Document ID: SEC-2010-1229-0001
Agency: sec
Document Type: Notice
Title: Program for Allocation of Regulatory Responsibilities: Financial Industry Regulatory Authority, Inc. and Chicago Stock Exchange, Inc.
Posted Date: 2010-08-12T04:00Z

[Federal Register: August 12, 2010 (Volume 75, Number 155)]
[Notices]               
[Page 49005-49010]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr12au10-97]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-62657; File No. 4-274]

 
Program for Allocation of Regulatory Responsibilities Pursuant to 
Rule 17d-2; Notice of Filing of an Amended 17d-2 Plan Between the 
Financial Industry Regulatory Authority, Inc. and the Chicago Stock 
Exchange, Inc.

August 5, 2010.
    Pursuant to Section 17(d) of the Securities Exchange Act of 1934

[[Page 49006]]

(``Act''),\1\ and Rule 17d-2 thereunder,\2\ notice is hereby given that 
on July 21, 2010, the Financial Industry Regulatory Authority, Inc. 
(``FINRA'') and the Chicago Stock Exchange, Inc. (``CHX'') (together 
with FINRA, the ``Parties'') filed with the Securities and Exchange 
Commission (``Commission'' or ``SEC'') an amendment to their September 
16, 1977 Agreement Between the National Association of Securities 
Dealers, Inc. (n/k/a FINRA) and the Midwest Stock Exchange Incorporated 
(n/k/a CHX) (``17d-2 Plan'' or the ``Plan'') for the allocation of 
regulatory responsibilities. The Commission is publishing this notice 
to solicit comments on the amendment to the 17d-2 Plan from interested 
persons.
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    \1\ 15 U.S.C. 78q(d).
    \2\ 17 CFR 240.17d-2.
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I. Introduction

    Section 19(g)(1) of the Act,\3\ among other things, requires every 
self-regulatory organization (``SRO'') registered as either a national 
securities exchange or national securities association to examine for, 
and enforce compliance by, its members and persons associated with its 
members with the Act, the rules and regulations thereunder, and the 
SRO's own rules, unless the SRO is relieved of this responsibility 
pursuant to Section 17(d) or Section 19(g)(2) of the Act.\4\ Without 
this relief, the statutory obligation of each individual SRO could 
result in a pattern of multiple examinations of broker-dealers that 
maintain memberships in more than one SRO (``common members''). Such 
regulatory duplication would add unnecessary expenses for common 
members and their SROs.
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    \3\ 15 U.S.C. 78s(g)(1).
    \4\ 15 U.S.C. 78q(d) and 15 U.S.C. 78s(g)(2), respectively.
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    Section 17(d)(1) of the Act \5\ was intended, in part, to eliminate 
unnecessary multiple examinations and regulatory duplication.\6\ With 
respect to a common member, Section 17(d)(1) authorizes the Commission, 
by rule or order, to relieve an SRO of the responsibility to receive 
regulatory reports, to examine for and enforce compliance with 
applicable statutes, rules, and regulations, or to perform other 
specified regulatory functions.
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    \5\ 15 U.S.C. 78q(d)(1).
    \6\ See Securities Act Amendments of 1975, Report of the Senate 
Committee on Banking, Housing, and Urban Affairs to Accompany S. 
249, S. Rep. No. 94-75, 94th Cong., 1st Session 32 (1975).
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    To implement Section 17(d)(1), the Commission adopted two rules: 
Rule 17d-1 and Rule 17d-2 under the Act.\7\ Rule 17d-1 authorizes the 
Commission to name a single SRO as the designated examining authority 
(``DEA'') to examine common members for compliance with the financial 
responsibility requirements imposed by the Act, or by Commission or SRO 
rules.\8\ When an SRO has been named as a common member's DEA, all 
other SROs to which the common member belongs are relieved of the 
responsibility to examine the firm for compliance with the applicable 
financial responsibility rules. On its face, Rule 17d-1 deals only with 
an SRO's obligations to enforce member compliance with financial 
responsibility requirements. Rule 17d-1 does not relieve an SRO from 
its obligation to examine a common member for compliance with its own 
rules and provisions of the federal securities laws governing matters 
other than financial responsibility, including sales practices and 
trading activities and practices.
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    \7\ 17 CFR 240.17d-1 and 17 CFR 240.17d-2, respectively.
    \8\ See Securities Exchange Act Release No. 12352 (April 20, 
1976), 41 FR 18808 (May 7, 1976).
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    To address regulatory duplication in these and other areas, the 
Commission adopted Rule 17d-2 under the Act.\9\ Rule 17d-2 permits SROs 
to propose joint plans for the allocation of regulatory 
responsibilities with respect to their common members. Under paragraph 
(c) of Rule 17d-2, the Commission may declare such a plan effective if, 
after providing for appropriate notice and comment, it determines that 
the plan is necessary or appropriate in the public interest and for the 
protection of investors; to foster cooperation and coordination among 
the SROs; to remove impediments to, and foster the development of, a 
national market system and a national clearance and settlement system; 
and is in conformity with the factors set forth in Section 17(d) of the 
Act. Commission approval of a plan filed pursuant to Rule 17d-2 
relieves an SRO of those regulatory responsibilities allocated by the 
plan to another SRO.
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    \9\ See Securities Exchange Act Release No. 12935 (October 28, 
1976), 41 FR 49091 (November 8, 1976).
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II. The Plan

