[Federal Register Volume 87, Number 204 (Monday, October 24, 2022)]
[Notices]
[Pages 64285-64294]
[FR Doc No: 2022-22988]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-96100; 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 Cboe BZX Exchange, Inc., BOX Exchange, LLC, Cboe
Exchange, Inc., Cboe C2 Exchange, Inc., Nasdaq ISE, LLC, Financial
Industry Regulatory Authority, Inc., Miami International Securities
Exchange, LLC, NYSE American LLC, NYSE Arca, Inc., The Nasdaq Stock
Market LLC, Nasdaq BX, Inc., Nasdaq PHLX LLC, Nasdaq GEMX, LLC, Cboe
EDGX Exchange, Inc., Nasdaq MRX, LLC, MIAX PEARL, LLC, MIAX Emerald,
LLC and MEMX LLC Concerning Options-Related Sales Practice Matters

October 18, 2022.
    Notice is hereby given that the Securities and Exchange Commission
(``Commission'') has issued an Order, pursuant to Section 17(d) of the
Securities Exchange Act of 1934 (``Act''),\1\ approving and declaring
effective an amendment to the plan for allocating regulatory
responsibility (``Plan'') filed on September 20, 2022, pursuant to Rule
17d-2 of the Act,\2\ by Cboe BZX Exchange, Inc. (``BZX''), BOX
Exchange, LLC (``BOX''), Cboe Exchange, Inc., Cboe C2 Exchange, Inc.
(``C2''), Nasdaq ISE, LLC (``ISE''), Financial Industry Regulatory
Authority, Inc. (``FINRA''), Miami International Securities Exchange,
LLC (``MIAX''), The Nasdaq Stock Market LLC (``Nasdaq''), Nasdaq BX,
Inc. (``BX''), NYSE American LLC (``NYSE American''), NYSE Arca, Inc.
(``NYSE Arca''), Nasdaq PHLX LLC (``PHLX''), Nasdaq GEMX, LLC
(``GEMX''), Cboe EDGX Exchange, Inc. (``EDGX''), Nasdaq MRX, LLC
(``MRX''), MIAX PEARL, LLC (``MIAX PEARL''), MIAX Emerald, LLC (``MIAX
Emerald''), and MEMX LLC (``MEMX'') (collectively, ``Participating
Organizations'' or ``parties'').
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    \1\ 15 U.S.C. 78q(d).
    \2\ 17 CFR 240.17d-2.
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I. Introduction

    Section 19(g)(1) of the Act,\3\ among other things, requires every
self-regulatory organization (``SRO'') registered as either a national
securities exchange or national securities association to examine for,
and enforce compliance by, its members and persons associated with its
members with the Act, the rules and regulations thereunder, and the
SRO's own rules, unless the SRO is relieved of this responsibility
pursuant to Section 17(d) \4\ or Section 19(g)(2) \5\ of the Act.
Without this relief, the statutory obligation of each individual SRO
could result in a pattern of multiple examinations of broker-dealers
that maintain memberships in more than one SRO (``common members'').
Such regulatory duplication would add unnecessary expenses for common
members and their SROs.
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    \3\ 15 U.S.C. 78s(g)(1).
    \4\ 15 U.S.C. 78q(d).
    \5\ 15 U.S.C. 78s(g)(2).
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    Section 17(d)(1) of the Act \6\ was intended, in part, to eliminate
unnecessary multiple examinations and regulatory duplication.\7\ With
respect to a common member, Section 17(d)(1) authorizes the Commission,
by rule or order, to relieve an SRO of the responsibility to receive
regulatory reports, to examine for and enforce compliance with
applicable statutes, rules, and regulations, or to perform other
specified regulatory functions.
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    \6\ 15 U.S.C. 78q(d)(1).
    \7\ See Securities Act Amendments of 1975, Report of the Senate
Committee on Banking, Housing, and Urban Affairs to Accompany S.
249, S. Rep. No. 94-75, 94th Cong., 1st Session 32 (1975).
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    To implement Section 17(d)(1), the Commission adopted two rules:
Rule 17d-1 and Rule 17d-2 under the Act.\8\ Rule 17d-1 authorizes the
Commission to name a single SRO as the designated examining authority
(``DEA'') to examine common members for compliance with the financial
responsibility requirements imposed by the Act, or by Commission or SRO
rules.\9\ When an SRO has been named as a common member's DEA, all
other SROs to which the common member belongs are relieved of the
responsibility to examine the firm for compliance with the applicable
financial responsibility rules. On its face, Rule 17d-1 deals only with
an SRO's obligations to enforce member compliance with financial
responsibility requirements. Rule 17d-1 does not relieve an SRO from
its obligation to examine a common member for compliance with its own
rules and provisions of the federal securities laws governing matters
other than financial responsibility, including sales practices and
trading activities and practices.
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    \8\ 17 CFR 240.17d-1 and 17 CFR 240.17d-2, respectively.
    \9\ See Securities Exchange Act Release No. 12352 (April 20,
1976), 41 FR 18808 (May 7, 1976).
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    To address regulatory duplication in these and other areas, the
Commission

adopted Rule 17d-2 under the Act.\10\ Rule 17d-2 permits SROs to
propose joint plans for the allocation of regulatory responsibilities
with respect to their common members. Under paragraph (c) of Rule 17d-
2, the Commission may declare such a plan effective if, after providing
for 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 Commission approved an amendment
to the plan, primarily to include the BSE, which was establishing a new
options trading facility to be known as BOX, as an SRO participant.\14\
On March 26, 2007, the Commission approved an amendment to the plan
that, among other things, provided that the National Association of
Securities Dealers (``NASD'') (n/k/a FINRA) and NYSE are Designated
Options Examining Authorities under the plan.\15\ On March 12, 2008,
the Commission approved an amendment to the plan primarily to add
NASDAQ as an SRO participant.\16\ On June 18, 2008, the Commission
approved 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.\17\ On February 25, 2010, the Commission approved 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.\18\ On May 11, 2012, the Commission approved an amendment to
the plan to add BOX as an SRO participant and to amend Section XIII of
the plan to set forth a revised procedure for adding new participants
to the plan.\19\ On December 5, 2012, the Commission approved an
amendment to the plan to add MIAX as an SRO participant, and to change
the name of NYSE Amex LLC to NYSE MKT LLC.\20\ On July 26, 2013, the
Commission approved an amendment to the plan to add Topaz Exchange LLC
as an SRO participant.\21\ On October 29, 2015, the Commission approved
an amendment to the plan to add EDGX as an SRO participant and to
change the name of Topaz Exchange, LLC to ISE Gemini, LLC.\22\ On
February 16, 2016, the Commission approved an amendment to the plan to
add ISE Mercury, and remove the NYSE, as an SRO participant to the
Plan.\23\ On February 2, 2017, the Commission approved an amendment to
the plan to add MIAX PEARL as an SRO participant to the Plan.\24\ On
February 12, 2019, the Commission approved an amendment to the plan to
add MIAX Emerald as an SRO participant to the Plan.\25\
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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. 57481 (March 12,
2008), 73 FR 14507 (March 18, 2008).
    \17\ See Securities Exchange Act Release No. 57987 (June 18,
2008), 73 FR 36156 (June 25, 2008).
    \18\ See Securities Exchange Act Release No. 61589 (February 25,
2012), 75 FR 9976 (March 4, 2010).
    \19\ See Securities Exchange Act Release No. 66974 (May 11,
2012), 77 FR 29705 (May 18, 2012).
    \20\ See Securities Exchange Act Release No. 68363 (December 5,
2012), 77 FR 73711 (December 11, 2012).
    \21\ See Securities Exchange Act Release No. 70051 (July 26,
2013), 78 FR 46644 (August 1, 2013).
    \22\ See Securities Exchange Act Release No. 76309 (October 29,
2015), 80 FR 68361 (November 4, 2015).
    \23\ See Securities Exchange Act Release No. 77148 (February 16,
2016), 81 FR 8775 (February 22, 2016).
    \24\ See Securities Exchange Act Release No. 79929 (February 2,
2017), 82 FR 9757 (February 8, 2017).
    \25\ See Securities Exchange Act Release No. 85106 (February 12,
2019), 84 FR 4554 (February 15, 2019).
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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 September 20, 2022, the Parties submitted a proposed amendment
to the Plan. The primary purpose of the amendment is to add MEMX as a
Participant to the Plan to accommodate the upcoming launch of MEMX's
new options facility, to reflect name changes of certain Participating
Organizations, and to reflect updated rule citations. The text of the
proposed amended 17d-2 plan is as follows (additions are italicized;
deletions are [bracketed]):
* * * * *

