Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Security Futures Risk Disclosure Statement, 40819-40821 [2018-17631]

Download as PDF Federal Register / Vol. 83, No. 159 / Thursday, August 16, 2018 / Notices SECURITIES AND EXCHANGE COMMISSION [Release No. 34–83825; File No. SR–FINRA– 2018–028] Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Security Futures Risk Disclosure Statement August 10, 2018. 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 August 9, 2018, Financial Industry Regulatory Authority, Inc. (‘‘FINRA’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by FINRA. FINRA has designated the proposed rule change as constituting a ‘‘non-controversial’’ rule change under paragraph (f)(6) of Rule 19b–4 under the Act,3 which renders the proposal effective upon receipt of this filing by the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change sradovich on DSK3GMQ082PROD with NOTICES FINRA is proposing to amend Section 6.1 (Protections for Securities Accounts) of the 2002 security futures risk disclosure statement (‘‘2002 Statement’’ or ‘‘Statement’’) 4 to reflect that the Securities Investor Protection Corporation’s (‘‘SIPC’’) cash limit protection for customers is $250,000, and make one technical change. The proposed rule change is related to File No. SR–FINRA–2018–024, which sets forth additional updates to the 2002 Statement. The proposed updated Statement is attached as Exhibit 3a. The proposed supplement pertaining to changes to the specified paragraph under Section 6.1, the proposed technical change to Section 5.2, as well as changes to the paragraphs specified in File No. SR– 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 17 CFR 240.19b–4(f)(6). 4 See Securities Exchange Act Release No. 46862 (November 20, 2002), 67 FR 70993 (November 27, 2002) (Order Approving File No. SR–NASD–2002– 129). See also Securities Exchange Act Release No. 46613 (October 7, 2002), 67 FR 64176 (October 17, 2002) (Notice of Filing and Effectiveness of File No. SR–NFA–2002–05). VerDate Sep<11>2014 17:15 Aug 15, 2018 Jkt 244001 FINRA–2018–024, is attached as Exhibit 3b.5 The text of the proposed rule change is available on FINRA’s website 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 the Statutory Basis for, the Proposed Rule Change 1. Purpose On June 7, 2018, FINRA filed with the SEC File No. SR–FINRA–2018–024 to update the 2002 Statement to: (1) Incorporate prior supplements pertaining to Sections 5.2 (Settlement by Physical Delivery) and 8.1 (Corporate Events); (2) make a technical change to Section 5.2 to reflect that the normal clearance and settlement cycle for securities transaction is now two business days; (3) amend Section 6.1 (Protections for Securities Accounts) to reflect the current address for SIPC; and (4) make other non-substantive and technical changes.6 In addition to that recent set of updates to the 2002 Statement, FINRA is proposing to amend Section 6.1 to reflect the correct amount of SIPC coverage. The third paragraph under Section 6.1 currently reads: SIPC coverage is limited to $500,000 per customer, including up to $100,000 for cash. For example, if a customer has 1,000 shares of XYZ stock valued at $200,000 and $10,000 cash in the account, both the security and the cash balance would be protected. However, if the customer has shares of stock valued at $500,000 and $100,000 in cash, only a total of $500,000 of those assets will be protected. The Dodd-Frank Wall Street Reform and Consumer Protection Act 7 amended the Securities Investor Protection Act of 5 The Commission notes that these exhibits are attached as exhibits to the filing. 6 See Securities Exchange Act Release No. 83407 (June 11, 2018), 83 FR 28045 (June 15, 2018) (Notice of Filing and Immediate Effectiveness of File No. SR–FINRA–2018–024). 7 Public Law 111–203, 124 Stat. 1376 (2010). PO 00000 Frm 00076 Fmt 4703 Sfmt 4703 40819 1970 (‘‘SIPA’’) to raise the ‘‘standard maximum cash advance amount’’ available to satisfy customer cash claims in a SIPA liquidation proceeding from $100,000 to $250,000 per customer.8 To reflect the current limit of protection for cash claims under SIPA, FINRA is proposing to amend the third paragraph of Section 6.1 to read: SIPC coverage is limited to $500,000 per customer, including up to $250,000 for cash. For example, if a customer has 1,000 shares of XYZ stock valued at $200,000 and $10,000 cash in the account, both the security and the cash balance would be protected. However, if the customer has shares of stock valued at $500,000 and $250,000 in cash, only a total of $500,000 of those assets will be protected. In addition, FINRA is proposing