Document ID: SEC-2020-2062-0001
Agency: sec
Document Type: Notice
Title: Filing and Order: Financial Industry Regulatory Authority, Inc. and Nasdaq GEMX, LLC
Posted Date: 2020-12-23T05:00Z

[Federal Register Volume 85, Number 247 (Wednesday, December 23, 2020)]
[Notices]
[Pages 84074-84079]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-28309]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-90704; File No. 4-663]

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 Nasdaq GEMX, LLC

December 17, 2020.
    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 November 19, 2020, pursuant to Rule 
17d-2 of the Act,\2\ by the Financial Industry Regulatory Authority, 
Inc. (``FINRA'') and Nasdaq GEMX, LLC (``GEMX'') (collectively, 
``Participating Organizations'' or ``parties''). This agreement amends 
and restates the agreement entered into between FINRA and Topaz 
Exchange, LLC (n/k/a GEMX) on June 21, 2013, entitled ``Agreement 
Between Financial Industry Regulatory Authority, Inc. and Topaz 
Exchange 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 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 appropriate notice and opportunity for comment, it 
determines that the plan is necessary or appropriate in the public 
interest and for the protection of investors, to foster cooperation and 
coordination among the SROs, to remove impediments to, and foster the 
development of, a national market system and a national clearance and 
settlement system, and is in conformity with the factors set forth in 
Section 17(d) of the Act. Commission approval of a plan filed pursuant 
to Rule 17d-2 relieves an SRO of those regulatory responsibilities 
allocated by the plan to another SRO.
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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 August 19, 2013, the Commission declared effective the Plan 
entered into between FINRA and GEMX for allocating regulatory 
responsibility pursuant to Rule 17d-2.\11\ The Plan is intended to 
reduce regulatory duplication for firms that are common members of 
FINRA and GEMX 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 GEMX rule for 
which FINRA bears responsibility under the Plan for overseeing and 
enforcing with respect to GEMX members that are also members of FINRA 
and the associated persons therewith (``Certification'').
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    \11\ See Securities Exchange Act Release No. 70228 (August 19, 
2013), 78 FR 52587 (August 23, 2013).
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III. Proposed Amendment to the Plan

    On November 19, 2020, the parties submitted a proposed amendment to 
the Plan (``Amended Plan''). The primary purpose of the Amended Plan is 
to allocate surveillance, investigation, and enforcement 
responsibilities for Rule 14e-4 under the Act and to reflect the name 
change of Topaz Exchange, LLC to Nasdaq GEMX, LLC. The text of the 
proposed Amended Plan is as follows

[[Page 84075]]

