Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Trade Reporting of Transfers of Securities Subject to an Asset Purchase Agreement, 79948-79952 [E8-30857]
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Federal Register / Vol. 73, No. 250 / Tuesday, December 30, 2008 / Notices
the existing allocation parameters for
orders represented in open outcry in
Hybrid on an uninterrupted basis. The
Commission believes that waiving the
30-day operative delay is consistent
with the protection of investors and the
public interest because such waiver will
allow the CBOE to continue to operate
under Rule 6.45A(b) without
interruption. For this reason, the
Commission designates the proposed
rule change as operative upon filing.16
At any time within 60 days of the
filing of such proposed rule change, the
Commission may summarily abrogate
such 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 the furtherance of the
purposes of the Act.
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:
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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–CBOE–2008–126 on the
subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street, NE.,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–CBOE–2008–126. 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
16 For the purposes only of waiving the operative
date of this proposal, 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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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 CBOE. 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–CBOE–2008–126 and
should be submitted on or before
January 20, 2009.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.17
Florence E. Harmon,
Acting Secretary.
[FR Doc. E8–30856 Filed 12–29–08; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–59126; File No. SR–FINRA–
2008–060]
Self-Regulatory Organizations;
Financial Industry Regulatory
Authority, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change Relating to Trade
Reporting of Transfers of Securities
Subject to an Asset Purchase
Agreement
December 19, 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
11, 2008, Financial Industry Regulatory
Authority, Inc. (‘‘FINRA’’) (f/k/a
National Association of Securities
Dealers, Inc. (‘‘NASD’’)) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I, II and III
below, which Items have been prepared
by FINRA. FINRA has designated the
proposed rule change as constituting a
‘‘non-controversial’’ rule change under
Section 19(b)(3)(A) of the Act 3 and Rule
19b–4(f)(6) thereunder,4 which renders
the proposal effective upon filing with
the Commission. The Commission is
17 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A).
4 17 CFR 240.19b–4(f)(6).
1 15
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publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
FINRA is proposing to amend FINRA
trade reporting rules to codify the
circumstances under which transfers of
securities made pursuant to an asset
purchase agreement are not subject to
the reporting requirements applicable to
over-the-counter transactions in debt
and equity securities.
Below is the text of the proposed rule
change.5 Proposed new language is in
italics; proposed deletions are in
brackets.
*
*
*
*
*
6200. Alternative Display Facility
*
*
*
*
*
6282. Transactions Reported by
Members to TRACS
(a) Through (h) No Change.
(i) [Transactions Not To Be Reported
To FINRA For Publication Purposes]
Reporting Requirements For Certain
Transactions and Transfers of Securities
(1) The following [types of
transactions effected by FINRA
members] shall not be reported to
TRACS [for publication purposes]:
([1]A) Transactions that are part of a
primary distribution by an issuer or of
a registered secondary distribution
(other than ‘‘shelf distributions’’) or of
an unregistered secondary distribution;
([2]B) Transactions made in reliance
on Section 4(2) of the Securities Act;
[(3) Transactions where the buyer and
seller have agreed to trade at a price
substantially unrelated to the current
market for the security, e.g., to enable
the seller to make a gift;]
[(4) Purchases or sales of securities
effected upon the exercise of an option
pursuant to the terms thereof or the
exercise of any other right to acquire
securities at a pre-established
consideration unrelated to the current
market;]
([5]C) Transactions reported on or
through an exchange;
5 On September 25, 2008, the SEC approved
proposed rule change SR–FINRA–2008–021, which
adopts the NASD Marketplace Rules (the NASD
Rule 4000 through 7000 Series) as the FINRA Rule
6000 through 7000 Series in the Consolidated
FINRA Rulebook. See Securities Exchange Act
Release No. 58643 (September 25, 2008), 73 FR
57174 (October 1, 2008) (Order Approving SR–
FINRA–2008–021; SR–FINRA–2008–022; SR–
FINRA–2008–026; SR–FINRA–2008–028; and SR–
FINRA–2008–029). SR–FINRA–2008–021 was
implemented on December 15, 2008. See Regulatory
Notice 08–57 (October 2008). This Exhibit 5 reflects
the underlying text of the FINRA Rules as adopted
pursuant to SR–FINRA–2008–021.
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([6]D) The acquisition of securities by
a member as principal in anticipation of
making an immediate exchange
distribution or exchange offering on an
exchange; [and]
([7]E) Purchases of securities off the
floor of an exchange pursuant to a
tender offer[.]; and
(F) Transfers of securities made
pursuant to an asset purchase
agreement (APA) that is subject to the
jurisdiction and approval of a court of
competent jurisdiction in insolvency
matters, provided that the purchase
price under the APA is not based on,
and cannot be adjusted to reflect, the
current market prices of the securities
on or following the effective date of the
APA.
(2) The following shall not be reported
to TRACS for publication purposes, but
shall be reported for regulatory
transaction fee assessment purposes
under Rule 7130(c):
(A) Transactions where the buyer and
seller have agreed to trade at a price
substantially unrelated to the current
market for the security, e.g., to enable
the seller to make a gift; and
(B) Purchases or sales of securities
effected upon the exercise of an option
pursuant to the terms thereof or the
exercise of any other right to acquire
securities at a pre-established
consideration unrelated to the current
market.
(j) No Change.
6300. Trade Reporting Facilities
6300A. FINRA/Nasdaq Trade Reporting
Facility
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*
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6380A. Transaction Reporting
(a) through (d) No Change.