to incorporate one technical change into the proposed updated Statement.9 Currently, the 2002 Statement, to which 2010 and 2014 supplements are appended, is posted on FINRA’s website 10 and the 2010 and 2014 supplements are also posted on the website 11 as separate documents to facilitate a member’s compliance with Rule 2370(b)(11)(A).12 FINRA intends to replace the 2002 Statement currently posted on FINRA’s website with an updated Statement that incorporates into the main body of the document the cumulative changes made to date, as well as the proposed amendment to the third paragraph of Section 6.1 and the one technical change described herein.13 8 15 U.S.C. 78fff–3. Effective January 1, 2017, and for the five years immediately thereafter, the Board of Directors of SIPC has determined that the maximum amount of the advance to satisfy a claim for cash will remain at the current level of $250,000 per customer. See Securities Exchange Commission, Release No. SIPA–174 (February 22, 2016), 81 FR 9561 (February 25, 2016). 9 Specifically, the proposed rule change would remove the quotes around the acronym that defines the National Securities Clearing Corporation in Section 5.2. 10 See Security Futures Risk Disclosure Statement brochure, https://www.finra.org/sites/default/files/ Security_Futures_Risk_Disclosure_Statement.pdf, posted in its current design in 2016. 11 See FINRA’s Security Futures Topic Page, https://www.finra.org/industry/security-futures (last visited August 9, 2018). 12 See Information Notice, September 7, 2010 (August 2010 Supplement to the Security Futures Risk Disclosure Statement); see also Regulatory Notice 14–24 (May 2014) (stating, a member may separately distribute new supplements to a customer that enters into a securities futures transaction and that a member is not required to redistribute the entire Statement or the earlier supplement). 13 The Statement, in its original language approved by the SEC in 2002, would remain accessible on FINRA’s website for those members whose customers may still refer to the original version of the Statement. The Statement, however, would bear a notation that an updated version of the Statement, which incorporates the paragraphs E:\FR\FM\16AUN1.SGM Continued 16AUN1 40820 Federal Register / Vol. 83, No. 159 / Thursday, August 16, 2018 / Notices FINRA is also in the process of creating a single, integrated supplement that aggregates the changes from File No. SR–FINRA–2018–024 and the updates described in this proposed rule change (‘‘2018 supplement’’). The 2018 supplement would appear on FINRA’s website as a separate document to continue to afford members with the flexibility to comply with the requirements of Rule 2370(b)(11)(A) by separately distributing the new supplement to customers who have already received the 2002 Statement.14 FINRA has filed the proposed rule change for immediate effectiveness and has requested that the SEC waive the requirement that the proposed rule change not become operative for 30 days after the date of the filing, so that FINRA can implement the proposed rule change on September 5, 2018.15 2. Statutory Basis FINRA believes that the proposed rule change is consistent with the provisions of Section 15A(b)(6) of the Act,16 which requires, among other things, that FINRA rules must be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, and, in general, to protect investors and the public interest. FINRA believes that updating the Statement to incorporate all supplements into the main body will help to accurately inform customers of the characteristics and risks of security futures. The proposed updated Statement would also reflect that SIPC’s current cash limit protection for customers is $250,000, increased from $100,000 in 2010. B. Self-Regulatory Organization’s Statement on Burden on Competition sradovich on DSK3GMQ082PROD with NOTICES 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. While FINRA recognizes that there may be a burden associated with the distribution of the proposed updated Statement or 2018 supplement, FINRA believes that any specified in the proposed integrated supplement, is available. 14 The 2010 and 2014 supplements would remain accessible on FINRA’s website with a notation that these paragraphs, as updated, appear in the 2018 supplement. 15 FINRA intends to announce the September 5, 2018 implementation date in an upcoming Regulatory Notice that will also establish September 5, 2018 as the implementation date for other changes to the Statement. See Securities Exchange Act Release No. 83407 (June 11, 2018), 83 FR 28045 (June 15, 2018) (Notice of Filing and Immediate Effectiveness of File No. SR–FINRA–2018–024). 