[Federal Register Volume 74, Number 64 (Monday, April 6, 2009)]
[Notices]
[Pages 15540-15545]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-7590]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59656; File No. SR-NYSEALTR-2009-26]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by NYSE Alternext US LLC, as Modified by Amendment No. 1, 
Changing Certain NYSE Amex Equities Rules To Conform Them With Changes 
to Corresponding Rules Submitted in a Companion Filing by the New York 
Stock Exchange LLC

March 30, 2009.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on March 9, 2009, NYSE Alternext US LLC (n/k/a NYSE Amex LLC) 
(``Exchange'' or ``NYSE Amex'') filed with the Securities and Exchange 
Commission (``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.\3\ The Commission is 
publishing this notice to solicit comments on the proposed rule change, 
as amended, from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Amendment No. 1 to SR-NYSEALTR-2009-26 replaces the original 
filing in its entirety.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange, formerly the American Stock Exchange LLC and NYSE 
Alternext US LLC,\4\ proposes changes to certain NYSE Amex Equities 
Rules, retroactively effective to December 15, 2008, to conform them 
with changes to corresponding rules submitted in a companion filing by 
the New York Stock Exchange LLC (``NYSE'').\5\ The text of the proposed 
rule change is available at the Exchange, the Commission's Public 
Reference Room, and http://www.nyse.com.
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    \4\ On March 3, 2009, the Exchange formally submitted a filing 
with the Commission changing its name to NYSE Amex LLC. See SR-
NYSEALTR-2009-24.
    \5\ See SR-NYSE-2009-25 (formally submitted on March 9, 2009), 
as amended.
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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 purpose of the proposed rule changes is to change certain NYSE 
Amex Equities Rules to conform them with amendments to corresponding 
NYSE Rules submitted in a companion filing by the NYSE.
Background
    As described more fully in a rule filing,\6\ NYSE Euronext acquired 
The Amex Membership Corporation (``AMC'') pursuant to an Agreement and 
Plan of Merger, dated January 17, 2008 (the ``Merger''). In connection 
with the Merger, the Exchange's predecessor, the American Stock 
Exchange LLC (``Amex''), a subsidiary of AMC, became a subsidiary of 
NYSE Euronext called NYSE Amex US LLC, and continues to operate as a 
national securities exchange registered under Section 6 of the Act.\7\ 
The effective date of the Merger was October 1, 2008.
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    \6\ See Securities Exchange Act Release No. 58673 (September 29, 
2008), 73 FR 57707 (October 3, 2008) (SR-NYSE-2008-60 and SR-Amex-
2008-62) (approving the Merger).
    \7\ 15 U.S.C. 78f.
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    In connection with the Merger, on December 1, 2008, the Exchange 
relocated all equities trading conducted on the Exchange legacy trading 
systems and facilities located at 86 Trinity Place, New York, New York, 
to trading systems and facilities located at 11 Wall Street, New York, 
New York (the ``Equities Relocation''). The Exchange's equity trading 
systems and facilities at 11 Wall Street (the ``NYSE Amex Trading 
Systems'') are operated by the NYSE on behalf of the Exchange.\8\
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    \8\ See Securities Exchange Act Release No. 58705 (October 1, 
2008), 73 FR 58995 (October 8, 2008) (SR-Amex-2008-63) (approving 
the Equities Relocation).

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[[Page 15541]]

