Self-Regulatory Organizations: Financial Industry Regulatory Authority, Inc.; Notice of Filing and Order Granting Accelerated Approval of Proposed Rule Change and Amendment No. 1 Relating to Options Supervision Requirements, 26453-26457 [E8-10339]
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Federal Register / Vol. 73, No. 91 / Friday, May 9, 2008 / Notices
permit unfair discrimination between
customers, issuers, brokers and dealers.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were solicited
or received with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
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The Exchange has designated the
proposed rule change as one that: (1)
Does not significantly affect the
protection of investors or the public
interest; (2) does not impose any
significant burden on competition; and
(3) does not become operative for 30
days from the date of filing, or such
shorter time as the Commission may
designate if consistent with the
protection of investors and the public
interest.8 Therefore, the foregoing rule
change has become effective pursuant to
section 19(b)(3)(A) of the Act 9 and
subparagraph (f)(6) of Rule 19b–4
thereunder.10 The Exchange has asked
the Commission to waive the operative
delay to permit the extension of the
implementation period of the ABC
program to become operative prior to
the 30th day after filing, in order to
allow the implementation period to
continue without interruption.
The Commission believes that
waiving the 30-day operative delay is
consistent with the protection of
investors and the public interest and
will allow the Exchange to extend the
roll-out of the ABC program, which
expired on May 1, 2008, without
interruption.11 Therefore, the
Commission designates the proposal
operative upon filing.
8 In addition, Rule 19b–4(f)(6)(iii) requires a selfregulatory organization to provide the Commission
with written notice of its intent to file the proposed
rule change, along with a brief description and text
of the proposed rule change, at least five business
days prior to the date of filing of the proposed rule
change, or such shorter time as designated by the
Commission. 17 CFR 240.19b–4(f)(6)(iii). The
Exchange has fulfilled this requirement.
9 15 U.S.C. 78s(b)(3)(A).
10 17 CFR 240.19b–4(f)(6).
11 For purposes only of waiving the 30-day
operative delay, the Commission has considered the
proposed rule’s impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
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At any time within 60 days of the
filing of the proposed rule change, the
Commission may summarily abrogate
the rule change if it appears to the
Commission that such action is
necessary or appropriate in the public
interest, for the protection of investors,
or otherwise in furtherance of the
purposes of the Act.
submissions should refer to File
Number SR–Amex–2008–37 and should
be submitted on or before May 30, 2008.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
BILLING CODE 8010–01–P
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
No. SR–Amex–2008–37 on the subject
line.
Paper Comments
• Send paper comments in triplicate
to Nancy M. Morris, Secretary,
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–1090.
All submissions should refer to File
Number SR–Amex–2008–37. This file
number should be included on the
subject line if e-mail is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commissions
Internet Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for inspection and copying in
the Commission’s Public Reference
Room, 100 F Street, NE., Washington,
DC 20549, on official business days
between the hours of 10 a.m. and 3 p.m.
Copies of such filing also will be
available for inspection and copying at
the principal office of the Exchange. All
comments received will be posted
without change; the Commission does
not edit personal identifying
information from submissions. You
should submit only information that
you wish to make available publicly. All
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For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.12
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E8–10340 Filed 5–8–08; 8:45 am]
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–57775; File No. SR–FINRA–
2007–035]
Self-Regulatory Organizations:
Financial Industry Regulatory
Authority, Inc.; Notice of Filing and
Order Granting Accelerated Approval
of Proposed Rule Change and
Amendment No. 1 Relating to Options
Supervision Requirements
May 5, 2008.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2
notice is hereby given that on December
18, 2007, Financial Industry Regulatory
Authority, Inc. (‘‘FINRA’’) (f/k/a
National Association of Securities
Dealers, Inc. (‘‘NASD’’)) filed with the
Securities and Exchange Commission
(‘‘Commission’’) and amended on April
17, 2008 3 the proposed rule change as
described in Items I and II below, which
Items have been substantially prepared
by FINRA. This order provides notice of
the proposed rule change as modified by
Amendment No. 1 and approves the
proposed rule change as amended on an
accelerated basis.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
FINRA is proposing to amend NASD
Rule 1022 (Categories of Principal
Registration), NASD Rule 2220 (Options
Communications with the Public) and
NASD Rule 2860 (Options) to eliminate
the requirement for separate
designations of Senior Registered
Options Principal (‘‘SROP’’) and
Compliance Registered Options
Principal (‘‘CROP’’) and require a
member to integrate the responsibility
for supervision of its public customer
options business into its overall
supervisory and compliance program.
12 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 Amendment No. 1 to SR–FINRA–2007–035
replaced and superseded the original rule filing
filed on December 18, 2007.
1 15
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Below is the text of the proposed rule
change. Proposed new language is in
italics; proposed deletions are in
brackets.
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1022. Categories of Principal
Registration
(a) through (e) No Change.
(f) Limited Principal—Registered
Options and Security Futures
(1) Every member of [the
Association]NASD that is engaged in, or
that intends to engage in transactions in
security futures or [put or call] options
with the public shall have at least one
Registered Options and Security Futures
Principal who shall have satisfied the
requirements of this subparagraph. [As
to options transactions, each member
shall also designate a Senior Registered
Options Principal and a Compliance
Registered Options Principal in
accordance with the provisions of Rule
2860(b)(20) and identify such persons to
the Association.] Every person engaged
in the supervision of options and
security futures sales practices,
including a person designated pursuant
to Rule 3010(a)(2) [the management of
the day-to-day options or security
futures activities of a member] shall
[also] be registered as a Registered
Options and Security Futures Principal.
(2) through (5) No Change.
(g) through (h) No Change.
2220. Options Communications with the
Public
(a) No Change.
