Document ID: SEC-2019-0141-0001
Agency: sec
Document Type: Notice
Title: Program for Allocation of Regulatory Responsibilities: Filing and Order Approving and Declaring Effective an Amendment to the Plan for the Allocation of Regulatory Responsibilities Among NYSE American LLC, et al.
Posted Date: 2019-02-15T05:00Z

[Federal Register Volume 84, Number 32 (Friday, February 15, 2019)]
[Notices]
[Pages 4554-4562]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-02493]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-85106; File No. S7-966]

Program for Allocation of Regulatory Responsibilities Pursuant to 
Rule 17d-2; Notice of Filing and Order Approving and Declaring 
Effective an Amendment to the Plan for the Allocation of Regulatory 
Responsibilities Among NYSE American LLC, Cboe BZX Exchange, Inc., the 
Cboe EDGX Exchange, Inc., Cboe C2 Exchange, Inc., Cboe Exchange, Inc., 
Nasdaq ISE, LLC, Financial Industry Regulatory Authority, Inc., NYSE 
Arca, Inc., The NASDAQ Stock Market LLC, BOX Exchange LLC, NASDAQ BX, 
Inc., NASDAQ PHLX LLC, Miami International Securities Exchange, LLC, 
Nasdaq GEMX, LLC, Nasdaq MRX, LLC, MIAX PEARL, LLC, and MIAX Emerald, 
LLC Concerning Options-Related Sales Practice Matters

February 12, 2019.
    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 January 3, 2019, pursuant to Rule 
17d-2 of the Act,\2\ by NYSE American LLC (``NYSE American''), Cboe BZX 
Exchange, Inc., (``BZX''), the Cboe EDGX Exchange, Inc. (``EDGX''), 
Cboe C2 Exchange, Inc. (``C2''), Cboe Exchange, Inc. (``Cboe''), Nasdaq 
ISE, LLC (``ISE''), Financial Industry Regulatory Authority, Inc. 
(``FINRA''), NYSE Arca, Inc. (``Arca''), The NASDAQ Stock Market LLC 
(``Nasdaq''), BOX Exchange LLC (``BOX''), NASDAQ BX, Inc. (``BX''), 
NASDAQ PHLX LLC (``PHLX''), Miami International Securities Exchange, 
LLC (``MIAX''), Nasdaq GEMX, LLC (``Gemini''), Nasdaq MRX, LLC 
(``Mercury''), MIAX PEARL, LLC (``MIAX PEARL''), and MIAX Emerald, LLC 
(MIAX Emerald) (collectively, ``Participating Organizations'' or 
``parties'').
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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 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 September 8, 1983, the Commission approved the SRO participants' 
plan for allocating regulatory responsibilities pursuant to Rule 17d-
2.\11\ On May 23, 2000, the Commission approved an amendment to the 
plan that added the ISE as a participant.\12\ On November 8, 2002, the 
Commission approved another amendment that replaced the original plan 
in its entirety and, among other things, allocated regulatory 
responsibilities among all the participants in a more equitable 
manner.\13\ On February 5, 2004, the Commission approved an amendment 
to the plan, primarily to include the BSE, which was establishing a new 
options trading facility to be known as BOX, as

[[Page 4555]]

an SRO participant.\14\ On March 26, 2007, the Commission approved an 
amendment to the plan that, among other things, provided that the 
National Association of Securities Dealers (``NASD'') (n/k/a FINRA) and 
NYSE are Designated Options Examining Authorities under the plan.\15\ 
On March 12, 2008, the Commission approved an amendment to the plan 
primarily to add NASDAQ as an SRO participant.\16\ On June 18, 2008, 
the Commission approved an amendment to the plan primarily to remove 
the NYSE as a Designated Options Examining Authority, leaving FINRA as 
the sole Designated Options Examining Authority for all common members 
that are members of FINRA.\17\ On February 25, 2010, the Commission 
approved a proposed amendment to the plan to add Bats and C2 as SRO 
participants and to reflect the name changes of the American Stock 
Exchange LLC to the NYSE Amex LLC, the Boston Stock Exchange, Inc., to 
the NASDAQ OMX BX, Inc. and the Philadelphia Stock Exchange, Inc. to 
the NASDAQ OMX PHLX, Inc.\18\ On May 11, 2012, the Commission approved 
an amendment to the plan to add BOX as an SRO participant and to amend 
Section XIII of the plan to set forth a revised procedure for adding 
new participants to the plan.\19\ On December 5, 2012, the Commission 
approved an amendment to the plan to add MIAX as an SRO participant, 
and to change the name of NYSE Amex LLC to NYSE MKT LLC.\20\ On July 
26, 2013, the Commission approved an amendment to the plan to add Topaz 
Exchange LLC as an SRO participant.\21\ On October 29, 2015, the 
Commission approved an amendment to the plan to add EDGX as an SRO 
participant and to change the name of Topaz Exchange, LLC to ISE 
Gemini, LLC.\22\ On February 16, 2016, the Commission approved an 
amendment to the plan to add ISE Mercury, and remove the NYSE, as an 
SRO participant to the Plan.\23\ On February 2, 2017, the Commission 
approved an amendment to the plan to add MIAX PEARL as an SRO 
participant to the Plan.\24\
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    \11\ See Securities Exchange Act Release No. 20158 (September 8, 
1983), 48 FR 41256 (September 14, 1983).
    \12\ See Securities Exchange Act Release No. 42816 (May 23, 
2000), 65 FR 34759 (May 31, 2000).
    \13\ See Securities Exchange Act Release No. 46800 (November 8, 
2002), 67 FR 69774 (November 19, 2002).
    \14\ See Securities Exchange Act Release No. 49197 (February 5, 
2004), 69 FR 7046 (February 12, 2004).
    \15\ See Securities Exchange Act Release No. 55532 (March 26, 
2007), 72 FR 15729 (April 2, 2007).
    \16\ See Securities Exchange Act Release No. 57481 (March 12, 
2008), 73 FR 14507 (March 18, 2008).
    \17\ See Securities Exchange Act Release No. 57987 (June 18, 
2008), 73 FR 36156 (June 25, 2008).
    \18\ See Securities Exchange Act Release No. 61589 (February 25, 
2012), 75 FR 9976 (March 4, 2010).
    \19\ See Securities Exchange Act Release No. 66974 (May 11, 
2012), 77 FR 29705 (May 18, 2012).
    \20\ See Securities Exchange Act Release No. 68363 (December 5, 
2012), 77 FR 73711 (December 11, 2012).
    \21\ See Securities Exchange Act Release No. 70051 (July 26, 
2013), 78 FR 46644 (August 1, 2013).
    \22\ See Securities Exchange Act Release No. 76309 (October 29, 
2015), 80 FR 68361 (November 4, 2015).
    \23\ See Securities Exchange Act Release No. 77148 (February 16, 
2016), 81 FR 8775 (February 22, 2016).
    \24\ See Securities Exchange Act Release No. 79929 (February 2, 
2017), 82 FR 9757 (February 8, 2017).
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    The plan reduces regulatory duplication for a large number of firms 
currently members of two or more of the SRO participants by allocating 
regulatory responsibility for certain options-related sales practice 
matters to one of the SRO participants. Generally, under the plan, the 
SRO participant responsible for conducting options-related sales 
practice examinations of a firm, and investigating options-related 
customer complaints and terminations for cause of associated persons of 
that firm, is known as the firm's ``Designated Options Examining 
Authority'' (``DOEA''). Pursuant to the plan, any other SRO of which 
the firm is a member is relieved of these responsibilities during the 
period in which the firm is assigned to another SRO acting as that 
firm's DOEA.