Agreement by and Among Cboe BZX Exchange, Inc., BOX [Options] Exchange,
LLC, Cboe Exchange, Inc., Cboe C2 Exchange, Inc., Nasdaq ISE, LLC,
Financial Industry Regulatory Authority, Inc., Miami International
Securities Exchange, LLC, NYSE American LLC, NYSE Arca, Inc., The
Nasdaq Stock Market LLC, Nasdaq BX, Inc., Nasdaq PHLX LLC, Nasdaq GEMX,
LLC, Cboe EDGX Exchange, Inc., Nasdaq MRX, LLC, MIAX PEARL, LLC [and],
MIAX Emerald, LLC and MEMX LLC Pursuant to Rule 17d-2 Under the
Securities Exchange Act of 1934

    This agreement (``Agreement''), by and among Cboe BZX Exchange,
Inc. (``BZX''), BOX [Options] Exchange, LLC, Cboe Exchange, Inc., Cboe
C2 Exchange, Inc., Nasdaq ISE, LLC, Financial Industry Regulatory
Authority, Inc. (``FINRA''), Miami International Securities Exchange,
LLC (``MIAX''), The Nasdaq Stock Market LLC (``Nasdaq''), Nasdaq BX,
Inc. (``BX''), NYSE American LLC (``NYSE

American''), NYSE Arca, Inc. (``NYSE Arca''), Nasdaq PHLX LLC
(``PHLX''), Nasdaq GEMX, LLC (``GEMX''), Cboe EDGX Exchange, Inc.
(``EDGX''), Nasdaq MRX, LLC (``MRX''), MIAX PEARL, LLC (``MIAX PEARL'')
[and], MIAX Emerald, LLC (``MIAX Emerald''), and MEMX LLC (``MEMX'')
hereinafter collectively referred to as the Participants, is made this
[2nd] 20th day of [January, 2019] September, 2022, 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 [January 13, 2017] January 2, 2019, entitled
``Agreement by and among Cboe BZX Exchange, Inc., BOX Options Exchange,
LLC, Cboe Exchange, Inc., Cboe C2 Exchange, Inc., Nasdaq ISE, LLC,
Financial Industry Regulatory Authority, Inc., Miami International
Securities Exchange, LLC, The Nasdaq Stock Market LLC, Nasdaq BX, Inc.,
NYSE American LLC, NYSE Arca, Inc., Nasdaq PHLX LLC, Nasdaq GEMX, LLC,
Cboe EDGX Exchange, Inc., Nasdaq MRX, LLC, MIAX PEARL, LLC and MIAX
Emerald, LLC, 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
BX, Inc. (``]BX['')], BZX, NYSE American, NYSE Arca, EDGX, MIAX
PEARL, MEMX, PHLX and Nasdaq, members are those persons who are
options participants (as defined in the [BOX,] BX, BZX, NYSE
American, NYSE Arca, EDGX, MIAX PEARL, MEMX, PHLX 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 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 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 Cboe BZX
Exchange, Inc. (``BZX''), BOX Exchange, LLC (``BOX''), Cboe Exchange,
Inc. (``Cboe''), Cboe C2 Exchange, Inc. (``C2''), Nasdaq ISE, LLC
(``ISE''), Financial Industry Regulatory Authority, Inc. (``FINRA''),
Miami International Securities Exchange, LLC (``MIAX''), The Nasdaq
Stock Market LLC (``Nasdaq''), Nasdaq BX, Inc. (``BX''), NYSE American
LLC (``NYSE American''), NYSE Arca, Inc. (``NYSE ARCA''), Nasdaq PHLX
LLC (``PHLX''), Nasdaq GEMX, LLC (``GEMX''), Cboe EDGX Exchange, Inc.
(``EDGX''), Nasdaq MRX, LLC (``MRX''), MIAX PEARL, LLC (``MIAX PEARL'')
[and], MIAX Emerald, LLC (``MIAX Emerald'') and MEMX LLC (``MEMX'')
pursuant to Rule 17d-2 under the Securities Exchange Act of 1934 dated
[January 2, 2019]September 20, 2022 (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
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NYSE American.....................  Rules 411, 921 and 1101.
BZX...............................  Rule 26.2.
BOX...............................  Rule 4020.
Cboe..............................  Rule [9.7]9.1.
C2 *..............................  Cboe Rule [9.7]9.1.
EDGX..............................  Rule 26.2.
ISE...............................  [Rule 608] Options 10, Section 6.
FINRA.............................  Rules 2360(b)(16) and 2352.
MEMX..............................  Rule 26.2.
MIAX..............................  Rule 1307.
MIAX PEARL........................  Rule 1307.
MIAX Emerald......................  Rule 1307.
GEMX..............................  [Rule 608] Options 10, Section 6.
MRX...............................  [Rule 608] Options 10, Section 6.
PHLX..............................  [Rule 1024(b) and (c)]Options 10,
                                     Section 6.\1\
NYSE ARCA.........................  [Options] Rules 9.2-O(a) [and], 9.18-
                                     O(b) [and], [Equities Rules] 9.18-
                                     E(b) and 8.4-E
BX................................  [Chapter XI, Section 7]Options 10,
                                     Section 6.
Nasdaq............................  [Chapter XI, Section 7]Options 10,
                                     Section 6.
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                               Supervision
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NYSE American.....................  Rules 411, 922 and 1104.
BZX...............................  Rule 26.3.
BOX...............................  Rule 4030.
Cboe..............................  Rule [9.8]9.2.\2\
C2 *..............................  Cboe Rule [9.8]9.2.\2\
EDGX..............................  Rule 26.3.
ISE...............................  [Rule 609]Options 10, Section 7.
FINRA.............................  Rules 2360(b)(20), 2360(b)(17)(B),
                                     2360(b)(16)(E), 2355 and 2358.
MEMX..............................  Rule 26.3.
MIAX..............................  Rule 1308.
MIAX PEARL........................  Rule 1308.
MIAX Emerald......................  Rule 1308.
GEMX..............................  [Rule 609]Options 10, Section 7.
MRX...............................  [Rule 609]Options 10, Section 7.
PHLX..............................  [Rule 1025]Options 10, Section 7.
NYSE ARCA.........................  [Options] Rules 9.2-O(b) [and], 9.18-
                                     O (d)(2)(G) and [Equities Rule] 8.7-
                                     E.
BX................................  [Chapter XI, Section 8]Options 10,
                                     Section 7.
Nasdaq............................  [Chapter XI, Section 8]Options 10,
                                     Section 7.
------------------------------------------------------------------------
\1\ FINRA shall not have any Regulatory Responsibility regarding foreign
  currency option requirements specified in any of the PHLX rules in
  this Exhibit A.
\2\ FINRA shall not have any Regulatory Responsibility regarding receipt
  of written reports by April 1 of each year pursuant to Cboe Rule
  9.8(g).

                               Suitability
------------------------------------------------------------------------

------------------------------------------------------------------------
NYSE American.....................  Rules 923 and 1102.
BZX...............................  Rule 26.4.
BOX...............................  Rule 4040.
Cboe..............................  Rule [9.9]9.3.
C2 *..............................  Cboe Rule [9.9]9.3.
EDGX..............................  Rule 26.4.
ISE...............................  [Rule 610]Options 10, Section 8.
FINRA.............................  Rule 2360(b)(19) and 2353.
MEMX..............................  Rule 26.4.
MIAX..............................  Rule 1309.
MIAX PEARL........................  Rule 1309.
MIAX Emerald......................  Rule 1309.

