27608 Federal Register / Vol. 72, No. 94 / Wednesday, May 16, 2007 / Notices 

26 15 U.S.C. 78o–3(b)(6). 

27 In approving this proposed rule change, the 

Commission notes that it has considered the 

proposed rule’s impact on efficiency, competition, 

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

28 15 U.S.C. 78s(b)(2). 

29 15 U.S.C. 78s(b)(2). 

30 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(7). 

2 17 CFR 240.19b–7. 

3 15 U.S.C. 78o–3(k). 

4 15 U.S.C. 78o(b)(11). 

Act,26 which provides, among other 

things, that NASD rules must be 

designed 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.27 The Commission 

believes that NASD has adequately 

responded to concerns about the 

proposed rule change raised by 

commenters, and that the proposed rule 

change is consistent with the provision 

of the Exchange Act noted above. In 

particular, proposed NASD Rule 2342 

should help to improve investors’

awareness of SIPC’s policies and 

practices, and the scope of coverage 

available under SIPA. 

Pursuant to Section 19(b)(2) of the 

Act,28 the Commission finds good cause 

for approving the proposed rule change 

before the thirtieth day after the date of 

publication of notice of filing thereof. 

Accelerating approval and delaying the 

effective date of the proposed rule 

change will give NASD additional time 

to notify its members about the 

requirements of the proposed rule and 

help to ensure that firms have sufficient 

time to efficiently make the changes to 

their customer documentation and 

systems needed to comply with the rule. 

V. Solicitation of Comments 

Interested persons are invited to 

submit written data, views and 

arguments concerning the foregoing, 

including whether the proposed rule 

change, as modified by Amendment 

Nos. 1 and 2, 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–NASD–2006–124 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Nancy M. Morris, Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–1090. 

All submissions should refer to File 

Number SR–NASD–2006–124. 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. Copies of such filing also will be 

available for inspection and copying at 

the principal office of NASD. 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 the File 

Number SR–NASD–2006–124 and 

should be submitted on or before June 

6, 2007. 

VI. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,29 that the 

proposed rule change (SR–NASD–2006–

124), as modified by Amendment Nos. 

1 and 2, be, and it here is, approved on 

an accelerated basis, and shall be 

effective 180 days following the date of 

this order. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.30

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–9433 Filed 5–15–07; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55732; File No. SR–NFA–

2007–02] 

Self-Regulatory Organization; National 

Futures Association; Notice of Filing 

and Immediate Effectiveness of a 

Proposed Interpretive Notice to 

Compliance Rule 2–4 Regarding 

Disclosure Guidelines for FCMs 

Offering Sweep Accounts 

May 9, 2007. 

Pursuant to Section 19(b)(7) of the 

Securities Exchange Act of 1934 

(‘‘Act’’) 1, and Rule 19b–7 under the 

Act,2 notice is hereby given that on 

February 27, 2007, National Futures 

Association (‘‘NFA’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change described in Items I, II, and III 

below, which Items have been 

substantially prepared by NFA. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. NFA, 

on February 26, 2007, submitted the 

proposed rule change to the Commodity 

Futures Trading Commission (‘‘CFTC’’) 

for approval. The CFTC approved the 

proposed rule change on March 12, 

2007. 

I. Self-Regulatory Organization’s 

Description of the Proposed Rules 

Section 15A(k) of the Act 3 makes 

NFA a national securities association for 

the limited purpose of regulating the 

activities of NFA members (‘‘Members’’) 

who are registered as brokers or dealers 

in security futures products under 

Section 15(b)(11) of the Exchange Act.4

The new Interpretive Notice to NFA 

Compliance Rule 2–4 entitled 

‘‘Disclosure Guidelines for FCMs 

Offering Sweep Accounts’’

(‘‘Interpretive Notice’’) will apply to all 

futures commission merchant (‘‘FCM’’) 

Members, including those who are 

registered as security futures brokers or 

dealers under Section 15(b)(11). The 

Interpretive Notice applies certain 

disclosure guidelines to FCM-offered 

sweep account programs that manage 

cash balances. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rules 

NFA has prepared statements 

concerning the purpose of, and basis for, 

the proposed rule change, burdens on 


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Federal Register / Vol. 72, No. 94 / Wednesday, May 16, 2007 / Notices 27609 

5 15 U.S.C. 78s(b)(7). 6 15 U.S.C. 78s(b)(1). 

competition, and comments received 

from members, participants, and others. 

The text of these statements may be 

examined at the places specified in Item 

IV below. These statements are set forth 

in Sections A, B, and C below. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rules 

1. Purpose 

As noted above, the Interpretive 

Notice applies certain disclosure 

guidelines to FCM-offered sweep 

account programs that manage cash 

balances. Specifically, these sweep 

account programs transfer a customer’s 

excess funds from a regulated 

commodity account (whether a 

customer segregated or secured account) 

to a non-regulated account for the 

customer at the FCM, an affiliate of the 

FCM, or another entity so that the 

customer can obtain a higher investment 

return than maintaining the funds in the 

FCM’s customer regulated commodity 

accounts. 

