[Federal Register Volume 84, Number 75 (Thursday, April 18, 2019)]
[Notices]
[Pages 16346-16377]
[FR Doc No: 2019-07739]

Vol. 84

Thursday,

No. 75

April 18, 2019

Part II

Securities and Exchange Commission

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Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed Rule Change To Adopt Investigation,
Disciplinary, Sanction, and Other Procedural Rules Modeled on the Rules
of the Exchange's Affiliate NYSE American LLC; Notice

Federal Register / Vol. 84 , No. 75 / Thursday, April 18, 2019 /
Notices

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-85639; File No. SR-NYSEARCA-2019-15]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Adopt
Investigation, Disciplinary, Sanction, and Other Procedural Rules
Modeled on the Rules of the Exchange's Affiliate NYSE American LLC

April 12, 2019.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby
given that, on April 2, 2019, NYSE Arca, Inc. (``NYSE Arca'' or the
``Exchange'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the self-regulatory
organization. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange proposes to adopt investigation, disciplinary,
sanction, and other procedural rules modeled on the rules of the
Exchange's affiliate NYSE American LLC (``NYSE American''), and to make
certain conforming and technical changes. The proposed rule change is
available on the Exchange's website at www.nyse.com, at the principal
office of the Exchange, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to adopt investigation, disciplinary,
sanction, and other procedural rules modeled on the rules of NYSE
American and to make certain conforming and technical changes.
Background and General Description of Proposed Rule Change
    In 2016, NYSE American adopted rules for conducting investigations
and enforcement actions that are, with certain exceptions,
substantially the same as the Rule 8000 Series and Rule 9000 Series of
its affiliate the New York Stock Exchange LLC (the ``NYSE'') and the
Financial Industry Regulatory Authority, Inc. (``FINRA'').\4\ In
September 2016, NYSE American amended its Rule 8313 (Release of
Disciplinary Complaints, Decisions and Other Information) modeled on
the text of FINRA's version of the rule and harmonized its disciplinary
rules and procedures relating to the imposition of temporary and
permanent cease and desist orders with certain approved FINRA
amendments, including adopting a new Rule 9291 based on FINRA's Rule
9291.\5\
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    \4\ See Securities Exchange Act Release Nos. 77241 (February 26,
2016), 81 FR 11311 (March 3, 2016) (SR-NYSEMKT-2016-30) (``2016
Notice''). The NYSE American disciplinary rules were implemented on
April 15, 2016. See NYSE American Information Memorandum 16-02
(March 14, 2016). The Commission approved the NYSE's adoption of
FINRA's disciplinary rules in 2013. See Securities Exchange Act
Release No. 69045 (March 5, 2013), 78 FR 15394 (March 11, 2013) (SR-
NYSE-2013-02). Most recently, the Commission approved NYSE National,
Inc.'s (``NYSE National'') adoption of disciplinary rules based on
the NYSE American and FINRA Rule 8000 and Rule 9000 Series. See
Securities Exchange Act Release No. 83289 (May 17, 2018), 83 FR
23968 (May 23, 2018) (SR-NYSENat-2018-02). Certain grammatical or
other non-substantive changes were made to the NYSE National
disciplinary rules that are proposed to be incorporated into the
Exchange's disciplinary rules.
    \5\ Securities Exchange Act Release Nos. 78959 (September 28,
2016), 81 FR 68481 (October 4, 2016) (SR-NYSEMKT-2016-71) (Notice).
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    To facilitate rule harmonization among self-regulatory
organizations (``SROs''), the Exchange proposes the NYSE Arca Rule
10.8000 and 10.9000 Series based on the text of the NYSE American Rule
8000 and Rule 9000 Series, with certain changes, as described below.\6\
The Exchange notes that all but nine permit holders \7\ (six ETP
Holders,\8\ two OTP Holders and OTP Firms,\9\ and one that is both an
ETP Holder and an OTP Firm) are already subject to similar rules by
virtue of their membership in NYSE American, the NYSE, NYSE National,
FINRA and/or the NASDAQ Stock Market LLC (``NASDAQ''), whose
disciplinary rules are similar to FINRA's rules. The overwhelming
majority of Exchange ETP Holders, OTP Holders, and OTP Firms are thus
already subject to rules similar to the proposed rules described
herein.
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    \6\ The Exchange operates its options and equities markets
directly and maintains a single rule book following the merger of
NYSE Arca Equities, Inc., with and into the Exchange. See Securities
Exchange Act Release Nos. 81419 (August 17, 2017), 82 FR 40044
(August 23, 2017) (SR-NYSEArca-2017-40).
    \7\ There are currently 190 equity and option permit holders on
the Exchange.
    \8\ An ``ETP Holder'' means a sole proprietorship, partnership,
corporation, limited liability company or other organization in good
standing that is a registered broker-dealer and has been issued an
Equity Trading Permit (``ETP'') by the Exchange. See Rules 1.1(n)
and (o). By way of comparison, FINRA uses the term ``member'' in its
rules and NYSE uses the term ``member organization'' in its rules.
    \9\ ``OTP'' means an Options Trading Permit issued by the
Exchange for effecting approved securities transactions on the
Exchange's Trading Facilities. An OTP may be issued to a sole
proprietor, partnership, corporation, limited liability company or
other organization that is a registered broker-dealer pursuant to
Section 15 of the Act, and which has been approved by the Exchange.
See Rule 1.1(mm). ``OTP Holder'' means a natural person, in good
standing, who has been issued an OTP, or has been named as a
Nominee. An OTP Holder must be a registered broker or dealer
pursuant to Section 15 of the Act, or a nominee or an associated
person of a registered broker or dealer that has been approved by
the Exchange to conduct business on the Exchange's Trading
Facilities. An OTP Holder has status as a ``member'' of the NYSE
Arca, Inc. as that term is defined in Section 3 of the Act. See Rule
1.1(nn). ``OTP Firm'' means a sole proprietorship, partnership,
corporation, limited liability company, or other organization in
good standing that holds an OTP or upon whom an individual OTP
Holder has conferred trading privileges on the Exchange's Trading
Facilities. An OTP Firm must be a registered broker-dealer pursuant
to Section 15 of the Act. An OTP Firm also has status as a
``member'' of the Exchange, as that term is defined in Section 3 of
the Act. See Rule 1.1(oo). By way of comparison, FINRA uses the term
``member'' in its rules and NYSE uses the term ``member
organization.''
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    Set forth below are (1) a description of the Exchange's current
disciplinary rules (current Rule 10 and related rules in Rule 13); (2)
a description of the proposed rule change and transition; (3) a more
detailed description of the proposed rules with a comparison to the
current rules; (4) a description of technical and conforming
amendments; and (5) a description of current rules that will not be
carried over into the proposed rule set and the reason(s) therefor.
Description of NYSE Arca Rules 10 and 13
    Rule 10 sets forth the Exchange's current rules governing
disciplinary proceedings and other hearings and

appeals in Rules 10.1 through 10.18. Rule 13 sets forth the Exchange's
current procedures for the cancellation, suspension, and reinstatement
of ETP Holder, OTP Firm, or OTP Holder status on the Exchange in Rules
13.1 through 13.9.
Rule 10.1
    Rule 10.1 concerns the Exchange's disciplinary jurisdiction. Under
Rule 10.1(a), an ETP Holder, OTP Holder, OTP Firm or associated person
of an ETP Holder, OTP Holder or OTP Firm (``Associated Person'') \10\
who is alleged to have violated or aided and abetted a violation of any
provision of the Act, the rules thereunder, any provision of the
Exchange's Bylaws or rules or any commentary thereof, any resolution of
the Board of Directors regulating the conduct of business of the
Exchange, or any policy or procedure of the Exchange is subject to the
disciplinary jurisdiction of the Exchange, and after notice and
opportunity for a hearing may be appropriately disciplined by
cancellation of trading privileges, expulsion, suspension, limitation
of activities, functions, and operations, suspension or bar from
association with an ETP Holder, OTP Holder or OTP Firm, fine, censure
or any other fitting sanction. An ETP Holder, OTP Holder or OTP Firm
may be charged with any violation committed by its employees or an
Associated Person, as though such violation were its own.
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    \10\ ``Associated Person'' means a person who is a partner,
officer, director, member of a limited liability company, trustee of
a business trust, employee of an OTP Firm or ETP Holder or any
person directly or indirectly controlling, controlled by or under
common control with an OTP Firm or ETP Holder. See Rule 1.1(d). The
term is sometimes capitalized in the Exchange's rules and will be
capitalized herein. Since an OTP Holder can have associated persons,
the Exchange proposes to add OTP Holder to the definition of
Associated Person in Rule 1.1.
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    Under Rule 10.1(b), any ETP Holder, OTP Holder, OTP Firm or
Associated Person continues to be subject to the disciplinary
jurisdiction of the Exchange following suspension or cancellation of an
ETP or OTP or termination of or association with an ETP Holder, OTP
Holder or OTP Firm with respect to matters that occurred prior to such
termination if the Exchange gives written notice of the commencement of
an inquiry into such matters to such former ETP Holder, OTP Holder, OTP
Firm or Associated Person within one year of receipt by the Exchange of
written notice of the termination of such person's status as an ETP
Holder, OTP Holder, OTP Firm or Associated Person.
    Under Rule 10.1(c), the Board of Directors may authorize any
officer to enter into a regulatory services agreement on behalf of the
Exchange with another SRO. Notwithstanding the fact that the Exchange
may enter into one or more such agreements, the Exchange retains
ultimate legal responsibility for, and control of, its SRO
responsibilities, and any such regulatory services agreement must so
provide.
Rule 10.2
    Rule 10.2 concerns investigations and regulatory cooperation. Rule
10.2(a) provides that the Exchange's Chief Regulatory Officer (``CRO'')
and his or her delegees will function independently of the commercial
interests of the Exchange and the commercial interests of the ETP
Holders, OTP Holders and OTP Firms and have sole discretion to
investigate possible violations within the Exchange's disciplinary
jurisdiction. No member of the Board of Directors or non-Regulatory
Staff may interfere with or attempt to influence the process or
resolution of any pending investigation or disciplinary proceeding.
    Under Rule 10.2(b), any person, any Exchange committee, or the
Board of Directors may submit for investigation a complaint alleging
possible violations. Each complaint must specify in reasonable detail
the facts constituting the violation and any specific provision
allegedly violated.
    Under Rule 10.2(c), an ETP Holder, OTP Holder, OTP Firm or
Associated Person is entitled to be represented by counsel during any
investigation by the Exchange.
    Under Rule 10.2(d), no ETP Holder, OTP Holder, OTP Firm, Associated
Person, or other person or entity over whom the Exchange has
jurisdiction may impede or delay a regulatory investigation with
respect to possible violations within the disciplinary jurisdiction of
the Exchange or refuse to furnish testimony, documentary materials, or
other information requested by the Exchange during the course of its
investigation. Failure to do so is considered obstructive of an inquiry
or investigation and subject to formal disciplinary action.
    Under Rule 10.2(e), an ETP Holder, OTP Holder, OTP Firm or
Associated Person must submit trade data in an automated format (known
as ``electronic blue sheets'') prescribed by the Exchange with respect
to any request for information made by the Exchange. The Exchange may
grant exceptions to these requirements. Failure to submit the data in
the required format is considered obstructive of an inquiry or
investigation and subject to formal disciplinary action. If a
transaction was a proprietary transaction effected or caused to be
effected by the ETP Holder, OTP Holder or OTP Firm for any account in
which such ETP Holder, OTP Holder, OTP Firm or Associated Person is
directly or indirectly interested, such ETP Holder, OTP Holder or OTP
Firm must submit or cause to be submitted the information set forth in
Commentary .01(A) of Rule 10.2(e). If a transaction was effected or
caused to be effected by the ETP Holder, OTP Holder or OTP Firm for any
customer account, such ETP Holder, OTP Holder or OTP Firm must submit
or cause to be submitted the information set forth in Commentary .01(B)
of Rule 10.2(e).
    Under Rule 10.2(f), no ETP Holder, OTP Holder, OTP Firm, Associated
Person, or other person or entity over whom the Exchange has
jurisdiction pursuant to Rule 10.1 may refuse to appear and testify
before another exchange or SRO \11\ in connection with a regulatory
investigation, examination, or disciplinary proceeding or refuse to
furnish documentary materials or other information or otherwise impede
or delay such investigation, examination, or disciplinary proceeding if
the Exchange requests such information or testimony in connection with
any inquiry resulting from an agreement entered into by the Exchange or
its SRO pursuant to Rule 3.6. The requirements of the rule apply
regardless of whether the Exchange has initiated an investigation
pursuant to Rule 10.2(a) or a disciplinary proceeding pursuant to Rule
10.4.
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    \11\ Under Commentary .01 of Rule 10.2(f), the terms
``exchange'' and ``SRO'' include, but are not limited to, any member
or affiliate member of the Intermarket Surveillance Group. Under
Commentary .02 of the rule, any person required to furnish
information or testimony pursuant to the rule is afforded the same
rights and procedural protections as that person would have if the
Exchange had initiated the request for information or testimony.
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Rule 10.3
    Rule 10.3 concerns ex parte communications.\12\ Rule 10.3(a)

