Federal Register / Vol. 73, No. 26 / Thursday, February 7, 2008 / Notices 7343 

18 17 CFR 200.30–3(a)(12). 

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

2 15 U.S.C. 78a et seq. 

3 17 CFR 240.19b–4. 

4 17 CFR 240.19b–4(f)(6). 

5FINRA has incorporated into its rulebook 

certain rules of NYSE, including NYSE Rules 421, 

440F and 440G. These incorporated NYSE rules 

apply solely to those members of FINRA that also 

are members of NYSE on or after July 30, 2007 

(‘‘Dual Members’’), until such time as FINRA adopts 

a consolidated rulebook applicable to all of its 

members. The incorporated NYSE rules apply to the 

same categories of persons to which they applied 

as of July 30, 2007. In applying the incorporated 

NYSE rules to Dual Members, FINRA also has 

incorporated the related interpretive positions set 

forth in the NYSE Rule Interpretations Handbook 

and NYSE Information Memos. 

6 17 CFR 240.10a–1. 

7 17 CFR 240.200–203. 

8See Securities Exchange Act Release No. 55970 

(June 28, 2007), 72 FR 36348 (July 3, 2007). 

9See File No. SR–NYSE–2007–62 (‘‘NYSE’s 

filing’’). 

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–2008–001 and 

should be submitted on or before 

February 28, 2008. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.18

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E8–2182 Filed 2–6–08; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–57252; File No. SR–FINRA–

2007–025] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change Relating to Amendments 

to FINRA’s NYSE Rules 421, 440F, and 

440G 

February 1, 2008. 

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

Securities Exchange Act of 1934 

(‘‘Act’’) 2 and Rule 19b–4 thereunder,3

notice is hereby given that on December 

4, 2007, Financial Industry Regulatory 

Authority, Inc. (‘‘FINRA’’) (f/k/a 

National Association of Securities 

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

Securities and Exchange Commission 

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

rule change as described in Items I and 

II below, which Items have been 

substantially prepared by FINRA. 

FINRA has designated the proposed rule 

change as constituting a ‘‘noncontroversial’’ rule change under 

paragraph (f)(6) of Rule 19b–4 under the 

Act,4 which renders the proposal 

effective upon filing with 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’s NYSE Rules 421 (Periodic 

Reports), 440F (Public Short Sale 

Transactions Effected on the Exchange) 

and 440G (Transactions in Stock and 

Warrants for the Accounts of Members, 

Allied Members and Member 

Organizations) 5 to conform such rules 

with the SEC’s amendments to Rule 

10a–1 6 (‘‘SEC Rule 10a–1’’) and 

Regulation SHO 7 under the Act.8 The 

proposed rule change makes conforming 

changes to FINRA’s NYSE Rules 421, 

440F and 440G, consistent with the 

proposed rule change by the New York 

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

versions of Rules 421, 440F and 440G.9

Below is the text of the proposed rule 

change. Proposed new language is in 

italics; proposed deletions are in 

brackets. 

* * * * * 

Rule 421. Periodic Reports 

No Change. 

* * * Supplementary Material: 

.10 Short positions.—Member 

organizations for which the Exchange is 

the designated examining authority are 

required to report ‘‘short’’ positions, 

including odd lots, in each stock or 

warrant listed on the Exchange, and in 

each other stock or warrant not listed on 

the Exchange which is not otherwise 

reported to another United States 

securities exchange or securities 

association, using such automated 

format and methods as prescribed by the 

Exchange. Such reports must include 

customer and proprietary positions and 

must be made at such times and 

covering such time period as may be 

designated by the Exchange. 

Member organizations for which the 

Exchange is not the designated 

examining authority must report ‘‘short’’

positions to the self-regulatory 

organization which is its designated 

examining authority (‘‘DEA’’) if such 

DEA has a requirement for such reports. 

If the DEA does not have such a 

reporting requirement, then such 

member organization must comply with 

the provisions of Rule 421. 

The term ‘‘designated examining 

authority’’ means the self-regulatory 

organization which has been assigned 

responsibility for examining a member 

organization for compliance with 

applicable financial responsibility rules. 

(See Rule 17d–1 under the Securities 

Exchange Act of 1934 (the ‘‘Exchange 

Act’’).) 

