Document ID: SEC-2012-0794-0001
Agency: sec
Document Type: Notice
Title: Program for Allocation of Regulatory Responsibilities, etc.: BATS Exchange, Inc.; BOX Options Exchange, LLC; Chicago Board Options Exchange, Inc., etc.
Posted Date: 2012-05-18T04:00Z

[Federal Register Volume 77, Number 97 (Friday, May 18, 2012)]
[Notices]
[Pages 29705-29712]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-12018]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-66974; File No. S7-966]

Program for Allocation of Regulatory Responsibilities Pursuant to 
Rule 17d-2; Notice of Filing and Order Approving and Declaring 
Effective an Amendment to the Plan for the Allocation of Regulatory 
Responsibilities Among the 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., the New York Stock 
Exchange LLC, NYSE Amex LLC, NYSE Arca, Inc., The NASDAQ Stock Market 
LLC, NASDAQ OMX BX, Inc., and NASDAQ OMX PHLX, Inc. Concerning Options-
Related Sales Practice Matters

May 11, 2012.
    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 filed on May 2, 2012, pursuant to Rule 17d-2 of the 
Act,\2\ by the BATS Exchange, Inc. (``BATS''), BOX Options Exchange, 
LLC (``BOX'') the Chicago Board Options Exchange, Incorporated 
(``CBOE''), C2 Options Exchange, Incorporated (``C2''), the 
International Securities Exchange, LLC (``ISE''), Financial Industry 
Regulatory Authority, Inc. (``FINRA''), the New York Stock Exchange LLC 
(``NYSE''), NYSE Amex LLC (``Amex''), NYSE Arca, Inc. (``Arca''), The 
NASDAQ Stock Market LLC (``NASDAQ''), NASDAQ OMX BX, Inc. (``BX''), and 
NASDAQ OMX PHLX, Inc. (``Phlx'') (collectively, ``SRO participants'').
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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

[[Page 29706]]

17(d) \4\ or Section 19(g)(2) \5\ of the Act. Without this relief, the 
statutory obligation of each individual SRO could result in a pattern 
of multiple examinations of broker-dealers that maintain memberships in 
more than one SRO (``common members''). Such regulatory duplication 
would add unnecessary expenses for common members and their SROs.
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    \3\ 15 U.S.C. 78s(g)(1).
    \4\ 15 U.S.C. 78q(d).
    \5\ 15 U.S.C. 78s(g)(2).
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    Section 17(d)(1) of the Act \6\ was intended, in part, to eliminate 
unnecessary multiple examinations and regulatory duplication.\7\ With 
respect to a common member, Section 17(d)(1) authorizes the Commission, 
by rule or order, to relieve an SRO of the responsibility to receive 
regulatory reports, to examine for and enforce compliance with 
applicable statutes, rules, and regulations, or to perform other 
specified regulatory functions.
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    \6\ 15 U.S.C. 78q(d)(1).
    \7\ See Securities Act Amendments of 1975, Report of the Senate 
Committee on Banking, Housing, and Urban Affairs to Accompany S. 
249, S. Rep. No. 94-75, 94th Cong., 1st Session 32 (1975).
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    To implement Section 17(d)(1), the Commission adopted two rules: 
Rule 17d-1 and Rule 17d-2 under the Act.\8\ Rule 17d-1 authorizes the 
Commission to name a single SRO as the designated examining authority 
(``DEA'') to examine common members for compliance with the financial 
responsibility requirements imposed by the Act, or by Commission or SRO 
rules.\9\ When an SRO has been named as a common member's DEA, all 
other SROs to which the common member belongs are relieved of the 
responsibility to examine the firm for compliance with the applicable 
financial responsibility rules. On its face, Rule 17d-1 deals only with 
an SRO's obligations to enforce member compliance with financial 
responsibility requirements. Rule 17d-1 does not relieve an SRO from 
its obligation to examine a common member for compliance with its own 
rules and provisions of the federal securities laws governing matters 
other than financial responsibility, including sales practices and 
trading activities and practices.
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    \8\ 17 CFR 240.17d-1 and 17 CFR 240.17d-2, respectively.
    \9\ See Securities Exchange Act Release No. 12352 (April 20, 
1976), 41 FR 18808 (May 7, 1976).
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    To address regulatory duplication in these and other areas, the 
Commission adopted Rule 17d-2 under the Act.\10\ Rule 17d-2 permits 
SROs to propose joint plans for the allocation of regulatory 
responsibilities with respect to their common members. Under paragraph 
(c) of Rule 17d-2, the Commission may declare such a plan effective if, 
after providing for notice and comment, it determines that the plan is 
necessary or appropriate in the public interest and for the protection 
of investors, to foster cooperation and coordination among the SROs, to 
remove impediments to, and foster the development of, a national market 
system and a national clearance and settlement system, and is in 
conformity with the factors set forth in Section 17(d) of the Act. 
Commission approval of a plan filed pursuant to Rule 17d-2 relieves an 
SRO of those regulatory responsibilities allocated by the plan to 
another SRO.
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    \10\ See Securities Exchange Act Release No. 12935 (October 28, 
1976), 41 FR 49091 (November 8, 1976).
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II. The Plan