GEMX..............................  [Rule 610]Options 10, Section 8.
MRX...............................  [Rule 610]Options 10, Section 8.
PHLX..............................  [Rule 1026]Options 10, Section 8.
NYSE ARCA.........................  [Options] Rules 9.18-O(c) [and],
                                     [Equities Rules] 9.18-E(c) and 8.5-
                                     E.
BX................................  [Chapter XI, Section 9]Options 10,
                                     Section 8.
Nasdaq............................  [Chapter XI, Section 9]Options 10,
                                     Section 8.
------------------------------------------------------------------------

                         Discretionary Accounts
------------------------------------------------------------------------

------------------------------------------------------------------------
NYSE American.....................  Rules 421, 924 and 1103.
BZX...............................  Rule 26.5 3.
BOX...............................  Rule 4050.
Cboe..............................  Rule [9.10]9.4.
C2 *..............................  Cboe Rule [9.10]9.4.
EDGX..............................  Rule 26.5 3.
ISE...............................  [Rule 611]Options 10, Section 9.
FINRA.............................  Rules 2360(b)(18) and 2354.
MEMX..............................  Rule 26.5 3.
MIAX..............................  Rule 1310.
MIAX PEARL........................  Rule 1310.
MIAX Emerald......................  Rule 1310.
GEMX..............................  [Rule 611]Options 10, Section 9.
MRX...............................  [Rule 611]Options 10, Section 9.
PHLX..............................  [Rule 1027]Options 10, Section 9.
NYSE ARCA.........................  [Options ]Rules 9.18-O(e) [and],
                                     [Equities Rules] 9.18-E(e) and 8.6-
                                     E.
BX................................  [Chapter XI, Section 10]Options 10,
                                     Section 9.
Nasdaq............................  [Chapter XI, Section 10]Options 10,
                                     Section 9.
------------------------------------------------------------------------
3 FINRA shall not have any Regulatory Responsibility to enforce this
  rule as to time and price discretion in institutional accounts.

                  Customer Communications (Advertising)
------------------------------------------------------------------------

------------------------------------------------------------------------
NYSE American.....................  Rules 8.9E, 991 and 1106.
BZX...............................  Rule 26.16.
BOX...............................  Rule 4170.
Cboe..............................  Rule [9.21]9.15.
C2 *..............................  Cboe Rule [9.21]9.15.
EDGX..............................  Rule 26.16.
ISE...............................  [Rule 623]Options 10, Section 20.
FINRA.............................  Rules 2220 and 2357.
MEMX..............................  Rule 26.16.
MIAX..............................  Rule 1322.
MIAX PEARL........................  Rule 1322.
MIAX Emerald......................  Rule 1322.
GEMX..............................  [Rule 623]Options 10, Section 20.
MRX...............................  [Rule 623]Options 10, Section 20.
PHLX..............................  [Rule 1049]Options 10, Section 20.
NYSE ARCA.........................  [Options] Rules 9.21-O(a), 9.21-
                                     O(b), 9.28-O and 9.28-E.
BX................................  [Chapter XI, Section 22]Options 10,
                                     Section 20.
Nasdaq............................  [Chapter XI, Section 22]Options 10,
                                     Section 20.
------------------------------------------------------------------------

                           Customer Complaints
------------------------------------------------------------------------

------------------------------------------------------------------------
NYSE American.....................  Rules 8.8E, 932 and 1105.
BZX...............................  Rule 26.17.
BOX...............................  Rule 4190.
Cboe..............................  Rule [9.23]9.17.
C2 *..............................  Cboe Rule [9.23]9.17.
EDGX..............................  Rule 26.17.
ISE...............................  [Rule 625]Options 10, Section 22.
FINRA.............................  FINRA Rules 2360(b)(17)(A) and 2356.
MEMX..............................  Rule 26.17.
MIAX..............................  Rule 1324.
MIAX PEARL........................  Rule 1324.

MIAX Emerald......................  Rule 1324.
GEMX..............................  [Rule 625]Options 10, Section 22.
MRX...............................  [Rule 625]Options 10, Section 22.
PHLX..............................  [Rule 1028]Options 10, Section 22.
NYSE ARCA.........................  [Options] Rules 9.18-O(I) [and],
                                     [Equities Rules] 9.18-E(l) and 8.8-
                                     E.
BX................................  [Chapter XI, Section 24]Options 10,
                                     Section 22.
Nasdaq............................  [Chapter XI, Section 24]Options 10,
                                     Section 22.
------------------------------------------------------------------------

                           Customer Statements
------------------------------------------------------------------------

------------------------------------------------------------------------
NYSE American.....................  Rules 419 and 930.
BZX...............................  Rule 26.7.
BOX...............................  Rule 4070.
Cboe..............................  Rule [9.12]9.6.
C2 *..............................  Cboe Rule [9.12]9.6.
EDGX..............................  Rule 26.7.
ISE...............................  [Rule 613]Options 10, Section 11.
FINRA.............................  Rule 2360(b)(15).
MEMX..............................  Rule 26.7.
MIAX..............................  Rule 1312.
MIAX PEARL........................  Rule 1312.
MIAX Emerald......................  Rule 1312.
GEMX..............................  [Rule 613]Options 10, Section 11.
MRX...............................  [Rule 613]Options 10, Section 11.
PHLX..............................  [Rule 1032]Options 10, Section 11.
NYSE ARCA.........................  [Options] Rules 9.18-O(j) and
                                     [Equities Rule] 9.18-E(j).
BX................................  [Chapter XI, Section 12]Options 10,
                                     Section 11.
Nasdaq............................  [Chapter XI, Section 12]Options 10,
                                     Section 11.
------------------------------------------------------------------------

                              Confirmations
------------------------------------------------------------------------

------------------------------------------------------------------------
NYSE American.....................  Rule 925.
BZX...............................  Rule 26.6.
BOX...............................  Rule 4060.
Cboe..............................  Rule [9.11]9.5.
C2 *..............................  Cboe Rule [9.11]9.5.
EDGX..............................  Rule 26.6.
ISE...............................  [Rule 612]Options 10, Section 10.
FINRA.............................  Rule 2360(b)(12).
MEMX..............................  Rule 26.6.
MIAX..............................  Rule 1311.
MIAX PEARL........................  Rule 1311.
MIAX Emerald......................  Rule 1311.
GEMX..............................  [Rule 612]Options 10, Section 10.
MRX...............................  [Rule 612]Options 10, Section 10.
PHLX..............................  [Rule 1028]Options 10, Section 10.
NYSE ARCA.........................  [Options] Rules 9.18-O(f) and
                                     [Equities Rule] 9.18-E(f).
BX................................  [Chapter XI, Section 11]Options 10,
                                     Section 10.
Nasdaq............................  [Chapter XI, Section 11]Options 10,
                                     Section 10.
------------------------------------------------------------------------

                Allocation of Exercise Assignment Notices
------------------------------------------------------------------------

------------------------------------------------------------------------
NYSE American.....................  Rule 981.
BZX...............................  Rule 23.2.
BOX...............................  Rule 9010.
Cboe..............................  Rule [11.2]6.21.
C2 *..............................  Cboe Rule [11.2]6.21.
EDGX..............................  Rule 23.2.
ISE...............................  [Rule 1101]Options 6B, Section 2.
FINRA.............................  Rule 2360(b)(23)(C).
MEMX..............................  Rule 23.2.
MIAX..............................  Rule 701.
MIAX PEARL........................  Rule 701.

