[Federal Register Volume 78, Number 234 (Thursday, December 5, 2013)]
[Notices]
[Pages 73223-73233]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-29043]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-70963; File No. SR-NYSEMKT-2013-95]
Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and
Immediate Effectiveness of Proposed Rule Change To Amend Its Rules
Concerning Communications With the Public To Harmonize Them With
Certain Financial Industry Regulatory Authority, Inc. Rules and Make
Other Conforming Changes
November 29, 2013.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Exchange Act'') and Rule 19b-4 thereunder,\2\ notice is
hereby given that on November 15, 2013, NYSE MKT LLC (the ``Exchange''
or ``NYSE MKT'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I and II
below, which Items have been substantially prepared by the Exchange.
The Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons. The Exchange has
designated the proposed rule change as constituting a ``non-
controversial'' rule change under Exchange Act Rule 19b-4(f)(6),\3\
which renders the proposal effective upon receipt of this filing by 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
The Exchange proposes to amend its rules concerning communications
with the public to harmonize them with
[[Page 73224]]
certain Financial Industry Regulatory Authority, Inc. (``FINRA'') rules
and make other conforming changes. The text of the proposed rule change
is available on the Exchange's Web site at www.nyse.com, 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 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 amend its rules concerning communications
with the public to harmonize them with certain FINRA rules and make
other conforming changes. Set forth below are descriptions of the
harmonization process, the current NYSE MKT rules, and the proposed
NYSE MKT rules. Specifically, the Exchange proposes to (i) delete
paragraphs (a)(1), (d), (i), (j) and (l) of NYSE MKT Rule 472--Equities
and Supplementary Materials 472.10(1), (3), (4) and (5)--Equities, and
472.90--Equities; (ii) adopt new rule text that is substantially
similar to FINRA Rules 2210 and 2212; and (iii) make other conforming
changes.\4\
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\4\ References to rules are to NYSE MKT rules unless otherwise
indicated. The remaining provisions of Rule 472--Equities and
supplementary material not addressed in this proposal concern
research and would remain in place because FINRA and NYSE MKT have
not yet harmonized their research rules.
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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 Exchange Act Rule 17d-2, New
York Stock Exchange LLC (``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 NYSE rules and rule interpretations (``FINRA
Incorporated NYSE Rules''). NYSE MKT became a party to the Agreement
effective December 15, 2008.\5\
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\5\ See Exchange Act Release No. 56148 (Jul. 26, 2007), 72 FR
42146 (Aug. 1, 2007) (order approving the Agreement); Exchange Act
Release No. 56147 (Jul. 26, 2007), 72 FR 42166 (Aug. 1, 2007) (order
approving the incorporation of certain NYSE Rules as ``Common
Rules''); Exchange Act Release No. 60409 (July 30, 2009), 74 FR
39353 (Aug. 6, 2009) (order approving the amended and restated
Agreement, adding NYSE MKT LLC as a party). Paragraph 2(b) of the
Agreement sets forth procedures regarding proposed changes by FINRA,
NYSE or NYSE MKT to the substance of any of the Common Rules.
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As part of its effort to reduce regulatory duplication and relieve
firms that are members of FINRA, the Exchange, and NYSE 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\ FINRA recently
harmonized NASD and FINRA Incorporated NYSE Rules and interpretations
concerning communications with the public.\7\ In that filing, FINRA
adopted NASD Rules 2210 and 2211 and NASD Interpretive Materials 2210-1
and 2210-3 through 2210-8 as FINRA Rules 2210 and 2212 through 2216 and
deleted paragraphs (a)(1), (i), (j) and (l) of FINRA Incorporated NYSE
Rule 472, FINRA Incorporated NYSE Rule Supplementary Materials
472.10(1), (3), (4) and (5) and 472.90, and FINRA Incorporated NYSE
Rule Interpretations 472/01 and 472/03 through 472/11.
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\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, dated March 12, 2008.
\7\ See Exchange Act Release No. 66681 (Mar. 29, 2012), 77 FR
20452 (Apr. 4, 2012).
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NYSE Rule 472 is virtually identical to Rule 472--Equities except
for certain technical differences. FINRA's rule change became effective
on February 4, 2013.\8\
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\8\ See FINRA Regulatory Notice 12-29.
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Current Communications With the Public Rules
Rule 472(a)(1)--Equities requires that each advertisement, sales
literature or other similar type of communication that is generally
distributed or made available by a member organization to customers or
the public be approved in advance by an allied member, supervisory
analyst, or qualified person designated under the provisions of Rule
342(b)(1)--Equities.
Rule 472(d)--Equities requires that communications with the public
be retained in accordance with Rule 440--Equities.
Rule 472(i)--Equities provides that no member organization may use
any communication that contains (i) any untrue statement or omission of
a material fact or is otherwise false or misleading; (ii) promises of
specific results, exaggerated or unwarranted claims; (iii) opinions for
which there is no reasonable basis; or (iv) projections or forecasts of
future events that are not clearly labeled as forecasts.
Rule 472(j)--Equities sets forth specific standards for
recommendations, records of past performance, projections and
predictions, comparisons, dating reports, identification of sources,
and testimonials.
Rule 472(l)--Equities provides that other communications activities
may include, but are not limited to, conducting interviews with the
media, writing books, conducting seminars or lecture courses, writing
newspaper or magazine articles, or making radio/TV appearances. Member
organizations must establish specific written supervisory procedures
applicable to allied members and employees who engage in these types of
communications activities. These procedures must include provisions
that require prior approval of such activity by a person designated
under the provisions of Rule 342(b)(1)--Equities. These types of
activities are subject to the general standards set forth in Rule
472(i)--Equities. In addition, any activity that includes discussion of
specific securities is subject to the specific standards in Rule
472(j)--Equities.
Supplementary Materials 472.10(1), (3), (4) and (5)--Equities
define ``communication,'' ``advertisement,'' ``market letter,'' and
``sales literature,'' respectively. For purposes of Rule 472(a)(1)--
Equities, Supplementary Material 472.90--Equities defines a ``qualified
person'' as one who has passed an examination acceptable to the
Exchange.
