Self-Regulatory Organizations; NYSE Amex LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending NYSE Amex Rule 352 and Adopting New Rule 2150-NYSE Amex Equities To Correspond With Rule Changes Filed by the Financial Industry Regulatory Authority, Inc., 67939-67942 [E9-30241]
Download as PDF
<![CDATA[
Federal Register / Vol. 74, No. 243 / Monday, December 21, 2009 / Notices
permit end-of-day order reporting rather
than require ten-second order reporting.
LavaFlow stated that it believed that
such an amendment would address
strains on the ADF’s capacity while still
providing FINRA with accurate and
timely order information.
Accordingly, FINRA is proposing to
replace the current ten-second order
reporting requirement with an end-ofday order reporting requirement;
however, to ensure that FINRA has
prompt access to this regulatory
information if necessary (e.g., a
‘‘backing-away’’ complaint is made
against an ADF Trading Center), the
proposed rule change also requires ADF
Trading Centers to provide order
information to FINRA immediately
upon request. Thus, the proposed rule
change will improve the systems
supporting the ADF and its
functionality by reducing the amount of
real-time reporting that must flow
through ADF systems, while still
providing FINRA with order
information on a timely basis.6
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.
erowe on DSK5CLS3C1PROD with NOTICES
2. Statutory Basis
FINRA believes that the proposed rule
change is consistent with the provisions
of Section 15A(b)(6) of the Act,7 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 enhance the
ADF’s functionality and decrease the
likelihood of systems issues while
continuing to ensure that FINRA has
necessary regulatory information
sufficient to monitor for compliance
with applicable rules.
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.
6 ADF Trading Centers would transmit the same
information in the same format as currently
required. Consequently, the sole effect of the
proposed rule change is to provide ADF Trading
Centers with additional time to report order
information.
7 15 U.S.C. 78o–3(b)(6).
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C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
A copy of a letter submitted by
LavaFlow requesting amendments to the
ADF order reporting rule was attached
to the proposed rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing 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
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, it has become effective
pursuant to Section 19(b)(3)(A) of the
Act 8 and Rule 19b–4(f)(6) thereunder.9
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:
67939
All submissions should refer to File
Number SR–FINRA–2009–085. 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 on official business days between
the hours of 10 a.m. and 3 p.m. Copies
of such filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–FINRA–
2009–085 and should be submitted on
or before January 11, 2010.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.10
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–30240 Filed 12–18–09; 8:45 am]
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–FINRA–2009–085 on the
subject line.
BILLING CODE 8011–01–P
Paper Comments
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–1090.
Self-Regulatory Organizations; NYSE
Amex LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change Amending NYSE Amex
Rule 352 and Adopting New Rule
2150—NYSE Amex Equities To
Correspond With Rule Changes Filed
by the Financial Industry Regulatory
Authority, Inc.
8 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6)(iii) requires the self-regulatory organization
to submit to the Commission written notice of its
intent to file the proposed rule change, along with
a brief description and text of the proposed rule
change, at least five business days prior to the date
of filing of the proposed rule change, or such
shorter time as designated by the Commission. The
Exchange has satisfied this requirement.
9 17
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Fmt 4703
Sfmt 4703
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–61157; File No. SR–
NYSEAmex–2009–88]
December 11, 2009.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
10 17
E:\FR\FM\21DEN1.SGM
CFR 200.30–3(a)(12).
21DEN1
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Federal Register / Vol. 74, No. 243 / Monday, December 21, 2009 / Notices
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2
notice is hereby given that on December
10, 2009, NYSE Amex LLC (‘‘NYSE
Amex’’ 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 NYSE Amex. NYSE
Amex filed the proposed rule change
pursuant to Section 19(b)(3)(A) of the
Act 3 and Rule 19b–4(f)(6) 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 proposes to amend
Rule 352—NYSE Amex Equities and
adopt new Rule 2150—NYSE Amex
Equities to correspond with rule
changes filed by the Financial Industry
Regulatory Authority, Inc. (‘‘FINRA’’)
and approved by the Commission.5 The
text of the proposed rule change is
available at the Exchange, the
Commission’s Public Reference Room,
and https://www.nyse.com.
