Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Incorporated NYSE Rule 312(g)(1), 7532-7534 [2010-3230]
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7532
Federal Register / Vol. 75, No. 33 / Friday, February 19, 2010 / Notices
later than 60 days following
Commission approval. The effective
date will be 30 days following
publication of the Regulatory Notice
announcing Commission approval.
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Exchange
Act. Comments may be submitted by
any of the following methods:
2. Statutory Basis
Electronic Comments
FINRA believes that the proposed rule
change is consistent with the provisions
of Section 15A(b)(6) of the Act,23 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 ensure that
FINRA continues to receive important
information regarding transactions in
restricted securities traded pursuant to
SEC Rule 144A.
FINRA believes that the other
proposed changes to the definition of
‘‘OTC Equity Security’’ will ensure that
the appropriate types of securities are
addressed in the applicable FINRA rules
and that key terminology reflects
current market structure and trends.
• 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–2010–003 on the
subject line.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
FINRA does not believe that the
proposed rule change will result in any
burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants or Others
Written comments were neither
solicited nor received.
pwalker on DSK8KYBLC1PROD with NOTICES
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within 35 days of the date of
publication of this notice in the Federal
Register or within such longer period (i)
as the Commission may designate up to
90 days of such date if it finds such
longer period to be appropriate and
publishes its reasons for so finding or
(ii) as to which the self-regulatory
organization consents, the Commission
will:
(A) by order approve such proposed
rule change, or
(B) institute proceedings to determine
whether the proposed rule change
should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
23 15
U.S.C. 78o–3(b)(6).
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18:05 Feb 18, 2010
Jkt 220001
[FR Doc. 2010–3142 Filed 2–18–10; 8:45 am]
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.
All submissions should refer to File
Number SR–FINRA–2010–003. 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,24 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 the filing also
will be available for inspection and
copying at the principal office of
FINRA. All comments received will be
posted without change; the Commission
does not edit personal identifying
information from submissions. You
should submit only information that
you wish to make available publicly. All
submissions should refer to File
Number SR–FINRA–2010–003 and
should be submitted on or before March
12, 2010.
24 The text of the proposed rule change is
available on the Commission’s Web site at https://
www.sec.gov/.
PO 00000
Frm 00095
Fmt 4703
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.25
Florence E. Harmon,
Deputy Secretary.
Sfmt 4703
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–61513; File No. SR–FINRA–
2010–008]
Self-Regulatory Organizations;
Financial Industry Regulatory
Authority, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend Incorporated
NYSE Rule 312(g)(1)
February 12, 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 February
4, 2010, Financial Industry Regulatory
Authority, Inc. (‘‘FINRA’’) filed with the
Securities and Exchange Commission
(‘‘SEC’’ or ‘‘Commission’’) the proposed
rule change as described in Items I and
II below, which Items have been
prepared by FINRA. FINRA has
designated the proposed rule change as
constituting a ‘‘non-controversial’’ rule
change under paragraph (f)(6) of Rule
19b–4 under the Act,3 which renders
the proposal effective upon receipt of
this filing by 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
FINRA proposes to make a technical
change to the FINRA rulebook. FINRA
proposes to amend Incorporated NYSE
Rule 312(g)(1) so as to delete certain
provisions that are rendered obsolete by
the adoption of new FINRA Rule 4110
in FINRA’s consolidated rulebook
(‘‘Consolidated FINRA Rulebook’’).4
25 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 17 CFR 240.19b–4(f)(6).
4 See Regulatory Notice 09–71 (December 2009)
(SEC Approves Consolidated FINRA Rules
Governing Financial Responsibility). FINRA
announced in Regulatory Notice 09–71 that the new
financial responsibility rules will be implemented
on February 8, 2010.
See also Securities Exchange Act Release No.
60933 (November 4, 2009), 74 FR 58334 (November
12, 2009) (Order Granting Approval to Proposed
Rule Change; File No. SR–FINRA–2008–067);
Securities Exchange Act Release No. 61408 (January
22, 2010), 75 FR 4596 (January 28, 2010) (Notice of
1 15
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Federal Register / Vol. 75, No. 33 / Friday, February 19, 2010 / Notices
Proposed new language is italicized;
proposed deletions are in brackets:
*
*
*
*
*
Rule 312. Changes Within Member
Organizations
(a) through (f) No Change.
