Document ID: SEC-2021-1452-0001
Agency: sec
Document Type: Notice
Title: Filing and Order: Approving and Declaring Effective an Amended Plan for the Allocation of Regulatory Responsibilities Between the Financial Industry Regulatory Authority, Inc. and Investors' Exchange LLC
Posted Date: 2021-10-20T04:00Z

[Federal Register Volume 86, Number 200 (Wednesday, October 20, 2021)]
[Notices]
[Pages 58110-58116]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-22810]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-93324; File No. 4-700]

Program for Allocation of Regulatory Responsibilities Pursuant to 
Rule 17d-2; Notice of Filing and Order Approving and Declaring 
Effective an Amended Plan for the Allocation of Regulatory 
Responsibilities Between the Financial Industry Regulatory Authority, 
Inc. and Investors' Exchange LLC

October 14, 2021.
    Notice is hereby given that the Securities and Exchange Commission 
(``Commission'') has issued an Order, pursuant to Section 17(d) of the 
Securities Exchange Act of 1934 (``Act''),\1\ approving and declaring 
effective an amendment to the plan for allocating regulatory 
responsibility (``Plan'') filed on September 13, 2021, pursuant to Rule 
17d-2 of the Act,\2\ by the Financial Industry Regulatory Authority, 
Inc. (``FINRA'') and Investors' Exchange LLC (``IEX'') (collectively, 
``Participating Organizations'' or ``parties''). This agreement amends 
and restates the agreement entered into between FINRA and IEX on June 
20, 2016, entitled ``Agreement between Financial Industry Regulatory 
Authority, Inc. and Investors' Exchange LLC pursuant to Rule 17d-2 
under the Securities Exchange Act of 1934,'' and any subsequent 
amendments thereafter.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78q(d).
    \2\ 17 CFR 240.17d-2.
---------------------------------------------------------------------------

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

    \3\ 15 U.S.C. 78s(g)(1).
    \4\ 15 U.S.C. 78q(d).
    \5\ 15 U.S.C. 78s(g)(2).
---------------------------------------------------------------------------

    Section 17(d)(1) of the Act \6\ was intended, in part, to eliminate 
unnecessary multiple examinations and regulatory duplication.\7\ 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.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78q(d)(1).
    \7\ 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).
---------------------------------------------------------------------------

    To implement Section 17(d)(1), the Commission adopted two rules: 
Rule 17d-1 and Rule 17d-2 under the Act.\8\ 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.\9\ 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.
---------------------------------------------------------------------------

    \8\ 17 CFR 240.17d-1 and 17 CFR 240.17d-2, respectively.
    \9\ See Securities Exchange Act Release No. 12352 (April 20, 
1976), 41 FR 18808 (May 7, 1976).
---------------------------------------------------------------------------

    To address regulatory duplication in these and other areas, the 
Commission adopted Rule 17d-2 under the Act.\10\ Rule 17d-2 permits 
SROs to propose joint plans for the allocation of regulatory 
responsibilities with respect

[[Page 58111]]

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 opportunity for 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.
---------------------------------------------------------------------------

    \10\ See Securities Exchange Act Release No. 12935 (October 28, 
1976), 41 FR 49091 (November 8, 1976).
---------------------------------------------------------------------------

II. The Plan

    On July 28, 2016, the Commission declared effective the Plan 
entered into between FINRA and IEX for allocating regulatory 
responsibility pursuant to Rule 17d-2.\11\ The Plan is intended to 
reduce regulatory duplication for firms that are common members of 
FINRA and IEX by allocating regulatory responsibility with respect to 
certain applicable laws, rules, and regulations that are common among 
them. Included in the Plan is an exhibit that lists every IEX rule for 
which FINRA bears responsibility under the Plan for overseeing and 
enforcing with respect to IEX members that are also members of FINRA 
and the associated persons therewith (``Certification'').
---------------------------------------------------------------------------

    \11\ See Securities Exchange Act Release No. 54136 (July 12, 
2006), 81 FR 51256 (August 3, 2016).
---------------------------------------------------------------------------

