Document ID: SEC-2006-0988-0001
Agency: sec
Document Type: Notice
Title: Securities Exchange Act: NYSE Arca, Inc. and National Association of Securities Dealers, Inc.; regulatory responsibilities allocation plan filing
Posted Date: 2006-08-02T04:00Z

[Federal Register: August 2, 2006 (Volume 71, Number 148)]
[Notices]               
[Page 43823-43828]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr02au06-125]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54224; File No. 4-523]

 
 Program for Allocation of Regulatory Responsibilities Pursuant 
to Rule 17d-2; Notice of Filing of the Plan for Allocation of 
Regulatory Responsibilities Between NYSE Arca, Inc. and the National 
Association of Securities Dealers, Inc.

July 27, 2006.
    Pursuant to Section 17(d) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 17d-2 thereunder,\2\ notice is hereby given that 
on January 20, 2006, NYSE Arca, Inc.\3\ (``NYSE Arca'') and the 
National Association of Securities Dealers, Inc. (``NASD'')

[[Page 43824]]

(together with the NYSE Arca, the ``Parties'') filed with the 
Securities and Exchange Commission (``Commission'') an amended and 
restated plan for the allocation of regulatory responsibilities. On 
July 25, 2006, the Parties submitted a revised amended and restated 
plan. The Commission is publishing this notice to solicit comments on 
the revised amended and restated 17d-2 plan from interested persons.
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    \1\ 15 U.S.C. 78q(d).
    \2\ 17 CFR 240.17d-2.
    \3\ NYSE Arca, Inc. was formerly called the Pacific Exchange, 
Inc. (``PCX''). On March 6, 2006, PCX filed with the Commission a 
proposed rule change, which was effective upon filing, to change the 
name of the PCX, as well as several other related entities, to 
reflect Archipelago Holdings, Inc.'s (``Archipelago'') recent 
acquisition of PCX and the merger of the New York Stock Exchange, 
Inc. with Archipelago. See Securities Exchange Act Release No. 53615 
(April 7, 2006), 71 FR 19226 (April 13, 2006).
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I. Introduction

    Section 19(g)(1) of the Act,\4\ among other things, requires every 
self-regulatory organization (``SRO'') registered as either a national 
securities exchange or registered 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) \5\ or 19(g)(2) \6\ 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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    \4\ 15 U.S.C. 78s(g)(1).
    \5\ 15 U.S.C. 78q(d).
    \6\ 15 U.S.C. 78s(g)(2).
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    Section 17(d)(1) of the Act \7\ was intended, in part, to eliminate 
unnecessary multiple examinations and regulatory duplication.\8\ 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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    \7\ 15 U.S.C. 78q(d)(1).
    \8\ 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.\9\ 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.\10\ 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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    \9\ 17 CFR 240.17d-1 and 17 CFR 240.17d-2, respectively.
    \10\ See Securities Exchange Act Release No. 12352 (April 20, 
1976), 41 FR 18809 (May 3, 1976).
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    To address regulatory duplication in these and other areas, the 
Commission adopted Rule 17d-2 under the Act.\11\ 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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    \11\ See Securities Exchange Act Release No. 12935 (October 28, 
1976), 41 FR 49093 (November 8, 1976).
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II. Proposed Plan