(additions are italicized; deletions are [bracketed]):
* * * * *
AGREEMENT BETWEEN FINANCIAL INDUSTRY REGULATORY AUTHORITY, INC. AND 
[TOPAZ EXCHANGE]NASDAQ GEMX, LLC PURSUANT TO RULE 17d-2 UNDER THE 
SECURITIES EXCHANGE ACT OF 1934
    This Agreement, by and between Financial Industry Regulatory 
Authority, Inc. (``FINRA'') and [Topaz Exchange, LLC (``Topaz'')]Nasdaq 
GEMX, LLC (``GEMX''), is made this [21st] 16th day of [June]November, 
20[13]20 (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 [Topaz]GEMX may be referred to 
individually as a ``party'' and together as the ``parties.''
    This Agreement amends and restates this agreement entered into 
between FINRA and GEMX on June 21, 2013, entitled ``Agreement between 
Financial Industry Regulatory Authority, Inc. and Topaz Exchange, LLC 
Pursuant to Rule 17d-2 under the Securities Exchange Act of 1934,'' and 
any subsequent amendments thereafter.
    Whereas, FINRA and [Topaz]GEMX 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 [Topaz]GEMX 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 [Topaz]GEMX 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) ``[Topaz]GEMX Rules'' or ``FINRA Rules'' shall mean the rules 
of [Topaz]GEMX or 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 [Topaz]GEMX Rules that are 
substantially similar to the applicable FINRA Rules 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 the rule, or a Dual Member's 
activity, conduct, or output in relation to such rule.
    (c) ``Dual Members'' shall mean those [Topaz]GEMX members that are 
also members of FINRA and the associated persons therewith.
    (d) ``Effective Date'' shall have the meaning set forth in 
paragraph 13.
    (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 pertinent laws, rules or regulations 
have occurred, and if such violations are deemed to have occurred, the 
imposition of appropriate sanctions as specified under the FINRA's Code 
of Procedure and sanctions guidelines. Common Rules shall not include 
any provisions regarding (i) notice, reporting or any other filings 
made directly to or from GEMX, (ii) incorporation by reference of GEMX 
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 GEMX, (iv) prior 
written approval of GEMX and (v) payment of fees or fines to GEMX.
    (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. The term ``Regulatory Responsibilities'' shall also 
include the surveillance, investigation and Enforcement 
Responsibilities relating to compliance by Common Members with Rule 
14e-4 of the Securities Exchange Act (``Rule 14e-4''), with a focus on 
the standardized call option provision of Rule 14e-4(a)(1)(ii)(D).
    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, 
[Topaz]GEMX 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 
[Topaz]GEMX Rules or FINRA Rules, [Topaz]GEMX shall submit an updated 
list of Common Rules to FINRA for review which shall add [Topaz]GEMX 
Rules not included in the current list of Common Rules that qualify as 
Common Rules as defined in this Agreement; delete [Topaz]GEMX 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 
[Topaz]GEMX 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 [Topaz]GEMX shall 
retain full responsibility for (unless otherwise addressed by separate 
agreement or rule) the following (collectively, the ``Retained 
Responsibilities''):
    (a) Surveillance and enforcement with respect to trading activities 
or practices involving [Topaz]GEMX's own marketplaces, including 
without limitation [Topaz]GEMX's Rules relating to the rights and 
obligations of market makers;
    (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 [Topaz]GEMX Rules that are not Common Rules.
    3. Dual Members. Prior to the Effective Date, [Topaz]GEMX 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 [Topaz]GEMX by FINRA for 
performing the Regulatory Responsibilities and Enforcement 
Responsibilities under this Agreement except as hereinafter provided. 
FINRA shall provide [Topaz]GEMX with ninety (90) days advance written 
notice in the

[[Page 84076]]

