Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rules 2848, 3330, and 9810 To Reflect Changes to Corresponding FINRA Rules, 7528-7530 [2010-3140]
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7528
Federal Register / Vol. 75, No. 33 / Friday, February 19, 2010 / Notices
provided that appropriate
communication standards are defined in
2010. What standard data
communications interfaces(s) should be
supported by appliances and the smart
meter or data gateway so that appliance
manufacturers can cost-effectively
produce smart appliances that can
communicate with the Smart Grid
anywhere in the nation? How can
communication between smart
appliances and the Smart Grid be made
‘‘plug and play’’ for consumers who do
not have the skills or means to configure
data networks? If gateways or adapters
are needed, who should pay for them:
The utility or the consumer?
Please note that several important
Smart Grid topics—including Federal
and State policy hurdles, cyber security,
and business case challenges—are
beyond the scope of this request, except
insofar as they bear on the primary
topics identified above. One or more
future requests for comment may be
organized to obtain input on these
additional issues. Discussions of all of
the above topics are also ongoing in
several forums, including the Smart
Grid Interoperability Panel established
by NIST and the GridWise Architecture
Council established by DOE. Relevant
input received through this request will
be shared with NIST, DOE, and other
interested Federal agencies.
Ted Wackler,
Deputy Chief of Staff.
[FR Doc. 2010–3251 Filed 2–18–10; 8:45 am]
BILLING CODE P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–61495; File No. SR–BX–
2010–006]
Self-Regulatory Organizations;
NASDAQ OMX BX, Inc.; Notice of Filing
and Immediate Effectiveness of
Proposed Rule Change To Amend
Rules 2848, 3330, and 9810 To Reflect
Changes to Corresponding FINRA
Rules
pwalker on DSK8KYBLC1PROD with NOTICES
February 4, 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 January
14, 2010, NASDAQ OMX BX, Inc. (the
‘‘Exchange’’ or ‘‘BX’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
1 15
2 17
U.S.C. 78s(b)(1).
CFR 240.19b–4.
VerDate Nov<24>2008
18:05 Feb 18, 2010
substantially 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.
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 BX Rules 2848
(Communications with the Public and
Customers Concerning Index Warrants,
Currency Index Warrants, and Currency
Warrants); 3330 (Payment Designed to
Influence Market Prices, Other than
Paid Advertising); and 9810 (Initiation
of Proceeding) to reflect recent changes
to corresponding rules of the Financial
Industry Regulatory Authority
(‘‘FINRA’’). The text of the proposed rule
change is available at https://
nasdaqomxbx.cchwallstreet.com, the
Exchange’s principal office, 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
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
BX based much of its rules on those
of The NASDAQ Stock Market LLC
(‘‘NASDAQ’’). Similarly, many of
NASDAQ’s rules are based on rules of
FINRA (formerly the National
Association of Securities Dealers
(‘‘NASD’’)). As a consequence, many of
BX’s rules closely mirror those of
FINRA. During 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
3 17
Jkt 220001
PO 00000
CFR 240.19b–4(f)(6).
Frm 00091
Fmt 4703
Sfmt 4703
substantively amended them.
Accordingly, BX also proposes to
initiate a process of modifying its
rulebook to ensure that BX rules
corresponding to FINRA/NASD rules
continue to mirror them as closely as
practicable. In some cases, it will not be
possible for the rule numbers of BX
rules to mirror corresponding FINRA
rules, because existing or planned BX
rules make use of those numbers.
However, wherever possible, BX plans
to update its rules to reflect changes to
corresponding FINRA rules.
This filing addresses BX Rules 2848
(Communications with the Public and
Customers Concerning Index Warrants,
Currency Index Warrants, and Currency
Warrants); 3330 (Payment Designed to
Influence Market Prices, Other than
Paid Advertising); and 9810 (Initiation
of Proceeding) to update crossreferences to corresponding rules of
FINRA.