16 15 U.S.C. 78o–3(b)(6). VerDate Sep<11>2014 17:15 Aug 15, 2018 Jkt 244001 such burden would be outweighed by the benefit to customers of accurately disclosing the characteristics and risks of security futures. FINRA also believes that any burden will be minimal because firms currently have an existing obligation to deliver each new (i.e., updated) Statement or supplement to customers, and may electronically transmit documents that they are required to furnish to customers under FINRA rules, including the proposed updated Statement or 2018 supplement, provided firms adhere to the standards contained in the Commission’s May 1996 and October 1995 releases on electronic delivery,17 and as discussed in Notice to Members 98–3.18 Firms also may transmit the proposed updated Statement or 2018 supplement to customers through the use of a hyperlink, provided that customers have consented to electronic delivery.19 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 20 and Rule 19b– 4(f)(6) thereunder.21 A proposed rule change filed under Rule 19b–4(f)(6) 22 normally does not become operative for 30 days after the date of filing. However, pursuant to 17 See Securities Act Release No. 7288 (May 9, 1996), 61 FR 24644 (May 15, 1996) and Securities Act Release No. 7233 (October 6, 1995), 60 FR 53458 (October 13, 1995). See also Securities Act Release No. 7856 (April 28, 2000), 65 FR 25843 (May 4, 2000) (affirming that the framework for electronic delivery established in the 1995 and 1996 releases continues to work well in today’s technological environment). 18 See Notice to Members 98–3 (January 1998). 19 See Information Notice, September 7, 2010 (August 2010 Supplement to the Security Futures Risk Disclosure Statement). 20 15 U.S.C. 78s(b)(3)(A). 21 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 4(f)(6)(iii) requires FINRA to give the Commission written notice of FINRA’s intent to file the proposed rule change, along with a brief description and text of the proposed rule change, at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. FINRA has satisfied this requirement. 22 17 CFR 240.19b–4(f)(6). PO 00000 Frm 00077 Fmt 4703 Sfmt 4703 Rule 19b–4(f)(6)(iii),23 the Commission may designate a shorter time if such action is consistent with the protection of investors and the public interest. FINRA has asked the Commission to waive the 30-day operative delay so that the proposed changes can be implemented on September 5, 2018. The Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest because it will allow the implementation date of the proposed changes to coincide with the implementation date of other changes that will be made to the Statement. Accordingly, the Commission hereby waives the 30-day operative delay requirement and designates the proposed rule change as operative upon filing.24 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 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–2018–028 on the subject line. Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549–1090. All submissions should refer to File Number SR–FINRA–2018–028. 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 23 17 CFR 240.19b–4(f)(6)(iii). purposes only of waiving the 30-day operative delay, the Commission has also considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 24 For E:\FR\FM\16AUN1.SGM 16AUN1 Federal Register / Vol. 83, No. 159 / Thursday, August 16, 2018 / Notices only one method. The Commission will post all comments on the Commission’s internet website (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 website 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 FINRA. All comments received will be posted without change. Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–FINRA– 2018–028, and should be submitted on or before September 6, 2018. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.25 Robert W. Errett, Deputy Secretary. [FR Doc. 2018–17631 Filed 8–15–18; 8:45 am] BILLING CODE 8011–01–P DEPARTMENT OF STATE [Public Notice 10506] sradovich on DSK3GMQ082PROD with NOTICES Notice of Public Meeting The Department of State will conduct an open meeting at 10:30 a.m. on Friday, September 14, 2018, in Room 5Y23–21 of the Douglas A. Munro Coast Guard Headquarters Building at St. Elizabeth’s, 2703 Martin Luther King Jr. Avenue SE, Washington, DC 20593. The primary purpose of the meeting is to prepare for the fifth Session of the International Maritime Organization’s (IMO) Sub-Committee on Implementation of IMO Instruments (III 5) to be held at the IMO headquarters, London, United Kingdom, on September 24–28, 2018. The agenda items to