Federal Register / Vol. 75, No. 236 / Thursday, December 9, 2010 / Notices 76759 

7 17 CFR 240.17d–1 and 17 CFR 240.17d–2, 

respectively. 

8See Securities Exchange Act Release No. 12352 

(April 20, 1976), 41 FR 18808 (May 7, 1976). 

9See Securities Exchange Act Release No. 12935 

(October 28, 1976), 41 FR 49091 (November 8, 

1976). 

10See Paragraph 1 of the proposed 17d–2 Plan; 

see e.g., Securities Exchange Act Release No. 58350 

(August 13, 2008), 73 FR 48247 (August 18, 2008) 

(File No. 4–566) (notice of filing of proposed insider 

trading plan) and Securities Exchange Act Release 

No. 58536 (September 12, 2008) (File No. 4–566) 

(order approving and declaring effective the plan). 

11 15 U.S.C. 78q(d). 

12 17 CFR 240.17d–2(c). 

13Paragraph 1 of the Plan provides that whenever 

a Common Member ceases to be a member of its 

DREA, the DREA shall promptly inform the 

Common Member’s DEA, which will become such 

Common Member’s DEA. 

14See, e.g., Paragraph 7 of the Plan (Sharing of 

Work Papers, Data and Related Information) and 

Paragraph 5 (sharing of customer complaints). 

15See Paragraph 22 of the Plan. 

16 17 CFR 200.30–3(a)(34). 

responsibility to receive regulatory 

reports, to examine for and enforce 

compliance with applicable statutes, 

rules, and regulations, or to perform 

other specified regulatory functions. 

To implement Section 17(d)(1), the 

Commission adopted two rules: Rule 

17d–1 and Rule 17d–2 under the Act.7

Rule 17d–1 authorizes the Commission 

to name a single SRO as the designated 

examining authority (‘‘DEA’’) to examine 

common members for compliance with 

the financial responsibility 

requirements imposed by the Act, or by 

Commission or SRO rules.8 When an 

SRO has been named as a common 

member’s DEA, all other SROs to which 

the common member belongs are 

relieved of the responsibility to examine 

the firm for compliance with the 

applicable financial responsibility rules. 

On its face, Rule 17d–1 deals only with 

an SRO’s obligations to enforce member 

compliance with financial responsibility 

requirements. Rule 17d–1 does not 

relieve an SRO from its obligation to 

examine a common member for 

compliance with its own rules and 

provisions of the federal securities laws 

governing matters other than financial 

responsibility, including sales practices 

and trading activities and practices. 

To address regulatory duplication in 

these and other areas, the Commission 

adopted Rule 17d–2 under the Act.9

Rule 17d–2 permits SROs to propose 

joint plans for the allocation of 

regulatory responsibilities with respect 

to their common members. Under 

paragraph (c) of Rule 17d–2, the 

Commission may declare such a plan 

effective if, after providing for 

appropriate notice and comment, it 

determines that the plan is necessary or 

appropriate in the public interest and 

for the protection of investors; to foster 

cooperation and coordination among the 

SROs; to remove impediments to, and 

foster the development of, a national 

market system and a national clearance 

and settlement system; and is in 

conformity with the factors set forth in 

Section 17(d) of the Act. Commission 

approval of a plan filed pursuant to Rule 

17d–2 relieves an SRO of those 

regulatory responsibilities allocated by 

the plan to another SRO. 

II. Proposed Plan 

The proposed 17d–2 Plan is intended 

to reduce regulatory duplication for 

firms that are members of more than one 

Party to the proposed 17d–2 Plan. 

Pursuant to the proposed 17d–2 Plan, 

the Designated Regulation NMS 

Examining Authority (‘‘DREA’’) would 

assume examination and enforcement 

responsibilities for broker-dealers that 

are members of more than one 

Participating Organization (‘‘Common 

Members’’) with respect to certain 

applicable laws, rules, and regulations. 

