Notice2026-05757
Program for Allocation of Regulatory Responsibilities Pursuant to Rule 17d-2; Order Approving and Declaring Effective an Amended Plan for the Allocation of Regulatory Responsibilities Between the Financial Industry Regulatory Authority, Inc., MEMX LLC, and MX2 LLC
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
March 25, 2026
Issuing agencies
Securities and Exchange Commission
Full Text
<html>
<head>
<title>Federal Register, Volume 91 Issue 57 (Wednesday, March 25, 2026)</title>
</head>
<body><pre>
[Federal Register Volume 91, Number 57 (Wednesday, March 25, 2026)]
[Notices]
[Pages 14609-14610]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-05757]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-105055; File No. 4-762]
Program for Allocation of Regulatory Responsibilities Pursuant to
Rule 17d-2; Order Approving and Declaring Effective an Amended Plan for
the Allocation of Regulatory Responsibilities Between the Financial
Industry Regulatory Authority, Inc., MEMX LLC, and MX2 LLC
March 20, 2026.
On February 3, 2026, the Financial Industry Regulatory Authority,
Inc. (``FINRA''), MEMX LLC (``MEMX''), and MX2 LLC (``MX2'') (together,
the ``Parties'') filed with the Securities and Exchange Commission
(``Commission'' or ``SEC'') a plan for the allocation of regulatory
responsibilities, dated January 20, 2026 (``17d-2 Plan'' or the
``Plan''). The Plan was published for comment on February 26, 2026.\1\
The Commission received no comments on the Plan. This order approves
and declares effective the Plan.
---------------------------------------------------------------------------
\1\ See Securities Exchange Act Release No. 104883 (February 24,
2026), 91 FR 9663.
---------------------------------------------------------------------------
I. Introduction
Section 19(g)(1) of the Securities Exchange Act of 1934
(``Act''),\2\ 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.\3\ 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.
---------------------------------------------------------------------------
\2\ 15 U.S.C. 78s(g)(1).
\3\ 15 U.S.C. 78q(d) and 15 U.S.C. 78s(g)(2), respectively.
---------------------------------------------------------------------------
Section 17(d)(1) of the Act \4\ was intended, in part, to eliminate
unnecessary multiple examinations and regulatory duplication.\5\ 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.
---------------------------------------------------------------------------
\4\ 15 U.S.C. 78q(d)(1).
\5\ 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).
---------------------------------------------------------------------------
To implement Section 17(d)(1), the Commission adopted two rules:
Rule 17d-1 and Rule 17d-2 under the Act.\6\ 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.\7\ 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.
---------------------------------------------------------------------------
\6\ 17 CFR 240.17d-1 and 17 CFR 240.17d-2, respectively.
\7\ See Securities Exchange Act Release No. 12352 (April 20,
1976), 41 FR 18808 (May 7, 1976).
---------------------------------------------------------------------------
To address regulatory duplication in these and other areas, the
Commission adopted Rule 17d-2 under the Act.\8\ 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.
---------------------------------------------------------------------------
\8\ See Securities Exchange Act Release No. 12935 (October 28,
1976), 41 FR 49091 (November 8, 1976).
---------------------------------------------------------------------------
II. Proposed Amended Plan
On June 17, 2020, the Commission declared effective the Plan
entered into between FINRA and MEMX for allocating regulatory
responsibility pursuant to Rule 17d-2.\9\ The Plan is intended to
reduce regulatory duplication for firms that are common members of
FINRA and MEMX by allocating regulatory responsibility with respect to
certain applicable laws, rules, and regulations that are common among
them. Included in the Plan is an exhibit that lists every MEMX rule for
which FINRA bears responsibility under the Plan for overseeing and
enforcing with respect to MEMX members that are also members of FINRA
and the associated persons therewith (``Certification''). On October 6,
2022, the parties submitted an amendment to the Plan to add Securities
Exchange Act Rule 14e-4(a)(1)(ii)(D) to the Certification and to
reflect updated rule citations.\10\ On February 3, 2026, the parties
submitted a proposed amendment to the Plan (``Amended Plan''). The
primary purpose of the Amended Plan is to add MX2 as a Participant to
the Plan, to
[[Page 14610]]
amend the procedures regarding statutory disqualifications, and to
specify the notice that FINRA would be required to give if it proposed
to charge MEMX and MX2 for performing the Regulatory Responsibilities
under the Agreement.
---------------------------------------------------------------------------
\9\ See Securities Exchange Act Release No. 89084 (June 17,
2020), 85 FR 37701 (June 23, 2020).
\10\ See Securities Exchange Act Release No. 96101 (October 18,
2022), 87 FR 64280 (October 24, 2022).
