[Federal Register Volume 75, Number 109 (Tuesday, June 8, 2010)]
[Notices]
[Pages 32519-32523]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-13662]



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SECURITIES AND EXCHANGE COMMISSION



[Release No. 34-62205; File No. SR-FINRA-2010-024]




Self-Regulatory Organizations; Financial Industry Regulatory 

Authority, Inc.; Notice of Filing of Proposed Rule Change To Adopt 

FINRA Rule 4210 (Margin Requirements), FINRA Rule 4220 (Daily Record of 

Required Margin) and FINRA Rule 4230 (Required Submissions for Requests 

for Extensions of Time Under Regulation T and SEC Rule 15c3-3) in the 

Consolidated FINRA Rulebook



June 2, 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 14, 2010, Financial Industry Regulatory



[[Page 32520]]



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. The Commission is publishing this notice to solicit comments 

on the proposed rule change from interested persons.

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

    \2\ 17 CFR 240.19b-4.

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I. Self-Regulatory Organization's Statement of the Terms of Substance 

of the Proposed Rule Change



    FINRA is proposing to adopt (1) NASD Rules 2520, 2521, 2522, and 

IM-2522 regarding margin requirements, (2) NASD Rule 3160 regarding 

extension of time requests under Regulation T and SEC Rule 15c3-3, and 

(3) Incorporated NYSE Rule 432(a) regarding daily record of margin 

requirements as FINRA rules in the consolidated FINRA rulebook, subject 

to certain amendments, and to delete Incorporated NYSE Rule 431 (Margin 

Requirements), Incorporated NYSE Rule 431 Interpretations,\3\ 

Incorporated NYSE Rule 432(b) and Incorporated NYSE Rule 434 (Required 

Submissions of Requests for Extension of Time for Customers). The 

proposed rule change would (1) Consolidate and renumber NASD Rules 

2520, 2521, 2522 and IM-2522 as FINRA Rule 4210 (Margin Requirements), 

(2) renumber NASD Rule 3160 as FINRA Rule 4230 (Required Submissions 

for Requests for Extensions of Time Under Regulation T and SEC Rule 

15c3-3), and (3) renumber Incorporated NYSE Rule 432(a) as FINRA Rule 

4220 (Daily Record of Required Margin) in the consolidated FINRA 

rulebook.

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    \3\ Assuming SEC approval of the proposed rule change, FINRA 

expects to maintain the Incorporated NYSE Rule 431 Interpretations 

as interpretations to FINRA Rule 4210.

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    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''),\4\ FINRA is proposing to adopt (1) 

NASD Rules 2520, 2521, 2522, and IM-2522 regarding margin requirements, 

(2) NASD Rule 3160 regarding extension of time requests under 

Regulation T and SEC Rule 15c3-3, and (3) Incorporated NYSE Rule 432(a) 

regarding daily record of margin requirements as FINRA rules in the 

Consolidated FINRA Rulebook, subject to certain amendments, and to 

delete Incorporated NYSE Rule 431 (Margin Requirements), Incorporated 

NYSE Rule 431 Interpretations,\5\ Incorporated NYSE Rule 432(b) and 

Incorporated NYSE Rule 434 (Required Submissions of Requests for 

Extension of Time for Customers). The proposed rule change would (1) 

consolidate and renumber NASD Rules 2520, 2521, 2522 and IM-2522 as 

FINRA Rule 4210 (Margin Requirements), (2) renumber NASD Rule 3160 as 

FINRA Rule 4230 (Required Submissions for Requests for Extensions of 

Time Under Regulation T and SEC Rule 15c3-3), and (3) renumber 

Incorporated NYSE Rule 432(a) as FINRA Rule 4220 (Daily Record of 

Required Margin) in the Consolidated FINRA Rulebook.

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    \4\ The 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).

    \5\ See supra note 3.

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Margin Requirements--NASD Rules 2520, 2521, 2522, and IM-2522 and 

Incorporated NYSE Rule 431

    FINRA proposes to adopt the margin requirements set forth in NASD 

Rules 2520 through 2522 and IM-2522 as FINRA Rule 4210, subject to 

certain amendments, discussed below and to delete Incorporated NYSE 

Rule 431 (Margin Requirements). The proposed amendments, among other 

things, reflect certain requirements in Incorporated NYSE Rule 431.