FINRA would serve as the DREA for 

Common Members that are members of 

FINRA. The DEA would serve as the 

DREA for Common Members that are 

not members of FINRA. 

The text of the Plan delineates the 

proposed regulatory responsibilities 

with respect to the Parties. Included in 

the proposed Plan is an exhibit (the 

‘‘Covered Regulation NMS Rules’’) that 

lists the Federal securities laws, rules, 

and regulations, for which the DREA 

would bear responsibility under the 

Plan for overseeing and enforcing with 

respect to Common Members. 

Specifically, under the 17d–2 Plan, 

the DREA would assume examination 

and enforcement responsibility relating 

to compliance by Common Members 

with the Covered Regulation NMS 

Rules. Under the Plan, each 

Participating Organization would retain 

full responsibility for examination, 

surveillance and enforcement with 

respect to trading activities or practices 

involving its own marketplace, unless 

otherwise allocated pursuant to a 

separate Rule 17d–2 agreement.10

III. Discussion 

The Commission finds that the 

proposed Plan is consistent with the 

factors set forth in Section 17(d) of the 

Act 11 and Rule 17d–2(c) thereunder 12

in that the proposed Plan is necessary 

or appropriate in the public interest and 

for the protection of investors, fosters 

cooperation and coordination among 

SROs, and removes impediments to and 

fosters the development of the national 

market system. In particular, the 

Commission believes that the proposed 

Plan should reduce unnecessary 

regulatory duplication by allocating to 

the DREA certain examination and 

enforcement responsibilities for 

Common Members that would 

otherwise be performed by each Party.13

Accordingly, the proposed Plan 

promotes efficiency by reducing costs to 

Common Members. Furthermore, 

because the Parties will coordinate their 

regulatory functions in accordance with 

the proposed Plan, the Plan should 

promote investor protection.14

The Commission is hereby declaring 

effective a plan that allocates regulatory 

responsibility for certain provisions of 

the federal securities laws, rules, and 

regulations as set forth in Exhibit A to 

the Plan. The Commission notes that 

any amendment to the Plan must be 

approved by the relevant Parties as set 

forth in Paragraph 22 of the Plan and 

must be filed with and approved by the 

Commission before it may become 

effective.15

IV. Conclusion 

This Order gives effect to the Plan 

filed with the Commission in File No. 

4–618. The Parties shall notify all 

members affected by the Plan of their 

rights and obligations under the Plan. 

It is therefore ordered, pursuant to 

Section 17(d) of the Act, that the Plan 

in File No. 4–618 is hereby approved 

and declared effective. 

It is further ordered that the Parties 

who are not the DREA as to a particular 

Common Member are relieved of those 

regulatory responsibilities allocated to 

the Common Member’s DREA under the 

Plan to the extent of such allocation. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.16

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–30946 Filed 12–8–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63418; File No. SR– 

NYSEAmex–2010–108] 

Self-Regulatory Organizations; NYSE 

Amex LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Eliminate Market and 

Stop Orders in Nasdaq-Listed 

Securities Traded on the Exchange 

December 2, 2010. 

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

Securities Exchange Act of 1934 (the 


erowe on DSK5CLS3C1PROD with NOTICES
76760 Federal Register / Vol. 75, No. 236 / Thursday, December 9, 2010 / Notices 

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

2 17 CFR 240.19b–4. 

3The UTP Pilot Program is currently scheduled 

to expire on the earlier of Commission approval to 

make such pilot permanent or January 31, 2011. See 

Securities Exchange Act Release No. 62857 

(September 7, 2010), 75 FR 55837 (September 14, 

2010) (SR–NYSEAmex–2010–89) (Notice of Filing 

and Immediate Effectiveness of Proposed Rule 

Change to Extend the Pilot Program that Allows 

Nasdaq Stock Market Securities to be Traded on the 

Exchange Pursuant to UTP). See also Securities 

Exchange Act Release No. 62479 (July 9, 2010), 75 

FR 41264 (July 15, 2010) (SR–NYSEAmex–2010–31) 

(Notice of Filing of Amendment Nos. 2 and 3, and 

Order Granting Accelerated Approval to a Proposed 

Rule Change, as Modified by Amendment Nos. 1, 

2, and 3 Thereto, To Adopt as a Pilot Program a 

New Rule Series for the Trading of Securities Listed 

on the Nasdaq Stock Market Pursuant to Unlisted 

Trading Privileges) (‘‘UTP Pilot Program Approval 

Order’’). 