In SR–FINRA–2009–078,4 FINRA
made changes that reflected, among
other things, incorporation into the
consolidated FINRA rulebook of NASD
Rule 3330 as FINRA Rule 5230
(Payments Involving Publications that
Influence the Market Price of a
Security); 5 NASD Rule 2330 as FINRA
Rule 2150 (Improper Use of Customers’
Securities or Funds; Prohibition Against
Guarantees and Sharing in Accounts); 6
and NASD Rule 2220 as FINRA Rule
2220 (Options Communications).7
FINRA Rule 2220, like former NASD
Rule 2220, sets forth a member’s
obligations with respect to its options
communications with the public and:
(a) uses, to the extent appropriate, the
same terminology and definitions as in
FINRA’s general rules on
communications with the public; (b)
makes the requirements for principal
review of correspondence concerning
options the same as for correspondence
generally; and (c) updates the standards
on the content of communications that
precede the delivery of the options
disclosure document (ODD).
BX is, by this filing, updating
references in its Rule 2848 from NASD
Rule 2220 to FINRA Rule 2220.
4 See Securities Exchange Act Release No. 61087
(December 1, 2009), 74 FR 65190 (December 9,
2009) (SR–FINRA–2009–078) (notice of filing and
immediate effectiveness).
5 See Securities Exchange Act Release No. 60648
(September 10, 2009), 74 FR 47837 (September 17,
2009) (SR–FINRA–2009–048) (order approving
adoption of FINRA Rule 5230).
6 See Securities Exchange Act Release No. 60701
(September 21, 2009); 74 FR 49425 (September 28,
2009) (SR–FINRA–2009–014) (order approving
adoption of FINRA Rule 2150).
7 See Securities Exchange Act Release No. 60534
(August 19, 2009), 74 FR 44410 (August 28, 2009)
(SR–FINRA–2009–036) (order approving adoption
of FINRA Rules 2124, 2220, 4370, and 5250).
E:\FR\FM\19FEN1.SGM
19FEN1
Federal Register / Vol. 75, No. 33 / Friday, February 19, 2010 / Notices
pwalker on DSK8KYBLC1PROD with NOTICES
NASD Rule 3330 prohibits a member
from giving, or offering to give, anything
of value to any person for the purpose
of influencing or rewarding the action of
such person in connection with the
publication or circulation in any
newspaper, investment service, or
similar publication, of any matter that
has, or is intended to have, an effect
upon the market price of any security;
and provides an exception for any
matter that is clearly distinguishable as
paid advertising. As part of transferring
NASD Rule 3330 into the consolidated
FINRA rulebook as FINRA Rule 5230,
FINRA proposed two changes to the rule
to modernize its terms and clarify its
scope by: (a) Updating the list of media
to which the rule refers to include
electronic and other types of media,
including magazines, Web sites, and
television programs; and (b) expanding
the exceptions in the rule beyond paid
advertising to also include
compensation paid in connection with
research reports and communications
published in reliance on Section 17(b)
of the Securities Act of 1933 (the ‘‘1933
Act’’).
BX is, by this filing, re-numbering its
Rule 3330 to Rule 5230 and amending
the text to conform to the changes
reflected in FINRA Rule 5230.
NASD Rule 2330 prohibits members
and associated persons from: (a) Making
improper use of a customer’s securities
or funds; (b) guaranteeing a customer
against loss in connection with any
securities transaction or in any
securities account of the customer; and
(c) sharing in the profits or losses in the
customer’s account except under certain
limited conditions specified in the Rule.
As part of transferring NASD Rule 2330
into the consolidated FINRA rulebook
as FINRA Rule 2150, FINRA proposed
minor changes to Rule 2150(c) and
added Supplementary Information to
the rule that codified existing staff
guidance concerning the inapplicability
of the rule to certain guarantees,
permissible reimbursement by a
member of certain losses, correction of
bona fide errors, and preservation of
written authorizations.8
8 Supplementary Material to FINRA Rule 2150
generally provides that (i) a ‘‘guarantee’’ extended to
all holders of a security by an issuer as part of that
security generally would not be subject to the
prohibition against guarantees; (ii) the rule does not
preclude a member from determining on an afterthe-fact basis to reimburse a customer for
transaction losses, provided however that the
member shall comply with all reporting
requirements that may be applicable to such
payment; (iii) the rule does not preclude a member
from correcting a bona fide error; and (iv) a member
must preserve the required written authorization(s)
for a period of at least six years after the date the
account is closed.
