[Federal Register Volume 75, Number 40 (Tuesday, March 2, 2010)]
[Notices]
[Pages 9472-9474]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-4228]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-61557; File No. SR-NYSE-2010-10]
Self-Regulatory Organizations; Notice of Filing and Order
Granting Accelerated Approval of Proposed Rule Change by New York Stock
Exchange LLC Changing Certain NYSE Rules and Rule Interpretations To
Correspond With Rule Changes Filed by the Financial Industry Regulatory
Authority, Inc.
February 22, 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 February 16, 2010, New York Stock Exchange LLC (``NYSE''
or the ``Exchange'') filed with the Securities and Exchange Commission
(the ``Commission'') the 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 and to approve the
proposal on an accelerated basis.
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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 changes to certain NYSE Rules and Rule
Interpretations to correspond with rule changes filed by the Financial
Industry Regulatory Authority, Inc. (``FINRA'') and approved by the
Commission.\4\ The Exchange proposes to apply these changes
retroactively to February 8, 2010. The text of the proposed rule change
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. 60933 (November 4,
2009), 74 FR 58334 (November 12, 2009) (order approving SR-FINRA-
2008-067). FINRA also recently filed for immediate effectiveness to
(i) adopt non-substantive technical changes to consolidated FINRA
Rule 4521(d), and (ii) amend FINRA Incorporated NYSE Rule 312(g).
See Securities Exchange Act Release No. 61408 (January 22, 2010), 75
FR 4596 (January 28, 2010) (SR-FINRA-2010-004). See also SR-FINRA-
2010-008, filed on February 4, 2010. These changes are incorporated
in this rule filing.
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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 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 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 adopt changes to
certain NYSE Rules and Rule Interpretations to correspond with rule
changes filed by FINRA and approved by the Commission. The Exchange
proposes to apply these changes retroactively to February 8, 2010, the
same effective date for FINRA's rule changes.\5\ The Exchange states
that making the proposed rule change retroactive to February 8, 2010
would ensure that the proposed rule changes are operative and effective
at the same time as FINRA's rule changes, that there are no regulatory
gaps between the FINRA and NYSE Rules and that, as applicable, the NYSE
Rules maintain their status as Common Rules under the 17d-2
Agreement.\6\
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\5\ See FINRA Regulatory Notice 09-71 (December 7, 2009).
\6\ As provided in paragraph 2(b) of the 17d-2 Agreement, FINRA
and NYSE will amend the list of Common Rules to conform to the rule
changes proposed herein.
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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,\7\
NYSE, NYSER and FINRA entered into an agreement (the ``17d-2
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 17d-2
Agreement effective December 15, 2008.\8\
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\7\ 15 U.S.C. 78a, et seq.
\8\ See Securities Exchange Act Release Nos. 56148 (July 26,
2007), 72 FR 42146 (August 1, 2007) (order approving the 17d-2
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 17d-2
Agreement, adding NYSE Amex LLC as a party). Paragraph 2(b) of the
17d-2 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.\9\
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\9\ 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 (``Common 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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[[Page 9473]]
Proposed Conforming Amendments to NYSE Rules
FINRA recently adopted consolidated FINRA Rules 4110 (Capital
Compliance), 4120 (Regulatory Notification and Business Curtailment),
4130 (Regulation of Activities of Section 15C Member Organizations
Experiencing Financial and/or Operational Difficulties), 4140 (Audit)
and 4521 (Notifications, Questionnaires and Reports) as part of its
rule set governing financial responsibility of member firms. FINRA also
amended consolidated FINRA Rules 9557 (Procedures for Regulating
Activities Under Rules 4110, 4120 and 4130 Regarding a Member
Experiencing Financial or Operational Difficulties) and 9559 (Hearing
Procedures for Expedited Proceedings Under the Rule 9550 Series), as
well as Section 4(g) of Schedule A of the FINRA By-Laws to reflect the
adoption of the new Rules.\10\
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\10\ See Securities Exchange Act Release No. 61408 (January 22,
2010), 75 FR 4596 (January 28, 2010). See also SR-FINRA-2010-008,
filed on February 4, 2010.