‘‘Short’’ positions to be reported are 

those resulting from ‘‘short’’ sales as 

defined in Rule 200(a) of the Securities 

and Exchange Commission’s Regulation 

SHO, but excluding positions that meet 

the following requirements: 

(1) any sale by any person, for an 

account in which he has an interest, if 

such person owns the security sold and 

intends to deliver such security as soon 

as is possible without undue 

inconvenience or expense; 

(2) any sale of a security covered by 

a short sale rule on a national securities 

exchange (except a sale to a stabilizing 

bid complying with Rule 104 of 

Regulation M) effected with the 

approval of such exchange which is 

necessary to equalize the price of such 

security thereon with the current price 

of such security on another national 

securities exchange which is the 

principal exchange market for such 

security; 

(3) any sale of a security for a special 

arbitrage account by a person who then 

owns another security by virtue of which 

he is, or presently will be, entitled to 

acquire an equivalent number of 

securities of the same class as the 

securities sold; provided such sale, or 

the purchase which such sale offsets, is 

effected for the bona fide purpose of 

profiting from a current difference 

between the price of security sold and 

the security owned and that such right 

of acquisition was originally attached to 

or represented by another security or 

was issued to all the holders of any such 

class of securities of the issuer; 

(4) any sale of a security registered on, 

or admitted to unlisted trading 

privileges on, a national securities 

exchange effected for a special 

international arbitrage account for the 

bona fide purpose of profiting from a 

current difference between the price of 

such security on a securities market not 

within or subject to the jurisdiction of 

the United States and on a securities 

market subject to the jurisdiction of the 

United States; provided the seller at the 

time of such sale knows or, by virtue of 

information currently received, has 


jlentini on PROD1PC65 with NOTICES
7344 Federal Register / Vol. 73, No. 26 / Thursday, February 7, 2008 / Notices 

10NYSE Rule 421 (Periodic Reports) contains the 

NYSE’s short interest reporting requirements. 

11NYSE Rule 440F requires members and 

member organizations to report round-lot short sale 

transactions for public customers. 

12NYSE 440G requires members and member 

organizations to report round-lot short sale 

transactions for members, allied members, and 

member organizations. 

13Pursuant to Rule 17d–2 under the Exchange 

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

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

regulatory duplication for firms that are Dual 

Members by allocating certain regulatory 

responsibilities for selected NYSE rules from NYSE 

Regulation to FINRA. The Agreement includes a list 

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

FINRA has assumed examination, enforcement and 

surveillance responsibilities under the Agreement 

relating to compliance by Dual Members to the 

extent that such responsibilities involve member 

reasonable grounds to believe that an 

offer enabling him to cover such sale is 

then available to him in such foreign 

securities market and intends to accept 

such offer immediately; and 

(5) any sale by an underwriter, or any 

member of a syndicate or group 

participating in the distribution of a 

security, in connection with an overallotment of securities, or any lay-off 

sale by such a person in connection with 

a distribution of securities through 

rights or a standby underwriting 

commitment. 

[resulting from sales specified in clauses 

(1), (6), (7), (8), and (10) of paragraph (e) 

of Rule 10a–1 under the Exchange Act.] 

Also to be excluded are ‘‘short’’

positions carried for other member 

organizations reporting for themselves. 

Only one report should be made for 

each stock or warrant in which there is 

a short position. If more than one 

‘‘account’’ has a short position in the 

same stock or warrant, the combined 

aggregate should be reported. 

NOTE: A member organization which 

does not carry customers’ margin 

accounts and does not clear its own 

transactions may obtain an exemption 

from reporting by notifying the 

Exchange in writing. 

.20–.50 No Change. 

* * * * * 

Rule 440F. Public Short Sale 

Transactions Effected on the Exchange 

* * * Supplementary Material: 

Reports on Form SS20 

.10 Requirements for filing. No 

Change. 

General Instructions.—

(1)–(2) No Change. 

(3) [Exclude short-exempt sales, 

except for short-exempt sales in 

securities subject to the SEC’s Pilot 

Order (SEA Release No. 34–50104)(July 

28, 2004), as amended by the SEC’s 

Second Pilot Order (SEA Release No. 

34–50747)(November 29, 2004), and any 

subsequent orders. 