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18:05 Feb 18, 2010
Jkt 220001
BX has proposed, in a recent
immediately effective filing,9 to renumber its Rule 2330 and IM–2330 to
Rule 2150 and IM–2150, respectively;
clarify cross-references in its rule and
IM; and reflect the changes to FINRA
Rule 2150. BX is, by this filing,
clarifying the cross-reference in its Rule
9810 to BX Equity Rule 2150.
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
the provisions of Section 6 of the Act,10
in general, and with Sections 6(b)(5) of
the Act,11 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 BX
Rules 2848, 3330 and 9810 to recent
changes made to several corresponding
FINRA rules, to promote application of
consistent regulatory standards.
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, it has
become effective pursuant to Section
9 See Securities Exchange Act Release No. 61129
(December 8, 2009), 74 FR 66188 (December 14,
2009) (SR–BX–2009–080) (notice of filing and
immediate effectiveness).
10 15 U.S.C. 78f.
11 15 U.S.C. 78f(b)(5).
PO 00000
Frm 00092
Fmt 4703
Sfmt 4703
7529
19(b)(3)(A) of the Act 12 and Rule 19b–
4(f)(6) thereunder.13
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–BX–2010–006 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–BX–2010–006. 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 Web site viewing and
printing in the Commission’s Public
Reference Room, 100 F Street, NE.,
Washington, DC 20549, on official
business days between the hours of 10
a.m. and 3 p.m. Copies of such filing
also will be available for inspection and
copying at the principal office of the
Exchange. All comments received will
12 15
13 17
E:\FR\FM\19FEN1.SGM
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6).
19FEN1
7530
Federal Register / Vol. 75, No. 33 / Friday, February 19, 2010 / Notices
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–BX–
2010–006, and should be submitted on
or before March 12, 2010.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.14
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010–3140 Filed 2–18–10; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–61510; File No. SR–FINRA–
2010–003]
Self-Regulatory Organizations;
Financial Industry Regulatory
Authority, Inc.; Notice of Filing of
Proposed Rule Change, as Modified by
Amendment No. 1, Relating to Trade
Reporting of OTC Equity Securities
and Restricted Equity Securities
February 5, 2010.
pwalker on DSK8KYBLC1PROD 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 January
15, 2010, Financial Industry Regulatory
Authority, Inc. (‘‘FINRA’’) (f/k/a
National Association of Securities
Dealers, Inc. (‘‘NASD’’)) filed with the
Securities and Exchange Commission
(‘‘SEC’’ or ‘‘Commission’’) the proposed
rule change as described in Items I, II,
and III below, which Items have been
prepared by FINRA. On February 5,
2010, FINRA filed Amendment No. 1 to
the proposed rule change.3 The
Commission is publishing this notice to
solicit comments on the proposed rule
change, as modified by Amendment No.
1, from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
FINRA is proposing to amend the
FINRA OTC Reporting Facility (‘‘ORF’’)
Rules and the PORTAL Rules (FINRA
Rule 6630 Series) regarding the
reporting requirements for restricted
equity securities; update the definition
of ‘‘OTC Equity Security;’’ and clarify
member reporting obligations with
14 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 Amendment No. 1 clarifies the proposed
revision to FINRA Rule 4560. See infra note 20.
1 15
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18:05 Feb 18, 2010
Jkt 220001
respect to certain trades reported on or
through an exchange.
The text of the proposed rule change
is available on FINRA’s Web site at
https://www.finra.org, at the principal
office of FINRA, and at the
Commission’s Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission,
FINRA included statements concerning
the purpose of and basis for the
proposed rule change and discussed any
comments it received on the proposed
rule change. The text of these statements
may be examined at the places specified
in Item IV below. FINRA has prepared
summaries, set forth in sections A, B,
and C below, of the most significant
aspects of such statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The proposed rule change includes
several amendments to the reporting
provisions regarding the ORF. In
general, the proposed rule change
amends the definition of ‘‘OTC Equity
Security’’ in the FINRA trade reporting
rules to address the cessation of the
PORTAL Market and clarifies the scope
of the ORF rules. The proposed rule
change also makes conforming changes
to other FINRA rules, including the
Order Audit Trail System (‘‘OATS’’)
rules.
