Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing of Proposed Rule Change To Amend NASD Rules 1012 (General Provisions) and 1017 (Application for Approval of Change in Ownership, Control, or Business Operations) To Adopt New Standardized Electronic Form CMA, 14052-14054 [2012-5631]
Download as PDF
14052
Federal Register / Vol. 77, No. 46 / Thursday, March 8, 2012 / Notices
investment objective; and (c) consistent
with the Exemptive Order, invest in
derivatives, including options, swaps, or
futures.
(7) The Fund may hold in the
aggregate up to 15% of its net assets in:
(a) Illiquid securities; and (b) Rule 144A
securities.35
(8) A minimum of 100,000 Shares of
the Fund will be outstanding at the
commencement of trading on the
Exchange.
This approval order is based on the
Exchange’s representations.
For the foregoing reasons, the
Commission finds that the proposed
rule change is consistent with Section
6(b)(5) of the Act 36 and the rules and
regulations thereunder applicable to a
national securities exchange.
IV. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,37 that the
proposed rule change (SR–NYSEArca–
2011–81), as modified by Amendment
No. 3 thereto, be, and it hereby is,
approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.38
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2012–5610 Filed 3–7–12; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–66508; File No. SR–FINRA–
2012–018]
Self-Regulatory Organizations;
Financial Industry Regulatory
Authority, Inc.; Notice of Filing of
Proposed Rule Change To Amend
NASD Rules 1012 (General Provisions)
and 1017 (Application for Approval of
Change in Ownership, Control, or
Business Operations) To Adopt New
Standardized Electronic Form CMA
wreier-aviles on DSK5TPTVN1PROD with NOTICES
March 2, 2012.
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
28, 2012, Financial Industry Regulatory
Authority, Inc. (‘‘FINRA’’) (f/k/a
National Association of Securities
Dealers, Inc. (‘‘NASD’’)) filed with the
Securities and Exchange Commission
35 See
supra note 6.
U.S.C. 78f(b)(5).
37 15 U.S.C. 78s(b)(2).
38 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
36 15
VerDate Mar<15>2010
15:20 Mar 07, 2012
(‘‘SEC’’ or ‘‘Commission’’) the proposed
rule change as described in Items I, II,
and III below, which Items have been
prepared by FINRA. 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 is proposing to amend NASD
Rules 1012 (General Provisions) and
1017 (Application for Approval of
Change in Ownership, Control, or
Business Operations) to adopt new
standardized electronic Form CMA.
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
NASD Rule 1017 (Application for
Approval of Change in Ownership,
Control, or Business Operations)
provides parameters for certain changes
in a member’s ownership, control, or
business operations that would require
a continuing membership application.
Among other things, those changes
include a merger of a member with
another member, a direct or indirect
acquisition by a member of another
member, a change in equity ownership
or partnership capital of the member
that results in one person or entity
directly or indirectly owning or
controlling 25 percent or more of the
equity or partnership capital, or a
material change in business operations
as defined in NASD Rule 1011(k)
(‘‘material change in business
operations’’).3 Currently, NASD Rule
3 NASD Rule 1011(k) defines a ‘‘material change
in business operations’’ as including, but not
limited to: (1) Removing or modifying a
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Frm 00054
Fmt 4703
Sfmt 4703
1017 does not require an applicant
seeking approval of a change of
ownership, control, or business
operations (‘‘continuing membership
applicant’’ or ‘‘applicant’’) to submit a
standardized form as part of its
continuing membership application and
provides little detail regarding an
application’s required contents. Instead,
each applicant is responsible for
determining the contents of its
continuing membership application.
This often results in information
deficiencies, which in turn, creates
unnecessary delays in efficiently
processing the applications. NASD Rule
1017 also generally requires a
continuing membership application to
be filed in the district office in which an
applicant’s principal place of business
is located. Additionally, NASD Rule
1012 (General Provisions) provides that,
unless otherwise prescribed by FINRA,
applicants may submit continuing
membership applications via first-class
mail, overnight courier, or handdelivery (or facsimile upon agreement
by FINRA and the applicant).
