67508 Federal Register / Vol. 79, No. 219 / Thursday, November 13, 2014 / Notices 

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

2 17 CFR 240.19b–4. 

3 17 CFR 240.19b–4(f)(6). 

4References to rules are to NYSE rules unless 

otherwise indicated. 

5 17 CFR 240.17d–2. 

6See Exchange Act Release Nos. 56148 (Jul. 26, 

2007), 72 FR 42146 (Aug. 1, 2007) (order approving 

the Agreement); 56147 (Jul. 26, 2007), 72 FR 42166 

(Aug. 1, 2007) (SR–NASD–2007–054) (order 

approving the incorporation of certain NYSE Rules 

as ‘‘Common Rules’’); 60409 (Jul. 30, 2009), 74 FR 

39353 (Aug. 6, 2009) (order approving the amended 

and restated Agreement, adding NYSE MKT LLC as 

a party). Paragraph 2(b) of the Agreement sets forth 

procedures regarding proposed changes by FINRA, 

NYSE or NYSE MKT to the substance of any of the 

Common Rules. 

7FINRA’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, dated March 12, 2008. 

8See Exchange Act Release No. 71179 (Dec. 23, 

2013), 78 FR 79542 (Dec. 30, 2013) (SR–FINRA– 

2013–025). 

9There is one exception. Effective as of April 7, 

2014, in order to coincide with related changes to 

Form BR, the Exchange deleted NYSE Rule 343 and 

the related interpretations and FINRA deleted the 

related FINRA Incorporated NYSE Rule and NYSE 

Rule Interpretations. See FINRA Regulatory Notices 

14–10 and 14–11 and Exchange Act Release No. 

71989 (Apr. 22, 2014), 79 FR 23391 (Apr. 28, 2014) 

(SR–NYSE–2014–21). See also Exchange Act 

Release No. 73325 (Oct. 9, 2014), 79 FR 61360 (Oct. 

10, 2014) (SR–NYSE–2014–55) (conforming 

amendments related to the deletion of NYSE Rule 

343). 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73554; File No. SR–NYSE– 

2014–56] 

Self-Regulatory Organizations; New 

York Stock Exchange LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change Amending Its 

Rules Concerning Supervision To 

Harmonize the Rules With Certain 

Financial Industry Regulatory 

Authority, Inc. Rules and Making Other 

Conforming Changes 

November 6, 2014. 

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

Securities Exchange Act of 1934 (the 

‘‘Act’’) and Rule 19b–4 thereunder,2

notice is hereby given that on October 

24, 2014, New York Stock Exchange 

LLC (‘‘NYSE’’ or ‘‘Exchange’’) 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 the 

Exchange. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. The Exchange 

has designated the proposed rule change 

as constituting a ‘‘non-controversial’’ 

rule change under Rule 19b–4(f)(6) of 

the Act,3 which renders the proposal 

effective upon receipt of this filing by 

the Commission. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend 

NYSE rules concerning supervision to 

harmonize the rules with certain 

Financial Industry Regulatory 

Authority, Inc. (‘‘FINRA’’) rules and 

make other conforming changes. The 

text of the proposed rule change is 

available on the Exchange’s Web site at 

www.nyse.com, at the principal office of 

the Exchange, 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, the 

Exchange 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 Exchange proposes to amend its 

rules concerning supervision to 

harmonize the rules with certain FINRA 

rules and make other conforming 

changes. Set forth below are 

descriptions of the harmonization 

process, the current NYSE rules, and the 

proposed NYSE rules. Specifically, the 

Exchange proposes to: (1) Adopt new 

rule text that is substantially similar to 

FINRA Rules 3110, 3120, 3150, and 

3170; (2) delete Rule 342 and related 

Rule Interpretations (except for certain 

text in Rule 342.13 and related Rule 

Interpretation regarding qualifications 

and exam requirements for individuals 

with supervisory responsibilities), Rule 

351(e) and related Rule Interpretations, 

Rule 354, Rule 401, and Rule 401A; and 

(3) make other conforming changes.4

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,5 the Exchange, 

NYSER, and FINRA entered into an 

agreement (‘‘Agreement’’) to reduce 

regulatory duplication for their 

members by allocating to FINRA certain 

regulatory responsibilities for NYSE 

rules and rule interpretations (‘‘FINRA 

Incorporated NYSE Rules’’). NYSE MKT 

LLC (‘‘NYSE MKT’’) became a party to 

the Agreement effective December 15, 

2008.6

As part of its effort to reduce 

regulatory duplication and relieve firms 

that are members of FINRA, the 

Exchange, and NYSE MKT 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.7

FINRA recently harmonized NASD 

and FINRA Incorporated NYSE Rules 

and interpretations concerning 

supervision. More particularly, FINRA: 

(1) Adopted FINRA Rules 3110 and 

3120 to largely replace NASD Rules 

3010 and 3012, respectively; (2) 

incorporated into FINRA Rule 3110 and 

its supplementary material the 

requirements of NASD IM–1000–4, 

NASD IM–3010–1, FINRA Incorporated 

NYSE Rule 401A, and FINRA 

Incorporated NYSE Rule 342.21; (3) 

replaced NASD Rule 3010(b)(2) with 

new FINRA Rule 3170; (4) replaced 

NASD Rule 3110(i) with new FINRA 

Rule 3150; and (5) deleted the following 

FINRA Incorporated NYSE Rules and 

NYSE Rule Interpretations: (i) NYSE 

Rule 342 and related NYSE Rule 

Interpretations; (ii) NYSE Rule 343 and 

related NYSE Rule Interpretations; (iii) 