III. Proposed Amendment to the Plan

    On January 3, 2019, the Parties submitted a proposed amendment to 
the Plan. The primary purpose of the amendment is to add MIAX Emerald 
as a Participant to the Plan and to reflect name changes of certain 
Participating Organizations. The text of the proposed amended 17d-2 
plan is as follows (additions are italicized; deletions are 
[bracketed]):
* * * * *

Agreement by and Among [Bats]Cboe BZX Exchange, Inc., BOX Options 
Exchange, LLC, [the Chicago Board Options]Cboe Exchange, 
Inc.[orporated], Cboe C2 [Options] Exchange, Inc.[orporated], [the 
International Securities Exchange]Nasdaq ISE, LLC, Financial Industry 
Regulatory Authority, Inc., Miami International Securities Exchange, 
LLC, [the] NYSE [MKT]American LLC, [the] NYSE Arca, Inc., The 
[NASDAQ]Nasdaq Stock Market LLC, [NASDAQ]Nasdaq BX, Inc., [the 
NASDAQ]Nasdaq PHLX LLC, [ISE Gemini]Nasdaq GEMX, LLC, [Bats]Cboe EDGX 
Exchange, Inc., [ISE Mercury]Nasdaq MRX, LLC [and], MIAX PEARL, LLC and 
MIAX Emerald, LLC Pursuant to Rule 17d-2 Under the Securities Exchange 
Act of 1934

    This agreement (``Agreement''), by and among [Bats]Cboe BZX 
Exchange, Inc., BOX Options Exchange, LLC, [the Chicago Board 
Options]Cboe Exchange, Inc.[orporated], Cboe C2 [Options] Exchange, 
Inc.[orporated], [the International Securities Exchange]Nasdaq ISE, 
LLC, Financial Industry Regulatory Authority, Inc. (``FINRA''), Miami 
International Securities Exchange, LLC, The [NASDAQ]Nasdaq Stock Market 
LLC (``[NASDAQ]Nasdaq''), [NASDAQ]Nasdaq BX, Inc., [the] NYSE 
[MKT]American LLC, [the] NYSE Arca, Inc., [the NASDAQ]Nasdaq PHLX LLC, 
[ISE Gemini]Nasdaq GEMX, LLC, [Bats]Cboe EDGX Exchange, Inc., [ISE 
Mercury]Nasdaq MRX, LLC [and], MIAX PEARL, LLC and MIAX Emerald, LLC, 
hereinafter collectively referred to as the Participants, is made this 
[13th] 2nd day of January, [2017]2019, pursuant to the provisions of 
Rule 17d-2 under the Securities Exchange Act of 1934 (the ``Exchange 
Act''), which allows for plans among self-regulatory organizations to 
allocate regulatory responsibility. This Agreement shall be 
administered by a committee known as the Options Self-Regulatory 
Council (the ``Council'').
    This Agreement amends and restates the agreement entered into among 
the Participants on [February 2, 2016]January 13, 2017, entitled 
``Agreement by and among [BATS]Bats BZX Exchange, Inc., BOX Options 
Exchange, LLC, the Chicago Board Options Exchange, Incorporated, C2 
Options Exchange, Incorporated, the International Securities Exchange, 
LLC, Financial Industry Regulatory Authority, Inc., Miami International 
Securities Exchange, LLC, [the New York Stock Exchange LLC,] NYSE MKT 
LLC, the NYSE Arca, Inc., the NASDAQ Stock Market LLC, NASDAQ OMX BX, 
Inc., the NASDAQ OMX PHLX, Inc., ISE Gemini, LLC, Bats EDGX Exchange, 
Inc. [and], ISE Mercury, LLC and MIAX PEARL, LLC, Pursuant to Rule 17d-
2 under the Securities Exchange Act of 1934.''
    Whereas, the Participants are desirous of allocating regulatory 
responsibilities with respect to broker-dealers, and persons associated 
therewith, that are members \1\ of more than one Participant (the 
``Common Members'') and conduct a public business for compliance with 
Common Rules (as hereinafter defined) relating to the conduct by 
broker-dealers of accounts for listed options, index warrants, currency 
index warrants and