III. Proposed Amendment to the Plan

    On September 13, 2021, the parties submitted a proposed amendment 
to the Plan (``Amended Plan''). The primary purpose of the Amended Plan 
is to clarify what is considered a Common Rule under the Plan, add 
Securities Exchange Act Rules 604, 610(d), and 611 to the 
Certification, eliminate the requirement that IEX provide to FINRA a 
current list of members each quarter, and eliminate the requirement 
that IEX and FINRA notify Dual Members of the Agreement after the 
Effective Date by a uniform joint notice. The text of the proposed 
Amended Plan is as follows (additions are italicized; deletions are 
[bracketed]):
* * * * *

AGREEMENT BETWEEN FINANCIAL INDUSTRY REGULATORY AUTHORITY, INC. AND 
INVESTORS' EXCHANGE LLC 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 Investors' Exchange LLC (``IEX''), 
is made this [20th]9th day of [June 20, 2016] September, 2021 (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 IEX may be referred to individually as a ``party'' and together 
as the ``parties.''
    This Agreement amends and restates the agreement entered into 
between FINRA and IEX on June 20, 2016, entitled ``Agreement between 
Financial Industry Regulatory Authority, Inc. and Investors' 
Exchange LLC pursuant to Rule 17d-2 under the Securities Exchange 
Act of 1934,'' and any subsequent amendments thereafter.
    WHEREAS, FINRA and IEX desire to reduce duplication in the 
examination and surveillance of their Dual Members (as defined 
herein) and in the filing and processing of certain registration and 
membership records; and
    WHEREAS, FINRA and IEX 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 IEX 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) ``IEX Rules'' or ``FINRA Rules'' shall mean: (i) The rules 
of IEX, 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 IEX 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 or surveillance for compliance with such provisions and 
rules would not require FINRA to develop one or more new examination 
or surveillance 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, IEX or FINRA rules as they pertain to 
violations of insider trading activities, which is covered by a 
separate 17d-2 Agreement by and among [BATS Exchange, Inc., BATS Y-
Exchange, Inc., Chicago Board Options Exchange, Inc., 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], Cboe BZX Exchange, Inc., Cboe 
BYX Exchange, Inc., NYSE Chicago, Inc., Cboe EDGA Exchange, Inc., 
Cboe EDGX Exchange, Inc., Financial Industry Regulatory Authority, 
Inc., MEMX, LLC, MIAX PEARL, LLC, Nasdaq BX, Inc., Nasdaq PHLX LLC, 
The Nasdaq Stock Market LLC, NYSE National, Inc., New York Stock 
Exchange LLC, NYSE American LLC, NYSE Arca, Inc., Investors Exchange 
LLC and Long-Term Stock Exchange, Inc. approved by the Commission on 
September 23, 2020 as may be amended from time to time. Common Rules 
shall not include any provisions regarding: (i) Notice, reporting or 
any other filings made directly to or from IEX; (ii) incorporation 
by reference of other IEX Rules that are not Common Rules; (iii) 
exercise of discretion in a manner that differs from FINRA's 
exercise of discretion including, but not limited to exercise of 
exemptive authority by IEX; (iv) prior written approval of IEX; and 
(v) payment of fees or fines to IEX.
    (c) ``Dual Members'' shall mean those IEX 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, surveillance 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, IEX furnished FINRA with a current list of Common Rules 
and certified to FINRA that such rules that are IEX 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 IEX or 
FINRA, IEX shall submit an updated list of Common Rules to FINRA for 
review which shall add IEX Rules not included in the current list of 
Common Rules

[[Page 58112]]

