The letter will describe the act or practice engaged in or omitted, the rule, regulation, or statutory provision violated, and the sanction or sanctions to be imposed. Unless the letter states otherwise, the effective date of any sanction(s) imposed will be a date to be determined by the Regulation Department staff. See Rule 9216(b) (contained within Nasdaq General 5). 

A fine of up to $2,500 may be assessed for a minor rule violation.  See Rule 9216(b) (contained within Nasdaq General 5). 

If you execute the minor rule violation plan letter, it will be submitted to the Review Council for acceptance.  The Review Subcommittee or the Office of Disciplinary Affairs may accept such letter or refer it to the Nasdaq Review Council for acceptance or rejection by the Nasdaq Review Council. The Review Subcommittee may reject such letter or refer it to the Nasdaq Review Council for acceptance or rejection by the Nasdaq Review Council. See Rule 9216(b) (contained within Nasdaq General 5). 

If the letter is accepted, it shall be deemed final and the Exchange shall report the violation to the Commission as required by the Commission pursuant to a plan approved under SEC Rule 19d-1(c)(2).  See Rule 9216(b) (contained within Nasdaq General 5). 

If the letter is rejected, the Exchange may take any other appropriate disciplinary action with respect to the alleged violation or violations.  That may include a decision to pursue formal disciplinary action.  Note that you will not be prejudiced by the execution of the minor rule violation plan letter, and the letter may not be introduced into evidence in connection with the determination of the issues set forth in any complaint or in any other proceeding.  See Rule 9216(b) (contained within Nasdaq General 5).

The Exchange or FINRA may decide to pursue a formal disciplinary action against you by filing a complaint.  If the Exchange or FINRA believes that you are violating or have violated the federal securities laws, rules or regulations thereunder, or Exchange Rules, the Exchange or FINRA may request authorization from the FINRA Office of Disciplinary Affairs to issue a complaint. See Rule 9211(a) (contained within Nasdaq General 5). 

Yes.  You must file an answer to the complaint on all other Parties within 25 days after service of the complaint, and at the time of service shall file such answer with the Office of Hearing Officers pursuant to Rules 9135, 9136 and 9137.  See Rule 9215 (contained within Nasdaq General 5). 

Yes. You may request a hearing with the filing of your answer.  

If you fail to request a hearing with the filing of your answer, you will waive your right to a hearing unless a Hearing Officer, Hearing Panel, or, if applicable, an Extended Hearing Panel, grants, for good cause shown, a later filed motion by you requesting a hearing. See Rule 9221 (contained within Nasdaq General 5). 

Yes. You, the Exchange, or FINRA may file a written notice of appeal within 25 days after service of a decision issued by the Hearing Panel provided, however, that a decision with respect to a Respondent that is an affiliate of the Exchange within the meaning of Nasdaq, BX, and Phlx Rule General 2, Section 4 may not be appealed to the Review Council.  See Rule 9311 (contained within Nasdaq General 5).

Yes. An appeal to the Review Council from a decision issued by the Hearing Panel shall operate as a stay of that decision until the Review Council issues a decision.  Any such appeal, however, will not stay a decision, or that part of a decision, that imposes a permanent cease and desist order.  See Rule 9311 (contained within Nasdaq General 5).

Yes.  A decision issued by the Hearing Panel may be subject to a call for review by any member of the Review Council or, pursuant to authority delegated from the Review Council, by any member of the Review Subcommittee. A decision issued pursuant to Rule 9268 (contained within Nasdaq General 5) shall be subject to a call for review within 45 days after the date of service of the decision. If called for review, such decision shall be reviewed by the Review Council.

A default decision issued pursuant to Rule 9269 (contained within Nasdaq General 5) shall be subject to a call for review by the Chief Regulatory Officer, on his or her own motion within 25 days after the date of service of the decision. If called for review, such decision shall be reviewed by the Exchange Review Council.

Note, however, that a decision with respect to a member or member organization that is an affiliate of the Exchange (within the meaning of Nasdaq and BX Rules General 2, Section 14 or PHLX Rule General 2, Section 4) may not be called for review by the Review Council.  See Rule 9312 (contained within Nasdaq General 5). 

Following the filing of a notice of appeal, the Review Council or the Review Subcommittee shall appoint a Subcommittee or an Extended Proceeding Committee to participate, subject to Rule 9345 (contained within Nasdaq General 5), in a disciplinary proceeding appealed or called for review.  A Subcommittee shall be composed of two or more persons who shall be current or former members of the Review Council or former Directors.  See Rule 9331 (contained within Nasdaq General 5).