    On September 8, 1983, the Commission approved the SRO participants' 
plan for allocating regulatory responsibilities pursuant to Rule 17d-
2.\11\ On May 23, 2000, the Commission approved an amendment to the 
plan that added the ISE as a participant.\12\ On November 8, 2002, the 
Commission approved another amendment that replaced the original plan 
in its entirety and, among other things, allocated regulatory 
responsibilities among all the participants in a more equitable 
manner.\13\ On February 5, 2004, the parties submitted an amendment to 
the plan, primarily to include the BSE, which was establishing a new 
options trading facility to be known as the Boston Options Exchange 
(``BOX''), as an SRO participant.\14\ On December 5, 2007, the parties 
submitted an amendment to the plan to, among other things, provide that 
the National Association of Securities Dealers (``NASD'') (n/k/a the 
Financial Industry Regulatory Authority, Inc. or ``FINRA'') and NYSE 
are Designated Options Examining Authorities under the plan.\15\ On 
June 5, 2008, the parties submitted an amendment to the plan primarily 
to remove the NYSE as a Designated Options Examining Authority, leaving 
FINRA as the sole Designated Options Examining Authority for all common 
members that are members of FINRA.\16\ On February 9, 2010, the parties 
submitted a proposed amendment to the plan to add BATS and C2 as SRO 
participants and to reflect the name changes of the American Stock 
Exchange LLC to the NYSE Amex LLC, the Boston Stock Exchange, Inc., to 
the NASDAQ OMX BX, Inc. and the Philadelphia Stock Exchange, Inc. to 
the NASDAQ OMX PHLX, Inc. \17\
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    \11\ See Securities Exchange Act Release No. 20158 (September 8, 
1983), 48 FR 41256 (September 14, 1983).
    \12\ See Securities Exchange Act Release No. 42816 (May 23, 
2000), 65 FR 34759 (May 31, 2000).
    \13\ See Securities Exchange Act Release No. 46800 (November 8, 
2002), 67 FR 69774 (November 19, 2002).
    \14\ See Securities Exchange Act Release No. 49197 (February 5, 
2004), 69 FR 7046 (February 12, 2004).
    \15\ See Securities Exchange Act Release No. 55532 (March 26, 
2007), 72 FR 15729 (April 2, 2007).
    \16\ See Securities Exchange Act Release No. 57987 (June 18, 
2008), 73 FR 36156 (June 25, 2008).
    \17\ See Securities Exchange Act Release No. 61589 (February 25, 
2010), 75 FR 9976 (March 4, 2010).
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    The plan reduces regulatory duplication for a large number of firms 
currently members of two or more of the SRO participants by allocating 
regulatory responsibility for certain options-related sales practice 
matters to one of the SRO participants. Generally, under the plan, the 
SRO participant responsible for conducting options-related sales 
practice examinations of a firm, and investigating options-related 
customer complaints and terminations for cause of associated persons of 
that firm, is known as the firm's ``Designated Options Examining 
Authority'' (``DOEA''). Pursuant to the plan, any other SRO of which 
the firm is a member is relieved of these responsibilities during the 
period in which the firm is assigned to another SRO acting as that 
firm's DOEA.

III. Proposed Amendment to the Plan

    On May 2, 2012, the parties submitted a proposed amendment to the 
plan. The primary purpose of the amendment is to add BOX as an SRO 
participant. The text of the proposed amended 17d-2 plan is as follows 
(additions are italicized; deletions are [bracketed]):
* * * * *

Agreement by and 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., the New York Stock Exchange LLC, 
the NYSE Amex LLC, the NYSE Arca, Inc., The NASDAQ Stock Market LLC, 
NASDAQ OMX BX, Inc. and the NASDAQ OMX PHLX[, Inc.] LLC Pursuant to 
Rule 17d-2 Under the Securities Exchange Act of 1934.