(b) Approval by [Compliance]a
Registered Options and Security Futures
Principal and Recordkeeping
All advertisements, sales literature
(except completed worksheets), and
educational material issued by a
member or member organization
pertaining to options shall be approved
in advance by [the Compliance
Registered Options Principal or
designee]a Registered Options and
Security Futures Principal designated by
the member’s written supervisory
procedures. Copies thereof, together
with the names of the persons who
prepared the material, the names of the
persons who approved the material and,
in the case of sales literature, the source
of any recommendations contained
therein, shall be retained by the member
or member organization and be kept at
an easily accessible place for
examination by [the Association]NASD
for a period of three years.
(c) through (d) No Change.
2860. Options
(a) No Change.
(b) Requirements
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(1) through (15) No Change.
(16) Opening of Accounts
(A) through (D) No Change.
(E) Uncovered Short Option Contracts
Each member transacting business
with the public in writing uncovered
short option contracts shall develop,
implement and maintain specific
written procedures governing the
conduct of such business which shall
include, at least, the following:
(i) through (ii) No Change.
(iii) Designation of [the Senior
Registered Options Principal and/or
Compliance Registered Options
Principal] a specific Registered Options
and Security Futures Principal(s) as [the
person] responsible for approving
customer accounts that do not meet the
specific criteria and standards for
writing uncovered short option
transactions and for maintaining written
records of the reasons for every account
so approved;
(iv) through (v) No Change.
(17) No Change.
(18) Discretionary Accounts
(A) Authorization and Approval
(i) No Change.
(ii) [The Senior Registered Options
Principal]Each firm shall designate
specific Registered Options and Security
Futures Principals to review
discretionary accounts. A Registered
Options and Security Futures Principal
other than the Registered Options and
Security Futures Principal who accepted
the account shall review the acceptance
of each discretionary account to
determine that the Registered Options
and Security Futures Principal
accepting the account had a reasonable
basis for believing that the customer was
able to understand and bear the risk of
the strategies or transactions proposed,
and shall maintain a record of the basis
for such determination. [Each
discretionary order shall be approved
and initialed on the day entered by the
branch office manager or other
Registered Options Principal, provided
that if the branch office manager is not
a Registered Options Principal, such
approval shall be confirmed within a
reasonable time by a Registered Options
Principal. Each] Every discretionary
order shall be identified as discretionary
on the order at the time of entry.
Discretionary accounts shall receive
frequent appropriate supervisory review
by [the Compliance Registered Options
Principal]a Registered Options and
Security Futures Principal who is not
exercising the discretionary authority.
The provisions of this subparagraph (18)
shall not apply to discretion as to the
price at which or the time when an
order given by a customer for the
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purchase or sale of a definite number of
option contracts in a specified security
shall be executed, except that the
authority to exercise time and price
discretion will be considered to be in
effect only until the end of the business
day on which the customer granted such
discretion, absent specific, written
contrary indication signed and dated by
the customer. This limitation shall not
apply to time and price discretion
exercised in an institutional account, as
defined in Rule 3110(c)(4), pursuant to
valid Good-Till-Cancelled instructions
issued on a ‘‘not held’’ basis. Any
exercise of time and price discretion
must be reflected on the order ticket.
(iii) Any member that does not utilize
computerized surveillance tools for the
frequent and appropriate review of
discretionary activity must establish and
implement procedures to require
specific Registered Options and Security
Futures Principals who have been
designated to review discretionary
accounts to approve and initial each
discretionary order on the day entered.
(B) through (C) No Change.
(19) No Change.
(20) Supervision of Accounts
(A) Duty to Supervise[; Senior
Registered Options Principal]
[Every member shall develop and
implement a written program providing
for the diligent supervision of all of its
customer accounts, and all orders in
such accounts, to the extent such
accounts and orders relate to options
contracts, by a general partner (in the
case of a partnership) or officer (in the
case of a corporation) of the member
who is a Registered Options Principal
and who has been specifically identified
to the Association as the member’s
Senior Registered Options Principal. A
Senior Registered Options Principal, in
meeting his responsibilities for
supervision of customer accounts and
orders, may delegate to qualified
employees (including other Registered
Options Principals) responsibility and
authority for supervision and control of
each branch office handling transactions
in option contracts, provided that the
Senior Registered Options Principal
shall have overall authority and
responsibility for establishing
appropriate procedures of supervision
and control over such employees. Every
such member shall also develop and
implement specific written procedures
concerning the manner of supervision of
customer accounts maintaining
uncovered short option positions and
specifically providing for frequent
supervisory review of such
accounts.]Each member that conducts a
public customer options business shall
ensure that its written supervisory
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system policies and procedures
pursuant to Rules 3010, 3012, and 3013
adequately address the member’s public
customer options business.
[(B) Compliance Registered Options
Principal]
[Every member shall designate and
specifically identify to the Association a
Compliance Registered Options
Principal (CROP), who may be the
Senior Registered Options Principal,
who shall have no sales functions and
who shall be responsible to review and
to propose appropriate action to secure
the member’s compliance with
securities laws and regulations and
Association Rules in respect of its
options business. The CROP shall
regularly furnish reports directly to the
Compliance officer (if the CROP is not
himself the Compliance officer) and to
other senior management of the
member. The requirement that the
CROP have no sales functions shall not
apply to a member that has received less
than $1,000,000 in gross commissions
on options business for either of the
preceding two fiscal years or that
currently has ten or fewer registered
representatives.]
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[(C)](B) Branch Offices
No branch office of a member shall
transact an options business unless the
principal supervisor of such branch
office accepting options transactions has
been qualified as either a Registered
Options and Security Futures Principal
or a Limited Principal—General
Securities Sales Supervisor; provided
that this requirement shall not apply to
branch offices in which no more than
three registered representatives are
located, so long as the options activities
of such branch offices are appropriately
supervised by either a Registered
Options and Security Futures Principal
or a Limited Principal—General
Securities Sales Supervisor.
