17270 Federal Register / Vol. 74, No. 70 / Tuesday, April 14, 2009 / Notices 

6 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 59440 

(February 24, 2009), 74 FR 9325 (‘‘Notice’’). 

4For transactions executed on the Exchange’s 

electronic trading platform, NYSE Arca will report 

the trade directly to OPRA. 

5The proposal also eliminates Rule 6.69 

Commentary .04, which relates to an obsolete and 

outdated practice. ‘‘Hard cards,’’ which refer to the 

cardboard backing of a paper trade ticket, are no 

longer in use on the trading floor. 

6See Rule 6.67(c). 

7The EOC system is the Exchange’s electronic 

audit trail and order tracking system that provides 

an accurate time-sequenced record of all orders and 

transactions on the Exchange. 

8 In approving this proposal, the Commission has 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

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

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

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 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–NYSEAmex–2009–09 and 

should be submitted on or before May 

5, 2009. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.6

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–8421 Filed 4–13–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–59716; File No. SR– 

NYSEArca–2009–11] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Order Approving a 

Proposed Rule Change To Amend Rule 

6.69—Reporting Duties 

April 6, 2009. 

I. Introduction 

On February 13, 2009, NYSE Arca, 

Inc. (‘‘NYSE Arca’’ or the ‘‘Exchange’’), 

filed with the Securities and Exchange 

Commission (‘‘Commission’’), pursuant 

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

Exchange Act of 1934 (‘‘Act’’) 1 and Rule 

19b–4 thereunder,2 a proposed rule 

change to amend Rule 6.69 to revise the 

procedures for reporting open outcry 

trades that occur on the options trading 

floor. The proposed rule change was 

published for comment in the Federal 

Register on March 3, 2009.3 The 

Commission received no comment 

letters on the proposal. This order 

approves the proposed rule change. 

II. Description 

NYSE Arca’s proposal revises the 

procedures for reporting open outcry 

trades that occur on the options trading 

floor. Under existing NYSE Arca rules, 

all option transactions that occur on the 

options trading floor must immediately 

be reported to the Exchange, in a form 

and manner prescribed by the Exchange, 

for dissemination to the Options Price 

Reporting Authority (‘‘OPRA’’).4 This 

requirement applies to all OTP Holders 

who are required to report trades either 

directly to OPRA or to another party 

who is responsible for reporting trades 

to OPRA. Currently, pursuant to existing 

Rule 6.69(b), the responsible party for 

reporting a transaction is the party that 

participates on the transaction as the 

seller. 

The proposed rule change makes 

several clarifying changes to these 

reporting obligations. First, the revised 

rule provides that whenever a Floor 

Broker is participating on one side of a 

transaction, the Floor Broker becomes 

the responsible party for reporting the 

trade, regardless of whether the Floor 

Broker is the buyer or seller. Second, in 

the event that there is a Floor Broker 

participating on both sides of a 

transaction, the Floor Broker 

participating as the seller must report 

the transaction to the Exchange. Third, 

for transactions occurring on the 

Exchange between two Market Makers, 

the Market Maker participating as the 

seller must report the transaction to the 

Exchange. 

Finally, in order to further clarify the 

rules regarding reporting duties, the 

Exchange proposes a new provision 

regarding Complex Orders. Since each 

party to a Complex Order transaction 

(which involves the simultaneous 

purchase and/or sale of two or more 

option series in the same underlying 

security) could be both buying and 

selling different series that make up an 

order, there may be no clearly defined 

seller, as is required by the existing rule. 

Consequently, pursuant to the proposed 

rule change, for Complex Order 

transactions between two Floor Brokers 

or two Market Makers, the party 

responsible for reporting the transaction 

will be the OTP Holder that first 

initiated the transaction. This provision 

does not affect the obligation that a 

Floor Broker has to report transactions 

pursuant to proposed Rule 6.69(b)(i), 

but will have bearing when a Complex 

Order is executed between two Floor 

Brokers or between two Market Makers.5

Presently, almost all orders on the 

Exchange are required to be in 

electronic format prior to representation 

on the trading floor.6 The Exchange 

represents that, typically, Floor Brokers 

enter the terms of orders they receive 

into the Electronic Order Capture 

System (‘‘EOC’’) 7, and upon 

consummating a trade, the Floor Broker 

is able to electronically report the 

transaction to the Exchange for 

processing and dissemination to OPRA. 

In contrast, the Exchange notes that 

Market Makers trading for their own 

proprietary account are not required to 

electronically systematize their orders 

prior to responding to a call from a 

Floor Broker. Consequently, a Market 

Maker acting as a ‘‘seller’’ (who would 

be the responsible reporting party under 

the current rules) would be required to 

re-enter all the order information 

already contained in the Floor Broker’s 

EOC system and then send the 

information to the Exchange for 

processing. The Exchange believes that 

it will be more efficient for the Floor 

Broker to be the responsible party for 

reporting a transaction. The Exchange 

further does not believe that requiring a 

Floor Broker to report every transaction 

to which they are a party will create any 

undue hardship or unnecessary burden 

on the Floor Broker, given the existing 

requirement that orders be put in 

electronic format prior to representation 

on the floor. 