event FINRA decides to impose any charges to [Topaz]GEMX for performing 
the Regulatory Responsibilities under this Agreement. If FINRA 
determines to impose a charge, [Topaz]GEMX 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. Reassignment of Regulatory Responsibilities. Notwithstanding any 
provision hereof, this Agreement shall be subject to any statute, or 
any rule or order of the Commission, or effective industry agreement, 
restructuring the regulatory framework of the securities industry or 
reassigning Regulatory Responsibilities between self-regulatory 
organizations. To the extent such action is inconsistent with this 
Agreement, such action shall supersede the provisions hereof to the 
extent necessary for them to be properly effectuated and the provisions 
hereof in that respect shall be null and void.
    6. Notification of Violations. In the event that FINRA becomes 
aware of apparent violations of any [Topaz]GEMX Rules, which are not 
listed as Common Rules, discovered pursuant to the performance of the 
Regulatory Responsibilities assumed hereunder, FINRA shall notify 
[Topaz]GEMX of those apparent violations for such response as 
[Topaz]GEMX deems appropriate. In the event [Topaz]GEMX becomes aware 
of apparent violations of the Common Rules, discovered pursuant to the 
performance of the Retained Responsibilities, [Topaz]GEMX shall notify 
FINRA of those apparent violations and such matters shall be handled by 
FINRA as provided in this Agreement. Apparent violations of all the 
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 [Topaz]GEMX, [Topaz]GEMX may 
in its discretion assume concurrent jurisdiction and responsibility. 
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. FINRA shall make available to [Topaz]GEMX 
all information obtained by FINRA in the performance by it of the 
Regulatory Responsibilities hereunder in respect to the Dual Members 
subject to this Agreement. In particular, and not in limitation of the 
foregoing, FINRA shall furnish [Topaz]GEMX any information it obtains 
about Dual Members which reflects adversely on their financial 
condition. It is understood that such information is of an extremely 
sensitive nature and, accordingly, [Topaz]GEMX acknowledges and agrees 
to take all reasonable steps to maintain its confidentiality. 
[Topaz]GEMX 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.
    8. Dual Member Applications.
    (a) Dual Members subject to this Agreement shall be required to 
submit, and FINRA shall be responsible for processing and acting upon 
all applications submitted on behalf of allied persons, partners, 
officers, registered personnel and any other person required to be 
approved by the [Topaz]GEMX Rules and FINRA Rules or associated with 
Dual Members thereof. Upon request, FINRA shall advise [Topaz]GEMX of 
any changes of allied members, partners, officers, registered personnel 
and other persons required to be approved by the [Topaz]GEMX Rules and 
FINRA Rules.
    (b) Dual Members shall be required to send to FINRA all letters, 
termination notices or other material respecting the individuals listed 
in paragraph 8(a).
    (c) When as a result of processing such submissions 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 [Topaz]GEMX advised of its actions in 
this regard for such subsequent proceedings as [Topaz]GEMX may 
initiate.
    (d) Notwithstanding the foregoing, FINRA shall not review the 
membership application, reports, filings, fingerprint cards, notices, 
or other writings filed to determine if such documentation submitted by 
a broker or dealer, or a person associated therewith or other persons 
required to register or qualify by examination: (i) Meets the 
[Topaz]GEMX requirements for general membership or for specified 
categories of membership or participation in [Topaz]GEMX, such as (A) 
Primary Market Maker Membership (``PMM''); (B) Competitive Market Maker 
Membership (``CMM''); (C) Electronic Access Membership (``EAM'') (or 
any similar type of [Topaz]GEMX membership or participation that is 
created after this Agreement is executed); or (ii) meets the 
[Topaz]GEMX requirements to be associated with, or employed by, a 
[Topaz]GEMX member or participant in any capacity, such a Designated 
Trading Representative (``DTR'') (or any similar type of participation, 
employment category or title, or associate-person category or class 
that is created after this Agreement is executed). FINRA shall not 
review applications or other documentation filed to request a change in 
the rights or status described in this paragraph 8(d), including 
termination or limitation on activities, of a member or a participant 
of [Topaz]GEMX, or a person associated with, or requesting association 
with, a member or participant of [Topaz]GEMX.
    9. Branch Office Information. FINRA shall also be responsible for 
processing and, if required, acting upon all requests for the opening, 
address changes, and terminations of branch offices by Dual Members and 
any other applications required of Dual Members with respect to the 
Common Rules as they may be amended from time to time. Upon request, 
FINRA shall advise [Topaz]GEMX of the opening, address change and 
termination of branch and main offices of Dual Members and the names of 
such branch office managers.
    10. Customer Complaints. [Topaz]GEMX shall forward to FINRA copies 
of all customer complaints involving Dual Members received by 
[Topaz]GEMX 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.
    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 [Topaz]GEMX or 
FINRA at any time upon the approval of the Commission after one (1) 
year's written notice to the other party (or such shorter time as may 
be agreed by the parties), except as provided in paragraph 4.
    13. Effective Date. This Agreement shall be effective upon approval 
of the Commission.
    14. Arbitration. In the event of a dispute between the parties as 
to the operation of this Agreement,

[[Page 84077]]

[Topaz]GEMX 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.
    15. Separate Agreement. This Agreement is wholly separate from (1) 
the multiparty Agreement made pursuant to Rule 17d-2 of the Exchange 
Act among [BATS 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, the NYSE MKT LLC, the 
NYSE Arca Inc., The NASDAQ Stock Market LLC, NASDAQ OMX BX, Inc., and 
the NASDAQ OMX PHLX, LLC] 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 approved by the Commission on [December 5, 2012]February 
12, 2019 involving the allocation of regulatory responsibilities with 
respect to common members for compliance with common rules relating to 
the conduct by broker-dealers of accounts for listed options or index 
warrants or (2) the multiparty Agreement made pursuant to Rule 17d-2 of 
the Exchange Act among [NYSE MKT LLC, BATS Exchange, Inc., BOX Options 
Exchange, LLC, C2 Options Exchange, Incorporated, Chicago Board Options 
Exchange, Incorporated, International Securities Exchange LLC, 
Financial Industry Regulatory Authority, Inc., NYSE Arca, Inc., The 
NASDAQ Stock Market LLC, NASDAQ OMX BX, Inc., NASDAQ OMX PHLX, Inc. and 
Miami International Securities Exchange, LLC,] 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 approved by the Commission 
on [December 5, 2012]February 11, 2019 involving options-related market 
surveillance matters and such agreements as may be amended from time to 
time.
    16. Notification of Members. [Topaz]GEMX and FINRA shall notify 
Dual Members of this Agreement after the Effective Date by means of a 
uniform joint notice.
    17. 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.
    18. Limitation of Liability. Neither FINRA nor [Topaz]GEMX 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 [Topaz]GEMX 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 [Topaz]GEMX 
with respect to any of the responsibilities to be performed by each of 
them hereunder.
    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. Relief From Responsibility. Pursuant to Sections 17(d)(1)(A) 
and 19(g) of the Exchange Act and Rule 17d-2 thereunder, FINRA and 
[Topaz]GEMX join in requesting the Commission, upon its approval of 
this Agreement or any part thereof, to relieve [Topaz]GEMX 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.
    In witness whereof, each party has executed or caused this 
Agreement to be executed on its behalf by a duly authorized officer as 
of the date first written above.