(e) [Transactions Not To Be Reported
For Publication Purposes] Reporting
Requirements For Certain Transactions
and Transfers of Securities
(1) The following [types of
transactions] shall not be reported to the
FINRA/Nasdaq Trade Reporting Facility
[for publication purposes]:
([1]A) Transactions that are part of a
primary distribution by an issuer or of
a registered secondary distribution
(other than ‘‘shelf distributions’’) or of
an unregistered secondary distribution;
([2]B) Transactions made in reliance
on Section 4(2) of the Securities Act;
[(3) Transactions where the buyer and
seller have agreed to trade at a price
substantially unrelated to the current
market for the security, e.g., to enable
the seller to make a gift;]
[(4) Purchases or sales of securities
effected upon the exercise of an option
pursuant to the terms thereof or the
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exercise of any other right to acquire
securities at a pre-established
consideration unrelated to the current
market;]
([5]C) Transactions reported on or
through an exchange;
([6]D) The acquisition of securities by
a member as principal in anticipation of
making an immediate exchange
distribution or exchange offering on an
exchange; [and]
([7]E) purchases of securities off the
floor of an exchange pursuant to a
tender offer[.]; and
(F) transfers of securities made
pursuant to an asset purchase
agreement (APA) that is subject to the
jurisdiction and approval of a court of
competent jurisdiction in insolvency
matters, provided that the purchase
price under the APA is not based on,
and cannot be adjusted to reflect, the
current market prices of the securities
on or following the effective date of the
APA.
(2) The following shall not be reported
to the FINRA/Nasdaq Trade Reporting
Facility for publication purposes, but
shall be reported for regulatory
transaction fee assessment purposes
under Rule 7230A(g):
(A) transactions where the buyer and
seller have agreed to trade at a price
substantially unrelated to the current
market for the security, e.g., to enable
the seller to make a gift; and
(B) purchases or sales of securities
effected upon the exercise of an option
pursuant to the terms thereof or the
exercise of any other right to acquire
securities at a pre-established
consideration unrelated to the current
market.
(f) through (h) No Change.
6300B. FINRA/NSX Trade Reporting
Facility
*
*
*
*
*
6380B. Transaction Reporting
(a) through (d) No Change.
(e) [Transactions Not To Be Reported
For Publication Purposes] Reporting
Requirements For Certain Transactions
and Transfers of Securities
(1) The following [types of
transactions] shall not be reported to the
FINRA/NSX Trade Reporting Facility
[for publication purposes]:
([1]A) transactions that are part of a
primary distribution by an issuer or of
a registered secondary distribution
(other than ‘‘shelf distributions’’) or of
an unregistered secondary distribution;
([2]B) transactions made in reliance
on Section 4(2) of the Securities Act;
[(3) transactions where the buyer and
seller have agreed to trade at a price
substantially unrelated to the current
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market for the security, e.g., to enable
the seller to make a gift;]
[(4) purchases or sales of securities
effected upon the exercise of an option
pursuant to the terms thereof or the
exercise of any other right to acquire
securities at a pre-established
consideration unrelated to the current
market;]
([5]C) transactions reported on or
through an exchange;
([6]D) the acquisition of securities by
a member as principal in anticipation of
making an immediate exchange
distribution or exchange offering on an
exchange; [and]
([7]E) purchases of securities off the
floor of an exchange pursuant to a
tender offer[.]; and
(F) transfers of securities made
pursuant to an asset purchase
agreement (APA) that is subject to the
jurisdiction and approval of a court of
competent jurisdiction in insolvency
matters, provided that the purchase
price under the APA is not based on,
and cannot be adjusted to reflect, the
current market prices of the securities
on or following the effective date of the
APA.
(2) The following shall not be reported
to the FINRA/NSX Trade Reporting
Facility for publication purposes, but
shall be reported for regulatory
transaction fee assessment purposes
under Rule 7230B(f):
(A) transactions where the buyer and
seller have agreed to trade at a price
substantially unrelated to the current
market for the security, e.g., to enable
the seller to make a gift; and
(B) purchases or sales of securities
effected upon the exercise of an option
pursuant to the terms thereof or the
exercise of any other right to acquire
securities at a pre-established
consideration unrelated to the current
market.
(f) through (h) No Change.
6300C. FINRA/NYSE Trade Reporting
Facility
*
*
*
*
*
6380C. Transaction Reporting
(a) through (d) No Change.
(e) [Transactions Not To Be Reported
For Publication Purposes] Reporting
Requirements For Certain Transactions
and Transfers of Securities
(1) The following [types of
transactions] shall not be reported to the
FINRA/NYSE Trade Reporting Facility
[for publication purposes]:
([1]A) transactions that are part of a
primary distribution by an issuer or of
a registered secondary distribution
(other than ‘‘shelf distributions’’) or of
an unregistered secondary distribution;
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([2]B) transactions made in reliance
on Section 4(2) of the Securities Act;
[(3) transactions where the buyer and
seller have agreed to trade at a price
substantially unrelated to the current
market for the security, e.g., to enable
the seller to make a gift;]
[(4) purchases or sales of securities
effected upon the exercise of an option
pursuant to the terms thereof or the
exercise of any other right to acquire
securities at a pre-established
consideration unrelated to the current
market;]
([5]C) transactions reported on or
through an exchange;
([6]D) the acquisition of securities by
a member as principal in anticipation of
making an immediate exchange
distribution or exchange offering on an
exchange; [and]
([7]E) purchases of securities off the
floor of an exchange pursuant to a
tender offer[.]; and
(F) transfers of securities made
pursuant to an asset purchase
agreement (APA) that is subject to the
jurisdiction and approval of a court of
competent jurisdiction in insolvency
matters, provided that the purchase
price under the APA is not based on,
and cannot be adjusted to reflect, the
current market prices of the securities
on or following the effective date of the
APA.
(2) The following shall not be reported
to the FINRA/NYSE Trade Reporting
Facility for publication purposes, but
shall be reported for regulatory
transaction fee assessment purposes
under Rule 7230C(f):
(A) transactions where the buyer and
seller have agreed to trade at a price
substantially unrelated to the current
market for the security, e.g., to enable
the seller to make a gift; and
(B) purchases or sales of securities
effected upon the exercise of an option
pursuant to the terms thereof or the
exercise of any other right to acquire
securities at a pre-established
consideration unrelated to the current
market.