that qualify as Common Rules as defined in this Agreement; delete 
IEX 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 IEX 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 IEX 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 IEX's own 
marketplace for rules that are not Common Rules;
    (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 IEX Rules that are not Common Rules, except for IEX 
Rules for IEX Services LLC as provided in paragraph [6]5.
    [3. Dual Members. Prior to the Effective Date, IEX shall furnish 
FINRA with a current list of Dual Members, which shall be updated no 
less frequently than once each quarter.]
    [4]3. No Charge. There shall be no charge to IEX by FINRA for 
performing the Regulatory Responsibilities and Enforcement 
Responsibilities under this Agreement except as otherwise agreed by 
the parties, either herein or in a separate agreement.
    [5]4. 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.
    [6]5. Notification of Violations.
    (a) In the event that FINRA becomes aware of apparent violations 
of any IEX Rules, which are not listed as Common Rules, discovered 
pursuant to the performance of the Regulatory Responsibilities 
assumed hereunder, FINRA shall notify IEX of those apparent 
violations for such response as IEX deems appropriate.
    (b) In the event that IEX becomes aware of apparent violations 
of any Common Rules, discovered pursuant to the performance of the 
Retained Responsibilities, IEX 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 IEX Services 
LLC FINRA shall not make referrals to IEX pursuant to this paragraph 
[6]5. 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 IEX, IEX 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]6. Continued Assistance.
    (a) FINRA shall make available to IEX 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 IEX any information it obtains about Dual 
Members which reflects adversely on their financial condition. IEX 
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]7. 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 IEX advised of its actions in this regard for such 
subsequent proceedings as IEX may initiate.
    [9]8. Customer Complaints. IEX shall forward to FINRA copies of 
all customer complaints involving Dual Members received by IEX 
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]9. 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]10. 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]11. Termination. This Agreement may be terminated by IEX or 
FINRA at any time upon the approval of the Commission after one (1) 
year's written notice to the other party.
    [13]12. Arbitration. In the event of a dispute between the 
parties as to the operation of this Agreement, IEX 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]12 shall interfere with a party's right to 
terminate this Agreement as set forth herein.
    [14. Notification of Members. IEX and FINRA shall notify Dual 
Members of this Agreement after the Effective Date by means of a 
uniform joint notice.]
    [15]13. 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]14. Limitation of Liability. Neither FINRA nor IEX 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 IEX 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 IEX with respect to any of the responsibilities 
to be performed by each of them hereunder.
    [17]15. Relief from Responsibility. Pursuant to Sections 
17(d)(1)(A) and 19(g) of the Exchange Act and Rule 17d-2 thereunder, 
FINRA and IEX join in requesting the Commission, upon its approval 
of this Agreement or any part thereof, to relieve IEX 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.

[[Page 58113]]

    [18]16. 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.
    [19]17. 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.
    Note: The entire existing table of rules should be deleted and 
replaced with the table below and for the remainder of the exhibit 
new text is italicized and deleted text is in brackets.

EXHIBIT 1

IEX CERTIFICATION OF COMMON RULES

    IEX hereby certifies that the requirements contained in the 
rules listed below for IEX are identical to, or substantially 
similar to, the comparable FINRA [(NASD)] Rules, Exchange Act 
provision or SEC rule identified (``Common Rules'').
    # Common Rules shall not include provisions regarding (i) 
notice, reporting or any other filings made directly to or from IEX, 
(ii) incorporations by reference of other IEX Rules that are not 
Common Rules (iii) exercise of discretion in a manner that differs 
from FINRA's exercise of discretion including, but not limited to 
exercise of exemptive authority, by IEX, (iv) prior written approval 
of IEX, and (v) payment of fees or fines to IEX.

