[Federal Register Volume 76, Number 213 (Thursday, November 3, 2011)]
[Notices]
[Pages 68240-68242]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-28512]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-65656; File No. SR-FINRA-2011-062]
Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing of Proposed Rule Change To Repeal
Incorporated NYSE Rule 2A (Jurisdiction)
October 28, 2011.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'' or ``Exchange Act'') \1\ and Rule 19b-4 thereunder,\2\ notice
is hereby given that on October 20, 2011, Financial Industry Regulatory
Authority, Inc. (``FINRA'') 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 FINRA. 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 Substance
of the Proposed Rule Change
FINRA is proposing to repeal Incorporated NYSE Rule 2A
(Jurisdiction) as part of the process of developing a consolidated
FINRA rulebook.
The text of the proposed rule change is available on FINRA's Web
site at http://www.finra.org, at the principal office of FINRA 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, FINRA 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. FINRA has prepared
[[Page 68241]]
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
As part of the process of developing a new consolidated rulebook
(``Consolidated FINRA Rulebook''),\3\ the proposed rule change would
repeal NYSE Rule 2A (Jurisdiction) from the FINRA rulebook as described
below. NYSE Rule 2A generally addresses jurisdictional authority with
respect to, among other things, rulemaking, examinations, disciplinary
actions, and listing applications. NYSE Rule 2A was adopted in 2006 as
part of the merger between the New York Stock Exchange LLC (``NYSE'')
and Archipelago Holdings, Inc. in light of the fact that the NYSE
Constitution, which contained the jurisdiction provisions for the NYSE,
was eliminated in the merger.\4\
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\3\ The current FINRA rulebook consists of (1) FINRA Rules; (2)
NASD Rules; and (3) rules incorporated from NYSE (``Incorporated
NYSE Rules'') (together, the NASD Rules and Incorporated NYSE Rules
are referred to as the ``Transitional Rulebook''). While the NASD
Rules generally apply to all FINRA members, the Incorporated NYSE
Rules apply only to those members of FINRA that are also members of
the NYSE (``Dual Members''). The FINRA Rules apply to all FINRA
members, unless such rules have a more limited application by their
terms. For more information about the rulebook consolidation
process, see Information Notice, March 12, 2008 (Rulebook
Consolidation Process). For convenience, the Incorporated NYSE Rules
are referred to as the NYSE Rules.
\4\ See Securities Exchange Act Release No. 53382 (February 27,
2006), 71 FR 11251 (March 6, 2006) (Order Approving File No. SR-
NYSE-2005-77).
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The FINRA By-Laws, as approved by the membership and the SEC in
2007, address the powers and authority of the FINRA Board of Governors
(``Board'') and, together with the Exchange Act, set forth FINRA's
authority and responsibilities as a registered securities association.
As outlined below, those matters addressed by NYSE Rule 2A that are
relevant to a registered securities association are currently addressed
by the FINRA By-Laws and Exchange Act, including jurisdictional
authority with respect to:
Rulemaking; \5\
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\5\ See, e.g., FINRA By-Laws, Article III, Section 2, Article
VII, Section 1 and Exchange Act Section 15A.
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General supervisory powers over members, member
organizations (and any other broker-dealer that chooses to be regulated
by the NYSE) and their offices, partnership and corporate arrangements,
their principal executives, employees and approved persons in
connection with their conduct of the business of member organizations;
\6\
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\6\ See, e.g., supra note 5 and FINRA By-Laws, Article VI,
Section 5 and Plan of Allocation and Delegation of Functions by
FINRA to Subsidiaries, Article II, Section A. In contrast to the
NYSE's jurisdictional provisions, which extend to ``approved
persons,'' as defined in NYSE Rule 2(c), FINRA regulates its members
and ``persons associated with a member,'' as defined in FINRA By-
Laws, Article 1 (rr). With respect to the ability to obtain
information regarding members' affiliates, FINRA is addressing such
authority as part of a separate proposal. See Regulatory Notice 10-
01 (January 2010).
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jurisdiction to discipline members, member organizations
(and any other broker-dealer that chooses to be regulated by the NYSE),
principal executives, employees and approved persons in connection with
their conduct of the business of member organizations; and \7\
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\7\ See, e.g., supra note 5, and FINRA By-Laws, Article VI,
Section 5 and Plan of Allocation and Delegation of Functions by
FINRA to Subsidiaries, Article II, Section A. Based on earlier Board
authority, FINRA repealed NYSE Rule 477 (Retention of Jurisdiction)
and continues to use FINRA's retention of jurisdiction provisions in
the FINRA By-laws. See Securities Exchange Act Release No. 58643
(September 25, 2008), 73 FR 57174 (October 1, 2008) (Order Approving
File No. SR-FINRA-2008-029).
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Jurisdiction over any and all other functions of members,
member organizations (and any other broker-dealer that chooses to be
regulated by the NYSE), principal executives, employees and approved
persons in connection with the conduct of the business of member
organizations in order for the NYSE to comply with its statutory
obligation as a self-regulatory organization.\8\
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\8\ See, e.g., supra note 5, and FINRA By-Laws, Article VI,
Section 5 and Plan of Allocation and Delegation of Functions by
FINRA to Subsidiaries, Article II, Section A.
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FINRA further notes that other matters addressed by NYSE Rule 2A
are not applicable to the operations of a registered securities
association that does not operate a listing market or are otherwise
unique to the NYSE, including:
Approving applications for the listing and admission of
securities to dealings on the NYSE, as well as suspending dealings in
and removing securities from listing;
Supervising all matters relating to the collection,
dissemination and use of quotations and of reports of prices on the
NYSE;
The power to approve or disapprove any connection or means
of communication with the floor and requiring the discontinuance of any
such connection or means of communication; and
Disapproving any member acting as a Designated Market
Maker or odd-lot dealer on the NYSE.
Therefore, FINRA considers the transfer of NYSE Rule 2A to the
Consolidated FINRA Rulebook to be unnecessary and proposes that it be
eliminated.\9\
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\9\ FINRA anticipates that the NYSE will retain a version of
NYSE Rule 2A.
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FINRA will announce the implementation date of the proposed rule
change in a Regulatory Notice to be published no later than 90 days
following Commission approval. The effective date will be no later than
150 days following Commission approval.
2. Statutory Basis
FINRA believes that the proposed rule change is consistent with the
provisions of Section 15A(b)(6) of the Act,\10\ which requires, among
other things, that FINRA rules must be designed to prevent fraudulent
and manipulative acts and practices, to promote just and equitable
principles of trade, and, in general, to protect investors and the
public interest. FINRA believes that the proposed rule change will
streamline and improve FINRA's rulebook by eliminating a rule that is
not necessary or appropriate for the Consolidated FINRA Rulebook. As
further discussed above, the FINRA By-Laws address the powers and
authority of the Board and, together with the Exchange Act, set forth
FINRA's authority and responsibilities as a registered securities
association.
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\10\ 15 U.S.C. 78o-3(b)(6).
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B. Self-Regulatory Organization's Statement on Burden on Competition
FINRA 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
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period (i) As the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory
[[Page 68242]]
organization consents, the Commission will:
(A) by order approve or disapprove such proposed rule change, or
(B) institute proceedings to determine whether the proposed rule
change should be 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 email to [email protected]. Please include
File Number SR-FINRA-2011-062 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-FINRA-2011-062. This
file number should be included on the subject line if email 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, 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 office of FINRA. 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-FINRA-2011-062 and should be
submitted on or before November 25, 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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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2011-28512 Filed 11-2-11; 8:45 am]
BILLING CODE 8011-01-P