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Because they are incorporated with or replaced by these new
consolidated FINRA Rules, FINRA also deleted and/or amended certain
FINRA Incorporated NYSE Rules and Rule Interpretations, including
312(g)--(h) (Changes Within Member Organizations), 313(d) (Submission
of Partnership Articles--Submission of Corporate Documents), 313(d)/01
-/02 (Opinion of Counsel), 325 (Capital Requirements Member
Organizations), 325(c)(1)/01 (Long Put or Call Options), 326(a) (Growth
Capital Requirement), 326(b) (Business Reduction Capital Requirement),
326(c) (Unsecured Loans and Advances), 326(d) (Reduction of Elimination
of Loans and Advances), 328 (Sale-And-Leasebacks, Factoring, Financing
and Similar Arrangements), 416.20 (Questionnaires and Reports), 416/01
(Gold and Silver Offerings), 418 (Audit), 420 (Reports of Borrowings
and Subordinate Loans For Capital Purposes) and 421 (Periodic
Reports).\11\
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\11\ FINRA also deleted references to FINRA Incorporated NYSE
Rules 313.14 (A-B-C agreements) and 313.18 (Sole board member
provision) as part of its clean-up of Rule 313. See Securities
Exchange Act Release No. 60933 (November 4, 2009), 74 FR 58334
(November 12, 2009). The Exchange also proposes to delete those
references in NYSE Rule 313.
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To harmonize the NYSE Rules with the approved consolidated FINRA
Rules, the Exchange correspondingly proposes to delete and/or amend
NYSE Rules and Rule Interpretations 312(g)--(h), 313(d), 313(d)/01 -/
02, 325, 325(c)(1)/01, 326(a)--(d), 328, 416.20, 416/01, 418, 420 and
421, and replace them with proposed NYSE Rules 4110, 4120, 4130, 4140
and 4521, which are substantially similar to the new FINRA Rules.\12\
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\12\ NYSE Amex has submitted a companion rule filing amending
its rules in accordance with FINRA's rule changes. See SR-NYSEAmex-
2010-13.
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As proposed, NYSE Rules 4110, 4120, 4130, 4140 and 4521 adopt the
same language as the corresponding consolidated FINRA Rules, except for
substituting for or adding to, as needed, the term ``Exchange'' for
``FINRA'' and the term ``member organization'' for the term ``member'',
and making corresponding technical changes that reflect the difference
between NYSE's and FINRA's membership structures.
In addition, the Exchange proposes other changes to the NYSE
version of the Rules in order to apply them to the Exchange. First, in
proposed NYSE Rules 4110(a) and 4140(a), the Exchange proposes to amend
FINRA's version of the Rules referring to ``FINRA's Executive Vice
President charged with oversight for financial responsibility, or his
or her written officer delegate,'' to remove this language as it is
inapplicable to the Exchange. As amended, the Exchange would retain the
flexibility to arrange to have FINRA conduct the actual oversight and
application of the proposed Rules pursuant to the 17d-2 Agreement or a
Regulatory Services Agreement as warranted.
Second, in proposed NYSE Rules 4110, 4120 and 4130, the Exchange
proposes to add cross-references to NYSE Rule 475. Similar to FINRA
Rule 9557, NYSE Rule 475 provides the Exchange with the ability to take
summary action against a member or member organization that is facing
financial or operational difficulties subject to certain due process
considerations, including notice and an opportunity to be heard. The
Exchange believes it should retain its current disciplinary procedures
for addressing non-FINRA members and member organizations that face
financial or operational difficulties.