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.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
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Jkt 220001
On July 30, 2007, FINRA’s
predecessor, the National Association of
Securities Dealers, Inc. (‘‘NASD’’), and
NYSE Regulation, Inc. (‘‘NYSER’’)
consolidated their member firm
regulation operations into a combined
organization, FINRA. Pursuant to Rule
17d–2 under the Act,6 the New York
Stock Exchange LLC (‘‘NYSE’’), NYSER
and FINRA entered into an agreement
(the ‘‘Agreement’’) to reduce regulatory
duplication for their members by
allocating to FINRA certain regulatory
responsibilities for certain NYSE rules
and rule interpretations (‘‘FINRA
Incorporated NYSE Rules’’). The
Exchange became a party to the
Agreement effective December 15,
2008.7
As part of its effort to reduce
regulatory duplication and relieve firms
that are members of FINRA, NYSE and
NYSE Amex of conflicting or
unnecessary regulatory burdens, FINRA
is now engaged in the process of
reviewing and amending the NASD and
FINRA Incorporated NYSE Rules in
order to create a consolidated FINRA
rulebook.8
Proposed Conforming Amendments to
NYSE Amex Equities Rules
FINRA adopted parts of NASD Rule
2330 (Customers’ Securities of Funds) as
consolidated FINRA Rule 2150
(Improper Use of Customers’ Securities
or Funds; Prohibition Against
Guarantees and Sharing in Accounts). In
adopting consolidated FINRA Rule
2150, FINRA also took into account
certain provisions of FINRA
Incorporated NYSE Rule 352
U.S.C. 78a, et seq.
Securities Exchange Act Release Nos. 56148
(July 26, 2007), 72 FR 42146 (August 1, 2007) (order
approving the Agreement); 56147 (July 26, 2007), 72
FR 42166 (August 1, 2007) (SR–NASD–2007–054)
(order approving the incorporation of certain NYSE
Rules as ‘‘Common Rules’’); and 60409 (July 30,
2009), 74 FR 39353 (August 6, 2009) (order
approving the amended and restated Agreement,
adding NYSE Amex as a party). Paragraph 2(b) of
the Agreement sets forth procedures regarding
proposed changes by FINRA, NYSE or NYSE Amex
to the substance of any of the Common Rules.
8 FINRA’s rulebook currently has three sets of
rules: (1) NASD Rules, (2) FINRA Incorporated
NYSE Rules, and (3) consolidated FINRA Rules.
The FINRA Incorporated NYSE Rules apply only to
those members of FINRA that are also members of
the NYSE, while the consolidated FINRA Rules
apply to all FINRA members. For more information
about the FINRA rulebook consolidation process,
see FINRA Information Notice, March 12, 2008.
7 See
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 See Securities Exchange Act Release No. 60701
(September 21, 2009), 74 FR 49425 (September 28,
2009) (order approving FINRA 09–14).
2 17
Background
6 15
1. Purpose
The purpose of the proposed rule
changes is to amend Rule 352—NYSE
Amex Equities (Guarantees, Sharing in
Accounts, and Loan Arrangements) and
adopt new Rule 2150—NYSE Amex
Equities (Improper Use of Customers’
1 15
Securities or Funds; Prohibition Against
Guarantees and Sharing in Accounts) to
correspond with rule changes filed by
FINRA and approved by the
Commission.