[(D)](C) Headquarters Review of
Accounts
Each member shall maintain at the
principal supervisory office having
jurisdiction over the office servicing
customer accounts, or have readily
accessible and promptly retrievable,
information to permit review of each
customer’s options account on a timely
basis to determine:
(i) The compatibility of options
transactions with investment objectives
and with the types of transactions for
which the account was approved;
(ii) The size and frequency of options
transactions;
(iii) Commission activity in the
account;
(iv) Profit or loss in the account;
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(v) Undue concentration in any
options class or classes, and
(vi) Compliance with the provisions
of Regulation T of the Federal Reserve
Board.
(21) through (24) No Change.
(c) No Change.
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II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission,
FINRA included statements concerning
the purpose of and basis for the
proposed rule change and discussed any
comments it received on the proposed
rule change. The text of these statements
may be examined at the places specified
in Item III below. FINRA has prepared
summaries, set forth in sections A, B,
and C below, of the most significant
aspects of such statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
FINRA is proposing to amend its
options rules to integrate the
responsibility for supervision of a
member’s public customer options
business into its overall supervisory and
compliance program. The proposed rule
change is substantively similar to recent
amendments to the rules of the Chicago
Board Options Exchange (‘‘CBOE’’),
which were approved by the
Commission.4 As part of these changes,
FINRA proposes to eliminate the
requirement that a firm must designate
a SROP and CROP to be responsible for
the overall supervision and compliance
programs, respectively, for a member’s
public customer options activities.
FINRA believes that the supervisory and
compliance function of a member’s
public customer options activities
would be better integrated into the
matrix of a firm’s overall supervisory
and compliance functions rather than
separately vested in a SROP and CROP.
FINRA does not believe that
eliminating the SROP and CROP
requirements would lead to a reduction
in supervision, as firms have an
obligation to designate an appropriately
registered principal(s) to supervise their
public customer options activities
pursuant to NASD Rule 3010(a)(2).5 The
4 See
Securities Exchange Act Release No. 56971
(December 14, 2007), 72 FR 72804 (December 21,
2007) (Approval Order for File No. SR–CBOE–
2007–106).
5 NASD Rule 3010(a)(2) requires that members
designate ‘‘an appropriately registered principal(s)
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26455
proposed rule change would provide
firms greater flexibility to incorporate
supervision into existing, firm-wide
supervisory structures.
The proposed rule change would
amend NASD Rule 1022 (Categories of
Principal Registration) to delete the
reference to the SROP and CROP and
clarify that if a person is engaged in the
supervision of options and security
futures sales practices, including a
person designated pursuant to NASD
Rule 3010(a)(2), then such person must
be registered as a Registered Options
and Security Futures Principal
(‘‘ROSFP’’).
The proposed rule change also makes
a few technical changes. All references
to ‘‘Registered Options Principal’’
would be changed to ‘‘Registered
Options and Security Futures Principal’’
to reflect the change in title when rules
governing security futures were
adopted.6 All references to ‘‘the
Association’’ would be changed to
‘‘NASD’’ for ease of reference while the
rules continue to be part of the legacy
NASD rulebook until such time as the
legacy NASD and incorporated NYSE
rules are consolidated into the FINRA
rule book when all references to
‘‘NASD’’ will be changed to ‘‘FINRA.’’
Finally, all references to ‘‘put and call’’
would be deleted before options and
‘‘options’’ will mean all types of
options.
The proposed rule change would
amend NASD Rule 2220(b) (Options
Communications with the Public) to
delete the reference to the CROP and
instead require that all advertisements,
sales literature (except completed
worksheets), and educational material
issued by a member or member
organization pertaining to options be
approved in advance by a ROSFP
designated by the member’s written
supervisory procedures.
In addition, the proposed rule change
would amend NASD Rule 2860
(Options) in several respects. First,
paragraph (b)(16)(E)(iii) would be
amended to delete the reference to the
SROP and CROP and require that a
specific ROSFP(s) be designated to be
responsible for approving customer
accounts that do not meet the specific
criteria and standards for writing
uncovered short option transactions and
for maintaining written records of the
reasons for every account so approved.
The proposed rule change would allow
with authority to carry out the supervisory
responsibilities of the member for each type of
business in which it engages for which registration
as a broker/dealer is required.’’
6 See Securities Exchange Act Release No. 46663
(October 15, 2002), 67 FR 64944 (October 22, 2002)
(Approval Order for File No. SR–NASD–2002–040).
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members the flexibility to assign this
responsibility, which currently rests
with the SROP and/or CROP, to a
specific ROSFP(s).
Second, the proposed rule change
would amend paragraph (b)(18) and the
treatment of options discretionary
accounts. Specifically, under the
proposed rule change, each firm would
be required to designate specific
ROSFPs to review discretionary
accounts.7 A ROSFP other than the
ROSFP who accepted the account
would review the acceptance of each
discretionary account to determine that
the ROSFP accepting the account had a
reasonable basis for believing that the
customer was able to understand and
bear the risk of the strategies or
transactions proposed and must
maintain a record of the basis for such
determination.
In addition, the proposed rule change
would eliminate the requirement in
paragraph (b)(18) that discretionary
options orders be approved and
initialed on the day of entry by the
branch office manager or authorized
Registered Options Principal (‘‘ROP’’) or
confirmed within a reasonable time by
a ROP if the branch office manager is
not a ROP, if a firm uses computerized
surveillance tools. Under the proposed
rule change, discretionary orders would
be required to receive frequent
appropriate supervisory review by a
ROSFP who is not exercising
discretionary authority (instead of a
CROP) and be reviewed in accordance
with a member’s written supervisory
procedures. The proposed rule change
would ensure that supervisory
responsibilities are assigned to specific
ROSFP-qualified individuals, thereby
enhancing the quality of supervision.
