Document ID: SEC-2016-0078-0001
Agency: sec
Document Type: Notice
Title: Filings: Financial Industry Regulatory Authority, Inc. and the National Stock Exchange, Inc.
Posted Date: 2016-01-14T05:00Z

[Federal Register Volume 81, Number 9 (Thursday, January 14, 2016)]
[Notices]
[Pages 1971-1976]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-00567]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76856; File No. 4-694]

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 the National Stock Exchange, Inc.

January 8, 2016.
    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 December 23, 2015, the National Stock Exchange, Inc. (``NSX'') and 
the Financial Industry Regulatory Authority, Inc. (``FINRA'') (together 
with NSX, the ``Parties'') filed with the Securities and Exchange 
Commission (``Commission'' or ``SEC'') a plan for the allocation of 
regulatory responsibilities, dated December 22, 2015 (``17d-2 Plan'' or 
the ``Plan''). The Commission is publishing this notice to solicit 
comments on the 17d-2 Plan from interested persons.
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    \1\ 15 U.S.C. 78q(d).
    \2\ 17 CFR 240.17d-2.
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I. Introduction

    Section 19(g)(1) of the Act,\3\ among other things, requires every 
self-regulatory 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'') for 
compliance with certain rules that are substantially identical across 
multiple SROs. Such regulatory duplication would add unnecessary 
expenses for common members and their SROs.
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    \3\ 15 U.S.C. 78s(g)(1).
    \4\ 15 U.S.C. 78q(d) and 15 U.S.C. 78s(g)(2), respectively.
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    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.
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    \5\ 15 U.S.C. 78q(d)(1).
    \6\ See 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).
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    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

[[Page 1972]]

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.
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    \7\ 17 CFR 240.17d-1 and 17 CFR 240.17d-2, respectively.
    \8\ See Securities Exchange Act Release No. 12352 (April 20, 
1976), 41 FR 18808 (May 7, 1976).
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    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.
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    \9\ See Securities Exchange Act Release No. 12935 (October 28, 
1976), 41 FR 49091 (November 8, 1976).
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II. Proposed Plan

    The proposed 17d-2 Plan is intended to reduce regulatory 
duplication for firms that are common members of both NSX 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.
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    \10\ The proposed 17d-2 Plan refers to these common members as 
``Dual Members.'' See Paragraph 1(c) of the proposed 17d-2 Plan.
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    The text of the Plan delineates the proposed regulatory 
responsibilities with respect to the Parties. Included in the proposed 
Plan is an exhibit (the ``National Stock Exchange (``NSX'') Rules 
Certification for 17d-2 Agreement with FINRA,'' referred to herein as 
the ``Certification'') that lists every NSX 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 NSX 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 NSX 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''). In the event that a Dual Member is 
the subject of an investigation relating to a transaction on NSX, the 
plan acknowledges that NSX may, in its discretion, exercise concurrent 
jurisdiction and responsibility for such matter.\12\
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    \11\ See 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 NSX 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 NSX shall furnish FINRA with a list of 
Dual Members, and shall update the list no less frequently than once 
each calendar quarter.
    \12\ See paragraph 6 of the proposed 17d-2 Plan.
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    Under the Plan, NSX would retain full responsibility for 
surveillance and enforcement with respect to trading activities or 
practices involving NSX'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 NSX rules 
that are not Common Rules.\13\
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    \13\ See paragraph 2 of the proposed 17d-2 Plan.
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    The text of the proposed 17d-2 Plan is as follows:

Agreement Between Financial Industry Regulatory Authority, Inc. and 
National Stock 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 the National Stock Exchange, Inc. 
(``NSX''), is made this 22nd day of December, 2015 (the ``Agreement''), 
pursuant to Section 17(d) of the Securities Exchange Act of 1934, as 
amended (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 NSX may 
be referred to individually as a ``party'' and together as the 
``parties.''
    This Agreement replaces and restates the agreement entered into 
between the parties on June 20, 1977 as amended, entitled ``Agreement 
Between the National Association of Securities Dealers, Inc. and the 
Cincinnati Stock Exchange Pursuant to SEC Rule 17d-2 Under the 
Securities Exchange Act of 1934,'' and any subsequent amendments 
thereafter.
    WHEREAS, FINRA and NSX 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 NSX 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 NSX 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) ``NSX Rules'' or ``FINRA Rules'' shall mean: (i) The rules of 
NSX 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 NSX 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, NSX 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 NSX Exchange, Inc., NSX Y-
Exchange, Inc., Chicago Board Options Exchange, Inc., Chicago Stock

[[Page 1973]]

