[Federal Register Volume 75, Number 54 (Monday, March 22, 2010)]
[Notices]
[Pages 13623-13625]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-6150]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-61705; File No. SR-NYSEAmex-2010-23]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by NYSE Amex LLC Amending Rule
390
March 15, 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 March 5, 2010, NYSE Amex LLC (``NYSE Amex'' or the
``Exchange'') 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 amend its sharing in accounts rule to
harmonize its requirements with those of the Financial Industry
Regulatory Authority (``FINRA''). A copy of this filing is available on
the Exchange's Web site at http://www.nyse.com, at the Exchange's
principal office and at the Commission's Public Reference Room. The
text of the proposed rule change is below. Proposed new language is in
italics and proposed deletions are in [brackets].
Rules of NYSE Amex, Inc.
* * * * *
Rule 390. [Assumption of Loss Prohibited] Prohibition Against
Guarantees and Sharing in Accounts
(a) Prohibition Against Guarantees
No member or member organization shall guarantee any customer
against loss in his account. [or take or receive directly or indirectly
a share in the profits of any customer's account or share in any losses
sustained in any such account. For the purposes of this rule the term
customer shall not be deemed to include the member or member
organization or any joint, group, or syndicate account with such member
or member organization.]
(b) Sharing in Accounts; Extent Permissible
(1)(A) Except as provided in paragraph (2) no member or person
associated with a member shall share directly or indirectly in the
profits or losses in any account of a customer carried by the member or
any other member; provided, however, that a member or person associated
with a member may share in the profits or losses in such an account if
(i) such person associated with a member obtains prior written
authorization from the member employing the associated person;
(ii) such member or person associated with a member obtains prior
written authorization from the customer; and
(iii) such member or person associated with a member shares in the
profits or losses in any account of such customer only in direct
proportion to the financial contributions made to such account by
either the member or person associated with a member.
(B) Exempt from the direct proportionate share limitation of
paragraph (1)(A)(iii) are accounts of the immediate family of such
member or person associated with a member. For
[[Page 13624]]
purposes of this Rule, the term ``immediate family'' shall include
parents, mother-in-law or father-in-law, husband or wife, children or
any relative to whose support the member or person associated with a
member otherwise contributes directly or indirectly.
(2) Notwithstanding the prohibition of paragraph (1), a member or
person associated with a member that is acting as an investment adviser
(whether or not registered as such) may receive compensation based on a
share in profits or gains in an account if
(A) such person associated with a member seeking such compensation
obtains prior written authorization from the member employing the
associated person;
(B) such member or person associated with a member seeking such
compensation obtains prior written authorization from the customer; and
(C) all of the conditions in Rule 205-3 of the Investment Advisers
Act of 1940 (as the same may be amended from time to time) are
satisfied.
* * * * *
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, 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
Pursuant to Rule 17d-2 under the Securities Exchange Act of 1934,
the American Stock Exchange, LLC (n/k/a NYSE Amex, LLC), the Boston
Stock Exchange, Inc., the Chicago Board Options Exchange, Inc., the
International Securities Exchange, LLC, Financial Industry Regulatory
Authority, Inc., The NASDAQ Stock Market LLC, the New York Stock
Exchange, LLC, NYSE Arca, Inc., and the Philadelphia Stock Exchange,
Inc. (collectively the ``Options Self Regulatory Council''), entered
into an agreement dated June 5, 2008 (the ``17d-2 Agreement'') to
allocate regulatory responsibility for common rules. By this proposal,
the Exchange seeks to harmonize its `Sharing in Accounts' rule with
FINRA's rule for purposes of the 17d-2 Agreement.
In order to maintain substantial similarity with FINRA rules, the
Exchange proposes to delete the language of NYSE Amex Rule 390 related
to sharing in the profits and losses of a customer account, and replace
it with the language of FINRA 2150(c), Sharing in Accounts; Extent
Permissible. FINRA Rule 2150(c) contains the same prohibition against
sharing in accounts as NYSE Amex Rule 390, but with additional limited
exceptions. The general prohibition contained in NYSE Amex Rule 390
against sharing in the profits or losses of a customer account is
currently covered by the 17d-2 Agreement. However, the limited
exceptions of FINRA Rule 2150(c) are not covered by the 17d-2
Agreement. The Exchange proposes to add those limited exceptions in
order to harmonize its rule with the FINRA rule and add those limited
exceptions to the 17d-2 Agreement. The portion of the rule prohibiting
the guarantee of a customer against loss will remain in place.
2. Statutory Basis
The proposed rule change is consistent with Section 6(b) \4\ of the
Act, in general, and furthers the objectives of Section 6(b)(5) \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 foster cooperation and coordination with
persons engaged in facilitating transactions in securities, and to
remove impediments to and perfect the mechanisms of a free and open
market and a national market system. Specifically, the changes proposed
herein, by harmonizing NYSE Amex rules with FINRA rules, provide NYSE
Amex Members with a clearer regulatory scheme. The Exchange further
notes that the changes proposed herein are neither novel nor
controversial and are modeled on existing FINRA rules.
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\4\ 15 U.S.C. 78f(b).
\5\ 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. 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 \6\ and Rule 19b-4(f)(6) thereunder.\7\
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 \8\ and Rule 19b-
4(f)(6)(iii) thereunder.\9\
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\6\ 15 U.S.C. 78s(b)(3)(A)(iii).
\7\ 17 CFR 240.19b-4(f)(6).
\8\ 15 U.S.C. 78s(b)(3)(A).
\9\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires the Exchange to give the Commission written notice of the
Exchange'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. The
Exchange has satisfied the pre-filing requirement.
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A proposed rule change filed under Rule 19b-4(f)(6) \10\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\11\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest.
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\10\ 17 CFR 240.19b-4(f)(6).
\11\ 17 CFR 240.19b-4(f)(6)(iii).
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The Exchange requests that the Commission waive the 30-day pre-
operative waiting period contained in Exchange Act Rule 19b-
4(f)(6)(iii).\12\ The Exchange requests this waiver so that these
changes can be both immediately effective and operative, thus
minimizing any possible confusion. The Exchange believes that by
harmonizing NYSE Amex rules with FINRA rules, NYSE Amex Members will be
provided with a clearer regulatory scheme. The Commission believes that
waiving the 30-day operative delay will permit the Exchange to
harmonize its rules with the corresponding FINRA rule immediately, thus
promoting
[[Page 13625]]
clarity with respect and minimizing confusion with respect to the
requirements regarding guarantees and sharing in accounts.\13\ The
Commission notes that the FINRA financial responsibility rules are
currently in operation. For these reasons, the Commission designates
the proposed rule change as operative upon filing. 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.
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\12\ 17 CFR 240.19b-4(f)(6)(iii).
\13\ For purposes only of waiving the 30-day operative delay of
this proposal, the Commission has considered the proposed rule's
impact on efficiency, competition, and capital formation. 15 U.S.C.
78c(f).
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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-2010-23 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-2010-23. 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 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-NYSEAmex-2010-23 and should be submitted
on or before April 12, 2010.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
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\14\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-6150 Filed 3-19-10; 8:45 am]
BILLING CODE 8011-01-P