(f) through (h) No Change.
*
*
*
*
*
(1) The following [types of
transactions] shall not be reported [for
publication purposes] to the OTC
Reporting Facility:
([1]A) Transactions that are part of a
primary distribution by an issuer or a
registered secondary distribution (other
than ‘‘shelf distributions’’) or of an
unregistered secondary distribution;
([2]B) Transactions made in reliance
on Section 4(2) of the Securities Act;
and
[(3) Transactions where the buyer and
seller have agreed to trade at a price
substantially unrelated to the current
market for the security;]
[(4) Purchases or sales of securities
effected upon the exercise of an option
pursuant to the terms thereof or the
exercise of any other right to acquire
securities at a pre-established
consideration unrelated to the current
market.]
(C) transfers of securities made
pursuant to an asset purchase
agreement (APA) that is subject to the
jurisdiction and approval of a court of
competent jurisdiction in insolvency
matters, provided that the purchase
price under the APA is not based on,
and cannot be adjusted to reflect, the
current market prices of the securities
on or following the effective date of the
APA.
(2) The following shall not be reported
to the OTC Reporting Facility for
publication purposes, but shall be
reported for regulatory transaction fee
assessment purposes under Rule
7330(g):
(A) Transactions where the buyer and
seller have agreed to trade at a price
substantially unrelated to the current
market for the security; and
(B) Purchases or sales of securities
effected upon the exercise of an option
pursuant to the terms thereof or the
exercise of any other right to acquire
securities at a pre-established
consideration unrelated to the current
market.
(f) through (g) No Change.
*
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*
6600. OTC REPORTING FACILITY
6630. Reporting Transactions in
PORTAL® Securities
*
*
*
*
*
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*
*
6633. Reporting Debt and Equity
Transactions in PORTAL Securities
*
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6620. Reporting Transactions in OTC
Equity Securities
(a) Subject to Rule 6622(e)(1),
[T]transactions in a PORTAL equity
security shall be reported to the OTC
Reporting Facility in accordance with
this Rule. Each PORTAL transaction
report on a PORTAL equity security
shall:
(1) through (3) No Change.
*
*
*
*
6622. Transaction Reporting
(a) through (d) No Change.
(e) [Transactions Not To Be Reported
For Publication Purposes] Reporting
Requirements For Certain Transactions
and Transfers of Securities
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*
(b) through (d) No Change.
*
*
*
*
6640. Reporting Transactions in Direct
Participation Program Securities
*
*
*
*
*
6643. Transaction Reporting
(a) through (d) No Change.
(e) Transactions Not Required To Be
Reported
The following [transactions] are not
required to be reported under the
foregoing procedures:
(1) through (3) No Change.
(4) Transfers of securities made
pursuant to an asset purchase
agreement (APA) that is subject to the
jurisdiction and approval of a court of
competent jurisdiction in insolvency
matters, provided that the purchase
price under the APA is not based on,
and cannot be adjusted to reflect, the
current market prices of the securities
on or following the effective date of the
APA.
6700. TRADE REPORTING AND
COMPLIANCE ENGINE (TRACE)
*
*
*
*
*
6730. Transaction Reporting
(a) through (d) No Change.
(e) [Transactions Exempt From
Reporting] Reporting Requirements For
Certain Transactions and Transfers of
Securities
The following [types of transactions]
shall not be reported:
(1) through (5) No Change.
(6) Transfers of securities made
pursuant to an asset purchase
agreement (APA) that is subject to the
jurisdiction and approval of a court of
competent jurisdiction in insolvency
matters, provided that the purchase
price under the APA is not based on,
and cannot be adjusted to reflect, the
current market prices of the securities
on or following the effective date of the
APA.
(f) 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 those
statements may be examined at the
places specified in Item IV below.
FINRA has prepared summaries, set
forth in sections A, B, and C below, of
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the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
pwalker on PROD1PC71 with NOTICES
1. Purpose
FINRA trade reporting rules require
that over-the-counter transactions in
debt and equity securities be reported to
FINRA unless they qualify for an
express exception under the rules.6
FINRA is proposing to amend the trade
reporting rules to clarify that in the
limited circumstance where securities
are transferred pursuant to an asset
purchase agreement (‘‘APA’’), such
transfer does not have to be reported if
(1) the APA is subject to the jurisdiction
and approval of a court of competent
jurisdiction in insolvency matters; and
(2) the purchase price under the APA is
not based on, and cannot be adjusted to
reflect, the current market prices of the
securities on or following the effective
date of the APA.7
FINRA believes that transfers effected
pursuant to an APA under these
circumstances are not trade reportable
events and that reporting and
dissemination of these transfers would
not provide meaningful price discovery
information to the market. By contrast,
a transfer of securities pursuant to an
APA where the terms of the APA dictate
that the securities be transferred based
on market prices that are current either
on or following the effective date of the
APA would be subject to the trade
reporting rules. Thus, for example, if
under the terms of the APA, the
purchase price can be adjusted based on
a change in the market price of the
securities between the agreement date
and the transfer date, the transfer of
securities would be required to be
reported.
Additionally, FINRA is proposing
technical, non-substantive amendments
to reorganize certain of the trade
reporting rules to clarify that, as is the
6 See FINRA Rules 6282 (formerly NASD Rule
4632A); 6380A (formerly NASD Rule 4632); 6380B
(formerly NASD Rule 4632C); 6380C (formerly
NASD Rule 4632E); 6622 (formerly NASD Rule
6620); 6633 (formerly NASD Rule 6732); 6643
(formerly NASD Rule 6920); and 6730 (formerly
NASD Rule 6230).
7 Generally, an APA addresses both the assets and
liabilities to be transferred, which include both
securities and non-securities assets and liabilities.