(a) Amendments to the ORF Rules
In 1990, the SEC adopted Rule 144A
(‘‘SEC Rule 144A’’) under the Securities
Act of 1933 4 (‘‘Securities Act’’) to
establish a safe harbor for the private
resale of ‘‘restricted securities’’ to
‘‘qualified institutional buyers’’
(‘‘QIBs’’).5 At the same time, FINRA
(then NASD) created the PORTAL
Market to serve as a system for quoting,
trading, and reporting trades in certain
designated restricted securities that
were eligible for resale under SEC Rule
144A (‘‘PORTAL securities’’).6 In
September 2008, the NASDAQ Stock
4 17
CFR 230.144A.
Securities Act Release No. 6862 (April 23,
1990), 55 FR 17933 (April 30, 1990). For the
purpose of SEC Rule 144A, a QIB is generally
defined as any institution acting for its own
account, or for the accounts of other QIBs, that in
the aggregate owns and invests on a discretionary
basis at least $100 million in securities of issuers
that are not affiliated with the institution.
6 See Securities Exchange Act Release No. 27956
(April 27, 1990), 55 FR 18781 (May 4, 1990).
5 See
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Frm 00093
Fmt 4703
Sfmt 4703
Market (‘‘NASDAQ’’) ceased the
operation of the PORTAL Market.7
NASDAQ explained in the rule filing
that it is taking a minority stake in a
consortium that will control and operate
a new electronic platform for handling
transactions in SEC Rule 144A-eligible
securities.8 On October 26, 2009,
NASDAQ filed a proposed rule change
with the Commission for immediate
effectiveness terminating NASDAQ’s
PORTAL security designation process
and removing rules related to the
PORTAL Market from its rulebook.9 As
a result, NASDAQ no longer accepts
new applications for debt or equity
securities seeking PORTAL
designation.10
FINRA’s transaction reporting rules
for restricted equity securities are
currently tied to whether the security is
designated for inclusion in the PORTAL
Market. Specifically, FINRA’s general
transaction reporting rules for over-thecounter equity securities specifically
exclude restricted securities and
PORTAL securities from the reporting
requirements.11 FINRA’s PORTAL rules
(FINRA Rule 6630 Series) require that
transactions in PORTAL equity
securities be reported to the ORF no
later than 6:30 p.m. Eastern Time.12
7 See Securities Exchange Act Release No. 58638
(September 24, 2008), 73 FR 57188 (October 1,
2008). As part of the separation of NASDAQ from
FINRA, certain functionality relating to PORTAL,
including the qualification and designation of
PORTAL securities, became part of NASDAQ’s
rules and were eliminated from the FINRA rules.
See Securities Exchange Act Release No. 53128
(January 13, 2006), 71 FR 3550 (January 23, 2006).
8 In addition to NASDAQ ceasing operation of the
PORTAL Market, the Commission has also
approved the deletion of the Depository Trust
Company (‘‘DTC’’) requirement that a SEC Rule
144A security, other than Investment Grade
Securities, be included in an ‘‘SRO Rule 144A
System’’ in order to be eligible for DTC’s deposit,
book-entry delivery, and other depository services.
See Securities Exchange Act Release No. 59384
(February 11, 2009), 74 FR 7941 (February 20,
2009). The PORTAL Market was the only ‘‘SRO Rule
144A System.’’ Id.
9 Securities Exchange Act Release No. 60991
(November 12, 2009), 74 FR 60006 (November 19,
2009).
10 See id. NASDAQ noted in the filing that
nothing in the proposal was ‘‘intended to impact
securities previously designated as PORTAL
securities or alter any existing regulatory obligation
applicable to such securities, including, but not
limited to, any trade reporting obligation imposed
by any self-regulatory organization.’’ Id.
