17702 Federal Register / Vol. 74, No. 72 / Thursday, April 16, 2009 / Notices 

10 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. 

4NYSE Rule 110 (Amended May 21, 1964 and 

July 16, 1964, effective August 3, 1964). 

5 15 U.S.C. 78k(a). 

6 15 U.S.C. 78k(a)(1)(A). 

7 15 U.S.C. 78c(a)(38). 

8See Securities Exchange Act Release No. 14718 

(May 1, 1978), 43 FR 19738 (May 8, 1978) (SR– 

NYSE–78–24). 

9 17 CFR 240.11a1–5. 

10This provision has since been changed to 

Section 11(a)(1)(I). 

11See Securities Exchange Act Release No. 17569, 

46 FR 14888 (March 3, 1981). 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.10

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–8737 Filed 4–15–09; 8:45 am] 

BILLING CODE 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–59746; File No. SR–NYSE– 

2009–08] 

Self-Regulatory Organizations; Notice 

of Filing of Proposed Rule Change by 

New York Stock Exchange LLC 

Rescinding NYSE Rule 110 Which 

Establishes the Role of Competitive 

Traders and Exchange Rule 107A 

Which Establishes the Role of the 

Registered Competitive Market Makers 

April 10, 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 April 6, 

2009, New York Stock Exchange LLC 

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

the Securities and Exchange 

Commission (the ‘‘Commission’’) the 

proposed rule change as described in 

Items I, II, and III below, which Items 

have been prepared by the selfregulatory organization. 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 rescind 

NYSE Rule 110 which establishes the 

role of Competitive Traders (‘‘CTs’’) and 

Exchange Rule 107A which establishes 

the role of the Registered Competitive 

Market Makers (‘‘RCMMs’’). The 

Exchange also proposes to make 

conforming amendments to NYSE Rules 

36, 98, 123, 111, 476A, 800, 900 and 

1600 to eliminate references to RCMMs 

and CTs. 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 

The Exchange proposes to rescind 

NYSE Rule 110 which sets forth the role 

of CTs and NYSE Rule 107A which sets 

forth the role of RCMMs. With the 

rescission of NYSE Rule 110 and NYSE 

Rule 107A, CTs and RCMMs will no 

longer be recognized classes of Floor 

Traders on the NYSE Floor. 

The Exchange also proposes to make 

conforming amendments to NYSE Rules 

36, 98, 476A, 111, 800, 900 and 1600 to 

eliminate references to RCMMs and 

CTs. 

I. Background of CTs and RCMMs 

The rules establishing CTs and 

RCMMs were enacted to create classes 

of Floor Traders that would commit 

capital to trade in a manner that would 

provide additional liquidity, contribute 

to mitigating price fluctuations and 

enhance competition. CTs were the 

class of Floor Traders that the Exchange 

established first in 1964.4 CTs were 

Floor Traders registered with and 

approved by the Exchange to trade for 

an account for which the CT had an 

interest. 

Section 11(a) of the Securities and 

Exchange Act of 1934 (the ‘‘Act’’),5 as 

amended by the 1975 Amendments, 

makes it unlawful, in part, for Exchange 

members to effect any transaction on the 

Floor for their own accounts. Section 

11(a)(1)(A) stated that it would exempt 

from this general prohibition 

transactions made by a dealer acting in 

the capacity of a market maker (‘‘market 

maker exception’’).6 A market maker is 

defined in Section 3(a)(38) of the Act as 

‘‘any dealer who, with respect to a 

security, holds himself out (by entering 

quotations in an inter-dealer 

communications system or otherwise) as 

being willing to buy and sell such 

security for his own account on a 

regular or continuous basis.’’ 7

In order to maintain a class of trader 

that could be called in to add depth and 

liquidity to the markets in listed stocks, 

the Exchange established the RCMM 

class of Floor trader in 1978.8 RCMMs 

functioned as proprietary traders that 

serve as supplemental market makers on 

the Floor. Historically, RCMMs were 

called upon to narrow the spread 

between bids and offers, improve the 

depth of the market in a given security 

and enter a bid or offer on the side of 

the market when called upon to do so 

by a Floor official. In their capacity as 

dealers, RCMMs were expected to 

provide a degree of competition to the 

specialists on the NYSE. 