In such instance, the purchase price under the APA
would not be based solely on the securities
positions, but on the basket of assets and liabilities
as a whole. FINRA notes that where securities are
the only asset being transferred pursuant to an APA,
such transfer may nonetheless qualify under the
proposed rule change where the APA is approved
by the court and the purchase price is not based on
current or future market prices.
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case today, the transactions and
transfers enumerated in new
subparagraph (1) of the Rules are not to
be reported to FINRA, while the
transactions enumerated in new
subparagraph (2) of the Rules are not to
be reported to FINRA for publication
purposes, but must be reported for
regulatory transaction fee assessment
purposes.8
FINRA rules have never required
members to report the transactions
enumerated in new subparagraph (1)
(e.g., transactions reported on or
through an exchange) to FINRA for
either publication or regulatory
purposes. By contrast, members
historically have been required to report
the transactions enumerated in new
subparagraph (2) (i.e., away from the
market sales and transactions effected
upon the exercise of an over-the-counter
option) to FINRA for purposes of
regulatory transaction fees under
Section 3 of Schedule A to the By-Laws
(‘‘Section 3’’). Prior to 2006, these
transactions were reported manually
and not through one of FINRA’s
automated reporting facilities. In 2006,
FINRA amended its rules and bylaws to
require members to report on an
automated basis all transactions that are
subject to a regulatory transaction fee,
but did not explicitly distinguish the
two categories of transactions (i.e.,
transactions that do not get reported to
FINRA at all and transactions that do
not get reported for publication
purposes, but do get reported for
regulatory transaction fee assessment
purposes) within the exceptions to the
trade reporting rules.9 The technical
amendments that FINRA is proposing
herein merely seek to clarify that
distinction. They will not change
members’ reporting obligations or limit
the transaction-related information that
FINRA receives.
2. Statutory Basis
FINRA believes that the proposed rule
change is consistent with the provisions
of Section 15A(b)(6) of the Act,10 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 See FINRA Rules 6282(i) (formerly NASD Rule
4632A); 6380A(e) (formerly NASD Rule 4632);
6380B(e) (formerly NASD Rule 4632C); 6380C(e)
(formerly NASD Rule 4632E); and 6622(e) (formerly
NASD Rule 6620).
9 See Securities Exchange Act Release No. 53977
(June 12, 2006), 71 FR 34976 (June 16, 2006) (order
approving SR–NASD–2006–055).
10 15 U.S.C. 78o–3(b)(6).
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79951
proposed rule change will clarify
members’ trade reporting obligations
and enhance market transparency.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
FINRA 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
Written comments were neither
solicited nor received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The Exchange represented that the
proposed rule change qualifies for
immediate effectiveness pursuant to
Section 19(b)(3)(A) of the Exchange
Act 11 and Rule 19b–4(f)(6) thereunder 12
because it: (i) Does not significantly
affect the protection of investors or the
public interest; (ii) does not impose any
significant burden on competition; and
(iii) by its terms, does not become
operative for 30 days from the date on
which it was filed, or such shorter time
as the Commission may designate if
consistent with the protection of
investors and the public interest.13
At any time within 60 days of the
filing of the proposed rule change, the
Commission may summarily abrogate
such 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.
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:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
11 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6).
13 In addition, Rule 19b–4(f)(6)(iii) requires a selfregulatory organization to give the Commission
written notice of its intent to file 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.
FINRA has satisfied this requirement.
12 17
E:\FR\FM\30DEN1.SGM
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79952
Federal Register / Vol. 73, No. 250 / Tuesday, December 30, 2008 / Notices
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–FINRA–2008–060 on the
subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street, NE.,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–FINRA–2008–060. 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
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 the 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
submissions should refer to File
Number SR–FINRA–2008–060 and
should be submitted on or before
January 20, 2009.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.14
Florence E. Harmon,
Acting Secretary.
[FR Doc. E8–30857 Filed 12–29–08; 8:45 am]
pwalker on PROD1PC71 with NOTICES
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–59127; File No. SR–ISE–
2008–94)]
Self-Regulatory Organizations;
International Securities Exchange,
LLC; Notice of Filing and Immediate
Effectiveness of Proposed Rule
Change Relating to Fee Changes
December 19, 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
10, 2008, the International Securities
Exchange, LLC (the ‘‘Exchange’’ or the
‘‘ISE’’) filed with the Securities and
Exchange Commission (the
‘‘Commission’’) the proposed rule
change, as described in Items I, II, and
III below, which Items have been
prepared by the self-regulatory
organization. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The ISE is proposing to amend its
Schedule of Fees to establish fees for
transactions in options on 14 Premium
Products.3 The text of the proposed rule
change is available on the Exchange’s
Web site (https://www.ise.com), at the
principal office of the Exchange, and at
the Commission’s Public Reference
Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization 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 IV below.
The self-regulatory organization has
prepared summaries, set forth in
Sections A, B, and C below, of the most
significant aspects of such statements.
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 Premium Products is defined in the Schedule of
Fees as the products enumerated therein.
2 17
14 17
CFR 200.30–3(a)(12).
VerDate Aug<31>2005
22:55 Dec 29, 2008
Jkt 217001
PO 00000
Frm 00164
Fmt 4703
Sfmt 4703
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange is proposing to amend
its Schedule of Fees to establish fees for
transactions in options on the Direxion
Energy Bear 3x Shares (‘‘ERY’’), the
Direxion Energy Bull 3x Shares
(‘‘ERX’’), the Direxion Financial Bear 3x
Shares (‘‘FAZ’’), the Direxion Financial
[Bull] 4 3x Shares (‘‘FAS’’), the Direxion
Large Cap Bear 3x Shares (‘‘BGZ’’), the
Direxion Large Cap Bull 3x Shares
(‘‘BGU’’), the Direxion Small Cap Bear
3x Shares (‘‘TZA’’), the Direxion Small
Cap Bull 3x Shares (‘‘TNA’’),5 the Ultra
Basic Materials ProShares (‘‘UYM’’),6
the iShares Russell Midcap Value Index
4 See e-mail from Samir Patel, Assistant General
Counsel, International Securities Exchange, to
Richard Holley, Senior Special Counsel, Division of
Trading and Markets, Commission, dated December
18, 2008 (correcting typographical error for product
associated with ticker symbol FAS from Bear to
Bull).
