Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Deleting the Rule Text of NYSE Arca Equities Rule 9.20(b), Which Addresses Telemarketing, and Adopting New Rule Text to NYSE Arca Equities Rule 9.20(b) to Conform to FINRA's Telemarketing Rule, 41854-41859 [2012-17174]
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41854
Federal Register / Vol. 77, No. 136 / Monday, July 16, 2012 / Notices
All submissions should refer to File
Number SR–NYSEARCA–2012–54 and
should be submitted on or before
August 6, 2012.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.62
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2012–17173 Filed 7–13–12; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of, and basis for,
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of 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, of
the most significant parts of such
statements.
[Release No. 34–67373; File No. SR–
NYSEARCA–2012–53]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change Deleting the Rule Text of
NYSE Arca Equities Rule 9.20(b),
Which Addresses Telemarketing, and
Adopting New Rule Text to NYSE Arca
Equities Rule 9.20(b) to Conform to
FINRA’s Telemarketing Rule
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to delete the
rule text of NYSE Arca Equities Rule
9.20(b), which addresses telemarketing,
and adopt new rule text that is
substantially similar to FINRA Rule
3230.4
July 10, 2012.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
‘‘Exchange Act’’) 2 and Rule 19b–4
thereunder,3 notice is hereby given that,
on June 25, 2012, NYSE Arca, Inc. (the
‘‘Exchange’’ or ‘‘NYSE Arca’’) filed with
the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I, II and III 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.
srobinson on DSK4SPTVN1PROD with NOTICES
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to delete the
rule text of NYSE Arca Equities Rule
9.20(b), which addresses telemarketing,
and adopt new rule text that is
substantially similar to FINRA Rule
3230. The text of the proposed rule
change is available on the Exchange’s
Web site at www.nyse.com, at the
principal office of the Exchange, and at
the Commission’s Public Reference
Room.
4 See Securities Exchange Act Release No. 66279
(January 30, 2012), 77 FR 5611 (February 3, 2012)
(SR–FINRA–2011–059). FINRA’s rule change will
become effective on July 9, 2012. See FINRA
Regulatory Notice 12–17.
5 15 U.S.C. 6101–6108.
62 17
CFR 200.30–3(a)(12).
1 15 U.S.C.78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
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Proposed Rule Change
The Exchange proposes to delete the
rule text of NYSE Arca Equities Rule
9.20(b) and adopt new rule text to NYSE
Arca Equities Rule 9.20(b) to conform to
the changes adopted by FINRA for
telemarketing. FINRA adopted NASD
Rule 2212 as FINRA Rule 3230, taking
into account FINRA Incorporated New
York Stock Exchange LLC (‘‘NYSE’’)
Rule 440A and NYSE Interpretation
440A/01. FINRA Rule 3230 adds
provisions that are substantially similar
to Federal Trade Commission (‘‘FTC’’)
rules that prohibit deceptive and other
abusive telemarketing acts or practices.
NYSE Arca Equities Rule 9.20(b) and
NASD Rule 2212 are similar rules that
require members to maintain do-not-call
lists, limit the hours of telephone
solicitations and prohibit members from
using deceptive and abusive acts and
practices in connection with
telemarketing. The Commission directed
FINRA and the Exchange to enact these
telemarketing rules in accordance with
the Telemarketing Consumer Fraud and
Abuse Prevention Act of 1994
(‘‘Prevention Act’’).5 The Prevention Act
requires the Commission to promulgate,
or direct any national securities
exchange or registered securities
association to promulgate, rules
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substantially similar to the FTC rules to
prohibit deceptive and other abusive
telemarketing acts or practices.6
In 2003, the FTC and the Federal
Communications Commission (‘‘FCC’’)
established requirements for sellers and
telemarketers to participate in the
national do-not-call registry.7 Pursuant
to the Prevention Act, the Commission
requested that FINRA and the Exchange
amend their telemarketing rules to
include a requirement that their
members participate in the national donot-call registry. In 2004, the
Commission approved amendments to
NASD Rule 2212 requiring member
firms to participate in the national donot-call registry.8 The following year,
the Commission approved amendments
to NYSE Arca Rule 9.20(b), which were
similar to the NASD rule amendments,
but included additional provisions
regarding the use of caller identification
information, pre-recorded messages,
telephone facsimiles and computer
advertisements.9
As mentioned above, the Prevention
Act requires the Commission to
promulgate, or direct any national
securities exchange or registered
securities association to promulgate,
rules substantially similar to the FTC
rules to prohibit deceptive and other
abusive telemarketing acts or
practices.10 In 2011, Commission staff
directed all exchanges and FINRA to
conduct a review of their telemarketing
rules and propose rule amendments that
provide protections that are at least as
strong as those provided by the FTC’s
telemarketing rules. FINRA’s adoption
of FINRA Rule 3230 reflects
amendments to NASD Rule 2212 and
FINRA Incorporated NYSE Rule 440A
that update those rules to meet the
standards of the Prevention Act.11
The proposed rule change, as directed
by the Commission staff, adopts
provisions in proposed NYSE Arca
Equities Rule 9.20(b) that are
substantially similar to the FTC’s
current rules that prohibit deceptive and
other abusive telemarketing acts or
practices as described below.12
6 15
U.S.C. 6102.
68 FR 4580 (January 29, 2003); 68 FR 44144
(July 25, 2003); CG Docket No. 02–278, FCC 03–153,
(adopted June 26, 2003; released July 3, 2003).
8 See Securities Exchange Act Release No. 49055
(January 12, 2004), 69 FR 2801 (January 20, 2004)
(Order Approving File No. SR–NASD–2003–131).
9 See Securities Exchange Act Release No. 54283
(August 8, 2006), 71 FR 46534 (August 14, 2006)
(Order Approving File No. SR–PCX–2005–97).
10 15 U.S.C. 6102.
11 See Securities Exchange Act Release No. 65645
(October 27, 2011), 76 FR 67787 (November 2, 2011)
(Order Approving File No. SR–FINRA–2011–059).
12 The text of proposed NYSE Arca Equities Rule
9.20(b) would be the same as FINRA Rule 3230,
7 See
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Federal Register / Vol. 77, No. 136 / Monday, July 16, 2012 / Notices
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Telemarketing Requirements
Proposed NYSE Arca Equities Rule
9.20(b)(1) provides that no ETP Holder
or Associated Person shall initiate any
outbound telephone call 13 to:
(1) Any residence of a person before
the hour of 8 a.m. or after 9 p.m. (local
time at the called party’s location),
unless the ETP Holder has an
established business relationship 14 with
the person pursuant to paragraph
9.20(b)(13)(L)(i), the ETP Holder has
received that person’s prior express
except that (i) the Exchange would substitute the
term ‘‘ETP Holder’’ for ‘‘member;’’ and (ii) the
Exchange would substitute the term ‘‘Associated
Person’’ for ‘‘person associated with a member.’’
13 An ‘‘outbound telephone call’’ is a telephone
call initiated by a telemarketer to induce the
purchase of goods or services or to solicit a
charitable contribution from a donor. A ‘‘customer’’
is any person who is or may be required to pay for
goods or services through telemarketing. A ‘‘donor’’
means any person solicited to make a charitable
contribution. A ‘‘person’’ is any individual, group,
unincorporated association, limited or general
partnership, corporation, or other business entity.
‘‘Telemarketing’’ means consisting of or relating to
a plan, program, or campaign involving at least one
outbound telephone call, for example cold-calling.
The term does not include the solicitation of sales
through the mailing of written marketing materials,
when the person making the solicitation does not
solicit customers by telephone but only receives
calls initiated by customers in response to the
marketing materials and during those calls takes
orders only without further solicitation. For
purposes of the previous sentence, the term ‘‘further
solicitation’’ does not include providing the
customer with information about, or attempting to
sell, anything promoted in the same marketing
materials that prompted the customer’s call. See
proposed NYSE Arca Equities Rule 9.20(b)(13)(K),
(N), (P), (Q), and (T); see also FINRA Rule
3230(m)(11), (14), (16), (17), and (20); and 16 CFR
310.2(f), (l), (n), (v), (w), and (dd).
14 An ‘‘established business relationship’’ is a
relationship between an ETP Holder and a person
if (i) the person has made a financial transaction or
has a security position, a money balance, or account
activity with the ETP Holder or at a clearing firm
that provides clearing services to the ETP Holder
within the 18 months immediately preceding the
date of an outbound telephone call; (b) the ETP
Holder is the broker-dealer of record for an account
of the person within the 18 months immediately
preceding the date of an outbound telephone call;
or (c) the person has contacted the ETP Holder to
inquire about a product or service offered by the
ETP Holder within the three months immediately
preceding the date of an outbound telephone call.
A person’s established business relationship with
an ETP Holder does not extend to the ETP Holder’s
affiliated entities unless the person would
reasonably expect them to be included. Similarly,
a person’s established business relationship with an
ETP Holder’s affiliate does not extend to the ETP
Holder unless the person would reasonably expect
the ETP Holder to be included. The term ‘‘account
activity’’ includes, but is not limited to, purchases,
sales, interest credits or debits, charges or credits,
dividend payments, transfer activity, securities
receipts or deliveries, and/or journal entries relating
to securities or funds in the possession or control
of the ETP Holder. The term ‘‘broker-dealer of
record’’ refers to the broker or dealer identified on
a customer’s account application for accounts held
directly at a mutual fund or variable insurance
product issuer. See proposed NYSE Arca Equities
Rule 9.20(b)(13)(A), (D), and (L); see also 16 CFR
310.2(o) and FINRA Rule 3230(m)(1), (4), and (12).