    As part of the Equities Relocation, NYSE Amex adopted NYSE Rules 1-
1004, subject to such changes as necessary to apply the Rules to the 
Exchange, as the NYSE Amex Equities Rules to govern trading on the NYSE 
Amex Trading Systems.\9\ The NYSE Amex Equities Rules, which became 
operative on December 1, 2008, are substantially identical to the 
current NYSE Rules 1-1004 and the Exchange continues to update the NYSE 
Amex Equities Rules as necessary to conform with rule changes to 
corresponding NYSE Rules filed by the NYSE.
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    \9\ See Securities Exchange Act Release No. 58705 (October 1, 
2008), 73 FR 58995 (October 8, 2008) (SR-Amex-2008-63) (approving 
the Equities Relocation); Securities Exchange Act Release No. 58833 
(October 22, 2008), 73 FR 64642 (October 30, 2008) (SR-NYSE-2008-
106) and Securities Exchange Act Release No. 58839 (October 23, 
2008), 73 FR 64645 (October 30, 2008) (SR-NYSEALTR-2008-03) 
(together, approving the Bonds Relocation); Securities Exchange Act 
Release No. 59022 (November 26, 2008), 73 FR 73683 (December 3, 
2008) (SR-NYSEALTR-2008-10) (adopting amendments to NYSE Amex 
Equities Rules to track changes to corresponding NYSE Rules); 
Securities Exchange Act Release No. 59027 (November 28, 2008), 73 FR 
73681 (December 3, 2008) (SR-NYSEALTR-2008-11) (adopting amendments 
to Rule 62-NYSE Amex Equities to track changes to corresponding NYSE 
Rule 62).
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Proposed Conforming Amendments to NYSE Amex Equities Rules
    As noted above, the Exchange proposes to change certain NYSE Amex 
Equities Rules to conform them with changes to corresponding NYSE Rules 
submitted in a companion filing by the NYSE.\10\ The NYSE is filing the 
proposed rule changes, retroactively effective to December 15, 2008, to 
harmonize its Rules 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.\11\ Unless specifically noted, and subject to such 
technical changes as are necessary to apply the Rules to the Exchange, 
NYSE Amex is proposing to adopt the NYSE's proposed rule changes in the 
form that they have been approved for filing by the Commission. The 
NYSE's proposed rule changes and the Exchange's proposed conforming 
rule changes are described below.\12\
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    \10\ See SR-NYSE-2009-25 (formally submitted on March 9, 2009), 
as amended.
    \11\ See 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. FINRA filed the rule changes as part of its effort to develop 
a new consolidated rulebook for its members (the ``Consolidated 
FINRA Rulebook'').
    \12\ In its filing, the NYSE proposes to change certain NYSE 
Rule Interpretations. The Exchange has not adopted a corresponding 
version of the NYSE Rule Interpretations and so those proposed rule 
changes are not applicable to the Exchange and are not included in 
this filing.
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    The Exchange further proposes that these rule changes be 
retroactively effective to December 15, 2008, the same as the effective 
date of the NYSE's proposed rule changes and FINRA's rule changes on 
which this filing and the NYSE's filing are based.
FINRA Rule Filing SR-FINRA-2008-027 \13\
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    \13\ See Securities Exchange Act Release No. 58660 (September 
26, 2008), 73 FR 57393 (October 2, 2008).
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    In this filing, 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).\14\ 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.\15\
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    \14\ FINRA 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 NYSE 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). NYSE Amex believes that the substance of these provisions is 
adequately addressed in existing NYSE Amex Equities Rules and the 
proposed NYSE Amex Equities Rules 2070 and 3220.
    \15\ See 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 NYSE 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. Upon approval, the Exchange will adopt a 
corresponding NYSE Amex Equities Rule. The Commission notes that 
NYSE Amex must file a proposed rule change under Section 19(b) of 
the Act to adopt such corresponding NYSE Amex Equities Rule.
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    Accordingly, to harmonize the NYSE Rules with the approved FINRA 
rule changes, the NYSE 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 NYSE 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.\16\
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    \16\ See SR-NYSE-2009-25 (formally submitted on March 9, 2009), 
as amended.
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    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 NYSE 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 NYSE 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 NYSE 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.\17\
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    \17\ See SR-NYSE-2009-25 (formally submitted on March 9, 2009), 
as amended.
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    Proposed NYSE Rule 3220(b) replaces NYSE Rule 350(b) because it 
addresses situations requiring dual employment and prior written 
consent when

[[Page 15542]]

