[Federal Register Volume 75, Number 89 (Monday, May 10, 2010)]
[Notices]
[Pages 25901-25902]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-10952]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-62014; File No. SR-NYSEAMEX-2010-26]
Self-Regulatory Organizations; NYSE Amex LLC; Order Approving a
Proposed Rule Change Deleting Rule 446--NYSE Amex Equities and Adopting
New Rule 4370--NYSE Amex Equities To Correspond With Rule Changes Filed
by the Financial Industry Regulatory Authority, Inc.
April 30, 2010.
I. Introduction
On March 11, 2010, NYSE Amex LLC (``NYSE Amex'' or ``Exchange'')
filed with the Securities and Exchange Commission (``Commission'')
pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 1934
(the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ a proposed rule change
to delete Rule 446--NYSE Amex Equities and adopt new Rule 4370--NYSE
Amex Equities to correspond with rule changes filed by the Financial
Industry Regulatory Authority, Inc. (``FINRA'') and approved by the
Commission.\4\ The proposed rule change was published for comment in
the Federal Register on March 26, 2009.\5\ The Commission received no
comments regarding the proposal. This order approves the proposed rule
change.
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\1\ 15 U.S.C.78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
\4\ See Securities Exchange Act Release No. 60534 (August 19,
2009), 74 FR 44410 (August 28, 2009) (order approving SR-FINRA-2009-
036) (``Release No. 34-60534'').
\5\ See Securities Exchange Act Release No. 61744 (March 19,
2010), 75 FR 14648.
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II. Description of the Proposal
The Exchange proposes to delete Rule 446--NYSE Amex Equities and
adopt new Rule 4370--NYSE Amex Equities to correspond with rule changes
filed by the Financial Industry Regulatory Authority, Inc. (``FINRA'')
and approved by the Commission.\6\
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\6\ See Release No. 34-60534, supra note 4.
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III. 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 Act, the
New York Stock Exchange LLC (``NYSE''), NYSER and FINRA entered into an
agreement (``Agreement'') to reduce regulatory duplication for their
members by
[[Page 25902]]
allocating to FINRA certain regulatory responsibilities for certain
NYSE rules and rule interpretations (``FINRA Incorporated NYSE
Rules''). The Exchange became a party to the Agreement effective
December 15, 2008.\7\
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\7\ See Securities Exchange Act Release Nos. 56148 (July 26,
2007), 72 FR 42146 (August 1, 2007) (order approving the Agreement);
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 60409 (July 30, 2009), 74 FR 39353 (August 6,
2009) (order approving the amended and restated Agreement, adding
NYSE Amex LLC as a party). Paragraph 2(b) of the Agreement sets
forth procedures regarding proposed changes by FINRA, NYSE or NYSE
Amex to the substance of any of the Common Rules.
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As part of its effort to reduce regulatory duplication and relieve
firms that are members of FINRA, NYSE and NYSE Amex of conflicting or
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.\8\
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\8\ 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, 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.
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In 2008, FINRA deleted FINRA Incorporated NYSE Rule 446 (Business
Continuity and Contingency Plans) as substantively duplicative of NASD
Rules 3510 (Business Continuity Plans) and 3520 (Emergency Contact
Information).\9\ Correspondingly, the Exchange amended Rule 446--NYSE
Amex Equities (Business Continuity and Contingency Plans) to remove the
existing text and incorporate NASD Rules 3510 and 3520 by
reference.\10\ Subsequently, FINRA adopted, subject to certain
amendments, NASD Rules 3510 and 3520 as consolidated FINRA Rule 4370
(Business Continuity Plans and Emergency Contact Information).\11\
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\9\ See Securities Exchange Act Release No. 58533 (September 12,
2008), 73 FR 54652 (September 22, 2008) (order approving SR-FINRA-
2008-036).
\10\ See Securities Exchange Act Release No. 59022 (November 26,
2008), 73 FR 73683 (December 3, 2008) (order approving SR-NYSEALTR-
2008-10).
