Document ID: SEC-2018-1705-0001
Agency: sec
Document Type: Notice
Title: Orders: Program for Allocation of Regulatory Responsibilities
Posted Date: 2018-11-05T05:00Z

[Federal Register Volume 83, Number 214 (Monday, November 5, 2018)]
[Notices]
[Pages 55410-55416]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-24070]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-84502; File No. 4-694]

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 NYSE National, Inc.

October 30, 2018.
    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 27, 2018, pursuant to Rule 
17d-2 of the Act,\2\ by the Financial Industry Regulatory Authority, 
Inc. (``FINRA'') and NYSE National, Inc. (``NYSE National'') 
(collectively, ``Participating Organizations'' or ``parties''). This 
Agreement amends and restates the agreement entered into between the 
parties on December 22, 2015, entitled ``Agreement Among Financial 
Industry Regulatory Authority, Inc. and National Stock Exchange, Inc. 
Pursuant to Rule 17d-2 under the Securities Exchange Act of 1934,'' and 
any subsequent amendments thereafter.
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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) \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.
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    \3\ 15 U.S.C. 78s(g)(1).
    \4\ 15 U.S.C. 78q(d).
    \5\ 15 U.S.C. 78s(g)(2).
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    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.
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    \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).
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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.\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

[[Page 55411]]

sales practices and trading activities and practices.
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    \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).
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    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 to their common members. Under paragraph 
(c) of Rule 17d-2, the Commission may declare such a plan effective if, 
after providing for 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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    \10\ See Securities Exchange Act Release No. 12935 (October 28, 
1976), 41 FR 49091 (November 8, 1976).
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II. The Plan

    On February 9, 2016, the Commission declared effective the Plan 
entered into between FINRA and the National Stock Exchange, Inc. (n/k/a 
NYSE National, Inc.) for allocating regulatory responsibility pursuant 
to Rule 17d-2.\11\ The Plan is intended to reduce regulatory 
duplication for firms that are dual members of FINRA and NYSE National 
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 NYSE National rule 
for which FINRA bears responsibility under the Plan for overseeing and 
enforcing with respect to NYSE National members that are also members 
of FINRA and the associated persons therewith.
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    \11\ See Securities Exchange Act Release No. 77089 (February 9, 
2016), 81 FR 7871 (February 16, 2016).
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III. Proposed Amendment to the Plan

    On September 27, 2018, the parties submitted a proposed amendment 
to the Plan (``Amended Plan''). The primary purposes of the Amended 
Plan are to (1) reflect the name change of National Stock Exchange, 
Inc. to NYSE National, Inc., (2) update the SRO rules that are covered 
by the agreement, and (3) to the extent that it becomes a member of 
NYSE National, allocate regulatory responsibility to FINRA for NYSE 
National's affiliated routing broker-dealer, Archipelago Securities. 
The text of the proposed Amended Plan is as follows (additions are 
underlined; deletions are [bracketed]):
* * * * *

Agreement Between Financial Industry Regulatory Authority, Inc. and 
NYSE 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 NYSE National [Stock Exchange], 
Inc. (``[[NSX]NYSE NATIONAL ]NYSE National''), is made this [22nd]26th 
day of September[December], 201[5]8 (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]NYSE 
National 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] December 22, 2015 entitled ``Agreement 
between Financial Industry Regulatory Authority, Inc. and National 
Stock Exchange, Inc. Pursuant to SEC Rule 17d-2 Under the Securities 
Exchange Act of 1934,'' and any subsequent amendments thereafter.
    WHEREAS, FINRA and [NSX]NYSE National 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]NYSE National 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]NYSE National 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]NYSE National Rules'' or ``FINRA Rules'' shall mean: (i) 
The rules of [NSX]NYSE National 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]NYSE National 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]NYSE National 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 Bats BZX Exchange, Inc., Bats BYX Exchange, Inc., Chicago Stock 
Exchange, Inc., Bats EDGA Exchange, Inc., Bats EDGX Exchange, Inc., 
Financial Industry Regulatory Authority, Inc., NASDAQ BX, Inc., NASDAQ 
PHLX LLC, The NASDAQ Stock Market LLC, National Stock Exchange, Inc., 
New York Stock Exchange LLC, NYSE MKT LLC, NYSE Arca, Inc., and 
Investors Exchange LLC, approved by the SEC on August 3, 2016 as the 
same may be amended from time to time. Common Rules shall not include 
provisions regarding (i) notice, reporting or any other filings made 
directly to or from NYSE National, (ii) incorporation by reference of 
other NYSE National 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 NYSE National, (iv) prior written approval of NYSE 
National, and (v) payment of fees or fines to NYSE National.
    (c) ``Dual Members'' shall mean those [NSX]NYSE National 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

