qualify as Common Rules as defined in 

this Agreement; delete BYX Rules included 

in the current list of Common Rules that no 

longer qualify as Common Rules as defined 

in this Agreement; and confirm that the 

remaining rules on the current list of 

Common Rules continue to be BYX Rules 

that qualify as Common Rules as defined in 

this Agreement. Within 30 days of receipt of 

such updated list, FINRA shall confirm in 

writing whether the rules listed in any 

updated list are Common Rules as defined in 

this Agreement. Notwithstanding anything 

herein to the contrary, it is explicitly 

understood that the term ‘‘Regulatory 

Responsibilities’’ does not include, and BYX 

shall retain full responsibility for (unless 

otherwise addressed by separate agreement 

or rule) (collectively, the ‘‘Retained 

Responsibilities’’) the following: 

(a) Surveillance, examination, investigation 

and enforcement with respect to trading 

activities or practices involving BYX’s own 

marketplace; 

(b) registration pursuant to its applicable 

rules of associated persons (i.e., registration 

rules that are not Common Rules); 

(c) discharge of its duties and obligations 

as a Designated Examining Authority 

pursuant to Rule 17d–1 under the Exchange 

Act; and 

(d) any BYX Rules that are not Common 

Rules, except for BYX Rules for any brokerdealer subsidiary of BATS Global Markets, 

Inc., as provided in paragraph 6. 

3. Dual Members. Prior to the Effective 

Date, BYX shall furnish FINRA with a 

current list of Dual Members, which shall be 

updated no less frequently than once each 

quarter. 

4. No Charge. There shall be no charge to 

BYX by FINRA for performing the Regulatory 

Responsibilities and Enforcement 

Responsibilities under this Agreement except 

as hereinafter provided. FINRA shall provide 

BYX with ninety (90) days advance written 

notice in the event FINRA decides to impose 

any charges to BYX for performing the 

Regulatory Responsibilities under this 

Agreement. If FINRA determines to impose a 

charge, BYX shall have the right at the time 

of the imposition of such charge to terminate 

this Agreement; provided, however, that 

FINRA’s Regulatory Responsibilities under 

this Agreement shall continue until the 

Commission approves the termination of this 

Agreement. 

5. Applicability of Certain Laws, Rules, 

Regulations or Orders. Notwithstanding any 

provision hereof, this Agreement shall be 

subject to any statute, or any rule or order of 

the Commission. To the extent such statute, 

rule or order is inconsistent with this 

Agreement, the statute, rule or order shall 

supersede the provision(s) hereof to the 

extent necessary for them to be properly 

effectuated and the provision(s) hereof in that 

respect shall be null and void. 


srobinson on DSKHWCL6B1PROD with NOTICES
58000 Federal Register / Vol. 75, No. 184 / Thursday, September 23, 2010 / Notices 

6. Notification of Violations. 

(a) In the event that FINRA becomes aware 

of apparent violations of any BYX Rules, 

which are not listed as Common Rules, 

discovered pursuant to the performance of 

the Regulatory Responsibilities assumed 

hereunder, FINRA shall notify BYX of those 

apparent violations for such response as BYX 

deems appropriate. 

(b) In the event that BYX becomes aware 

of apparent violations of any Common Rules, 

discovered pursuant to the performance of 

the Retained Responsibilities, BYX shall 

notify FINRA of those apparent violations 

and such matters shall be handled by FINRA 

as provided in this Agreement. With respect 

to apparent violations of any BYX Rules by 

any broker-dealer subsidiary of BYX’s parent 

company, BATS Global Markets, Inc., FINRA 

shall not make referrals to BYX pursuant to 

this paragraph 6. Such apparent violations 

shall be processed by, and enforcement 

proceedings in respect thereto will be 

conducted by, FINRA as provided in this 

Agreement. 

(c) Apparent violations of Common Rules 

shall be processed by, and enforcement 

proceedings in respect thereto shall be 

conducted by FINRA as provided 

hereinbefore; provided, however, that in the 

event a Dual Member is the subject of an 

investigation relating to a transaction on 

BYX, BYX may in its discretion assume 

concurrent jurisdiction and responsibility. 