    NASD Rule 2520 (Margin Requirements) and Incorporated NYSE Rule 

431, which are almost identical, prescribe requirements governing the 

extension of credit by members that offer margin accounts to customers, 

as generally permitted in accordance with Regulation T of the Board of 

Governors of the Federal Reserve System (``Regulation T'').\6\ These 

rules promulgate the margin requirements that determine the amount of 

collateral customers are expected to maintain in their margin accounts, 

including strategy-based margin accounts and portfolio margin accounts. 

Maintenance margin requirements for equity, fixed income, warrants and 

option securities also are established under these rules.

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    \6\ See Regulation T Section 220.4.

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Rule Structure

    FINRA proposes to combine NASD Rules 2520, 2521, 2522 and IM-2522 

into the single consolidated margin rule, FINRA Rule 4210. In addition, 

FINRA proposes to re-structure the rule to improve its organization and 

make it easier to read. First, FINRA proposes to incorporate NASD Rule 

2521 (Margin--Exemption for Certain Members) as FINRA Rule 4210(h), 

which provides that any member for which another self-regulatory 

organization acts as the designated examining authority is exempt from 

FINRA Rule 4210. Second, FINRA proposes to incorporate NASD Rule 2522 

(Definitions Related to Options, Currency Warrants, Currency Index 

Warrants and Stock Index Warrant Transactions) as FINRA Rule 

4210(f)(2)(A), which contains definitions regarding margining options, 

currency warrants, currency index warrants and stock index warrant 

transactions.\7\ In so doing, FINRA proposes to delete extraneous 

definitions and retain only those definitions that are pertinent to the 

new rule. Third, FINRA proposes to combine the margin provisions 

regarding currency warrants, currency index warrants and stock index 

warrants from NASD Rule 2520(f)(10) together with similar sections in 

paragraph (f)(2) of FINRA Rule 4210. All margin provisions regarding 

such warrants were combined in a single section in corresponding 

Incorporated NYSE Rule 431(f)(2), and FINRA proposes to follow this 

model. FINRA believes combining all provisions in a single section 

regarding such warrants will make the rule easier to read. Finally, 

FINRA proposes to incorporate NASD IM-2522 (Computation of Elapsed 

Days) as Supplementary Material to FINRA Rule



[[Page 32521]]



4210, which provides illustrations on how to calculate the number of 

elapsed days for accrued interest on Treasury bonds or notes.

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    \7\ In this regard, FINRA proposes to adopt the model of 

Incorporated NYSE Rule 431 of consolidating relevant definitions 

into FINRA Rule 4210.

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Net Capital Calculations

    FINRA proposes in several instances in FINRA Rule 4210 \8\ to 

specify that the member should reference SEC Rule 15c3-1 and, if 

applicable, FINRA Rule 4110 (Capital Compliance) when calculating net 

capital, charges against net capital and haircut requirements. Members 

that may be subject to greater net capital requirements pursuant to 

FINRA Rule 4110 would need to ensure they are in compliance with both 

the SEC and FINRA net capital provisions in calculating net capital and 

its impact on margin calculations. In addition, consistent with the 

corresponding Incorporated NYSE Rule 431 requirements, FINRA proposes 

to provide in FINRA Rule 4210(e)(5)(A) and (B) (regarding specialists' 

and market makers' accounts), (e)(6)(A) (regarding broker-dealer 

accounts) and (e)(6)(B)(i)c. (regarding joint back office arrangements) 

that when computing charges against net capital for transactions in 

securities covered by FINRA Rule 4210(e)(2)(F) (regarding transactions 

with exempt accounts involving certain ``good faith'' securities) and 

FINRA Rule 4210(e)(2)(G) (regarding transactions with exempt accounts 

involving highly rated foreign sovereign debt securities and investment 

grade debt securities), absent a greater haircut requirement that may 

have been imposed on such securities pursuant to FINRA Rule 4110(a), 

the respective requirements of those paragraphs may be used, rather 

than the haircut requirements of SEC Rule 15c3-1.