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invitation or permission, or the person
called is a broker or dealer;
(2) Any person that previously has
stated that he or she does not wish to
receive an outbound telephone call
made by or on behalf of the ETP
Holder; 15 or
(3) Any person who has registered his
or her telephone number on the FTC’s
national do-not-call registry.
The proposed rule change is
substantially similar to the FTC’s
provisions regarding abusive
telemarketing acts or practices.16 The
FTC provided a discussion of the
provision when it was adopted pursuant
to the Prevention Act.17
National Do-Not-Call List Exceptions
Proposed NYSE Arca Equities Rule
9.20(b)(2) provides that an ETP Holder
making outbound telephone calls will
not be liable for initiating any outbound
telephone call to any person who has
registered his or her telephone number
on the FTC’s national do-not-call
registry if:
(1) The ETP Holder has an established
business relationship with the recipient
of the call; 18
(2) The ETP Holder has obtained the
person’s prior express invitation or
permission; 19 or
(3) The Associated Person making the
call has a personal relationship 20 with
the recipient of the call.
The proposed rule change modifies
the established business relationship
exception in NYSE Arca Equities Rule
9.20(b) and the definition for
‘‘established business relationships,’’
which is substantially similar to the
FTC’s definition of that term.21 In
addition, the proposed rule change is
15 This restriction was previously included under
NYSE Arca Equities Rule 9.20(b)(1). See the
discussion below under Procedures.
16 See 16 CFR 310.4(b)(1)(iii)(A) and (B) and (c);
see also FINRA Rule 3230(a).
17 See Federal Trade Commission, Telemarketing
Sales Rule, 68 FR 4580 (Jan. 29, 2003) at 4628; and
Federal Trade Commission, Telemarketing Sales
Rule, 60 FR 43842 (Aug. 23, 1995) at 43855.
18 A person’s request to be placed on the firmspecific do-not-call list terminates the established
business relationship exception to that national donot-call list provision for that ETP Holder even if
the person continues to do business with the ETP
Holder.
19 Such permission must be evidenced by a
signed, written agreement (which may be obtained
electronically under the E-Sign Act (See 15 U.S.C.
7001 et seq.) between the person and ETP Holder
which states that the person agrees to be contacted
by the ETP Holder and includes the telephone
number to which the calls may be placed.
20 The term ‘‘personal relationship’’ means any
family member, friend, or acquaintance of the
person making an outbound telephone call. See
proposed NYSE Arca Equities Rule 9.20(b)(13)(R);
see also FINRA Rule 3230(m)(18).
21 See supra note 14; see also FINRA Rule
3230(a).
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41855
substantially similar to the FTC’s
provision regarding an exception to the
prohibition on making outbound
telephone calls to persons on the FTC’s
do-not-call registry.22 The FTC provided
a discussion of the provision when it
was adopted pursuant to the Prevention
Act.23
Safe Harbor Provision
Proposed NYSE Arca Equities Rule
9.20(b)(3) provides that an ETP Holder
or Associated Person making outbound
telephone calls will not be liable for
initiating any outbound telephone call
to any person who has registered his or
her telephone number on the FTC’s
national do-not-call registry if the ETP
Holder or Associated Person
demonstrates that the violation is the
result of an error and that as part of the
ETP Holder’s routine business practice,
it meets the following standards:
(1) The ETP Holder has established
and implemented written procedures to
comply with the national do-not-call
rules;
(2) The ETP Holder has trained its
personnel, and any entity assisting in its
compliance, in procedures established
pursuant to the national do-not-call
rules;
(3) The ETP Holder has maintained
and recorded a list of telephone
numbers that it may not contact; and
(4) The ETP Holder uses a process to
prevent outbound telephone calls to any
telephone number on any list
established pursuant to the do-not-call
rules, employing a version of the
national do-not-call registry obtained
from the administrator of the registry no
more than 31 days prior to the date any
call is made, and maintains records
documenting this process.
The proposed rule change is
substantially similar to the FTC’s safe
harbor to the prohibition on making
outbound telephone calls to persons on
the FTC’s national do-not-call registry.24
The FTC provided a discussion of the
provision when it was adopted pursuant
to the Prevention Act.25
Procedures
Proposed NYSE Arca Equities Rule
9.20(b)(4) adopts procedures that ETP
Holders must institute to comply with
22 See 16 CFR 310.4(b)(1)(iii)(B); see also FINRA
Rule 3230(b).
23 See Federal Trade Commission, Telemarketing
Sales Rule, 68 FR 4580 (Jan. 29, 2003) at 4628; and
Federal Trade Commission, Telemarketing Sales
Rule, 60 FR 43842 (Aug. 23, 1995) at 43854.
24 See 16 CFR 310.4(b)(1)(iii)(B); see also FINRA
Rule 3230(c).
25 See Federal Trade Commission, Telemarketing
Sales Rule, 68 FR 4580 (Jan. 29, 2003) at 4628; and
Federal Trade Commission, Telemarketing Sales
Rule, 60 FR 43842 (Aug. 23, 1995) at 43855.
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Federal Register / Vol. 77, No. 136 / Monday, July 16, 2012 / Notices
NYSE Arca Equities Rule 9.20(b)(1)
prior to engaging in telemarketing.
These procedures are substantially
similar to the procedural requirements
under NYSE Arca Equities Rule
9.20(b)(4); however, the proposed rule
change deletes the requirement that an
ETP Holder honor a firm-specific donot-call request for five years from the
time the request is made. Additionally,
the proposed rule change clarifies that
the request not to receive further calls
would come from a person. The
procedures must meet the following
minimum standards:
(1) ETP Holders must have a written
policy for maintaining their do-not-call
lists.
(2) Personnel engaged in any aspect of
telemarketing must be informed and
trained in the existence and use of the
ETP Holder’s do-not-call list.
(3) If an ETP Holder receives a request
from a person not to receive calls from
that ETP Holder, the ETP Holder must
record the request and place the
person’s name, if provided, and
telephone number on its do-not-call list
at the time the request is made.26
(4) ETP Holders or Associated Persons
making an outbound telephone call
must make certain caller disclosures set
forth in NYSE Arca Equities Rule
9.20(b)(4)(D).
(5) In the absence of a specific request
by the person to the contrary, a person’s
do-not-call request shall apply to the
ETP Holder making the call, and will
not apply to affiliated entities unless the
consumer reasonably would expect
them to be included given the
identification of the call and the product
being advertised.
(6) An ETP Holder making outbound
telephone calls must maintain a record
of a person’s request not to receive
further calls.
Inclusion of this requirement to adopt
these procedures will not create any
new obligations on ETP Holders, as they
are already subject to identical
provisions under FCC telemarketing
regulations.27
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Wireless Communications
Proposed NYSE Arca Equities Rule
9.20(b)(5) states that the provisions set
forth in the rule are applicable to ETP
26 ETP Holders must honor a person’s do-not-call
request within a reasonable time from the date the
request is made, which may not exceed 30 days
from the date of the request. If these requests are
recorded or maintained by a party other than the
ETP Holder on whose behalf the outbound
telephone call is made, the ETP Holder on whose
behalf the outbound telephone call is made will
still be liable for any failures to honor the do-notcall request.
27 See 47 CFR 64.1200(d); see also FINRA Rule
3230(d).
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Holders telemarketing or making
telephone solicitations calls to wireless
telephone numbers. In addition,
proposed NYSE Arca Equities Rule
9.20(b)(5) clarifies that the application
of the rule also applies to Associated
Persons making outbound telephone
calls to wireless telephone numbers.28
Outsourcing Telemarketing
NYSE Arca Equities Rule 9.20(b)(6)
states that if an ETP Holder uses another
entity to perform telemarketing services
on its behalf, the ETP Holder remains
responsible for ensuring compliance
with all provisions contained in the
rule. Proposed NYSE Arca Equities Rule
9.20(b)(6) also clarifies that ETP Holders
must consider whether the entity or
person that an ETP Holder uses for
outsourcing, must be appropriately
registered or licensed, where required.29
Caller Identification Information
Proposed NYSE Arca Equities Rule
9.20(b)(7) provides that any ETP Holder
that engages in telemarketing must
transmit or cause to be transmitted the
telephone number, and, when made
available by the ETP Holder’s telephone
carrier, the name of the ETP Holder, to
any caller identification service in use
by a recipient of an outbound telephone
call. The telephone number so provided
must permit any person to make a donot-call request during regular business
hours. In addition, any ETP Holder that
engages in telemarketing is prohibited
from blocking the transmission of caller
identification information.30
These provisions are similar to the
caller identification provision in the
FTC rules.31 Inclusion of these caller
identification provisions in this
proposed rule change will not create
any new obligations on ETP Holders, as
they are already subject to identical
provisions under FCC telemarketing
regulations.32
Unencrypted Consumer Account
Numbers
Proposed NYSE Arca Equities Rule
9.20(b)(8) prohibits an ETP Holder or
Associated Person from disclosing or
receiving, for consideration,
unencrypted consumer account
numbers for use in telemarketing. The
proposed rule change is substantially
similar to the FTC’s provision regarding
also FINRA Rule 3230(e).
also FINRA Rule 3230(f).