(d) Each party agrees to make available 

promptly all files, records and witnesses 

necessary to assist the other in its 

investigation or proceedings. 

7. Continued Assistance. 

(a) FINRA shall make available to BYX all 

information obtained by FINRA in the 

performance by it of the Regulatory 

Responsibilities hereunder with respect to 

the Dual Members subject to this Agreement. 

In particular, and not in limitation of the 

foregoing, FINRA shall furnish BYX any 

information it obtains about Dual Members 

which reflects adversely on their financial 

condition. BYX shall make available to 

FINRA any information coming to its 

attention that reflects adversely on the 

financial condition of Dual Members or 

indicates possible violations of applicable 

laws, rules or regulations by such firms. 

(b) The parties agree that documents or 

information shared shall be held in 

confidence, and used only for the purposes 

of carrying out their respective regulatory 

obligations. Neither party shall assert 

regulatory or other privileges as against the 

other with respect to documents or 

information that is required to be shared 

pursuant to this Agreement. 

(c) The sharing of documents or 

information between the parties pursuant to 

this Agreement shall not be deemed a waiver 

as against third parties of regulatory or other 

privileges relating to the discovery of 

documents or information. 

8. Statutory Disqualifications. When 

FINRA becomes aware of a statutory 

disqualification as defined in the Exchange 

Act with respect to a Dual Member, FINRA 

shall determine pursuant to Sections 15A(g) 

and/or Section 6(c) of the Exchange Act the 

acceptability or continued applicability of 

the person to whom such disqualification 

applies and keep BYX advised of its actions 

in this regard for such subsequent 

proceedings as BYX may initiate. 

9. Customer Complaints. BYX shall 

forward to FINRA copies of all customer 

complaints involving Dual Members received 

by BYX relating to FINRA’s Regulatory 

Responsibilities under this Agreement. It 

shall be FINRA’s responsibility to review and 

take appropriate action in respect to such 

complaints. 

10. Advertising. FINRA shall assume 

responsibility to review the advertising of 

Dual Members subject to the Agreement, 

provided that such material is filed with 

FINRA in accordance with FINRA’s filing 

procedures and is accompanied with any 

applicable filing fees set forth in FINRA 

Rules. 

11. No Restrictions on Regulatory Action. 

Nothing contained in this Agreement shall 

restrict or in any way encumber the right of 

either party to conduct its own independent 

or concurrent investigation, examination or 

enforcement proceeding of or against Dual 

Members, as either party, in its sole 

discretion, shall deem appropriate or 

necessary. 

12. Termination. This Agreement may be 

terminated by BYX or FINRA at any time 

upon the approval of the Commission after 

one (1) year’s written notice to the other 

party, except as provided in paragraph 4. 

13. Arbitration. In the event of a dispute 

between the parties as to the operation of this 

Agreement, BYX and FINRA hereby agree 

that any such dispute shall be settled by 

arbitration in Washington, DC in accordance 

with the rules of the American Arbitration 

Association then in effect, or such other 

procedures as the parties may mutually agree 

upon. Judgment on the award rendered by 

the arbitrator(s) may be entered in any court 

having jurisdiction. Each party acknowledges 

that the timely and complete performance of 

its obligations pursuant to this Agreement is 

critical to the business and operations of the 

other party. In the event of a dispute between 

the parties, the parties shall continue to 

perform their respective obligations under 

this Agreement in good faith during the 

resolution of such dispute unless and until 

this Agreement is terminated in accordance 

with its provisions. Nothing in this Section 

13 shall interfere with a party’s right to 

terminate this Agreement as set forth herein. 

14. Notification of Members. BYX and 

FINRA shall notify Dual Members of this 

Agreement after the Effective Date by means 

of a uniform joint notice. 

15. Amendment. This Agreement may be 

amended in writing duly approved by each 

party. All such amendments must be filed 

with and approved by the Commission before 

they become effective. 