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    \8\ See, e.g., FINRA Rule 4210(e)(2)(D), (e)(2)(F), (e)(2)(G), 

(e)(4), (e)(5) and (e)(6). Incorporated NYSE Rule 431 referenced 

NYSE's net capital rules in these same sections, and FINRA proposes 

to follow this model.

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Joint Accounts Exemption

    FINRA proposes to integrate Incorporated NYSE Rule 431 

Supplementary Material .10 into FINRA Rule 4210(e)(3) regarding joint 

accounts in which the carrying member or a partner or stockholder 

therein has an interest. The provision permits a member to seek an 

exemption under the FINRA Rule 9600 Series if the account is confined 

exclusively to transactions and positions in exempted securities. The 

proposed rule change would provide that any such application shall 

include the complete description of the security; cost price, offering 

price and principal amount of obligations which have been purchased or 

may be required to be purchased; the date on which the security is to 

be purchased or on which there will be a contingent commitment to 

purchase the security; the approximate aggregate indebtedness; the 

approximate net capital; and the approximate total market value of all 

readily marketable securities (1) exempted and (2) non-exempted, held 

in member accounts, partners' capital accounts, partners' individual 

accounts covered by approved agreements providing for their inclusion 

as partnership property, accounts covered by subordination agreements 

approved by FINRA and customers' accounts in deficit.

Additional Requirements on Control and Restricted Securities and 

Relationship to FINRA Rule 4120 (Regulatory Notification and Business 

Curtailment)

    FINRA proposes to adopt provisions from Incorporated NYSE Rule 431 

pertaining to deductions from net capital on control and restricted 

securities, which are not contained in NASD Rule 2520.\9\ These 

provisions, which would be set forth in FINRA Rule 4210(e)(8)(C)(ii), 

(iii) and (v), require that a member make deductions from its net 

capital if it extends credit over specified thresholds, discussed 

below, on control and restricted securities, and it must take such 

deductions into account when determining if it has reached any of the 

financial triggers specified in FINRA Rule 4120.\10\ The proposed rule 

change also would make conforming amendments to FINRA Rule 

4120(a)(1)(F) and (c)(1)(F) (Regulatory Notification and Business 

Curtailment) to clarify that a member must take into account the 

special deductions from net capital set forth in FINRA Rule 

4210(e)(8)(C) in determining its status under FINRA Rule 4120. The 

margin provision specifically provides that the greater of the 

aggregate credit agreed to be extended in writing or the aggregate 

credit that is actually extended to all customers on control and 

restricted securities of any one issue that exceeds 10 percent of the 

member's excess net capital shall be deducted from net capital for 

purposes of determining a member's status under FINRA Rule 4120. The 

amount of such aggregate credit extended, which has been deducted in 

computing net capital under SEC Rule 15c3-1 and, if applicable, FINRA 

Rule 4110(a), need not be included in this calculation. FINRA, upon 

written application, may reduce the deduction to net capital under 

FINRA Rule 4120 to 25 percent of such aggregate credit extended that 

exceeds 10 percent but is less than 15 percent of the member's excess 

net capital. In addition, the aggregate credit extended to all 

customers on all control and restricted securities (reduced by the 

amount of such aggregate credit which has been deducted in computing 

net capital under SEC Rule 15c3-1 and, if applicable, FINRA Rule 

4110(a)), shall be deducted from net capital on the following basis for 

purposes of determining a member's status under FINRA Rule 4120. First, 

to the extent such net amount of credit extended does not exceed 50 

percent of a member's excess net capital, 25 percent of such net amount 

of credit extended shall be deducted. Second, 100 percent of such net 

amount of credit extended which exceeds 50 percent of a member's excess 

net capital shall be deducted. The amount to be deducted from net 

capital for purposes of determining a member's status under Rule 4120 

shall not exceed 100 percent of the aggregate credit extended reduced 

by any amount deducted in computing net capital under SEC Rule 15c3-1 

and, if applicable, Rule 4110(a).

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    \9\ See Incorporated NYSE Rule 431(e)(8)(C)(ii), (iii) and (v).