    On September 26, 1978, the Commission approved the Plan allocating 
regulatory responsibilities pursuant to Rule 17d-2 on a provisional 
basis.\10\ Under the Plan, FINRA was responsible, in part, for 
conducting on-site examination of each dual member for which it was the 
DEA. On February 20, 1980, the Commission noticed for comment an 
amendment to the Plan, which provided, in part, for the handling of 
customer complaints, the review of dual members' advertising, and the 
arbitration of disputes under the Plan.\11\ On May 30, 1980, the 
Commission approved the Plan, as amended.\12\
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    \10\ See Securities Exchange Act Release No. 15191 (September 
26, 1978), 43 FR 46093 (October 5, 1978).
    \11\ See Securities Exchange Act Release No. 16591 (February 20, 
1980), 45 FR 12573 (February 26, 1980).
    \12\ See Securities Exchange Act Release No. 16858 (May 30, 
1980), 45 FR 37927 (June 5, 1980).
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III. Proposed Amendment to the Plan

    On July 21, 2010, the Parties submitted a proposed amendment to the 
Plan. The amended agreement would replace the previous Plan in its 
entirety. Accordingly, the proposed 17d-2 Plan is intended to reduce 
the duplication in the examination of common members \13\ and in the 
filing and processing of certain registration and membership records. 
Pursuant to the proposed 17d-2 Plan, FINRA would assume certain 
examination and enforcement responsibilities for common members with 
respect to certain applicable laws, rules, and regulations.
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    \13\ The proposed 17d-2 Plan refers to these members as ``Dual 
Members.'' See Paragraph 1(c) of the proposed 17d-2 Plan.
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    The text of the Plan delineates the proposed regulatory 
responsibilities with respect to the Parties. Included in the proposed 
Plan is an exhibit (the ``CHX Certification of Common Rules'' referred 
to herein as the ``Certification'') that lists every CHX rule, and 
select federal securities laws, rules, and regulations, for which FINRA 
would bear responsibility under the Plan for examine and enforcing with 
respect to CHX members that are also members of FINRA and the 
associated persons therewith (``Dual Members'').
    Specifically, under the 17d-2 Plan, FINRA would assume examination 
and enforcement responsibility relating to compliance by Dual Members 
with the rules of CHX that are substantially similar to the applicable 
rules of FINRA, as well as certain provisions of the federal securities 
laws and the rules and regulations thereunder delineated in the 
Certification (``Common Rules'').\14\ Common Rules would not include 
the application of any CHX rule or FINRA rule, or any rule or 
regulation under the Act, to the extent that it pertains to

[[Page 49007]]