4See Securities Exchange Act Release No. 58863 

(October 27, 2008), 73 FR 65417 (November 3, 2008) 

(Notice of Filing and Immediate Effectiveness of 

Amendment No. 20 to the UTP Plan). The 

Exchange’s predecessor, the American Stock 

Exchange LLC, joined the UTP Plan in 2001. See 

Securities Exchange Act Release No. 55647 (April 

19, 2007), 72 FR 20891 (April 26, 2007) (S7–24–89). 

In March 2009, the Exchange changed its name to 

NYSE Amex LLC. See Securities Exchange Act 

Release No. 59575 (March 13, 2009), 74 FR 11803 

(March 19, 2009) (SR–NYSEALTR–2009–24). 

5 15 U.S.C. 78l. 

6 ‘‘Nasdaq Securities’’ is included within the 

definition of ‘‘security’’ as that term is used in the 

NYSE Amex Equities Rules. See NYSE Amex 

Equities Rule 3. In accordance with this definition, 

Nasdaq Securities are admitted to dealings on the 

Exchange on an ‘‘issued,’’ ‘‘when issued,’’ or ‘‘when 

distributed’’ basis. See NYSE Amex Equities Rule 

501. 

7 17 CFR 242.611. A protected bid or protected 

offer means a quotation in an NMS stock that: (i) 

Is displayed by an automated trading center; (ii) is 

disseminated pursuant to an effective national 

market system plan; and (iii) is an automated 

quotation that is the best bid or best offer of a 

national securities exchange, the best bid or best 

offer of The Nasdaq Stock Market, Inc., or the best 

bid or best offer of a national securities association 

other than the best bid or best offer of The Nasdaq 

Stock Market, Inc. 17 CFR 242.600(b)(57). 

8See Rule 80C—NYSE Amex Equities (Trading 

Pauses in Individual Securities Due to 

Extraordinary Market Volatility). 

9See Rule 128—NYSE Amex Equities (Clearly 

Erroneous Executions For NYSE Amex Equities). 

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

notice is hereby given that on November 

22, 2010, NYSE Amex LLC (the 

‘‘Exchange’’ or ‘‘NYSE Amex’’) 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 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 

Rule 501—NYSE Amex Equities to 

eliminate Market and Stop Orders in 

Nasdaq-listed securities traded on the 

Exchange. The text of the proposed rule 

change is available at the Exchange’s 

principal office, the Commission’s 

Public Reference Room, and http:// 

www.nyse.com. 

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 

self-regulatory organization 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 purpose of this proposed rule 

change is to amend Rule 501—NYSE 

Amex Equities to eliminate Market and 

Stop Orders in Nasdaq-listed securities 

traded on the Exchange. 

Background 

Rules 500–525—NYSE Amex 

Equities, as a pilot program, govern the 

trading of any Nasdaq-listed security on 

the Exchange pursuant to unlisted 

trading privileges (‘‘UTP Pilot 

Program’’).3 The UTP Pilot Program 

includes any security listed on Nasdaq 

that (i) is designated as an ‘‘eligible 

security’’ under the Joint Self-Regulatory 

Organization Plan Governing the 

Collection, Consolidation and 

Dissemination of Quotation and 

Transaction Information for NasdaqListed Securities Traded on Exchanges 

on an Unlisted Trading Privilege Basis, 

as amended (‘‘UTP Plan’’),4 and (ii) has 

been admitted to dealings on the 

Exchange pursuant to a grant of unlisted 

trading privileges in accordance with 

Section 12(f) of the Securities Exchange 

Act of 1934, as amended (the ‘‘Act’’) 5

(collectively, ‘‘Nasdaq Securities’’).6

Rule 501—NYSE Amex Equities 

(Definitions) 