    The Parties currently operate pursuant to a 17d-2 plan in which the 
NASD assumed certain inspection, examination, and enforcement 
responsibility for common members with respect to certain applicable 
laws, rules, and regulations (the ``current NASD-PCX 17d-2 Plan'').\12\ 
On September 22, 2005, the Commission approved a proposed rule change 
submitted by PCX, the predecessor to NYSE Arca,\13\ relating to the 
acquisition of PCX Holdings, Inc. by Archipelago.\14\ In that filing, 
PCX committed to amend the current NASD-PCX 17d-2 Plan within 90 days 
of the Commission's approval of SR-PCX-2005-90 to expand the scope of 
the NASD's regulatory functions under the plan so as to encompass all 
of the regulatory oversight and enforcement responsibilities with 
respect to the broker-dealer affiliate of Archipelago, Archipelago 
Securities, L.L.C.\15\ This time period has been extended three 
times.\16\
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    \12\ See Securities Exchange Act Release Nos. 14095 (October 25, 
1977), 42 FR 57198 (November 1, 1977) (File No. 4-267) (notice of 
1977 Agreement); 15191 (September 26, 1978), 43 FR 46093 (October 5, 
1978) (File No. 4-267) (order granting temporary approval); 15722 
(April 12, 1979), 44 FR 23616 (April 20, 1979) (File No. 4-267) 
(extension of time to file amendments); 15941 (June 21, 1979) (File 
No. 4-267), SEC Docket, Vol. 17, no. 14, page 995 (July 3, 1979) 
(further extension of time to file required amendments); 16462 
(January 2, 1980), 45 FR 2121 (January 10, 1980) (File No. 4-267) 
(order granting temporary approval); 16591 (February 20, 1980), 45 
FR 12573 (February 26, 1980) (File No. 4-267) (notice of 1980 
Amendment); 16719 (April 2, 1980), 45 FR 23841 (April 8, 1980) (File 
No. 4-267) (order granting temporary approval); and 16858 (May 30, 
1980), 45 FR 37927 (June 5, 1980) (File No. 4-267) (approval order).
    \13\ See supra note 3.
    \14\ See Securities Exchange Act Release No. 52497 (September 
22, 2005), 70 FR 56949 (September 29, 2005) (approving SR-PCX-2005-
90, as amended).
    \15\ Archipelago Securities acts as the outbound order router 
for the NYSE Arca Marketplace (formerly, the Archipelago Exchange, 
or ArcaEx), the equities trading facility of NYSE Arca.
    \16\ See Securities Exchange Act Release Nos. 52995 (December 
21, 2005), 70 FR 77232 (December 29, 2005); 53545 (March 23, 2006), 
71 FR 16183 (March 30, 2006); and 54046 (June 26, 2006), 71 FR 37965 
(July 3, 2006).
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     On January 20, 2006, the Parties submitted an amended and restated 
17d-2 plan for review and approval by the Commission. On July 25, 2006, 
the Parties submitted a revised amended and restated plan. The revised 
amended and restated plan is intended to replace and supersede the 
current NASD-PCX 17d-2 Plan and all prior amendments thereto in their 
entirety. The revised amended and restated 17d-2 plan is intended to 
reduce regulatory duplication for firms that are common members of NYSE 
Arca and the NASD. The text of the plan delineates regulatory 
responsibilities with respect to the Parties, including responsibility 
for NYSE Arca rules. Included in the revised amended and restated plan 
is an attachment (``NYSE Arca Rules Certification for 17d-2 Agreement 
with NASD,'' referred to herein as the ``Certification'') that lists 
every NYSE Arca rule and the federal securities laws and rules and 
regulations thereunder for which, under the plan, the NASD would bear 
responsibility for overseeing and enforcing with respect to common 
members. In particular, under the revised amended and restated 17d-2 
plan, the NASD would assume examination and enforcement responsibility 
relating to compliance by dual members and persons associated therewith 
with the rules of NYSE Arca that are substantially similar to the rules

[[Page 43825]]

of the NASD (``Common Rules''), as well as any provisions of the 
federal securities laws and the rules and regulations thereunder 
delineated in the Certification.\17\ Under the plan, NYSE Arca would 
retain full responsibility for surveillance and enforcement with 
respect to trading activities or practices involving NYSE Arca's own 
marketplace; registration pursuant to its unique rules (i.e., non-
common rules); its duties as a Designated Examining Authority pursuant 
to Rule 17d-1 under the Act; and any rules that are not substantially 
similar to the rules of the NASD, except for NYSE Arca rules for any 
broke-dealer subsidiary of Archipelago.\18\
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    \17\ See paragraph 2 of the revised amended and restated 17d-2 
plan. The Commission notes that there is only one federal security 
law rule on the Certification, Rule 200 of Regulation SHO.
    \18\ See id. Apparent violations of such NYSE Arca rules by any 
broker-dealer subsidiary of Archipelago will be processed by, and 
enforcement proceedings will be conducted by, the NASD. See 
paragraph 5 of the revised amended and restated 17d-2 plan.
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    The text of the revised amended and restated 17d-2 plan is as 
follows:

Agreement Between the NASD and NYSA Arca, Inc. Pursuant to Sec Rule 
17d-2 Under the Securities Exchange Act of 1934

    This Agreement, between the National Association of Securities 
Dealers, Inc. (``NASD'') and the NYSE Arca, Inc. (``NYSE Arca''), is 
made this 25th day of July, 2006, pursuant to the provisions of SEC 
Rule 17d-2 under the Securities Exchange Act of 1934 which calls for 
agreements between self-regulatory organizations for plans to reduce or 
eliminate regulatory duplication.
    This Agreement supersedes and replaces Agreements entered into 
between the parties on May 27, 1977 and January 20, 2006, entitled 
``Agreement Between the National Association of Securities Dealers, 
Inc. and the Pacific Stock Exchange, Inc. Pursuant to SEC Rule 17d-2 
Under the Securities Exchange Act of 1934,'' and any subsequent 
amendments thereafter.
    Whereas, NASD and NYSE Arca are desirous of reducing duplication in 
the examination of their dual members (a broker-dealer firm which is a 
member of both NASD and NYSE Arca) and in the filing and processing of 
certain registration and membership records; and
    Whereas, NASD and NYSE Arca are desirous of executing a plan 
covering such subjects pursuant to the provisions of Rule 17d-2 and 
filing such with the Commission for its approval.
    Now, therefore, in consideration of the mutual covenants contained 
hereafter, the said NASD and NYSE Arca hereby agree as follows:
    1. That NASD will assume regulatory responsibilities for all firms 
who are members of NYSE Arca and NASD (``dual members''). NYSE Arca 
shall furnish NASD with a current list of dual members, which shall be 
updated no less frequently than once each quarter.
    2. For purposes of this plan, the term ``regulatory 
responsibilities'' shall mean the examination and enforcement 
responsibility relating to compliance by the dual members and persons 
associated therewith with the rules of NYSE Arca that are substantially 
similar to the rules of NASD in that the NYSE Arca's rule would not 
require NASD to develop one or more new examination standards, modules, 
procedures, or criteria in order to analyze the application of the 
rule, or a dual member's activity, conduct, or output in relation to 
such rule, (the ``Common Rules''). Prior to the effective date of this 
Agreement, NYSE Arca shall furnish NASD with a current list of Common 
Rules (``Certification''), and NASD will confirm in writing whether the 
rules listed in the Certification are Common Rules as defined in this 
Agreement. Each year following the commencement of operation of this 
Agreement, or more frequently if required by changes in either the 
rules of NYSE Arca or NASD, NYSE Arca shall submit an updated list of 
Common Rules to NASD for review which shall add NYSE Arca rules not 
included in the current list of Common Rules that qualify as Common 
Rules as defined in this Agreement; delete NYSE Arca 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 NYSE Arca rules that 
qualify as Common Rules as defined in this Agreement. Within 30 days of 
receipt of such updated list, NASD will confirm in writing whether the 
rules listed in any updated list are Common Rules as defined in this 
Agreement. Regulatory responsibilities under this Agreement shall also 
extend to those provisions of the federal securities laws and rules and 
regulations thereunder listed in the Certification.
    The term ``enforcement responsibility'' shall mean the conduct of 
appropriate proceedings, in accordance with the NASD Code of Procedure 
(the Rule 9000 Series) and other applicable NASD 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 NASD's Code 
of Procedure and sanctions guidelines. Notwithstanding anything herein 
to the contrary, it is explicitly understood that the term ``regulatory 
responsibilities'' does not include, and NYSE Arca will retain full 
responsibility for (unless otherwise addressed by separate agreement or 
rule):
    (a) Surveillance and enforcement with respect to trading activities 
or practices involving NYSE Arca's own marketplace, including without 
limitation NYSE Arca'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 Act; and
    (d) Any rules of NYSE Arca that are not substantially similar to 
the rules of NASD, except for NYSE Arca rules for any broker-dealer 
subsidiary of Archipelago Holdings, Inc. as provided in paragraph 5.
    3. There shall be no charge to NYSE Arca by NASD for performing the 
stated regulatory responsibilities under this plan except as 
hereinafter provided. NASD will provide NYSE Arca with ninety (90) days 
advance written notice in the event NASD decides to impose any charges 
to NYSE Arca for performing the stated regulatory responsibilities 
under this plan. If it becomes necessary to impose a charge, NYSE Arca 
shall have the right at the time of the imposition of such to terminate 
this Agreement; provided, however, that NASD's regulatory 
responsibilities under this Agreement shall continue until the SEC 
approves the termination of this Agreement.
    4. Notwithstanding any provision hereof, this Agreement shall be 
subject to any statute, or any rule or order of the Securities and 
Exchange Commission, or industry agreement, restructuring the 
regulatory framework of the securities industry or reassigning 
regulatory responsibilities between self-regulatory organizations. To 
the extent such is inconsistent with this Agreement, such 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.
    5. Should NASD become aware of apparent violations of NYSE Arca's 
rules, which are not listed as Common Rules, discovered pursuant to the 
performance of the regulatory