MIAX Emerald......................  Rule 701.
GEMX..............................  [Rule 1101]Options 6B, Section 2.
MRX...............................  [Rule 1101]Options 6B, Section 2.
PHLX..............................  [Rule 1043]Options 6B, Section 2.
NYSE ARCA.........................  [Options] Rule 6.25-O(a).
BX................................  [Chapter VIII, Section 2]Options 6B,
                                     Section 2.
Nasdaq............................  [Chapter VIII, Section 2]Options 6B,
                                     Section 2.
------------------------------------------------------------------------

                          Disclosure Documents
------------------------------------------------------------------------

------------------------------------------------------------------------
NYSE American.....................  Rules 921 and 926.
BZX...............................  Rule 26.10.
BOX...............................  Rule 4100.
Cboe..............................  Rule [9.15]9.9.
C2 *..............................  Cboe Rule [9.15]9.9.
EDGX..............................  Rule 26.10.
ISE...............................  [Rule 616]Options 10, Section 13.
FINRA.............................  Rule 2360(b)(11).
MEMX..............................  Rule 26.10.
MIAX..............................  Rule 1315.
MIAX PEARL........................  Rule 1315.
MIAX Emerald......................  Rule 1315.
GEMX..............................  [Rule 616]Options 10, Section 13.
MRX...............................  [Rule 616]Options 10, Section 13.
PHLX..............................  [Rule 102(b)(v), 1029]Options 10,
                                     Section 13.
NYSE ARCA.........................  [Options] Rules 9.18-O(g) and
                                     [Equities Rule] 9.18-E(g).
BX................................  [Chapter XI, Section 15]Options 10,
                                     Section 13.
Nasdaq............................  [Chapter XI, Section 15]Options 10,
                                     Section 13.
------------------------------------------------------------------------

                 Branch Offices of Member Organizations
------------------------------------------------------------------------

------------------------------------------------------------------------
NYSE American.....................  Rule 922 4.
BOX...............................  Rule 4010(b).
Cboe..............................  Rule [9.6]3.40.
C2 *..............................  Cboe Rule [9.6]3.40.
ISE...............................  [Rule 607]Options 10, Section 5.
FINRA.............................  Rules 2360(b)(20)(B) and 2355.
MIAX..............................  Rule 1306.
MIAX PEARL........................  Rule 1306.
MIAX Emerald......................  Rule 1306.
GEMX..............................  [Rule 607]Options 10, Section 5.
MRX...............................  [Rule 607]Options 10, Section 5.
PHLX..............................  N/A.
NYSE ARCA.........................  [Options] Rules 9.18-O(m) and
                                     [Equities Rule] 9.18-E(m).
BX................................  [Chapter XI, Section 6]Options 10,
                                     Section 5.
Nasdaq............................  [Chapter XI, Section 6]Options 10,
                                     Section 5.
------------------------------------------------------------------------
4 FINRA shall only have Regulatory Responsibility for the first
  paragraph and shall not have any Regulatory Responsibility regarding
  the requirements for debt options.

                     Prohibition Against Guarantees
------------------------------------------------------------------------

------------------------------------------------------------------------
NYSE American.....................  Rule 390.
BZX...............................  Rule 26.13.
BOX...............................  Rule 4130.
Cboe..............................  Rule [9.18]9.12.
C2 *..............................  Cboe Rule [9.18]9.12.
EDGX..............................  Rule 26.13.
ISE...............................  [Rule 619]Options 10, Section 16.
FINRA.............................  Rule 2150(b).
MEMX..............................  Rule 26.13.
MIAX..............................  Rule 1318.
MIAX PEARL........................  Rule 1318.
MIAX Emerald......................  Rule 1318.

GEMX..............................  [Rule 619]Options 10, Section 16.
MRX...............................  [Rule 619]Options 10, Section 16.
PHLX..............................  [Rule 777]General 9, Section 54(b).
NYSE ARCA.........................  [Options] Rules 9.1-O(e), [Equities
                                     Rules] 9.1-E(e) and 9.2150-E(b).
BX................................  [Chapter XI, Sections 18 and
                                     19]Options 10, Section 16.
Nasdaq............................  [Chapter XI, Sections 18 and
                                     19]Options 10, Section 16.
------------------------------------------------------------------------

                           Sharing in Accounts
------------------------------------------------------------------------

------------------------------------------------------------------------
NYSE American.....................  Rule 390.
BZX...............................  Rule 26.14 5.
BOX...............................  Rule 4140.
Cboe..............................  Rule [9.18(b)]9.12(b).
C2 *..............................  Cboe Rule [9.18(b)]9.12(b).
EDGX..............................  Rule 26.14 5.
ISE...............................  [Rule 620]Options 10, Section 17 6.
FINRA.............................  Rule 2150(c).
MEMX..............................  Rule 26.14 5.
MIAX..............................  Rule 1319.
MIAX PEARL........................  Rule 1319.
MIAX Emerald......................  Rule 1319.
GEMX..............................  [Rule 620]Options 10, Section 17 6.
MRX...............................  [Rule 620]Options 10, Section 17 6.
PHLX..............................  N/A.
NYSE ARCA.........................  [Options] Rules 9.1-O(f) and
                                     [Equities Rule] 9.2150-E(c).
BX................................  [Chapter XI, Section 19]Options 10,
                                     Section 17 6.
Nasdaq............................  [Chapter XI, Section 19]Options 10,
                                     Section 17 6.
------------------------------------------------------------------------
5 FINRA shall not have any Regulatory Responsibility regarding MEMX's,
  BZX's, and EDGX's requirements to the extent such rules do not contain
  an exemption addressing immediate family.
6 FINRA shall not have any Regulatory Responsibility regarding Nasdaq's,
  BX's, ISE's, GEMX's and MRX's requirements to the extent its rule does
  not permit sharing in the profits and losses of an account upon prior
  written consent from the customer, or contain an exemption addressing
  immediate family.

                           Registration of ROP
------------------------------------------------------------------------

------------------------------------------------------------------------
NYSE American.....................  Rules 920 and 2.1220(a)(7)(A).
BZX...............................  Rule 17.2(g)(1), (2), (6) and (7).
BOX...............................  Rule 2020(c)(1).
Cboe..............................  Rule [9.2]3.36.
C2 *..............................  Cboe Rule [9.2]3.36.
EDGX..............................  Rule 17.2(g)(1), (2), (6) and (7).
ISE...............................  [Rule 601]Options 10, Section 2.
FINRA.............................  Rule 1220(a)(8).
MEMX..............................  Rule 17.2(g)(1), (2), (6) and (7).
MIAX..............................  Rule 1301.
MIAX PEARL........................  Rule 1301.
MIAX Emerald......................  Rule 1301.
GEMX..............................  [Rule 601]Options 10, Section 2.
MRX...............................  [Rule 601]Options 10, Section 2.
PHLX..............................  [Rule 1024(a)(i)]Options 10, Section
                                     2.
NYSE ARCA.........................  [Options] Rules 9.26-O, [Equities
                                     Rule] 9.26-E and 2.1220(a)(7)(A).
BX................................  [Chapter XI, Section 2 and Chapter
                                     II, Section 2(g)]Options 10,
                                     Section 2.
Nasdaq............................  [Chapter XI, Section 2 and Chapter
                                     II, Section 2(g)]Options 10,
                                     Section 2.
------------------------------------------------------------------------

                  Certification OF Registered Personnel
------------------------------------------------------------------------

------------------------------------------------------------------------
NYSE American.....................  Rules 920 and 1220(b).
BZX...............................  Rule 2.5 Interpretation .01(c) and
                                     11.4(e).
BOX...............................  IM-2040-3.
Cboe..............................  Rule [9.3]3.37.
C2 *..............................  Cboe Rule [9.3]3.37.
EDGX..............................  Rule 2.5 Interpretation .01(c) and
                                     11.4(e).
ISE...............................  [Rule 602]Options 10, Section 3.
FINRA.............................  Rule 1220(b) and FINRA By-Laws
                                     Article V Sections 2 and 3.

MEMX..............................  Rule 2.5 Interpretation .01(c) and
                                     11.4(e).
MIAX..............................  Rule 1302.
MIAX PEARL........................  Rule 1302.
MIAX Emerald......................  Rule 1302.
GEMX..............................  [Rule 602]Options 10, Section 3.
MRX...............................  [Rule 602]Options 10, Section 3.
PHLX..............................  [Rule 1024]Options 10, Section 6.
NYSE ARCA.........................  [Options] Rules 9.27-O(a), [Equities
                                     Rule] 9.27-E(a) and 2.1220(b).
BX................................  [Chapter XI, Section 2 and Chapter
                                     II, Section 2(h)]Options 10,
                                     Section 3.
Nasdaq............................  [Chapter XI, Section 2 and Chapter
                                     II, Section 2(h)]Options 10,
                                     Section 3.
------------------------------------------------------------------------
* Cboe Options rule incorporated by reference into C2 Rulebook.