be considered include: —Decisions of other IMO bodies; —Consideration and analysis of reports on alleged inadequacy of port reception facilities; —Lessons learned and safety issues identified from the analysis of marine safety investigation reports; —Measures to harmonize port state control (PSC) activities and procedures worldwide; —Identified issues related to the implementation of IMO instruments from the analysis of PSC data; —Analysis of consolidated audit summary reports; —Updated survey guidelines under the Harmonized System of Survey and Certification (HSSC); —Non-exhaustive list of obligations under the instruments relevant to the IMO Instruments Implementation Code (III Code); and —Unified interpretation of provisions of IMO safety, security, and environment related conventions. —Review the Model Agreement for the authorization of recognized organizations acting on behalf of the Administration. The public meeting will focus on answering any questions from the public that are directly related to the meeting documents submitted for this meeting. The public may attend this meeting up to the seating capacity of the room. However, due to the size of the room and security protocols at Coast Guard Headquarters, members of the public are encouraged to participate via teleconference. To access the teleconference line or request physical access to the meeting, participants should contact the meeting coordinator, Mr. Christopher Gagnon, by email at christopher.j.gagnon@uscg.mil or by phone at (202) 372–1231. Physical access to the meeting requires that all attendees respond to the meeting coordinator not later than September 5, 2018, seven working days prior to the meeting. Responses made after September 5, 2018 might result in not being able to participate in person at the meeting. Please note that due to security considerations, two valid, government issued photo identifications must be presented to gain entrance to the Coast Guard Headquarters building. The building is accessible by public transportation or taxi. Joel C. Coito, Coast Guard Liaison Officer, Office of Ocean and Polar Affairs, Department of State. [FR Doc. 2018–17701 Filed 8–15–18; 8:45 am] 25 17 CFR 200.30–3(a)(12). VerDate Sep<11>2014 17:15 Aug 15, 2018 BILLING CODE 4710–09–P Jkt 244001 PO 00000 Frm 00078 Fmt 4703 Sfmt 4703 40821 OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE [Docket No. USTR–2018–0027] 2018 Special 301 Out-of-Cycle Review of Notorious Markets: Comment Request Office of the United States Trade Representative. ACTION: Request for comments. AGENCY: The Office of the United States Trade Representative (USTR) requests written comments that identify online and physical markets based outside the United States that should be included in the 2018 Notorious Markets List (List). Conducted under the auspices of the Special 301 program, the List identifies online and physical marketplaces that reportedly engage in and facilitate substantial copyright piracy and trademark counterfeiting. In 2010, USTR began publishing the Notorious Markets List separately from the annual Special 301 Report as an ‘‘Out-of-Cycle Review.’’ DATES: October 1, 2018 at midnight EST: Deadline for submission of written comments. October 15, 2018 at midnight EST: Deadline for submission of rebuttal comments and other information USTR should consider during the review. ADDRESSES: You should submit written comments through the Federal eRulemaking Portal: https:// www.regulations.gov. Follow the instructions for submitting comments in section III below. For alternatives to online submissions, please contact USTR at Special301@ustr.eop.gov before transmitting a comment and in advance of the relevant deadline. FOR FURTHER INFORMATION CONTACT: Sung Chang, Director for Innovation and Intellectual Property, at special301@ ustr.eop.gov. You can find information about the Special 301 Review, including the Notorious Markets List, at www.ustr.gov. SUMMARY: SUPPLEMENTARY INFORMATION: I. Background The United States is concerned with trademark counterfeiting and copyright piracy on a commercial scale because they cause significant financial losses for right holders, legitimate businesses and governments, undermine critical U.S. comparative advantages in innovation and creativity to the detriment of American workers, and potentially pose significant risks to consumer health and safety as well as privacy and security. The Notorious E:\FR\FM\16AUN1.SGM 16AUN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 83, Number 159 (Thursday, August 16, 2018)]
[Notices]
[Pages 40819-40821]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-17631]