FINANCIAL INDUSTRY REGULATORY AUTHORITY, INC.
By---------------------------------------------------------------------
Name:
Title:
[TOPAZ EXCHANGE]NASDAQ GEMX, LLC

By---------------------------------------------------------------------
Name:
Title:

    NOTE: The entire existing table of rules should be deleted and 
replaced with the table below.

EXHIBIT 1

[TOPAZ]GEMX CERTIFICATION OF COMMON RULES
    [Topaz]GEMX hereby certifies that the requirements contained in the 
rules listed below for [Topaz]GEMX are identical to, or substantially 
similar to, the comparable FINRA Rules or SEC Rules identified.
    # Common Rules shall not include provisions regarding (i) notice, 
reporting or any other filings made directly to or from GEMX, (ii) 
incorporations by reference to other GEMX 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 GEMX, (iv) prior written approval of GEMX, 
and (v) payment of fees or fines to GEMX.

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               GEMX RULE                        FINRA or SEC RULE
------------------------------------------------------------------------
General 3, Section 3(b)--Persons         FINRA Rule 1010 Electronic
 Associated with Members; General 4--     Filing Requirements for
 Nasdaq Stock Market General 4, Rule      Uniform Forms; FINRA By-Laws
 1.1250 Electronic Filing Requirements    Article IV, Sec. 1(c)
 for Uniform Forms incorporated by        Application for Membership;
 reference .                             FINRA By-Laws, Article V,
                                          Section 1 Qualification
                                          Requirements; FINRA By-Laws,
                                          Article V, Sec. 2 Application
                                          for Registration; and FINRA By-
                                          Laws Article V, Section 3
                                          Notification by Member to the
                                          Corporation and Associated
                                          Person of Termination;
                                          Amendments to Notification

[[Page 84078]]

 
General 4--Nasdaq Stock Market General   FINRA Rule 1240 Continuing
 4, Section 1.1240 Continuing Education   Education Requirements
 Requirements incorporated by reference
 .
Options 9, Nasdaq ISE Options 9,         FINRA Rule 2010 Standards of
 Section 1 Just and Equitable             Commercial Honor and
 Principles of Trade incorporated by      Principles of Trade; FINRA
 reference \1\.                           Rule 0140(a) Applicability
Options 9--Nasdaq ISE Options 9,         Section 15(g) of the Securities
 Section 9(a)(1) Prevention of the        Exchange Act of 1934, and
 Misuse of Material, Nonpublic            FINRA Rule 3110(b)(1), (d)
 Information incorporated by reference    Supervision
 .
Options 9--Nasdaq ISE Options 9,         FINRA Rule 4530(a)(1)(A) and
 Section 10 Disciplinary Action by        (2) Reporting Requirements;
 Other Organizations incorporated by      FINRA By-Laws, Article V,
 reference .                             Section 2(c); and FINRA By-
                                          Laws, Article V, Section 3
Options 9--Nasdaq ISE Options 9,         FINRA Rule 3310 Anti-Money
 Section 21 Anti-Money Laundering         Laundering Compliance Program
 Compliance Program incorporated by
 reference .
Options 10--Nasdaq ISE Options 10,       Rule 17a-5 of the Securities
 Section 12 Statements of Financial       Exchange Act of 1934
 Condition to Customers incorporated by
 reference.
Options 10--Nasdaq ISE Options 10,       FINRA Rule 11870 Customer
 Section 19 Transfer of Accounts          Account Transfer Contracts
 incorporated by reference .
Options 10--Nasdaq ISE Options 10,       FINRA Rule 3230 Telemarketing
 Section 23 Telemarketing incorporated
 by reference.
Options 6E--Nasdaq ISE Options 6E,       FINRA Rule 4511(a) Books and
 Section 1 Maintenance, Retention, and    Records--Requirements
 Furnishing of Books, Records and Other
 Information incorporated by reference
 .
------------------------------------------------------------------------
\1\ FINRA shall not have Regulatory Responsibilities with respect to the
  Supplementary Material to Nasdaq ISE Options 9, Section 1.
  Responsibility for such shall remain with GEMX.