Proposed Rule Change
The Exchange proposes to delete the foregoing rules relating to
communications with the public and adopt the text of FINRA Rules 2210
and 2212, subject to certain technical and conforming changes.\9\ As
noted in Rule
[[Page 73225]]
0--Equities, Exchange rules that refer to NYSER, NYSER staff or
departments, Exchange staff, and Exchange departments should be
understood as also referring to FINRA staff and FINRA departments
acting on behalf of the Exchange pursuant to the Agreement, as
applicable. The Exchange does not propose to adopt the text of FINRA
Rules 2213, 2214, 2215, and 2216 because they cover products that are
not traded on the Exchange or a limited exception for investment
analysis tools that is not being adopted. These rules would continue to
apply to all Dual Members.
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\9\ The technical and conforming changes are that the Exchange
would (i) substitute the term ``member organization'' for
``member,'' (ii) substitute the term ``Exchange'' for ``FINRA,''
(iii) change certain cross-references to FINRA rules to cross-
references to Exchange rules, and (iv) add supplementary material to
define the term ``associated person.''
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Communication Categories
Under proposed Rule 2210(a)--Equities, the following three
communication categories would be established:
``Institutional communication'' would include any written
(including electronic) communication that is distributed or made
available only to institutional investors, but does not include a
member organization's internal communications. ``Institutional
investor'' would include any (i) person described in FINRA Rule
4512(c), regardless of whether the person has an account with a member
organization; (ii) governmental entity or subdivision thereof; (iii)
employee benefit plan, or multiple employee benefit plans offered to
employees of the same employer, that meet the requirements of Section
403(b) or Section 457 of the Internal Revenue Code and in the aggregate
have at least 100 participants, but does not include any participant of
such plans; (iv) qualified plan, as defined in Exchange Act Section
3(a)(12)(C), or multiple qualified plans offered to employees of the
same employer, that in the aggregate have at least 100 participants,
but does not include any participant of such plans; (v) member
organization or registered person of such a member organization; and
(vi) person acting solely on behalf of any such institutional investor.
``Retail communication'' would include any written
(including electronic) communication that is distributed or made
available to more than 25 retail investors within any 30 calendar-day
period. ``Retail investor'' would include any person other than an
institutional investor, regardless of whether the person has an account
with the member organization.
``Correspondence'' would include any written (including
electronic) communication that is distributed or made available to 25
or fewer retail investors within any 30 calendar-day period.
The proposed communication categories would replace the
communication categories currently defined in Supplementary Material
472.10(1), (3), (4) and (5)--Equities.
Approval, Review and Recordkeeping Requirements
Proposed Rule 2210(b)(1)(A)--Equities would require an
appropriately qualified registered principal of the member organization
to approve each retail communication before the earlier of its use or
its filing with the Exchange's Advertising Regulation Department
(``Department''). The principal registration required to approve
particular communications would depend upon the permissible activities
for each principal registration category. Current Rule 472(a)(1)--
Equities requires prior approval of certain communications by an allied
member, Supervisory Analyst, or qualified person designated under the
provisions of Rule 342(b)(1)--Equities, but the Exchange does not
require member organizations to file communications with the Exchange.
Proposed Rule 2210(b)(1)(B)--Equities would provide that the
requirements of proposed Rule 2210(b)(1)(A)--Equities could be met by a
Supervisory Analyst approved pursuant to Rule 344--Equities with
respect to (i) research reports on debt and equity securities; (ii)
retail communications as described in Rule 472.10(2)(a)--Equities; and
(iii) other research that does not meet the definition of ``research
report'' under Rule 472.10(2)--Equities, provided that the Supervisory
Analyst has technical expertise in the particular product area. A
Supervisory Analyst may not approve a retail communication that
requires a separate registration unless the Supervisory Analyst also
has such other registration. As stated above, current Rule 472(a)(1)--
Equities requires prior approval of certain communications by an allied
member, Supervisory Analyst, or qualified person designated under the
provisions of Rule 342(b)(1)--Equities. As such, the proposed rule
would be limited to approval by Supervisory Analysts only and to
certain types of communications.
Proposed Rule 2210(b)(1)(C)--Equities would provide an exception
from the principal approval requirements of proposed Rule
2210(b)(1)(A)--Equities for retail communications, if at the time that
a member organization intends to publish or distribute the retail
communication (i) another member organization has filed it with the
Department and has received a letter from the Department stating that
it appears to be consistent with applicable standards and (ii) the
member organization using the communication in reliance on this
exception has not materially altered it and will not use it in a manner
that is inconsistent with the conditions of the Department's letter.
The Exchange does not currently have a comparable rule because the
Exchange has not previously required member organizations to file
communications with the Exchange.
Proposed Rule 2210(b)(1)(D)--Equities would except from the
principal approval requirements of proposed Rule 2210(b)(1)(A)--
Equities three additional categories of retail communications, provided
that the member organization supervises and reviews such communications
in the same manner as required for supervising and reviewing
correspondence pursuant to Rule 342--Equities. These communications
include (i) any retail communication that is excepted from the
definition of ``research report'' pursuant to Rule 472.10(2)(a)--
Equities, unless the communication makes any financial or investment
recommendation; (ii) any retail communication that is posted on an
online interactive electronic forum; and (iii) any retail communication
that does not make any financial or investment recommendation or
otherwise promote a product or service of the member organization.
Under current Rule 342--Equities, correspondence and communications
with the public are subject to all supervisory provisions of the
Exchange's rules. The proposed rule change would specifically delineate
these three categories of retail communications that would be excepted
from the additional principal approval requirements under proposed Rule
2210--Equities.
Proposed Rule 2210(b)(1)(E)--Equities would allow FINRA, pursuant
to the FINRA Rule 9600 Series, to grant an exemption from the principal
approval requirements of proposed Rule 2210(b)(1)(A)--Equities for good
cause shown after taking into consideration all relevant factors, to
the extent that the exemption is consistent with the purposes of Rule
2210--Equities, the protection of investors, and the public
interest.\10\ FINRA Rule 9610 sets forth procedures for exemptive
relief.
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\10\ Similarly, the Exchange's affiliate, NYSE Arca Equities,
Inc. (``NYSE Arca Equities''), has FINRA process certain exemptions
under FINRA Rule 9610. See NYSE Arca Equities Rule 9.21(c)(10). The
Exchange will propose to adopt its own rules for exemptions when the
Exchange conforms its disciplinary rules to FINRA's and NYSE's
disciplinary rules.