This manner of submitting a
continuing membership application
reduces the overall efficiency of the
process and also creates unnecessary
delays in properly forwarding
information within FINRA, such as in
conveying information to and from the
centralized Membership Application
Program Group formed in January 2011.
To address these deficiencies, the
proposed rule change amends NASD
Rule 1012 to require continuing
membership applicants to file an
application in the manner prescribed in
Rule 1017. In addition, the proposed
rule change amends NASD Rule 1017(b)
to require continuing membership
applicants to file an application in the
manner prescribed by FINRA with the
Department of Member Regulation (‘‘the
Department’’) and to include the
completed Form CMA as part of the
contents of a continuing membership
application.
New Form CMA will provide
continuing membership applicants with
the benefits of a streamlined application
process that new member applicants
currently experience via the
standardized online Form NMA and is
intended to significantly reducing
administrative delays that exists in
today’s manual application processes.
New Form CMA is structured
similarly to revisions proposed for Form
NMA with adjustments in the content of
membership agreement restriction; (2) market
making, underwriting, or acting as a dealer for the
first time; and (3) adding business activities that
require a higher minimum net capital under SEA
Rule 15c3–1.
E:\FR\FM\08MRN1.SGM
08MRN1
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Federal Register / Vol. 77, No. 46 / Thursday, March 8, 2012 / Notices
new Form CMA based on the differing
nature of the application types.4 As with
revised Form NMA, new Form CMA
will seek to elicit information from
applicants in a manner consistent with
the standards of admission, contained in
NASD Rule 1014, against which NASD
Rule 1017 requires each application to
be evaluated. Additionally, the structure
and guidance provided by new Form
CMA is designed to obtain the basic
information needed for all applicants
with embedded flexibility to allow for
variations based on the particular
application type being submitted.
Also, new Form CMA, as with the
revised Form NMA, will pre-populate
certain fields with information provided
to FINRA in other submissions (e.g.,
Central Registration Depository (CRD®)
entitlement forms and Form BD) or
otherwise available to FINRA from CRD
records (e.g. continuing education
status), thereby minimizing the time
necessary for applicants to complete the
new form.5 In addition, new Form CMA
will include a number of optional
information request fields that can be
used by applicants to provide additional
information if and when it is applicable
to the applicant’s proposed change. The
optional field approach is intended to
provide flexibility for the significant
level of variation seen in members’
structures, business lines, and proposed
changes.
Below is a synopsis of the content of
new Form CMA, by standard:
• Standard 1 (Overview of the
Applicant):
This standard seeks certain applicant
overview information (e.g., details of the
proposed business change, verification
of current business activities, new
business lines added, supervisors for
new business lines, identification of
other persons associated with the
proposed business change).
• Standard 2 (Licenses and
Registrations):
This standard consists of information
requests regarding the continuing
membership applicant’s licenses and
registrations that will be affected by the
proposed business change (e.g., changes
to required licenses and registrations,
new or continuing registration or
examination waivers, new or continuing
two-principal requirement waiver, new
or continuing Securities Information
Center exemption, other self-regulatory
organization (‘‘SRO’’) registrations and/
4 See SR–FINRA–2012–017 (proposed rule change
to restructure the content of existing Form NMA to,
among other things, make the requested information
and documentation more consistent with the
standards in NASD Rule 1014 (Department
Decision)).
5 See id.
VerDate Mar<15>2010
15:20 Mar 07, 2012
Jkt 226001
or withdrawals from other SRO
registrations, new non-registered
officers, directors, or control persons).
• Standard 3 (Compliance With
Securities Laws, Just and Equitable
Principles of Trade):
This standard consists of specific
requests for information (e.g.,
disciplinary history) and documentation
(e.g., state or federal orders or decrees,
statements of claims, cancelled checks
for payment of arbitration awards,
proofs of settlement, settlement
agreements) that FINRA considers
necessary for the applicant to
demonstrate compliance with the
requirements of this standard.
