Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Order Approving Proposed Rule Change To Adopt Incorporated NYSE Rule 406 (Designation of Accounts) as a FINRA Rule in the Consolidated FINRA Rulebook, 25293-25294 [E9-12218]
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Federal Register / Vol. 74, No. 100 / Wednesday, May 27, 2009 / Notices
with Section 6(b)(5) of the Act 8 which
requires, among other things, that the
rules of a national securities exchange
be designed to prevent fraudulent and
manipulative acts and practices, 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, to protect investors and the
public interest, and are not designed to
permit unfair discrimination between
customers, issuers, brokers or dealers.9
The Commission believes that the
Exchange’s proposal to append an
Aberrant Report Indicator to certain
trade reports is a reasonable means to
alert investors and others that the
Exchange believes that the trade price
for a trade executed in its market does
not accurately reflect the prevailing
market for the security. In addition, the
Commission notes that the Exchange
will use objective numerical thresholds
in determining whether a trade report is
eligible to have an Aberrant Trade
Indicator appended to it. The
Commission further notes that the
Exchange’s appending the Aberrant
Trade Indicator to a trade report has no
effect on the validity of the underlying
trade. The Commission previously
found a similar proposal by the NYSE
to be consistent with the Act.10 Finally,
the Commission notes that the
retroactive application of this proposal
to January 1, 2008 is similar to the
retroactive period approved for the
NYSE.11
For the reasons set forth above, the
Commission finds that the proposed
rule change is consistent with the Act.
IV. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,12 that the
proposed rule change (SR–NYSEArca2009–24) be, and hereby is, approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.13
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–12215 Filed 5–26–09; 8:45 am]
BILLING CODE 8010–01–P
8 15
U.S.C. 78f(b)(5).
approving this proposed rule change, the
Commission has considered the proposed rule’s
impact on efficiency, competition, and capital
formation. See 15 U.S.C. 78c(f).
10 See supra note 4.
11 Id.
12 15 U.S.C. 78s(b)(2).
13 17 CFR 200.30–3(a)(12).
erowe on PROD1PC63 with NOTICES
9 In
VerDate Nov<24>2008
15:23 May 26, 2009
Jkt 217001
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 59947; File No. SR–FINRA–
2009–017]
Self-Regulatory Organizations;
Financial Industry Regulatory
Authority, Inc.; Order Approving
Proposed Rule Change To Adopt
Incorporated NYSE Rule 406
(Designation of Accounts) as a FINRA
Rule in the Consolidated FINRA
Rulebook
May 20, 2009.
I. Introduction
On March 26, 2009, the Financial
Industry Regulatory Authority, Inc.
(‘‘FINRA’’) (f/k/a National Association
of Securities Dealers, Inc. (‘‘NASD’’)),
filed with the Securities and Exchange
Commission (‘‘SEC’’ or ‘‘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 adopt
Incorporated NYSE Rule 406
(Designation of Accounts) as a FINRA
rule in the consolidated FINRA
rulebook (‘‘Consolidated FINRA
Rulebook’’) 3 with the minor changes
discussed below. The proposed rule
change was published in the Federal
Register on April 16, 2009.4 The
Commission received no comments on
the proposed rule change. This order
approves the proposed rule change.
II. Description of the Proposed Rule
Change
As part of the process of developing
the Consolidated FINRA Rulebook,5
FINRA proposed to adopt Incorporated
NYSE Rule 406, with minor changes, as
renumbered FINRA Rule 3250 in the
Consolidated FINRA Rulebook.
Incorporated NYSE Rule 406 provides
that no member organization shall carry
an account on its books in the name of
a person other than that of the customer,
except that an account may be
designated by a number or symbol,
provided that the member has on file a
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 The current FINRA rulebook consists of two sets
of rules: (1) NASD Rules and (2) rules incorporated
from NYSE (‘‘Incorporated NYSE Rules’’) (together
referred to as the ‘‘Transitional Rulebook’’). The
Incorporated NYSE Rules apply only to those
members of FINRA that are also members of the
NYSE (‘‘Dual Members’’). Dual members must also
comply with NASD Rules. For more information
about the rulebook consolidation process, see
FINRA Information Notice, March 12, 2008
(‘‘Rulebook Consolidation Process’’).
4 See Exchange Act Release No. 59745 (April 10,
2009), 74 FR 17705 (April 16, 2009) (‘‘notice’’ or
‘‘proposal’’).
