Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change to Amend NASDAQ Rules 1140 and 3080 to Reflect Changes to a Corresponding FINRA Rule, 2917-2920 [2010-797]

Download as PDF Federal Register / Vol. 75, No. 11 / Tuesday, January 19, 2010 / Notices jlentini on DSKJ8SOYB1PROD with NOTICES Commission finds that the proposed rule change is consistent with the requirements of Section 6(b)(4) of the Act,12 which requires that the rules of a national securities exchange provide for the equitable allocation of reasonable dues, fees and other charges among members and issuers and other persons using its facilities. The Commission also believes that the proposed rule change is consistent with Section 6(b)(5) of the Act,13 which requires, among other things, that the rules of an exchange be designed 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 securities, 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; and not be designed to permit unfair discrimination between customers, issuers, brokers, or dealers. The Commission further believes that the proposed rule change is consistent with Section 6(b)(8) of the Act 14 in that it does not impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. Because ISE’s instant proposal relates to the distribution of non-core data, the Commission will apply the marketbased approach set forth in the Commission’s approval of a NYSE Arca market data proposal.15 The Commission believes that ISE was subject to significant competitive forces in setting the terms of its proposal, including the level of fees.16 Specifically, the Exchange has a compelling need to attract order flow to maintain its share of trading volume, imposing pressure on the Exchange to act reasonably in establishing fees for these data offerings.17 Further, ISE is impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 12 15 U.S.C. 78f(b)(4). 13 15 U.S.C. 78f(b)(5). 14 15 U.S.C. 78f(b)(8). 15 See Securities Exchange Act Release No. 59039 (December 2, 2008), 73 FR 74770 (December 9, 2008) (SR–NYSEArca–2006–21). 16 The Commission has previously made a finding that the options industry is subject to significant competitive forces. See Securities Exchange Act Release No. 59949 (May 20, 2009), 74 FR 25593 (May 28, 2009) (SR–ISE–2009–97) (order approving ISE’s proposal to establish fees for a real-time depth of market data offering). 17 ISE states that it has a compelling need to attract order flow from market participants in order to maintain its share of trading volume. ISE further states that this compelling need to attract order flow imposes significant pressure on ISE to act reasonably in setting the fees for its market data VerDate Nov<24>2008 16:28 Jan 15, 2010 Jkt 220001 constrained in pricing these data offerings because of the availability of alternatives to purchasing ISE’s market data products.18 Finally, the Commission does not believe that a substantial countervailing basis exists to support a finding that the proposed fees fail to meet the requirements of the Act or the rules thereunder. The Commission did not receive any comments on the terms of the proposal. Further, the fees charged will be the same for all market participants, and therefore do not unreasonably discriminate among market participants. In addition, ISE represents that it has enhanced its Open/Close Trade Profile and Historical Options Ticket Data offerings, and that the increase ‘‘is nominal in light of the increased costs borne by the Exchange for the enhancements.’’ 19 IV. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act, that the proposed rule change (SR–ISE–2009– 103), be and 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. 2010–704 Filed 1–15–10; 8:45 am] BILLING CODE 8011–01–P offerings, particularly given that the market participants that will pay such fees often will be the same market participants from whom ISE must attract order flow. These market participants include broker-dealers that control the handling of a large volume of customer and proprietary order flow. ISE states that, given the portability of order flow from one exchange to another, any exchange that sought to charge unreasonably high market data fees would risk alienating many of the same customers on whose orders it depends for competitive survival. See Notice, supra note 3, at 64785. 18 For example, the Exchange represents that all of the information available in the Historical Options Tick Data product is available from the core data feed offered by the Options Price Reporting Authority. Further, the Exchange represents that CBOE is a potential competitor because it also sells an Open/Close market data product. See Notice, supra note 3, at 64785. 