    \10\ FINRA Rule 4120 is based on Incorporated NYSE Rules 325 and 

326, which were referenced in Incorporated NYSE Rule 

431(e)(8)(C)(ii), (iii) and (v). FINRA Rule 4120 requires carrying 

and clearing members to notify FINRA if any of the specified 

financial triggers in FINRA Rule 4120 are reached. The rule also 

addresses circumstances under which a member would be prohibited 

from expanding its business or required to reduce its business.

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Day Trading

    FINRA proposes to adopt Supplementary Material .30 and .60 from 

Incorporated NYSE Rule 431 regarding day trading in proposed FINRA Rule 

4210(f)(8)(B). FINRA proposes to integrate Supplementary Material .60 

from Incorporated NYSE Rule 431 in FINRA Rule 4210(f)(8)(B)(iii) to 

provide that the day-trading buying power for non-equity securities may 

be computed using the applicable special maintenance margin 

requirements pursuant to other provisions of the margin rule. In 

addition, FINRA proposes to adopt Supplementary Material .30 from 

Incorporated NYSE Rule 431 as FINRA Rule 4210(f)(8)(B)(iv)b. to provide 

that in the event that the member at which a customer seeks to open an 

account or resume day trading in an existing account, knows or has a 

reasonable basis to believe that the customer will engage in pattern 

day trading, then the minimum equity required ($25,000) must be 

deposited in the account prior to commencement of day trading. FINRA 

also proposes to relocate



[[Page 32522]]



paragraph (f)(8)(C) of NASD Rule 2520 into FINRA Rule 

4210(f)(8)(B)(iii) that specifies that day trading deficiencies must be 

met within five business days of the trade date.

Portfolio Margining

    FINRA proposes to amend FINRA Rule 4210(g)(5) to highlight to 

members that portfolio margin-eligible participants, in addition to 

being required to be approved to engage in uncovered short option 

contracts pursuant to FINRA Rule 2360, must be approved to engage in 

security futures transactions pursuant to FINRA Rule 2370.

Conforming Amendments

    FINRA proposes to add the terms ``approved market maker,'' ``market 

maker'' and ``market making'' to FINRA Rule 4210(f)(10)(F) to conform 

to rule changes made by the NYSE.\11\ The NYSE changes were made in 

connection with the operation of the NYSE's Market Model.\12\ As a 

result of the implementation of these changes, the NYSE amended several 

of its rules, including NYSE Rule 431(f)(10)(F), to add the terms 

``approved market maker,'' ``market maker'' and ``market making'' to 

reflect the current DMMs operating on the NYSE. FINRA also proposes 

amending the definitions of the same terms used in FINRA Rule 

4210(e)(5)(A) and (f)(10)(E) for consistency purposes.

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    \11\ See Securities Exchange Act Release No. 59077 (December 10, 

2008), 73 FR 76691 (December 17, 2008) (Notice of Filing and 

Immediate Effectiveness of Proposed Rule Change by New York Stock 

Exchange LLC Amending Exchange Rule 104T to Make a Technical 

Amendment to Delete Language Relating to Orders Received by NYSE 

Systems and DMM Yielding; Clarifying the Duration of the Provisions 

of Rule 104T; Making Technical Amendments to Rule 98 and Rule 123E 

to Update Rule References for DMM Net Capital Requirements; 

Rescinding Paragraph (g) of Rule 123; and Making Conforming Changes 

to Certain Exchange Rules to Replace the Term ``Specialist'' with 

``DMM''; File No. SR-NYSE-2008-127).

    \12\ See Securities Exchange Act Release No. 58845 (October 24, 

2008), 73 FR 64379 (October 29, 2008) (SEC Approval Order of SR-

NYSE-2008-46 approving certain rules to operate as a pilot scheduled 

to end October 1, 2009); see also Securities Exchange Act Release 

No. 60756 (October 1, 2009), 74 FR 51628 (October 7, 2009) (SR-NYSE-

2009-100); Securities Exchange Act Release No. 61031 (November 19, 

2009), 74 FR 62368 (November 27, 2009); and Securities Exchange Act 

Release No. 61724 (March 17, 2010), 75 FR 14221 (March 24, 2010) 

(extending the operation of the pilot until the earlier of the SEC 

approval to make permanent or September 30, 2010). As part of this 

new model, the functions formerly carried out by specialists on the 

NYSE were replaced by a new market participant, known as a 

Designated Market Maker (``DMM'').

