[Federal Register Volume 77, Number 247 (Wednesday, December 26, 2012)]
[Notices]
[Pages 76141-76145]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-30886]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-68455; File No. SR-CHX-2012-14]
Self-Regulatory Organizations; Chicago Stock Exchange, Inc.;
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change
Relating to Telemarketing Rules
December 18, 2012.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Exchange Act'' or ``Act''), \1\ and Rule 19b-4 \2\ thereunder,
notice is hereby given that on December 4, 2012, the Chicago Stock
Exchange, Inc. (``CHX'' or the ``Exchange'') filed with the Securities
and Exchange Commission (``Commission'') the proposed rule change as
described in Items I, II and III below, which Items have been prepared
by the Exchange. CHX has filed this proposal pursuant to Exchange Act
Rule 19b-4(f)(6) \3\ which is effective upon filing with the
Commission.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
CHX proposes to amend its rules to adopt provisions that are
substantially similar in all material respects to Financial Industry
Regulatory Authority (``FINRA'') Rule 3230 (Telemarketing), which the
Commission recently approved.\4\ In turn, FINRA's rule was modeled
after and is substantially similar to Federal Trade Commission
(``FTC'') rules that prohibit deceptive and other abusive telemarketing
acts or practices.\5\ The text of this proposed rule change is
available on the Exchange's Web site at (www.chx.com) and in the
Commission's Public Reference Room.
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\4\ See Exchange Act Release No. 66279 (Jan. 30, 2012), 77 FR
5611 (Feb. 3, 2012) (SR-FINRA-2011-059) (approval order of proposed
rule change to adopt telemarketing rule).
\5\ 16 CFR 310.1-.9. The FTC adopted rules under the
Telemarketing Consumer Fraud and Abuse Prevention Act of 1994
(``Prevention Act'') in 1995. See Federal Trade Commission,
Telemarketing Sales Rule, 60 FR 43842 (Aug. 23, 1995). Since the FTC
rule is the model for the FINRA rule and the CHX rule, subsequent
references will be to the FTC rule.
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II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, CHX included statements
concerning the purpose of and basis for the proposed rule changes and
discussed any comments it received regarding the proposal. The text of
these statements may be examined at the places specified in Item IV
below. CHX 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 Changes
1. Purpose
The Exchange proposes to amend Article 8, Rule 13 (Advertising and
Promotion) to adopt provisions that are substantially similar to FTC
rules that prohibit deceptive and other abusive telemarketing acts or
practices.\6\
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\6\ See supra note 5.
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The Prevention Act required, among other things, the Commission to
promulgate, or direct any national securities exchange or registered
securities associations to promulgate, rules substantially similar to
the FTC rules \7\ to prohibit deceptive and other abusive telemarketing
acts or practices, unless the Commission determines either that the
rules are not necessary or appropriate for the protection of investors
or the maintenance of orderly markets or that existing federal
securities laws or Commission rules already provide for such
protection.\8\ To this end, in May 2011, Commission staff directed the
Exchange to conduct a review of its telemarketing rule and propose rule
amendments that provide protections that are at least as strong as
those provided by the FTC's telemarketing rules.\9\
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\7\ Id.
\8\ 15 U.S.C. 6102.
\9\ See Letter from Robert W. Cook, Director, Division of
Trading and Markets, Securities and Exchange Commission, to David A.
Herron, Chief Executive Officer of CHX, Inc. (May 12, 2011).
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Proposed CHX Article 8, Rule 13
Based on the aforementioned considerations, the proposed rule
change to CHX Article 8, Rule 13, adopts new rule text that is
substantially similar to the FTC's rules that prohibit deceptive and
other abusive telemarketing acts or practices as described below.\10\
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\10\ See supra note 5.
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General Telemarketing Restrictions
Proposed CHX Article 8, Rule 13(d) provides that no Participant or
associated person therewith may initiate any outbound telephone call
\11\ to:
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\11\ An ``outbound telephone call'' is a telephone call
initiated by a telemarketer to induce the purchase of goods or
services or to solicit a charitable contribution from a donor. A
``customer'' is any person who is or may be required to pay for
goods or services through telemarketing. A ``donor'' means any
person solicited to make a charitable contribution. A ``person'' is
any individual, group, unincorporated association, limited or
general partnership, corporation, or other business entity.