    This agreement (``Agreement''), by and 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. (``FINRA''), The NASDAQ Stock Market LLC (``NASDAQ''), NASDAQ 
OMX BX, Inc., the New York Stock Exchange LLC (``NYSE''), the NYSE 
Amex LLC, the NYSE Arca, Inc., and the NASDAQ

[[Page 29707]]

OMX PHLX[, Inc.] LLC, hereinafter collectively referred to as the 
Participants, is made this [5th] 25th day of [February, 2010] 
April,2012, pursuant to the provisions of Rule 17d-2 under the 
Securities Exchange Act of 1934 (the ``Exchange Act''), which allows 
for plans among self-regulatory organizations to allocate regulatory 
responsibility. This Agreement shall be administered by a committee 
known as the Options Self-Regulatory Council (the ``Council'').
    This Agreement amends and restates the agreement entered into 
among the Participants on [June] February 5, [2008] 2010, entitled 
``Agreement by and among [the American Stock Exchange, LLC, the 
Boston Stock] BATS Exchange, Inc., the Chicago Board Options 
Exchange, Incorporated, C2 Options Exchange, Incorporated, the 
International Securities Exchange, LLC, Financial Industry 
Regulatory Authority, Inc., the New York Stock Exchange LLC, NYSE 
Amex LLC, the NYSE Arca, Inc., the NASDAQ Stock Market LLC, NASDAQ 
OMX BX, Inc. and the [Philadelphia Stock Exchange] NASDAQ OMX PHLX, 
Inc., Pursuant to Rule 17d-2 under the Securities Exchange Act of 
1934.''
    WHEREAS, the Participants are desirous of allocating regulatory 
responsibilities with respect to broker-dealers, and persons 
associated therewith, that are members \1\ of more than one 
Participant (the ``Common Members'') and conduct a public business 
for compliance with Common Rules (as hereinafter defined) relating 
to the conduct by broker-dealers of accounts for listed options, 
index warrants, currency index warrants and currency warrants 
(collectively, ``Covered Securities''); and
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    \1\ In the case of BOX Options Exchange, LLC (``BOX''), NASDAQ 
OMX BX, Inc. (``BX'') and NASDAQ members are those persons who are 
options participants (as defined in the BOX, BX and NASDAQ Options 
Market Rules).
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    Whereas, the Participants are desirous of executing a plan for 
this purpose pursuant to the provisions of Rule 17d-2 and filing 
such plan with the Securities and Exchange Commission (``SEC'' or 
the ``Commission'') for its approval;
    Now, therefore, in consideration of the mutual covenants 
contained hereafter, the Participants agree as follows:
    I. As used herein the term Designated Options Examining 
Authority (``DOEA'') shall mean: (1) FINRA insofar as it shall 
perform Regulatory Responsibility (as hereinafter defined) for its 
broker-dealer members that also are members of another Participant 
or (2) the Designated Examination Authority (``DEA'') pursuant to 
SEC Rule 17d-1 under the Securities Exchange Act (``Rule 17d-1'') 
for a broker-dealer that is a member of a more than one Participant 
(but not a member of FINRA).
    II. As used herein, the term ``Regulatory Responsibility'' shall 
mean the examination and enforcement responsibilities relating to 
compliance by Common Members with the rules of the applicable 
Participant that are substantially similar to the rules of the other 
Participants (the ``Common Rules''), insofar as they apply to the 
conduct of accounts for Covered Securities. A list of the current 
Common Rules of each Participant applicable to the conduct of 
accounts for Covered Securities is attached hereto as Exhibit A. 
Each year within 30 days of the anniversary date of the commencement 
of operation of this Agreement, each Participant shall submit in 
writing to FINRA and each DEA performing as a DOEA for any members 
of such Participant any revisions to Exhibit A reflecting changes in 
the rules of the Participant, and confirm that all other rules of 
the Participant listed in Exhibit A continue to meet the definition 
of Common Rules as defined in this Agreement. Within 30 days from 
the date that FINRA and each DEA performing as a DOEA has received 
revisions and/or confirmation that no change has been made to 
Exhibit A from all Participants, FINRA and each DEA performing as a 
DOEA shall confirm in writing to each Participant whether the rules 
listed in any updated Exhibit A are Common Rules as defined in this 
Agreement. Notwithstanding anything herein to the contrary, it is 
explicitly understood that the term ``Regulatory Responsibility'' 
does not include, and each of the Participants shall (unless 
allocated pursuant to Rule 17d-2 otherwise than under this 
Agreement) retain full responsibility for, each of the following:
    (a) Surveillance and enforcement with respect to trading 
activities or practices involving its own marketplace, including 