violations of insider trading activities, because such matters are 
covered by a separate multiparty agreement under Rule 17d-2.\15\ In the 
event that a Dual Member is the subject of an investigation relating to 
a transaction on CHX, the plan acknowledges that CHX may, in its 
discretion, exercise concurrent jurisdiction and responsibility for 
such matter.\16\
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    \14\ See paragraph 1(b) of the proposed 17d-2 Plan (defining 
Common Rules). See also paragraph 1(f) of the proposed 17d-2 Plan 
(defining Regulatory Responsibilities). Paragraph 2 of the Plan 
provides that annually, or more frequently as required by changes in 
either CHX rules or FINRA rules, the parties shall review and 
update, if necessary, the list of Common Rules. Further, paragraph 3 
of the Plan provides that CHX shall furnish FINRA with a list of 
Dual Members, and shall update the list no less frequently than once 
each quarter.
    \15\ See Securities Exchange Act Release No. 61919 (April 15, 
2010), 75 FR 21051 (April 22, 2010) (File No. 4-566) (notice of 
filing and order approving and declaring effective the plan).
    \16\ See paragraph 6 of the proposed 17d-2 Plan.
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    Under the Plan, CHX would retain full responsibility for 
surveillance, examination, investigation, and enforcement with respect 
to trading activities or practices involving CHX's own marketplace; 
registration pursuant to its applicable rules of associated persons 
(i.e., registration rules that are not Common Rules); its duties and 
obligations as a DEA pursuant to Rule 17d-1 under the Act; and any CHX 
rules that are not Common Rules.\17\
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    \17\ See paragraph 2 of the proposed 17d-2 Plan.
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    The text of the proposed 17d-2 Plan is as follows:

AGREEMENT BETWEEN FINANCIAL INDUSTRY REGULATORY AUTHORITY, INC. AND 
CHICAGO 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 Chicago Stock Exchange, Inc. 
(``CHX''), is made this 9th day of July, 2010 (the ``Agreement''), 
pursuant to Section 17(d) of the Securities Exchange Act of 1934 (the 
``Exchange Act'') and Rule 17d-2 thereunder which permits agreements 
between self-regulatory organizations to allocate regulatory 
responsibility to eliminate regulatory duplication. FINRA and CHX may 
be referred to individually as a ``party'' and together as the 
``parties.''
    This Agreement amends and restates the agreement entered into 
between the parties on September 16, 1977, entitled ``Agreement Between 
the National Association of Securities Dealers, Inc. and the Midwest 
Stock Exchange Incorporated Pursuant to SEC Rule 17d-2 Under the 
Securities Exchange Act of 1934,'' and any subsequent amendments 
thereafter.
    WHEREAS, FINRA and CHX 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 CHX 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 CHX 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) ``CHX Rules'' or ``FINRA Rules'' shall mean: (i) the rules of 
the CHX, 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 the CHX 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 rules would not require FINRA 
to develop one or more new examination standards, modules, procedures, 
or criteria in order to analyze the application of such provisions or 
rule, or a Dual Member's activity, conduct, or output in relation to 
such rule; provided, however, Common Rules shall not include the 
application of SEC, CHX or FINRA rules as they pertain to violations of 
insider trading activities, which is covered by a separate 17d-2 
Agreement by and among the American Stock Exchange LLC, BATS Exchange, 
Inc., Chicago Board Options Exchange, Inc., Chicago Stock Exchange, 
Inc., EDGA Exchange, Inc., EDGX Exchange, Inc., Financial Industry 
Regulatory Authority, Inc., International Securities Exchange, LLC, The 
NASDAQ Stock Market LLC, National Stock Exchange, Inc., New York Stock 
Exchange, LLC, NYSE Arca Inc., NYSE Regulation, Inc., NASDAQ OMX BX, 
Inc. and NASDAQ OMX PHLX, Inc. effective April 15, 2010, as may be 
amended from time to time.
    (c) ``Dual Members'' shall mean those CHX 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 the FINRA Code of Procedure 
(the Rule 9000 Series) and other applicable FINRA procedural rules, to 
determine whether violations of Common Rules have occurred, and if such 
violations are deemed to have occurred, the imposition of appropriate 
sanctions as specified under the FINRA 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, 
CHX furnished FINRA with a current list of Common Rules and certified 
to FINRA that such rules are substantially similar to the corresponding 
FINRA Rule (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 CHX or 
FINRA, CHX shall submit an updated list of Common Rules to FINRA for 
review which shall add CHX Rules not included in the current list of 
Common Rules that qualify as Common Rules as defined in this Agreement; 
delete CHX 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 CHX 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 CHX shall retain 
full responsibility for (unless otherwise addressed by separate 
agreement or rule) the following (collectively, the ``Retained 
Responsibilities''):
    (a) surveillance, examination, investigation and enforcement with 
respect to trading activities or practices involving CHX's own 
marketplace;

[[Page 49008]]