19 See Notice, supra note 3, at 64784. 20 17 CFR 200.30–3(a)(12). PO 00000 Frm 00074 Fmt 4703 Sfmt 4703 2917 SECURITIES AND EXCHANGE COMMISSION [Release No. 34–61314; File No. SR– NASDAQ–2009–112] Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change to Amend NASDAQ Rules 1140 and 3080 to Reflect Changes to a Corresponding FINRA Rule January 7, 2010. 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 30, 2009, The NASDAQ Stock Market LLC (the ‘‘Exchange’’ or ‘‘NASDAQ’’) 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 the proposed rule change as constituting a noncontroversial rule change under Rule 19b–4(f)(6) 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. I. Self-Regulatory Organization’s Statement of the Terms of the Substance of the Proposed Rule Change The Exchange is filing this proposed rule change to amend NASDAQ Rules 1140 and 3080 to reflect recent changes to a corresponding rule of the Financial Industry Regulatory Authority (‘‘FINRA’’). The Exchange will implement the proposed rule change thirty days after the date of the filing. The text of the proposed rule change is available at https:// nasdaqomx.cchwallstreet.com, at the Exchange’s principal office, on the Commission’s Web site at https:// www.sec.gov, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange 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 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 17 CFR 240.19b–4(f)(6). 2 17 E:\FR\FM\19JAN1.SGM 19JAN1 2918 Federal Register / Vol. 75, No. 11 / Tuesday, January 19, 2010 / Notices places specified in Item IV below. The Exchange 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 jlentini on DSKJ8SOYB1PROD with NOTICES 1. Purpose Many of NASDAQ’s rules are based on rules of FINRA (formerly the National Association of Securities Dealers (‘‘NASD’’)). Beginning in 2008, FINRA embarked on an extended process of moving rules formerly designated as ‘‘NASD Rules’’ into a consolidated FINRA rulebook. In most cases, FINRA has renumbered these rules, and in some cases has substantively amended them. Accordingly, NASDAQ also has initiated a process of modifying its rulebook to ensure that NASDAQ rules corresponding to FINRA/NASD rules continue to mirror them as closely as practicable. In some cases, it is not possible for the rule numbers of NASDAQ rules to mirror corresponding FINRA rules, because existing or planned NASDAQ rules make use of those numbers. However, wherever possible, NASDAQ plans to update its rules to reflect changes to corresponding FINRA rules. This filing addresses NASDAQ Rules 1140 and 3080 which follow or incorporate by reference former NASD Rules 1140 and 3080. In SR–FINRA– 2009–019,4 FINRA modified, renumbered, and transitioned these NASD rules into the FINRA Consolidated Rule Manual. This proposal makes conforming changes to the NASDAQ rules but does not re-number them. Rule 1140 requires each Nasdaq member to file its Forms U4, U5, BR, BDW, and BD amendments (referred to collectively as ‘‘Uniform Forms’’) via electronic process or such other process as Nasdaq may prescribe to the Web CRD, the centralized database for registration and qualification information for firms and their associated persons. Rule 1140 also requires that the member retain and provide upon regulatory request every original, signed initial and transfer Form U4 that form the basis of the member’s electronically filed Forms U4 and every record of the member’s electronically filed initial and amended Forms U5. 4 See Securities Exchange Act Release No. 60348 (July 20, 2009), 74 FR 37077 (July 27, 2009) (SR– FINRA–2009–019). VerDate Nov<24>2008 16:28 Jan 15, 2010 Jkt 220001 In SR–FINRA–2009–019, FINRA proposed and the Commission approved the following changes to Rule 1140: • Codified that every initial and transfer electronic Form U4 must be based on an original, manually signed Form U4 provided to the member by the person on whose behalf the Form U4 is being filed. • Modified the signature requirement with respect to amendments to disclosure information in the Form U4. The new FINRA rule would permit a firm to file amendments to the Form U4 disclosure information without obtaining the registered person’s manual signature if the firm uses reasonable efforts to (1) provide the registered person with a copy of the amended disclosure information prior to filing and (2) obtain the registered person’s written acknowledgment (which may be electronic) prior to filing that the information has been received and reviewed. The proposed rule change also requires a member, as part of its recordkeeping requirements, to retain the written acknowledgment in accordance with SEA Rule 17a–4(e)(1) and