On February 24, 1981, the 

Commission adopted Rule 11a1–5 9 to 

exempt from the proprietary trading 

prohibition of Section 11(a)(1) certain 

transactions by RCMMs registered on 

the Exchange. The Commission 

determined that RCMMs had the 

potential to provide sufficient benefits 

to their markets to warrant an 

exemption from the statutory 

prohibition pursuant to Section 

11(a)(1)(H).10 Rule 11a1–5 set forth that 

‘‘any transaction by a New York Stock 

Exchange registered competitive market 

maker * * * effected in compliance 

with their respective governing rules 

shall be deemed to be of a kind which 

is consistent with the purposes of 

Section 11(a)(1) of the Act, the 

protection of investors, and the 

maintenance of fair and orderly 

markets.’’ 11

II. Functions and Obligations of the 

RCMMs and CTs 

CTs and RCMMs are classes of Floor 

traders that commit capital to trade in 

a manner that provides additional 

liquidity, contribute to mitigating price 

fluctuations and enhance competition. 

A member registered as an RCMM is 

permitted, with certain limitations, to 

act as both a Floor Broker and RCMM 

in the same trading session. However, 

an RCMM may not act as both Floor 

Broker and RCMM in the same security 

in the same trading session. 

As a Floor Broker, the RCMM 

executes orders as agent for his 

customers, including other Floor 

Brokers. In his capacity as a Floor 

Broker, the RCMM acts solely as agent 

for his customer and does not commit 

capital or initiate on-Floor orders, 

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Federal Register / Vol. 74, No. 72 / Thursday, April 16, 2009 / Notices 17703 

12See Securities Exchange Act Release No. 53539 

(March 22, 2006), 71 FR 16353 (March 31, 2006) 

(SR–NYSE–2004–05) (establishing the Hybrid 

Market). 

13See Securities Exchange Act Release No. 52648 

(October 21, 2005), 70 FR 62155 (October 28, 2005) 

(SR–NYSE–2005–63). 

14Registration as an RCMM is applicable only to 

individual members, not member organizations. See 

NYSE Rule 107A(1). Accordingly, RCMM trading 

licenses are issued to individual members. 

15See Securities Exchange Act Release Numbers 

54140 (July 13, 2006), 71 FR 41491 (July 21, 2006) 

(SR–NYSE–2006–48); 54985 (December 21, 2006), 

72 FR 171 (January 3, 2007) (SR–NYSE–2006–113); 

55992 (June 29, 2007), 72 FR 37289 (July 9, 2007) 

(SR–NYSE–2007–57); 56556 (September 27, 2007), 

72 FR 56421 (October 3, 2007) (SR–NYSE–2007– 

86); 57072 (December 31, 2007), 73 FR 1252 

(January 7, 2008) (SR–NYSE–2007–125); 57601 

(April 2, 2008), 73 FR 19123 (April 8, 2008) (SR– 

NYSE–2008–22). The Moratorium was also 

amended to grant RCMM firms the ability to replace 

a RCMM who relinquishes his or her registration 

and ceases to conduct business as a RCMM during 

the moratorium, with a newly qualified and 

registered RCMM. See Securities Exchange Act 

Release No. 53549 (March 24, 2006), 71 FR 16388 

(March 31, 2006) (SR–NYSE–2006–11). 

16See Securities Exchange Act Release No. 58845 

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

(SR–NYSE–2008–46). 

17See Securities Exchange Act Release Numbers 

58033 (June 26, 2008), 73 FR 38265 (July 3, 2008) 

Continued 

except in the case of a trade for his error 

account. 

As an RCMM, the RCMM may initiate 

on-Floor orders to commit capital on his 

firm’s behalf, subject to certain 

conditions. While acting in an RCMM 

capacity, and subject to its dealings, an 

RCMM provides additional liquidity in 

situations in which the RCMM is 

requested to do so by a Floor Official, 

DMM, or other Floor Broker. 

Additionally, an RCMM may, subject to 

certain limitations on its dealings, 

provide liquidity in instances in which 

the dealings are reasonably calculated to 

contribute to maintenance of price 

continuity with reasonable depth, and 

to minimize temporary disparities 

between supply and demand. 