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Frm 00091
Fmt 4703
Sfmt 4703
(Guarantees, Sharing in Accounts, and
Loan Arrangements).9
Because they are substantially similar
to the provisions of FINRA Rule 2150 or
are otherwise incorporated into the
Supplementary Material to the Rule,
FINRA deleted the corresponding
provisions of FINRA Incorporated NYSE
Rule 352(a)–(d). In particular, FINRA
Incorporated NYSE Rule 352(a), which
prohibits members, member
organizations and their employees from
guaranteeing or representing that it will
guarantee a customer against loss in any
account or on any transaction, is
substantially the same as FINRA Rule
2150(b).10
In addition, FINRA Incorporated
NYSE Rule 352(b) and (c) prohibit
members, member organizations and
their employees from sharing in profits
or losses in a customer’s account or on
any transaction except, subject to
written authorization by the member or
member organization (though not prior
written customer authorization), in
direct proportion to the financial
contributions made to the account.
FINRA Incorporated NYSE Rule 352(c)
also permits sharing in customer losses
resulting from an erroneous transaction.
FINRA Incorporated NYSE Rule 352(d)
permits sharing arrangements that
comply with Rule 205 of the Investment
Advisers Act of 1940, as amended,11
though again, there is no requirement
for prior written customer authorization.
These provisions are all substantially
similar to those of consolidated FINRA
Rule 2150(c) and the Supplementary
Material.12
To harmonize the NYSE Amex
Equities Rules with the approved
FINRA Rules, the Exchange
correspondingly proposes to delete the
provisions of Rule 352(a)–(d)—NYSE
Amex Equities and replace them with
proposed Rule 2150—NYSE Amex
Equities, which is substantially similar
to the new FINRA Rule.13 As proposed,
Rule 2150—NYSE Amex Equities adopts
the same language as FINRA Rule 2150,
except for substituting for or adding to,
as needed, the term ‘‘member
organization’’ for the term ‘‘member’’,
and making corresponding technical
changes. In addition, in Supplementary
9 See Securities Exchange Act Release No. 60701
(September 21, 2009), 74 FR 49425 (September 28,
2009).
10 See Securities Exchange Act Release No. 60701
(September 21, 2009), 74 FR 49425 (September 28,
2009).
11 15 U.S.C. 80b–1, et seq.
12 See Securities Exchange Act Release No. 60701
(September 21, 2009), 74 FR 49425 (September 28,
2009).
13 NYSE has submitted a companion rule filing
amending its rules in accordance with FINRA’s rule
changes. See SR–NYSE–2009–123.
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21DEN1
Federal Register / Vol. 74, No. 243 / Monday, December 21, 2009 / Notices
Material .04 to proposed Rule 2150—
NYSE Amex Equities, the Exchange
substituted NYSE Amex Equities Rules
346, 407 and 407A for NASD Rules
3030, 3040 and 3050 cross-referenced in
the FINRA Rule, as these rules, which
are analogous in purpose, have not yet
been harmonized by FINRA.
Finally, in order to ensure that both
proposed Rule 2150—NYSE Amex
Equities and FINRA Rule 2150 are fully
harmonized, the Exchange also proposes
to add Supplementary Material .05 to
Rule 2150—NYSE Amex Equities to
provide that, for the purposes of the
rule, the term ‘‘associated person of a
member or member organization’’ shall
have the same meaning as the terms
‘‘person associated with a member’’ or
‘‘associated person of a member’’ as
defined in Article I (rr) of the FINRA ByLaws.
erowe on DSK5CLS3C1PROD with NOTICES
2. Statutory Basis
The Exchange believes that the
proposed rule changes are consistent
with Section 6(b) of the Act,14 in
general, and further the objectives of
Section 6(b)(5) of the Act,15 in
particular, in that they are 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, and, in
general, to protect investors and the
public interest. The proposed rule
changes also support the principles of
Section 11A(a)(1) 16 of the Act in that
they seek to ensure the economically
efficient execution of securities
transactions and fair competition among
brokers and dealers and among
exchange markets.
