[Federal Register Volume 84, Number 137 (Wednesday, July 17, 2019)]
[Notices]
[Pages 34225-34230]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-15144]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-86356; File No. 4-747]


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

July 11, 2019.
    Pursuant to Section 17(d) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 17d-2 thereunder,\2\ notice is hereby given that 
on July 11, 2019, the Financial Industry Regulatory Authority, Inc. 
(``FINRA'') and the Long-Term Stock Exchange, Inc. (``LTSE'') (together 
with FINRA, the ``Parties'') filed with the Securities and Exchange 
Commission (``Commission'' or ``SEC'') a plan for the allocation of 
regulatory responsibilities, dated July 11, 2019 (``17d-2 Plan'' or the 
``Plan''). The Commission is publishing this notice to solicit comments 
on the 17d-2 Plan from interested persons.
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    \1\ 15 U.S.C. 78q(d).
    \2\ 17 CFR 240.17d-2.
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I. Introduction

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

    The proposed 17d-2 Plan is intended to reduce regulatory 
duplication for firms that are common members of both LTSE and 
FINRA.\10\ Pursuant to the proposed 17d-2 Plan, FINRA would assume 
certain examination and enforcement responsibilities for common members 
with respect to certain applicable laws, rules, and regulations.
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    \10\ The proposed 17d-2 Plan refers to these common members as 
``Dual Members.'' See Paragraph 1(c) of the proposed 17d-2 Plan.
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    The text of the Plan delineates the proposed regulatory 
responsibilities with respect to the Parties. Included in the proposed 
Plan is an exhibit (the ``LTSE Certification of Common Rules,'' 
referred to herein as the ``Certification'') that lists every LTSE 
rule, and select federal securities laws, rules, and regulations, for 
which FINRA would bear responsibility under the Plan for overseeing and 
enforcing with respect to LTSE members that are also members of FINRA 
and the associated persons therewith (``Dual Members'').
    Specifically, under the 17d-2 Plan, FINRA would assume examination 
and enforcement responsibility relating to compliance by Dual Members 
with the rules of LTSE that are substantially similar to the applicable 
rules of FINRA,\11\ as well as any provisions of the federal securities 
laws and the rules and regulations thereunder delineated in the 
Certification (``Common Rules''). In the event that a Dual Member is 
the subject of an investigation relating to a transaction on LTSE, the 
plan acknowledges that LTSE may, in its discretion, exercise concurrent 
jurisdiction and responsibility for such matter.\12\
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    \11\ See paragraph 1(b) of the proposed 17d-2 Plan (defining 
Common Rules). See also paragraph 1(f) of the proposed 17d-2 Plan 
(defining Regulatory Responsibilities). Paragraph 2 of the Plan 
provides that annually, or more frequently as required by changes in 
either LTSE rules or FINRA rules, the parties shall review and 
update, if necessary, the list of Common Rules. Further, paragraph 3 
of the Plan provides that LTSE shall furnish FINRA with a list of 
Dual Members, and shall update the list no less frequently than once 
each calendar quarter.
    \12\ See paragraph 6 of the proposed 17d-2 Plan.
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    Under the Plan, LTSE would retain full responsibility for 
surveillance and

[[Page 34226]]

enforcement with respect to trading activities or practices involving 
LTSE's own marketplace, including, without limitation, registration 
pursuant to its applicable rules of associated persons (i.e., 
registration rules that are not Common Rules); its duties as a DEA 
pursuant to Rule 17d-1 under the Act; and any LTSE rules that are not 
Common Rules.\13\
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    \13\ See paragraph 2 of the proposed 17d-2 Plan.
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    The text of the proposed 17d-2 Plan is as follows:

Agreement Between Financial Industry Regulatory Authority, Inc. and 
Long-Term Stock Exchange, Inc. Pursuant to Rule 17d-2 Under the 
Securities Exchange Act of 1934

