Federal Register / Vol. 74, No. 70 / Tuesday, April 14, 2009 / Notices 17263 

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

2 17 CFR 240.19b–4. 

3 17 CFR 240.19b–4(f)(6). 

4The current FINRA rulebook consists of (1) 

FINRA Rules; (2) NASD Rules; and (3) rules 

incorporated from NYSE (‘‘Incorporated NYSE 

Rules’’) (together, the NASD Rules and Incorporated 

NYSE Rules are referred to as the ‘‘Transitional 

Rulebook’’). While the NASD Rules generally apply 

to all FINRA members, the Incorporated NYSE 

Rules apply only to those members of FINRA that 

are also members of the NYSE (‘‘Dual Members’’). 

The FINRA Rules apply to all FINRA members, 

unless such rules have a more limited application 

by their terms. For more information about the 

rulebook consolidation process, see FINRA 

Information Notice, March 12, 2008 (Rulebook 

Consolidation Process). 

5See File No. SR–NYSE–2008–46; File No. SR– 

NYSE–2008–127. 

6 Incorporated NYSE Rule 2 defines terms 

including ‘‘member,’’ ‘‘member organization,’’ and 

‘‘approved person.’’ 

7 Incorporated NYSE Rule 2A sets forth the 

jurisdiction of the Exchange. 

8 Incorporated NYSE Rule 325 sets forth capital 

requirements for member organizations. 

9See Securities Exchange Act Release No. 58845 

(October 24, 2008), 73 FR 64379 (October 29, 2008) 

(Order Approving File No. SR–NYSE–2008–46); 

Securities Exchange Act Release No. 59077 

(December 10, 2008), 73 FR 76691 (December 17, 

2008) (Order Approving File No. SR–NYSE–127). 

[sic] 

10See File No. SR–NYSE–2008–46. 

11The term ‘‘market maker’’ shall have the same 

meaning as that term in Section (3)(a)(38) of the 

Act. 

12See supra note 5. 13Pursuant to Rule 17d–2 under the Exchange 

Act, NASD, NYSE, and NYSE Regulation, Inc. 

entered into an agreement (‘‘Agreement’’) to reduce 

regulatory duplication for firms that are Dual 

Members by allocating certain regulatory 

responsibilities for selected NYSE rules from NYSE 

Regulation to FINRA. The Agreement includes a list 

of all those rules (‘‘Common Rules’’) for which 

FINRA has assumed examination, enforcement and 

surveillance responsibilities under the Agreement 

relating to compliance by Dual Members to the 

extent that such responsibilities involve member 

firm regulation. 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). 

14 15 U.S.C. 78o–3(b)(6). 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–59726; File No. SR–FINRA– 

2009–025] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Amend Incorporated 

NYSE Rules 2, 2A and 325 To Conform 

to Amendments Made by NYSE 

April 8, 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 April 7, 

2009, Financial Industry Regulatory 

Authority, Inc. (‘‘FINRA’’) (f/k/a 

National Association of Securities 

Dealers, Inc. (‘‘NASD’’)) filed with the 

Securities and Exchange Commission 

(‘‘SEC’’ or ‘‘Commission’’) the proposed 

rule change as described in Items I and 

II below, which Items have been 

prepared by FINRA. FINRA has 

designated the proposed rule change as 

constituting a ‘‘non-controversial’’ rule 

change under paragraph (f)(6) of Rule 

19b–4 under the Act,3 which renders 

the proposal effective upon receipt of 

this filing by the Commission. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

FINRA is proposing to amend 

Incorporated NYSE Rules 2 (‘‘Member,’’ 

‘‘Membership,’’ ‘‘Member Firm,’’ etc.), 

2A (Jurisdiction) and 325 (Capital 

Requirements Member Organizations) 4

to conform to rule changes by the New 

York Stock Exchange, LLC (‘‘NYSE’’) to 

its versions of Rules 2, 2A and 325.5

The text of the proposed rule change 

is available on FINRA’s Web site at 

http://www.finra.org, at the principal 

office of FINRA 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, 

FINRA included statements concerning 

the purpose of and basis for the 

proposed rule change and discussed any 

comments it received on the proposed 

rule change. The text of these statements 

may be examined at the places specified 

in Item IV below. FINRA has prepared 

summaries, set forth in sections A, B, 

and C below, of the most significant 

aspects of such statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

FINRA is proposing changes to 

Incorporated NYSE Rules 2,6 2A 7 and 

325 8 to conform these rules to 

amendments made by NYSE which 

established a new market model (‘‘New 

Model’’).9 As described by the NYSE in 

its filing,10 the New Model: (i) Provides 

market participants with additional 

abilities to post hidden liquidity on 

Exchange systems; (ii) creates a 

Designated Market Maker (‘‘DMM’’), and 

phases out the NYSE specialist; and (iii) 

enhances the speed of execution 

through technological enhancements 

and reduces message traffic between 

Exchange systems and its DMMs. 

