Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Update Cross-References and Make Other Non-Substantive Changes Within FINRA Rules and By-Laws, 4182-4184 [2013-00969]
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4182
Federal Register / Vol. 78, No. 13 / Friday, January 18, 2013 / Notices
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 Act.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
mstockstill on DSK4VPTVN1PROD with
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–CHX–2012–19 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–CHX–2012–19. 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
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. 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
VerDate Mar<15>2010
16:52 Jan 17, 2013
Jkt 229001
available publicly. All submissions
should refer to File Number SR–CHX–
2012–19 and should be submitted on or
before February 8, 2013.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.10
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2013–01027 Filed 1–17–13; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–68650; File No. SR–FINRA–
2013–001]
Self-Regulatory Organizations;
Financial Industry Regulatory
Authority, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Update CrossReferences and Make Other NonSubstantive Changes Within FINRA
Rules and By-Laws
January 14, 2013.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2
notice is hereby given that on January 3,
2013, Financial Industry Regulatory
Authority, Inc. (‘‘FINRA’’) filed with the
Securities and Exchange Commission
(‘‘SEC’’ or ‘‘Commission’’) the proposed
rule change as described in Items I, II
and III below, which Items have been
prepared by FINRA. FINRA has
designated the proposed rule change as
constituting a ‘‘non-controversial’’ rule
change under Section 19(b)(3)(A) of the
Act 3 and Rule 19b–4(f)(6) 4 thereunder,
which renders the proposal effective
upon receipt of this filing by the
Commission. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
FINRA is proposing to update crossreferences and make other nonsubstantive changes within certain
FINRA rules and By-Laws, primarily as
the result of approval of new
consolidated FINRA rules.
The text of the proposed rule change
is available on FINRA’s Web site at
https://www.finra.org, at the principal
10 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A)
4 17 CFR 240.19b–4(f)(6).
1 15
PO 00000
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Fmt 4703
Sfmt 4703
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
FINRA is in the process of developing
a consolidated rulebook (‘‘Consolidated
FINRA Rulebook’’).5 That process
involves FINRA submitting to the
Commission for approval a series of
proposed rule changes over time to
adopt rules in the Consolidated FINRA
Rulebook. The phased adoption and
implementation of those rules
necessitates periodic amendments to
update rule cross-references and other
non-substantive changes in the
Consolidated FINRA Rulebook.
The proposed rule change would
make several such changes, as well as
certain other non-substantive changes
unrelated to the adoption of rules in the
Consolidated FINRA Rulebook. First,
the proposed rule change would update
rule cross-references and make other
non-substantive changes to reflect the
adoption of new consolidated FINRA
communications with the public rules.
On March 29, 2012, the SEC approved
a proposed rule change to adopt NASD
Rules 2210 and 2211 and NASD
Interpretive Materials 2210–1 and 2210–
3 through 2210–8 as FINRA Rules 2210
and 2212 through 2216, with several
5 The current FINRA rulebook consists of (1)
FINRA Rules; (2) NASD Rules; and (3) rules
incorporated from NYSE (‘‘Incorporated NYSE
Rules’’) (together, the NASD Rules and Incorporated
NYSE Rules are referred to as the ‘‘Transitional
Rulebook’’). While the NASD Rules generally apply
to all FINRA members, the Incorporated NYSE
Rules apply only to those members of FINRA that
are also members of the NYSE (‘‘Dual Members’’).
The FINRA Rules apply to all FINRA members,
unless such rules have a more limited application
by their terms. For more information about the
rulebook consolidation process, see Information
Notice, March 12, 2008 (Rulebook Consolidation
Process).
E:\FR\FM\18JAN1.SGM
18JAN1
Federal Register / Vol. 78, No. 13 / Friday, January 18, 2013 / Notices
mstockstill on DSK4VPTVN1PROD with
changes.6 The new rules will be
implemented on February 4, 2013. As
such, the proposed rule change would
update references to the new rule
numbers in FINRA Rules 0150
(Application of Rules to Exempted
Securities Except Municipal Securities),
2111 (Suitability), 2220 (Options
Communications), 6630 (Applicability
of FINRA Rules to Securities Previously
Designated as PORTAL Securities), 9217
(Violations Appropriate for Disposition
Under Plan Pursuant to SEA Rule 19d–
1(c)(2)), 9551 (Failure to Comply with
Public Communication Standards) and
9610 (Application).
