10788 Federal Register / Vol. 77, No. 36 / Thursday, February 23, 2012 / Notices 

5See FINRA Rule 4360 ‘‘Fidelity Bonds.’’ 

6 15 U.S.C. 78f(b). 

7 15 U.S.C. 78f(b)(5). 

8 15 U.S.C. 78s(b)(3)(A). 

9 17 CFR 240.19b–4(f)(1). 

10 17 CFR 200.30–3(a)(12). 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

substantially the same form as the 

Financial Industry Regulatory 

Authority, Inc. (‘‘FINRA’’) Rule 4360.5

The Supplementary Material to 

Exchange Rule 705 is being replaced, 

along with the remainder of Rule 705, 

by a new Rule 705, as of April 2, 2012. 

The title of Exchange Rule 705 will also 

be changed from ‘‘Members Must Carry’’ 

to ‘‘Fidelity Bonds.’’ The Exchange 

intended to delete the current Rule 705 

in its entirety and rename the rule and 

add new text similar to that in FINRA 

Rule 4360. The Exchange inadvertently 

did not place the Supplementary 

Material section of the Rule in that filing 

to be deleted. The Exchange proposes to 

delete the current Supplementary 

Material to Exchange Rule 705 as of 

April 2, 2012, to correspond with the 

operative date of SR–Phlx–2012–13. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act 6 in general, and furthers the 

objectives of Section 6(b)(5) of the Act 7

in particular, in that it is 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, by 

correcting an error in the Exchange’s 

Rules in order that the Rule properly 

reflect the correct text. The Exchange’s 

proposal will correct the text of the Rule 

so that the new text will be properly 

reflected as of April 2, 2012. 

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 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 either 

solicited or received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Pursuant to Section 19(b)(3)(A) of the 

Act 8 and Rule 19b–4(f)(1) 9 thereunder, 

the Exchange has designated this 

proposal as one that constitutes a stated 

policy, practice or interpretation with 

respect to the meaning, administration, 

or enforcement of an existing rule of the 

self-regulatory organization, and 

therefore has become effective. 

The Exchange intends for Rule 705 to 

become operative on April 2, 2012. This 

operative delay will allow members or 

member organizations that are not 

exempt from the Rule to comply with 

the requirements set forth under the 

Rule. 

At any time within 60 days of the 

filing of the 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. If the 

Commission takes such action, the 

Commission shall institute proceedings 

to determine whether the proposed rule 

should be approved or 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 email to rulecomments@sec.gov. Please include File 

Number SR–Phlx–2012–21 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–Phlx–2012–21. This file 

number should be included on the 

subject line if email 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–Phlx–2012–21 and should 

be submitted on or before March 15, 

2012. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.10

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2012–4148 Filed 2–22–12; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–66411; File No. SR–NYSE– 

2012–04] 

Self-Regulatory Organizations; New 

York Stock Exchange LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change Deleting NYSE 

Rule 319 and its Interpretation, Which 

Address Fidelity Bond Requirements, 

and Adopt New Rule Text That Is 

Substantially Similar to FINRA Rule 

4360 

February 16, 2012. 

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

Securities Exchange Act of 1934 (the 

‘‘Act’’) 2 and Rule 19b–4 thereunder,3

notice is hereby given that on February 

3, 2012, New York Stock Exchange LLC 

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

the Securities and Exchange 

Commission (the ‘‘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. 

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Federal Register / Vol. 77, No. 36 / Thursday, February 23, 2012 / Notices 10789 

4See Securities Exchange Act Release No. 63961 

(February 24, 2011), 76 FR 11542 (March 2, 2011) 

(SR–FINRA–2010–059). FINRA’s rule change 

became effective on January 1, 2012. See FINRA 

Regulatory Notice 11–21. 

5See Securities Exchange Act Release Nos. 56148 

(July 26, 2007), 72 FR 42146 (August 1, 2007) (order 

approving the Agreement); 56147 (July 26, 2007), 72 

FR 42166 (August 1, 2007) (SR–NASD–2007–054) 

(order approving the incorporation of certain NYSE 

Rules as ‘‘Common Rules’’); and 60409 (July 30, 

2009), 74 FR 39353 (August 6, 2009) (order 

approving the amended and restated Agreement, 

adding NYSE Amex LLC as a party). Paragraph 2(b) 

of the Agreement sets forth procedures regarding 

proposed changes by FINRA, NYSE or NYSE Amex 

to the substance of any of the Common Rules. 