    This Agreement, by and between the Financial Industry Regulatory 
Authority, Inc. (``FINRA'') and Long-Term Stock Exchange, Inc. 
(``LTSE''), is made this 11th day of July, 2019 (the ``Agreement''), 
pursuant to Section 17(d) of the Securities Exchange Act of 1934 (the 
``Exchange Act'') and Rule 17d-2 thereunder, which permits agreements 
between self-regulatory organizations to allocate regulatory 
responsibility to eliminate regulatory duplication. FINRA and LTSE may 
be referred to individually as a ``party'' and together as the 
``parties.''
    Whereas, FINRA and LTSE desire to reduce duplication in the 
examination and surveillance of their Dual Members (as defined herein) 
and in the filing and processing of certain registration and membership 
records; and
    Whereas, FINRA and LTSE desire to execute an agreement covering 
such subjects pursuant to the provisions of Rule 17d-2 under the 
Exchange Act and to file such agreement with the Securities and 
Exchange Commission (the ``SEC'' or ``Commission'') for its approval.
    Now, therefore, in consideration of the mutual covenants contained 
hereinafter, FINRA and LTSE hereby agree as follows:
    1. Definitions. Unless otherwise defined in this Agreement or the 
context otherwise requires, the terms used in this Agreement shall have 
the same meaning as they have under the Exchange Act and the rules and 
regulations thereunder. As used in this Agreement, the following terms 
shall have the following meanings:
    (a) ``LTSE Rules'' or ``FINRA Rules'' shall mean: (i) The rules of 
LTSE, or (ii) the rules of FINRA, respectively, as the rules of an 
exchange or association are defined in Exchange Act Section 3(a)(27).
    (b) ``Common Rules'' shall mean LTSE Rules that are substantially 
similar to the applicable FINRA Rules and certain provisions of the 
Exchange Act and SEC rules set forth on Exhibit 1 in that examination 
or surveillance for compliance with such provisions and rules would not 
require FINRA to develop one or more new examination or surveillance 
standards, modules, procedures, or criteria in order to analyze the 
application of the provision or rule, or a Dual Member's activity, 
conduct, or output in relation to such provision or rule; provided, 
however, Common Rules shall not include the application of the SEC, 
LTSE or FINRA rules as they pertain to violations of insider trading 
activities, which is covered by a separate 17d-2 Agreement by and among 
Cboe BZX Exchange, Inc., Cboe BYX Exchange, Inc., Chicago Stock 
Exchange, Inc., Cboe EDGA Exchange, Inc., Cboe EDGX Exchange, Inc., 
Financial Industry Regulatory Authority, Inc., Nasdaq BX, Inc., Nasdaq 
PHLX LLC, The Nasdaq Stock Market LLC, NYSE National, Inc., New York 
Stock Exchange LLC, NYSE American LLC, NYSE Arca Inc., and Investors' 
Exchange LLC effective October 10, 2018, as may be amended from time to 
time. Common Rules shall not include any provisions regarding (i) 
notice, reporting or any other filings made directly to or from LTSE, 
(ii) incorporation by reference of LTSE Rules that are not Common 
Rules, (iii) exercise of discretion in a manner that differs from 
FINRA's exercise of discretion including, but not limited to exercise 
of exemptive authority, by LTSE, (iv) prior written approval of LTSE 
and (v) payment of fees or fines to LTSE.
    (c) ``Dual Members'' shall mean those LTSE members that are also 
members of FINRA and the associated persons therewith.
    (d) ``Effective Date'' shall be the date this Agreement is approved 
by the Commission.
    (e) ``Enforcement Responsibilities'' shall mean the conduct of 
appropriate proceedings, in accordance with FINRA's Code of Procedure 
(the Rule 9000 Series) and other applicable FINRA procedural rules, to 
determine whether violations of Common Rules have occurred, and if such 
violations are deemed to have occurred, the imposition of appropriate 
sanctions as specified under FINRA's Code of Procedure and sanctions 
guidelines.
    (f) ``Regulatory Responsibilities'' shall mean the examination 
responsibilities, surveillance responsibilities and Enforcement 
Responsibilities relating to compliance by the Dual Members with the 
Common Rules and the provisions of the Exchange Act and the rules and 
regulations thereunder, and other applicable laws, rules and 
regulations, each as set forth on Exhibit 1 attached hereto.
    2. Regulatory and Enforcement Responsibilities. FINRA shall assume 
Regulatory Responsibilities and Enforcement Responsibilities for Dual 
Members. Attached as Exhibit 1 to this Agreement and made part hereof, 
LTSE furnished FINRA with a current list of Common Rules and certified 
to FINRA that such rules that are LTSE Rules are substantially similar 
to the corresponding FINRA Rules (the ``Certification''). FINRA hereby 
agrees that the rules listed in the Certification are Common Rules as 
defined in this Agreement. Each year following the Effective Date of 
this Agreement, or more frequently if required by changes in either the 
rules of LTSE or FINRA, LTSE shall submit an updated list of Common 
Rules to FINRA for review which shall add LTSE Rules not included in 
the current list of Common Rules that qualify as Common Rules as 
defined in this Agreement; delete LTSE Rules included in the current 
list of Common Rules that no longer qualify as Common Rules as defined 
in this Agreement; and confirm that the remaining rules on the current 
list of Common Rules continue to be LTSE Rules that qualify as Common 
Rules as defined in this Agreement. Within 30 days of receipt of such 
updated list, FINRA shall confirm in writing whether the rules listed 
in any updated list are Common Rules as defined in this Agreement. 
Notwithstanding anything herein to the contrary, it is explicitly 
understood that the term ``Regulatory Responsibilities'' does not 
include, and LTSE shall retain full responsibility for (unless 
otherwise addressed by separate agreement or rule) (collectively, the 
``Retained Responsibilities'') the following:
    (a) Surveillance, examination, investigation and enforcement with 
respect to trading activities or practices involving LTSE's own 
marketplace for rules that are not Common Rules;
    (b) registration pursuant to its applicable rules of associated 
persons (i.e., registration rules that are not Common Rules);
    (c) discharge of its duties and obligations as a Designated 
Examining Authority pursuant to Rule 17d-1 under the Exchange Act; and
    (d) any LTSE Rules that are not Common Rules.
    3. Dual Members. Prior to the Effective Date, LTSE shall furnish 
FINRA with a current list of Dual