make it available promptly upon regulatory request. • Clarified that a member must submit disclosure information to which it has knowledge in those cases where the member is not able to obtain an associated person’s manual signature or written acknowledgement of the amendment. Proposed supplementary material sets forth examples of reasons why a member may not be able to obtain the associated person’s manual signature or written acknowledgement. • Incorporated Web CRD’s current practice of permitting Form U4 administrative information to be amended without obtaining the associated person’s signature (manual or otherwise). Proposed supplementary material explains that such administrative information includes items such as the addition of state or self regulatory organization registrations, exam scheduling, and updates to residential, business, and personal history. • Proposed supplementary material expressly permitted the registered principal(s) or corporate officer(s) who is responsible for supervising a firm’s electronic filings to delegate to another associated person (who need not be registered) the electronic filing of the member’s forms via Web CRD. The delegatee may also acknowledge, electronically, that he is making the filing on behalf of the member and the member’s associated person. The proposed supplementary material makes clear, however, that the principal(s) or PO 00000 Frm 00075 Fmt 4703 Sfmt 4703 corporate officer(s) may not delegate any of his or her supervision, review and approval responsibilities and must take reasonable and appropriate action to ensure that all delegated electronic filing functions are properly executed and supervised. • Continued to permit firms to enter into third-party agreements for the electronic filing of the required forms. The supplementary material makes clear that the firm remains responsible for complying with the requirements of the rule. • Made other technical changes, such as making clarifying rule crossreferences, replacing the reference to fingerprint ‘‘cards’’ with fingerprint ‘‘information,’’ and noting the applicable retention periods for the forms under SEA Rule 17a–4. NASDAQ proposes to adopt these approved changes in Nasdaq Rule 1140. NASDAQ does not propose to renumber Rule 1140 to 1010 as did FINRA. Nasdaq Rule 3080 (Disclosure to Associated Persons When Signing Form U–4) requires members to provide each associated person, whenever the associated person is asked to sign a new or amended Form U4, with certain written disclosures regarding the nature and process of arbitration proceedings. The associated person agrees to be bound by this process upon signing a Form U4. The disclosures required by NASD Rule 3080 may be given by the same member firm to the same associated person on more than one occasion during that person’s employment, if the associated person has reason to re-sign the Form U4. NASD Rule 3080 does not address any private arbitration agreements that the associated person might enter into with the member firm. The disclosure language in NASD Rule 3080 explains that the Form U4 contains a pre-dispute arbitration clause, indicates in which Item of the Form U4 the clause is located and advises the associated person to read the pre-dispute arbitration clause. Rule 3080 was modeled on the disclosure given to customers when signing pre-dispute arbitration agreements with member firms, as contained in NASD Rule 3110(f). NASDAQ Rule 3080 currently incorporates by reference NASD Rule 3080. In SR–FINRA–2009–019, FINRA transferred NASD Rule 3080 to the FINRA Consolidated Rule Manual and re-numbered it as FINRA Rule 2263. FINRA’s proposed rule change made the following changes: • Amended the current title ‘‘Disclosure to Associated Person When E:\FR\FM\19JAN1.SGM 19JAN1 Federal Register / Vol. 75, No. 11 / Tuesday, January 19, 2010 / Notices Signing Form U4’’ to clarify that the rule relates to arbitration disclosures. Accordingly, the new proposed title is ‘‘Arbitration Disclosure to Associated Persons Signing or Acknowledging Form U4.’’ • Clarified that a member must provide the required arbitration disclosures whenever a member asks an associated person, pursuant to proposed FINRA Rule 1010 (as described above), to manually sign an initial or amended Form U4, or to otherwise provide written (which may be electronic) acknowledgement of an amendment to the Form. • Updated the rule language to reflect recent amendments to FINRA’s Code of Arbitration Procedure requiring arbitrators to provide an explained decision to the parties in eligible cases if there is a joint request by all parties at least 20 days before the first scheduled hearing date. NASDAQ is proposing to continue to incorporate FINRA Rule 2263 in NASDAQ Rule 3080. This will result in NASDAQ adopting the changes described above. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with the provisions of Section 6 of the Act,5 in general, and with Sections 6(b)(5) of the Act,6 in particular, in that the proposal is 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 securities, 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 changes will conform NASDAQ Rules 1140 and 3080 to recent changes made to corresponding FINRA rules, to promote application of consistent regulatory standards. jlentini on DSKJ8SOYB1PROD with NOTICES B. Self-Regulatory Organization’s Statement on Burden on Competition 6 15 U.S.C. 78f. U.S.C. 78f(b)(5). VerDate Nov<24>2008 16:28 Jan 15, 2010 Jkt 220001 Written comments were neither solicited nor received. 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 7 and Rule 19b– 4(f)(6) thereunder.8 Normally, a proposed rule change filed under 19b–4(f)(6) may not become operative prior to 30 days after the date of filing. However, Rule 19b–4(f)(6)(iii) 9 permits the Commission to designate a shorter time if such action is consistent with the protection of investors and the public interest. Nasdaq has requested that the Commission waive the 30-day operative delay. In its filing, Nasdaq noted that the proposal would amend NASDAQ Rules 1140 and 3080 to reflect recent changes to a corresponding rule of FINRA. The Commission believes that waiver of the 30-day operative period is consistent with the protection of investors and the public interest. The proposed rule change would allow greater consistency between NASDAQ and FINRA rules, which should benefit NASDAQ and FINRA members, regulators, and the investing public. In addition, the Commission notes that the changes proposed in this filing are in all material respects the same as changes proposed in FINRA’s filing, which was published for comment, and for which no comment letters were received.10 Accordingly, the Commission 7 15 U.S.C. 78s(b)(3)(A). 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 Nasdaq satisfied the five-day pre-filing notice requirement. 9 17 CFR 240.19b–4(f)(6)(iii). 10 See Securities Exchange Act Release No. 61151 (December 10, 2009)(SR–NASDAQ–2009–109). 8 17 The Exchange 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, as amended. 5 15 C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received from Members, Participants, or Others PO 00000 Frm 00076 Fmt 4703 Sfmt 4703 2919 designates the proposal to be effective upon filing with the Commission.11 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–NASDAQ–2009–112 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–NASDAQ–2009–112. 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 offices 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– NASDAQ–2009–112, and should be submitted on or before February 9, 2010. 11 For the purposes only of waiving the 30-day operative delay, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). E:\FR\FM\19JAN1.SGM 19JAN1 2920 Federal Register / Vol. 75, No. 11 / Tuesday, January 19, 2010 / Notices For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.12 Florence E. Harmon, Deputy Secretary. [FR Doc. 2010–797 Filed 1–15–10; 8:45 am] BILLING CODE 8011–01–P DEPARTMENT OF STATE [Public Notice 6875] Designations of Foreign Terrorist Organizations; In the Matter of the Designation of: al-Qa’ida in the Arabian Peninsula (AQAP), Also Known as al-Qa’ida of Jihad Organization in the Arabian Peninsula, Also Known as Tanzim Qa’idat al-Jihad fi Jazirat al-Arab, Also Known as alQa’ida Organization in the Arabian Peninsula (AQAP), Also Known as alQa’ida in Yemen (AQY), Also Known as al-Qa’ida in the South Arabian Peninsula, as a Foreign Terrorist Organization Pursuant to Section 219 of the Immigration and Nationality Act, as Amended. jlentini on DSKJ8SOYB1PROD with NOTICES [FR Doc. 2010–880 Filed 1–15–10; 8:45 am] BILLING CODE 4710–10–P DEPARTMENT OF STATE [Public Notice 6873] [Public Notice 6874] In the Matter of the Designation of Nasir al-Wahishi, Also Known as Abu Basir, Also Known as Abu Basir Nasir al-Wahishi, Also Known as Naser Abdel Karim al-Wahishi, Also Known as Nasir Abd al-Karim al-Wuhayshi, Also Known as Abu Basir Nasir alWuhayshi, Also Known as Nasser Abdul-karim Abdullah al-Wouhichi, Also Known as Abu Baseer alWehaishi, Also Known as Abu Basir Nasser al-Wuhishi as a Specially Designated Global Terrorist Pursuant to Section 1(b) of Executive Order 13224, as Amended In the Matter of the Designation of alQa’ida in the Arabian Peninsula (AQAP), Also Known as al-Qa’ida of Jihad Organization in the Arabian Peninsula, Also