NYSE Rule 351(e) and related NYSE 

Rule Interpretation; (iv) NYSE Rule 354; 

(v) NYSE Rule 401; and (vi) NYSE Rule 

401A.8

FINRA has announced that the 

effective date for the rule change will be 

December 1, 2014. The Exchange 

proposes to make its proposed rule 

change effective on the same date as 

FINRA, and will announce the effective 

date via an Information Memo.9

Current Supervision Rules and 

Interpretations 

Rule 342(a) requires each office, 

department or business activity of a 

member or member organization 

(including foreign incorporated branch 

offices) to be under the supervision and 

control of the member or member 


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Federal Register / Vol. 79, No. 219 / Thursday, November 13, 2014 / Notices 67509 

organization establishing it and of the 

personnel delegated such authority and 

responsibility. The person in charge of 

a group of employees must reasonably 

discharge his duties and obligations in 

connection with supervision and 

control of the activities of those 

employees related to the business of 

their employer and compliance with 

securities laws and regulations. 

Rule 342(b) provides that the general 

partners or directors of each member 

organization must provide for 

appropriate supervisory control and 

must designate a general partner or 

principal executive to assume overall 

authority and responsibility for internal 

supervision and control of the 

organization and compliance with 

securities’ laws and regulations. This 

person must: 

• Delegate to qualified principals or 

employees responsibility and authority 

for supervision and control of each 

office, department or business activity, 

and provide for appropriate procedures 

of supervision and control; and 

• Establish a separate system of 

follow-up and review to determine that 

the delegated authority and 

responsibility is being properly 

exercised. 

Rule 342(c) provides that a member 

organization must provide notice to the 

Exchange of each branch office 

established by such member 

organization. 

Rule 342(d) provides that qualified 

persons acceptable to the Exchange 

must be in charge of: 

• Any office of a member or member 

organization; 

• Any regional or other group of 

offices; and 

• Any sales department or activity. 

Rule 342(e) provides that the amounts 

and types of credit extended by a 

member organization must be 

supervised by members or principal 

executives qualified by experience for 

such control in the types of business in 

which the member organization extends 

credit. 

Supplementary Materials 342.10-.30 

provide additional guidance relating to 

the definition of branch offices, annual 

fees, foreign branch offices, the 

acceptability of supervisors, the 

experience of senior management, small 

offices, the supervision of registered 

representatives, the review of 

communications with the public, 

bookkeeping, the supervision of 

producing managers, information 

requests, trade review and investigation, 

the definition of related financial 

instrument, internal controls, annual 

branch office inspection, risk-based 

surveillance and branch office 

identification, criteria for inspection 

programs, and annual reports and 

certifications. The related Rule 342 

Interpretations provide further guidance 

relating to the foregoing. 

Rule 351(e) provides that each 

member not associated with a member 

organization and a principal executive 

of each member organization must take 

one or both of the following two actions 

in relation to the trades that are subject 

to the review procedures required by 

Rule 342.21(a): 

• Sign a written statement in the form 

specified in the rule and deliver it to the 

Exchange by the 15th day of the month 

following the calendar quarter in which 

the trade occurred. 

• As to any such trade that is the 

subject of an internal investigation 

pursuant to Rule 342.21(b), but has not 

been both resolved and included in the 

written statement, report in writing to 

the Exchange: 

• The commencement of the internal 

investigation, the identity of the trade, 

and the reason why the trade could not 

be the subject of the written statement 

(report by the 15th day of the month, 

following the calendar quarter in which 

the trade occurred); 

• the quarterly progress of each open 

investigation (report by the 15th day of 

the month following the quarter); and 

• the completion of the investigation, 

detailing the methodology and results of 

the investigation, any internal 

disciplinary action taken, and any 

referral of the matter to the Exchange, 

another self-regulatory organization 

(‘‘SRO’’), the Commission or another 

Federal agency, and including, where 

no internal disciplinary action has been 

taken and no such referral has been 

made, a written statement in relation to 

the trade in the form specified below 

(report within one week after 

completion of the investigation). 

Rule 351(e) also provides that when a 

statement pertains to one or more trades 

that have been the subject of an internal 

investigation pursuant to Rule 342.21(b) 

but as to which no internal disciplinary 

action has been taken and no referral of 

the matter to the Exchange, another 

SRO, or a Federal agency has been 

made, the written statement must also 

refer to the particular trade(s) (rather 

than to the trades of a particular 

calendar quarter) and must omit the 

clause excepting trades reported as the 

subject of an investigation. The related 

Rule 351 Interpretations provide 

additional guidance relating to the 

foregoing. 

Rule 354(a) provides that, by April 1 

of each year, each member organization 

must submit a copy of its Rule 342.30 

annual report on supervision and 

compliance to its control person(s) or, if 

the member organization has no control 

person, to the audit committee of its 

Board of Directors or its equivalent 

committee or group. In the case of a 

control person that is an organization (a 

‘‘controlling organization’’), the member 

organization must submit the report to 

the general counsel of the controlling 

organization and to the audit committee 

of the controlling organization’s Board 

of Directors or its equivalent committee 

or group. 

