7528 Federal Register / Vol. 75, No. 33 / Friday, February 19, 2010 / Notices 

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

2 17 CFR 240.19b–4. 3 17 CFR 240.19b–4(f)(6). 

4See Securities Exchange Act Release No. 61087 

(December 1, 2009), 74 FR 65190 (December 9, 

2009) (SR–FINRA–2009–078) (notice of filing and 

immediate effectiveness). 5See Securities Exchange Act Release No. 60648 

(September 10, 2009), 74 FR 47837 (September 17, 

2009) (SR–FINRA–2009–048) (order approving 

adoption of FINRA Rule 5230). 6See Securities Exchange Act Release No. 60701 

(September 21, 2009); 74 FR 49425 (September 28, 

2009) (SR–FINRA–2009–014) (order approving 

adoption of FINRA Rule 2150). 

7See Securities Exchange Act Release No. 60534 

(August 19, 2009), 74 FR 44410 (August 28, 2009) 

(SR–FINRA–2009–036) (order approving adoption 

of FINRA Rules 2124, 2220, 4370, and 5250). 

provided that appropriate 

communication standards are defined in 

2010. What standard data 

communications interfaces(s) should be 

supported by appliances and the smart 

meter or data gateway so that appliance 

manufacturers can cost-effectively 

produce smart appliances that can 

communicate with the Smart Grid 

anywhere in the nation? How can 

communication between smart 

appliances and the Smart Grid be made 

‘‘plug and play’’ for consumers who do 

not have the skills or means to configure 

data networks? If gateways or adapters 

are needed, who should pay for them: 

The utility or the consumer? 

Please note that several important 

Smart Grid topics—including Federal 

and State policy hurdles, cyber security, 

and business case challenges—are 

beyond the scope of this request, except 

insofar as they bear on the primary 

topics identified above. One or more 

future requests for comment may be 

organized to obtain input on these 

additional issues. Discussions of all of 

the above topics are also ongoing in 

several forums, including the Smart 

Grid Interoperability Panel established 

by NIST and the GridWise Architecture 

Council established by DOE. Relevant 

input received through this request will 

be shared with NIST, DOE, and other 

interested Federal agencies. 

Ted Wackler, 

Deputy Chief of Staff. 

[FR Doc. 2010–3251 Filed 2–18–10; 8:45 am] 

BILLING CODE P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–61495; File No. SR–BX– 

2010–006] 

Self-Regulatory Organizations; 

NASDAQ OMX BX, Inc.; Notice of Filing 

and Immediate Effectiveness of 

Proposed Rule Change To Amend 

Rules 2848, 3330, and 9810 To Reflect 

Changes to Corresponding FINRA 

Rules 

February 4, 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 January 

14, 2010, NASDAQ OMX BX, Inc. (the 

‘‘Exchange’’ or ‘‘BX’’) 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 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 the Substance 

of the Proposed Rule Change 

The Exchange is filing this proposed 

rule change to amend BX Rules 2848 

(Communications with the Public and 

Customers Concerning Index Warrants, 

Currency Index Warrants, and Currency 

Warrants); 3330 (Payment Designed to 

Influence Market Prices, Other than 

Paid Advertising); and 9810 (Initiation 

of Proceeding) to reflect recent changes 

to corresponding rules of the Financial 

Industry Regulatory Authority 

(‘‘FINRA’’). The text of the proposed rule 

change is available at http:// 

nasdaqomxbx.cchwallstreet.com, 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 

BX based much of its rules on those 

of The NASDAQ Stock Market LLC 

(‘‘NASDAQ’’). Similarly, many of 

NASDAQ’s rules are based on rules of 

FINRA (formerly the National 

Association of Securities Dealers 

(‘‘NASD’’)). As a consequence, many of 

BX’s rules closely mirror those of 

FINRA. 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, BX also proposes to 

initiate a process of modifying its 

rulebook to ensure that BX 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 BX 

rules to mirror corresponding FINRA 

rules, because existing or planned BX 

rules make use of those numbers. 

However, wherever possible, BX plans 

to update its rules to reflect changes to 

corresponding FINRA rules. 