Firms that do not use computerized
surveillance tools for the frequent and
appropriate review of discretionary
activity would be required to establish
and implement procedures to require
ROSFPs who have been designated to
review discretionary accounts to
approve and initial each discretionary
order on the day entered. FINRA
believes that any member that does not
use computerized tools for the frequent
and adequate surveillance of options
discretionary account activity should
continue to be required to perform the
daily manual review of discretionary
orders.
Paragraph (b)(18) also would be
revised to limit the duration of the time
and price discretionary authority to the
7 Under the existing rule, the SROP must review
the acceptance of each discretionary account and
the CROP must perform frequency supervisory
review of such accounts.
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end of the business day on which the
customer granted such discretion,
absent specific written contrary
indication signed and dated by the
customer. The limitation would not
apply to time and price discretion
exercised in an institutional account, as
defined in NASD Rule 3110(c)(4),
pursuant to valid Good-Till-Cancelled
instructions issued on a ‘‘not held’’
basis. The proposed rule change would
require any exercise of time and price
discretion to be reflected on the order
ticket. The proposed rule change
mirrors the limitations to discretionary
authority provided in NASD Rule
2510(d). FINRA believes that it is
appropriate to have consistent treatment
of discretionary orders for options as for
all other securities.
Third, the proposed rule change
would amend paragraph (b)(20) to
delete references to a supervision
process involving a SROP and CROP,
and instead would require each member
that conducts a public customer options
business to ensure that its written
supervisory system policies and
procedures pursuant to NASD Rules
3010, 3012, and 3013 adequately
address the member’s public customer
options business. Although the
proposed rule change would eliminate
entirely the positions and titles of the
SROP and CROP, a member would still
be required pursuant to NASD Rule
3010(a)(2) to designate ‘‘an
appropriately registered principal(s)
with authority to carry out the
supervisory responsibilities of the
member for each type of business in
which it engages for which registration
as a broker/dealer is required,’’ which
would include designating a ROSFP to
supervise a member’s public customer
options activities.
FINRA will announce the effective
date of the proposed rule change in a
Regulatory Notice to be published no
later than 60 days following
Commission approval. The effective
date will be no later than 30 days
following publication of the Regulatory
Notice announcing Commission
approval.
2. Statutory Basis
FINRA believes that the proposed rule
change is consistent with the provisions
of Section 15A(b)(6) of the Act,8 which
requires, among other things, that
FINRA rules must be designed to
prevent fraudulent and manipulative
acts and practices, to promote just and
equitable principles of trade, and, in
general, to protect investors and the
public interest. FINRA believes that the
8 15
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supervisory and compliance function of
a member’s public customer options
activities would be better integrated into
the matrix of a firm’s overall
supervisory and compliance functions
rather than separately vested in a SROP
and CROP.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
FINRA does not believe that the
proposed rule change will result in any
burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
Written comments were neither
solicited nor received.
III. Solicitation of Comments
Interested persons are invited to
submit written data, views and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–FINRA–2007–035 on the
subject line.
Paper Comments
• Send paper comments in triplicate
to Nancy M. Morris, Secretary,
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–1090.
All submissions should refer to File
Number SR–FINRA–2007–035. This file
number should be included on the
subject line if e-mail is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for inspection and copying in
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the Commission’s Public Reference
Room, 100 F Street, NE., Washington,
DC 20549, on official business days
between the hours of 10 a.m. and 3 p.m.
Copies of such filings also will be
available for inspection and copying at
the principal office of FINRA. All
comments received will be posted
without change; the Commission does
not edit personal identifying
information from submissions. You
should submit only information that
you wish to make available publicly. All
submissions should refer to File
Number SR–FINRA–2007–035 and
should be submitted on or before May
30, 2008.
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IV. Commission Findings
The Commission has carefully
reviewed the proposed rule change and
finds that it is consistent with the
requirements of the Act and the rules
and regulations thereunder applicable to
a national securities association.9 In
particular, the Commission believes that
the proposed rule change would help to
better integrate the supervisory and
compliance functions of a firm’s public
customer options activities into the
firm’s overall supervisory and
compliance functions, thereby
eliminating any uncertainty about
where supervisory responsibility lies.
Therefore, the Commission finds that
the proposed rule change is consistent
with Section 15A(b)(6) of the Act,10
which requires, among other things, that
FINRA rules be designed to prevent
fraudulent and manipulative acts and
practices, to promote just and equitable
principles of trade, and, in general, to
protect investors and the public interest.
The Commission also finds good
cause to approve the proposed rule
change prior to the thirtieth day after
the date of publication of notice of filing
of the amendment in the Federal
Register. The proposed rule change is
substantially similar to recent CBOE
rule amendments concerning options
supervision, which were approved by
the Commission.11 The Commission
believes that approving the proposed
rule change will simplify firms’
compliance, and is consistent with the
public interest and the investor
protection goals of the Act. Finally, the
Commission finds that it is in the public
interest to approve the proposed rule
9 In approving the proposed rule change, the
Commission considered the proposal’s impact on
efficiency, competition, and capital formation. 15
U.S.C. 78c(f).
10 15 U.S.C. 78o–3(b)(6).
11 See Securities Exchange Act Release No. 56971
(December 14, 2007), 72 FR 72804 (December 21,
2007) (Approval Order for File No. SR–CBOE–
2007–106).
VerDate Aug<31>2005
18:01 May 08, 2008
Jkt 214001
change as soon as possible to expedite
its implementation.
Accordingly, the Commission believes
good cause exists, consistent with
Sections 15A(b)(6) and 19(b) of the
Act,12 to approve the proposed rule
change on an accelerated basis.
V. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,13 that the
proposed rule change (File No. SR–
FINRA–2007–035), as modified by
Amendment No. 1, be, and hereby is,
approved on an accelerated basis.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.14
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E8–10339 Filed 5–8–08; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–57777; File No. SR–ISE–
2008–25]
Self-Regulatory Organizations;
International Securities Exchange,
LLC; Order Approving Proposed Rule
Change, as Modified by Amendment
No. 1, Relating to the Rescission of the
‘‘No MPM’’ Order Type
May 5, 2008.