16. Limitation of Liability. Neither FINRA 

nor BYX nor any of their respective directors, 

governors, officers or employees shall be 

liable to the other party to this Agreement for 

any liability, loss or damage resulting from or 

claimed to have resulted from any delays, 

inaccuracies, errors or omissions with respect 

to the provision of Regulatory 

Responsibilities as provided hereby or for the 

failure to provide any such responsibility, 

except with respect to such liability, loss or 

damages as shall have been suffered by one 

or the other of FINRA or BYX and caused by 

the willful misconduct of the other party or 

their respective directors, governors, officers 

or employees. No warranties, express or 

implied, are made by FINRA or BYX with 

respect to any of the responsibilities to be 

performed by each of them hereunder. 

17. Relief from Responsibility. Pursuant to 

Sections 17(d)(1)(A) and 19(g) of the 

Exchange Act and Rule 17d–2 thereunder, 

FINRA and BYX join in requesting the 

Commission, upon its approval of this 

Agreement or any part thereof, to relieve BYX 

of any and all responsibilities with respect to 

matters allocated to FINRA pursuant to this 

Agreement; provided, however, that this 

Agreement shall not be effective until the 

Effective Date. 

19. Severability. Any term or provision of 

this Agreement that is invalid or 

unenforceable in any jurisdiction shall, as to 

such jurisdiction, be ineffective to the extent 

of such invalidity or unenforceability 

without rendering invalid or unenforceable 

the remaining terms and provisions of this 

Agreement or affecting the validity or 

enforceability of any of the terms or 

provisions of this Agreement in any other 

jurisdiction. 

20. Counterparts. This Agreement may be 

executed in one or more counterparts, each 

of which shall be deemed an original, and 

such counterparts together shall constitute 

one and the same instrument. 

In witness whereof, each party has 

executed or caused this Agreement to be 

executed on its behalf by a duly authorized 

officer as of the date first written above. 

BATS Y–EXCHANGE, INC. 

By: lllllllllllllllllll

Name: lllllllllllllllll

Title: llllllllllllllllll

FINANCIAL INDUSTRY REGULATORY 

AUTHORITY, INC. 

By: lllllllllllllllllll

Name: lllllllllllllllll

Title: llllllllllllllllll

BATS Y–Exchange, Inc. (‘‘BYX’’) Rules 

Certification for 17d–2 Agreement With 

FINRA 

BYX hereby certifies that the requirements 

contained in the rules listed below are 

identical to, or substantially similar to, the 

comparable FINRA Rule, NASD Rule, 

Exchange Act provision or SEC rule 

identified (‘‘Common Rules’’). 


srobinson on DSKHWCL6B1PROD with NOTICES
Federal Register / Vol. 75, No. 184 / Thursday, September 23, 2010 / Notices 58001 

BYX Rule: FINRA Rule, NASD Rule, Exchange Act Provision or SEC Rule: 

Rule 2.5, Interpretation and Policy .02 Continuing Education Requirement for Authorized Traders of Members.NASD Rule 1120(a)(1)–(4) Continuing Education Requirements 

Rule 2.5, Interpretation and Policy .04 Termination of Employment ....... FINRA By-Laws of the Corporation, Article V, Section 3 Notification by 

Member to the Corporation and Associated Person of Termination; 

Amendments to Notification 

Rule 2.6 (g) Application Procedures for Membership or to become an 

Associated Person of a Member.

FINRA By-Laws of the Corporation, Article IV, Section 1(c) Application 

for Membership 

Rule 3.1 Business Conduct of Members ................................................. FINRA Rule 2010 Standards of Commercial Honor and Principles of 

Trade 

Rule 3.2 Violations Prohibited 1 ................................................................ FINRA Rule 2010 Standards of Commercial Honor and Principles of

Trade and NASD Rule 3010 Supervision*

Rule 3.3 Use of Fraudulent Devices ........................................................ FINRA Rule 2020 Use of Manipulative, Deceptive or Other Fraudulent 

Device 

Rule 3.5(a) Advertising Practices ............................................................. NASD Rule 2210(d)(1)(B) Communications with the Public 

Rule 3.5(b) Advertising Practices ............................................................. NASD Rule 2210(d)(2)(C) Communications with the Public 2