5 See supra note 3.
2 17
PO 00000
Frm 00080
Fmt 4703
Sfmt 4703
25293
written statement signed by the
customer attesting to the ownership of
such account. In effect, this rule
establishes a general requirement that a
member must hold each customer
account in the customer’s name, except
that a member may identify a customer’s
account with a number or symbol, as
long as the member maintains
documentation identifying the
customer.6 Currently, Incorporated
NYSE Rule 406 applies only to Dual
Members.
NYSE’s enforcement of the rule has
addressed, among other things, sales
practice abuses such as co-mingling of
funds, the failure to disclose ownership
interests in accounts and unauthorized
trading.7 In the notice, FINRA proposed
to adopt Incorporated NYSE Rule 406 as
FINRA Rule 3250, stating it believes that
the rule will continue to be an
important enforcement tool and should
be expanded to apply to the entire
FINRA membership. In the notice,
FINRA stated that Incorporated NYSE
Rule 406 could provide members’
customers with a level of anonymity
within the member and with certain
external relationships that they find
useful, while still allowing customers’
identities to be clearly known to
members and available to regulators. In
the proposal, FINRA indicated that
Incorporated NYSE Rule 406 would be
renumbered as FINRA Rule 3250 with
minor changes to replace references to
‘‘member organization’’ or
‘‘organization’’ with the term
‘‘member.’’ 8
III. Discussion and Findings
After careful review of the proposal,
the Commission finds that the proposed
rule change is consistent with the
requirements of the Act, and the rules
and regulations thereunder that are
applicable to a national securities
associations,9 and in particular, with
6 Members are subject to additional requirements
regarding customer accounts. See, e.g., Rule 17a–
3(a)(9) under the Act (requiring records indicating
the name and address of the beneficial owner of
each cash and margin customer account). 17 CFR
240.17a–3(a)(9).
7 See, e.g., Robert S. Bartek, Exchange Hearing
Panel Decision 73–60 (August 28, 1973); Jeffrey
Alan Schultz, Exchange Hearing Panel Decision 82–
23 (March 18, 1982); Kery Shane Hutner, Exchange
Hearing Panel Decision 02–27 (January 31, 2002).
See also NYSE Information Memo 78–80, Members’
Accounts and Initiating Orders on the NYSE Floor
(November 10, 1978) (addressing, among other
things, NYSE Rule 406(1), now Rule 406).
8 FINRA also stated that it will announce the
implementation date of the proposed rule change in
a Regulatory Notice to be published no later than
90 days following Commission approval.
9 In approving this proposal, the Commission has
considered the proposed rule’s impact on
E:\FR\FM\27MYN1.SGM
Continued
27MYN1
25294
Federal Register / Vol. 74, No. 100 / Wednesday, May 27, 2009 / Notices
Section 15A(b)(6) of the Act,10 which
requires, among other things, that
FINRA’s rules be designed to prevent
fraudulent and manipulative practices,
to promote just and equitable principles
of trade, and in general, to protect
investors and the public interest.
FINRA’s adoption of Incorporated NYSE
Rule 406 as FINRA Rule 3250 in the
Consolidated FINRA Rulebook, with the
minor changes discussed above, will
extend to all FINRA members the
applicability of a rule that serves as an
important tool to guard against behavior
that may be manipulative and
fraudulent and that may violate just and
equitable principles of trade.
IV. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,11 that the
proposed rule change (SR–FINRA–
2009–017) be, and hereby is, approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.12
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–12218 Filed 5–26–09; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–59944; File No. SR–
NYSEArca–2009–44]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing of Proposed
Rule Change Amending Rule 6.72
Governing Trading Differentials and
Proposing To Expand the Penny Pilot
May 20, 2009.
erowe on PROD1PC63 with NOTICES
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on May 15,
2009, NYSE Arca, Inc. (‘‘NYSE Arca’’ or
the ‘‘Exchange’’) 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.
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
10 15 U.S.C. 78o–3(b)(6).
11 15 U.S.C. 78s(b)(2).
12 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19–4.
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15:23 May 26, 2009
Jkt 217001
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend its
option trading rules to (i) extend the
Penny Pilot in options classes in certain
issues (‘‘Pilot Program’’) previously
approved by the Securities and
Exchange Commission (‘‘Commission’’)
through December 31, 2010, (ii) provide
for additional classes to quote and trade
all contracts in one cent ($0.01)
increments, and (iii) expand the number
of issues included in the Pilot. The text
of the proposed rule change is attached
as Exhibit 5.4 A copy of this filing is
available on the Exchange’s Web site at
https://www.nyse.com, at the Exchange’s
principal office and at the Commission’s
Public Reference Room.
Exchange proposes to determine the
identity of the Top 300 based on
national average daily volume in the
prior six calendar months immediately
preceding their addition to the Pilot
Program.6 In determining the identity of
the Top 300, the Exchange will exclude
options classes with high premiums.
