Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Notices 49425 

63 15 U.S.C. 78s(b)(2). 

64 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3The 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 FINRA 

Information Notice, March 12, 2008 (Rulebook 

Consolidation Process). 

4Other provisions that set forth certain financial 

and operational requirements, including, NASD 

Rules 2330(b) (General Provisions), 2330(c) 

(Authorization to Lend), 2330(d) (Segregation and 

Identification of Securities) and Interpretive 

Material 2330 (Segregation of Customers’ Securities) 

would remain in the Transitional Rulebook to be 

addressed as part of a later phase of the 

consolidation process. 

5NYSE Rules 352(e), 352(f) and 352(g) govern 

borrowing from or lending to customers. These 

provisions generally are equivalent to the 

provisions of NASD Rule 2370 (Borrowing From or 

Lending to Customers). NASD Rule 2370 and the 

corresponding NYSE provisions would remain in 

the Transitional Rulebook to be addressed as part 

of a later phase of the rulebook consolidation 

process. 

6Securities Exchange Act Release No. 60135 

(June 18, 2009), 74 FR 30198 (‘‘Notice’’). 

7For convenience, Incorporated NYSE Rule 352 

is hereinafter referred to as ‘‘NYSE Rule 352.’’ 

submissions should refer to File No. 

SR–NYSEArca-2009–44 and should be 

submitted on or before October 19, 

2009. 

VI. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,63 that the 

proposed rule change (SR–NYSEArca– 

2009–44) as modified by Amendment 

Nos. 1 and 3 thereto, be, and hereby is, 

partially approved on an accelerated 

basis, as discussed above. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.64

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–23374 Filed 9–25–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60701; File No. SR–FINRA– 

2009–014] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Order Approving 

Proposed Rule Change To Adopt 

FINRA Rule 2150 (Improper Use of 

Customers’ Securities or Funds; 

Prohibition Against Guarantees and 

Sharing in Accounts) in the 

Consolidated FINRA Rulebook 

September 21, 2009. 

I. Introduction 

On March 24, 2009, the Financial 

Industry Regulatory Authority, Inc. 

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

Securities and Exchange Commission 

(‘‘Commission’’), pursuant to Section 

19(b)(1) of the Securities Exchange Act 

of 1934 (‘‘Act’’) 1 and Rule 19b–4 

thereunder,2 a proposed rule change as 

part of the process of developing a new 

consolidated rulebook (the 

‘‘Consolidated FINRA Rulebook’’).3

FINRA proposed to adopt NASD Rules 

2330(a), 2330(e) and 2330(f) as FINRA 

Rules 2150(a), 2150(b) and 2150(c), 

respectively, in the Consolidated FINRA 

Rulebook, with certain changes as 

described below.4 Proposed FINRA Rule 

2150 also would take into account 

certain provisions of NYSE Rule 352. In 

addition, proposed FINRA Rule 2150 

includes a ‘‘Supplementary Material’’ 

section that contains certain 

clarifications and codifications of 

existing staff guidance. FINRA further 

proposed to delete NYSE Rule 352 (with 

the exception of paragraphs (e), (f) and 

(g)) 5 from the Transitional Rulebook. 

The proposed rule change was 

published for public comment in the 

Federal Register on June 24, 2009.6 The 

Commission received no comment 

letters regarding proposed rule change. 

This order approves the proposed rule 

change. 

II. Description of the Proposal 

FINRA proposed to adopt certain 

paragraphs, as specified below, of NASD 

Rule 2330 (Customers’ Securities or 

Funds) as FINRA Rule 2150 (Improper 

Use of Customers’ Securities or Funds; 

Prohibition Against Guarantees and 

Sharing in Accounts) in the 

Consolidated FINRA Rulebook taking 

into account certain provisions of 

Incorporated NYSE Rule 352 

(Guarantees, Sharing in Accounts, and 

Loan Arrangements) 7 and to delete 

NYSE Rule 352, with the exception of 

NYSE Rules 352(e) (Limitations on 

Borrowing From or Lending to 

Customers), 352(f) (Loan Procedures) 

and 352(g). 