------------------------------------------------------------------------
                                             FINRA rule, exchange act
                IEX rule                       provision, SEC rule
------------------------------------------------------------------------
Rule 2.140 Prohibited Conditions         FINRA Rule 2081 Prohibited
 Relating to Expungement of Customer      Conditions Relating to
 Dispute.                                 Expungement of Customer
                                          Dispute.
Rule 2.160(o) Lapse of Registration and  FINRA Rule 1210.08--
 Expiration of SIE.                       Registration Requirements--
                                          Lapse of Registration and
                                          Expiration of SIE.
Rule 2.160(p) Restrictions on            FINRA Rule 1240(a)(1)-(4), (6)-
 Membership--Continuing Education         (7) and (b) Continuing
 Requirements .                          Education Requirements.
Rule 2.160(q) and (r) Registration       FINRA By-Laws of the
 Requirements and Restrictions on         Corporation Article IV, Sec
 Membership, and Rule 2.170(b) and (g)    1(c) Application for
 Application Procedures for Membership    Membership, Article V,
 or to become an Associated Person of a   Sections 2 and 3 Application
 Member .                                for Registration and
                                          Notification by Member to the
                                          Corporation and Associated
                                          Person of Termination;
                                          Amendments to Notification,
                                          FINRA Rule 1010(c) and (e)
                                          Electronic Filing Requirements
                                          for Uniform Forms and FINRA
                                          Rule 4517 Members Filing and
                                          Contact Information
                                          Requirements.
Rule 2.240 Fidelity Bonds ............  FINRA Rule 4360 Fidelity Bonds.
Rule 3.110 Business Conduct of Members   FINRA Rule 2010 Standards of
 caret.                                   Commercial Honor and
                                          Principles of Trade. caret
Rule 3.120 Violations Prohibited1 caret  FINRA Rule 2010 Standards of
 .                                       Commercial Honor and
                                          Principles of Trade caret and
                                          FINRA Rule 3110 Supervision.
Rule 3.130 Use of Fraudulent Devices     FINRA Rule 2020 Use of
 caret.                                   Manipulative, Deceptive or
                                          Other Fraudulent Devices.
                                          caret
Rule 3.150 Know Your Customer..........  FINRA Rule 2090 Know Your
                                          Customer.
Rule 3.160 Fair Dealing with Customers.  FINRA Rule 2020 Use of
                                          Manipulative, Deceptive or
                                          Other Fraudulent Devices.
                                          caret
Rule 3.170 Suitability.................  FINRA Rule 2111 Suitability.
Rule 3.180(a) The Prompt Receipt and     FINRA Rule 11860 COD Orders.
 Delivery of Securities.
Rule 3.180(b) The Prompt Receipt and     SEA Regulation SHO.
 Delivery of Securities.
Rule 3.190 Charges for Services          FINRA Rule 2122 Charges for
 Performed.                               Services Performed.
Rule 3.200 Use of Information Obtained   FINRA Rule 2060 Use of
 in a Fiduciary Capacity.                 Information Obtained in
                                          Fiduciary Capacity.
Rule 3.210 Publication of Transactions   FINRA Rule 5210 Publication of
 and Quotations.                          Transactions and Quotations.
Rule 3.220 Offers at Stated Prices.....  FINRA Rule 5220 Offers at
                                          Stated Prices.
Rule 3.230 Payments Involving            FINRA Rule 5230 Payments
 Publications that Influence the Market   Involving Publications that
 Price of a Security.                     Influence the Market Price of
                                          a Security.
Rule 3.240 Customer Confirmations......  FINRA Rule 2232(a) Customer
                                          Confirmations and SEA Rule 10b-
                                          10 Confirmation of
                                          Transactions.
Rule 3.250 Disclosure of Control         FINRA Rule 2262 Disclosure of
 Relationship with Issuer.                Control Relationship with
                                          Issuer.
Rule 3.260 Discretionary Accounts......  FINRA Rule 3260 Discretionary
                                          Accounts.
Rule 3.270 Improper Use of Customers'    FINRA Rule 2150(a)-(c) and SM
 Securities or Funds; Prohibition         .03 Improper Use of Customers'
 Against Guarantees and Sharing in        Securities or Funds;
 Accounts.                                Prohibition Against Guarantees
                                          and Sharing in Accounts.
Rule 3.280 Communications with the       FINRA Rule 2210 Communications
 Public.                                  with the Public.
                                         FINRA Rule 2265 Extended Hours
                                          Trading Risk Disclosure.
Rule 3.291 Influencing or Rewarding      FINRA Rule 3220 Influencing or
 Employees of Others; Gratuities.         Rewarding Employees of Others.
Rule 3.292 Telemarketing...............  FINRA Rule 3230 Telemarketing.
Rule 3.293 Short-Interest Reporting....  FINRA Rule 4560 Short-Interest
                                          Reporting.
Rule 4.511 General Requirements........  FINRA Rule 4511 General
                                          Requirements.
Rule 4.512 Customer Account Information  FINRA Rule 4512 Customer
                                          Account Information.
Rule 4.513 Record of Written Customer    FINRA Rule 4513 Record of
 Complaints.                              Written Customer Complaints.
Rule 4.550 Disclosure of Financial       FINRA Rule 2261 Disclosure of
 Condition.                               Financial Condition.
Rule 5.110 Supervision ...............  FINRA Rule 3110 Supervision.
Rule 5.120 Supervisory Control System   FINRA Rule 3120 Supervisory
                                          Control System.
Rule 5.130 Annual Certification of       FINRA Rule 3130 Annual
 Compliance and Supervisory Processes .  Certification of Compliance
                                          and Supervisory Processes.
Rule 5.160 Anti-Money Laundering         FINRA Rule 3310 Anti-Money
 Compliance Program .                    Laundering Compliance Program.
Rule 5.170 Transactions for or by        FINRA Rule 3210 Accounts At
 Associated Persons.                      Other Broker-Dealers and
                                          Financial Institutions.
Rule 6.120 Failure to Deliver and        Regulation SHO Rules 200 and
 Failure to Receive.                      203.
Rule 6.130(a), (b), (d)-(i) Forwarding   FINRA Rule 2251 Processing and
 of Proxy and Other Issuer-Related        Forwarding of Proxy and Other
 Materials; Proxy Voting.                 Issuer-Related Materials.
Rule 10.110(a) Market Manipulation.....  FINRA Rule 6140 Other Trading
                                          Practices.

