Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Order Approving the Proposed Rule Change To Amend FINRA Rule 5190 (Notification Requirements for Offering Participants), 59771-59772 [2010-24227]

Download as PDF Federal Register / Vol. 75, No. 187 / Tuesday, September 28, 2010 / Notices Projected peak 5 second MPS Projected peak total daily transactions Period beginning: srobinson on DSKHWCL6B1PROD with NOTICES UTP Quote Approved By: llllllllllll of securities that are considered Date Submitted: lllllllllll ‘‘actively traded’’ and thus are not subject to a restricted period under Rule [FR Doc. 2010–24225 Filed 9–27–10; 8:45 am] 101 of Regulation M.4 In connection BILLING CODE 8010–01–P with such distributions, pursuant to Rule 5190(d)(1), FINRA members are required to provide written notice to SECURITIES AND EXCHANGE FINRA of the member’s determination COMMISSION that no restricted period applies and the [Release No. 34–62970; File No. SR–FINRA– basis for such determination. FINRA 2010–037] members must provide such notice at least one business day prior to the Self-Regulatory Organizations; pricing of the distribution, unless later Financial Industry Regulatory notification is necessary under specific Authority, Inc.; Order Approving the circumstances. Rule 5190(d)(2) requires Proposed Rule Change To Amend that, upon pricing a distribution of an FINRA Rule 5190 (Notification ‘‘actively traded’’ security, FINRA Requirements for Offering members provide written notice to Participants) FINRA along with pricing-related September 22, 2010. information such as the offering price, the last sale before the distribution, and I. Introduction the pricing basis. Notice of pricing must On July 27, 2010, the Financial be provided no later than the close of Industry Regulatory Authority, Inc. business the next business day (‘‘FINRA’’) (f/k/a National Association of following the pricing of the distribution, Securities Dealers, Inc. (‘‘NASD’’)) filed unless later notification is necessary with the Securities and Exchange under specific circumstances. Commission (‘‘Commission’’), pursuant FINRA proposed to amend Rule to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 5190(d) to require that notice under 19b–4 thereunder,2 a proposal to amend subparagraphs (1) and (2) be provided at the same time, specifically no later than FINRA Rule 5190 (Notification the close of business the next business Requirements for Offering Participants) day following the pricing of the relating to the notice requirements distribution. While the timing of notice applicable to distributions of ‘‘actively under subparagraph (1) would change, traded’’ securities, as defined under the information required would not Regulation M. This proposal was change. Thus, pursuant to the proposed published for comment in the Federal rule change, FINRA members will be 3 The Register on August 13, 2010. required to provide a single notice after Commission received no comments pricing of the distribution and will be regarding the proposal. This order required to provide all of the same approves this proposed rule change. information that they provide today. II. Description of the Proposed Rule FINRA has determined that it will be Change sufficient for members to provide notice of their determination that no restricted FINRA Rule 5190 imposes certain notice requirements on FINRA members period applies following the pricing of the distribution. FINRA clarified that participating in distributions of listed the proposed rule change will not and unlisted securities and is designed to ensure that FINRA receives pertinent impact FINRA’s Regulation M distribution-related information from its surveillance program. members in a timely fashion to facilitate 4 The exception for ‘‘actively traded’’ securities in its Regulation M surveillance program. Rule 101 of Regulation M applies to