Exchange, Inc., EDGA Exchange, Inc., EDGX Exchange, Inc., Financial 
Industry Regulatory Authority, Inc., NASDAQ OMX BX, Inc., NASDAQ OMX 
PHLX LLC, The NASDAQ Stock Market LLC, National Stock Exchange, Inc., 
New York Stock Exchange LLC, NYSE Amex LLC, NYSE Arca, Inc., and NYSE 
Regulation, Inc., approved by the SEC on December 16, 2011 as the same 
may be amended from time to time.
    (c) ``Dual Members'' shall mean those NSX 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, 
NSX furnished FINRA with a current list of Common Rules and certified 
to FINRA that such rules that are NSX 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 NSX or FINRA, NSX shall submit an updated list of Common Rules 
to FINRA for review which shall add NSX Rules not included in the 
current list of Common Rules that qualify as Common Rules as defined in 
this Agreement; delete NSX 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 NSX 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 NSX 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 NSX'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 NSX Rules that are not Common Rules.
    3. Dual Members. Prior to the Effective Date, NSX 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 NSX by FINRA for 
performing the Regulatory Responsibilities and Enforcement 
Responsibilities under this Agreement except as hereinafter provided. 
FINRA shall provide NSX with ninety (90) days advance written notice in 
the event FINRA decides to impose any charges to NSX for performing the 
Regulatory Responsibilities under this Agreement. If FINRA determines 
to impose a charge, NSX 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, order or action is inconsistent with this 
Agreement, the statute, rule, order or action 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.
    6. Notification of Violations.
    (a) In the event that FINRA becomes aware of apparent violations of 
any NSX Rules, which are not listed as Common Rules, discovered 
pursuant to the performance of the Regulatory Responsibilities assumed 
hereunder, FINRA shall notify NSX of those apparent violations for such 
response as NSX deems appropriate.
    (b) In the event that NSX becomes aware of apparent violations of 
any Common Rules, discovered pursuant to the performance of the 
Retained Responsibilities, NSX shall notify FINRA of those apparent 
violations and such matters shall be handled 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 
NSX, NSX 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 NSX 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 NSX any information it obtains about Dual Members which 
reflects adversely on their financial condition. NSX 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

[[Page 1974]]

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 NSX advised of its actions in this regard for such subsequent 
proceedings as NSX may initiate.
    9. Customer Complaints. NSX shall forward to FINRA copies of all 
customer complaints involving Dual Members received by NSX 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 NSX 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, NSX 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. Separate Agreement. This Agreement is wholly separate from the 
following agreements: (1) The multiparty agreement for insider trading 
activities, which is covered by a separate 17d-2 Agreement by and among 
NSX Exchange, Inc., NSX-Y Exchange, Inc., Chicago Board Options 
Exchange, Incorporated, Chicago Stock Exchange, Inc., EDGA Exchange 
Inc., EDGX Exchange Inc., Financial Industry Regulatory Authority, 
Inc., NASDAQ OMX BX, Inc., NASDAQ OMX PHLX LLC, The NASDAQ Stock Market 
LLC, National Stock Exchange, Inc., New York Stock Exchange, LLC, NYSE 
Amex LLC, and NYSE Arca Inc. effective December 16, 2011, as may be 
amended from time to time and (2) the multiparty 17d-2 agreement 
relating to Regulation NMS rules by and among NSX Exchange, Inc., NSX-Y 
Exchange, Inc., BOX Options Exchange LLC, Chicago Board Options 
Exchange, Incorporated, C2 Options Exchange, Incorporated, Chicago 
Stock Exchange, Inc., EDGA Exchange, Inc., EDGX Exchange, Inc., FINRA, 
International Securities Exchange, LLC, ISE Gemini, LLC, Miami 
International Securities Exchange, LLC, The NASDAQ Stock Market LLC, 
NASDAQ OMX BOX, Inc., NASDAQ OMX PHLX, Inc., National Stock Exchange, 
Inc., New York Stock Exchange LLC, NYSE MKT LLC, and NYSE Arca, Inc. 
effective October 29, 2015 as may be amended from time to time.
    15. Notification of Members. NSX and FINRA shall notify Dual 
Members of this Agreement after the Effective Date by means of a 
uniform joint notice.
    16. 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.
    17. Limitation of Liability. Neither FINRA nor NSX 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 NSX 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 NSX with respect 
to any of the responsibilities to be performed by each of them 
hereunder.
    18. Relief from Responsibility. Pursuant to Sections 17(d)(1)(A) 
and 19(g) of the Exchange Act and Rule 17d-2 thereunder, FINRA and NSX 
join in requesting the Commission, upon its approval of this Agreement 
or any part thereof, to relieve NSX 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.

