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General 2 Organization and Administration
Section 1. Reserved

 

Adopted October 23, 2019 (SR-BX-2019-039).

Section 2. Fees, Dues and Other Charges

(a) The Board of Directors shall have the power (i) to establish, assess and levy such fees, dues and other charges (including, without limitation, any extraordinary assessments) upon members and any other persons using the facilities or services of the Exchange, and upon applicants for and persons being admitted, registered, qualified and/or initiated to any such status, in each case as the Board of Directors may from time to time establish by resolution or in the Rules of the Exchange (which shall be deemed to include any schedule of fees, dues, other charges and penalties as may be in effect from time to time), (ii) to establish rebates, credits and discounts with respect to any of the foregoing, (iii) to establish programs whereby the Exchange shares or permits any person to participate in any identified source of revenues (less any expenses or other charges as the Exchange shall determine) of the Exchange, (iv) to provide for the direct reimbursement to the Exchange of any cost, expense or category thereof, and (v) except insofar as otherwise specified or provided for in the By-Laws, to establish and assess penalties for failure to pay any fees, dues or charges owed to the Exchange, including, without limitation, termination of membership (which membership may be reissued) and forfeiture of all rights as a member. The Board of Directors may authorize any committee thereof or the Chair of the Board of Directors to exercise any powers of the Board of Directors with respect to the assessment of fees, dues, other charges and penalties authorized in accordance with this Rule.

(b) Without limiting the generality of the provisions of the By-Laws, the Board of Directors may, from time to time, fix and impose charges upon members, measured by their respective net commissions on transactions effected on the Exchange. Such charges shall be payable at such times and shall be collected in such manner as may be determined by the Board of Directors.

(c) The obligation of members to abide by the provisions of these By-Laws and the Rules of the Exchange shall include, without limitation, the obligation to pay all applicable fees, dues and other charges imposed thereon by these By-Laws or the Rules of the Exchange.

(d) The Board of Directors or their designee may suspend or terminate, after due notice, any permit or rights of any member or employee thereof using facilities or services of the Exchange, or enjoying any of the privileges therein, who shall not pay dues, fees, other charges, other monies due and owed the Exchange, fines and/or other monetary sanctions in accordance with the Rules of the Exchange.

Adopted October 23, 2019 (SR-BX-2019-039).

Section 3. Reserved

 

Adopted October 23, 2019 (SR-BX-2019-039).

Section 4. Limitation on Affiliation between the Exchange and Members

(a) No member or person associated with a member shall be the beneficial owner of greater than twenty percent (20%) of the then-outstanding voting securities of Nasdaq, Inc.

(b) For purposes of this Rule, any calculation of the number of shares of common stock outstanding at any particular time shall be made in accordance with the last sentence of SEC Rule 13d-3(d)(1)(i)(D). The term "beneficial owner" shall have the meaning set forth in the Restated Certificate of Incorporation of Nasdaq, Inc.

Adopted October 23, 2019 (SR-BX-2019-039).

Section 5. Regulation of the Exchange and Its Members

(a) The Exchange and FINRA are parties to the FINRA Regulatory Contract, pursuant to which FINRA has agreed to perform certain functions described in the Equity Rules on behalf of the Exchange. Equity Rules that refer to the Exchange's Regulation Department, Regulation Department staff, Exchange staff, and Exchange departments should be understood as also referring to FINRA staff and FINRA departments acting on behalf of the Exchange pursuant to the FINRA Regulatory Contract.

(b) Notwithstanding the fact that the Exchange has entered into the FINRA Regulatory Contract with FINRA to perform some of the Exchange's functions, the Exchange shall retain ultimate legal responsibility for, and control of, such functions. In addition, the Exchange has incorporated by reference certain NASD rules. Exchange members shall comply with these rules and interpretations as if such rules and interpretations were part of the General Equity and Options Rules.

(c) FINRA is in the process of consolidating certain NASD rules into a new FINRA rulebook. If an NASD rule that is incorporated by reference in a rule of the Exchange is transferred into the FINRA rulebook, then the Exchange rule shall be construed to require Exchange members to comply with the FINRA rule corresponding to the NASD rule (regardless of whether such rule is renumbered or amended) as if such rule were part of the Rules of the Exchange.

Adopted October 23, 2019 (SR-BX-2019-039).