The proposed rule change would 

renumber NASD Rule 2330(a) (Improper 

Use) as FINRA Rule 2150(a) (Improper 

Use), NASD Rule 2330(e) (Prohibition 

Against Guarantees) as FINRA Rule 

2150(b) (Prohibition Against 

Guarantees) and NASD Rule 2330(f) 

(Sharing in Accounts; Extent 

Permissible) as FINRA Rule 2150(c) 

(Sharing in Accounts; Extent 

Permissible) in the consolidated FINRA 

rulebook. The proposed rule change also 

would add a ‘‘Supplementary Material’’ 

section to proposed FINRA Rule 2150 

that contains certain clarifications and 

codifications of existing staff guidance. 

A. Improper Use of Customers’ 

Securities or Funds (Proposed FINRA 

Rule 2150(a)) 

NASD Rule 2330(a) prohibits 

members and associated persons from 

making improper use of a customer’s 

securities or funds. The improper use of 

customer securities or funds threatens 

the fundamental relationship between a 

broker and a customer and undermines 

the integrity of the securities industry. 

FINRA proposed to adopt NASD Rule 

2330(a) as FINRA Rule 2150(a) in the 

Consolidated FINRA Rulebook without 

changes. 

B. Prohibition Against Guarantees 

(Proposed FINRA Rule 2150(b)) 

NASD Rule 2330(e) prohibits 

members and their associated persons 

from guaranteeing a customer against 

loss in connection with any securities 

transaction or in any securities account 

of the customer. The reason for the 

prohibition is that such guarantees 

create the expectation that the customer 

is insulated from market risk intrinsic in 

securities ownership and may induce 

the customer to engage in a securities 

transaction that is not otherwise 

appropriate for the customer. 

FINRA proposed to adopt NASD Rule 

2330(e) as FINRA Rule 2150(b) in the 

Consolidated FINRA Rulebook without 

changes and delete NYSE Rule 352(a) 

(Prohibitions Against Guarantees) 

because its provisions are substantially 

similar to proposed FINRA Rule 

2150(b). 

C. Sharing in Accounts (Proposed 

FINRA Rule 2150(c)) 

NASD Rule 2330(f) prohibits members 

and associated persons from sharing in 

the profits or losses in a customer’s 

account except under certain limited 

conditions specified in the Rule. 

FINRA proposed to adopt NASD Rule 

2330(f) as FINRA Rule 2150(c) in the 

Consolidated FINRA Rulebook, with 

only minor changes. 

FINRA proposed to delete NYSE 

Rules 352(b), (c) and (d) as they are 

substantially similar to proposed FINRA 

Rule 2150(c) or are otherwise 

incorporated as part of the 

supplementary material to proposed 

FINRA Rule 2150. 


srobinson on DSKHWCL6B1PROD with NOTICES
49426 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Notices 

8Associated persons would not similarly be 

permitted to reimburse their customers for losses 

under the rule given the concern that such 

payments may conceal individual misconduct. 

9 In approving this rule proposal, the Commission 

has considered the proposed rule’s impact on 

efficiency, competition, and capital formation. 15 

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

10 15 U.S.C. 78o–3(b)(6). 

11 15 U.S.C. 78s(b)(2). 

12 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3Amendment No. 1 revises the proposal to: (1) 

Correct an example in the purpose section of the 

proposal of the fee applicable when one firm 

represents both sides of a transaction; and (2) 

provide additional discussion of the statutory basis 

for the proposal. 

4 15 U.S.C. 78s(b)(3)(A). 

5 17 CFR 19b–4(f)(2). 

6See Securities and Exchange Act Release No. 

60554 (August 21, 2009) 74 FR 43737 (August 27, 

2009) (Order granting accelerated approval of 

NYSEAmex–2009–42). 