Known as Tanzim Qa’idat al-Jihad fi Jazirat al-Arab, Also Known as al-Qa’ida Organization in the Arabian Peninsula (AQAP), Also Known as al-Qa’ida in Yemen (AQY), Also Known as al-Qa’ida in the South Arabian Peninsula as a Specially Designated Global Terrorist Pursuant to Section 1(b) of Executive Order 13224, as Amended Acting under the authority of and in accordance with section 1(b) of Executive Order 13224 of September 23, 2001, as amended by Executive Order 13268 of July 2, 2002, and Executive Order 13284 of January 23, 2003, I hereby determine that the individual known as Nasir al-Wahishi, and also known as Abu Basir, also known as Abu Basir Nasir al-Wahishi, also known as Naser Abdel Karim al-Wahishi, also known as Nasir Abd al-Karim alWuhayshi, also known as Abu Basir Nasir al-Wuhayshi, also known as Nasser Abdul-karim Abdullah alWouhichi, also known as Abu Baseer alWehaishi, also known as Abu Basir Nasser al-Wuhishi committed, or poses a significant risk of committing, acts of terrorism that threaten the security of U.S. nationals or the national security, foreign policy, or economy of the United States. Consistent with the determination in section 10 of Executive Order 13224 that ‘‘prior notice to persons determined to be subject to the Order who might have a constitutional presence in the United States would render ineffectual the blocking and other measures authorized in the Order because of the ability to transfer funds instantaneously,’’ I determine that no prior notice needs to be provided to any person subject to this determination who might have a constitutional presence in the United States, because to do so would render ineffectual the measures authorized in the Order. This notice shall be published in the Federal Register. Acting under the authority of and in accordance with section 1(b) of Executive Order 13224 of September 23, 2001, as amended by Executive Order 13268 of July 2, 2002, and Executive Order 13284 of January 23, 2003, I hereby determine that the organization known as al-Qa’ida in the Arabian Peninsula (AQAP), and also known as al-Qa’ida of Jihad Organization in the Arabian Peninsula, also known as Tanzim Qa’idat al-Jihad fi Jazirat alArab, also known as al-Qa’ida Organization in the Arabian Peninsula (AQAP), also known as al-Qa’ida in Yemen (AQY), also known as al-Qa’ida in the South Arabian Peninsula committed, or poses a significant risk of committing, acts of terrorism that threaten the security of U.S. nationals or the national security, foreign policy, or economy of the United States. Consistent with the determination in section 10 of Executive Order 13224 that ‘‘prior notice to persons determined to be subject to the Order who might have a constitutional presence in the United States would render ineffectual the blocking and other measures authorized in the Order because of the ability to transfer funds instantaneously,’’ I determine that no prior notice needs to be provided to any person subject to this determination who might have a constitutional presence in the United States, because to do so would render ineffectual the measures authorized in the Order. This notice shall be published in the Federal Register. Dated: December 14, 2009. Hillary Rodham Clinton, Secretary of State, Department of State. Based upon a review of the Administrative Record assembled in this matter, and in consultation with the Attorney General and the Secretary of the Treasury, I conclude that there is a sufficient factual basis to find that the relevant circumstances described in section 219 of the Immigration and Nationality Act, as amended (hereinafter ‘‘INA’’) (8 U.S.C. 1189), exist with respect to al-Qa’ida in the Arabian Peninsula (AQAP), also known as alQa’ida of Jihad Organization in the Arabian Peninsula, also known as Tanzim Qa’idat al-Jihad fi Jazirat alArab, also known as al-Qa’ida Organization in the Arabian Peninsula (AQAP), also known as al-Qa’ida in Yemen (AQY), also known as al-Qa’ida in the South Arabian Peninsula. Therefore, I hereby designate the aforementioned organization and its aliases as a foreign terrorist organization pursuant to section 219 of the INA. This determination shall be published in the Federal Register. December 14, 2009. Hillary Rodham Clinton, Secretary of State, Department of State. DEPARTMENT OF STATE Dated: December 14, 2009. Hillary Rodham Clinton, Secretary of State, Department of State. [FR Doc. 2010–875 Filed 1–15–10; 8:45 am] 12 17 CFR 200.30–3(a)(12). VerDate Nov<24>2008 16:28 Jan 15, 2010 BILLING CODE 4710–10–P BILLING CODE 4710–10–P Jkt 220001 PO 00000 Frm 00077 Fmt 4703 [FR Doc. 2010–946 Filed 1–15–10; 8:45 am] Sfmt 9990 E:\FR\FM\19JAN1.SGM 19JAN1