RCMMs have both affirmative and 

negative obligations pursuant to NYSE 

Rule 107A(b). The RCMM’s affirmative 

obligations require the RCMM to: (i) 

Make a bid or offer in a stock that 

contributes to the maintenance of a fair 

and orderly market whenever called 

upon; and (ii) effect all purchases and 

sales for the RCMM’s proprietary 

account in a manner that contributes to 

the maintenance of price continuity 

with reasonable depth and minimizes 

the effects of a temporary disparity 

between supply and demand. The 

negative obligations of the RCMM 

require the RCMM to avoid 

participation as a dealer during the 

opening of the stock in a manner that 

would disrupt the public balance of 

supply and demand. Furthermore, 

RCMMs may not effect transactions for 

its own account or the account of its 

member organization that are not a part 

of a course of dealings reasonably 

calculated to contribute to the 

maintenance of price continuity with 

reasonable depth and to the minimizing 

of the effects of any temporary disparity 

between supply and demand. RCMMs 

must be ready to enter the market with 

one round lot if called upon by a Floor 

Official or broker to narrow the 

quotation spread or add liquidity to the 

market. 

CTs likewise have these same 

affirmative and negative obligations 

pursuant to NYSE Rule 110. In addition, 

members acting as CTs that desire to 

purchase or sell stock for accounts in 

which they have an interest shall not 

congregate in a particular stock, and 

individually or as a group, intentionally 

or unintentionally, dominate the market 

in that stock, and shall not effect such 

purchases or sales except in a 

reasonable and orderly manner. CTs are 

also subject to meeting certain 

stabilization tests which are computed 

on a monthly basis. Specifically, CT 

trading is required to be 75% 

stabilizing. 

NYSE Regulation Inc. is responsible 

for reviewing RCMM and CT trading 

activity in order to determine that 

RCMMs and CTs are complying with 

their negative and affirmative 

obligations. 

III. Viability of CTs and RCMMs in 

Today’s NYSE Market 

The volume and speed of the 

securities markets has increased 

dramatically since the inception of the 

CTs and RCMMs. Significant changes 

have occurred with respect to market 

dynamics such as quotations, order 

entry and order executions. The 

majority of trades on the Exchange are 

executed electronically. When the 

Exchange introduced its Hybrid 

Market,12 the Exchange determined that 

a review of the viability of RCMMs and 

CTs to trade in the more electronic 

trading environment was warranted. 

The Exchange undertook to assess the 

contributions of RCMMs and CTs to the 

liquidity available to the NYSE in its 

more electronic market model. 

In October 2005, the Exchange 

implemented a Moratorium on the 

qualification and registration of new 

CTs and RCMMs while the Exchange 

conducted a study on the future 

viability of CTs and RCMMs.13 At the 

time the Moratorium was first imposed, 

there were 11 registered RCMMs and 

one registered but inactive CT. In 

December 2006, the largest RCMM firm 

ceased its RCMM business and left the 

Floor, eliminating 6 RCMMs from the 

Floor. This reduced the number of 

RCMMs operating on the Exchange to 

five.14 These remaining five RCMMs are 

associated with two member 

organizations. 

In its study of the CT and RCMM 

trading in the more electronic 

environment, the Exchange reviewed 

the trading data associated with the CT 

and RCMM order execution. The review 

found that the CT class of Floor Trader 

had not executed any transactions on 

the Floor as a result of the non-usage of 

the CT license and therefore provided 

no contribution to the quality of the 

NYSE Market. 

From May 2004 to December 2004, 

RCMM trading volume comprised only 

.018% of the total NYSE trading volume 

for that time period. In 2005, the year 

that the Moratorium was implemented, 

RCMM trading volume comprised only 

.017% of the total NYSE trading volume 

for the year. In 2006, the RCMM trading 

volume comprised .008% of the total 

NYSE trading volume for the year. After 

the largest RCMM firm ceased its 

business in December 2006, RCMM 

trading volume in 2007 and 2008 

comprised only .001% of the NYSE total 

trading volume for each of those years. 

From August 2005 through February 

2008, RCMM’s monthly average trading 

volume for that time period never 

exceeded .021% of the Exchange’s total 

trading volume for that time period. On 

average during this time period, RCMMs 

comprised only .006% of the NYSE’s 

trading volume. The Moratorium was 

then extended six times 15 while the 

Exchange continued its evaluation of CT 

and RCMM trading. A review of the 

trading volume prior to and during the 

Moratorium indicates that RCMM/CT 

trading volume was minimally impacted 

by the Moratorium. 