[[Page 40819]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83825; File No. SR-FINRA-2018-028]


Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change To Amend the Security Futures Risk Disclosure 
Statement

August 10, 2018.
    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 August 9, 2018, Financial Industry Regulatory Authority, Inc. 
(``FINRA'') filed with the Securities and Exchange Commission (``SEC'' 
or ``Commission'') the proposed rule change as described in Items I and 
II below, which Items have been prepared by FINRA. FINRA has designated 
the proposed rule change as constituting a ``non-controversial'' rule 
change under paragraph (f)(6) of Rule 19b-4 under the Act,\3\ which 
renders the proposal effective upon receipt of this filing by the 
Commission. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    FINRA is proposing to amend Section 6.1 (Protections for Securities 
Accounts) of the 2002 security futures risk disclosure statement 
(``2002 Statement'' or ``Statement'') \4\ to reflect that the 
Securities Investor Protection Corporation's (``SIPC'') cash limit 
protection for customers is $250,000, and make one technical change. 
The proposed rule change is related to File No. SR-FINRA-2018-024, 
which sets forth additional updates to the 2002 Statement.
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    \4\ See Securities Exchange Act Release No. 46862 (November 20, 
2002), 67 FR 70993 (November 27, 2002) (Order Approving File No. SR-
NASD-2002-129). See also Securities Exchange Act Release No. 46613 
(October 7, 2002), 67 FR 64176 (October 17, 2002) (Notice of Filing 
and Effectiveness of File No. SR-NFA-2002-05).
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    The proposed updated Statement is attached as Exhibit 3a. The 
proposed supplement pertaining to changes to the specified paragraph 
under Section 6.1, the proposed technical change to Section 5.2, as 
well as changes to the paragraphs specified in File No. SR-FINRA-2018-
024, is attached as Exhibit 3b.\5\
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    \5\ The Commission notes that these exhibits are attached as 
exhibits to the filing.
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    The text of the proposed rule change is available on FINRA's 
website 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    On June 7, 2018, FINRA filed with the SEC File No. SR-FINRA-2018-
024 to update the 2002 Statement to: (1) Incorporate prior supplements 
pertaining to Sections 5.2 (Settlement by Physical Delivery) and 8.1 
(Corporate Events); (2) make a technical change to Section 5.2 to 
reflect that the normal clearance and settlement cycle for securities 
transaction is now two business days; (3) amend Section 6.1 
(Protections for Securities Accounts) to reflect the current address 
for SIPC; and (4) make other non-substantive and technical changes.\6\ 
In addition to that recent set of updates to the 2002 Statement, FINRA 
is proposing to amend Section 6.1 to reflect the correct amount of SIPC 
coverage. The third paragraph under Section 6.1 currently reads:
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    \6\ See Securities Exchange Act Release No. 83407 (June 11, 
2018), 83 FR 28045 (June 15, 2018) (Notice of Filing and Immediate 
Effectiveness of File No. SR-FINRA-2018-024).

    SIPC coverage is limited to $500,000 per customer, including up 
to $100,000 for cash. For example, if a customer has 1,000 shares of 
XYZ stock valued at $200,000 and $10,000 cash in the account, both 
the security and the cash balance would be protected. However, if 
the customer has shares of stock valued at $500,000 and $100,000 in 
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cash, only a total of $500,000 of those assets will be protected.