The Exchange believes that the
proposed rule changes support the
objectives of the Act by providing
greater harmonization between NYSE
Amex Equities Rules and FINRA Rules
of similar purpose, resulting in less
burdensome and more efficient
regulatory compliance for joint
members. To the extent the Exchange
has proposed changes that differ from
the FINRA version of the Rules, such
changes are technical in nature and do
not change the substance of the
proposed NYSE Amex Equities Rules.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition that is not
14 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
16 15 U.S.C. 78k–1(a)(1).
15 15
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14:14 Dec 18, 2009
Jkt 220001
necessary or appropriate in furtherance
of the purposes of the Act.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants or Others
No written comments were solicited
or received with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The Exchange has filed the proposed
rule change pursuant to Section
19(b)(3)(A)(iii) of the Act 17 and Rule
19b–4(f)(6) thereunder.18 Because the
foregoing 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 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 public interest, it has
become effective pursuant to Section
19(b)(3)(A) of the Act 19 and Rule 19b–
4(f)(6) thereunder.20
A proposed rule change filed under
19b–4(f)(6) normally does not become
operative prior to 30 days after the date
of filing. However, Rule 19b–
4(f)(6)(iii) 21 permits the Commission to
designate a shorter time if such action
is consistent with the protection of
investors and the public interest. The
Exchange has requested that the
Commission waive the 30-day operative
delay set forth in Rule 19b–4(f)(6)(iii)
under the Act 22 in order for the rule to
become operative upon filing. The
Commission notes that the operative
date of FINRA 2150 becomes operative
on December 14, 2009.23 The
Commission believes that the earlier
operative date is consistent with the
protection of investors and the public
interest because the proposed rule
change permits the Exchange to
implement the rule without further
delay and will prevent any potential
17 15
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(6).
19 15 U.S.C. 78s(b)(3)(A).
20 17 CFR 240.19b–4(f)(6).
21 17 CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6)(iii) requires that a self-regulatory
organization submit to the Commission written
notice of its intent to file the proposed rule change,
along with a brief description and text of the
proposed rule change, at least five business days
prior to the date of filing of the proposed rule
change, or such shorter time as designated by the
Commission. The Commission notes that NYSE has
satisfied the five-day pre-filing notice requirement.
22 17 CFR 240.19b–4(f)(6)(iii).
23 See FINRA Regulatory Notice 09–60 (October
15, 2009).
18 17
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Frm 00092
Fmt 4703
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67941
regulatory gaps between the FINRA and
NYSE Amex Rules.24
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
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–NYSEAmex–2009–88 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–NYSEAmex–2009–88. 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
24 For purposes only of waiving the 30-day
operative delay of this proposal, the Commission
has considered the proposed rule’s impact on
efficiency, competition, and capital formation. 15
U.S.C. 78c(f).
E:\FR\FM\21DEN1.SGM
21DEN1
67942
Federal Register / Vol. 74, No. 243 / Monday, December 21, 2009 / Notices
the principal office of NYSE Amex. 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–NYSEAmex–2009–88 and
should be submitted on or before
January 11, 2010.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.25
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–30241 Filed 12–18–09; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–61158; File No. SR–NYSE–
2009–123]
Self-Regulatory Organizations; New
York Stock Exchange LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change Amending
NYSE Rule 352 and Adopting New Rule
2150 To Correspond With Rule
Changes Filed by the Financial
Industry Regulatory Authority, Inc.
December 11, 2009.
erowe on DSK5CLS3C1PROD with NOTICES
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, 2009, the New York Stock Exchange
LLC (‘‘NYSE’’ 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 NYSE. NYSE filed the
proposed rule change pursuant to
Section 19(b)(3)(A) of the Act 3 and Rule
19b–4(f)(6) 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 proposes to amend
NYSE Rule 352 and adopt new Rule
2150 to correspond with rule changes
filed by the Financial Industry
Regulatory Authority, Inc. (‘‘FINRA’’)
25 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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14:14 Dec 18, 2009
Jkt 220001
and approved by the Commission.5 The
text of the proposed rule change is
available at the Exchange, the
Commission’s Public Reference Room,
and https://www.nyse.com.