Rule 501—NYSE Amex Equities 

provides certain defined terms, the 

meanings of which are applicable for 

trading in Nasdaq Securities. All other 

defined terms used in Rules 500–525— 

NYSE Amex Equities have the meanings 

assigned to them in the NYSE Amex 

Equities Rules. Rule 501(e)(2)—NYSE 

Amex Equities lists specific order types 

that are not accepted for trading in 

Nasdaq Securities and are therefore not 

considered ‘‘Orders’’ under the UTP 

Pilot Program. The Exchange proposes 

to include ‘‘Market Orders’’ and ‘‘Stop 

Orders’’ within Rule 501(e)(2)—NYSE 

Amex Equities, therefore eliminating 

submission of such order types in 

Nasdaq Securities and likewise 

excluding them from the definition of 

Order under the UTP Pilot Program. 

Market and Stop Orders in Nasdaq 

Securities 

Currently, if the Exchange is at the 

National Best Bid or Offer (‘‘NBBO’’), a 

Market Order submitted in a Nasdaq 

Security will execute against available 

contra-side liquidity at that best price. If 

size remains unfilled, and another 

market is similarly at the NBBO, the 

Market Order will route for execution 

against the away market’s protected bid 

or offer, in accordance with Rule 611 of 

Regulation NMS.7 If size still remains 

unfilled after routing, the Market Order 

will return to the Exchange and execute 

against the depth of the Exchange’s 

book, until it is either fully executed or 

available liquidity on the Exchange is 

depleted. The Exchange notes that, as 

provided under Rule 501(e)(1)(B)— 

NYSE Amex Equities, a Stop Order to 

buy (sell) becomes a Market Order, and 

is treated as such for purposes of 

execution and routing, when a 

transaction in the Nasdaq Security 

occurs on the Exchange at or above 

(below) the stop price after the order is 

received in to the Exchange’s automated 

order routing system or is manually 

represented by a Floor broker in the 

Crowd. 

Nasdaq Securities are thinly traded on 

the Exchange, which is not the primary 

listing market, and account for less than 

1% of total volume in such securities 

across all markets. This lack of depth in 

liquidity combined with the manner in 

which Market Orders (and Stop Orders 

that become Market Orders) in Nasdaq 

Securities execute, route and re-execute 

at the Exchange, creates the potential for 

multiple rapid executions on the 

Exchange at increasingly inferior prices, 

until the Market Order (or Stop Order 

that becomes a Market Order) is fully 

executed. Submission of a large Market 

Order in a Nasdaq Security that results 

in several executions on the Exchange at 

increasingly inferior prices could 

potentially trigger individual stock 

volatility trading pauses,8 raise 

questions of whether the execution 

should be busted under the Exchange’s 

clearly erroneous rule 9 or create other 


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Federal Register / Vol. 75, No. 236 / Thursday, December 9, 2010 / Notices 76761 

10See Rule 1000(a)(iv)—NYSE Amex Equities. 

11 15 U.S.C. 78f(b). 

12 15 U.S.C. 78f(b)(5). 

13 15 U.S.C. 78s(b)(3)(A). 

14 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

4(f)(6)(iii) requires that a self-regulatory 

organization 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 filing of the proposed rule change, or 

such shorter time as designated by the Commission. 

The Exchange has satisfied this requirement. 

15For purposes only of waiving the 30-day 

operative delay, the Commission has also 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

15 U.S.C. 78c(f). 

potentially harmful market-wide 

implications. 