[[Page 4556]]

currency warrants (collectively, ``Covered Securities''); and
    Whereas, the Participants are desirous of executing a plan for this 
purpose pursuant to the provisions of Rule 17d-2 and filing such plan 
with the Securities and Exchange Commission (``SEC'' or the 
``Commission'') for its approval;
    Now, therefore, in consideration of the mutual covenants contained 
hereafter, the Participants agree as follows:

    I. As used herein the term Designated Options Examining 
Authority (``DOEA'') shall mean: (1) FINRA insofar as it shall 
perform Regulatory Responsibility (as hereinafter defined) for its 
broker-dealer members that also are members of another Participant 
or (2) the Designated Examination Authority (``DEA'') pursuant to 
SEC Rule 17d-1 under the Securities Exchange Act (``Rule 17d-1'') 
for a broker-dealer that is a member of a more than one Participant 
(but not a member of FINRA).
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    \1\ In the case of BOX Options Exchange, LLC (``BOX''), [NASDAQ 
OMX]Nasdaq BX, Inc. (``BX'') and [NASDAQ]Nasdaq members are those 
persons who are options participants (as defined in the BOX, BX and 
[NASDAQ]Nasdaq Options Market Rules).
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    II. As used herein, the term ``Regulatory Responsibility'' shall 
mean the examination and enforcement responsibilities relating to 
compliance by Common Members with the rules of the applicable 
Participant that are substantially similar to the rules of the other 
Participants (the ``Common Rules''), insofar as they apply to the 
conduct of accounts for Covered Securities. A list of the current 
Common Rules of each Participant applicable to the conduct of 
accounts for Covered Securities is attached hereto as Exhibit A. 
Each year within 30 days of the anniversary date of the commencement 
of operation of this Agreement, each Participant shall submit in 
writing to FINRA and each DEA performing as a DOEA for any members 
of such Participant any revisions to Exhibit A reflecting changes in 
the rules of the Participant, and confirm that all other rules of 
the Participant listed in Exhibit A continue to meet the definition 
of Common Rules as defined in this Agreement. Within 30 days from 
the date that FINRA and each DEA performing as a DOEA has received 
revisions and/or confirmation that no change has been made to 
Exhibit A from all Participants, FINRA and each DEA performing as a 
DOEA shall confirm in writing to each Participant whether the rules 
listed in any updated Exhibit A are Common Rules as defined in this 
Agreement. Notwithstanding anything herein to the contrary, it is 
explicitly understood that the term ``Regulatory Responsibility'' 
does not include, and each of the Participants shall (unless 
allocated pursuant to Rule 17d-2 otherwise than under this 
Agreement) retain full responsibility for, each of the following:
    (a) Surveillance and enforcement with respect to trading 
activities or practices involving its own marketplace, including 
without limitation its rules relating to the rights and obligations 
of specialists and other market makers;
    (b) Registration pursuant to its applicable rules of associated 
persons;
    (c) Discharge of its duties and obligations as a DEA; and
    (d) Evaluation of advertising, responsibility for which shall 
remain with the Participant to which a Common Member submits same 
for approval.
    III. Apparent violations of another Participant's rules 
discovered by a DOEA, but which rules are not within the scope of 
the discovering DOEA's Regulatory Responsibility, shall be referred 
to the relevant Participant for such action as the Participant to 
which such matter has been referred deems appropriate. 
Notwithstanding the foregoing, nothing contained herein shall 
preclude a DOEA in its discretion from requesting that another 
Participant conduct an enforcement proceeding on a matter for which 
the requesting DOEA has Regulatory Responsibility. If such other 
Participants agree, the Regulatory Responsibility in such case shall 
be deemed transferred to the accepting Participant and confirmed in 
writing by the Participants involved. Each Participant agrees, upon 
request, to make available promptly all relevant files, records and/
or witnesses necessary to assist another Participant in an 
investigation or enforcement proceeding.
    IV. The Council shall be composed of one representative 
designated by each of the Participants. Each Participant shall also 
designate one or more persons as its alternate representative(s). In 
the absence of the representative of a Participant, such alternate 
representative shall have the same powers, duties and 
responsibilities as the representative. Each Participant may, at any 
time, by notice to the then Chair of the Council, replace its 
representative and/or its alternate representative on such Council. 
A majority of the Council shall constitute a quorum and, unless 
specifically otherwise required, the affirmative vote of a majority 
of the Council members present (in person, by telephone or by 
written consent) shall be necessary to constitute action by the 
Council. The representative from FINRA shall serve as Chair of the 
Council. All notices and other communications for the Council shall 
be sent to it in care of the Chair or to each of the 
representatives.
    V. The Council shall determine the times and locations of 
Council meetings, provided that the Chair, acting alone, may also 
call a meeting of the Council in the event the Chair determines that 
there is good cause to do so. To the extent reasonably possible, 
notice of any meeting shall be given at least ten-business days 
prior thereto. Notwithstanding anything herein to the contrary, 
representatives shall always be given the option of participating in 
any meeting telephonically at their own expense rather than in 
person.
    VI. FINRA shall have Regulatory Responsibility for all Common 
Members that are members of FINRA. For the purpose of fulfilling the 
Participants' Regulatory Responsibilities for Common Members that 
are not members of FINRA, the Participant that is the DEA shall 
serve as the DOEA. All Participants shall promptly notify the DOEAs 
no later than the next scheduled meeting of any change in membership 
of Common Members. A DOEA may request that a Common Member that is 
allocated to it be reallocated to another DOEA by giving thirty days 
written notice thereof. The DOEAs in their discretion may approve 
such request and reallocate such Common Member to another DOEA.
    VII. Each DOEA shall conduct an examination of each Common 
Member. The Participants agree that, upon request, relevant 
information in their respective files relative to a Common Member 
will be made available to the applicable DOEA. At each meeting of 
the Council, each DOEA shall be prepared to report on the status of 
its examination program for the previous quarter and any period 
prior thereto that has not previously been reported to the Council.
    VIII. Each DOEA will promptly furnish a copy of the Examination 
report, relating to Covered Securities, of any examination made 
pursuant to the provisions of this Agreement to each other 
Participant of which the Common Member examined is a member.
    IX. Each DOEA's Regulatory Responsibility shall for each Common 
Member allocated to it include investigations into terminations 
``for cause'' of associated persons relating to Covered Securities, 
unless such termination is related solely to another Participant's 
market. In the latter instance, that Participant to whose market the 
termination for cause relates shall discharge Regulatory 
Responsibility with respect to such termination for cause. In 
connection with a DOEA's examination, investigation and/or 
enforcement proceeding regarding a Covered Security-related 
termination for cause, the other Participants of which the Common 
Member is a member shall furnish, upon request, copies of all 
pertinent materials related thereto in their possession. As used in 
this Section, ``for cause'' shall include, without limitation, 
terminations characterized on Form U5 under the label ``Permitted to 
Resign,'' ``Discharge'' or ``Other.''
    X. Each DOEA shall discharge the Regulatory Responsibility for 
each Common Member allocated to it relative to a Covered Securities-
related customer complaint \2\ unless such complaint is uniquely 
related to another Participant's market. In the latter instance, the 
DOEA shall forward the matter to that Participant to whose market 
the matter relates, and the latter shall discharge Regulatory 
Responsibility with respect thereto. If a Participant receives a 
customer complaint for a Common Member related to a Covered Security 
for which the Participant is not the DOEA, the Participant shall 
promptly forward a copy of such complaint to the DOEA.
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    \2\ For purposes of complaints, they can be reported pursuant to 
Form U4, Form U5 or RE-3 and any amendments thereto.
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    XI. Any written notice required or permitted to be given under 
this Agreement shall be deemed given if sent by certified mail, 
return receipt requested, or by a comparable means of electronic 
communication to each Participant entitled to receipt thereof, to 
the attention of the Participant's representative on the Council at 
the Participant's then principal office or by email at such address 
as the representative shall have filed in writing with the Chair.
    XII. The Participants shall notify the Common Members of this 
Agreement by