[[Page 55412]]

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]NYSE National furnished FINRA with a current list of Common Rules 
and certified to FINRA that such rules that are [NSX]NYSE National 
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]NYSE National or FINRA, 
[NSX]NYSE National shall submit an updated list of Common Rules to 
FINRA for review which shall add [NSX]NYSE National Rules not included 
in the current list of Common Rules that qualify as Common Rules as 
defined in this Agreement; delete [NSX]NYSE National 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]NYSE National 
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]NYSE National 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]NYSE 
National'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]NYSE National Rules that are not Common Rules, except 
for NYSE National rules for any NYSE National affiliate that is a 
member that operates as a facility (as defined in Section 3(a)(2) of 
the Exchange Act), acts as a router for NYSE National and is a member 
of FINRA (``Router Member'') as provided in paragraph 6. As of the date 
of this Agreement, Archipelago Securities is the only Router Member.
    3. Dual Members. Prior to the Effective Date, [NSX]NYSE National 
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]NYSE National by 
FINRA for performing the Regulatory Responsibilities and Enforcement 
Responsibilities under this Agreement except as hereinafter provided. 
FINRA shall provide [NSX]NYSE National with ninety (90) days advance 
written notice in the event FINRA decides to impose any charges to 
[NSX]NYSE National for performing the Regulatory Responsibilities under 
this Agreement. If FINRA determines to impose a charge, [NSX]NYSE 
National 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]NYSE National Rules, which are not listed as Common Rules, 
discovered pursuant to the performance of the Regulatory 
Responsibilities assumed hereunder, FINRA shall notify [NSX]NYSE 
National of those apparent violations for such response as [NSX]NYSE 
National deems appropriate. With respect to apparent violations of any 
NYSE National Rules by any Router Member, FINRA shall not make 
referrals to NYSE National 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.
    (b) In the event that [NSX]NYSE National becomes aware of apparent 
violations of any Common Rules, discovered pursuant to the performance 
of the Retained Responsibilities, [NSX]NYSE National 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]NYSE National, [NSX]NYSE National 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]NYSE National 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]NYSE National any information it 
obtains about Dual Members which reflects adversely on their financial 
condition. [NSX]NYSE National 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

[[Page 55413]]

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 [NSX]NYSE National advised of its actions in this regard for such 
subsequent proceedings as [NSX]NYSE National may initiate.
    9. Customer Complaints. [NSX]NYSE National shall forward to FINRA 
copies of all customer complaints involving Dual Members received by 
[NSX]NYSE National 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]NYSE 
National 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]NYSE National 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 
Bats BZX Exchange, Inc., Bats BYX Exchange, Inc., Chicago Stock 
Exchange, Inc., Bats EDGA Exchange, Inc., Bats EDGX Exchange, Inc., 
Financial Industry Regulatory Authority, Inc., NASDAQ BX, Inc., NASDAQ 
PHLX LLC, The NASDAQ Stock Market LLC, National Stock Exchange, Inc., 
New York Stock Exchange LLC, NYSE MKT LLC, and NYSE Arca Inc., and 
Investors Exchange LLC effective August 3, 2016, as may be amended from 
time to time and (2) the multiparty 17d-2 agreement relating to 
Regulation NMS rules by and among Bats BZX Exchange, Inc., Bats BYX 
Exchange, Inc., BOX Options Exchange LLC, Chicago Board Options 
Exchange, Incorporated, C2 Options Exchange, Incorporated, Chicago 
Stock Exchange, Inc., Bats EDGA Exchange, Inc., Bats EDGX Exchange, 
Inc., Financial Industry Regulatory Authority, Inc., International 
Securities Exchange, LLC, Investors Exchange LLC, ISE Gemini, LLC, ISE 
Mercury, LLC, Miami International Securities Exchange, LLC, MIAX PEARL, 
LLC, The NASDAQ Stock Market LLC, NASDAQ BX, Inc., NASDAQ PHLX, Inc., 
National Stock Exchange, Inc., New York Stock Exchange LLC, NYSE MKT 
LLC, and NYSE Arca, Inc. effective February 2, 2017 as may be amended 
from time to time.
    15. Notification of Members. [NSX]NYSE National 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]NYSE National 
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]NYSE National 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]NYSE National 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]NYSE National join in requesting the Commission, upon its approval 
of this Agreement or any part thereof, to relieve [NSX]NYSE National 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.
* * * * *

Exhibit 1

    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.

