Federal Register / Vol. 75, No. 102 / Thursday, May 27, 2010 / Notices 29793 

5Confidential letters from Stephen M. Pettibone, 

Managing Director Surveillance, Phlx, to Michael 

Gaw, Assistant Director, Division of Trading and 

Markets, and Tina Barry, Assistant Director, Office 

of Compliance Inspections and Examinations, 

Commission, dated October 6, 2009 and December 

30, 2009. 

6See letter from Charles Rogers, Chief Regulatory 

Officer, Phlx, to Tina Barry, Assistant Director, 

Office of Compliance Inspections and Examinations 

and Michael Gaw, Assistant Director, Division of 

Trading and Markets, Commission, dated February 

18, 2010. 

7 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). 

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

9 15 U.S.C. 78f(b)(1) and 78f(b)(6). 10 17 CFR 240.19d–1(c)(2). 

11 15 U.S.C. 78s(b)(2). 

12 17 CFR 240.19d–1(c)(2). 

13 17 CFR 200.30–3(a)(12) and 200.30–3(a)(44). 

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

2 17 CFR 240.19b–4. 

3 17 CFR 240.19b–4(f)(6). 

event to the BCC as a fourth violation 

under the current rule, such violations 

should be batched together and treated 

as one violation. This way, pursuant to 

the revised rules, the firm would receive 

a warning letter for the first three 

batched violations before being subject 

to a monetary fine. The Exchange 

further noted that it could, in any 

particular situation, deem the violations 

to be egregious rather than ‘‘minor’’ and 

refer the matter directly to the BCC for 

disciplinary action. The Exchange 

believes that this approach is 

appropriate because the relevant 

warning letters or monetary fines should 

serve as a deterrent against future 

violations, while recognizing that a 

single programming error can have a 

widespread effect. In addition, the 

Exchange believes that Advice F–6 (and 

its corresponding rule) is appropriate for 

batching because the automated 

surveillance for quote spread parameter 

compliance,5 as well as the issuance of 

sanctions pursuant to the minor rule 

plan,6 will be conducted daily. 

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.7 In particular, the 

Commission finds that the proposed 

rule change is consistent with Section 

6(b)(5) of the Act,8 which requires, 

among other things, that the rules of a 

national securities exchange be 

designed 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 Commission also 

believes that the proposal is consistent 

with Sections 6(b)(1) and 6(b)(6) of the 

Act,9 which require that the rules of an 

exchange enforce compliance with, and 

provide appropriate discipline for, 

violations of Commission and Exchange 

rules. Furthermore, the Commission 

believes that the proposed changes to 

the MRP should strengthen the 

Exchange’s ability to carry out its 

oversight and enforcement 

responsibilities as a self-regulatory 

organization in cases where full 

disciplinary proceedings are unsuitable 

in view of the minor nature of the 

particular violation. In addition, the 

Commission finds that the proposal is 

consistent with the public interest, the 

protection of investors, or otherwise in 

furtherance of the purposes of the Act, 

as required by Rule 19d–1(c)(2) under 

the Act,10 which governs minor rule 

violation plans. 

The Commission believes that the 

Exchange’s proposal to amend Advice 

F–6 to add rule text referencing quote 

spread parameters for options that are 

quoted electronically is appropriate 

because the text was inadvertently 

omitted. In addition, the Commission 

believes that batching of violations of 

the quote spread parameter rule, under 

the MRP, reasonably addresses quoting 

violations on an electronic market, 

where one inadvertent error can 

potentially result in multiple quotes that 

fall outside the quote spread parameters. 

The Exchange has represented it will 

conduct automated surveillance for 

quote spread parameter compliance on 

a daily basis, and will issue sanctions 

for quote spread violations pursuant to 

the MRP also on a daily basis. The 

Commission further notes that pursuant 

to Rules 960.2(f)(ii) and 970.01, the 

batching program will continue to 

require that the violations be 

determined based on an exceptionbased surveillance program. Any further 

proposal by the Exchange to permit the 

batching of violations of any Exchange 

rule would be subject to Commission 

approval. 

In approving this proposed rule 

change, the Commission in no way 

minimizes the importance of 

compliance with Exchange rules and all 

other rules subject to the imposition of 

fines under the MRP. The Commission 

believes that the violation of any selfregulatory organization’s rules, as well 

as Commission rules, is a serious matter. 

However, the MRP provides a 

reasonable means of addressing rule 

violations that do not rise to the level of 

requiring formal disciplinary 

proceedings, while providing greater 

flexibility in handling certain violations. 