[[Page 34227]]

Members, which shall be updated no less frequently than once each 
quarter.
    4. No Charge. There shall be no charge to LTSE by FINRA for 
performing the Regulatory Responsibilities and Enforcement 
Responsibilities under this Agreement except as otherwise agreed by the 
parties, either herein or in a separate agreement.
    5. Applicability of Certain Laws, Rules, Regulations or Orders. 
Notwithstanding any provision hereof, this Agreement shall be subject 
to any statute, or any rule or order of the Commission. To the extent 
such statute, rule or order is inconsistent with this Agreement, the 
statute, rule or order shall supersede the provision(s) hereof to the 
extent necessary for them to be properly effectuated and the 
provision(s) hereof in that respect shall be null and void.
    6. Notification of Violations.
    (a) In the event that FINRA becomes aware of apparent violations of 
any LTSE Rules, which are not listed as Common Rules, discovered 
pursuant to the performance of the Regulatory Responsibilities assumed 
hereunder, FINRA shall notify LTSE of those apparent violations for 
such response as LTSE deems appropriate.
    (b) In the event that LTSE becomes aware of apparent violations of 
any Common Rules, discovered pursuant to the performance of the 
Retained Responsibilities, LTSE shall notify FINRA of those apparent 
violations and such matters shall be handled by FINRA as provided in 
this Agreement.
    (c) Apparent violations of Common Rules shall be processed by, and 
enforcement proceedings in respect thereto shall be conducted by FINRA 
as provided hereinbefore; provided, however, that in the event a Dual 
Member is the subject of an investigation relating to a transaction on 
LTSE, LTSE may in its discretion assume concurrent jurisdiction and 
responsibility.
    (d) Each party agrees to make available promptly all files, records 
and witnesses necessary to assist the other in its investigation or 
proceedings.
    7. Continued Assistance.
    (a) FINRA shall make available to LTSE all information obtained by 
FINRA in the performance by it of the Regulatory Responsibilities 
hereunder with respect to the Dual Members subject to this Agreement. 
In particular, and not in limitation of the foregoing, FINRA shall 
furnish LTSE any information it obtains about Dual Members which 
reflects adversely on their financial condition. LTSE shall make 
available to FINRA any information coming to its attention that 
reflects adversely on the financial condition of Dual Members or 
indicates possible violations of applicable laws, rules or regulations 
by such firms.
    (b) The parties agree that documents or information shared shall be 
held in confidence, and used only for the purposes of carrying out 
their respective regulatory obligations. Neither party shall assert 
regulatory or other privileges as against the other with respect to 
documents or information that is required to be shared pursuant to this 
Agreement.
    (c) The sharing of documents or information between the parties 
pursuant to this Agreement shall not be deemed a waiver as against 
third parties of regulatory or other privileges relating to the 
discovery of documents or information.
    8. Statutory Disqualifications. When FINRA becomes aware of a 
statutory disqualification as defined in the Exchange Act with respect 
to a Dual Member, FINRA shall determine pursuant to Sections 15A(g) 
and/or Section 6(c) of the Exchange Act the acceptability or continued 
applicability of the person to whom such disqualification applies and 
keep LTSE advised of its actions in this regard for such subsequent 
proceedings as LTSE may initiate.
    9. Customer Complaints. LTSE shall forward to FINRA copies of all 
customer complaints involving Dual Members received by LTSE relating to 
FINRA's Regulatory Responsibilities under this Agreement. It shall be 
FINRA's responsibility to review and take appropriate action in respect 
to such complaints.
    10. Advertising. FINRA shall assume responsibility to review the 
advertising of Dual Members subject to the Agreement, provided that 
such material is filed with FINRA in accordance with FINRA's filing 
procedures and is accompanied with any applicable filing fees set forth 
in FINRA Rules.
    11. No Restrictions on Regulatory Action. Nothing contained in this 
Agreement shall restrict or in any way encumber the right of either 
party to conduct its own independent or concurrent investigation, 
examination or enforcement proceeding of or against Dual Members, as 
either party, in its sole discretion, shall deem appropriate or 
necessary.
    12. Termination. This Agreement may be terminated by LTSE or FINRA 
at any time upon the approval of the Commission after six (6) month's 
written notice to the other party.
    13. Arbitration. In the event of a dispute between the parties as 
to the operation of this Agreement, LTSE and FINRA hereby agree that 
any such dispute shall be settled by arbitration in Washington, DC in 
accordance with the rules of the American Arbitration Association then 
in effect, or such other procedures as the parties may mutually agree 
upon. Judgment on the award rendered by the arbitrator(s) may be 
entered in any court having jurisdiction. Each party acknowledges that 
the timely and complete performance of its obligations pursuant to this 
Agreement is critical to the business and operations of the other 
party. In the event of a dispute between the parties, the parties shall 
continue to perform their respective obligations under this Agreement 
in good faith during the resolution of such dispute unless and until 
this Agreement is terminated in accordance with its provisions. Nothing 
in this Section 13 shall interfere with a party's right to terminate 
this Agreement as set forth herein.
    14. Notification of Members. LTSE and FINRA shall notify Dual 
Members of this Agreement after the Effective Date by means of a 
uniform joint notice.
    15. Amendment. This Agreement may be amended in writing duly 
approved by each party. All such amendments must be filed with and 
approved by the Commission before they become effective.
    16. Limitation of Liability. Neither FINRA nor LTSE nor any of 
their respective directors, governors, officers or employees shall be 
liable to the other party to this Agreement for any liability, loss or 
damage resulting from or claimed to have resulted from any delays, 
inaccuracies, errors or omissions with respect to the provision of 
Regulatory Responsibilities as provided hereby or for the failure to 
provide any such responsibility, except with respect to such liability, 
loss or damages as shall have been suffered by one or the other of 
FINRA or LTSE and caused by the willful misconduct of the other party 
or their respective directors, governors, officers or employees. No 
warranties, express or implied, are made by FINRA or LTSE with respect 
to any of the responsibilities to be performed by each of them 
hereunder.
    17. Relief from Responsibility. Pursuant to Sections 17(d)(1)(A) 
and 19(g) of the Exchange Act and Rule 17d-2 thereunder, FINRA and LTSE 
join in requesting the Commission, upon its approval of this Agreement 
or any part thereof, to relieve LTSE of any and all responsibilities 
with respect to matters allocated to FINRA pursuant to this Agreement; 
provided, however, that this Agreement shall not be effective until the 
Effective Date.

[[Page 34228]]

    18. Severability. Any term or provision of this Agreement that is 
invalid or unenforceable in any jurisdiction shall, as to such 
jurisdiction, be ineffective to the extent of such invalidity or 
unenforceability without rendering invalid or unenforceable the 
remaining terms and provisions of this Agreement or affecting the 
validity or enforceability of any of the terms or provisions of this 
Agreement in any other jurisdiction.
    19. Counterparts. This Agreement may be executed in one or more 
counterparts, each of which shall be deemed an original, and such 
counterparts together shall constitute one and the same instrument.
* * * * *