On March 5, 2008, the International
Securities Exchange, LLC (‘‘ISE’’) filed
with the Securities and Exchange
Commission (‘‘Commission’’), pursuant
to Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Act’’),1 and
Rule 19b–4 thereunder,2 a proposed rule
change to amend its rules governing ISE
Stock Exchange to rescind the ‘‘No
MPM’’ order type. On March 17, 2008,
ISE filed Amendment No. 1 to the
proposed rule change. The proposed
rule change, as modified by Amendment
No. 1, was published for comment in
the Federal Register on April 1, 2008.3
The Commission received no comment
letters on the proposed rule change.
This order approves the proposed rule
change, as modified by Amendment No.
1.
The best bids and offers on the ISE
Stock Exchange are displayed to the
marketplace on a continuous basis. In
addition, the ISE offers incoming orders
U.S.C. 78o–3(b)(6), and 78s(b).
U.S.C. 78s(b)(2).
14 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 See Securities Exchange Act Release No. 57557
(March 26, 2008), 73 FR 17386.
26457
an opportunity to receive price
improvement at the midpoint of the
National Best Bid or Offer (‘‘NBBO’’)
through its MidPoint Match (‘‘MPM’’)
process. Specifically, before executing
incoming orders against the ISE’s
displayed bid or offer, the system
checks MPM to see if there is contraside interest that can provide price
improvement. However, under ISE’s
current rules, Equity Electronic Access
Members may specify on orders that
they do not want the orders to execute
against MPM interest, thereby denying
such orders the opportunity for price
improvement.
The Exchange proposes to amend
Rules 2104 and 2106 to eliminate the
‘‘No MPM’’ order type, and to clarify in
Rule 2107 that all inbound orders will
be exposed to MPM interest and be
afforded price improvement, when
available, before executing against the
ISE’s displayed quotations. The
Exchange also proposes to amend Rule
2129 to clarify that MPM is a process by
which ISE members may receive an
execution price that is at the midpoint
of the NBBO.
After careful review, the Commission
finds that the proposed rule change is
consistent with the Act and the rules
and regulations thereunder applicable to
a national securities exchange.4
Specifically, the Commission finds that
the proposed rule change is consistent
with Section 6(b)(5) 5 of the Act, which
requires that, among other things, the
rules of an exchange be designed to
promote just and equitable principles of
trade, to remove impediments to and
perfect the mechanism of a free and
open market and a national market
system, and, in general, to protect
investors and the public interest. The
Commission believes that exposing all
inbound orders to MPM interest should
afford such orders an opportunity for
price improvement by providing
customers the opportunity to interact
with an additional source of liquidity.
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act, that the
proposed rule change (SR–ISE–2008–
25), as modified by Amendment No. 1,
be, and it hereby is, approved.
12 15
13 15
PO 00000
Frm 00100
Fmt 4703
Sfmt 4703
4 In approving this proposed rule change, the
Commission has considered the proposed rule’s
impact on efficiency, competition, and capital
formation. 15 U.S.C. 78c(f).
5 15 U.S.C. 78(f)(b)(5).
E:\FR\FM\09MYN1.SGM
09MYN1
]]>Agencies
[Federal Register Volume 73, Number 91 (Friday, May 9, 2008)]
[Notices]
[Pages 26453-26457]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-10339]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-57775; File No. SR-FINRA-2007-035]
Self-Regulatory Organizations: Financial Industry Regulatory
Authority, Inc.; Notice of Filing and Order Granting Accelerated
Approval of Proposed Rule Change and Amendment No. 1 Relating to
Options Supervision Requirements
May 5, 2008.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on December 18, 2007, Financial Industry Regulatory Authority, Inc.
(``FINRA'') (f/k/a National Association of Securities Dealers, Inc.
(``NASD'')) filed with the Securities and Exchange Commission
(``Commission'') and amended on April 17, 2008 \3\ the proposed rule
change as described in Items I and II below, which Items have been
substantially prepared by FINRA. This order provides notice of the
proposed rule change as modified by Amendment No. 1 and approves the
proposed rule change as amended on an accelerated basis.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ Amendment No. 1 to SR-FINRA-2007-035 replaced and superseded
the original rule filing filed on December 18, 2007.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
FINRA is proposing to amend NASD Rule 1022 (Categories of Principal
Registration), NASD Rule 2220 (Options Communications with the Public)
and NASD Rule 2860 (Options) to eliminate the requirement for separate
designations of Senior Registered Options Principal (``SROP'') and
Compliance Registered Options Principal (``CROP'') and require a member
to integrate the responsibility for supervision of its public customer
options business into its overall supervisory and compliance program.
[[Page 26454]]
Below is the text of the proposed rule change. Proposed new
language is in italics; proposed deletions are in brackets.
* * * * *
1022. Categories of Principal Registration
(a) through (e) No Change.
(f) Limited Principal--Registered Options and Security Futures
(1) Every member of [the Association]NASD that is engaged in, or
that intends to engage in transactions in security futures or [put or
call] options with the public shall have at least one Registered
Options and Security Futures Principal who shall have satisfied the
requirements of this subparagraph. [As to options transactions, each
member shall also designate a Senior Registered Options Principal and a
Compliance Registered Options Principal in accordance with the
provisions of Rule 2860(b)(20) and identify such persons to the
Association.] Every person engaged in the supervision of options and
security futures sales practices, including a person designated
pursuant to Rule 3010(a)(2) [the management of the day-to-day options
or security futures activities of a member] shall [also] be registered
as a Registered Options and Security Futures Principal.
(2) through (5) No Change.
(g) through (h) No Change.
2220. Options Communications with the Public
(a) No Change.