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[[Page 73226]]
Proposed Rule 2210(b)(1)(F)--Equities would require,
notwithstanding any other provision of Rule 2210--Equities, a
registered principal to approve a communication prior to the member
organization's filing it with the Department. The Exchange does not
currently have a comparable rule because the Exchange has not
previously required member organizations to file communications with
the Exchange.
Proposed Rules 2210(b)(2) and (3)--Equities generally would impose
certain supervisory and review requirements with regard to a member
organization's correspondence and institutional communications.
Proposed Rule 2210(b)(2)--Equities would subject all correspondence to
the supervision and review requirements already in place under Rule
342--Equities. Proposed Rule 2210(b)(3)--Equities would require each
member organization to establish written procedures that are
appropriate to its business, size, structure, and customers for the
review by an appropriately qualified registered principal of
institutional communications used by the member organization and its
associated persons. Such procedures must be reasonably designed to
ensure that institutional communications comply with applicable
standards. When such procedures do not require review of all
institutional communications prior to first use or distribution, they
must include provision for the education and training of associated
persons as to the firm's procedures governing institutional
communications, documentation of such education and training, and
surveillance and follow-up to ensure that such procedures are
implemented and adhered to. Evidence that these supervisory procedures
have been implemented and carried out must be maintained and made
available to the Exchange upon request. These requirements are similar
to current Rule 342.10(B)(v)--Equities, which provides that
correspondence and communications with the public are subject to all
supervisory provisions of the Exchange's rules, and Rule 342.17--
Equities, which requires member organizations to develop written
policies and procedures that are appropriate for their business, size,
structure and customers in connection with the review of communications
with the public relating to their business. Rule 472(c)--Equities also
requires each member organization to establish written procedures
reasonably designed to ensure that allied members, member organizations
and their employees are in compliance with Rule 472--Equities, which
includes both communications with the public provisions and research
provisions. While proposed Rule 2210(b)(3)--Equities would cover
written procedures relating to communications with the public, the
Exchange would maintain Rule 472(c)--Equities to cover written
procedures for the research provisions that will remain in that rule.
Proposed Rule 2210(b)(4)(A)--Equities would set forth the
recordkeeping requirements for retail and institutional communications.
This provision would incorporate by reference the recordkeeping format,
medium and retention period requirements of Exchange Act Rule 17a-
4.\11\
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\11\ Exchange Act Rule 17a-4(b) requires broker-dealers to
preserve certain records for a period of not less than three years,
the first two years in an easily accessible place. Among these
records, pursuant to Exchange Act Rule 17a-4(b)(4), are
``[o]riginals of all communications received and copies of all
communications sent (and any approvals thereof) by the member,
broker or dealer (including inter-office memoranda and
communications) relating to its business as such, including all
communications which are subject to rules of a self-regulatory
organization of which the member, broker or dealer is a member
regarding communications with the public. As used in this paragraph,
the term communications includes sales scripts.'' Exchange Act Rule
17a-4(f) permits broker-dealers to maintain and preserve these
records on ``micrographic media'' or by means of ``electronic
storage media,'' as defined in the rule and subject to a number of
conditions.
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Proposed Rule 2210(b)(4)(A)--Equities specifies that such records
would have to include:
A copy of the communication and the dates of first and (if
applicable) last use;
The name of any registered principal who approved the
communication and the date that approval was given;
In the case of a retail communication or institutional
communication that is not approved prior to first use by a registered
principal, the name of the person who prepared or distributed the
communication; \12\
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\12\ To the extent clerical staff is employed in the preparation
or distribution of the communication, the records should include the
name of the person on whose behalf the communication was prepared or
distributed.
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Information concerning the source of any statistical
table, chart, graph or other illustration used in the communication;
and
For retail communications that would rely on the exception
under proposed Rule 2210(b)(1)(C)--Equities, the name of the member
organization that filed the retail communication with the Department
and a copy of the Department's review letter.
Current Rule 440--Equities also incorporates by reference the
recordkeeping format, medium and retention period requirements of
Exchange Act Rule 17a-4. Current Rule 472(d)--Equities provides that
communications with the public prepared or issued by a member
organization must be retained in accordance with Rule 440--Equities,
and the names of the persons who prepared, reviewed, and approved the
material must be ascertainable from the retained records, and those
records must be readily available to the Exchange upon request. The
Exchange proposes to delete current Rule 472(d)--Equities because
proposed Rule 2210(b)(4)(B)--Equities would address recordkeeping
requirements and cross-reference Rule 440--Equities with respect to
correspondence recordkeeping requirements.
Filing Requirements and Review Procedures
Proposed Rule 2210(c)--Equities would set forth the filing
requirements and review procedures for retail communications. The
Exchange does not currently require member organizations to file
communications with the Exchange, and as such, the Exchange does not
currently have a comparable rule.
Proposed Rule 2210(c)(1)(A)--Equities would require a member
organization to file with the Department at least 10 business days
prior to first use any retail communication that is published or used
in any electronic or other public media, including any generally
accessible Web site, newspaper, magazine or other periodical, radio,
television, telephone or audio recording, video display, signs or
billboards, motion pictures, or telephone directories (other than
routine listings). This filing requirement continues for a period of
one year beginning on the date reflected in the Central Registration
Depository (``CRD'') system as the date that Exchange membership became
effective. To the extent any retail communication is a free writing
prospectus that has been filed with the Commission pursuant to Rule
433(d)(1)(ii), promulgated under the Securities Act of 1933
(``Securities Act''), the member organization may file such retail
communication within 10 business days of first use rather than at least
10 business days prior to first use.
[[Page 73227]]
Proposed Rule 2210(c)(1)(B)--Equities would authorize the
Department to require a member organization to file all of its
communications, or the portion of the member organization's material
relating to specific types or classes of securities or services, with
the Department at least 10 business days prior to first use, if the
Department determines that the member organization has departed from
the standards of the proposed rule. The Department would notify the
member organization in writing of the types of communications to be
filed and the length of time such requirement is to be in effect. Any
filing requirement imposed would take effect 21 calendar days after
service of the written notice, during which time the member
organization may request a hearing under FINRA Rules 9551 and 9559.\13\
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\13\ FINRA currently performs this function for requesting NYSE
Arca ETP Holders under NYSE Arca Equities Rule 9.21(c)(5)(B). The
Exchange will propose to adopt comparable rules when the Exchange
conforms its disciplinary rules to FINRA's and NYSE's disciplinary
rules.