[[Page 43826]]

responsibilities assumed hereunder, NASD will notify NYSE Arca of those 
apparent violations. With respect to apparent violations of any NYSE 
Arca rules by any broker-dealer subsidiary of NYSE Arca's parent 
company, Archipelago Holdings, Inc., NASD shall not make referrals to 
NYSE Arca pursuant to this Item 5. Such apparent violations shall be 
processed by, and enforcement proceedings in respect thereto will be 
conducted by, NASD as provided in this agreement. Apparent violations 
of all other applicable rules, including violations of the various 
securities acts, and rules and regulations thereunder, will be 
processed by, and enforcement proceedings in respect thereto will be 
conducted by NASD as provided hereinbefore; provided however that in 
the event a covered dual member or a person associated therewith is the 
subject of an investigation relating to a transaction on NYSE Arca, 
NYSE Arca 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.
    6. NASD will make available to NYSE Arca all information obtained 
by it in the performance by it of the regulatory responsibilities 
hereunder in respect to the firms which are subject to this Agreement. 
In particular, and not in limitation of the foregoing, NASD will 
furnish NYSE Arca any information it obtains about dual members which 
reflects adversely on their financial condition and which should be 
known by NYSE Arca or any subsidiaries thereof. It is understood that 
such information is of an extremely sensitive nature and, accordingly, 
NYSE Arca agrees to take all reasonable steps to maintain its 
confidentiality. NYSE Arca will supply NASD 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.
    7. Dual members subject to this agreement will be required to 
submit, and NASD will 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 rules of both NYSE Arca and NASD or associated with dual members 
thereof. NASD shall advise NYSE Arca monthly of any changes of allied 
members, partners, officers, registered personnel and other persons 
required to be approved by the rules of both NYSE Arca and NASD. Dual 
members will be required to send to NASD all letters, termination 
notices or other material respecting these individuals. When as a 
result of processing said submissions NASD becomes aware of a statutory 
disqualification as defined in the Securities Exchange Act of 1934 with 
respect to a dual member or person associated with a dual member, NASD 
will determine pursuant to sections 15A(g) and/or section 6(c) the 
acceptability or continued applicability of the person to whom such 
disqualification applies and keep NYSE Arca advised of its actions in 
this regard.
    NASD will 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 under the Common Rules as they 
may be amended from time to time. NASD will advise NYSE Arca monthly of 
the opening, address change and termination of branch and main offices 
of dual members and the names of such branch office managers.
    8. NYSE Arca shall forward to NASD copies of all customer 
complaints involving dual members and persons associated therewith 
received by it relating to NASD's regulatory responsibilities under 
this Agreement. It shall be NASD's responsibility to review and take 
appropriate action in respect to such complaints.
    9. NASD shall assume responsibility to review the advertising of 
dual members subject to the Agreement, provided that such material is 
filed with NASD in accordance with NASD's filing procedures and is 
accompanied with any applicable filing fees. Such review will be made 
in accordance with then applicable NASD rules and interpretations. In 
all cases of dual members subject to this Agreement, the advertising of 