5 The Russell 1000® Energy Index, Russell 1000®
Financial Services Index, Russell 1000® Index and
Russell 2000® Index are trademarks of Frank
Russell Company (‘‘Russell’’) and have been
licensed for use by Direxion Shares ETF Trust. All
other trademarks and service marks are the property
of their respective owners. The Direxion Energy
Bear 3x Shares (‘‘ERY’’), the Direxion Energy Bull
3x Shares (‘‘ERX’’), the Direxion Financial Bear 3x
Shares (‘‘FAZ’’), the Direxion Financial [Bull] 3x
Shares (‘‘FAS’’), the Direxion Large Cap Bear 3x
Shares (‘‘BGZ’’), the Direxion Large Cap Bull 3x
Shares (‘‘BGU’’), the Direxion Small Cap Bear 3x
Shares (‘‘TZA’’) and the Direxion Small Cap Bull 3x
Shares (‘‘TNA’’) are not sponsored, endorsed,
issued, sold or promoted by Russell. Russell has not
licensed or authorized ISE to (i) engage in the
creation, listing, provision of a market for trading,
marketing, and promotion of options on ERY, ERX,
FAZ, FAS, BGZ, BGU, TZA and TNA or (ii) to use
and refer to any of their trademarks or service marks
in connection with the listing, provision of a market
for trading, marketing, and promotion of options on
ERY, ERX, FAZ, FAS, BGZ, BGU, TZA and TNA or
with making disclosures concerning options on
ERY, ERX, FAZ, FAS, BGZ, BGU, TZA and TNA
under any applicable federal or state laws, rules or
regulations. Russell does not sponsor, endorse, or
promote such activity by ISE and is not affiliated
in any manner with ISE.
6 ‘‘Dow Jones’’ and ‘‘Dow Jones U.S. Basic
MaterialsSM’’ are service marks of Dow Jones &
Company, Inc. (‘‘Dow Jones’’) and have been
licensed for use for certain purposes by ProFunds
Trust. All other trademarks and service marks are
the property of their respective owners. The Ultra
Basic Materials ProShares (‘‘UYM’’) is not
sponsored, endorsed, issued, sold or promoted by
Dow Jones. Dow Jones has not licensed or
authorized ISE to (i) engage in the creation, listing,
provision of a market for trading, marketing, and
promotion of options on UYM or (ii) to use and
refer to any of its trademarks or service marks in
connection with the listing, provision of a market
for trading, marketing, and promotion of options on
UYM or with making disclosures concerning
options on UYM under any applicable federal or
state laws, rules or regulations. Dow Jones does not
sponsor, endorse, or promote such activity by ISE
and is not affiliated in any manner with ISE.
E:\FR\FM\30DEN1.SGM
30DEN1
]]>Agencies
[Federal Register Volume 73, Number 250 (Tuesday, December 30, 2008)]
[Notices]
[Pages 79948-79952]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-30857]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-59126; File No. SR-FINRA-2008-060]
Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing and Immediate Effectiveness of
Proposed Rule Change Relating to Trade Reporting of Transfers of
Securities Subject to an Asset Purchase Agreement
December 19, 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 11, 2008, Financial Industry Regulatory Authority, Inc.
(``FINRA'') (f/k/a National Association of Securities Dealers, Inc.
(``NASD'')) filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II
and III below, which Items have been prepared by FINRA. FINRA has
designated the proposed rule change as constituting a ``non-
controversial'' rule change under Section 19(b)(3)(A) of the Act \3\
and Rule 19b-4(f)(6) thereunder,\4\ which renders the proposal
effective upon filing with the Commission. The Commission is publishing
this notice to solicit comments on the proposed rule change from
interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A).
\4\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
FINRA is proposing to amend FINRA trade reporting rules to codify
the circumstances under which transfers of securities made pursuant to
an asset purchase agreement are not subject to the reporting
requirements applicable to over-the-counter transactions in debt and
equity securities.
Below is the text of the proposed rule change.\5\ Proposed new
language is in italics; proposed deletions are in brackets.
---------------------------------------------------------------------------
\5\ On September 25, 2008, the SEC approved proposed rule change
SR-FINRA-2008-021, which adopts the NASD Marketplace Rules (the NASD
Rule 4000 through 7000 Series) as the FINRA Rule 6000 through 7000
Series in the Consolidated FINRA Rulebook. See Securities Exchange
Act Release No. 58643 (September 25, 2008), 73 FR 57174 (October 1,
2008) (Order Approving SR-FINRA-2008-021; SR-FINRA-2008-022; SR-
FINRA-2008-026; SR-FINRA-2008-028; and SR-FINRA-2008-029). SR-FINRA-
2008-021 was implemented on December 15, 2008. See Regulatory Notice
08-57 (October 2008). This Exhibit 5 reflects the underlying text of
the FINRA Rules as adopted pursuant to SR-FINRA-2008-021.
---------------------------------------------------------------------------
* * * * *
6200. Alternative Display Facility
* * * * *
6282. Transactions Reported by Members to TRACS
(a) Through (h) No Change.
