Document ID: SEC-2010-1456-0001
Agency: sec
Document Type: Notice
Title: Filing of Proposed Plan for the Allocation of Regulatory Responsibilities: the Financial Industry Regulatory Authority, Inc. and BATS-Y Exchange, Inc.
Posted Date: 2010-09-23T04:00Z

[Federal Register: September 23, 2010 (Volume 75, Number 184)]
[Notices]               
[Page 57998-58002]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr23se10-108]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-62935; File No. 4-613]

 
Program for Allocation of Regulatory Responsibilities Pursuant to 
Rule 17d-2; Notice of Filing of Proposed Plan for the Allocation of 
Regulatory Responsibilities Between the Financial Industry Regulatory 
Authority, Inc. and BATS-Y Exchange, Inc.

September 17, 2010.
    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 September 3, 2010, BATS-Y Exchange, Inc. (``BYX'') and the Financial 
Industry Regulatory Authority, Inc. (``FINRA'') (together with BYX, the 
``Parties'') filed with the Securities and Exchange Commission 
(``Commission'' or ``SEC'') a plan for the allocation of regulatory 
responsibilities, dated September 3, 2010 (``17d-2 Plan'' or the 
``Plan''). The Commission is publishing this notice to solicit comments 
on the 17d-2 Plan from interested persons.
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    \1\ 15 U.S.C. 78q(d).
    \2\ 17 CFR 240.17d-2.
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I. Introduction

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

    The proposed 17d-2 Plan is intended to reduce regulatory 
duplication for firms that are common members of both BYX and 
FINRA.\10\ Pursuant to the proposed 17d-2 Plan, FINRA would assume 
certain examination and enforcement responsibilities for common members 
with respect to certain applicable laws, rules, and regulations.
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    \10\ The proposed 17d-2 Plan refers to these common members as 
``Dual Members.'' See Paragraph 1(c) of the proposed 17d-2 Plan.
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    The text of the Plan delineates the proposed regulatory 
responsibilities with respect to the Parties. Included in the proposed 
Plan is an exhibit (the ``BATS-Y Exchange Rules Certification for 17d-2 
Agreement with FINRA,'' referred to herein as the ``Certification'') 
that lists every BYX rule, and select federal securities laws, rules, 
and regulations, for which FINRA would bear responsibility under the 
Plan for overseeing and enforcing with respect to BYX members that are 
also members of FINRA and the associated persons therewith (``Dual 
Members'').
    Specifically, under the 17d-2 Plan, FINRA would assume examination 
and enforcement responsibility relating to compliance by Dual Members 
with the rules of BYX that are substantially similar to the applicable 
rules of FINRA,\11\ as well as any provisions of the federal securities 
laws and the rules and regulations thereunder delineated in the 
Certification (``Common Rules''). Common Rules would not include the 
application of any BYX rule or FINRA rule, or any rule or regulation 
under the Act, to the extent that it pertains to violations of insider 
trading activities, because such matters are covered by a separate 
multiparty agreement under Rule 17d-2.\12\ In the event that a Dual

[[Page 57999]]