``Telemarketing'' means consisting of or relating to a plan,
program, or campaign involving at least one outbound telephone call,
for example cold-calling. The term does not include the solicitation
of sales through the mailing of written marketing materials, when
the person making the solicitation does not solicit customers by
telephone but only receives calls initiated by customers in response
to the marketing materials and during those calls takes orders only
without further solicitation. For purposes of the previous sentence,
the term ``further solicitation'' does not include providing the
customer with information about, or attempting to sell, anything
promoted in the same marketing materials that prompted the
customer's call. See proposed CHX Article 8, Rule 13(p)(11), (14),
(16), (17), and (20); see also FINRA Rule 3230(m)(11), (14), (16),
(17), and (20); and 16 CFR 310.2(f), (l), (n), (v), (w), and (dd).
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1. Any residence of a person before the hour of 8:00 a.m. or after
9:00 p.m. local time at the called person's
[[Page 76142]]
location, unless the Participant has an established business
relationship \12\ with the person pursuant to subparagraph (p)(12), the
Participant has received that person's prior express invitation or
permission, or the person called is a broker or dealer;
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\12\ An ``established business relationship'' is a relationship
between a Participant and a person if (i) the person has made a
financial transaction or has a security position, a money balance,
or account activity with the Participant or at a clearing firm that
provides clearing services to the Participant within the 18 months
immediately preceding the date of an outbound telephone call; (b)
the Participant is the broker-dealer of record for an account of the
person within the 18 months immediately preceding the date of an
outbound telephone call; or (c) the person has contacted the
Participant to inquire about a product or service offered by the
Participant within the three months immediately preceding the date
of an outbound telephone call. A person's established business
relationship with a Participant does not extend to the Participant's
affiliated entities unless the person would reasonably expect them
to be included. Similarly, a person's established business
relationship with a Participant's affiliate does not extend to the
Participant unless the person would reasonably expect the
Participant to be included. The term ``account activity'' includes,
but is not limited to, purchases, sales, interest credits or debits,
charges or credits, dividend payments, transfer activity, securities
receipts or deliveries, and/or journal entries relating to
securities or funds in the possession or control of the Participant.
The term ``broker-dealer of record'' refers to the broker or dealer
identified on a customer's account application for accounts held
directly at a mutual fund or variable insurance product issuer. See
proposed CHX Article 8, Rule 13(p)(1), (4), and (12); see also 16
CFR 310.2(o) and FINRA Rule 3230(m)(1), (4), and (12).
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2. any person that previously has stated that he or she does not
wish to receive an outbound telephone call made by or on behalf of the
Participant; or
3. any person who has registered his or her telephone number on the
FTC's national do-not-call registry.
The proposed rule change is substantially similar to the FTC's
provisions regarding abusive telemarketing acts or practices.\13\ The
FTC provided a discussion of the provision when it was adopted pursuant
to the Prevention Act.\14\
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\13\ See 16 CFR 310.4(b)(1)(iii)(A) and (B) and (c); see also
FINRA Rule 3230(a).
\14\ See Federal Trade Commission, Telemarketing Sales Rule, 68
FR 4580 (Jan. 29, 2003) at 4628; and Federal Trade Commission,
Telemarketing Sales Rule, 60 FR 43842 (Aug. 23, 1995) at 43855.
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National Do-Not-Call List Exceptions
Proposed CHX Article 8, Rule 13(e) provides that the Participant
making outbound telephone calls to any person who has registered his or
her telephone number on the FTC's national do-not-call registry will
not be liable for violating the prohibition in paragraph (d)(3) if:
1. The Participant has an established business relationship with
the recipient of the call; \15\
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\15\ A person's request to be placed on the firm-specific do-
not-call list terminates the established business relationship
exception to that national do-not-call list provision for that
Participant even if the person continues to do business with the
Participant.
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2. the Participant has obtained the person's prior express
invitation or permission; \16\ or
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\16\ Such permission must be evidenced by a signed, written
agreement (which may be obtained electronically under the E-Sign Act
(see 15 U.S.C. 7001 et seq.) between the person and Participant
which states that the person agrees to be contacted by the
Participant and includes the telephone number to which the calls may
be placed.