without limitation its rules relating to the rights and obligations 
of specialists and other market makers;
    (b) Registration pursuant to its applicable rules of associated 
persons;
    (c) Discharge of its duties and obligations as a DEA; and
    (d) Evaluation of advertising, responsibility for which shall 
remain with the Participant to which a Common Member submits same 
for approval.
    III. Apparent violations of another Participant's rules 
discovered by a DOEA, but which rules are not within the scope of 
the discovering DOEA's Regulatory Responsibility, shall be referred 
to the relevant Participant for such action as the Participant to 
which such matter has been referred deems appropriate. 
Notwithstanding the foregoing, nothing contained herein shall 
preclude a DOEA in its discretion from requesting that another 
Participant conduct an enforcement proceeding on a matter for which 
the requesting DOEA has Regulatory Responsibility. If such other 
Participants agree, the Regulatory Responsibility in such case shall 
be deemed transferred to the accepting Participant and confirmed in 
writing by the Participants involved. Each Participant agrees, upon 
request, to make available promptly all relevant files, records and/
or witnesses necessary to assist another Participant in an 
investigation or enforcement proceeding.
    IV. The Council shall be composed of one representative 
designated by each of the Participants. Each Participant shall also 
designate one or more persons as its alternate representative(s). In 
the absence of the representative of a Participant, such alternate 
representative shall have the same powers, duties and 
responsibilities as the representative. Each Participant may, at any 
time, by notice to the then Chair of the Council, replace its 
representative and/or its alternate representative on such Council. 
A majority of the Council shall constitute a quorum and, unless 
specifically otherwise required, the affirmative vote of a majority 
of the Council members present (in person, by telephone or by 
written consent) shall be necessary to constitute action by the 
Council. The representative from FINRA shall serve as Chair of the 
Council. All notices and other communications for the Council shall 
be sent to it in care of the Chair or to each of the 
representatives.
    V. The Council shall determine the times and locations of 
Council meetings, provided that the Chair, acting alone, may also 
call a meeting of the Council in the event the Chair determines that 
there is good cause to do so. To the extent reasonably possible, 
notice of any meeting shall be given at least ten-business days 
prior thereto. Notwithstanding anything herein to the contrary, 
representatives shall always be given the option of participating in 
any meeting telephonically at their own expense rather than in 
person.
    VI. FINRA shall have Regulatory Responsibility for all Common 
Members that are members of FINRA. For the purpose of fulfilling the 
Participants' Regulatory Responsibilities for Common Members that 
are not members of FINRA, the Participant that is the DEA shall 
serve as the DOEA. All Participants shall promptly notify the DOEAs 
no later than the next scheduled meeting of any change in membership 
of Common Members. A DOEA may request that a Common Member that is 
allocated to it be reallocated to another DOEA by giving thirty days 
written notice thereof. The DOEAs in their discretion may approve 
such request and reallocate such Common Member to another DOEA.
    VII. Each DOEA shall conduct an examination of each Common 
Member. The Participants agree that, upon request, relevant 
information in their respective files relative to a Common Member 
will be made available to the applicable DOEA. At each meeting of 
the Council, each DOEA shall be prepared to report on the status of 
its examination program for the previous quarter and any period 
prior thereto that has not previously been reported to the Council.
    VIII. Each DOEA will promptly furnish a copy of the Examination 
report, relating to Covered Securities, of any examination made 
pursuant to the provisions of this Agreement to each other 
Participant of which the Common Member examined is a member.
    IX. Each DOEA's Regulatory Responsibility shall for each Common 
Member allocated to it include investigations into terminations 
``for cause'' of associated persons relating to Covered Securities, 
unless such termination is related solely to another Participant's 
market. In the latter instance, that Participant to whose market the 
termination for cause relates shall discharge Regulatory 
Responsibility with respect to such termination for cause. In 
connection with a DOEA's examination, investigation and/or 
enforcement proceeding regarding a Covered Security-related 
termination for cause, the other Participants of which the Common

