[Federal Register Volume 75, Number 147 (Monday, August 2, 2010)]
[Notices]
[Pages 45183-45185]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-18891]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-62572; File No. SR-NYSEAmex-2010-72]
Self-Regulatory Organizations; NYSE Amex LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change Deleting Rule
123G--NYSE Amex Equities and Adopting New Rule 5290--NYSE Amex Equities
to Correspond With Rule Changes Filed by the Financial Industry
Regulatory Authority, Inc.
July 26, 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 July 19, 2010, NYSE Amex LLC (the ``Exchange'' or ``NYSE
Amex'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I and II
below, which Items have been prepared by the self-regulatory
organization. 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\ 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 Change
The Exchange proposes to delete Rule 123G--NYSE Amex Equities and
adopt new Rule 5290--NYSE Amex Equities to correspond with rule changes
filed by the Financial Industry Regulatory Authority, Inc. (``FINRA'')
and approved by the Commission.\4\ The text of the proposed rule change
is available at the Exchange, at the Commission's Public Reference
Room, on the Commission's Web site at http://www.sec.gov, and at http://www.nyse.com.
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\4\ See Securities Exchange Act Release No. 61071 (November 30,
2009), 74 FR 64109 (December 7, 2009) (order approving SR-FINRA-
2009-067).
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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 self-regulatory organization
included statements concerning the purpose of,
[[Page 45184]]
and basis for, the proposed rule change and discussed any comments it
received on the proposed rule change. The text of those statements may
be examined at the places specified in Item IV below. The Exchange has
prepared summaries, set forth in sections A, B, and C below, of the
most significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of the proposed rule changes is to delete Rule 123G--
NYSE Amex Equities (Order Entry Practices) and adopt new Rule 5290
(Order Entry and Execution Practices) 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, the
New York Stock Exchange LLC (``NYSE''), NYSER and FINRA entered into an
agreement (the ``Agreement'') to reduce regulatory duplication for
their members by allocating to FINRA certain regulatory
responsibilities for certain NYSE rules and rule interpretations
(``FINRA Incorporated NYSE Rules''). The Exchange 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, 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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Current Rule 123G--NYSE Amex Equities
Rule 123G--NYSE Amex Equities provides that a member, member
organization, principal executive, approved person, or registered or
non-registered employee thereof, may not engage in conduct that has the
intent or effect of unbundling or splitting orders for execution in
order to maximize a monetary or in-kind payment received as a result of
the execution of such orders. For purposes of the Rule, ``monetary or
in-kind amounts'' include commissions, gratuities, payments for or
rebate of fees, or any similar payments of value resulting from the
entry of such orders.
Current FINRA Rule 5290
In December 2009, FINRA adopted NASD Rule 3380 (Order Entry and
Execution Practices), which governs certain order entry and/or
execution practices, as consolidated FINRA Rule 5290, subject to
certain modifications.\7\
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\7\ See Securities Exchange Act Release No. 61071 (November 30,
2009), 74 FR 64109 (December 7, 2009). In this filing FINRA also
adopted NASD Rule 3120 (Use of Information Obtained in Fiduciary
Capacity) as consolidated FINRA Rule 2060. The Exchange does not
intend to adopt a corresponding rule at this time.
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Consolidated FINRA Rule 5290 is substantially the same as Rule
123G--NYSE Amex Equities; however, consolidated FINRA Rule 5290 applies
to the unbundling or splitting of both orders and executions, whereas
Rule 123G--NYSE Amex Equities applies only to order entry and not
execution.
Proposed Conforming Amendments to NYSE Amex Equities Rules
Even though Rule 123G--NYSE Amex Equities is not part of the Common
Rules subject to the rulebook consolidation and harmonization process
governed by the Agreement, the Exchange hereby proposes to delete Rule
123G--NYSE Amex Equities and replace it with proposed Rule 5290--NYSE
Amex Equities, which is substantially similar to the new FINRA Rule.\8\
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\8\ NYSE has submitted a companion rule filing amending its
rules in accordance with FINRA's rule changes. See SR-NYSE-2010-54.
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As proposed, Rule 5290--NYSE Amex Equities adopts the same language
as FINRA Rule 5290, 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 Rule 5290--NYSE Amex Equities and FINRA Rule 5290
are fully harmonized, the Exchange also proposes to add Supplementary
Material .01 to Rule 5290--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 also notes that, upon adoption of proposed Rule 5290--
NYSE Amex Equities, it intends to add the Rule to the Agreement as a
Common Rule for dual NYSE Amex/FINRA members.
2. Statutory Basis
The Exchange believes that the proposed rule changes are consistent
with Section 6(b) of the Act,\9\ in general, and further the objectives
of Section 6(b)(5) of the Act,\10\ 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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\9\ 15 U.S.C. 78f(b).
\10\ 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
Amex Equities Rules and FINRA Rules of similar purpose, resulting in
less burdensome and more efficient regulatory compliance for joint
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 Amex
Equities Rules.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others
No written comments were solicited or received with respect to the
proposed rule change.
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III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \11\ and Rule 19b-4(f)(6) thereunder.\12\
Because the proposed rule change does not: (i) Significantly affect the
protection of investors or the public interest; (ii) impose any
significant burden on competition; and (iii) become operative prior to
30 days from the date on which it was filed, or such shorter time as
the Commission may designate, if consistent with the protection of
investors and the public interest, the proposed rule change has become
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.\13\
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\11\ 15 U.S.C. 78s(b)(3)(A)(iii).
\12\ 17 CFR 240.19b-4(f)(6).
\13\ See id. In addition, Rule 19b-4(f)(6) requires a self-
regulatory organization to give the Commission written notice of its
intent to file 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. The Exchange has
satisfied this requirement.
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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 believes
that waiving the 30-day operative delay is consistent with the
protection of investors and the public interest, because such waiver
will enable the Exchange to immediately implement new Rule 5290--NYSE
Amex Equities to prevent any regulatory gaps between the NYSE Amex and
FINRA rules. In addition, as noted by the Exchange, Rule 5290--NYSE
Amex Equities is consistent with FINRA Rule 5290, which was previously
approved by the Commission.\16\
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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 4. 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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Accordingly, the Commission waives the 30-day operative delay
requirement and designates the proposed rule change as operative upon
filing with the Commission. At any time within 60 days of the filing of
the proposed rule change, the Commission may summarily abrogate 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:
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-NYSEAmex-2010-72 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-NYSEAmex-2010-72. 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 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 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
publicly available. All submissions should refer to File Number SR-
NYSEAmex-2010-72 and should be submitted on or before August 23, 2010.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
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\17\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-18891 Filed 7-30-10; 8:45 am]
BILLING CODE 8010-01-P