    The Dodd-Frank Wall Street Reform and Consumer Protection Act \7\ 
amended the Securities Investor Protection Act of 1970 (``SIPA'') to 
raise the ``standard maximum cash advance amount'' available to satisfy 
customer cash claims in a SIPA liquidation proceeding from $100,000 to 
$250,000 per customer.\8\ To reflect the current limit of protection 
for cash claims under SIPA, FINRA is proposing to amend the third 
paragraph of Section 6.1 to read:
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    \7\ Public Law 111-203, 124 Stat. 1376 (2010).
    \8\ 15 U.S.C. 78fff-3. Effective January 1, 2017, and for the 
five years immediately thereafter, the Board of Directors of SIPC 
has determined that the maximum amount of the advance to satisfy a 
claim for cash will remain at the current level of $250,000 per 
customer. See Securities Exchange Commission, Release No. SIPA-174 
(February 22, 2016), 81 FR 9561 (February 25, 2016).

    SIPC coverage is limited to $500,000 per customer, including up 
to $250,000 for cash. For example, if a customer has 1,000 shares of 
XYZ stock valued at $200,000 and $10,000 cash in the account, both 
the security and the cash balance would be protected. However, if 
the customer has shares of stock valued at $500,000 and $250,000 in 
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cash, only a total of $500,000 of those assets will be protected.

    In addition, FINRA is proposing to incorporate one technical change 
into the proposed updated Statement.\9\
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    \9\ Specifically, the proposed rule change would remove the 
quotes around the acronym that defines the National Securities 
Clearing Corporation in Section 5.2.
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    Currently, the 2002 Statement, to which 2010 and 2014 supplements 
are appended, is posted on FINRA's website \10\ and the 2010 and 2014 
supplements are also posted on the website \11\ as separate documents 
to facilitate a member's compliance with Rule 2370(b)(11)(A).\12\ FINRA 
intends to replace the 2002 Statement currently posted on FINRA's 
website with an updated Statement that incorporates into the main body 
of the document the cumulative changes made to date, as well as the 
proposed amendment to the third paragraph of Section 6.1 and the one 
technical change described herein.\13\
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    \10\ See Security Futures Risk Disclosure Statement brochure, 
https://www.finra.org/sites/default/files/Security_Futures_Risk_Disclosure_Statement.pdf, posted in its 
current design in 2016.
    \11\ See FINRA's Security Futures Topic Page, https://www.finra.org/industry/security-futures (last visited August 9, 
2018).
    \12\ See Information Notice, September 7, 2010 (August 2010 
Supplement to the Security Futures Risk Disclosure Statement); see 
also Regulatory Notice 14-24 (May 2014) (stating, a member may 
separately distribute new supplements to a customer that enters into 
a securities futures transaction and that a member is not required 
to redistribute the entire Statement or the earlier supplement).
    \13\ The Statement, in its original language approved by the SEC 
in 2002, would remain accessible on FINRA's website for those 
members whose customers may still refer to the original version of 
the Statement. The Statement, however, would bear a notation that an 
updated version of the Statement, which incorporates the paragraphs 
specified in the proposed integrated supplement, is available.

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[[Page 40820]]