The Commission expects that the 

Exchange will continue to conduct 

surveillance with due diligence and 

make a determination based on its 

findings, on a case-by-case basis, 

whether a fine of more or less than the 

recommended amount is appropriate for 

a violation under the MRP, whether it 

might not be appropriate to batch a 

series of actions as a single violation 

under the MRP, or whether a violation 

or series of violations may require 

formal disciplinary action. 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act 11 and Rule 

19d–1(c)(2) under the Act,12 that the 

proposed rule change (SR–Phlx–2010– 

43) be, and hereby is, approved and 

declared effective. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.13

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–12748 Filed 5–26–10; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–62146; File No. SR–FINRA– 

2010–023] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Update Certain CrossReferences and Make a NonSubstantive Technical Change to a 

FINRA Rule 

May 20, 2010. 

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 May 4, 

2010, Financial Industry Regulatory 

Authority, Inc. (‘‘FINRA’’) 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 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. 


wwoods2 on DSK1DXX6B1PROD with NOTICES
29794 Federal Register / Vol. 75, No. 102 / Thursday, May 27, 2010 / Notices 

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 Information 

Notice, March 12, 2008 (Rulebook Consolidation 

Process). 

5See Securities Exchange Act Release No. 61540 

(February 18, 2010), 75 FR 8771 (February 25, 2010) 

(Order Approving File No. SR–FINRA–2009–081). 

6See Securities Exchange Act Release No. 61542 

(February 18, 2010), 75 FR 8768 (February 25, 2010) 

(Order Approving File No. SR–FINRA–2009–093). 

7See Securities Exchange Act Release No. 61473 

(February 2, 2010), 75 FR 6422 (February 9, 2010) 

(Order Approving File No. SR–FINRA–2009–087). 

8The text of FINRA Rule 6635 has recently been 

amended and been renumbered as FINRA Rule 

6630. The amended rule text is reflected in the 

attached Exhibit 5. See Securities Exchange Act 

Release No. 61979 (April 23, 2010), 75 FR 23316 

(May 3, 2010) (SEC Approval Order for File No. SR– 

FINRA–2010–003). 

9See note 5. 

10See note 6. 

11See note 7. 

12See Regulatory Notice 10–21 (April 2010). 

13 15 U.S.C. 78o–3(b)(6). 

14 15 U.S.C. 78s(b)(3)(A). 

15 17 CFR 240.19b–4(f)(6). 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

FINRA is proposing to update crossreferences within certain FINRA rules to 

reflect changes adopted in the 

consolidated FINRA rulebook and to 

make a non-substantive technical 

change to a FINRA rule. 

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 in the process of developing 

a new consolidated rulebook 

(‘‘Consolidated FINRA Rulebook’’).4

That process involves FINRA submitting 

to the Commission for approval a series 

of proposed rule changes over time to 

adopt rules in the Consolidated FINRA 

Rulebook. The phased adoption and 

implementation of those rules 

necessitates periodic amendments to 

update rule cross-references and other 

non-substantive technical changes in 

the Consolidated FINRA Rulebook. 

The proposed rule change would 

update rule cross-references to reflect 

recent changes adopted in the 

Consolidated FINRA Rulebook. The 

proposed rule change would update 

FINRA Rule 0150 to reflect (1) the 

adoption into the Consolidated FINRA 

Rulebook of FINRA Rule 2261 and the 

deletion of NASD Rules 2270 and 2910 5

and (2) the deletion of NASD Rules 

2450 6 and 2780.7 The rule crossreferences in FINRA Rule 6630 8 would 

be similarly updated to reflect (1) the 

adoption of FINRA Rule 2261 and the 

deletion of NASD Rule 2270 9 and (2) 

the deletion of NASD Rule 2450.10

Finally, the rule references in FINRA 

Rule 9217, which sets forth FINRA’s 

Minor Rule Violation Plan, would be 

updated to reflect the deletion of 

Incorporated NYSE Rule 411(b).11

In addition, the proposed rule change 

would make a technical amendment to 

FINRA Rule 3160 to reflect a change in 

FINRA’s style convention when 

referencing federal securities 

regulations. 

FINRA has filed the proposed rule 

change for immediate effectiveness. The 

implementation date for the proposed 

rule change will be June 14, 2010, the 

date on which the previously approved 

rule changes will be implemented.12

2. Statutory Basis 

FINRA believes that the proposed rule 

change is consistent with the provisions 

of Section 15A(b)(6) of the Act,13 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 the 

proposed rule change will provide 

greater clarity to members and the 

public regarding FINRA’s rules. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

FINRA does not believe that the 

proposed rule change will result in 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 

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 14 and Rule 19b4(f)(6) thereunder.15

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–2010–023 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–2010–023. 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 


wwoods2 on DSK1DXX6B1PROD with NOTICES
Federal Register / Vol. 75, No. 102 / Thursday, May 27, 2010 / Notices 29795 

16 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. 

4See Securities Exchange Act Release No. 61542 

(February 18, 2010), 75 FR 8768 (February 25, 2010) 

(order approving SR–FINRA–2009–093). 

