Federal Register / Vol. 74, No. 64 / Monday, April 6, 2009 / Notices 15563 

21 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. 

4On March 30, 2009, the Exchange withdrew 

Amendment No. 1. 

5Amendment No. 2 to SR–NYSE–2009–25 

replaces the original filing in its entirety. References 

to Amendment No. 1 in Amendment No. 2 should 

be read as Amendment No. 2. Telephone call 

between Nancy Burke-Sanow, Division of Trading 

and Markets, Commission, and Clare Saperstein, 

Managing Director, NYSE, March 30, 2009. 

6See Securities Exchange Act Release No. 58461 

(September 4, 2008), 73 FR 52710 (September 10, 

2008) (SR–FINRA–2008–033); Securities Exchange 

Act Release No. 58514 (September 11, 2008), 73 FR 

54190 (September 18, 2008) (SR–FINRA–2008–039); 

Securities Exchange Act Release No. 58643 

(September 25, 2008), 73 FR 57174 (October 1, 

2008) (SR–FINRA–2008–021, –022, –026, –028, 

–029); Securities Exchange Act Release No. 58660 

(September 26, 2008), 73 FR 57393 (October 2, 

2008) (SR–FINRA–2008–027); Securities Exchange 

Act Release No. 58661 (September 26, 2008), 73 FR 

57395 (October 2, 2008) (SR–FINRA–2008–030); 

and Securities Exchange Act Release No. 59097 

(December 12, 2008), 73 FR 78412 (December 22, 

2008) (SR–FINRA–2008–057). See also FINRA 

Regulatory Notice 08–57, October 16, 2008. 

7The current FINRA rulebook consists of three 

sets of rules: (1) NASD Rules, (2) rules and rule 

interpretations incorporated from the NYSE 

(‘‘FINRA Incorporated NYSE Rules’’) (together, 

referred to as the ‘‘Transitional Rulebook’’), 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 (Rulebook Consolidation 

Process). 

8Pursuant to Rule 17d–2 under the Act, NYSE, 

NYSER and NASD entered into an agreement (the 

‘‘Agreement’’) to reduce regulatory duplication for 

Dual Members by allocating to FINRA regulatory 

responsibility for certain NYSE and NASD Rules 

(the ‘‘Common Rules’’). See Securities Exchange 

Act Release No. 56148 (July 26, 2007), 72 FR 42146 

(August 1, 2007) (Notice of Filing and Order 

Approving and Declaring Effective a Plan for the 

Allocation of Regulatory Responsibilities). The 

Common Rules include the FINRA Incorporated 

NYSE Rules. See Securities Exchange Act Release 

No. 56147 (July 26, 2007), 72 FR 42166 (August 1, 

2007) (Notice of Filing and Order Granting 

Accelerated Approval of Proposed Rule Change to 

Incorporate Certain NYSE Rules Relating to Member 

Firm Conduct) (SR–NASD–2007–054). Paragraph 

2(b) of the Agreement sets forth procedures 

regarding proposed changes by either NYSE or 

FINRA to the substance of any of the Common 

Rules. 

All submissions should refer to File 

Number SR–NASDAQ–2009–026. 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, 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– 

NASDAQ–2009–026 and should be 

submitted on or before April 27, 2009. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.21

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–7631 Filed 4–3–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–59655; File No. SR–NYSE– 

2009–25] 

Self-Regulatory Organizations; Notice 

of Filing of Proposed Rule Change by 

New York Stock Exchange LLC, as 

Modified by Amendment No. 2, 

Changing Certain NYSE Rules and 

Rule Interpretations To Harmonize 

Them With Changes to Corresponding 

Rules Recently Filed by the Financial 

Industry Regulatory Authority, Inc. 

March 30, 2009. 

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 March 9, 

2009, New York Stock Exchange LLC 

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

the Securities and Exchange 

Commission (the ‘‘Commission’’ or 

‘‘SEC’’) the proposed rule change as 

described in Items I, II, and III below, 

which Items have been prepared by the 

self-regulatory organization. On March 

27, 2009, the Exchange filed 

Amendment No. 1 to the proposed rule 

change, which was withdrawn.4 On 

March 30, 2009, the Exchange filed 

Amendment No. 2 to the proposed rule 

change.5 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 changes to 

certain NYSE Rules and Rule 

Interpretations, retroactively effective to 

December 15, 2008, to harmonize them 

with changes to corresponding rules 

recently filed by the Financial Industry 

Regulatory Authority, Inc. (‘‘FINRA’’) 

and approved by the Commission or 

submitted for immediate effectiveness.6

FINRA filed the rule changes as part of 

its effort to develop a new consolidated 

rulebook for its members (the 

‘‘Consolidated FINRA Rulebook’’).7 The 

text of the proposed rule change is 

available at the Exchange, the 

Commission’s Public Reference Room, 

and http://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 

On July 30, 2007, the National 

Association of Securities Dealers, Inc. 

