Sec. 602. Registration, rulemaking, and supervision of customer protection and market integrity authorities
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Chapter 98 of title 31, United States Code, as amended by section 601, is amended by adding at the end the following: The Securities and Exchange Commission and Commodity Futures Trading Commission shall, upon the filing of an application for registration as a customer protection and market integrity authority under section 9809, publish notice of that filing and afford interested persons an opportunity to submit written data, views, and arguments concerning the application. Not later than 90 days after the date on which notice is published under subparagraph (A), or within a longer period to which the applicable applicant consents, the Securities and Exchange Commission and Commodity Futures Trading Commission shall— by joint order, grant registration of the customer protection and market integrity authority; or institute proceedings to determine whether registration should be denied.
Proceedings instituted under subparagraph (B)(ii) shall include notice of the grounds for denial under consideration and opportunity for hearing before the joint commissions. A hearing described in clause
(i)shall be concluded not later than 180 days after the date on which notice of the filing of the application for registration is published under subparagraph (A). At the conclusion of a hearing conducted under this subparagraph, and not later than the end of the 180-day period described in clause (ii), the Securities and Exchange Commission and Commodity Futures Trading Commission, voting separately, shall act to grant or deny the applicable registration. The failure of the Securities and Exchange Commission and Commodity Futures Trading Commission to issue a joint order during the period described in subclause
(I)shall be deemed to be a denial of the applicable registration. With respect to an application for registration described in this paragraph, the Securities and Exchange Commission and Commodity Futures Trading Commission shall— grant registration if all statutory requirements have been met and the rules under those statutory provisions with respect to the applicant are satisfied; and deny such registration if the commissions do not make the findings described in clause (i). A customer protection and market integrity authority may, upon such terms and conditions as the Securities and Exchange Commission and Commodity Futures Trading Commission, by rule, determine necessary or appropriate in the public interest or for the protection of customers, withdraw from registration described in paragraph
(1)by filing a written notice of withdrawal with the commissions. If the Securities and Exchange Commission and Commodity Futures Trading Commission, voting separately, each finds that a customer protection and market integrity authority is no longer in existence or has ceased to do business in the capacity specified in the application for registration submitted by the authority, the commissions may cancel the registration of the authority. Upon withdrawal by registration or the cancellation, suspension, or revocation of the registration of a customer protection and market integrity authority, the registration of any affiliate shall automatically terminate. Except as otherwise provided in paragraph (2)— a customer protection and market integrity authority shall file with the appropriate commission, in accordance with the rules of that commission, copies of any proposed rule or any proposed change in, addition to, or deletion from the rules of such customer protection and market integrity authority accompanied by a concise general statement of the basis and purpose of such proposed rule change; the appropriate commission shall— as soon as practicable after the date on which a proposed rule change is filed under subparagraph (A), publish notice of that filing together with the terms of substance of the proposed rule change or a description of the subjects and issues involved; and give interested persons an opportunity to submit written data, views, and arguments concerning that proposed rule change; no proposed rule change described in subparagraph
(A)shall take effect unless approved by the appropriate commission or otherwise permitted in accordance with the provisions of this subsection; and no proposed rule change described in subparagraph
(A)relating to a matter under the jurisdiction of more than 1 commission may be filed. Except as provided in clause (ii), not later than 30 days after the date on which notice of a proposed rule change is published under paragraph (1), the appropriate commission shall— by order, approve or disapprove the proposed rule change; or institute proceedings under subparagraph
(B)to determine whether the proposed rule change should be disapproved. The appropriate commission may extend the period established under clause
(i)by not more than an additional 30 days, if— the commission determines that a longer period is appropriate and publishes the reasons for that determination; or the customer protection and market integrity authority that filed the proposed rule change consents to a longer period. If the appropriate commission does not approve or disapprove a proposed rule change under subparagraph (A), the commission shall provide to the customer protection and market integrity authority that filed the proposed rule change— notice of the grounds for disapproval under consideration; and opportunity for hearing, to be concluded not later than 180 days after the date of publication of notice of the filing of the proposed rule change. Except as provided in subclause (II), not later than 180 days after the date on which notice is published under paragraph (1), the appropriate commission shall issue an order approving or disapproving the proposed rule change that is the subject of the notice. The appropriate commission may extend the period for issuance under clause