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

[NSX]NYSE National hereby certifies that the requirements contained in 
the rules listed below are identical to, or substantially similar to, 
the comparable

[[Page 55414]]

FINRA Rule, NASD Rule, 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 NYSE National, 
(ii) incorporation by reference to other NYSE National 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 NYSE National, (iv) prior written 
approval of NYSE National, and (v) payment of fees or fines to NYSE 
National.

------------------------------------------------------------------------
                                         FINRA rule, NASD rule, Exchange
          NYSE national rule:               Act provision or SEC rule:
 
------------------------------------------------------------------------
Rule 2.2(e) Obligations of ETP Holders   FINRA Rule 1250 Continuing
 and the Exchange .                      Education Requirements.
Rule 2.2 Obligations of ETP Holders and  FINRA Rule 1010(a), (c)
 the Exchange Commentary .05 .           Electronic Filing Requirements
                                          for Uniform Forms, and FINRA
                                          By-Laws Article V, Sec. 2 and
                                          Sec. 3 Registered
                                          Representatives and Associated
                                          Persons.
Rule 3.10(b) Notice of Expulsion or      FINRA Rule 4530(a)(1)(D)
 Suspension .                            Reporting Requirements.\1\
Rule 6.7410 Definitions(a)-(o).........  FINRA Rule 7410 Definitions.
Rule 6.7420 Applicability..............  FINRA Rule 7420
                                          Applicability.\2\
Rule 6.7430 Synchronization of ETP       FINRA Rule 4590 Synchronization
 Holder Business Clocks .                of member Business Clocks.\3\
Rule 6.7440 Recording of Order           FINRA Rule 7440 Recording of
 Information .                           Order Information.
Rule 6.7450 Order Data Transmission      FINRA Rule 7450 Order Data
 Requirements.                            Transmission Requirements.
Rule 6.7460 Violation of Order Audit     FINRA Rule 7460 Violation of
 Trail System Rules.                      Order Audit Trail System
                                          Rules.
Rule 6.7470 Exemption to the Order       FINRA Rule 7470 Exemption to
 Recording and Data Transmission          the Order Recording and Data
 Requirements .                          Transmission Requirements.
Rule 7.3 (b) and (c) Commissions.......  FINRA Rule 2232 Customer
                                          Confirmations and SEA Rule 10b-
                                          10 Confirmation of
                                          Transactions.
Rule 7.34(d)(3) Trading Sessions.......  FINRA Rule 2265 Extended Hours
                                          Trading Risk Disclosure.
Rule 11.2111 Suitability...............  FINRA Rule 2111 Suitability.
Rule 11.2210 Communications with the     FINRA Rule 2210 Communications
 Public.                                  with the Public.
Rule 11.2232 Customer Confirmations....  FINRA Rule 2232 Customer
                                          Confirmations and SEA Rule 10b
                                          10 Confirmation of
                                          Transactions.
Rule 11.3.1 Business Conduct of ETP      FINRA Rule 2010 Standards of
 Holders *.                               Commercial Honor and
                                          Principles of Trade.* \4\
Rule 11.3.2 Violations Prohibited * ..  FINRA Rule 2010 Standards of
                                          Commercial Honor and
                                          Principles of Trade and FINRA
                                          Rule 3110 Supervision.* \5\
Rule 11.3.3 Use of Fraudulent Devices *  FINRA Rule 2020 Use of
                                          Manipulative, Deceptive or
                                          Other Fraudulent Device.*
Rule 11.3.5(a) Advertising Practices...  FINRA Rule 2210(d)(1)(B)
                                          Communications with the
                                          Public.
Rule 11.3.5(c) Advertising Practices...  FINRA Rule 2210(d)(1)
                                          Communications with the
                                          Public.
