Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Order Approving Proposed Rule Change Relating to the FINRA Regulation Board Composition and Conforming Changes to the FINRA Regulation By-Laws, 25792-25793 [E9-12444]
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mstockstill on PROD1PC66 with NOTICES
25792
Federal Register / Vol. 74, No. 102 / Friday, May 29, 2009 / Notices
the comment letters received, and the
MSRB’s responses to the comment
letters and finds that the proposed rule
change is consistent with the
requirements of the Act and the rules
and regulations thereunder applicable to
the MSRB and, in particular, the
requirements of Section 15B(b)(2)(C) of
the Act 17 and the rules and regulations
thereunder. Section 15B(b)(2)(C) of the
Act requires, among other things, that
the MSRB’s rules be designed to prevent
fraudulent and manipulative acts and
practices, to promote just and equitable
principles of trade, to foster cooperation
and coordination with persons engaged
in regulating, clearing, settling,
processing information with respect to,
and facilitating transactions in
municipal securities, to remove
impediments to and perfect the
mechanism of a free and open market in
municipal securities, and, in general, to
protect investors and the public
interest.18
In particular, the Commission finds
that the proposed rule change is
consistent with the Act because it
would serve as an additional
mechanism by which the MSRB works
toward removing impediments to and
helping to perfect the mechanisms of a
free and open market in municipal
securities by providing a centralized
venue for free public access to primary
market disclosure documents and
transaction price information for the
municipal securities market through
EMMA. The proposed rule change
would provide greater access to primary
market disclosure documents and
transaction price information about
municipal securities information to all
participants in the municipal securities
market on an equal basis, thereby
removing potential barriers to obtaining
such information, and will allow the
municipal securities industry to
produce more accurate trade reporting
and transparency. Broad access to
primary market disclosure documents
and price transparency information
through the EMMA portal should also
assist in preventing fraudulent and
manipulative acts and practices by
improving the opportunity for public
investors to access material information
about issuers, their securities and the
prices at which such securities trade.
Furthermore, free public access to
disclosure and transaction price
information should promote a more fair
and efficient municipal securities
17 15
U.S.C. 78o-4(b)(2)(C).
In approving this proposed rule change, the
Commission notes that it has considered the
proposed rule’s impact on efficiency, competition
and capital formation. 15 U.S.C. 78c(f).
18 Id.
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17:24 May 28, 2009
Jkt 217001
market in which transactions are
effected on the basis of material
information available to all parties to
such transactions, and thereby allow for
fairer pricing of transactions. In
addition, the electronic dissemination of
primary market disclosure documents
should enable issuers to reduce their
issuance costs by eliminating the need
to print and to distribute in paper
official statements in connection with
their primary offerings, thereby
resulting in lower costs to issuers and
savings to their citizens, lower expenses
for underwriters, and potentially lower
prices for investors. All of these factors
serve to promote the statutory mandate
of the MSRB to protect investors and the
public interest.
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,19 that the
proposed rule change (SR–MSRB–2009–
02), be, and it hereby is, approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.20
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–12442 Filed 5–28–09; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–59962; File No. SR–FINRA–
2009–020]
Self-Regulatory Organizations;
Financial Industry Regulatory
Authority, Inc.; Order Approving
Proposed Rule Change Relating to the
FINRA Regulation Board Composition
and Conforming Changes to the FINRA
Regulation By-Laws
May 21, 2009.
I. Introduction
On March 27, 2009, Financial
Industry Regulatory Authority, Inc.
(‘‘FINRA’’) (f/k/a National Association
of Securities Dealers, Inc. (‘‘NASD’’))
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 the By-Laws of FINRA
Regulation, Inc. (‘‘FINRA Regulation’’)
to modify the composition of the board
of directors of FINRA Regulation
(‘‘FINRA Regulation Board’’), to adopt
changes to conform the FINRA
Regulation By-Laws to the FINRA By19 15
U.S.C. 78s(b)(2).
CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
20 17
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Sfmt 4703
Laws, and to make various nonsubstantive or conforming changes. The
proposed rule change was published for
comment in the Federal Register on
April 8, 2009.3 The Commission
received no comments on the proposal.
This order approves the proposed rule
change.
II. Description of the Proposal
On July 30, 2007, NASD and New
York Stock Exchange Regulation, Inc.
(‘‘NYSE Regulation’’), the regulatory
subsidiary of the New York Stock
Exchange, consolidated their member
firm regulation operations into a
combined organization, FINRA. As part
of the consolidation, the Commission
approved amendments to the NASD ByLaws to implement governance and
related changes.4 The approved changes
included a FINRA Board governance
structure that balanced public and
industry representation. FINRA
Regulation (formerly known as NASD
Regulation, Inc. (‘‘NASD Regulation’’))
is a subsidiary of FINRA that operates
according to the Plan of Allocation and
Delegation of Functions by NASD to
Subsidiaries, as amended, which NASD
adopted in 1996 when it formed NASD
Regulation. FINRA Regulation’s ByLaws were not amended at the time of
the consolidation, other than in a few
sections where those By-Laws conflicted
with the new FINRA By-Laws.