6FINRA’s rulebook currently has three sets of 

rules: (1) NASD Rules, (2) FINRA Incorporated 

NYSE Rules, and (3) consolidated FINRA Rules. 

The FINRA Incorporated NYSE Rules apply only to 

those members of FINRA that are also members of 

the NYSE (‘‘Dual Members’’), while the 

consolidated FINRA Rules apply to all FINRA 

members. For more information about the FINRA 

rulebook consolidation process, see FINRA 

Information Notice, March 12, 2008. 

7The purpose of a fidelity bond is to protect a 

member organization against certain types of losses, 

including, but not limited to, those caused by the 

malfeasance of its officers and employees, and the 

effect of such losses on the member organization’s 

capital. 

8 15 U.S.C. 78f(b). 

9 15 U.S.C. 78f(b)(5). 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to delete 

NYSE Rule 319 and its Interpretation, 

which address fidelity bond 

requirements, and adopt new rule text 

that is substantially similar to FINRA 

Rule 4360. The text of the proposed rule 

change is available at the Exchange, the 

Commission’s Public Reference Room, 

and 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 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to delete 

NYSE Rule 319 and its Interpretation, 

which address fidelity bond 

requirements, and adopt new rule text 

that is substantially similar to FINRA 

Rule 4360.4

Background 

On July 30, 2007, FINRA’s 

predecessor, the National Association of 

Securities Dealers, Inc. (‘‘NASD’’), and 

NYSE Regulation, Inc. (‘‘NYSER’’) 

consolidated their member firm 

regulation operations into a combined 

organization, FINRA. Pursuant to Rule 

17d–2 under the Act, NYSE, NYSER and 

FINRA entered into an agreement (the 

‘‘Agreement’’) to reduce regulatory 

duplication for their members by 

allocating to FINRA certain regulatory 

responsibilities for certain NYSE rules 

and rule interpretations (‘‘FINRA 

Incorporated NYSE Rules’’). NYSE 

Amex LLC (‘‘NYSE Amex’’) became a 

party to the Agreement effective 

December 15, 2008.5

As part of its effort to reduce 

regulatory duplication and relieve firms 

that are members of FINRA, NYSE and 

NYSE Amex of conflicting or 

unnecessary regulatory burdens, FINRA 

is now engaged in the process of 

reviewing and amending the NASD and 

FINRA Incorporated NYSE Rules in 

order to create a consolidated FINRA 

rulebook.6

Proposed Conforming Amendments to 

NYSE Rules 

The Exchange proposes to delete 

NYSE Rule 319 and its Interpretation 

and adopt new Rule 4360 to conform to 

the changes adopted by FINRA for 

fidelity bonds.7 FINRA adopted NASD 

Rule 3020 as FINRA Rule 4360, taking 

into account NYSE Rule 319 and its 

Interpretation. FINRA Rule 4360 

updates and clarifies fidelity bond 

requirements for member firms and 

better reflects current industry practices. 

The Rule requires each FINRA member 

that is required to join Securities 

Investor Protection Corporation to 

maintain blanket fidelity bond coverage 

with specified amounts of coverage 

based on the member organization’s net 

capital requirement, with certain 

exceptions, and to maintain fidelity 

bond coverage that provides for per loss 

coverage without an aggregate limit of 

liability. 

Because it covers the same topic as 

the new FINRA rule, FINRA deleted 

FINRA Incorporated NYSE Rule 319 and 

its Interpretation. In particular, NYSE 

Rule 319 and its Interpretation generally 

require member organizations to 

maintain minimum amounts of fidelity 

bond coverage for officers and 

employees, and that such coverage 

address losses incurred due to certain 

specified events. To harmonize the 

NYSE Rules with the approved FINRA 

Rules, the Exchange correspondingly 

proposes to delete Rule 319 and its 

Interpretation and to adopt proposed 

NYSE Rule 4360. The text of proposed 

NYSE Rule 4360 would be the same as 

FINRA Rule 4360, except that the 

Exchange would substitute the term 

‘‘member organization’’ for ‘‘member’’ 

and ‘‘Exchange’’ for ‘‘FINRA.’’ 