(b) Approval by [Compliance]a Registered Options and Security
Futures Principal and Recordkeeping
All advertisements, sales literature (except completed worksheets),
and educational material issued by a member or member organization
pertaining to options shall be approved in advance by [the Compliance
Registered Options Principal or designee]a Registered Options and
Security Futures Principal designated by the member's written
supervisory procedures. Copies thereof, together with the names of the
persons who prepared the material, the names of the persons who
approved the material and, in the case of sales literature, the source
of any recommendations contained therein, shall be retained by the
member or member organization and be kept at an easily accessible place
for examination by [the Association]NASD for a period of three years.
(c) through (d) No Change.
2860. Options
(a) No Change.
(b) Requirements
(1) through (15) No Change.
(16) Opening of Accounts
(A) through (D) No Change.
(E) Uncovered Short Option Contracts
Each member transacting business with the public in writing
uncovered short option contracts shall develop, implement and maintain
specific written procedures governing the conduct of such business
which shall include, at least, the following:
(i) through (ii) No Change.
(iii) Designation of [the Senior Registered Options Principal and/
or Compliance Registered Options Principal] a specific Registered
Options and Security Futures Principal(s) as [the person] responsible
for approving customer accounts that do not meet the specific criteria
and standards for writing uncovered short option transactions and for
maintaining written records of the reasons for every account so
approved;
(iv) through (v) No Change.
(17) No Change.
(18) Discretionary Accounts
(A) Authorization and Approval
(i) No Change.
(ii) [The Senior Registered Options Principal]Each firm shall
designate specific Registered Options and Security Futures Principals
to review discretionary accounts. A Registered Options and Security
Futures Principal other than the Registered Options and Security
Futures Principal who accepted the account shall review the acceptance
of each discretionary account to determine that the Registered Options
and Security Futures Principal accepting the account had a reasonable
basis for believing that the customer was able to understand and bear
the risk of the strategies or transactions proposed, and shall maintain
a record of the basis for such determination. [Each discretionary order
shall be approved and initialed on the day entered by the branch office
manager or other Registered Options Principal, provided that if the
branch office manager is not a Registered Options Principal, such
approval shall be confirmed within a reasonable time by a Registered
Options Principal. Each] Every discretionary order shall be identified
as discretionary on the order at the time of entry. Discretionary
accounts shall receive frequent appropriate supervisory review by [the
Compliance Registered Options Principal]a Registered Options and
Security Futures Principal who is not exercising the discretionary
authority. The provisions of this subparagraph (18) shall not apply to
discretion as to the price at which or the time when an order given by
a customer for the purchase or sale of a definite number of option
contracts in a specified security shall be executed, except that the
authority to exercise time and price discretion will be considered to
be in effect only until the end of the business day on which the
customer granted such discretion, absent specific, written contrary
indication signed and dated by the customer. This limitation shall not
apply to time and price discretion exercised in an institutional
account, as defined in Rule 3110(c)(4), pursuant to valid Good-Till-
Cancelled instructions issued on a ``not held'' basis. Any exercise of
time and price discretion must be reflected on the order ticket.
(iii) Any member that does not utilize computerized surveillance
tools for the frequent and appropriate review of discretionary activity
must establish and implement procedures to require specific Registered
Options and Security Futures Principals who have been designated to
review discretionary accounts to approve and initial each discretionary
order on the day entered.
(B) through (C) No Change.
(19) No Change.
(20) Supervision of Accounts
(A) Duty to Supervise[; Senior Registered Options Principal]
[Every member shall develop and implement a written program
providing for the diligent supervision of all of its customer accounts,
and all orders in such accounts, to the extent such accounts and orders
relate to options contracts, by a general partner (in the case of a
partnership) or officer (in the case of a corporation) of the member
who is a Registered Options Principal and who has been specifically
identified to the Association as the member's Senior Registered Options
Principal. A Senior Registered Options Principal, in meeting his
responsibilities for supervision of customer accounts and orders, may
delegate to qualified employees (including other Registered Options
Principals) responsibility and authority for supervision and control of
each branch office handling transactions in option contracts, provided
that the Senior Registered Options Principal shall have overall
authority and responsibility for establishing appropriate procedures of
supervision and control over such employees. Every such member shall
also develop and implement specific written procedures concerning the
manner of supervision of customer accounts maintaining uncovered short
option positions and specifically providing for frequent supervisory
review of such accounts.]Each member that conducts a public customer
options business shall ensure that its written supervisory
[[Page 26455]]
system policies and procedures pursuant to Rules 3010, 3012, and 3013
adequately address the member's public customer options business.
[(B) Compliance Registered Options Principal]
[Every member shall designate and specifically identify to the
Association a Compliance Registered Options Principal (CROP), who may
be the Senior Registered Options Principal, who shall have no sales
functions and who shall be responsible to review and to propose
appropriate action to secure the member's compliance with securities
laws and regulations and Association Rules in respect of its options
business. The CROP shall regularly furnish reports directly to the
Compliance officer (if the CROP is not himself the Compliance officer)
and to other senior management of the member. The requirement that the
CROP have no sales functions shall not apply to a member that has
received less than $1,000,000 in gross commissions on options business
for either of the preceding two fiscal years or that currently has ten
or fewer registered representatives.]
[(C)](B) Branch Offices
No branch office of a member shall transact an options business
unless the principal supervisor of such branch office accepting options
transactions has been qualified as either a Registered Options and
Security Futures Principal or a Limited Principal--General Securities
Sales Supervisor; provided that this requirement shall not apply to
branch offices in which no more than three registered representatives
are located, so long as the options activities of such branch offices
are appropriately supervised by either a Registered Options and
Security Futures Principal or a Limited Principal--General Securities
Sales Supervisor.
[(D)](C) Headquarters Review of Accounts
Each member shall maintain at the principal supervisory office
having jurisdiction over the office servicing customer accounts, or
have readily accessible and promptly retrievable, information to permit
review of each customer's options account on a timely basis to
determine:
(i) The compatibility of options transactions with investment
objectives and with the types of transactions for which the account was
approved;
(ii) The size and frequency of options transactions;
(iii) Commission activity in the account;
(iv) Profit or loss in the account;
(v) Undue concentration in any options class or classes, and
(vi) Compliance with the provisions of Regulation T of the Federal
Reserve Board.