The proposed rule change would
modify the FINRA Regulation By-Laws
to parallel more closely the composition
and governance structure of the FINRA
board of directors (‘‘FINRA Board’’). In
addition, the proposed rule change
would modify the FINRA Regulation
By-Laws to reflect current business and
legal practices concerning the
administration and capital stock of
FINRA Regulation. Furthermore, the
proposed rule change would make nonsubstantive or conforming changes,
including updating the FINRA
Regulation By-Laws to reflect the
corporate name change. A more detailed
description of the proposed rule change
is provided in the Notice.5 The
Commission discusses below the most
significant aspects of the proposed
changes to the FINRA Regulation ByLaws.
3 See Securities Exchange Act Release No. 59696
(April 2, 2009), 74 FR 16020 (‘‘Notice’’).
4 See Securities Exchange Act Release No. 56145
(July 26, 2007), 72 FR 42169 (August 1, 2007), as
amended by Securities Exchange Act Release No.
56145A (May 30, 2008), 73 FR 32377 (June 6, 2008)
(File No. SR–NASD–2007–023) (‘‘Consolidation
Approval Order’’).
5 See supra note 3.
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Federal Register / Vol. 74, No. 102 / Friday, May 29, 2009 / Notices
mstockstill on PROD1PC66 with NOTICES
III. Discussion and Commission’s
Findings
After careful review of the proposed
rule change, the Commission finds that
the proposed rule change is consistent
with the requirements of the Act and the
rules and regulations thereunder
applicable to a national securities
association.6 In particular, the
Commission finds that the proposed
rule change is consistent with the
provisions of Section 15A(b)(4) of the
Act,7 which requires that FINRA rules
be designed to assure a fair
representation of FINRA’s members in
the selection of its directors and the
administration of its affairs.
The FINRA By-Laws provide that the
FINRA Board currently must consist of
the Chief Executive Officer of FINRA,
the Chief Executive Officer of NYSE
Regulation, eleven Public Governors
and ten Industry Governors, including a
Floor Member Governor, an
Independent Dealer/Insurance Affiliate
Governor, an Investment Company
Affiliate Governor, three Small Firm
Governors, one Mid-Size Firm
Governor, and three Large-Firm
Governors.8 The Small Firm Governors,
Mid-Size Firm Governor, and LargeFirm Governors are elected by members
of FINRA according to their
classification as a Small Firm, Mid-Size
Firm or Large Firm.9
The proposed rule change would
provide that the FINRA Regulation
Board continue to consist of between 5
and 15 members,10 and that FINRA
Regulation Board members be elected
by, and drawn exclusively from, the
FINRA Board. Additionally, the
proposed rule change would require
that the FINRA Regulation Board, like
the FINRA Board, have a greater number
of Public Directors than Industry
Directors.11 In addition, to ensure fair
representation on the FINRA Regulation
Board, the proposed rule change also
would require that at least two, and not
less than 20%, of the Directors of the
FINRA Regulation Board be Small, MidSize, or Large Firm Governors.12 The
Commission notes that it previously
6 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).
7 15 U.S.C. 78o–3(b)(4).
8 See FINRA By-Laws, Article VII, Section 4 and
XXII, Section 2(a).
9 See FINRA By-Laws, Article I(z), Article I(dd),
Article I(xx) (defining Small Firm Governor, MidSize Firm Governor, and Large-Firm Governor), and
Article VII, Section 4(a).
10 See proposed FINRA Regulation By-Laws,
Article IV, Section 4.2 (Number of Directors).
11 See proposed FINRA Regulation By-Laws,
Article IV, Section 4.3(a) (Qualifications).
12 See id.
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found the composition of the FINRA
Board to be consistent with the fair
representation requirement of Section
15A(b)(4) of the Act.13 The Commission
further notes that it has previously
found a requirement that at least 20% of
directors represent the exchange’s
members to be consistent with the fair
representation requirement applicable
to national securities exchanges under
Section 6(b)(3) of the Act.14
Accordingly, the Commission believes
that the requirement that the FINRA
Regulation Board be composed of at
least two, and not less than 20%, of
FINRA Regulation’s Directors be Small
Firm, Mid-Size Firm or Large-Firm
Governors is consistent with Section
15A(b)(4) of the Act.
The Commission also finds that the
proposed rule change is consistent with
the provisions of Section 15A(b)(6) of
the Act,15 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. The
Commission believes that the proposed
changes to the FINRA Regulation ByLaws should allow the FINRA
Regulation Board to operate in a more
effective and efficient manner by,
among other things, having a similar
composition and a complementary
governance structure to the FINRA
Board.