V. Solicitation of Comments

    Interested persons are invited to submit written data, views, and
arguments concerning the foregoing. Comments may be submitted by any of
the following methods:

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include
File Number S7-966 on the subject line.

Paper Comments

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

All submissions should refer to File Number 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 website (http://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed plan that are filed with the
Commission, and all written communications relating to the proposed
plan between the Commission and any person, other than those that may
be withheld from the public in accordance with the provisions of 5
U.S.C. 552, will be available for website viewing and printing in the
Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549, on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the plan also will be available for inspection and
copying at the principal offices of BZX, BOX, C2, ISE, FINRA, MIAX,
Nasdaq, BX, NYSE American, NYSE Arca, PHLX, GEMX, EDGX, MRX, MIAX
PEARL, MIAX Emerald, and MEMX. All comments received will be posted
without change. Persons submitting comments are cautioned that we do
not redact or edit personal identifying information from comment
submissions. You should submit only information that you wish to make
available publicly. All submissions should refer to File Number S7-966
and should be submitted on or before November 14, 2022.

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 MEMX as a
Participant and to reflect the name changes of certain Participating
Organizations. By declaring it effective today, the amended Plan can
become effective and be implemented without undue delay. The Commission
notes that the prior version of this plan immediately prior to this
proposed amendment was published for comment and the Commission did not
receive any comments thereon.\26\ Furthermore, the Commission does not
believe that the amendment to the plan raises any new regulatory issues
that the Commission has not previously considered.
---------------------------------------------------------------------------

    \26\ See Securities Exchange Act Release No. 85106 (February 12,
2019), 84 FR 4554 (February 15, 2019).
---------------------------------------------------------------------------

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, that
the Plan, as amended, filed with the Commission pursuant to Rule 17d-2
on September 20, 2022, is hereby approved and declared effective.
    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.
---------------------------------------------------------------------------

    \27\ 17 CFR 200.30-3(a)(34).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\27\
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-22988 Filed 10-21-22; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 78, Number 236 (Monday, December 9, 2013)]
[Notices]
[Pages 73900-73905]
[FR Doc No: 2013-29257]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-70966; File No. SR-FINRA-2013-036]

Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing of Amendment No. 1 and Order
Instituting Proceedings To Determine Whether To Approve or Disapprove a
Proposed Rule Change Relating to Wash Sale Transactions and FINRA Rule
5210 (Publication of Transactions and Quotations)

December 3, 2013.

I. Introduction

    On August 15, 2013, the Financial Industry Regulatory Authority,
Inc. (``FINRA'') filed with the Securities and Exchange Commission (the
``Commission'') pursuant to Section 19(b)(1) of the Securities Exchange
Act of 1934 (the ``Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed
rule change to add Supplementary Material .02 to FINRA Rule 5210
(Publication of Transactions and Quotations) to emphasize that wash
sale transactions are generally non-bona fide transactions and that
members have an obligation to have policies and procedures in place to
review their trading activity for, and prevent, wash sale transactions.
The proposed rule change was published for

comment in the Federal Register on September 4, 2013.\3\ The Commission
received five comment letters on the proposed rule change.\4\ On
October 4, 2013, the Commission extended the time period for Commission
action to December 3, 2013.\5\ On December 2, 2013, FINRA submitted a
response to the comment letters \6\ and filed Amendment No. 1 to the
proposed rule change. This order institutes proceedings under Section
19(b)(2)(B) of the Act \7\ to determine whether to approve or
disapprove the proposed rule change as modified by Amendment No. 1.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 70276 (August 28,
2013), 78 FR 54502 (``Notice'').
    \4\ See letter from Anonymous to Elizabeth M. Murphy, Secretary,
Commission, dated September 9, 2013 (``Anonymous Letter''); letter
from William A. Jacobson, Clinical Professor of Law, and Director,
Cornell Securities Law Clinic, and Jimin Lee, Cornell University Law
School, to Elizabeth M. Murphy, Secretary, Commission, dated
September 25, 2013 (``Cornell Letter''); letter from Stuart J.
Kaswell, Executive Vice President, Managing Director and General
Counsel, Managed Funds Association, to Elizabeth M. Murphy,
Secretary, Commission, dated September 25, 2013 (``MFA Letter'');
letter from Manisha Kimmel, Executive Director, Financial Industry
Forum, to Elizabeth M. Murphy, Secretary, Commission, dated
September 25, 2013 (``FIF Letter''); and letter from Theodore R.
Lazo, Managing Director and Associate General Counsel, Securities
Industry and Financial Markets Association, to Elizabeth M. Murphy,
Secretary, Commission, dated October 4, 2013 (``SIFMA Letter'').
    \5\ See Securities Exchange Act Release No. 70613 (October 4,
2013), 78 FR 62784 (October 22, 2013).
    \6\ See letter to Elizabeth M. Murphy, Secretary, Commission,
from Brant K. Brown, FINRA, dated December 2, 2013 (``FINRA
Letter'').
    \7\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

II. Description of the Proposal

    FINRA initially proposed to add Supplementary Material .02 to FINRA
Rule 5210 to address members' obligations with respect to certain
securities transactions that involve no change in the beneficial
ownership of those securities (referred to by FINRA as ``wash sales''),
that are occurring and being disseminated to the public when there is
no fraudulent or manipulative motivation for the trading activity at
issue.\8\ The proposed rule change explains that wash sales are
generally non-bona fide transactions for purposes of Rule 5210 and that
member firms must have policies and procedures that are reasonably
designed to review their trading for wash sale transactions and to
prevent such transactions from taking place. The proposed rule excludes
from the definition of wash sale, transactions that do not result in a
change of beneficial ownership, but that originate from unrelated
algorithms or from separate and distinct trading strategies, provided
these transactions are not undertaken for manipulative or other
fraudulent purposes.\9\ The proposed rule also initially provided that
algorithms or trading strategies within the most discrete unit of an
effective system of internal controls at a member firm are presumed to
be related, and provided the following examples of the ``most discrete
unit of an effective system of internal controls'' in the text of the
rule: An aggregation unit, or individual trading desks within an
aggregation unit separated by reasonable information barriers, as
applicable.
---------------------------------------------------------------------------

    \8\ Securities transactions that do not result in a change of
beneficial ownership of the securities and that are undertaken for
the purpose of creating or inducing a false or misleading appearance
of activity in the securities are already prohibited by existing
securities laws and FINRA rules. See footnote 11, infra.
    \9\ FINRA notes that transactions that originate from unrelated
algorithms or from separate or distinct trading strategies, trading
desks, or aggregation units that are frequent or numerous may raise
a presumption that such transactions were undertaken with the intent
that they cross and may, therefore, be intended as manipulative or
fraudulent.
---------------------------------------------------------------------------

    Even if transactions resulting in no change of beneficial ownership
were not undertaken with fraudulent or manipulative intent, FINRA
believes these transactions can create a misimpression of the level of
legitimate trading interest and activity in the security. In a number
of instances, FINRA has found that these types of transactions can
account for a material percentage (e.g., over 5%) of the consolidated
trading volume in a security on a particular day, which can distort the
market information that is publicly available for that security.
    FINRA states that the proposed rule change is intended to address
wash sales occurring due to orders sent by a single algorithm or the
interaction of multiple, related algorithms operated by a single firm.
The proposal does not seek to prevent trading activity that results
from separate trading strategies operating within a single firm. FINRA
explains that, in many situations, what may seem to be wash sale
activity occurs as a result of orders that originate from the same
firm, but from separate or distinct underlying trading strategies
(e.g., separate ``desks,'' aggregation units, or algorithms) that have
different--and sometimes competing--investment objectives and that
deliberately do not interact with each other before generating orders
to the market.
    FINRA states that only those firms that engage in a pattern or
practice of effecting wash sale transactions that result in a material
percentage of the trading volume in a particular security would
generally violate Rule 5210. The proposed rule change requires
reasonable policies and procedures and would not, therefore, apply to
isolated wash sale transactions, provided the firm's policies and
procedures were reasonable.\10\
---------------------------------------------------------------------------