compensation provided to another employee exceeds a specified amount. 
NYSE Rule 350(b) requires dual employment for any payments over $200 to 
Floor employees whereas proposed NYSE Rule 3220(b) requires dual 
employment for any payment made to any employee for employment or 
services over the $100 limit prescribed by NYSE Rule 3220(a), including 
Floor employees of a member organization.\18\
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    \18\ See SR-NYSE-2009-25 (formally submitted on March 9, 2009), 
as amended.
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    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 NYSE 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 NYSE Rule 3220(b) triggers the NYSE Rule 35 dual 
registration requirements, it is not necessary to specify dual 
registration in proposed NYSE Rule 3220. Upon adoption of NYSE Rule 
3220 the NYSE and the Exchange intend to issue guidance to their 
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 
NSYE and NYSE Amex Equities Rule 35.\19\
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    \19\ See SR-NYSE-2009-25 (formally submitted on March 9, 2009), 
as amended.
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    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 NYSE by members, member organizations and their 
employees. In particular, NYSE Rule 350.10 specifies, inter alia, the 
procedures for seeking NYSE's consent for the employment or 
compensation of NYSE employees and describes the types of dual-
employment arrangements generally acceptable to the NYSE and those that 
are not acceptable.
    The NYSE believes that proposed NYSE Rules 3220 and 2070 
specifically address the provisions of NYSE Rule 350(a) and 350.10 
dealing expressly with NYSE employees. To begin with, proposed NYSE 
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 NYSE. In addition, proposed NYSE Rule 2070(c) 
specifically provides that, notwithstanding the more general 
prescriptions of NYSE Rule 3220(a), members and member organizations 
are prohibited from giving anything of value to an NYSE employee 
responsible for any regulatory matter involving such member or member 
organization. The NYSE did not include the standards or procedures for 
dual-employment arrangements for its employees contained in NYSE Rule 
350.10 into the proposed NYSE Rules 2070 and 3220 because those rules 
bind only NYSE members and member organizations and not its employees. 
The NYSE does believe, however, that proposed NYSE Rules 2070 and 3220 
governing member conduct, together with the NYSE'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.\20\
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    \20\ See SR-NYSE-2009-25 (formally submitted on March 9, 2009), 
as amended. The Exchange, which is the NYSE's corporate affiliate, 
has the same policies and procedures governing the acceptance of 
gifts and gratuities and dual employment arrangements by its 
employees.
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    In its filing, the NYSE also noted that NYSE Rule Interpretations 
350/01-/03 are addressed by proposed NYSE Rules 2010, 2020 and 3220, as 
well as existing NYSE Rules 476(a)(1) and (a)(5).\21\ The NYSE also 
noted that, upon adoption of new NYSE Rule 3220, it would issue an 
Information Memorandum to its members and member organizations, 
including dual FINRA and NYSE members and members 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. The 
Exchange would issue joint guidance to its members and member 
organizations, including both dual FINRA and NYSE Amex members and 
member organizations as well as NYSE Amex-only members and member 
organizations, concurrently with the NYSE.\22\
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    \21\ See SR-NYSE-2009-25 (formally submitted on March 9, 2009), 
as amended. In its filing, the NYSE 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. The Exchange 
proposes, infra, the adoption of NYSE Amex Equities Rules 2010 and 
2020 in the form proposed by the NYSE, subject to such changes as 
are necessary to apply them to the Exchange.
    \22\ See SR-NYSE-2009-25 (formally submitted on March 9, 2009), 
as amended. Specifically, 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.
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    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 NYSE 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 NYSE, rather than FINRA, for accounts held 
by NYSE employees. In addition, the NYSE proposes to add language to 
NYSE 2070(c) to include listing applications and delisting proceedings, 
and to remove the reference to dispute-resolution proceedings.\23\ With 
respect to proposed NYSE Rule 3220, to conform that Rule to NYSE 
definitions, the NYSE proposes adding the term ``member organization.'' 
\24\
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    \23\ See SR-NYSE-2009-25 (formally submitted on March 9, 2009), 
as amended. Unlike FINRA, both the NYSE and the Exchange still 
review listing applications and conduct delisting proceedings and 
believe it is appropriate to include these matters in proposed NYSE 
and NYSE Amex Equities Rule 2070(c). In addition, since neither the 
NYSE nor the Exchange no longer engages in dispute-resolution 
proceedings (i.e. arbitrations), they do not need such a designation 
in either proposed NYSE or NYSE Amex Equities Rule 2070.
    \24\ See SR-NYSE-2009-25 (formally submitted on March 9, 2009), 
as amended.
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    Finally, although FINRA has deleted language from FINRA 
Incorporated NYSE Rule 407, because the NYSE uses its corresponding 
NYSE Rule to, inter alia, monitor accounts held by NYSE employees, the 
NYSE will retain NYSE Rule 407 without change.\25\
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    \25\ See SR-NYSE-2009-25 (formally submitted on March 9, 2009), 
as amended. Even 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 NYSE 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 NYSE employee, it must provide duplicate account 
statements to the NYSE. In addition, NYSE Rule 407.10 prescribes 
procedures for how NYSE employees may open accounts that are not 
addressed by FINRA Rule 2070 or proposed NYSE Rule 2070. Thus, the 
NYSE 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. Similarly, the Exchange will retain Rule 407-
NYSE Amex Equities.