Rule 354(b) provides that, for the 

purpose of Rule 354(a), ‘‘control 

person’’ means a person who controls 

the member organization within the 

meaning of Rule 2 otherwise than solely 

by virtue of being a director, general 

partner, or principal executive (or 

person occupying a similar status or 

performing similar functions) of the 

member organization. 

Rule 401(b) provides that each 

member and member organization must 

maintain written policies and 

procedures, administered pursuant to 

the internal control requirements 

prescribed under Rule 342.23, 

specifically with respect to the 

following activities: 

• Transmittals of funds (e.g., wires, 

checks, etc.) or securities: 

• From customer accounts to third 

party accounts (i.e., a transmittal that 

would result in a change of beneficial 

ownership); 

• from customer accounts to outside 

entities (e.g., banks, investment 

companies, etc.); 

• from customer accounts to locations 

other than a customer’s primary 

residence (e.g., post office box, ‘‘in care 

of’’ accounts, alternate address, etc.); 

and 

• between customers and registered 

representatives (including the handdelivery of checks). 

• Customer changes of address. 

• Customer changes of investment 

objectives. 

The policies and procedures required 

under Rule 401(b)(1), (2), and (3) must 

include a means/method of customer 

confirmation, notification, or follow-up 

that can be documented. 

Rule 401A(a) provides that, for every 

customer complaint they receive that is 

subject to the reporting requirements of 

Rule 4530(d), members and member 

organizations must: 

• Acknowledge receipt of the 

complaint within 15 business days of 

receiving it; and 

• Respond to the issues raised in the 

complaint within a reasonable period of 

time. 

Rule 401A(b) provides that each 

acknowledgement and response 


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67510 Federal Register / Vol. 79, No. 219 / Thursday, November 13, 2014 / Notices 

10The technical and conforming changes are that 

the Exchange would: (1) substitute the term 

‘‘member organization’’ for ‘‘member,’’ (2) 

substitute the term ‘‘Exchange’’ for ‘‘FINRA,’’ (3) 

change certain cross-references to FINRA rules to 

cross-references to Exchange rules, and (4) add 

supplementary material to define the term 

‘‘associated person’’ in proposed Rules 3110, 3120, 

and 3150. 

11The Interpretation to Rule 342 refers to ‘‘allied 

members,’’ a category the Exchange eliminated and 

replaced with ‘‘principal executive,’’ which has 

substantially the same meaning. See Exchange Act 

Release No. 58549 (Sept. 15, 2008), 73 FR 54444 

(Sept. 19, 2008) (SR–NYSE–2008–80). 

required by this rule must be conveyed 

to the complaining customer by an 

appropriate method. More specifically: 

• Acknowledgements and responses 

to written complaints must be either: 

• In writing, mailed to the 

complaining customer’s last known 

address; or 

• Electronically transmitted to the 

email address from which the complaint 

was sent (method only permissible for 

electronically transmitted complaints). 

• Acknowledgements and responses 

to verbal complaints must be either: 

• In writing, mailed to the 

complaining customer’s last known 

address; or 

• Made verbally to the complaining 

customer, and recorded in a log of 

verbal acknowledgements and responses 

to customer complaints. 

Rule 401A(c) provides that written 

records of the acknowledgements, 

responses, and logs required by this rule 

must be retained in accordance with 

Rule 440. 

Proposed Rule Change 

The Exchange proposes to delete the 

foregoing rules and interpretations 

relating to supervision (except as noted 

below), which are, in main part, either 

duplicative of, or do not align with, the 

proposed supervision requirements 

discussed below, and adopt the text of 

FINRA Rules 3110, 3120, 3150, and 

3170, subject to certain technical and 

conforming changes.10 As noted in Rule 

0, NYSE rules that refer to NYSER, 

NYSER staff or departments, Exchange 

staff, and Exchange departments should 

be understood as also referring to 

FINRA staff and FINRA departments 

acting on behalf of the Exchange 

pursuant to the Agreement, as 

applicable. 

The Exchange proposes to retain the 

requirements contained in Rule 

342.13(a) and (b) and related 

interpretations regarding qualifications 

and exam requirements for individuals 

with supervisory responsibilities. The 

proposed new version of Rule 342(a), 

corresponding to current Rule 342.13(a), 

would provide that any member or 

employee identified as in charge of (1) 

any office of a member or member 

organization, (2) any regional or other 

group of offices, or (3) any sales 

department or activity must have a 

creditable record and pass the General 

Securities Sales Supervisor 

Qualification Examination (Series 9/10) 

or another examination acceptable to 

the Exchange. The proposed new 

version of Rule 342(a) would retain the 

current requirement in the 

Interpretation to Rule 342 that every 

branch office or sales manager must 

have at least three years’ experience as 

a registered representative or substantial 

experience in a related sales or 

managerial position and must pass the 

Series 9/10. 

Further, the proposed new version of 

Rule 342(a) would retain the current 

examples of a related sales or 

managerial position in the Interpretation 

to Rule 342 and the requirement that in 

order to qualify as a supervisory person, 

a principal executive 11 should have at 

least three years’ experience as a 

registered representative unless granted 

an exception. The proposed new version 

of Rule 342(a) would also retain from 

the related Interpretation that the 

General Securities Principal 

Examination (Series 24) is an acceptable 

alternative for persons whose duties do 

not include the supervision of options 

or municipal securities sales activity 

and that the examination requirement 

may be waived at the discretion of the 

Exchange. Finally, the proposed new 

version of Rule 342(a) would retain the 

requirement from the Interpretation that 

in the case of a firm applying for 

registered broker-dealer status, the 

supervisory candidates must have at 

least one year of direct experience or 

two years of related experience in the 

subject area to be supervised in addition 

to the requirements outlined above. 

