Federal Register / Vol. 77, No. 51 / Thursday, March 15, 2012 / Notices 15445 

25 15 U.S.C. 78s(b)(2). 

26 17 CFR 200.30–3(a)(12). 

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. 53564 

(March 29, 2006), 71 FR 16847 (April 4, 2006) (SR– 

NASD–2006–038) (Order Approving File No. SR– 

NASD–2006–038); NASD Notice to Members 06–16 

(April 2006) (NASD Amends Rule 1013 to Adopt a 

Standardized Application Form (Form NMA) to be 

Used by All New Member Applicants); see also 

Securities Exchange Act Release No. 55412 (March 

7, 2007), 72 FR 11414 (March 13, 2007) (Order 

Approving File No. SR–NASD–2007–015); NASD 

Notice to Members 07–20 (May 2007) (NASD 

Amends Rules 1012 and 1013 to Require Applicants 

for Membership to Submit Applications Using 

Online Form NMA). 

5While NASD Rule 1014 sets forth 14 standards 

for membership, Form NMA does not elicit specific 

information from the applicant regarding standards 

13 (FINRA does not possess information indicating 

that the applicant may circumvent the federal 

securities laws or FINRA rules) or 14 (the 

application is consistent with the federal securities 

laws and FINRA rules). See NASD Rule 1014(a)(13) 

and (14). 

IV. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,25 that the 

proposed rule change (SR–NYSEArca2012–04) be, and it hereby is, approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.26

Kevin M. O’Neill, 

Secretary. 

[FR Doc. 2012–6231 Filed 3–14–12; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–66555; File No. SR–FINRA– 

2012–017] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Amend Online Form 

NMA, the Standardized Membership 

Application Form Applicants Must File 

Pursuant to NASD Rule 1013 (New 

Member Application and Interview) 

March 9, 2012. 

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 March 5, 

2012, 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 and 

II below, which Items have been 

prepared by FINRA. FINRA has 

designated the proposed rule change as 

constituting a ‘‘non-controversial’’ rule 

change under paragraph (f)(6) of Rule 

19b-4 under the Act,3 which renders the 

proposal effective upon receipt of this 

filing by 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 

FINRA is proposing to amend online 

Form NMA, the standardized 

membership application form 

applicants must file pursuant to NASD 

Rule 1013 (New Member Application 

and Interview) as part of their new 

membership application. 

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 

Pursuant to NASD Rule 1012 (General 

Provisions) and NASD Rule 1013 (New 

Member Application and Interview), 

each applicant for FINRA membership 

must complete and electronically file 

the standardized online Form NMA as 

part of its new member application. The 

standardized online Form NMA was 

implemented several years ago to 

streamline the new member application 

process and to assist applicants in 

compiling a complete application 

package by identifying and organizing 

the information and supporting 

documentation required by NASD Rule 

1013 into eight major sections: (1) 

Section I (General Information); (2) 

Section II (Business Lines); (3) Section 

III (Personnel); (4) Section IV (Net 

Capital and Sources of Funding); (5) 

Section V (Contractual and Business 

Arrangements); (6) Section VI (Policies 

and Procedures); (7) Section VII 

(Facilities); and (8) Section VIII 

(Recordkeeping). 

Prior to FINRA’s adoption of Form 

NMA, applicants would submit 

inadequate or incomplete new member 

applications that were subject to 

rejection pursuant to NASD Rule 

1013(a)(3) as not substantially 

complete.4

FINRA is now proposing to revise 

Form NMA to further streamline the 

new member application process and to 

organize Form NMA according to the 12 

standards for membership enumerated 

in NASD Rule 1014 (Department 

Decision) and further detailed below.5

The revisions also seek to group 

information requests on specific topics 

that currently are located throughout 

existing Form NMA, as well as reduce 

current duplicative information requests 

in Form NMA. Additionally, revised 

Form NMA provides the following new 

user-friendly features intended to 

reduce the administrative burden placed 

on applicants: 

• Information fields, included in 

standards 1, 2, 8, and 12, that are prepopulated with information previously 

provided by applicants to FINRA in 

other submissions (e.g., Central 

Registration Depository (‘‘CRD’’®) 

entitlement forms and Form BD) or 

otherwise available to FINRA from CRD 

records (e.g., continuing education 

status), thereby minimizing the time 

necessary for applicants to complete the 

new form; 

• Information fields, included in 

standards 2, 3, 5, 6, 8, and 12, 

requesting information that applicants 

are currently required to provide during 

FINRA’s review of the new member 

application that were not included in 

current Form NMA but rather obtained 

during application review through 

requests from FINRA for additional 

information. These information fields, 

which were added based on industry 

and staff feedback on existing Form 

NMA and the new member application 

process should reduce the need for 

extensive follow-up during the review 

process which currently results in 

processing delays; and 

• Information fields, included in all 

standards except standard 9, allowing 

applicants to provide additional 

information, if applicable to their 

proposed business activities, structures, 

or circumstances. 