(4)] Exclude transactions in rights. 

[(5)](4) If there are no reportable 

transactions for a specific week, a form 

should be filed marked ‘‘None’’. 

[(6)](5) File this report with Credit 

Regulation Department, via the New 

York Stock Exchange’s Electronic Filing 

Platform (‘‘EFP’’), as soon as possible, 

but not later than 12:00 noon on the 

Friday of the week following the week 

covered by the report. 

[(7)](6) Inquiries should be addressed 

to Credit Regulation Department, 

telephone 212–656–8572. 

[(8)](7) Reserved. 

Specific Instructions.—

(1) No Change. 

(2) Short sales for hedging accounts 

and short sales executed as such for 

arbitrage accounts should be included. 

[Sales made on a ‘‘short-exempt’’ basis 

for arbitrage accounts should not be 

included.] 

(3) No Change. 

* * * * * 

Rule 440G. Transactions in Stocks and 

Warrants for the Accounts of Members, 

Allied Members and Member 

Organizations 

* * * Supplementary Material: 

.10 Requirements for filing. No 

Change. 

Instructions.—

(1)–(8) No Change. 

(9) [Short-exempt sales are to be 

included with total sales only. Solely for 

purposes of Rule 440G and Form 121, 

‘‘short-exempt sales’’ in securities 

subject to the SEC’s Pilot Order (SEA 

Release 34–50104)(July 28, 2004), as 

amended by the SEC’s Second Pilot 

Order (SEA Release 34–

50747)(November 29, 2004), and any 

subsequent orders, are to be included 

with short sales on Form 121. 

(10)] Transactions are to be classified 

into one of the following three 

categories 

(a)–(c) No Change. 

[(11)](10) If a reporting member or 

member organization does not have 

reportable transactions during a given 

week, a Form 121 report should be filed 

marked ‘‘No transactions’’. 

[(12)](11) The Member Firm 

Regulation Division will consider 

written requests for exemption from 

filing REGULAR weekly reports on 

Form 121. Exemption may be granted 

for a period of time not to exceed one 

year, renewable annually if the 

applicant does not expect to have any, 

or expects to have only an occasional, 

reportable transaction during this time. 

THE EXEMPTION, WHEN GRANTED, 

IS FROM FILING REGULARLY EACH 

WEEK AND, IF DURING THE 

EXEMPTION PERIOD A REPORTABLE 

TRANSACTION IS EFFECTED, A 

FORM 121 REPORT, FOR THE WEEK 

IN WHICH THE TRANSACTION(S) 

TOOK PLACE, MUST BE FILED 

IMMEDIATELY. 

[(13)](12) File this report with the 

Credit Regulation Department, via the 

New York Stock Exchange’s Electronic 

Filing Platform (‘‘EFP’’) as soon as 

possible but not later than 12:00 noon 

on the Friday following the week 

covered by the report. 

[(14)](13) Inquiries should be 

addressed to the Credit Regulation 

Department, telephone 212–656–8572. 

[(15)](14) No Change. 

* * * * * 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, 

FINRA included statements concerning 

the purpose of and basis for the 

proposed rule change and discussed any 

comments it received on the proposed 

rule change. The text of these statements 

may be examined at the places specified 

in Item IV below. FINRA has prepared 

summaries, set forth in sections A, B, 

and C below, of the most significant 

aspects of such statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

FINRA is proposing changes to 

FINRA’s NYSE Rules 421, 440F and 

440G to conform these rules with the 

SEC’s amendments to SEC Rule 10a–1 

and Regulation SHO. The SEC’s 

amendments, among other things, 

remove the short sale price test in SEC 

Rule 10a–1 and remove the ‘‘short 

exempt’’ marking requirements in 

Regulation SHO. 

In light of the SEC’s amendments, the 

NYSE has proposed amending its Rules 

421,10 440F 11 and 440G.12 As detailed 

in the NYSE’s filing, the proposed 

amendments would remove: (1) The 

references to SEC Rule 10a–1 in NYSE 

Rule 421 and (2) the references to the 

‘‘short exempt’’ marking requirements 

in NYSE Rules 440F and 440G. NYSE 

has proposed to make the changes 

effective upon filing. 