(‘‘NASD’’) and NYSE Regulation, Inc. 

(‘‘NYSER’’) consolidated their member 

firm regulation operations into a 

combined organization, FINRA.8 As 

discussed in more detail below, FINRA 

recently filed, and the Commission 

approved, changes to certain NASD and 

FINRA Incorporated NYSE Rules and 

adopted a number of Consolidated 

FINRA Rules to replace other NASD and 

FINRA Incorporated NYSE Rules. The 

effective date for the FINRA rule 

changes was December 15, 2008. 

To reduce regulatory duplication, the 

Exchange proposes to harmonize NYSE 

Rules with the recently approved 

FINRA rule changes by deleting certain 

NYSE Rules and Rule Interpretations 

and replacing them with rules that are 


pwalker on PROD1PC71 with NOTICES
15564 Federal Register / Vol. 74, No. 64 / Monday, April 6, 2009 / Notices 

9NYSE Amex LLC has filed a companion rule 

filing to conform its Equities Rules to the changes 

proposed in this filing. See SR–NYSEALTR–2009– 

26 (formally submitted March 9, 2009), amended. 

10See Securities Exchange Act Release No. 58660 

(September 26, 2008), 73 FR 57393 (October 2, 

2008). 

11FINRA also noted that certain provisions of 

FINRA Incorporated NYSE Rules 350 and 350.10 

and Rule Interpretation 350/02 related to 

operations/Floor employees of the Exchange are not 

applicable to FINRA and could be deleted. See 

Securities Exchange Act Release No. 58660 

(September 26, 2008), 73 FR 57393 (October 2, 

2008). The Exchange believes that the substance of 

these provisions is adequately addressed in existing 

NYSE Rules and the proposed NYSE Rules 2070 

and 3220. 

12See Securities Exchange Act Release No. 55765 

(May 15, 2007), 72 FR 28743 (May 22, 2007) (SR– 

NASD–2006–44), as subsequently amended, 

January 2, 2008. The Exchange has proposed the 

adoption of a new NYSE Rule 350A that is 

substantively duplicative of the rule proposed in 

SR–NASD–2006–044. See Securities Exchange Act 

Release No. 55766 (May 15, 2007), 72 FR 28534 

(May 21, 2007) (SR–NYSE–2006–06). These filings 

have not been approved by the Commission as of 

the date of this filing. 

identical to, or substantially identical to, 

the recently approved FINRA Rules, 

subject to technical amendments to 

make them specific to the Exchange. To 

more readily identify those NYSE Rules 

that are harmonized with FINRA Rules, 

the Exchange proposes to adopt the 

same rule numbering used in the 

Consolidated FINRA Rulebook. 

The Exchange further proposes that 

these rule changes be retroactively 

effective to December 15, 2008, the same 

as the effective date of FINRA’s rule 

changes on which this filing is based. 

The FINRA approved rule changes 

and the Exchange’s proposed 

conforming rule changes are 

summarized below.9

FINRA Rule Filing SR–FINRA–2008– 

027 10

FINRA adopted NASD Rules 3060 

(Influencing or Rewarding Employees of 

Others) and 3090 (Transactions 

Involving Association and American 

Stock Exchange Employees) as FINRA 

Rules 3220 and 2070, respectively. 

FINRA Rule 3220 prohibits members or 

associated persons from giving gifts or 

gratuities in excess of $100 per year to 

an agent or employee of another person 

where it relates to the business of the 

employer of the recipient. FINRA Rule 

2070 addresses conflicts of interest 

involving FINRA employees. 

Because they are substantively 

duplicative of these FINRA Rules, 

FINRA deleted the corresponding 

provisions of FINRA Incorporated NYSE 

Rules 407(a) and 407.10 (Transactions— 

Employees of Members, Member 

Organizations and the Exchange) and 

350 (Compensation or Gratuities to 

Employees of Others), and Rule 

Interpretations 350/01 (Application) 

and/02 (Conflicts of Interest).11 FINRA 

also deleted FINRA Incorporated NYSE 

Rule Interpretation 350/03 

(Entertainment), which deals with 

business entertainment expenses, since 

it is addressed in a separate rule filing.12

Accordingly, to harmonize the NYSE 

Rules with the approved FINRA rule 

changes, the Exchange proposes to (i) 

delete NYSE Rule 350 and Rule 

Interpretations 350/01–/03, and (ii) 

adopt proposed NYSE Rules 2070 and 

3220, which are nearly identical to 

FINRA Rules 2070 and 3220, to replace 

the deleted NYSE Rules. The Exchange 

believes that proposed NYSE Rules 2070 

and 3220, together with other existing 

and/or proposed NYSE Rules, address 

the specific provisions of NYSE Rule 

350 and the related Rule Interpretations. 