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Clarifying and Technical Amendments

    Finally, FINRA proposes to make several technical changes to the 

margin rule text to update terminology and similar clarifications. 

First, FINRA proposes to add definitions to FINRA Rule 4210(f)(2)(A) 

regarding ``listed'' and ``OTC'' options and employ such terms 

throughout FINRA Rule 4210(f)(2).\13\ FINRA is not proposing any 

substantive changes to the margin requirements for listed or over-the-

counter options; rather, the proposed rule change would make the rule 

easier to read by creating such definitions and using the terms 

consistently throughout the rule text.

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    \13\ The term ``listed'' as used with reference to a call or put 

option contract would mean an option contract that is traded on a 

national securities exchange and issued and guaranteed by a 

registered clearing agency. The term ``OTC'' as used with reference 

to a call or put option contract would mean an over-the-counter 

option contract that is not traded on a national securities exchange 

and is issued and guaranteed by the carrying broker-dealer. 

Accordingly, the proposed rule change would delete as unnecessary 

certain descriptive references in NASD Rule 2520(f)(2) to listed and 

OTC options.

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    Second, in proposed FINRA Rule 4210(f)(2)(I)(iv), FINRA proposes 

several clarifications to terminology where no margin may be required 

if the specified options or warrants are carried ``short'' in the 

account of a customer, against an escrow agreement, and either are held 

in the account at the time the options or warrants are written, or 

received in the account promptly thereafter. The proposed rule change 

would clarify that with respect to such options or warrants, an escrow 

agreement is used, in a form satisfactory to FINRA, issued by a third 

party custodian bank or trust company, and in compliance with the 

requirements of Rule 610 of The Options Clearing Corporation. The 

corresponding provisions in Incorporated NYSE Rule 431\14\ used the 

terms ``letter of guarantee'' and ``escrow receipt'' while NASD Rule 

2520 used the term ``letter of guarantee.'' While in this context such 

terms generally were used interchangeably, FINRA proposes to use the 

term ``escrow agreement'' to eliminate any potential confusion.\15\ The 

proposed rule change also would replace the term ``guarantor'' with the 

term ``custodian'' to more accurately reflect the third party's role. 

In addition, the proposed rule change would revise the definition of 

what constitutes a qualified security by eliminating the reference to 

the list of Over-the-Counter Margin Stocks published by the Board of 

Governors of the Federal Reserve System as the Federal Reserve no 

longer publishes such a list.

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    \14\ See Incorporated NYSE Rule 431(f)(2)(H)(iv).

    \15\ Such approach also is consistent with the CBOE rules. See 

CBOE Rule 12.3(d).

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    Third, the proposed rule change would insert the term ``aggregate'' 

before exercise price throughout proposed FINRA Rule 4210(f)(2)(H) and 

(f)(2)(N) to clarify a calculation must be made in the strategies and 

spreads that are noted (i.e., offsets, reverse conversions, butterfly 

spread, etc.). Finally, the proposed rule change would make various 

non-substantive changes to reflect the formatting, presentation and 

style conventions used in the Consolidated FINRA Rulebook.

Daily Record of Margin Requirements--Incorporated NYSE Rule 432(a)

    FINRA proposes to adopt Incorporated NYSE Rule 432(a) (Daily Record 

of Required Margin) as FINRA Rule 4220 in substantially the form it 

exists today. Incorporated NYSE Rule 432(a) sets forth the requirements 

for daily recordkeeping of initial and maintenance margin calls that 

are issued pursuant to Regulation T and the margin rules. There is no 

corresponding NASD rule. FINRA believes that this is an important 

requirement to heighten FINRA's ability to monitor members' margin call 

practices. In addition, Incorporated NYSE Rule 432(b) prohibits a 

member from allowing a customer to make a practice of satisfying 

initial margin calls by the liquidation of securities. However, this 

provision is substantially similar to the provision in proposed FINRA 

Rule 4210(f)(7), except that the proposed FINRA rule provision does not 

contain the exception for omnibus accounts. Accordingly, FINRA proposes 

to eliminate Incorporated NYSE Rule 432(b) and modify paragraph (f)(7) 

of FINRA Rule 4210 to add that the prohibition on liquidations shall 

not apply to any account carried on an omnibus basis as prescribed by 

Regulation T.