Yes.  A Party may request oral argument before the Subcommittee or, if applicable, the Extended Proceeding Committee. Oral argument must be requested in writing either in the Party's notice of appeal or cross-appeal or within 15 days after service of the Review Council's notice of review.  Subject to the limitations of Rules 9342 and Rule 9344, oral argument shall be granted if timely requested.  See Rule 9341 (contained within Nasdaq General 5).

Yes.  Briefs shall be due upon dates established by the Subcommittee or, if applicable, the Extended Proceeding Committee, the Review Council, the Review Subcommittee, or Counsel to the Review Council in a scheduling order. Unless the Subcommittee or, if applicable, the Extended Proceeding Committee, the Review Council, the Review Subcommittee, or Counsel to the Review Council specifies otherwise, opening briefs shall be submitted not less than 21 days from the date of the scheduling order, and answering briefs shall be submitted 21 days thereafter. When reply briefs are submitted, such briefs shall be filed not later than ten days after service of the answering brief. Counsel to the Review Council may not shorten a period previously established for the filing of briefs except with the consent of the Parties. The time periods listed in this provision are only applicable to the filing of opening briefs, answering briefs, and reply briefs.  See Rule 9347 (contained within Nasdaq General 5). 

A Subcommittee or, if applicable, an Extended Proceeding Committee, will present a recommended decision in writing to the Review Council before the meeting of the Review Council at which the disciplinary proceeding shall be considered.  See Rule 9345 (contained within Nasdaq General 5).

In an appeal or review of a disciplinary proceeding governed by the Rule 9300 (contained within Nasdaq General 5) Series that is not withdrawn or dismissed prior to a decision on the merits, the Review Council, after considering all matters presented in the appeal or review and the written recommended decision of the Subcommittee or, if applicable, the Extended Proceeding Committee, may affirm, dismiss, modify or reverse the decision of the Hearing Panel or, if applicable, Extended Hearing Panel, with respect to each Respondent who has appealed or cross-appealed or is subject to a call for review. The Review Council may affirm, modify, reverse, increase, or reduce any sanction, or impose any other fitting sanction. Alternatively, the Review Council or the Review Subcommittee may remand the disciplinary proceeding with instructions. The Review Council shall prepare a proposed written decision.  See Rule 9348 (contained within Nasdaq General 5). 

Yes. You may appeal the decision to the Securities & Exchange Commission.  See Rule 9370 (contained within Nasdaq General 5). 

The Exchange can impose the following sanctions:

1. censure a member or person associated with a member;
2. impose a fine upon a member or person associated with a member;
3. suspend the membership of a member, suspend the permit of a member (under the PHLX Rules), or suspend the registration of a person associated with a member for a definite period or a period contingent on the performance of a particular act;
4. expel a member, cancel the membership of a member, revoke or cancel the permit of a member (under the Phlx Rules), or revoke or cancel the registration of a person associated with a member;
5. suspend or bar a member or person associated with a member from association with all members;
6. impose a temporary or permanent cease and desist order against a member or a person associated with a member; or
7. impose any other fitting sanction

See Rule 8310(a) (contained within Nasdaq General 5). 

The Exchange has the right to impose sanctions on a member or person associated with a member for violations of the federal securities laws, rules or regulations thereunder, or Exchange Rules, or for any neglect or refusal to comply with an order, direction, or decision issued under the Exchange Rules.  See Rule 8310 (contained within Nasdaq General 5).

Yes, so long as the Exchange serves written notice to you within one year of you no longer being a member or an associated person, informing you that the Exchange is looking into a matter or matters which occurred while you were a member or an associated person. 

Yes, if you are subject to the Exchange's jurisdiction.  For the purpose of an investigation, compliant, examination, or proceeding authorized by the Exchange’s By-Laws or Rules, the Exchange  has the right to inspect and copy your books, records, and accounts with respect to any matter involved in the investigation, complaint, examination, or proceeding.  The Exchange also has the right to require you to provide information orally, in writing, or electronically (if the requested information is, or is required to be, maintained in electronic form) with respect to any matter involved in the investigation, complaint, examination, or proceeding. See Rule 8210(a) (contained within Nasdaq General 5).