Section 6. Applicability

(a) The General Equity and Options Rules and Equity Rules shall apply to all members and persons associated with a member. Persons associated with a member shall have the same duties and obligations as a member under the Equity Rules.

(b) The 9000 Series and General 6 of these Rules and the Grandfathered Rules shall apply to all former BOX Options Participants and associated persons for activities that occurred during the time that BOX was a facility of the Exchange. The Grandfathered Rules shall also apply to activities of members, members organizations, persons associated with members, and other persons subject to the jurisdiction of the Exchange that occurred prior to the adoption of the Equity Rules.

(c) A member or person associated with a member, who has been expelled, canceled or revoked from membership or from registration or who has been barred from being associated with all members, shall cease to have any privileges of membership or registration. A member or person associated with a member who has been suspended from membership or registration shall also cease to have any privileges of membership or registration other than those under the Code of Procedure as set forth in the Rule 9000 Series. In neither case shall such a member or person associated with a member be entitled to recover any admission fees, dues, assessments or other charges paid to the Exchange.

(d) A member or person associated with a member who has been suspended from membership or from registration shall be considered as a non-member during the period of suspension for purposes of applying the provisions of the Equity Rules which govern dealings between members and non-members. However, such member or person associated with a member shall have all of the obligations imposed by the Equity Rules.

Adopted October 23, 2019 (SR-BX-2019-039).

Section 7. Regulatory Independence

(a) In furtherance of the independence of the Exchange's regulatory functions from its commercial operations, the Exchange shall ensure that, unless it obtains prior Commission approval, the regulatory functions subject to the FINRA Regulatory Contract shall at all times continue to be performed by FINRA or an affiliate thereof or by another independent self-regulatory organization.

Adopted October 23, 2019 (SR-BX-2019-039); amended June 4, 2020 (SR-BX-2020-007).

Section 8. Delegation, Authority and Access

(a) The Exchange delegates to its subsidiary BX Equities LLC the authority to act on behalf of the Exchange as set forth in a Delegation Agreement approved by the Commission pursuant to its authority under the Act.

(b) Notwithstanding any delegation of authority to BX Equities LLC pursuant to this Rule, the staff, books, records and premises of BX Equities LLC are the staff, books, records and premises of the Exchange subject to oversight pursuant to the Act, and all officers, employees and agents of BX Equities LLC are the officers, employees and agents of the Exchange for purposes of the Act.

Adopted October 23, 2019 (SR-BX-2019-039).

Section 9. Reliance on Current Membership List

The Secretary of the Exchange shall keep a currently accurate and complete membership roll, containing the name and address of each Exchange member, and the name and address of the executive representative of each Exchange member. In any case where a membership has been terminated, such fact shall be recorded together with the date on which the membership ceased. The membership roll of the Exchange shall at all times be available to all members of the Exchange, to all governmental authorities, and to the general public; provided, however, that the names and address of executive representatives shall not be available to the general public. For the purpose of complying with pertinent Rules, a member shall be entitled to rely on such membership roll.

Adopted October 23, 2019 (SR-BX-2019-039).

Section 10. Executive Representative

Each Exchange member shall appoint and certify to the Secretary of the Exchange one "executive representative" who shall represent, vote, and act for the Exchange member in all the affairs of the Exchange; provided, however, that other representatives of an Exchange member may also serve on the Exchange Board or committees of the Exchange or otherwise take part in the affairs of the Exchange. If an Exchange member is also a member of FINRA or Nasdaq, the Exchange executive representative shall be the same person appointed to serve as the FINRA or Nasdaq executive representative. An Exchange member may change its executive representative or appoint a substitute for its executive representative upon giving notice thereof to the Exchange Secretary via electronic process or such other process as the Exchange may prescribe. An executive representative of an Exchange member or a substitute shall be a member of senior management. Each executive representative shall maintain an Internet electronic mail account for communication with the Exchange and shall update firm contact information as prescribed by the Exchange. Each member shall review and, if necessary, update its executive representative designation and contact information in the manner prescribed by General 2, Section 11.

Adopted October 23, 2019 (SR-BX-2019-039).

Section 11. Contact Information Requirements

(a) Each member shall report to the Exchange all contact information required by the Exchange via the FINRA Contact System.