The proposed new version of Rule 

342(b), corresponding to current Rule 

342.13(b), would provide that the 

individuals designated as having day-today compliance responsibilities for their 

respective firms, or who supervise ten 

or more persons engaged in compliance 

activities, have the knowledge necessary 

to carry out their job responsibilities 

(i.e., overall knowledge of the securities 

laws and Exchange rules) and pass the 

Compliance Official Examination (the 

‘‘Series 14’’) or, in the case of 

compliance supervisors of member 

organizations that conduct a Designated 

Market Maker (‘‘DMM’’) business, the 

DMM Compliance Official Examination 

(the ‘‘Series 14A’’). The proposed new 

version of Rule 342(b) would also retain 

the current requirement in the 

Interpretation to Rule 342 that member 

organizations engaged in a public 

business in addition to a DMM business 

must have a qualified compliance 

supervisor who has passed both the 

Series 14 and Series 14A Examinations. 

Finally, the proposed new version of 

Rule 342(b) would incorporate the 

following exemptions from the Series 14 

Examination requirement (currently 

contained in the Interpretation to Rule 

342): 

• Compliance supervisors at member 

organizations whose activities are solely 

related to execution of orders on the 

Exchange trading floor and who do not 

conduct any business with the public; 

• Compliance supervisors at member 

organizations whose commissions and 

other fees from public business (retail 

and institutional) are under $500,000 in 

the preceding calendar year and who 

introduce to another broker-dealer; and 

• Supervisors of ten or more persons 

whose compliance responsibilities are 

limited to the registration of member 

organization employees with the various 

regulators and SROs. 

Proposed Rule 3110 (Supervision) 

Proposed Rule 3110 is based 

primarily on requirements in the FINRA 

rulebook and current Rule 342 relating 

to, among other things, supervisory 

systems, written procedures, internal 

inspections, and review of 

correspondence. 

Proposed Rule 3110(a) 

Proposed Rule 3110(a) would cover 

supervisory systems and would require 

each member organization to establish 

and maintain a system to supervise the 

activities of each associated person that 

is reasonably designed to achieve 

compliance with applicable securities 

laws and regulations, and with 

applicable Exchange rules. Under the 

proposed rule, final responsibility for 

proper supervision would rest with the 

member organization. In addition, a 

member organization’s supervisory 

system would be required to provide, at 

a minimum, for the following: 

• The establishment and maintenance 

of written procedures as required by 

proposed Rule 3110. 

• The designation, where applicable, 

of an appropriately registered principal 

with authority to carry out the 

supervisory responsibilities of the 

member organization for each type of 

business in which it engages for which 

registration as a broker-dealer is 

required. 

• The registration and designation as 

a branch office or an office of 

supervisory jurisdiction (‘‘OSJ’’) of each 

location, including the main office, that 


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Federal Register / Vol. 79, No. 219 / Thursday, November 13, 2014 / Notices 67511 

12Although to date the Exchange and FINRA have 

used the same definition for ‘‘branch office,’’ the 

Exchange has not previously designated OSJs. As 

such, the requirements relating to OSJs described 

hereinafter would be new for member 

organizations. 

13With respect to customer complaints, proposed 

Rule 3110(b)(5) also would affirmatively require 

members to capture, acknowledge, and respond to 

all written (including electronic) customer 

complaints. 

14The Exchange adopted the text of FINRA Rule 

4530 to replace comparable provisions in Rule 351. 

See Exchange Act Release No. 64785 (Jun. 30, 

2011), 76 FR 39946 (Jul. 7, 2011) (SR–NYSE–2011– 

27). 

meets the definitions contained in 

proposed Rule 3110(e).12

• The designation of one or more 

appropriately registered principals in 

each OSJ and one or more appropriately 

registered representatives or principals 

in each non-OSJ branch office with 

authority to carry out the supervisory 

responsibilities assigned to that office 

by the member organization. 

• The assignment of each registered 

person to an appropriately registered 

representative or principal who would 

be responsible for supervising that 

person’s activities. 

• The use of reasonable efforts to 

determine that all supervisory personnel 

are qualified, either by virtue of 

experience or training, to carry out their 

assigned responsibilities. 

• The participation of each registered 

representative and registered principal, 

either individually or collectively, no 

less than annually, in an interview or 

meeting conducted by persons 

designated by the member organization 

at which compliance matters relevant to 

the activities of the representative and 

principal are discussed, which may 

occur in conjunction with the 

discussion of other matters and may be 

conducted at a central or regional 

location or at the representative’s or 

principal’s place of business. 

Proposed Rule 3110(b) 

In proposed Rule 3110(b), the 

Exchange proposes to consolidate 

provisions from current Rule 401A 

relating to the review of customer 

complaints with various provisions and 

rules from the FINRA rulebook that 

currently require written procedures, 

including provisions relating to the 

supervision and review of registered 

representatives’ transactions and 

correspondence. In addition, proposed 

supplementary material, which is 

discussed in detail below, would codify 

and expand guidance in these areas. 

