75 FR 111 pgs. 32978-32980 - 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.
Type: NOTICEVolume: 75Number: 111Pages: 32978 - 32980
Docket number: [Release No. 34-62223; File No. SR-NYSE-2010-40]
FR document: [FR Doc. 2010-13931 Filed 6-9-10; 8:45 am]
Agency: Securities and Exchange Commission
Official PDF Version: PDF Version
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)1of the Securities Exchange Act of 1934 (the "Act")2and Rule 19b-4 thereunder,3notice 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.
Footnotes:
1 15 U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b-4.
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") and approved by the Commission.4The text of the proposed rule changes is available at the Exchange, the Commission's Public Reference Room, and http://www.nyse.com.
Footnotes:
4 See Securities Exchange Act Release No. 61537 (February 18, 2010), 75 FR 8772. (February 25, 2010) (order approving SR-FINRA-2009-095).
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
Footnotes:
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.
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
Footnotes:
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.
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.7Because they are substantially similar to consolidated FINRA Rule 3240, FINRA also deleted FINRA Incorporated NYSE Rules 352(e)-(g).8
Footnotes:
7 See Securities Exchange Act Release No. 61537 (February 18, 2010), 75 FR 8772 (February 25, 2010).
8 Id.
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.9As 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.
Footnotes:
9 NYSE Amex has submitted a companion rule filing amending its rules in accordance with FINRA's rule changes. See SR-NYSEAmex-2010-47.
2. Statutory Basis
The Exchange believes that the proposed rule changes are consistent with Section 6(b) of the Act,10in general, and further the objectives of Section 6(b)(5) of the Act,11in 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.
Footnotes:
10 15 U.S.C. 78f(b).
11 15 U.S.C. 78f(b)(5).
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 Act12and Rule 19b-4(f)(6) thereunder.13Because 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 effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-4(f)(6)(iii) thereunder.
Footnotes:
12 15 U.S.C. 78s(b)(3)(A)(iii).
13 17 CFR 240.19b-4(f)(6).
A proposed rule change filed under Rule 19b-4(f)(6)14normally does not become operative prior to 30 days after the date of the filing. However, pursuant to Rule 19b-4(f)(6)(iii),15the 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.16For 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
Footnotes:
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).
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 rule-comments@sec.gov. 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
Footnotes:
18 17 CFR 200.30-3(a)(12).
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-13931 Filed 6-9-10; 8:45 am]
BILLING CODE 8010-01-P