Exhibit 1

LTSE Certification of Common Rules

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

------------------------------------------------------------------------
                                         FINRA (NASD) Rule, Exchange Act
               LTSE Rule                       Provision, SEC Rule
------------------------------------------------------------------------
Rule 2.140 Prohibited Conditions         FINRA Rule 2081 Prohibited
 Relating to Expungement of Customer      Conditions Relating to
 Dispute.                                 Expungement of Customer
                                          Dispute.
Rule 2.160(p) Registration Requirements  FINRA Rule 1240(a)(1)-(4), (6)-
 and Restrictions on Membership--         (7) and (b) Continuing
 Continuing Education Requirements .     Education Requirements.
Rule 2.240 Fidelity Bonds ............  FINRA Rule 4360 Fidelity Bonds.
Rule 3.110 Business Conduct of Members   FINRA Rule 2010 Standards of
 [supcaret].                              Commercial Honor and
                                          Principles of Trade.[supcaret]
Rule 3.120 Violations Prohibited 1       FINRA Rule 2010 Standards of
 [supcaret] .                            Commercial Honor and
                                          Principles of Trade [supcaret]
                                          and FINRA Rule 3110
                                          Supervision.
Rule 3.130 Use of Fraudulent Devices     FINRA Rule 2020 Use of
 [supcaret].                              Manipulative, Deceptive or
                                          Other Fraudulent
                                          Devices.[supcaret]
Rule 3.150 Know Your Customer..........  FINRA Rule 2090 Know Your
                                          Customer.
Rule 3.160 Fair Dealing with Customers.  FINRA Rule 2020 Use of
                                          Manipulative, Deceptive or
                                          Other Fraudulent Device,
                                          [supcaret] FINRA Rule 2010
                                          Standards of Commercial Honor
                                          and Principles of
                                          Trade,[supcaret] FINRA Rule
                                          2111(a) and SM .06
                                          Suitability, FINRA Rule
                                          2150(a) Improper Use of
                                          Customers' Securities or
                                          Funds; Prohibition Against
                                          Guarantees and Sharing in
                                          Accounts, and FINRA Rule
                                          3240(a) Borrowing From or
                                          Lending to Customers.
Rule 3.170 Suitability.................  FINRA Rule 2111 Suitability.
Rule 3.180(a) The Prompt Receipt and     FINRA Rule 11860 COD Orders.
 Delivery of Securities.
Rule 3.180(b) The Prompt Receipt and     SEA Regulation SHO.
 Delivery of Securities.
Rule 3.190 Charges for Services          FINRA Rule 2122 Charges for
 Performed.                               Services Performed.
Rule 3.200 Use of Information Obtained   FINRA Rule 2060 Use of
 in a Fiduciary Capacity.                 Information Obtained in
                                          Fiduciary Capacity.
Rule 3.210 Publication of Transactions   FINRA Rule 5210 Publication of
 and Quotations.                          Transactions and Quotations.
Rule 3.220 Offers at Stated Prices.....  FINRA Rule 5220 Offers at
                                          Stated Prices.
Rule 3.230 Payments Involving            FINRA Rule 5230 Payments
 Publications that Influence the Market   Involving Publications that
 Price of a Security.                     Influence the Market Price of
                                          a Security.
Rule 3.240 Customer Confirmations......  FINRA Rule 2232(a) Customer
                                          Confirmations and SEC Rule 10b-
                                          10 Confirmation of