securities with Rule 5190(d) sets forth the notice requirements applicable to distributions an ADTV value, as defined in Rule 100 of 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 Securities Exchange Act Release No. 62664 (Aug. 9, 2010), 75 FR 49542 (Aug. 13, 2010) (SR– FINRA–2010–037). VerDate Mar<15>2010 15:22 Sep 27, 2010 Jkt 220001 Regulation M, of at least $1 million and are issued by an issuer whose common equity securities have a public float value of at least $150 million, provided, however, that such securities are not issued by the distribution participant or an affiliate of the distribution participant. 17 CFR 242.101(c)(1). PO 00000 Frm 00093 Fmt 4703 Sfmt 4703 UTP Trade 59771 UTP Quote UTP Trade In its filing, FINRA stated that a significant number of distributions of ‘‘actively traded’’ securities evolve quickly after the market close and are priced overnight before the next trading session. Thus, FINRA believes that its members frequently do not have sufficient advance knowledge of their participation in the distribution to provide notice to FINRA at least one business day prior to pricing and in such instances are unable to comply with the express terms of Rule 5190(d)(1). FINRA then must make a determination whether later notification was necessary under the circumstances, in accordance with the rule. FINRA has stated that the proposed rule change will clarify members’ notice obligations in the context of such distributions. FINRA represented that the proposed rule change will be effective on the date of Commission approval. III. Discussion and Findings After careful review, the Commission finds that the proposed rule change is consistent with the requirements of the Act, and the rules and regulations thereunder that are applicable to a national securities association.5 In particular, the Commission believes that the proposed rule change is consistent with the provisions of Section 15A(b)(6) of the Act,6 which requires, among other things, that FINRA rules 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. The proposed rule change will streamline FINRA member obligations and continue FINRA’s surveillance program regarding Regulation M to protect investors. IV. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,7 that the proposed rule change (File No. SR– FINRA–2010–037) be, and hereby is, approved. 5 In approving this proposal, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 6 15 U.S.C. 78o–3(b)(6). 7 15 U.S.C. 78s(b)(2). E:\FR\FM\28SEN1.SGM 28SEN1 59772 Federal Register / Vol. 75, No. 187 / Tuesday, September 28, 2010 / Notices For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.8 Florence E. Harmon, Deputy Secretary. [FR Doc. 2010–24227 Filed 9–27–10; 8:45 am] of the most significant parts of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change BILLING CODE 8010–01–P 1. Purpose The purpose of the proposed rule change is to amend Rule 515—NYSE Amex Equities. SECURITIES AND EXCHANGE COMMISSION [Release No. 34–62971; File No. SR– NYSEAmex–2010–95] Self-Regulatory Organizations; NYSE Amex LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Clarify the Requirement for Floor Official Approval for Certain Halts of Nasdaq Securities Traded via UTP September 22, 2010. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Act’’) 1 and Rule 19b–4 thereunder,2 notice is hereby given that on September 16, 2010, NYSE Amex LLC (the ‘‘Exchange’’ or ‘‘NYSE Amex’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been 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 amend Rule 515—NYSE Amex Equities. The text of the proposed rule change is available at the Exchange’s principal office, the Commission’s Public Reference Room, the Commission’s Web site (https://www.sec.gov), and https:// www.nyse.com. srobinson on DSKHWCL6B1PROD with NOTICES II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, 