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Proposed Rule 2210(c)(2)--Equities would require member
organizations to file retail communications concerning any registered
investment company that include self-created rankings and retail
communications concerning security futures at least 10 business days
prior to first use and to withhold them from use until any changes
specified by the Department have been made. The requirement to file
retail communications concerning security futures prior to first use
would not apply to (i) retail communications that are submitted to
another self-regulatory organization having comparable standards
pertaining to such communications and (ii) retail communications in
which the only reference to security futures is contained in a listing
of the services of a member organization. The Exchange does not propose
to adopt the text of FINRA 2210(c)(2)(C), which requires prior filing
of retail communications concerning bond mutual funds that include or
incorporate bond mutual fund volatility ratings as defined in FINRA
Rule 2213 because, as stated above, the Exchange does not propose to
adopt the text of FINRA Rule 2213 (the text of which the Exchange also
does not propose adopting) because it covers products that are not
traded on the Exchange, and FINRA Rule 2213 would continue to apply to
all Dual Members.
Proposed Rule 2210(c)(3)(A)--Equities would require retail
communications concerning registered investment companies (including
mutual funds, exchange-traded funds, variable insurance products,
closed-end funds, and unit investment trusts) to be filed within 10
business days of first use or publication. In addition, the filing of
any retail communication that includes or incorporates a performance
ranking or performance comparison of the investment company with other
investment companies must include a copy of the ranking or comparison
used in the retail communication. Proposed Rule 2210(c)(3)(B)--Equities
would require retail communications concerning public direct
participation programs to be filed within 10 business days of first use
or publication. The Exchange does not propose to adopt the text of
FINRA Rule 2210(c)(3)(C), which requires prior filing of first use
templates for written reports produced by, or retail communications
concerning an investment analysis tool, as such term is defined in
FINRA Rule 2214 (the text of which the Exchange also does not propose
adopting) because it covers a limited exception for investment analysis
tools that is not being adopted, and FINRA Rule 2214 would continue to
apply to all Dual Members. As such, proposed Rule 2210(c)(3)(C)--
Equities would be marked ``Reserved.'' Proposed Rule 2210(c)(3)(D)--
Equities would require member organizations to file within 10 business
days of first use retail communications concerning collateralized
mortgage obligations that are registered under the Securities Act.
Under proposed Rule 2210(c)(3)(E)--Equities, member organizations
would have to file within 10 business days of first use all retail
communications concerning any security that is registered under the
Securities Act and that is derived from or based on a single security,
a basket of securities, an index, a commodity, a debt issuance or a
foreign currency, not included within the requirements of paragraphs
(c)(1), (c)(2) or subparagraphs (A) through (E) of paragraph (c)(3) of
proposed Rule 2210--Equities. This provision would exclude retail
communications that are already subject to a separate filing
requirement found elsewhere in proposed paragraph (c), such as retail
communications concerning registered investment companies or public
direct participation programs.
Proposed Rule 2210(c)(4)--Equities would provide that, if a member
organization has filed a draft version or ``story board'' of a
television or video retail communication pursuant to a filing
requirement, then the member organization also must file the final
filmed version within 10 business days of first use or broadcast.
Proposed Rule 2210(c)(5)--Equities would specify that a member
organization must provide with each filing the actual or anticipated
date of first use, the name, title and CRD number of the registered
principal who approved the communication, and the date of approval.
Proposed Rule 2210(c)(6)--Equities would provide that each member
organization's written communications may be subject to a spot-check
procedure, and that member organizations must submit requested material
within the time frame specified by the Department.
Proposed Rule 2210(c)(7)(A)--Equities would create a filing
exclusion for retail communications that previously have been filed
with the Department and that are to be used without material change.
Proposed Rule 2210(c)(7)(B)--Equities would create an exclusion for
retail communications that are based on templates that were previously
filed with the Department, the changes to which are limited to updates
of more recent statistical or other non-narrative information. Proposed
Rule 2210(c)(7)(C)--Equities would exclude retail communications that
do not make any financial or investment recommendation or otherwise
promote a product or service of the member organization.\14\
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\14\ This filing exception would have the same scope as the
proposed exception from the principal pre-use approval requirements
for retail communications that do not make any financial or
investment recommendation or otherwise promote a product or service
of the member organization. See Proposed Rule 2210(b)(1)(D)(iii)--
Equities.
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Paragraphs (c)(7)(D), (E), (G) and (H) of proposed Rule 2210--
Equities would create a filing exclusion for retail communications that
do no more than identify a national securities exchange symbol of the
member organization or identify a security for which the member
organization is a registered market maker; advertisements and sales
literature that do no more than identify the member organization or
offer a specific security at a stated price; certain ``tombstone''
advertisements governed by Securities Act Rule 134; and press releases
that are made available only to members of the media.
Proposed Rule 2210(c)(7)(F)--Equities would create a filing
exclusion for prospectuses, preliminary prospectuses, fund profiles,
offering circulars and similar documents that have been filed with the
Commission or any state, or that are exempt from such registration,
except that an investment company prospectus published pursuant to
Securities Act Rule 482 and a free writing prospectus that has been
filed with the Commission pursuant to Securities Act Rule 433(d)(1)(ii)
would
[[Page 73228]]
not be considered a prospectus for purposes of this exclusion.\15\
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\15\ Securities Act Rule 433(d)(1)(ii) requires any offering
participant, other than the issuer, to file with the Commission a
free writing prospectus that is used or referred to by such offering
participant and distributed by or on behalf of such person in a
manner reasonably designed to lead to its broad unrestricted
dissemination.
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Proposed Rule 2210(c)(7)(I)--Equities would create a filing
exclusion for any reprint or excerpt of any article or report issued by
a publisher (``reprint''), provided that the publisher is not an
affiliate of the member organization using the reprint or any
underwriter or issuer of a security mentioned in the reprint that the
member organization is promoting; neither the member organization using
the reprint nor any underwriter or issuer of a security mentioned in
the reprint has commissioned the reprinted article or report; and the
member organization using the reprint has not materially altered its
contents except as necessary to make the reprint consistent with
applicable regulatory standards or to correct factual errors.
Paragraphs (c)(7)(J) and (K) of proposed Rule 2210--Equities would
create filing exclusions for correspondence and institutional
communications. Proposed paragraph (c)(7)(L) would exclude from filing
communications that refer to types of investments solely as part of a
listing of products or services offered by the member organization.