Proposed Rule 3110(b)(1) would 

address written procedures and would 

require each member organization to 

establish, maintain, and enforce written 

procedures to supervise the types of 

business in which it engages and the 

activities of its associated persons that 

are reasonably designed to achieve 

compliance with applicable securities 

laws and regulations and applicable 

Exchange rules. 

Under proposed Rule 3110(b)(2), the 

supervisory procedures required by 

proposed Rule 3110(b) would include 

procedures for the review by a 

registered principal, evidenced in 

writing, of all transactions relating to 

the investment banking or securities 

business of the member organization. 

Consistent with FINRA Rule 

3110(b)(3), proposed Rule 3110(b)(3) 

would be marked ‘‘Reserved.’’ 

Under proposed Rule 3110(b)(4), the 

supervisory procedures required by 

proposed Rule 3110(b) would also 

include procedures for the review of 

incoming and outgoing written 

(including electronic) correspondence 

and internal communications relating to 

the member organization’s investment 

banking or securities business and be 

appropriate for the member 

organization’s business, size, structure, 

and customers. The supervisory 

procedures would require the member 

organization’s review of: 

• Incoming and outgoing written 

(including electronic) correspondence to 

properly identify and handle in 

accordance with firm procedures, 

customer complaints, instructions, 

funds and securities, and 

communications that are of a subject 

matter that require review under 

Exchange rules and federal securities 

laws; and 

• Internal communications to 

properly identify those communications 

that are of a subject matter that require 

review under Exchange rules and 

federal securities laws. 

Such reviews would be conducted by a 

registered principal and would be 

evidenced in writing, either 

electronically or on paper. Those 

communications subject to review 

would include (without limitation): 

• Communications between nonresearch and research departments 

concerning a research report’s contents 

(Rule 472(b)(3)). 

• Certain communications with the 

public that require a principal’s preapproval (Rule 2210). 

• The identification and reporting to 

the Exchange of customer complaints 

(Rule 4530).13

Current Rule 401A requires firms to 

acknowledge and respond to all 

customer complaints subject to the 

reporting requirements of current Rule 

4530(d). Previously, this meant that 

firms had to acknowledge and respond 

to both written and oral customer 

complaints. However, as part of the 

effort to harmonize the NASD and NYSE 

rules in the interim period before 

completion of the Consolidated FINRA 

Rulebook, current Rule 4530(d) was 

amended to limit the definition of 

‘‘customer complaint’’ to include only 

written complaints, thereby making the 

definition substantially similar to that in 

FINRA Rule 4530(d).14

Proposed Rule 3110(b)(5), which 

requires a member organization’s 

supervisory procedures to include 

procedures to capture, acknowledge, 

and respond to all written (including 

electronic) customer complaints, 

essentially incorporates the customer 

complaint requirement in current Rule 

401A, including the limitation on 

including only written (including 

electronic) customer complaints. The 

Exchange believes that oral complaints 

are difficult to capture and assess, and 

that they raise competing views as to the 

substance of the complaint being 

alleged. Consequently, the Exchange 

believes that oral complaints do not 

lend themselves as effectively to a 

review program as written complaints, 

which are more readily documented and 

retained. However, the Exchange 

reminds member organizations that the 

failure to address any customer 

complaint, written or oral, may be a 

violation of Rule 2010. 

Under proposed Rule 3110(b)(6), the 

supervisory procedures required by 

proposed Rule 3110(b) must set forth 

the supervisory system established by 

the member organization pursuant to 

proposed Rule 3110(a), and would 

include: 

• The titles, registration status, and 

locations of the required supervisory 

personnel and the responsibilities of 

each supervisory person as these relate 

to the types of business engaged in, 

applicable securities laws and 

regulations, and Exchange rules. 

• A record, preserved by the member 

organization for a period of not less than 

three years, the first two years in an 

easily accessible place, of the names of 

all persons who are designated as 

supervisory personnel and the dates for 

which such designation is or was 

effective. 

• Procedures prohibiting associated 

persons who perform a supervisory 

function from: 

• Supervising their own activities; 

and 

• Reporting to, or having their 

compensation or continued employment 

determined by, a person or persons they 

are supervising. 


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15 17 CFR 240.17a–3(a)(17)(i)(B)(2) and 17 CFR 

240.17a–3(a)(17)(i)(B)(3). 

• If a member organization 

determines, with respect to any of its 

supervisory personnel, that compliance 

with the preceding two bullets is not 

possible because of the member 

organization’s size or a supervisory 

personnel’s position within the firm, the 

member organization would be required 

to document: 

• The factors the member 

organization used to reach such 

determination; and 

• How the supervisory arrangement 

with respect to such supervisory 

personnel otherwise complies with 

proposed Rule 3110(a). 

• Procedures reasonably designed to 

prevent the supervisory system required 

pursuant to proposed Rule 3110(a) from 

being compromised due to the conflicts 

of interest that may be present with 

respect to the associated person being 

supervised, including the position of 

such person, the revenue such person 

generates for the firm, or any 

compensation that the associated person 

conducting the supervision may derive 

from the associated person being 

supervised. 

Proposed Rule 3110(b)(7) would 

require a member organization to keep 

and maintain a copy of its written 

supervisory procedures, or such 

relevant portions, in each OSJ and at 

each location where supervisory 

activities are conducted on behalf of the 

member organization. Each member 

organization would be required to 

promptly amend its written supervisory 

procedures to reflect changes in 

applicable securities laws or 

regulations, including Exchange rules, 

and as changes occur in its supervisory 

system. Each member organization 

would be responsible for promptly 

communicating its written supervisory 

procedures and amendments to all 

associated persons to whom such 

written supervisory procedures and 

amendments are relevant based on their 

activities and responsibilities. 