Second, the proposed rule change
similarly would update the rule
references in FINRA Rules 2214
(Requirements for the Use of Investment
Analysis Tools) and 9610 as the result
of adoption of new consolidated FINRA
Rules 2111 (Suitability) and 5123
(Private Placement of Securities),
respectively.7
Third, the proposed rule change
would make additional non-substantive
changes as a result of new definitions in
FINRA Rule 2210.8 That rule combines
the current definitions of ‘‘sales
literature,’’ ‘‘advertisement’’ and
‘‘independently prepared reprint’’ into a
single category of ‘‘retail
communications.’’ Accordingly, the
proposed rule change makes
corresponding changes in the rulebook
where the current terms are used:
Section 13, Schedule A to the FINRA
By-Laws (Review Charge for
Communications Filed or Submitted),
FINRA Rules 2130 (Approval
Procedures for Day-Trading Accounts),
2220 (Options Communications),9 2270
6 See Securities Exchange Act Release No. 66681
(March 29, 2012), 77 FR 20452 (April 4, 2012)
(Order Approving File No. SR–FINRA–2011–035).
7 See Securities Exchange Act Release No. 63325
(November 17, 2010), 75 FR 71479 (November 23,
2010) (Order Approving File No. SR–FINRA–2010–
039); and Securities Exchange Act Release No.
67157 (June 7, 2012), 77 FR 35457 (June 13, 2012)
(Order Approving File No. SR–FINRA–2011–057).
8 See Securities Exchange Act Release No. 66681
(March 29, 2012), 77 FR 20452 (April 4, 2012)
(Order Approving File No. SR–FINRA–2011–035).
9 New FINRA Rule 2210(a)(2) defines
‘‘correspondence’’ as any written (including
electronic) communication that is distributed or
made available to 25 or fewer retail investors within
any 30 calendar-day period. The proposed change
to Rule 2220(b) would delete the requirement for
principal approval for correspondence that is
distributed to 25 or more existing retail customers
within a 30 calendar-day period that makes any
financial or investment recommendation or
otherwise promotes the product or service of a
member. Under the new communications with the
public rule, communications distributed to more
than 25 retail investors within any 30 calendar-day
period that include such recommendations or
promotions would be considered retail
communications and therefore subject to the
principal approval requirement. As such, the
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16:52 Jan 17, 2013
Jkt 229001
4183
(Day-Trading Risk Disclosure
Statement), 3160 (Networking
Arrangements Between Members and
Financial Institutions) and NASD Rule
3010 (Supervision).10
Fourth, the proposed rule change
would make technical changes to
FINRA Rules 2210 (Communications
with the Public) and 4210 (Margin
Requirements) to reflect FINRA Manual
style convention changes and FINRA
Rule 3230 (Telemarketing) to reflect
changes adopted in a recent FINRA
proposed rule change regarding
telemarketing.11
Finally, FINRA is proposing to make
non-substantive changes to certain other
rules. FINRA is proposing to delete
paragraph (c) (Aggregate Volume Match)
of FINRA Rules 7240A and 7340 (Trade
Report Processing) relating to the
FINRA/Nasdaq Trade Reporting Facility
(‘‘FINRA/Nasdaq TRF’’) and OTC
Reporting Facility (‘‘ORF’’),
respectively. The aggregate volume
match functionality was eliminated
when the facilities were migrated to a
new operating platform in 2007, but the
rules were inadvertently not updated to
reflect the system changes. In addition,
FINRA is proposing to re-designate
paragraph (d) of FINRA Rules 7240A
and 7340 as paragraph (c), and to
replace the reference to 5:15 p.m. with
8:00 p.m. in this paragraph. The
reference to 5:15 p.m. was inadvertently
not amended when the system closing
time for the FINRA/Nasdaq TRF and
ORF was extended to 8:00 p.m. in
2006.12
FINRA has filed the proposed rule
change for immediate effectiveness. The
implementation date for the proposed
rule change will be February 4, 2013.
proposed change to Rule 2210(b) does not
substantively change the scope of options
communications that would require principal
approval.