(g) A member corporation shall not
without the prior written approval of
the Exchange:
(1) [Reduce its capital or purchase or
redeem any shares of any class of its
stock or] I[i]n any way amend its
charter, certificate of incorporation or
by-laws[, and the Exchange may at any
time in its discretion require the
corporation to restore or increase capital
or surplus, or both].
(2) through (3) No Change.
The Exchange will approve any action
described in (1), (2) or (3) above unless
it determines that such action will
impair the financial responsibility or
operational capability of the member
corporation.
(h) through (j) No Change.
*
*
*
*
*
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
pwalker on DSK8KYBLC1PROD with NOTICES
FINRA proposes to make a technical
change to the FINRA rulebook.5 FINRA
proposes to delete from Incorporated
NYSE Rule 312(g)(1) the phrases that
Filing and Immediate Effectiveness of Proposed
Rule Change; File No. SR–FINRA–2010–004).
5 The current FINRA rulebook consists of (1)
FINRA Rules; (2) NASD Rules; and (3) rules
incorporated from NYSE (‘‘Incorporated NYSE
Rules’’) (together, the NASD Rules and Incorporated
NYSE Rules are referred to as the ‘‘Transitional
Rulebook’’). While the NASD Rules generally apply
to all FINRA members, the Incorporated NYSE
Rules apply only to those members of FINRA that
are also members of the NYSE (‘‘Dual Members’’).
The FINRA Rules apply to all FINRA members,
unless such rules have a more limited application
by their terms. For more information about the
rulebook consolidation process, see Information
Notice, March 12, 2008 (Rulebook Consolidation
Process).
VerDate Nov<24>2008
18:05 Feb 18, 2010
Jkt 220001
read ‘‘[r]educe its capital or purchase or
redeem any shares of any class of its
stock or’’ and ‘‘and the Exchange may at
any time in its discretion require the
corporation to restore or increase capital
or surplus, or both.’’ FINRA is proposing
the rule change because the Commission
has approved for inclusion in the
Consolidated FINRA Rulebook a set of
new financial responsibility rules that,
among other things, regulate
withdrawals of equity capital by
members. Accordingly, the new FINRA
rules render the above-mentioned
Incorporated NYSE rule provisions
obsolete.6 Specifically:
• New FINRA Rule 4110(c)(1)
prohibits a member from withdrawing
equity capital for a period of one year
from the date such equity capital is
contributed, unless otherwise permitted
by FINRA in writing. The rule provides
that, subject to the requirements of
FINRA Rule 4110(c)(2), members are not
precluded from withdrawing profits
earned. FINRA Rule 4110(c)(2) prohibits
any carrying or clearing member,7
without the prior written approval of
FINRA, from withdrawing capital,
paying a dividend or effecting a similar
distribution that would reduce the
member’s equity, or making any
unsecured advance or loan to a
stockholder, partner, sole proprietor,
employee or affiliate, where such
withdrawals, payments, reductions,
advances or loans in the aggregate, in
any 35 rolling calendar day period, on
a net basis, would exceed 10 percent of
the member’s excess net capital.
• New FINRA Rule 4110(a) provides
that, when necessary for the protection
of investors or in the public interest,
FINRA may, at any time or from time to
time with respect to a particular
carrying or clearing member or all
carrying or clearing members, pursuant
to authority exercised by FINRA’s
Executive Vice President charged with
oversight for financial responsibility, or
his or her written officer delegate,
prescribe greater net capital or net worth
requirements than those otherwise
applicable, including more stringent
treatment of items in computing net
capital or net worth, or require such
member to restore or increase its net
worth. The rule provides that, in any
such instance, FINRA shall issue a
6 See
note 4.
Rule 4110.02 provides that, for purposes
of the rule, all requirements that apply to a member
that clears or carries customer accounts also apply
to any member that, operating pursuant to the
exemptive provisions of SEA Rule 15c3–3(k)(2)(i),
either clears customer transactions pursuant to such
exemptive provisions or holds customer funds in a
bank account established thereunder.