FINANCIAL INDUSTRY REGULATORY AUTHORITY, INC.
By Name:---------------------------------------------------------------
Title:

NATIONAL STOCK EXCHANGE, INC.
By Name:---------------------------------------------------------------
Title:

EXHIBIT 1

National Stock Exchange (``NSX'') Rules Certification for 17d-2 
Agreement With FINRA

    NSX 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'').

[[Page 1975]]

------------------------------------------------------------------------
                                         Finra Rule, NASD Rule, Exchange
               NSX Rule:                    Act Provision or SEC Rule:
 
------------------------------------------------------------------------
Rule 3.1 Business Conduct of Members*..  FINRA Rule 2010 Standards of
                                          Commercial Honor and
                                          Principles of Trade.* \1\
Rule 3.2 Violations Prohibited*........  FINRA Rule 2010 Standards of
                                          Commercial Honor and
                                          Principles of Trade and FINRA
                                          Rule 3110 Supervision.* \2\
Rule 3.3 Use of Fraudulent Devices*....  FINRA Rule 2020 Use of
                                          Manipulative, Deceptive or
                                          Other Fraudulent Device.*
Rule 3.5(a) Advertising Practices......  FINRA Rule 2210(d)(1)(B)
                                          Communications with the
                                          Public.
Rule 3.5(c) Advertising Practices......  FINRA Rule 2210(d)(1)
                                          Communications with the
                                          Public.
Rule 3.5(g) Advertising Practices......  FINRA Rule 2210(d)(1)(B)
                                          Communications with the
                                          Public.
Rule 3.5(h) Advertising Practices......  FINRA Rule 2210(d)(1)(B)
                                          Communications with the
                                          Public.
Rule 3.6 Fair Dealing with Customers...  FINRA Rule 2020 Use of
                                          Manipulative, Deceptive or
                                          Other Fraudulent Device and
                                          FINRA Rule 2111
                                          Suitability.\3\
Rule 3.7(a) and .01 Recommendations to   FINRA Rule 2111 Suitability.
 Customers.
Rule 3.8(a) The Prompt Receipt and       FINRA Rule 11860 COD Orders.
 Delivery of Securities.
Rule 3.9 Charges for Services Performed  FINRA Rule 2122 Charges for
                                          Services Performed.
Rule 3.10 Use of Information...........  FINRA Rule 2060 Use of
                                          Information Obtained in
                                          Fiduciary Capacity.
Rule 3.11 Publication of Transactions    FINRA Rule 5210 Publication of
 and Quotations.                          Transactions and Quotations.
                                          \4\
Rule 3.12 Offers at Stated Prices......  FINRA Rule 5220 Offers at
                                          Stated Prices.
Rule 3.13 Payment Designed to Influence  FINRA Rule 5230 Payments
 Market Prices, Other than Paid           Involving Publications that
 Advertising.                             Influence the Market Price of
                                          a Security. \5\
Rule 3.14 Disclosure on Confirmations..  FINRA Rule 2232(a) Customer
                                          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. \6\
Rule 3.17 Customer's Securities or       FINRA Rule 2150(a) Customers'
 Funds.                                   Securities or Funds--Improper
                                          Use.
Rule 3.18 Prohibition Against            FINRA Rule 2150(b) Customers'
 Guarantees.                              Securities or Funds--
                                          Prohibition Against
                                          Guarantees.
Rule 3.19 Sharing in Accounts; Extent    FINRA Rule 2150(c)(1)
 Permissible.                             Customers' Securities or
                                          Funds--Sharing in Accounts;
                                          Extent Permissible.
Rule 3.21 Telephone Solicitation.......  FINRA Rule 3230 Telemarketing.
Rule 4.1 Requirements*.................  FINRA Rule 4511 General
                                          Requirements.* \7\
Rule 4.3 Record of Written Complaints..  FINRA Rule 4513 Records of
                                          Written.
Rule 5.1 Written Procedures*...........  FINRA Rule 3110(b) Supervision--
                                          Written Procedures.* \8\
Rule 5.2 Responsibility of Members.....  FINRA Rule 3110(a) and (b)(7)
                                          Supervision.*
Rule 5.3 Records*......................  FINRA Rule 3110(a)
                                          Supervision.*
Rule 5.4 Review of Activities..........  FINRA Rule 3110(c) and (d)
                                          Supervision--Internal
                                          Inspections/Review of
                                          Transactions and
                                          Correspondence.* \9\
Rule 5.6 Anti-Money Laundering           FINRA Rule 3310 Anti-Money
 Compliance Program.                      Laundering Compliance
                                          Program.\10\
Rule 5.7 Annual Certification of         FINRA Rule 3130 Annual
 Compliance and Supervisory Processes.    Certification of Compliance
                                          and Supervisory Processes.\11\
Rule 11.1(c) Hours of Trading..........  FINRA Rule 2265 Extended Hours
                                          Trading Risk Disclosure.
Rule 11.21(b) Short Sales..............  FINRA Rule 6182 Trade Reporting
                                          of Short Sales.\11\
Rule 11.22 Locking or Crossing           FINRA Rule 6240 Prohibition
 Quotations in NMS Stocks.                from Locking or Crossing
                                          Quotation in NMS Stocks.
Rule 11.24 Limit Up-Limit Down.........  FINRA Rule 6190(a)(1) and (2)
                                          Compliance with Regulation NMS
                                          Plan to Address Extraordinary
                                          Market Volatility.
Rule 12.10 Best Execution..............  FINRA Rule 5310 Best Execution
                                          and Interpositioning.\12\
Rule 13.2 Failure to Deliver and         Regulation SHO Rule 200 and
 Failure to Receive \13\.                 203.
------------------------------------------------------------------------
\1\ FINRA shall not have Regulatory Responsibilities regarding .01 of
  NSX Rule 3.1.
\2\ FINRA shall only have Regulatory Responsibilities regarding the
  first phrase of the NSX 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 NSX.
\3\ FINRA shall not have Regulatory Responsibilities regarding .01 of
  NSX Rule 3.6.
\4\ FINRA shall not have Regulatory Responsibilities with regard to the
  requirement to report to NSX.
\5\ FINRA shall not have Regulatory Responsibilities 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.
\6\ FINRA shall not have Regulatory Responsibilities for the NSX rule to
  the extent the exception in FINRA Rule 2510(d)(2) applies.
\7\ FINRA shall not have Regulatory Responsibilities regarding
  requirements to keep records ``in conformity with . . . Exchange
  Rules;'' responsibility for such requirement remains with NSX.
\8\ FINRA shall not have Regulatory Responsibilities regarding
  requirements to assure compliance with Exchange Rules; responsibility
  for such requirement remains with NSX.
\9\ FINRA shall not have Regulatory Responsibilities regarding the NSX
  requirement to annually inspect each office of the ETP Holder (other
  than as required by the FINRA rule to annually inspect each OSJ and
  any branch office that supervises one or more non-branch locations).
\10\ FINRA shall not have Regulatory Responsibilities regarding
  notification to NSX.
\11\ FINRA shall not have Regulatory Responsibilities regarding
  certification as to compliance with NSX rules, the requirement that
  the certification be delivered to NSX, and the requirement that the
  report is titled in a manner indicating that it is responsive to NSX
  Rule 5.7.
\12\ FINRA shall not have Regulatory Responsibilities regarding .01 of
  NSX Rule 12.10.
\13\ FINRA shall only have Regulatory Responsibilities regarding Rules
  200 and 203 of Regulation SHO.
* 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 NSX Exchange, Inc.,
  NSX-Y Exchange, Inc., Chicago Board Options Exchange, Incorporated,
  Chicago Stock Exchange, Inc., EDGA Exchange Inc., EDGX Exchange Inc.,
  Financial Industry Regulatory Authority, Inc., NASDAQ OMX BX, Inc.,
  NASDAQ OMX PHLX LLC, The NASDAQ Stock Market LLC, National Stock
  Exchange, Inc., New York Stock Exchange, LLC, NYSE Amex LLC, and NYSE
  Arca Inc. effective December 16, 2011, as may be amended from time to
  time.