• Standard 4 (Contractual and
Business Relationships):
This standard includes the
information requests regarding a
continuing membership applicant’s
contractual and business relationships
(e.g., description of contractual
arrangements, expense sharing
agreements, financing arrangements,
fidelity bonds or fidelity bond
applications, support and service
agreements).
• Standard 5 (Facilities):
This standard consists of information
requests regarding a continuing
membership applicant’s facilities (e.g.,
material changes to facilities or
locations, departmental information
barriers, space sharing arrangements,
lease and/or sub-lease agreements).
• Standard 6 (Communications and
Operational Systems):
This standard includes information
requests regarding a continuing
membership applicant’s
communications and operational
systems (e.g., communications and
operational systems changes,
supervision arrangements of multiple
locations, business continuity plan
documents, information relating to the
applicant’s use of social media sites).
• Standard 7 (Maintaining Adequate
Net Capital):
This standard includes information
regarding an applicant’s net capital
requirements (e.g., information on the
nature and source of capital, additional
funding plans, minimum net capital
requirements, future funding sources).
• Standard 8 (Financial Controls):
This standard seeks information
regarding a continuing membership
applicant’s financial controls (e.g.,
information regarding changes to the
applicant’s registered financial and
operations principal (‘‘FINOP’’), impact
of proposed business change on
financial controls).
• Standard 9 (Written Procedures):
This standard seeks information
regarding a continuing membership
PO 00000
Frm 00055
Fmt 4703
Sfmt 4703
14053
applicant’s written procedures (e.g.,
impact of proposed change on written
supervisory procedures (‘‘WSP’’), WSP
checklist, sample reports to support
supervision and financial controls).
• Standard 10 (Supervisory
Structure):
This standard seeks information
regarding a continuing membership
applicant’s supervisory structure (e.g.,
changes to supervisory or management
personnel, information regarding
supervisors’ experience and duties,
chief compliance officer experience,
non-FINOP outside business activities
notifications).
• Standard 11 (Books and Records):
This standard seeks information
regarding a continuing membership
applicant’s books and records (e.g.,
impact of potential business change on
applicant’s recordkeeping systems and
recordkeeping service providers, sample
books and records relating to new
business activities).
• Standard 12 (Continuing
Education):
This standard seeks information
regarding a continuing membership
applicant’s continuing education (‘‘CE’’)
obligations (e.g., changes to the
applicant’s CE program, revised CE
training needs assessment and written
training plan).
FINRA worked closely with an
industry task force, comprised of seven
representatives from small and large
firms, several of whom also act as
consultants, during the development of
the new Form CMA. Among other
things, the task force’s input assisted
FINRA to make changes intended to
reduce applicants’ administrative
burden when completing Form CMA.
Overall, FINRA believes that the new
Form CMA will facilitate more effective
and efficient application processing for
the applicants.
FINRA will announce the effective
date of the proposed rule change in a
Regulatory Notice to be published no
later than 60 days following
Commission approval. The effective
date will be 180 days following
publication of the Regulatory Notice
announcing Commission approval.
2. Statutory Basis
FINRA 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 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
6 15
E:\FR\FM\08MRN1.SGM
U.S.C. 78o–3(b)(6).
08MRN1
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Federal Register / Vol. 77, No. 46 / Thursday, March 8, 2012 / Notices
public interest. The proposed rule
change amends NASD Rules 1012 and
1017 to adopt a new standardized
electronic form, Form CMA, to be used
by all continuing membership
applicants as part of their continuing
membership applications. Form CMA
elicits information from applicants in a
manner consistent with the standards of
admission contained in NASD Rule
1014, against which continuing
membership applications are evaluated.
FINRA believes that new Form CMA
will reduce applicants’ administrative
burden and ensure a more streamlined
and efficient continuing membership
application process for both FINRA and
applicants.
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
Within 45 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 or disapprove
such proposed rule change, or
(B) Institute proceedings to determine
whether the proposed rule change
should be disapproved.
wreier-aviles on DSK5TPTVN1PROD with NOTICES
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:
Number SR–FINRA–2012–018 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–FINRA–2012–018. This file
number should be included on the
subject line if email 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 publicly available. All
submissions should refer to File
Number SR–FINRA–2012–018 and
should be submitted on or before March
29, 2012.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority. 7
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2012–5631 Filed 3–7–12; 8:45 am]
BILLING CODE 8011–01–P
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rulecomments@sec.gov. Please include File
VerDate Mar<15>2010
15:20 Mar 07, 2012
Jkt 226001
7 17
PO 00000
CFR 200.30–3(a)(12).