10 FINRA Rules 2130 and 2270 impose approval
procedures and disclosure requirements,
respectively, on a member that is ‘‘promoting a daytrading strategy.’’ For purposes of the rules, a
member shall be deemed to be ‘‘promoting a day
trading strategy’’ if ‘‘* * * it affirmatively endorses
a ‘day trading strategy,’ as defined in [the Rules]
through advertising, its Web site, trading seminars
or direct outreach programs. For example, a
member generally shall be deemed to be ‘promoting
a day-trading strategy’ if its advertisements address
the benefits of day trading, rapid fire trading, or
momentum trading, or encourage persons to trade
or profit like a professional trader.’’ The proposed
rule change would change ‘‘advertisements’’ in the
example provided to ‘‘retail communications.’’
FINRA believes that any member that currently uses
sales literature or independently prepared reprints
to promote day trading would be subject to the
existing rule, and thus the change would not
expand the scope of the rule. In addition, Rules
2130 and 2270 both provide that members may
submit advertisements to FINRA’s Advertising
Department for guidance on whether the content
constitutes ‘‘promoting a day-trading strategy.’’
FINRA believes it consistent with the changes to the
communications with the public rules to allow
members to now submit ‘‘retail communications’’
for such guidance.
11 See Securities Exchange Act Release No. 66279
(January 30, 2012), 77 FR 5611 (February 3, 2012)
(Order Approving File No. SR–FINRA–2011–059).
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule
change does not: (i) Significantly affect
the protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) become
operative for 30 days from the date on
which it was filed, or such shorter time
as the Commission may designate, it has
become effective pursuant to Section
19(b)(3)(A) of the Act 14 and Rule 19b–
4(f)(6) thereunder.15
At any time within 60 days of the
filing of the 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
PO 00000
Frm 00064
Fmt 4703
Sfmt 4703
2. Statutory Basis
FINRA believes that the proposed rule
change is consistent with the provisions
of Section 15A(b)(6) of the Act,13 which
requires, among other things, that
FINRA rules must be designed to
prevent fraudulent and manipulative
acts and practices, to promote just and
equitable principles of trade, and, in
general, to protect investors and the
public interest. FINRA believes the
proposed rule change will provide
greater clarity to members and the
public regarding FINRA’s rules.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
FINRA does not believe that the
proposed rule change will result in any
burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. The
proposed rule change brings clarity and
consistency to FINRA rules without
adding any burden on firms.
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.
12 See Securities Exchange Act Release No. 54772
(November 17, 2006), 71 FR 68665 (November 27,
2006) (Notice of Filing and Immediate Effectiveness
of File No. SR–NASD–2006–120).
13 15 U.S.C. 78o–3(b)(6).
14 15 U.S.C. 78s(b)(3)(A).
15 17 CFR 240.19b–4(f)(6).
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Federal Register / Vol. 78, No. 13 / Friday, January 18, 2013 / Notices
the purposes of the Act. If the
Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
should be approved or 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 rulecomments@sec.gov. Please include File
Number SR–FINRA–2013–001 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–2013–001. 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 available publicly. All
submissions should refer to File
Number SR–FINRA–2013–001 and
should be submitted on or before
February 8, 2013.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.16
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2013–00969 Filed 1–17–13; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–68648; File No. SR–Phlx–
2013–02]
Self-Regulatory Organizations;
NASDAQ OMX PHLX LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Reduce the
Fees Assessed for Certain Co-location
Services
January 14, 2013.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on January 2,
2013, NASDAQ OMX PHLX LLC
(‘‘PHLX’’ or ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) a 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.