30 Caller identification information includes the
telephone number and, when made available by the
ETP Holder’s telephone carrier, the name of the ETP
Holder.
31 See 16 CFR 310.4(a)(8); see also FINRA Rule
3230(g).
32 See 47 CFR 64.1601(e).
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28 See
29 See
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unencrypted consumer account
numbers.33 The FTC provided a
discussion of the provision when it was
adopted pursuant to the Prevention
Act.34 Additionally, the proposed rule
change defines ‘‘unencrypted’’ as not
only complete, visible account numbers,
whether provided in lists or singly, but
also encrypted information with a key to
its decryption. The proposed definition
is substantially similar to the view taken
by the FTC.35
Submission of Billing Information
The proposed rule change provides
that, for any telemarketing transaction,
no ETP Holder or Associated Person
may submit billing information 36 for
payment without the express informed
consent of the customer. Proposed
NYSE Arca Equities Rule 9.20(b)(9)
requires, for any telemarketing
transaction, an ETP Holder or
Associated Person to obtain the express
informed consent of the person to be
charged and to be charged using the
identified account. If the telemarketing
transaction involves preacquired
account information 37 and a free-to-pay
conversion 38 feature, the ETP Holder or
Associated Person must:
(1) Obtain from the customer, at a
minimum, the last four digits of the
account number to be charged;
(2) Obtain from the customer an
express agreement to be charged and to
be charged using the identified account
number; and
(3) Make and maintain an audio
recording of the entire telemarketing
transaction.
For any other telemarketing
transaction involving preacquired
33 See 16 CFR 310.4(a)(6); see also FINRA Rule
3230(h).
34 See Federal Trade Commission, Telemarketing
Sales Rule, 68 FR 4580 (January 29, 2003) at 4615.
35 See id. at 4616.
36 The term ‘‘billing information’’ means any data
that enables any person to access a customer’s or
donor’s account, such as a credit or debit card
number, a brokerage, checking, or savings account
number, or a mortgage loan account number. See
proposed NYSE Arca Equities Rule 9.20(b)(13)(C).
37 The term ‘‘preacquired account information’’
means any information that enables an ETP Holder
or Associated Person to cause a charge to be placed
against a customer’s or donor’s account without
obtaining the account number directly from the
customer or donor during the telemarketing
transaction pursuant to which the account will be
charged. See proposed NYSE Arca Equities Rule
9.20(b)(13)(S).
38 The term ‘‘free-to-pay conversion’’ means, in an
offer or agreement to sell or provide any goods or
services, a provision under which a customer
receives a product or service for free for an initial
period and will incur an obligation to pay for the
product or service if he or she does not take
affirmative action to cancel before the end of that
period. See proposed NYSE Arca Equities Rule
9.20(b)(13)(M).
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Federal Register / Vol. 77, No. 136 / Monday, July 16, 2012 / Notices
account information, the ETP Holder or
Associated Person must:
(1) Identify the account to be charged
with sufficient specificity for the
customer to understand what account
will be charged; and
(2) Obtain from the customer an
express agreement to be charged and to
be charged using the identified account
number.
The proposed rule change is
substantially similar to the FTC’s
provision regarding the submission of
billing information.39 The FTC provided
a discussion of the provision when it
was adopted pursuant to the Prevention
Act.40
Abandoned Calls
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Proposed NYSE Arca Equities Rule
9.20(b)(10) prohibits an ETP Holder or
Associated Person from abandoning 41
any outbound telemarketing call. The
abandoned calls prohibition is subject to
a ‘‘safe harbor’’ under proposed
subparagraph (10)(B) that requires:
(1) The ETP Holder or Associated
Person to employ technology that
ensures abandonment of no more than
three percent of all calls answered by a
person, measured over the duration of a
single calling campaign, if less than 30
days, or separately over each successive
30-day period or portion thereof that the
campaign continues;
(2) The ETP Holder or Associated
Person, for each telemarketing call
placed, allows the telephone to ring for
at least 15 seconds or four rings before
disconnecting an unanswered call;
(3) Whenever an Associated Person is
not available to speak with the person
answering the telemarketing call within
two seconds after the person’s
completed greeting, the ETP Holder or
Associated Person promptly plays a
recorded message stating the name and
telephone number of the ETP Holder or
Associated Person on whose behalf the
call was placed; and
(4) The ETP Holder to maintain
records documenting compliance with
the ‘‘safe harbor.’’
The proposed rule change is
substantially similar to the FTC’s
provisions regarding abandoned calls.42
The FTC provided a discussion of the
39 See 16 CFR 310.4(a)(7); see also FINRA Rule
3230(i).
40 See Federal Trade Commission, Telemarketing
Sales Rule, 68 FR 4580 (January 29, 2003) at 4615.
41 An outbound telephone call is ‘‘abandoned’’ if
the called person answers it and the call is not
connected to an ETP Holder or Associated Person
within two seconds of the called person’s
completed greeting.
42 See 16 CFR 310.4(b)(1)(iv); see also 16 CFR
310.4(b)(4).
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provisions when they were adopted
pursuant to the Prevention Act.43
Prerecorded Messages
Proposed NYSE Arca Equities Rule
9.20(b)(11) prohibits an ETP Holder or
Associated Person from initiating any
outbound telemarketing call that
delivers a prerecorded message without
a person’s express written agreement 44
to receive such calls. The proposed rule
change also requires that all prerecorded
telemarketing calls provide specified
opt-out mechanisms so that a person
can opt out of future calls. The
prohibition does not apply to a
prerecorded message permitted for
compliance with the ‘‘safe harbor’’ for
abandoned calls under proposed
subparagraph (10)(B).
The proposed rule change is
substantially similar to the FTC’s
provisions regarding prerecorded
messages.45 The FTC provided a
discussion of the provisions when they
were adopted pursuant to the
Prevention Act.46
Credit Card Laundering
Proposed NYSE Arca Equities Rule
9.20(b)(12) prohibits credit card
laundering, the practice of depositing
into the credit card system 47 a sales
draft that is not the result of a credit
card transaction between the
cardholder 48 and the ETP Holder.
Except as expressly permitted, the
43 See Federal Trade Commission, Telemarketing
Sales Rule, 68 FR 4580 (January 29, 2003) at 4641.
44 The express written agreement must: (a) Have
been obtained only after a clear and conspicuous
disclosure that the purpose of the agreement is to
authorize the ETP Holder to place prerecorded calls
to such person; (b) have been obtained without
requiring, directly or indirectly, that the agreement
be executed as a condition of purchasing any good
or service; (c) evidence the willingness of the called
person to receive calls that deliver prerecorded
messages by or on behalf of the ETP Holder; and
(d) include the person’s telephone number and
signature (which may be obtained electronically
under the E-Sign Act).
45 See 16 CFR 310.4(b)(1)(v); see also FINRA Rule
3230(k).
46 See Federal Trade Commission, Telemarketing
Sales Rule, 73 FR 51164 (August 29, 2008) at 51165.
47 The term ‘‘credit card system’’ means any
method or procedure used to process credit card
transactions involving credit cards issued or
licensed by the operator of that system. The term
‘‘credit card’’ means any card, plate, coupon book,
or other credit device existing for the purpose of
obtaining money, property, labor, or services on
credit. The term ‘‘credit’’ means the right granted
by a creditor to a debtor to defer payment of debt
or to incur debt and defer its payment. See
proposed NYSE Arca Equities Rule 9.20(b)(13)(G),
(H), and (J).
48 The term ‘‘cardholder’’ means a person to
whom a credit card is issued or who is authorized
to use a credit card on behalf of or in addition to
the person to whom the credit card is issued. See
proposed NYSE Arca Equities Rule 9.20(b)(13)(F).
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Sfmt 4703
41857
proposed rule change prohibits an ETP
Holder or Associated Person from:
(1) Presenting to or depositing into,
the credit card system for payment, a
credit card sales draft 49 generated by a
telemarketing transaction that is not the
result of a telemarketing credit card
transaction between the cardholder and
the ETP Holder;
(2) Employing, soliciting, or otherwise
causing a merchant,50 or an employee,
representative or agent of the merchant,
to present to or to deposit into the credit
card system for payment, a credit card
sales draft generated by a telemarketing
transaction that is not the result of a
telemarketing credit card transaction
between the cardholder and the
merchant; or
(3) Obtaining access to the credit card
system through the use of a business
relationship or an affiliation with a
merchant, when such access is not
authorized by the merchant
agreement 51 or the applicable credit
card system.
The proposed rule change is
substantially similar to the FTC’s
provisions regarding credit card
laundering.52 The FTC provided a
discussion of the provisions when they
were adopted pursuant to the
Prevention Act.53
Definitions
Proposed NYSE Arca Equities Rule
9.20(b)(13) adopts the following
definitions, which are substantially
similar to the FTC’s definitions of these
terms: ‘‘acquirer,’’ ‘‘billing information,’’
‘‘caller identification service,’’
‘‘cardholder,’’ ‘‘charitable contribution,’’
49 The term ‘‘credit card sales draft’’ means any
record or evidence of a credit card transaction. See
proposed NYSE Arca Equities Rule 9.20(b)(13)(I).