                                          Transactions.
Rule 3.250 Disclosure of Control         FINRA Rule 2262 Disclosure of
 Relationship with Issuer.                Control Relationship with
                                          Issuer.
Rule 3.260 Discretionary Accounts......  NASD Rule 2510 Discretionary
                                          Accounts.
Rule 3.270 Improper Use of Customers'    FINRA Rule 2150(a)-(c) and SM
 Securities or Funds; Prohibition         .03 Improper Use of Customers'
 Against Guarantees and Sharing in        Securities or Funds;
 Accounts.                                Prohibition Against Guarantees
                                          and Sharing in Accounts.
Rule 3.280 Communications with           FINRA Rule 2210 Communications
 Customers and the Public.                with the Public.
Rule 3.290 Customer Disclosures........  FINRA Rule 2265 Extended Hours
                                          Trading Risk Disclosure.
Rule 3.291 Influencing or Rewarding      FINRA Rule 3220 Influencing or
 Employees of Others; Gratuities.         Rewarding Employees of Others.
Rule 3.292 Telemarketing...............  FINRA Rule 3230 Telemarketing.
Rule 3.293 Short-Interest Reporting....  FINRA Rule 4560 Short Interest
                                          Reporting.
Rule 4.511 General Requirements........  FINRA Rule 4511 General
                                          Requirements.
Rule 4.512 Customer Account Information  FINRA Rule 4512 Customer
                                          Account Information.
Rule 4.513 Record of Written Customer    FINRA Rule 4513 Record of
 Complaints.                              Written Customer Complaints.
Rule 4.550 Disclosure of Financial       FINRA Rule 2261 Disclosure of
 Condition.                               Financial Condition.
Rule 5.110 Supervision ...............  FINRA Rule 3110 Supervision.
Rule 5.120 Supervisory Control System   FINRA Rule 3120 Supervisory
                                          Control System.
Rule 5.130 Annual Certification of       FINRA Rule 3130 Annual
 Compliance and Supervisory Processes .  Certification of Compliance
                                          and Supervisory Processes.
Rule 5.160 Anti-Money Laundering         FINRA Rule 3310 Anti-Money
 Compliance Program .                    Laundering Compliance Program.
Rule 5.170 Transactions for or by        FINRA Rule 3210 Accounts At
 Associated Persons.                      Other Broker-Dealers and
                                          Financial Institutions.
Rule 6.120 Failure to Deliver and        Regulation SHO Rules 200 and
 Failure to Receive.                      203.
Rule 6.130(a), (b), (d) and (e)          FINRA Rule 2251 Forwarding of
 Forwarding of Proxy and Other Issuer-    Proxy and Other Issuer-Related
 Related Materials; Proxy Voting.         Materials.
Rule 10.110(a) Market Manipulation.....  FINRA Rule 6140 Other Trading
                                          Practices.
Rule 10.110(b) Market Manipulation.....  FINRA Rule 5210 Publication of
                                          Transactions and Quotations,
                                          FINRA Rule 2020 Use of
                                          Manipulative, Deceptive or
                                          Other Fraudulent Devices,
                                          FINRA Rule 2010 Standards of
                                          Commercial Honor and
                                          Principles of Trade, and FINRA
                                          Rule 6140(a) Other Trading
                                          Practices.
Rule 10.120 Fictitious Transactions....  FINRA Rule 6140 Other Trading
                                          Practices and FINRA Rule 5210
                                          Supplementary Material .02
                                          Self-Trades.
Rule 10.130 Excessive Sales By A Member  FINRA Rule 6140(c) Other
                                          Trading Practices.
Rule 10.140 Manipulative Transactions..  FINRA Rule 6140 Other Trading
                                          Practices.