Frm 00056
Fmt 4703
Sfmt 4703
DEPARTMENT OF TRANSPORTATION
Maritime Administration
[Docket No. MARAD–2012 0023]
Requested Administrative Waiver of
the Coastwise Trade Laws: Vessel
CABARET V; Invitation for Public
Comments
Maritime Administration,
Department of Transportation.
ACTION: Notice.
AGENCY:
As authorized by 46 U.S.C.
12121, the Secretary of Transportation,
as represented by the Maritime
Administration (MARAD), is authorized
to grant waivers of the U.S.-build
requirement of the coastwise laws under
certain circumstances. A request for
such a waiver has been received by
MARAD. The vessel, and a brief
description of the proposed service, is
listed below.
DATES: Submit comments on or before
April 9, 2012.
ADDRESSES: Comments should refer to
docket number MARAD–2012–0023.
Written comments may be submitted by
hand or by mail to the Docket Clerk,
U.S. Department of Transportation,
Docket Operations, M–30, West
Building Ground Floor, Room W12–140,
1200 New Jersey Avenue SE.,
Washington, DC 20590. You may also
send comments electronically via the
Internet at https://www.regulations.gov.
All comments will become part of this
docket and will be available for
inspection and copying at the above
address between 10 a.m. and 5 p.m.,
E.T., Monday through Friday, except
federal holidays. An electronic version
of this document and all documents
entered into this docket is available on
the World Wide Web at https://
www.regulations.gov.
SUMMARY:
FOR FURTHER INFORMATION CONTACT:
Joann Spittle, U.S. Department of
Transportation, Maritime
Administration, 1200 New Jersey
Avenue SE, Room W21–203,
Washington, DC 20590. Telephone 202–
366–5979, Email Joann.Spittle@dot.gov.
SUPPLEMENTARY INFORMATION:
As described by the applicant the
intended service of the vessel CABARET
V is:
Intended Commercial Use of Vessel:
‘‘Sportfishing without commercial sale
and carrying of passengers for whale
watching, etc. (When not carrying
passengers, the vessel will continue to
engage in commercial fisheries as an
undertonnage vessel).’’
E:\FR\FM\08MRN1.SGM
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Agencies
[Federal Register Volume 77, Number 46 (Thursday, March 8, 2012)]
[Notices]
[Pages 14052-14054]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-5631]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-66508; File No. SR-FINRA-2012-018]
Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing of Proposed Rule Change To Amend NASD
Rules 1012 (General Provisions) and 1017 (Application for Approval of
Change in Ownership, Control, or Business Operations) To Adopt New
Standardized Electronic Form CMA
March 2, 2012.
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 28, 2012, 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. 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.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
FINRA is proposing to amend NASD Rules 1012 (General Provisions)
and 1017 (Application for Approval of Change in Ownership, Control, or
Business Operations) to adopt new standardized electronic Form CMA.
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
NASD Rule 1017 (Application for Approval of Change in Ownership,
Control, or Business Operations) provides parameters for certain
changes in a member's ownership, control, or business operations that
would require a continuing membership application. Among other things,
those changes include a merger of a member with another member, a
direct or indirect acquisition by a member of another member, a change
in equity ownership or partnership capital of the member that results
in one person or entity directly or indirectly owning or controlling 25
percent or more of the equity or partnership capital, or a material
change in business operations as defined in NASD Rule 1011(k)
(``material change in business operations'').\3\ Currently, NASD Rule
1017 does not require an applicant seeking approval of a change of
ownership, control, or business operations (``continuing membership
applicant'' or ``applicant'') to submit a standardized form as part of
its continuing membership application and provides little detail
regarding an application's required contents. Instead, each applicant
is responsible for determining the contents of its continuing
membership application. This often results in information deficiencies,
which in turn, creates unnecessary delays in efficiently processing the
applications. NASD Rule 1017 also generally requires a continuing
membership application to be filed in the district office in which an
applicant's principal place of business is located. Additionally, NASD
Rule 1012 (General Provisions) provides that, unless otherwise
prescribed by FINRA, applicants may submit continuing membership
applications via first-class mail, overnight courier, or hand-delivery
(or facsimile upon agreement by FINRA and the applicant).