[[Page 29708]]

Member is a member shall furnish, upon request, copies of all 
pertinent materials related thereto in their possession. As used in 
this Section, ``for cause'' shall include, without limitation, 
terminations characterized on Form U5 under the label ``Permitted to 
Resign,'' ``Discharge'' or ``Other.''
    X. Each DOEA shall discharge the Regulatory Responsibility for 
each Common Member allocated to it relative to a Covered Securities-
related customer complaint \2\ unless such complaint is uniquely 
related to another Participant's market. In the latter instance, the 
DOEA shall forward the matter to that Participant to whose market 
the matter relates, and the latter shall discharge Regulatory 
Responsibility with respect thereto. If a Participant receives a 
customer complaint for a Common Member related to a Covered Security 
for which the Participant is not the DOEA, the Participant shall 
promptly forward a copy of such complaint to the DOEA.
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    \2\ For purposes of complaints, they can be reported pursuant to 
Form U4, Form U5 or RE-3 and any amendments thereto.
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    XI. Any written notice required or permitted to be given under 
this Agreement shall be deemed given if sent by certified mail, 
return receipt requested, or by a comparable means of electronic 
communication to each Participant entitled to receipt thereof, to 
the attention of the Participant's representative on the Council at 
the Participant's then principal office or by email at such address 
as the representative shall have filed in writing with the Chair.
    XII. The Participants shall notify the Common Members of this 
Agreement by means of a uniform joint notice approved by the 
Council.
    [XIII. This Agreement may be amended in writing duly approved by 
each Participant.]
    XIII. This Agreement may be amended to add a new Participant 
provided that such Participant does not assume Regulatory 
Responsibility, solely by an amendment by FINRA and such new 
Participant. All other Participants expressly consent to allow FINRA 
to add new Participants to this Agreement as provided above. FINRA 
will promptly notify all Participants of any such amendments to add 
new Participants. All other amendments to this Agreement must be 
approved in writing by each Participant. All amendments, including 
adding a new Participant, must be filed with and approved by the SEC 
before they become effective.
    XIV. Any of the Participants may manifest its intention to 
cancel its participation in this Agreement at any time by giving the 
Council written notice thereof at least 90 days prior to the 
effective date of such cancellation. Upon receipt of such notice the 
Council shall allocate, in accordance with the provisions of this 
Agreement, any Common Members for which the petitioning party was 
the DOEA. Until such time as the Council has completed the 
reallocation described above; the petitioning Participant shall 
retain all its rights, privileges, duties and obligations hereunder.
    XV. The cancellation of its participation in this Agreement by 
any Participant shall not terminate this Agreement as to the 
remaining Participants. This Agreement will only terminate following 
notice to the Commission, in writing, by the then Participants that 
they intend to terminate the Agreement and the expiration of the 
applicable notice period. Such notice shall be given at least six 
months prior to the intended date of termination, provided that in 
the event a notice of cancellation is received from a Participant 
that, assuming the effectiveness thereof, would result in there 
being just one remaining member of the Council, notice to the 
Commission of termination of this Agreement shall be given promptly 
upon the receipt of such notice of cancellation, which termination 
shall be effective upon the effectiveness of the cancellation that 
triggered the notice of termination to the Commission.
    XVI. No Participant nor the Council nor any of their respective 
directors, governors, officers, employees or representatives shall 
be liable to any other Participant in this Agreement for any 
liability, loss or damage resulting from or claimed to have resulted 
from any delays, inaccuracies, errors or omissions with respect to 
the provision of Regulatory Responsibility as provided hereby or for 
the failure to provide any such Responsibility, except with respect 
to such liability, loss or damages as shall have been suffered by 
one or more of the Participants and caused by the willful misconduct 
of one or more of the other participants or their respective 
directors, governors, officers, employees or representatives. No 
warranties, express or implied, are made by any or all of the 
Participants or the Council with respect to any Regulatory 
Responsibility to be performed by each of them hereunder.
    XVII. Pursuant to Section 17(d)(1)(A) of the Securities Exchange 
Act of 1934 and Rule 17d-2 promulgated pursuant thereto, the 
Participants join in requesting the Securities and Exchange 
Commission, upon its approval of this Agreement or any part thereof, 
to relieve those Participants which are from time to time 
participants in this Agreement which are not the DOEA as to a Common 
Member of any and all Regulatory Responsibility with respect to the 
matters allocated to the DOEA.

EXHIBIT A

RULES ENFORCED UNDER 17d-2 AGREEMENT

    Pursuant to Section II of the Agreement by and among BATS 
Exchange, Inc. (``BATS''), BOX Options Exchange, LLC (``BOX''), the 
Chicago Board Options Exchange, Incorporated (``CBOE''), C2 Options 
Exchange, Incorporated (``C2''), the International Securities 
Exchange, LLC (``ISE''), Financial Industry Regulatory Authority, 
Inc. (``FINRA''), The NASDAQ Stock Market LLC (``NASDAQ''), NASDAQ 
OMX BX, Inc. (``BX''), the New York Stock Exchange LLC (``NYSE''), 
the NYSE Amex LLC (``NYSE Amex''), the NYSE Arca, Inc. (``NYSE 
ARCA''), and the NASDAQ OMX PHLX[, Inc.] LLC (``PHLX'') pursuant to 
Rule 17d-2 under the Securities Exchange Act of 1934 dated [February 
5, 2010] April 25, 2012 (the ``Agreement''), a revised list of the 
current Common Rules of each Participant, as compared to those of 
FINRA, applicable to the conduct of accounts for Covered Securities 
is set forth in this Exhibit A.