Specifically, NYSE Rule 350(a) 

addresses the giving of gifts or gratuities 

by members, member organizations and 

their employees to other members, 

member organizations, their employees 

or the employees of non-members 

engaged in certain businesses. NYSE 

Rules 350(a) and (b) address the 

employment or compensation of others 

by members, member organizations and 

their employees, including Floor-based 

employees of other members or member 

organizations. Under Rule 350(b), 

payment in excess of $200 for 

employment or compensation of a Floor 

employee of another member or member 

organization requires the employee to 

become registered with such member or 

member organization. 

The Exchange believes that proposed 

new NYSE Rule 3220 replaces NYSE 

Rule 350(a) because it addresses the 

giving of gifts or gratuities to, and the 

employment or compensation for 

services of, the employees of others, 

both members and non-members. 

Proposed Rule 3220(a) harmonizes with 

FINRA Rule 3220(a) because it prohibits 

the giving of gifts or gratuities in excess 

of $100 per year to ‘‘any person, 

principal, proprietor, employee, agent or 

representative of another person’’ where 

that gift is related to the business of the 

recipient’s employer. 

Proposed NYSE Rule 3220(b) replaces 

NYSE Rule 350(b) because it addresses 

situations requiring dual employment 

and prior written consent when 

compensation provided to another 

employee exceeds a specified amount. 

Rule 350(b) requires dual employment 

for any payments over $200 to Floor 

employees whereas proposed Rule 

3220(b) requires dual employment for 

any payment made to any employee for 

employment or services over the $100 

limit prescribed by 3220(a), including 

Floor employees of a member 

organization. 

Because under proposed NYSE Rule 

3220(a) any employee, including Floor 

employees, receiving more than $100 for 

services from another member 

organization must be dually employed 

with that member organization, the 

requirement under NYSE Rule 350(b) 

that a Floor employee receiving more 

than $200 in compensation be dually 

registered is no longer necessary. Under 

NYSE Rules 35 and 35.50, which 

require that all member and member 

organization Floor employees must be 

registered with the Exchange on Form 

U–4, any Floor employee that is dually 

employed must be registered with each 

member organization for whom he or 

she works. Accordingly, because the 

new dual employment requirement 

under proposed Rule 3220(b) triggers 

the Rule 35 dual registration 

requirements, it is not necessary to 

specify dual registration in proposed 

Rule 3220. Upon adoption of Rule 3220 

the Exchange intends to issue guidance 

to its members and member 

organizations reminding them that any 

person who is dually employed by two 

or more members or member 

organizations must be registered with 

each such member or member 

organization pursuant to Rule 35. 

NYSE Rules 350(a) and 350.10 also 

specifically address, inter alia, the 

giving of gifts or gratuities to, or the 

employment or compensation of, 

employees of the Exchange by members, 

member organizations and their 

employees. In particular, Rule 350.10 

specifies, inter alia, the procedures for 

seeking the Exchange’s consent for the 

employment or compensation of 

Exchange employees and describes the 

types of dual-employment arrangements 

generally acceptable to the Exchange 

and those that are not acceptable. 

The Exchange believes that proposed 

NYSE Rules 3220 and 2070 specifically 

address the provisions of NYSE Rule 

350(a) and 350.10 dealing expressly 

with Exchange employees. To begin 

with, proposed Rule 3220 concerns the 

giving of gifts or gratuities to, or the 

employment or compensation of, any 

employee of another, which would 

include employees of the Exchange. In 

addition, proposed Rule 2070(c) 

specifically provides that, 

notwithstanding the more general 

prescriptions of Rule 3220(a), members 

and member organizations are 

prohibited from giving anything of value 

to an Exchange employee responsible 

for any regulatory matter involving such 

member or member organization. The 

Exchange did not include the standards 


pwalker on PROD1PC71 with NOTICES
Federal Register / Vol. 74, No. 64 / Monday, April 6, 2009 / Notices 15565 

13 In this filing, infra, the Exchange proposes to 

replace current NYSE Rule 401(a), concerning good 

business practices, with proposed NYSE Rules 2010 

and 2020, which are substantially identical to 

FINRA Rules 2010 and 2020, approved by the 

Commission. 

14Specifically, FINRA’s interpretative guidance 

concerning business entertainment expenses 

includes a June 24, 1999, Letter to Henry H. 

Hopkins and Sarah McCafferty, T. Rowe Price 

Investment Services, Inc. This interpretative letter 

and other interpretive guidance concerning 

business entertainment expenses are currently 

available at FINRA’s Web site at http:// 

www.finra.org/Industry/Regulation/Guidance/ 

InterpretiveLetters/ConductRules/index.htm. 

15Unlike FINRA, the Exchange still reviews 

listing applications and conducts delisting 

proceedings and believes it is appropriate to 

include these matters in proposed NYSE Rule 

2070(c). In addition, since the Exchange no longer 

engages in dispute-resolution proceedings (i.e., 

arbitrations), it does not need such a designation in 

proposed Rule 2070. 

