[Federal Register Volume 77, Number 67 (Friday, April 6, 2012)]
[Notices]
[Pages 20870-20871]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-8259]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-66709; File No. SR-NYSE-2012-06]
Self-Regulatory Organizations; New York Stock Exchange LLC; Order
Approving a Proposed Rule Change Amending the Definition of Approved
Person To Exclude Foreign Affiliates, Eliminating the Application
Process for Approved Persons, and Making Related Technical and
Conforming Changes
April 2, 2012.
I. Introduction
On February 14, 2012, New York Stock Exchange LLC (``NYSE'' or the
``Exchange'') filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 19(b)(1) \1\ of the Securities
Exchange Act of 1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ a
proposed rule change to amend the definition of approved person to
exclude foreign affiliates, eliminate the application process for
approved persons, and make related technical and conforming changes.
The proposed rule change was published for comment in the Federal
Register on March 1, 2012.\4\ The Commission received no comments on
the proposal. This order approves the proposed rule change.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a et seq.
\3\ 17 CFR 240.19b-4.
\4\ See Securities Exchange Act Release No. 66462 (February 24,
2012), 77 FR 12626 (March 1, 2012) (``Notice'').
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II. Description of the Proposed Rule Change
The Exchange proposed to amend the definition of ``approved
person'' in NYSE Rule 2 to revise the definition of which entities are
deemed to be under ``common control'' with a member organization.
The Exchange proposed several additional amendments to its Rules.
The Exchange proposed to amend paragraphs (3) and (4) of NYSE Rule 21
to provide that a member of the Exchange's Board of Directors or an
authorized committee who is associated with a member organization
cannot participate in the deliberations concerning the listing of a
security if the Director knows that an affiliate of the member
organization directly or indirectly owns one percent or more of any
class of stock of the issuer or has a contract, option, or privilege to
purchase the security to be listed. The Exchange proposed to amend NYSE
Rule 22 to provide that a member of certain NYSE boards and committees
may not participate in the consideration of any matter if there are
certain types of indebtedness between the board or committee member and
a member organization's affiliate or other related parties. The
Exchange proposed to amend NYSE Rule 98A, which provides that no
issuer, or partner or subsidiary thereof, may become an approved person
of a Designated Market Maker (``DMM'') unit that is registered in the
stock of that issuer, to provide instead that a DMM unit may not be
registered in a stock of an issuer, or a partner or subsidiary thereof,
if such entity is either an approved person or an affiliate of the DMM
unit's member organization. The Exchange proposed to amend
Supplementary Material .30(c) of Rule 402 to provide that when
securities are callable in part under the Rule, a member organization
may not allocate any called securities to the account of an affiliate
until all customer positions have been satisfied.
The Exchange also proposed to amend its rules to remove the
requirement that the Exchange affirmatively approve each application to
become an approved person, and accordingly, to remove all references to
an approval process and the submission of an application for such
approval from NYSE Rules 304, 308, and 311. The Exchange also proposed
to eliminate use of the Forms AP-1 and AD-G.
The Exchange proposed to amend NYSE Rule 304 to provide
specifically that a member organization would be required to identify
all of its approved persons to the Exchange and each such approved
person would continue to be required to consent to the Exchange's
jurisdiction. The Exchange also proposed to make technical and
conforming changes to other rules.
III. Discussion and Commission Findings
After careful review, the Commission finds that the proposed rule
change is consistent with the requirements of the Act and the rules and
regulations thereunder applicable to a national securities exchange. In
particular, the Commission finds that the proposed rule change is
consistent with Section 6(b) \5\ of the Act, in general, and furthers
the objectives of Section 6(b)(5) \6\ in particular in that it is
designed to prevent fraudulent and manipulative acts and practices, to
promote just and equitable principles of trade, to foster cooperation
and coordination with persons engaged in facilitating transactions in
securities, to remove impediments to and perfect the mechanism of a
free and open market and a national market system and, in general, to
protect investors and the public interest. The Exchange noted that the
proposed approved person definition and consent to jurisdiction process
would remove unnecessary complexities and excessive informational
requirements and create a more efficient and less burdensome process
for membership applicants and member organizations while maintaining
appropriate regulatory standards.\7\ As such, the Exchange believes
that the proposed rule change would contribute to removing impediments
to and perfecting the mechanism of a free and open market and a
national market system.\8\ The Commission believes that the proposed
rule change is consistent with the Exchange Act and should reduce the
burdens on Exchange members while preserving the Exchange's
jurisdiction over approved persons and maintaining appropriate controls
over approved persons.
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\5\ 15 U.S.C. 78f(b).
\6\ 15 U.S.C. 78f(b)(5).
\7\ Notice, 77 FR at 12628.
\8\ Id.
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The Commission has reviewed the record for the proposed rule change
and believes that the record does not contain any information to
indicate that the proposed rule would have a significant effect on
efficiency, competition, or capital formation. In light of the record,
the Commission has considered the proposed rule's impact on efficiency,
competition, and capital formation and has concluded that the proposed
rule is unlikely to have any significant effect.\9\
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\9\ 15 U.S.C. 78c(f).
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[[Page 20871]]
IV. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\10\ that the proposed rule change (SR-NYSE-2012-06) be, and it
hereby is, approved.
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\10\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
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\11\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2012-8259 Filed 4-5-12; 8:45 am]
BILLING CODE 8011-01-P