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,16 that the
proposed rule change (SR–FINRA–
2009–020) be, and it hereby is,
approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.17
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–12444 Filed 5–28–09; 8:45 am]
Consolidation Approval Order, supra note
4.
14 See, e.g., Securities Exchange Act Release No.
58324 (August 7, 2008), 73 FR 46936, 46941
(August 12, 2008) (SR–BSE–2008–02, SR–BSE–
2008–23, SR–BSE–2008–25, SR–BSECC–2008–01).
15 15 U.S.C. 78o–3(b)(6).
16 15 U.S.C. 78s(b)(2).
17 17 CFR 200.30–3(a)(12).
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SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–59967; File No. SR–BATS–
2009–015]
Self-Regulatory Organizations; BATS
Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend BATS Rule
11.13, Entitled ‘‘Order Execution’’
May 21, 2009.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on May 19,
2009, BATS Exchange, Inc. (‘‘BATS’’ or
the ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the Exchange. The Exchange has
designated this proposal as a ‘‘noncontroversial’’ proposed rule change
pursuant to Section 19(b)(3)(A) of the
Act 3 and Rule 19b–4(f)(6)(iii)
thereunder,4 which renders it effective
upon filing with the Commission. 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 Exchange is proposing to amend
BATS Rule 11.13, entitled ‘‘Order
Execution,’’ to provide Users 5 of the
Exchange with another option with
respect to the Exchange’s method of
processing the unfilled balance of a
limit order that returns to the Exchange
and is posted to the BATS Book after
being routed away to one or more away
Trading Centers 6 for execution.
The text of the proposed rule change
is available at the Exchange’s Web site
at https://www.batstrading.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
BILLING CODE 8010–01–P
13 See
25793
Sfmt 4703
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A).
4 17 CFR 240.19b–4(f)(6).
5 As defined in BATS Rule 1.5(bb).
6 As defined in BATS Rule 2.11.
2 17
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]]>Agencies
[Federal Register Volume 74, Number 102 (Friday, May 29, 2009)]
[Notices]
[Pages 25792-25793]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-12444]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-59962; File No. SR-FINRA-2009-020]
Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Order Approving Proposed Rule Change Relating to the
FINRA Regulation Board Composition and Conforming Changes to the FINRA
Regulation By-Laws
May 21, 2009.
I. Introduction
On March 27, 2009, Financial Industry Regulatory Authority, Inc.
(``FINRA'') (f/k/a National Association of Securities Dealers, Inc.
(``NASD'')) 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 the By-Laws of FINRA Regulation, Inc.
(``FINRA Regulation'') to modify the composition of the board of
directors of FINRA Regulation (``FINRA Regulation Board''), to adopt
changes to conform the FINRA Regulation By-Laws to the FINRA By-Laws,
and to make various non-substantive or conforming changes. The proposed
rule change was published for comment in the Federal Register on April
8, 2009.\3\ The Commission received no comments on the proposal. This
order approves the proposed rule change.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 59696 (April 2,
2009), 74 FR 16020 (``Notice'').
---------------------------------------------------------------------------
II. Description of the Proposal
On July 30, 2007, NASD and New York Stock Exchange Regulation, Inc.
(``NYSE Regulation''), the regulatory subsidiary of the New York Stock
Exchange, consolidated their member firm regulation operations into a
combined organization, FINRA. As part of the consolidation, the
Commission approved amendments to the NASD By-Laws to implement
governance and related changes.\4\ The approved changes included a
FINRA Board governance structure that balanced public and industry
representation. FINRA Regulation (formerly known as NASD Regulation,
Inc. (``NASD Regulation'')) is a subsidiary of FINRA that operates
according to the Plan of Allocation and Delegation of Functions by NASD
to Subsidiaries, as amended, which NASD adopted in 1996 when it formed
NASD Regulation. FINRA Regulation's By-Laws were not amended at the
time of the consolidation, other than in a few sections where those By-
Laws conflicted with the new FINRA By-Laws.
---------------------------------------------------------------------------
\4\ See Securities Exchange Act Release No. 56145 (July 26,
2007), 72 FR 42169 (August 1, 2007), as amended by Securities
Exchange Act Release No. 56145A (May 30, 2008), 73 FR 32377 (June 6,
2008) (File No. SR-NASD-2007-023) (``Consolidation Approval
Order'').