11 See FINRA Rule 6400 Series.
12 FINRA Rule 6633(a). The proposed rule change
is limited in scope to equity securities and would
not affect the Trade Reporting and Compliance
Engine Service (‘‘TRACE’’) or the reporting
requirements with respect to transactions in debt
securities. With respect to PORTAL securities that
are debt securities, FINRA Rule 6633(b) currently
requires members to report secondary market
transactions to TRACE in accordance with the
FINRA Rule 6700 Series. Thus, under current
FINRA rules, reporting obligations for debt
securities are set forth in the TRACE rules rather
E:\FR\FM\19FEN1.SGM
19FEN1
]]>Agencies
[Federal Register Volume 75, Number 33 (Friday, February 19, 2010)]
[Notices]
[Pages 7528-7530]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-3140]
=======================================================================
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-61495; File No. SR-BX-2010-006]
Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Amend
Rules 2848, 3330, and 9810 To Reflect Changes to Corresponding FINRA
Rules
February 4, 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 January 14, 2010, NASDAQ OMX BX, Inc. (the ``Exchange'' or ``BX'')
filed with the Securities and Exchange Commission (``Commission'') the
proposed rule change as described in Items I, II, and III below, which
Items have been substantially 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 BX Rules
2848 (Communications with the Public and Customers Concerning Index
Warrants, Currency Index Warrants, and Currency Warrants); 3330
(Payment Designed to Influence Market Prices, Other than Paid
Advertising); and 9810 (Initiation of Proceeding) to reflect recent
changes to corresponding rules of the Financial Industry Regulatory
Authority (``FINRA''). The text of the proposed rule change is
available at https://nasdaqomxbx.cchwallstreet.com, the Exchange's
principal office, 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 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
BX based much of its rules on those of The NASDAQ Stock Market LLC
(``NASDAQ''). Similarly, many of NASDAQ's rules are based on rules of
FINRA (formerly the National Association of Securities Dealers
(``NASD'')). As a consequence, many of BX's rules closely mirror those
of FINRA. During 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, BX also proposes to
initiate a process of modifying its rulebook to ensure that BX rules
corresponding to FINRA/NASD rules continue to mirror them as closely as
practicable. In some cases, it will not be possible for the rule
numbers of BX rules to mirror corresponding FINRA rules, because
existing or planned BX rules make use of those numbers. However,
wherever possible, BX plans to update its rules to reflect changes to
corresponding FINRA rules.
This filing addresses BX Rules 2848 (Communications with the Public
and Customers Concerning Index Warrants, Currency Index Warrants, and
Currency Warrants); 3330 (Payment Designed to Influence Market Prices,
Other than Paid Advertising); and 9810 (Initiation of Proceeding) to
update cross-references to corresponding rules of FINRA.
In SR-FINRA-2009-078,\4\ FINRA made changes that reflected, among
other things, incorporation into the consolidated FINRA rulebook of
NASD Rule 3330 as FINRA Rule 5230 (Payments Involving Publications that
Influence the Market Price of a Security); \5\ NASD Rule 2330 as FINRA
Rule 2150 (Improper Use of Customers' Securities or Funds; Prohibition
Against Guarantees and Sharing in Accounts); \6\ and NASD Rule 2220 as
FINRA Rule 2220 (Options Communications).\7\
---------------------------------------------------------------------------
\4\ See Securities Exchange Act Release No. 61087 (December 1,
2009), 74 FR 65190 (December 9, 2009) (SR-FINRA-2009-078) (notice of
filing and immediate effectiveness).
\5\ See Securities Exchange Act Release No. 60648 (September 10,
2009), 74 FR 47837 (September 17, 2009) (SR-FINRA-2009-048) (order
approving adoption of FINRA Rule 5230).
\6\ See Securities Exchange Act Release No. 60701 (September 21,
2009); 74 FR 49425 (September 28, 2009) (SR-FINRA-2009-014) (order
approving adoption of FINRA Rule 2150).
\7\ See Securities Exchange Act Release No. 60534 (August 19,
2009), 74 FR 44410 (August 28, 2009) (SR-FINRA-2009-036) (order
approving adoption of FINRA Rules 2124, 2220, 4370, and 5250).
---------------------------------------------------------------------------
FINRA Rule 2220, like former NASD Rule 2220, sets forth a member's
obligations with respect to its options communications with the public
and: (a) uses, to the extent appropriate, the same terminology and
definitions as in FINRA's general rules on communications with the
public; (b) makes the requirements for principal review of
correspondence concerning options the same as for correspondence
generally; and (c) updates the standards on the content of
communications that precede the delivery of the options disclosure
document (ODD).