[[Page 4557]]

means of a uniform joint notice approved by the Council.
    XIII. This Agreement may be amended to add a new Participant 
provided that such Participant does not assume Regulatory 
Responsibility, solely by an amendment by FINRA and such new 
Participant. All other Participants expressly consent to allow FINRA 
to add new Participants to this Agreement as provided above. FINRA 
will promptly notify all Participants of any such amendments to add 
new Participants. All other amendments to this Agreement must be 
approved in writing by each Participant. All amendments, including 
adding a new Participant, must be filed with and approved by the SEC 
before they become effective.
    XIV. Any of the Participants may manifest its intention to 
cancel its participation in this Agreement at any time by giving the 
Council written notice thereof at least 90 days prior to the 
effective date of such cancellation. Upon receipt of such notice the 
Council shall allocate, in accordance with the provisions of this 
Agreement, any Common Members for which the petitioning party was 
the DOEA. Until such time as the Council has completed the 
reallocation described above; the petitioning Participant shall 
retain all its rights, privileges, duties and obligations hereunder.
    XV. The cancellation of its participation in this Agreement by 
any Participant shall not terminate this Agreement as to the 
remaining Participants. This Agreement will only terminate following 
notice to the Commission, in writing, by the then Participants that 
they intend to terminate the Agreement and the expiration of the 
applicable notice period. Such notice shall be given at least six 
months prior to the intended date of termination, provided that in 
the event a notice of cancellation is received from a Participant 
that, assuming the effectiveness thereof, would result in there 
being just one remaining member of the Council, notice to the 
Commission of termination of this Agreement shall be given promptly 
upon the receipt of such notice of cancellation, which termination 
shall be effective upon the effectiveness of the cancellation that 
triggered the notice of termination to the Commission.
    XVI. No Participant nor the Council nor any of their respective 
directors, governors, officers, employees or representatives shall 
be liable to any other Participant in 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 Responsibility 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 more of the Participants and caused by the willful misconduct 
of one or more of the other participants or their respective 
directors, governors, officers, employees or representatives. No 
warranties, express or implied, are made by any or all of the 
Participants or the Council with respect to any Regulatory 
Responsibility to be performed by each of them hereunder.
    XVII. Pursuant to Section 17(d)(1)(A) of the Securities Exchange 
Act of 1934 and Rule 17d-2 promulgated pursuant thereto, the 
Participants join in requesting the Securities and Exchange 
Commission, upon its approval of this Agreement or any part thereof, 
to relieve those Participants which are from time to time 
participants in this Agreement which are not the DOEA as to a Common 
Member of any and all Regulatory Responsibility with respect to the 
matters allocated to the DOEA.
* * * * *