7 FINRA
PO 00000
Frm 00096
Fmt 4703
Sfmt 4703
notice pursuant to new FINRA Rule
9557.
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 on February 8, 2010.
2. Statutory Basis
FINRA believes that the proposed rule
change is consistent with the provisions
of Section 15A(b)(6) of the Act,8 which
requires, among other things, that
FINRA rules must be designed to
prevent fraudulent and manipulative
acts and practices, to promote just and
equitable principles of trade, and, in
general, to protect investors and the
public interest. FINRA believes that the
proposed rule change is consistent with
the purposes of the Act because it will
provide greater clarity to members and
the public regarding FINRA’s 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.
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 9 and Rule 19b–
4(f)(6) thereunder.10
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) 11 permits the Commission to
8 15
U.S.C. 78o–3(b)(6).
U.S.C. 78s(b)(3)(A).
10 17 CFR 240.19b–4(f)(6).
11 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,
9 15
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Continued
19FEN1
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Federal Register / Vol. 75, No. 33 / Friday, February 19, 2010 / Notices
designate a shorter time if such action
is consistent with the protection of
investors and the public interest. As
noted above, the Commission approved
FINRA 4110 as part of a new,
consolidated set of financial
responsibility rules, which, among other
things, regulates withdrawals of equity
capital.12 FINRA has requested that the
Commission waive the 30-day operative
delay set forth in Rule 19b–4(f)(6)(iii)
under the Act 13 in order for the rule to
become operative upon filing. The
Commission notes that the proposed
rule changes render the abovementioned Incorporated NYSE rule
provisions obsolete. The Commission
further notes that the operative date of
FINRA 4110 was February 8, 2009.14
The Commission believes that the
earlier operative date is consistent with
the protection of investors and the
public interest because it permits
FINRA to implement the rule without
further delay and in recognition of the
operative date of the financial
responsibility rules was February 8,
2010.15
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:
pwalker on DSK8KYBLC1PROD with NOTICES
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–2010–008 on the
subject line.
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 FINRA
has satisfied the five-day pre-filing notice
requirement.
12 See notes 4 and 5.
13 17 CFR 240.19b–4(f)(6)(iii).
14 See FINRA Regulatory Notice 09–71 (December
2009).
15 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).
VerDate Nov<24>2008
18:05 Feb 18, 2010
Jkt 220001
Paper Comments
• Send paper comments in triplicate
Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–1090.
All submissions should refer to File
Number SR–FINRA–2010–008. 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
FINRA. All comments received will be
posted without change; the Commission
does not edit personal identifying
information from submissions. You
should submit only information that
you wish to make available publicly. All
submissions should refer to File
Number SR–FINRA–2010–008 and
should be submitted on or before March
12, 2010.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.16
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010–3230 Filed 2–18–10; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–61509; File No. SR–Phlx2010–15]
Self-Regulatory Organizations;
NASDAQ OMX PHLX, Inc.; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change Relating to
Routing Fees
February 5, 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
26, 2010, NASDAQ OMX PHLX, Inc.
(‘‘Phlx’’ or ‘‘Exchange’’) 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
substantially prepared by the Exchange.
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 adopt fees
governing pricing for Exchange
members using the Phlx XL II system,3
for routing standardized equity and
index options to away markets for
execution.
While changes to the Exchange’s Fee
Schedule pursuant to this proposal are
effective upon filing, the Exchange has
designated this proposal to be operative
for trades settling on or after February
1, 2010.
The text of the proposed rule change
is available on the Exchange’s Web site
at https://nasdaqtrader.com/
micro.aspx?id=PHLXfilings, on the
Commission’s Web site at https://
www.sec.gov, at the principal office of
the Exchange, and at the Commission’s
Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 For a complete description of Phlx XL II, see
Securities Exchange Act Release No. 59995 (May
28, 2009), 74 FR 26750 (June 3, 2009) (SR–Phlx–
2009–32). The instant proposed fees will apply only
to options entered into, and routed by, the Phlx XL
II system.
2 17
16 17
PO 00000
CFR 200.30–3(a)(12).