    \10\ FINRA notes that the proposed rule change would not change
member firms' existing obligations under NASD Rule 3010 and FINRA
Rule 2010 with respect to wash sales.
---------------------------------------------------------------------------

    FINRA rules and the federal securities laws explicitly prohibit
transactions in securities that do not result in a change of beneficial
ownership of the securities when there is a fraudulent or manipulative
purpose behind the trading activity.\11\ In addition, FINRA Rule 5210
provides that no member may cause to be published or circulated any
report of a securities transaction unless the member knows or has
reason to believe that the transaction was a bona fide transaction.
Supplementary Material .01 states that ``[i]t shall be deemed
inconsistent with Rules 2010 (Standards of Commercial Honor and
Principles of Trade), 2020 (Use of Manipulative, Deceptive or Other
Fraudulent Devices) and 5210 (Publication of Transactions and
Quotations) for a member to publish or circulate or cause to be
published or circulated, by any means whatsoever, any report of any
securities transaction or of any purchase or sale of any security
unless such member knows or has reason to believe that such transaction
was a bona fide transaction, purchase or sale.'' FINRA represents that
each FINRA member has an existing obligation to know, or have a basis
to believe, that transactions in which it participates are bona fide.
FINRA states that a member must review its trading activity to
determine whether it is engaging in wash sale transactions and make
changes to minimize their occurrence.
---------------------------------------------------------------------------

    \11\ See, e.g., 15 U.S.C. 78i(a)(1); FINRA Rule 6140(b).
---------------------------------------------------------------------------

    In response to the comments received,\12\ FINRA filed Amendment No.
1 which would amend the proposed rule change in the following ways: (1)
By replacing the term ``wash sale'' with ``self-trade;'' (2) by
clarifying that self-trades are transactions in a security resulting
from the unintentional interaction of orders originating from the same
firm that involve no change in the beneficial ownership of the
security, and are bona fide transactions; (3) by clarifying that the
policies and procedures required by Rule 5210 must be reasonably
designed to review trading activity for, and prevent, a pattern or
practice of self-trades

resulting from orders originating from a single algorithm or trading
desk, or related algorithms or trading desks; (4) by clarifying that
transactions resulting from orders that originate from unrelated
algorithms or separate and distinct trading strategies within the same
firm would generally be considered bona fide self-trades; and (5) by
removing the examples from the proposed rule text of the types of
algorithms or trading desks FINRA would presume to be related for
purposes of Rule 5210.
---------------------------------------------------------------------------

    \12\ See supra note 4.
---------------------------------------------------------------------------

III. Comment Letters

    As noted above, the Commission received five comment letters
regarding the proposed rule change \13\ and FINRA responded to the
comments.\14\ One comment letter supported the proposal.\15\ Three
comment letters suggested modifications to the proposal.\16\ One
comment letter opposed the proposal.\17\
---------------------------------------------------------------------------

    \13\ See supra note 4.
    \14\ See FINRA Letter, supra note 6.
    \15\ See Cornell Letter, supra note 4.
    \16\ See MFA Letter, FIF Letter, and SIFMA Letter, supra note 4.
    \17\ See Anonymous Letter, supra note 4.
---------------------------------------------------------------------------

    The commenter who supports the proposed rule change believes the
proposed rule will enhance the integrity of the markets by requiring
FINRA members to prevent unintended wash sales from being effected,
which can otherwise result in misleading volume in a security.\18\
Further, the commenter agrees that not all wash sales can be
prohibited, so it believes that the exception in the proposed rule for
wash sale transactions resulting from unrelated algorithms or from
separate and distinct trading strategies is appropriate.\19\
---------------------------------------------------------------------------

    \18\ See Cornell Letter, supra note 4, at 1.
    \19\ See id., at 2.
---------------------------------------------------------------------------

    The three commenters who also support the proposed rule change, but
recommend modifications, believe that the proposal is too restrictive
in certain respects.\20\ One such commenter argues that the
unintentional interaction of orders from one or more algorithms from a
single firm should not be a violation of Rule 5210,\21\ and that the
proposed rule change may create ``a chilling effect on legitimate
trading.'' \22\ The commenter believes that there should not be a
presumption that algorithms within the most discrete trading units are
related as they may only share common oversight staff and the same
trading unit, but have different trading strategies.\23\ In its letter,
FINRA responded by stating that there should continue to be a
rebuttable presumption that algorithms within the most discrete unit of
a firm's internal controls are related.\24\ FINRA agrees that firms
should be able to attempt to demonstrate their compliance and rebut
such a presumption.\25\ By referencing examples such as aggregation
units or information barriers, FINRA stated that it did not intend to
limit the rule to those examples. To avoid confusion, however, FINRA is
proposing to remove the examples.\26\
---------------------------------------------------------------------------

    \20\ See MFA Letter; FIF Letter; SIFMA Letter; supra note 4.
    \21\ See MFA Letter, supra note 4, at 1.
    \22\ See id., at 2.
    \23\ See id., at 3.
    \24\ See FINRA Letter, supra note 6, at 5.
    \25\ See id.
    \26\ At the same time, FINRA believes it is unlikely that in
such situations firms will be able to rebut the presumption that
algorithms are ``related.'' FINRA also clarifies that,
notwithstanding a presumption that such algorithms are ``related,''
firms are permitted to attempt to demonstrate that two or more
algorithms within the most discrete unit of a firm's internal
controls, such as an aggregation unit, are not ``related.'' See id.
---------------------------------------------------------------------------

    The commenter also requests clarification from FINRA that
algorithms are not considered ``related'' ``because they share common
infrastructure, inputs such as market data or certain characteristics
of a security, or had common quantitative researchers.'' \27\ The
commenter recommends that the proposed rule change make clear that
unrelated trading algorithms would not incur liability,\28\ and that
the proposed rule change should be limited to equities executed and
reported in the United States and not be applied to transactions that
are not publicly reported.\29\ Finally, the commenter supports the
development by markets of a functionality to prevent the unintentional
interaction of orders from one or more algorithms at a single firm, and
believes that FINRA members should take reasonable steps to prevent
such transactions from being publicly reported.\30\ In its letter,
FINRA responded by stating, among other things, that it does not
believe the rule should be limited to equity securities as the same
issues can arise in fixed-income transactions.\31\
---------------------------------------------------------------------------

    \27\ See MFA Letter, supra note 4, at 3.
    \28\ See id.
    \29\ See MFA Letter, supra note 4, at 2.
    \30\ See MFA Letter, supra note 4, at 3.
    \31\ See FINRA Letter, supra note 6, at 7.
---------------------------------------------------------------------------

    Another commenter who supports modifications to the proposal
disagrees with the presumption made in the proposed rule that
algorithms are related if they are in the same aggregation unit or are
not separated by information barriers within a firm.\32\ The commenter
argues that the proposed rule would require such algorithms to have the
capability of knowing the orders submitted by other algorithms within
the same aggregation unit (or not separated by information barriers) to
thus prevent their orders from crossing, which the commenter believes
would require ``a substantial development effort,'' and could
negatively affect legitimate trading activity.\33\ In addition, the
commenter is concerned with the proposed requirement that firms have
policies and procedures in place that are reasonably designed to review
their trading activity for, and prevent, wash sale transactions. The
commenter believes it would be a significant challenge for firms to
prevent wash sale transactions from taking place, and notes that
current wash sale surveillances are done on a post-trade basis.\34\ The
commenter argues that the better standard would be to require firms to
monitor wash sale activity and implement controls ``where such activity
demonstrates a pattern or practice of effecting wash sale transactions
that result in a material percentage of the volume in a security.''
\35\ Review of such activity would occur on a post-trade basis. The
commenter also lists several examples where it believes that the
prevention requirement in the proposed rule could negatively affect
legitimate trading activity,\36\ such as by prohibiting an investment
advisor from placing orders for different beneficial owners on both
sides of the market.\37\ FINRA responded to this last point by noting
that it does not intend to modify the rule to remove the word
``prevent'' as there are already exchanges that ``provide
functionalities and tools to help firms prevent self-trades.'' \38\
---------------------------------------------------------------------------

