Opinion ID: 6105520
Heading Depth: 3
Heading Rank: 1

Heading: Consistency with Commission Regulations

Text: An SEC regulation defining the terms used in Section 3(a)(1) provides: An organization, association, or group of persons shall be considered to constitute, maintain, or provide “a market place or facilities for bringing together purchasers and sellers of securities or for otherwise performing with respect to securities the functions commonly performed by a stock exchange,” as those terms are used in section 3(a)(1) of the Act, (15 U.S.C. 78c(a)(1)), if such organization, association, or group of persons:
securities of multiple buyers and sellers; and
methods (whether by providing a trading facility or by setting rules) under which such orders interact with each other, and the buyers and sellers entering such orders agree to the terms of a trade. 17 C.F.R. § 240.3b-16(a)(1)-(2). The Wireless Connections do not process orders from buyers and sellers, let alone establish methods for such orders to interact with each other. Therefore, ICE argues, the Final Order ignored this regulation in concluding that the Wireless Connections are subject to the jurisdiction of the SEC as facilities of an exchange. 25 The cited regulation has no bearing upon this case; it merely describes characteristics an exchange as a whole — that is, the group of persons that together constitute an exchange — must have. Not every part of an exchange, nor every person that is part of a group that constitutes an exchange, must have all these characteristics. That the Wireless Connections lack these characteristics, therefore, does not preclude their being regulated as part of an exchange. ICE also points to a regulation providing that merely “[r]out[ing] orders to a national securities exchange” does not make something an exchange. 17 C.F.R. § 240.3b-16(b)(1). This is a red herring. The SEC held not that the Wireless Connections are exchanges because they route orders to a national security exchange but that they are included in the statutory definition of exchange because they are part of a group of persons that together perform and facilitate exchange functions going far beyond merely routing orders.