(i) [Transactions Not To Be Reported To FINRA For Publication
Purposes] Reporting Requirements For Certain Transactions and Transfers
of Securities
(1) The following [types of transactions effected by FINRA members]
shall not be reported to TRACS [for publication purposes]:
([1]A) Transactions that are part of a primary distribution by an
issuer or of a registered secondary distribution (other than ``shelf
distributions'') or of an unregistered secondary distribution;
([2]B) Transactions made in reliance on Section 4(2) of the
Securities Act;
[(3) Transactions where the buyer and seller have agreed to trade
at a price substantially unrelated to the current market for the
security, e.g., to enable the seller to make a gift;]
[(4) Purchases or sales of securities effected upon the exercise of
an option pursuant to the terms thereof or the exercise of any other
right to acquire securities at a pre-established consideration
unrelated to the current market;]
([5]C) Transactions reported on or through an exchange;
[[Page 79949]]
([6]D) The acquisition of securities by a member as principal in
anticipation of making an immediate exchange distribution or exchange
offering on an exchange; [and]
([7]E) Purchases of securities off the floor of an exchange
pursuant to a tender offer[.]; and
(F) Transfers of securities made pursuant to an asset purchase
agreement (APA) that is subject to the jurisdiction and approval of a
court of competent jurisdiction in insolvency matters, provided that
the purchase price under the APA is not based on, and cannot be
adjusted to reflect, the current market prices of the securities on or
following the effective date of the APA.
(2) The following shall not be reported to TRACS for publication
purposes, but shall be reported for regulatory transaction fee
assessment purposes under Rule 7130(c):
(A) Transactions where the buyer and seller have agreed to trade at
a price substantially unrelated to the current market for the security,
e.g., to enable the seller to make a gift; and
(B) Purchases or sales of securities effected upon the exercise of
an option pursuant to the terms thereof or the exercise of any other
right to acquire securities at a pre-established consideration
unrelated to the current market.
(j) No Change.
6300. Trade Reporting Facilities
6300A. FINRA/Nasdaq Trade Reporting Facility
* * * * *
6380A. Transaction Reporting
(a) through (d) No Change.
(e) [Transactions Not To Be Reported For Publication Purposes]
Reporting Requirements For Certain Transactions and Transfers of
Securities
(1) The following [types of transactions] shall not be reported to
the FINRA/Nasdaq Trade Reporting Facility [for publication purposes]:
([1]A) Transactions that are part of a primary distribution by an
issuer or of a registered secondary distribution (other than ``shelf
distributions'') or of an unregistered secondary distribution;
([2]B) Transactions made in reliance on Section 4(2) of the
Securities Act;
[(3) Transactions where the buyer and seller have agreed to trade
at a price substantially unrelated to the current market for the
security, e.g., to enable the seller to make a gift;]
[(4) Purchases or sales of securities effected upon the exercise of
an option pursuant to the terms thereof or the exercise of any other
right to acquire securities at a pre-established consideration
unrelated to the current market;]
([5]C) Transactions reported on or through an exchange;
([6]D) The acquisition of securities by a member as principal in
anticipation of making an immediate exchange distribution or exchange
offering on an exchange; [and]
([7]E) purchases of securities off the floor of an exchange
pursuant to a tender offer[.]; and
(F) transfers of securities made pursuant to an asset purchase
agreement (APA) that is subject to the jurisdiction and approval of a
court of competent jurisdiction in insolvency matters, provided that
the purchase price under the APA is not based on, and cannot be
adjusted to reflect, the current market prices of the securities on or
following the effective date of the APA.
(2) The following shall not be reported to the FINRA/Nasdaq Trade
Reporting Facility for publication purposes, but shall be reported for
regulatory transaction fee assessment purposes under Rule 7230A(g):
(A) transactions where the buyer and seller have agreed to trade at
a price substantially unrelated to the current market for the security,
e.g., to enable the seller to make a gift; and
(B) purchases or sales of securities effected upon the exercise of
an option pursuant to the terms thereof or the exercise of any other
right to acquire securities at a pre-established consideration
unrelated to the current market.
(f) through (h) No Change.
6300B. FINRA/NSX Trade Reporting Facility
* * * * *
6380B. Transaction Reporting
(a) through (d) No Change.
(e) [Transactions Not To Be Reported For Publication Purposes]
Reporting Requirements For Certain Transactions and Transfers of
Securities
(1) The following [types of transactions] shall not be reported to
the FINRA/NSX Trade Reporting Facility [for publication purposes]:
([1]A) transactions that are part of a primary distribution by an
issuer or of a registered secondary distribution (other than ``shelf
distributions'') or of an unregistered secondary distribution;
([2]B) transactions made in reliance on Section 4(2) of the
Securities Act;
[(3) transactions where the buyer and seller have agreed to trade
at a price substantially unrelated to the current market for the
security, e.g., to enable the seller to make a gift;]
[(4) purchases or sales of securities effected upon the exercise of
an option pursuant to the terms thereof or the exercise of any other
right to acquire securities at a pre-established consideration
unrelated to the current market;]
([5]C) transactions reported on or through an exchange;
([6]D) the acquisition of securities by a member as principal in
anticipation of making an immediate exchange distribution or exchange
offering on an exchange; [and]
([7]E) purchases of securities off the floor of an exchange
pursuant to a tender offer[.]; and
(F) transfers of securities made pursuant to an asset purchase
agreement (APA) that is subject to the jurisdiction and approval of a
court of competent jurisdiction in insolvency matters, provided that
the purchase price under the APA is not based on, and cannot be
adjusted to reflect, the current market prices of the securities on or
following the effective date of the APA.
(2) The following shall not be reported to the FINRA/NSX Trade
Reporting Facility for publication purposes, but shall be reported for
regulatory transaction fee assessment purposes under Rule 7230B(f):
(A) transactions where the buyer and seller have agreed to trade at
a price substantially unrelated to the current market for the security,
e.g., to enable the seller to make a gift; and
(B) purchases or sales of securities effected upon the exercise of
an option pursuant to the terms thereof or the exercise of any other
right to acquire securities at a pre-established consideration
unrelated to the current market.