    \32\ See FIF Letter, supra note 4, at 1.
    \33\ See id., at 2.
    \34\ See id.
    \35\ See id.
    \36\ See id., at 2-3.
    \37\ See FIF Letter, supra note 4, at 3.
    \38\ See FINRA Letter, supra note 6, at 7.
---------------------------------------------------------------------------

    The third commenter also recommends modifications to the proposal.
First, the commenter states that the proposed rule change should refer
to ``wash sales'' as ``self-trades'' instead, as it believes that the
term ``wash sales'' connotes manipulation or fraudulent activity.\39\
In response to the comment, FINRA has determined to change the use of
the term ``wash sale'' to ``self-trade'' to avoid the implication that
the types of trading activity addressed in the supplementary material
are limited to trading that is undertaken with manipulative intent.
FINRA defines ``self-trade'' for purposes

of the rule as a transaction in a security resulting from the
unintentional interaction of orders originating from the same firm that
involves no change in the beneficial ownership of the security.\40\
---------------------------------------------------------------------------

    \39\ See SIFMA Letter, supra note 4, at 2.
    \40\ See FINRA Letter, supra note 4, at 5-6. FINRA notes,
however, that the use of the term ``self-trade'' in this context
does not change members' existing obligations with respect to the
prevention of wash sales under NASD Rule 3010 and FINRA Rule 2010.
---------------------------------------------------------------------------

    Additionally, the commenter recommends that FINRA amend the
proposed rule change to instead require firms to have policies and
procedures to monitor and prevent ``self-trades'' that constitute a
large amount of trading volume in a security on a trading day.\41\
Further, the commenter believes that the proposed rule text should be
amended to state that only broker-dealers that engage in a pattern or
practice of unintentional ``self-trades'' that result in a material
amount of trading volume would be in violation of the proposed
rule.\42\ The commenter urges that a firm that engages in ``self-
trades'' on isolated trading days should not be in violation of the
proposed rule if the firm then detects and rectifies the issue and
takes preventative measures.\43\ FINRA responded to this and other
commenters who discussed the material percentage matter by stating that
it does not believe the rule text should be limited to those
transactions that have a material effect on the market because, in many
instances, firms will not be able to know the ultimate effect self-
trading has as it occurs. Rather, each individual firm should review
its trading activity to assess any self-trading in which the firm has
engaged and, where necessary, take appropriate action to prevent a
pattern or practice of such activity from occurring going forward.\44\
FINRA reiterated its view, however, that isolated self-trades are
generally bona fide transactions, and that it is only when that type of
trading activity accounts for a material percentage of the volume in a
particular security that the self-trading activity results in potential
misinformation that can adversely affect the price discovery
process.\45\ FINRA stated that it is amending the proposed rule to
specifically note that firms' obligations are to prevent a pattern or
practice of self-trades, and not all self-trades.\46\
---------------------------------------------------------------------------

    \41\ The commenter suggests specifically: ``policies and
procedures reasonably designed to monitor for and prevent the
otherwise unintentional transactions that result in no change of
beneficial ownership that constitutes a material percentage of
consolidated trading volume in a subject security on a particular
day.'' See SIFMA Letter, supra note 4, at 3.
    \42\ See id.
    \43\ See id.
    \44\ See FINRA Letter, supra note 6, at 6.
    \45\ See id.
    \46\ See id., at 6-7.
---------------------------------------------------------------------------

    Finally, the commenter requests that FINRA remove the broad
presumption that all algorithms and strategies within the most discrete
unit of an effective system of internal controls are related. According
to the commenter, algorithms within a discrete unit may be unrelated,
but may still effect unintentional ``self-trades.'' \47\ The commenter
believes that the exclusion for unrelated algorithms should be a non-
exclusive safe harbor allowing FINRA members to ``demonstrate their
compliance by those means that best reflect their organization, rather
than be limited to information barriers alone.'' \48\ In its letter,
FINRA stated that it believes that the presumption that algorithms
within the most discrete unit of a firm's internal controls are related
is valid, and that firms should be permitted to demonstrate their
compliance and rebut this presumption.\49\ FINRA proposed to remove
from its proposed rule text the examples it provided of such related
algorithms and trading strategies--specifically, those ``within an
aggregation unit, or individual trading desks within an aggregation
unit separated by reasonable information barriers, as applicable'' to
avoid limiting the proposed rule to those examples.\50\ However, FINRA
believes that it is unlikely that a firm will be able to rebut the
presumption that algorithms or trading strategies within an aggregation
unit or individual trading desks within an aggregation unit separated
by information barriers are in fact related.\51\
---------------------------------------------------------------------------

    \47\ See SIFMA Letter, supra note 4, at 3.
    \48\ See id.
    \49\ See FINRA Letter, supra note 6, at 5.
    \50\ See id.
    \51\ See id.
---------------------------------------------------------------------------

    The commenter who opposes the proposal questions the effectiveness
of the proposed rule change, noting that FINRA acknowledged in the
proposal that certain wash sales cannot be prevented without explaining
why this is the case.\52\ The commenter expresses concern that FINRA
would treat such activity as acceptable when FINRA has stated that it
can result in a significant distortion of the trading volume in a
security, which thereby misleads market participants.\53\ The commenter
argues that by not prohibiting this activity, the proposed rule change
is contrary to the public interest,\54\ and that firms that
consistently engage in wash sale activity should be required to incur
the cost to prevent it, as the commenter notes that wash sales that
occur on a regular basis are not mistakes, but the ``predictable,
direct result of conduct in which the [f]irms have chosen to engage.''
\55\ The commenter suggests that FINRA revise its proposed rule to
prohibit multiple algorithms within the same firm from effecting
transactions with no change of beneficial ownership.\56\ Finally, the
commenter requests that FINRA explain how it currently, and in the
future, will surveil for compliance with the proposed rule,\57\ and
notes that it is not clear in the proposal how FINRA will be able to
conclude that these transactions were not carried out with manipulative
or fraudulent intent.\58\
---------------------------------------------------------------------------

    \52\ See Anonymous Letter, supra note 4, at 1.
    \53\ See id., at 2.
    \54\ See id., at 3.
    \55\ See id., at 2.
    \56\ See id.
    \57\ See Anonymous Letter, supra note 4, at 1.
    \58\ See id., at 2.
---------------------------------------------------------------------------

    FINRA disagreed with the commenter, stating that the proposal will
``take affirmative steps to address trading activity that is generally
permitted. . . but that can potentially result in misinformation in the
marketplace.'' \59\ FINRA further stated that a reported trade with a
firm on both sides in not per se illegitimate.\60\ FINRA then noted, as
stated in the proposal, that the proposed rule change is not meant to
prevent all types of trading activity that result from separate
strategies operating within a single firm.\61\ FINRA explained that the
proposal is meant to strike a balance between allowing a single firm to
engage in separate trading activities and strategies (recognizing that
this may result at times in self-trades) while ensuring firms have
policies and procedures in place to identify and prevent patterns and
practices of self-trades that may materially distort reported trade
volume.\62\
---------------------------------------------------------------------------

    \59\ See FINRA Letter, supra note 6, at 3.
    \60\ See id. at 4.
    \61\ See id.
    \62\ See id.
---------------------------------------------------------------------------

IV. Proceedings To Determine Whether To Approve or Disapprove SR-FINRA-
2013-036 and Grounds for Disapproval Under Consideration

    The Commission is instituting proceedings pursuant to Section
19(b)(2)(B) \63\ of the Act to determine whether the proposed rule
change, as amended, should be approved or disapproved. Institution of
such proceedings is appropriate at this time in view of the legal and
policy issues raised by the proposed rule change. Institution of
proceedings does not indicate that the Commission has reached any
conclusions with respect to any of the issues involved. Rather, as
described in greater detail below, the

Commission seeks and encourages interested persons to provide
additional comment on the proposed rule change, as amended, to inform
the Commission's analysis of whether to approve or disapprove the
proposal.
---------------------------------------------------------------------------