This is not a concern with respect to 

trading Exchange-Listed Securities 

because of the operation of Liquidity 

Replenishment Points (‘‘LRPs’’).10 LRPs 

are pre-determined price points that 

temporarily convert the automatic 

Exchange market to an auction market 

when it is experiencing a large price 

movement based on a security’s typical 

trading characteristics or market 

conditions over short periods of time 

during the trading day. LRPs work to 

dampen volatility and allow the 

Designated Market Maker (‘‘DMM’’) 

assigned to such security to solicit 

additional liquidity. However, LRPs are 

not applicable to trading in Nasdaq 

Securities, and are therefore unavailable 

as a means to impede or prevent these 

multiple rapid executions at 

increasingly inferior prices. The 

Exchange believes that the elimination 

proposed herein is an appropriate 

measure to reduce the potential for 

erroneous executions and individual 

stock volatility trading pauses in Nasdaq 

Securities until such time as other 

volatility curbs are in place. 

The Exchange believes that the 

elimination of Market and Stop Orders 

in Nasdaq Securities would not hinder 

the ability of members and member 

organizations to seek execution of their 

orders. On average, only 113 Market 

Orders and 27 Stop Orders in Nasdaq 

Securities are submitted to the Exchange 

each trading day, accounting for less 

than 0.0060% and 0.0014%, 

respectively, of the Exchange’s 

1,971,439 average daily orders in 

Nasdaq Securities. Upon 

implementation of the proposed rule 

change, members and member 

organizations could continue to utilize 

several other existing order types, under 

Rule 13—NYSE Amex Equities, for 

execution of their orders. The Exchange 

believes that, despite the relative 

infrequency in which they are 

submitted, the potentially harmful 

regulatory effects created by Market 

Orders (and Stop Orders that become 

Market Orders) in Nasdaq Securities 

requires that they be eliminated on the 

Exchange. 

Accordingly, the Exchange proposes 

to eliminate the ability to enter Market 

and Stop Orders. As proposed, an order 

in a Nasdaq Security would be 

systematically rejected if submitted as a 

Market or Stop Order. A member or 

member organization whose Market or 

Stop Order is rejected would be 

required to re-submit the order to the 

Exchange, if it all, as one of several 

permissible order types provided under 

Rule 13—NYSE Amex Equities. 

Rule 501(e)(1)(B)—Stop Order 

The proposed inclusion of Stop 

Orders within Rule 501(e)(2)—NYSE 

Amex Equities would require that Rule 

501(e)(1)(B)—NYSE Amex Equities be 

deleted. Rule 501(e)—NYSE Amex 

Equities modifies the meaning of certain 

order types, including Stop Orders, as 

these terms are defined under Rule 13— 

NYSE Amex Equities. Because the 

Exchange proposes to no longer accept 

Stop Orders for trading in Nasdaq 

Securities, a modified definition thereof 

is no longer necessary or appropriate. 

The Exchange therefore proposes to 

delete Rule 501(e)(1)(B)—NYSE Amex 

Equities in its entirety. 

The Exchange will implement the 

system changes to no longer accept Stop 

and Market Orders on or about 

December 6, 2010, but in no event, any 

later than December 13, 2010, and will 

notify market participants in advance 

when the change will be implemented. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act,11 in general, and furthers the 

objectives of Section 6(b)(5) of the Act,12

in particular, 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. Specifically, the changes 

proposed herein would contribute to 

improving the quality of executions in 

Nasdaq Securities on the Exchange and 

avoiding executions of Nasdaq 

Securities at inferior prices. 