    FINRA is also in the process of creating a single, integrated 
supplement that aggregates the changes from File No. SR-FINRA-2018-024 
and the updates described in this proposed rule change (``2018 
supplement''). The 2018 supplement would appear on FINRA's website as a 
separate document to continue to afford members with the flexibility to 
comply with the requirements of Rule 2370(b)(11)(A) by separately 
distributing the new supplement to customers who have already received 
the 2002 Statement.\14\
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    \14\ The 2010 and 2014 supplements would remain accessible on 
FINRA's website with a notation that these paragraphs, as updated, 
appear in the 2018 supplement.
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    FINRA has filed the proposed rule change for immediate 
effectiveness and has requested that the SEC waive the requirement that 
the proposed rule change not become operative for 30 days after the 
date of the filing, so that FINRA can implement the proposed rule 
change on September 5, 2018.\15\
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    \15\ FINRA intends to announce the September 5, 2018 
implementation date in an upcoming Regulatory Notice that will also 
establish September 5, 2018 as the implementation date for other 
changes to the Statement. See Securities Exchange Act Release No. 
83407 (June 11, 2018), 83 FR 28045 (June 15, 2018) (Notice of Filing 
and Immediate Effectiveness of File No. SR-FINRA-2018-024).
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2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the 
provisions of Section 15A(b)(6) of the Act,\16\ which requires, among 
other things, that FINRA rules must be designed to prevent fraudulent 
and manipulative acts and practices, to promote just and equitable 
principles of trade, and, in general, to protect investors and the 
public interest. FINRA believes that updating the Statement to 
incorporate all supplements into the main body will help to accurately 
inform customers of the characteristics and risks of security futures. 
The proposed updated Statement would also reflect that SIPC's current 
cash limit protection for customers is $250,000, increased from 
$100,000 in 2010.
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    \16\ 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. While FINRA recognizes that 
there may be a burden associated with the distribution of the proposed 
updated Statement or 2018 supplement, FINRA believes that any such 
burden would be outweighed by the benefit to customers of accurately 
disclosing the characteristics and risks of security futures. FINRA 
also believes that any burden will be minimal because firms currently 
have an existing obligation to deliver each new (i.e., updated) 
Statement or supplement to customers, and may electronically transmit 
documents that they are required to furnish to customers under FINRA 
rules, including the proposed updated Statement or 2018 supplement, 
provided firms adhere to the standards contained in the Commission's 
May 1996 and October 1995 releases on electronic delivery,\17\ and as 
discussed in Notice to Members 98-3.\18\ Firms also may transmit the 
proposed updated Statement or 2018 supplement to customers through the 
use of a hyperlink, provided that customers have consented to 
electronic delivery.\19\
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    \17\ See Securities Act Release No. 7288 (May 9, 1996), 61 FR 
24644 (May 15, 1996) and Securities Act Release No. 7233 (October 6, 
1995), 60 FR 53458 (October 13, 1995). See also Securities Act 
Release No. 7856 (April 28, 2000), 65 FR 25843 (May 4, 2000) 
(affirming that the framework for electronic delivery established in 
the 1995 and 1996 releases continues to work well in today's 
technological environment).
    \18\ See Notice to Members 98-3 (January 1998).
    \19\ See Information Notice, September 7, 2010 (August 2010 
Supplement to the Security Futures Risk Disclosure Statement).
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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 \20\ and Rule 19b-
4(f)(6) thereunder.\21\
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    \20\ 15 U.S.C. 78s(b)(3)(A).
    \21\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires FINRA to give the Commission written notice of FINRA's 
intent to file the proposed rule change, along with a brief 
description and text of the proposed rule change, at least five 
business days prior to the date of filing of the proposed rule 
change, or such shorter time as designated by the Commission. FINRA 
has satisfied this requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) \22\ normally 
does not become operative for 30 days after the date of filing. 
However, pursuant to Rule 19b-4(f)(6)(iii),\23\ the Commission may 
designate a shorter time if such action is consistent with the 
protection of investors and the public interest. FINRA has asked the 
Commission to waive the 30-day operative delay so that the proposed 
changes can be implemented on September 5, 2018. The Commission 
believes that waiving the 30-day operative delay is consistent with the 
protection of investors and the public interest because it will allow 
the implementation date of the proposed changes to coincide with the 
implementation date of other changes that will be made to the 
Statement. Accordingly, the Commission hereby waives the 30-day 
operative delay requirement and designates the proposed rule change as 
operative upon filing.\24\
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    \22\ 17 CFR 240.19b-4(f)(6).
    \23\ 17 CFR 240.19b-4(f)(6)(iii).
    \24\ For purposes only of waiving the 30-day operative delay, 
the Commission has also considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission 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. 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 [email protected]. Please include 
File Number SR-FINRA-2018-028 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to File Number SR-FINRA-2018-028. 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

[[Page 40821]]

only one method. The Commission will post all comments on the 
Commission's internet website (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 website 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 FINRA. All comments received 
will be posted without change. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-FINRA-2018-028, and should be submitted 
on or before September 6, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\25\
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    \25\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2018-17631 Filed 8-15-18; 8:45 am]
BILLING CODE 8011-01-P

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