Required Submissions of Requests for Extension of Time Under Regulation 

T and SEC Rule 15c3-3--NASD Rule 3160 and Incorporated NYSE Rule 434

    FINRA proposes to adopt NASD Rule 3160 (Extensions of Time Under 

Regulation T and SEC Rule 15c3-3) as FINRA Rule 4230 with one 

modification discussed below and delete the substantively similar 

Incorporated NYSE Rule 434 (Required Submission of Requests for 

Extensions of Time for Customers). NASD Rule 3160 and Incorporated NYSE 

Rule 434 set forth requirements governing members' requests for 

extensions of time, as permitted in accordance with Regulation T and 

SEC Rule 15c3-3(n). These rules provide that when FINRA is the 

designated examining authority for a member, requests for extensions of 

time must be submitted to FINRA for approval, in a format FINRA 

requires. In addition, NASD Rule 3160 requires each



[[Page 32523]]



clearing member that submits extensions of time on behalf of broker-

dealers for which it clears to submit a monthly report to FINRA that 

indicates overall ratios of requested extensions of time to total 

transactions that have exceeded a percentage specified by FINRA.\16\ 

FINRA monitors the number of Regulation T and SEC Rule 15c3-3 extension 

requests for each firm to determine whether to impose prohibitions on 

further extensions of time.\17\

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    \16\ See Notice to Members 06-62 (November 2006). FINRA would 

retain the reporting threshold specified in Notice to Members 06-62 

of requiring a report for all introducing or correspondent firms 

that have overall ratios of requests for extensions of time to total 

transactions for the month that exceed 2%. In the event FINRA 

adjusts the reporting threshold, or the limitation threshold stated 

in note 16 below, it would advise members of the new parameters in a 

Regulatory Notice.

    \17\ See supra note 15. FINRA will continue to prohibit further 

extension of time requests for (1) introducing or correspondent 

firms that exceed a 3% ratio of the number of extension of time 

requests to total transactions for the month and (2) clearing firms 

that exceed a 1% ratio of extension of time requests to total 

transactions.

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    FINRA proposes to add a provision to proposed FINRA Rule 4230 to 

clarify that for the months when no broker-dealer for which a clearing 

member clears exceeds the extension of time ratio criteria (i.e., 2%), 

the clearing member must submit a report indicating such. FINRA had 

previously requested such submissions but believes the submissions are 

essential to ensure FINRA has a complete and accurate understanding of 

correspondent firm extension requests.

    As noted above, FINRA will announce the implementation date of the 

proposed rule change in a Regulatory Notice to be published no later 

than 90 days following Commission approval. The implementation date 

will be no later than 180 days following Commission approval.

2. Statutory Basis

    FINRA believes that the proposed rule change is consistent with the 

provisions of Section 15A(b)(6) of the Act,\18\ 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 will 

clarify and streamline the margin requirements applicable to its 

members, as well as those rules addressing extension of time requests 

under Regulation T and SEC Rule 15c3-3.

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    \18\ 15 U.S.C. 78o-3(b)(6).

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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



    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#e290978e87cf818d8f8f878c9691a2918781cc858d94"><span class="__cf_email__" data-cfemail="b7c5c2dbd29ad4d8dadad2d9c3c4f7c4d2d499d0d8c1">[email protected]</span></a>. Please include 

File Number SR-FINRA-2010-024 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-FINRA-2010-024. 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 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 available 

publicly. All submissions should refer to File Number SR-FINRA-2010-024 

and should be submitted on or before June 29, 2010.



    For the Commission, by the Division of Trading and Markets, 

pursuant to delegated authority.\19\

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    \19\ 17 CFR 200.30-3(a)(12).

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Florence E. Harmon,

Deputy Secretary.

[FR Doc. 2010-13662 Filed 6-7-10; 8:45 am]

BILLING CODE 8010-01-P




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