(I)by not more than 60 days, if— the commission determines that a longer period is appropriate and publishes the reasons for such determination; or the customer protection and market integrity authority that filed the proposed rule change consents to the longer period. The appropriate commission shall approve a proposed rule change of a customer protection and market integrity authority if the commission finds that the proposed rule change is consistent with law. The appropriate commission may not approve a proposed rule change earlier than 30 days after the date of publication of notice with respect to the proposed rule change under paragraph (1), unless the commission finds good cause for so doing and publishes the reason for the finding. A proposed rule change shall be deemed to have been approved by the appropriate commission, if— the commission does not approve or disapprove the proposed rule change, or begin proceedings under subparagraph (B), within the period described in subparagraph (A); or the commission does not issue an order approving or disapproving the proposed rule change under subparagraph
(B)within the period described in subparagraph (B)(ii). For purposes of this paragraph, if, after filing a proposed rule change with the appropriate commission under paragraph (1), a customer protection and market integrity authority publishes a notice of the filing of that proposed rule change, together with the substantive terms of that proposed rule change, on a publicly accessible website, the commission shall send the notice to the Federal Register for publication of the proposed rule change under paragraph
(1)not later than 5 days after the date on which that website publication is made. If the appropriate commission fails to send notice under clause
(i)during the 5-day period described in that clause, the date of publication shall be deemed to be the date on which the applicable website publication is made. With respect to a proposed rule relating to the internal operation, governance, and procedures of a customer protection and market integrity authority, or a proposed rule relating to the determination of the legal character of a crypto asset— the proposed rule shall be— subject to approval by the Securities and Exchange Commission and the Commodity Futures Trading Commission; and deemed to be approved on the date that is 5 days after the date on which the proposed rule is submitted, unless either commission objects to the proposed rule change; and if a commission objects to the proposed rule change under subparagraph (A)(ii)— the commission shall, in a public format, provide to the authority and the non-objecting commission the reasons for the objection; the authority, and interested members of the public, may provide written comments to the commissions during the 20-day period beginning on the date on which the objection is noted; and the Securities and Exchange Commission and the Commodity Futures Trading Commission, voting separately, shall jointly issue an order approving or disapproving the proposed rule, with the failure to issue such a joint order being deemed to be approval of the proposed rule. Notwithstanding paragraphs
(2)and (3), a proposed rule change shall take effect upon filing if self-certified by an authority as— constituting a stated policy, practice, or interpretation with respect to the meaning, administration, or enforcement of an existing rule of the authority; establishing or changing a due, fee, or other charge imposed by the authority on any person, whether or not the person is a member of the authority; or notwithstanding any other provision of this subsection, necessary for customer protection, the maintenance of fair and orderly markets, or the safeguarding of crypto assets, customer funds, or other property, in which case the proposed rule change under shall be filed promptly thereafter in accordance with paragraph (1). Any proposed rule change of an authority that has taken effect under subparagraph
(A)may be enforced by the authority to the extent the rule change is not inconsistent with applicable law. At any time during the 60-day period beginning on the date on which a proposed rule change is filed under paragraph (1), the appropriate commission may temporarily and summarily suspend the change in the rules of the authority on a temporary basis, if the commission determines that such action is necessary or appropriate in the public interest, for customer protection, or to otherwise comply with applicable law. If a commission takes action under subclause (I), the commission shall institute proceedings under paragraph (2)(B) to determine whether the applicable proposed rule should be approved or disapproved. Action under this subparagraph shall not affect the validity or force of a proposed rule change during the period the rule change was in effect and shall not be reviewable in a judicial proceeding, nor deemed to be final agency action for purposes of section 704 of title 5. For purposes of this subsection, the date of filing of a proposed rule change shall be deemed to be the date on which the applicable commission receives the proposed rule change. Subject to clause (ii), a proposed rule has not been received by the applicable commission for purposes of subparagraph (A), if, not later than 7 business days after the date on which the commission receives the rule, the commission notifies the authority that the proposed rule change does not comply with the rules of the commission relating to the required form of a proposed rule change. If the applicable commission determines that a proposed rule change is unusually lengthy, and is complex or raises novel regulatory issues, the commission shall inform the authority of that determination not later than 7 business days after the date on which the commission receives the rule. For the purposes of subparagraph (A), a proposed rule change described in subclause