2. Statutory Basis 

The proposed rule change is 

consistent with Section 6(b) of the Act 8

in general, and furthers the objectives of 

Section 6(b)(5) 9 in particular, in that it 

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 

facilitating transactions in securities, 

and to remove impediments to and 

perfect the mechanism of a free and 

open market and a national market 

system. Specifically, the Exchange 

believes that the proposed rule change 

supports the objectives of the Act by 

providing greater harmonization 

between NYSE Rules and FINRA Rules 

of similar purpose, resulting in less 

burdensome and more efficient 

regulatory compliance. In particular, all 

NYSE member organizations that are 

subject to NYSE Rule 319 are also 

subject to FINRA Rule 4360 and 

harmonizing these two rules would 

promote just and equitable principles of 

trade by requiring a single standard for 

fidelity bonds. To the extent the 

Exchange has proposed changes that 

differ from the FINRA version of the 

Rules, such changes are technical in 

nature and do not change the substance 

of the proposed NYSE Rules. The 

Exchange also believes that the 

proposed rule change will update and 

clarify the requirements governing 

fidelity bonds, which will promote just 

and equitable principles of trade and 

help to protect investors. 

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. 

mstockstill on DSK4VPTVN1PROD with NOTICES

10790 Federal Register / Vol. 77, No. 36 / Thursday, February 23, 2012 / Notices 

10 15 U.S.C. 78s(b)(3)(A)(iii). 

11 17 CFR 240.19b–4(f)(6). 

12 17 CFR 240.19b–4(f)(6). 

13 17 CFR 240.19b–4(f)(6)(iii). 14 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 66119 

(January 9, 2012), 77 FR 2112. 

4 In approving this proposed rule change, the 

Commission has considered the proposed rule’s 

impact on efficiency, competition, and capital 

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

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

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The Exchange has filed the proposed 

rule change pursuant to Section 

19(b)(3)(A)(iii) of the Act 10 and Rule 

19b–4(f)(6) thereunder.11 Because the 

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 

prior to 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 and Rule 19b–4(f)(6)(iii) 

thereunder. 

A proposed rule change filed under 

Rule 19b–4(f)(6) 12 normally does not 

become operative prior to 30 days after 

the date of the filing. However, pursuant 

to Rule 19b–4(f)(6)(iii),13 the 

Commission may designate a shorter 

time if such action is consistent with the 

protection of investors and the public 

interest. The Exchange has asked the 

Commission to waive the 30-day 

operative delay so that the proposal may 

become operative immediately upon 

filing. 

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. 

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 email to rulecomments@sec.gov. Please include File 

Number SR–NYSE–2012–04 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–NYSE–2012–04. This file 

number should be included on the 

subject line if email 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 Section, 100 F Street NE., 

Washington, DC 20549–1090. Copies of 

the filing will also be available for 

inspection and copying at the NYSE’s 

principal office and on its Internet Web 

site at www.nyse.com. 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–NYSE–2012–04 and should 

be submitted on or before March 15, 

2012. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.14

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2012–4194 Filed 2–22–12; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–66408; File No. SR–CBOE– 

2011–126] 

Self-Regulatory Organizations; 

Chicago Board Options Exchange, 

Incorporated; Order Approving 

Proposed Rule Change Relating to the 

CBOE Stock Exchange Request for 

Quote Rules 

February 16, 2012. 

On December 27, 2011, Chicago Board 

Options Exchange, Incorporated 

(‘‘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 

modify its rules relating to requests for 

quotes (‘‘RFQs’’) on the CBOE Stock 

Exchange (‘‘CBSX’’). The proposal 

removes the rule provisions affording 

CBSX participants the ability to submit 

RFQs. The proposed rule change was 

published for comment in the Federal 

Register on January 13, 2012.3 The 

Commission received no comments on 

the proposal. 

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 exchange 4 and, in particular, 

the requirements of Section 6(b)(5) of 

the Act,5 which requires that the 

Commission determine that the rules of 

the Exchange are designed to remove 

impediments to and perfect the 

mechanism for a free and open market. 

The proposal removes references 

pertaining to RFQs in the CBSX rules 

because the method of trading on CBSX 

obviates the need for an RFQ process. 

The Exchange represents that 

participants have not used, or inquired 

about using, RFQs on CBSX. Moreover, 

the systems of CBSX do not fully 

support transmitting RFQ messages. 

Given that the CBSX system for 

submitting RFQs is not currently 

functional, the Commission believes the 

removal of references to RFQs in the 

CBSX rules may prevent confusion 

among participants who may otherwise 

expect to be able to submit RFQs. For 

the foregoing reasons, the Commission 

mstockstill on DSK4VPTVN1PROD with NOTICES