    (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, if 
applicable; and
    (d) any CHX Rules that are not Common Rules.
    3. Dual Members. Prior to the Effective Date, CHX 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 CHX by FINRA for 
performing the Regulatory Responsibilities and Enforcement 
Responsibilities under this Agreement except as hereinafter provided. 
FINRA shall provide CHX with ninety (90) days advance written notice in 
the event FINRA decides to impose any charges to CHX for performing the 
Regulatory Responsibilities under this Agreement. If FINRA determines 
to impose a charge, CHX shall have the right at the time of the 
imposition of such charge to terminate this Agreement; provided, 
however, that FINRA's Regulatory Responsibilities under this Agreement 
shall continue until the Commission approves the termination of this 
Agreement.
    5. Applicability of Certain Laws, Rules, Regulations or Orders. 
Notwithstanding any provision hereof, this Agreement shall be subject 
to any statute, or any rule or order of the Commission. To the extent 
such statute, rule or order is inconsistent with one or more provisions 
of this Agreement, the statute, rule or order shall supersede the 
provision(s) hereof to the extent necessary 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 CHX Rules, which are not listed as Common Rules, discovered 
pursuant to the performance of the Regulatory Responsibilities assumed 
hereunder, FINRA shall notify CHX of those apparent violations for such 
response as CHX deems appropriate.
    (b) In the event that CHX becomes aware of apparent violations of 
any Common Rules, discovered pursuant to the performance of the 
Retained Responsibilities, CHX 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 
the CHX, CHX 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 CHX 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 CHX any information it obtains about Dual Members which 
reflects adversely on their financial condition. CHX shall make 
available to FINRA any information coming to its attention that 
reflects adversely on the financial condition of Dual Members or 
indicates possible violations of applicable laws, rules or regulations 
by such firms.
    (b) The parties agree that documents or information shared shall be 
held in confidence, and used only for the purposes of carrying out 
their respective regulatory obligations. Neither party shall assert 
regulatory or other privileges as against the other with respect to 
documents or information that is required to be shared pursuant to this 
Agreement.
    (c) The sharing of documents or information between the parties 
pursuant to this Agreement shall not be deemed a waiver as against 
third parties of regulatory or other privileges relating to the 
discovery of documents or information.
    8. Statutory Disqualifications. When FINRA becomes aware of a 
statutory disqualification as defined in the Exchange Act with respect 
to a Dual Member, FINRA shall determine pursuant to Sections 15A(g) 
and/or Section 6(c) of the Exchange Act the acceptability or continued 
applicability of the person to whom such disqualification applies and 
keep CHX advised of its actions in this regard for such subsequent 
proceedings as CHX may initiate.
    9. Customer Complaints. CHX shall forward to FINRA copies of all 
customer complaints involving Dual Members received by CHX 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 CHX 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, CHX and FINRA hereby agree that any 
such dispute shall be settled by arbitration in Washington, D.C. in 
accordance with the rules of the American Arbitration Association then 
in effect, or such other procedures as the parties may mutually agree 
upon. Judgment on the award rendered by the arbitrator(s) may be 
entered in any court having jurisdiction. Each party acknowledges that 
the timely and complete performance of its obligations pursuant to this 
Agreement is critical to the business and operations of the other 
party. In the event of a dispute between the parties, the parties shall 
continue to perform their respective obligations under this Agreement 
in good faith during the resolution of such dispute unless and until 
this Agreement is terminated in accordance with its provisions. Nothing 
in this Section 13 shall interfere with a party's right to terminate 
this Agreement as set forth herein.
    14. Notification of Members. CHX and FINRA shall notify Dual 
Members of this Agreement after the Effective Date by means of a 
uniform joint notice.
    15. Amendment. This Agreement may be amended in writing duly 
approved by each party. All such amendments must be filed with and 
approved by the Commission before they become effective.
    16. Limitation of Liability. Neither FINRA nor CHX 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

[[Page 49009]]

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 CHX 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 CHX with respect to any of the responsibilities to 
be performed by each of them hereunder.
    17. Relief from Responsibility. Pursuant to Sections 17(d)(1)(A) 
and 19(g) of the Exchange Act and Rule 17d-2 thereunder, FINRA and CHX 
join in requesting the Commission, upon its approval of this Agreement 
or any part thereof, to relieve CHX 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.
    18. Severability. Any term or provision of this Agreement that is 
invalid or unenforceable in any jurisdiction shall, as to such 
jurisdiction, be ineffective to the extent of such invalidity or 
unenforceability without rendering invalid or unenforceable the 
remaining terms and provisions of this Agreement or affecting the 
validity or enforceability of any of the terms or provisions of this 
Agreement in any other jurisdiction.
    19. 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

CHX CERTIFICATION OF COMMON RULES
    CHX hereby certifies that the requirements contained in the rules 
listed below for CHX are identical to, or substantially similar to, the 
comparable FINRA (NASD) Rules, Exchange Act provision or SEC rule 
identified (``Common Rules'').