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.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The purpose of the proposed rule
changes is to amend NYSE Rule 352
(Guarantees, Sharing in Accounts, and
Loan Arrangements) and adopt new
Rule 2150 (Improper Use of Customers’
Securities or Funds; Prohibition Against
Guarantees and Sharing in Accounts) to
correspond with rule changes filed
FINRA and approved by the
Commission.
Background
On July 30, 2007, FINRA’s
predecessor, the National Association of
Securities Dealers, Inc. (‘‘NASD’’), and
NYSE Regulation, Inc. (‘‘NYSER’’)
consolidated their member firm
regulation operations into a combined
organization, FINRA. Pursuant to Rule
17d–2 under the Act,6 NYSE, NYSER
and FINRA entered into an agreement
(the ‘‘Agreement’’) to reduce regulatory
duplication for their members by
allocating to FINRA certain regulatory
responsibilities for certain NYSE rules
and rule interpretations (‘‘FINRA
Incorporated NYSE Rules’’). NYSE
Amex LLC (‘‘NYSE Amex’’) became a
party to the Agreement effective
December 15, 2008.7
5 See Securities Exchange Act Release No. 60701
(September 21, 2009), 74 FR 49425 (September 28,
2009) (order approving FINRA 09–14).
6 15 U.S.C. 78a, et seq.
7 See Securities Exchange Act Release Nos. 56148
(July 26, 2007), 72 FR 42146 (August 1, 2007) (order
approving the Agreement); 56147 (July 26, 2007), 72
FR 42166 (August 1, 2007) (SR–NASD–2007–054)
(order approving the incorporation of certain NYSE
Rules as ‘‘Common Rules’’); and 60409 (July 30,
2009), 74 FR 39353 (August 6, 2009) (order
PO 00000
Frm 00093
Fmt 4703
Sfmt 4703
As part of its effort to reduce
regulatory duplication and relieve firms
that are members of FINRA, NYSE and
NYSE Amex of conflicting or
unnecessary regulatory burdens, FINRA
is now engaged in the process of
reviewing and amending the NASD and
FINRA Incorporated NYSE Rules in
order to create a consolidated FINRA
rulebook.8
Proposed Conforming Amendments to
NYSE Rules
FINRA adopted parts of NASD Rule
2330 (Customers’ Securities of Funds) as
consolidated FINRA Rule 2150
(Improper Use of Customers’ Securities
or Funds; Prohibition Against
Guarantees and Sharing in Accounts). In
adopting consolidated FINRA Rule
2150, FINRA also took into account
certain provisions of FINRA
Incorporated NYSE Rule 352
(Guarantees, Sharing in Accounts, and
Loan Arrangements).9
Because they are substantially similar
to the provisions of FINRA Rule 2150 or
are otherwise incorporated into the
Supplementary Material to the Rule,
FINRA deleted the corresponding
provisions of FINRA Incorporated NYSE
Rule 352(a)–(d). In particular, FINRA
Incorporated NYSE Rule 352(a), which
prohibits members, member
organizations and their employees from
guaranteeing or representing that it will
guarantee a customer against loss in any
account or on any transaction, is
substantially the same as FINRA Rule
2150(b).10
In addition, FINRA Incorporated
NYSE Rule 352(b) and (c) prohibit
members, member organizations and
their employees from sharing in profits
or losses in a customer’s account or on
any transaction except, subject to
written authorization by the member or
member organization (though not prior
written customer authorization), in
direct proportion to the financial
contributions made to the account.
approving the amended and restated Agreement,
adding NYSE Amex as a party). Paragraph 2(b) of
the Agreement sets forth procedures regarding
proposed changes by FINRA, NYSE or NYSE Amex
to the substance of any of the Common Rules.
8 FINRA’s rulebook currently has three sets of
rules: (1) NASD Rules, (2) FINRA Incorporated
NYSE Rules, and (3) consolidated FINRA Rules.