Given these changes, FINRA is 

proposing to make conforming changes 

to FINRA’s NYSE Rules 421, 440F and 

440G to ensure consistency with NYSE’s 

versions of Rules 421, 440F and 440G.13


jlentini on PROD1PC65 with NOTICES
Federal Register / Vol. 73, No. 26 / Thursday, February 7, 2008 / Notices 7345 

firm regulation. See Securities Exchange Act 

Release No. 56148 (July 26, 2007), 72 FR 42146 

(August 1, 2007) (Notice of Filing and Order 

Approving and Declaring Effective a Plan for the 

Allocation of Regulatory Responsibilities). The 

Common Rules are the same NYSE rules that 

FINRA has incorporated into its rulebook. See 

Securities Exchange Act Release No. 56147 (July 26, 

2007), 72 FR 42166 (August 1, 2007) (Notice of 

Filing and Order Granting Accelerated Approval of 

Proposed Rule Change to Incorporate Certain NYSE 

Rules Relating to Member Firm Conduct; File No. 

SR–NASD–2007–054). Paragraph 2(b) of the 

Agreement sets forth procedures regarding 

proposed changes by either NYSE or FINRA to the 

substance of any of the Common Rules. 

14 15 U.S.C. 78o–3(b)(6). 

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

16 17 CFR 240.19b–4(f)(6). 

17 17 CFR 240.19b–4(f)(6)(iii). 

18 17 CFR 240.19b–4(f)(6)(iii). 

19For purposes only of waiving the 30-day 

operative delay, the Commission has considered the 

proposed rule’s impact on efficiency, competition, 

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

20 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

2. Statutory Basis 

The proposed rule change is 

consistent with the provisions of 

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

requires, among other things, that 

FINRA rules must be designed to 

prevent fraudulent and manipulative 

acts and practices, to promote just and 

equitable principles of trade, and, in 

general, to protect investors and the 

public interest. The proposed rule 

change is necessary and appropriate to 

comply with the amendments to SEC 

Rule 10a–1 and Regulation SHO and to 

maintain consistency with the NYSE’s 

amendments to its Rules 421, 440F and 

440G. 

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 15 and Rule 19b–

4(f)(6) thereunder.16

FINRA has requested that the 

Commission waive the five-day prefiling notice 17 and the requirement that 

the rule change, by its terms, not 

become operative for 30 days after the 

date of the filing.18 FINRA has requested 

that the effective date of the proposed 

rule change be the same as the effective 

date of the NYSE’s amendments to 

NYSE Rules 421, 440F and 440G to 

ensure that FINRA’s NYSE Rules 421, 

440F and 440G maintain their status as 

Common Rules under the Agreement. 

The Commission believes that waiver of 

the five-day pre-filing notice and the 30- 

day operative delay 19 is consistent with 

the protection of investors and the 

public interest, given that the 

compliance date for the Commission’s 

amendments to Rule 10a–1 was July 6, 

2007. In addition, waiver of these 

requirements will permit FINRA to 

implement its rule changes on the same 

date that proposed rule changes 

included in the NYSE’s filing are 

implemented. For these reasons, the 

Commission designates the proposal to 

be effective and operative upon filing 

with the Commission. 

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–2007–025 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Nancy M. Morris, Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–1090. 

All submissions should refer to File 

Number SR–FINRA–2007–025. This file 

number should be included on the 

subject line if e-mail is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

Internet Web site (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for inspection and copying in 

the Commission’s Public Reference 

Room, 100 F Street, NE., Washington, 

DC 20549, on official business days 

between the hours of 10 a.m. to 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–2007–025 and 

should be submitted on or before 

February 28, 2008. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.20

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E8–2184 Filed 2–6–08; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–57254; File No. SR–ISE–

2006–26] 

Self-Regulatory Organizations; 

International Securities Exchange, 

LLC; Notice of Filing of Proposed Rule 

Change, as Modified by Amendment 

No. 1, Relating to Professional 

Account Holders 

February 1, 2008. 

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 5, 

2006, the International Securities 

Exchange, LLC (‘‘ISE’’ or ‘‘Exchange’’) 

filed with the Securities and Exchange 

Commission (‘‘Commission’’) a 

proposed rule change as described in 


jlentini on PROD1PC65 with NOTICES