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]]>Agencies
[Federal Register Volume 75, Number 33 (Friday, February 19, 2010)]
[Notices]
[Pages 7532-7534]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-3230]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-61513; File No. SR-FINRA-2010-008]
Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing and Immediate Effectiveness of
Proposed Rule Change To Amend Incorporated NYSE Rule 312(g)(1)
February 12, 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 February 4, 2010, Financial Industry Regulatory Authority, Inc.
(``FINRA'') filed with the Securities and Exchange Commission (``SEC''
or ``Commission'') the proposed rule change as described in Items I and
II below, which Items have been prepared by FINRA. FINRA has designated
the proposed rule change as constituting a ``non-controversial'' rule
change under paragraph (f)(6) of Rule 19b-4 under the Act,\3\ which
renders the proposal effective upon receipt of this filing by the
Commission. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
FINRA proposes to make a technical change to the FINRA rulebook.
FINRA proposes to amend Incorporated NYSE Rule 312(g)(1) so as to
delete certain provisions that are rendered obsolete by the adoption of
new FINRA Rule 4110 in FINRA's consolidated rulebook (``Consolidated
FINRA Rulebook'').\4\
[[Page 7533]]
Proposed new language is italicized; proposed deletions are in
brackets:
---------------------------------------------------------------------------
\4\ See Regulatory Notice 09-71 (December 2009) (SEC Approves
Consolidated FINRA Rules Governing Financial Responsibility). FINRA
announced in Regulatory Notice 09-71 that the new financial
responsibility rules will be implemented on February 8, 2010.
See also Securities Exchange Act Release No. 60933 (November 4,
2009), 74 FR 58334 (November 12, 2009) (Order Granting Approval to
Proposed Rule Change; File No. SR-FINRA-2008-067); Securities
Exchange Act Release No. 61408 (January 22, 2010), 75 FR 4596
(January 28, 2010) (Notice of Filing and Immediate Effectiveness of
Proposed Rule Change; File No. SR-FINRA-2010-004).
---------------------------------------------------------------------------
* * * * *
Rule 312. Changes Within Member Organizations
(a) through (f) No Change.
(g) A member corporation shall not without the prior written
approval of the Exchange:
(1) [Reduce its capital or purchase or redeem any shares of any
class of its stock or] I[i]n any way amend its charter, certificate of
incorporation or by-laws[, and the Exchange may at any time in its
discretion require the corporation to restore or increase capital or
surplus, or both].
(2) through (3) No Change.
The Exchange will approve any action described in (1), (2) or (3)
above unless it determines that such action will impair the financial
responsibility or operational capability of the member corporation.
(h) through (j) No Change.
* * * * *
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, FINRA included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. FINRA has prepared summaries, set forth in sections A,
B, and C below, of the most significant aspects of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
FINRA proposes to make a technical change to the FINRA rulebook.\5\
FINRA proposes to delete from Incorporated NYSE Rule 312(g)(1) the
phrases that read ``[r]educe its capital or purchase or redeem any
shares of any class of its stock or'' and ``and the Exchange may at any
time in its discretion require the corporation to restore or increase
capital or surplus, or both.'' FINRA is proposing the rule change
because the Commission has approved for inclusion in the Consolidated
FINRA Rulebook a set of new financial responsibility rules that, among
other things, regulate withdrawals of equity capital by members.
Accordingly, the new FINRA rules render the above-mentioned
Incorporated NYSE rule provisions obsolete.\6\ Specifically:
---------------------------------------------------------------------------
\5\ The current FINRA rulebook consists of (1) FINRA Rules; (2)
NASD Rules; and (3) rules incorporated from NYSE (``Incorporated
NYSE Rules'') (together, the NASD Rules and Incorporated NYSE Rules
are referred to as the ``Transitional Rulebook''). While the NASD
Rules generally apply to all FINRA members, the Incorporated NYSE
Rules apply only to those members of FINRA that are also members of
the NYSE (``Dual Members''). The FINRA Rules apply to all FINRA
members, unless such rules have a more limited application by their
terms. For more information about the rulebook consolidation
process, see Information Notice, March 12, 2008 (Rulebook
Consolidation Process).
\6\ See note 4.