50 The term ‘‘merchant’’ means a person who is
authorized under written contract with an acquirer
to honor or accept credit cards, or to transmit or
process for payment credit card payments, for the
purchase of goods or services or a charitable
contribution. The term ‘‘acquirer’’ means a business
organization, financial institution, or an agent of a
business organization or financial institution that
has authority from an organization that operates or
licenses a credit card system to authorize merchants
to accept, transmit, or process payment by credit
card through the credit card system for money,
goods or services, or anything else of value. A
‘‘charitable contribution’’ means any donation or
gift of money or any other thing of value, for
example a transfer to a pooled income fund. See
proposed NYSE Arca Equities Rule 9.20(b)(13)(B)
and (N).
51 The term ‘‘merchant agreement’’ means a
written contract between a merchant and an
acquirer to honor or accept credit cards, or to
transmit or process for payment credit card
payments, for the purchase of goods or services or
charitable contribution. See proposed NYSE Arca
Equities Rule 9.20(b)(13)(O).
52 See 16 CFR 310.2; see also FINRA Rule 3230(l).
53 See Federal Trade Commission, Telemarketing
Sales Rule, 60 FR 43842 (August 23, 1995) at 43852.
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41858
Federal Register / Vol. 77, No. 136 / Monday, July 16, 2012 / Notices
‘‘credit,’’ ‘‘credit card,’’‘‘credit card sales
draft,’’ ‘‘credit card system,’’
‘‘customer,’’ ‘‘donor,’’ ‘‘established
business relationship,’’ ‘‘free-to-pay
conversion,’’ ‘‘merchant,’’ ‘‘merchant
agreement,’’ ‘‘outbound telephone call,’’
‘‘person,’’ ‘‘preacquired account
information,’’ and telemarketing’’.54 The
FTC provided a discussion of each
definition when they were adopted
pursuant to the Prevention Act.
The Exchange proposes to make the
new rule text to NYSE Arca Equities
Rule 9.20(b) effective on the same date
as FINRA makes FINRA Rule 3230
effective.55
srobinson on DSK4SPTVN1PROD with NOTICES
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
Section 6(b) of the Exchange Act 56 in
general, and furthers the objectives of
Section 6(b)(5) 57 in particular, in that it
is designed to prevent fraudulent and
manipulative acts and practices, to
promote just and equitable principles of
trade, to foster cooperation and
coordination with persons engaged in
facilitating transactions in securities,
and to remove impediments to and
perfect the mechanism of a free and
open market and a national market
system. Specifically, the Exchange
believes that the proposed rule change
supports the objectives of the Exchange
Act by providing greater harmonization
between NYSE Arca Equities Rules and
FINRA Rules of similar purpose,
resulting in less burdensome and more
efficient regulatory compliance. In
particular, NYSE Arca ETP Holders that
are also FINRA members are subject to
both NYSE Arca Equities Rule 9.20(b)
and FINRA Rule 3230 and harmonizing
these two rules would promote just and
equitable principles of trade by
requiring a single standard for
telemarketing. In addition, adopting
new rule text to NYSE Arca Equities
Rule 9.20(b) will assure that the
Exchange’s rules governing
telemarketing meet the standards set
forth in the Prevention Act. To the
54 See proposed NYSE Arca Equities Rule
9.20(b)(13)(B), (C), (E), (F), (G), (H), (I), (J), (K), (L),
(M), (N), (O), (P), (Q), (S), and (T); and 16 CFR
310.2(a), (c), (d), (e), (f), (h), (i), (j), (k), (l), (n), (o),
(p), (s), (t), (v), (w), (x), and (dd); see also FINRA
Rule 3230(m)(2), (3), (5), (6), (7), (8), (9), (10), (11),
(12), (13), (14), (15), (16), (17), (19), and (20). The
proposed rule change also adopts definitions of
‘‘account activity,’’ ‘‘broker-dealer of record,’’ and
‘‘personal relationship’’ that are substantially
similar to FINRA’s definitions of these terms. See
proposed NYSE Arca Equities Rule 9.20(b)(13)(A),
(D), and (R) and FINRA Rule 3230(m)(1), (4), and
(18); see also 47 CFR 64.1200(t)(14) (FCC’s
definition of ‘‘personal relationship’’).
55 See supra note 4.
56 15 U.S.C. 78f(b).
57 15 U.S.C. 78f(b)(5).
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Jkt 226001
extent the Exchange has proposed
changes that differ from the FINRA
version of the NYSE Arca Equities
Rules, it believes such changes are
technical in nature and do not change
the substance of the proposed NYSE
Arca Equities Rule. The Exchange also
believes that the proposed rule change
will update and clarify the requirements
governing telemarketing, which will
promote just and equitable principles of
trade and help to protect investors.
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 Exchange Act.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange neither solicited nor
received written comments 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 Exchange Act 58
and Rule 19b–4(f)(6) thereunder.59
Because the 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 prior to 30 days from the date
on which it was filed, or such shorter
time as the Commission may designate,
if consistent with the protection of
investors and the public interest, the
proposed rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Exchange Act and Rule 19b–
4(f)(6)(iii) thereunder.
A proposed rule change filed under
Rule 19b–4(f)(6) 60 normally does not
become operative prior to 30 days after
the date of the filing. However, pursuant
to Rule 19b4(f)(6)(iii),61 the Commission
may designate a shorter time if such
action is consistent with the protection
of investors and the public interest. The
Exchange has asked the Commission to
waive the 30-day operative delay so that
the proposal may become operative
immediately upon filing.
At any time within 60 days of the
filing of such proposed rule change, the
PO 00000
58 15
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(6).
60 17 CFR 240.19b–4(f)(6).
61 17 CFR 240.19b–4(f)(6)(iii).
59 17
Frm 00118
Fmt 4703
Sfmt 4703
Commission summarily may
temporarily suspend 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 Exchange 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 Exchange
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 rulecomments@sec.gov. Please include File
Number SR–NYSEARCA–2012–53 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–NYSEARCA–2012–53. 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 Section, 100 F Street NE.,
Washington, DC 20549–1090 on official
business days between the hours of 10
a.m. and 3 p.m. Copies of the filing will
also be available for inspection and
copying at the NYSE’s principal office
and on its Internet Web site at
www.nyse.com. 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.
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Federal Register / Vol. 77, No. 136 / Monday, July 16, 2012 / Notices
All submissions should refer to File
Number SR–NYSEARCA–2012–53 and
should be submitted on or before
August 6, 2012.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.62
Kevin M. O’Neill,
Deputy Secretary.
In its filing with the Commission, the
Exchange included statements
concerning the purpose of, and basis for,
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of 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, of
the most significant parts of such
statements.
[FR Doc. 2012–17174 Filed 7–13–12; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–67375; File No. SR–
NYSEMKT–2012–03]
Self-Regulatory Organizations; NYSE
MKT LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change Deleting NYSE MKT LLC
Rule 440A—Equities, Which Addresses
Telemarketing, and Adopting New
NYSE MKT LLC Rule 3230—Equities,
To Conform to FINRA’s Telemarketing
Rule
July 10, 2012.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
‘‘Exchange Act’’) 2 and Rule 19b–4
thereunder,3 notice is hereby given that
on June 25, 2012, NYSE MKT LLC (the
‘‘Exchange’’ or ‘‘NYSE MKT’’) filed with
the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I, II and III 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.
srobinson on DSK4SPTVN1PROD with NOTICES
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to delete Rule
440A—Equities, which addresses
telemarketing, and adopt new rule text
that is substantially similar to FINRA
Rule 3230. The text of the proposed rule
change is available on the Exchange’s
Web site at www.nyse.com, at the
principal office of the Exchange, and at
the Commission’s Public Reference
Room.
62 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
1 15
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16:32 Jul 13, 2012
Jkt 226001
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to delete Rule
440A—Equities, which addresses
telemarketing, and adopt new rule text
that is substantially similar to FINRA
Rule 3230.4
Background
On July 30, 2007, FINRA’s
predecessor, the National Association of
Securities Dealers, Inc. (‘‘NASD’’), and
NYSE Regulation, Inc. (‘‘NYSER’’)
consolidated their member firm
regulation operations into a combined
organization, FINRA. Pursuant to Rule
17d–2 under the Exchange Act, New
York Stock Exchange LLC (‘‘NYSE’’),
NYSER and FINRA entered into an
agreement (the ‘‘Agreement’’) to reduce
regulatory duplication for their
members by allocating to FINRA certain
regulatory responsibilities for certain
NYSE rules and rule interpretations
(‘‘FINRA Incorporated NYSE Rules’’).
NYSE MKT became a party to the
Agreement effective December 15,
2008.5
As part of its effort to reduce
regulatory duplication and relieve firms
that are members of FINRA, NYSE and
NYSE MKT of conflicting or
4 See Securities Exchange Act Release No. 66279
(January 30, 2012), 77 FR 5611 (February 3, 2012)
(SR–FINRA–2011–059). FINRA’s rule change will
become effective on July 9, 2012. See FINRA
Regulatory Notice 12–17.