(b) Each member shall update its required contact information promptly, but in any event not later than 30 days following any change in such information. In addition, each member shall review and, if necessary, update its required contact information, via such means as the Exchange may specify, within 17 business days after the end of each calendar year.

(c) Each member shall comply with any Exchange request for such information promptly, but in any event not later than 15 days following the request, or such longer period that may be agreed to by Exchange staff.

Adopted October 23, 2019 (SR-BX-2019-039).

Section 12. Business Continuity and Disaster Recovery Plan Testing Requirements for Members and Options Participants Pursuant to Regulation SCI

With respect to the Exchange's business continuity and disaster recovery plans, including its backup systems, the Exchange shall:

(a) Establish standards for the designation of those Members and Options Participants that the Exchange reasonably determines are, taken as a whole, the minimum necessary for the maintenance of fair and orderly markets in the event of the activation of such plans. Such standards may include volume-based and/or market share-based criteria, and may be adjusted from time to time by the Exchange. The Exchange will provide public notice of the standards;

(b) Designate Members and Options Participants pursuant to the standards established in paragraph (a) of this Rule and require participation by such designated Members and Options Participants in scheduled functional and performance testing of the operation of such plans, in the manner and frequency specified by the Exchange, provided that such frequency shall not be less than once every 12 months. The Exchange will provide at least six months prior notice to Members and Options Participants that are designated for mandatory testing, and participation of such Members and Options Participants is a condition of membership.

Adopted October 23, 2019 (SR-BX-2019-039).

Section 13. Fingerprint-Based Background Checks of Employees and Independent Contractors

(a) In order to enhance the physical security of the facilities, systems, data, and information of the Exchange and its affiliates (collectively, the "Exchange Entities"), it shall be the policy of the Exchange Entities to conduct a fingerprint-based criminal records check of (i) all prospective and current employees of the Exchange Entities, (ii) all prospective and current independent contractors who have or are anticipated to have access to facilities of the Exchange Entities for ten business days or longer, and (iii) all prospective and current temporary employees who have or are anticipated to have access to facilities of the Exchange Entities for ten business days or longer. The Exchange Entities shall apply this policy in all circumstances where permitted by applicable law.

(b) The Exchange Entities shall submit fingerprint cards obtained pursuant to the foregoing policy to the Attorney General of the United States or his or her designee for identification and processing. The Exchange Entities shall at all times maintain the security of fingerprint cards and information received from the Attorney General or his or her designee.

(c) The Exchange Entities shall evaluate information received from the Attorney General or his or her designee in accordance with the terms of a written fingerprint policy and provisions of applicable law. A felony or serious misdemeanor conviction will be a factor in considering whether to hire a prospective employee, take adverse employment action with respect to a current employee, or deny prospective or current independent contractors or temporary employees access to facilities of the Exchange Entities.

(d) All current and prospective employees, independent contractors, and temporary employees of the Exchange Entities shall be fingerprinted prior to being given access to facilities of the Exchange Entities that are subject to regulation by the Commission. All other current or prospective employees, independent contractors, and temporary employees of the Exchange Entities shall be fingerprinted as soon as practicable, either before or after the commencement of an employment or contracting relationship. A prospective employee, independent contractor, or temporary employee who refuses to submit to fingerprinting will be denied employment or access. A current employee, independent contractor, or temporary employee who refuses to submit to fingerprinting will be denied employment or access following notice and being given three opportunities to submit.

Adopted October 23, 2019 (SR-BX-2019-039).

Section 14. Restrictions on Affiliation

(a) Except as provided in paragraph (b):

(1) the Exchange or any entity with which it is affiliated shall not, directly or indirectly, acquire or maintain an ownership interest in, or engage in a business venture with, an Exchange member or an affiliate of an Exchange member in the absence of an effective filing under Section 19(b) of the Act; and

(2) an Exchange member shall not be or become an affiliate of the Exchange, or an affiliate of an entity affiliated with the Exchange, in the absence of an effective filing under Section 19(b) of the Act.

The term "affiliate" shall have the meaning specified in Rule 12b-2 under the Act; provided, however, that for purposes of this Rule, one entity shall not be deemed to be an affiliate of another entity solely by reason of having a common director. The term "business venture" means an arrangement under which (A) the Exchange or an entity with which it is affiliated, and (B) an Exchange member or an affiliate of an Exchange member, engage in joint activities with an expectation of shared profit and a risk of shared loss from common entrepreneurial efforts.