Agencies

[Federal Register Volume 75, Number 11 (Tuesday, January 19, 2010)]
[Notices]
[Pages 2917-2920]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-797]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61314; File No. SR-NASDAQ-2009-112]


Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change to 
Amend NASDAQ Rules 1140 and 3080 to Reflect Changes to a Corresponding 
FINRA Rule

January 7, 2010.
    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 30, 2009, The NASDAQ Stock Market LLC (the ``Exchange'' or 
``NASDAQ'') 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 the proposed rule change as constituting a non-
controversial rule change under Rule 19b-4(f)(6) 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 the 
Substance of the Proposed Rule Change

    The Exchange is filing this proposed rule change to amend NASDAQ 
Rules 1140 and 3080 to reflect recent changes to a corresponding rule 
of the Financial Industry Regulatory Authority (``FINRA''). The 
Exchange will implement the proposed rule change thirty days after the 
date of the filing. The text of the proposed rule change is available 
at https://nasdaqomx.cchwallstreet.com, at the Exchange's principal 
office, on the Commission's Web site at https://www.sec.gov, and at the 
Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange 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

[[Page 2918]]

places specified in Item IV below. The Exchange 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
    Many of NASDAQ's rules are based on rules of FINRA (formerly the 
National Association of Securities Dealers (``NASD'')). Beginning in 
2008, FINRA embarked on an extended process of moving rules formerly 
designated as ``NASD Rules'' into a consolidated FINRA rulebook. In 
most cases, FINRA has renumbered these rules, and in some cases has 
substantively amended them. Accordingly, NASDAQ also has initiated a 
process of modifying its rulebook to ensure that NASDAQ rules 
corresponding to FINRA/NASD rules continue to mirror them as closely as 
practicable. In some cases, it is not possible for the rule numbers of 
NASDAQ rules to mirror corresponding FINRA rules, because existing or 
planned NASDAQ rules make use of those numbers. However, wherever 
possible, NASDAQ plans to update its rules to reflect changes to 
corresponding FINRA rules.
    This filing addresses NASDAQ Rules 1140 and 3080 which follow or 
incorporate by reference former NASD Rules 1140 and 3080. In SR-FINRA-
2009-019,\4\ FINRA modified, re-numbered, and transitioned these NASD 
rules into the FINRA Consolidated Rule Manual. This proposal makes 
conforming changes to the NASDAQ rules but does not re-number them.
---------------------------------------------------------------------------

    \4\ See Securities Exchange Act Release No. 60348 (July 20, 
2009), 74 FR 37077 (July 27, 2009) (SR-FINRA-2009-019).
---------------------------------------------------------------------------