5 See Securities Exchange Act Release No. 56148
(July 26, 2007), 72 FR 42146 (August 1, 2007) (order
approving the Agreement); Securities Exchange Act
56147 (July 26, 2007), 72 FR 42166 (August 1, 2007)
(SR–NASD–2007–054) (order approving the
incorporation of certain NYSE Rules as ‘‘Common
Rules’’); and Securities Exchange Act 60409 (July
30, 2009), 74 FR 39353 (August 6, 2009) (order
approving the amended and restated Agreement,
adding NYSE MKT LLC as a party). Paragraph 2(b)
of the Agreement sets forth procedures regarding
proposed changes by FINRA, NYSE or NYSE MKT
to the substance of any of the Common Rules.
PO 00000
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Fmt 4703
Sfmt 4703
41859
unnecessary regulatory burdens, FINRA
is now engaged in the process of
reviewing and amending the NASD and
FINRA Incorporated NYSE Rules in
order to create a consolidated FINRA
rulebook.6
Proposed Rule Change
The Exchange proposes to delete Rule
440A—Equities and adopt new Rule
3230—Equities to conform to the
changes adopted by FINRA for
telemarketing. FINRA adopted NASD
Rule 2212 as FINRA Rule 3230, taking
into account FINRA Incorporated NYSE
Rule 440A 7 and NYSE Interpretation
440A/01. FINRA Rule 3230 adds
provisions that are substantially similar
to Federal Trade Commission (‘‘FTC’’)
rules that prohibit deceptive and other
abusive telemarketing acts or practices.
NASD Rule 2212 and Rule 440A—
Equities are similar rules that require
members, among other things, to
maintain do-not-call lists, limit the
hours of telephone solicitations and
prohibit members from using deceptive
and abusive acts and practices in
connection with telemarketing. The
Commission directed FINRA and the
Exchange to enact these telemarketing
rules in accordance with the
Telemarketing Consumer Fraud and
Abuse Prevention Act of 1994
(‘‘Prevention Act’’).8 The Prevention Act
requires the Commission to promulgate,
or direct any national securities
exchange or registered securities
association to promulgate, rules
substantially similar to the FTC rules to
prohibit deceptive and other abusive
telemarketing acts or practices.9
In 2003, the FTC and the Federal
Communications Commission (‘‘FCC’’)
established requirements for sellers and
telemarketers to participate in the
national do-not-call registry.10 Pursuant
to the Prevention Act, the Commission
requested that FINRA and the Exchange
amend their telemarketing rules to
include a requirement that their
members participate in the national donot-call registry. In 2004, the
Commission approved amendments to
6 FINRA’s rulebook currently has three sets of
rules: (1) NASD Rules, (2) FINRA Incorporated
NYSE Rules, and (3) consolidated FINRA Rules.
The FINRA Incorporated NYSE Rules apply only to
those members of FINRA that are also members of
the NYSE (‘‘Dual Members’’), while the
consolidated FINRA Rules apply to all FINRA
members. For more information about the FINRA
rulebook consolidation process, see FINRA
Information Notice, March 12, 2008.
7 NYSE Rule 440A is identical to Rule 440A—
Equities.
8 15 U.S.C. 6101–6108.
9 15 U.S.C. 6102.
10 See 68 FR 4580 (January 29, 2003); 68 FR 44144
(July 25, 2003); CG Docket No. 02–278, FCC 03–153,
(adopted June 26, 2003; released July 3, 2003).
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]]>Agencies
[Federal Register Volume 77, Number 136 (Monday, July 16, 2012)]
[Notices]
[Pages 41854-41859]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-17174]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-67373; File No. SR-NYSEARCA-2012-53]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change Deleting the Rule
Text of NYSE Arca Equities Rule 9.20(b), Which Addresses Telemarketing,
and Adopting New Rule Text to NYSE Arca Equities Rule 9.20(b) to
Conform to FINRA's Telemarketing Rule
July 10, 2012.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Exchange Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is
hereby given that, on June 25, 2012, NYSE Arca, Inc. (the ``Exchange''
or ``NYSE Arca'') filed with the Securities and Exchange Commission
(the ``Commission'') the proposed rule change as described in Items I,
II and III 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.
---------------------------------------------------------------------------
\1\ 15 U.S.C.78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to delete the rule text of NYSE Arca Equities
Rule 9.20(b), which addresses telemarketing, and adopt new rule text
that is substantially similar to FINRA Rule 3230. The text of the
proposed rule change is available on the Exchange's Web site at
www.nyse.com, 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 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, 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
1. Purpose
The Exchange proposes to delete the rule text of NYSE Arca Equities
Rule 9.20(b), which addresses telemarketing, and adopt new rule text
that is substantially similar to FINRA Rule 3230.\4\
---------------------------------------------------------------------------
\4\ See Securities Exchange Act Release No. 66279 (January 30,
2012), 77 FR 5611 (February 3, 2012) (SR-FINRA-2011-059). FINRA's
rule change will become effective on July 9, 2012. See FINRA
Regulatory Notice 12-17.
---------------------------------------------------------------------------
Proposed Rule Change
The Exchange proposes to delete the rule text of NYSE Arca Equities
Rule 9.20(b) and adopt new rule text to NYSE Arca Equities Rule 9.20(b)
to conform to the changes adopted by FINRA for telemarketing. FINRA
adopted NASD Rule 2212 as FINRA Rule 3230, taking into account FINRA
Incorporated New York Stock Exchange LLC (``NYSE'') Rule 440A and NYSE
Interpretation 440A/01. FINRA Rule 3230 adds provisions that are
substantially similar to Federal Trade Commission (``FTC'') rules that
prohibit deceptive and other abusive telemarketing acts or practices.
NYSE Arca Equities Rule 9.20(b) and NASD Rule 2212 are similar
rules that require members to maintain do-not-call lists, limit the
hours of telephone solicitations and prohibit members from using
deceptive and abusive acts and practices in connection with
telemarketing. The Commission directed FINRA and the Exchange to enact
these telemarketing rules in accordance with the Telemarketing Consumer
Fraud and Abuse Prevention Act of 1994 (``Prevention Act'').\5\ The
Prevention Act requires the Commission to promulgate, or direct any
national securities exchange or registered securities association to
promulgate, rules substantially similar to the FTC rules to prohibit
deceptive and other abusive telemarketing acts or practices.\6\
---------------------------------------------------------------------------
\5\ 15 U.S.C. 6101-6108.
\6\ 15 U.S.C. 6102.
---------------------------------------------------------------------------
In 2003, the FTC and the Federal Communications Commission
(``FCC'') established requirements for sellers and telemarketers to
participate in the national do-not-call registry.\7\ Pursuant to the
Prevention Act, the Commission requested that FINRA and the Exchange
amend their telemarketing rules to include a requirement that their
members participate in the national do-not-call registry. In 2004, the
Commission approved amendments to NASD Rule 2212 requiring member firms
to participate in the national do-not-call registry.\8\ The following
year, the Commission approved amendments to NYSE Arca Rule 9.20(b),
which were similar to the NASD rule amendments, but included additional
provisions regarding the use of caller identification information, pre-
recorded messages, telephone facsimiles and computer advertisements.\9\
---------------------------------------------------------------------------
\7\ See 68 FR 4580 (January 29, 2003); 68 FR 44144 (July 25,
2003); CG Docket No. 02-278, FCC 03-153, (adopted June 26, 2003;
released July 3, 2003).
\8\ See Securities Exchange Act Release No. 49055 (January 12,
2004), 69 FR 2801 (January 20, 2004) (Order Approving File No. SR-
NASD-2003-131).
\9\ See Securities Exchange Act Release No. 54283 (August 8,
2006), 71 FR 46534 (August 14, 2006) (Order Approving File No. SR-
PCX-2005-97).
---------------------------------------------------------------------------
As mentioned above, the Prevention Act requires the Commission to
promulgate, or direct any national securities exchange or registered
securities association to promulgate, rules substantially similar to
the FTC rules to prohibit deceptive and other abusive telemarketing
acts or practices.\10\ In 2011, Commission staff directed all exchanges
and FINRA to conduct a review of their telemarketing rules and propose
rule amendments that provide protections that are at least as strong as
those provided by the FTC's telemarketing rules. FINRA's adoption of
FINRA Rule 3230 reflects amendments to NASD Rule 2212 and FINRA
Incorporated NYSE Rule 440A that update those rules to meet the
standards of the Prevention Act.\11\
---------------------------------------------------------------------------
\10\ 15 U.S.C. 6102.
\11\ See Securities Exchange Act Release No. 65645 (October 27,
2011), 76 FR 67787 (November 2, 2011) (Order Approving File No. SR-
FINRA-2011-059).
---------------------------------------------------------------------------
The proposed rule change, as directed by the Commission staff,
adopts provisions in proposed NYSE Arca Equities Rule 9.20(b) that are
substantially similar to the FTC's current rules that prohibit
deceptive and other abusive telemarketing acts or practices as
described below.\12\
---------------------------------------------------------------------------
\12\ The text of proposed NYSE Arca Equities Rule 9.20(b) would
be the same as FINRA Rule 3230, except that (i) the Exchange would
substitute the term ``ETP Holder'' for ``member;'' and (ii) the
Exchange would substitute the term ``Associated Person'' for
``person associated with a member.''