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3. the associated person making the call has a personal
relationship \17\ with the recipient of the call.
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\17\ The term ``personal relationship'' means any family member,
friend, or acquaintance of the person making an outbound telephone
call. See proposed CHX Article 8, Rule 13(p)(18); see also FINRA
Rule 3230(m)(18).
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The proposed rule change is substantially similar to the FTC's
provision regarding an exception to the prohibition on making outbound
telephone calls to persons on the FTC's do-not-call registry.\18\ The
FTC provided a discussion of the provision when it was adopted pursuant
to the Prevention Act.\19\
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\18\ See 16 CFR 3l0.4(b)(1)(iii)(B); see also FINRA Rule
3230(b).
\19\ See Federal Trade Commission, Telemarketing Sales Rule, 68
FR 4580 (Jan. 29, 2003) at 4628; and Federal Trade Commission,
Telemarketing Sales Rule, 60 FR 43842 (Aug. 23, 1995) at 43854.
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Safe Harbor Provision
Proposed CHX Article 8, Rule 13(f) provides that the Participant or
person associated therewith making outbound telephone calls will not be
liable for initiating any outbound telephone call to any person who has
registered his or her telephone number on the FTC's national do-not-
call registry if the Participant or person associated therewith
demonstrates that the violation is the result of an error and that as
part of the Participant's routine business practice, it meets the
following standards:
1. The Participant has established and implemented written
procedures to comply with the national do-not-call rules;
2. the Participant has trained its personnel, and any entity
assisting in its compliance, in procedures established pursuant to the
national do-not-call rules;
3. the Participant has maintained and recorded a list of telephone
numbers that it may not contact; and
4. the Participant uses a process to prevent outbound telephone
calls to any telephone number on any list established pursuant to the
do-not-call rules, employing a version of the national do-not-call
registry obtained from the administrator of the registry no more than
thirty-one (31) days prior to the date any call is made, and maintains
records documenting this process.
The proposed rule change is substantially similar to the FTC's safe
harbor to the prohibition on making outbound telephone calls to persons
on the FTC's national do-not-call registry.\20\ The FTC provided a
discussion of the provision when it was adopted pursuant to the
Prevention Act.\21\
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\20\ See 16 CFR 310.4(b)(1)(iii)(B); see also FINRA Rule
3230(c).
\21\ See Federal Trade Commission, Telemarketing Sales Rule, 68
FR 4580 (Jan. 29, 2003) at 4628; and Federal Trade Commission,
Telemarketing Sales Rule, 60 FR 43842 (Aug. 23, 1995) at 43855.
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Procedures
Proposed CHX Article 8, Rule 13(g) adopts procedures that
Participants must institute to comply with Article 8, Rule 13 prior to
engaging in telemarketing. Such procedures must meet the following
minimum standards:
1. Participants must have a written policy for maintaining their
firm-specific do-not-call lists.
2. Personnel engaged in any aspect of telemarketing must be
informed and trained in the existence and use of the Participant's
firm-specific do-not-call list.
3. If the Participant receives a request from a person not to
receive calls from that Participant, the Participant must record the
request and place the person's name, if provided, and telephone number
on the firm's do-not-call list at the time the request is made.\22\
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\22\ Participants must honor a person's do-not-call request
within a reasonable time from the date the request was made, which
may not exceed thirty (30) days from the date of such request. If
such requests are recorded or maintained by a party other than the
Participant on whose behalf the outbound telephone call is made, the
Participant on whose behalf the outbound telephone call is made will
be liable for any failures to honor the do-not-call request.
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4. The Participant or person associated therewith making an
outbound telephone call must provide the called party with the name of
the individual caller, the name of the Participant, an address or
telephone number at which the Participant may be contacted, and that
the purpose of the call is to solicit the purchase of securities or
related service. The telephone number provided may not be a 900 number
or any other number for
[[Page 76143]]
which charges exceed local or long distance transmission charges.\23\
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\23\ See proposed CHX Article 8, Rule 13(g)(4); see also 47 CFR
64.1200(d)(4) and FINRA Rule 3230(d)(4).