(I)has not been received by the applicable commission, if, not later than 21 days after the date on which the commission receives the rule, the commission notifies the applicable authority that the proposed rule change does not comply with the rules of the commission relating to the required form of a proposed rule change. This paragraph shall not apply to a rule relating to the internal operations, governance, and procedure of an authority. The appropriate commission may, by rule, abrogate, add to, and delete from the rules of an authority as the commission determines necessary or appropriate to ensure the fair administration of the authority or to conform the rules of the authority to law or applicable rule, in the following manner: The appropriate commission shall notify the authority and publish notice of the proposed rulemaking in the Federal Register, which shall include the text of the proposed amendment to the rules of the authority and a statement of the reasons of the commission, including any pertinent facts, for commencing the proposed rulemaking. The appropriate commission shall give interested persons an opportunity for the oral presentation of data, views, and arguments, in addition to an opportunity to make written submissions. A transcript shall be kept of any oral presentation under clause (i). A rule adopted pursuant to this paragraph shall incorporate the text of the amendment to the rules of the authority and a statement of the appropriate commission regarding the basis for amendment of the rule, which shall include an identification of any facts on which the determination of the commission to amend the rules of the authority is based, including the reasons for the conclusions of the commission relating to any facts that were disputed in the rulemaking. Nothing in this subsection may be construed to impair or limit the authority of the appropriate commission to make, or to modify or alter the procedures the commission may follow in making, rules pursuant to any other authority granted by law that is consistent with this subsection. Any amendment to the rules of an authority made by the appropriate commission under this subsection shall be considered for all purposes to be part of the rules of that authority and shall not be considered to be a rule of that commission. With respect to rules described in subsection (b)(4)(A)(iii), the appropriate commission shall consult with and consider the views of the other commission and the Secretary of the Treasury before abrogating, adding to, and deleting from those rules, except where the commission determines that an emergency exists requiring expeditious or summary action and publishes the reasons of the commission for taking that action. If an authority imposes any final disciplinary sanction on any member of the authority, or any participant with respect to the authority, denies membership or participation to any applicant, prohibits or limits any person from accessing services offered by the authority or a member of the authority, imposes any final disciplinary sanction on any person associated with a member, or bars any person from becoming associated with a member, the authority shall promptly file notice of that action with the appropriate commission. Any action with respect to which an authority is required to file notice under paragraph
(1)shall be subject to review by the appropriate commission for the applicable member, participant, applicant, or other person, on its own motion, or upon application by any person aggrieved by that action if filed not later than 30 days after the date on which the notice was filed with the appropriate commission and received by the aggrieved person, or within such longer period as the appropriate commission may determine. Application to the appropriate commission for review, or the institution of review by the commission on its own motion, shall not operate as a stay of an action described in subparagraph
(A)unless the appropriate commission otherwise orders, summarily or after notice and opportunity for hearing on the question of a stay, which may consist solely of the submission of affidavits or presentation of oral arguments. For the purposes of this paragraph, each of the appropriate commissions shall establish for appropriate cases an expedited procedure for consideration and determination of the question of a stay. This subsection shall apply only to the extent that an authority imposes any final disciplinary sanction for— a violation of Federal law or the rules issued under Federal law; or a violation of a rule of the authority, as to which a proposed change would be required to be filed under this section. In any proceeding to review a final disciplinary sanction imposed by an authority on a member, a participant with respect to the authority, or a person associated with such a member, after notice and opportunity for hearing, which may consist solely of consideration of the record before the authority and opportunity for the presentation of supporting reasons to affirm, modify, or set aside the sanction— if the appropriate commission finds that such member, participant, or person associated with a member has engaged in such acts or practices, or has omitted such acts, as the authority has found that person to have engaged in or omitted, that such acts or practices, or omissions to act, are in violation of law, the rules thereunder, or the rules of the authority, and that such provisions are, and were applied in a manner, consistent with law, the commission, by order, shall— make a declaration regarding that finding; and as appropriate— affirm the sanction imposed by the authority; modify the sanction in accordance with paragraph (2); or remand to the authority for further proceedings; or