[[Page 58114]]

 
Rule 10.110(b) Market Manipulation.....  FINRA Rule 5210 Publication of
                                          Transactions and Quotations,
                                          FINRA Rule 2020 Use of
                                          Manipulative, Deceptive or
                                          Other Fraudulent Devices,
                                          FINRA Rule 2010 Standards of
                                          Commercial Honor and
                                          Principles of Trade, and FINRA
                                          Rule 6140(a) Other Trading
                                          Practices.
Rule 10.120 Fictitious Transactions....  FINRA Rule 6140 Other Trading
                                          Practices and FINRA Rule 5210
                                          Supplementary Material .02
                                          Self-Trades.
Rule 10.130 Excessive Sales By A Member  FINRA Rule 6140(c) Other
                                          Trading Practices.
Rule 10.140 Manipulative Transactions..  FINRA Rule 6140 Other Trading
                                          Practices.
Rule 10.150 Dissemination of False       FINRA Rule 6140(e) Other
 Information.                             Trading Practices.
Rule 10.160 Prohibition Against Trading  FINRA Rule 5320 Prohibition
 Ahead of Customer Orders  **.           Against Trading Ahead of
                                          Customer Orders. **
Rule 10.180 Influencing the              FINRA Rule 6140(a) Other
 Consolidated Tape.                       Trading Practices and FINRA
                                          Rule 5210 Publication of
                                          Transactions and Quotations.
Rule 10.190 Trade Shredding............  FINRA Rule 5290 Order Entry and
                                          Execution Practices.
Rule 10.220 Best Execution and           FINRA Rule 5310 Best Execution
 Interpositioning **.                     and Interpositioning. **
Rule 10.240 Trading Ahead of Research    FINRA Rule 5280 Trading Ahead
 Reports **.                              of Research Reports. **
Rule 10.260 Front Running of Block       FINRA Rule 5270 Front Running
 Transactions **.                         of Block Transactions. **
Rule 11.151(e) Market Maker              FINRA Rule 6240(a)-(c), (d)(1)
 Obligations..                            and (2) Prohibition from
                                          Locking or Crossing Quotations
                                          in NMS Stocks
Rule 11.280(e)(3) & (4) Trading Halts    FINRA Rule 6190(a)&(b)
 Due to Extraordinary Market Volatility.  Compliance with Regulation NMS
                                          Plan to Address Extraordinary
                                          Market Volatility.
Rule 11.310 Locking or Crossing          FINRA Rule 6240(a),-(c), (d)(1)
 Quotations in NMS Stocks **.             and (2) Prohibition from
                                          Locking or Crossing Quotations
                                          in NMS Stocks. **
Rule 11.420(c) Order Audit Trail System  FINRA Rule 4590 Synchronization
 Requirements.                            of Member Business Clocks.
Rule 11.420(d)--Order Audit Trail        FINRA Rule 7440--Recording of
 System Requirements--Recording of        Order Information.
 Order Information.
Rule 11.420(e)--Order Audit Trail        FINRA Rule 7450--Order Data
 System Requirements--Order Data          Transmission.
 Transmission Requirements.
Rule 12.110(c) Arbitration.............  FINRA Rule 2268 Requirements
                                          When Using Predispute
                                          Arbitration Agreements for
                                          Customer Accounts.
------------------------------------------------------------------------
\1\ FINRA shall only have Regulatory Responsibilities for Rule 3.120(a)
  regarding conduct in violation of the Act, or the rules or regulations
  thereunder.
In addition, the following provisions shall be part of this 17d-2
  Agreement:
Securities Exchange Act of 1934 (``SEA''):
Section 15(g)
SEA Rules:
 SEA Rule 200 of Regulation SHO--Definition of Short Sales and
  Marking Requirements**
 SEA Rule 201 of Regulation SHO--Circuit Breaker**
 SEA Rule 203 of Regulation SHO--Borrowing and Delivery
  Requirements**
 SEA Rule 204 of Regulation SHO--Close-Out Requirement**
 SEA Rule 101 of Regulation M--Activities by Distribution
  Participants**
 SEA Rule 102 of Regulation M--Activities by Issuers and Selling
  Security Holders During a Distribution**
 SEA Rule 103 of Regulation M--Nasdaq Passive Market Making**
 SEA Rule 104 of Regulation M--Stabilizing and Other Activities
  in Connection with an Offering**
 SEA Rule 105 of Regulation M--Short Selling in Connection With
  a Public Offering**
 SEA Rule 604 of Regulation NMS--Display of Customer Limit
  Orders**
 SEA Rule 610(d) of Regulation NMS--Locking or Crossing
  Quotations**
 SEA Rule 611 of Regulation NMS--Order Protection Rule**
 SEA Rule 10b-5 Employment of Manipulative and Deceptive Devices
  caret
 SEA Rule 17a-3/17a-4--Records to Be Made by Certain Exchange
  Members, Brokers, and Dealers/Records to Be Preserved by Certain
  Exchange Members, Brokers, and Dealers caret
[ FINRA shall not have Regulatory Responsibilities regarding
  notification or reporting to IEX.]
caret 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 [BATS
  Exchange, Inc., BATS-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] Cboe BZX
  Exchange, Inc., Cboe BYX Exchange, Inc., NYSE Chicago, Inc., Cboe EDGA
  Exchange Inc., Cboe EDGX Exchange Inc., Financial Industry Regulatory
  Authority, Inc., MEMX, LLC, MIAX PEARL, LLC, Nasdaq BX, Inc., Nasdaq
  PHLX LLC, The Nasdaq Stock Market LLC, NYSE National, Inc., New York
  Stock Exchange, LLC, NYSE American LLC, NYSE Arca Inc., and Investors'
  Exchange LLC and the Long-Term Stock Exchange, Inc. as approved by the
  SEC on September 23, 2020, as may be amended from time to time.
** FINRA shall perform the surveillance responsibilities for the double
  star rules. These rules may be cited by FINRA in both the context of
  this Agreement and the Regulatory Services Agreement.