I. Self-Regulatory Organization’s
Statement of the Terms of the Substance
of the Proposed Rule Change
The Exchange proposes to reduce the
fees assessed under Section X(a) of the
PHLX Fee Schedule for certain colocation services. PHLX is proposing
that the implementation date of the
proposed rule change will be January 2,
2013. The text of the proposed rule
change is available at https://
nasdaqomxphlx.cchwallstreet.com, at
PHLX’s principal office, and at the
Commission’s Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of, and basis for,
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of those
statements may be examined at the
places specified in Item III [sic] 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
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend
Section X(a) of the PHLX Fee Schedule
to reduce the monthly recurring cabinet
(‘‘MRC’’) fees assessed for the
installation of certain new co-location
cabinets. The reduced MRC fees will
apply to new cabinets ordered by
customers using the CoLo Console 3
during the months of January and
February of 2013, provided that such
cabinets are fully operational by May
31, 2013. The reduced fee shall apply to
any cabinet that increases the number of
dedicated cabinets beyond the total
number dedicated to that customer as of
December 31, 2012 (‘‘Baseline
Number’’), for so long as the total
number of dedicated cabinets exceeds
that customer’s Baseline Number. The
reduced MRC fees will apply for a
period of 24 months from the date the
new cabinet becomes fully operational
under Phlx rules, provided that the
customer’s total number of cabinets
continues to exceed the Baseline
Number.
The Exchange proposes to reduce the
applicable fees as follows:
Current
ongoing
monthly fee
mstockstill on DSK4VPTVN1PROD with
Cabinet type
Low Density .............................................................................................................................................................
Medium Density .......................................................................................................................................................
Medium-High Density ..............................................................................................................................................
16 17
1 15
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
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2 17
Jkt 229001
PO 00000
CFR 240.19b–4.
Frm 00065
Fmt 4703
$4,000
5,000
6,000
Reduced
ongoing
monthly fee
$2,000
2,500
3,500
3 The ‘‘CoLo Console’’ is Phlx’s web-based
ordering tool, and it is the exclusive means for
ordering colocation services.
Sfmt 4703
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]]>Agencies
[Federal Register Volume 78, Number 13 (Friday, January 18, 2013)]
[Notices]
[Pages 4182-4184]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-00969]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-68650; File No. SR-FINRA-2013-001]
Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing and Immediate Effectiveness of
Proposed Rule Change To Update Cross-References and Make Other Non-
Substantive Changes Within FINRA Rules and By-Laws
January 14, 2013.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on January 3, 2013, Financial Industry Regulatory Authority, Inc.
(``FINRA'') filed with the Securities and Exchange Commission (``SEC''
or ``Commission'') the proposed rule change as described in Items I, II
and III below, which Items have been prepared by FINRA. FINRA has
designated the proposed rule change as constituting a ``non-
controversial'' rule change under Section 19(b)(3)(A) of the Act \3\
and Rule 19b-4(f)(6) \4\ thereunder, which renders the proposal
effective upon receipt of this filing by the Commission. The Commission
is publishing this notice to solicit comments on the proposed rule
change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A)
\4\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
FINRA is proposing to update cross-references and make other non-
substantive changes within certain FINRA rules and By-Laws, primarily
as the result of approval of new consolidated FINRA rules.
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
FINRA is in the process of developing a consolidated rulebook
(``Consolidated FINRA Rulebook'').\5\ That process involves FINRA
submitting to the Commission for approval a series of proposed rule
changes over time to adopt rules in the Consolidated FINRA Rulebook.
The phased adoption and implementation of those rules necessitates
periodic amendments to update rule cross-references and other non-
substantive changes in the Consolidated FINRA Rulebook.
---------------------------------------------------------------------------
\5\ The current FINRA rulebook consists of (1) FINRA Rules; (2)
NASD Rules; and (3) rules incorporated from NYSE (``Incorporated
NYSE Rules'') (together, the NASD Rules and Incorporated NYSE Rules
are referred to as the ``Transitional Rulebook''). While the NASD
Rules generally apply to all FINRA members, the Incorporated NYSE
Rules apply only to those members of FINRA that are also members of
the NYSE (``Dual Members''). The FINRA Rules apply to all FINRA
members, unless such rules have a more limited application by their
terms. For more information about the rulebook consolidation
process, see Information Notice, March 12, 2008 (Rulebook
Consolidation Process).