\11\ See Release No. 34-60534, supra note 4.
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The Exchange correspondingly proposes to delete Rule 446--NYSE Amex
Equities and replace it with proposed Rule 4370--NYSE Amex Equities,
which is substantially similar to the new FINRA Rule.\12\ The Exchange
states that the purpose of this is to harmonize the NYSE Amex Equities
Rules with the consolidated FINRA Rules. The Exchange states that, as
proposed, Rule 4370--NYSE Amex Equities adopts the same language as
FINRA Rule 4370, except for substituting for or adding to, as needed,
the term ``member organization'' for the term ``member,'' and making
corresponding technical changes that reflect the difference between
NYSE Amex's and FINRA's membership structures. The Exchange also states
that, in paragraph (f)(2) to proposed NYSE Rule 4370--NYSE Amex
Equities, the Exchange has added a cross-reference to Rule 416A--NYSE
Amex Equities to ensure that those Exchange members and member
organizations that are not FINRA members are required to update the
contact information for emergency personnel in accordance with NYSE
Amex Equities Rules.
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\12\ New York Stock Exchange LLC submitted a companion rule
filing amending its rules in accordance with FINRA's rule changes,
which the Commission has approved. See Securities Exchange Act
Release No. 62015 (April 30, 2010)(SR-NYSE-2010-23).
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The Exchange also proposes to add Supplementary Material .01 to
Rule 4370--NYSE Amex Equities to provide that, for the purposes of the
rule, the term ``associated person'' shall have the same meaning as the
terms ``person associated with a member'' or ``associated person of a
member'' as defined in Article I (rr) of the FINRA By-Laws. The
Exchange states that this change is necessary to ensure that both
proposed Rule 4370--NYSE Amex Equities and FINRA Rule 4370 are fully
harmonized.
Finally, the Exchange proposes that the effective date for the
proposed rule changes be retroactive to December 14, 2009, the same
effective date for the corresponding FINRA rule changes.\13\ As a
result, there should be no regulatory gaps between the FINRA and NYSE
Amex Equities Rules and that, as applicable, the NYSE Amex Equities
Rules would maintain their status as Common Rules under the
Agreement.\14\
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\13\ See FINRA Regulatory Notice 09-60 (October 15, 2009).
\14\ As provided in paragraph 2(b) of the Agreement, FINRA and
NYSE will amend the list of Common Rules to conform to the rule
changes proposed herein.
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IV. Discussion and Commission Findings
After careful review, the Commission finds that the proposed rule
change is consistent with the requirements of the Act and the rules and
regulations thereunder applicable to a national securities exchange.
Specifically, the Commission finds that the proposed rule change is
consistent with Section 6(b)(5) of the Act,\15\ which requires, among
other things, that the rules of a national securities exchange be
designed to prevent fraudulent and manipulative acts and practices, to
promote just and equitable principles of trade, to remove impediments
to and perfect the mechanism of, a free and open market and a national
market system, and in general, to protect investors and the public
interest.\16\
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\15\ 15 U.S.C. 78f(b)(5).
\16\ In approving the proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition and
capital formation. See 15 U.S.C. 78c(f).
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The Commission believes that the proposed rule change provides
greater harmonization between NYSE Amex Equities Rules and FINRA Rules
of similar purpose, resulting in less burdensome and more efficient
regulatory compliance for NYSE Amex members. In addition, the
Commission believes that retroactive application of the proposed rule
change to December 14, 2009, is appropriate to assure that there are no
regulatory gaps between FINRA and NYSE Amex Equities Rules, and that,
as applicable, the NYSE Amex Rules would maintain their status as
Common Rules under the Agreement.
V. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\17\ that the proposed rule change (SR-NYSEAmex-2010-26), be, and
hereby is, approved.
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\17\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
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\18\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-10952 Filed 5-7-10; 8:45 am]
BILLING CODE 8011-01-P