Rule 11.3.6 Fair Dealing with Customers  FINRA Rule 2020 Use of
                                          Manipulative, Deceptive or
                                          Other Fraudulent Device, FINRA
                                          2010 Standards of Commercial
                                          Honor and Principles of Trade,
                                          and FINRA Rule 2111
                                          Suitability.\6\
Rule 11.3.8(a) The Prompt Receipt and    FINRA Rule 11860 COD Orders.
 Delivery of Securities.
Rule 11.3.9 Charges for Services         FINRA Rule 2122 Charges for
 Performed.                               Services Performed.
Rule 11.3.10 Use of Information........  FINRA Rule 2060 Use of
                                          Information Obtained in
                                          Fiduciary Capacity.
Rule 11.3.11 Publication of              FINRA Rule 5210 Publication of
 Transactions and Quotations .           Transactions and Quotations.
Rule 11.3.12 Offers at Stated Prices...  FINRA Rule 5220 Offers at
                                          Stated Prices.
Rule 11.3.13 Payment Designed to         FINRA Rule 5230 Payments
 Influence Market Prices, Other than      Involving Publications that
 Paid Advertising.                        Influence the Market Price of
                                          a Security.\7\
Rule 11.3.15 Disclosure of Control.....  FINRA Rule 2262 Disclosure of
                                          Control Relationship With
                                          Issuer.
Rule 11.3.16 Discretionary Accounts....  NASD Rule 2510 Discretionary
                                          Accounts.\8\
Rule 11.3.17 Customer's Securities or    FINRA Rule 2150(a) Customers'
 Funds.                                   Securities or Funds--Improper
                                          Use.
Rule 11.3.18 Prohibition Against         FINRA Rule 2150(b) Customers'
 Guarantees.                              Securities or Funds--
                                          Prohibition Against
                                          Guarantees.
Rule 11.3.19 Sharing in Accounts;        FINRA Rule 2150(c)(1)
 Extent Permissible.                      Customers' Securities or
                                          Funds--Sharing in Accounts;
                                          Extent Permissible.
Rule 11.3.21 Telephone Solicitation....  FINRA Rule 3230 Telemarketing.
Rule 11.3310 Anti-Money Laundering       FINRA Rule 3310 Anti-Money
 Compliance Program .                    Laundering Compliance Program.
Rule 11.4.1 Requirements * ...........  FINRA Rule 4511 General
                                          Requirements.*
Rule 11.4.3 Record of Written            FINRA Rule 4513 Records of
 Complaints.                              Written Customer Complaints.
Rule 11.5.1 Written Procedures * .....  FINRA Rule 3110(b) Supervision--
                                          Written Procedures.*
Rule 11.5.2 Responsibility of ETP        FINRA Rule 3110(a) and (b)(7)
 Holders.                                 Supervision.*
Rule 11.5.3 Records *..................  FINRA Rule 3110(a) and (b)
                                          Supervision; * and FINRA Rule
                                          4511 General Requirements.
Rule 11.5.4 Review of Activities and     FINRA Rule 3110(c) and (d)
 Annual Inspections.                      Supervision--Internal
                                          Inspections/Review of
                                          Transactions and
                                          Correspondence.* \9\
Rule 11.5.7 Annual Certification of      FINRA Rule 3130 Annual
 Compliance and Supervisory Processes .  Certification of Compliance
                                          and Supervisory Processes.
Rule 11.5220 Disruptive Quoting and      FINRA Rule 5210 .03 Disruptive
 Trading Activity Prohibited .           Quoting and Trading Activity
                                          Prohibited.
Rule 11.5320 Prohibition Against         FINRA Rule 5320 Prohibition
 Trading Ahead of Customer Orders.        Against Trading Ahead of
                                          Customer Orders.
Rule 11.12.10 Best Execution...........  FINRA Rule 5310 Best Execution
                                          and Interpositioning.\10\ROW>

[[Page 55415]]