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 that is 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 solicited 

or received with respect to the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Because the foregoing rule 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 if consistent 

with the protection of investors and the 

public interest, the proposed rule 

change has become effective pursuant to 

Section 19(b)(3)(A) of the Act 13 and 

Rule 19b–4(f)(6) thereunder.14

The Exchange has requested that the 

Commission waive the 30-day operative 

delay so that the Exchange can 

eliminate market and stop orders in 

Nasdaq-listed securities traded on the 

Exchange immediately. The Exchange 

has represented that the elimination of 

market and stop orders in Nasdaq-listed 

securities should lessen the potential for 

multiple rapid executions on the 

Exchange at inferior prices as a result of 

the lack of depth in liquidity for 

Nasdaq-listed securities on the 

Exchange, and should therefore reduce 

the potential for erroneous executions 

and individual stock volatility trading 

pauses in Nasdaq-listed securities. In 

light of the benefits afforded by this 

reduced potential, the Commission 

believes that waiving the 30-day 

operative delay is consistent with the 

protection of investors and the public 

interest.15

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 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. 


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76762 Federal Register / Vol. 75, No. 236 / Thursday, December 9, 2010 / Notices 

16 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3 17 CFR 240.19b–4(f)(6). 

4Securities Exchange Act Release No. 61540 

(February 18, 2010), 75 FR 8771 (February 25, 2010) 

(SR–FINRA–2008–081). 

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–NYSEAmex–2010–108 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–NYSEAmex–2010–108. 

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– 

NYSEAmex–2010–108 and should be 

submitted on or before December 30, 

2010. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.16

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–30883 Filed 12–8–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63425; File No. SR– 

NASDAQ–2010–156] 

Self-Regulatory Organizations; The 

NASDAQ Stock Market LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change To Amend 

NASDAQ Rules 2270 and 2910 To 

Reflect Changes to Corresponding 

FINRA Rule 

December 3, 2010. 

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

Securities Exchange Act of 1934 

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

notice is hereby given that on December 

1, 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 prepared by the Exchange. 

The Exchange has designated the 

proposed rule change as constituting a 

non-controversial rule change under 

Rule 19b–4(f)(6) under the Act,3 which 

renders the proposal effective upon 

filing with the Commission. 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 is filing this proposed 

rule change to amend NASDAQ Rules 

2270 and 2910 to reflect recent changes 

to a corresponding rule of the Financial 

Industry Regulatory Authority 

(‘‘FINRA’’). NASDAQ proposes to 

implement the proposed rule change 

immediately. [sic] The text of the 

proposed rule change is available at 

http://nasdaqomx.cchwallstreet.com, at 

the Exchange’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 initiated a 

process of modifying its rulebook to 

ensure that NASDAQ rules 

corresponding to FINRA/NASD rules 

continue to mirror them as closely as 

practicable. NASDAQ proposes to 

update its rules to reflect changes [sic] 

NASDAQ Rules 2270 and 2910 which 

corresponds to FINRA Rule 2261. 

NASDAQ Rule 2270 (Disclosure of 

Financial Condition to Customers) and 

NASDAQ Rule 2910 (Disclosure of 

Financial Condition to Other Members) 

formerly corresponded to NASD Rule 

2270 (Disclosure of Financial Condition 

to Customers) and NASD Rule 2910 

(Disclosure of Financial Condition to 

Other Members). In SR–FINRA–2009– 

081,4 FINRA re-designated NASD Rules 

2270 and 2910 as FINRA Rule 2261 and 

made substantive amendments to 

strengthen and simplify the rules. 

More specifically, the current 

NASDAQ Rule 2270, which 

incorporates NASD Rule 2270 by 

reference, requires that the members 

make information relative to a member’s 

financial condition, as disclosed in its 

most recent balance sheet, available for 

inspection by any bona fide regular 

customer upon request. In FINRA SR– 

2009–081, [sic] FINRA provided 

members the option of delivering their 

balance sheet, in paper or electronic 

form, to customers who request it. 

Additionally, if the delivery is 

electronic, the requesting customer must 

provide consent to receive the balance 

sheet in electronic form to ensure that 

such information is accessible to the 

customer. 

This proposed filing also addresses 

NASDAQ Rule 2910, which compares to 

the former NASD Rule 2910. NASDAQ 

Rule 2910 requires that any member that 

is a party to an open transaction or who 


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