D. Proposed Supplementary Material 

In addition, FINRA proposed to add a 

‘‘Supplementary Material’’ section to 

proposed FINRA Rule 2150 that would: 

• Codify existing staff guidance 

clarifying that a ‘‘guarantee’’ extended 

to all holders of a particular security by 

an issuer as part of that security 

generally would not be subject to the 

prohibition against guarantees and that 

a permissible sharing arrangement 

remains subject to other applicable 

FINRA rules; 

• Clarify that the rule does not 

preclude a member from determining on 

an after-the-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; 8

• Consistent with NYSE Rule 352(c), 

clarify that the rule does not preclude a 

member from correcting a bona fide 

error; and 

• Clarify that the required written 

authorization(s) shall be preserved for a 

period of at least six years after the date 

the account is closed, which is 

consistent with the retention period 

under the SEA for similar records. 

FINRA stated in its proposal that it 

intends to announce the 

implementation date of the proposed 

rule change in a Regulatory Notice to be 

published no later than 90 days 

following Commission approval. 

III. Discussion 

After careful review, the Commission 

finds that the proposed rule change is 

consistent with the requirements of the 

Act and the rules and regulations 

thereunder applicable to a national 

securities association.9 In particular, the 

Commission believes the proposal is 

consistent with the requirements of 

Section 15A(b)(6) of the Act,10 which 

requires, among other things, that the 

Association’s rules 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. Further, the Commission 

believes it is appropriate to transfer 

these NASD Rules into the FINRA 

Consolidated Rulebook, with the 

changes specified, and to delete the 

noted NYSE Rules as proposed because 

the proposal will protect investors 

against potential misconduct. 

IV. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,11 that the 

proposed rule change (SR–FINRA– 

2009–014) is approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.12

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–23307 Filed 9–25–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60698; File No. SR– 

NYSEAmex–2009–61] 

Self-Regulatory Organizations; NYSE 

Amex, LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change, as Modified by 

Amendment No. 1, Implementing a Fee 

for Complex Orders to Its Schedule of 

Fees and Charges for Exchange 

Services 

September 21, 2009. 

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 

September 9, 2009, NYSE Amex, LLC 

(the ‘‘Exchange’’ or ‘‘NYSE Amex’’) 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 NYSE Amex. 

NYSE Amex filed Amendment No. 1 to 

the proposal on September 18, 2009.3

NYSE Amex filed the proposed rule 

change, as amended, pursuant to 

Section 19(b)(3)(A) of the Act 4 and Rule 

19b–4(f)(2) thereunder,5 which renders 

the proposed rule change, as amended, 

effective upon filing with the 

Commission. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change, 

as amended, from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend the 

section of its Schedule of Fees and 

Charges for Exchange Services (the 

‘‘Schedule’’). While changes to the 

Schedule pursuant to this proposal will 

be effective upon filing, the changes will 

become operative on September 9, 2009. 

The amended section of the Schedule is 

included as Exhibit 5 hereto. A copy of 

this filing is available on the Exchange’s 

Web site at http://www.nyse.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 

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 

Pursuant to a recent rule filing 6 the 

Exchange will be introducing automated 

complex order trading for all market 

participants on NYSE Amex. In 

conjunction with this new functionality, 

the Exchange proposes to introduce two 

new transaction fees specific to 

Complex Order executions. 

Complex Orders that are executed 

against other similar Complex Orders 

will be subject to a transaction fee of 

$0.10 per contract. For example, if a 

Complex Order, comprised of two legs, 

executes against a similar two-legged 

Complex Order, each market participant 

will be charged $0.20 ($0.10 per 

contract). To expand on this example, if 

the same strategy is executed a total of 

ten (10) times, each participant would 

be charged $2.00. If a Complex Order 

comprised of three legs executes against 

a similar three-legged Complex Order 

then each participant would be charged 

$0.30, for the transaction. To expand on 

this example, if the same three-legged 


srobinson on DSKHWCL6B1PROD with NOTICES