[January 13, 2017]January 2, 2019

Exhibit A

Rules Enforced Under 17d-2 Agreement

    Pursuant to Section II of the Agreement by and among [Bats]Cboe 
BZX Exchange, Inc. (``BZX''), BOX Options Exchange, LLC (``BOX''), 
[the Chicago Board Options Exchange, Incorporated]Cboe Exchange, 
Inc. (``[CBOE]Cboe''), Cboe C2 [Options] Exchange, Inc.[orporated] 
(``C2''), [the International Securities Exchange]Nasdaq ISE, LLC 
(``ISE''), Financial Industry Regulatory Authority, Inc. 
(``FINRA''), Miami International Securities Exchange, LLC 
(``MIAX''), The [NASDAQ]Nasdaq Stock Market LLC 
(``[NASDAQ]Nasdaq''), [NASDAQ]Nasdaq BX, Inc. (``BX''), [the] NYSE 
[MKT]American LLC (``NYSE [MKT]American''), [the] NYSE Arca, Inc. 
(``NYSE ARCA''), [the NASDAQ]Nasdaq PHLX LLC (``PHLX''), [ISE 
Gemini]Nasdaq GEMX, LLC (``[ISE Gemini]GEMX''), [Bats]Cboe EDGX 
Exchange, Inc. (``EDGX''), [ISE Mercury]Nasdaq MRX, LLC (``[ISE 
Mercury]MRX'') [and], MIAX PEARL, LLC (``MIAX PEARL'') and MIAX 
Emerald, LLC (``MIAX Emerald'') pursuant to Rule 17d-2 under the 
Securities Exchange Act of 1934 dated [January 13, 2017]January 2, 
2019 (the ``Agreement''), a revised list of the current Common Rules 
of each Participant, as compared to those of FINRA, applicable to 
the conduct of accounts for Covered Securities is set forth in this 
Exhibit A.

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------------------------------------------------------------------------
                           Opening of Accounts
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NYSE [MKT]American...........  Rules 411, 921 and 1101.
BZX..........................  Rule 26.2.
BOX..........................  Rule 4020.
[CBOE]Cboe...................  Rule 9.7.
C2 *.........................  [CBOE]Cboe Rule 9.7.
EDGX.........................  Rule 26.2
ISE..........................  Rule 608.
FINRA........................  Rules 2360(b)(16) and 2352.
MIAX.........................  Rule 1307.
MIAX PEARL...................  Rule 1307.
MIAX Emerald.................  Rule 1307.
[ISE Gemini]GEMX.............  Rule 608.
[ISE Mercury]MRX.............  Rule 608.
PHLX.........................  Rule 1024(b) and (c).\1\
NYSE ARCA....................  Options Rules 9.2-O(a) and 9.18-O(b) and
                                Equities Rules 9.18-E(b) and 8.4-E.
BX...........................  Chapter XI, Section 7.
[NASDAQ]Nasdaq...............  Chapter XI, Section 7.
------------------------------------------------------------------------
                               Supervision
------------------------------------------------------------------------
NYSE [MKT]American...........  Rules 411, 922 and 1104.
BZX..........................  Rule 26.3.
BOX..........................  Rule 4030.
[CBOE]Cboe...................  Rule 9.8.\2\
C2*..........................  [CBOE]Cboe Rule 9.8.\2\
EDGX.........................  Rule 26.3.
ISE..........................  Rule 609.
FINRA........................  Rules 2360(b)(20), 2360(b)(17)(B),
                                2360(b)(16)(E), 2355 and 2358.
MIAX.........................  Rule 1308.
MIAX PEARL...................  Rule 1308.
MIAX Emerald.................  Rule 1308.
[ISE Gemini]GEMX.............  Rule 609.

[[Page 4558]]