16Even though FINRA amended FINRA 

Incorporated NYSE Rule 407 when it adopted 

FINRA Rule 2070, those two rules are not 

inconsistent. NYSE Rule 407(a) provides, inter alia, 

that a member or member organization must obtain 

prior written consent before opening an account or 

executing a trade for an Exchange employee. FINRA 

Rule 2070(a) and proposed NYSE Rule 2070(a) 

simply require that, once a member or member 

organization has actual notice of an account held 

by a FINRA or Exchange employee, it must provide 

duplicate account statements to the Exchange. In 

addition, NYSE Rule 407.10 prescribes procedures 

for how Exchange employees may open accounts 

that are not addressed by FINRA Rule 2070 or 

proposed NYSE Rule 2070. Thus, the Exchange can 

retain NYSE Rule 407 in its original form as well 

as adopt NYSE Rule 2070 without any regulatory 

conflict for its members and member organizations. 

17See Securities Exchange Act Release No. 58643 

(September 25, 2008), 73 FR 57174 (October 1, 

2008) (SR–FINRA–2008–021, –022, –026, –028, 

–029). 

18FINRA Rule 6140 was adopted in SR–FINRA– 

2008–021. See Securities Exchange Act Release No. 

58643 (September 25, 2008), 73 FR 57174 (October 

1, 2008) (SR–FINRA–2008–021, –022, –026, –028, 

–029). 

19 In addition to being covered more generally by 

FINRA Rules 2010 and 2020, provisions (1), (3) and 

(4) of FINRA Incorporated NYSE Rule 435 are also 

Continued 

or procedures for dual-employment 

arrangements for its employees 

contained in Rule 350.10 into the 

proposed Rules 2070 and 3220 because 

those rules bind only Exchange 

members and member organizations and 

not its employees. The Exchange does 

believe, however, that proposed Rules 

2070 and 3220 governing member 

conduct, together with the Exchange’s 

internal policies and procedures 

governing the acceptance of gifts and 

gratuities and dual employment 

arrangements by its employees, provide 

sufficient protection against any 

improper relationships between its 

employees and its members. 

NYSE Rule Interpretation 350/01 

prohibits, in conjunction with NYSE 

Rule 401 (Business Conduct), conflicts 

of interest (via gifts, gratuities or 

compensation) between member 

organizations and agents or employees 

of customers. Rule Interpretation 350/01 

also specifically prohibits member 

organizations from aiding and abetting 

fraudulent practices by money 

managers. NYSE Rule Interpretation 

350/02 cautions member organizations 

about possible conflicts of interest when 

Floor employees are employed by other 

member organizations, including the 

monitoring of the amount and type of 

compensation paid to such employees. 

The Exchange believes that proposed 

NYSE Rule 3220—which, as described 

above, deals more generally with the 

provision of gifts or compensation to 

employees of others—when read with 

other current and proposed NYSE Rules, 

prohibits the same types of conduct 

specifically referenced in NYSE Rule 

Interpretations 350/01 and /02. For 

example, current NYSE Rule 476(a)(1) 

prohibits members and member 

organizations from violating any 

provision of the Act and current NYSE 

Rule 476(a)(5) prohibits engaging in 

fraud or fraudulent acts. In addition, 

proposed NYSE Rules 2010 and 2020, 

which require member organizations to 

observe high standards of commercial 

honor, to use just and equitable 

principles of trade, and prohibit the use 

of manipulative, deceptive or fraudulent 

devices, would also apply to such 

conduct.13

NYSE Rule Interpretation 350/03 

concerns business entertainment 

expenses. As noted above, FINRA 

deleted this Rule Interpretation on the 

grounds that its current interpretations 

of FINRA Rule 3220 concerning 

business expenses, together with a 

pending rule filing, sufficiently govern 

this conduct. The Exchange believes 

that proposed NYSE Rule 3220—which 

is virtually identical to FINRA’s Rule 

and, with respect to business 

entertainment expenses, FINRA would 

have regulatory responsibility for the 

NYSE rule pursuant to Rule 17d–2 of 

the Act—harmonizes with FINRA’s 

approach to business entertainment 

expenses. Upon adoption of new NYSE 

Rule 3220, the Exchange intends to 

issue an Information Memorandum to 

its members and member organizations, 

which would include both dual FINRA 

and NYSE members and member 

organizations as well as NYSE-only 

members and member organizations, 

informing them of their obligations 

under the new Rule incorporating the 

FINRA interpretations under its Rule 

3220 concerning business entertainment 

expenses.14

As proposed, new NYSE Rules 2070 

and 3220 are virtually identical to 

FINRA Rules 2070 and 3220, previously 

approved by the Commission. With 

respect to proposed NYSE Rule 2070, 

the Exchange proposes minor changes to 

the approved FINRA version of that 

Rule to conform it to the Exchange, 

including changing the title of the Rule 

to ‘‘Transactions Involving Exchange 

Employees,’’ adding the term ‘‘member 

organization,’’ and adding language that 

requires member organizations to 

provide statements to the Exchange, 

rather than FINRA, for accounts held by 

Exchange employees. In addition, the 

Exchange proposes to add language to 

2070(c) to include listing applications 

and delisting proceedings, and to 

remove the reference to disputeresolution proceedings.15 With respect 

to proposed NYSE Rule 3220, to 

conform that Rule to Exchange 

definitions, the Exchange proposes 

adding the term ‘‘member organization.’’ 