---------------------------------------------------------------------------
[[Page 41855]]
Telemarketing Requirements
Proposed NYSE Arca Equities Rule 9.20(b)(1) provides that no ETP
Holder or Associated Person shall initiate any outbound telephone call
\13\ to:
---------------------------------------------------------------------------
\13\ An ``outbound telephone call'' is a telephone call
initiated by a telemarketer to induce the purchase of goods or
services or to solicit a charitable contribution from a donor. A
``customer'' is any person who is or may be required to pay for
goods or services through telemarketing. A ``donor'' means any
person solicited to make a charitable contribution. A ``person'' is
any individual, group, unincorporated association, limited or
general partnership, corporation, or other business entity.
``Telemarketing'' means consisting of or relating to a plan,
program, or campaign involving at least one outbound telephone call,
for example cold-calling. The term does not include the solicitation
of sales through the mailing of written marketing materials, when
the person making the solicitation does not solicit customers by
telephone but only receives calls initiated by customers in response
to the marketing materials and during those calls takes orders only
without further solicitation. For purposes of the previous sentence,
the term ``further solicitation'' does not include providing the
customer with information about, or attempting to sell, anything
promoted in the same marketing materials that prompted the
customer's call. See proposed NYSE Arca Equities Rule
9.20(b)(13)(K), (N), (P), (Q), and (T); see also FINRA Rule
3230(m)(11), (14), (16), (17), and (20); and 16 CFR 310.2(f), (l),
(n), (v), (w), and (dd).
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(1) Any residence of a person before the hour of 8 a.m. or after 9
p.m. (local time at the called party's location), unless the ETP Holder
has an established business relationship \14\ with the person pursuant
to paragraph 9.20(b)(13)(L)(i), the ETP Holder has received that
person's prior express invitation or permission, or the person called
is a broker or dealer;
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\14\ An ``established business relationship'' is a relationship
between an ETP Holder and a person if (i) the person has made a
financial transaction or has a security position, a money balance,
or account activity with the ETP Holder or at a clearing firm that
provides clearing services to the ETP Holder within the 18 months
immediately preceding the date of an outbound telephone call; (b)
the ETP Holder is the broker-dealer of record for an account of the
person within the 18 months immediately preceding the date of an
outbound telephone call; or (c) the person has contacted the ETP
Holder to inquire about a product or service offered by the ETP
Holder within the three months immediately preceding the date of an
outbound telephone call. A person's established business
relationship with an ETP Holder does not extend to the ETP Holder's
affiliated entities unless the person would reasonably expect them
to be included. Similarly, a person's established business
relationship with an ETP Holder's affiliate does not extend to the
ETP Holder unless the person would reasonably expect the ETP Holder
to be included. The term ``account activity'' includes, but is not
limited to, purchases, sales, interest credits or debits, charges or
credits, dividend payments, transfer activity, securities receipts
or deliveries, and/or journal entries relating to securities or
funds in the possession or control of the ETP Holder. The term
``broker-dealer of record'' refers to the broker or dealer
identified on a customer's account application for accounts held
directly at a mutual fund or variable insurance product issuer. See
proposed NYSE Arca Equities Rule 9.20(b)(13)(A), (D), and (L); see
also 16 CFR 310.2(o) and FINRA Rule 3230(m)(1), (4), and (12).
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(2) Any person that previously has stated that he or she does not
wish to receive an outbound telephone call made by or on behalf of the
ETP Holder; \15\ or
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\15\ This restriction was previously included under NYSE Arca
Equities Rule 9.20(b)(1). See the discussion below under Procedures.
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(3) Any person who has registered his or her telephone number on
the FTC's national do-not-call registry.
The proposed rule change is substantially similar to the FTC's
provisions regarding abusive telemarketing acts or practices.\16\ The
FTC provided a discussion of the provision when it was adopted pursuant
to the Prevention Act.\17\
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\16\ See 16 CFR 310.4(b)(1)(iii)(A) and (B) and (c); see also
FINRA Rule 3230(a).
\17\ See Federal Trade Commission, Telemarketing Sales Rule, 68
FR 4580 (Jan. 29, 2003) at 4628; and Federal Trade Commission,
Telemarketing Sales Rule, 60 FR 43842 (Aug. 23, 1995) at 43855.
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National Do-Not-Call List Exceptions
Proposed NYSE Arca Equities Rule 9.20(b)(2) provides that an ETP
Holder making outbound telephone calls will not be liable for
initiating any outbound telephone call to any person who has registered
his or her telephone number on the FTC's national do-not-call registry
if:
(1) The ETP Holder has an established business relationship with
the recipient of the call; \18\
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\18\ A person's request to be placed on the firm-specific do-
not-call list terminates the established business relationship
exception to that national do-not-call list provision for that ETP
Holder even if the person continues to do business with the ETP
Holder.
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(2) The ETP Holder has obtained the person's prior express
invitation or permission; \19\ or
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\19\ Such permission must be evidenced by a signed, written
agreement (which may be obtained electronically under the E-Sign Act
(See 15 U.S.C. 7001 et seq.) between the person and ETP Holder which
states that the person agrees to be contacted by the ETP Holder and
includes the telephone number to which the calls may be placed.
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(3) The Associated Person making the call has a personal
relationship \20\ with the recipient of the call.
---------------------------------------------------------------------------
\20\ The term ``personal relationship'' means any family member,
friend, or acquaintance of the person making an outbound telephone
call. See proposed NYSE Arca Equities Rule 9.20(b)(13)(R); see also
FINRA Rule 3230(m)(18).
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The proposed rule change modifies the established business
relationship exception in NYSE Arca Equities Rule 9.20(b) and the
definition for ``established business relationships,'' which is
substantially similar to the FTC's definition of that term.\21\ In
addition, the proposed rule change is substantially similar to the
FTC's provision regarding an exception to the prohibition on making
outbound telephone calls to persons on the FTC's do-not-call
registry.\22\ The FTC provided a discussion of the provision when it
was adopted pursuant to the Prevention Act.\23\
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\21\ See supra note 14; see also FINRA Rule 3230(a).
\22\ See 16 CFR 310.4(b)(1)(iii)(B); see also FINRA Rule
3230(b).
\23\ See Federal Trade Commission, Telemarketing Sales Rule, 68
FR 4580 (Jan. 29, 2003) at 4628; and Federal Trade Commission,
Telemarketing Sales Rule, 60 FR 43842 (Aug. 23, 1995) at 43854.
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Safe Harbor Provision
Proposed NYSE Arca Equities Rule 9.20(b)(3) provides that an ETP
Holder or Associated Person making outbound telephone calls will not be
liable for initiating any outbound telephone call to any person who has
registered his or her telephone number on the FTC's national do-not-
call registry if the ETP Holder or Associated Person demonstrates that
the violation is the result of an error and that as part of the ETP
Holder's routine business practice, it meets the following standards:
(1) The ETP Holder has established and implemented written
procedures to comply with the national do-not-call rules;
(2) The ETP Holder has trained its personnel, and any entity
assisting in its compliance, in procedures established pursuant to the
national do-not-call rules;
(3) The ETP Holder has maintained and recorded a list of telephone
numbers that it may not contact; and
(4) The ETP Holder uses a process to prevent outbound telephone
calls to any telephone number on any list established pursuant to the
do-not-call rules, employing a version of the national do-not-call
registry obtained from the administrator of the registry no more than
31 days prior to the date any call is made, and maintains records
documenting this process.
The proposed rule change is substantially similar to the FTC's safe
harbor to the prohibition on making outbound telephone calls to persons
on the FTC's national do-not-call registry.\24\ The FTC provided a
discussion of the provision when it was adopted pursuant to the
Prevention Act.\25\
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\24\ See 16 CFR 310.4(b)(1)(iii)(B); see also FINRA Rule
3230(c).
\25\ See Federal Trade Commission, Telemarketing Sales Rule, 68
FR 4580 (Jan. 29, 2003) at 4628; and Federal Trade Commission,
Telemarketing Sales Rule, 60 FR 43842 (Aug. 23, 1995) at 43855.
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Procedures
Proposed NYSE Arca Equities Rule 9.20(b)(4) adopts procedures that
ETP Holders must institute to comply with
[[Page 41856]]
NYSE Arca Equities Rule 9.20(b)(1) prior to engaging in telemarketing.
These procedures are substantially similar to the procedural
requirements under NYSE Arca Equities Rule 9.20(b)(4); however, the
proposed rule change deletes the requirement that an ETP Holder honor a
firm-specific do-not-call request for five years from the time the
request is made. Additionally, the proposed rule change clarifies that
the request not to receive further calls would come from a person. The
procedures must meet the following minimum standards:
(1) ETP Holders must have a written policy for maintaining their
do-not-call lists.
(2) Personnel engaged in any aspect of telemarketing must be
informed and trained in the existence and use of the ETP Holder's do-
not-call list.
(3) If an ETP Holder receives a request from a person not to
receive calls from that ETP Holder, the ETP Holder must record the
request and place the person's name, if provided, and telephone number
on its do-not-call list at the time the request is made.\26\
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\26\ ETP Holders must honor a person's do-not-call request
within a reasonable time from the date the request is made, which
may not exceed 30 days from the date of the request. If these
requests are recorded or maintained by a party other than the ETP
Holder on whose behalf the outbound telephone call is made, the ETP
Holder on whose behalf the outbound telephone call is made will
still be liable for any failures to honor the do-not-call request.