Yes, if you are subject to the Exchange's jurisdiction.  For the purpose of an investigation, complaint, examination, or proceeding authorized by the Exchange’s By-Laws or Rules, the Exchange has the right to require you to provide information orally and to testify at a location specified by the Exchange under oath or affirmation administered by a court reporter or a notary public if requested, with respect to any matter involved in the investigation, complaint, examination, or proceeding. See Rule 8210(a) (contained within Nasdaq General 5).

You may be subject to suspension.  If you are subject to the Exchange's jurisdiction and fail to provide any information, report, material, data, or testimony requested or required to be filed pursuant to the Exchange's By-Laws or the Rules of the Exchange, or fail to keep your membership application or supporting documents current, the Exchange may provide written notice to you specifying the nature of the failure and stating that the failure to take corrective action within 21 days after service of the notice will result in suspension of membership or of association with any member or member organization. See Rule 9552(a) (contained within Nasdaq General 5).

Yes.  If you have been served with a notice under Rule 9552, you may file with the Office of Hearing Officers a written request for a hearing pursuant to Rule 9559.  A request for a hearing shall be made before the effective date of the notice. A request for a hearing must set forth with specificity any and all defenses to the Exchange action. See Rule 9552(e) (contained within Nasdaq General 5).

If the Exchange has reason to believe a violation has occurred and you do not dispute the violation, the Exchange will prepare and ask that you execute an acceptance, waiver, and consent letter accepting a finding of violation, consenting to the imposition of sanctions, and agreeing to waive your right to a hearing and any right of appeal, or to otherwise challenge the validity of the letter, if the letter is accepted. See Rule 9216(a) (contained within Nasdaq General 5).

The letter will describe the act or practice engaged in or omitted, the rule, regulation, or statutory provision violated, and the sanction or sanctions to be imposed.  See Rule 9216(a)(1) (contained within Nasdaq General 5). 

The executed acceptance, waiver, and consent letter will be submitted to FINRA’S Office of Disciplinary Affairs, the Review Subcommittee, or the Exchange’s Review Council.  The Review Subcommittee or the Office of Disciplinary Affairs may accept such letter or refer it to the Nasdaq Review Council for acceptance or rejection by the Nasdaq Review Council.  The Review Subcommittee may reject such letter or refer it to the Nasdaq Review Council for acceptance or rejection by the Nasdaq Review Council  See Rule 9216(a)(3) (contained within Nasdaq General 5). 

If the letter is rejected, the Exchange may take any other appropriate disciplinary action with respect to the alleged violation or violations.  That may include a decision to pursue formal disciplinary action. Note that you will not be prejudiced by the execution of the acceptance, waiver, and consent letter, and the letter may not be introduced into evidence in connection with the determination of the issues set forth in any complaint or in any other proceeding. See Rule 9216(a)(4) (contained within Nasdaq General 5).

If the letter is accepted, it will be deemed final and will constitute the complaint, answer, and decision in the matter.  See Rule 9216(a)(4) (contained within Nasdaq General 5).

Maybe, depending on the circumstances. The Exchange must release to the public information with respect to any acceptance, waiver, and consent letter, imposing a suspension, cancellation or expulsion of a member organization or member; suspension or revocation of a member's permit (on PHLX); or suspension or revocation of the registration of a member or person associated with a member organization; or suspension or barring of a member organization, member or person associated with a member organization from association with all member organizations; or imposition of monetary sanctions of $10,000 or more upon a member organization, member or person associated with a member organization; or containing an allegation of a violation of a Designated Rule; and may also release such information with respect to any disciplinary decision or group of decisions that involve a significant policy or enforcement determination where the release of information is deemed by the Chief Regulatory Officer to be in the public interest. See IM-8310-3(c)(1) (contained within Nasdaq General 5).

The Exchange may prepare and request that you execute a minor rule violation plan letter accepting a finding of violation, consenting to the imposition of sanctions, and agreeing to waive such member's or associated person's right to a hearing before a Hearing Panel or, if applicable, an Extended Hearing Panel, and any right of appeal to the Review Council, the Commission, and the courts, or to otherwise challenge the validity of the letter, if the letter is accepted.  See Rule 9216(b) (contained within Nasdaq General 5).

Refer to Nasdaq IM-9216 (contained within Nasdaq General 5) for a list of rules subject to an SEC-approved minor rule violation plan.