Finally, although FINRA has deleted 

language from FINRA Incorporated 

NYSE Rule 407, because the Exchange 

uses its corresponding NYSE Rule to, 

inter alia, monitor accounts held by 

Exchange employees, the Exchange will 

retain NYSE Rule 407 without change.16

FINRA Rule Filing SR–FINRA–2008– 

028 17

FINRA adopted, inter alia, NASD 

Rules 2110 (Standards of Commercial 

Honor and Principles of Trade) and 

2120 (Use of Manipulative, Deceptive or 

Other Fraudulent Devices) as FINRA 

Rules 2010 and 2020, respectively. 

FINRA Rule 2010 requires members to 

observe high standards of commercial 

honor and just and equitable principles 

of trade in the conduct of their business. 

This Rule is used to protect market 

participants from dishonest and unfair 

practices even where those practices do 

not violate a specific law, rule or 

regulation. FINRA Rule 2020 is a 

general antifraud provision that is used 

to address a range of conduct, including 

market manipulation, excessive trading, 

insider trading and fraudulent 

misrepresentation. In a separate filing, 

FINRA also adopted FINRA Rule 6140 

(Other Trading Practices), which 

replaces NASD Rule 5120 and governs 

a number of prohibited trading 

practices, including manipulation and 

disseminating false and misleading 

information about a security.18

Because they are substantively 

duplicative of these FINRA Rules, 

FINRA deleted the corresponding 

provisions of FINRA Incorporated NYSE 

Rules 401(a) (Business Conduct) and 

435(1), (3) and (4) (Miscellaneous 

Prohibitions) and Rule Interpretation 

401/01 (Trading Against Firm 

Recommendations).19 In addition, 


pwalker on PROD1PC71 with NOTICES
15566 Federal Register / Vol. 74, No. 64 / Monday, April 6, 2009 / Notices 

substantially the same as FINRA Rule 6140. See 

Securities Exchange Act Release No. 58643 

(September 25, 2008), 73 FR 57174 (October 1, 

2008) (SR–FINRA–2008–021, –022, –026, –028, 

–029). 20FINRA has stated that these particular NASD 

and NYSE Rules are proposed for inclusion in the 

so-called ‘‘supervision rules’’ that are to be adopted 

at some later date as part of the Consolidated 

FINRA Rulebook. See FINRA Regulatory Notice 08– 

24. 

21Although it is not addressed by FINRA in its 

filing because it is not a FINRA Incorporated NYSE 

Rule subject to FINRA’s regulatory responsibility 

under the Agreement, NYSE Rule 476(a)(6) 

prescribes that NYSE members and member 

organizations and their employees may not engage 

in conduct ‘‘inconsistent with just and equitable 

principles of trade[.]’’ The Exchange is hereby 

including this provision for deletion since ‘‘just and 

equitable principles of trade’’ are addressed in new 

NYSE Rule 2010, proposed for adoption herein. 

22See Securities Exchange Act Release No. 58643 

(September 25, 2008), 73 FR 57174 (October 1, 

2008) (SR–FINRA–2008–021, –022, –026, –028, 

–029). 

23NASD Rule 2110 was adopted by FINRA as 

FINRA Rule 2010 in SR–FINRA–2008–028. See 

Securities Exchange Act Release No. 58643 

(September 25, 2008), 73 FR 57174 (October 1, 

2008) (SR–FINRA–2008–021, –022, –026, –028, 

–029). 

24The Exchange is not adopting NASD Notice 03– 

68 as it is not a formally adopted rule. It is 

important to note that all of the Exchange’s 

members and member organizations that have 

public customers are also members of, and have 

their member firm conduct regulated by, FINRA. 

Thus, to the extent FINRA Rule 2010 and new 

NYSE Rule 2010 apply to conduct involving nonmanaged fee-based account programs, which 

concerns member firm conduct, such application 

will be administered by FINRA. Upon adoption of 

new NYSE Rule 2010, the Exchange intends to issue 

guidance to its members and member organizations 

informing them of their obligations for such 

programs under the new Rule and FINRA rules. 

25See Securities Exchange Act Release No. 58661 

(September 26, 2008), 73 FR 57395 (October 2, 

2008) (SR–FINRA–2008–030). 

FINRA deleted NYSE Rule 

Interpretation 401/02 (Private Sales), 

which requires members to monitor 

personnel that market securities through 

private offerings, for being substantively 

duplicative of NASD Rule 3040 (Private 

Securities Transactions of an Associated 

Person) and NYSE Rules 407(b) and 

407.11.20 FINRA also deleted FINRA 

Incorporated NYSE Rule 435 provisions 

(6) and (7) as being obsolete and/or 

substantively duplicative of Federal 

Reserve Board Regulation T. 