Proposed Rule 3110(c) 

Proposed Rule 3110(c) would cover 

internal inspections. Proposed Rule 

3110(c)(1) would require each member 

organization to conduct a review, at 

least annually (on a calendar-year basis), 

of the businesses in which it engages. 

The review must be reasonably designed 

to assist the member organization in 

detecting and preventing violations of, 

and achieving compliance with, 

applicable securities laws and 

regulations, and with applicable 

Exchange rules. Each member 

organization would be required to 

review the activities of each office, 

which would include the periodic 

examination of customer accounts to 

detect and prevent irregularities or 

abuses. Each member organization 

would also be required to retain a 

written record of the date upon which 

each review and inspection is 

conducted. 

In addition, proposed Rule 3110(c)(1) 

would require each member 

organization to inspect at least annually 

(on a calendar-year basis) every OSJ and 

any branch office that supervises one or 

more non-branch locations. Each 

member organization would also be 

required to inspect at least every three 

years every branch office that does not 

supervise one or more non-branch 

locations. In establishing how often to 

inspect each non-supervisory branch 

office, the member organization would 

be required to consider whether the 

nature and complexity of the securities 

activities for which the location is 

responsible, the volume of business 

done at the location, and the number of 

associated persons assigned to the 

location require the non-supervisory 

branch office to be inspected more 

frequently than every three years. If a 

member organization establishes a more 

frequent inspection cycle, the member 

organization would be required to 

ensure that at least every three years, the 

inspection requirements enumerated in 

proposed Rule 3110(c)(2) have been 

met. The member organization’s written 

supervisory and inspection procedures 

would have to set forth the nonsupervisory branch office examination 

cycle, an explanation of the factors the 

member organization used in 

determining the frequency of the 

examinations in the cycle, and the 

manner in which a member organization 

would comply with proposed Rule 

3110(c)(2) if using more frequent 

inspections than every three years. 

Under proposed Rule 3110(c)(1), each 

member organization would also be 

required to inspect every non-branch 

location on a regular, periodic schedule. 

In establishing such a schedule, the 

member organization would be required 

to consider the nature and complexity of 

the securities activities for which the 

location is responsible and the nature 

and extent of contact with customers. 

The member organization’s written 

supervisory and inspection procedures 

would have to set forth the schedule 

and an explanation regarding how the 

member organization determined the 

frequency of the examination. 

Proposed Rule 3110(c)(2) would 

require that the inspection and review 

by a member organization pursuant to 

proposed Rule 3110(c)(1) be reduced to 

a written report and kept on file by the 

member organization for a minimum of 

three years, unless the inspection is 

being conducted pursuant to proposed 

Rule 3110(c)(1)(C) and the regular 

periodic schedule is longer than a threeyear cycle, in which case the report 

would have to be kept on file at least 

until the next inspection report has been 

written. If applicable to the location 

being inspected, proposed Rule 

3110(c)(2)(A) would require that 

location’s written inspection report to 

include, without limitation, the testing 

and verification of the member 

organization’s policies and procedures, 

including supervisory policies and 

procedures in the following areas: 

• Safeguarding of customer funds and 

securities; 

• Maintaining books and records; 

• Supervision of supervisory 

personnel; 

• Transmittals of funds (e.g., wires or 

checks, etc.) or securities from 

customers to third party accounts; from 

customer accounts to outside entities 

(e.g., banks, investment companies, 

etc.); from customer accounts to 

locations other than a customer’s 

primary residence (e.g., post office box, 

‘‘in care of’’ accounts, alternate address, 

etc.); and between customers and 

registered representatives, including the 

hand-delivery of checks; and 

• Changes of customer account 

information, including address and 

investment objectives changes and 

validation of such changes. 

Under proposed Rules 3110(c)(2)(B) 

and 3110(c)(2)(C), a member 

organization’s policies and procedures 

regarding transmittals of funds must 

include a means or method of customer 

confirmation, notification, or follow-up 

that can be documented. Member 

organizations could use reasonable riskbased criteria to determine the 

authenticity of the transmittal 

instructions. The policies and 

procedures regarding changes in 

customer account information would 

have to include, for each change 

processed, a means or method of 

customer confirmation, notification, or 

follow-up that can be documented and 

that complies with Rules 17a– 

3(a)(17)(i)(B)(2) and 17a–3(a)(17)(i)(B)(3) 

under the Act.15

Pursuant to proposed Rule 

3110(c)(2)(D), if a member organization 

does not engage in all of the activities 

enumerated in the bullets immediately 

above at the location being inspected, 

the member organization would be 

required to identify those activities in 

the member organization’s written 

supervisory procedures or the location’s 


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16See Insider Trading and Securities Fraud 

Enforcement Act of 1988, Public Law No. 100–704, 

102 Stat. 4677. 17 15 U.S.C. 78o(g). 

written inspection report and document 

in the member organization’s written 

supervisory procedures or the location’s 

written inspection report that 

supervisory policies and procedures for 

such activities must be in place at that 

location before the member organization 

can engage in them. 

