[Federal Register Volume 75, Number 111 (Thursday, June 10, 2010)]
[Notices]
[Pages 32978-32980]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-13931]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-62223; File No. SR-NYSE-2010-40]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Changes
Deleting NYSE Rules 352(e)-(g) and Adopting New Rule 3240 To Correspond
With Rule Changes Filed by the Financial Industry Regulatory Authority,
Inc.
June 4, 2010.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby
given that on May 17, 2010, New York Stock Exchange LLC (the
``Exchange'' or ``NYSE'') filed with the Securities and Exchange
Commission (the ``Commission'') the proposed rule changes as described
in Items I, II, and III below, which Items have been substantially
prepared by the Exchange. The Commission is publishing this notice to
solicit comments on the proposed rule changes from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Changes
The Exchange proposes to delete NYSE Rules 352(e)-(g) and adopt new
Rule 3240 to correspond with rule changes filed by the Financial
Industry Regulatory Authority, Inc. (``FINRA'')
[[Page 32979]]
and approved by the Commission.\4\ The text of the proposed rule
changes is available at the Exchange, the Commission's Public Reference
Room, and http://www.nyse.com.
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\4\ See Securities Exchange Act Release No. 61537 (February 18,
2010), 75 FR 8772. (February 25, 2010) (order approving SR-FINRA-
2009-095).
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II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Changes
In its filing with the Commission, the Exchange included statements
concerning the purpose of, and basis for, the proposed rule changes and
discussed any comments it received on the proposed rule changes. 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 Changes
1. Purpose
The purpose of the proposed rule changes is to delete NYSE Rules
352(e)-(g) (Guarantees, Sharing in Accounts, and Loan Arrangements) and
adopt new Rule 3240 (Borrowing From or Lending to Customers) to
correspond with rule changes filed by FINRA and approved by the
Commission.
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,
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 Amex LLC
(``NYSE Amex'') became a party to the Agreement effective December 15,
2008.\5\
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\5\ 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.\6\
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\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.
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Proposed Conforming Amendments to NYSE Rules
FINRA adopted NASD Rule 2370 (Borrowing From or Lending to
Customers), which governs lending arrangements between registered
persons and their customers, as consolidated FINRA Rule 3240, subject
to certain modifications.\7\ Because they are substantially similar to
consolidated FINRA Rule 3240, FINRA also deleted FINRA Incorporated
NYSE Rules 352(e)-(g).\8\
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\7\ See Securities Exchange Act Release No. 61537 (February 18,
2010), 75 FR 8772 (February 25, 2010).
\8\ Id.
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To harmonize the NYSE Rules with the approved consolidated FINRA
Rules, the Exchange correspondingly proposes to delete NYSE Rules
352(e)-(g) and replace them with proposed NYSE Rule 3240, which is
substantially similar to the new FINRA Rule.\9\ As proposed, NYSE Rule
3240 adopts the same language as FINRA Rule 3240, except for
substituting for or adding to, as needed, the term ``member
organization'' for the term ``member,'' and making corresponding
technical changes. In addition, in order to ensure that both proposed
NYSE Rule 3240 and FINRA Rule 3240 are fully harmonized, the Exchange
also proposes to add Supplementary Material .02 to NYSE Rule 3240 to
provide that, for the purposes of the rule, the term ``person
associated with a member organization'' 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.
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\9\ NYSE Amex has submitted a companion rule filing amending its
rules in accordance with FINRA's rule changes. See SR-NYSEAmex-2010-
47.
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2. Statutory Basis
The Exchange believes that the proposed rule changes are consistent
with Section 6(b) of the Act,\10\ in general, and further the
objectives of Section 6(b)(5) of the Act,\11\ in particular, in that
they are 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.
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\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that the proposed rule changes support the
objectives of the Act by providing greater harmonization between NYSE
Rules and FINRA Rules (including Common Rules) of similar purpose,
resulting in less burdensome and more efficient regulatory compliance
for Dual Members. To the extent the Exchange has proposed changes that
differ from the FINRA version of the Rules, such changes are technical
in nature and do not change the substance of the proposed NYSE Rules.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule changes will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Changes Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule changes.
III. Date of Effectiveness of the Proposed Rule Changes and Timing for
Commission Action
The Exchange has filed the proposed rule changes pursuant to
Section 19(b)(3)(A)(iii) of the Act \12\ and Rule 19b-4(f)(6)
thereunder.\13\ Because the proposed rule changes do 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 changes have become
[[Page 32980]]
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.
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\12\ 15 U.S.C. 78s(b)(3)(A)(iii).
\13\ 17 CFR 240.19b-4(f)(6).
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A proposed rule change filed under Rule 19b-4(f)(6) \14\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\15\ 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. The Commission notes that
the proposed rule changes are substantially identical to rule changes
proposed by FINRA and approved by the Commission after an opportunity
for public comment, and do not raise any new substantive issues.\16\
For these reasons, the Commission believes that waiver of the 30-day
operative delay is consistent with the protection of investors and the
public interest because it will promote greater harmonization between
NYSE Rules and FINRA Rules of similar purpose, resulting in less
burdensome and more efficient regulatory compliance for joint members
and greater harmonization between NYSE Rules and FINRA Rules.
Therefore, the Commission designates the proposed rule change effective
and operative upon filing.\17\
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\14\ 17 CFR 240.19b-4(f)(6).
\15\ 17 CFR 240.19b-4(f)(6)(iii).
\16\ See supra note 7.
\17\ For purposes only of waiving the 30-day operative delay,
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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At any time within 60 days of the filing of the proposed rule
changes, the Commission may summarily abrogate such rule changes 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
changes are consistent with the Act. Comments may be submitted by any
of the following methods:
Electronic Comments
Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
Send an e-mail to [email protected]. Please include
File Number SR-NYSE-2010-40 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-NYSE-2010-40. This file
number should be included on the subject line if e-mail 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 (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule changes that are
filed with the Commission, and all written communications relating to
the proposed rule changes 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 20549-1090 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 http://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. All submissions
should refer to File Number SR-NYSE-2010-40 and should be submitted on
or before July 1, 2010.
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. 2010-13931 Filed 6-9-10; 8:45 am]
BILLING CODE 8010-01-P