---------------------------------------------------------------------------
III. Discussion
The Commission finds that the proposed Amended Plan is consistent
with the factors set forth in Section 17(d) of the Act \11\ and Rule
17d-2(c) thereunder \12\ in that the proposed Amended Plan is necessary
or appropriate in the public interest and for the protection of
investors, fosters cooperation and coordination among SROs, and removes
impediments to and fosters the development of the national market
system. In particular, the Commission believes that the proposed
Amended Plan should reduce unnecessary regulatory duplication by
allocating to FINRA certain examination and enforcement
responsibilities for common members that would otherwise be performed
by MEMX, MX2, and FINRA. Accordingly, the proposed Amended Plan
promotes efficiency by reducing costs to common members. Furthermore,
because MEMX, MX2, and FINRA will coordinate their regulatory functions
in accordance with the Amended Plan, the proposed Amended Plan should
promote investor protection.
---------------------------------------------------------------------------
\11\ 15 U.S.C. 78q(d).
\12\ 17 CFR 240.17d-2(c).
---------------------------------------------------------------------------
The Commission notes that, under the proposed Amended Plan, MEMX,
MX2, and FINRA have allocated regulatory responsibility for those MEMX
and MX2 rules, set forth in the Certification, that are substantially
similar to the applicable FINRA rules in that examination for
compliance with such provisions and rules would not require FINRA to
develop one or more new examination standards, modules, procedures, or
criteria in order to analyze the application of the rule, or a common
member's activity, conduct, or output in relation to such rule. In
addition, under the proposed Amended Plan, FINRA would assume
regulatory responsibility for certain provisions of the federal
securities laws and the rules and regulations thereunder that are set
forth in the Certification. The Common Rules covered by the proposed
Amended Plan are specifically listed in the Certification, as may be
amended by the Parties from time to time.
According to the proposed Amended Plan, MEMX and MX2 will review
the Certification, at least annually, or more frequently if required by
changes in either the rules of MEMX, MX2, or FINRA, and, if necessary,
submit to FINRA an updated list of Common Rules to add MEMX and MX2
rules not included on the then-current list of Common Rules that are
substantially similar to FINRA rules; delete MEMX and MX2 rules
included in the then-current list of Common Rules that are no longer
substantially similar to FINRA rules; and confirm that the remaining
rules on the list of Common Rules continue to be MEMX and MX2 rules
that are substantially similar to FINRA rules.\13\ FINRA will then
confirm in writing whether the rules listed in any updated list are
Common Rules as defined in the Amended Plan. The proposed Amended Plan
also clarifies the procedures regarding statutory disqualifications
with respect to Common Members and requires FINRA to give adequate
notice to MEMX and MX2 in the event FINRA decides to impose any charges
to MEMX and MX2 for performing the Regulatory Responsibilities under
the proposed Amended Plan. The Commission believes that these
provisions are designed to provide for continuing communication between
the Parties to ensure the continued accuracy of the scope of the
proposed allocation of regulatory responsibility.
---------------------------------------------------------------------------
\13\ See paragraph 2 of the Amended Plan.
---------------------------------------------------------------------------
The Commission is hereby declaring effective an Amended Plan that,
among other things, allocates regulatory responsibility to FINRA for
the oversight and enforcement of all MEMX and MX2 rules that are
substantially similar to the rules of FINRA for common members of MEMX
and FINRA, and MX2 and FINRA. Therefore, modifications to the
Certification need not be filed with the Commission as an amendment to
the Amended Plan, provided that the Parties are only adding to,
deleting from, or confirming changes to MEMX or MX2 rules in the
Certification in conformance with the definition of Common Rules
provided in the proposed Amended Plan. However, should the Parties
decide to add a MEMX or MX2 rule to the Certification that is not
substantially similar to a FINRA rule; delete a MEMX or MX2 rule from
the Certification that is substantially similar to a FINRA rule; or
leave on the Certification a MEMX or MX2 rule that is no longer
substantially similar to a FINRA rule, then such a change would
constitute an amendment to the Amended Plan, which must be filed with
the Commission pursuant to Rule 17d-2 under the Act.\14\
---------------------------------------------------------------------------
\14\ The Commission also notes that the addition to or deletion
from the Certification of any federal securities laws, rules, and
regulations for which FINRA would bear responsibility under the Plan
for examining, and enforcing compliance by, common members, also
would constitute an amendment to the Plan.
---------------------------------------------------------------------------
IV. Conclusion
This Order gives effect to the Amended Plan filed with the
Commission in File No. 4-762. The Parties shall notify all members
affected by the Plan of their rights and obligations under the Plan.
It is therefore ordered, pursuant to Section 17(d) of the Act, that
the Plan in File No. 4-762, between FINRA, MEMX, and MX2, filed
pursuant to Rule 17d-2 under the Act, is approved and declared
effective.
It is further ordered that MEMX and MX2 are relieved of those
responsibilities allocated to FINRA under the Plan in File No. 4-762.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
---------------------------------------------------------------------------
\15\ 17 CFR 200.30-3(a)(34).
---------------------------------------------------------------------------
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2026-05757 Filed 3-24-26; 8:45 am]
BILLING CODE 8011-01-P
</pre></body>
</html>Indexed from Federal Register on March 25, 2026.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.