[[Page 34229]]

 
Rule 10.150 Dissemination of False       FINRA Rule 6140(e) Other
 Information.                             Trading Practices.
Rule 10.160 Prohibition Against Trading  FINRA Rule 5320 Prohibition
 Ahead of Customer Orders  **.           Against Trading Ahead of
                                          Customer Orders.**
Rule 10.180 Influencing the              FINRA Rule 6140(a) Other
 Consolidated Tape.                       Trading Practices and FINRA
                                          Rule 5210 Publication of
                                          Transactions and Quotations.
Rule 10.190 Trade Shredding............  FINRA Rule 5290 Order Entry and
                                          Execution Practices.
Rule 10.220 Best Execution and           FINRA Rule 5310 Best Execution
 Interpositioning **.                     and Interpositioning.**
Rule 10.240 Trading Ahead of Research    FINRA Rule 5280 Trading Ahead
 Reports **.                              of Research Reports.**
Rule 10.260 Front Running of Block       FINRA Rule 5270 Front Running
 Transactions.                            of Block Transactions.**
Rule 11.280(e)(3) & (4) Limit Up-Limit   FINRA Rule 6190(a)(1) & (2)
 Down Plan and Trading Halts--Limit Up-   Compliance with Regulation NMS
 Limited Down Mechanism.                  Plan to Address Extraordinary
                                          Market Volatility.
------------------------------------------------------------------------
 Common Rules shall not include any provisions regarding (i) notice,
  reporting or any other filings made directly to or from LTSE, (ii)
  incorporation by reference of LTSE Rules that are not Common Rules,
  (iii) exercise of discretion in a manner that differs from FINRA's
  exercise of discretion including, but not limited to exercise of
  exemptive authority, by LTSE, (iv) prior written approval of LTSE and
  (v) payment of fees or fines to LTSE.
\1\ FINRA shall only have Regulatory Responsibilities for Rule 3.120(a)
  regarding conduct in violation of the Act, or the rules or regulations
  thereunder.
[supcaret] FINRA shall not have any Regulatory Responsibilities for
  these rules as they pertain to violations of insider trading
  activities, which is covered by a separate 17d-2 Agreement by and
  among Cboe BZX Exchange, Inc., Cboe BYX Exchange, Inc., Chicago Stock
  Exchange, Inc., Cboe EDGA Exchange Inc., Cboe EDGX Exchange Inc.,
  Financial Industry Regulatory Authority, Inc., Nasdaq BX, Inc., Nasdaq
  PHLX LLC, The Nasdaq Stock Market LLC, NYSE National, Inc., New York
  Stock Exchange, LLC, NYSE American LLC, NYSE Arca Inc., and Investors'
  Exchange LLC effective October 10, 2018, as may be amended from time
  to time.
** FINRA shall perform the surveillance responsibilities for the double
  star rules. These rules may be cited by FINRA in both the context of
  this Agreement and the Regulatory Services Agreement.