describes prohibited communications. Under the rule, unless upon
adequate notice and reasonable opportunity for all parties to
participate:
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    \12\ Under Commentary .01 of Rule 10.3, ``ex parte
communication'' means an oral or written communication made without
notice to all parties, i.e., Exchange Regulatory Staff and the
Subjects of investigations or Respondents in disciplinary
proceedings. The term ``Exchange Regulatory Staff'' used in
Commentary .01 of Rule 10.3 is not defined in the current rules. A
written communication is ex parte unless a copy has been previously
or simultaneously delivered to all interested parties. An oral
communication is ex parte unless it is made in the presence of all
interested parties except those who, on adequate prior notice,
declined to be present. Under Commentary .02 of Rule 10.3, a
disciplinary proceeding is considered to be pending from the date
that a Complaint is issued pursuant to Rule 10.4 until the
proceeding, including any appeals, becomes final.
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     No person who is a subject of a pending investigation by
the Exchange (``Subject'') or a Respondent in a pending disciplinary
proceeding (``Respondent''),\13\ or counsel for or a representative of
the Subject or the Respondent, or any interested NYSE Arca staff,\14\
with knowledge of a pending investigation or disciplinary proceeding,
may make or knowingly cause to be made an ex parte communication
relevant to the facts or allegations of the investigation or the
disciplinary proceeding to (a) a member of the Board of Directors, (b)
a person who advises the Board of Directors, (c) any member of the
Exchange's Regulatory Staff who is not participating in the resolution
of the investigation or the disciplinary proceeding, or (d) a member of
the Business Conduct Committee (``BCC''),\15\ the Ethics and Business
Conduct Committee (``EBCC''),\16\ or the Committee for Review
(``CFR'').\17\
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    \13\ See Rule 10.4(a).
    \14\ The term ``interested NYSE Arca staff'' is not defined in
the current rules.
    \15\ Disciplinary proceedings against ETP Holders and Associated
Persons are currently heard by a ``Conduct Panel'' appointed by the
BCC. See Rules 3.2(b)(2)(B) and 10.5 (Hearing). Under the proposed
rules, Hearing Panels or Extended Hearing Panels will be the primary
adjudicators and function in the role of the Conduct Panel. As
proposed, panelists for Hearing Panels or Extended Hearing Panels in
equities matters will be drawn from the Hearing Board as described
in proposed Rule 10.9232. See, e.g., proposed Rule 10.9232 (Criteria
for Selection of Panelists, Replacement Panelists, and Floor-Based
Panelists); see also proposed Rule10.9120(v) (definition of
``Panelist'') and 10.9231 (Appointment by the Chief Hearing Officer
of Hearing Panel or Extended Hearing Panel or Replacement Hearing
Officer).
    \16\ Disciplinary proceedings against OTP Holders, OTP Firms and
Associated Persons are currently heard by a ``Conduct Panel''
appointed by the EBCC. See Rules 3.2(b)(1)(B) and 10.5. Under the
proposed rules, Hearing Panels or Extended Hearing Panels will be
the primary adjudicators and function in the role of the Conduct
Panel. As proposed, panelists for Hearing Panels or Extended Hearing
Panels in options matters will be drawn from the Hearing Board as
described in proposed Rule 10.9232. See, e.g., proposed Rules
10.9120(v) (definition of ``Panelist'') and 10.9231 (Appointment by
the Chief Hearing Officer of Hearing Panel or Extended Hearing Panel
or Replacement Hearing Officer).
    \17\ See Rule 3.3(a)(2).
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     No person who is a member of the BCC, EBCC or Conduct
Panel with knowledge of a pending investigation or disciplinary
proceeding, or any interested Exchange staff,\18\ may make or knowingly
cause to be made an ex parte communication relevant to the facts or
allegations of the investigation or the disciplinary proceeding to (a)
a member of the Board of Directors, (b) a person who advises the Board
of Directors, (c) any member of the Exchange's Regulatory Staff, or (d)
the Subject of a pending investigation by the Exchange or a Respondent
in a pending disciplinary proceeding, or counsel for or a
representative of the Subject or the Respondent.
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    \18\ The term ``interested Exchange staff'' is not defined in
the current rules.
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     No person who is a member of the Board of Directors, or
any person who advises the Board of Directors, or any interested NYSE
Arca staff, with knowledge of a pending investigation or disciplinary
proceeding, may knowingly make or cause to be made an ex parte
communication relevant to the facts or allegations of the investigation
or the disciplinary proceeding to (a) any member of the Exchange's
Regulatory Staff, (b) the Subject of a pending investigation by the
Exchange or a Respondent in a pending disciplinary proceeding, or
counsel for or a representative of the Subject or the Respondent, or
(c) a member of the BCC, EBCC or Conduct Panel.
    Under Rule 10.3(b), any person who receives, makes, or knowingly
causes to be made a communication prohibited by the rule must promptly
submit to the Regulatory Staff for inclusion in the record of the
investigation or disciplinary proceeding (1) all such written
communications, (2) memoranda stating the substance of all such oral
communications, and (3) all written responses and memoranda stating the
substance of any oral responses to such communications.
    Rule 10.3(c) sets forth remedies. Under the rule, any ETP Holder,
OTP Holder, OTP Firm or Associated Person who made or knowingly caused
to be made an ex parte communication prohibited by Rule 10.3(a) is
subject to disciplinary action. Furthermore, the BCC or EBCC, to the
extent consistent with the interests of justice, may issue to the ETP
Holder, OTP Holder, OTP Firm, Associated Person of an ETP Holder, OTP
Firm, or interested NYSE Arca staff responsible for the communication,
or who benefited from the communication, an order to show cause why the
claim, defense or interest of the ETP Holder, OTP Holder, OTP Firm,
Associated Person of an ETP Holder, OTP Firm, or interested NYSE Arca
staff should not be adversely affected by reason of such ex parte
communication, including but not limited to the entry of an adverse
summary decision. All parties to a disciplinary proceeding and the
Regulatory Staff are provided with adequate notice and a reasonable
opportunity to respond to any allegations or contentions contained in
the prohibited communication, and any responses are included in the
record of the investigation or disciplinary proceeding.
    Rule 10.3(d) describes permitted communications. Nothing in the
rule prohibits the members of a disciplinary committee or the
Regulatory Staff from discussing a pending investigation or
disciplinary proceeding at a meeting of the committee in connection
with (1) the adjudication of the investigation pursuant to the Rule
10.12, the Minor Rule Plan, (2) the determination of whether to impose
informal discipline, (3) the determination of whether to authorize a
complaint or take no further action, or (4) the determination of
whether to accept an offer of settlement.
    Under Rule 10.3(e), no member of the BCC, EBCC or Conduct Panel may
participate in a matter governed by Rule 10.3(c) as to which that
person has a conflict of interest or bias, or if circumstances
otherwise exist where his or her fairness might reasonably be
questioned. In such a case, the person must recuse himself or herself
or be disqualified as follows: The CRO has the authority to direct the
disqualification of the interested member of the BCC, EBCC or Conduct
Panel, and the Chief Executive Officer (``CEO'') has the authority to
direct the disqualification of the CRO.
Rule 10.4
    Rule 10.4 governs complaints. Under Rule 10.4(a), the CRO and his
or her delegee(s) have the authority to determine whether there is
probable cause \19\ for finding that a violation within the
disciplinary jurisdiction of the Exchange has occurred and if further
proceedings are warranted. If the Exchange Regulatory Staff (the
``Complainant'') determines that further proceedings are warranted,
then Regulatory Staff initiates a formal disciplinary action by
preparing a statement of charges (``Complaint'') against a Respondent
specifying the acts in which the Respondent is alleged to have engaged
in [sic], or which the Respondent is alleged to have omitted, and
alleging the specific provisions of the Bylaws, rules, policies or
procedures of the Exchange, or the rules, regulations, and procedures
promulgated under the Act, of which

such acts or omissions are alleged to be in violation.
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    \19\ Under Commentary .01 of Rule 10.4, the term ``probable
cause'' means that facts and circumstances establish a reasonable
likelihood that the person committed the violation in issue.
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    Under Rule 10.4(b), at any time prior to service of the written
answer to the Complaint, the Complaint may be amended to allege new
matters of fact or law. After service of the written answer, the BCC or
EBCC may allow amendment of the Complaint upon written motion by the
Regulatory Staff and a showing of good cause. The Respondent has 15
business day \20\ after service of the charges to file a written
answer. The answer must specifically admit or deny each allegation
contained in the charges, and the Respondent is deemed to have admitted
any allegation not specifically denied. The answer may also contain any
defense that the Respondent wishes to submit and may be accompanied by
documents in support of the answer or defense. If the Respondent fails
to file an answer, the charges are considered to be admitted. The
period to file any answer may be extended for such further periods as
may be granted by the Regulatory Staff if such request for extension of
the filing period is received by the Regulatory Staff within five
business days before the date on which the answer is due.
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    \20\ All references to ``days'' herein mean calendar days unless
business days are specified, as above.
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    Rule 10.4(c) provides for summary determinations. The rule provides
that notwithstanding the provisions of Rule 10.5, the BCC or EBCC may
make a determination without a hearing and may impose a penalty as to
such charges that the Respondent has admitted or has failed to answer
or that otherwise do not appear to be in dispute. Notice of such
summary determination, specifying the violations and penalty, must be
served upon the Respondent.
Rule 10.5
    Rule 10.5 governs hearings. Under Rule 10.5(a), upon the
Respondent's filing an answer, the Respondent may request a hearing.
The BCC or EBCC appoints three or more members to hear the matter
(``Conduct Panel''). Parties are given at least 15 days' notice of the
time and place of the hearing and a statement of the matters to be
considered therein.
    Under Rule 10.5(b), prior to the hearing, the Parties are notified
of the composition of the Conduct Panel. Any objection to the
composition of the Conduct Panel must be submitted to the Hearing
Administrator within five business days of receipt of the notification
regarding the composition of the Conduct Panel. Under Rule 10.5(c), at
least five business days prior to the hearing, the parties must submit
to the Hearing Administrator a list of witnesses and any documentary
evidence or other materials to be presented at the hearing. The Hearing
Administrator must immediately furnish such list of witnesses,
documentary evidence, or other materials to the other parties.
    Under Rule 10.5(d), at the hearing, both the Complainant and the
Respondent are entitled to be heard in person and to present any
relevant matter. Any witness, testimony, or evidence offered by the
Complainant or the Respondent is subject to cross-examination by the
other party. The Conduct Panel determines all questions concerning the
admissibility of evidence and otherwise regulates the conduct of the
hearing. Formal rules of evidence do not apply. The charges are
presented by the Exchange. The Exchange, the Respondent, and any other
party may present evidence and produce witnesses, who must testify
under oath and are subject to questioning by the Conduct Panel and
other parties. The Conduct Panel, upon its own motion or the motion of
the Complainant or Respondent, may request the production of
documentary materials and witnesses. No ETP Holder, OTP Holder, OTP
Firm or Associated Person may refuse to furnish relevant testimony,
documentary materials, or other information requested by the Conduct
Panel during the course of the hearing. The Respondent and intervening
parties are entitled to be represented by counsel, who may participate
fully in the hearing. A transcript of the hearing must be made and
becomes part of the record.
    Under Rule 10.5(e), any person not otherwise a party may intervene
as a party to the hearing upon demonstrating to the satisfaction of the
Conduct Panel that the party has an interest in the subject of the
hearing and that the disposition of the matter may, as a practical
matter, impair or impede the party's ability to protect that interest.
The Conduct Panel also may, in its discretion, permit a person to
intervene as a party to the hearing when the person's claim or defense
and the main action have questions of law or fact in common. Any person
wishing to intervene as a party to a hearing must file with the Conduct
Panel a notice requesting the right to intervene, stating the grounds
therefor, and setting forth the claim or defense for which intervention
is sought. The Conduct Panel, in exercising its discretion concerning
intervention, must take into consideration whether the intervention
will unduly delay or prejudice the adjudication of the rights of the
original parties.
Rule 10.6
    Rule 10.6 governs offers of settlement. Under Rule 10.6(a), a
Respondent who is notified that a matter has been referred to
Enforcement against him or her may propose in writing to Enforcement an
offer of settlement at any time. If a Respondent proposes an offer of
settlement after a hearing on the merits has begun, the making of an
offer of settlement does not stay the proceeding, unless otherwise
decided by the Conduct Panel. Under Rule 10.6(b), a Respondent who
makes an offer of settlement must do so in conformity with the rule and
must not make such an offer frivolously or propose a sanction
inconsistent with the seriousness of the violations to be found. Rule
10.6(c) sets forth contents and signature requirements for an offer of
settlement. Under the rule, an offer of settlement must be in writing
and signed by the person making the offer, and, if the person is
represented by counsel or a representative, signed also by the counsel
or representative. The offer of settlement must contain reasonable
detail about the facts, violations, and sanctions; a statement
consenting to the findings of fact and violations; a proposed sanction
to be imposed that is consistent with the Exchange's then current
Sanctioning Guidelines or, if inconsistent with them, a detailed
statement supporting the proposed sanction(s); and the effective date
of any sanctions imposed.
    Under Rule 10.6(d), if a Respondent submits an offer of settlement,
by the submission thereof, such Respondent expressly waives any right
(1) to appeal or otherwise challenge the acceptance or the rejection of
the offer or the related decision before a Conduct Panel, the BCC or
EBCC, any other Board committee, the Board, the Securities and Exchange
Commission (the ``Commission''), the courts, or any other relevant
authority; (2) to claim bias or prejudgment of the CRO, BCC, EBCC,
Chairman of the BCC or EBCC, the Conduct Panel, the Chairman of the
Conduct Panel, a panelist of the Conduct Panel, the General Counsel,
the Board, or any member of the Board, in connection with such person's
or body's participation in discussions regarding the terms and
conditions of the offer of settlement and the decision, or other
consideration of the offer of settlement and decision, including
acceptance, or rejection of such offer of settlement and decision; and
(3) to claim that a person or body violated the ex parte prohibitions
of NYSE Arca Rule 10.3, in

connection with such person's or body's participation in discussions
regarding the terms and conditions of the offer of settlement and the
decision, or other consideration of the offer of settlement and
decision, including acceptance or rejection of such offer of settlement
and decision.
    Rule 10.6(e) addresses uncontested offers of settlement, and Rule
10.6(f) addresses contested offers of settlement. If a Respondent makes
an offer of settlement and Enforcement does not oppose it, the offer of
settlement is uncontested; conversely, if Enforcement opposes it, the
offer of settlement is contested. Enforcement must transmit the offer
and a proposed decision with its recommendation to the following
adjudicators at the following stages:
---------------------------------------------------------------------------

    \21\ The Exchange proposes to correct an oversight in current
Rule 10.6(f)(2) and (3) to include omitted references to the BCC.