The FINRA Incorporated NYSE Rules apply only to
those members of FINRA that are also members of
the NYSE (‘‘Dual Members’’), while the
consolidated FINRA Rules apply to all FINRA
members. For more information about the FINRA
rulebook consolidation process, see FINRA
Information Notice, March 12, 2008.
9 See Securities Exchange Act Release No. 60701
(September 21, 2009), 74 FR 49425 (September 28,
2009).
10 See Securities Exchange Act Release No. 60701
(September 21, 2009), 74 FR 49425 (September 28,
2009).
E:\FR\FM\21DEN1.SGM
21DEN1
]]>Agencies
[Federal Register Volume 74, Number 243 (Monday, December 21, 2009)]
[Notices]
[Pages 67939-67942]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-30241]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-61157; File No. SR-NYSEAmex-2009-88]
Self-Regulatory Organizations; NYSE Amex LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change Amending NYSE Amex
Rule 352 and Adopting New Rule 2150--NYSE Amex Equities To Correspond
With Rule Changes Filed by the Financial Industry Regulatory Authority,
Inc.
December 11, 2009.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
[[Page 67940]]
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on December 10, 2009, NYSE Amex LLC (``NYSE Amex'' 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 NYSE Amex. NYSE Amex filed the proposed rule
change pursuant to Section 19(b)(3)(A) of the Act \3\ and Rule 19b-
4(f)(6) 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.
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\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).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend Rule 352--NYSE Amex Equities and
adopt new Rule 2150--NYSE Amex Equities to correspond with rule changes
filed by the Financial Industry Regulatory Authority, Inc. (``FINRA'')
and approved by the Commission.\5\ The text of the proposed rule change
is available at the Exchange, the Commission's Public Reference Room,
and https://www.nyse.com.
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\5\ See Securities Exchange Act Release No. 60701 (September 21,
2009), 74 FR 49425 (September 28, 2009) (order approving FINRA 09-
14).
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II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, 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.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of the proposed rule changes is to amend Rule 352--NYSE
Amex Equities (Guarantees, Sharing in Accounts, and Loan Arrangements)
and adopt new Rule 2150--NYSE Amex Equities (Improper Use of Customers'
Securities or Funds; Prohibition Against Guarantees and Sharing in
Accounts) to correspond with rule changes filed by FINRA and approved
by the Commission.
Background
On July 30, 2007, FINRA's predecessor, the National Association of
Securities Dealers, Inc. (``NASD''), and NYSE Regulation, Inc.
(``NYSER'') consolidated their member firm regulation operations into a
combined organization, FINRA. Pursuant to Rule 17d-2 under the Act,\6\
the New York Stock Exchange LLC (``NYSE''), NYSER and FINRA entered
into an agreement (the ``Agreement'') to reduce regulatory duplication
for their members by allocating to FINRA certain regulatory
responsibilities for certain NYSE rules and rule interpretations
(``FINRA Incorporated NYSE Rules''). The Exchange became a party to the
Agreement effective December 15, 2008.\7\
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\6\ 15 U.S.C. 78a, et seq.
\7\ See Securities Exchange Act Release Nos. 56148 (July 26,
2007), 72 FR 42146 (August 1, 2007) (order approving the Agreement);
56147 (July 26, 2007), 72 FR 42166 (August 1, 2007) (SR-NASD-2007-
054) (order approving the incorporation of certain NYSE Rules as
``Common Rules''); and 60409 (July 30, 2009), 74 FR 39353 (August 6,
2009) (order approving the amended and restated Agreement, adding
NYSE Amex as a party). Paragraph 2(b) of the Agreement sets forth
procedures regarding proposed changes by FINRA, NYSE or NYSE Amex to
the substance of any of the Common Rules.