Member is the subject of an investigation relating to a transaction on 
BYX, the plan acknowledges that BYX may, in its discretion, exercise 
concurrent jurisdiction and responsibility for such matter.\13\
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    \11\ See paragraph 1(b) of the proposed 17d-2 Plan (defining 
Common Rules). See also paragraph 1(f) of the proposed 17d-2 Plan 
(defining Regulatory Responsibilities). Paragraph 2 of the Plan 
provides that annually, or more frequently as required by changes in 
either BYX rules or FINRA rules, the parties shall review and 
update, if necessary, the list of Common Rules. Further, paragraph 3 
of the Plan provides that BYX shall furnish FINRA with a list of 
Dual Members, and shall update the list no less frequently than once 
each calendar quarter.
    \12\ See Securities Exchange Act Release No. 58350 (August 13, 
2008), 73 FR 48247 (August 18, 2008) (File No. 4-566) (notice of 
filing of proposed plan). See also Securities Exchange Act Release 
No. 58536 (September 12, 2008) (File No. 4-566) (order approving and 
declaring effective the plan). The Certification identifies several 
Common Rules that may also be addressed in the context of regulating 
insider trading activities pursuant to the proposed separate 
multiparty agreement.
    \13\ See paragraph 6 of the proposed 17d-2 Plan.
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    Under the Plan, BYX would retain full responsibility for 
surveillance and enforcement with respect to trading activities or 
practices involving BYX's own marketplace, including, without 
limitation, registration pursuant to its applicable rules of associated 
persons (i.e., registration rules that are not Common Rules); its 
duties as a DEA pursuant to Rule 17d-1 under the Act; and any BYX rules 
that are not Common Rules, except for BYX rules for any broker-dealer 
subsidiary of BYX's parent company, BATS Global Markets, Inc.\14\ 
Apparent violations of any BYX rules by any broker-dealer subsidiary of 
BATS Global Markets will be processed by, and enforcement proceedings 
in respect thereto will be conducted by, FINRA.\15\
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    \14\ See paragraph 2 of the proposed 17d-2 Plan.
    \15\ See paragraph 6 of the proposed 17d-2 Plan.
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    The text of the proposed 17d-2 Plan is as follows:\16\
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    \16\ The Commission notes that the Proposed 17d-2 Plan does not 
contain a paragraph number 18 and skips from 17 to 19.
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AGREEMENT BETWEEN FINANCIAL INDUSTRY REGULATORY AUTHORITY, INC. AND 
BATS Y-EXCHANGE, INC. PURSUANT TO RULE 17d-2 UNDER THE SECURITIES 
EXCHANGE ACT OF 1934

