Federal Register / Vol. 76, No. 70 / Tuesday, April 12, 2011 / Notices 20407 

7 15 U.S.C. 78s(b)(3)(A). 

8 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

4(f)(6)(iii) requires the self-regulatory organization 

to submit to the Commission written notice of its 

intent to file the proposed rule change, along with 

a brief description and text of the proposed rule 

change, at least five business days prior to the date 

of filing of the proposed rule change, or such 

shorter time as designated by the Commission. The 

Exchange has satisfied this requirement. 

9See SR–CBOE–2011–036, Items 7 and 8. 

10For purposes of waiving the 30-day operative 

delay, the Commission has considered the proposed 

rule change’s impact on efficiency, competition, 

and capital formation. 15 U.S.C. 78c(f). 

11 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

19(b)(3)(A) of the Act 7 and Rule 19b– 

4(f)(6) thereunder.8

The Exchange requested that the 

Commission waive the 30-day operative 

delay. The Exchange stated that waiver 

would allow the Exchange to 

immediately delete references to the 

flash functionality and thereby reduce 

any customer confusion. In addition, the 

Exchange noted that the proposal is 

consistent with proposals from other 

exchanges to eliminate flash 

functionality.9 Based on the foregoing, 

the Commission believes it is consistent 

with the protection of investors and the 

public interest to waive the 30-day 

operative delay and hereby designates 

the proposal operative upon filing.10

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. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an e-mail to rulecomments@sec.gov. Please include File 

Number SR–CBOE–2011–036 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–CBOE–2011–036. This file 

number should be included on the 

subject line if e-mail is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

Internet Web site (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for Web site viewing and 

printing in the Commission’s Public 

Reference Room on official business 

days between the hours of 10 a.m. and 

3 p.m. Copies of such filing also will 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–CBOE–2011–036 and 

should be submitted on or before May 

3, 2011. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.11

Cathy H. Ahn, 

Deputy Secretary. 

[FR Doc. 2011–8656 Filed 4–11–11; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–64215; File No. SR– 

NASDAQ–2011–045] 

Self-Regulatory Organizations; The 

NASDAQ Stock Market LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change To Amend 

NASDAQ Rule 3011 To Reflect 

Changes to a Corresponding Financial 

Industry Regulatory Authority, Inc. 

Rule 

April 6, 2011. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’),1 and Rule 19b–4 2 thereunder, 

notice is hereby given that on March 31, 

2011, The NASDAQ Stock Market LLC 

(the ‘‘Exchange’’ or ‘‘NASDAQ’’) 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 substantially prepared by the 

Exchange. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend 

NASDAQ Rule 3011 to reflect recent 

changes to a corresponding rule of the 

Financial Industry Regulatory 

Authority, Inc. (‘‘FINRA’’). The text of 

the proposed rule change is available at 

http://nasdaq.cchwallstreet.com, at 

NASDAQ’s principal office, and at the 

Commission’s Public Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

forth in sections A, B, and C below, of 

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

Many of NASDAQ’s rules are based 

on rules of FINRA (formerly the 

National Association of Securities 

Dealers (‘‘NASD’’)). During 2008, FINRA 

embarked on an extended process of 

moving rules formerly designated as 

‘‘NASD Rules’’ into a consolidated 

FINRA rulebook. In most cases, FINRA 

has renumbered these rules, and in 

some cases has substantively amended 

them. Accordingly, NASDAQ also has 

been modifying its rulebook to ensure 

that NASDAQ rules corresponding to 

FINRA/NASD rules continue to mirror 

them as closely as practicable. In some 

cases, it will not be possible for the rule 

numbers of NASDAQ rules to mirror 

corresponding FINRA rules, because 

existing or planned NASDAQ rules 

make use of those numbers. However, 

wherever possible, NASDAQ plans to 

update its rules to reflect changes to 

corresponding FINRA rules. 


srobinson on DSKHWCL6B1PROD with NOTICES
20408 Federal Register / Vol. 76, No. 70 / Tuesday, April 12, 2011 / Notices 

3NASDAQ Rule 3011 will remain numbered as 

Rule 3011, rather than Rule 3310, like FINRA’s rule, 

because NASDAQ already has a different rule 

operating as NASDAQ Rule 3310. 

4Securities Exchange Act Release No. 60645 

(September 10, 2009), 74 FR 47630 (September 16, 

2009) (SR–FINRA–2009–039). 

5See Currency and Foreign Transactions 

Reporting Act of 1970 (commonly referred to as the 

Bank Secrecy Act), 12 U.S.C. 1829b, 12 U.S.C. 

1951–1959, and 31 U.S.C. 5311–5330. 

6 15 U.S.C. 78f(b)(5). 

7 15 U.S.C. 78s(b)(3)(A). 

