Federal Register / Vol. 73, No. 196 / Wednesday, October 8, 2008 / Notices 59001 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 58291 

(August 1, 2008), 73 FR 46661 (August 11, 2008) 

(SR–FINRA–2008–043). 

4See Securities Exchange Act Release No. 58284 

(August 1, 2008), 73 FR 46086 (August 7, 2008) 

(SR–Amex–2008–62). 

5See Securities Exchange Act Release No. 58290 

(August 1, 2008), 73 FR 46676 (August 11, 2008) 

(SR–NYSE–2008–70). 

6FINRA previously established a waive-in 

process to expedite the approval of membership 

applications of NYSE-only member organizations 

that were required to become FINRA members. That 

process is set forth in IM–1013–1 (Membership 

Waive-In Process for Certain New York Stock 

Exchange Member Organizations). See Securities 

Exchange Act Release No. 56653 (October 12, 2007), 

72 FR 59127 (October 18, 2007) (SR–NASD–2007– 

056). 

7An ‘‘86 Trinity Permit’’ will authorize any 

owner, lessee, or nominee of an Amex Regular 

Member or Options Principal Member (‘‘OPM’’); 

Amex limited trading permit holder; or Amex 

associate members who was authorized to trade on 

the Amex immediately before the Mergers to 

continue to trade at NYSE Alternext’s systems and 

facilities at 86 Trinity Place, New York, New York 

(‘‘86 Trinity Trading Systems’’). 

8 In connection with the Mergers, NYSE Euronext 

intends to relocate all equities trading previously 

conducted on the 86 Trinity Trading Systems to 11 

Wall Street, New York, New York. See Securities 

Exchange Act Release No. 58265 (July 30, 2008), 73 

FR 46075 (August 7, 2008) (SR-Amex-2008–63). 

9NYSE is proposing a 60-day grace period for 

such NYSE Alternext member organizations to 

apply for and be approved for FINRA membership. 

See Securities Exchange Act Release No. 58290, 

supra note 5. In coordination with this proposal 

and with respect to the requirement in Incorporated 

NYSE Rule 2, FINRA would permit a 60-day grace 

period within which these member organizations 

must apply for and be approved for FINRA 

membership. Such grace period would run from the 

date that the NYSE Alternext member organization 

transfers its equities operations to NYSE Alternext 

Trading Systems. 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–58707; File No. SR–FINRA– 

2008–043] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Order Granting 

Approval of Proposed Rule Change To 

Establish a Membership Waive-in 

Process and Fee Waiver for Certain 

NYSE Alternext U.S. LLC Member 

Organizations 

October 1, 2008. 

I. Introduction 

On July 30, 2008, the Financial 

Industry Regulatory Authority, Inc. 

(‘‘FINRA’’) (f/k/a National Association 

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

filed with the Securities and Exchange 

Commission (‘‘Commission’’), pursuant 

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

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

19b–4 thereunder,2 a proposed rule 

change to establish a membership 

waive-in process and fee waiver for 

certain NYSE Alternext members. The 

proposed rule change was published for 

comment in the Federal Register on 

August 11, 2008.3 The Commission 

received no comments on the proposal. 

This order approves the proposed rule 

change. 

II. Description of the Proposal 

As discussed in a separate proposed 

rule change,4 on January 17, 2008, the 

Amex Membership Corporation and 

NYSE Euronext entered into an 

Agreement and Plan of Merger whereby, 

through a series of mergers (‘‘Mergers’’), 

NYSE Euronext will acquire the 

American Stock Exchange LLC 

(‘‘Amex’’). As a result of these Mergers, 

Amex will become a wholly-owned 

subsidiary of NYSE Group and renamed 

NYSE Alternext U.S. LLC (‘‘NYSE 

Alternext’’). 

As described in a separate filing,5 the 

New York Stock Exchange LLC 

(‘‘NYSE’’) intends to (1) require 

mandatory FINRA and NYSE 

membership for NYSE Alternext 

member organizations (other than those 

that exclusively trade options); (2) adopt 

a series of member conduct rules for 

NYSE Alternext member organizations 

that are substantively identical to the 

Incorporated NYSE Rules that are the 

subject of an agreement among FINRA, 

NYSE, and NYSE Regulation, Inc., 

pursuant to Rule 17d–2 under the Act 

(‘‘17d–2 Agreement’’); and (3) amend 

the 17d–2 Agreement to include NYSE 

Alternext as a party to that agreement so 

that FINRA will assume regulatory 

responsibility consistent with the terms 

of that agreement for the NYSE 

Alternext Equities rules that are 

substantively identical to the 

Incorporated NYSE Rules. 