    In addition, the following provisions shall be part of this 17d-2 
Agreement:

SEA Rules:
     SEA Rule 200 of Regulation SHO--Definition of Short Sales 
and Marking Requirements **
     SEA Rule 201 of Regulation SHO--Circuit Breaker **
     SEA Rule 203 of Regulation SHO--Borrowing and Delivery 
Requirements **
     SEA Rule 204 of Regulation SHO--Close-Out Requirement **
     SEA Rule 101 of Regulation M--Activities by Distribution 
Participants **
     SEA Rule 102 of Regulation M--Activities by Issuers and 
Selling Security Holders During a Distribution **
     SEA Rule 103 of Regulation M--Nasdaq Passive Market Making 
**
     SEA Rule 104 of Regulation M--Stabilizing and Other 
Activities in Connection with an Offering **
     SEA Rule 105 of Regulation M--Short Selling in Connection 
With a Public Offering **
     SEA Rule 604 of Regulation NMS--Display of Customer Limit 
Orders **
     SEA Rule 606 of Regulation NMS--Disclosure of Routing 
Information **
     SEA Rule 610(d) of Regulation NMS--Locking or Crossing 
Quotations **
     SEA Rule 611 of Regulation NMS--Order Protection Rule **
     SEA Rule 10b-5 Employment of Manipulative and Deceptive 
Devices [supcaret]
     SEA Rule 17a-3/17a-4--Records to Be Made by Certain 
Exchange Members, Brokers, and Dealers/Records to Be Preserved by 
Certain Exchange Members, Brokers, and Dealers [supcaret]

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

    Pursuant to Section 17(d)(1) of the Act \14\ and Rule 17d-2 
thereunder,\15\ after August 1, 2019, the Commission may, by written 
notice, declare the plan submitted by LTSE and FINRA, File No. 4-747, 
to be effective if the Commission finds that the plan is necessary or 
appropriate in the public interest and for the protection of investors, 
to foster cooperation and coordination among self-regulatory 
organizations, or to remove impediments to and foster the development 
of the national market system and a national system for the clearance 
and settlement of securities transactions and in conformity with the 
factors set forth in Section 17(d) of the Act.
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    \14\ 15 U.S.C. 78q(d)(1).
    \15\ 17 CFR 240.17d-2.
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IV. Solicitation of Comments

    In order to assist the Commission in determining whether to approve 
the proposed 17d-2 Plan and to relieve LTSE of the responsibilities 
which would be assigned to FINRA, interested persons are invited to 
submit written data, views, and arguments concerning the foregoing. 
Comments may be submitted by any of the following methods:

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/other.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number 4-747 on the subject line.

Paper Comments

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

All submissions should refer to File Number 4-747. This file number 
should be included on the subject line if email is used. To help the 
Commission process and review your comments more efficiently, please 
use only one method. The Commission will post all comments on the 
Commission's internet website (http://www.sec.gov/rules/other.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for website viewing and printing in 
the Commission's Public Reference Room, 100 F Street NE, Washington, DC 
20549 on official business days between the hours of 10:00 a.m. and 
3:00 p.m. Copies of the plan also will be available for inspection and 
copying at the principal offices of LTSE and FINRA. All comments 
received will be posted without change.

[[Page 34230]]

Persons submitting comments are cautioned that we do not redact or edit 
personal identifying information from comment submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number 4-747 and should be submitted 
on or before August 1, 2019.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(34).
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Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-15144 Filed 7-16-19; 8:45 am]
BILLING CODE 8011-01-P