    Rule 1140 requires each Nasdaq member to file its Forms U4, U5, BR, 
BDW, and BD amendments (referred to collectively as ``Uniform Forms'') 
via electronic process or such other process as Nasdaq may prescribe to 
the Web CRD, the centralized database for registration and 
qualification information for firms and their associated persons. Rule 
1140 also requires that the member retain and provide upon regulatory 
request every original, signed initial and transfer Form U4 that form 
the basis of the member's electronically filed Forms U4 and every 
record of the member's electronically filed initial and amended Forms 
U5.
    In SR-FINRA-2009-019, FINRA proposed and the Commission approved 
the following changes to Rule 1140:
     Codified that every initial and transfer electronic Form 
U4 must be based on an original, manually signed Form U4 provided to 
the member by the person on whose behalf the Form U4 is being filed.
     Modified the signature requirement with respect to 
amendments to disclosure information in the Form U4. The new FINRA rule 
would permit a firm to file amendments to the Form U4 disclosure 
information without obtaining the registered person's manual signature 
if the firm uses reasonable efforts to (1) provide the registered 
person with a copy of the amended disclosure information prior to 
filing and (2) obtain the registered person's written acknowledgment 
(which may be electronic) prior to filing that the information has been 
received and reviewed. The proposed rule change also requires a member, 
as part of its recordkeeping requirements, to retain the written 
acknowledgment in accordance with SEA Rule 17a-4(e)(1) and make it 
available promptly upon regulatory request.
     Clarified that a member must submit disclosure information 
to which it has knowledge in those cases where the member is not able 
to obtain an associated person's manual signature or written 
acknowledgement of the amendment. Proposed supplementary material sets 
forth examples of reasons why a member may not be able to obtain the 
associated person's manual signature or written acknowledgement.
     Incorporated Web CRD's current practice of permitting Form 
U4 administrative information to be amended without obtaining the 
associated person's signature (manual or otherwise). Proposed 
supplementary material explains that such administrative information 
includes items such as the addition of state or self regulatory 
organization registrations, exam scheduling, and updates to 
residential, business, and personal history.
     Proposed supplementary material expressly permitted the 
registered principal(s) or corporate officer(s) who is responsible for 
supervising a firm's electronic filings to delegate to another 
associated person (who need not be registered) the electronic filing of 
the member's forms via Web CRD. The delegatee may also acknowledge, 
electronically, that he is making the filing on behalf of the member 
and the member's associated person. The proposed supplementary material 
makes clear, however, that the principal(s) or corporate officer(s) may 
not delegate any of his or her supervision, review and approval 
responsibilities and must take reasonable and appropriate action to 
ensure that all delegated electronic filing functions are properly 
executed and supervised.
     Continued to permit firms to enter into third-party 
agreements for the electronic filing of the required forms. The 
supplementary material makes clear that the firm remains responsible 
for complying with the requirements of the rule.
     Made other technical changes, such as making clarifying 
rule cross-references, replacing the reference to fingerprint ``cards'' 
with fingerprint ``information,'' and noting the applicable retention 
periods for the forms under SEA Rule 17a-4.

NASDAQ proposes to adopt these approved changes in Nasdaq Rule 1140. 
NASDAQ does not propose to re-number Rule 1140 to 1010 as did FINRA.
    Nasdaq Rule 3080 (Disclosure to Associated Persons When Signing 
Form U-4) requires members to provide each associated person, whenever 
the associated person is asked to sign a new or amended Form U4, with 
certain written disclosures regarding the nature and process of 
arbitration proceedings. The associated person agrees to be bound by 
this process upon signing a Form U4. The disclosures required by NASD 
Rule 3080 may be given by the same member firm to the same associated 
person on more than one occasion during that person's employment, if 
the associated person has reason to re-sign the Form U4. NASD Rule 3080 
does not address any private arbitration agreements that the associated 
person might enter into with the member firm. The disclosure language 
in NASD Rule 3080 explains that the Form U4 contains a pre-dispute 
arbitration clause, indicates in which Item of the Form U4 the clause 
is located and advises the associated person to read the pre-dispute 
arbitration clause. Rule 3080 was modeled on the disclosure given to 
customers when signing pre-dispute arbitration agreements with member 
firms, as contained in NASD Rule 3110(f).
    NASDAQ Rule 3080 currently incorporates by reference NASD Rule 
3080. In SR-FINRA-2009-019, FINRA transferred NASD Rule 3080 to the 
FINRA Consolidated Rule Manual and re-numbered it as FINRA Rule 2263. 
FINRA's proposed rule change made the following changes:
     Amended the current title ``Disclosure to Associated 
Person When