---------------------------------------------------------------------------
As part of its effort to reduce regulatory duplication and relieve
firms that are members of FINRA, NYSE and NYSE Amex of conflicting or
unnecessary regulatory burdens, FINRA is now engaged in the process of
reviewing and amending the NASD and FINRA Incorporated NYSE Rules in
order to create a consolidated FINRA rulebook.\8\
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\8\ FINRA's rulebook currently has three sets of rules: (1) NASD
Rules, (2) FINRA Incorporated NYSE Rules, and (3) consolidated FINRA
Rules. The FINRA Incorporated NYSE Rules apply only to those members
of FINRA that are also members of the NYSE, while the consolidated
FINRA Rules apply to all FINRA members. For more information about
the FINRA rulebook consolidation process, see FINRA Information
Notice, March 12, 2008.
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Proposed Conforming Amendments to NYSE Amex Equities Rules
FINRA adopted parts of NASD Rule 2330 (Customers' Securities of
Funds) as consolidated FINRA Rule 2150 (Improper Use of Customers'
Securities or Funds; Prohibition Against Guarantees and Sharing in
Accounts). In adopting consolidated FINRA Rule 2150, FINRA also took
into account certain provisions of FINRA Incorporated NYSE Rule 352
(Guarantees, Sharing in Accounts, and Loan Arrangements).\9\
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\9\ See Securities Exchange Act Release No. 60701 (September 21,
2009), 74 FR 49425 (September 28, 2009).
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Because they are substantially similar to the provisions of FINRA
Rule 2150 or are otherwise incorporated into the Supplementary Material
to the Rule, FINRA deleted the corresponding provisions of FINRA
Incorporated NYSE Rule 352(a)-(d). In particular, FINRA Incorporated
NYSE Rule 352(a), which prohibits members, member organizations and
their employees from guaranteeing or representing that it will
guarantee a customer against loss in any account or on any transaction,
is substantially the same as FINRA Rule 2150(b).\10\
---------------------------------------------------------------------------
\10\ See Securities Exchange Act Release No. 60701 (September
21, 2009), 74 FR 49425 (September 28, 2009).
---------------------------------------------------------------------------
In addition, FINRA Incorporated NYSE Rule 352(b) and (c) prohibit
members, member organizations and their employees from sharing in
profits or losses in a customer's account or on any transaction except,
subject to written authorization by the member or member organization
(though not prior written customer authorization), in direct proportion
to the financial contributions made to the account. FINRA Incorporated
NYSE Rule 352(c) also permits sharing in customer losses resulting from
an erroneous transaction. FINRA Incorporated NYSE Rule 352(d) permits
sharing arrangements that comply with Rule 205 of the Investment
Advisers Act of 1940, as amended,\11\ though again, there is no
requirement for prior written customer authorization. These provisions
are all substantially similar to those of consolidated FINRA Rule
2150(c) and the Supplementary Material.\12\
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\11\ 15 U.S.C. 80b-1, et seq.
\12\ See Securities Exchange Act Release No. 60701 (September
21, 2009), 74 FR 49425 (September 28, 2009).
---------------------------------------------------------------------------
To harmonize the NYSE Amex Equities Rules with the approved FINRA
Rules, the Exchange correspondingly proposes to delete the provisions
of Rule 352(a)-(d)--NYSE Amex Equities and replace them with proposed
Rule 2150--NYSE Amex Equities, which is substantially similar to the
new FINRA Rule.\13\ As proposed, Rule 2150--NYSE Amex Equities adopts
the same language as FINRA Rule 2150, except for substituting for or
adding to, as needed, the term ``member organization'' for the term
``member'', and making corresponding technical changes. In addition, in
Supplementary
[[Page 67941]]
Material .04 to proposed Rule 2150--NYSE Amex Equities, the Exchange
substituted NYSE Amex Equities Rules 346, 407 and 407A for NASD Rules
3030, 3040 and 3050 cross-referenced in the FINRA Rule, as these rules,
which are analogous in purpose, have not yet been harmonized by FINRA.
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\13\ NYSE has submitted a companion rule filing amending its
rules in accordance with FINRA's rule changes. See SR-NYSE-2009-123.