    In addition, the following provisions shall be part of this 17d-2 
Agreement:
    SEA Rule 14e-4--Prohibited Transactions in Connection with Partial 
Tender Offers [supcaret]
    [supcaret] FINRA shall perform surveillance, investigation, and 
Enforcement Responsibilities for SEA Rule 14e-4(a)1)(ii)(D).

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 4-663 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 4-663. 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 FINRA and GEMX. 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 4-663 and should be submitted on or before 
January 13, 2021.

V. Discussion

    The Commission finds that the proposed Amended Plan is consistent 
with the factors set forth in Section 17(d) of the Act \12\ and Rule 
17d-2(c) thereunder \13\ in that the proposed Amended Plan is necessary 
or appropriate in the public interest and for the protection of 
investors, fosters cooperation and coordination among SROs, and removes 
impediments to and fosters the development of the national market 
system. In particular, the Commission believes that the proposed 
Amended Plan should reduce unnecessary regulatory duplication by 
allocating to FINRA certain examination and enforcement 
responsibilities for Common Members that would otherwise be performed 
by both FINRA and GEMX. Accordingly, the proposed Amended Plan promotes 
efficiency by reducing costs to Common Members. Furthermore, because 
GEMX and FINRA will coordinate their regulatory functions in accordance 
with the Amended Plan, the Amended Plan should promote investor 
protection.
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    \12\ 15 U.S.C. 78q(d).
    \13\ 17 CFR 240.17d-2(c).
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    The Commission notes that, under the Amended Plan, GEMX and FINRA 
have allocated regulatory responsibility for those GEMX 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 Common Member's activity, 
conduct, or output in relation to such rule. In addition, under the 
Amended Plan, FINRA would assume regulatory responsibility for certain 
provisions of the federal securities laws and the rules and regulations 
thereunder that are set forth in the Certification. The Common Rules 
covered by the Amended Plan are specifically listed in the 
Certification, as may be amended by the Parties from time to time.
    According to the Amended Plan, GEMX will review the Certification 
at least annually, or more frequently if required by changes in either 
the rules of GEMX or FINRA, and, if necessary, submit to FINRA an 
updated list of Common Rules to add GEMX rules not included on the 
then-current list of Common Rules that are substantially similar to 
FINRA rules; delete GEMX

[[Page 84079]]

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 GEMX 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, GEMX also will provide FINRA with a current 
list of Common Members and will 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.
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    \14\ See paragraph 2 of the Amended Plan.
    \15\ See paragraph 3 of the Amended Plan.
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    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 GEMX rules that are substantially 
similar to the rules of FINRA for Common Members of GEMX 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 
GEMX rules in the Certification in conformance with the definition of 
Common Rules provided in the Amended Plan. However, should the Parties 
decide to add a GEMX rule to the Certification that is not 
substantially similar to a FINRA rule; delete a GEMX rule from the 
Certification that is substantially similar to a FINRA rule; or leave 
on the Certification a GEMX 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\
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    \16\ 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, Common Members, also would constitute an 
amendment to the Amended Plan.
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    Under paragraph (c) of Rule 17d-2, the Commission may, after 
appropriate notice and comment, declare a plan, or any part of a plan, 
effective. In this instance, the Commission believes that appropriate 
notice and comment can take place after the proposed amendment is 
effective. The primary purpose of the amendment is to allocate 
surveillance, investigation, and enforcement responsibilities for Rule 
14e-4 under the Act, to reflect the name change of Topaz Exchange, LLC 
to Nasdaq GEMX, LLC. 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.
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    \17\ See supra note 11 (citing to Securities Exchange Act 
Release No. 70228).
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VI. Conclusion

    This order gives effect to the Amended Plan filed with the 
Commission in File No. 4-663. 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. 4-663, between the FINRA and GEMX, filed 
pursuant to Rule 17d-2 under the Act, hereby is approved and declared 
effective.
    It is further ordered that GEMX is relieved of those 
responsibilities allocated to FINRA under the Amended Plan in File No. 
4-663.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(34).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-28309 Filed 12-22-20; 8:45 am]
BILLING CODE 8011-01-P