------------------------------------------------------------------------
 
-----------------------------------------
           Opening of Accounts
------------------------------------------------------------------------
 NYSE Amex  Rules 411, 921 and 1101
      BATS  Rule 26.2
       BOX  Rule 4020 \1\
      CBOE  Rule 9.7
     C2 **  CBOE Rule 9.7
       ISE  Rule 608
     FINRA  Rules 2360(b)(16) and 2352
      NYSE  Rule 721 \2\
      PHLX  Rule 1024(b) and (c) \3\
 NYSE ARCA  Options Rules 9.2(a) and
             9.18(b) and Equities Rule
             8.4
  BX[/BOX]  Chapter XI, Section 9
    NASDAQ  Chapter XI, Section 7
------------------------------------------------------------------------
               Supervision
------------------------------------------------------------------------
 NYSE Amex  Rules 411, 922 and 1104
      BATS  Rule 26.3
       BOX  Rule 4030

[[Page 29709]]

 
      CBOE  Rule 9.8
        C2  CBOE Rule 9.8
       ISE  Rule 609
     FINRA  Rules 2360(b)(20),
             2360(b)(17)(B),
             2360(b)(16)(E), 2355 and
             2358
      NYSE  N/A
      PHLX  Rule 1025
 NYSE ARCA  Options Rules 9.2(b) and
             9.18(d)(2)(G) and Equities
             Rule 8.7
  BX[/BOX]  Chapter XI, Section 10
    NASDAQ  Chapter XI, Section 8
------------------------------------------------------------------------
               Suitability
------------------------------------------------------------------------
      AMEX  Rules 923 and 1102
      BATS  Rule 26.4
       BOX  Rule 4040
      CBOE  Rule 9.9
        C2  CBOE Rule 9.9
       ISE  Rule 610
     FINRA  Rule 2360(b)(19) and 2353
      NYSE  Rule 723
      PHLX  Rule 1026
 NYSE ARCA  Options Rule 9.18(c) and
             Equities Rule 8.5
  BX[/BOX]  Chapter XI, Section 11
    NASDAQ  Chapter XI, Section 9
------------------------------------------------------------------------
          Discretionary Accounts
------------------------------------------------------------------------
 NYSE Amex  Rules 421, 924 and 1103
      BATS  Rule 26.5 \4\
       BOX  Rule 4050 \4\
      CBOE  Rule 9.10
        C2  CBOE Rule 9.10
       ISE  Rule 611
     FINRA  Rules 2360(b)(18) and 2354
      NYSE  N/A
      PHLX  Rule 1027
 NYSE ARCA  Options Rule 9.18(e) and
             Equities Rule 8.6
  BX[/BOX]  Chapter XI, Section 12
    NASDAQ  Chapter XI, Section 10
------------------------------------------------------------------------
  Customer Communications (Advertising)
------------------------------------------------------------------------
 NYSE Amex  Rules 991 and 1106
      BATS  Rule 26.16
       BOX  Rule 4170
      CBOE  Rule 9.21 \5\
        C2  CBOE Rule 9.[21 \4\] \5\
       ISE  Rule 623 \6\
     FINRA  Rules 2220 and 2357
      NYSE  N/A
      PHLX  N/A
 NYSE ARCA  Options Rules 9.21(a) and
             9.21(b)
  BX[/BOX]  Chapter XI, Section 24
    NASDAQ  Chapter XI, Section 22
------------------------------------------------------------------------
           Customer Complaints
------------------------------------------------------------------------
 NYSE Amex  Rules 932 and 1105
      BATS  Rule 26.17
       BOX  Rule 4190
      CBOE  Rule 9.23
        C2  CBOE Rule 9.23
       ISE  Rule 625
     FINRA  FINRA Rules 2360(b)(17)(A)
             and 2356 [and NASD Rule
             3070(a) and (c)]
      NYSE  Rules 732 & 351(a) and (d)
      PHLX  Rule 1070
 NYSE ARCA  Options Rule 9.18(I) and
             Equities Rule 8.8
  BX[/BOX]  Chapter XI, Section 26
    NASDAQ  Chapter XI, Section 24
------------------------------------------------------------------------
           Customer Statements
------------------------------------------------------------------------
 NYSE Amex  Rules 419 and 930
      BATS  Rule 26.7
       BOX  Rule 4070
      CBOE  Rule 9.12
        C2  CBOE Rule 9.12

[[Page 29710]]