Accordingly, to harmonize NYSE 

Rules with the approved FINRA Rules, 

the Exchange similarly proposes to 

delete (i) NYSE Rule 401(a) and Rule 

Interpretations 401/01 and /02, (ii) 

NYSE Rule 476(a)(6),21 and (iii) NYSE 

Rules 435(1), (3), (4), (6), and (7). To 

replace NYSE Rules 401(a) and 476(a)(6) 

and Rule Interpretation 401/01, the 

Exchange proposes to adopt NYSE Rules 

2010 and 2020, which are substantially 

identical to FINRA Rules 2010 and 

2020, except for adding the term 

‘‘member organization.’’ To replace 

NYSE Rules 435(1), (3), and (4), the 

Exchange proposes to adopt NYSE Rule 

6140, which is substantially identical to 

FINRA Rule 6140, except for adding the 

term ‘‘member organization.’’ For the 

same reasons proposed by FINRA, the 

Exchange proposes deleting NYSE Rule 

Interpretation 401/02 as being 

substantively duplicative of NYSE Rules 

407(b) and 407.11, and deleting NYSE 

Rules 435(6) and (7) as being obsolete 

and/or substantively duplicative of 

Reserve Board Regulation T. 

FINRA Rule Filing SR–FINRA–2008– 

029 22

FINRA deleted, inter alia, FINRA 

Incorporated NYSE Rules 405A (NonManaged Fee-Based Account 

Programs—Disclosure and Monitoring), 

440F (Public Short Sale Transactions 

Effected on the Exchange), 440G 

(Transactions in Stocks and Warrants 

for the Accounts of Members, Allied 

Members and Member Organizations) 

and 477 (Retention of Jurisdiction— 

Failure to Cooperate) as being 

duplicative of other NASD, FINRA or 

SEC rules or regulations or as being 

specific to the NYSE marketplace. 

For the same reasons set forth in the 

approved FINRA filing, the Exchange 

proposes to delete NYSE Rule 405A. As 

FINRA noted, the prescriptions of Rule 

405A are addressed under the 

Investment Advisers Act of 1940 and 

also, to the extent fee-based programs 

continue to exist in brokerage accounts, 

in NASD Notice to Members 03–68, 

which applies NASD Rule 2110 

(Standards of Commercial Honor and 

Principles of Trade) to such accounts.23

The Exchange is proposing to adopt 

NYSE Rule 2010, which is substantially 

the same as FINRA 2010, and so, to the 

extent fee-based programs continue to 

exist in brokerage accounts they would 

be addressed under the proposed 

Rule.24

With respect to NYSE Rules 440F and 

440G, as FINRA noted these Rules are 

Exchange specific—they require 

member organizations to file with the 

Exchange certain information about 

short sale and proprietary transactions 

executed at the Exchange. These Rules 

date to a time when trading at the 

Exchange was not as automated as it is 

today. Today, the Exchange is able to 

track short sale and proprietary trades 

through its ‘‘OCS’’ and ‘‘PTP’’ systems 

and run surveillances based on that 

information. Because the Exchange can 

derive that information from its trading 

systems, the Exchange no longer needs 

member organizations to file separately 

that information. The Exchange 

therefore believes that these Rules can 

be deleted in their entirety. 

Finally, although FINRA has deleted 

FINRA Incorporated NYSE Rule 477, 

because the Exchange uses that Rule for 

disciplinary purposes specific to the 

Exchange, the Exchange will retain 

NYSE Rule 477 without change. 

Because FINRA has deleted FINRA 

Incorporated NYSE Rule 477, NYSE 

Rule 477 will lose its status as a 

Common Rule and FINRA will no 

longer retain any regulatory 

responsibility for this Rule. 

FINRA Rule Filing SR–FINRA–2008– 

030 25

FINRA adopted NASD Rule 3013 

(Annual Certification of Compliance 

and Supervisory Processes) and IM– 

3013 (Annual Compliance and 

Supervision Certification) as FINRA 

Rule 3130. FINRA Rule 3130 requires 

each member firm to designate one or 

more principals to serve as Chief 

Compliance Officer and also requires 

that the Chief Executive Officer certify 

annually that the firm has established 

and maintained procedures and 

processes reasonably designed to ensure 

compliance with all applicable FINRA 

Rules and federal laws and regulations. 

Because they are substantively 

duplicative of the FINRA Rule, FINRA 

deleted the corresponding provisions of 

FINRA Incorporated NYSE Rules 

342.30(d) and (e) (Annual Report and 

Certification) and Rule Interpretations 

311(b)(5)/04 (Formation and Approval 

of Member Organizations—Officers— 

Other Dual or Multi-Designations) and/ 

05 (Co-Designation of Principle 

Executive Officers) and 342.30(d)/01 

(Annual Reports and Certification— 

Designation of Chief Compliance 

Officer) and (e)/01 (Annual 

Certification). 