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              After complaint
                                       Before complaint       issued, before                             After hearing commences
                                            issued           hearing commences
--------------------------------------------------------------------------------------------------------------------------------------------------------
Uncontested Offer.................  General Counsel......  General Counsel.....  Conduct Panel.
Contested Offer...................  n/a..................  BCC or EBCC \21\....  Conduct Panel.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The proposed decision accepting an offer of settlement must recite
the facts and findings to which Respondent has stipulated, impose
sanctions consistent with those to which Respondent has consented, and
recite the rules, regulations, or statutory provisions relating to such
sanctions. The adjudicator indicated above must accept or reject the
offer of settlement and proposed decision. If the offer and decision
are accepted, they become final. The decision is issued, and the
Respondent is notified.
    Rule 10.6(g) governs final disciplinary action. Under Rule
10.6(g)(1), a proceeding pursuant to Rule 10.6(e)(2) concludes as of
the date a decision is issued. The decision constitutes final
disciplinary action of the Exchange, and the sanction(s) takes effect
as set forth in the decision. Under Rule 10.6(g)(2), a proceeding
pursuant to Rule 10.6(e)(3), (e)(4), (f)(3) or (f)(4) concludes as of
the date the decision is issued by the General Counsel of the Exchange.
The decision shall constitute final disciplinary action of the
Exchange. The sanction(s) shall take effect as set forth in the
decision.
    Rule 10.6(h) addresses rejection of an offer of settlement. Under
the rule, if an uncontested offer of settlement or a decision is
rejected by the General Counsel of the Exchange or the Conduct Panel,
the Respondent is notified in writing and the offer of settlement and
proposed decision are deemed withdrawn. If a contested offer of
settlement or a decision is rejected by the BCC, EBCC or Conduct Panel,
the Respondent is notified in writing and the offer of settlement and
proposed decision are deemed withdrawn. A rejected offer of settlement
or a rejected proposed decision is not a part of the record in any
proceeding against the Respondent making the offer. If an offer of
settlement or a decision is rejected by the General Counsel of the
Exchange, the BCC, EBCC or the Conduct Panel, the Respondent has no
right to challenge or contest the rejection of the offer of settlement
or the decision before a Conduct Panel, the BCC or EBCC, any Board
Committee, the Board, the Commission, the courts, or any other relevant
authority.
    Rule 10.6(i) addresses a settlement offer in a disciplinary
proceeding with multiple Respondents. In such proceedings, settlement
offers may be accepted or rejected as to any one or all of the
Respondents submitting offers. The proceedings are terminated as to
those Respondents whose offers of settlement are accepted, but such
Respondents may be required to participate in any hearing conducted as
to those Respondents that did not submit offers of settlement or whose
offers of settlement were rejected.
    Under Rule 10.6(j), if an offer of settlement is rejected by the
General Counsel of the Exchange, the BCC or EBCC or the Conduct Panel,
the Respondent may not be prejudiced by the offer, which may not be
introduced into evidence in connection with the determination of the
issues involved in the pending complaint or in any other proceeding.
    Lastly, Rule 10.6(k) provides for review of final disciplinary
actions. Under the rule, the BCC or EBCC and the CFR review quarterly
the final disciplinary actions pursuant to Rule 10.6(g) in order to
provide Enforcement and the General Counsel of the Exchange with
guidance related to future settlement practices and sanction amounts.
The CFR and the Board do not have the ability to reject final
disciplinary actions pursuant to Rule 10.6.
Rule 10.7
    Rule 10.7 addresses decisions. Under the rule, within 30 days after
the date of a hearing conducted pursuant to Rule 10.5, the Conduct
Panel must prepare a written decision determining whether the
Respondent has committed a violation and imposing the penalty, if any,
therefor. The decision must include a statement of findings and
conclusions, with the reasons therefor upon all material issues
presented on the record. Where a penalty is imposed, the decision must
include a statement specifying the acts or practices in which the
Respondent engaged or omitted and setting forth the specific provisions
of the Bylaws, Rules, policies or procedures of the Exchange, or the
rules, regulations and procedures promulgated under the Act, which the
act or omission to act are deemed to violate. The Respondent must be
promptly sent a copy of the decision. The determination of the Conduct
Panel and any penalty imposed become final 15 days after notifying the
Respondent, except if a request for review of such determination or
penalty, or both, is filed as hereinafter described, the penalty is
stayed pending outcome of that review.
Rule 10.8
    Rule 10.8 provides for review of disciplinary decisions. Under Rule
10.8(a), either the Complainant or the Respondent may request a review
of a decision issued under Rule 10.7 or a summary determination issued
under Rule 10.4(c) by petitioning the CFR for such review within 15
days after service of notice of a decision made pursuant to Rule 10.7
or Rule 10.4(c). Such petition must be in writing and must specify the
findings and conclusions to which exceptions are taken together with
reasons for such exceptions. Any objections to a decision not specified
by written exception are considered to have been abandoned. The
Respondent must submit a filing fee of $500 with its

request for review. The CFR may waive such filing fee upon a showing of
hardship or other compelling reason. If the decision is overruled in
whole, the filing fee is refunded. If the decision is overruled in part
as a result of the Respondent's request for review, refund of the
filing fee, or any portion thereof, is at the discretion of the CFR.
    Under Rule 10.8(b), the CFR may appoint a CFR Appeals Panel
(``Appeals Panel'') to conduct reviews of disciplinary proceedings or
may decide to conduct review proceedings on its own. The composition of
the Appeals Panel is determined by the CFR in accordance with Rule 3.3.
The body conducting the review, either the CFR itself or the Appeals
Panel, is referred to in the rule as ``the Review Board.'' Unless the
Review Board decides to open the record for the introduction of new
evidence or to hear argument, the review is based solely upon the
record and the written exceptions filed by the parties. The standard of
review is de novo. Based upon such review, the Review Board may affirm,
reverse, or modify, in whole or in part, the decision of the Conduct
Panel. Such modification may include an increase or decrease of the
sanction. The decision of the Review Board is in writing and becomes
final 15 days after notifying the parties, except if a request for
review of such determination is filed pursuant to Rule 10.8(c) or Rule
10.8(d) as described below, the penalty is stayed pending the outcome
of that review.
    Each Review Board member is required to disclose to the CFR any
circumstances that might preclude such Review Board member from
rendering an objective and impartial determination. Prior to the
commencement of the first hearing session, the CFR may remove a Review
Board member who discloses such information. The CFR must also inform
the parties of any information disclosed pursuant to this rule if the
Review Board member who disclosed the information is not removed. If
any Review Board member, after the commencement of the review, but
prior to the rendition of the decision, becomes disqualified, resigns,
dies, refuses or is unable to perform or discharge his or her duties,
the CFR, upon such proof as it deems satisfactory, must either (a)
appoint a new member to the Review Board to replace such member, or (b)
direct that the review proceed without the substitution of a new
member.
    Under Rule 10.8(c), notwithstanding anything else contained in the
rule, the Board may, on its own initiative, order review of a decision
made pursuant to Rule 10.5 or 10.7 within 30 days after notice of the
decision has been served on the Respondent. If the Board does not order
review of a decision made pursuant to Rule 10.5 or 10.7 within the
period specified, the decision shall become final. Such review shall be
conducted in accordance with the procedure set forth in Rule 10.8(b).
Either the Complainant or the Respondent may request a review of the
decision of the Review Board by the Board within 15 days after service
of notice of a decision made pursuant to Rule 10.8(b). Such petition
must be in writing and shall specify the findings and conclusions to
which exceptions are taken together with reasons for such exceptions.
Any objections to a decision not specified by written exception will be
considered to have been abandoned. Respondent shall submit a filing fee
of $500 with its request for review, which filing fee may be waived by
the Board upon a showing of hardship or other compelling reason. If the
decision is overruled in whole, the filing fee will be refunded. If the
decision is overruled in part as a result of Respondent's request for
review, refund of the filing fee, or any portion thereof, is in the
discretion of the Board.
    Under Rule 10.8(d), the Board may, on its own initiative, order
review of a decision made by the Review Board within 30 days after
notice of the decision is served on the Respondent. If such review is
held, it shall be conducted in accordance with the procedure set forth
in Rule 10.8(b) as if the Board had conducted the initial review,
except that the record shall include the decision of the Review Board
and any exceptions filed by the parties to such decision. If the Board
does not order review of a decision of the Review Board within the
period specified in this paragraph, the decision of the Review Board
shall become final.
    Rule 10.8(e) provides that nothing in Rule 10.8 affects any right
that a Respondent may have to seek review of an Exchange decision by
the Commission.
Rule 10.9
    Rule 10.9 addresses judgments and penalties. Under Rule 10.9(a), an
ETP Holder, OTP Holder, OTP Firm, or Associated Person is subject to
appropriate discipline by the Exchange for violations under the rule
including cancellation or suspension of trading privileges, expulsion,
suspension, limitation of activities, functions and operations,
suspension or bar from association with an ETP Holder, OTP Holder or
OTP Firm, fine, censure, or any other fitting sanction. Under Rule
10.9(b), penalties imposed under the rule are not effective until the
Exchange review process is complete or the decision otherwise becomes
final. Rule 10.9(c) provides that notwithstanding anything contained in
Rule 10.9 to the contrary, the Exchange may impose such conditions and/
or restrictions on the activities of the Respondent as the Exchange
considers reasonably necessary for the protection of investors and of
the Exchange.
Rule 10.10
    Rule 10.10 provides that any charges, notices or other documents
may be served upon the Respondent either personally or by leaving the
same at the Respondent's place of business or by deposit in the United
States Post Office, postage prepaid via registered or certified mail
addressed to the Respondent at its address as it appears on the books
and records of the Exchange.
Rule 10.11
    Rule 10.11 sets forth procedures for a person aggrieved by Exchange
action taken pursuant to the provisions of the Bylaws and Rules of the
Exchange for which action an ETP Holder, OTP Holder, OTP Firm, or
Associated Person has been sanctioned via floor citation or pursuant to
Rule 10.12 (the Minor Rule Plan), and applies for an opportunity to
make an oral presentation or to have the matter reviewed on the papers
alone. The rule further provides that this Section does not apply to
disciplinary action taken pursuant to Rule 10.4, non-disciplinary
action taken pursuant to Rule 10.14, or to an action in arbitration.
    Under Rule 10.11(b), any ETP Holder, OTP Holder, OTP Firm or
Associated Person aggrieved by any action of the Exchange within the
scope of the rule and who desires the opportunity to make an oral
presentation with respect to such action or to have such action
reviewed on the papers alone must file a written application with
Enforcement within five business days after notification that such
action has been taken. The notification submitted by the Exchange must
state the specific grounds for the action taken by the Exchange and
must notify the party of the party's right to make an oral presentation
or to have the matter reviewed on the papers alone. The application
must contain (1) an identification of the Exchange action over which
the review is being requested, (2) the reason(s) why the applicant
disagrees with such action, and (3) the relief sought. In addition, the
application must indicate whether the applicant desires to make an oral