This filing addresses BX Rules 2848 

(Communications with the Public and 

Customers Concerning Index Warrants, 

Currency Index Warrants, and Currency 

Warrants); 3330 (Payment Designed to 

Influence Market Prices, Other than 

Paid Advertising); and 9810 (Initiation 

of Proceeding) to update crossreferences to corresponding rules of 

FINRA. 

In SR–FINRA–2009–078,4 FINRA 

made changes that reflected, among 

other things, incorporation into the 

consolidated FINRA rulebook of NASD 

Rule 3330 as FINRA Rule 5230 

(Payments Involving Publications that 

Influence the Market Price of a 

Security); 5 NASD Rule 2330 as FINRA 

Rule 2150 (Improper Use of Customers’ 

Securities or Funds; Prohibition Against 

Guarantees and Sharing in Accounts); 6

and NASD Rule 2220 as FINRA Rule 

2220 (Options Communications).7

FINRA Rule 2220, like former NASD 

Rule 2220, sets forth a member’s 

obligations with respect to its options 

communications with the public and: 

(a) uses, to the extent appropriate, the 

same terminology and definitions as in 

FINRA’s general rules on 

communications with the public; (b) 

makes the requirements for principal 

review of correspondence concerning 

options the same as for correspondence 

generally; and (c) updates the standards 

on the content of communications that 

precede the delivery of the options 

disclosure document (ODD). 

BX is, by this filing, updating 

references in its Rule 2848 from NASD 

Rule 2220 to FINRA Rule 2220. 


pwalker on DSK8KYBLC1PROD with NOTICES
Federal Register / Vol. 75, No. 33 / Friday, February 19, 2010 / Notices 7529 

8Supplementary Material to FINRA Rule 2150 

generally provides that (i) a ‘‘guarantee’’ extended to 

all holders of a security by an issuer as part of that 

security generally would not be subject to the 

prohibition against guarantees; (ii) the rule does not 

preclude a member from determining on an afterthe-fact basis to reimburse a customer for 

transaction losses, provided however that the 

member shall comply with all reporting 

requirements that may be applicable to such 

payment; (iii) the rule does not preclude a member 

from correcting a bona fide error; and (iv) a member 

must preserve the required written authorization(s) 

for a period of at least six years after the date the 

account is closed. 

9See Securities Exchange Act Release No. 61129 

(December 8, 2009), 74 FR 66188 (December 14, 

2009) (SR–BX–2009–080) (notice of filing and 

immediate effectiveness). 

10 15 U.S.C. 78f. 

11 15 U.S.C. 78f(b)(5). 

12 15 U.S.C. 78s(b)(3)(A). 

13 17 CFR 240.19b–4(f)(6). 

NASD Rule 3330 prohibits a member 

from giving, or offering to give, anything 

of value to any person for the purpose 

of influencing or rewarding the action of 

such person in connection with the 

publication or circulation in any 

newspaper, investment service, or 

similar publication, of any matter that 

has, or is intended to have, an effect 

upon the market price of any security; 

and provides an exception for any 

matter that is clearly distinguishable as 

paid advertising. As part of transferring 

NASD Rule 3330 into the consolidated 

FINRA rulebook as FINRA Rule 5230, 

FINRA proposed two changes to the rule 

to modernize its terms and clarify its 

scope by: (a) Updating the list of media 

to which the rule refers to include 

electronic and other types of media, 

including magazines, Web sites, and 

television programs; and (b) expanding 

the exceptions in the rule beyond paid 

advertising to also include 

compensation paid in connection with 

research reports and communications 

published in reliance on Section 17(b) 

of the Securities Act of 1933 (the ‘‘1933 

Act’’). 

BX is, by this filing, re-numbering its 

Rule 3330 to Rule 5230 and amending 

the text to conform to the changes 

reflected in FINRA Rule 5230. 

NASD Rule 2330 prohibits members 

and associated persons from: (a) Making 

improper use of a customer’s securities 

or funds; (b) guaranteeing a customer 

against loss in connection with any 

securities transaction or in any 

securities account of the customer; and 

(c) sharing in the profits or losses in the 

customer’s account except under certain 

limited conditions specified in the Rule. 