Below is a synopsis of the content of 

revised Form NMA, by standard, and its 

nexus to existing Form NMA: 

• Standard 1 (Overview of the 

Applicant): 

This standard seeks certain applicant 

overview information currently 

contained primarily in Sections I 

(General Information) and VII 

(Facilities) of existing Form NMA (e.g., 

formation information, identification of 


srobinson on DSK4SPTVN1PROD with NOTICES
15446 Federal Register / Vol. 77, No. 51 / Thursday, March 15, 2012 / Notices 

6The task force also assisted FINRA in creating 

a new online Form CMA for continuing member 

applicants. See SR–FINRA–2012–018 (February 28, 

2012) (proposed rule change amending NASD Rules 

1012 and 1017 to adopt a new standardized online 

Form CMA). 

7 15 U.S.C. 78o–3(b)(6). 

business activities, types of customers 

(and/or counterparties), owners, 

officers, directors, and control persons, 

validation of clearing arrangements). 

• Standard 2 (Licenses and 

Registrations): 

This standard consists of information 

requests regarding licenses and 

registrations (e.g., required licenses and 

registrations, two-principal requirement 

waiver, Securities Information Center 

exemption, other self-regulatory 

organization registrations) currently 

contained primarily in Sections I and III 

(Personnel) of existing Form NMA as 

well as incorporating additional 

information requests (e.g., intent to 

claim exemptions from registration or 

seek examination waivers for 

personnel). 

• Standard 3 (Compliance With 

Securities Laws, Just and Equitable 

Principles of Trade): 

This standard consists of specific 

requests for information (e.g., 

disciplinary history) contained in 

Sections I and III of existing Form NMA 

that FINRA considers necessary for the 

applicant to demonstrate compliance 

with the requirements of this standard 

in the revised Form NMA and also 

incorporates additional information 

requests (e.g., state or federal orders or 

decrees, statements of claims, settlement 

agreements). 

• Standard 4 (Contractual and 

Business Relationships): 

This standard includes the 

information requests regarding an 

applicant’s contractual and business 

relationships currently contained in 

Sections I, IV (Net Capital and Sources 

of Funding) and V (Contractual and 

Business Arrangements) of existing 

Form NMA (e.g., description of 

contractual arrangements, expense 

sharing agreements, financing 

arrangements, fidelity bonds or fidelity 

bond applications, support and service 

agreements, auditor information). 

• Standard 5 (Facilities): 

This standard consists of information 

requests regarding an applicant’s 

facilities primarily contained in Section 

VII of existing Form NMA (e.g., space 

sharing arrangements, leasing or subleasing arrangements). This standard 

also incorporates requests for additional 

information (e.g., authorizations to 

sublet, deeds of ownership). 

• Standard 6 (Communications and 

Operational Systems): 

This standard includes information 

requests regarding an applicant’s 

communications and operational 

systems currently in Sections VI 

(Policies and Procedures) and VII of 

existing Form NMA (e.g., 

communications and operational 

systems descriptions, supervision 

arrangements of multiple locations, 

business continuity plan documents). 

The standard also incorporates requests 

for additional information (e.g., 

information relating to the use of social 

media sites). 

• Standard 7 (Maintaining Adequate 

Net Capital): 

This standard includes information 

regarding an applicant’s net capital 

requirements currently requested 

primarily in Section IV of existing Form 

NMA (e.g., information on the nature 

and source of capital, additional 

funding plans, minimum net capital 

requirements, future funding sources). 

• Standard 8 (Financial Controls): 

This standard seeks information 

regarding an applicant’s financial 

controls currently requested primarily 

in Sections I, III, and VI of existing Form 

NMA (e.g., information regarding the 

FINOP’s experience, financial controls, 

FINOP outside business activity 

notification) as well as incorporates 

requests for additional information (e.g., 

net capital deficiency plans). 

• Standard 9 (Written Procedures): 

This standard seeks information 

regarding an applicant’s written 

procedures currently requested in 

Sections III, VI, and VIII (Recordkeeping 

System) of existing Form NMA (e.g., 

written supervisory procedures 

(‘‘WSP’’), WSP checklist, sample reports 

to support supervision and financial 

controls, heightened supervisory 

procedures attestation). 

• Standard 10 (Supervisory 

Structure): 

This standard seeks information 

regarding an applicant’s supervisory 

structure currently requested in 

Sections I and III of the existing Form 

NMA (e.g., information regarding 

supervisors’ experience and duties, 

chief compliance officers’ experience, 

non-FINOP outside business activities 

notifications). 

• Standard 11 (Books and Records): 

This standard seeks information 

regarding an applicant’s books and 

records currently requested primarily in 

Section VIII of existing Form NMA (e.g., 

recordkeeping system, sample books 

and records, recordkeeping service 

providers). 