(f) through (h) No Change.
6300C. FINRA/NYSE Trade Reporting Facility
* * * * *
6380C. Transaction Reporting
(a) through (d) No Change.
(e) [Transactions Not To Be Reported For Publication Purposes]
Reporting Requirements For Certain Transactions and Transfers of
Securities
(1) The following [types of transactions] shall not be reported to
the FINRA/NYSE Trade Reporting Facility [for publication purposes]:
([1]A) transactions that are part of a primary distribution by an
issuer or of a registered secondary distribution (other than ``shelf
distributions'') or of an unregistered secondary distribution;
[[Page 79950]]
([2]B) transactions made in reliance on Section 4(2) of the
Securities Act;
[(3) transactions where the buyer and seller have agreed to trade
at a price substantially unrelated to the current market for the
security, e.g., to enable the seller to make a gift;]
[(4) purchases or sales of securities effected upon the exercise of
an option pursuant to the terms thereof or the exercise of any other
right to acquire securities at a pre-established consideration
unrelated to the current market;]
([5]C) transactions reported on or through an exchange;
([6]D) the acquisition of securities by a member as principal in
anticipation of making an immediate exchange distribution or exchange
offering on an exchange; [and]
([7]E) purchases of securities off the floor of an exchange
pursuant to a tender offer[.]; and
(F) transfers of securities made pursuant to an asset purchase
agreement (APA) that is subject to the jurisdiction and approval of a
court of competent jurisdiction in insolvency matters, provided that
the purchase price under the APA is not based on, and cannot be
adjusted to reflect, the current market prices of the securities on or
following the effective date of the APA.
(2) The following shall not be reported to the FINRA/NYSE Trade
Reporting Facility for publication purposes, but shall be reported for
regulatory transaction fee assessment purposes under Rule 7230C(f):
(A) transactions where the buyer and seller have agreed to trade at
a price substantially unrelated to the current market for the security,
e.g., to enable the seller to make a gift; and
(B) purchases or sales of securities effected upon the exercise of
an option pursuant to the terms thereof or the exercise of any other
right to acquire securities at a pre-established consideration
unrelated to the current market.
(f) through (h) No Change.
* * * * *
6600. OTC REPORTING FACILITY
* * * * *
6620. Reporting Transactions in OTC Equity Securities
* * * * *
6622. Transaction Reporting
(a) through (d) No Change.
(e) [Transactions Not To Be Reported For Publication Purposes]
Reporting Requirements For Certain Transactions and Transfers of
Securities
(1) The following [types of transactions] shall not be reported
[for publication purposes] to the OTC Reporting Facility:
([1]A) Transactions that are part of a primary distribution by an
issuer or a registered secondary distribution (other than ``shelf
distributions'') or of an unregistered secondary distribution;
([2]B) Transactions made in reliance on Section 4(2) of the
Securities Act; and
[(3) Transactions where the buyer and seller have agreed to trade
at a price substantially unrelated to the current market for the
security;]
[(4) Purchases or sales of securities effected upon the exercise of
an option pursuant to the terms thereof or the exercise of any other
right to acquire securities at a pre-established consideration
unrelated to the current market.]
(C) transfers of securities made pursuant to an asset purchase
agreement (APA) that is subject to the jurisdiction and approval of a
court of competent jurisdiction in insolvency matters, provided that
the purchase price under the APA is not based on, and cannot be
adjusted to reflect, the current market prices of the securities on or
following the effective date of the APA.
(2) The following shall not be reported to the OTC Reporting
Facility for publication purposes, but shall be reported for regulatory
transaction fee assessment purposes under Rule 7330(g):
(A) Transactions where the buyer and seller have agreed to trade at
a price substantially unrelated to the current market for the security;
and
(B) Purchases or sales of securities effected upon the exercise of
an option pursuant to the terms thereof or the exercise of any other
right to acquire securities at a pre-established consideration
unrelated to the current market.
(f) through (g) No Change.
* * * * *
6630. Reporting Transactions in PORTAL[supreg] Securities
* * * * *
6633. Reporting Debt and Equity Transactions in PORTAL Securities
(a) Subject to Rule 6622(e)(1), [T]transactions in a PORTAL equity
security shall be reported to the OTC Reporting Facility in accordance
with this Rule. Each PORTAL transaction report on a PORTAL equity
security shall:
(1) through (3) No Change.
(b) through (d) No Change.
* * * * *
6640. Reporting Transactions in Direct Participation Program Securities
* * * * *
6643. Transaction Reporting
(a) through (d) No Change.
(e) Transactions Not Required To Be Reported
The following [transactions] are not required to be reported under
the foregoing procedures:
(1) through (3) No Change.
(4) Transfers of securities made pursuant to an asset purchase
agreement (APA) that is subject to the jurisdiction and approval of a
court of competent jurisdiction in insolvency matters, provided that
the purchase price under the APA is not based on, and cannot be
adjusted to reflect, the current market prices of the securities on or
following the effective date of the APA.
6700. TRADE REPORTING AND COMPLIANCE ENGINE (TRACE)
* * * * *
6730. Transaction Reporting
(a) through (d) No Change.
(e) [Transactions Exempt From Reporting] Reporting Requirements For
Certain Transactions and Transfers of Securities
The following [types of transactions] shall not be reported:
(1) through (5) No Change.
(6) Transfers of securities made pursuant to an asset purchase
agreement (APA) that is subject to the jurisdiction and approval of a
court of competent jurisdiction in insolvency matters, provided that
the purchase price under the APA is not based on, and cannot be
adjusted to reflect, the current market prices of the securities on or
following the effective date of the APA.