The Interpretive Notice makes clear 

that the disclosure guidelines apply 

only to sweep account programs offered 

or regularly recommended by an FCM. 

If a customer elects on its own to 

transfer funds to a particular sweep 

account program that is not offered by 

the FCM, then the FCM does not have 

any disclosure obligations pursuant to 

the Interpretive Notice. Additionally, 

the disclosure guidelines are 

inapplicable to transfers made pursuant 

to an FCM’s customer agreement’s 

provisions whereby a customer 

authorizes the transfer of funds from a 

regulated commodity account to any 

other account maintained by the 

customer at the FCM or one of its 

affiliates when necessary to avoid a 

margin call or to reduce the debit 

balance in the other account, or to 

satisfy any other obligation to the FCM 

or its affiliates. 

Initially, FCMs should identify the 

entity maintaining the sweep account 

and whether that entity is subject to 

regulation and should disclose any 

material terms and conditions, risks and 

features of their offered programs. In 

addition, FCMs should advise 

customers of any conflicts of interest in 

connection with the offered programs, 

including whether the FCM receives 

compensation or other benefits for 

customer balances maintained in the 

sweep account, and the FCM should 

advise the customer which entity to 

contact to gain access to any swept 

funds. An FCM should make these 

disclosures at the time a sweep program 

is offered to a customer and, of course, 

these disclosures should be updated for 

participants if any material changes are 

made to an existing sweep program. The 

Interpretive Notice also provides that if 

a customer elects to participate in a 

sweep program offered by the FCM, 

then the FCM must obtain the 

customer’s written consent prior to any 

funds being transferred pursuant to the 

program. 

The Interpretive Notice also requires 

FCMs to advise customers of the 

consequences of transferring monies 

from the FCM’s customer regulated 

accounts. Specifically, the FCM should 

disclose that by transferring excess 

funds from an FCM’s customer 

regulated commodity accounts, the 

customer will not receive the 

preferential treatment afforded funds 

held in a customer regulated commodity 

account pursuant to CFTC Regulation 

Part 190 and the U.S. Bankruptcy Code. 

The Interpretive Notice recognizes, 

however, that an FCM may offer 

programs that transfer monies to an 

account whereby customers receive 

certain other protections (e.g., SIPC or 

FDIC) in the event of a bankruptcy. In 

this case, the FCM should disclose the 

nature and extent of the protection 

available, including any applicable SIPC 

or FDIC coverage. If the FCM’s programs 

transfer funds to a non-regulated 

account that does not offer protections 

comparable to those afforded funds held 

in a customer regulated commodity 

account, then the FCM must clearly 

disclose this fact and describe the 

impact upon customer funds in the 

unlikely event that the entity 

maintaining the sweep account files for 

bankruptcy. 

Failure to follow the prescribed 

guidelines may be deemed conduct 

inconsistent with a Member’s obligation 

under NFA Compliance Rule 2–4 to 

observe high standards of commercial 

honor and just and equitable principles 

of trade in the conduct of its commodity 

futures business. The Interpretive 

Notice recognizes, however, that FCMs 

offering these sweep programs may have 

to modify these guidelines to address 

their particular programs. 

2. Statutory Basis 

NFA has filed these proposed 

regulations pursuant to Section 19(b)(7) 

of the Act.5 The rule change is 

authorized by, and consistent with, 

Section 15A(k) of the Act. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The rule change will not impose any 

burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act and the 

Commodity Exchange Act. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rules Received From 

Members, Participants, or Others 

NFA did not publish the rule change 

to the membership for comment but did 

discuss it with NFA’s FCM Advisory 

Committee. NFA did not receive 

comment letters concerning the rule 

change. 

III. Date of Effectiveness of the 

Proposed Rules and Timing for 

Commission Action 

On February 26, 2007, NFA submitted 

the proposed Interpretive Notice to the 

CFTC for approval. The proposed rule 

change has become effective on March 

12, 2007, the date of approval of the 

proposed rule change by the CFTC. 

Within 60 days of the date of 

effectiveness of the proposed rule 

change, the Commission, after 

consultation with the CFTC, may 

summarily abrogate the proposed rule 

change and require that the proposed 

rule change be refiled in accordance 

with the provisions of Section 19(b)(1) 

of the Exchange Act.6

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–NFA–2007–02 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Nancy M. Morris, Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–1090. 

All submissions should refer to File 

Number SR–NFA–2007–02. 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/ 


cprice-sewell on PROD1PC66 with NOTICES
27610 Federal Register / Vol. 72, No. 94 / Wednesday, May 16, 2007 / Notices 

7 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Exchange Act Release No. 55517 (Mar. 23, 

2007), 72 FR 14842 (Mar. 29, 2007). 

4See Exchange Act Release No. 53382 (Feb. 27, 

2006), 71 FR 11251 (Mar. 6, 2006) (SR–NYSE–2005–

77). 5See Exchange Act Release No. 34–52579 (Oct. 7, 

2005), 70 FR 60119 (Oct. 14, 2005) (SR–NYSE–

2004–73). 6Rules and Regulations Implementing the 

Telephone Consumer Protection Act of 1991, FCC 

03–153 (Jun. 26, 2003), 68 FR 44144 (Jul. 25, 2003). 