 
[ISE Mercury]MRX.............  Rule 609.
PHLX.........................  Rule 1025.
NYSE ARCA....................  Options Rules 9.2-O(b) and 9.18-O
                                (d)(2)(G) and Equities Rule 8.7-E.
BX...........................  Chapter XI, Section 8.
[NASDAQ]Nasdaq...............  Chapter XI, Section 8.
------------------------------------------------------------------------
                               Suitability
------------------------------------------------------------------------
NYSE [MKT]American...........  Rules 923 and 1102.
BZX..........................  Rule 26.4.
BOX..........................  Rule 4040.
[CBOE]Cboe...................  Rule 9.9.
C2 *.........................  [CBOE]Cboe Rule 9.9.
EDGX.........................  Rule 26.4.
ISE..........................  Rule 610.
FINRA........................  Rule 2360(b)(19) and 2353.
MIAX.........................  Rule 1309.
MIAX PEARL...................  Rule 1309.
MIAX Emerald.................  Rule 1309.
[ISE Gemini]GEMX.............  Rule 610.
[ISE Mercury]MRX.............  Rule 610.
PHLX.........................  Rule 1026.
NYSE ARCA....................  Options Rule 9.18-O(c) and Equities Rules
                                9.18-E(c) and 8.5-E.
BX...........................  Chapter XI, Section 9.
[NASDAQ]Nasdaq...............  Chapter XI, Section 9.
------------------------------------------------------------------------
                         Discretionary Accounts
------------------------------------------------------------------------
NYSE [MKT]American...........  Rules 421, 924 and 1103.
BZX..........................  Rule 26.5.\3\
BOX..........................  Rule 4050.
[CBOE]Cboe...................  Rule 9.10.
C2 *.........................  [CBOE]Cboe Rule 9.10.
EDGX.........................  Rule 26.5.\3\
ISE..........................  Rule 611.
FINRA........................  Rules 2360(b)(18) and 2354.
MIAX.........................  Rule 1310.
MIAX PEARL...................  Rule 1310.
MIAX Emerald.................  Rule 1310.
[ISE Gemini]GEMX.............  Rule 611.
[ISE Mercury]MRX.............  Rule 611.
PHLX.........................  Rule 1027.
NYSE ARCA....................  Options Rule 9.18-O(e) and Equities Rules
                                9.18-E(e) and 8.6-E.
BX...........................  Chapter XI, Section 10.
[NASDAQ]Nasdaq...............  Chapter XI, Section 10.
------------------------------------------------------------------------
                  Customer Communications (Advertising)
------------------------------------------------------------------------
NYSE [MKT]American...........  Rules 991 and 1106.
BZX..........................  Rule 26.16.
BOX..........................  Rule 4170.
[CBOE]Cboe...................  Rule 9.21.
C2 *.........................  [CBOE]Cboe Rule 9.21.
EDGX.........................  Rule 26.16.
ISE..........................  Rule 623.
FINRA........................  Rules 2220 and 2357.
MIAX.........................  Rule 1322.
MIAX PEARL...................  Rule 1322.
MIAX Emerald.................  Rule 1322.
[ISE Gemini]GEMX.............  Rule 623.
[ISE Mercury]MRX.............  Rule 623.
PHLX.........................  [N/A] Rule 1049.
NYSE ARCA....................  Options Rules 9.21-O(a) and 9.21-O(b).
BX...........................  Chapter XI, Section 22.
[NASDAQ]Nasdaq...............  Chapter XI, Section 22.
------------------------------------------------------------------------
                           Customer Complaints
------------------------------------------------------------------------
NYSE [MKT]American...........  Rules 932 and 1105.
BZX..........................  Rule 26.17.
BOX..........................  Rule 4190.
[CBOE]Cboe...................  Rule 9.23.
C2*..........................  [CBOE]Cboe Rule 9.23.
EDGX.........................  Rule 26.17.
ISE..........................  Rule 625.
FINRA........................  FINRA Rules 2360(b)(17)(A) and 2356.
MIAX.........................  Rule 1324.

[[Page 4559]]

 
MIAX PEARL...................  Rule 1324.
MIAX Emerald.................  Rule 1324.
[ISE Gemini]GEMX.............  Rule 625.
[ISE Mercury]MRX.............  Rule 625.
PHLX.........................  Rule 1028.
NYSE ARCA....................  Options Rule 9.18-O(I) and Equities Rules
                                9.18-E(l) and 8.8-E.
BX...........................  Chapter XI, Section 24.
[NASDAQ]Nasdaq...............  Chapter XI, Section 24.
------------------------------------------------------------------------
                           Customer Statements
------------------------------------------------------------------------
NYSE [MKT]American...........  Rules 419 and 930.
BZX..........................  Rule 26.7.
BOX..........................  Rule 4070.
[CBOE]Cboe...................  Rule 9.12.
C2 *.........................  [CBOE]Cboe Rule 9.12.
EDGX.........................  Rule 26.7.
ISE..........................  Rules 613.
FINRA........................  Rule 2360(b)(15).
MIAX.........................  Rule 1312.
MIAX PEARL...................  Rule 1312.
MIAX Emerald.................  Rule 1312.
[ISE Gemini]GEMX.............  Rule 613.
[ISE Mercury]MRX.............  Rule 613.
PHLX.........................  Rule 1032.
NYSE ARCA....................  Options Rule 9.18-O(j) and Equities Rule
                                9.18-E(j).
BX...........................  Chapter XI, Section[s] 12.
[NASDAQ]Nasdaq...............  Chapter XI, Section 12.
------------------------------------------------------------------------
                              Confirmations
------------------------------------------------------------------------
NYSE [MKT]American...........  Rule 925.
BZX..........................  Rule 26.6.
BOX..........................  Rule 4060.
[CBOE]Cboe...................  Rule 9.11.
C2*..........................  [CBOE]Cboe Rule 9.11.
EDGX.........................  Rule 26.6.
ISE..........................  Rule 612.
FINRA........................  Rule 2360(b)(12).
MIAX.........................  Rule 1311.
MIAX PEARL...................  Rule 1311.
MIAX Emerald.................  Rule 1311.
[ISE Gemini]GEMX.............  Rule 612.
[ISE Mercury]MRX.............  Rule 612.
PHLX.........................  Rule 1028.
NYSE ARCA....................  Options Rule 9.18-O(f) and Equities Rule
                                9.18-E(f).
BX...........................  Chapter XI, Section 11.
[NASDAQ]Nasdaq...............  Chapter XI, Section 11.
------------------------------------------------------------------------
                Allocation of Exercise Assignment Notices
------------------------------------------------------------------------
NYSE [MKT]American...........  Rule 981.
BZX..........................  Rule 23.2.
BOX..........................  Rule 9010.
[CBOE]Cboe...................  Rule 11.2.
C2 *.........................  [CBOE]Cboe Rule 11.2.
EDGX.........................  Rule 23.2.
ISE..........................  Rule 1101.
FINRA........................  Rule 2360(b)(23)(C).
MIAX.........................  Rule 701.
MIAX PEARL...................  Rule 701.
MIAX Emerald.................  Rule 701.
[ISE Gemini]GEMX.............  Rule 1101.
[ISE Mercury]MRX.............  Rule 1101.
PHLX.........................  Rule 1043.
NYSE ARCA....................  Options Rule 6.25-O(a).
BX...........................  Chapter VIII, Section 2.
[NASDAQ]Nasdaq...............  Chapter VIII, Section 2.
------------------------------------------------------------------------
                          Disclosure Documents
------------------------------------------------------------------------
NYSE [MKT]American...........  Rules 921 and 926.
BZX..........................  Rule 26.10.
BOX..........................  Rule 4100.
[CBOE]Cboe...................  Rule 9.15.
C2 *.........................  [CBOE]Cboe Rule 9.15.
EDGX.........................  Rule 26.10.
ISE..........................  Rule 616.