IV. Solicitation of Comments

    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/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number 4-700 on the subject line.

Paper Comments

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

All submissions should refer to File Number 4-700. This file number 
should be included on the subject line if email is used. To help the 
Commission

[[Page 58115]]

process and review your comments more efficiently, please use only one 
method. The Commission will post all comments on the Commission's 
internet website (http://www.sec.gov/rules/sro.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 website viewing and printing in the Commission's Public 
Reference Room, 100 F Street NE, Washington, DC 20549, on official 
business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of 
the plan also will be available for inspection and copying at the 
principal offices of FINRA and IEX. All comments received will be 
posted without change. Persons submitting comments are cautioned that 
we do not redact or edit personal identifying information from comment 
submissions. You should submit only information that you wish to make 
available publicly. All submissions should refer to File Number 4-700 
and should be submitted on or before November 10, 2021.

V. Discussion

    The Commission finds that the proposed Amended Plan is consistent 
with the factors set forth in Section 17(d) of the Act \12\ and Rule 
17d-2(c) thereunder \13\ in that the proposed Amended 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 
Amended Plan should reduce unnecessary regulatory duplication by 
allocating to FINRA certain examination and enforcement 
responsibilities for Dual Members that would otherwise be performed by 
FINRA and IEX. Accordingly, the proposed Amended Plan promotes 
efficiency by reducing costs to Dual Members. Furthermore, because IEX 
and FINRA will coordinate their regulatory functions in accordance with 
the Amended Plan, the Amended Plan should promote investor protection.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78q(d).
    \13\ 17 CFR 240.17d-2(c).
---------------------------------------------------------------------------