On October 24, 2008, the Commission 

approved the Exchange’s new market 

model filing (‘‘Next Generation 

NYSE’’).16 The Next Generation NYSE 

rule and technology changes: (i) 

Provided market participants with 

additional abilities to post hidden 

liquidity on Exchange systems; (ii) 

created a Designated Market Maker 

(‘‘DMM’’), and phased out the NYSE 

specialist; and (iii) enhanced the speed 

of execution through technological 

enhancements and a reduction in 

message traffic between Exchange 

systems and its DMMs. In light of the 

implementation of the Next Generation 

NYSE, the Exchange requested an 

extension of the Moratorium to evaluate 

the viability of the RCMMs and CTs in 

the proposed New Generation NYSE.17

mstockstill on PROD1PC66 with NOTICES

17704 Federal Register / Vol. 74, No. 72 / Thursday, April 16, 2009 / Notices 

(SR–NYSE–2008–49); 58713 (October 2, 2008), 73 

FR 59024 (October 8, 2008) (SR–NYSE–2008–96); 

59069 (December 8, 2008), 73 FR 76081 (December 

15, 2008) (SR–NYSE–2008–124). 

18See Securities Exchange Act Release No. 58877 

(October 29, 2008), 73 FR 65904 (November 5, 2008) 

(SR–NYSE–2008–108). See also NYSE Rule 1600. 19 15 U.S.C. 78f(b)(5). 

The Next Generation NYSE is 

currently operating as a pilot scheduled 

to end on October 1, 2009. For the time 

period of July 2008 to December 2008, 

RCMM and CT average trading volume 

did not exceed .0011% of the 

Exchange’s total trading volume per 

month for that time period. On average 

over these six months, RCMMs 

comprised only .001% of the NYSE’s 

trading volume. The review found that 

the CT class of Floor Trader still had not 

executed any transactions on the Floor 

as a result of the non-usage of the CT 

license and therefore provided no 

contribution to the market quality on 

the NYSE. In 2009, RCMM trading is 

reported to comprise approximately 

.001% of the total NYSE trading volume 

to date. 

In light of these statistics, the 

Exchange has concluded that the level 

of participation of the RCMMs and CTs 

no longer serve as viable supplemental 

market makers because they no longer 

contribute significantly to the overall 

liquidity available on the NYSE. 

In addition to reviewing the trading 

statistics of the RCMMs and the sole 

inactive CT, NYSE Market and NYSE 

Regulation reviewed the technology, 

operational and regulatory costs 

required to adequately support and 

surveil RCMM and CT trading activity 

in a predominantly electronic trading 

environment. The review included the 

projected costs for trading system 

enhancements for RCMM and CT 

trading, the cost of continued 

development of surveillance technology 

and procedures, and staff training and 

hours spent in these efforts. The NYSE’s 

trading systems, including the handheld devices used by Floor brokers on 

the NYSE, were not designed to 

facilitate trading by RCMMs and CTs 

under special supplemental marketmaking rules enacted when the NYSE 

was a manual trading center in which 

RCMMs and CTs traded on paper. To 

develop technology specifically 

designed to comport with the RCMM 

and CT trading rules in the context of 

Next Generation NYSE would not be 

cost effective in view of the minimal 

current trading volume of the five 

RCMMs and the nonexistent trading 

volume of the one registered CT. The 

fundamental changes in the securities 

markets generally and in the NYSE 

trading model in particular since the 

RCMM and CT rules were first enacted 

in the late 1970s and early 1980s have 

resulted in much higher trading 

volumes and message traffic through 

NYSE systems. The RCMM and CT rules 

were enacted for a marketplace that 

functioned much differently than 

today’s high speed and high volume 

trading environment. 

There are now new opportunities for 

market participants to efficiently access 

the NYSE market. The NYSE has 

developed a new class of electronic 

liquidity providers, Supplemental 

Liquidity Providers (‘‘SLPs’’)18 that has 

largely supplanted the role once filled 

by RCMMs and CTs. SLPs are off-Floor 

entities that quote and trade on the 

NYSE electronically. The operation of 

SLPs is intended to provide incentives 

for quoting and to add competition to 

the existing group of Floor-based 

liquidity providers, the DMMs. An SLP 

is required to quote at the National Best 

Bid (‘‘NBB’’) or the National Best Offer 

(‘‘NBO’’) at least 5% of the trading day 

for each assigned security in round lots 

to maintain its status as an SLP. If an 

SLP posts liquidity in its assigned 

securities that results in an execution, 

the Exchange will pay the SLP a 

financial rebate per share for such 

executions provided that the SLP meets 

its monthly quoting requirement for 

rebates averaging 3% at the NBB or NBO 

in its assigned securities in round lots. 

The Exchange believes that this rebate 

program will encourage SLPs to 

aggressively provide liquidity to the 

NYSE market and will also provide 

customers with the premier venue for 

price discovery, competitive quote and 

price improvement. 