---------------------------------------------------------------------------
The proposed rule change would make several such changes, as well
as certain other non-substantive changes unrelated to the adoption of
rules in the Consolidated FINRA Rulebook. First, the proposed rule
change would update rule cross-references and make other non-
substantive changes to reflect the adoption of new consolidated FINRA
communications with the public rules. On March 29, 2012, the SEC
approved a proposed rule change to adopt NASD Rules 2210 and 2211 and
NASD Interpretive Materials 2210-1 and 2210-3 through 2210-8 as FINRA
Rules 2210 and 2212 through 2216, with several
[[Page 4183]]
changes.\6\ The new rules will be implemented on February 4, 2013. As
such, the proposed rule change would update references to the new rule
numbers in FINRA Rules 0150 (Application of Rules to Exempted
Securities Except Municipal Securities), 2111 (Suitability), 2220
(Options Communications), 6630 (Applicability of FINRA Rules to
Securities Previously Designated as PORTAL Securities), 9217
(Violations Appropriate for Disposition Under Plan Pursuant to SEA Rule
19d-1(c)(2)), 9551 (Failure to Comply with Public Communication
Standards) and 9610 (Application).
---------------------------------------------------------------------------
\6\ See Securities Exchange Act Release No. 66681 (March 29,
2012), 77 FR 20452 (April 4, 2012) (Order Approving File No. SR-
FINRA-2011-035).
---------------------------------------------------------------------------
Second, the proposed rule change similarly would update the rule
references in FINRA Rules 2214 (Requirements for the Use of Investment
Analysis Tools) and 9610 as the result of adoption of new consolidated
FINRA Rules 2111 (Suitability) and 5123 (Private Placement of
Securities), respectively.\7\
---------------------------------------------------------------------------
\7\ See Securities Exchange Act Release No. 63325 (November 17,
2010), 75 FR 71479 (November 23, 2010) (Order Approving File No. SR-
FINRA-2010-039); and Securities Exchange Act Release No. 67157 (June
7, 2012), 77 FR 35457 (June 13, 2012) (Order Approving File No. SR-
FINRA-2011-057).
---------------------------------------------------------------------------
Third, the proposed rule change would make additional non-
substantive changes as a result of new definitions in FINRA Rule
2210.\8\ That rule combines the current definitions of ``sales
literature,'' ``advertisement'' and ``independently prepared reprint''
into a single category of ``retail communications.'' Accordingly, the
proposed rule change makes corresponding changes in the rulebook where
the current terms are used: Section 13, Schedule A to the FINRA By-Laws
(Review Charge for Communications Filed or Submitted), FINRA Rules 2130
(Approval Procedures for Day-Trading Accounts), 2220 (Options
Communications),\9\ 2270 (Day-Trading Risk Disclosure Statement), 3160
(Networking Arrangements Between Members and Financial Institutions)
and NASD Rule 3010 (Supervision).\10\
---------------------------------------------------------------------------
\8\ See Securities Exchange Act Release No. 66681 (March 29,
2012), 77 FR 20452 (April 4, 2012) (Order Approving File No. SR-
FINRA-2011-035).
\9\ New FINRA Rule 2210(a)(2) defines ``correspondence'' as any
written (including electronic) communication that is distributed or
made available to 25 or fewer retail investors within any 30
calendar-day period. The proposed change to Rule 2220(b) would
delete the requirement for principal approval for correspondence
that is distributed to 25 or more existing retail customers within a
30 calendar-day period that makes any financial or investment
recommendation or otherwise promotes the product or service of a
member. Under the new communications with the public rule,
communications distributed to more than 25 retail investors within
any 30 calendar-day period that include such recommendations or
promotions would be considered retail communications and therefore
subject to the principal approval requirement. As such, the proposed
change to Rule 2210(b) does not substantively change the scope of
options communications that would require principal approval.