Proposed Rule 2210(c)(7)(M)--Equities would exclude from the filing
requirements retail communications that are posted on an online
interactive electronic forum. Proposed Rule 2210(c)(7)(N)--Equities
would exclude from the filing requirements press releases issued by
closed-end investment companies that are listed on the Exchange
pursuant to Section 401 of the NYSE MKT Company Guide (or any successor
provision).
The Exchange does not propose to adopt FINRA Rule 2210(c)(8)
because Section 24(b) of the Investment Company Act and Rule 24b-3
thereunder only apply to a registered national securities association,
i.e., FINRA. As such, Rule 2210(c)(8)--Equities would be marked
``Reserved.''
Proposed Rule 2210(c)(9)(A)--Equities would allow FINRA to exempt,
pursuant to the FINRA Rule 9600 Series, a member organization from the
pre-use filing requirements of paragraph (c)(1)(A) for good cause
shown. Proposed Rule 2210(c)(9)(B)--Equities would allow FINRA to grant
an exemption from the filing requirements of paragraph (c)(3) for good
cause shown after taking into consideration all relevant factors,
provided that the exemption is consistent with the purposes of the
rule, the protection of investors, and the public interest. Generally,
this relief would be limited to the same extent as in proposed
paragraph (b)(1)(E), which would authorize FINRA to grant exemptive
relief from the principal approval requirements in proposed Rule
2210(b)(1)(A)--Equities for retail communications, subject to the same
standards.\16\
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\16\ See supra note 8.
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Content Standards
Proposed Rule 2210(d)--Equities would incorporate the current
content standards applicable to communications with the public that are
found in Rules 472(i) and (j)--Equities, subject to certain changes.
Proposed Rule 2210(d)(1)--Equities is comparable to the general
standards for all communications in Rule 472(i)--Equities; however, the
proposed rule would expand upon these general standards.
Proposed Rule 2210(d)(1)(A)--Equities would provide that all member
organization communications must be based on principles of fair dealing
and good faith, must be fair and balanced, and must provide a sound
basis for evaluating the facts in regard to any particular security or
type of security, industry, or service. In addition, the proposed rule
would provide that no member organization may omit any material fact or
qualification if the omission, in light of the context of the material
presented, would cause the communications to be misleading. Current
Rule 472(i)--Equities, which sets forth the general content standards
for all communications, is comparable to the proposed rule.
As with current Rule 472(i)--Equities, which specifically prohibits
promissory statements, proposed Rule 2210(d)(1)(B)--Equities would
prohibit a member organization from making any false, exaggerated,
unwarranted, promissory or misleading statement or claim in any
communication. In addition, no member organization may publish,
circulate or distribute any communication that the member organization
knows or has reason to know contains any untrue statement of a material
fact or is otherwise false or misleading.
Proposed Rule 2210(d)(1)(C)--Equities would allow information to be
placed in a legend or footnote only in the event that such placement
would not inhibit an investor's understanding of the communication. The
Exchange does not currently have a comparable rule with this specific
requirement.
Proposed Rule 2210(d)(1)(D)--Equities would provide that member
organizations must ensure that statements are clear and not misleading
within the context in which they are made, and that they provide
balanced treatment of risks and potential benefits. In addition,
communications must be consistent with the risks of fluctuating prices
and the uncertainty of dividends, rates of return and yield inherent to
investments. The Exchange does not currently have a comparable rule
with this specific requirement.
Proposed Rule 2210(d)(1)(E)--Equities would provide that member
organizations must consider the nature of the audience to which the
communication will be directed and must provide details and
explanations appropriate to the audience. The Exchange does not
currently have a comparable rule with this specific requirement.
Proposed Rule 2210(d)(1)(F)--Equities would provide that
communications may not predict or project performance, imply that past
performance will recur or make any exaggerated or unwarranted claim,
opinion or forecast; provided, however, the following would not be
prohibited:
A hypothetical illustration of mathematical principles,
provided that it does not predict or project the performance of an
investment or investment strategy; and
A price target contained in a research report on debt or
equity securities, provided that the price target has a reasonable
basis, the report discloses the valuation methods used to determine the
price target, and the price target is accompanied by disclosure
concerning the risks that may impede achievement of the price target.
The Exchange does not propose to adopt the text of FINRA Rule
2210(d)(1)(F)(ii), which references an investment analysis tool, or a
written report produced by an investment analysis tool, that meets the
requirements of FINRA Rule 2214 (the text of which the Exchange also
does not propose adopting) because it covers a limited exception for
investment analysis tools that is not being adopted, and FINRA Rule
2214 would continue to apply to all Dual Members. As such, text of
proposed Rule 2210(d)(1)(F)(ii)--Equities would correspond to the text
of FINRA Rule 2210(d)(1)(F)(iii).
Current Rule 472(j)(3)--Equities provides that any projection or
prediction must contain the bases or assumptions upon which they are
made
[[Page 73229]]
and must indicate that the bases or assumptions of the materials upon
which such projections and predictions are made are available upon
request. The proposed rule would make a blanket prohibition against
predictions and projections and carve out certain exemptions.
Proposed Rule 2210(d)(2)--Equities would provide that any
comparison in retail communications between investments or services
must disclose all material differences between them, including (as
applicable) investment objectives, costs and expenses, liquidity,
safety, guarantees or insurance, fluctuation of principal or return,
and tax features. Similarly, current Rule 472(j)(4)--Equities provides
that any comparison of one member organization's service, personnel,
facilities or charges with those of other firms must be factually
supportable.
Rule 2210(d)(3)--Equities would require all retail communications
and correspondence to (i) prominently disclose the name of the member
organization, and would allow a fictional name by which the member
organization is commonly recognized or which is required by any state
or jurisdiction; (ii) reflect any relationship between the member
organization and any non-member organization that, or individual who,
also is named in the communication; and (iii) if the communication
includes other names, reflect which products and services are offered
by the member organization. Proposed Rule 2210(d)(3)--Equities would
apply these standards to correspondence as well as to retail
communications. A member organization would be permitted to use the
name under which the member organization's broker-dealer business is
conducted as disclosed on the member organization's Form BD, as well as
a fictional name by which the member organization is commonly
recognized or which is required by any state or jurisdiction. The
proposed rule would not apply to ``blind'' advertisements used to
recruit personnel. The Exchange does not currently have a comparable
rule with these specific requirements.