As part of transferring NASD Rule 2330 

into the consolidated FINRA rulebook 

as FINRA Rule 2150, FINRA proposed 

minor changes to Rule 2150(c) and 

added Supplementary Information to 

the rule that codified existing staff 

guidance concerning the inapplicability 

of the rule to certain guarantees, 

permissible reimbursement by a 

member of certain losses, correction of 

bona fide errors, and preservation of 

written authorizations.8

BX has proposed, in a recent 

immediately effective filing,9 to renumber its Rule 2330 and IM–2330 to 

Rule 2150 and IM–2150, respectively; 

clarify cross-references in its rule and 

IM; and reflect the changes to FINRA 

Rule 2150. BX is, by this filing, 

clarifying the cross-reference in its Rule 

9810 to BX Equity Rule 2150. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

the provisions of Section 6 of the Act,10

in general, and with Sections 6(b)(5) of 

the Act,11 in particular, in that the 

proposal 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 regulating, clearing, settling, 

processing information with respect to, 

and 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 

proposed changes will conform BX 

Rules 2848, 3330 and 9810 to recent 

changes made to several corresponding 

FINRA rules, 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 result in 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act, as amended. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

Written comments were neither 

solicited nor 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 12 and Rule 19b– 

4(f)(6) thereunder.13

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission may summarily abrogate 

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–BX–2010–006 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–BX–2010–006. 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 such filing 

also will be available for inspection and 

copying at the principal office of the 

Exchange. All comments received will 


pwalker on DSK8KYBLC1PROD with NOTICES
7530 Federal Register / Vol. 75, No. 33 / Friday, February 19, 2010 / Notices 

14 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3Amendment No. 1 clarifies the proposed 

revision to FINRA Rule 4560. See infra note 20. 

4 17 CFR 230.144A. 

5See Securities Act Release No. 6862 (April 23, 

1990), 55 FR 17933 (April 30, 1990). For the 

purpose of SEC Rule 144A, a QIB is generally 

defined as any institution acting for its own 

account, or for the accounts of other QIBs, that in 

the aggregate owns and invests on a discretionary 

basis at least $100 million in securities of issuers 

that are not affiliated with the institution. 

6See Securities Exchange Act Release No. 27956 

(April 27, 1990), 55 FR 18781 (May 4, 1990). 

7See Securities Exchange Act Release No. 58638 

(September 24, 2008), 73 FR 57188 (October 1, 

2008). As part of the separation of NASDAQ from 

FINRA, certain functionality relating to PORTAL, 

including the qualification and designation of 

PORTAL securities, became part of NASDAQ’s 

rules and were eliminated from the FINRA rules. 

See Securities Exchange Act Release No. 53128 

(January 13, 2006), 71 FR 3550 (January 23, 2006). 

8 In addition to NASDAQ ceasing operation of the 

PORTAL Market, the Commission has also 

approved the deletion of the Depository Trust 

Company (‘‘DTC’’) requirement that a SEC Rule 

144A security, other than Investment Grade 

Securities, be included in an ‘‘SRO Rule 144A 

System’’ in order to be eligible for DTC’s deposit, 

book-entry delivery, and other depository services. 

See Securities Exchange Act Release No. 59384 

(February 11, 2009), 74 FR 7941 (February 20, 

2009). The PORTAL Market was the only ‘‘SRO Rule 

144A System.’’ Id. 

9Securities Exchange Act Release No. 60991 

(November 12, 2009), 74 FR 60006 (November 19, 

2009). 

10See id. NASDAQ noted in the filing that 

nothing in the proposal was ‘‘intended to impact 

securities previously designated as PORTAL 

securities or alter any existing regulatory obligation 

applicable to such securities, including, but not 

limited to, any trade reporting obligation imposed 

by any self-regulatory organization.’’ Id. 

11See FINRA Rule 6400 Series. 