(b) Nothing in this Rule shall prohibit, or require a filing under Section 19(b) of the Act, for:

(1) an Exchange member or an affiliate of an Exchange member acquiring or holding an equity interest in Nasdaq, Inc. that is permitted by the ownership limitations contained in General 2, Section 4, or

(2) the Exchange or an entity affiliated with the Exchange acquiring or maintaining an ownership interest in, or engaging in a business venture with, an affiliate of an Exchange member if:

(A) there are information barriers between the member and the Exchange and its facilities, such that the member

(i) will not be provided an informational advantage concerning the operation of the Exchange and its facilities, and will not be provided changes or improvements to the trading system that are not available to the industry generally or other Exchange members;

(ii) will not have any knowledge in advance of other Exchange members of proposed changes, modifications, or improvements to the operations or trading systems of the Exchange and its facilities, including advance knowledge of Exchange filings pursuant to Section 19(b) of the Act;

(iii) will be notified of any proposed changes, modifications, or improvements to the operations or trading systems of the Exchange and its facilities in the same manner as other Exchange members are notified; and

(iv) will not share employees, office space, or databases with the Exchange or its facilities, Nasdaq, Inc., or any entity that is controlled by Nasdaq, Inc.; and

(B) the Exchange's Regulatory Oversight Committee certifies, on an annual basis, to the Director of the Division of Trading & Markets that the Exchange has taken all reasonable steps to implement the requirements of this rule and is in compliance therewith.

(c) Nasdaq, Inc., which is the holding company owning the Exchange and Nasdaq Execution Services, LLC, shall establish and maintain procedures and internal controls reasonably designed to ensure that Nasdaq Execution Services, LLC does not develop or implement changes to its system on the basis of non-public information regarding planned changes to Exchange systems, obtained as a result of its affiliation with the Exchange, until such information is available generally to similarly situated members of the Exchange in connection with the provision of inbound routing to the Exchange.

Adopted October 23, 2019 (SR-BX-2019-039).

Section 15. Business Continuity Plans

(a) Exchange Members shall comply with NASD Rule 3510 as if such Rule were part of the Exchange's Rules. The Exchange and FINRA are parties to the Regulatory Contract pursuant to which FINRA has agreed to perform certain functions on behalf of the Exchange. Therefore, Exchange members are complying with this Rule by complying with NASD Rule 3510 as written, including, for example, filing requirements and notifications. In addition, functions performed by FINRA, FINRA departments, and FINRA staff under this Rule are being performed by FINRA on behalf of the Exchange.

FINRA is in the process of consolidating certain NASD rules into a new FINRA rulebook. If the provisions of NASD Rule 3510 are transferred into the FINRA rulebook, then Equity Rule 3510 shall be construed to require Exchange members to comply with the FINRA rule corresponding to NASD Rule 3510 (regardless of whether such rule is renumbered or amended) as if such rule were part of the Rules of the Exchange.

Adopted October 23, 2019 (SR-BX-2019-039).

Section 16. Emergency Contact Information

(a) Each member shall report to the Exchange, via such electronic or other means as the Exchange may specify, prescribed emergency contact information for the member. The emergency contact information for the member includes designation of two emergency contact persons. Each emergency contact person shall be a member of senior management and a registered principal of the member.

(b) Each member must promptly update its emergency contact information, via such electronic or other means as the Exchange may specify, in the event of any material change. With respect to designated emergency contact persons, each member must identify, review, and, if necessary, update such designations in the manner prescribed by General 2, Section 11.

Adopted October 23, 2019 (SR-BX-2019-039).

Section 17. Reserved

Reserved

Adopted January 29, 2020 (SR-BX-2020-001).

Section 18. Reserved

Reserved

Adopted January 29, 2020 (SR-BX-2020-001).

Section 19. Reserved

Reserved

Adopted January 29, 2020 (SR-BX-2020-001).

Section 20. Reserved

Reserved

Adopted January 29, 2020 (SR-BX-2020-001).

Section 21. Reserved

Reserved

Adopted January 29, 2020 (SR-BX-2020-001).

Section 22. Reserved

Reserved

Adopted January 29, 2020 (SR-BX-2020-001).

 
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