[[Page 1976]]

    In addition, the following provisions shall be part of this 17d-2 
Agreement:
    Securities Exchange Act of 1934:
    Section 15(f)
* * * * *

III. Date of Effectiveness of the Proposed Plan and Timing for 
Commission Action

    Pursuant to Section 17(d)(1) of the Act \14\ and Rule 17d-2 
thereunder,\15\ after January 29, 2016, the Commission may, by written 
notice, declare the plan submitted by NSX and FINRA, File No. 4-694, 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.
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    \14\ 15 U.S.C. 78q(d)(1).
    \15\ 17 CFR 240.17d-2.
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IV. Solicitation of Comments

    In order to assist the Commission in determining whether to approve 
the proposed 17d-2 Plan and to relieve NSX 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 email to rule-comments@sec.gov. Please include 
File Number 4-694 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, Station Place, 100 F Street NE., Washington, 
DC 20549-1090.

All submissions should refer to File Number 4-694. 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/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 10:00 a.m. and 3:00 p.m. Copies of the plan also will be 
available for inspection and copying at the principal offices of NSX 
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 4-694 
and should be submitted on or before January 29, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
Robert W. Errett,
Deputy Secretary.
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    \16\ 17 CFR 200.30-3(a)(34).
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[FR Doc. 2016-00567 Filed 1-13-16; 8:45 am]
 BILLING CODE 8011-01-P