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[[Page 15543]]

    The Exchange proposes to correspondingly delete Rule 350-NYSE Amex 
Equities and adopt Rules 2070- and 3220-NYSE Amex Equities in the form 
proposed by the NYSE, subject to such changes as are necessary to apply 
them to the Exchange. Similarly, the Exchange will retain Rule 407-NYSE 
Amex Equities without change to monitor accounts held by Exchange 
employees.
FINRA Rule Filing SR-FINRA-2008-028 \26\
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    \26\ See Securities Exchange Act Release No. 58643 (September 
25, 2008), 73 FR 57174 (October 1, 2008) (SR-FINRA-2008-021, -022, -
026,-028, -029).
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    Here, 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.\27\
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    \27\ FINRA 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).
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    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).\28\ In addition, 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 NYSE Rules 407(b) and 407.11.\29\ 
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.
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    \28\ 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 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).
    \29\ FINRA 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.
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    Accordingly, to harmonize NYSE Rules with the approved FINRA Rules, 
the NYSE similarly proposes to delete (i) NYSE Rule 401(a) and Rule 
Interpretations 401/01 and/02, (ii) NYSE Rule 476(a)(6),\30\ 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 NYSE 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 NYSE 
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 NYSE 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.\31\
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    \30\ See SR-NYSE-2009-25 (formally submitted on March 9, 2009), 
as amended. Although 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 NYSE thus includes this 
provision for deletion since ``just and equitable principles of 
trade'' are addressed in proposed NYSE Rule 2010. The Exchange 
correspondingly proposes to delete Non-NYSE Amex Equities Rule 
476(a)(6).
    \31\ See SR-NYSE-2009-25 (formally submitted on March 9, 2009), 
as amended.
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    The Exchange proposes to correspondingly delete Rules 401(a)- and 
435(1), (3), (4), (6) and (7)-NYSE Amex Equities and Non-NYSE Amex 
Equities Rule 476(a)(6).\32\ The Exchange further proposes to adopt 
Rules 2010-, 2020- and 6140-NYSE Amex Equities in the form proposed by 
the NYSE, subject to such changes as are necessary to apply them to the 
Exchange.
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    \32\ For a definition of ``Non-NYSE Amex Equities Rules,'' see 
legacy Amex Rule 0 and Rule 0--NYSE Amex Equities.
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FINRA Rule Filing SR-FINRA-2008-029 \33\
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    \33\ See Securities Exchange Act Release No. 58643 (September 
25, 2008), 73 FR 57174 (October 1, 2008) (SR-FINRA-2008-021, -022, -
026, -028, -029).
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    In this filing, FINRA deleted, inter alia, FINRA Incorporated NYSE 
Rules 405A (Non-Managed 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 
NYSE 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.\34\ The NYSE 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.\35\
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    \34\ NASD 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).
    \35\ See SR-NYSE-2009-25 (formally submitted on March 9, 2009), 
as amended. Neither NYSE nor the Exchange is 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 Rule 2010--NYSE Amex Equities apply to conduct 
involving non-managed fee-based account programs, which concerns 
member firm conduct, such application will be administered by FINRA. 
Upon adoption of new Rule 2010--NYSE Amex Equities, 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.
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    With respect to NYSE Rules 440F and 440G, as FINRA noted these 
Rules are NYSE specific--they require member organizations to file with 
the NYSE certain information about short sale and proprietary 
transactions executed at the

[[Page 15544]]

NYSE. These Rules date to a time when trading at the NYSE was not as 
automated as it is today. Today, the NYSE is able to track short sale 
and proprietary trades through its ``OCS'' and ``PTP'' systems and run 
surveillances based on that information. Because the NYSE can derive 
that information from its trading systems, the NYSE no longer needs 
member organizations to file separately that information. The NYSE 
therefore believes that these Rules can be deleted in their 
entirety.\36\
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    \36\ See SR-NYSE-2009-25 (formally submitted on March 9, 2009), 
as amended.
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    Finally, although FINRA has deleted FINRA Incorporated NYSE Rule 
477, because the NYSE uses that Rule for disciplinary purposes specific 
to the organization, the NYSE 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.\37\
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    \37\ See SR-NYSE-2009-25 (formally submitted on March 9, 2009), 
as amended.
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    The Exchange proposes to correspondingly delete Rules 405A-, 440F- 
and 440G- NYSE Amex Equities. Similarly, the Exchange will retain Non-
NYSE Amex Equities Rule 477 without change for disciplinary purposes 
specific to NYSE Amex.
FINRA Rule Filing SR-FINRA-2008-030 \38\
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    \38\ See Securities Exchange Act Release No. 58661 (September 
26, 2008), 73 FR 57395 (October 2, 2008) (SR-FINRA-2008-030).
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    In this filing, 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 NYSE 
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.\39\
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    \39\ See SR-NYSE-2009-25 (formally submitted on March 9, 2009), 
as amended.
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    The Exchange proposes to correspondingly delete Rules 342.30(d) and 
(e)--NYSE Amex Equities and adopt Rule 3130--NYSE Amex Equities in the 
form proposed by the NYSE, subject to such changes as are necessary to 
apply the Rule to the Exchange.
FINRA Rule Filing SR-FINRA-2008-033 \40\
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    \40\ See Securities Exchange Act Release No. 58461 (September 4, 
2008), 73 FR 52710 (September 10, 2008) (SR-FINRA-2008-033).
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    Here, 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 NYSE 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 NYSE, the NYSE 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.\41\
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    \41\ See SR-NYSE-2009-25 (formally submitted on March 9, 2009), 
as amended.
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    The Exchange proposes to correspondingly delete Rules 421(1) and 
421.10--NYSE Amex Equities and adopt Rule 4560--NYSE Amex Equities in 
the form proposed by the NYSE, subject to such changes as are necessary 
to apply the Rule to the Exchange.
FINRA Rule Filing SR-FINRA-2008-039 \42\
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    \42\ See Securities Exchange Act Release No. 58514 (September 
11, 2008), 73 FR 54190 (September 18, 2008) (SR-FINRA-2008-039).
---------------------------------------------------------------------------