if the appropriate commission does not make a finding described in subparagraph (A), the commission shall, by order— set aside the sanction imposed by the authority; and if appropriate, remand to the authority for further proceedings. If the appropriate commission for a member, participant, or person associated with a member, having due regard for the public interest and customer protection, finds, after a proceeding under paragraph (1), that a sanction imposed by a authority upon that member, participant, or person associated with a member imposes any burden on competition not necessary or appropriate or is excessive or oppressive, the commission may cancel, reduce, or require the remission of that sanction. In any proceeding to review the denial of membership or participation in an authority to any applicant, the barring of any person from becoming associated with a member of an authority, or the prohibition or limitation by an authority of any person from accessing services offered by the authority or any member, if the appropriate commission, after notice and opportunity for hearing, which may consist solely of consideration of the record before the authority and opportunity for the presentation of supporting reasons to dismiss the proceeding or set aside the action of the authority, finds that the specific grounds on which that denial, bar, or prohibition or limitation is based exist in fact, that such denial, bar, or prohibition or limitation is in accordance with the rules of the authority, and that such rules are, and were applied in a manner, consistent with law, the appropriate commission, by order, shall dismiss the proceeding. If the appropriate commission does not make a finding described in paragraph (1), or if the commission finds that the applicable denial, bar, prohibition, or limitation imposes any burden on competition not necessary or appropriate, the commission, by order, shall set aside the action of the authority and require the authority to admit the applicable applicant to membership or participation, permit that person to become associated with a member, or grant that person access to services offered by the authority or a member. If necessary or appropriate in the public interest, for customer protection, or otherwise in furtherance of the purposes of this section, the appropriate commissions, voting separately, may issue a joint order suspending for a period not exceeding 1 year or revoking the registration of an authority, or censuring or imposing limitations upon the activities, functions, and operations of an authority, if, the commissions find, on the record after notice and opportunity for hearing, that the authority— has violated or is unable to comply with any provision of law, rule, or the rules of the authority without reasonable justification or excuse; or has failed to enforce compliance with any provision by a member of the authority or a person associated with a member of the authority. The appropriate commission may, by order, if necessary or appropriate in the public interest, for customer protection, or otherwise in furtherance of the purposes of this section, to suspend for a period not exceeding 1 year or expel from an authority, any member of an authority, or participant with respect to an authority, if such member or participant is subject to an order of the commission or if the commission, on the record after notice and opportunity for hearing, determines that the member or participant has willfully violated, or has effected any transaction for any other person who the member or participant had reason to believe was violating, with respect to such transaction any applicable provision of law under the jurisdiction of the commission. The applicable commission may, by order, if necessary or appropriate in the public interest, for customer protection, or otherwise in furtherance of the purposes of this section, to suspend for a period not exceeding 1 year or to bar any person from being associated with a member of such authority, if the person is subject to an order of the appropriate commission or if the appropriate commission finds, on the record after notice and opportunity for hearing, that the person has willfully violated, or has effected any transaction for any other person who the person associated with a member had reason to believe was violating, with respect to the transaction any applicable provision of law under the jurisdiction of the commission. If necessary or appropriate in the public interest, for customer protection, or otherwise in furtherance of the purposes of this section, the Securities and Exchange Commission and the Commodity Futures Trading Commission, voting separately, may, by joint order, remove from office or censure any person who is, or at the time of the alleged misconduct was, an officer or director of an authority, if the commissions find, on the record after notice and opportunity for a hearing before an impartial hearing officer, that such person has willfully violated any provision of law, the rules thereunder, or the rules of such authority, willfully abused the authority of the person, or without reasonable justification or excuse has failed to enforce compliance with any provision of law by any member or person associated with a member. The Securities and Exchange Commission and the Commodity Futures Trading Commission shall each appoint an equal number of employees, under the supervision of the Chairman of the respective commissions, to an interagency working group, which shall coordinate and facilitate the responsibilities and powers of the respective commissions under this chapter. . The table of sections for chapter 98 of title 31, United States Code, as amended by section 601, is amended by adding at the end the following: 9810. Registration, rulemaking, and supervision of customer protection and market integrity authorities. .