Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Incorporated NYSE Rules 12 and 282 To Conform to Amendments Made by NYSE, 40278-40279 [E9-19142]
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[Federal Register Volume 74, Number 153 (Tuesday, August 11, 2009)] [Notices] [Pages 40278-40279] From the Federal Register Online via the Government Printing Office [www.gpo.gov] [FR Doc No: E9-19142] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-60432; File No. SR-FINRA-2009-053] Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Incorporated NYSE Rules 12 and 282 To Conform to Amendments Made by NYSE August 4, 2009. 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 July 30, 2009, Financial Industry Regulatory Authority, Inc. (``FINRA'') filed with the Securities and Exchange Commission (``SEC'' or ``Commission'') the proposed rule change as described in Items I and II below, which Items have been prepared by FINRA. FINRA has designated the proposed rule change as constituting a ``non-controversial'' rule change under paragraph (f)(6) of Rule 19b-4 under the Act,\3\ 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\ 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 Incorporated NYSE Rules 12 (``Business Day'') and 282 (Buy-in Procedures) \4\ to conform to rule changes by the New York Stock Exchange LLC (``NYSE'') to its versions of Rules 12 and 282.\5\ --------------------------------------------------------------------------- \4\ The current FINRA rulebook consists of (1) FINRA Rules; (2) NASD Rules; and (3) rules incorporated from NYSE (``Incorporated NYSE Rules'') (together, the NASD Rules and Incorporated NYSE Rules are referred to as the ``Transitional Rulebook''). While the NASD Rules generally apply to all FINRA members, the Incorporated NYSE Rules apply only to those members of FINRA that are also members of the NYSE (``Dual Members''). The FINRA Rules apply to all FINRA members, unless such rules have a more limited application by their terms. For more information about the rulebook consolidation process, see FINRA Information Notice, March 12, 2008 (Rulebook Consolidation Process). \5\ See Securities Exchange Act Release No. 60216 (July 1, 2009), 74 FR 33283 (July 10, 2009) (Notice of Filing and Immediate Effectiveness of SR-NYSE-2009-59). --------------------------------------------------------------------------- The text of the proposed rule change is available on FINRA's Web site at https://www.finra.org, at the principal office of FINRA 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, FINRA included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. FINRA has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose FINRA is proposing changes to Incorporated NYSE Rules 12 \6\ and 282 \7\ to conform these rules to amendments made by NYSE to allow customers to transmit orders for execution on the NYSE with the settlement instructions of ``cash'', ``next day'' and ``seller's option'' (collectively referred to herein as ``non-regular way settlement'') directly to a Floor broker for manual execution. --------------------------------------------------------------------------- \6\ Incorporated NYSE Rule 12 defines the term ``business day.'' \7\ Incorporated NYSE Rule 282 sets forth buy-in procedures. --------------------------------------------------------------------------- According to the NYSE filing,\8\ after adopting amendments in March 2009 requiring that all orders submitted to the NYSE be submitted for regular way settlement (i.e., settlement on the third business day following trade date),\9\ the NYSE recognized that there was a continuing need for the availability of orders with non-regular way settlement instructions. NYSE customers have expressed that certain trading strategies and/or expiration of certain trading instruments (e.g., rights and warrants) require the ability to submit orders to the NYSE that contain instructions for execution with non-regular way settlement. To accommodate the needs of its customers, the NYSE adopted NYSE Rule 14 (Non-Regular Way Settlement Instructions for Orders) to allow customers to directly transmit an order containing instructions for cash, next day and seller's option settlement to a Floor broker for representation in the trading crowd. In addition, the NYSE added Rule 14 references to several NYSE rules that relate in some way to these settlement instructions. --------------------------------------------------------------------------- \8\ See supra note 5. \9\ See Securities Exchange Act Release No. 59446 (February 25, 2009), 74 FR 9323 (March 3, 2009) (Notice of Filing and Immediate Effectiveness of SR-NYSE-2009-17). --------------------------------------------------------------------------- Under the NYSE filing, references to proposed NYSE Rule 14 (Non- Regular Way Settlement Instructions for Orders) and non-regular way settlement instructions were added to NYSE Rule 12 (``Business Day''), and specific provisions related to orders submitted with cash settlement instructions were added to NYSE Rule 282 (Buy-in Procedures). FINRA is making conforming changes to Incorporated NYSE Rules 12 and 282 to ensure consistency with NYSE's versions of Rules 12 and 282.