presentation, in which event it must be considered a ``request for a
hearing,'' or to proceed only upon the existing and/or any additional
documents or materials, in which event it must be considered a
``request for a review on the papers.'' The terms ``hearing'' and
``review on the papers'' are referred to jointly as the
``Proceeding(s)'' under the rule.
    Under Rule 10.11(c), any person associated with the applicant whose
interest might be affected by the Proceeding is entitled to participate
as a party. Further, in the discretion either of the Conduct Panel or
the Board of Directors, any other person whose interests might be
affected by the Proceeding may be permitted to intervene in the
Proceeding and may be granted such rights of a party as either the
Conduct Panel or the Board of Directors deems appropriate. Any
determination of the Conduct Panel as to participation in the
Proceeding is subject to review by the Board of Directors at the close
of the Proceeding or, in the Board of Directors' discretion, during the
course of the Proceeding.
    Rule 10.11(d) sets forth the procedure following application for
hearing and/or review on the papers. Under Rule 10.11(d), applications
for a hearing and/or review on the papers must be referred to the BCC
or EBCC. The BCC or EBCC must appoint a Conduct Panel pursuant to Rule
10.5(a). The Conduct Panel must be furnished with all materials
considered by the Regulatory Staff in connection with its initial
action. Parties to the Proceeding must be notified of the composition
of the Conduct Panel. Any objection to the composition of the Conduct
Panel must be submitted within five business days of receipt of the
notification regarding the composition.
    Within 15 business days after receipt of the notification regarding
the composition of the Conduct Panel, the applicant, if the application
is for a review on the papers, must submit to the Conduct Panel any
additional documents, statements, arguments or other materials.
Regulatory Staff then has 15 business days to submit to the Conduct
Panel any additional documents, statements, arguments or other
materials in response to the applicant's submission. If the application
is for a hearing, the parties may, at this time, request an opportunity
to call witnesses to the hearing; the Conduct Panel, in its discretion,
may or may not grant this request. If a hearing is held, each party
must furnish to the Conduct Panel and other parties, not less than five
business days before the scheduled hearing date, copies of all
documentary evidence that such party intends to present at the hearing.
Parties must be given at least 15 business days' notice of the time and
place of the hearing.
    Whether the Proceeding is a hearing or a review on the papers
alone, the Conduct Panel determines all questions concerning the
admissibility of evidence and otherwise regulates the conduct of the
Proceeding. Formal rules of evidence do not apply. If a hearing is
held, each of the parties is permitted to make an opening statement,
present witnesses, present documentary evidence, cross-examine
witnesses, and present closing arguments; a transcript is made and
becomes part of the record. The Conduct Panel may question all parties
and witnesses to the Proceeding. The Conduct Panel may also request the
production of documentary evidence and witnesses. No ETP Holder, OTP
Holder, OTP Firm, or associated person of an ETP Holder or OTP Firm, or
employee of the Exchange, shall refuse to furnish relevant testimony,
documentary materials or other information requested by the Conduct
Panel during the course of the Proceeding. All parties are entitled to
be represented by counsel who may participate fully in the Proceeding.
In the event of a hearing, a transcript of the hearing shall be made
and shall become part of the record.
    Within 30 days after the date of the hearing or the review on the
papers, the Conduct Panel must render its decision. The standard of
review is de novo. The Conduct Panel may confirm, reverse, or modify,
in whole or in part, the decision of the Exchange Regulatory Staff, and
may make any findings or conclusions that in its judgment are proper.
The decision of the Conduct Panel is in writing, contains a concise
statement setting forth the specific findings and conclusions of the
Conduct Panel and the reasons in support thereof, and is sent to the
parties to the Proceeding.
    If the Conduct Panel determines after a hearing or review on the
papers that an ETP Holder, OTP Holder, OTP Firm or Associated Person
has violated one or more rules of the Exchange as alleged, the Conduct
Panel (i) may impose one or more of the disciplinary sanctions
authorized by the Exchange's Bylaws and rules, and (ii) must impose a
$250 forum fee against the person charged if the determination was
reached based on a review of the papers, or a $500 forum fee if a
hearing was conducted. However, if the sole disciplinary sanction
imposed by the Conduct Panel is a fine less than the total fine
initially imposed by the Exchange Regulatory Staff, then the Conduct
Panel may waive the forum fee. The decision of the Conduct Panel is
subject to review by the Board of Directors either on the Board's own
motion within 30 days after issuance (or upon presentation to the
Board, whichever is later), or upon written petition of any party to
the Proceeding filed within 15 business days after issuance.
    Rule 10.11(e) sets forth the procedure following petition for
review by the Board. Under the rule, petitions for appellate review of
the Proceeding are referred to the Board, which is furnished with all
material considered by the Exchange Regulatory Staff and the Conduct
Panel. Parties may submit a written statement to the Board and may
request an opportunity to make an oral presentation. The Board, in its
discretion, may grant or deny the request for oral presentation. In the
absence of a request for such a presentation, or at any time, the Board
may require an oral presentation. Whether appellate review is conducted
by hearing or by review on the papers alone, the matter shall be
referred to the CFR. A transcript shall be made of any oral
presentation and shall become part of the record.
    Review by the CFR is made upon the material furnished it by the
Exchange Regulatory Staff or Conduct Panel as well as by the parties
after such further proceedings as the CFR shall order. The standard of
review is de novo. The CFR may appoint a CFR Appeals Panel to conduct
reviews, or may decide to conduct review proceedings on its own. The
CFR or CFR Appeals Panel may confirm, reverse, or modify, in whole or
in part, the decision of the Regulatory Staff or Conduct Panel and may
make any findings or conclusions which in its judgment are proper. The
decision of the CFR or CFR Appeals Panel shall be in writing, contain a
concise statement of the findings and conclusions of the CFR or CFR
Appeals Panel and the reasons therefor, and is sent to the parties to
the Proceeding.
    Rule 10.11(f) provides that nothing contained in the rule affects
any right that a Respondent may have to seek review of the Exchange's
decision by the Commission.
Rule 10.12
    As noted, Rule 10.12 sets forth the Exchange's Minor Rule Plan.
Under Rule 10.12(a), in lieu of initiating a formal disciplinary action
or proceeding, the Exchange may impose a fine not to exceed $5,000 \22\
on any ETP

Holder, OTP Holder, OTP Firm or Associated Person for any violation of
a rule of the Exchange that has been determined to be minor in
nature.\23\
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    \22\ The proposed rule would retain the Exchange's maximum fine
for minor rule violations which, under current Rule 10.12, is
$5,000.
    \23\ As set forth in Rule 10.12(f), the Exchange is not required
to impose a fine for a violation under its Minor Rule Plan. The
Exchange always can bring formal disciplinary action against a
member or associated person that has violated its rules.
---------------------------------------------------------------------------

    Under Rule 10.12(b), whenever it appears that an ETP Holder, OTP
Holder, OTP Firm or Associated Person has violated a rule under the
Minor Rule Plan, the Exchange must serve on such person or organization
a written statement setting forth (i) the rule(s) alleged to have been
violated, (ii) the act or omission constituting each such violation,
and (iii) notice that such person or organization may submit a written
statement to a designated committee for its consideration. Under Rule
10.12(c), the BCC or EBCC and Exchange Regulatory Staff have the
authority to impose a fine pursuant to the rule. Pursuant to Rule
10.12(d), if a person or organization fined pursuant to the rule pays
the fine, such payment is deemed a waiver of any right to a
disciplinary proceeding under Rule 10.11 and of any right to a review
of the matter by the BCC or EBCC, CFR, or Board of Directors.
    Under Rule 10.12(e), any person or organization fined pursuant to
the rule may contest such fine by filing with Enforcement a written
application submitted not more than five business days after receipt of
written notification that a fine has been imposed. If a determination
is contested, the matter becomes a formal disciplinary action, and any
penalty imposed by a hearing panel must be publicly reported after such
decision has become ``final'' pursuant to Rule 10.7. Any person or
organization found in violation of a minor rule is not required to
report such violation on SEC Form BD or Form U-4 if the sanction
imposed consists of a fine not exceeding $2,500 and the sanctioned
person or organization has not sought an adjudication, including a
hearing, or otherwise exhausted the administrative remedies available
with respect to the matter. Any fine imposed in excess of $2,500 is
subject to current rather than quarterly reporting to the Commission
pursuant to Rule 19d-1 under the Act. Rule 10.12(f) provides that
nothing in the rule requires the Exchange to impose a fine for a
violation of any rule under this Minor Rule Plan. If the Exchange
determines that any violation is not minor in nature, the Exchange may,
at its discretion, proceed under Rule 10.4 rather than under Rule
10.12.
    Under Rule 10.12(g), subject to certain procedural requirements, a
Trading Official or any Regulatory Staff designated by the Exchange may
issue a Floor Citation to any ETP Holder, OTP Holder, OTP Firm, or
Associated Person, when it appears to such Official(s) that a Minor
Rule Plan violation specified in Rule 10.12(h) or (i) has occurred.
Except as provided in Rule 10.13 (the summary sanction procedure for
options pursuant to which a Trading Official may summarily sanction any
OTP Holder, OTP Firm, or Associated Person), the circumstances
underlying the issuance of each floor citation is reviewed by the BCC
or EBCC for a determination of whether the evidence is sufficient to
find a violation of Exchange rules.
    Rule 10.12(h) sets forth a list of options floor decorum and minor
trading rule violations. Rule 10.12(i) sets forth a list of minor
trading rule violations. Rule 10.12(j) sets forth a list of record-
keeping and other minor rule violations. Rule 10.12(k) sets forth the
recommended fine schedule for the options minor rule plan. Rule
10.12(l) sets forth the recommended fine schedule for the equities
minor rule plan. Under both Rules 10.12(k) and (l), the fines for
violations increase if there have been prior offenses.
Rule 10.13
    Rule 10.13 sets forth a summary sanction procedure for options
pursuant to which a Trading Official may summarily sanction any OTP
Holder, OTP Firm, or Associated Person. Under subsection (c), if a
Trading Official does not become aware of a violation of Rule 6.69-O
(failure to time stamp an order ticket) until Exchange Regulatory Staff
discovers the violation and notifies the Trading Official, a Trading
Official may impose a summary sanction at the time they [sic] are
notified and will be responsible for issuing a floor citation. Under
Rule 10.13(d), any OTP Holder, OTP Firm or Associated Person sanctioned
pursuant to this procedure may appeal pursuant to Rule 10.11.
Rule 10.14
    Rule 10.14 provides procedures for persons ``aggrieved'' by any of
the Exchange actions specified therein to apply for an opportunity to
be heard and have the action reviewed. By its terms, Rule 10.14 does
not apply to reviews of disciplinary actions for which review is
already provided under Rule 10, actions in arbitration, and reviews of
delisting decisions for which review is provided under Rule 5-E.
Accordingly, the Exchange has determined to retain Rule 10.14 and amend
subsections (a)(2)-(4) as described below to reflect those actions that
will be governed by Rule 10.14 prior to the effective date of the new
disciplinary rules but that will be governed by the proposed Rule
10.8000 Series and 10.9000 Series following the effective date of the
new rules.
Rule 10.15
    Rule 10.15 sets forth miscellaneous provisions. Under Rule
10.15(a), any charges, notices or other documents may be served upon
the Respondent either personally or by leaving the same at Respondent's
place of business or by deposit in the United States Post Office,
postage prepaid via registered or certified mail addressed to the
Respondent at his address as it appears on the books and records of the
Exchange. Under Rule 10.15(b), unless otherwise stated, any time limits
imposed under Rule 10.0 for the submission of answers, petitions or
other materials may be extended only by the prior written approval of
the Exchange. Under Rule 10.15(c), the procedures set forth in Rule
10.4 and 10.8 do not apply in cases where Floor Citations are issued
for violations of Rules, policies or procedures adopted by the Exchange
and the fine or fines imposed are $500.00 or less. Under Rule 10.15(d),
the Board may designate any Standing or Special Committee of the
Exchange as the Conduct Panel in any given proceeding or type of
proceeding.
Rule 10.16
    Rule 10.16 sets forth the options Sanctioning Guidelines.\24\
---------------------------------------------------------------------------

    \24\ See Securities Exchange Act Release Nos. 45416 (February 7,
2002), 67 FR 6777 (February 13, 2002); 45567 (March 15, 2002), 67 FR
13392 (March 22, 2002) (SR-PCX-2001-23). The Exchange filed that
proposed rule change pursuant to the provisions of Section IV.B.i of
the Commission's September 11, 2000 Order Instituting Public
Administrative Proceedings Pursuant to Section 19(h)(1) of the Act,
which required the Exchange to adopt rules establishing, or
modifying existing, sanctioning guidelines such that they are
reasonably designed to effectively enforce compliance with options
order handling rules. See Securities Exchange Act Release No. 43268
(September 11, 2000), Administrative Proceeding File No. 3-10282.
The Sanctions Guidelines do not apply to equities-related
violations. As such, the CRO, Hearing Officer, Hearing Panel or
Extended Hearing Panel, as applicable, would consider relevant
Exchange precedent or such other precedent as it deemed appropriate
in determining sanctions that should be imposed in connection with a
decision pursuant to proposed Rule 10.9268 or 10.9269, or in
connection with an AWC, fine or settlement pursuant to proposed Rule
10.9216 or 10.9270.
---------------------------------------------------------------------------