8 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 VerDate Mar<15>2010 15:22 Sep 27, 2010 Jkt 220001 a. Background On July 9, 2010, the Exchange received approval from the Commission to begin trading, as a pilot program, securities listed on the Nasdaq Stock Market pursuant to unlisted trading privileges (‘‘Nasdaq Securities’’). The Nasdaq Securities program commenced on July 13, 2010.3 b. Proposed Amendments to Rule 515— NYSE Amex Equities The Exchange proposes to amend Rule 515—NYSE Amex Equities dealing with trading halts. In its filing adopting the Nasdaq Securities program, the Exchange included a provision in Rule 515(a)(1)—NYSE Amex Equities that DMM Units did not need to obtain Floor Official approval in order to halt trading in a Nasdaq Security pursuant to Rule 123D—NYSE Amex Equities. Upon further review of the operation of this provision and the Nasdaq Securities program, the Exchange believes it should revise this provision to clarify that the DMM does not need to obtain Floor Official approval if a Nasdaq Security is halted, suspended, or paused pursuant to section (a)(2)–(4) of the Rule. Accordingly, if a Nasdaq Security is halted, suspended or paused from trading by the UTP Listing Market for regulatory purposes in accordance with its rules and/or the UTP Plan, or if the authority to trade the Nasdaq Security on the Exchange is revoked, Floor Official approval to halt trading on the Exchange is not required. However, if 3 See Securities Exchange Act Release No. 62479 (July 9, 2010), 75 FR 41264 (July 15, 2010) (order approving SR–NYSEAmex–2010–31 and the adoption of the NYSE Amex Equities Rule 500 Series). The pilot program is scheduled to run until September 30, 2010, the expiration date of the New York Stock Exchange LLC’s (‘‘NYSE’’) and the Exchange’s New Market Model (‘‘NMM’’) pilot program, on which the Nasdaq Securities program relies. See Securities Exchange Act Release Nos. 61274 (March 17, 2010), 75 FR 14221 (March 24, 2010)(SR–NYSE–2010–25) and 61275 (March 17, 2010), 75 FR 14223 (March 24, 2010)(SR– NYSEAmex–2010–28) (extending operation of the NMM pilot program on NYSE and NYSE Amex until the earlier of the Commission’s approval to make the program permanent or September 30, 2010). For more information on the NMM pilot program, see Securities Exchange Act Release No.58845 (October 24, 2008), 73 FR 64379 (October 29, 2008)(SR–NYSE–2008–46). PO 00000 Frm 00094 Fmt 4703 Sfmt 4703 the Exchange halts trading of a Nasdaq Security pursuant to Rule 123D—NYSE Amex Equities for non-regulatory purposes, such as an imbalance halt or an equipment changeover halt, the DMM must obtain prior Floor Official approval as provided for in that rule. The proposed provision would be consistent with the manner by which Rule 123D—NYSE Amex Equities operates for listed securities when a non-regulatory halt is invoked on the Exchange. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act,4 in general, and furthers the objectives of Section 6(b)(5) of the Act,5 in particular, in that it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. The Exchange believes that the proposed rule change supports the objectives of the Act by harmonizing the procedures for implementing nonregulatory trading halts under Rule 123D—NYSE Amex Equities for both its listed securities and Nasdaq Securities. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were solicited or received with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The Exchange has filed the proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act 6 and Rule 19b–4(f)(6) thereunder.7 Because the 4 15 U.S.C. 78f(b). U.S.C. 78f(b)(5). 6 15 U.S.C. 78s(b)(3)(A)(iii). 7 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 4(f)(6) requires a self-regulatory organization to give 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 5 15 E:\FR\FM\28SEN1.SGM 28SEN1