The NYSE believes that its New 

Model requires a new type of market 

maker 11 with the ability to contribute 

liquidity in a security by trading 

competitively for its dealer account. The 

NYSE proposed to phase out the 

existing specialist system and to replace 

specialists with Designated Market 

Makers who will be employees of 

Designated MarketMaker Units (‘‘DMM 

Units’’). According to the NYSE, 

although the specialist system has 

served a central role in equities trading 

at the NYSE for well over a century, 

specialist trading is, by nature, wellsuited to manual trading, and less 

suitable for electronic trading. The 

NYSE recognizes that the scheme of 

rules and obligations governing 

specialists can unduly hamstring them 

in an electronic market and prevent 

them from easily fulfilling their 

appointed role. To address this new 

reality, DMM Units will be given tools 

and opportunities that are not available 

to specialists, but that are more 

commensurate with trading in 

electronic markets. 

Under the NYSE filings, definitions of 

‘‘Designated Market Maker’’ and ‘‘DMM 

Unit’’ were added to NYSE Rule 2 

(‘‘Member,’’ ‘‘Membership,’’ ‘‘Member 

Firm,’’ etc.) and a reference to specialist 

was changed to DMM under NYSE Rule 

325 (Capital Requirements Member 

Organizations) to conform these rules to 

the operation of the New Model.12

Given these changes, FINRA is 

proposing to make conforming changes 

to Incorporated NYSE Rules 2, 2A and 

325 to ensure consistency with NYSE’s 

versions of Rules 2, 2A and 325.13

2. Statutory Basis 

FINRA believes that the proposed rule 

change is consistent with the provisions 

of Section 15A(b)(6) of the Act,14 which 

requires, among other things, that 

FINRA rules must be designed to 

prevent fraudulent and manipulative 

acts and practices, to promote just and 

equitable principles of trade, and, in 

general, to protect investors and the 

public interest. FINRA believes that the 

proposed rule change is necessary and 

appropriate to conform these rules to 

the operation of NYSE’s New Model and 

to maintain consistency with the 

NYSE’s amendments to its Rules 2, 2A 

and 325. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

FINRA does not believe that the 

proposed rule change will result in any 

17264 Federal Register / Vol. 74, No. 70 / Tuesday, April 14, 2009 / Notices 

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

16 17 CFR 240.19b–4(f)(6). 

17 17 CFR 240.19b–4(f)(6). 

18 17 CFR 240.19b–4(f)(6)(iii). 

19For purposes only of waiving the 30-day 

operative delay, the Commission has considered the 

proposed rule change’s impact on efficiency, 

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

20 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

Written comments were neither 

solicited nor received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Because the foregoing proposed rule 

change does not: (i) Significantly affect 

the protection of investors or the public 

interest; (ii) impose any significant 

burden on competition; and (iii) become 

operative for 30 days from the date on 

which it was filed, or such shorter time 

as the Commission may designate, it has 

become effective pursuant to Section 

19(b)(3)(A) of the Act 15 and Rule 19b– 

4(f)(6) thereunder.16

A proposed rule change filed under 

Rule 19b–4(f)(6) 17 normally does not 

become operative prior to 30 days after 

the date of the filing. However, pursuant 

to Rule 19b–4(f)(6)(iii),18 the 

Commission may designate a shorter 

time if such action is consistent with the 

protection of investors and the public 

interest. FINRA has asked the 

Commission to waive the 30-day 

operative delay so that the proposal may 

become operative immediately upon 

filing. Such waiver would permit 

FINRA to implement these changes 

without delay, thereby allowing 

FINRA’s Incorporated NYSE Rules to 

maintain their status as Common Rules 

under the Agreement upon filing of the 

proposed rule change with the 

Commission. The Commission believes 

it is consistent with the protection of 

investors and the public interest to 

waive the 30-day operative delay for 

this reason, and hereby grants such 

waiver.19

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission may summarily abrogate 

such rule change if it appears to the 

Commission that such action is 

necessary or appropriate in the public 

interest, for the protection of investors, 

or otherwise in furtherance of the 

purposes of the Act. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an e-mail to rulecomments@sec.gov. Please include File 

Number SR–FINRA–2009–025 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Elizabeth M. Murphy, Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–1090. 

All submissions should refer to File 

Number SR–FINRA–2009–025. 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 FINRA. All 

comments received will be posted 

without change; the Commission does 

not edit personal identifying 

information from submissions. You 

should submit only information that 

you wish to make available publicly. All 

submissions should refer to File 

Number SR–FINRA–2009–025 and 

should be submitted on or before May 

5, 2009. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.20

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–8426 Filed 4–13–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–59714; File No. SR–CHX– 

2009–03] 

Self-Regulatory Organizations; 

Chicago Stock Exchange, Inc.; Notice 

of Filing and Immediate Effectiveness 

of Proposed Rule Change Relating to 

Participant Fees and Credits 

April 6, 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 April 1, 

2009, Chicago Stock Exchange, Inc. 

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

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III below, which Items have been 

prepared by the Exchange. 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 CHX proposes to amend its 

Schedule of Participant Fees and 

Assessments (the ‘‘Fee Schedule’’), 

effective April 1, 2009, to provide for 

transaction fees and rebates to Exchange 

Participants for transactions involving 

issues priced less than one dollar that 

occur within the Exchange’s Matching 

System. The text of this proposed rule 

change is available on the Exchange’s 

website at http://www.chx.com/rules/ 

proposed_rules.htm and in the 

Commission’s Public Reference Room, 

100 F Street, NE., Washington, DC 

20549. 

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 

CHX included statements concerning 

the purpose of and basis for the 

proposed rule changes and discussed 

any comments it received regarding the 

proposal. The text of these statements