---------------------------------------------------------------------------
The proposed rule change would modify the FINRA Regulation By-Laws
to parallel more closely the composition and governance structure of
the FINRA board of directors (``FINRA Board''). In addition, the
proposed rule change would modify the FINRA Regulation By-Laws to
reflect current business and legal practices concerning the
administration and capital stock of FINRA Regulation. Furthermore, the
proposed rule change would make non-substantive or conforming changes,
including updating the FINRA Regulation By-Laws to reflect the
corporate name change. A more detailed description of the proposed rule
change is provided in the Notice.\5\ The Commission discusses below the
most significant aspects of the proposed changes to the FINRA
Regulation By-Laws.
---------------------------------------------------------------------------
\5\ See supra note 3.
---------------------------------------------------------------------------
[[Page 25793]]
III. Discussion and Commission's Findings
After careful review of the proposed rule change, the Commission
finds that the proposed rule change is consistent with the requirements
of the Act and the rules and regulations thereunder applicable to a
national securities association.\6\ In particular, the Commission finds
that the proposed rule change is consistent with the provisions of
Section 15A(b)(4) of the Act,\7\ which requires that FINRA rules be
designed to assure a fair representation of FINRA's members in the
selection of its directors and the administration of its affairs.
---------------------------------------------------------------------------
\6\ 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).
\7\ 15 U.S.C. 78o-3(b)(4).
---------------------------------------------------------------------------
The FINRA By-Laws provide that the FINRA Board currently must
consist of the Chief Executive Officer of FINRA, the Chief Executive
Officer of NYSE Regulation, eleven Public Governors and ten Industry
Governors, including a Floor Member Governor, an Independent Dealer/
Insurance Affiliate Governor, an Investment Company Affiliate Governor,
three Small Firm Governors, one Mid-Size Firm Governor, and three
Large-Firm Governors.\8\ The Small Firm Governors, Mid-Size Firm
Governor, and Large-Firm Governors are elected by members of FINRA
according to their classification as a Small Firm, Mid-Size Firm or
Large Firm.\9\
---------------------------------------------------------------------------
\8\ See FINRA By-Laws, Article VII, Section 4 and XXII, Section
2(a).
\9\ See FINRA By-Laws, Article I(z), Article I(dd), Article
I(xx) (defining Small Firm Governor, Mid-Size Firm Governor, and
Large-Firm Governor), and Article VII, Section 4(a).
---------------------------------------------------------------------------
The proposed rule change would provide that the FINRA Regulation
Board continue to consist of between 5 and 15 members,\10\ and that
FINRA Regulation Board members be elected by, and drawn exclusively
from, the FINRA Board. Additionally, the proposed rule change would
require that the FINRA Regulation Board, like the FINRA Board, have a
greater number of Public Directors than Industry Directors.\11\ In
addition, to ensure fair representation on the FINRA Regulation Board,
the proposed rule change also would require that at least two, and not
less than 20%, of the Directors of the FINRA Regulation Board be Small,
Mid-Size, or Large Firm Governors.\12\ The Commission notes that it
previously found the composition of the FINRA Board to be consistent
with the fair representation requirement of Section 15A(b)(4) of the
Act.\13\ The Commission further notes that it has previously found a
requirement that at least 20% of directors represent the exchange's
members to be consistent with the fair representation requirement
applicable to national securities exchanges under Section 6(b)(3) of
the Act.\14\ Accordingly, the Commission believes that the requirement
that the FINRA Regulation Board be composed of at least two, and not
less than 20%, of FINRA Regulation's Directors be Small Firm, Mid-Size
Firm or Large-Firm Governors is consistent with Section 15A(b)(4) of
the Act.
---------------------------------------------------------------------------
\10\ See proposed FINRA Regulation By-Laws, Article IV, Section
4.2 (Number of Directors).
\11\ See proposed FINRA Regulation By-Laws, Article IV, Section
4.3(a) (Qualifications).
\12\ See id.
\13\ See Consolidation Approval Order, supra note 4.
\14\ See, e.g., Securities Exchange Act Release No. 58324
(August 7, 2008), 73 FR 46936, 46941 (August 12, 2008) (SR-BSE-2008-
02, SR-BSE-2008-23, SR-BSE-2008-25, SR-BSECC-2008-01).
---------------------------------------------------------------------------
The Commission also finds that the proposed rule change is
consistent with the provisions of Section 15A(b)(6) of the Act,\15\
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. The Commission believes that the
proposed changes to the FINRA Regulation By-Laws should allow the FINRA
Regulation Board to operate in a more effective and efficient manner
by, among other things, having a similar composition and a
complementary governance structure to the FINRA Board.
---------------------------------------------------------------------------
\15\ 15 U.S.C. 78o-3(b)(6).
---------------------------------------------------------------------------
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\16\ that the proposed rule change (SR-FINRA-2009-020) be, and it
hereby is, approved.
---------------------------------------------------------------------------
\16\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
---------------------------------------------------------------------------
\17\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-12444 Filed 5-28-09; 8:45 am]
BILLING CODE 8010-01-P