Agencies

[Federal Register Volume 75, Number 187 (Tuesday, September 28, 2010)]
[Notices]
[Pages 59771-59772]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-24227]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-62970; File No. SR-FINRA-2010-037]


Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Order Approving the Proposed Rule Change To Amend 
FINRA Rule 5190 (Notification Requirements for Offering Participants)

September 22, 2010.

I. Introduction

    On July 27, 2010, the Financial Industry Regulatory Authority, Inc. 
(``FINRA'') (f/k/a National Association of Securities Dealers, Inc. 
(``NASD'')) filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a 
proposal to amend FINRA Rule 5190 (Notification Requirements for 
Offering Participants) relating to the notice requirements applicable 
to distributions of ``actively traded'' securities, as defined under 
Regulation M. This proposal was published for comment in the Federal 
Register on August 13, 2010.\3\ The Commission received no comments 
regarding the proposal. This order approves this proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Securities Exchange Act Release No. 62664 (Aug. 9, 2010), 75 
FR 49542 (Aug. 13, 2010) (SR-FINRA-2010-037).
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II. Description of the Proposed Rule Change

    FINRA Rule 5190 imposes certain notice requirements on FINRA 
members participating in distributions of listed and unlisted 
securities and is designed to ensure that FINRA receives pertinent 
distribution-related information from its members in a timely fashion 
to facilitate its Regulation M surveillance program.
    Rule 5190(d) sets forth the notice requirements applicable to 
distributions of securities that are considered ``actively traded'' and 
thus are not subject to a restricted period under Rule 101 of 
Regulation M.\4\ In connection with such distributions, pursuant to 
Rule 5190(d)(1), FINRA members are required to provide written notice 
to FINRA of the member's determination that no restricted period 
applies and the basis for such determination. FINRA members must 
provide such notice at least one business day prior to the pricing of 
the distribution, unless later notification is necessary under specific 
circumstances. Rule 5190(d)(2) requires that, upon pricing a 
distribution of an ``actively traded'' security, FINRA members provide 
written notice to FINRA along with pricing-related information such as 
the offering price, the last sale before the distribution, and the 
pricing basis. Notice of pricing must be provided no later than the 
close of business the next business day following the pricing of the 
distribution, unless later notification is necessary under specific 
circumstances.
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    \4\ The exception for ``actively traded'' securities in Rule 101 
of Regulation M applies to securities with an ADTV value, as defined 
in Rule 100 of Regulation M, of at least $1 million and are issued 
by an issuer whose common equity securities have a public float 
value of at least $150 million, provided, however, that such 
securities are not issued by the distribution participant or an 
affiliate of the distribution participant. 17 CFR 242.101(c)(1).
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    FINRA proposed to amend Rule 5190(d) to require that notice under 
subparagraphs (1) and (2) be provided at the same time, specifically no 
later than the close of business the next business day following the 
pricing of the distribution. While the timing of notice under 
subparagraph (1) would change, the information required would not 
change. Thus, pursuant to the proposed rule change, FINRA members will 
be required to provide a single notice after pricing of the 
distribution and will be required to provide all of the same 
information that they provide today.
    FINRA has determined that it will be sufficient for members to 
provide notice of their determination that no restricted period applies 
following the pricing of the distribution. FINRA clarified that the 
proposed rule change will not impact FINRA's Regulation M surveillance 
program.
    In its filing, FINRA stated that a significant number of 
distributions of ``actively traded'' securities evolve quickly after 
the market close and are priced overnight before the next trading 
session. Thus, FINRA believes that its members frequently do not have 
sufficient advance knowledge of their participation in the distribution 
to provide notice to FINRA at least one business day prior to pricing 
and in such instances are unable to comply with the express terms of 
Rule 5190(d)(1). FINRA then must make a determination whether later 
notification was necessary under the circumstances, in accordance with 
the rule. FINRA has stated that the proposed rule change will clarify 
members' notice obligations in the context of such distributions.
    FINRA represented that the proposed rule change will be effective 
on the date of Commission approval.

III. Discussion and Findings

    After careful review, the Commission finds that the proposed rule 
change is consistent with the requirements of the Act, and the rules 
and regulations thereunder that are applicable to a national securities 
association.\5\ In particular, the Commission believes that the 
proposed rule change is consistent with the provisions of Section 
15A(b)(6) of the Act,\6\ which requires, among other things, that FINRA 
rules 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. The proposed 
rule change will streamline FINRA member obligations and continue 
FINRA's surveillance program regarding Regulation M to protect 
investors.
---------------------------------------------------------------------------

    \5\ In approving this proposal, the Commission has considered 
the proposed rule's impact on efficiency, competition, and capital 
formation. See 15 U.S.C. 78c(f).
    \6\ 15 U.S.C. 78o-3(b)(6).
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IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\7\ that the proposed rule change (File No. SR-FINRA-2010-037) be, 
and hereby is, approved.
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    \7\ 15 U.S.C. 78s(b)(2).


[[Page 59772]]


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    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\8\
Florence E. Harmon,
Deputy Secretary.
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    \8\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2010-24227 Filed 9-27-10; 8:45 am]
BILLING CODE 8010-01-P
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