(21) through (24) No Change.
(c) No Change.
* * * * *
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, FINRA included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item III below. FINRA has prepared summaries, set forth in sections A,
B, and C below, of the most significant aspects of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
FINRA is proposing to amend its options rules to integrate the
responsibility for supervision of a member's public customer options
business into its overall supervisory and compliance program. The
proposed rule change is substantively similar to recent amendments to
the rules of the Chicago Board Options Exchange (``CBOE''), which were
approved by the Commission.\4\ As part of these changes, FINRA proposes
to eliminate the requirement that a firm must designate a SROP and CROP
to be responsible for the overall supervision and compliance programs,
respectively, for a member's public customer options activities. FINRA
believes that the supervisory and compliance function of a member's
public customer options activities would be better integrated into the
matrix of a firm's overall supervisory and compliance functions rather
than separately vested in a SROP and CROP.
---------------------------------------------------------------------------
\4\ See Securities Exchange Act Release No. 56971 (December 14,
2007), 72 FR 72804 (December 21, 2007) (Approval Order for File No.
SR-CBOE-2007-106).
---------------------------------------------------------------------------
FINRA does not believe that eliminating the SROP and CROP
requirements would lead to a reduction in supervision, as firms have an
obligation to designate an appropriately registered principal(s) to
supervise their public customer options activities pursuant to NASD
Rule 3010(a)(2).\5\ The proposed rule change would provide firms
greater flexibility to incorporate supervision into existing, firm-wide
supervisory structures.
---------------------------------------------------------------------------
\5\ NASD Rule 3010(a)(2) requires that members designate ``an
appropriately registered principal(s) with authority to carry out
the supervisory responsibilities of the member for each type of
business in which it engages for which registration as a broker/
dealer is required.''
---------------------------------------------------------------------------
The proposed rule change would amend NASD Rule 1022 (Categories of
Principal Registration) to delete the reference to the SROP and CROP
and clarify that if a person is engaged in the supervision of options
and security futures sales practices, including a person designated
pursuant to NASD Rule 3010(a)(2), then such person must be registered
as a Registered Options and Security Futures Principal (``ROSFP'').
The proposed rule change also makes a few technical changes. All
references to ``Registered Options Principal'' would be changed to
``Registered Options and Security Futures Principal'' to reflect the
change in title when rules governing security futures were adopted.\6\
All references to ``the Association'' would be changed to ``NASD'' for
ease of reference while the rules continue to be part of the legacy
NASD rulebook until such time as the legacy NASD and incorporated NYSE
rules are consolidated into the FINRA rule book when all references to
``NASD'' will be changed to ``FINRA.'' Finally, all references to ``put
and call'' would be deleted before options and ``options'' will mean
all types of options.
---------------------------------------------------------------------------
\6\ See Securities Exchange Act Release No. 46663 (October 15,
2002), 67 FR 64944 (October 22, 2002) (Approval Order for File No.
SR-NASD-2002-040).
---------------------------------------------------------------------------
The proposed rule change would amend NASD Rule 2220(b) (Options
Communications with the Public) to delete the reference to the CROP and
instead require that all advertisements, sales literature (except
completed worksheets), and educational material issued by a member or
member organization pertaining to options be approved in advance by a
ROSFP designated by the member's written supervisory procedures.
In addition, the proposed rule change would amend NASD Rule 2860
(Options) in several respects. First, paragraph (b)(16)(E)(iii) would
be amended to delete the reference to the SROP and CROP and require
that a specific ROSFP(s) be designated to be responsible for approving
customer accounts that do not meet the specific criteria and standards
for writing uncovered short option transactions and for maintaining
written records of the reasons for every account so approved. The
proposed rule change would allow
[[Page 26456]]
members the flexibility to assign this responsibility, which currently
rests with the SROP and/or CROP, to a specific ROSFP(s).
Second, the proposed rule change would amend paragraph (b)(18) and
the treatment of options discretionary accounts. Specifically, under
the proposed rule change, each firm would be required to designate
specific ROSFPs to review discretionary accounts.\7\ A ROSFP other than
the ROSFP who accepted the account would review the acceptance of each
discretionary account to determine that the ROSFP accepting the account
had a reasonable basis for believing that the customer was able to
understand and bear the risk of the strategies or transactions proposed
and must maintain a record of the basis for such determination.
---------------------------------------------------------------------------
\7\ Under the existing rule, the SROP must review the acceptance
of each discretionary account and the CROP must perform frequency
supervisory review of such accounts.
---------------------------------------------------------------------------
In addition, the proposed rule change would eliminate the
requirement in paragraph (b)(18) that discretionary options orders be
approved and initialed on the day of entry by the branch office manager
or authorized Registered Options Principal (``ROP'') or confirmed
within a reasonable time by a ROP if the branch office manager is not a
ROP, if a firm uses computerized surveillance tools. Under the proposed
rule change, discretionary orders would be required to receive frequent
appropriate supervisory review by a ROSFP who is not exercising
discretionary authority (instead of a CROP) and be reviewed in
accordance with a member's written supervisory procedures. The proposed
rule change would ensure that supervisory responsibilities are assigned
to specific ROSFP-qualified individuals, thereby enhancing the quality
of supervision.
Firms that do not use computerized surveillance tools for the
frequent and appropriate review of discretionary activity would be
required to establish and implement procedures to require ROSFPs who
have been designated to review discretionary accounts to approve and
initial each discretionary order on the day entered. FINRA believes
that any member that does not use computerized tools for the frequent
and adequate surveillance of options discretionary account activity
should continue to be required to perform the daily manual review of
discretionary orders.