\10\ FINRA Rules 2130 and 2270 impose approval procedures and
disclosure requirements, respectively, on a member that is
``promoting a day-trading strategy.'' For purposes of the rules, a
member shall be deemed to be ``promoting a day trading strategy'' if
``* * * it affirmatively endorses a `day trading strategy,' as
defined in [the Rules] through advertising, its Web site, trading
seminars or direct outreach programs. For example, a member
generally shall be deemed to be `promoting a day-trading strategy'
if its advertisements address the benefits of day trading, rapid
fire trading, or momentum trading, or encourage persons to trade or
profit like a professional trader.'' The proposed rule change would
change ``advertisements'' in the example provided to ``retail
communications.'' FINRA believes that any member that currently uses
sales literature or independently prepared reprints to promote day
trading would be subject to the existing rule, and thus the change
would not expand the scope of the rule. In addition, Rules 2130 and
2270 both provide that members may submit advertisements to FINRA's
Advertising Department for guidance on whether the content
constitutes ``promoting a day-trading strategy.'' FINRA believes it
consistent with the changes to the communications with the public
rules to allow members to now submit ``retail communications'' for
such guidance.
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Fourth, the proposed rule change would make technical changes to
FINRA Rules 2210 (Communications with the Public) and 4210 (Margin
Requirements) to reflect FINRA Manual style convention changes and
FINRA Rule 3230 (Telemarketing) to reflect changes adopted in a recent
FINRA proposed rule change regarding telemarketing.\11\
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\11\ See Securities Exchange Act Release No. 66279 (January 30,
2012), 77 FR 5611 (February 3, 2012) (Order Approving File No. SR-
FINRA-2011-059).
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Finally, FINRA is proposing to make non-substantive changes to
certain other rules. FINRA is proposing to delete paragraph (c)
(Aggregate Volume Match) of FINRA Rules 7240A and 7340 (Trade Report
Processing) relating to the FINRA/Nasdaq Trade Reporting Facility
(``FINRA/Nasdaq TRF'') and OTC Reporting Facility (``ORF''),
respectively. The aggregate volume match functionality was eliminated
when the facilities were migrated to a new operating platform in 2007,
but the rules were inadvertently not updated to reflect the system
changes. In addition, FINRA is proposing to re-designate paragraph (d)
of FINRA Rules 7240A and 7340 as paragraph (c), and to replace the
reference to 5:15 p.m. with 8:00 p.m. in this paragraph. The reference
to 5:15 p.m. was inadvertently not amended when the system closing time
for the FINRA/Nasdaq TRF and ORF was extended to 8:00 p.m. in 2006.\12\
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\12\ See Securities Exchange Act Release No. 54772 (November 17,
2006), 71 FR 68665 (November 27, 2006) (Notice of Filing and
Immediate Effectiveness of File No. SR-NASD-2006-120).
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FINRA has filed the proposed rule change for immediate
effectiveness. The implementation date for the proposed rule change
will be February 4, 2013.
2. Statutory Basis
FINRA believes that the proposed rule change is consistent with the
provisions of Section 15A(b)(6) of the Act,\13\ which requires, among
other things, that FINRA rules must be designed to prevent fraudulent
and manipulative acts and practices, to promote just and equitable
principles of trade, and, in general, to protect investors and the
public interest. FINRA believes the proposed rule change will provide
greater clarity to members and the public regarding FINRA's rules.
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\13\ 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. The proposed rule change brings
clarity and consistency to FINRA rules without adding any burden on
firms.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
Written comments were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \14\ and Rule 19b-
4(f)(6) thereunder.\15\
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\14\ 15 U.S.C. 78s(b)(3)(A).
\15\ 17 CFR 240.19b-4(f)(6).
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At any time within 60 days of the filing of the proposed rule
change, the Commission 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
[[Page 4184]]
the purposes of the Act. If the Commission takes such action, the
Commission shall institute proceedings to determine whether the
proposed rule should be approved or 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-2013-001 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-2013-001. 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 available publicly. All
submissions should refer to File Number SR-FINRA-2013-001 and should be
submitted on or before February 8, 2013.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-00969 Filed 1-17-13; 8:45 am]
BILLING CODE 8011-01-P