(f) 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 those statements may be examined at the places specified in
Item IV below. FINRA has prepared summaries, set forth in sections A,
B, and C below, of
[[Page 79951]]
the most significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
FINRA trade reporting rules require that over-the-counter
transactions in debt and equity securities be reported to FINRA unless
they qualify for an express exception under the rules.\6\ FINRA is
proposing to amend the trade reporting rules to clarify that in the
limited circumstance where securities are transferred pursuant to an
asset purchase agreement (``APA''), such transfer does not have to be
reported if (1) the APA is subject to the jurisdiction and approval of
a court of competent jurisdiction in insolvency matters; and (2) the
purchase price under the APA is not based on, and cannot be adjusted to
reflect, the current market prices of the securities on or following
the effective date of the APA.\7\
---------------------------------------------------------------------------
\6\ See FINRA Rules 6282 (formerly NASD Rule 4632A); 6380A
(formerly NASD Rule 4632); 6380B (formerly NASD Rule 4632C); 6380C
(formerly NASD Rule 4632E); 6622 (formerly NASD Rule 6620); 6633
(formerly NASD Rule 6732); 6643 (formerly NASD Rule 6920); and 6730
(formerly NASD Rule 6230).
\7\ Generally, an APA addresses both the assets and liabilities
to be transferred, which include both securities and non-securities
assets and liabilities. In such instance, the purchase price under
the APA would not be based solely on the securities positions, but
on the basket of assets and liabilities as a whole. FINRA notes that
where securities are the only asset being transferred pursuant to an
APA, such transfer may nonetheless qualify under the proposed rule
change where the APA is approved by the court and the purchase price
is not based on current or future market prices.
---------------------------------------------------------------------------
FINRA believes that transfers effected pursuant to an APA under
these circumstances are not trade reportable events and that reporting
and dissemination of these transfers would not provide meaningful price
discovery information to the market. By contrast, a transfer of
securities pursuant to an APA where the terms of the APA dictate that
the securities be transferred based on market prices that are current
either on or following the effective date of the APA would be subject
to the trade reporting rules. Thus, for example, if under the terms of
the APA, the purchase price can be adjusted based on a change in the
market price of the securities between the agreement date and the
transfer date, the transfer of securities would be required to be
reported.
Additionally, FINRA is proposing technical, non-substantive
amendments to reorganize certain of the trade reporting rules to
clarify that, as is the case today, the transactions and transfers
enumerated in new subparagraph (1) of the Rules are not to be reported
to FINRA, while the transactions enumerated in new subparagraph (2) of
the Rules are not to be reported to FINRA for publication purposes, but
must be reported for regulatory transaction fee assessment purposes.\8\
---------------------------------------------------------------------------
\8\ See FINRA Rules 6282(i) (formerly NASD Rule 4632A); 6380A(e)
(formerly NASD Rule 4632); 6380B(e) (formerly NASD Rule 4632C);
6380C(e) (formerly NASD Rule 4632E); and 6622(e) (formerly NASD Rule
6620).
---------------------------------------------------------------------------
FINRA rules have never required members to report the transactions
enumerated in new subparagraph (1) (e.g., transactions reported on or
through an exchange) to FINRA for either publication or regulatory
purposes. By contrast, members historically have been required to
report the transactions enumerated in new subparagraph (2) (i.e., away
from the market sales and transactions effected upon the exercise of an
over-the-counter option) to FINRA for purposes of regulatory
transaction fees under Section 3 of Schedule A to the By-Laws
(``Section 3''). Prior to 2006, these transactions were reported
manually and not through one of FINRA's automated reporting facilities.
In 2006, FINRA amended its rules and bylaws to require members to
report on an automated basis all transactions that are subject to a
regulatory transaction fee, but did not explicitly distinguish the two
categories of transactions (i.e., transactions that do not get reported
to FINRA at all and transactions that do not get reported for
publication purposes, but do get reported for regulatory transaction
fee assessment purposes) within the exceptions to the trade reporting
rules.\9\ The technical amendments that FINRA is proposing herein
merely seek to clarify that distinction. They will not change members'
reporting obligations or limit the transaction-related information that
FINRA receives.
---------------------------------------------------------------------------
\9\ See Securities Exchange Act Release No. 53977 (June 12,
2006), 71 FR 34976 (June 16, 2006) (order approving SR-NASD-2006-
055).
---------------------------------------------------------------------------
2. Statutory Basis
FINRA believes that the proposed rule change is consistent with the
provisions of Section 15A(b)(6) of the Act,\10\ 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 proposed rule change will
clarify members' trade reporting obligations and enhance market
transparency.
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\10\ 15 U.S.C. 78o-3(b)(6).
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B. Self-Regulatory Organization's Statement on Burden on Competition
FINRA 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
Written comments were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The Exchange represented that the proposed rule change qualifies
for immediate effectiveness pursuant to Section 19(b)(3)(A) of the
Exchange Act \11\ and Rule 19b-4(f)(6) thereunder \12\ because it: (i)
Does not significantly affect the protection of investors or the public
interest; (ii) does not impose any significant burden on competition;
and (iii) by its terms, does not become operative for 30 days from the
date on which it was filed, or such shorter time as the Commission may
designate if consistent with the protection of investors and the public
interest.\13\
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\11\ 15 U.S.C. 78s(b)(3)(A).
\12\ 17 CFR 240.19b-4(f)(6).
\13\ In addition, Rule 19b-4(f)(6)(iii) requires a self-
regulatory organization to give the Commission written notice of its
intent to file 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. FINRA has satisfied
this requirement.
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At any time within 60 days of the filing of the proposed rule
change, the Commission may summarily abrogate such 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.
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:
Electronic Comments
Use the Commission's Internet comment form (https://
www.sec.gov/rules/sro.shtml); or
[[Page 79952]]
Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-FINRA-2008-060 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-FINRA-2008-060. 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 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 the 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
submissions should refer to File Number SR-FINRA-2008-060 and should be
submitted on or before January 20, 2009.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
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\14\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-30857 Filed 12-29-08; 8:45 am]
BILLING CODE 8011-01-P