Rule 10.17
    Rule 10.17 governs the release of disciplinary complaints,
decisions and other information. The rule is modeled

on FINRA, NYSE and NYSE American Rule 8313, and is substantially the
same as proposed Rule 10.8313.
Rule 10.18
    Rule 10.18 governs expedited client suspension proceedings and sets
forth procedures for issuing suspension orders, immediately prohibiting
a Respondent from conducting continued disruptive quoting and trading
activity on the Exchange in violation of Rule 11.21 (Disruptive Quoting
and Trading Activity Prohibited). The rule is substantially the same as
proposed Rule 10.9560.
Rule 13
    Rule 13 addresses cancellations, suspensions, and reinstatements.
Rule 13.1 concerns certain required notices. Under this rule, an ETP
Holder, OTP Holder or OTP Firm that is expelled or suspended from any
SRO, encounters financial difficulty or operating inadequacies, fails
to perform contracts, or becomes insolvent must give prompt written
notice to the Exchange. An ETP Holder, OTP Holder or OTP Firm also must
give prompt written notice to the Exchange with respect to the
expulsion or suspension of any Associated Person by any SRO.
    Rule 13.2 sets forth the procedures for certain suspensions,
cancellations, bars, limitations and prohibitions on access to the
Exchange's services. Under Rule 13.2(a)(1), in accordance with Section
6(d)(3) of the Act, the Board of Directors may summarily:
     Suspend the trading privileges of an ETP Holder, OTP
Holder, OTP Firm or Associated Person who has been and is expelled or
suspended from any SRO or barred or suspended from being associated
with a member of any SRO;
     suspend the trading privileges of an ETP Holder, OTP
Holder, OTP Firm or Associated Person who is in such financial or
operating difficulty that the Exchange determines and so notifies the
appropriate regulatory agency that such suspension is necessary for the
protection of the investors, creditors, ETP Holders, OTP Firms, OTP
Holders or the Exchange;
     suspend the trading privileges of an ETP Holder or
Associated Person who is found in violation of any of the prohibited
acts as specified in Rule 11.2(a)-(f) that are violations of the rules
of the Exchange; or
     limit or prohibit any person with respect to access to
services offered by the Exchange if one of the first two bullets are
[sic] applicable to such person or, in the case of a person who is not
an ETP Holder, OTP Holder or OTP Firm, if the Exchange determines that
such person does not meet the qualification requirements or
prerequisites for such access with safety to investors, creditors, ETP
Holders, OTP Firms, OTP Holders, or the Exchange.
    Under Rule 13.2(a)(2), the Exchange also may take the following
non-summary actions, after written notice, after the passage of any
grace period and/or applicable cure period, and after opportunity for
hearing:
     Cancel ETP trading privileges of an ETP Holder, OTP Holder
or OTP Firm that becomes ineligible for trading privileges or that
continues to be associated with an ineligible person, or suspend or bar
a person from continuing to be associated with an ETP Holder, OTP
Holder or OTP Firm because such person is or becomes ineligible for
association under Rule 2.22;
     suspend or cancel trading privileges of an ETP Holder, OTP
Holder or OTP Firm for failure to pay any fees, charges, assessments,
or fines to the Exchange under Rule 3.7 or 3.8,\25\ or failure to
comply with an arbitration award or settlement agreement related to an
arbitration or mediation under Rule 12;
---------------------------------------------------------------------------

    \25\ Rule 13.2(a)(2)(B) currently refers to ``Rule 3.8-E or 3.7-
O.'' The Exchange proposes to replace these references with the
references to Rule 3.7 (Dues, Fees and Charges) and Rule 3.8
(Liability for Payment).
---------------------------------------------------------------------------

     cancel trading privileges of an ETP Holder, OTP Holder or
OTP Firm for failure to file or submit on request any report, document,
or other information required to be filed with or requested by the
Exchange under Rule 10.2(d);
     limit or prohibit any ETP Holder, OTP Holder, OTP Firm or
Associated Person of an ETP Holder, OTP Firm or other person with
respect to access to services offered by the Exchange, if the Exchange
determines that such person does not meet the qualification
requirements or prerequisites for such access or such person cannot be
permitted to continue to have access with safety to investors,
creditors, ETP Holders, OTP Holders, OTP Firms, or the Exchange; or
     suspend all trading rights and privileges of an ETP
Holder, OTP Holder or OTP Firm for failure to comply with Rule 3.10
(which concerns Exchange affiliation rules).\26\
---------------------------------------------------------------------------

    \26\ In such case, the Exchange must: (1) Provide notice to the
ETP Holder, OTP Holder or OTP Firm within five business days of
learning of the events contemplated by the rule; (2) allow the ETP
Holder, OTP Holder or OTP Firm 15 days to cure any such failure; (3)
if the ETP Holder, OTP Holder or OTP Firm does not cure such failure
to comply within such 15-day cure period, schedule a hearing to
occur within 30 days following the expiration of such 15-day period;
and (4) render its decision as to the suspension of all trading
rights and privileges of the ETP Holder, OTP Holder or OTP Firm no
later than 10 days following the hearing.
---------------------------------------------------------------------------

    Under Rule 13.2(b), any person aggrieved by any summary action
taken under Rule 13.2(a)(1) must be promptly notified of the suspension
and the reason therefor and afforded an opportunity for a hearing by
the Exchange. The Exchange must provide the suspended or affected
person or organization with a written statement of the specific grounds
for the suspension or disciplinary proceeding and an opportunity to be
heard. A record of any such hearing must be maintained. A determination
by the Exchange to continue the suspension or impose a disciplinary
sanction must be supported by a statement setting forth the specific
grounds for such suspension or sanction.
    Under Rule 13.2(c), any action taken pursuant to Rule 13.2(a)(1) or
(2) is subject to the applicable hearing and review provisions of Rule
10.14.
    Under Commentary .01 of Rule 13.2, if a determination is made by
the Exchange to take action pursuant to the rule, notice thereof is
sent to the Commission. In addition, the Commission may on its own
motion order, or such a person or organization may apply to the
Commission, for a stay of such action pending the results of a hearing.
    Rule 13.3 concerns the effect of a suspension or cancellation. When
an ETP Holder, OTP Holder, OTP Firm or Associated Person has its
trading privileges suspended or canceled by the Exchange under Rule
13.2(a)(1) or (2), such person or organization must be deprived during
the term of the suspension of all rights and trading privileges
conferred by the ETP or OTP, except as otherwise provided in the rules
of the Exchange. The person or organization having trading privileges
suspended or canceled remains subject to the disciplinary power of the
Exchange.
    Under Rule 13.4, an ETP Holder, OTP Holder, OTP Firm or Associated
Person whose trading privileges are suspended under the provisions of
Rule 13.2(a)(1) or (2) \27\ may be disciplined pursuant to the rules of
the Exchange for any offense committed either before or after the
announcement of the suspension, in all respects as if no suspension
were in effect.
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    \27\ Current Rule 13.4 refers to ``Rule 13.3(a)(1) or (2).'' The
Exchange proposes to correct the reference to read ``Rule 13.2(a)(1)
or (2).''
---------------------------------------------------------------------------

    Under Rule 13.5, every ETP Holder, OTP Holder, OTP Firm or
Associated Person whose trading privileges are suspended under the
provisions of Rule

13.2(a)(1) must immediately afford every resource required by the
Exchange for the investigation of its affairs as required by the Board
of Directors and must, after the notification of the suspension, file
with the Exchange a written statement covering all information required
by the Exchange.
    Under Rule 13.6, if an ETP Holder, OTP Holder, OTP Firm or
Associated Person has had trading privileges suspended under the
provisions of Rule 13.2(a)(1) and such person or organization does not
request a hearing within 30 days to review such suspension or at such
hearing it is determined that the suspension was properly imposed, and
such person or organization has not, within 45 days after the
suspension, remedied the reason for such suspension and has not applied
for reinstatement, the Board may cancel the trading privileges of such
person or organization. If application for reinstatement is made within
45 days of suspension, and such application is disapproved, the Board
of Directors may cancel the trading privileges of such person or
organization.
    Under Rule 13.7, when an ETP Holder, OTP Holder, OTP Firm or
Associated Person that has had trading privileges suspended under the
provisions of Rule 13.2(a)(1) or (2) applies for reinstatement, it must
be demonstrated to the satisfaction of the Exchange that the problem or
problems responsible for such suspension have [sic] been satisfactorily
resolved. If such problem involves financial difficulty or operating
inadequacies, the person or organization must furnish the Exchange
comprehensive financial and operating reports in a form and manner to
be prescribed by the Exchange. If the ETP Holder, OTP Holder, OTP Firm
or Associated Person furnishes satisfactory proof of a resolution of
the problem or problems responsible for such suspension, the Exchange
notifies in writing all ETP Holders, OTP Holders and OTP Firms of the
application for reinstatement and that a meeting of the Board of
Directors to consider it will be held on a designated date which shall
be not less than ten (10) business days subsequent to such notice. At
such meeting at which a quorum is present the ETP Holder, OTP Holder,
OTP Firm or Associated Person may be reinstated provided not less than
a majority of the Directors voting approve the application.
    Under Rule 13.8, if an ETP Holder, OTP Holder, OTP Firm or
Associated Person whose trading privileges have been suspended under
the provisions of the rule fails or is unable to apply for
reinstatement in accordance with Rule 13.7, or fails to obtain
reinstatement as therein provided, then the trading privileges
conferred by an ETP or OTP are terminated.
    Finally, Rule 13.9 governs when an ETP Holder, OTP Firm, OTP Holder
or an Associated Person of an ETP Holder, OTP Firm or OTP Holder does
not meet the eligibility or qualification standards set forth in the
Exchange's rules; does not meet the prerequisites for access to
services offered by the Exchange or an ETP Holder, OTP Firm or OTP
Holder thereof; or cannot be permitted to continue to have access to
services offered by the Exchange or an ETP Holder, OTP Firm or OTP
Holder thereof with safety to investors, creditors, ETP Holders, OTP
Firms, OTP Holders, or the Exchange. Current Rule 13.9 was modeled on
NYSE and NYSE American Rule 9555 and, as discussed below, is
substantially the same as proposed Rule 10.9555.\28\
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    \28\ Subsection (h) of Rule 13.9 is modeled on NYSE and NYSE
American Rule 9559, which provides uniform hearing procedures for
expedited proceedings under the NYSE and NYSE American Rule 9550
Series, including proceedings under NYSE and NYSE American Rule
9555. Subsection (h) of Rule 13.9 has no analogue in NYSE and NYSE
American Rule 9555, and was added to Rule 13.9 because NYSE Arca did
not have a procedural rule comparable to NYSE and NYSE American Rule
9559.
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Proposed Rule Change
    The Exchange proposes the Rule 10.8000 Series (Investigations and
Sanctions) and the Rule 10.9000 Series (Code of Procedure), which would
be based on the text of the NYSE American Rule 8000 and 9000 Series.
The Exchange proposes to include these rules in Rule 10. Because the
proposed rules would address topics currently set forth in both Rules
10 and 13, the Exchange proposes to rename Rule 10 as ``Disciplinary
Proceedings; Suspension, Cancellation and Reinstatement.'' The Exchange
further proposes to add a new subheading of ``Rule 10.0. Legacy
Disciplinary Proceedings, Other Hearings and Appeals,'' which would
precede current Rules 10.1 through 10.18.
    Unless otherwise specified below, the individual rules in the
proposed Rule 10.8000 Series and Rule 10.9000 Series are based on the
individual rules of the counterpart NYSE American Rule 8000 and 9000
Series without any differences, except that the Exchange:
     Would describe its own transition process in Rules 10.0
and 13 and in proposed Rules 10.8001, 10.8130(d), and 10.9001;
     would use the terms ``ETP Holder,'' ``OTP Holder'' and
``OTP Firm,'' together or separately, as applicable, rather than
``member organization'' or ``Exchange member,'' consistent with the
Exchange's other rules;
     would define ``covered person'' to include those persons
subject to the Exchange's jurisdiction, rather than use NYSE American's
text for that term;
     would retain the text of the Exchange's currently
applicable list of minor rule violations in proposed Rule 10.9217;
     would retain its options Sanctioning Guidelines; \29\
---------------------------------------------------------------------------

    \29\ See note 24, supra.
---------------------------------------------------------------------------

     would make certain other technical and conforming changes;
\30\ and
---------------------------------------------------------------------------

    \30\ As described below and herein, the Exchange proposes to
make technical and conforming changes to Rules 2.5, 3.2, 3.3, 3.6,
3.8, 3.10, 4.11-O, 6.2-O, 6.17-O, 6.24-O, 6.35-O, 6.44-O, 6.67-O,
6.69-O, 6.82-O, 4.11-E [sic], 7.20-E, 7.22-E, 7.23-E, 9.21-E, 10,
12, 13.2 and 13.4.
---------------------------------------------------------------------------

     proposes non-substantive differences in specified rules,
as needed, which do not change the meaning of the proposed rule text as
compared to the NYSE American version of the same rule.
    The Exchange also proposes to harmonize its rules for non-payment
of fees or other sums due to the Exchange, other than fines or monetary
sanctions, with NYSE American. In particular, the Exchange proposes to
delete the current text and heading of Rule 3.8 and adopt the heading
and text of NYSE American Rule 41. The heading of Rule 3.8 would become
``Failure to Pay Exchange Fees.'' As amended, Rule 3.8 would provide
that an ETP Holder, OTP Holder or OTP Firm \31\ who does not pay a fee
or any other sums due to the Exchange, within forty-five days after the
same shall become payable, would be reported to the Chief Financial
Officer of the Exchange or designee who, after notice has been given to
such ETP Holder, OTP Holder or OTP Firm of such arrearages, could
suspend access to some or all of the facilities of the Exchange until
payment is made. Amended Rule 3.8 would also specifically provide that
failure to pay any fine levied in connection with a disciplinary action
shall be governed by Rule 10.8320. Finally, as amended, Rule 3.8 would
provide that denial of access to some or all of the facilities of the
Exchange through suspension under the provisions of the rule would not
prevent the ETP Holder, OTP Holder or OTP Firm from being proceeded
against for any offense other than that for which such ETP Holder, OTP
Holder or OTP Firm was suspended. By adopting this

new rule text, the Exchange would have a single rule applicable to both
its equities and options markets that is consistent with the
counterpart rule of its affiliated exchanges.
---------------------------------------------------------------------------