Rule 3.5(c) Advertising Practices ............................................................. NASD Rule 2210(d)(1) Communications with the Public 

Rule 3.5(d) Advertising Practices ............................................................. NASD Rule 2210(b)(1) Communications with the Public 3

Rule 3.5(e) Advertising Practices ............................................................. NASD Rule 2210(b)(2)(A) and 2210(c) Communications with the Public 

Rule 3.5(f) Advertising Practices .............................................................. NASD Rule 2210(d)(2)(A) and 2210(d)(1)(E) Communications with the 

Public 

Rule 3.5(g) Advertising Practices ............................................................. NASD Rule 2210(d)(1) Communications with the Public 

Rule 3.5(h) Advertising Practices ............................................................. NASD Rule 2210(d)(1) Communications with the Public 

Rule 3.6 Fair Dealing with Customers ..................................................... NASD Rule IM–2310–2(b)(1), (2), (4)(A)(i), (4)(A)(iii), (4)(A)(iv), and (5) 

Fair Dealing with Customers 

Rule 3.7(a) Recommendations to Customers .......................................... NASD Rule 2310(a) and (b) Recommendations to Customers (Suitability) 

Rule 3.8(a) The Prompt Receipt and Delivery of Securities .................... NASD Rule 3370 Purchases 

Rule 3.8(b) The Prompt Receipt and Delivery of Securities .................... SEC Regulation SHO 

Rule 3.9 Charges for Services Performed ............................................... NASD Rule 2430 Charges for Services Performed 

Rule 3.10 Use of Information ................................................................... FINRA Rule 2060 Use of Information Obtained in Fiduciary Capacity 

Rule 3.13 Payment Designed to Influence Market Prices, Other than 

Paid Advertising.

FINRA Rule 5230 Payment Designed to Influence Market Prices, Other 

than Paid Advertising 4

Rule 3.14 Disclosure on Confirmations .................................................... NASD Rule 2230 Confirmations and SEC Rule 10b–10 Confirmation of 

Transactions 

Rule 3.15 Disclosure of Control ............................................................... FINRA Rule 2262 Disclosure of Control Relationship With Issuer 

Rule 3.16 Discretionary Accounts ............................................................ NASD Rule 2510 Discretionary Accounts 

Rule 3.17 Customer’s Securities or Funds .............................................. FINRA Rule 2150(a) Customers’ Securities or Funds—Improper Use 

Rule 3.18 Prohibition Against Guarantees ............................................... FINRA Rule 2150(b) Customers’ Securities or Funds—Prohibition 

Against Guarantees 

Rule 3.19 Sharing in Accounts; Extent Permissible ................................ FINRA Rule 2150(c) Customers’ Securities or Funds—Sharing in Accounts; Extent Permissible 

Rule 3.21 Customer Disclosures .............................................................. FINRA Rule 2265 Extended Hours Trading Risk Disclosure 

Rule 4.1 Requirements ............................................................................. Section 17 of the Exchange Act and the rules thereunder 

Rule 5.1 Written Procedures .................................................................... NASD Rule 3010(b)(1) Supervision—Written Procedures*

Rule 5.2 Responsibility of Members ........................................................ NASD Rule 3010(a)(4) and (b)(4) Supervision* 

Rule 5.3 Records ...................................................................................... NASD Rule 3010(a)(1), (b) and (c) Supervision*

Rule 5.4 Review of Activities .................................................................... NASD Rule 3010(c) & (d) Supervision—Internal Inspections/Review of 

Transactions and Correspondence*

Rule 5.6 Anti-Money Laundering Compliance Program .......................... FINRA Rule 3310 Anti-Money Laundering Compliance Program 

Rule 9.3 Predispute Arbitration Agreements ............................................ NASD Rule 3110(f) Books and Records; Requirements When Using 

Predispute Arbitration Agreements for Customer Accounts*

Rule 12.11 Best Execution ....................................................................... NASD Rule 2320 Best Execution and Interpositioning 

Rule 12.13 Trading Ahead of Research Reports ..................................... FINRA Rule 5280 Trading Ahead of Research Reports 

1FINRA shall only have Regulatory Responsibility regarding the first phrase of the BYX rule regarding prohibitions from violating the Securities 

Exchange Act of 1934 and the rules and regulations thereunder; responsibility for the remainder of the Rule shall remain with BYX. 2FINRA shall only have Regulatory Responsibility with regard to market letters and sales literature to the extent the rule requires the disclosure of the name of the Member. 3FINRA shall not have Regulatory Responsibility with regard to the requirement that all market letters be approved prior to use.

