1672 Federal Register / Vol. 75, No. 7 / Tuesday, January 12, 2010 / Notices 

13For purposes only of waiving the 30-day 

operative delay, the Commission has considered the 

proposal’s impact on efficiency, competition, and 

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

14 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See supra note 4 and accompanying text. 

4The current FINRA rulebook consists of (1) 

FINRA Rules; (2) NASD Rules; and (3) rules 

incorporated from NYSE (‘‘Incorporated NYSE 

Rules’’) (together, the NASD Rules and Incorporated 

NYSE Rules are referred to as the ‘‘Transitional 

Rulebook’’). While the NASD Rules generally apply 

to all FINRA members, the Incorporated NYSE 

Rules apply only to those members of FINRA that 

are also members of the NYSE (‘‘Dual Members’’). 

The FINRA Rules apply to all FINRA members, 

unless such rules have a more limited application 

by their terms. For more information about the 

rulebook consolidation process, see Information 

Notice, March 12, 2008 (Rulebook Consolidation 

Process). 

become operative immediately upon 

filing. 

The Commission believes that 

waiving the 30-day operative delay is 

consistent with the protection of 

investors and the public interest 

because doing so will allow member 

organizations to immediately seek 

compensation for losses of less than 

$500 sustained in relation to an 

Exchange system failure. For this 

reason, the Commission designates that 

the proposed rule change become 

immediately operative.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–NYSEAmex–2009–100 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–2009–100. 

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 inspection and copying 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 be posted 

without change; the Commission does 

not edit personal identifying 

information from submissions. You 

should submit only information that 

you wish to make publicly available. All 

submissions should refer to File 

Number SR–NYSEAmex–2009–100 and 

should be submitted on or before 

February 2, 2010. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.14

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–299 Filed 1–11–10; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–61302; File No. SR–FINRA– 

2009–095] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Notice of Filing of 

Proposed Rule Change To Adopt 

FINRA Rule 3240 (Borrowing From or 

Lending to Customers) in the 

Consolidated FINRA Rulebook 

January 6, 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 31, 2009, 

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 

substantially prepared by FINRA. 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 

FINRA is proposing to adopt NASD 

Rule 2370 (Borrowing From or Lending 

to Customers) as FINRA Rule 3240 

(Borrowing From or Lending to 

Customers) in the Consolidated FINRA 

Rulebook 3 with certain changes and to 

delete Incorporated NYSE Rules 352(e) 

(Limitations on Borrowing From or 

Lending to Customers), (f) (Loan 

Procedures) and (g). The proposed rule 

change also would add a Supplementary 

Material section regarding record 

retention requirements to proposed 

FINRA Rule 3240. 

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 

As part of the process of developing 

a new consolidated rulebook 

(‘‘Consolidated FINRA Rulebook’’),4

FINRA is proposing to adopt NASD 

Rule 2370 as FINRA Rule 3240 in the 

Consolidated FINRA Rulebook with 

certain changes as described below. The 

proposed rule change also would delete 

Incorporated NYSE Rules 352(e) 

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Federal Register / Vol. 75, No. 7 / Tuesday, January 12, 2010 / Notices 1673 

5For convenience, the Incorporated NYSE Rules 

are referred to as the NYSE Rules. 

6NYSE Rules 352(a) through (d) were deleted as 

part of a prior rule change. See Securities Exchange 

Act Release No. 60701 (September 21, 2009), 74 FR 

49425 (September 28, 2009) (Order Approving File 

No. SR–FINRA–2009–014). 

7NASD Rule 2370 defines the term ‘‘immediate 

family’’ to include parents, grandparents, mother-inlaw or father-in-law, husband or wife, brother or 

sister, brother-in-law or sister-in-law, son-in-law or 

daughter-in-law, children, grandchildren, cousin, 

aunt or uncle, or niece or nephew, and any other 

person whom the registered person supports, 

directly or indirectly, to a material extent. 

8The fact that a registered person can negotiate 

a better rate or terms for a loan that is not the 

product of the broker-customer relationship would 

not vitiate the idea that the loan occurred on terms 

generally offered to the public. See Notice to 

Members 04–14 (March 2004). 9 15 U.S.C. 78o–3(b)(6). 

through (g) 5 from the Transitional 

Rulebook.6 Further, the proposed rule 

change would add a Supplementary 

Material section regarding record 

retention requirements to proposed 

FINRA Rule 3240. 