III. Discussion and Commission’s 

Findings 

After careful review, the Commission 

finds that the proposed rule change is 

consistent with the requirements of the 

Act and the rules and regulations 

thereunder applicable to a national 

securities exchange.8 In particular, the 

Commission finds that the proposed 

rule change is consistent with Section 

6(b)(5) of the Act,9 which requires, 

among other things, that that the rules 

of a national securities exchange be 

designed to promote just and equitable 

principles of trade, to remove 

Federal Register / Vol. 74, No. 70 / Tuesday, April 14, 2009 / Notices 17271 

10 15 U.S.C. 78s(b)(2). 

11 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

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

4 17 CFR 240.19b–4(f)(6). 

5See Rules 6282, 6380A, 6380B, 6622 and 6730. 

6See Trade Reporting Frequently Asked 

Questions, FAQ 100.4, available at http:// 

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

P038942. 

7Certain trades are reported to FINRA, but not for 

publication purposes (referred to as ‘‘non-tape 

reports’’). For example, FINRA rules require 

members to submit non-tape reports for transactions 

that are effected upon the exercise of an OTC option 

or for ‘‘away from the market sales’’ (e.g., a gift 

between two parties). The non-tape reports are used 

for audit trail and regulatory fee assessment 

purposes only and are not reported to the 

appropriate exclusive Securities Information 

Processor (‘‘SIP’’) for public dissemination. See 

Rules 6282(i)(2) and 7130(c) (relating to the 

Alternative Display Facility); 6380A(e)(2) and 

7230A(g) (relating to the FINRA/Nasdaq Trade 

Reporting Facility); 6380B(e)(2) and 7230B(f) 

(relating to the FINRA/NYSE Trade Reporting 

Facility); and 6622(e)(2) and 7330(g) (relating to the 

OTC Reporting Facility). 

8Similarly, FINRA amended its trade reporting 

rules to clarify that in the limited circumstance 

where securities are transferred pursuant to an asset 

purchase agreement (‘‘APA’’), such transfer does 

not have to be reported if (1) the APA is subject to 

the jurisdiction and approval of a court of 

competent jurisdiction in insolvency matters; and 

(2) the purchase price under the APA is not based 

on, and cannot be adjusted to reflect, the current 

market prices of the securities on or following the 

effective date of the APA. FINRA believes that 

transfers effected pursuant to an APA under these 

circumstances are not trade reportable events and 

that reporting and dissemination of these transfers 

would not provide meaningful price discovery 

information to the market. See Securities Exchange 

Act Release No. 59126 (December 19, 2008), 73 FR 

79948 (December 30, 2008) (notice of filing and 

immediate effectiveness of SR–FINRA–2008–060). 

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, and not be designed to 

permit unfair discrimination between 

customers, issuers, brokers, or dealers. 

The Commission believes that the 

proposed rule change will increase 

efficiency in trade reporting and remove 

potential confusion about which party 

to a transaction is responsible for 

reporting such information. 

V. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,10 that the 

proposed rule change (SR–NYSEArca– 

2009–11) be, and hereby is, approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.11

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–8419 Filed 4–13–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–59713; File No. SR–FINRA– 

2009–024] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change Relating to Trade 

Reporting Transfers of Proprietary 

Securities Positions in Connection 

With Certain Corporate Control 

Transactions 

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 3, 

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, II 

and III below, which Items have been 

prepared by FINRA. FINRA has 

designated the proposed rule change as 

constituting a ‘‘non-controversial’’ rule 

change under Section 19(b)(3)(A) of the 

Act 3 and paragraph (f)(6) thereunder,4

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 FINRA 

trade reporting rules to codify the 

reporting requirements applicable to 

over-the-counter (‘‘OTC’’) transfers of 

proprietary positions in debt and equity 

securities between a member and 

another member or non-member brokerdealer effected in connection with 

certain corporate control transactions. 

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 trade reporting rules require 

that OTC transactions in debt and equity 

securities be reported to FINRA unless 

they qualify for an express exception 

under the rules.5 For purposes of the 

trade reporting rules, a ‘‘trade’’ or 

‘‘transaction’’ entails a beneficial change 

of ownership of securities between 

parties (e.g., a purchase or sale of 

securities) in which a FINRA member 

participates.6 As a general matter, when 

members report trades to a FINRA trade 

reporting facility, FINRA facilitates the 

public dissemination of the trade 

information and/or assesses regulatory 

transaction fees.7

Occasionally, broker-dealers may 

transfer proprietary securities positions, 

along with other assets, in connection 

with corporate control transactions such 

as mergers and acquisitions. Such 

transfers are ‘‘trades’’ or ‘‘transactions’’ 

because they result in a change of 

beneficial ownership, but unlike the 

typical securities transaction, they are 

not driven by a trading or investment 

strategy (e.g., a desire to exit a position 

or lock in a profit) relating to a 

particular security position. Rather, the 

transfers are in furtherance of the 

consolidation of the broker-dealers’ 

separate sales and proprietary trading 

businesses. Additionally, the securities 

that are transferred typically are 

assigned a value, such as the closing 

price of the security on a date certain, 

solely for purposes of effectuating the 

transfer. 

As such, FINRA believes that public 

dissemination of such transfers would 

not provide meaningful price discovery 

information to the market. To the 

contrary, dissemination could confuse 

investors and other market participants, 

particularly where the positions being 

transferred are substantial. Public 

dissemination of significant and 

perhaps unusual trading activity could 

give the false impression of investor 

interest, market participant transactions 

and significant price discovery 

activities, and the volume reports could 

skew a variety of trading activity 

indicators.8

Accordingly, FINRA is proposing to 

amend its trade reporting rules to clarify