In furtherance of these efforts, FINRA 

proposes a membership waive-in 

process for certain NYSE Alternext 

member organizations, similar to the 

process for NYSE member 

organizations.6 Proposed IM–1013–2 

would apply to any NYSE Alternext 

member organization that holds a valid 

86 Trinity Permit 7 as of the date such 

firm transfers its equities operations to 

the NYSE Alternext trading systems at 

11 Wall Street 8 and that is not currently 

a FINRA member. 

FINRA recognizes that the Amex and 

NYSE have comprehensive membership 

applications and review processes based 

on similar principles and standards to 

that of FINRA. As such, those NYSE 

Alternext member organizations that 

will become FINRA members already 

have been subjected to an extensive 

screening process. The waive-in process 

would make each such firm eligible to 

automatically become a FINRA member 

and to automatically register all 

associated persons whose registrations 

are approved with NYSE Alternext in 

registration categories recognized by 

FINRA upon submission to FINRA’s 

Member Regulation Department 

(‘‘Department’’) of a signed waive-in 

membership application (‘‘Waive-In 

Application’’).9

Associated persons of the NYSE 

Alternext member organizations will be 

automatically registered with FINRA 

only for those registration categories 

that are recognized jointly by FINRA 

and NYSE Alternext—e.g. , a General 

Securities Representative (Series 7); 

provided, however, that the firm must, 

upon approval of FINRA membership, 

submit an amended Form U4 for each 

such associated person, denoting the 

corresponding FINRA registration 

category(ies) for such person. A list of 

those registration categories is included 

as part of the Waive-In Application. For 

those associated persons registered in a 

category recognized only by NYSE 

Alternext, FINRA will acknowledge 

such registrations to permit such 

persons to continue to function in the 

capacity for which they are registered. 

The Waive-In Application would 

require the following information: 

(1) General company information, 

including Central Registration 

Depository (‘‘CRD’’) Number and 

contact person; 

(2) An attestation that all information 

on the applicant’s CRD form, as of the 

date of submission of the Waive-In 

Application, is accurate and complete 

and fully reflects all aspects of the 

applicant’s current business, including, 

but not limited to, ownership structure, 

management, product lines, and 

disclosures; 

(3) The identity of the firm’s 

Executive Representative; 

(4) Completed and signed Entitlement 

Forms (unless previously submitted); 

(5) A signed FINRA Membership 

Agreement; and 

(6) Representations that the 

applicant’s Uniform Application for 

Broker-Dealer Registration will be 

amended as needed to keep current and 

accurate; that all individual and entity 

registrations with FINRA will be kept 

current; and that all information and 

statements contained in the Waive-In 

Application are current, true, and 

complete. 

The Waive-In Application must be 

reviewed within three business days of 

receipt and, if complete, the Department 


jlentini on PROD1PC65 with NOTICES
59002 Federal Register / Vol. 73, No. 196 / Wednesday, October 8, 2008 / Notices 

10FINRA is proposing that firms admitted to 

FINRA membership under IM–1013–1 be subject to 

the consolidated FINRA rules. See Securities 

Exchange Act Release No. 58206 (July 22, 2008), 73 

FR 43808 (July 28, 2008). 

11FINRA proposes to grant NYSE Alternext 

waive-in member organizations a six-month period 

to comply with Incorporated NYSE Rules 311–313. 

12For purposes of this order, activities that are 

ancillary to a Floor broker’s core business include 

(i) routing orders in NYSE-traded or NYSE 

Alternext-traded securities to an away market for 

any reason relating to their ongoing Floor activity, 

including regulatory compliance or meeting bestexecution obligations; or (ii) provided that the 

majority of transactions effected by the firm are 

effected on NYSE, sending to other markets orders 

in NYSE-traded, NYSE Alternext-traded, or nonNYSE-traded securities and/or futures if such 

orders relate to hedging positions in NYSE-traded 

or NYSE Alternext-traded securities, or are part of 

arbitrage or program trade strategies that include 

NYSE-traded or NYSE Alternext-traded securities. 

13The licensing and other requirements 

applicable to the NYSE Alternext member 

organizations and their associated persons are 

subject to change as part of the process of 

establishing the Consolidated FINRA Rulebook. 

14 In approving this proposed rule change, the 

Commission has considered the proposed rule’s 

impact on efficiency, competition, and capital 

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

15 15 U.S.C. 78o–3(b)(2). 

16 15 U.S.C. 78o–3(b)(6). 

17See Securities Exchange Act Release No. 56653, 

supra note 6. 

18 15 U.S.C. 78s(b)(2). 

19 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

would issue a letter notifying the 

applicant that it has been approved for 

membership. The Membership 

Agreement would become effective on 

the date of such notification letter. 