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                                         FINRA (NASD) rule, Exchange Act
                CHX rule                       provision, SEC rule
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Article 6, Rule 2 Registration and       NASD Rule 1021(a) and (b)
 Approval of Participant Personnel \18\.  Registration Requirements;
                                          NASD Rule 1031(a) and (b)
                                          Registration Requirements;
                                          NASD Rule 1060(a)(1) and (2)
                                          Persons Exempt from
                                          Registration; and NASD Rule
                                          3070 (a) Reporting
                                          Requirements.
Article 6, Rule 3 Training and           NASD Rules 1031(a) and (b)
 Examination of Registrants \19\.         Registration Requirements and
                                          1032 Categories of
                                          Representative Registration.
Article 6, Rule 5(a) Supervision of      NASD Rule 3010(a)(2) and (b)(3)
 Registered Persons and Branch and        Supervision.*
 Resident Offices.
Article 6, Rule 5(b) Supervision of      NASD Rule 3010(a)(2), (b)(1),
 Registered Persons and Branch and        (b)(4), and (d) Supervision.*
 Resident Offices.
Article 6, Rule 5(c) Supervision of      NASD Rule 3010(a)(7)
 Registered Persons and Branch and        Supervision.*
 Resident Offices.
Article 6, Rule 10(a) Fingerprinting...  Exchange Act Rule 17f-2.
Article 6, Rule 11 Continuing Education  NASD Rule 1120(a)(1)-(5),
 for Registered Persons \20\.             1120(b) Continuing Education
                                          Requirements.
Article 6, Rule 12 Anti-Money            FINRA Rule 3310 Anti-Money
 Laundering Compliance Program \21\.      Laundering Compliance Program.
Article 8, Rule 3 Fraudulent Acts......  FINRA Rules 2010 Standards of
                                          Commercial Honor and
                                          Principles of Trade, 2020 Use
                                          of Manipulative, Deceptive or
                                          Other Fraudulent Devices and
                                          NASD IM 2310-2(b)(4) Fair
                                          Dealing with Customers.
Article 8, Rule 10 Customer Dealings--   NASD Rule 11870(a)(1) Customer
 Account Transfers.                       Account Transfer Contracts.
Article 8, Rule 11 Customer Dealings--   NASD Rule 2310 Recommendations
 Suitability.                             to Customers (Suitability) and
                                          IM-2310-2(b) Fair Dealing with
                                          Customers.
Article 8, Rule 12 Interest in Customer  FINRA Rule 2150(b) Customers'
 Accounts \22\.                           Securities or Funds.
Article 8, Rule 13(a) Advertising and    NASD Rule 2210(d)(1)(B)
 Promotion.                               Communications with the
                                          Public.
Article 8, Rule 13(b) Advertising and    NASD Rule 2210(a)
 Promotion.                               Communications with the
                                          Public.
Article 9, Rule 2 Just and Equitable     FINRA Rule 2010 Standards of
 Trade Principles.                        Commercial Honor and
                                          Principles of Trade.
Article 9, Rule 10 Prearranged Trades..  Exchange Act Sections 9(a);
                                          10(b) and Rule 10b-5
                                          thereunder.*
Article 9, Rule 11 Price Manipulation..  Exchange Act Sections 9(a);
                                          10(b) and Rule 10b-5
                                          thereunder.*
Article 9, Rule 12 Manipulative          Exchange Act Sections 9(a);
 Operations.                              10(b) and Rule 10b-5
                                          thereunder.*
Article 9, Rule 21 Discretion of         NASD Rule 2510(b), (c) and
 Employees Prohibited \23\.               (d)(1) Discretionary Accounts.
Article 9, Rule 23(a) Short Sales......  Regulation SHO.
Article 11, Rule 2 Maintenance of Books  NASD Rule 3110(a) Books and
 and Records \24\.                        Records.*
Article 21, Rule 2 Book-Entry            NASD Rule 11310 Book-Entry
 Settlement Requirements.                 Settlement.
------------------------------------------------------------------------
* FINRA shall not have any Regulatory Responsibilities for these rules
  as they pertain to violations of insider trading activities, which is
  covered by a separate 17d-2 Agreement by and among the American Stock
  Exchange LLC, BATS Exchange, Inc., Chicago Board Options Exchange,
  Inc., Chicago Stock Exchange, Inc., EDGA Exchange, Inc., EDGX
  Exchange, Inc., Financial Industry Regulatory Authority, Inc.,
  International Securities Exchange, LLC, The NASDAQ Stock Market LLC,
  National Stock Exchange, Inc., New York Stock Exchange, LLC, NYSE Arca
  Inc., NYSE Regulation, Inc., NASDAQ OMX BX, Inc. and NASDAQ OMX PHLX,
  Inc. effective April 15, 2010, as may be amended from time to time.
\18\ FINRA shall not have any Regulatory Responsibilities for CHX
  Article 6 Rule 2 (a), (b)(7), (b)(10), (f), interpretation .01 or
  interpretation .03 and such sections shall not be considered Common
  Rules for purposes of this Agreement; responsibility for such
  requirements remain with CHX.
\19\ FINRA shall not have any Regulatory Responsibilities for CHX
  Article 6 Rule 3 requirement regarding completion of a training course
  and interpretation .01 and such provisions shall not be considered
  Common Rules for purposes of this Agreement; responsibility for such
  requirements remain with CHX.
\20\ FINRA shall not have any Regulatory Responsibilities for exercise
  of exemptive or other discretionary authority by CHX to the extent it
  makes the rule inconsistent with the corresponding FINRA rule.
\21\ FINRA shall not have any Regulatory Responsibilities regarding the
  CHX rule to the extent it does not contain an exception to independent
  testing and requires notice to CHX.
\22\ FINRA shall only have Regulatory Responsibilities for the first
  phrase of CHX Article 8 Rule 12 regarding guaranteeing customers
  against loss in their account and only the first phrase shall be
  considered a Common Rule for purposes of this Agreement;
  responsibility for the remainder of the CHX rule remains with CHX.