Background 

The purpose of NASD Rule 2370, 

which became effective in November 

2003, is to give members the 

opportunity to evaluate the 

appropriateness of particular lending 

arrangements between their registered 

persons and customers, to the extent 

permitted by the member, and the 

potential for conflicts of interests 

between both the registered person and 

his or her customer and the registered 

person and the member with which he 

or she is associated. 

To that end, NASD Rule 2370 

prohibits registered persons from 

borrowing money from or lending 

money to their customers (collectively 

referred to as ‘‘lending arrangements’’) 

unless certain conditions are met. More 

specifically, under Rule 2370, no 

registered person may borrow money 

from or lend money to his or her 

customer unless the firm has written 

procedures allowing such lending 

arrangements and (1) the customer is a 

member of the registered person’s 

immediate family;7 (2) the customer is 

in the business of lending money; (3) 

the customer and the registered person 

are both registered persons of the same 

firm; (4) the lending arrangement is 

based on a personal relationship outside 

of the broker-customer relationship; or 

(5) the lending arrangement is based on 

a business relationship outside of the 

broker-customer relationship. In 

addition, with the exception of lending 

arrangements between immediate family 

members and lending arrangements 

between registered persons and 

customers in the business of lending 

money, FINRA members are required to 

pre-approve in writing the other lending 

arrangements described above. 

With respect to lending arrangements 

between immediate family members, a 

FINRA member’s written procedures 

may indicate that the member permits 

such lending arrangements and that 

registered persons need not notify the 

member or receive member approval for 

such lending arrangements. 

With respect to lending arrangements 

between registered persons and 

customers in the business of lending 

money, a member’s written procedures 

may indicate that registered persons are 

not required to notify the member or 

receive member approval for such 

lending arrangements, provided that 

such lending arrangements have been 

made on commercial terms that the 

customer generally makes available to 

members of the general public who are 

similarly situated as to need, purpose 

and creditworthiness.8 Further, the 

member need not investigate such 

lending arrangements, but may rely on 

the registered person’s representation 

that the terms of the loan meet these 

standards. 

It is important to note that members 

can choose to permit registered persons 

to borrow money from or lend money to 

their customers consistent with the 

requirements of the rule or prohibit the 

practice in whole or in part. 

NYSE Rules 352(e) through (g) also 

govern lending arrangements between 

registered persons and their customers. 

These provisions are substantially 

similar to the provisions of NASD Rule 

2370, with one exception. NYSE Rule 

352(f) provides an exception from the 

pre-approval requirements of the rule 

for loans totaling $100 or less between 

registered persons of the same firm. 

Proposal 

FINRA proposes to adopt NASD Rule 

2370 as FINRA Rule 3240 in the 

Consolidated FINRA Rulebook, subject 

to the following changes. FINRA 

proposes to amend paragraph (a) 

(Permissible Lending Arrangements; 

Conditions) of the rule to indicate more 

explicitly that such arrangements are 

subject to the procedural requirements 

set forth in paragraph (b) (Notification 

and Approval) of the rule. FINRA also 

proposes to amend paragraph (a)(2)(B) 

of the rule regarding permissible 

lending arrangements between 

registered persons and customers in the 

business of lending money to indicate 

more explicitly that such customers 

must be acting in the course of such 

business. 

Further, FINRA proposes to amend 

paragraph (b)(1) of the rule to require 

expressly that registered persons notify 

their member firms of the lending 

arrangements that require member preapproval (FINRA is proposing this 

change for purposes of consistency with 

paragraphs (b)(2) and (3) of the rule, 

which provide that a registered person 

is not required either to notify the 

member or receive member approval for 

certain specified lending arrangements) 

and to clarify that any modifications to 

such lending arrangements (including 

any extension of the duration of such 

arrangements) are also subject to 

notification and member pre-approval. 