dual members shall be subject only to compliance with appropriate NASD 
rules and interpretations.
    10. Nothing contained in this Agreement shall restrict or in any 
way encumber the right of NASD or NYSE Arca to conduct special or cause 
examinations of dual members and persons associated therewith as NASD 
or NYSE Arca, in their sole discretions, shall deem appropriate.
    11. NYSE Arca recognizes that, pursuant to this Agreement, NASD 
will maintain an available and appropriate mechanism for considering 
and acting upon requests by dual members for extensions of time 
pursuant to Federal Reserve Regulation T and SEC Rule 15c3-3 of the 
Securities Exchange Act of 1934. NASD will keep NYSE Arca informed with 
respect to its activities in granting extensions of time pursuant to 
Regulation T and Rule 15c3-3 to dual members in such form and content 
as reasonably determined by NASD.
    12. Should a dispute arise between the parties as to the operation 
of this Agreement, NYSE Arca and NASD 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.
    13. This Agreement may be cancelled by NYSE Arca or NASD at any 
time with the approval of the Securities and Exchange Commission upon 
one (1) year's written notice, except as provided in paragraph 3.
    14. This Agreement shall be effective upon approval of the 
Securities and Exchange Commission.
    15. This Agreement is wholly separate from the multiparty Agreement 
made pursuant to SEC Rule 17d-2 of the Securities Exchange Act of 1934 
between the American Stock Exchange LLC, the Boston Stock Exchange, 
Inc., the Chicago Board Options Exchange, Inc., the International 
Securities Exchange, Inc., the National Association of Securities 
Dealers, Inc., the New York Stock Exchange, Inc., the Pacific Exchange, 
Inc., and the Philadelphia Stock Exchange 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 entered into on 
January 14, 2004, and as may be amended from time to time.
Limitation of Liability
    Neither NASD nor NYSE Arca nor any of their respective directors, 
governors, officers or employees shall be liable to the other party to 
this plan 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 NASD or NYSE Arca 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

[[Page 43827]]

by NASD or NYSE Arca with respect to any of the responsibilities to be 
performed by each of them hereunder.
Relief From Responsibility
    Pursuant to Sections 17(d)(1)(A) and 19(g) of the Securities 
Exchange Act of 1934 and Rule 17d-2 promulgated pursuant thereto, NASD 
and NYSE Arca join in requesting the Commission, upon its approval of 
this plan or any part thereof, to relieve NYSE Arca of any and all 
responsibilities with respect to matters allocated to NASD pursuant to 
this plan.

NYSE Arca Certification

NYSE Arca Rules Certification for 17d-2 Agreement With NASD
    NYSE Arca, Inc. hereby certifies that the requirements contained in 
the rules listed below for NYSE Arca Equities, Inc., a wholly-owned 
subsidiary, are identical to, or substantially similar to, comparable 
NASD rules (``Common Rules'') as of July 2006.\19\
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    \19\ The Commission notes that the Certification attached to the 
executed revised amended and restated plan also includes references 
to the NASD rules to which the Common Rules are identical or 
substantially similar. Further, the Certification notes that, with 
respect to several of the NYSE Arca rules, NYSE Arca will be 
responsible for any significant differences between its rule and the 
comparable NASD rule identified, until such time amendments to such 
rule(s) may be approved. A copy of the revised amended and restated 
plan, including the Certification, is available on the Commission's 
Web site at http://www.sec.gov.