    This Agreement, by and between the Financial Industry Regulatory 
Authority, Inc. (``FINRA'') and BATS Y-Exchange, Inc. (``BYX''), is 
made this 3rd day of September, 2010 (the ``Agreement''), pursuant 
to Section 17(d) of the Securities Exchange Act of 1934 (the 
``Exchange Act'') and Rule 17d-2 thereunder, which permits 
agreements between self-regulatory organizations to allocate 
regulatory responsibility to eliminate regulatory duplication. FINRA 
and BYX may be referred to individually as a ``party'' and together 
as the ``parties.''
    Whereas, FINRA and BYX 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 BYX 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 BYX 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) ``BYX Rules'' or ``FINRA Rules'' shall mean: (i) the rules 
of BYX, or (ii) the rules of FINRA, respectively, as the rules of an 
exchange or association are defined in Exchange Act Section 
3(a)(27).
    (b) ``Common Rules'' shall mean BYX Rules that are substantially 
similar to the applicable FINRA Rules and certain provisions of the 
Exchange Act and SEC rules set forth on Exhibit 1 in that 
examination for compliance with such 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 provision or rule, or a Dual Member's activity, conduct, or 
output in relation to such provision or rule; provided, however, 
Common Rules shall not include the application of the SEC, BYX or 
FINRA rules as they pertain to violations of insider trading 
activities, which is covered by a separate 17d-2 Agreement by and 
among the American Stock Exchange, LLC, BATS Exchange, Inc., Chicago 
Board Options Exchange, Inc., Chicago Stock Exchange, Inc., EDGA 
Exchange, Inc., EDGX Exchange, Inc., Financial Industry Regulatory 
Authority, Inc., International Securities Exchange, LLC, The NASDAQ 
Stock Market LLC, National Stock Exchange, Inc., New York Stock 
Exchange, LLC, NYSE Arca Inc., NYSE Regulation, Inc., NASDAQ OMX BX, 
Inc. and NASDAQ OMX PHLX, Inc. approved by the SEC on April 15, 2010 
as the same may be amended from time to time.
    (c) ``Dual Members'' shall mean those BYX members that are also 
members of FINRA and the associated persons therewith.
    (d) ``Effective Date'' shall be the date this Agreement is 
approved by the Commission.
    (e) ``Enforcement Responsibilities'' shall mean the conduct of 
appropriate proceedings, in accordance with FINRA's Code of 
Procedure (the Rule 9000 Series) and other applicable FINRA 
procedural rules, to determine whether violations of Common Rules 
have occurred, and if such violations are deemed to have occurred, 
the imposition of appropriate sanctions as specified under FINRA's 
Code of Procedure and sanctions guidelines.
    (f) ``Regulatory Responsibilities'' shall mean the examination 
responsibilities and Enforcement Responsibilities relating to 
compliance by the Dual Members with the Common Rules and the 
provisions of the Exchange Act and the rules and regulations 
thereunder, and other applicable laws, rules and regulations, each 
as set forth on Exhibit 1 attached hereto.
    2. Regulatory and Enforcement Responsibilities. FINRA shall 
assume Regulatory Responsibilities and Enforcement Responsibilities 
for Dual Members. Attached as Exhibit 1 to this Agreement and made 
part hereof, BYX furnished FINRA with a current list of Common Rules 
and certified to FINRA that such rules that are BYX Rules are 
substantially similar to the corresponding FINRA Rules (the 
``Certification''). FINRA hereby agrees that the rules listed in the 
Certification are Common Rules as defined in this Agreement. Each 
year following the Effective Date of this Agreement, or more 
frequently if required by changes in either the rules of BYX or 
FINRA, BYX shall submit an updated list of Common Rules to FINRA for 
review which shall add BYX Rules not included in the current list of 
Common Rules that qualify as Common Rules as defined in this 
Agreement; delete BYX 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 BYX 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 BYX shall retain full responsibility for 
(unless otherwise addressed by separate agreement or rule) 
(collectively, the ``Retained Responsibilities'') the following:
    (a) Surveillance, examination, investigation and enforcement 
with respect to trading activities or practices involving BYX's own 
marketplace;
    (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 BYX Rules that are not Common Rules, except for BYX 
Rules for any broker-dealer subsidiary of BATS Global Markets, Inc., 
as provided in paragraph 6.
    3. Dual Members. Prior to the Effective Date, BYX 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 BYX by FINRA for 
performing the Regulatory Responsibilities and Enforcement 
Responsibilities under this Agreement except as hereinafter 
provided. FINRA shall provide BYX with ninety (90) days advance 
written notice in the event FINRA decides to impose any charges to 
BYX for performing the Regulatory Responsibilities under this 
Agreement. If FINRA determines to impose a charge, BYX shall have 
the right at the time of the imposition of such charge to terminate 
this Agreement; provided, however, that FINRA's Regulatory 
Responsibilities under this Agreement shall continue until the 
Commission approves the termination of this Agreement.
    5. Applicability of Certain Laws, Rules, Regulations or Orders. 
Notwithstanding any provision hereof, this Agreement shall be 
subject to any statute, or any rule or order of the Commission. To 
the extent such statute, rule or order is inconsistent with this 
Agreement, the statute, rule or order shall supersede the 
provision(s) hereof to the extent necessary for them to be properly 
effectuated and the provision(s) hereof in that respect shall be 
null and void.