BX is, by this filing, updating references in its Rule 2848 from
NASD Rule 2220 to FINRA Rule 2220.
[[Page 7529]]
NASD Rule 3330 prohibits a member from giving, or offering to give,
anything of value to any person for the purpose of influencing or
rewarding the action of such person in connection with the publication
or circulation in any newspaper, investment service, or similar
publication, of any matter that has, or is intended to have, an effect
upon the market price of any security; and provides an exception for
any matter that is clearly distinguishable as paid advertising. As part
of transferring NASD Rule 3330 into the consolidated FINRA rulebook as
FINRA Rule 5230, FINRA proposed two changes to the rule to modernize
its terms and clarify its scope by: (a) Updating the list of media to
which the rule refers to include electronic and other types of media,
including magazines, Web sites, and television programs; and (b)
expanding the exceptions in the rule beyond paid advertising to also
include compensation paid in connection with research reports and
communications published in reliance on Section 17(b) of the Securities
Act of 1933 (the ``1933 Act'').
BX is, by this filing, re-numbering its Rule 3330 to Rule 5230 and
amending the text to conform to the changes reflected in FINRA Rule
5230.
NASD Rule 2330 prohibits members and associated persons from: (a)
Making improper use of a customer's securities or funds; (b)
guaranteeing a customer against loss in connection with any securities
transaction or in any securities account of the customer; and (c)
sharing in the profits or losses in the customer's account except under
certain limited conditions specified in the Rule. As part of
transferring NASD Rule 2330 into the consolidated FINRA rulebook as
FINRA Rule 2150, FINRA proposed minor changes to Rule 2150(c) and added
Supplementary Information to the rule that codified existing staff
guidance concerning the inapplicability of the rule to certain
guarantees, permissible reimbursement by a member of certain losses,
correction of bona fide errors, and preservation of written
authorizations.\8\
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\8\ Supplementary Material to FINRA Rule 2150 generally provides
that (i) a ``guarantee'' extended to all holders of a security by an
issuer as part of that security generally would not be subject to
the prohibition against guarantees; (ii) the rule does not preclude
a member from determining on an after-the-fact basis to reimburse a
customer for transaction losses, provided however that the member
shall comply with all reporting requirements that may be applicable
to such payment; (iii) the rule does not preclude a member from
correcting a bona fide error; and (iv) a member must preserve the
required written authorization(s) for a period of at least six years
after the date the account is closed.
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BX has proposed, in a recent immediately effective filing,\9\ to
re-number its Rule 2330 and IM-2330 to Rule 2150 and IM-2150,
respectively; clarify cross-references in its rule and IM; and reflect
the changes to FINRA Rule 2150. BX is, by this filing, clarifying the
cross-reference in its Rule 9810 to BX Equity Rule 2150.
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\9\ See Securities Exchange Act Release No. 61129 (December 8,
2009), 74 FR 66188 (December 14, 2009) (SR-BX-2009-080) (notice of
filing and immediate effectiveness).
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2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the provisions of Section 6 of the Act,\10\ in general, and with
Sections 6(b)(5) of the Act,\11\ 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 BX Rules 2848, 3330 and 9810 to recent changes
made to several corresponding FINRA rules, to promote application of
consistent regulatory standards.
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\10\ 15 U.S.C. 78f.
\11\ 15 U.S.C. 78f(b)(5).
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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, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \12\ and Rule 19b-
4(f)(6) thereunder.\13\
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\12\ 15 U.S.C. 78s(b)(3)(A).
\13\ 17 CFR 240.19b-4(f)(6).
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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-BX-2010-006 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-BX-2010-006. 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 Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street, NE.,
Washington, DC 20549, on official business days between the hours of 10
a.m. and 3 p.m. Copies of such filing also will be available for
inspection and copying at the principal office of the Exchange. All
comments received will
[[Page 7530]]
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-BX-2010-006, and should be submitted on
or before March 12, 2010.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
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\14\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-3140 Filed 2-18-10; 8:45 am]
BILLING CODE 8011-01-P