Pursuant to Commentary .02 to NYSE
Arca Rule 6.72, the Pilot Program issues
will be announced to the Exchange’s
membership via Regulatory Bulletin and
published by the Exchange on its
website.7 This will bring the total
number of options classes traded
pursuant to the Pilot Program to 363.
NYSE Arca represents that the Exchange
has the necessary system capacity to
support any additional series listed as
part of the Pilot Program.
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 those statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant parts of such
statements.
Phased Implementation
The Exchange proposes to phase-in
the additional classes to the Pilot
Program over four successive quarters.
Specifically, the Exchange proposes to
add 75 classes in July 2009, October
2009, January 2010, and April 2010. In
order to reduce operational confusion
and provide for appropriate time to
update databases, the Exchange
proposes to add the eligible issues to the
Pilot Program effective for trading on
the Monday ten days after Expiration
Friday. Thus, the quarterly additions
would be effective on July 27, 2009;
October 26, 2009; January 25, 2010; and
April 26, 2010.8
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange hereby proposes to
extend the time period of the Pilot
Program 5 which is currently scheduled
to expire on July 3, 2009, through
December 31, 2010.
Top 300
The Exchange also proposes to
expand the number of issues included
in the Pilot Program. Specifically, NYSE
Arca proposes to add the top 300 most
actively traded multiply listed options
classes that are not yet included in the
Pilot Program (‘‘Top 300’’). The
4 The Commission notes that while provided in
Exhibit 5 to the filing, the text of the proposed rule
change is not attached to this notice, but is available
at the Commission’s Public Reference Room and at
https://www.nyse.com.
5 See Securities Exchange Act Release No. 34–
55156 (January 23, 2007), 72 FR 4759 (February 21,
2007); Securities Exchange Act Release No. 34–
56568 (September 27, 2007), 72 FR 56422 (October
3, 2007); Securities Exchange Act Release No.34–
59628 (March 26, 2009), 74 FR 15025 (April 2,
2009).
PO 00000
Frm 00081
Fmt 4703
Sfmt 4703
Exchange Designations
The Exchange further proposes to
designate two Pilot Program issues as
eligible to quote and trade all options
contracts in one cent increments,
regardless of premium value.
Specifically, the Exchange proposes to
so designate SPY (SPDR S&P 500 ETF)
and IWM (iShares Russell 2000 Index
Fund). In selecting these issues, the
Exchange considered, among other
things, that these symbols are (a) among
the most actively traded issues
nationally, with a wide array of investor
6 The Exchange will not include options classes
in which the issuer of the underlying security is
subject to an announced merger or is in the process
of being acquired by another company, or if the
issuer is in bankruptcy. For purposes of assessing
national average daily volume, the Exchange will
use data compiled and disseminated by the Options
Clearing Corporation.
7 The Exchange shall also identify the classes to
be added to the Pilot Program, per each phase, in
a filing with the Commission.
8 For purposes of identifying the issues to be
added per quarter, the Exchange shall use data from
the prior six calendar months immediately
preceding the implementation month. For example,
the quarterly additions to be added on July 27, 2009
shall be determined using data from the sixth
month period ending June 30, 2009.
E:\FR\FM\27MYN1.SGM
27MYN1
]]>Agencies
[Federal Register Volume 74, Number 100 (Wednesday, May 27, 2009)]
[Notices]
[Pages 25293-25294]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-12218]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 59947; File No. SR-FINRA-2009-017]
Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Order Approving Proposed Rule Change To Adopt
Incorporated NYSE Rule 406 (Designation of Accounts) as a FINRA Rule in
the Consolidated FINRA Rulebook
May 20, 2009.
I. Introduction
On March 26, 2009, the Financial Industry Regulatory Authority,
Inc. (``FINRA'') (f/k/a National Association of Securities Dealers,
Inc. (``NASD'')), filed with the Securities and Exchange Commission
(``SEC'' or ``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 adopt Incorporated NYSE Rule
406 (Designation of Accounts) as a FINRA rule in the consolidated FINRA
rulebook (``Consolidated FINRA Rulebook'') \3\ with the minor changes
discussed below. The proposed rule change was published in the Federal
Register on April 16, 2009.\4\ The Commission received no comments on
the proposed rule change. This order approves the proposed rule change.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ The current FINRA rulebook consists of two sets of rules:
(1) NASD Rules and (2) rules incorporated from NYSE (``Incorporated
NYSE Rules'') (together referred to as the ``Transitional
Rulebook''). The Incorporated NYSE Rules apply only to those members
of FINRA that are also members of the NYSE (``Dual Members''). Dual
members must also comply with NASD Rules. For more information about
the rulebook consolidation process, see FINRA Information Notice,
March 12, 2008 (``Rulebook Consolidation Process'').