4FINRA shall not have Regulatory Responsibility with regard to the prohibitions set forth under subsection (a) of FINRA Rule 5230 to the extent subsections (b)(2) or (b)(3) of the rule apply. *FINRA shall not have any Regulatory Responsibilities for these rules as they pertain to violations of insider trading activities, which is covered 

by a separate 17d–2 Agreement by and among the American Stock Exchange, LLC, BATS Exchange, Inc., Chicago Board Options Exchange, 

Inc., Chicago Stock Exchange, Inc., EDGA Exchange, Inc., EDGX Exchange, Inc., Financial Industry Regulatory Authority, Inc., International Securities Exchange, LLC, The NASDAQ Stock Market LLC, National Stock Exchange, Inc., New York Stock Exchange, LLC, NYSE Arca Inc., 

NYSE Regulation, Inc., NASDAQ OMX BX, Inc. and NASDAQ OMX PHLX, Inc. approved by the SEC on April 15, 2010, as the same may be 

amended from time to time. 

In addition, the following provisions 

shall be part of this 17d–2 Agreement: 

Securities Exchange Act of 1934: 

Section 15(f) 

SEC Rules: 

Rule 200 of Regulation SHO— 

Definition of ‘‘Short Sale’’ and Marking 

Requirements 

Rule 203 of Regulation SHO— 

Borrowing and Delivery Requirements 

Rule 606 of Regulation NMS— 

Disclosure of Order Routing Information 

Rule 607 of Regulation NMS— 

Customer Account Statements 


srobinson on DSKHWCL6B1PROD with NOTICES
58002 Federal Register / Vol. 75, No. 184 / Thursday, September 23, 2010 / Notices 

17 15 U.S.C. 78q(d)(1). 

18 17 CFR 240.17d–2. 

19 17 CFR 200.30–3(a)(34). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 62683 

(August 10, 2010), 75 FR 50017. 

4The time that elapses from an order message’s 

receipt by an Exchange device until the time that 

a matching engine acknowledgement with respect 

to such order message is transmitted from the 

Exchange device back to the user. For market data, 

the time measurement will be from the time that the 

market data engine receives a market data update 

until the time that the market data update is 

transmitted from the Exchange device back to the 

user. 

5 In addition to the boundary-level Exchange 

latency information, match level information will 

also provide further elapsed time detail for 

messaging between Exchange internal systems. 

6According to EDGA, the product measures 

latency of orders regardless of whether the orders 

are rejected, executed, or partially executed. 

III. Date of Effectiveness of the 

Proposed Plan and Timing for 

Commission Action 

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

Act 17 and Rule 17d–2 thereunder,18

after October 8, 2010, the Commission 

may, by written notice, declare the plan 

submitted by BYX and FINRA, File No. 

4–613, to be effective if the Commission 

finds that the plan is necessary or 

appropriate in the public interest and 

for the protection of investors, to foster 

cooperation and coordination among 

self-regulatory organizations, or to 

remove impediments to and foster the 

development of the national market 

system and a national system for the 

clearance and settlement of securities 

transactions and in conformity with the 

factors set forth in Section 17(d) of the 

Act. 