Paragraph (b)(18) also would be revised to limit the duration of
the time and price discretionary authority to the end of the business
day on which the customer granted such discretion, absent specific
written contrary indication signed and dated by the customer. The
limitation would not apply to time and price discretion exercised in an
institutional account, as defined in NASD Rule 3110(c)(4), pursuant to
valid Good-Till-Cancelled instructions issued on a ``not held'' basis.
The proposed rule change would require any exercise of time and price
discretion to be reflected on the order ticket. The proposed rule
change mirrors the limitations to discretionary authority provided in
NASD Rule 2510(d). FINRA believes that it is appropriate to have
consistent treatment of discretionary orders for options as for all
other securities.
Third, the proposed rule change would amend paragraph (b)(20) to
delete references to a supervision process involving a SROP and CROP,
and instead would require each member that conducts a public customer
options business to ensure that its written supervisory system policies
and procedures pursuant to NASD Rules 3010, 3012, and 3013 adequately
address the member's public customer options business. Although the
proposed rule change would eliminate entirely the positions and titles
of the SROP and CROP, a member would still be required pursuant to NASD
Rule 3010(a)(2) to designate ``an appropriately registered principal(s)
with authority to carry out the supervisory responsibilities of the
member for each type of business in which it engages for which
registration as a broker/dealer is required,'' which would include
designating a ROSFP to supervise a member's public customer options
activities.
FINRA will announce the effective date of the proposed rule change
in a Regulatory Notice to be published no later than 60 days following
Commission approval. The effective date will be no later than 30 days
following publication of the Regulatory Notice announcing Commission
approval.
2. Statutory Basis
FINRA believes that the proposed rule change is consistent with the
provisions of Section 15A(b)(6) of the Act,\8\ which requires, among
other things, that FINRA rules must be designed to prevent fraudulent
and manipulative acts and practices, to promote just and equitable
principles of trade, and, in general, to protect investors and the
public interest. FINRA believes that the supervisory and compliance
function of a member's public customer options activities would be
better integrated into the matrix of a firm's overall supervisory and
compliance functions rather than separately vested in a SROP and CROP.
---------------------------------------------------------------------------
\8\ 15 U.S.C. 78o-3(b)(6).
---------------------------------------------------------------------------
B. Self-Regulatory Organization's Statement on Burden on Competition
FINRA does not believe that the proposed rule change will result in
any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
Written comments were neither solicited nor received.
III. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://
www.sec.gov/rules/sro.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-FINRA-2007-035 on the subject line.
Paper Comments
Send paper comments in triplicate to Nancy M. Morris,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-FINRA-2007-035. This
file number should be included on the subject line if e-mail is used.
To help the Commission process and review your comments more
efficiently, please use only one method. The Commission will post all
comments on the Commission's Internet Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the submission, all subsequent amendments,
all written statements with respect to the proposed rule change that
are filed with the Commission, and all written communications relating
to the proposed rule change between the Commission and any person,
other than those that may be withheld from the public in accordance
with the provisions of 5 U.S.C. 552, will be available for inspection
and copying in
[[Page 26457]]
the Commission's Public Reference Room, 100 F Street, NE., Washington,
DC 20549, on official business days between the hours of 10 a.m. and 3
p.m. Copies of such filings also will be available for inspection and
copying at the principal office of FINRA. All comments received will be
posted without change; the Commission does not edit personal
identifying information from submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-FINRA-2007-035 and should be submitted
on or before May 30, 2008.
IV. Commission Findings
The Commission has carefully reviewed the proposed rule change and
finds that it is consistent with the requirements of the Act and the
rules and regulations thereunder applicable to a national securities
association.\9\ In particular, the Commission believes that the
proposed rule change would help to better integrate the supervisory and
compliance functions of a firm's public customer options activities
into the firm's overall supervisory and compliance functions, thereby
eliminating any uncertainty about where supervisory responsibility
lies. Therefore, the Commission finds that the proposed rule change is
consistent with Section 15A(b)(6) of the Act,\10\ which requires, among
other things, that FINRA rules be designed to prevent fraudulent and
manipulative acts and practices, to promote just and equitable
principles of trade, and, in general, to protect investors and the
public interest.
---------------------------------------------------------------------------
\9\ In approving the proposed rule change, the Commission
considered the proposal's impact on efficiency, competition, and
capital formation. 15 U.S.C. 78c(f).
\10\ 15 U.S.C. 78o-3(b)(6).
---------------------------------------------------------------------------
The Commission also finds good cause to approve the proposed rule
change prior to the thirtieth day after the date of publication of
notice of filing of the amendment in the Federal Register. The proposed
rule change is substantially similar to recent CBOE rule amendments
concerning options supervision, which were approved by the
Commission.\11\ The Commission believes that approving the proposed
rule change will simplify firms' compliance, and is consistent with the
public interest and the investor protection goals of the Act. Finally,
the Commission finds that it is in the public interest to approve the
proposed rule change as soon as possible to expedite its
implementation.
---------------------------------------------------------------------------
\11\ See Securities Exchange Act Release No. 56971 (December 14,
2007), 72 FR 72804 (December 21, 2007) (Approval Order for File No.
SR-CBOE-2007-106).
---------------------------------------------------------------------------
Accordingly, the Commission believes good cause exists, consistent
with Sections 15A(b)(6) and 19(b) of the Act,\12\ to approve the
proposed rule change on an accelerated basis.
---------------------------------------------------------------------------
\12\ 15 U.S.C. 78o-3(b)(6), and 78s(b).
---------------------------------------------------------------------------
V. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\13\ that the proposed rule change (File No. SR-FINRA-2007-035), as
modified by Amendment No. 1, be, and hereby is, approved on an
accelerated basis.
---------------------------------------------------------------------------
\13\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
---------------------------------------------------------------------------
\14\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E8-10339 Filed 5-8-08; 8:45 am]
BILLING CODE 8010-01-P