    \31\ NYSE American Rule 41 included a reference to ``principal
executive,'' a registration category that has no direct analogue on
the Exchange.
---------------------------------------------------------------------------

Transition
    Once the proposed rule change is effective, the Exchange intends to
announce by Information Memorandum with at least 30 days advance notice
the effective date of the new rules.\32\ To further facilitate an
orderly transition from the current rules to the new rules, the
Exchange proposes that matters already initiated under the current
rules would be completed under such rules. The proposed transition is
substantially the same as the NYSE American transition to its Rule 8000
and 9000 Series.\33\
---------------------------------------------------------------------------

    \32\ The proposed Information Memorandum would be substantially
the same as that published for NYSE American. See NYSE MKT (now
American) Information Memorandum 16-02 (March 14, 2016). See
generally 2016 Notice and note 4, supra.
    \33\ See 2016 Notice, supra note 4, & NYSE MKT (now American)
Information Memorandum 16-02 (March 14, 2016).
---------------------------------------------------------------------------

    Specifically, Rule 10.0 would continue to apply with respect to a
proceeding for which the Exchange had (1) served a Complaint under Rule
10.4, (2) received a written offer of settlement under Rule 10.6, or
for which (3) a written statement or citation had been filed or served
under Rule 10.11 or Rule 10.12 prior to the effective date of the new
rules. Rule 10.0, as applicable, would continue to apply until any such
proceeding under the respective rule was final. Rule 10.0 would also
continue to apply to any ETP Holder, OTP Holder, OTP Firm or covered
person over whom the Exchange asserted jurisdiction by providing
written notice of the commencement of an inquiry pursuant to Rule
10.1(b) prior to the effective date of the new rules.
    In all other cases, the proposed Rule 10.8000 and Rule 10.9000
Series, as described below, would apply, except that summary sanctions
in options-related matters would continue to be governed by current
Rule 10.13, appeals of Floor citations would continue to be governed by
Rule 10.11 and, as discussed below, the options Sanctioning Guidelines
set forth in Rule 10.16 would apply to all sanctions imposed in
options-related matters.
    Finally, Rule 10.14 would continue to apply to actions by persons
aggrieved by Exchange decisions as provided for therein, subject to the
exceptions noted therein. Currently, Rule 10.14 applies to three types
of actions that will be governed by the Rule 10.8000 Series and 10.9000
Series following the effective date of the new rules: The barring of
any person from becoming associated with an ETP Holder or OTP Firm
(Rule 10.14(a)(2)); the suspension or cancellation of ETP or OTP
trading privileges (Rule 10.14(a)(3)); and the prohibition or
limitation with respect to access to services provided by the Exchange,
or the access to services of any ETP Holder or OTP Firm taken pursuant
to the Bylaws, or Rules or procedures of the Exchange. The Exchange
proposes to amend Rule 10.14 to provide that, following the effective
date of the new rules, the barring of any person from becoming
associated with an ETP Holder or OTP Firm, the suspension or
cancellation of ETP or OTP trading privileges, and the prohibition or
limitation with respect to access to services provided by the Exchange,
or the access to services of any ETP Holder or OTP Firm taken pursuant
to the Bylaws, or Rules or procedures of the Exchange, will be governed
by the Rule 10.8000 Series and 10.9000 Series.
    Summary suspensions under current Rule 13 would continue to apply
to a proceeding for which the Exchange has issued a written notice of
suspension, cancellation, or other action thereunder prior to the
effective date of the of the new rules. Thereafter, the proposed Rule
10.9500 Series would apply, with the exception of the non-payment of a
fine levied in connection with a disciplinary action, other monetary
sanction imposed pursuant to Rule 10.8310 or a cost imposed pursuant to
Rule 10.8330, in which case Rule 10.8320 would apply.
    When the transition is complete, the Exchange intends to submit a
proposed rule change that would delete the provisions of Rules 10 and
13 that are no longer necessary. Other provisions would be retained and
moved to an appropriate place in the Exchange's rules.
Proposed Changes to Rule 3.2 (Exchange Committees)
    Under Rules 3.2(b)(1) and 3.2(b)(2), the EBCC and BCC,
respectively, have certain delegated authority and functions, including
conducting hearings and rendering decisions in summary disciplinary
actions and proceedings pursuant to Rule 10.5 and in expedited
proceedings pursuant to Rule 13.9. Under Rules 3.2(b)(1)(C) and
3.2(b)(2)(C), the EBCC and BCC, respectively, have the authority,
whenever it appears that an OTP Holder, OTP Firm or ETP Holder is in
violation of Rule 4 or Rule 4-E, respectively, to direct a
representative of such OTP Holder, OTP Firm or ETP Holder to appear
before the EBCC or BCC for examination upon 48 hours' notice, either
orally or in writing. After such examination, the EBCC or BCC has the
authority to suspend such OTP Holder, OTP Firm or ETP Holder until the
requirements of Rule 4 or 4-E are fully met. Appeals of such
suspensions or sanctions imposed by the Regulatory Staff are governed
by Rule 3.2(b)(1)(D) and 3.2(b)(2)(D).
    The Exchange proposes certain clarifying and/or non-substantive
changes to Rules 3.2(b)(1) and 3.2(b)(2), which set forth the delegated
authority and functions the EBCC and BCC, respectively.
    First, the Exchange proposes to amend Rule 3.2(b)(1)(A) governing
the composition of the EBCC to clarify that Associated Persons of an
OTP Holder may also be members of the EBCC.
    The Exchange also proposes to amend Rule 3.2(b)(2)(B)(ii), which
describes the functions and authority of the BCC, to clarify that the
BCC would conduct hearings and render decisions in summary disciplinary
actions and proceedings pursuant to Rule 10.5.
    Following the effective date of the new disciplinary rules,
panelists for disciplinary proceedings involving both equity and
options permit holders would be drawn from a hearing board as provided
for in proposed Rule 10.9232. The Exchange proposes to retain the EBCC
and the BCC to effectuate their current responsibilities, including
with respect to legacy disciplinary matters under Rule 10.5. As a
practical matter, members of the hearing board under proposed Rule
10.9232 would generally be members of the EBCC and the BCC.
    Finally, the Exchange proposes the non-substantive change of moving
Rule 10.15(d), which provides that the Board of Directors may designate
any Standing or Special Committee of the Exchange as the Conduct Panel
in any given proceeding or type of proceeding, to a new subsection (d)
to Rule 3.2. The Exchange proposes to amend the language to also
provide for Hearing Panels, which is how Conduct Panels for current
disciplinary actions under Rule 10 are referred to in the proposed Rule
10.8000 and 10.9000 Series. The proposed changes would add clarity to
the Exchange's rules by relocating a provision relating to Board powers
with respect to Standing or Special Committees of the Exchange to the
rule governing Exchange committees and would clarify the provision's
applicability to disciplinary matters under the proposed rules.

Proposed Changes to Rule 3.3 (Board Committees)
    The Exchange proposes to amend Rule 3.3, which governs the CFR, to
reflect the transition. Specifically, Rule 3.3(a)(2)(B), which provides
that the CFR may appoint a CFR Appeals Panel to conduct certain
reviews, would be amended to reflect that the CFR Appeals Panel would
conduct reviews of matters subject to the applicable provisions of Rule
3.2(b)(1)(C) or Rule 10.0 or the Rule 10.9000 Series, as applicable.
Rule 3.3(a)(2)(C) would be amended to reflect that decisions of the CFR
are subject to review of the Board of Directors, subject to Rule 10.0
or the Rule 10.9000 Series, as applicable. The clause ``of the
Exchange'' would also be deleted as superfluous.
    The proposed amendments to Rule 3.3 would not change the authority
of the EBCC, BCC or CFR.
Jurisdiction
    The Exchange proposes a new Rule 2.0 titled ``Disciplinary
Jurisdiction'' based on current Rule 10.1, which describes the
Exchange's current disciplinary jurisdiction. Proposed Rule 2.0(a)
would be substantially the same as current Rule 10.1(a) with the
following changes.\34\ First, the Exchange would replace ``associated
person'' with the term ``covered person'' and note that the term is
defined in proposed Rule 10.9120(g). Second, the Exchange would replace
the reference to ``this Rule'' with ``the Rule 10.8000 and 10.9000
Series.''
---------------------------------------------------------------------------

    \34\ The new Rule 2.0 titled ``Rule 2.0 Jurisdiction'' would
appear below ``Rule 2 Trading Permits.'' The current subheading
titled ``[Rules 2.1-2.6]'' would be deleted.
---------------------------------------------------------------------------

    Proposed Rule 2.0(b) would provide that an ETP Holder, OTP Holder
or OTP Firm that resigns or has its membership canceled or revoked, and
a person whose status as a covered person has been terminated and who
is no longer a covered person of any ETP Holder, OTP Holder or OTP Firm
or a covered person whose registration has been revoked or canceled,
would continue to be subject to the Exchange's disciplinary
jurisdiction as set forth in proposed Rule 10.8130.
    Finally, proposed Rule 2.0(c) would be substantially the same as
current Rule 10.1(c), and would provide that the Board of Directors may
authorize any officer, on behalf of the Exchange, subject to the
approval of the Board of Directors, to enter into one or more
agreements with another self-regulatory organization to provide
regulatory services to the Exchange to assist the Exchange in
discharging its obligations under Section 6 and Section 19(g) of the
Exchange Act. The proposed rule would further provide that any action
taken by another self-regulatory organization, or its employees or
authorized agents, acting on behalf of the Exchange pursuant to a
regulatory services agreement shall be deemed to be an action taken by
the Exchange; provided, however, that nothing in this provision shall
affect the oversight of such other self-regulatory organization by the
Commission. Finally, proposed Rule 2.0(c) would provide that,
notwithstanding the fact that the Exchange may enter into one or more
regulatory services agreements, the Exchange shall retain ultimate
legal responsibility for, and control of, its self-regulatory
responsibilities, and any such regulatory services agreement shall so
provide.
    As proposed, Rule 2.0 would set forth the scope of the Exchange's
disciplinary jurisdiction under the Rule 10.8000 and 10.9000 Series. As
discussed below, proposed Rule 10.8130 would address the Exchange's
retention of jurisdiction, and would enable the Exchange to generally
retain jurisdiction to file a complaint against an ETP Holder, OTP
Holder, OTP Firm or covered person for two years after such status was
terminated.
    Current Rule 10.1 would continue to apply to a proceeding for which
the Exchange has served a Complaint under Rule 10.4, received a written
offer of settlement under Rule 10.6, or for which a written application
has been filed under Rule 10.11 or Rule 10.12 prior to the effective
date of the new disciplinary rules, and shall continue to apply until
such proceeding is final.
Terms and Definitions Used Throughout the Proposed Rule 10.8000 and
10.9000 Series
    To continue the current coverage of the Exchange's disciplinary
rules and conform to the NYSE American rules' terminology, the proposed
rule change would use the terms ``ETP Holder,'' \35\ ``OTP Holder,''
``OTP Firm,'' and ``covered person'' to describe the persons to which
the proposed Rule 10.8000 and 10.9000 Series apply. The term ``covered
person,'' referenced in proposed Rule 10.8120(b) and defined in
proposed Rule 10.9120(g), would include an Associated Person of an ETP
Holder, an OTP Holder or OTP Firm, an Approved Person, and any other
person subject to the jurisdiction of the Exchange. By defining and
utilizing the term ``covered person'' in this manner, the Exchange
would effect no substantive change in the scope of persons subject to
the Exchange's disciplinary rules.
---------------------------------------------------------------------------

    \35\ The term ``ETP Holder'' encompasses Market Makers,
Designated Market Makers, and Lead Market Makers. See Rules 1.1(o),
(w) and (z).
---------------------------------------------------------------------------

Proposed Rule 10.8000 Series
    The Proposed Rule 10.8000 Series would address Investigations and
Sanctions.
    Proposed Rule 10.8001 (Effective Date of Rule 10.8000 Series) would
include the effective date of the proposed rule change for the Rule
10.8000 Series, noting the exception for the retention of jurisdiction
dates in proposed Rule 10.8130(d), as described below.
    The text of NYSE American Rules 8110 through 8330 would be adopted
as Rules 10.8110 through 10.8330 with proposed changes to reflect the
Exchange's membership and to update a cross-reference in proposed Rules
10.8130 and 10.8320.\36\ Proposed Rule 10.8100 (General Provisions)
would include proposed Rules 10.8110 through 10.8130.
---------------------------------------------------------------------------

    \36\ Rules 8212, 8213, and 8312 are marked ``Reserved'' in the
NYSE American rulebook. As such, to maintain consistency with NYSE
American's rule numbering, the Exchange has designated proposed
Rules 10.8212, 10.8213, and 10.8312 as ``Reserved.''
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    Proposed Rule 10.8110 (Availability of Rules for Customers) would
require ETP Holders, OTP Holders and OTP Firms to make available a
current copy of the Exchange's rules for examination by customers upon
request. Although there is no comparable requirement in the current
Rules, the Exchange's rules are currently available on the Exchange's
website.\37\
---------------------------------------------------------------------------

    \37\ The rules are available at http://wallstreet.cch.com/PCXtools/PlatformViewer.asp?SelectedNode=chp_1_1&manual=/PCX/PCXRules/pcx-rules/.
---------------------------------------------------------------------------