To harmonize NYSE Rules with the 

approved FINRA Rules, the Exchange 

proposes to (i) delete NYSE Rules 

342.30(d) and (e) and Rule 

Interpretations 311(b)(5)/04 and/05 and 

342.30(d)/01 and (e)/01, and (ii) replace 

them with proposed NYSE Rule 3130, 

which is substantially similar to FINRA 

Rule 3130. As proposed, NYSE Rule 

3130 adopts the same language as 

FINRA Rule 3130, except for changing 

the term ‘‘member’’ to ‘‘member 

organization.’’ Therefore, as proposed, 

NYSE Rule 3130 would require NYSE 

member organizations to complete their 

annual certifications at the same time 

they complete their certifications for 

FINRA. 


pwalker on PROD1PC71 with NOTICES
Federal Register / Vol. 74, No. 64 / Monday, April 6, 2009 / Notices 15567 

26See Securities Exchange Act Release No. 58461 

(September 4, 2008), 73 FR 52710 (September 10, 

2008) (SR–FINRA–2008–033). 

27See Securities Exchange Act Release No. 58514 

(September 11, 2008), 73 FR 54190 (September 18, 

2008) (SR–FINRA–2008–039). 

28See Securities Exchange Act Release No. 59097 

(December 12, 2008), 73 FR 78412 (December 22, 

2008) (SR–FINRA–2008–057). 

29 15 U.S.C. 78f(b). 

30 15 U.S.C. 78f(b)(5). 

31 15 U.S.C. 78k–1(a)(1). 

FINRA Rule Filing SR–FINRA–2008– 

033 26

FINRA adopted NASD Rule 3360 

(Short-Interest Reporting) and FINRA 

Incorporated NYSE Rules 421(1) 

(Periodic Reports) and 421.10 (Short 

Positions) as new FINRA Rule 4560 and 

deleted these provisions from the 

Common Rules. FINRA Rule 4560 

adopted rule text to consolidate the 

NASD and NYSE short-interest 

reporting requirements, including 

requiring members to follow certain 

reporting requirements for short 

positions in over-the-counter (‘‘OTC’’) 

and exchange-listed securities for all 

customer and proprietary accounts. 

Accordingly, the Exchange proposes 

to (i) delete NYSE Rules 421(1) and 

421.10, and (ii) adopt proposed NYSE 

Rule 4560 to replace the deleted NYSE 

Rules. Proposed NYSE Rule 4560 is 

substantially identical to FINRA Rule 

4560. To conform NYSE Rule 4560 to 

the Exchange, the Exchange proposes to 

remove the references to ‘‘OTC Equity 

Securities’’ in the rule, including 

provision (b)(3), and change the term 

‘‘member’’ to ‘‘member organization.’’ 

Because FINRA processes short-interest 

reporting on behalf of multiple 

exchanges, including the NYSE, 

proposed NYSE Rule 4560 will retain 

the requirement that member 

organizations report to FINRA. 

FINRA Rule Filing SR–FINRA–2008– 

039 27

FINRA adopted, inter alia, provisions 

of NASD Rules 2710(b)(10) and (11) 

(Corporate Financing Rule— 

Underwriting Terms and Arrangements) 

and FINRA Incorporated NYSE Rule 

392(a) (Notification Requirements for 

Offerings of Listed Securities) as 

consolidated FINRA Rule 5190. FINRA 

Rule 5190 contains the Regulation Mrelated notice requirements for members 

participating in securities offerings. 

FINRA also deleted FINRA Incorporated 

NYSE Rule 392(b) as specific to the 

NYSE marketplace. 

The Exchange continues to have 

regulatory responsibility with respect to 

Regulation M and relies on reports filed 

by member organizations pursuant to 

NYSE Rule 392 to conduct certain 

surveillances. Accordingly, the 

Exchange continues to need an 

Exchange-specific rule requiring firms 

to report this information to the 

Exchange. However, in an effort to 

harmonize the reporting obligations 

across the Exchange and FINRA as 

much as possible, the Exchange 

proposes to delete NYSE Rule 392 and 

adopt proposed NYSE Rule 5190. 

Proposed NYSE Rule 5190 is 

substantially identical to FINRA Rule 

5190, except for replacing the term 

‘‘member’’ with the term ‘‘member 

organization’’, changing the references 

to ‘‘OTC Equity Securities’’ and 

‘‘securities’’ in the Rule to ‘‘listed 

securities’’ in order to apply the Rule to 

the Exchange, and adding language to 

paragraphs (b) and (e) of the Rule 

concerning stabilizing bids in order to 

ensure that the requirements of NYSE 

Rule 392(b) are fully imported into new 

NYSE Rule 5190. The substantive 

reporting requirements of NYSE Rule 

392 are essentially being reorganized 

and renumbered into new NYSE Rule 

5190 to help eliminate confusion and 

regulatory duplication for its member 

organizations. Member organizations 

will therefore continue to file these 

reports with the Exchange. 