---------------------------------------------------------------------------
New FINRA Rule 4110(c)(1) prohibits a member from
withdrawing equity capital for a period of one year from the date such
equity capital is contributed, unless otherwise permitted by FINRA in
writing. The rule provides that, subject to the requirements of FINRA
Rule 4110(c)(2), members are not precluded from withdrawing profits
earned. FINRA Rule 4110(c)(2) prohibits any carrying or clearing
member,\7\ without the prior written approval of FINRA, from
withdrawing capital, paying a dividend or effecting a similar
distribution that would reduce the member's equity, or making any
unsecured advance or loan to a stockholder, partner, sole proprietor,
employee or affiliate, where such withdrawals, payments, reductions,
advances or loans in the aggregate, in any 35 rolling calendar day
period, on a net basis, would exceed 10 percent of the member's excess
net capital.
---------------------------------------------------------------------------
\7\ FINRA Rule 4110.02 provides that, for purposes of the rule,
all requirements that apply to a member that clears or carries
customer accounts also apply to any member that, operating pursuant
to the exemptive provisions of SEA Rule 15c3-3(k)(2)(i), either
clears customer transactions pursuant to such exemptive provisions
or holds customer funds in a bank account established thereunder.
---------------------------------------------------------------------------
New FINRA Rule 4110(a) provides that, when necessary for
the protection of investors or in the public interest, FINRA may, at
any time or from time to time with respect to a particular carrying or
clearing member or all carrying or clearing members, pursuant to
authority exercised by FINRA's Executive Vice President charged with
oversight for financial responsibility, or his or her written officer
delegate, prescribe greater net capital or net worth requirements than
those otherwise applicable, including more stringent treatment of items
in computing net capital or net worth, or require such member to
restore or increase its net worth. The rule provides that, in any such
instance, FINRA shall issue a notice pursuant to new FINRA Rule 9557.
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 on February 8, 2010.
2. Statutory Basis
FINRA believes that the proposed rule change is consistent with the
provisions of Section 15A(b)(6) of the Act,\8\ which requires, among
other things, that FINRA rules must be designed to prevent fraudulent
and manipulative acts and practices, to promote just and equitable
principles of trade, and, in general, to protect investors and the
public interest. FINRA believes that the proposed rule change is
consistent with the purposes of the Act because it will provide greater
clarity to members and the public regarding FINRA's rules.
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\8\ 15 U.S.C. 78o-3(b)(6).
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B. Self-Regulatory Organization's Statement on Burden on Competition
FINRA does not believe that the proposed rule change will result in
any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others
Written comments were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the 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 \9\ and Rule 19b-
4(f)(6) thereunder.\10\
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\9\ 15 U.S.C. 78s(b)(3)(A).
\10\ 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) \11\ permits the Commission to
[[Page 7534]]
designate a shorter time if such action is consistent with the
protection of investors and the public interest. As noted above, the
Commission approved FINRA 4110 as part of a new, consolidated set of
financial responsibility rules, which, among other things, regulates
withdrawals of equity capital.\12\ FINRA has requested that the
Commission waive the 30-day operative delay set forth in Rule 19b-
4(f)(6)(iii) under the Act \13\ in order for the rule to become
operative upon filing. The Commission notes that the proposed rule
changes render the above-mentioned Incorporated NYSE rule provisions
obsolete. The Commission further notes that the operative date of FINRA
4110 was February 8, 2009.\14\ The Commission believes that the earlier
operative date is consistent with the protection of investors and the
public interest because it permits FINRA to implement the rule without
further delay and in recognition of the operative date of the financial
responsibility rules was February 8, 2010.\15\
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\11\ 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 FINRA has satisfied the five-
day pre-filing notice requirement.
\12\ See notes 4 and 5.
\13\ 17 CFR 240.19b-4(f)(6)(iii).
\14\ See FINRA Regulatory Notice 09-71 (December 2009).
\15\ 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-FINRA-2010-008 on the subject line.
Paper Comments
Send paper comments in triplicate Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-FINRA-2010-008. 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 FINRA.
All comments received will be posted without change; the Commission
does not edit personal identifying information from submissions. You
should submit only information that you wish to make available
publicly. All submissions should refer to File Number SR-FINRA-2010-008
and should be submitted on or before March 12, 2010.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-3230 Filed 2-18-10; 8:45 am]
BILLING CODE 8011-01-P