Proposed Rule 2210(d)(4)(A)--Equities would specify that in retail
communications and correspondence, references to tax-free or tax-exempt
income must indicate which income taxes apply, or which do not, unless
income is free from all applicable taxes, and provides an example of
income from an investment company investing in municipal bonds that is
free from federal income tax but subject to state or local income
taxes. The Exchange does not currently have a comparable rule with
these specific requirements.
Proposed Rule 2210(d)(4)(B)--Equities would prohibit communications
from characterizing income or investment returns as tax-free or exempt
from income tax when tax liability is merely postponed or deferred,
such as when taxes are payable upon redemption. The Exchange does not
currently have a comparable rule with these specific requirements.
Proposed Rule 2210(d)(4)(C)--Equities would add new language
concerning comparative illustrations of the mathematical principles of
tax-deferred versus taxable compounding. First, the illustration would
have to depict both the taxable investment and the tax-deferred
investment using identical investment amounts and identical assumed
gross investment rates of return, which may not exceed 10 percent per
annum. Second, the illustration would have to use and identify actual
federal income tax rates. Third, the illustration would be permitted
(but not required) to reflect an actual state income tax rate, provided
that the communication prominently discloses that the illustration is
applicable only to investors that reside in the identified state.
Fourth, the tax rates used in the illustration that is intended for a
target audience would have to reasonably reflect its tax bracket or
brackets as well as the tax character of capital gains and ordinary
income. Fifth, if the illustration covers an investment's payout
period, the illustration would have to reflect the impact of taxes
during this period. Sixth, the illustration could not assume an
unreasonable period of tax deferral. Seventh, the illustration would
have to include the following disclosures, as applicable:
The degree of risk in the investment's assumed rate of
return, including a statement that the assumed rate of return is not
guaranteed;
The possible effects of investment losses on the relative
advantage of the taxable versus tax-deferred investments;
The extent to which tax rates on capital gains and
dividends would affect the taxable investment's return;
The fact that ordinary income tax rates will apply to
withdrawals from a tax-deferred investment;
Its underlying assumptions; \17\
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\17\ These assumptions may include, for example, the age at
which an investor may begin withdrawing funds from a tax-deferred
account, the actual federal tax rates applied in the hypothetical
taxable illustration, any state income tax rate applied in the
illustration, and the charges associated with the hypothetical
investment.
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The potential impact resulting from federal or state tax
penalties (e.g., for early withdrawals or use on non-qualified
expenses); and
That an investor should consider his or her current and
anticipated investment horizon and income tax bracket when making an
investment decision, as the illustration may not reflect these factors.
The Exchange does not currently have a comparable rule with these
specific requirements.
Proposed Rule 2210(d)(5)--Equities would require retail
communications and correspondence that present the performance of a
non-money market mutual fund, to disclose the fund's maximum sales
charge and operating expense ratio as set forth in the fund's current
prospectus fee table. The Exchange does not currently have a comparable
rule with these specific requirements.
Proposed Rule 2210(d)(6)(A)--Equities would provide that, if any
testimonial in a communication concerns a technical aspect of
investing, the person making the testimonial must have the knowledge
and experience to form a valid opinion. This requirement would be
identical to current Rule 472(j)(7)(iv)--Equities.
Proposed Rule 2210(d)(6)(B)--Equities would require any retail
communications and correspondence that provide a testimonial concerning
the investment advice or investment performance of a member
organization or its products to prominently disclose (i) the fact that
the testimonial may not be representative of the experience of other
customers, (ii) the fact that the testimonial is no guarantee of future
performance or success, and (iii) if more than $100 in value is paid
for the testimonial, the fact that it is a paid testimonial. The
proposed rule would be substantially the same as current Rule
472(j)(7)(i)-(iii)--Equities, except that Rule 472(j)(7)(iii)--Equities
refers instead to a ``nominal amount.''
Proposed Rule 2210(d)(7)--Equities would apply to retail
communications that contain a recommendation. Proposed Rule
2210(d)(7)(A)--Equities would require disclosure of certain specified
conflicts of interest to the extent applicable. Retail communications
that include a recommendation of securities must have a reasonable
basis for the recommendation and must disclose, if applicable, the
following: (i) That at the time the communication was published or
distributed, the member organization was making a market in the
security being recommended, or in the underlying security if the
recommended
[[Page 73230]]
security is an option or security future, or that the member
organization or associated persons will sell to or buy from customers
on a principal basis; (ii) that the member organization or any
associated person that is directly and materially involved in the
preparation of the content of the communication has a financial
interest in any of the securities of the issuer whose securities are
recommended, and the nature of the financial interest (including,
without limitation, whether it consists of any option, right, warrant,
future, long or short position), unless the extent of the financial
interest is nominal; and (iii) that the member organization was manager
or co-manager of a public offering of any securities of the issuer
whose securities were recommended within the past 12 months. The
proposed rule would be more detailed than current Rule 472(j)(1)--
Equities, which covers recommendations.
Proposed Rule 2210(d)(7)(B)--Equities would require a member
organization to provide, or offer to furnish upon request, available
investment information supporting the recommendation, and if the
recommendation is for a corporate equity security, to provide the price
at the time the recommendation is made. The proposed rule would be
comparable to current Rule 472(j)(1)--Equities, which provides that
when recommending the purchase, sale or switch of specific securities,
supporting information must be provided or offered, and the market
price at the time the recommendation is made must be indicated.
Proposed Rule 2210(d)(7)(C)--Equities would amend the provisions
governing communications that include past recommendations, which are
currently found in Rule 472(j)(2)--Equities. The proposed standards
mirror those found in Rule 206(4)-1(a)(2) under the Investment Advisers
Act of 1940 (``Advisers Act''), which apply to investment adviser
advertisements that contain past recommendations.\18\
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\18\ Proposed Rule 2210(d)(7)(C)--Equities, like Advisers Act
Rule 206(4)-1(a)(2), generally would prohibit retail communications
from referring to past specific recommendations of the member
organization that were or would have been profitable to any person.
The proposed rule would allow, however, a retail communication or
correspondence to set out or offer to furnish a list of all
recommendations as to the same type, kind, grade or classification
of securities made by the member organization within the immediately
preceding period of not less than one year. The list would have to
provide certain information regarding each recommended security and
include a prescribed cautionary legend warning investors not to
assume that future recommendations will be profitable.