8 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

4(f)(6) requires a self-regulatory organization to give 

the Commission written notice of its intent to file 

the proposed rule change at least five business days 

prior to the date of filing of the proposed rule 

change, or such shorter time as designated by the 

Commission. The Exchange has satisfied this 

requirement. 

This filing addresses NASDAQ Rule 

3011, which pertains to anti-money 

laundering compliance programs.3 In 

SR–FINRA–2009–039,4 FINRA adopted: 

(1) NASD Rule 3011 (AML Compliance 

Program) as FINRA Rule 3310 (AML 

Compliance Program), without 

substantive change; (2) NASD IM–3011– 

1 (Independent Testing Requirements) 

as FINRA Rule 3310.01, subject to 

certain amendments; and (3) NASD IM– 

3011–2 (Review of AML Compliance 

Person Information) as FINRA Rule 

3310.02, without substantive change. 

FINRA Rule 3310 requires that each 

AML compliance program must, at a 

minimum: (1) Establish and implement 

policies and procedures that can be 

reasonably expected to detect and cause 

the reporting of suspicious transactions; 

(2) establish and implement policies, 

procedures, and internal controls 

reasonably designed to achieve 

compliance with the Bank Secrecy Act 

(‘‘BSA’’) 5 and its implementing 

regulations promulgated by the 

Department of the Treasury; (3) provide 

in most instances for annual (on a 

calendar-year basis) independent testing 

for compliance to be conducted by 

member personnel or a qualified outside 

party; (4) designate and identify to 

FINRA an individual or individuals 

(i.e., AML compliance person(s)) who 

will be responsible for implementing 

and monitoring the day-to-day 

operations and internal controls of the 

AML compliance program and provide 

prompt notification to FINRA of any 

changes to the designation; and (5) 

provide on-going training for 

appropriate persons. NASDAQ is 

proposing to adopt FINRA Rule 3310 in 

the same form as NASDAQ Rule 3011. 

FINRA Rule 3310.01 (Independent 

Testing Requirements) is substantially 

similar to NASD IM–3011–1 (the 

predecessor to FINRA Rule 3310.01) in 

that: (1) Members should undertake 

more frequent testing than required if 

circumstances warrant; (2) the person 

conducting the independent test must 

have a working knowledge of applicable 

requirements under the BSA and its 

implementing regulations; and (3) the 

testing cannot be conducted by any 

person who performs the functions 

being tested, by the AML compliance 

person(s), or by any person who reports 

to any of these persons. 

However, NASD IM–3011–1 

permitted the AML compliance program 

testing to be conducted by persons who 

report to either the AML compliance 

person or persons performing the 

functions being tested if: (1) The 

member has no other qualified internal 

personnel to conduct the test; (2) the 

member establishes written policies and 

procedures to address conflicts that may 

arise from allowing the test to be 

conducted by a person who reports to 

the person(s) whose activities he or she 

is testing (e.g., anti-retaliation 

procedures); (3) to the extent possible, 

the person conducting the test reports 

the results of the test to someone who 

is senior to the AML compliance person 

or persons performing the functions 

being tested; and (4) the member 

documents its rationale, which must be 

reasonable, for determining there is no 

other alternative than to comply in this 

manner. In addition, if the person does 

not report the results consistent with (3) 

above, the member must document a 

reasonable explanation for not doing so. 

This provision is referred to as the 

‘‘independent testing exception.’’ When 

it renumbered NASD IM–3011–1 as 

FINRA Rule 3310.01, FINRA eliminated 

the independent testing exception, 

because the Financial Crimes 

Enforcement Network (‘‘FinCEN’’), a 

bureau within the Department of the 

Treasury that is responsible for 

administering the BSA and its 

implementing regulations, has stated 

that the independent testing provision 

of the BSA precludes AML program 

testing by personnel with an interest in 

the outcome of the testing and that an 

independent testing exception, such as 

the one previously in NASD IM–3011– 

1, is inconsistent with the BSA’s 

independent testing provision and 

FinCEN’s interpretive guidance on the 

BSA’s independent testing requirement. 

In light of this, NASDAQ proposes to 

adopt FINRA Rule 3310.01, which 

eliminates the independent testing 

exception, in the same form as 

NASDAQ Rule 3011.01. 

Finally, FINRA Rule 3310.02 (Review 

of AML Compliance Person 

Information) requires each member to 

identify, review, and if necessary, 

update the information regarding its 

AML compliance person in the manner 

prescribed in NASD Rule 1160. 