12FINRA Rule 6633(a). The proposed rule change 

is limited in scope to equity securities and would 

not affect the Trade Reporting and Compliance 

Engine Service (‘‘TRACE’’) or the reporting 

requirements with respect to transactions in debt 

securities. With respect to PORTAL securities that 

are debt securities, FINRA Rule 6633(b) currently 

requires members to report secondary market 

transactions to TRACE in accordance with the 

FINRA Rule 6700 Series. Thus, under current 

FINRA rules, reporting obligations for debt 

securities are set forth in the TRACE rules rather 

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–BX– 

2010–006, and should be submitted on 

or before March 12, 2010. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.14

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–3140 Filed 2–18–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–61510; File No. SR–FINRA– 

2010–003] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Notice of Filing of 

Proposed Rule Change, as Modified by 

Amendment No. 1, Relating to Trade 

Reporting of OTC Equity Securities 

and Restricted Equity Securities 

February 5, 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 January 

15, 2010, Financial Industry Regulatory 

Authority, Inc. (‘‘FINRA’’) (f/k/a 

National Association of Securities 

Dealers, Inc. (‘‘NASD’’)) filed with the 

Securities and Exchange Commission 

(‘‘SEC’’ or ‘‘Commission’’) the proposed 

rule change as described in Items I, II, 

and III below, which Items have been 

prepared by FINRA. On February 5, 

2010, FINRA filed Amendment No. 1 to 

the proposed rule change.3 The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change, as modified by Amendment No. 

1, from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

FINRA is proposing to amend the 

FINRA OTC Reporting Facility (‘‘ORF’’) 

Rules and the PORTAL Rules (FINRA 

Rule 6630 Series) regarding the 

reporting requirements for restricted 

equity securities; update the definition 

of ‘‘OTC Equity Security;’’ and clarify 

member reporting obligations with 

respect to certain trades reported on or 

through an exchange. 

The text of the proposed rule change 

is available on FINRA’s Web site at 

http://www.finra.org, at the principal 

office of FINRA, 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, 

FINRA 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. FINRA 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 

The proposed rule change includes 

several amendments to the reporting 

provisions regarding the ORF. In 

general, the proposed rule change 

amends the definition of ‘‘OTC Equity 

Security’’ in the FINRA trade reporting 

rules to address the cessation of the 

PORTAL Market and clarifies the scope 

of the ORF rules. The proposed rule 

change also makes conforming changes 

to other FINRA rules, including the 

Order Audit Trail System (‘‘OATS’’) 

rules. 

(a) Amendments to the ORF Rules 

In 1990, the SEC adopted Rule 144A 

(‘‘SEC Rule 144A’’) under the Securities 

Act of 1933 4 (‘‘Securities Act’’) to 

establish a safe harbor for the private 

resale of ‘‘restricted securities’’ to 

‘‘qualified institutional buyers’’ 

(‘‘QIBs’’).5 At the same time, FINRA 

(then NASD) created the PORTAL 

Market to serve as a system for quoting, 

trading, and reporting trades in certain 

designated restricted securities that 

were eligible for resale under SEC Rule 

144A (‘‘PORTAL securities’’).6 In 

September 2008, the NASDAQ Stock 

Market (‘‘NASDAQ’’) ceased the 

operation of the PORTAL Market.7

NASDAQ explained in the rule filing 

that it is taking a minority stake in a 

consortium that will control and operate 

a new electronic platform for handling 

transactions in SEC Rule 144A-eligible 

securities.8 On October 26, 2009, 

NASDAQ filed a proposed rule change 

with the Commission for immediate 

effectiveness terminating NASDAQ’s 

PORTAL security designation process 

and removing rules related to the 

PORTAL Market from its rulebook.9 As 

a result, NASDAQ no longer accepts 

new applications for debt or equity 

securities seeking PORTAL 

designation.10

FINRA’s transaction reporting rules 

for restricted equity securities are 

currently tied to whether the security is 

designated for inclusion in the PORTAL 

Market. Specifically, FINRA’s general 

transaction reporting rules for over-thecounter equity securities specifically 

exclude restricted securities and 

PORTAL securities from the reporting 

requirements.11 FINRA’s PORTAL rules 

(FINRA Rule 6630 Series) require that 

transactions in PORTAL equity 

securities be reported to the ORF no 

later than 6:30 p.m. Eastern Time.12


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