[[Page 4560]]

 
FINRA........................  Rule 2360(b)(11).
MIAX.........................  Rule 1315.
MIAX PEARL...................  Rule 1315.
MIAX Emerald.................  Rule 1315.
[ISE Gemini]GEMX.............  Rule 616.
[ISE Mercury]MRX.............  Rule 616.
PHLX.........................  Rule 1024(b)(v), 1029.
NYSE ARCA....................  Options Rule 9.18-O(g) and Equities Rule
                                9.18-E(g).
BX...........................  Chapter XI, Section 15.
[NASDAQ]Nasdaq...............  Chapter XI, Section 15.
------------------------------------------------------------------------
                 Branch Offices of Member Organizations
------------------------------------------------------------------------
NYSE [MKT]American...........  Rule 922(d).\4\
BOX..........................  Rule 4010(b).
[CBOE]Cboe...................  Rule 9.6.
C2 *.........................  [CBOE]Cboe Rule 9.6.
ISE..........................  Rule 607.
FINRA........................  Rules 2360(b)(20)(B) and 2355.
MIAX.........................  Rule 1306.
MIAX PEARL...................  Rule 1306.
MIAX Emerald.................  Rule 1306.
[ISE Gemini]GEMX.............  Rule 607.
[ISE Mercury]MRX.............  Rule 607.
PHLX.........................  N/A.
NYSE ARCA....................  Options Rule 9.18-O(m) and Equities Rule
                                9.18-E(m).
BX...........................  Chapter XI, Section 6.
[NASDAQ]Nasdaq...............  Chapter XI, Section 6.
------------------------------------------------------------------------
                     Prohibition Against Guarantees
------------------------------------------------------------------------
NYSE [MKT]American...........  Rule 390.
BZX..........................  Rule 26.13.
BOX..........................  Rule 4130.
[CBOE]Cboe...................  Rule 9.18.
C2 *.........................  [CBOE]Cboe Rule 9.18.
EDGX.........................  Rule 26.13.
ISE..........................  Rules 619.
FINRA........................  Rule 2150(b).
MIAX.........................  Rule 1318.
MIAX PEARL...................  Rule 1318.
MIAX Emerald.................  Rule 1318.
[ISE Gemini]GEMX.............  Rule 619.
[ISE Mercury]MRX.............  Rule 619.
PHLX.........................  Rule 777.
NYSE ARCA....................  Options Rule 9.1-O(e) and Equities Rules
                                9.1-E(e).
BX...........................  Chapter XI, Sections 18 and 19.
[NASDAQ]Nasdaq...............  Chapter XI, Sections 18 and 19.
------------------------------------------------------------------------
                           Sharing in Accounts
------------------------------------------------------------------------
NYSE [MKT]American...........  Rule 390.
BZX..........................  Rule 26.14.\6\
BOX..........................  Rule 4140.
[CBOE]Cboe...................  Rule 9.18(b).
C2 *.........................  [CBOE]Cboe Rule 9.18(b).
EDGX.........................  Rule 26.14.\6\
ISE..........................  Rule 620.\5\
FINRA........................  Rule 2150(c).
MIAX.........................  Rule 1319.
MIAX PEARL...................  Rule 1319.
MIAX Emerald.................  Rule 1319.
[ISE Gemini]GEMX.............  Rule 620.\5\
[ISE Mercury]MRX.............  Rule 620.\5\
PHLX.........................  N/A.
NYSE ARCA....................  Options Rule 9.1-O(f).
BX...........................  Chapter XI, Section 19.\6\
[NASDAQ]Nasdaq...............  Chapter XI, Section 19.\6\
------------------------------------------------------------------------
                           Registration of ROP
------------------------------------------------------------------------
NYSE [MKT]American...........  Rule 920.
BZX..........................  Rule 17.2(g)(1), (2), (6) and (7).
BOX..........................  Rule 2020(c)(1), (e)(1) and IM-2040-4 and
                                IM-2040-5(b).
[CBOE]Cboe...................  Rule 9.2.
C2 *.........................  [CBOE]Cboe Rule 9.2.
EDGX.........................  Rule 17.2(g)(1), (2), (6) and (7).