---------------------------------------------------------------------------
Proposed Rule 2210(d)(7)(D)--Equities expressly would exclude from
its coverage communications that meet the definition of ``research
report'' or that are public appearances by a research analyst for
purposes of Rule 472--Equities and that include all of the applicable
disclosures required by that rule. Proposed Rule 2210(d)(7)(D)--
Equities also would exclude any communication that recommends only
registered investment companies or variable insurance products.\19\ The
Exchange does not currently have a comparable rule regarding registered
investment companies.
---------------------------------------------------------------------------
\19\ The Exchange is proposing to exclude communications that
recommend only registered investment companies or variable insurance
products because it believes that recommendations of these products
do not raise the same kinds of conflicts of interest as
recommendations of other types of securities, since they are pooled
investment vehicles rather than securities of a single issuer.
---------------------------------------------------------------------------
Under proposed Rule 2210(d)(8)--Equities, prospectuses, preliminary
prospectuses, fund profiles and similar documents that have been filed
with the Commission would not be subject to the standards of proposed
Rule 2210(d)--Equities; provided, however, that the standards would
apply to an investment company prospectus published pursuant to
Securities Act Rule 482 and a free writing prospectus that has been
filed with the Commission pursuant to Securities Act Rule
433(d)(1)(ii). The Exchange does not currently have a comparable rule.
Certain Text Not Adopted
The Exchange does not propose to adopt the text of FINRA Rule
2210(e), which relates to limitations on the use of FINRA's name and
any other corporate name owned by FINRA. The Exchange does not propose
to adopt the text of FINRA Rule 2210(e)(2) because that provision
relates to over-the-counter transactions, which the Exchange does not
regulate. Lastly, the Exchange does not propose to adopt the text of
FINRA Rule 2210(e)(3) because the Exchange has not previously imposed a
requirement on member organizations to provide a link to the Exchange's
Web site in connection with its indication of NYSE MKT membership, and
the Exchange does not believe it is necessary to impose such a
restriction at this time. FINRA Rule 2210(e)(3) would continue to apply
to all Dual Members. As such, Rule 2210(e)--Equities would be marked
``Reserved.''
Public Appearances
Proposed Rule 2210(f)--Equities sets forth the general standards
that would apply to public appearances. Public appearances would have
to meet the general ``fair and balanced'' standards of proposed Rule
2210(d)(1)--Equities. The disclosure requirements applicable to
recommendations in proposed Rule 2210(d)(7)--Equities would apply if
the public appearance included a recommendation of a security. The
proposed rule also would require member organizations to establish
appropriate written policies and procedures to supervise public
appearances, and clarify that scripts, slides, handouts or other
written (including electronic) materials used in connection with public
appearances are considered communications for purposes of proposed Rule
2210--Equities. The proposed requirement to establish supervisory
policies and procedures for public appearances would be consistent with
Rule 472(l)--Equities, which covers other communications activities.
Violations of Other Rules
Proposed Rule 2210(g)--Equities would provide that any violation by
a member organization of any rule of the Commission or the Securities
Investor Protection Corporation applicable to member organization
communications would be deemed a violation of proposed Rule 2210--
Equities. FINRA Rule 2210(g) also applies to violations of Municipal
Securities Rulemaking Board (``MSRB'') rules because FINRA enforces
such rules. Because the Exchange does not enforce MSRB rules, the
reference to MSRB rules would not be included in proposed Rule
2210(g)--Equities.
Use of Investment Companies Rankings in Retail Communications
The Exchange proposes to adopt the text of FINRA Rule 2212, which
would cover the use of investment company rankings in retail
communications. The Exchange currently does not have a comparable rule.
Proposed Rule 2212(a)--Equities would define ``Ranking Entity'' as
``any entity that provides general information about investment
companies to the public, that is independent of the investment company
and its affiliates, and whose services are not procured by the
investment company or any of its affiliates to assign the investment
company a ranking.''
Proposed Rule 2212(b)--Equities would provide that member
organizations may not use investment company rankings in any retail
communication other than (i) rankings created and published by Ranking
Entities or (ii) rankings created by an investment company or an
investment
[[Page 73231]]
company affiliate but based on the performance measurements of a
Ranking Entity. Rankings in retail communications also would have to
conform to the requirements described below.
Proposed Rule 2212(c)--Equities would require certain disclosures
in retail communications. A headline or other prominent statement must
not state or imply that an investment company or investment company
family is the best performer in a category unless it is actually ranked
first in the category. All retail communications containing an
investment company ranking also would have to disclose prominently:
The name of the category (e.g., growth);
The number of investment companies or, if applicable,
investment company families, in the category;
The name of the Ranking Entity and, if applicable, the
fact that the investment company or an affiliate created the category
or subcategory;
The length of the period (or the first day of the period)
and its ending date; and
Criteria on which the ranking is based (e.g., total
return, risk-adjusted performance).
In addition, all retail communications containing an investment company
ranking also would have to disclose:
The fact that past performance is no guarantee of future
results;
For investment companies that assess front-end sales
loads, whether the ranking takes those loads into account;
If the ranking is based on total return or the current
Commission standardized yield, and fees have been waived or expenses
advanced during the period on which the ranking is based, and the
waiver or advancement had a material effect on the total return or
yield for that period, a statement to that effect;
The publisher of the ranking data (e.g., ``ABC Magazine,
June 2011''); and
If the ranking consists of a symbol (e.g., a star system)
rather than a number, the meaning of the symbol (e.g., a four-star
ranking indicates that the fund is in the top 30% of all investment
companies).
Proposed Rule 2212(d)--Equities would provide that any investment
company ranking included in a retail communication must be, at a
minimum, current to the most recent calendar quarter ended prior to use
or submission for publication. If no ranking that meets this
requirement is available from the Ranking Entity, then a member
organization would only be able to use the most current ranking
available from the Ranking Entity unless use of the most current
ranking would be misleading, in which case no ranking from the Ranking
Entity may be used. In addition, except for money market mutual funds:
Retail communications may not present any ranking that
covers a period of less than one year, unless the ranking is based on
yield;
An investment company ranking based on total return must
be accompanied by rankings based on total return for a one year period
for investment companies in existence for at least one year; one and
five year periods for investment companies in existence for at least
five years; and one, five and ten year periods for investment companies
in existence for at least ten years supplied by the same Ranking
Entity, relating to the same investment category, and based on the same
time period; provided that, if rankings for such one, five and ten year
time periods are not published by the Ranking Entity, then rankings
representing short, medium and long term performance must be provided
in place of rankings for the required time periods; and
An investment company ranking based on yield may be based
only on the current Commission standardized yield and must be
accompanied by total return rankings for the time periods specified in
Rule 2212(d)(2)(B)--Equities.