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Finally, in order to ensure that both proposed Rule 2150--NYSE Amex
Equities and FINRA Rule 2150 are fully harmonized, the Exchange also
proposes to add Supplementary Material .05 to Rule 2150--NYSE Amex
Equities to provide that, for the purposes of the rule, the term
``associated person of a member or member organization'' shall have the
same meaning as the terms ``person associated with a member'' or
``associated person of a member'' as defined in Article I (rr) of the
FINRA By-Laws.
2. Statutory Basis
The Exchange believes that the proposed rule changes are consistent
with Section 6(b) of the Act,\14\ in general, and further the
objectives of Section 6(b)(5) of the Act,\15\ in particular, in that
they are 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, and, in general, to protect investors and the
public interest. The proposed rule changes also support the principles
of Section 11A(a)(1) \16\ of the Act in that they seek to ensure the
economically efficient execution of securities transactions and fair
competition among brokers and dealers and among exchange markets.
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\14\ 15 U.S.C. 78f(b).
\15\ 15 U.S.C. 78f(b)(5).
\16\ 15 U.S.C. 78k-1(a)(1).
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The Exchange believes that the proposed rule changes support the
objectives of the Act by providing greater harmonization between NYSE
Amex Equities Rules and FINRA Rules of similar purpose, resulting in
less burdensome and more efficient regulatory compliance for joint
members. To the extent the Exchange has proposed changes that differ
from the FINRA version of the Rules, such changes are technical in
nature and do not change the substance of the proposed NYSE Amex
Equities Rules.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \17\ and Rule 19b-4(f)(6) thereunder.\18\
Because the foregoing 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 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 public interest, it has become effective pursuant to
Section 19(b)(3)(A) of the Act \19\ and Rule 19b-4(f)(6)
thereunder.\20\
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\17\ 15 U.S.C. 78s(b)(3)(A)(iii).
\18\ 17 CFR 240.19b-4(f)(6).
\19\ 15 U.S.C. 78s(b)(3)(A).
\20\ 17 CFR 240.19b-4(f)(6).
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A proposed rule change filed under 19b-4(f)(6) normally does not
become operative prior to 30 days after the date of filing. However,
Rule 19b-4(f)(6)(iii) \21\ permits the Commission to designate a
shorter time if such action is consistent with the protection of
investors and the public interest. The Exchange has requested that the
Commission waive the 30-day operative delay set forth in Rule 19b-
4(f)(6)(iii) under the Act \22\ in order for the rule to become
operative upon filing. The Commission notes that the operative date of
FINRA 2150 becomes operative on December 14, 2009.\23\ The Commission
believes that the earlier operative date is consistent with the
protection of investors and the public interest because the proposed
rule change permits the Exchange to implement the rule without further
delay and will prevent any potential regulatory gaps between the FINRA
and NYSE Amex Rules.\24\
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\21\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires that a self-regulatory organization submit to the
Commission written notice of its intent to file the proposed rule
change, along with a brief description and text of the proposed rule
change, at least five business days prior to the date of filing of
the proposed rule change, or such shorter time as designated by the
Commission. The Commission notes that NYSE has satisfied the five-
day pre-filing notice requirement.
\22\ 17 CFR 240.19b-4(f)(6)(iii).
\23\ See FINRA Regulatory Notice 09-60 (October 15, 2009).
\24\ For purposes only of waiving the 30-day operative delay of
this proposal, the Commission has considered the proposed rule's
impact on efficiency, competition, and capital formation. 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of the proposed rule
change, the Commission may summarily abrogate 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
Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-NYSEAmex-2009-88 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-NYSEAmex-2009-88. 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
[[Page 67942]]
the principal office of NYSE Amex. 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-NYSEAmex-2009-88 and should be submitted on or before
January 11, 2010.
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\25\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\25\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-30241 Filed 12-18-09; 8:45 am]
BILLING CODE 8011-01-P