[[Page 4561]]

 
ISE..........................  Rule 601.
FINRA........................  [NASD Rules 1022(f), IM-1022-1, &
                                1250(a)(1)] Rule 1220(a)(8).
MIAX.........................  Rule 1301.
MIAX PEARL...................  Rule 1301.
MIAX Emerald.................  Rule 1301.
[ISE Gemini]GEMX.............  Rule 601.
[ISE Mercury]MRX.............  Rule 601.
PHLX.........................  Rule 1024(a)(i).
NYSE ARCA....................  Options Rule 9.26-O and Equities Rule
                                9.26-E.
BX...........................  Chapter XI, Section 2 and Chapter II,
                                Section 2(g).
[NASDAQ]Nasdaq...............  Chapter XI, Section 2 and Chapter II,
                                Section 2(g).
------------------------------------------------------------------------
                  Certification of Registered Personnel
------------------------------------------------------------------------
NYSE [MKT]American...........  Rule 920.
BZX..........................  Rule 2.5 Interpretation .01(c) and
                                11.4(e).
BOX..........................  IM-2040-3.
[CBOE]Cboe...................  Rule 9.3.
C2 *.........................  [CBOE]Cboe Rule 9.3.
EDGX.........................  Rule 2.5 Interpretation .01(c) and
                                11.4(e).
ISE..........................  Rule 602.
FINRA........................  [NASD Rule 1032(d)] Rule 1220(b) and
                                FINRA By-Laws Article V Sections 2 and
                                3.
MIAX.........................  Rule 1302.
MIAX PEARL...................  Rule 1302.
MIAX Emerald.................  Rule 1302.
[ISE Gemini]GEMX.............  Rule 602.
[ISE Mercury]MRX.............  Rule 602.
PHLX.........................  Rule 1024.
NYSE ARCA....................  Options Rule 9.27-O(a) and Equities Rule
                                9.27-E(a).
BX...........................  Chapter XI, Section 3 and Chapter II,
                                Section 2(h).
[NASDAQ]Nasdaq...............  Chapter XI, Section 3 and Chapter II,
                                Section 2(h).
------------------------------------------------------------------------
\1\ FINRA shall not have any Regulatory Responsibility regarding foreign
  currency option requirements specified in any of the PHLX rules in
  this Exhibit A.
\2\ FINRA shall not have any Regulatory Responsibility regarding receipt
  of written reports by April 1 of each year pursuant to [CBOE]Cboe Rule
  9.8(g).
\3\ FINRA shall not have any Regulatory Responsibility to enforce this
  rule as to time and price discretion in institutional accounts.
\4\ FINRA shall only have Regulatory Responsibility for the first
  paragraph and shall not have any Regulatory Responsibility regarding
  the requirements for debt options.
\5\ FINRA shall not have any Regulatory Responsibility regarding ISE's,
  [ISE Gemini]GEMX's and [ISE Mercury]MRX's requirements to the extent
  its rule does not contain an exception to permit sharing in the
  profits and losses of an account.
\6\ FINRA shall not have any Regulatory Responsibility regarding
  [NASDAQ]Nasdaq's, BX's, BZX's, and EDGX's requirements to the extent
  such rules do not contain an exception addressing immediate family.

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 rule-comments@sec.gov. Please include 
File Number S7-966 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 S7-966. 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 10:00 a.m. and 
3:00 p.m. Copies of the plan also will be available for inspection and 
copying at the principal offices of NYSE American, BZX, C2, Cboe, EDGX, 
Gemini, ISE, Mercury, FINRA, Arca, Nasdaq, BOX, BX, PHLX, MIAX, MIAX 
PEARL, and MIAX Emerald. 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 S7-966 and should 
be submitted on or before March 8, 2019.

V. Discussion

    The Commission continues to believe that the proposed plan is an 
achievement in cooperation among the SRO participants. The Plan, as 
amended, will reduce unnecessary regulatory duplication by allocating 
to the designated SRO the responsibility for certain options-related 
sales practice matters that would otherwise be performed by multiple 
SROs. The plan promotes efficiency by reducing costs to firms that are 
members of more than one of the SRO participants. In addition, because 
the SRO participants coordinate their regulatory functions in 
accordance with the plan, the plan promotes, and will continue to 
promote, investor protection.
    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

[[Page 4562]]

appropriate notice and comment can take place after the proposed 
amendment is effective. The primary purpose of the amendment is to add 
MIAX Emerald as a Participant and to reflect the name changes of 
certain Participating Organizations. By declaring it effective today, 
the amended Plan can become effective and be implemented without undue 
delay.\25\ 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.\26\ 
Furthermore, the Commission does not believe that the amendment to the 
plan raises any new regulatory issues that the Commission has not 
previously considered.
---------------------------------------------------------------------------

    \25\ On December 20, 2018, the Commission approved MIAX 
Emerald's application for registration as a national securities 
exchange. See Securities Exchange Act Release No. 84891, 83 FR 67421 
(December 28, 2018).
    \26\ See Securities Exchange Act Release No. 79929 (February 2, 
2017), 82 FR 9757 (February 8, 2017).
---------------------------------------------------------------------------

VI. Conclusion

    This order gives effect to the amended Plan submitted to the 
Commission that is contained in File No. S7-966.
    It is therefore ordered, pursuant to Section 17(d) of the Act, that 
the Plan, as amended, filed with the Commission pursuant to Rule 17d-2 
on January 3, 2019, is hereby approved and declared effective.
    It is further ordered that those SRO participants that are not the 
DOEA as to a particular common member are relieved of those regulatory 
responsibilities allocated to the common member's DOEA under the 
amended Plan to the extent of such allocation.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\27\
---------------------------------------------------------------------------

    \27\ 17 CFR 200.30-3(a)(34).
---------------------------------------------------------------------------

Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-02493 Filed 2-14-19; 8:45 am]
BILLING CODE 8011-01-P