[Federal Register Volume 77, Number 216 (Wednesday, November 7, 2012)]
[Notices]
[Pages 66898-66900]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-27211]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-68127; File No. SR-Phlx-2012-124]
Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change Relating to
Branch Offices
November 1, 2012.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''), \1\ and Rule 19b-4 \2\ thereunder, notice is hereby given
that on October 24, 2012, NASDAQ OMX PHLX LLC (``Phlx'' or
``Exchange'') 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 the
Exchange. 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
The Exchange proposes to amend Rule 748 titled ``Supervision'' to
require member organizations for which the Exchange is the Designated
Examining Authority (``DEA'') to file a list of their branch offices
with the Exchange.
The text of the proposed rule change is available on the Exchange's
Web site at http://www.nasdaqtrader.com/micro.aspx?id=PHLXRulefilings,
at the principal office of the Exchange, 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, the Exchange 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. The
[[Page 66899]]
Exchange 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 purpose of the proposed rule change is to amend Rule 748 which
provides that each office, location, department, or business activity
of a member or member organization (including foreign incorporated
branch offices) shall be under the supervision and control of the
member or member organization establishing it and of an appropriately
qualified supervisor. When the Exchange is the DEA, it examines its
members and member organizations for compliance with Rule 748 with
respect to supervision. Accurate information related to branch offices
is an important component of the examination process. The Exchange
currently does not require members or member organizations to report
branch office information.
The Exchange is proposing to adopt a reporting requirement for
member organizations for which the Exchange is the DEA to report branch
office information for purposes of conducting regulatory oversight,
specifically through its examination program. The Financial Industry
Regulatory Authority (``FINRA'') has a requirement for its members to
register and keep current information with respect to branch
offices.\3\ Phlx member organizations for which the Exchange is the DEA
do not have access to the Form BR filing process because they are not
FINRA members. The Exchange believes that adopting Rule 748(f) to
require member organizations for which the Exchange is the DEA to
provide a list identifying its [sic] branch offices would assist the
Exchange in maintaining an efficient examination schedule for Exchange
member organizations for which it is the DEA.
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\3\ This is accomplished through an electronic filing process in
WebCRD using the Uniform Branch Office Registration Form (Form BR).
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Specifically, the Exchange is proposing that each member
organization for which the Exchange is the DEA file a Branch Office
Disclosure Form with the Exchange which requires identification of the
member organization's branch offices.\4\ These member organizations
would also be subject to a continuing requirement to file amendments to
the Branch Office Disclosure Form with the Exchange no later than
thirty (30) days from the date of any change to the information
previously provided on the Form. Member organizations for which the
Exchange is the DEA shall provide information about its [sic] branch
offices, including, but not limited to: location, designated
supervisor, contact information, number of traders at the location and
type of activity conducted at the branch office. The Exchange intends
to provide its member organizations notice of this requirement to
report branch offices.
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\4\ Member organizations for which the Exchange is not the DEA
would not be subject to this requirement.
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2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act \5\ in general, and furthers the objectives of Section
6(b)(5) of the Act \6\ 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, 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 Exchange is proposing to require
its member organizations, for which the Exchange is the DEA, to provide
the Exchange with similar information that is being provided today by
other market participants that report information through Form BR
related to branch offices.\7\
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\5\ 15 U.S.C. 78f(b).
\6\ 15 U.S.C. 78f(b)(5).
\7\ Currently, members and member organization of the New York
Stock Exchange, Inc. (``NYSE''), and FINRA require their members to
report branch offices in Web CRD on the Form BR. See Securities
Exchange Act Release No. 51923 (June 24, 2005), 70 FR 38229 (July 1,
2005) (SR-NYSE-2005-13).
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The information on branch offices is necessary for the Exchange to
conduct proper regulatory oversight of its member organizations where
the Exchange is the DEA.\8\ Today, other options exchanges have similar
rules. The International Stock Exchange, LLC (``ISE'') requires its
members approved to do options business with the public to file with
the exchange and keep current a list of each of its branch offices.\9\
The Chicago Board Options Exchange, Inc. (``CBOE'') also has a similar
rule applicable to TPH organizations.\10\
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\8\ Section 19(g)(1) of the Act, among other things, requires
every self-regulatory organization (``SRO'') registered as either a
national securities exchange or national securities association to
examine for, and enforce compliance by, its members and persons
associated with its members with the Act, the rules and regulations
thereunder, and the SRO's own rules, unless the SRO is relieved of
this responsibility pursuant to Section 17(d) or Section 19(g)(2) of
the Act. With respect to a common member, Section 17(d)(1)
authorizes the Commission, by rule or order, to relieve an SRO of
the responsibility to receive regulatory reports, to examine for and
enforce compliance with applicable statutes, rules, and regulations,
or to perform other specified regulatory functions. Pursuant to 17d-
1, the Commission is authorized to name a single SRO as the DEA to
examine common members for compliance with the SRO rules. See 15
U.S.C. 78q(d), 15 U.S. C. 78s(g)(1) and 15 U.S.C. 78s(g)(2).
\9\ See ISE Rule 607.
\10\ See CBOE Rule 9.6. A ``TPH'' is a trading permit holder.
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The Exchange believes that the proposed rule change would be
beneficial because it would provide the Exchange with additional
information necessary for the supervision of branch offices. The
Exchange does not believe that it is burdensome for member
organizations for which the Exchange is the DEA to comply with this
request as the information pertaining to branch offices is readily
available and member organizations are required to supervise employees
in those locations. Also, the Exchange is only requiring this
information of its member organizations for which it is the DEA because
those are the firms for which the Exchange is examining compliance with
Rule 748 in connection with sales practices and trading activities and
practices. Member organizations for which the Exchange is not the DEA
are subject to the rules of their respective DEA with respect to branch
office reporting.\11\
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\11\ See also NYSE Rule (Options) [sic] 342, FINRA [sic] IM-
1000-4, NASDAQ OMX BX, Inc. (``BX'') Rule Chapter XI, Section 6 and
The NASDAQ Stock Market LLC (``NASDAQ'') Rule Chapter XI, Section 6.
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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 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 either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not: (i)
significantly affect the protection of investors or the public
interest; (ii) impose any significant
[[Page 66900]]
burden on competition; and (iii) become operative for 30 days after the
date of the filing, or such shorter time as the Commission may
designate, it has become effective pursuant to 19(b)(3)(A) of the Act
\12\ and Rule 19b-4(f)(6) \13\ thereunder.
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\12\ 15 U.S.C. 78s(b)(3)(A).
\13\ 17 CFR 240.19b-4(f)(6). 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 necessary or
appropriate in the public interest, for the protection of investors, or
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 email to [email protected]. Please include
File Number SR-Phlx-2012-124 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-Phlx-2012-124. 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 on official business
days between the hours of 10:00 a.m. and 3:00 p.m. Copies of such
filing also will be available for inspection and copying at the
principal offices of Phlx. 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-Phlx-2012-124, and should be submitted on or before November 28,
2012.
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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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-27211 Filed 11-6-12; 8:45 am]
BILLING CODE 8011-01-P