\10\ --------------------------------------------------------------------------- \10\ Pursuant to Rule 17d-2 under the Exchange Act, NASD, NYSE, and NYSE Regulation, Inc., entered into an agreement (``Agreement'') to reduce regulatory duplication for firms that are Dual Members by allocating certain regulatory responsibilities for selected NYSE rules from NYSE Regulation to FINRA. The Agreement includes a list of all those rules (``Common Rules'') for which FINRA has assumed examination, enforcement and surveillance responsibilities under the Agreement relating to compliance by Dual Members to the extent that such responsibilities involve member firm regulation. See Securities Exchange Act Release No. 56148 (July 26, 2007), 72 FR 42146 (August 1, 2007) (Notice of Filing and Order Approving and Declaring Effective a Plan for the Allocation of Regulatory Responsibilities). The Common Rules are the same NYSE rules that FINRA has incorporated into its rulebook. See Securities Exchange Act Release No. 56147 (July 26, 2007), 72 FR 42166 (August 1, 2007) (Notice of Filing and Order Granting Accelerated Approval of Proposed Rule Change to Incorporate Certain NYSE Rules Relating to Member Firm Conduct; File No. SR-NASD-2007-054). --------------------------------------------------------------------------- [[Page 40279]] FINRA has filed the proposed rule change for immediate effectiveness and has requested that the SEC waive the requirement that the proposed rule change not become operative for 30 days after the date of the filing, such that FINRA can implement the proposed rule change immediately. 2. Statutory Basis FINRA believes that the proposed rule change is consistent with the provisions of Section 15A(b)(6) of the Act,\11\ 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 is necessary and appropriate to restore the ability of NYSE market participants to enter orders with other than ``regular way'' settlement instructions and maintain consistency with the NYSE's amendments to its Rules 12 and 282. --------------------------------------------------------------------------- \11\ 15 U.S.C. 78o-3(b)(6). --------------------------------------------------------------------------- B. Self-Regulatory Organization's Statement on Burden on Competition FINRA does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Written comments were neither solicited nor received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the proposed rule change does not: (i) Significantly affect the protection of investors or the public interest, (ii) impose any significant burden on competition, and (iii) become operative for 30 days after the date of the filing, or such shorter time as the Commission may designate, if consistent with the protection of investors and the public interest, it has become effective pursuant to Section 19(b)(3)(A) \12\ of the Act and Rule 19b-4(f)(6) thereunder.\13\ --------------------------------------------------------------------------- \12\ 15 U.S.C. 78s(b)(3)(A). \13\ 17 CFR 240.19b-4(f)(6). --------------------------------------------------------------------------- A proposed rule change filed under Rule 19b-4(f)(6) normally does not become operative until 30 days after the date of filing.\14\ However, Rule 19b-4(f)(6)(iii) \15\ permits the Commission to designate a shorter time if such action is consistent with the protection of investors and the public interest. FINRA has requested that the Commission waive the 30-day operative delay so that the proposed rule change may become operative immediately. Specifically, FINRA states that waiving the 30-day operative delay will allow FINRA's Incorporated NYSE Rules to maintain their status as Common Rules under the Agreement. Accordingly, the Commission believes that allowing the proposed rule change to become operative immediately is consistent with the protection of investors and the public interest, because it will enable FINRA to maintain consistency between its rules and NYSE's rules for purposes of the Agreement.\16\ --------------------------------------------------------------------------- \14\ Id. \15\ 17 CFR 240.19b-4(f)(6)(iii). 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. \16\ For purposes only of waiving the 30-day operative delay of the proposal, the Commission has considered the proposed rule's impact on efficiency, competition and capital formation. 15 U.S.C. 78c(f). --------------------------------------------------------------------------- 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 CommentsUse the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or Send an e-mail to rule-comments@sec.gov. Please include File Number SR-FINRA-2009-053 on the subject line. Paper Comments Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-FINRA-2009-053. 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 such filing also will be available for inspection and copying at the principal office of FINRA. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-FINRA-2009-053 and should be submitted on or before September 1, 2009. 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. E9-19142 Filed 8-10-09; 8:45 am] BILLING CODE 8010-01-P
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