IV. Solicitation of Comments 

In order to assist the Commission in 

determining whether to approve the 

proposed 17d–2 Plan and to relieve BYX 

of the responsibilities which would be 

assigned to FINRA, interested persons 

are invited to submit written data, 

views, and arguments concerning the 

foregoing. Comments may be submitted 

by any of the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

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

rules/other.shtml); or 

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

Number 4–613 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Elizabeth M. Murphy, Secretary, 

Securities and Exchange Commission, 

Station Place, 100 F Street, NE., 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number 4–613. This file number should 

be included on the subject line if e-mail 

is used. To help the Commission 

process and review your comments 

more efficiently, please use only one 

method. The Commission will post all 

comments on the Commission’s Internet 

Web site (http://www.sec.gov/rules/ 

other.shtml). Copies of the submission, 

all subsequent amendments, all written 

statements with respect to the proposed 

plan that are filed with the Commission, 

and all written communications relating 

to the proposed plan between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

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

available for Web site viewing and 

printing in the Commission’s Public 

Reference Room, on official business 

days between the hours of 10 am and 3 

pm. Copies of the plan also will be 

available for inspection and copying at 

the principal offices of BYX and FINRA. 

All comments received will be posted 

without change; the Commission does 

not edit personal identifying 

information from submissions. You 

should submit only information that 

you wish to make available publicly. All 

submissions should refer to File 

Number 4–613 and should be submitted 

on or before October 8, 2010. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.19

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–23772 Filed 9–22–10; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–62928; File No.SR–EDGA– 

2010–09] 

Self-Regulatory Organizations; EDGA 

Exchange, Inc.; Order Approving a 

Proposed Rule Change Relating to a 

Revenue Sharing Program With 

Correlix, Inc. 

September 17, 2010. 

On July 28, 2010, EDGA Exchange, 

Inc. (the ‘‘Exchange’’ or ‘‘EDGA’’) filed 

with the Securities and Exchange 

Commission (‘‘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 a revenue sharing 

program with Correlix, Inc. (‘‘Correlix’’). 

The proposed rule change was 

published for comment in the Federal 

Register on August 13, 2010.3 The 

Commission received no comment 

letters on the proposal. This order 

approves the proposed rule change. 

In its proposal, EDGA described realtime analytical tools offered by Correlix 

to measure the latency of orders to and 

from the System, and also described the 

terms of the pricing and the revenue 

sharing agreement between Correlix and 

the Exchange. In addition, the Exchange 

represented that under the agreement, 

EDGA will receive 30% of the total 

monthly subscription fees received by 

Correlix from parties who have 

contracted directly with Correlix to use 

their RaceTeam latency measurement 

service for the Exchange. According to 

the Exchange, EDGA will not bill or 

contract with any Correlix RaceTeam 

customer directly. 

Pricing for the Correlix RaceTeam 

product for the Exchange varies 

depending on the depth of latency 

information requested, the number of 

unique MPIDs subscribed by the 

customer, and the number of ports 

available for monitoring by Correlix. For 

boundary-level Exchange latency 

information,4 the fee will be an initial 

$1,500 monthly base fee for the first 25 

ports associated in aggregate with any of 

the MPIDs selected by the Member for 

latency monitoring. For each additional 

25 ports associated in aggregate with 

any of the MPIDs selected by the 

Member for latency monitoring, an 

additional monthly charge of $750 will 

be assessed. For match-level Exchange 

latency information,5 the fee will be an 

initial $2,000 monthly base fee for the 

first 25 ports associated in aggregate 

with any of the MPIDs selected for 

latency monitoring, and an additional 

$1,000 per month for each additional 25 

ports associated in aggregate with any of 

the MPIDs selected for latency 

monitoring. 

According to the Exchange, Correlix 

will see an individualized unique 

Exchange-generated identifier that will 

allow Correlix RaceTeam to determine 

round-trip order time,6 from the time 

the order reaches the Exchange extranet, 

through the Exchange matching engine, 

and back out of the Exchange extranet. 

In its proposal, the Exchange 

represented that the RaceTeam product 

offering does not measure latency 

outside of the Exchange extranet. 

Further, EDGA stated that the unique 

identifier serves as a technological 

information barrier so that the 

RaceTeam data collector will only be 

able to view data for Correlix RaceTeam 

subscriber firms related to latency. 

Accordingly, Correlix will not see 

subscriber’s individual order detail such 

as security, price or size; individual 


srobinson on DSKHWCL6B1PROD with NOTICES