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5. In the absence of a specific request by the person to the
contrary, a person's do-not-call request shall apply to the Participant
making the call, and will not apply to affiliated entities unless the
consumer reasonably would expect them to be included given the
identification of the caller and the product being advertised.
6. The Participant making outbound telephone calls must maintain a
record of a person's request not to receive further calls.
Inclusion of this requirement to adopt these procedures will not
create any new obligations on Participants, as they are already subject
to identical provisions under the Federal Communications Commission's
(``FCC'') telemarketing regulations.\24\
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\24\ See 47 CFR 64.1200(d); see also FINRA Rule 3230(d).
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Wireless Communications
Proposed CHX Article 8, Rule 13(h) states that the provisions set
forth under this Rule are applicable to Participants and persons
associated therewith making outbound telephone calls to wireless
telephone numbers.\25\
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\25\ See also FINRA Rule 3230(e).
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Outsourcing Telemarketing
Proposed CHX Article 8, Rule 13(i) states that if the Participant
uses another entity or person to perform telemarketing services on its
behalf, the Participant remains responsible for ensuring compliance
with all provisions contained in this Rule 13. This proposed rule also
clarifies that Participants must consider whether the entity or person
that the Participant uses for outsourcing, must be appropriately
registered or licensed, where required.\26\
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\26\ See also FINRA Rule 3230(f).
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Caller Identification Information
Proposed CHX Article 8, Rule 13(j) provides that any Participant
that engages in telemarketing, as defined in subparagraph (p)(20) of
this Rule, must transmit or cause to be transmitted the telephone
number, and, when made available by the Participant's telephone
carrier, the name of the Participant, to any caller identification
service in use by a recipient of an outbound telephone call. The
telephone number so provided must permit any person to make a do-not-
call request during regular business hours. In addition, any
Participant that engages in telemarketing, as defined in subparagraph
(p)(20) of this Rule, is prohibited from blocking the transmission of
caller identification information.\27\
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\27\ Caller identification information includes the telephone
number and, when made available by the Participant's telephone
carrier, the name of the Participant.
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The provisions are similar to the caller identification provisions
in the FTC rules.\28\ Inclusion of these caller identification
provisions in this proposed rule change will not create any new
obligations on Participants, as they are already subject to identical
provisions under FCC telemarketing regulations.\29\
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\28\ See 16 CFR 310.4(a)(8); see also FINRA Rule 3230(g).
\29\ See 47 CFR 64.1601(e).
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Unencrypted Consumer Account Numbers
Proposed CHX Article 8, Rule 13(k) prohibits Participant or persons
associated therewith from disclosing or receiving, for consideration,
unencrypted consumer account numbers for use in telemarketing. The
proposed rule change is substantially similar to the FTC's provision
regarding unencrypted consumer account numbers.\30\ The FTC provided a
discussion of the provision when it was adopted pursuant to the
Prevention Act.\31\ In addition, the term ``unencrypted'' means not
only complete, visible account numbers, whether provided in lists or
singly, but also encrypted information with a key to its decryption.
The proposed definition is substantially similar to the view taken by
the FTC.\32\
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\30\ See 16 CFR 310.4(a)(6); see also FINRA Rule 3230(h).
\31\ See Federal Trade Commission, Telemarketing Sales Rule, 68
FR 4580 (Jan. 29, 2003) at 4615.
\32\ See id. at 4616.
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Submission of Billing Information
Proposed CHX Article 8, Rule 13(l) requires, for any telemarketing
transaction, a Participant or associated person therewith to obtain the
express informed consent of the person to be charged and to be charged
using the identified account. In addition, in any telemarketing
transaction involving preacquired account information \33\ and a free-
to-pay conversion \34\ feature, the Participant or person associated
therewith must:
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\33\ The term ``preacquired account information'' means any
information that enables a Participant or person associated with a
Participant to cause a charge to be placed against a customer's or
donor's account without obtaining the account number directly from
the customer or donor during the telemarketing transaction pursuant
to which the account will be charged. See proposed CHX Article 8,
Rule 13(p)(19).