    The Commission notes that, under the Amended Plan, IEX and FINRA 
have allocated regulatory responsibility for those IEX rules, set forth 
in the Certification, that are substantially similar to the applicable 
FINRA rules in that examination for compliance with such provisions and 
rules would not require FINRA to develop one or more new examination 
standards, modules, procedures, or criteria in order to analyze the 
application of the rule, or a Dual Member's activity, conduct, or 
output in relation to such rule. In addition, under the Amended 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 Amended Plan are specifically listed in the Certification, as may 
be amended by the Parties from time to time.
    According to the Amended Plan, IEX will review the Certification at 
least annually, or more frequently if required by changes in either the 
rules of IEX or FINRA, and, if necessary, submit to FINRA an updated 
list of Common Rules to add IEX rules not included on the then-current 
list of Common Rules that are substantially similar to FINRA rules; 
delete IEX rules included in the then-current list of Common Rules that 
no longer qualify as common rules; and confirm that the remaining rules 
on the list of Common Rules continue to be IEX rules that qualify as 
common rules.\14\ FINRA will then confirm in writing whether the rules 
listed in any updated list are Common Rules as defined in the Amended 
Plan. The Commission believes that these provisions are designed to 
provide for continuing communication between the Parties to ensure the 
continued accuracy of the scope of the proposed allocation of 
regulatory responsibility.
---------------------------------------------------------------------------

    \14\ See paragraph 2 of the Amended Plan.
---------------------------------------------------------------------------

    The Commission is hereby declaring effective an Amended Plan that, 
among other things, allocates regulatory responsibility to FINRA for 
the oversight and enforcement of all IEX rules that are substantially 
similar to the rules of FINRA for Dual Members of IEX and FINRA. 
Therefore, modifications to the Certification need not be filed with 
the Commission as an amendment to the Amended Plan, provided that the 
Parties are only adding to, deleting from, or confirming changes to IEX 
rules in the Certification in conformance with the definition of Common 
Rules provided in the Amended Plan. However, should the Parties decide 
to add an IEX rule to the Certification that is not substantially 
similar to a FINRA rule; delete an IEX rule from the Certification that 
is substantially similar to a FINRA rule; or leave on the Certification 
an IEX rule that is no longer substantially similar to a FINRA rule, 
then such a change would constitute an amendment to the Amended Plan, 
which must be filed with the Commission pursuant to Rule 17d-2 under 
the Act.\15\
---------------------------------------------------------------------------

    \15\ The addition to or deletion from the Certification of any 
federal securities laws, rules, and regulations for which FINRA 
would bear responsibility under the Amended Plan for examining, and 
enforcing compliance by, Dual Members, also would constitute an 
amendment to the Amended Plan.
---------------------------------------------------------------------------

    Under paragraph (c) of Rule 17d-2, the Commission may, after 
appropriate notice and comment, declare a plan, or any part of a plan, 
effective. In this instance, the Commission believes that appropriate 
notice and comment can take place after the proposed amendment is 
effective. The primary purpose of the Amended Plan to clarify what is 
considered a Common Rule under the Plan, add Securities Exchange Act 
Rules 604, 610(d), and 611 to the Certification, eliminate the 
requirement that IEX provide FINRA a current list of members each 
quarter, and eliminate the requirements that IEX and FINRA notify Dual 
Members of the Agreement after the Effective Date by a uniform joint 
notice. The Commission notes that the prior version of this plan 
immediately prior to this proposed amendment was published for comment 
and the Commission did not receive any comments thereon.\16\ 
Furthermore, the Commission does not believe that the amendment to the 
plan raises any new regulatory issues that the Commission has not 
previously considered. The Commission notes that FINRA has access to 
real-time information regarding Exchange membership via its Central 
Registration Depository.
---------------------------------------------------------------------------

    \16\ See supra note 11 (citing to Securities Exchange Act 
Release No. 78434).
---------------------------------------------------------------------------

VI. Conclusion

    This order gives effect to the Amended Plan filed with the 
Commission in File No. 4-700. The Parties shall notify all members 
affected by the Amended Plan of their rights and obligations under the 
Amended Plan.
    It is therefore ordered, pursuant to Section 17(d) of the Act, that 
the Amended Plan in File No. 4-700, between the FINRA and IEX, filed 
pursuant to Rule 17d-2 under the Act, hereby is approved and declared 
effective.
    It is further ordered that IEX is relieved of those 
responsibilities allocated to FINRA under the Amended Plan in File No. 
4-700.

[[Page 58116]]

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
---------------------------------------------------------------------------

    \17\ 17 CFR 200.30-3(a)(34).
---------------------------------------------------------------------------

J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-22810 Filed 10-19-21; 8:45 am]
BILLING CODE 8011-01-P