7 Junk Fax Prevention Act of 2005, Pub. L. 109–

21, 119 Stat. 359 (2005). 

8FCC 06–42 (Apr. 5, 2006), 71 FR 56893 (Sept. 

28, 2006). 

9An established business relationship is defined 

as a prior existing relationship formed by voluntary 

two-way communication between a member 

organization and a person where the person has, 

generally speaking, done business with the member 

organization within the 18 months preceding the 

telephone call, the member organization is the 

broker-dealer of record for the person’s account 

within those 18 months, or the person has 

contacted the member organization to inquire about 

a product or service within the three months 

preceding the telephone call. 

10 15 U.S.C. 78f(b)(5). 

11 In approving this proposed rule change, the 

Commission notes that it has considered the 

proposed rule’s impact on efficiency, competition, 

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

12 15 U.S.C. 78s(b)(2). 

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. 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–NFA–2007–02 and should 

be submitted on or before June 6, 2007. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.7

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–9371 Filed 5–15–07; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55735; File No. SR–NYSE–

2007–06] 

Self-Regulatory Organizations; New 

York Stock Exchange LLC.; Order 

Approving Proposed Rule Change To 

Amend NYSE Rule 440A (‘‘Telephone 

Solicitations’’) 

May 10, 2007. 

I. Introduction 

On January 25, 2007, the New York 

Stock Exchange LLC (‘‘NYSE’’ or the 

‘‘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 to 

amend Rule 440A, addressing member 

organizations’ telephone solicitations of 

customers. The proposed rule change 

was published for comment in the 

Federal Register on March 29, 2007.3

The Commission received no comments 

on the proposal. This order approves the 

proposed rule change. 

II. Description of the Proposal 

NYSE Rule 440A generally addresses 

member organizations’ telephone 

solicitations of customers. Rule 440A(g) 

provides ‘‘No member or member 

organization may use a telephone 

facsimile machine, computer or other 

device to send an unsolicited 

advertisement to a telephone facsimile 

machine, computer or other device.’’

Subsection 440A(g)(1) further provides 

that a facsimile advertisement is not 

‘‘unsolicited’’ where the recipient has 

granted the member organization prior 

express invitation or permission to 

deliver the advertisement, as further 

defined in the Rule. This proposed rule 

change provided that such an 

advertisement also will not be 

considered ‘‘unsolicited’’ where there is 

an ‘‘established business relationship’’

as defined in the present Rule 440A(j). 

In addition, the Exchange proposed to 

delete the term ‘‘member’’ as used in the 

Rule to reflect the recent reorganization 

of the Exchange,4 and the term ‘‘allied 

member’’ as redundant within the 

context of the present regulation. 

The amendments to Rule 440A(g) 

were adopted by the Exchange on 

December 2, 2004 5 to incorporate 

regulations issued by the Federal 

Communications Commission (‘‘FCC’’) 

and the Federal Trade Commission 

(‘‘FTC’’) relating to the implementation 

of the National Do Not Call registry and 

the amendments to the Telephone 

Consumer Protection Act of 1991.6 The 

FCC and FTC regulations contained no 

exception for facsimiles sent to 

customers with which a broker-dealer 

had an ‘‘established business 

relationship’’ as such term was defined. 

Subsequently, Congress passed 

legislation 7 which restored an 

exemption for unsolicited faxes sent to 

a recipient with whom the sender had 

an established business relationship. 

Accordingly, the proposed amendments 

to NYSE Rule 440A(g)(1) added an 

exception for established business 

relationships to the definition of 

‘‘unsolicited’’ and set forth the measures 

necessary for a customer to opt out of 

the receipt of further communications. 

These standards, which are taken from 

applicable FCC regulations,8 generally 

require that the member organization 

and the person not only have an 

established business relationship,9 but 

also that the member organization 

obtain the fax number from the recipient 

(or the recipient’s web site, directory, or 

advertisement). Further, the recipient 

must not have stated on those materials 

that they do not accept unsolicited 

advertisements at the listed number. 

Under the proposed rule change, the 

member organization must also take 

reasonable steps to verify that the 

recipient consented to have the number 

listed. 

III. Discussion and Commission 

Findings 

After careful review, the Commission 

finds that the proposed rule change is 

consistent with the Act and, in 

particular, with Section 6(b)(5) of the 

Act, which requires, among other 

things, that the NYSE’s rules be 

designed to promote just and equitable 

principles of trade, and, in general, to 

protect investors and the public 

interest.10 The Commission believes 

that in bringing the NYSE’s Rule setting 

forth the definition and treatment of 

unsolicited telemarketing 

communications into concurrence with 

FCC regulations, the proposed rule 

change will harmonize currently 

disparate regulations and therefore 

provide greater clarity, both to members 

and customers, as to which 

communications between members and 

customers qualify as ‘‘unsolicited.’’ 11

IV. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act 12 that the 

proposed rule change (SR–NYSE–2007–

06), be, and hereby is, approved. 


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