\34\ The term ``free-to-pay conversion'' means, in an offer or
agreement to sell or provide any goods or services, a provision
under which a customer receives a product or service for free for an
initial period and will incur an obligation to pay for the product
or service if he or she does not take affirmative action to cancel
before the end of that period. See proposed CHX Article 8, Rule
13(p)(13).
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1. Obtain from the customer, at a minimum, the last four (4) digits
of the account number to be charged;
2. obtain from the customer an express agreement to be charged and
to be charged using the account number pursuant to subparagraph
(l)(1)(A); and
3. make and maintain an audio recording of the entire telemarketing
transaction.
In any other telemarketing transaction involving preacquired
account information not described in paragraph (l)(1), the Participant
or person associated therewith must:
1. identify the account to be charged with sufficient specificity
for the customer to understand what account will be charged; and
2. obtain from the customer an express agreement to be charged and
to be charged using the account number identified pursuant to
subparagraph (l)(2)(A).
The proposed rule change is substantially similar to the FTC's
provision regarding the submission of billing information.\35\ The FTC
provided a discussion of the provision when it was adopted pursuant to
the Prevention Act.\36\
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\35\ See 16 CFR 310.4(a)(7); see also FINRA Rule 3230(i).
\36\ See Federal Trade Commission, Telemarketing Sales Rule, 68
FR 4580 (Jan. 29, 2003) at 4615.
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Abandoned Calls
Proposed CHX Article 8, Rule 13(m) prohibits a Participant or
person associated with the Participant from abandoning \37\ any
outbound telemarketing call. The abandoned calls prohibition is subject
to a ``safe harbor'' under proposed subparagraph (m)(2) if:
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\37\ An outbound call is ``abandoned'' if a person answers it
and the call is not connected to a person associated with the
Participant within two (2) seconds of the person's completed
greeting.
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1. The Participant or person associated therewith employs
technology that ensures abandonment of no more than three (3) percent
of all telemarketing calls answered by a person, measured over the
duration of a single calling campaign, if less than thirty (30) days,
or separately over each successive 30-day period or portion thereof
that the campaign continues;
2. the Participant or person associated therewith, for each
telemarketing call placed, allows the telephone to ring for at least
fifteen (15) seconds or four (4) rings before disconnecting an
unanswered call;
[[Page 76144]]
3. whenever a person associated with the Participant is not
available to speak with the person answering the telemarketing call
within two (2) seconds after the person's completed greeting, the
Participant or person associated therewith promptly plays a recorded
message that states the name and telephone number of the Participant or
person associated with the Participant on whose behalf the call was
placed; and
4. the Participant retains records establishing compliance with the
``safe harbor.''
The proposed rule change is substantially similar to the FTC's
provisions regarding abandoned calls.\38\ The FTC provided a discussion
of the provisions when they were adopted pursuant to the Prevention
Act.\39\
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\38\ See 16 CFR 310.4(b)(1)(iv); see also 16 CFR 310.4(b)(4).
\39\ See Federal Trade Commission, Telemarketing Sales Rule, 68
FR 4580 (Jan. 29, 2003) at 4641.
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Prerecorded Messages
Proposed CHX Article 8, Rule 13(n) prohibits the Participant or
person associated therewith from initiating any outbound telemarketing
call that delivers a prerecorded message without a person's express
written agreement \40\ to receive such calls. The proposed rule change
also requires that all prerecorded telemarketing calls provide
specified opt-out mechanisms so that a person can opt out of future
calls. The prohibition does not apply to a prerecorded message
permitted for compliance with the ``safe harbor'' for abandoned calls
under proposed subparagraph (m)(2).
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\40\ The express written agreement must: (a) Have been obtained
only after a clear and conspicuous disclosure that the purpose of
the agreement is to authorize the Participant to place prerecorded
calls to such person; (b) have been obtained without requiring,
directly or indirectly, that the agreement be executed as a
condition of purchasing any good or service; (c) evidence the
willingness of the called person to receive calls that deliver
prerecorded messages by or on behalf of the Participant; and (d)
include the person's telephone number and signature (which may be
obtained electronically under the E-Sign Act).