 
       ISE  Rules 613
     FINRA  Rule 2360(b)(15)
      NYSE  Rules 730
      PHLX  Rule 1032
 NYSE ARCA  Options Rule 9.18(j)
  BX[/BOX]  Chapter XI, Sections 14
    NASDAQ  Chapter XI, [Sections]
             Section 12
------------------------------------------------------------------------
              Confirmations
------------------------------------------------------------------------
 NYSE Amex  Rule 925
      BATS  Rule 26.6
       BOX  Rule 4060 \7\
      CBOE  Rule 9.11
        C2  CBOE Rule 9.11
       ISE  Rule 612
     FINRA  Rule 2360(b)(12)
      NYSE  Rules 725 \8\
      PHLX  Rule 1028
 NYSE ARCA  Options Rule 9.18(f)
  BX[/BOX]  Chapter XI, Section 13
    NASDAQ  Chapter XI, Section 11
------------------------------------------------------------------------
Allocation of Exercise Assignment Notices
------------------------------------------------------------------------
 NYSE Amex  Rule 981
      BATS  Rule 23.2
       BOX  Rule 9010
      CBOE  Rule 11.2
        C2  CBOE Rule 11.2
       ISE  Rule1101
     FINRA  Rule 2360(b)(23)(C)
      NYSE  Rule 781
      PHLX  Rule 1043
 NYSE ARCA  Options Rule 6.25(a)
  BX[/BOX]  Chapter VII, Section 2
    NASDAQ  Chapter VIII, Section 2
------------------------------------------------------------------------
           Disclosure Documents
------------------------------------------------------------------------
 NYSE Amex  Rules 921 and 926
      BATS  Rule 26.10
       BOX  Rule 4100
      CBOE  Rule 9.15
        C2  CBOE Rule 9.15
       ISE  Rule 616
     FINRA  Rule 2360(b)(11)
      NYSE  Rule 726(a) and (c)
      PHLX  Rule 1024(b)(v), 1029
 NYSE ARCA  Options Rule 9.18(g)
  BX[/BOX]  Chapter XI, Section 17
    NASDAQ  Chapter XI, Section 15
------------------------------------------------------------------------
  Branch Offices of Member Organizations
------------------------------------------------------------------------
 NYSE Amex  Rule 922(d) \9\
       BOX  Rule 4010(b)
      CBOE  Rule 9.6
        C2  CBOE Rule 9.6
       ISE  Rule 607
     FINRA  Rules 2360(b)(20)(B) and 2355
      NYSE  N/A
      PHLX  N/A
 NYSE ARCA  Options Rule 9.18(m)
  BX[/BOX]  Chapter XI, Section 8
    NASDAQ  Chapter XI, Section 6
------------------------------------------------------------------------
      Prohibition Against Guarantees
------------------------------------------------------------------------
 NYSE Amex  Rule 390
      BATS  Rule 26.13
       BOX  Rule 4130
      CBOE  Rule 9.18
        C2  CBOE Rule 9.18
       ISE  Rules 619
     FINRA  Rule 2150(b)
      NYSE  Rule 2150(b)

[[Page 29711]]

 
      PHLX  Rule 777
 NYSE ARCA  Options Rule 9.1(e)
  BX[/BOX]  Chapter XI, Sections 20 and
             21
    NASDAQ  Chapter XI, Sections 18 and
             19
------------------------------------------------------------------------
           Sharing in Accounts
------------------------------------------------------------------------
 NYSE Amex  Rule 390
      BATS  Rule 26.14
       BOX  Rule 4140
      CBOE  Rule 9.18(b)
        C2  CBOE Rule 9.18(b)
       ISE  Rule 620 \10\
     FINRA  Rule 2150(c)
      NYSE  Rules 2150(c)
      PHLX  N/A
 NYSE ARCA  Options Rule 9.1(f)
  BX[/BOX]  Chapter XI, Section 21
    NASDAQ  Chapter XI, Section 19 \11\
------------------------------------------------------------------------
           Registration of Rop
------------------------------------------------------------------------
 NYSE Amex  Rule 920
      BATS  17.2(g)(1), (2), (6) and (7)
       BOX  Rule 2020(c)(1), (e)(1) and
             IM-2040-4 and IM-2040-5(b)
      CBOE  Rule 9.2
        C2  CBOE Rule 9.2
       ISE  Rule 601
     FINRA  NASD Rules 1022(f) & IM-1022-
             1
      NYSE  N/A
      PHLX  Rule 1024(a)(i)
 NYSE ARCA  Options Rule 9.26
  BX[/BOX]  Chapter XI, Section 2
    NASDAQ  Chapter XI, Section 2
------------------------------------------------------------------------
  Certification of Registered Personnel
------------------------------------------------------------------------
 NYSE Amex  Rule 920
      BATS  Rule 2.5 Interpretation
             .01(c) and 11.4(e)
       BOX  IM-2040-3
      CBOE  Rule 9.3
        C2  CBOE Rule 9.3
       ISE  Rule 602
     FINRA  NASD Rule 1032(d)
      NYSE  N/A
      PHLX  Rule 1024
 NYSE ARCA  Options Rule 9.27(a)
  BX[/BOX]  Chapter XI, Section 3
    NASDAQ  Chapter XI, Section 3
------------------------------------------------------------------------
\1\ FINRA shall not have any Regulatory Responsibility regarding the
  requirement for designation of Senior Options Principal and Compliance
  Options Principal.
* Pursuant to C2 Chapters 9 and 11, the rules contained in CBOE Chapters
  IX and XI and referenced herein shall apply to C2.
\2\ FINRA shall not have any Regulatory Responsibility regarding opening
  short uncovered option accounts requirements.
\3\ FINRA shall not have any Regulatory Responsibility regarding foreign
  currency option requirements specified in any of the PHLX rules in
  this Exhibit A.
\4\ FINRA shall not have any Regulatory Responsibility to enforce this
  rule as to time and price discretion in institutional accounts. In
  addition FINRA shall not have any Regulatory Responsibility regarding
  BOX Rule 4050(a)(2).
\5\ FINRA shall not have any Regulatory Responsibility regarding CBOE's
  and C2's requirements to the extent that a customer would meet FINRA's
  definition of Institutional Investor and Institutional Sales Material
  but would not meet the requirements for such definitions in under
  CBOE's and C2's rule.
\6\ FINRA shall not have any Regulatory Responsibility regarding ISE's
  requirements to the extent that a customer would meet FINRA's
  definition of Institutional Investor and Institutional Sales Material
  but would not meet the requirements for such definitions in under such
  rule. In addition, FINRA shall not have any Regulatory Responsibility
  regarding ISE's requirements regarding approval of all market letters.
\7\ FINRA shall not have any Regulatory Responsibility regarding the
  requirement in confirmations to distinguish between BOX option
  transactions and other transactions in option contracts.
\8\ FINRA shall not have any Regulatory Responsibility regarding the
  requirement in confirmations to distinguish between NYSE option
  transactions and other transactions in option contracts.
\9\ FINRA shall only have Regulatory Responsibility for the first
  paragraph and shall not have any Regulatory Responsibility regarding
  the requirements for debt options.
\10\ FINRA shall not have any Regulatory Responsibility regarding ISE's
  requirements to the extent its rule does not contain an exception to
  permit sharing in the profits and losses of an account.
\11\ FINRA shall not have any Regulatory Responsibility regarding
  NASDAQ's requirements to the extent such rules do not contain an
  exception addressing immediate family.