---------------------------------------------------------------------------
\3\ NASD Rule 1011(k) defines a ``material change in business
operations'' as including, but not limited to: (1) Removing or
modifying a membership agreement restriction; (2) market making,
underwriting, or acting as a dealer for the first time; and (3)
adding business activities that require a higher minimum net capital
under SEA Rule 15c3-1.
---------------------------------------------------------------------------
This manner of submitting a continuing membership application
reduces the overall efficiency of the process and also creates
unnecessary delays in properly forwarding information within FINRA,
such as in conveying information to and from the centralized Membership
Application Program Group formed in January 2011. To address these
deficiencies, the proposed rule change amends NASD Rule 1012 to require
continuing membership applicants to file an application in the manner
prescribed in Rule 1017. In addition, the proposed rule change amends
NASD Rule 1017(b) to require continuing membership applicants to file
an application in the manner prescribed by FINRA with the Department of
Member Regulation (``the Department'') and to include the completed
Form CMA as part of the contents of a continuing membership
application.
New Form CMA will provide continuing membership applicants with the
benefits of a streamlined application process that new member
applicants currently experience via the standardized online Form NMA
and is intended to significantly reducing administrative delays that
exists in today's manual application processes.
New Form CMA is structured similarly to revisions proposed for Form
NMA with adjustments in the content of
[[Page 14053]]
new Form CMA based on the differing nature of the application types.\4\
As with revised Form NMA, new Form CMA will seek to elicit information
from applicants in a manner consistent with the standards of admission,
contained in NASD Rule 1014, against which NASD Rule 1017 requires each
application to be evaluated. Additionally, the structure and guidance
provided by new Form CMA is designed to obtain the basic information
needed for all applicants with embedded flexibility to allow for
variations based on the particular application type being submitted.
---------------------------------------------------------------------------
\4\ See SR-FINRA-2012-017 (proposed rule change to restructure
the content of existing Form NMA to, among other things, make the
requested information and documentation more consistent with the
standards in NASD Rule 1014 (Department Decision)).
---------------------------------------------------------------------------
Also, new Form CMA, as with the revised Form NMA, will pre-populate
certain fields with information provided to FINRA in other submissions
(e.g., Central Registration Depository (CRD[supreg]) entitlement forms
and Form BD) or otherwise available to FINRA from CRD records (e.g.
continuing education status), thereby minimizing the time necessary for
applicants to complete the new form.\5\ In addition, new Form CMA will
include a number of optional information request fields that can be
used by applicants to provide additional information if and when it is
applicable to the applicant's proposed change. The optional field
approach is intended to provide flexibility for the significant level
of variation seen in members' structures, business lines, and proposed
changes.
---------------------------------------------------------------------------
\5\ See id.
---------------------------------------------------------------------------
Below is a synopsis of the content of new Form CMA, by standard:
Standard 1 (Overview of the Applicant):
This standard seeks certain applicant overview information (e.g.,
details of the proposed business change, verification of current
business activities, new business lines added, supervisors for new
business lines, identification of other persons associated with the
proposed business change).
Standard 2 (Licenses and Registrations):
This standard consists of information requests regarding the
continuing membership applicant's licenses and registrations that will
be affected by the proposed business change (e.g., changes to required
licenses and registrations, new or continuing registration or
examination waivers, new or continuing two-principal requirement
waiver, new or continuing Securities Information Center exemption,
other self-regulatory organization (``SRO'') registrations and/or
withdrawals from other SRO registrations, new non-registered officers,
directors, or control persons).