[[Page 58000]]

    6. Notification of Violations.
    (a) In the event that FINRA becomes aware of apparent violations 
of any BYX Rules, which are not listed as Common Rules, discovered 
pursuant to the performance of the Regulatory Responsibilities 
assumed hereunder, FINRA shall notify BYX of those apparent 
violations for such response as BYX deems appropriate.
    (b) In the event that BYX becomes aware of apparent violations 
of any Common Rules, discovered pursuant to the performance of the 
Retained Responsibilities, BYX shall notify FINRA of those apparent 
violations and such matters shall be handled by FINRA as provided in 
this Agreement. With respect to apparent violations of any BYX Rules 
by any broker-dealer subsidiary of BYX's parent company, BATS Global 
Markets, Inc., FINRA shall not make referrals to BYX pursuant to 
this paragraph 6. Such apparent violations shall be processed by, 
and enforcement proceedings in respect thereto will be conducted by, 
FINRA as provided in this Agreement.
    (c) Apparent violations of Common Rules shall be processed by, 
and enforcement proceedings in respect thereto shall be conducted by 
FINRA as provided hereinbefore; provided, however, that in the event 
a Dual Member is the subject of an investigation relating to a 
transaction on BYX, BYX may in its discretion assume concurrent 
jurisdiction and responsibility.
    (d) Each party agrees to make available promptly all files, 
records and witnesses necessary to assist the other in its 
investigation or proceedings.
    7. Continued Assistance.
    (a) FINRA shall make available to BYX all information obtained 
by FINRA in the performance by it of the Regulatory Responsibilities 
hereunder with respect to the Dual Members subject to this 
Agreement. In particular, and not in limitation of the foregoing, 
FINRA shall furnish BYX any information it obtains about Dual 
Members which reflects adversely on their financial condition. BYX 
shall make available to FINRA any information coming to its 
attention that reflects adversely on the financial condition of Dual 
Members or indicates possible violations of applicable laws, rules 
or regulations by such firms.
    (b) The parties agree that documents or information shared shall 
be held in confidence, and used only for the purposes of carrying 
out their respective regulatory obligations. Neither party shall 
assert regulatory or other privileges as against the other with 
respect to documents or information that is required to be shared 
pursuant to this Agreement.
    (c) The sharing of documents or information between the parties 
pursuant to this Agreement shall not be deemed a waiver as against 
third parties of regulatory or other privileges relating to the 
discovery of documents or information.
    8. Statutory Disqualifications. When FINRA becomes aware of a 
statutory disqualification as defined in the Exchange Act with 
respect to a Dual Member, FINRA shall determine pursuant to Sections 
15A(g) and/or Section 6(c) of the Exchange Act the acceptability or 
continued applicability of the person to whom such disqualification 
applies and keep BYX advised of its actions in this regard for such 
subsequent proceedings as BYX may initiate.
    9. Customer Complaints. BYX shall forward to FINRA copies of all 
customer complaints involving Dual Members received by BYX relating 
to FINRA's Regulatory Responsibilities under this Agreement. It 
shall be FINRA's responsibility to review and take appropriate 
action in respect to such complaints.
    10. Advertising. FINRA shall assume responsibility to review the 
advertising of Dual Members subject to the Agreement, provided that 
such material is filed with FINRA in accordance with FINRA's filing 
procedures and is accompanied with any applicable filing fees set 
forth in FINRA Rules.
    11. No Restrictions on Regulatory Action. Nothing contained in 
this Agreement shall restrict or in any way encumber the right of 
either party to conduct its own independent or concurrent 
investigation, examination or enforcement proceeding of or against 
Dual Members, as either party, in its sole discretion, shall deem 
appropriate or necessary.
    12. Termination. This Agreement may be terminated by BYX or 
FINRA at any time upon the approval of the Commission after one (1) 
year's written notice to the other party, except as provided in 
paragraph 4.
    13. Arbitration. In the event of a dispute between the parties 
as to the operation of this Agreement, BYX 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. Each 
party acknowledges that the timely and complete performance of its 
obligations pursuant to this Agreement is critical to the business 
and operations of the other party. In the event of a dispute between 
the parties, the parties shall continue to perform their respective 
obligations under this Agreement in good faith during the resolution 
of such dispute unless and until this Agreement is terminated in 
accordance with its provisions. Nothing in this Section 13 shall 
interfere with a party's right to terminate this Agreement as set 
forth herein.
    14. Notification of Members. BYX and FINRA shall notify Dual 
Members of this Agreement after the Effective Date by means of a 
uniform joint notice.
    15. Amendment. This Agreement may be amended in writing duly 
approved by each party. All such amendments must be filed with and 
approved by the Commission before they become effective.
    16. Limitation of Liability. Neither FINRA nor BYX 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 BYX 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 BYX with respect to any of the responsibilities 
to be performed by each of them hereunder.
    17. Relief from Responsibility. Pursuant to Sections 17(d)(1)(A) 
and 19(g) of the Exchange Act and Rule 17d-2 thereunder, FINRA and 
BYX join in requesting the Commission, upon its approval of this 
Agreement or any part thereof, to relieve BYX 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.
    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. Counterparts. This Agreement may be executed in one or more 
counterparts, each of which shall be deemed an original, and such 
counterparts together shall constitute one and the same instrument.
    In witness whereof, each party has executed or caused this 
Agreement to be executed on its behalf by a duly authorized officer 
as of the date first written above.