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The proposed rule change is substantially similar to the FTC's
provisions regarding prerecorded messages.\41\ The FTC provided a
discussion of the provisions when they were adopted pursuant to the
Prevention Act.\42\
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\41\ See 16 CFR 310.4(b)(1)(v); see also FINRA Rule 3230(k).
\42\ See Federal Trade Commission, Telemarketing Sales Rule, 73
FR 51164 (Aug. 29, 2008) at 51165.
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Credit Card Laundering
Proposed CHX Article 8, Rule 13(o) prohibits credit card
laundering, the practice of depositing into the credit card system \43\
a sales draft that is not the result of a credit card transaction
between the cardholder \44\ and the Participant. Except as expressly
permitted, the proposed rule change prohibits the Participant or
associated person therewith from:
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\43\ The term ``credit card system'' means any method or
procedure used to process credit card transactions involving credit
cards issued or licensed by the operator of that system. The term
``credit card'' means any card, plate, coupon book, or other credit
device existing for the purpose of obtaining money, property, labor,
or services on credit. The term ``credit'' means the right granted
by a creditor to a debtor to defer payment of debt or to incur debt
and defer its payment. See proposed CHX Article 8, Rule 13(p)(7),
(8), and (10).
\44\ The term ``cardholder'' means a person to whom a credit
card is issued or who is authorized to use a credit card on behalf
of or in addition to the person to whom the credit card is issued.
See proposed CHX Article 8, Rule 13(p)(6).
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1. Presenting or depositing into, the credit card system for
payment, a credit card sales draft \45\ generated by a telemarketing
transaction that is not the result of a telemarketing credit card
transaction between the cardholder and the Participant;
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\45\ The term ``credit card sales draft'' means any record or
evidence of a credit card transaction. See proposed CHX Article 8,
Rule 13(p)(9).
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2. employ, solicit, or otherwise cause a merchant, or an employee,
representative or agent of the merchant,\46\ to present to or to
deposit into the credit card system for payment, a credit card sales
draft generated by a telemarketing transaction that is not the result
of a telemarketing credit card transaction between the cardholder and
the merchant; or
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\46\ The term ``merchant'' means a person who is authorized
under written contract with an acquirer to honor or accept credit
cards, or to transmit or process for payment credit card payments,
for the purchase of goods or services or a charitable contribution.
The term ``acquirer'' means a business organization, financial
institution, or an agent of a business organization or financial
institution that has authority from an organization that operates or
licenses a credit card system to authorize merchants to accept,
transmit, or process payment by credit card through the credit card
system for money, goods or services, or anything else of value. A
``charitable contribution'' means any donation or gift of money or
any other thing of value, for example a transfer to a pooled income
fund. See proposed CHX Article 8, Rule 13(p)(2) and (14).
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3. obtain access to the credit card system through the use of a
business relationship or an affiliation with a merchant, when such
access is not authorized by the merchant agreement \47\ or the
applicable credit card system.
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\47\ The term ``merchant agreement'' means a written contract
between a merchant and an acquirer to honor or accept credit cards,
or to transmit or process for payment credit card payments, for the
purchase of goods or services or charitable contribution. See
proposed CHX Article 8, Rule 13(p)(15).
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The proposed rule change is substantially similar to the FTC's
provisions regarding credit card laundering.\48\ The FTC provided a
discussion of the provisions when they were adopted pursuant to the
Prevention Act.\49\
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\48\ See 16 CFR 310.3(c); see also FINRA Rule 3230(l).
\49\ See Federal Trade Commission, Telemarketing Sales Rule, 60
FR 43842 (Aug. 23, 1995) at 43852.
