[Federal Register Volume 76, Number 130 (Thursday, July 7, 2011)]
[Notices]
[Pages 39946-39947]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-16933]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-64785; File No. SR-NYSE-2011-27]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
Deleting NYSE Rule 351(a)-(d) and Supplementary Material .10 and .13,
Adopting the Text of FINRA Rule 4530, and Making Certain Conforming
Changes
June 30, 2011.
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 June 20, 2011, 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 substantially prepared by the
self-regulatory organization. The Commission is publishing this notice
to solicit comments on the proposed rule change from interested
persons.
---------------------------------------------------------------------------
\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 Change
The Exchange proposes to delete NYSE Rule 351(a)-(d) and
Supplementary Material .10 and .13, adopt the text of FINRA Rule 4530,
and make certain conforming changes. The text of the proposed rule
change is available at the Exchange, the Commission's Public Reference
Room, and http://www.nyse.com.
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
The Exchange proposes to delete NYSE Rule 351(a)-(d) and
Supplementary Material .10 and .13, adopt the text of FINRA Rule 4530,
and make certain conforming changes.
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.\4\ 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\
---------------------------------------------------------------------------
\4\ See Securities Exchange Act Release No. 62970 (Sept. 22,
2010), 75 FR 59771 (Sept. 28, 2010) (order approving SR-FINRA-2010-
37).
\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\
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
In connection with the rule consolidation efforts between the
Exchange and FINRA, the Commission has recently approved FINRA Rule
4530,\7\ which is modeled after NYSE Rule 351(a)-(d) and NASD Rule
3070.\8\ FINRA Rule 4530 requires member firms to: (1) Report to FINRA
certain specified events and quarterly statistical and summary
information regarding written customer complaints; and (2) file with
FINRA copies of certain criminal actions, civil complaints and
arbitration claims. FINRA uses the information for regulatory purposes
to identify and initiate investigations of firms, offices and
associated persons that may pose a risk. In most cases, the
requirements of FINRA Rule 4530 are based on similar requirements in
the NASD and NYSE rules.
---------------------------------------------------------------------------
\7\ See Securities Exchange Act Release No. 63260 (November 5,
2010), 75 FR 69508 (November 12, 2010) (SR-FINRA-2010-034). See also
Securities Exchange Act Release No. 64560 (May 27, 2011), 76 FR
32246 (June 3, 2011) (SR-FINRA-2011-024).
\8\ NYSE Rule 351(e) and NYSE Rule Interpretation 351(e)/01
(Reports of Investigation) govern trade investigation reporting
requirements. NYSE Rules 351(f), 351.11 and 351.12 govern the annual
attestation requirement of the research analyst conflict of interest
rules. These provisions will be addressed as part of the supervision
rules and research analyst conflict of interest rules, respectively.
See Regulatory Notice 08-24 (Proposed Consolidated FINRA Rules
Governing Supervision and Supervisory Controls) and Regulatory
Notice 08-55 (FINRA Requests Comment on Proposed Research
Registration and Conflict of Interest Rules) NYSE Rule 351(e) and
(f) are addressed by a separate FINRA harmonization proposal. NYSE
Rules 351(a)-(d) would be marked as ``Reserved'' until such time as
NYSE Rule 351 is fully harmonized with FINRA rules.
---------------------------------------------------------------------------
Proposed Rule Change
The Exchange proposes to adopt the text of FINRA Rule 4530 as NYSE
Rule 4530, with certain technical changes. For consistency with
Exchange rules, the Exchange proposes to change all references to
``members'' to ``member organizations'' and add a definition of
``person associated with a member organization.'' The Exchange proposes
to delete NYSE Rule 351(a)-(d) and Supplementary Material .10 and .13
and make conforming amendments in NYSE Rules 342, 401A, and 476A, which
contain references to NYSE Rule 351, and delete an unnecessary cross-
reference in NYSE Rule 311. The Exchange proposes to make NYSE Rule
4530 effective on the same date as FINRA makes FINRA Rule 4530
effective.\9\
---------------------------------------------------------------------------
\9\ See FINRA Regulatory Notice 11-06. The implementation date
is currently scheduled for July 1, 2011. NYSE Amex also has
submitted a companion rule filing amending its rules in accordance
with FINRA's rule changes. See SR-NYSEAmex-2011-42.
---------------------------------------------------------------------------
[[Page 39947]]
2. Statutory Basis
The proposed rule change is consistent with Section 6(b) of the
Act,\10\ in general, and furthers the objectives of Section
6(b)(5),\11\ 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 mechanism of a free and open
market and a national market system. Specifically, the Exchange
believes that the proposed rule changes support the objectives of the
Act by providing greater harmonization between NYSE Rules and FINRA
Rules of similar purpose, resulting in less burdensome and more
efficient regulatory compliance. 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.
---------------------------------------------------------------------------
\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
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 \12\ and Rule 19b-4(f)(6) thereunder.\13\
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.
---------------------------------------------------------------------------
\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) \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.\16\
---------------------------------------------------------------------------
\14\ Id.
\15\ 17 CFR 240.19b-4(f)(6)(iii). In addition, Rule 19b-
4(f)(6)(iii) requires that a self-regulatory organization submit to
the Commission written notice of its 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 this requirement.
\16\ 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 such proposed rule
change, the Commission summarily may temporarily suspend 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-NYSE-2011-27 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-2011-27. 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 20549-1090. 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 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-2011-27 and should be submitted on
or before July 28, 2011.
---------------------------------------------------------------------------
\17\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-16933 Filed 7-6-11; 8:45 am]
BILLING CODE 8011-01-P