[[Page 29712]]

* * * * *

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/other.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number S7-966 on the subject line.

Paper Comments

     Send paper comments in triplicate to 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 S7-966. This file number 
should be included on the subject line if email is used. To help the 
Commission process and review your comments more efficiently, please 
use only one method. The Commission will post all comments on the 
Commission's Internet 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 10:00 a.m. and 3:00 p.m. Copies of the plan also will be 
available for inspection and copying at the principal offices of BATS, 
BOX, CBOE, C2, ISE, FINRA, NYSE, Amex, Arca, NASDAQ, BX and the Phlx. 
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 S7-966 and should 
be submitted on or before June 8, 2012.

V. Discussion

    The Commission continues to believe that the proposed plan is an 
achievement in cooperation among the SRO participants. The Plan, as 
amended, will reduce unnecessary regulatory duplication by allocating 
to the designated SRO the responsibility for certain options-related 
sales practice matters that would otherwise be performed by multiple 
SROs. The plan promotes efficiency by reducing costs to firms that are 
members of more than one of the SRO participants. In addition, because 
the SRO participants coordinate their regulatory functions in 
accordance with the plan, the plan promotes, and will continue to 
promote, investor protection.
    Under paragraph (c) of Rule 17d-2, the Commission may, after 
appropriate notice and comment, declare a plan, or any part of a plan, 
effective. In this instance, the Commission believes that appropriate 
notice and comment can take place after the proposed amendment is 
effective. The primary purpose of the amendment is to add BOX as an SRO 
participant. By declaring it effective today, the amended Plan can 
become effective and be implemented without undue delay.\18\ 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.\19\ Furthermore, the Commission 
does not believe that the amendment to the plan raises any new 
regulatory issues that the Commission has not previously considered.
---------------------------------------------------------------------------

    \18\ On April 27, 2012, the Commission granted BOX's application 
for registration as a national securities exchange. See Securities 
Exchange Act Release No. 66871 (April 27, 2012), 77 FR 26323 (May 3, 
2012).
    \19\ See supra note 17 (citing to Securities Exchange Act 
Release No. 61589).
---------------------------------------------------------------------------

VI. Conclusion

    This order gives effect to the amended plan submitted to the 
Commission that is contained in File No. S7-966.
    It is therefore ordered, pursuant to Section 17(d) of the Act,\20\ 
that the amended plan dated April 25, 2012, by and between the BATS, 
BOX, CBOE, C2, ISE, FINRA, NYSE, Amex, Arca, NASDAQ, BX and the Phlx 
filed pursuant to Rule 17d-2 on May 2, 2012 is hereby approved and 
declared effective.
---------------------------------------------------------------------------

    \20\ 15 U.S.C. 78q(d).
---------------------------------------------------------------------------

    It is further ordered that those SRO participants that are not the 
DOEA as to a particular common member are relieved of those regulatory 
responsibilities allocated to the common member's DOEA under the 
amended plan to the extent of such allocation.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\21\
---------------------------------------------------------------------------

    \21\ 17 CFR 200.30-3(a)(34).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-12018 Filed 5-17-12; 8:45 am]
BILLING CODE 8011-01-P