FINRA Rule Filing SR–FINRA–2008– 

057 28

In this filing, FINRA proposed 

additional clean-up rule changes, 

including to FINRA Rules 3130, 4560 

and 5190 addressed in this filing. The 

Exchange has included the proposed 

rule changes to NYSE Rule 5190; the 

proposed changes to FINRA Rules 3130 

and 4560 are not applicable to NYSE 

Rules 3130 and 4560 as proposed for 

adoption. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule changes are consistent 

with Section 6(b) of the Act,29 in 

general, and further the objectives of 

Section 6(b)(5) of the Act,30 in 

particular, in that they are designed to 

prevent fraudulent and manipulative 

acts and practices, 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. The proposed rule 

changes also support the principles of 

Section 11A(a)(1) 31 of the Act in that 

they seek to ensure the economically 

efficient execution of securities 

transactions and fair competition among 

brokers and dealers and among 

exchange markets. 

The Exchange believes that the 

proposed rule changes will provide 

greater harmonization between NYSE 

Rules and FINRA Rules of similar 

purpose, resulting in less burdensome 

and more efficient regulatory 

compliance for Dual Members. 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 therefore believes 

that the proposed rule changes support 

the objectives of the Act by providing 

greater regulatory clarity and relieving 

unnecessary regulatory burdens. 

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. 

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 the 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 


pwalker on PROD1PC71 with NOTICES
15568 Federal Register / Vol. 74, No. 64 / Monday, April 6, 2009 / Notices 

32 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. 

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

5 17 CFR 240.19b–4(f)(6). 

6See Securities Exchange Act Release No. 34– 

55162 (January 24, 2007), 72 FR 4738 (February 1, 

2007); Securities Exchange Act Release No. 34– 

56567 (September 27, 2007), 72 FR 56396 (October 

7, 2007). 

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

8 15 U.S.C. 78f(b)(5). 

Number SR–NYSE–2009–25 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–2009–25. 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 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–NYSE–2009–25 and should 

be submitted on or before April 27, 

2009. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.32

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–7589 Filed 4–3–09; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–59642; File No. SR– 

NYSEAmex–2009–06] 

Self-Regulatory Organizations; Notice 

of Filing and Immediate Effectiveness 

of Proposed Rule Change by NYSE 

Amex LLC Amending the Option 

Trading Rules in Order To Extend the 

Penny Pilot Program 

March 27, 2009. 

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 March 

27, 2009, NYSE Amex LLC (‘‘NYSE 

Amex’’ or the ‘‘Exchange’’) filed with 

the Securities and Exchange 

Commission (the ‘‘Commission’’) the 

proposed rule change as described in 

Items I and II below, which Items have 

been prepared by the self-regulatory 

organization. The Exchange filed the 

proposal as a ‘‘non-controversial’’ 

proposed rule change pursuant to 

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

Rule 19b–4(f)(6) thereunder.5 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 its 

option trading rules in order to extend 

the Penny Pilot in options classes in 

certain issues (‘‘Pilot Program’’) 

previously approved by the Securities 

and Exchange Commission 

(‘‘Commission’’), through July 3, 2009. 

The text of the proposed rule change is 

attached as Exhibit 5 to the 19b–4 form. 

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 

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 hereby proposes to 

extend the time period of the Pilot 

Program 6 which is currently scheduled 

to expire on March 27, 2009 through 

July 3, 2009. This filing does not 

propose any substantive changes to the 

Pilot Program: All classes currently 

participating will remain the same and 

all minimum increments will remain 

unchanged. The Exchange believes the 

benefits to public customers and other 

market participants who will be able to 

express their true prices to buy and sell 

options have been demonstrated to 

outweigh the increase in quote traffic. 

The Exchange agrees to submit a 

report to the Commission that includes 

data and written analysis of information 

collected from February 1, 2009 through 

April 30, 2009 which will be submitted 

by the close of May 2009. The report 

will analyze the impact of the Pilot 

Program on market quality and options 

systems capacity. This report will 

include, but is not limited to: (1) Data 

and written analysis on the number of 

quotations generated for options 

selected for the Pilot Program; (2) an 

assessment of the quotation spreads for 

the options selected for the Pilot 

Program; (3) an assessment of the 

impact of the Pilot Program on the 

capacity of the NYSE Arca’s automated 

systems; (4) any capacity problems or 

other problems that arose related to the 

operation of the Pilot Program and how 

the Exchange addressed them; and (5) 

an assessment of trade through 

complaints that were sent by the 

Exchange during the operation of the 

Pilot Program and how they were 

addressed. 

2. Statutory Basis 

The proposed rule change is 

consistent with Section 6(b) 7 of the 

Securities Exchange Act of 1934 (the 

‘‘Act’’), in general, and furthers the 

objectives of Section 6(b)(5) 8 in 

particular in that it is designed to 

prevent fraudulent and manipulative 


pwalker on PROD1PC71 with NOTICES