[[Page 2919]]

Signing Form U4'' to clarify that the rule relates to arbitration 
disclosures. Accordingly, the new proposed title is ``Arbitration 
Disclosure to Associated Persons Signing or Acknowledging Form U4.''
     Clarified that a member must provide the required 
arbitration disclosures whenever a member asks an associated person, 
pursuant to proposed FINRA Rule 1010 (as described above), to manually 
sign an initial or amended Form U4, or to otherwise provide written 
(which may be electronic) acknowledgement of an amendment to the Form.
     Updated the rule language to reflect recent amendments to 
FINRA's Code of Arbitration Procedure requiring arbitrators to provide 
an explained decision to the parties in eligible cases if there is a 
joint request by all parties at least 20 days before the first 
scheduled hearing date.

NASDAQ is proposing to continue to incorporate FINRA Rule 2263 in 
NASDAQ Rule 3080. This will result in NASDAQ adopting the changes 
described above.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6 of the Act,\5\ in general, and with 
Sections 6(b)(5) of the Act,\6\ in particular, in that the proposal is 
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 securities, 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 
changes will conform NASDAQ Rules 1140 and 3080 to recent changes made 
to corresponding FINRA rules, to promote application of consistent 
regulatory standards.
---------------------------------------------------------------------------

    \5\ 15 U.S.C. 78f.
    \6\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange 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, as amended.

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 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 \7\ and Rule 19b-
4(f)(6) thereunder.\8\
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    \7\ 15 U.S.C. 78s(b)(3)(A).
    \8\ 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 Nasdaq satisfied the five-day 
pre-filing notice requirement.
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    Normally, a proposed rule change filed under 19b-4(f)(6) may not 
become operative prior to 30 days after the date of filing. However, 
Rule 19b-4(f)(6)(iii) \9\ permits the Commission to designate a shorter 
time if such action is consistent with the protection of investors and 
the public interest. Nasdaq has requested that the Commission waive the 
30-day operative delay. In its filing, Nasdaq noted that the proposal 
would amend NASDAQ Rules 1140 and 3080 to reflect recent changes to a 
corresponding rule of FINRA.
---------------------------------------------------------------------------

    \9\ 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------

    The Commission believes that waiver of the 30-day operative period 
is consistent with the protection of investors and the public interest. 
The proposed rule change would allow greater consistency between NASDAQ 
and FINRA rules, which should benefit NASDAQ and FINRA members, 
regulators, and the investing public. In addition, the Commission notes 
that the changes proposed in this filing are in all material respects 
the same as changes proposed in FINRA's filing, which was published for 
comment, and for which no comment letters were received.\10\ 
Accordingly, the Commission designates the proposal to be effective 
upon filing with the Commission.\11\
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    \10\ See Securities Exchange Act Release No. 61151 (December 10, 
2009)(SR-NASDAQ-2009-109).
    \11\ For the purposes only of waiving the 30-day operative 
delay, the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
---------------------------------------------------------------------------

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-NASDAQ-2009-112 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-NASDAQ-2009-112. 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 offices 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-NASDAQ-2009-112, and should be submitted on or before 
February 9, 2010.


[[Page 2920]]


    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-797 Filed 1-15-10; 8:45 am]
BILLING CODE 8011-01-P
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