Under proposed Rule 3110(c)(3), for 

each inspection conducted pursuant to 

the proposed rule, a member 

organization would be required to: 

• Have procedures reasonably 

designed to prevent the effectiveness of 

inspections from being compromised 

due to conflicts of interest that may be 

present with respect to the location 

being inspected, including but not 

limited to, economic, commercial, or 

financial interests in the associated 

persons and businesses being inspected; 

and 

• Ensure that the person conducting 

an inspection is not an associated 

person assigned to the location or is not 

directly or indirectly supervised by, or 

otherwise reporting to, an associated 

person assigned to the location. 

Under the proposed rule, if a member 

organization determines that 

compliance with these two bullets is not 

possible either because of a member 

organization’s size or its business 

model, the member organization would 

be required to document in the 

inspection report both the factors the 

member organization used to make its 

determination and how the inspection 

otherwise complies with proposed Rule 

3110(c)(1). 

By way of comparison, under current 

Rules 342.24 and 342.25, each branch 

office must be inspected annually, 

unless the member organization 

obtained an exemption by submitting to 

the Exchange written policies and 

procedures for systematic risk-based 

surveillance of its branch offices, in 

which case each branch office must be 

inspected at least every three years. The 

proposed subject matter requirements 

for inspection reports are substantially 

the same as the current subject matter 

requirements. 

Proposed Rule 3110(d) 

Section 15(g) of the Act, adopted as 

part of the Insider Trading and 

Securities Fraud Enforcement Act of 

1988,16 requires every registered broker 

or dealer to establish, maintain, and 

enforce written policies and procedures 

reasonably designed to prevent the 

misuse of material, non-public 

information by the broker or dealer or 

any associated person of the broker or 

dealer.17 Current Rule 342.21 sets forth 

specific supervisory procedures for 

compliance with Section 15(g) by 

requiring firms to review trades in 

Exchange-listed securities and related 

financial instruments that are effected 

for the member organization’s account 

or for the accounts of the member 

organization’s employees and family 

members. Current Rule 342.21 also 

requires member organizations to 

promptly conduct an internal 

investigation into any trade the firm 

identifies that may have violated insider 

trading laws or rules. 

Proposed Rule 3110(d) incorporates 

provisions of current Rule 342.21, with 

some modifications, and extends the 

requirement beyond Exchange-listed 

securities and related financial 

instruments to cover all securities. 

Proposed Rule 3110(d) would cover 

transaction reviews and investigations. 

Proposed Rule 3110(d)(1) would require 

each member organization to include in 

its supervisory procedures a process for 

the review of securities transactions 

reasonably designed to identify trades 

that may violate the provisions of the 

Act, the rules thereunder, or Exchange 

rules prohibiting insider trading and 

manipulative and deceptive devices that 

are effected for the: 

• Accounts of the member 

organization; 

• Accounts introduced or carried by 

the member organization in which a 

person associated with the member 

organization has a beneficial interest or 

the authority to make investment 

decisions; 

• Accounts of a person associated 

with the member organization that are 

disclosed to the member organization 

pursuant to Rule 407 or NASD Rule 

3050, as applicable; and 

• Covered accounts. 

Under proposed Rule 3110(d)(2), each 

member organization would be required 

to promptly conduct an internal 

investigation into any such trade to 

determine whether a violation of those 

laws or rules has occurred. In addition, 

under proposed Rule 3110(d)(3), a 

member organization engaging in 

investment banking services would be 

required to file written reports with the 

Exchange, signed by a senior officer of 

the member organization, at such times 

and, without limitation, including such 

content, as follows: 

• Within ten business days of the end 

of each calendar quarter, a written 

report describing each internal 

investigation initiated in the previous 

calendar quarter pursuant to proposed 

Rule 3110(d)(2), including the identity 

of the member organization, the date 

each internal investigation commenced, 

the status of each open internal 

investigation, the resolution of any 

internal investigation reached during 

the previous calendar quarter, and, with 

respect to each internal investigation, 

the identity of the security, trades, 

accounts, associated persons of the 

member organization, or associated 

person of the member organization’s 

family members holding a covered 

account, under review, and that 

includes a copy of the member 

organization’s policies and procedures 

required by proposed Rule 3110(d)(1). 

• Within five business days of 

completion of an internal investigation 

pursuant to proposed Rule 3110(d)(2) in 

which it was determined that a violation 

of the provisions of the Act, the rules 

thereunder, or Exchange rules 

prohibiting insider trading and 

manipulative and deceptive devices had 

occurred, a written report detailing the 

completion of the investigation, 

including the results of the 

investigation, any internal disciplinary 

action taken, and any referral of the 

matter to the Exchange, another SRO, 

the SEC, or any other federal, state, or 

international regulatory authority. 

For purposes of proposed Rule 

3110(d)(4), the following definitions 

would apply: 

• The term ‘‘covered account’’ would 

include any account introduced or 

carried by the member organization that 

is held by: 

• The spouse of a person associated 

with the member organization; 

• A child of the person associated 

with the member organization or such 

person’s spouse, provided that the child 

resides in the same household as, or is 

financially dependent upon, the person 

associated with the member 

organization; 

• Any other related individual over 

whose account the person associated 

with the member organization has 

control; or 

• Any other individual over whose 

account the associated person of the 

member organization has control and to 

whose financial support such person 

materially contributes. 