 
Rule 11.12.3 Excessive Sales by an ETP   FINRA Rule 6140(c) Other
 Holder.                                  Trading Practices.
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* 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 BZX Exchange,
  Inc., Bats BYX Exchange, Inc., Chicago Stock Exchange, Inc., Bats EDGA
  Exchange, Inc., Bats EDGX Exchange, Inc., Financial Industry
  Regulatory Authority, Inc., NASDAQ BX, Inc., NASDAQ PHLX LLC, The
  NASDAQ Stock Market LLC, National Stock Exchange, Inc., New York Stock
  Exchange, LLC, NYSE MKT LLC, and NYSE Arca, Inc. effective August 3,
  2016, as may be amended from time to time.
\1\ FINRA shall only have Regulatory Responsibilities to the extent NYSE
  National has adopted or accepts interpretations consistent with FINRA
  Rule 4530 regarding the specific timing and thresholds for reporting.
\2\ Applies only to NYSE National ETP Holders and their associated
  persons, as that term is defined in FINRA's By-laws Art. I(rr).
\3\ FINRA shall not have regulatory responsibilities to the extent NYSE
  National prescribes additional procedures not required by FINRA.
\4\ FINRA shall not have Regulatory Responsibilities regarding .01 of
  NYSE National Rule 11.3.1.
\5\ FINRA shall only have Regulatory Responsibilities regarding the
  first phrase of the NYSE National 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 NYSE National.
\6\ FINRA shall not have Regulatory Responsibilities regarding .01 of
  NYSE National Rule 11.3.6.
\7\ 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.
\8\ FINRA shall not have Regulatory Responsibilities for the NYSE
  National rule to the extent the exception in FINRA Rule 2510(d)(2)
  applies.
\9\ FINRA shall not have Regulatory Responsibilities regarding the NYSE
  National 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 .01 of
  NYSE National Rule 11.12.10.

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

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 4-694 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 4-694. 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 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 a.m. and 3 
p.m. Copies of the plan also will be available for inspection and 
copying at the principal offices of FINRA and NYSE National. 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 4-694 and should be submitted 
on or before November 26, 2018.

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 
NYSE National and FINRA. Accordingly, the proposed Amended Plan 
promotes efficiency by reducing costs to Dual Members. Furthermore, 
because NYSE National 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, NYSE National 
and FINRA have allocated regulatory responsibility for those NYSE 
National 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. 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, NYSE National will review the 
Certification, at least annually, or more frequently if required by 
changes in either the rules of NYSE National or FINRA, and, if 
necessary, submit to FINRA an updated list of Common Rules to add NYSE 
National rules not included on the then-current list of Common Rules 
that are substantially similar to FINRA rules; delete NYSE National 
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 NYSE National 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. Under the Amended Plan, NYSE

[[Page 55416]]

National will also provide FINRA with a current list of Dual Members 
and shall update the list no less frequently than once each 
quarter.\15\ 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.
    \15\ See paragraph 3 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 NYSE National rules that are 
substantially similar to the rules of FINRA for Dual Members of NYSE 
National 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 NYSE National 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 NYSE National rule 
to the Certification that is not substantially similar to a FINRA rule; 
delete an NYSE National rule from the Certification that is 
substantially similar to a FINRA rule; or leave on the Certification an 
NYSE National 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.\16\
---------------------------------------------------------------------------

    \16\ The Commission also notes that the addition to or deletion 
from the Certification of any federal securities laws, rules, and 
regulations for which FINRA would bear responsibility under the 
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 purposes of the amendment are to (1) reflect the 
name change of National Stock Exchange, Inc. to NYSE National, Inc., 
(2) update the SRO rules that are covered by the agreement, and (3) to 
the extent that it becomes a member of NYSE National, allocate 
regulatory responsibility to FINRA for NYSE National's affiliated 
routing broker-dealer, Archipelago Securities. By declaring it 
effective today, the Amended Plan can become effective and be 
implemented without undue delay. 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.\17\ Furthermore, the Commission does not believe that the 
amendment to the plan raises any new regulatory issues that the 
Commission has not previously considered.
---------------------------------------------------------------------------

    \17\ See supra note 11 (citing to Securities Exchange Act 
Release No. 77089).
---------------------------------------------------------------------------

VI. Conclusion

    This order gives effect to the Amended Plan filed with the 
Commission in File No. 4-694. 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. 4-694, between the FINRA and NYSE 
National, filed pursuant to Rule 17d-2 under the Act, hereby is 
approved and declared effective.
    It is further ordered that NYSE National is relieved of those 
responsibilities allocated to FINRA under the Amended Plan in File No. 
4-694.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
---------------------------------------------------------------------------

    \18\ 17 CFR 200.30-3(a)(34).
---------------------------------------------------------------------------

Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-24070 Filed 11-2-18; 8:45 am]
 BILLING CODE 8011-01-P