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               Rule                             Description
------------------------------------------------------------------------
2.15.............................  Responsibilities of Non-Resident
                                    Firms.
2.21.............................  Employees of ETP Holder Registration.
2.24.............................  ETP Books and Records.
6.1..............................  Adherence to Law.
6.2..............................  Prohibited Acts.
6.6..............................  Front-Running of Block Transactions.
6.13.............................   Disciplinary Action By Other
                                    Organizations.
6.15.............................   Miscellaneous Prohibitions.
6.16.............................   Trading Ahead of Customer Limit
                                    Orders.
6.17.............................   Anti-Money Laundering Compliance
                                    Program.
6.18.............................   Supervision.
8.4..............................  Account Approval.
8.5..............................  Suitability.
8.6..............................  Discretionary Accounts.
8.7..............................  Supervision of Accounts.
8.8..............................  Customer Complaints.
8.9..............................  Prior Approval of Certain
                                    Communications to Customers.
9.1(a)...........................  Register with the Corporation.
9.1(c)...........................  Office Supervision.
9.1(d)...........................  Designation of Firm Principal.
9.1(e)...........................  Guarantees.
9.1(f)...........................  Sharing Profits--Losses.
9.2(b)...........................  Account Supervision.
9.2(c)...........................  Customer Records.
9.3(a)...........................  Employee Accounts.
9.3(b)...........................  ETP Holder and Allied Person
                                    Accounts.
9.4..............................  Proxies Voting.
9.5..............................  Solicitation Expense.
9.6(a)...........................  Discretion as to Customers' Accounts.
9.6(b)...........................  Records of Discretionary Accounts.
9.7(a)...........................  Pledging Customer Securities.
9.7(b)...........................  Use of Customer Securities.
9.7(c)...........................  Customer Protection--Reserves and
                                    Custody of Securities.
9.7(d)...........................  Agreements for Use of Customer
                                    Securities.
9.10.............................  Assuming Losses.
9.11.............................  Confirmations.
9.12.............................  COD Orders--Partial Delivery.
9.13.............................  Long Sales.
9.14.............................  Account Designation.
9.15.............................  Statements of Account to Customers.
9.17.............................  Books and Records.
9.19.............................  Transfer of Accounts.
9.20(b)..........................  Telemarketing.
9.21(a)..........................  Policy.
9.22(a)..........................  Advertisements.
9.23.............................  Sales Literature--Market Letters.
9.24.............................  Radio, Television, Telephone and
                                    Other Reports.
9.25.............................  Standards.
9.27.............................  Registration of Representatives.
9.27.............................  Regulatory Element.
9.29.............................  Borrowing From or Lending to
                                    Customers.
------------------------------------------------------------------------

In addition, the following provisions of the Securities Exchange Act of 
1934, and rules and regulations thereunder, shall be part of this 17d-2 
Agreement: Rule 200 of Regulation SHO-Definition of ``Short Sale'' and 
Marking Requirements.

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

    Pursuant to Section 17(d)(1) of the Act \20\ and Rule 17d-2 
thereunder,\21\ after August 23, 2006, the Commission may, by written 
notice, declare the plan submitted by NYSE Arca and the NASD, File No. 
4-523, 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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    \20\ 15 U.S.C. 78q(d)(1).
    \21\ 17 CFR 240.17d-2.
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IV. Solicitation of Comments

    In order to assist the Commission in determining whether to approve 
the revised amended and restated 17d-2 plan and to relieve NYSE Arca of 
the responsibilities which would be assigned to the NASD, 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 4-523 on the subject line.

Paper Comments

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

All submissions should refer to File Number 4-523. 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 inspection and copying in the 
Commission's Public Reference Room. Copies of the plan also will be 
available for inspection and copying at the principal office of the 
Exchange. 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 4-523 
and should be submitted on or before August 23, 2006.
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    \22\ 17 CFR 200.30-3(a)(34).

[[Page 43828]]

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    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\22\
J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E6-12429 Filed 8-1-06; 8:45 am]

BILLING CODE 8010-01-P