    In this filing, 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 M-related notice 
requirements for members participating in securities offerings. FINRA 
also deleted FINRA Incorporated NYSE Rule 392(b) as specific to the 
NYSE marketplace.
    The NYSE 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 NYSE continues to need an NYSE-specific rule requiring 
firms to report this information to the NYSE. However, in an effort to 
harmonize the reporting obligations across the NYSE and FINRA as much 
as possible, the NYSE 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 NYSE, 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

[[Page 15545]]

will therefore continue to file these reports with the NYSE.\43\
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    \43\ See SR-NYSE-2009-25 (formally submitted on March 9, 2009), 
as amended.
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    The Exchange proposes to correspondingly delete Rule 392--NYSE Amex 
Equities and adopt Rule 5190--NYSE Amex Equities in the form proposed 
by the NYSE, subject to such changes as are necessary to apply the Rule 
to the Exchange.
FINRA Rule Filing SR-FINRA-2008-057 \44\
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    \44\ See Securities Exchange Act Release No. 59097 (December 12, 
2008), 73 FR 78412 (December 22, 2008) (SR-FINRA-2008-057).
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    In accordance with FINRA 2008-057, the NYSE incorporated changes to 
proposed NYSE Rule 5190. As noted above, the Exchange proposes to adopt 
corresponding Rule 5190- NYSE Amex Equities in the form proposed by the 
NYSE, subject to such changes as are necessary to apply the Rule to the 
Exchange.
2. Statutory Basis
    The Exchange believes that the proposed rule changes are consistent 
with Section 6(b) of the Act,\45\ in general, and further the 
objectives of Section 6(b)(5) of the Act,\46\ 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) \47\ 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.
---------------------------------------------------------------------------

    \45\ 15 U.S.C. 78f(b).
    \46\ 15 U.S.C. 78f(b)(5).
    \47\ 15 U.S.C. 78k-1(a)(1).
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    The Exchange believes that the proposed rule changes are necessary 
and appropriate to conform the NYSE Amex Equities Rules with changes 
made to the corresponding NYSE Rules on which they are based. The 
Exchange also believes that the proposed rule changes will provide 
greater harmonization among NYSE Rules, NYSE Amex Equities Rules and 
FINRA Rules of similar purpose, resulting in less burdensome and more 
efficient regulatory compliance for their common members and member 
organizations. To the extent the Exchange has proposed changes that 
differ from the NYSE version of the Rules, such changes are technical 
in nature and do not change the substance of the proposed NYSE Amex 
Equities 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 such 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

    <bullet> Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
    <bullet> Send an e-mail to <a href="/cdn-cgi/l/email-protection#b9cbccd5dc94dad6d4d4dcd7cdcaf9cadcda97ded6cf"><span class="__cf_email__" data-cfemail="94e6e1f8f1b9f7fbf9f9f1fae0e7d4e7f1f7baf3fbe2">[email protected]</span></a>. Please include 
File Number SR-NYSEALTR-2009-26 on the subject line.

Paper Comments

    <bullet> 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-NYSEALTR-2009-26. 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 such 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-NYSEALTR-2009-26 and should 
be submitted on or before April 27, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\48\
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    \48\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-7590 Filed 4-3-09; 8:45 am]
BILLING CODE 8011-01-P


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