[Federal Register Volume 76, Number 71 (Wednesday, April 13, 2011)]
[Notices]
[Pages 20747-20749]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-8913]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-64262; File No. SR-NASDAQ-2011-047]
Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Conform Rules 2360, 2361, 2370, 6951 to FINRA Rule Changes
April 8, 2011.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\, and Rule 19b-4 thereunder,\2\ notice is hereby given
that on April 1, 2011, The NASDAQ Stock Market LLC (``NASDAQ'') filed
with the Securities and Exchange Commission (``SEC'' or ``Commission'')
the proposed rule change as described in Items I, II, and III, below,
which Items have been prepared by NASDAQ. 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\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of the
Substance of the Proposed Rule Change
NASDAQ is filing with the Securities Commission [sic] a proposal
for NASDAQ to amend NASDAQ Rules 2360 (Approval Procedures for Day-
Trading Accounts); 2361 (Day-Trading Risk Disclosure Statement); 2370
(Borrowing From or Lending to Customers); and 6951 (Definitions) to
make non-substantive changes that reflect recent changes to
corresponding rules of the Financial Industry Regulatory Authority
(``FINRA'').
The text of the proposed rule change is available from NASDAQ's Web
site at http://nasdaq.cchwallstreet.com/Filings/, at NASDAQ's principal
office, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, NASDAQ 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 these statements may be examined at the places specified in
Item IV below. NASDAQ has prepared summaries, set forth in sections A,
B, and C below, of the most significant aspects of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange is not making any substantive changes to the content
of its rules. The purpose of this proposal is to update NASDAQ Rules
2360, 2361, 2370, and 6951 to reflect proper cross-references to
corresponding FINRA rules.
Many of NASDAQ's rules are based on rules of FINRA (formerly the
National Association of Securities Dealers (``NASD'')). During 2008,
FINRA embarked on an extended process of moving rules formerly
designated as ``NASD Rules'' into a consolidated FINRA rulebook. In
most cases, FINRA has renumbered these rules, and in some cases has
substantively amended them. Accordingly, NASDAQ also proposes to
initiate a process of modifying its rulebook to ensure that NASDAQ
rules corresponding to FINRA/NASD rules continue to mirror them as
closely as practicable. In some cases, it will not be possible for the
rule
[[Page 20748]]
numbers of NASDAQ rules to mirror corresponding FINRA rules, because
existing or planned NASDAQ rules make use of those numbers. However,
wherever possible, NASDAQ plans to update its rules to reflect changes
to corresponding FINRA rules.
In SR-FINRA-2009-059,\3\ FINRA adopted, with minor changes, NASD
Rules 2360 and 2361 regarding day trading into the FINRA consolidated
rulebook as FINRA Rules 2130 and 2270, respectively. FINRA Rules 2130
and 2270, like former NASD Rules 2360 and 2361, define day-trading
strategy and focus on members' obligations to disclose to non-
institutional customers the basic risks of engaging in a day-trading
strategy and to assess the appropriateness of day-trading strategies
for such customers. FINRA Rule 2130 creates an obligation on members
that promote a day-trading strategy regarding account-opening approval
procedures for non-institutional customers. FINRA Rule 2270 creates an
obligation on such members to disclose to non-institutional customers
the unique risks of engaging in a day-trading strategy. NASDAQ is, by
this filing, updating the references in its Rules 2360 and 2361 from
NASD Rules 2360 and 2361 to FINRA Rules 2130 and 2270.
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\3\ See Securities Exchange Release No. 61059 (November 24,
2009), 74 FR 62847 (December 1, 2009) (SR-FINRA-2009-059) (notice of
filing and immediate effectiveness). See also Securities Exchange
Release No. 59432 (February 23, 2009), 74 FR 9121 (March 2, 2009)
(SR-FINRA-2009-005) (notice of filing and immediate effectiveness
regarding, among other things, updated rule cross-references and
other non-substantive technical changes to FINRA Rules 2360 and
2370).
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NASDAQ is similarly updating the reference in its Rule 2370 from
NASD Rule 2370 to FINRA Rule 3240. In SR-FINRA-2009-095,\4\ FINRA
adopted, with minor changes, NASD Rule 2370 regarding borrowing from or
lending to customers into the FINRA consolidated rulebook as FINRA Rule
3240, and added record retention requirements. FINRA Rule 3240, like
former NASD Rules 2370, focuses in general on the appropriateness of
particular lending arrangements between FINRA member broker-dealers and
their registered persons and customers (to the extent permitted by the
member) and the potential for conflicts of interests between both the
registered person and his or her customer and the registered person and
the member with which he or she is associated.
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\4\ See Securities Exchange Release No. 61537 (February 18,
2010), 75 FR 8772 (February 25, 2010)(SR-FINRA-2009-095)(order
approving, among other things, adoption of NASD Rule 2370 as FINRA
Rule 3240).
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Additionally, in SR-FINRA-2009-005,\5\ FINRA renumbered cross-
references in its rules from NYSE Rule 80A to NYSE Rule 132B on the
basis of a New York Stock Exchange (``NYSE'' or NYSE Euronext'') rule
proposal.\6\ In that proposal, NYSE rescinded its Rule 80A regarding
index arbitration [sic] restrictions and repositioned the definitions
of ``index arbitrage'' and ``program trading'' into NYSE Rule 132B.
Because NASDAQ Rule 6951 refers in its definitions of index arbitrage
and program trading to Rule 80A, NASDAQ is, by this filing, updating
the references in its Rule 6951 from NYSE Rule 80A to 132B.
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\5\ See Securities Exchange Release No. 59432 (February 23,
2009), 74 FR 9121 (March 2, 2009) (SR-FINRA-2009-005) (notice of
filing and immediate effectiveness).
\6\ See Securities Exchange Release No. 56726 (October 31,
2007), 72 FR 62719 (November 6, 2007) (SR-NYSE-2007-96) (notice of
filing and immediate effectiveness).
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2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the provisions of Section 6 of the Act,\7\ in general, and with
Sections 6(b)(5) of the Act,\8\ in particular, in that the proposal 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 regulating, clearing,
settling, processing information with respect to, and facilitating
transactions in securities, 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 proposed
changes will conform NASDAQ Rules 2360, 2361, 2370, and 6951 to recent
changes made to several corresponding FINRA rules, to promote
application of consistent regulatory standards.
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\7\ 15 U.S.C. 78f.
\8\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
NASDAQ does not believe that the proposed rule change will result
in 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
Written comments were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The Exchange believes that the foregoing proposed rule change may
take effect upon filing with the Commission pursuant to Section
19(b)(3)(A) \9\ of the Act and Rule 19b-4(f)(6)(iii) thereunder \10\
because the foregoing 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 for
30 days from the date on which it was filed, or such shorter time as
the Commission may designate.
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\9\ 15 U.S.C. 78s(b)(3)(A).
\10\ 17 CFR 240.19b-4(f)(6)(iii). 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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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is: (i)
Necessary or appropriate in the public interest; (ii) for the
protection of investors; or (iii) otherwise in furtherance of the
purposes of the Act. If the Commission takes such action, the
Commission shall institute proceedings to determine whether the
proposed rule should be approved or disapproved.
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-NASDAQ-2011-047 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-NASDAQ-2011-047. This
file number should be included on the subject line if e-mail is used.
[[Page 20749]]
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 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 offices 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 available publicly. All submissions should refer to
File Number SR-NASDAQ-2011-047, and should be submitted on or before
May 4, 2011.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
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\11\ 17 CFR 200.30-3(a)(12).
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Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-8913 Filed 4-12-11; 8:45 am]
BILLING CODE 8011-01-P