Finally, in proposed NYSE Rules 4140(b) and 4521(e), the Exchange
proposes to amend the language from FINRA's version of the Rules
referring to Schedule A, Section 4(g) of the FINRA By-Laws to simply
incorporate the language of Section 4(g) into the NYSE version of the
Rules. Accordingly, proposed NYSE Rules 4140(b) and 4521(e) specify
that member organizations that fail to timely file any report,
notification or information pursuant to those Rules will be subject to
a late fee of $100 per day, for a period not to exceed 10 business
days. Under the proposed Rules, requests for an extension of time must
be submitted at least three business days prior to the due date of the
report, notification or information required to be provided.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\13\ in general, and further the
objectives of Section 6(b)(5) of the Act,\14\ in particular, in that it
is 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. 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 Common 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. The Exchange states that making the proposed rule change
retroactive to February 8, 2010 would ensure that the proposed rule
changes are operative and effective at the same time as FINRA's rule
changes, that there are no regulatory gaps between the FINRA and NYSE
Rules and that, as applicable, the NYSE Rules maintain their status as
Common Rules under the 17d-2 Agreement.
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\13\ 15 U.S.C. 78f(b).
\14\ 15 U.S.C. 78f(b)(5).
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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.
III. Solicitation of Comments
Interested persons are invited to submit written data, views, and
[[Page 9474]]
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-NYSE-2010-10 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-2010-10. 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 Section, 100 F Street,
NE., Washington, DC 20549-1090. 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 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-2010-10 and should be submitted on
or before March 23, 2010.
IV. Commission's Findings and Order Granting Accelerated Approval of
Proposed Rule Change
After careful consideration, the Commission finds that the
Exchange's proposal to retroactively apply the proposed rule change to
February 8, 2010 is consistent with the requirements of the Section 6
of the Act\15\ and the rules and regulations thereunder applicable to a
national securities exchange.\16\ In particular, the Commission
believes that the proposed rule change is consistent with Section
6(b)(5) in particular, in that it is 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.\17\ Approving
the proposed rule change, and making such approval retroactive to
February 8, 2010, would ensure that the proposed rule changes are
operative and effective at the same time as FINRA's rule changes, that
there are no regulatory gaps between the FINRA and NYSE Rules and that,
as applicable, the NYSE Rules maintain their status as Common Rules
under the 17d-2 Agreement
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\15\ 15 U.S.C. 78f.
\16\ In approving this proposed rule change, the Commission has
considered its impact on efficiency, competition, and capital
formation. See 78c(f).
\17\ See 15 U.S.C. 78f(b)(5).
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The Exchange has requested that the Commission find good cause for
approving the proposed rule change prior to the thirtieth day after
publication of the notice thereof in the Federal Register. The
Commission believes that good cause exists for accelerated approval of
the proposed rule change because it raises no novel issues and is
consistent with the FINRA rule filings previously approved by or filed
with the Commission on which it is based.\18\ Except as has been
specifically noted and subject to a number of technical changes
necessary to apply the Rules to the Exchange, the proposed rule changes
will conform certain NYSE Rules and Rule Interpretations to FINRA's
amendments to corresponding FINRA Incorporated NYSE Rules and Rule
Interpretations and FINRA's adoption of consolidated FINRA Rules 4110,
4120, 4130, 4140 and 4521 in furtherance of the consolidation of the
member firm regulation functions of NYSER and FINRA. Accordingly, the
Commission finds good cause, pursuant to Section 19(b)(2) of the
Act,\19\ for approving the proposed rule change prior to the thirtieth
day after publication of the notice thereof in the Federal Register.
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\18\ See Securities Exchange Act Release No. 61408 (January 22,
2010), 75 FR 4596 (January 28, 2010). See also SR-FINRA-2010-008,
filed on February 4, 2010.
\19\ See 15 U.S.C. 78s(b)(2).
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V. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\20\ that the proposed rule change, (SR-NYSE-2010-10), is hereby
approved on an accelerated basis.
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\20\ See id.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\21\
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\21\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-4228 Filed 3-1-10; 8:45 am]
BILLING CODE 8011-01-P