Standard 3 (Compliance With Securities Laws, Just and
Equitable Principles of Trade):
This standard consists of specific requests for information (e.g.,
disciplinary history) and documentation (e.g., state or federal orders
or decrees, statements of claims, cancelled checks for payment of
arbitration awards, proofs of settlement, settlement agreements) that
FINRA considers necessary for the applicant to demonstrate compliance
with the requirements of this standard.
Standard 4 (Contractual and Business Relationships):
This standard includes the information requests regarding a
continuing membership applicant's contractual and business
relationships (e.g., description of contractual arrangements, expense
sharing agreements, financing arrangements, fidelity bonds or fidelity
bond applications, support and service agreements).
Standard 5 (Facilities):
This standard consists of information requests regarding a
continuing membership applicant's facilities (e.g., material changes to
facilities or locations, departmental information barriers, space
sharing arrangements, lease and/or sub-lease agreements).
Standard 6 (Communications and Operational Systems):
This standard includes information requests regarding a continuing
membership applicant's communications and operational systems (e.g.,
communications and operational systems changes, supervision
arrangements of multiple locations, business continuity plan documents,
information relating to the applicant's use of social media sites).
Standard 7 (Maintaining Adequate Net Capital):
This standard includes information regarding an applicant's net
capital requirements (e.g., information on the nature and source of
capital, additional funding plans, minimum net capital requirements,
future funding sources).
Standard 8 (Financial Controls):
This standard seeks information regarding a continuing membership
applicant's financial controls (e.g., information regarding changes to
the applicant's registered financial and operations principal
(``FINOP''), impact of proposed business change on financial controls).
Standard 9 (Written Procedures):
This standard seeks information regarding a continuing membership
applicant's written procedures (e.g., impact of proposed change on
written supervisory procedures (``WSP''), WSP checklist, sample reports
to support supervision and financial controls).
Standard 10 (Supervisory Structure):
This standard seeks information regarding a continuing membership
applicant's supervisory structure (e.g., changes to supervisory or
management personnel, information regarding supervisors' experience and
duties, chief compliance officer experience, non-FINOP outside business
activities notifications).
Standard 11 (Books and Records):
This standard seeks information regarding a continuing membership
applicant's books and records (e.g., impact of potential business
change on applicant's recordkeeping systems and recordkeeping service
providers, sample books and records relating to new business
activities).
Standard 12 (Continuing Education):
This standard seeks information regarding a continuing membership
applicant's continuing education (``CE'') obligations (e.g., changes to
the applicant's CE program, revised CE training needs assessment and
written training plan).
FINRA worked closely with an industry task force, comprised of
seven representatives from small and large firms, several of whom also
act as consultants, during the development of the new Form CMA. Among
other things, the task force's input assisted FINRA to make changes
intended to reduce applicants' administrative burden when completing
Form CMA. Overall, FINRA believes that the new Form CMA will facilitate
more effective and efficient application processing for the applicants.
FINRA will announce the effective date of the proposed rule change
in a Regulatory Notice to be published no later than 60 days following
Commission approval. The effective date will be 180 days following
publication of the Regulatory Notice announcing Commission approval.
2. Statutory Basis
FINRA 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 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
[[Page 14054]]
public interest. The proposed rule change amends NASD Rules 1012 and
1017 to adopt a new standardized electronic form, Form CMA, to be used
by all continuing membership applicants as part of their continuing
membership applications. Form CMA elicits information from applicants
in a manner consistent with the standards of admission contained in
NASD Rule 1014, against which continuing membership applications are
evaluated. FINRA believes that new Form CMA will reduce applicants'
administrative burden and ensure a more streamlined and efficient
continuing membership application process for both FINRA and
applicants.
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\6\ 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
Within 45 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 or disapprove 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
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 email to rule-comments@sec.gov. Please include
File Number SR-FINRA-2012-018 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-FINRA-2012-018. This
file number should be included on the subject line if email 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 publicly available. All
submissions should refer to File Number SR-FINRA-2012-018 and should be
submitted on or before March 29, 2012.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority. \7\
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\7\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-5631 Filed 3-7-12; 8:45 am]
BILLING CODE 8011-01-P