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(4) ETP Holders or Associated Persons making an outbound telephone
call must make certain caller disclosures set forth in NYSE Arca
Equities Rule 9.20(b)(4)(D).
(5) In the absence of a specific request by the person to the
contrary, a person's do-not-call request shall apply to the ETP Holder
making the call, and will not apply to affiliated entities unless the
consumer reasonably would expect them to be included given the
identification of the call and the product being advertised.
(6) An ETP Holder making outbound telephone calls must maintain a
record of a person's request not to receive further calls.
Inclusion of this requirement to adopt these procedures will not
create any new obligations on ETP Holders, as they are already subject
to identical provisions under FCC telemarketing regulations.\27\
---------------------------------------------------------------------------
\27\ See 47 CFR 64.1200(d); see also FINRA Rule 3230(d).
---------------------------------------------------------------------------
Wireless Communications
Proposed NYSE Arca Equities Rule 9.20(b)(5) states that the
provisions set forth in the rule are applicable to ETP Holders
telemarketing or making telephone solicitations calls to wireless
telephone numbers. In addition, proposed NYSE Arca Equities Rule
9.20(b)(5) clarifies that the application of the rule also applies to
Associated Persons making outbound telephone calls to wireless
telephone numbers.\28\
---------------------------------------------------------------------------
\28\ See also FINRA Rule 3230(e).
---------------------------------------------------------------------------
Outsourcing Telemarketing
NYSE Arca Equities Rule 9.20(b)(6) states that if an ETP Holder
uses another entity to perform telemarketing services on its behalf,
the ETP Holder remains responsible for ensuring compliance with all
provisions contained in the rule. Proposed NYSE Arca Equities Rule
9.20(b)(6) also clarifies that ETP Holders must consider whether the
entity or person that an ETP Holder uses for outsourcing, must be
appropriately registered or licensed, where required.\29\
---------------------------------------------------------------------------
\29\ See also FINRA Rule 3230(f).
---------------------------------------------------------------------------
Caller Identification Information
Proposed NYSE Arca Equities Rule 9.20(b)(7) provides that any ETP
Holder that engages in telemarketing must transmit or cause to be
transmitted the telephone number, and, when made available by the ETP
Holder's telephone carrier, the name of the ETP Holder, to any caller
identification service in use by a recipient of an outbound telephone
call. The telephone number so provided must permit any person to make a
do-not-call request during regular business hours. In addition, any ETP
Holder that engages in telemarketing is prohibited from blocking the
transmission of caller identification information.\30\
---------------------------------------------------------------------------
\30\ Caller identification information includes the telephone
number and, when made available by the ETP Holder's telephone
carrier, the name of the ETP Holder.
---------------------------------------------------------------------------
These provisions are similar to the caller identification provision
in the FTC rules.\31\ Inclusion of these caller identification
provisions in this proposed rule change will not create any new
obligations on ETP Holders, as they are already subject to identical
provisions under FCC telemarketing regulations.\32\
---------------------------------------------------------------------------
\31\ See 16 CFR 310.4(a)(8); see also FINRA Rule 3230(g).
\32\ See 47 CFR 64.1601(e).
---------------------------------------------------------------------------
Unencrypted Consumer Account Numbers
Proposed NYSE Arca Equities Rule 9.20(b)(8) prohibits an ETP Holder
or Associated Person from disclosing or receiving, for consideration,
unencrypted consumer account numbers for use in telemarketing. The
proposed rule change is substantially similar to the FTC's provision
regarding unencrypted consumer account numbers.\33\ The FTC provided a
discussion of the provision when it was adopted pursuant to the
Prevention Act.\34\ Additionally, the proposed rule change defines
``unencrypted'' as not only complete, visible account numbers, whether
provided in lists or singly, but also encrypted information with a key
to its decryption. The proposed definition is substantially similar to
the view taken by the FTC.\35\
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\33\ See 16 CFR 310.4(a)(6); see also FINRA Rule 3230(h).
\34\ See Federal Trade Commission, Telemarketing Sales Rule, 68
FR 4580 (January 29, 2003) at 4615.
\35\ See id. at 4616.
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Submission of Billing Information
The proposed rule change provides that, for any telemarketing
transaction, no ETP Holder or Associated Person may submit billing
information \36\ for payment without the express informed consent of
the customer. Proposed NYSE Arca Equities Rule 9.20(b)(9) requires, for
any telemarketing transaction, an ETP Holder or Associated Person to
obtain the express informed consent of the person to be charged and to
be charged using the identified account. If the telemarketing
transaction involves preacquired account information \37\ and a free-
to-pay conversion \38\ feature, the ETP Holder or Associated Person
must:
---------------------------------------------------------------------------
\36\ The term ``billing information'' means any data that
enables any person to access a customer's or donor's account, such
as a credit or debit card number, a brokerage, checking, or savings
account number, or a mortgage loan account number. See proposed NYSE
Arca Equities Rule 9.20(b)(13)(C).
\37\ The term ``preacquired account information'' means any
information that enables an ETP Holder or Associated Person to cause
a charge to be placed against a customer's or donor's account
without obtaining the account number directly from the customer or
donor during the telemarketing transaction pursuant to which the
account will be charged. See proposed NYSE Arca Equities Rule
9.20(b)(13)(S).
\38\ The term ``free-to-pay conversion'' means, in an offer or
agreement to sell or provide any goods or services, a provision
under which a customer receives a product or service for free for an
initial period and will incur an obligation to pay for the product
or service if he or she does not take affirmative action to cancel
before the end of that period. See proposed NYSE Arca Equities Rule
9.20(b)(13)(M).
---------------------------------------------------------------------------
(1) Obtain from the customer, at a minimum, the last four digits of
the account number to be charged;
(2) Obtain from the customer an express agreement to be charged and
to be charged using the identified account number; and
(3) Make and maintain an audio recording of the entire
telemarketing transaction.
For any other telemarketing transaction involving preacquired
[[Page 41857]]
account information, the ETP Holder or Associated Person must:
(1) Identify the account to be charged with sufficient specificity
for the customer to understand what account will be charged; and
(2) Obtain from the customer an express agreement to be charged and
to be charged using the identified account number.
The proposed rule change is substantially similar to the FTC's
provision regarding the submission of billing information.\39\ The FTC
provided a discussion of the provision when it was adopted pursuant to
the Prevention Act.\40\
---------------------------------------------------------------------------
\39\ See 16 CFR 310.4(a)(7); see also FINRA Rule 3230(i).
\40\ See Federal Trade Commission, Telemarketing Sales Rule, 68
FR 4580 (January 29, 2003) at 4615.
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Abandoned Calls
Proposed NYSE Arca Equities Rule 9.20(b)(10) prohibits an ETP
Holder or Associated Person from abandoning \41\ any outbound
telemarketing call. The abandoned calls prohibition is subject to a
``safe harbor'' under proposed subparagraph (10)(B) that requires:
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\41\ An outbound telephone call is ``abandoned'' if the called
person answers it and the call is not connected to an ETP Holder or
Associated Person within two seconds of the called person's
completed greeting.
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(1) The ETP Holder or Associated Person to employ technology that
ensures abandonment of no more than three percent of all calls answered
by a person, measured over the duration of a single calling campaign,
if less than 30 days, or separately over each successive 30-day period
or portion thereof that the campaign continues;
(2) The ETP Holder or Associated Person, for each telemarketing
call placed, allows the telephone to ring for at least 15 seconds or
four rings before disconnecting an unanswered call;
(3) Whenever an Associated Person is not available to speak with
the person answering the telemarketing call within two seconds after
the person's completed greeting, the ETP Holder or Associated Person
promptly plays a recorded message stating the name and telephone number
of the ETP Holder or Associated Person on whose behalf the call was
placed; and
(4) The ETP Holder to maintain records documenting compliance with
the ``safe harbor.''
The proposed rule change is substantially similar to the FTC's
provisions regarding abandoned calls.\42\ The FTC provided a discussion
of the provisions when they were adopted pursuant to the Prevention
Act.\43\
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\42\ See 16 CFR 310.4(b)(1)(iv); see also 16 CFR 310.4(b)(4).
\43\ See Federal Trade Commission, Telemarketing Sales Rule, 68
FR 4580 (January 29, 2003) at 4641.
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Prerecorded Messages
Proposed NYSE Arca Equities Rule 9.20(b)(11) prohibits an ETP
Holder or Associated Person from initiating any outbound telemarketing
call that delivers a prerecorded message without a person's express
written agreement \44\ to receive such calls. The proposed rule change
also requires that all prerecorded telemarketing calls provide
specified opt-out mechanisms so that a person can opt out of future
calls. The prohibition does not apply to a prerecorded message
permitted for compliance with the ``safe harbor'' for abandoned calls
under proposed subparagraph (10)(B).