BATS Y-EXCHANGE, INC.

By:--------------------------------------------------------------------

Name:------------------------------------------------------------------

Title:-----------------------------------------------------------------

FINANCIAL INDUSTRY REGULATORY AUTHORITY, INC.

By:--------------------------------------------------------------------

Name:------------------------------------------------------------------

Title:-----------------------------------------------------------------

BATS Y-Exchange, Inc. (``BYX'') Rules Certification for 17d-2 
Agreement With FINRA

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

[[Page 58001]]

------------------------------------------------------------------------
                                         FINRA Rule, NASD Rule, Exchange
               BYX Rule:                    Act Provision or SEC Rule:

------------------------------------------------------------------------
Rule 2.5, Interpretation and Policy .02  NASD Rule 1120(a)(1)-(4)
 Continuing Education Requirement for     Continuing Education
 Authorized Traders of Members.           Requirements
Rule 2.5, Interpretation and Policy .04  FINRA By-Laws of the
 Termination of Employment.               Corporation, Article V,
                                          Section 3 Notification by
                                          Member to the Corporation and
                                          Associated Person of
                                          Termination; Amendments to
                                          Notification
Rule 2.6 (g) Application Procedures for  FINRA By-Laws of the
 Membership or to become an Associated    Corporation, Article IV,
 Person of a Member.                      Section 1(c) Application for
                                          Membership
Rule 3.1 Business Conduct of Members...  FINRA Rule 2010 Standards of
                                          Commercial Honor and
                                          Principles of Trade
Rule 3.2 Violations Prohibited \1\.....  FINRA Rule 2010 Standards of
                                          Commercial Honor and
                                          Principles of Trade and NASD
                                          Rule 3010 Supervision\*\
Rule 3.3 Use of Fraudulent Devices.....  FINRA Rule 2020 Use of
                                          Manipulative, Deceptive or
                                          Other Fraudulent Device
Rule 3.5(a) Advertising Practices......  NASD Rule 2210(d)(1)(B)
                                          Communications with the Public
Rule 3.5(b) Advertising Practices......  NASD Rule 2210(d)(2)(C)
                                          Communications with the Public
                                          \2\
Rule 3.5(c) Advertising Practices......  NASD Rule 2210(d)(1)
                                          Communications with the Public
Rule 3.5(d) Advertising Practices......  NASD Rule 2210(b)(1)
                                          Communications with the Public
                                          \3\
Rule 3.5(e) Advertising Practices......  NASD Rule 2210(b)(2)(A) and
                                          2210(c) Communications with
                                          the Public
Rule 3.5(f) Advertising Practices......  NASD Rule 2210(d)(2)(A) and
                                          2210(d)(1)(E) Communications
                                          with the Public
Rule 3.5(g) Advertising Practices......  NASD Rule 2210(d)(1)
                                          Communications with the Public
Rule 3.5(h) Advertising Practices......  NASD Rule 2210(d)(1)
                                          Communications with the Public
Rule 3.6 Fair Dealing with Customers...  NASD Rule IM-2310-2(b)(1), (2),
                                          (4)(A)(i), (4)(A)(iii),
                                          (4)(A)(iv), and (5) Fair
                                          Dealing with Customers
Rule 3.7(a) Recommendations to           NASD Rule 2310(a) and (b)
 Customers.                               Recommendations to Customers
                                          (Suitability)
Rule 3.8(a) The Prompt Receipt and       NASD Rule 3370 Purchases
 Delivery of Securities.
Rule 3.8(b) The Prompt Receipt and       SEC Regulation SHO
 Delivery of Securities.
Rule 3.9 Charges for Services Performed  NASD Rule 2430 Charges for
                                          Services Performed
Rule 3.10 Use of Information...........  FINRA Rule 2060 Use of
                                          Information Obtained in
                                          Fiduciary Capacity