5See Securities Exchange Act Release Nos. 56148 

(July 26, 2007), 72 FR 42146 (August 1, 2007) (order 

approving the Agreement); 56147 (July 26, 2007), 72 

FR 42166 (August 1, 2007) (SR–NASD–2007–054) 

(order approving the incorporation of certain NYSE 

Rules as ‘‘Common Rules’’); and 60409 (July 30, 

2009), 74 FR 39353 (August 6, 2009) (order 

approving the amended and restated Agreement, 

adding NYSE Amex LLC as a party). Paragraph 2(b) 

of the Agreement sets forth procedures regarding 

proposed changes by FINRA, NYSE or NYSE Amex 

to the substance of any of the Common Rules. 

6FINRA’s rulebook currently has three sets of 

rules: (1) NASD Rules, (2) FINRA Incorporated 

NYSE Rules, and (3) consolidated FINRA Rules. 

The FINRA Incorporated NYSE Rules apply only to 

those members of FINRA that are also members of 

the NYSE (‘‘Dual Members’’), while the consolidated 

FINRA Rules apply to all FINRA members. For 

more information about the FINRA rulebook 

consolidation process, see FINRA Information 

Notice, March 12, 2008. 

7See Securities Exchange Act Release No. 61542 

(February 18, 2010), 75 FR 8768 (February 25, 

2010). 

8See Securities Exchange Act Release No. 61542 

(February 18, 2010), 75 FR 8768 (February 25, 

2010). 

9NYSE Amex has submitted a companion rule 

filing amending its rules in accordance with 

FINRA’s rule changes. See SR–NYSEAmex–2010– 

45. 

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 Web site viewing and 

printing 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 publicly available. All 

submissions should refer to File 

Number SR–FINRA–2010–023 and 

should be submitted on or before June 

17, 2010. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.16

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–12747 Filed 5–26–10; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–62142; File No. SR–NYSE– 

2010–38] 

Self-Regulatory Organizations; New 

York Stock Exchange LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change Deleting NYSE 

Rule 413 To Correspond With Rule 

Changes Filed by the Financial 

Industry Regulatory Authority, Inc. 

May 20, 2010. 

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 May 12, 

2010, 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 and II below, which Items have 

been prepared by the self-regulatory 

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 delete 

NYSE Rule 413 to correspond with rule 

changes filed by the Financial Industry 

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

and approved by the Commission.4 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 the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The purpose of the proposed rule 

changes is to delete NYSE Rule 413 

(Uniform Forms) to correspond with 

rule changes filed by FINRA and 

approved by the Commission. 

Background: 

On July 30, 2007, FINRA’s 

predecessor, the National Association of 

Securities Dealers, Inc. (‘‘NASD’’), and 

NYSE Regulation, Inc. (‘‘NYSER’’) 

consolidated their member firm 

regulation operations into a combined 

organization, FINRA. Pursuant to Rule 

17d–2 under the Act, NYSE, NYSER and 

FINRA entered into an agreement (the 

‘‘Agreement’’) to reduce regulatory 

duplication for their members by 

allocating to FINRA certain regulatory 

responsibilities for certain NYSE rules 

and rule interpretations (‘‘FINRA 

Incorporated NYSE Rules’’). NYSE 

Amex LLC (‘‘NYSE Amex’’) became a 

party to the Agreement effective 

December 15, 2008.5

As part of its effort to reduce 

regulatory duplication and relieve firms 

that are members of FINRA, NYSE and 

NYSE Amex of conflicting or 

unnecessary regulatory burdens, FINRA 

is now engaged in the process of 

reviewing and amending the NASD and 

FINRA Incorporated NYSE Rules in 

order to create a consolidated FINRA 

rulebook.6

Proposed Conforming Amendments to 

NYSE Rules: 

FINRA recently deleted FINRA 

Incorporated NYSE Rule 413 (Uniform 

Forms), which required that each 

member had to adopt such uniform 

forms as may be prescribed by the 

Exchange to facilitate the orderly flow of 

transactions within the financial 

community.7

In deleting FINRA Incorporated NYSE 

Rule 413, FINRA noted that several 

provisions in its By-Laws required its 

members to provide certain information 

in the manner and form prescribed by 

FINRA, including membership 

applications, registration of branch 

offices, registration of registered 

representatives and associated persons, 

and termination of registered 

employees. FINRA also noted its 

proposal to adopt a new Rule 4540 

governing information and data 

reporting and filing requirements.8

In order to harmonize the NYSE Rules 

with the approved consolidated FINRA 

Rules, the Exchange correspondingly 

proposes to delete NYSE Rule 413.9 As 

with FINRA, the Exchange has a number 

of rules that require members and 

member organizations to provide certain 

information in the manner and form 

prescribed by the Exchange: for 

example, NYSE Rules 301(b) and 311– 


wwoods2 on DSK1DXX6B1PROD with NOTICES