    Proposed Rule 10.8120 (Definitions) would provide cross-references
to definitions of the terms ``Adjudicator,'' ``covered person,'' and
``Regulatory Staff'' in proposed Rule 10.9120. Proposed Rule 10.8120 is
simply technical in nature.\38\
---------------------------------------------------------------------------

    \38\ Based on NYSE National Rule 10.8120, proposed Rule 10.8120
would incorporate non-substantive grammatical differences in
subsections (a) and (b) to replace the phrase ``have the meaning as
defined in'' with ``have the same meaning as'' before applicable
Exchange rules.
---------------------------------------------------------------------------

    Proposed Rule 10.8130 (Retention of Jurisdiction) would set forth
retention of jurisdiction provisions that are substantially the same as
NYSE American Rule 8130, except for (1) references to reflect the
Exchange's membership, (2) the cross-references in paragraph (b)(1) and
(d), (3) clarifying in paragraph (d) for purposes of the transition
that Rule 10.0 would continue to apply to persons or entities over whom
the Exchange asserted

jurisdiction by providing written notice of the commencement of an
inquiry pursuant to current rule 10.1(b) prior to the effective date of
the new disciplinary rules, and (4) a non-substantive grammatical
difference in paragraph (b) to add the word ``who'' to conform to NYSE
National Rule 10.8130.
    Generally, subject to proposed Rule 10.8130(d), under the proposed
rule change, the Exchange would retain jurisdiction to file a complaint
against an ETP Holder, OTP Holder, OTP Firm or covered person for two
years after such ETP Holder's, OTP Holder's, OTP Firm's or covered
person's status is terminated. This differs from current Rule 10.1(b),
which provides that jurisdiction is retained if a written notice of the
commencement of an inquiry into such matters is given by the Exchange
to the former ETP Holder, OTP Holder, OTP Firm or Associated Person
within one year of receipt by the Exchange of written notice of the
termination of such person's status as an ETP Holder, OTP Holder, OTP
Firm or Associated Person. The Exchange believes that the period under
the proposed rule is appropriate because it will harmonize the
Exchange's rule with NYSE American's rule.
    Proposed Rule 10.8200 (Investigations) would set forth the
following rules. Proposed Rule 10.8210 (Provision of Information and
Testimony and Inspection and Copying of Books) would set forth
procedures for the provision of information and testimony and
inspection and copying of books by the Exchange. Proposed Rule
10.8210(a) would require an ETP Holder, OTP Holder, OTP Firm or covered
person to provide information and testimony and permit the inspection
of books, records, and accounts for the purpose of an investigation,
complaint, examination, or proceeding authorized by the Exchange's
rules. As noted above, under proposed Rule 10.8130, the Exchange would
retain jurisdiction over an ETP Holder, OTP Holder, OTP Firm or a
covered person to file a complaint or otherwise initiate a proceeding
for two years after such ETP Holder's, OTP Holder's, OTP Firm's or
covered person's status is terminated; as such, the Exchange can
continue to obtain information and testimony during such period and
thereafter if a complaint or proceeding is timely filed. Currently, the
Exchange also requires persons subject to its jurisdiction to provide
books and records and appear and testify upon request under current
Rule 10.2(d), and as noted above, the Exchange retains jurisdiction
after termination of a registration or association as long as a written
notice of the commencement of an inquiry has been served within one
year after termination of such status. The Exchange believes the
proposed rule is appropriate because it will harmonize the Exchange's
rules with its affiliate's rules with respect to jurisdiction and
obtaining books and records from ETP Holders, OTP Holders, OTP Firms
and covered persons.
    Finally, proposed Rule 10.8210 would provide that, in performing
the functions of investigation, complaint, examination, or proceeding
authorized by Exchange rules, the CRO and Regulatory Staff would
function independently of the commercial interests of the Exchange and
the commercial interests of ETP Holders, OTP Holders and OTP Firms. As
noted below, the concept of CRO and regulatory staff independence from
the commercial interests of the Exchange and its permit holders is
based on current Rule 10.2(a), which provides that no member of the
Board of Directors or non-Regulatory Staff may interfere with or
attempt to influence the process or resolution of any pending
investigation or disciplinary proceeding, and also appears in proposed
Rule 10.9110(a). The Exchange proposes to add the last sentence of Rule
10.2(a), which provides that no member of the Board of Directors or
non-Regulatory Staff may interfere with or attempt to influence the
process or resolution of any pending investigation or disciplinary
proceeding, to proposed Rule 10.8210(a).\39\
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    \39\ As noted below, the last sentence of current Rule 10.2(a)
will also be added to proposed Rule 10.9110(a).
---------------------------------------------------------------------------

    Proposed Rule 10.8210(b) would authorize Exchange staff to enter
into regulatory cooperation agreements with a domestic federal agency
or subdivision thereof, a foreign regulator, or a domestic or foreign
SRO. Under current Rule 3.6, the Exchange may enter into agreements
with domestic and foreign SROs, but it does not cover domestic agencies
and foreign regulators. As such, the Exchange would delete the text of
current Rule 3.6 as of the effective date of the new rules and mark
Rule 3.6 as ``Reserved.''
    The remainder of proposed Rule 10.8210 would set forth certain
procedures for investigations. Proposed Rule 10.8210(c) would require
ETP Holders, OTP Holders, OTP Firms, and covered persons to comply with
information requests under the Rule. This requirement is substantially
the same as current Rule 10.2(d), as described above.
    Proposed Rule 10.8210(d) would provide that a notice under this
Rule would be deemed received by the ETP Holder, OTP Holder, OTP Firm
or covered person (including a currently or formerly registered person)
to whom it is directed by mailing or otherwise transmitting the notice
to the last known business address of the ETP Holder, OTP Holder, or
OTP Firm, or the last known residential address of the covered person
as reflected in the Central Registration Depository (``CRD''). With
respect to a person who is currently associated with an ETP Holder, OTP
Holder or OTP Firm in an unregistered capacity, a notice under this
Rule would be deemed received by the person by mailing or otherwise
transmitting the notice to the last known business address of the ETP
Holder, OTP Holder or OTP Firm as reflected in CRD. With respect to a
person subject to the Exchange's jurisdiction who was formerly
associated with an ETP Holder, OTP Holder or OTP Firm in an
unregistered capacity, a notice under the proposed Rule would be deemed
received by the person upon personal service, as set forth in Rule
10.9134(a)(1).
    If the Adjudicator or Exchange staff responsible for mailing or
otherwise transmitting the notice to the ETP Holder, OTP Holder, OTP
Firm or covered person had actual knowledge that the address in CRD is
out of date or inaccurate, then a copy of the notice would be mailed or
otherwise transmitted to: (1) The last known business address of the
ETP Holder, OTP Holder or OTP Firm or the last known residential
address of the covered person as reflected in CRD; and (2) any other
more current address of the ETP Holder, OTP Holder, OTP Firm or covered
person known to the Adjudicator or Exchange staff responsible for
mailing or otherwise transmitting the notice. If the Adjudicator or
Exchange staff responsible for mailing or otherwise transmitting the
notice to the ETP Holder, OTP Holder, OTP Firm or covered person knew
that the such person or entity was represented by counsel regarding the
investigation, complaint, examination, or proceeding that is the
subject of the notice, then the notice would be served upon counsel by
mailing or otherwise transmitting the notice to the counsel in lieu of
such person or entity, and any notice served upon counsel would be
deemed received by the person or entity.
    Current Rule 10.10 provides that any charges, notices or other
documents

may be served upon the Respondent either personally or by leaving the
same at Respondent's place of business or by deposit in the United
States Post Office, postage prepaid via registered or certified mail
addressed to the Respondent at its address as it appears on the books
and records of the Exchange. The changes to proposed Rule 10.8210(d)
would harmonize service of process across affiliated exchanges.
    Proposed Rule 10.8210(e) would provide that in carrying out its
responsibilities under this Rule, the Exchange may, as appropriate,
establish programs for the submission of information to the Exchange on
a regular basis through a direct or indirect electronic interface
between the Exchange and ETP Holders, OTP Holders or OTP Firms.
    Proposed Rule 10.8210(f) would permit a witness to inspect the
official transcript of the witness's own testimony, and permit a person
who has submitted documentary evidence or testimony in an Exchange
investigation to obtain a copy of the person's documentary evidence or
the transcript of the person's testimony under certain circumstances.
    Finally, proposed Rule 10.8210(g) would require any ETP Holder, OTP
Holder, OTP Firm or covered person who in response to a request
pursuant to this Rule provided the requested information on a portable
media device to ensure that such information was encrypted. Proposed
Rule 10.8210(g)(3) would also replace ``in'' with ``to'' before
``which'' in the first sentence of the subsection. This non-substantive
grammatical difference with NYSE American Rule 8210(g) is based on NYSE
National Rule 10.8210(g). The Exchange's current rules do not contain
comparable provisions.
    Commentary .01 to proposed Rule 10.8210 would require ETP Holders,
OTP Holders, OTP Firms and covered persons to provide Exchange staff
and adjudicators with requested books, records and accounts. In
specifying the books, records and accounts ``of such ETP Holder, OTP
Holder, OTP Firm or covered person,'' proposed paragraph (a) of the
rule refers to books, records and accounts that the broker-dealer or
its covered persons makes or keeps relating to its operation as a
broker-dealer or relating to the person's association with the ETP
Holder, OTP Holder or OTP Firm. This includes but is not limited to
records relating to an Exchange investigation of outside business
activities, private securities transactions or possible violations of
just and equitable principles of trade, as well as other Exchange rules
and the federal securities laws. It does not ordinarily include books
and records that are in the possession, custody or control of an ETP
Holder, OTP Holder, OTP Firm or covered person, but whose bona fide
ownership is held by an independent third party and the records are
unrelated to the business of the ETP Holder, OTP Holder, OTP Firm or
covered person. The rule would require, however, that an ETP Holder,
OTP Holder, OTP Firm or covered person must make available its books,
records or accounts when these books, records or accounts are in the
possession of another person or entity, such as a professional service
provider, but the ETP Holder, OTP Holder, OTP Firm or covered person
controls or has a right to demand them. The Exchange's current rules do
not contain comparable provisions. The Exchange believes that the
additional specificity would provide better notice to persons subject
to its jurisdiction.
    Proposed Rule 10.8211 (Automated Submission of Trading Data
Requested by the Exchange) would set forth the procedures for
electronic blue sheets. Because FINRA now performs surveillance
functions based on the information gathered as a result of these rules,
the Exchange believes that its procedures for electronic blue sheets
should be harmonized with FINRA and across affiliated exchanges that
have adopted the FINRA rule. Proposed Rule 10.8211 is substantially the
same as NYSE American Rule 8211 except for references reflecting the
Exchange's membership.
    Proposed Rule 10.8300 (Sanctions) would set forth the following
rules.
    Proposed Rule 10.8310 (Sanctions for Violation of the Rules) would
set forth the range of sanctions that could be imposed in connection
with disciplinary actions under the proposed rule change. Such
sanctions would include censure, fine, suspension, revocation, bar,
expulsion, or any other fitting sanction. These sanctions are
substantially the same as the permitted sanctions set forth in current
Rules 10.1 and 10.9, which are expulsion, cancellation of trading
privileges; suspension; limitation of activities, functions, and
operations; suspension or bar from association with an ETP Holder, OTP
Holder or OTP Firm; fine; censure; or any other fitting sanction.
Although there is some difference between the text of the current and
proposed rules, the Exchange believes that in practice the range of
sanctions is the same due to the inclusion in both rules of the general
category ``any other fitting sanction.''
    Proposed Rule 10.8310 would also permit the Exchange to impose a
temporary or permanent cease and desist order against an ETP Holder,
OTP Holder, OTP Firm or covered person. This authority, which currently
exists only with respect to alleged violations of Rule 11.21
(Disruptive Quoting and Trading Activity Prohibited), is described in
further detail below in the section concerning the proposed Rule
10.9800 Series. Under proposed Rule 10.8310, each party to a proceeding
resulting in a sanction is deemed to have assented to the imposition of
the sanction unless such party files a written application for review
or relief pursuant to the Rule 10.9000 Series.
    Proposed Rule 10.8311 (Effect of a Suspension, Revocation,
Cancellation, Bar or Other Disqualification) would provide that if the
Commission or the Exchange imposed a suspension, revocation,
cancellation or bar or other disqualification on a person, an ETP
Holder, OTP Holder or OTP Firm may not permit such person to remain
associated with it in any capacity that is inconsistent with the
sanction imposed or disqualified status, including a clerical or
ministerial capacity and may not, with certain exceptions, pay or
credit to any person subject to a sanction or disqualification, during
the period of the sanction or disqualification or any period
thereafter, any salary, commission, profit, or any other remuneration
that the person might accrue during the period of the sanction or
disqualification. Under Rule 13.3, when an ETP Holder, OTP Holder, OTP
Firm or Associated Person has its trading privileges suspended or
canceled by the Exchange for any reason specified in Rule 13.2(a)(1) or
(2), such person or entity is deprived during the term of the
suspension of all rights and trading privileges conferred by the ETP or
OTP, except as otherwise provided in the rules. The proposed rule is
broader because it applies to all persons subject to a suspension,
revocation, cancellation or bar and more explicitly prohibits the
payment of compensation.
    Proposed Rule 10.8313 (Release of Disciplinary Complaints,
Decisions and Other Information) would provide, in part, that the
Exchange would publish all final disciplinary decisions issued under
the proposed Rule 10.9000 Series, other than minor rule violations, on
its website. Current Rule 10.17, which is substantially the same as
proposed Rule 10.8313 and was modeled on NYSE and