NASDAQ is proposing to adopt this in 

the same form as NASDAQ Rule 

3011.02. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

Section 6(b)(5) of the Act,6 in that it is 

designed to prevent fraudulent and 

manipulative acts and practices, to 

promote just and equitable principles of 

trade, 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 

proposed changes will conform 

NASDAQ Rule 3011 to recent changes 

made to a corresponding FINRA rule in 

order to promote application of 

consistent regulatory standards. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition not 

necessary or appropriate in furtherance 

of the purposes of the Act. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were either 

solicited or received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Because the foregoing proposed rule 

change does not: (i) Significantly affect 

the protection of investors or the public 

interest; (ii) impose any significant 

burden on competition; and (iii) become 

operative for 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 Section 

19(b)(3)(A) of the Act 7 and Rule 19b– 

4(f)(6) 8 thereunder. 

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is necessary or appropriate in the 

public interest, for the protection of 

investors, or otherwise in furtherance of 

the purposes of the Act. If the 

Commission takes such action, the 

Commission shall institute proceedings 

to determine whether the proposed rule 

should be approved or disapproved. 


srobinson on DSKHWCL6B1PROD with NOTICES
Federal Register / Vol. 76, No. 70 / Tuesday, April 12, 2011 / Notices 20409 

9 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 62252 

(June 10, 2010), 75 FR 34186 (June 16, 2010) (SR– 

NSX–2010–05). 

4See Securities Exchange Act Release No. 63512 

(December 9, 2010), 75 FR 78786 (December 16, 

2010) (SR–NSX–2010–17). 

5See Securities Exchange Act Release No. 62884 

(September 10, 2010), 75 FR 56618 (September 16, 

2010) (SR–NSX–2010–08). 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an e-mail to rulecomments@sec.gov. Please include File 

Number SR–NASDAQ–2011–045 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–NASDAQ–2011–045. This 

file number should be included on the 

subject line if e-mail is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

Internet Web site (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for Web site viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street, NE., 

Washington, DC 20549, on official 

business days between the hours of 

10 a.m. and 3 p.m. Copies of the filing 

also will 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– 

NASDAQ–2011–045 and should be 

submitted on or before May 3, 2011. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.9

Cathy H. Ahn, 

Deputy Secretary. 

[FR Doc. 2011–8633 Filed 4–11–11; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–64213; File No. SR–NSX– 

2011–04] 

Self-Regulatory Organizations; 

National Stock Exchange, Inc.; Notice 

of Filing and Immediate Effectiveness 

of Proposed Rule Change To Amend 

Its Rules To Extend a Pilot Program 

Regarding Trading Pauses in 

Individual Securities Due to 

Extraordinary Market Volatility 

April 6, 2011. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 (the 

‘‘Act’’) 1 and Rule 19b–4 thereunder,2

notice is hereby given that on March 31, 

2011, National Stock Exchange, Inc. 

(‘‘Exchange’’ or ‘‘NSX’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change, as described in Items I and II 

below, which Items have been prepared 

by the Exchange. The Commission is 

publishing this notice to solicit 

comment on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

National Stock Exchange, Inc. 

(‘‘NSX®’’ or ‘‘Exchange’’) is proposing to 

amend its rules to extend a certain pilot 

program regarding trading pauses in 

individual securities due to 

extraordinary market volatility. 

The text of the proposed rule change 

is available on the Exchange’s Web site 

at http://www.nsx.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 these 

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 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

With this rule change, the Exchange is 

proposing to extend a pilot program 

currently in effect regarding trading 

pauses in individual securities due to 

extraordinary market volatility under 

NSX Rule 11.20B. Currently, unless 

otherwise extended or approved 

permanently, this pilot program will 

expire on April 11, 2011. The instant 

rule filing proposes to extend the pilot 

program until the earlier of August 11, 

2011 or the date on which a limit up/ 

limit down mechanism to address 

extraordinary market volatility, if 

adopted, applies to the Circuit Breaker 

Securities as defined in Commentary .05 

of Rule 11.20. 

NSX Rule 11.20B (Trading Pauses in 

Individual Securities Due to 

Extraordinary Market Volatility) was 

approved by the Securities and 

Exchange Commission (the 

‘‘Commission’’) on June 10, 2010 on a 

pilot basis to end on December 10, 

2010.3 The pilot program end date was 

subsequently extended until April 11, 

2011.4 Similar rule changes were 

adopted by other markets in the national 

market system in a coordinated manner. 

As the Exchange noted in its filing to 

adopt NSX Rule 11.20B, during the pilot 

period, the Exchange, in conjunction 

with other markets in the national 

market system, would continue to assess 

whether additional securities need to be 

added and whether the parameters of 

the rule would need to be modified to 

accommodate trading characteristics of 

different securities. NSX Rule 11.20B 

was expanded to include additional 

exchange traded products on September 

10, 2010.5 The Exchange, in 

consultation with the Commission and 

other markets, has determined that the 

duration of this pilot program should be 

extended until August 11, 2011 or to 

coincide, if applicable, with the earlier 

implementation date of the limit up/ 

limit down mechanism. Accordingly, 


srobinson on DSKHWCL6B1PROD with NOTICES