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Definitions
Proposed CHX Article 8, Rule 13(p) adopts the following
definitions, which are substantially similar to the FTC's definitions
of these terms: ``acquirer,'' ``billing information,'' ``caller
identification service,'' ``cardholder,'' ``charitable contribution,''
``credit,'' ``credit card,'' ``credit card sales draft,'' ``credit card
system,'' ``customer,'' ``donor,'' ``established business
relationship,'' ``free-to-pay conversion,'' ``merchant,'' ``merchant
agreement,'' ``outbound telephone call,'' ``person,'' ``preacquired
account information,'' and ``telemarketing.'' \50\
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\50\ See proposed CHX Article 8, Rule 13(p)(2), (3), (5), (6),
(7), (8), (9), (10), (11), (12), (13), (14), (15), (16), (17), (19),
and (20); and 16 CFR 310.2(a), (c), (d), (e), (f), (h), (i), (j),
(k), (l), (n), (o), (p), (s), (t), (v), (w), (x), and (dd); see also
FINRA Rule 3230(m)(2), (3), (5), (6), (7), (8), (9), (10), (11),
(12), (13), (14), (15), (16), (17), (19), and (20). The proposed
rule change also adopts definitions of ``account activity,''
``broker-dealer of record,'' and ``personal relationship'' that are
substantially similar to FINRA's definitions of these terms. See
proposed CHX Article 8, Rule 13(p)(1), (4), and (18) and FINRA Rule
3230(m)(1), (4), and (18); see also 47 CFR 64.1200(t)(14) (FCC's
definition of ``personal relationship'').
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Compliance with Other Requirements
Proposed CHX Article 8, Rule 13.01 states that this Rule does not
affect the obligation of any Participant or person associated therewith
that engages in telemarketing to comply with relevant state and federal
laws and rules, including but not limited to the Telemarketing and
Consumer Fraud and Abuse Prevention Act,\51\ the Telephone Consumer
Protection Act,\52\ and the rules of the FCC relating to telemarketing
practices and the rights of telephone consumers.\53\
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\51\ 15 U.S.C. 6101-6108, as amended.
\52\ 47 U.S.C. 227.
\53\ 47 CFR 64.1200.
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2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Act and the rules and regulations thereunder, in particular Section
6(b) of the Act.\54\ Specifically, the Exchange believes that the
proposed rule change furthers the objectives of Section 6(b)(5) \55\ in
that it is designed to promote just and equitable principles of
[[Page 76145]]
trade, to foster cooperation and coordination with persons engaged in
facilitating transaction in securities, to remove impediments and
perfect the mechanisms of a free and open market, and, in general, to
protect investors and the public interest. More specifically, the
Exchange believes that the proposed rule change supports the objective
of the Act by providing greater harmonization between CHX Rules and
rules of similar purpose of other self-regulatory organizations, such
as FINRA, resulting in less burdensome and more efficient regulatory
compliance. In particular, CHX Participants that are also FINRA members
are subject to both CHX Article 8, Rule 13 and FINRA Rule 3230; CHX
believes that harmonizing these two rules would promote just and
equitable principles of trade by requiring a single standard for
telemarketing. In addition, CHX believes that adopting the amendments
to CHX Article 8, Rule 13 will assure that the Exchange's rules
governing telemarketing meet the standards set forth in the Prevention
Act. To the extent the Exchange has proposed changes that differ from
the FINRA version of the CHX Rules, the Exchange believes that such
changes are technical in nature and do not change the substance of the
proposed CHX Rules. The Exchange also believes that the proposed rule
change will update and clarify the requirements governing
telemarketing, which will promote just and equitable principles of
trade and help to protect investors.
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\54\ 15 U.S.C. 78f(b).
\55\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement of 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 Regarding the
Proposed Rule Changes Received From Members, Participants or Others
CHX neither solicited nor received written comments on the proposed
rule change.
III. Date of Effectiveness of the Proposed Rule Changes and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A) of the Act \56\ and Rule 19b-4(f)(6) \57\ thereunder in
that it effects a change that: (i) Does not significantly affect the
protection of investors or the public interest; (ii) does not impose
any significant burden on competition; and (iii) by its terms, does not
become operative for 30 days after the date of the filing, or such
shorter time as the Commission may designate if consistent with the
protection of investors and the public interest.
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\56\ 15 U.S.C. 78s(b)(3)(A).
\57\ 17 CFR 240.19b-4(f)(6).
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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.
Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposal 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 No. SR-CHX-2012-14 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 No. SR-CHX-2012-14. 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 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 on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of such filing will also be available
for inspection and copying at the principal office 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 No. SR-CHX-2012-14 and
should be submitted on or before January 14, 2013.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\58\
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\58\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-30886 Filed 12-21-12; 8:45 am]
BILLING CODE 8011-01-P