Any NYSE Alternext member 

organization admitted pursuant to 

proposed IM–1013–2, being a member 

organization of both NYSE and NYSE 

Alternext, would be subject to the 

consolidated FINRA rules,10 the NYSE 

rules incorporated by FINRA,11 the 

FINRA By-Laws and Schedules to ByLaws, including Schedule A 

(Assessments and Fees), and NASD 

Rules 8000 (Investigations and 

Sanctions) and 9000 (Code of 

Procedure) series, provided that its 

NYSE or NYSE Alternext securities 

business is limited to floor-based 

activities in either NYSE-traded or 

NYSE Alternext-traded securities, or 

routing away to other markets orders 

that are ancillary to its core NYSE or 

NYSE Alternext floor business under 

NYSE Rule 70.40 or NYSE Alternext 

Equities Rule 70.40 (‘‘permitted floor 

activities’’).12

If an NYSE Alternext member 

organization admitted pursuant to 

proposed IM–1013–2 seeks to expand its 

business operations to include any 

activities other than the permitted floor 

activities or makes changes to its 

securities business that would otherwise 

require FINRA membership, such firm 

must apply for and receive approval to 

engage in such business activity 

pursuant to NASD Rule 1017. Upon 

approval of such business expansion, 

the firm would become subject to all 

NASD Rules, in addition to the 

consolidated FINRA rules and those 

NYSE rules incorporated by FINRA. 

Associated persons of an NYSE 

Alternext member organization 

admitted to FINRA pursuant to 

proposed IM–1013–2 would be subject 

to the same set of rules as the firm with 

which they are associated. Inasmuch as 

these associated persons would not be 

subject to NASD Rules 1021 or 1031, 

they would not be required to register in 

a registration category recognized by 

FINRA. To the extent that such persons 

continue to be associated solely with a 

firm whose business complies with the 

limitations imposed on those firms 

admitted to FINRA pursuant to 

proposed IM–1013–2, FINRA is not 

imposing any registration requirements 

beyond those required by the NYSE or 

NYSE Alternext, provided their 

business is confined in scope as 

contemplated in proposed IM–1013–2.13

Finally, FINRA proposes to amend 

Interpretive Material Section 4(b)(1) and 

4(e) of Schedule A of the FINRA ByLaws to exempt NYSE Alternext 

applicants from the assessment of a 

FINRA membership application fee and 

from fees for each initial Form U4 filed 

by the applicant with FINRA for the 

registration of a representative or 

principal associated with the firm at the 

time it submits its application for 

FINRA membership pursuant to 

proposed IM–1013–2. 

III. Discussion and Commission 

Findings 

The Commission has carefully 

reviewed the proposed rule change and 

finds that it is consistent with the 

requirements of the Act and the rules 

and regulations thereunder applicable to 

a national securities association.14 In 

particular, the Commission finds that 

the proposed rule change is consistent 

with Section 15A(b)(2) of the Act,15

which requires a national securities 

association to be so organized and have 

the capacity to carry out the purposes of 

the Act and to enforce compliance by its 

members and persons associated with 

its members with the provisions of the 

Act. Further, the Commission finds that 

the proposed rule change is consistent 

with Section 15A(b)(6) of the Act,16 in 

that it is designed, among other things, 

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. 

The Commission has previously 

approved a similar waive-in process for 

NYSE members required to become 

FINRA members.17 This proposal 

affords eligible NYSE Alternext 

members and member organizations 

with a similar expedited process to 

become FINRA members, provided that 

they engage in permitted floor activities 

only. The proposal appears reasonably 

designed to facilitate the consolidation 

of member firm regulatory functions of 

FINRA, NYSE, and NYSE Alternext, 

thereby encouraging more efficient 

regulation of members and their 

associated persons. 

IV. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,18 that the 

proposed rule change (SR–FINRA– 

2008–043) be, and hereby is, approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.19

Florence E. Harmon, 

Acting Secretary. 

[FR Doc. E8–23839 Filed 10–7–08; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–58665; File No. SR–ISE– 

2008–21] 

Self-Regulatory Organizations; 

International Securities Exchange, 

LLC; Notice of Filing of Amendment 

No. 1 and Order Granting Accelerated 

Approval of Proposed Rule Change as 

Modified by Amendment No. 1 Relating 

to an Exchange Member’s Conduct of 

Doing Business With the Public 

September 26, 2008. 

I. Introduction 

On March 27, 2008, the International 

Securities Exchange, LLC (‘‘ISE’’ or the 

‘‘Exchange’’), pursuant to Section 

19(b)(1) of the Securities Exchange Act 

of 1934 (the ‘‘Act’’),1 and Rule 19b–4 

thereunder,2 filed with the Securities 

and Exchange Commission (the 

‘‘Commission’’) the proposed rule 

change relating to the Exchange’s rules 

governing doing business with the 

public. On July 9, 2008, the Commission 

issued a release noticing the proposed 


jlentini on PROD1PC65 with NOTICES