A complete schedule of financial reporting requirements and due dates for broker dealers who are designated to PHLX can be found here. 

Pursuant to Exchange Act Rule 17f-2, every member of a national securities exchange shall require its partners, directors, officers and employees to be fingerprinted. All fingerprints shall be submitted to the Attorney General of the United States or its designee (i.e., the Federal Bureau of Investigations). Broker dealers must retain evidence that the fingerprints have been taken and submitted for each individual. Securities Exchange Act Rule 17f-2 allows for certain exemptions from fingerprinting but those exemptions are limited.

Yes. Pursuant to SIPC Act of 1970 Section 78ccc (a)(2), all registered broker dealers must become members of the Securities Investor Protection Corporation ("SIPC"). Beginning April 1, 2009, all PHLX DEA Member Firms are required to file SIPC-6 and SIPC-7T Forms and the corresponding payment, which is .0025 of the Member Firm's net operating revenue as computed on both SIPC-6 and SIPC-7T Forms. SIPC-6 Form and assessment payment is due no later than 30 days after the end of the first six months of the fiscal year; SIPC-7T Form and assessment payment is due no later than 60 days after the end of the fiscal year, or after membership termination. The SIPC Forms and assessments should be forwarded to the main office of SIPC in Washington, D.C. For more details, please refer to www.sipc.org.

Broker dealers are required to file annual Audited Financial Statements pursuant to Exchange Act Rule 17a-5(d). 

The rule contains an annual audit filing exemption for a broker dealer that is a member of a national securities exchange, has transacted a business in securities solely with or for other members of a national securities exchange, and has not carried any margin account, credit balance or security for any person who is defined as a "customer" in paragraph (c)(4) of Rule 17a-5.

Broker dealers for which PHLX is the assigned designated examining authority may find additional guidance here.

Broker dealers are required to maintain all books and records as required under Securities Exchange Act Rules 17a-3 and 17a-4, and PHLX Options 6E, Section 1.

Capital requirements for broker dealers who are designated to PHLX may be found here.  

PHLX members may reference SEC 15c3-1 and PHLX Options 6D, Section 1 and Equity 9, Section 20 for relevant rules.

Broker dealers designated to PHLX for regulatory responsibility are required to submit written notification of a change in business operation at least 10 business days prior to the change pursuant to PHLX General 9, Section 59.  Written notice should be submitted to the Nasdaq Membership Department at membership@nasdaq.com.

All Nasdaq members are required to submit their Annual Audited Financials through the FINRA Portal.  Refer to the following instructions: Annual Audit Automation. Submission through the FINRA Portal satisfies the reporting requirements for all Nasdaq exchanges.

Please call 215-496-1571 or email optionshelpdesk@nasdaq.com for options-related matters and 212-231-5180 or email tradingservices@nasdaq.com  for equity-related matters.

Yes. Nasdaq member organizations are required by rule to register all representatives with any of the Nasdaq-affiliated exchanges on which it is an approved member.  The relevant rule is Nasdaq Rule 1.1210 (contained within Nasdaq General 4, Section 1).

Nasdaq exchanges require an associated person of a member organization who holds the title of Chief Compliance Officer to successfully complete the Series 24 qualification exam.  Alternatively, Nasdaq may accept the Series 14 in certain circumstances where the individual’s responsibilities are limited. See Nasdaq Rule 1.1220 (contained within Nasdaq General 4, Section 1).

Nasdaq rules require that all broker dealer members provide an NSCC clearing account number for purposes of collecting, via direct debit, exchange fees. 

Members wishing to withdraw from a Nasdaq-affiliated exchange (NQX, BX, PHLX, ISE, GEMX, MRX) should file, via WebCRD, a full or partial broker dealer withdraw (BDW) removing the relevant exchange from its registration and subsequently sending an email to membership@nasdaq.com.  The email should specify from which market the member wishes to terminate and the date of anticipated effectiveness.  Most terminations will be processed in approximately three business days. 

Members wishing to make adjustments to their participation status on any of the Nasdaq-affiliated exchanges should email a request to membership@nasdaq.com.  This request should specify the desired change and the date of anticipated effectiveness.  Most requests will be processed in approximately three business days.

No. If a broker dealer is approved or terminates mid-month, they will be assessed the total fee for that month.

Broker Dealers who have questions or require assistance related to FINRA CAT may contact the FINRA CAT Helpdesk at 888-696-3348 or via email at help@finracat.com.