• Standard 12 (Continuing 

Education): 

This standard seeks information 

regarding an applicant’s continuing 

education (‘‘CE’’) obligations currently 

requested in Section VI of existing Form 

NMA (e.g., firm element owner 

identification, CE checklist, CE needs 

assessment) as well as incorporates 

additional requests for information (e.g., 

information regarding the applicant’s CE 

deficiency mitigation plan). 

FINRA worked closely with an 

industry task force, comprised of seven 

representatives from small and large 

firms, several of whom also act as 

consultants, during the development of 

revised Form NMA.6 Among other 

things, the task force’s input assisted 

FINRA to make changes intended to 

reduce applicants’ administrative 

burden when completing Form NMA. 

Overall, FINRA believes that revised 

Form NMA will facilitate more effective 

and efficient application processing for 

applicants. 

FINRA has filed the proposed rule 

change for immediate effectiveness. The 

implementation date for the revised 

Form NMA will be July 23, 2012. 

2. Statutory Basis 

FINRA believes that the proposed rule 

change is consistent with the provisions 

of Section 15A(b)(6) of the Act,7 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. The proposed change 

restructures the content of existing Form 

NMA to make the requested information 

and documentation more consistent 

with the standards in NASD Rule 1014 

against which they are evaluated and 

elicits information that applicants are 

currently required to provide during 

FINRA’s review of the new member 

application. FINRA believes that revised 

Form NMA will reduce new member 

applicants’ administrative burden and 

ensure a more streamlined and efficient 

membership application process for 

both FINRA and applicants. 

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. 


srobinson on DSK4SPTVN1PROD with NOTICES
Federal Register / Vol. 77, No. 51 / Thursday, March 15, 2012 / Notices 15447 

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

9 17 CFR 240.19b–4(f)(6). 

10 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

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

4 17 CFR 240.19b–4(f)(2). 

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 8 and Rule 19b– 

4(f)(6) thereunder.9

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–FINRA–2012–017 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–2012–017. 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 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–2012–017 and 

should be submitted on or before April 

5, 2012. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.10

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2012–6233 Filed 3–14–12; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–66554; File No. SR–CME– 

2012–04] 

Self-Regulatory Organizations; 

Chicago Mercantile Exchange, Inc.; 

Notice of Filing and Immediate 

Effectiveness of Proposed Rule 

Change To Amend the Fee Schedule 

Applicable to Its OTC Interest Rate 

Swap Clearing Offering 

March 9, 2012. 

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 March 1, 

2012, Chicago Mercantile Exchange Inc. 

(‘‘CME’’) filed with the Securities and 

Exchange Commission (‘‘Commission’’) 

the proposed rule change described in 

Items I, II and III below, which items 

have been prepared primarily by CME. 

CME filed the proposed rule change 

pursuant to Section 19(b)(3)(A)(ii) 3 of 

the Act and Rule 19b–4(f)(2) 4

thereunder. 

I. Self-Regulatory Organization’s 

Statement of Terms of Substance of the 

Proposed Rule Change 

CME is proposing to amend the fee 

schedule that currently applies to its 

OTC Interest Rate Swap clearing 

offering. The text of the proposed 

changes is attached as Exhibit 5 to the 

proposed rule change, which is 

available on CME’s Web site at http:// 

www.cmegroup.com/market-regulation/ 

rule-filings.html. 

II. Self-Regulatory Organization’s 

Statement of Purpose of, and Statutory 

Basis for, the Proposed Rule Change 

In its filing with the Commission, 

CME included statements concerning 

the purpose 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. CME 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 Purpose of, and Statutory 

Basis for, the Proposed Rule Change 

CME currently offers clearing for 

certain OTC Interest Rate Swap 

products. The filing proposes to amend 

the current fee schedule that applies to 

CME’s OTC Interest Rate Swap (‘‘IRS’’) 

clearing fees. The proposed changes are 

related to fees and therefore will become 

effective immediately. However, the 

proposed fee changes will become 

operative as of March 12, 2012, and by 

their terms will expire on September 30, 

2012. 

The proposed fee changes will 

temporarily modify CME’s current OTC 

IRS clearing fee schedule so that all 

house accounts of CME IRS Clearing 

Members will be charged a flat fee of 

$250 per ticket on a preallocation basis 

between March 12, 2012, and September 

30, 2012, for any trades accepted for 

clearing where the effective date of the 

trade is prior to the date the trade was 

accepted for clearing (‘‘backloaded 

trades’’). The temporary fee rates will 

apply to all CME IRS Clearing members 

submitting backloaded trades to CME 

for clearing during the applicable time 

period. 

CME believes the temporary 

modification to the CME IRS Fee 

Schedule will encourage IRS Clearing 

members to submit additional volume 

into the system to ensure readiness and 

help build open interest ahead of a 

regulatory mandate. 

CME has also certified the proposed 

rule changes that are the subject of this 


srobinson on DSK4SPTVN1PROD with NOTICES