Rule 3.13 Payment Designed to Influence  FINRA Rule 5230 Payment
 Market Prices, Other than Paid           Designed to Influence Market
 Advertising.                             Prices, Other than Paid
                                          Advertising \4\
Rule 3.14 Disclosure on Confirmations..  NASD Rule 2230 Confirmations
                                          and SEC Rule 10b-10
                                          Confirmation of Transactions
Rule 3.15 Disclosure of Control........  FINRA Rule 2262 Disclosure of
                                          Control Relationship With
                                          Issuer
Rule 3.16 Discretionary Accounts.......  NASD Rule 2510 Discretionary
                                          Accounts
Rule 3.17 Customer's Securities or       FINRA Rule 2150(a) Customers'
 Funds.                                   Securities or Funds--Improper
                                          Use
Rule 3.18 Prohibition Against            FINRA Rule 2150(b) Customers'
 Guarantees.                              Securities or Funds--
                                          Prohibition Against Guarantees
Rule 3.19 Sharing in Accounts; Extent    FINRA Rule 2150(c) Customers'
 Permissible.                             Securities or Funds--Sharing
                                          in Accounts; Extent
                                          Permissible
Rule 3.21 Customer Disclosures.........  FINRA Rule 2265 Extended Hours
                                          Trading Risk Disclosure
Rule 4.1 Requirements..................  Section 17 of the Exchange Act
                                          and the rules thereunder
Rule 5.1 Written Procedures............  NASD Rule 3010(b)(1)
                                          Supervision--Written
                                          Procedures\*\
Rule 5.2 Responsibility of Members.....  NASD Rule 3010(a)(4) and (b)(4)
                                          Supervision*
Rule 5.3 Records.......................  NASD Rule 3010(a)(1), (b) and
                                          (c) Supervision\*\
Rule 5.4 Review of Activities..........  NASD Rule 3010(c) & (d)
                                          Supervision--Internal
                                          Inspections/Review of
                                          Transactions and
                                          Correspondence\*\
Rule 5.6 Anti-Money Laundering           FINRA Rule 3310 Anti-Money
 Compliance Program.                      Laundering Compliance Program
Rule 9.3 Predispute Arbitration          NASD Rule 3110(f) Books and
 Agreements.                              Records; Requirements When
                                          Using Predispute Arbitration
                                          Agreements for Customer
                                          Accounts\*\
Rule 12.11 Best Execution..............  NASD Rule 2320 Best Execution
                                          and Interpositioning
Rule 12.13 Trading Ahead of Research     FINRA Rule 5280 Trading Ahead
 Reports.                                 of Research Reports
------------------------------------------------------------------------
\1\ FINRA shall only have Regulatory Responsibility regarding the first
  phrase of the BYX rule regarding prohibitions from violating the
  Securities Exchange Act of 1934 and the rules and regulations
  thereunder; responsibility for the remainder of the Rule shall remain
  with BYX.
\2\ FINRA shall only have Regulatory Responsibility with regard to
  market letters and sales literature to the extent the rule requires
  the disclosure of the name of the Member.
\3\ FINRA shall not have Regulatory Responsibility with regard to the
  requirement that all market letters be approved prior to use.
\4\ FINRA shall not have Regulatory Responsibility with regard to the
  prohibitions set forth under subsection (a) of FINRA Rule 5230 to the
  extent subsections (b)(2) or (b)(3) of the rule apply.
\*\ FINRA shall not have any Regulatory Responsibilities for these rules
  as they pertain to violations of insider trading activities, which is
  covered by a separate 17d-2 Agreement by and among the American Stock
  Exchange, LLC, BATS Exchange, Inc., Chicago Board Options Exchange,
  Inc., Chicago Stock Exchange, Inc., EDGA Exchange, Inc., EDGX
  Exchange, Inc., Financial Industry Regulatory Authority, Inc.,
  International Securities Exchange, LLC, The NASDAQ Stock Market LLC,
  National Stock Exchange, Inc., New York Stock Exchange, LLC, NYSE Arca
  Inc., NYSE Regulation, Inc., NASDAQ OMX BX, Inc. and NASDAQ OMX PHLX,
  Inc. approved by the SEC on April 15, 2010, as the same may be amended
  from time to time.