[[Page 49010]]

\23\ FINRA shall not have any Regulatory Responsibilities regarding the
  CHX rule to the extent it does not contain an exception for time and
  price discretion.
\24\ FINRA shall not have any Regulatory Responsibilities regarding
  maintaining books and records in conformity with CHX rules.

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

    Pursuant to Section 17(d)(1) of the Act \25\ and Rule 17d-2 
thereunder,\26\ after September 2, 2010, the Commission may, by written 
notice, declare the plan submitted by FINRA and CHX, File No. 4-274, to 
be effective if the Commission finds that the plan is necessary or 
appropriate in the public interest and for the protection of investors, 
to foster cooperation and coordination among self-regulatory 
organizations, or to remove impediments to and foster the development 
of the national market system and a national system for the clearance 
and settlement of securities transactions and in conformity with the 
factors set forth in Section 17(d) of the Act.
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    \25\ 15 U.S.C. 78q(d)(1).
    \26\ 17 CFR 240.17d-2.
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V. Solicitation of Comments

    In order to assist the Commission in determining whether to approve 
the proposed 17d-2 Plan and to relieve CHX of the responsibilities 
which would be assigned to FINRA, interested persons are invited to 
submit written data, views, and arguments concerning the foregoing. 
Comments may be submitted by any of the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://
www.sec.gov/rules/other.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number 4-274 on the subject line.

Paper Comments

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

All submissions should refer to File Number 4-274. This file number 
should be included on the subject line if e-mail is used. To help the 
Commission process and review your comments more efficiently, please 
use only one method. The Commission will post all comments on the 
Commission's Internet Web site (http://www.sec.gov/rules/other.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed plan that are filed with the 
Commission, and all written communications relating to the proposed 
plan between the Commission and any person, other than those that may 
be withheld from the public in accordance with the provisions of 5 
U.S.C. 552, will be available for Web site viewing and printing in the 
Commission's Public Reference Room, on official business days between 
the hours of 10 a.m. and 3 p.m. Copies of the plan also will be 
available for inspection and copying at the principal offices of CHX 
and FINRA. All comments received will be posted without change; the 
Commission does not edit personal identifying information from 
submissions. You should submit only information that you wish to make 
available publicly. All submissions should refer to File Number 4-274 
and should be submitted on or before September 2, 2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\27\
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    \27\ 17 CFR 200.30-3(a)(34).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-19852 Filed 8-11-10; 8:45 am]
BILLING CODE 8010-01-P