In addition, FINRA proposes to 

amend the definition of ‘‘immediate 

family’’ in paragraph (c) (Definition of 

Immediate Family) of the rule to replace 

the reference that the term ‘‘includes’’ 

the enumerated persons to reflect that 

the term ‘‘means’’ such persons. Finally, 

FINRA proposes to add Supplementary 

Material .01 (Record Retention) 

requiring that members preserve the 

written pre-approval required by the 

rule for at least three years after the date 

that the lending arrangement has 

terminated or for at least three years 

after the registered person’s association 

with the member has terminated. FINRA 

proposes to delete NYSE Rules 352(e) 

through (g) as the provisions of the 

NYSE rules are substantially similar to 

NASD Rule 2370. 

FINRA will announce the 

implementation date of the proposed 

rule change in a Regulatory Notice to be 

published no later than 90 days 

following Commission approval. The 

implementation date will be no later 

than 180 days following Commission 

approval. 

2. Statutory Basis 

FINRA believes that the proposed rule 

change is consistent with the provisions 

of Section 15A(b)(6) of the Act,9 which 

requires, among other things, that 

FINRA rules must be designed to 

prevent fraudulent and manipulative 

acts and practices, to promote just and 

equitable principles of trade, and, in 

general, to protect investors and the 

public interest. FINRA believes that the 

proposed rule change will further the 

purposes of the Act by giving members 

the opportunity to evaluate the 

appropriateness of certain lending 

arrangements between their registered 

persons and others, to the extent 

permitted by a member, and the 

potential that these lending 

arrangements could create certain 

conflicts of interest. 

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1674 Federal Register / Vol. 75, No. 7 / Tuesday, January 12, 2010 / Notices 

10 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3References to ISE Members in this filing refer to 

DECN Subscribers who are ISE Members. 

4See Securities and Exchange Act Release No. 

60232 (July 2, 2009), 74 FR 33309 (July 10, 2009) 

(SR–ISE–2009–43). 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

FINRA 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. 

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 

Within 35 days of the date of 

publication of this notice in the Federal 

Register or within such longer period (i) 

as the Commission may designate up to 

90 days of such date if it finds such 

longer period to be appropriate and 

publishes its reasons for so finding or 

(ii) as to which the self-regulatory 

organization consents, the Commission 

will: 

(A) By order approve such proposed 

rule change, or 

(B) institute proceedings to determine 

whether the proposed rule change 

should be disapproved. 

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–FINRA–2009–095 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–FINRA–2009–095. 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 inspection and copying 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 FINRA. 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–FINRA–2009–095 and 

should be submitted on or before 

February 2, 2010. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.10

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–359 Filed 1–11–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–61289; File No. SR–ISE– 

2009–108] 

Self-Regulatory Organizations; 

International Securities Exchange, 

LLC; Notice of Filing and Immediate 

Effectiveness of Proposed Rule 

Change Relating To Amending the 

Direct Edge ECN Fee Schedule 

January 5, 2010. 

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 December 

30, 2009, the International Securities 

Exchange, LLC (the ‘‘Exchange’’ or the 

‘‘ISE’’) 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 selfregulatory organization. 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 

Direct Edge ECN’s (‘‘DECN’’) fee 

schedule for ISE Members 3 to simplify 

its fee schedule by (i) eliminating the 

Super Tier and Ultra Tier rebates and 

(ii) amending its fees and rebates. All of 

the changes described herein are 

applicable to ISE Members. 

All of the changes described herein 

are applicable to ISE Members. The text 

of the proposed rule change is available 

on the Exchange’s Internet Web site at 

http://www.ise.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 these statements may be examined at 

the places specified in Item IV below. 

The self-regulatory organization 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 

DECN, a facility of ISE, operates two 

trading platforms, EDGX and EDGA. On 

July 1, 2009,4 the Exchange adopted a 

new Ultra Tier Rebate whereby ISE 

Members were provided a $0.0032 

rebate per share for securities priced at 

or above $1.00 when ISE Members add 

liquidity on EDGX if the attributed 

MPID satisfies one of the following 

criteria on a daily basis, measured 

monthly: (i) Adding 100,000,000 shares 

or more on EDGX; or (ii) adding 

50,000,000 shares or more of liquidity 

on EDGX, so long as added liquidity on 

EDGX is at least 20,000,000 shares 

greater than the previous calendar 

month. The rebate described above is 

referred to as an ‘‘Ultra Tier Rebate’’ on 

the DECN fee schedule. 

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