    In addition, the following provisions shall be part of this 17d-2 
Agreement:
    Securities Exchange Act of 1934: Section 15(f)
    SEC Rules:
    Rule 200 of Regulation SHO--Definition of ``Short Sale'' and 
Marking Requirements
    Rule 203 of Regulation SHO--Borrowing and Delivery Requirements
    Rule 606 of Regulation NMS--Disclosure of Order Routing Information
    Rule 607 of Regulation NMS--Customer Account Statements

[[Page 58002]]

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

    Pursuant to Section 17(d)(1) of the Act \17\ and Rule 17d-2 
thereunder,\18\ after October 8, 2010, the Commission may, by written 
notice, declare the plan submitted by BYX and FINRA, File No. 4-613, to 
be effective if the Commission finds that the plan is necessary or 
appropriate in the public interest and for the protection of investors, 
to foster cooperation and coordination among self-regulatory 
organizations, or to remove impediments to and foster the development 
of the national market system and a national system for the clearance 
and settlement of securities transactions and in conformity with the 
factors set forth in Section 17(d) of the Act.
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    \17\ 15 U.S.C. 78q(d)(1).
    \18\ 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 proposed 17d-2 Plan and to relieve BYX of the responsibilities 
which would be assigned to FINRA, interested persons are invited to 
submit written data, views, and arguments concerning the foregoing. 
Comments may be submitted by any of the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://
www.sec.gov/rules/other.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number 4-613 on the subject line.

Paper Comments

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

All submissions should refer to File Number 4-613. This file number 
should be included on the subject line if e-mail is used. To help the 
Commission process and review your comments more efficiently, please 
use only one method. The Commission will post all comments on the 
Commission's Internet Web site (http://www.sec.gov/rules/other.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed plan that are filed with the 
Commission, and all written communications relating to the proposed 
plan between the Commission and any person, other than those that may 
be withheld from the public in accordance with the provisions of 5 
U.S.C. 552, will be available for Web site viewing and printing in the 
Commission's Public Reference Room, on official business days between 
the hours of 10 am and 3 pm. Copies of the plan also will be available 
for inspection and copying at the principal offices of BYX and FINRA. 
All comments received will be posted without change; the Commission 
does not edit personal identifying information from submissions. You 
should submit only information that you wish to make available 
publicly. All submissions should refer to File Number 4-613 and should 
be submitted on or before October 8, 2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
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    \19\ 17 CFR 200.30-3(a)(34).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-23772 Filed 9-22-10; 8:45 am]
BILLING CODE 8010-01-P