Proposed Rule 2212(e)--Equities would provide specific requirements
with respect to categories. The choice of category (including a
subcategory of a broader category) on which the investment company
ranking is based must be one that provides a sound basis for evaluating
the performance of the investment company. An investment company
ranking must be based only on (i) a published category or subcategory
created by a Ranking Entity or (ii) a category or subcategory created
by an investment company or an investment company affiliate, but based
on the performance measurements of a Ranking Entity. Retail
communications must not use any category or subcategory that is based
upon the asset size of an investment company or investment company
family, whether or not it has been created by a Ranking Entity.
Proposed Rule 2212(f)--Equities would provide that investment
company rankings for more than one class of investment company with the
same portfolio must be accompanied by prominent disclosure of the fact
that the investment companies or classes have a common portfolio and
different expense structures.
Proposed Rule 2212(g)--Equities would provide that retail
communications may contain rankings of investment company families,
provided that these rankings comply with proposed Rule 2212--Equities,
and further provided that no retail communication for an individual
investment company may provide a ranking of an investment company
family unless it also prominently discloses the various rankings for
the individual investment company supplied by the same Ranking Entity,
as described in proposed Rule 2212(d)(2)(B)--Equities. For purposes of
Rule 2212--Equities, the term ``investment company family'' would mean
any two or more registered investment companies or series thereof that
hold themselves out to investors as related companies for purposes of
investment and investor services.
Proposed Rule 2212(h)--Equities would specify that Rule 2212--
Equities would not apply to any reprint or excerpt of any article or
report that is excluded from the Exchange's Advertising Regulation
Department filing requirements pursuant to Rule 2210(c)(7)(I)--
Equities.
Conforming Changes
The Exchange also proposes to make certain conforming changes to
Rule 342--Equities. Specifically, the Exchange proposes to amend
Supplementary Materials .10(B) and .17 to Rule 342--Equities, which
covers the approval, supervision, and control of offices, to include a
cross-reference to proposed Rule 2210--Equities in addition to the
current cross-references to Rule 472--Equities in that rule. The
Exchange also proposes to amend the definition of ``branch office'' in
Supplementary Material .10 to Rule 342--Equities to replace references
to ``advertisements'' and ``sales literature'' with references to
``retail communications.''
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Exchange Act Section 6(b),\20\ in general, and furthers the
objectives of Exchange Act Section 6(b)(5),\21\ in particular, because
it is designed to promote just and equitable principles of trade 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 change supports the objectives of the
Exchange Act by
[[Page 73232]]
providing greater harmonization between NYSE MKT rules and FINRA rules
of similar purpose, resulting in less burdensome and more efficient
regulatory compliance. In particular, NYSE MKT member organizations
that are also FINRA members are subject to Rule 472--Equities and FINRA
Rules 2210 and 2212, and harmonizing these rules by adopting proposed
Rules 2210--Equities and 2212--Equities would promote just and
equitable principles of trade by requiring a single standard for
communications with the public. The Exchange believes that to the
extent the Exchange has proposed changes that differ from the FINRA
version of the NYSE MKT rules, such changes are generally technical in
nature and do not change the substance of the proposed rules. The
Exchange also believes that the proposed rule change would update and
add specificity to the requirements governing communications with the
public, which would promote just and equitable principles of trade and
help to protect investors. The Exchange further believes that using
FINRA's procedures in the event that a member wishes to obtain an
exemption or contest a pre-filing requirement would create greater
efficiency and consistency while providing members with appropriate
procedural protections until the Exchange adopts comparable procedures.
As such, the Exchange believes the proposed rule change meets the
requirements of Exchange Act Section 6(b)(5).
---------------------------------------------------------------------------
\20\ 15 U.S.C. 78f(b).
\21\ 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
result in any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Exchange Act. The
Exchange believes that the proposed rule change is not intended to
address competitive issues but rather to achieve greater consistency
between the Exchange's rules and FINRA's rules.
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
Exchange Act Section 19(b)(3)(A)(iii) \22\ and Rule 19b-4(f)(6)
thereunder.\23\ 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, it has become
effective pursuant to Exchange Act Section 19(b)(3)(A) and Rule 19b-
4(f)(6)(iii) thereunder.
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\22\ 15 U.S.C. 78s(b)(3)(A)(iii).
\23\ 17 CFR 240.19b-4(f)(6).
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A proposed rule change filed under Rule 19b-4(f)(6) \24\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\25\ 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.
---------------------------------------------------------------------------
\24\ 17 CFR 240.19b-4(f)(6).
\25\ 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------
The Commission believes that waiving the 30-day operative delay is
consistent with the protection of investors and the public interest,
because it would allow the Exchange to immediately conform its rules to
corresponding FINRA rules. This will ensure that Dual Members generally
will be subject to a single set of rules governing communications with
the public. As noted by the Exchange, the proposal would harmonize NYSE
and FINRA rules. In addition, the proposal would update and add
specificity to the Exchange's requirements governing communications
with the public, which are designed to help protect customers of all
NYSE members. For these reasons, the Commission designates the proposed
rule change to be operative upon filing.\26\
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\26\ For purposes 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 Exchange Act. If the
Commission takes such action, the Commission shall institute
proceedings under Exchange Act Section 19(b)(2)(B) \27\ to determine
whether the proposed rule change should be approved or disapproved.
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\27\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------
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 Exchange 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-NYSEMKT-2013-95 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-NYSEMKT-2013-95. 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 Section, 100 F Street
NE., Washington, DC 20549-1090, on official business days between the
hours of 10:00 a.m. and 3:00 p.m. Copies of the 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 Number SR-
NYSEMKT-2013-95 and should be submitted on or before December 26, 2013.
[[Page 73233]]
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\28\
Kevin M. O'Neill,
Deputy Secretary.
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\28\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2013-29043 Filed 12-4-13; 8:45 am]
BILLING CODE 8011-01-P