NYSE American Rule 8313, would be deleted.\40\
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    \40\ See Securities Exchange Act Release No. 79547 (December 14,
2016), 81 FR 92892 (December 20, 2016) (SR-NYSEArca-2016-161).
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    Proposed Rule 10.8320 (Payment of Fines, Other Monetary Sanctions,
or Costs; Summary Action for Failure to Pay) would govern payment of
fines and other monetary sanctions or costs and provide for a summary
action for an ETP Holder's, OTP Holder's or OTP Firm's or covered
person's failure to pay. The Exchange proposes a non-substantive
grammatical difference with NYSE American Rule 8320 in paragraph
(b)(1).
    Proposed Rule 10.8320(a) would provide that all fines and other
monetary sanctions shall be paid to the Treasurer of the Exchange.
    Proposed Rule 10.8320(b) and (c) would permit the Exchange, after
seven days' notice in writing, to summarily suspend or expel from
membership an ETP Holder, OTP Holder or OTP Firm or revoke the
registration of a covered person for failure to pay a fine or other
monetary sanction imposed pursuant to proposed Rule 10.8310 or a cost
imposed pursuant to proposed Rule 10.8330 when such fine, monetary
sanction, or cost becomes finally due and payable. As noted above,
under current Rule 13.2, an ETP Holder, OTP Holder, OTP Firm or
Associated Person is subject to a non-summary suspension for failing to
pay a fine, after written notice, an unspecified grace period, and
opportunity for hearing.
    As the NYSE and NYSE American explained in proposing their Rules
8320, FINRA's rules do not set forth a notice period but, as a matter
of practice, FINRA typically provides a respondent at least 30 days to
pay a fine after the conclusion of a proceeding. As both exchanges
reasoned, a 30-day period, along with the seven days' notice provided
under Rules 8320, provides respondents with an adequate amount of time
to pay a fine and avoid any further sanction by the Exchange.\41\ The
Exchange proposes to follow the same reasoning for its Rule 10.8320.
For clarity regarding the transition, proposed Rule 10.9001 would
provide that the provisions of Rule 13 governing summary suspensions
shall apply only to such a proceeding for which the Exchange has issued
a written notice thereunder prior to the effective date of the proposed
rule change and that thereafter the proposed Rule 10.9500 Series will
apply, except with respect to non-payment of a fine levied in
connection with a disciplinary action, other monetary sanction imposed
pursuant to proposed Rule 10.8310 or a cost imposed pursuant to
proposed Rule 10.8330, in which case proposed Rule 10.8320 would apply.
In addition, proposed Rule 10.8320(d) would provide that the Exchange
may exercise the authority set forth in paragraphs (b) and (c) as
described above with respect to non-payment of a fine, monetary
sanction, or cost assessed in a disciplinary action initiated under
Rule 13.2(a)(2)(B) for which a decision was issued on or after the
transition date.
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    \41\ See Securities Exchange Act Release Nos. 68678 (January 16,
2013), 78 FR 5213, 5222 (January 24, 2013) (SR-NYSE-2013-02)
(Notice); 2016 Notice, 81 FR at 11321.
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    Proposed Rule 10.8330 (Costs of Proceedings) would provide that a
disciplined ETP Holder, OTP Holder, OTP Firm or covered person may be
assessed the costs of a proceeding, which are determined by the
Adjudicator. Under current Rules 10.1 and 10.9, the Exchange may assess
costs as a ``fitting sanction,'' and under Rule 10.11, the Exchange
charges certain forum fees ranging from $250 to $500, which may be
waived in certain instances. The Exchange believes that Adjudicators
should have the discretion to assess costs as they deem appropriate.
Proposed Rule 10.9000 Series
    The proposed Rule 10.9000 Series would set forth the Code of
Procedure.
Proposed Rules 10.9001 Through 10.9120
    Proposed Rule 10.9001 (Effective Date of Rule 10.9000 Series) would
set forth the effective date of the Rule 10.9000 Series, noting the
transitional provisions described above. The text of proposed Rule
10.9001 would include similar introductory text as that proposed for
Rules 10.0 and 13. While the transition would be structured in
substantially the same manner as NYSE American's transition, the
Exchange's proposed text would differ from NYSE American Rule 9001 due
to differences in terminology and cross-references.
    Proposed Rule 10.9100 (Application and Purpose) would set forth the
following rules.
    Proposed Rule 10.9110 (Application) would state the types of
proceedings to which the proposed Rule 10.9000 Series would apply (each
of which is described below) and the rights, duties, and obligations of
ETP Holders, OTP Holders, OTP Firms and covered persons, and would set
forth the defined terms and cross-references. The proposed rule would
also provide that, in performing the functions under the Rule 10.9000
Series, the CRO and Regulatory Staff shall function independently of
the commercial interests of the Exchange and the commercial interests
of the ETP Holders, OTP Holders, and OTP Firms. The proposed rule would
also incorporate language from current Rule 10.2 providing that no
member of the Board of Directors or non-Regulatory Staff may interfere
with or attempt to influence the process or resolution of any pending
investigation or disciplinary proceeding. Proposed Rule 10.9110(c)
would incorporate non-substantive grammatical changes based on NYSE
National Rule 10.9110(c) to insert ``same'' before ``meaning'' and
delete ``define'' before ``in Rule 10.9120,'' which are not found in
the NYSE American version of the rule. The Exchange does not have a
comparable rule.
    Proposed Rule 10.9120 (Definitions) would set forth definitions
applicable to the Rule 10.9000 Series. The definitions are
substantially the same as the definitions set forth in NYSE American
Rule 9120, except that (1) references would reflect the Exchange's
membership; (2) ``covered person'' defined in paragraph (g) would
conform to the Exchange's rules; and (3) the Exchange would not define
the terms ``Board of Directors'' and ``Exchange'' in proposed Rule
10.9120 because those terms are already defined in Rule 1.1. The
Exchange would therefore designate paragraphs (b) and (n) as
``Reserved.'' \42\
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    \42\ As noted above, current Exchange rules do not define the
term ``Exchange Regulatory Staff''. See note 12, supra. Proposed
Rule 10.9120(x) would generally define ``Regulatory Staff'' as any
officer or employee reporting, directly or indirectly, to the CRO of
the Exchange, and FINRA staff acting on behalf of the Exchange in
connection with the Rule 10.8000 Series and Rule 10.9000 Series. The
proposed definition is congruent with the current practice at the
Exchange, and refers to the same individuals that currently work in
the Exchange's regulatory department.
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Proposed Rules 10.9130 Through 10.9138
    Proposed Rule 10.9130 (Service; Filing of Papers) would govern the
service of a complaint or other procedural documents under the Rules.
    Proposed Rule 10.9131 (Service of Complaint) would set forth the
requirements for serving a complaint or document initiating a
proceeding. Proposed Rule 10.9132 (Service of Orders, Notices, and
Decisions by Adjudicator) would cover the service of orders, notices,
and decisions by an Adjudicator. Proposed Rule 10.9133 (Service of
Papers Other Than Complaints, Orders, Notices, or Decisions) would
govern the service of papers other than complaints, orders, notices, or
decisions. Proposed Rule 10.9134 (Methods of, Procedures for Service)
would describe the methods of

service and the procedures for service. Proposed Rule 10.9135 (Filing
of Papers with Adjudicator: Procedure) would set forth the procedure
for filing papers with an Adjudicator. Proposed Rule 10.9136 (Filing of
Papers: Form) would govern the form of papers filed in connection with
any proceeding under the proposed Rule 10.9200 and 10.9300 Series.
Proposed Rule 10.9137 (Filing of Papers: Signature Requirement and
Effect) would state the requirements for and the effect of a signature
in connection with the filing of papers. Finally, proposed Rule 10.9138
(Computation of Time) would establish the computation of time.
    With respect to service of process, under proposed Rule 10.9134,
papers served on a natural person could be served at the natural
person's residential address, as reflected in CRD, if applicable. When
a Party or other person responsible for serving such person had actual
knowledge that the natural person's CRD address was out of date,
duplicate copies would be required to be served on the natural person
at the natural person's last known residential address and the business
address in CRD of the entity with which the natural person is employed
or affiliated. Papers could also be served at the business address of
the entity with which the natural person is employed or affiliated, as
reflected in CRD, or at a business address, such as a branch office, at
which the natural person is employed or at which the natural person is
physically present during a normal business day. The Hearing Officer
could waive the requirement of serving documents (other than
complaints) at the addresses listed in CRD if there were evidence that
these addresses were no longer valid and there was a more current
address available. If a natural person were represented by counsel or a
representative, papers served on the natural person, excluding a
complaint or a document initiating a proceeding, would be required to
be served on the counsel or representative.
    Similarly, under proposed Rule 10.9134, papers served on an entity
would be required to be made by service on an officer, a partner of a
partnership, a managing or general agent, a contact employee as set
forth on Form BD, or any other agent authorized by appointment or by
law to accept service. Such papers would be required to be served at
the entity's business address as reflected in CRD, if applicable;
provided, however, that when the Party or other person responsible for
serving such entity had actual knowledge that an entity's CRD address
was out of date, duplicate copies would be required to be served at the
entity's last known address. If an entity were represented by counsel
or a representative, papers served on such entity, excluding a
complaint or document initiating a proceeding, would be required to be
served on such counsel or representative.
    By comparison, current Rule 10.10, which governs service of
process, is less detailed. As noted above, it provides that any
charges, notices or other documents may be served upon the Respondent
either personally or by leaving the same at Respondent's place of
business or by deposit in the United States Post Office, postage
prepaid via registered or certified mail addressed to the Respondent at
its address as it appears on the books and records of the Exchange. The
Exchange believes that the more detailed procedures for service of
process in proposed Rules 10.9130 through 10.9138 would increase the
likelihood of successful service of process while providing appropriate
due process protections to its ETP Holders, OTP Holders, OTP Firms and
covered persons.
Proposed Rules 10.9140 Through 10.9148
    Proposed Rule 10.9140 (Proceedings) would contain various rules
relating to the conduct of disciplinary proceedings.
    Proposed Rule 10.9141 (Appearance and Practice; Notice of
Appearance) would govern appearances in a proceeding, notices of
appearance, and representation. Proposed Rule 10.9141 would permit a
Respondent to represent himself or herself, or be represented by an
attorney at law admitted to practice before the highest court of any
state of the United States, the District of Columbia, or any
commonwealth, territory, or possession of the United States. The
proposed rule also permits a partnership to be represented by a partner
and a corporation, trust, or association to be represented by an
officer of such entity. Proposed Rule 10.9141 requires an attorney or
representative to file a notice of appearance. Current Rules 10.2,
10.5, 10.6, 10.11, and 10.14 are more general; they permit a respondent
to be represented by counsel but do not require a notice of appearance.
    Proposed Rule 10.9142 (Withdrawal by Attorney or Representative)
would require an attorney or representative to file a motion to
withdraw. The Exchange currently does not have a comparable rule.
    Subsection (a) of proposed Rule 10.9143 (Ex Parte Communications)
would prohibit certain ex parte communications with an Adjudicator or
Exchange employee. Under proposed Rule 10.9143(b), an Adjudicator
participating in a decision with respect to a proceeding, or an
Exchange employee participating or advising in the decision of an
Adjudicator, who received, made, or knowingly caused to be made a
communication prohibited by the rule would be required to place in the
record of the proceeding (1) all such written communications, (2)
memoranda stating the substance of all such oral communications, and
(3) all written responses and memoranda stating the substance of all
oral responses to all such communications.
    Under proposed Rule 10.9143(c), upon receipt of a prohibited
communication made or knowingly caused to be made by any Party, any
counsel or representative to a Party, or any Interested Staff, the
Exchange or an Adjudicator may order the Party responsible for the
communication, or the Party who may benefit from the ex parte
communication made, to show cause why the Party's claim or interest in
the proceeding should not be dismissed, denied, disregarded, or
otherwise adversely affected by reason of such ex parte communication.
All participants in a proceeding could respond to any allegations or
contentions contained in a prohibited ex parte communication placed in
the record, and such responses would be placed in the record.
    Under proposed Rule 10.9143(d), in a disciplinary proceeding
governed by the Rule 10.9200 Series and the Rule 10.9300 Series, the
prohibitions of the rule would apply beginning with the authorization
of a complaint as provided in Rule 10.9211, unless the person
responsible for the communication had knowledge that the complaint
would be authorized, in which case the prohibitions would apply
beginning at the time of his or her acquisition of such knowledge.
    Under proposed Rule 10.9143(e), there would be a waiver of the ex
parte prohibition in the case of an offer of settlement; letter of
acceptance, waiver, and consent; or minor rule violation plan letter.
    Finally, the Exchange proposes non-substantive grammatical
differences from NYSE American Rule 9143 in paragraphs (c) and (e)(3).
    As noted above, current Rule 10.3 also addresses ex parte
communications. The current and proposed rules are substantially
similar in how they address prohibited communications, disclosure of
prohibited communications and remedies for disclosure of prohibited

communications. Notable differences include that the current rule does
not utilize the term ``Adjudicator'' and does not define the terms
``NYSE Arca staff'' and ``interested Exchange staff,'' while the term
``Interested Staff'' as used in proposed Rule 10.9143 would be defined