Statement Summary
The SEC has issued a notice regarding a proposed regulatory plan between FINRA and 24X National Exchange to address regulatory responsibilities for common members, referred to as “Dual Members.” The proposed 17d-2 Plan aims to reduce regulatory duplication and unnecessary expenses by allowing FINRA to assume certain examination and enforcement duties over Dual Members, specifically concerning rules that are substantially similar to FINRA’s. This allocation of responsibilities seeks to streamline compliance processes while maintaining 24X’s authority over its own specific rules and trading activities. The SEC is soliciting public comments on this plan, which, if approved, would relieve 24X of designated regulatory responsibilities.
Original Statement
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-102972; File No. 4-854]
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 24X National Exchange LLC
May 2, 2025
Pursuant to Section 17(d) of the Securities Exchange Act of 1934 (“Act”), and Rule 17d-2 thereunder, notice is hereby given that on April 24, 2025, the Financial Industry Regulatory Authority, Inc. (“FINRA”) and 24X National Exchange LLC (“24X”) (together with FINRA, the “Parties”) filed with the Securities and Exchange Commission (“Commission” or “SEC”) a plan for the allocation of regulatory responsibilities, dated April 17, 2025 (“17d-2 Plan” or the “Plan”). The Commission is publishing this notice to solicit comments on the 17d-2 Plan from interested persons.
Introduction
Section 19(g)(1) of the Act 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. 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.
Section 17(d)(1) of the Act was intended, in part, to eliminate unnecessary multiple examinations and regulatory duplication. To implement Section 17(d)(1), the Commission adopted two rules: Rule 17d-1 and Rule 17d-2 under the Act. Rule 17d-2 permits SROs to propose joint plans for the allocation of regulatory responsibilities with respect to their common members.
Proposed Plan
The proposed 17d-2 Plan is intended to reduce regulatory duplication for firms that are common members of both 24X and FINRA. Under this plan, FINRA would assume certain examination and enforcement responsibilities for common members with respect to applicable laws, rules, and regulations. Specifically, FINRA would take on responsibilities related to the rules of 24X that are substantially similar to the applicable rules of FINRA, as well as any provisions of federal securities laws and regulations delineated in the Certification.
Under the Plan, 24X would retain full responsibility for surveillance and enforcement with respect to trading activities or practices involving 24X’s own marketplace and registration rules of associated persons.
Date of Effectiveness of the Proposed Plan and Timing for Commission Action
Pursuant to Section 17(d)(1) of the Act and Rule 17d-2 thereunder, the Commission may declare the plan submitted by 24X and FINRA 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 among self-regulatory organizations, and in conformity with the factors set forth in Section 17(d) of the Act.
Solicitation of Comments
In order to assist the Commission in determining whether to approve the proposed 17d-2 Plan and to relieve 24X 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 electronic comments or sending paper comments in triplicate to the Secretary of the Securities and Exchange Commission.
All submissions should refer to File Number 4-854 and should be submitted on or before [INSERT DATE 15 DAYS AFTER DATE OF PUBLICATION IN THE FEDERAL REGISTER].