Because of the electronic nature of 

SLP trading, the regulatory and 

technology considerations that exist 

with maintaining CTs and RCMMs as 

classes of Floor Traders on the NYSE are 

not present. The intent behind 

establishing the CT and RCMM classes 

of trading, i.e., providing additional 

liquidity in the NYSE market, is now 

best fulfilled through the SLP process. 

Given all of the above, the Exchange 

seeks to rescind CTs and RCMMs as 

valid classes of Floor Traders. 

The Exchange notes that while it is 

proposing the rescission of RCMMs and 

CTs as classes of traders, it is not 

rescinding membership to the Exchange. 

Those RCMMs and CTs currently 

trading on the Exchange will continue 

to be Exchange members but will not be 

permitted to trade for their proprietary 

accounts in their roles as RCMMs and 

CTs. RCMMs and CTs will continue to 

have electronic access to the market and 

are permitted to continue trading as a 

different class of trader subject to 

regulatory requirements to change their 

respective business models. 

IV. Conforming Changes to NYSE Rules 

36, 98, 111, 123, 476A, 800, 900 and 

1600 

The Exchange seeks to make 

conforming amendments to NYSE Rules 

36, 98, 111, 123, 476A, 800, 900 and 

1600 to delete references to RCMMs and 

CTs throughout the rule text. 

V. Conclusion 

RCMMs and CTs are no longer viable 

classes of Floor Traders due to the 

significant evolution of the NYSE 

marketplace since the enactment of the 

original rules establishing these classes 

of members. The existing RCMMs and 

sole CT no longer meet the objectives of 

adding depth and liquidity to the NYSE 

market and providing a degree of 

competition to the NYSE DMMs. The 

Exchange concludes that these classes of 

Floor Traders should be rescinded given 

the trading volumes associated with CTs 

and RCMMs and the considerable costs 

to regulate these classes of traders. 

2. Statutory Basis 

The Exchange believes the proposed 

rule change is consistent with and 

furthers the objectives of Section 6(b)(5) 

of the Act,19 in that it is 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. 

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 

mstockstill on PROD1PC66 with NOTICES

Federal Register / Vol. 74, No. 72 / Thursday, April 16, 2009 / Notices 17705 

20 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3The 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). 

4Members are subject to additional requirements 

regarding customer accounts. See, e.g., Rule 17a3(a)(9) under the Act (requiring records indicating 

the name and address of the beneficial owner of 

each cash and margin customer account). 17 CFR 

240.17a–3(a)(9). 

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 

Number SR–NYSE–2009–08 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–2009–08. 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 will also be available 

for inspection and copying at the 

principal office of the self-regulatory 

organization. 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– 

2009–08 and should be submitted on or 

before May 7, 2009. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.20

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–8732 Filed 4–15–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–59745; File No. SR–FINRA– 

2009–017] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Notice of Filing of 

Proposed Rule Change To Adopt 

Incorporated NYSE Rule 406 

(Designation of Accounts) as a FINRA 

Rule in the Consolidated FINRA 

Rulebook 

April 10, 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 26, 

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 

substantially prepared by FINRA. 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 adopt 

Incorporated NYSE Rule 406 

(Designation of Accounts) as a FINRA 

rule in the consolidated FINRA 

rulebook with minor changes. The 

proposed rule change would renumber 

Incorporated NYSE Rule 406 as FINRA 

Rule 3250 in the consolidated FINRA 

rulebook. 

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 

As part of the process of developing 

a new consolidated rulebook 

(‘‘Consolidated FINRA Rulebook’’),3

FINRA is proposing to adopt 

Incorporated NYSE Rule 406 into the 

Consolidated FINRA Rulebook with 

minor changes, discussed below. The 

proposed rule change would renumber 

Incorporated NYSE Rule 406 as FINRA 

Rule 3250. Incorporated NYSE Rule 406 

provides that no member organization 

shall carry an account on its books in 

the name of a person other than that of 

the customer, except that an account 

may be designated by a number or 

symbol, provided the member has on 

file a written statement signed by the 

customer attesting the ownership of 

such account. In effect, this rule 

establishes a general requirement that a 

member must hold each customer 

account in the customer’s name, except 

that a member may identify a customer’s 

account with a number or symbol, as 

long as the member maintains 

documentation identifying the 

customer.4

Currently, Incorporated NYSE Rule 

406 applies only to Dual Members (i.e., 

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