\4\ See Exchange Act Release No. 59745 (April 10, 2009), 74 FR
17705 (April 16, 2009) (``notice'' or ``proposal'').
---------------------------------------------------------------------------
II. Description of the Proposed Rule Change
As part of the process of developing the Consolidated FINRA
Rulebook,\5\ FINRA proposed to adopt Incorporated NYSE Rule 406, with
minor changes, as renumbered FINRA Rule 3250 in the Consolidated FINRA
Rulebook. Incorporated NYSE Rule 406 provides that no member
organization shall carry an account on its books in the name of a
person other than that of the customer, except that an account may be
designated by a number or symbol, provided that the member has on file
a written statement signed by the customer attesting to the ownership
of such account. In effect, this rule establishes a general requirement
that a member must hold each customer account in the customer's name,
except that a member may identify a customer's account with a number or
symbol, as long as the member maintains documentation identifying the
customer.\6\ Currently, Incorporated NYSE Rule 406 applies only to Dual
Members.
---------------------------------------------------------------------------
\5\ See supra note 3.
\6\ Members are subject to additional requirements regarding
customer accounts. See, e.g., Rule 17a-3(a)(9) under the Act
(requiring records indicating the name and address of the beneficial
owner of each cash and margin customer account). 17 CFR 240.17a-
3(a)(9).
---------------------------------------------------------------------------
NYSE's enforcement of the rule has addressed, among other things,
sales practice abuses such as co-mingling of funds, the failure to
disclose ownership interests in accounts and unauthorized trading.\7\
In the notice, FINRA proposed to adopt Incorporated NYSE Rule 406 as
FINRA Rule 3250, stating it believes that the rule will continue to be
an important enforcement tool and should be expanded to apply to the
entire FINRA membership. In the notice, FINRA stated that Incorporated
NYSE Rule 406 could provide members' customers with a level of
anonymity within the member and with certain external relationships
that they find useful, while still allowing customers' identities to be
clearly known to members and available to regulators. In the proposal,
FINRA indicated that Incorporated NYSE Rule 406 would be renumbered as
FINRA Rule 3250 with minor changes to replace references to ``member
organization'' or ``organization'' with the term ``member.'' \8\
---------------------------------------------------------------------------
\7\ See, e.g., Robert S. Bartek, Exchange Hearing Panel Decision
73-60 (August 28, 1973); Jeffrey Alan Schultz, Exchange Hearing
Panel Decision 82-23 (March 18, 1982); Kery Shane Hutner, Exchange
Hearing Panel Decision 02-27 (January 31, 2002). See also NYSE
Information Memo 78-80, Members' Accounts and Initiating Orders on
the NYSE Floor (November 10, 1978) (addressing, among other things,
NYSE Rule 406(1), now Rule 406).
\8\ FINRA also stated that it will announce the implementation
date of the proposed rule change in a Regulatory Notice to be
published no later than 90 days following Commission approval.
---------------------------------------------------------------------------
III. Discussion and Findings
After careful review of the proposal, the Commission finds that the
proposed rule change is consistent with the requirements of the Act,
and the rules and regulations thereunder that are applicable to a
national securities associations,\9\ and in particular, with
[[Page 25294]]
Section 15A(b)(6) of the Act,\10\ which requires, among other things,
that FINRA's rules be designed to prevent fraudulent and manipulative
practices, to promote just and equitable principles of trade, and in
general, to protect investors and the public interest. FINRA's adoption
of Incorporated NYSE Rule 406 as FINRA Rule 3250 in the Consolidated
FINRA Rulebook, with the minor changes discussed above, will extend to
all FINRA members the applicability of a rule that serves as an
important tool to guard against behavior that may be manipulative and
fraudulent and that may violate just and equitable principles of trade.
---------------------------------------------------------------------------
\9\ In approving this proposal, the Commission has considered
the proposed rule's impact on efficiency, competition, and capital
formation. See 15 U.S.C. 78c(f).
\10\ 15 U.S.C. 78o-3(b)(6).
---------------------------------------------------------------------------
IV. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\11\ that the proposed rule change (SR-FINRA-2009-017) be, and
hereby is, approved.
---------------------------------------------------------------------------
\11\ 15 U.S.C. 78s(b)(2).
\12\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-12218 Filed 5-26-09; 8:45 am]
BILLING CODE 8010-01-P