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\44\ The express written agreement must: (a) Have been obtained
only after a clear and conspicuous disclosure that the purpose of
the agreement is to authorize the ETP Holder to place prerecorded
calls to such person; (b) have been obtained without requiring,
directly or indirectly, that the agreement be executed as a
condition of purchasing any good or service; (c) evidence the
willingness of the called person to receive calls that deliver
prerecorded messages by or on behalf of the ETP Holder; and (d)
include the person's telephone number and signature (which may be
obtained electronically under the E-Sign Act).
---------------------------------------------------------------------------
The proposed rule change is substantially similar to the FTC's
provisions regarding prerecorded messages.\45\ The FTC provided a
discussion of the provisions when they were adopted pursuant to the
Prevention Act.\46\
---------------------------------------------------------------------------
\45\ See 16 CFR 310.4(b)(1)(v); see also FINRA Rule 3230(k).
\46\ See Federal Trade Commission, Telemarketing Sales Rule, 73
FR 51164 (August 29, 2008) at 51165.
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Credit Card Laundering
Proposed NYSE Arca Equities Rule 9.20(b)(12) prohibits credit card
laundering, the practice of depositing into the credit card system \47\
a sales draft that is not the result of a credit card transaction
between the cardholder \48\ and the ETP Holder. Except as expressly
permitted, the proposed rule change prohibits an ETP Holder or
Associated Person from:
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\47\ The term ``credit card system'' means any method or
procedure used to process credit card transactions involving credit
cards issued or licensed by the operator of that system. The term
``credit card'' means any card, plate, coupon book, or other credit
device existing for the purpose of obtaining money, property, labor,
or services on credit. The term ``credit'' means the right granted
by a creditor to a debtor to defer payment of debt or to incur debt
and defer its payment. See proposed NYSE Arca Equities Rule
9.20(b)(13)(G), (H), and (J).
\48\ The term ``cardholder'' means a person to whom a credit
card is issued or who is authorized to use a credit card on behalf
of or in addition to the person to whom the credit card is issued.
See proposed NYSE Arca Equities Rule 9.20(b)(13)(F).
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(1) Presenting to or depositing into, the credit card system for
payment, a credit card sales draft \49\ generated by a telemarketing
transaction that is not the result of a telemarketing credit card
transaction between the cardholder and the ETP Holder;
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\49\ The term ``credit card sales draft'' means any record or
evidence of a credit card transaction. See proposed NYSE Arca
Equities Rule 9.20(b)(13)(I).
---------------------------------------------------------------------------
(2) Employing, soliciting, or otherwise causing a merchant,\50\ or
an employee, representative or agent of the merchant, to present to or
to deposit into the credit card system for payment, a credit card sales
draft generated by a telemarketing transaction that is not the result
of a telemarketing credit card transaction between the cardholder and
the merchant; or
---------------------------------------------------------------------------
\50\ The term ``merchant'' means a person who is authorized
under written contract with an acquirer to honor or accept credit
cards, or to transmit or process for payment credit card payments,
for the purchase of goods or services or a charitable contribution.
The term ``acquirer'' means a business organization, financial
institution, or an agent of a business organization or financial
institution that has authority from an organization that operates or
licenses a credit card system to authorize merchants to accept,
transmit, or process payment by credit card through the credit card
system for money, goods or services, or anything else of value. A
``charitable contribution'' means any donation or gift of money or
any other thing of value, for example a transfer to a pooled income
fund. See proposed NYSE Arca Equities Rule 9.20(b)(13)(B) and (N).
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(3) Obtaining access to the credit card system through the use of a
business relationship or an affiliation with a merchant, when such
access is not authorized by the merchant agreement \51\ or the
applicable credit card system.
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\51\ The term ``merchant agreement'' means a written contract
between a merchant and an acquirer to honor or accept credit cards,
or to transmit or process for payment credit card payments, for the
purchase of goods or services or charitable contribution. See
proposed NYSE Arca Equities Rule 9.20(b)(13)(O).
---------------------------------------------------------------------------
The proposed rule change is substantially similar to the FTC's
provisions regarding credit card laundering.\52\ The FTC provided a
discussion of the provisions when they were adopted pursuant to the
Prevention Act.\53\
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\52\ See 16 CFR 310.2; see also FINRA Rule 3230(l).
\53\ See Federal Trade Commission, Telemarketing Sales Rule, 60
FR 43842 (August 23, 1995) at 43852.
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Definitions
Proposed NYSE Arca Equities Rule 9.20(b)(13) adopts the following
definitions, which are substantially similar to the FTC's definitions
of these terms: ``acquirer,'' ``billing information,'' ``caller
identification service,'' ``cardholder,'' ``charitable contribution,''
[[Page 41858]]
``credit,'' ``credit card,''``credit card sales draft,'' ``credit card
system,'' ``customer,'' ``donor,'' ``established business
relationship,'' ``free-to-pay conversion,'' ``merchant,'' ``merchant
agreement,'' ``outbound telephone call,'' ``person,'' ``preacquired
account information,'' and telemarketing''.\54\ The FTC provided a
discussion of each definition when they were adopted pursuant to the
Prevention Act.
---------------------------------------------------------------------------
\54\ See proposed NYSE Arca Equities Rule 9.20(b)(13)(B), (C),
(E), (F), (G), (H), (I), (J), (K), (L), (M), (N), (O), (P), (Q),
(S), and (T); and 16 CFR 310.2(a), (c), (d), (e), (f), (h), (i),
(j), (k), (l), (n), (o), (p), (s), (t), (v), (w), (x), and (dd); see
also FINRA Rule 3230(m)(2), (3), (5), (6), (7), (8), (9), (10),
(11), (12), (13), (14), (15), (16), (17), (19), and (20). The
proposed rule change also adopts definitions of ``account
activity,'' ``broker-dealer of record,'' and ``personal
relationship'' that are substantially similar to FINRA's definitions
of these terms. See proposed NYSE Arca Equities Rule 9.20(b)(13)(A),
(D), and (R) and FINRA Rule 3230(m)(1), (4), and (18); see also 47
CFR 64.1200(t)(14) (FCC's definition of ``personal relationship'').
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The Exchange proposes to make the new rule text to NYSE Arca
Equities Rule 9.20(b) effective on the same date as FINRA makes FINRA
Rule 3230 effective.\55\
---------------------------------------------------------------------------
\55\ See supra note 4.
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2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Exchange Act \56\ in general, and furthers the
objectives of Section 6(b)(5) \57\ in particular, in that it is
designed to prevent fraudulent and manipulative acts and practices, to
promote just and equitable principles of trade, to foster cooperation
and coordination with persons engaged in facilitating transactions in
securities, and to remove impediments to and perfect the mechanism of a
free and open market and a national market system. Specifically, the
Exchange believes that the proposed rule change supports the objectives
of the Exchange Act by providing greater harmonization between NYSE
Arca Equities Rules and FINRA Rules of similar purpose, resulting in
less burdensome and more efficient regulatory compliance. In
particular, NYSE Arca ETP Holders that are also FINRA members are
subject to both NYSE Arca Equities Rule 9.20(b) and FINRA Rule 3230 and
harmonizing these two rules would promote just and equitable principles
of trade by requiring a single standard for telemarketing. In addition,
adopting new rule text to NYSE Arca Equities Rule 9.20(b) will assure
that the Exchange's rules governing telemarketing meet the standards
set forth in the Prevention Act. To the extent the Exchange has
proposed changes that differ from the FINRA version of the NYSE Arca
Equities Rules, it believes such changes are technical in nature and do
not change the substance of the proposed NYSE Arca Equities Rule. The
Exchange also believes that the proposed rule change will update and
clarify the requirements governing telemarketing, which will promote
just and equitable principles of trade and help to protect investors.
---------------------------------------------------------------------------
\56\ 15 U.S.C. 78f(b).
\57\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Exchange Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange neither solicited nor received written comments 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 Exchange Act \58\ and Rule 19b-4(f)(6)
thereunder.\59\ Because the 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 prior to 30 days from the date on which it was filed,
or such shorter time as the Commission may designate, if consistent
with the protection of investors and the public interest, the proposed
rule change has become effective pursuant to Section 19(b)(3)(A) of the
Exchange Act and Rule 19b-4(f)(6)(iii) thereunder.
---------------------------------------------------------------------------
\58\ 15 U.S.C. 78s(b)(3)(A)(iii).
\59\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
A proposed rule change filed under Rule 19b-4(f)(6) \60\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b4(f)(6)(iii),\61\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has asked
the Commission to waive the 30-day operative delay so that the proposal
may become operative immediately upon filing.
---------------------------------------------------------------------------
\60\ 17 CFR 240.19b-4(f)(6).
\61\ 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------
At any time within 60 days of the filing of such proposed rule
change, the Commission summarily may temporarily suspend 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 Exchange 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 Exchange 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-NYSEARCA-2012-53 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-NYSEARCA-2012-53. 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 Section, 100 F Street
NE., Washington, DC 20549-1090 on official business days between the
hours of 10 a.m. and 3 p.m. Copies of the filing will also be available
for inspection and copying at the NYSE's principal office and on its
Internet Web site at www.nyse.com. 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.
[[Page 41859]]
All submissions should refer to File Number SR-NYSEARCA-2012-53 and
should be submitted on or before August 6, 2012.
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\62\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\62\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-17174 Filed 7-13-12; 8:45 am]
BILLING CODE 8011-01-P