    \63\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

    Pursuant to Section 19(b)(2)(B),\64\ the Commission is providing
notice of the grounds for disapproval under consideration. In
particular, Section 15A(b)(6) \65\ requires that the rules of a
registered securities association be designed, among other things, to
prevent fraudulent and manipulative acts and practices, to promote just
and equitable principles of trade, to remove impediments to and perfect
the mechanism of a free and open market and a national market system
and, in general, to protect investors and the public interest.
---------------------------------------------------------------------------

    \64\ 15 U.S.C. 78s(b)(2)(B).
    \65\ 15 U.S.C. 78o-3(b)(6).
---------------------------------------------------------------------------

    Currently, FINRA Rule 5210 prohibits a member from reporting a
transaction unless it believes such transaction was bona fide, and
Supplementary Material .01 clarifies that a member should not report a
transaction unless such member knows or has reason to believe that the
transaction is bona fide. Through the proposed addition of Supplemental
Material .02, as amended, FINRA appears to seek to create a presumption
that ``self-trades,'' defined as the unintentional interaction of
orders originating from the same firm that involve no change in the
beneficial ownership of the security, generally are bona fide. In fact,
FINRA would expressly provide that transactions resulting from orders
that originate from unrelated algorithms or separate and distinct
trading strategies within the same firm would generally be considered
bona fide self-trades. FINRA would require members to have policies and
procedures reasonably designed to prevent a pattern or practice of
self-trades resulting from orders originating from a single or related
algorithms or trading desks. FINRA's rationale for this requirement is
that, even if transactions are not undertaken with fraudulent or
manipulative intent, they can create a misimpression of the level of
legitimate trading interest and activity in a security, and could
adversely affect the price discovery process. FINRA expresses concern
that firms will continue to allow this type of trading to occur rather
than incur the costs necessary to prevent it, even though significant
misinformation may be disseminated to the marketplace.
    Despite raising these serious concerns about self-trades, however,
FINRA's proposal would appear to provide substantial flexibility with
respect to the required policies and procedures, such that a
significant number of self-trades could continue to be publicly
reported. Although not formally part of the proposed rule text, FINRA
expresses the view in its filing that only those firms that engage in a
pattern or practice of effecting self-trades that result in a material
percentage of the trading volume in a particular security would
generally violate Rule 5210. In addition, the policies and procedures
requirement would not apply at all to orders originating from
``unrelated'' algorithms or ``separate and distinct'' trading
strategies, which are broad terms for which little guidance is provided
by FINRA. Accordingly, the Commission is concerned that the proposal
may not achieve its stated purpose of addressing the identified
problems associated with respect to self-trades, and therefore believes
questions remain as to whether FINRA's proposal is consistent with the
requirements of Section 15A(b)(6) of the Act.
    In addition, the Commission notes that FINRA filed Amendment No. 1
and its response to comments on December 2, 2013, one day before the
Commission was required to act on the proposed rule change. Although
Amendment No. 1 seeks to address a number of concerns expressed by
commenters, the Commission believes the institution of proceedings is
appropriate to allow the Commission and commenters time to assess
whether the amended proposal is consistent with the Act.

V. Procedures: Request for Written Comments

    The Commission requests that interested persons provide written
submissions of their views, data, and arguments with respect to the
issues identified above, as well as any others they may have identified
with the proposal. In particular, the Commission invites the written
views of interested persons concerning whether the proposed rule change
is consistent with Section 15A(b)(6) or any other provision of the Act,
or the rules and regulations thereunder. Although there do not appear
to be any issues relevant to approval or disapproval which would be
facilitated by an oral presentation of views, data, and arguments, the
Commission will consider, pursuant to Rule 19b-4, any request for an
opportunity to make an oral presentation.\66\
---------------------------------------------------------------------------

    \66\ Section 19(b)(2) of the Act, as amended by the Securities
Acts Amendments of 1975, Public Law 94-29, 89 Stat. 97 (1975),
grants the Commission flexibility to determine what type of
proceeding--either oral or notice and opportunity for written
comments--is appropriate for consideration of a particular proposal
by a self-regulatory organization. See Securities Acts Amendments of
1975, Report of the Senate Committee on Banking, Housing and Urban
Affairs to Accompany S. 249, S. Rep. No. 75, 94th Cong., 1st Sess.
30 (1975).
---------------------------------------------------------------------------

    Interested persons are invited to submit written data, views, and
arguments regarding whether the proposed rule change should be approved
or disapproved by December 30, 2013. Any person who wishes to file a
rebuttal to any other person's submission must file that rebuttal by
January 13, 2014.
    Comments may be submitted by any of the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File Number SR-FINRA-2013-036 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-FINRA-2013-036. 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/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change 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, 100 F Street NE.,
Washington, DC 20549, on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available
for inspection and copying at the principal office of 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 SR-
FINRA-2013-036 and should be submitted on or before December 30, 2013.
Rebuttal comments should be submitted by January 13, 2014.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\67\
---------------------------------------------------------------------------

    \67\ 17 CFR 200.30-3(a)(57).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-29257 Filed 12-6-13; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 77, Number 25 (Tuesday, February 7, 2012)]
[Rules and Regulations]
[Pages 6012-6013]
[FR Doc No: 2012-2780]

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DEPARTMENT OF HOMELAND SECURITY

Coast Guard

33 CFR Part 117

[Docket No. USCG-2012-0034]

Drawbridge Operation Regulations; Annisquam River and Blynman
Canal, Gloucester, MA

AGENCY: Coast Guard, DHS.

ACTION: Notice of temporary deviation from regulations.

-----------------------------------------------------------------------

SUMMARY: The Commander, First Coast Guard District, has issued a
temporary deviation from the regulation governing the operation of the
SR127 Bridge at mile 0.0 across the Annisquam River and Blynman Canal.
The deviation is necessary to facilitate bridge rehabilitation repairs.
This deviation allows the bridge to remain in the closed position
during two separate phases.

DATES: This deviation is effective from February 15, 2012 through April
10, 2012.

ADDRESSES: Documents mentioned in this preamble as being available in
the docket are part of docket USCG-2012-0034 and are available online
at www.regulations.gov, inserting USCG-2012-0034 in the ``Keyword'' and
then clicking ``Search''. They are also available for inspection or
copying at the Docket Management Facility (M-30), U.S. Department of
Transportation, West Building Ground Floor, Room W12-140, 1200 New
Jersey Avenue SE., Washington, DC, 20590, between 9 a.m. and 5 p.m.,
Monday through Friday, except Federal holidays.

FOR FURTHER INFORMATION CONTACT: If you have questions on this rule,
call or email Mr. John McDonald, Project Officer, First Coast Guard
District<EMAIL_ADDRESS>or telephone<PHONE_NUMBER>. If you
have questions on viewing the docket, call Renee V. Wright, Program
Manager, Docket Operations, telephone<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION: The SR127 Bridge, across the Annisquam
River/Blynman Canal, mile 0.0, at Gloucester, Massachusetts, has a
vertical clearance in the closed position of 7 feet at mean high water
and 16 feet at mean low water. The drawbridge operation regulations are
listed at 33 CFR 117.586.
    The owner of the bridge, Massachusetts Department of
Transportation, requested a temporary deviation from the regulations to

facilitate bridge rehabilitation repairs during two separate phases.
    During the first phase of the temporary deviation, the SR127 Bridge
may remain in the closed position from February 15, 2012 through March
8, 2012, to replace bridge stringers. At the end of the first phase the
bridge will return to its regular operating schedule. During the second
phase of the temporary deviation, the bridge may remain in the closed
position from March 12, 2012 through April 10, 2012, to rehabilitate
the bridge operating machinery. At the end of the second phase the
bridge will return to its regular operating schedule.
    The Gloucester Harbor Master and the local marinas were notified
and no objections were received.
    In accordance with 33 CFR 117.35(e), the bridge must return to its
regular operating schedule immediately at the end of the designated
time periods. This deviation from the operating regulations is
authorized under 33 CFR 117.35.

    Dated: January 25, 2012.
Gary Kassof,
Bridge Program Manager, First Coast Guard District.
[FR Doc. 2012-2780 Filed 2-6-12; 8:45 am]
BILLING CODE 9110-04-P