• The term ‘‘investment banking 

services’’ would include, without 

limitation, acting as an underwriter, 

participating in a selling group in an 

offering for the issuer, or otherwise 

acting in furtherance of a public offering 

of the issuer; acting as a financial 

adviser in a merger or acquisition; 

providing venture capital or equity lines 

of credit or serving as placement agent 

for the issuer or otherwise acting in 


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18The term ‘‘business day’’ would not include 

any partial business day provided that the 

associated person spends at least four hours on 

such business day at his or her designated branch 

office during the hours that such office is normally 

open for business. 

19Where such office of convenience is located on 

bank premises, signage necessary to comply with 

applicable federal and state laws, rules and 

regulations and applicable rules and regulations of 

other SROs, and securities and banking regulators 

could be displayed and would not be deemed 

‘‘holding out’’ for purposes of this section. 

furtherance of a private offering of the 

issuer. 

Proposed Rule 3110(e) 

Proposed Rule 3110(e) would define 

‘‘OSJ’’ and ‘‘branch office.’’ As noted 

above, ‘‘OSJ’’ would be a new 

designation for the Exchange and the 

definition of the term would 

substantially mirror FINRA’s definition. 

The term ‘‘OSJ’’ would mean any office 

of a member organization at which any 

one or more of the following functions 

take place: 

• Order execution or market making; 

• Structuring of public offerings or 

private placements; 

• Maintaining custody of customers’ 

funds or securities; 

• Final acceptance (approval) of new 

accounts on behalf of the member 

organization; 

• Review and endorsement of 

customer orders; 

• Final approval of retail 

communications for use by persons 

associated with the member 

organization, pursuant to Rule 

2210(b)(1), except for an office that 

solely conducts final approval of 

research reports; or 

• Responsibility for supervising the 

activities of persons associated with the 

member organization at one or more 

other branch offices of the member 

organization. 

The definition of ‘‘branch office’’ would 

be substantially the same as current 

Rule 342.10. It would mean any location 

where one or more associated persons of 

a member organization regularly 

conducts the business of effecting any 

transactions in, or inducing or 

attempting to induce the purchase or 

sale of, any security, or is held out as 

such, excluding: 

• Any location that is established 

solely for customer service or back 

office type functions where no sales 

activities are conducted and that is not 

held out to the public as a branch office; 

• Any location that is the associated 

person’s primary residence, provided 

that: 

• Only one associated person, or 

multiple associated persons who reside 

at that location and are members of the 

same immediate family, conduct 

business at the location; 

• The location is not held out to the 

public as an office and the associated 

person does not meet with customers at 

the location; 

• Neither customer funds nor 

securities are handled at that location; 

• The associated person is assigned to 

a designated branch office, and such 

designated branch office is reflected on 

all business cards, stationery, retail 

communications and other 

communications to the public by such 

associated person; 

• The associated person’s 

correspondence and communications 

with the public are subject to the firm’s 

supervision in accordance with 

proposed Rule 3110; 

• Electronic communications (e.g., 

email) are made through the member 

organization’s electronic system; 

• All orders are entered through the 

designated branch office or an electronic 

system established by the member 

organization that is reviewable at the 

branch office; 

• Written supervisory procedures 

pertaining to supervision of sales 

activities conducted at the residence are 

maintained by the member organization; 

and 

• A list of the residence locations is 

maintained by the member organization. 

• Any location, other than a primary 

residence, that is used for securities 

business for less than 30 business 

days 18 in any one calendar year, 

provided the member organization 

complies with the first eight of the nine 

immediately preceding bullet points; 

• Any office of convenience, where 

associated persons occasionally and 

exclusively by appointment meet with 

customers, which is not held out to the 

public as an office; 19

• Any location that is used primarily 

to engage in non-securities activities 

and from which the associated person(s) 

effects no more than 25 securities 

transactions in any one calendar year; 

provided that any retail communication 

identifying such location also sets forth 

the address and telephone number of 

the location from which the associated 

person(s) conducting business at the 

non-branch locations are directly 

supervised; 

• The floor of a registered national 

securities exchange where a member 

organization conducts a direct access 

business with public customers; or 

• A temporary location established in 

response to the implementation of a 

business continuity plan. 

Notwithstanding the exclusions for 

branch offices described above, any 

location that is responsible for 

supervising the activities of persons 

associated with the member 

organization at one or more non-branch 

locations of the member organization 

would be considered a branch office. 

Proposed Supplementary Materials to 

Proposed Rule 3110 

Proposed Supplementary Material .01 

to Rule 3110 would require a member 

organization’s main office location to be 

registered and designated as a branch 

office or OSJ if it meets the definitions 

of a ‘‘branch office’’ or ‘‘office of 

supervisory jurisdiction’’ as set forth in 

proposed Rule 3110(e). In general, the 

nature of activities conducted at a main 

office will satisfy the requirements of 

such terms. 

Proposed Supplementary Material .02 

to Rule 3110 would provide that, in 

addition to the locations that meet the 

definition of OSJ in proposed Rule 

3110(e), each member organization must 

also register and designate other offices 

as OSJs as is necessary to supervise its 

associated persons in accordance with 

the standards set forth in proposed Rule 

3110. In making a determination as to 

whether to designate a location as an 

OSJ, the member organization should 

consider the following factors: 

• Whether registered persons at the 

location engage in retail sales or other 

activities involving regular contact with 

public customers; 

• Whether a substantial number of 

registered persons conduct securities 

activities at, or are otherwise supervised 

from, such location; 

• Whether the location is 

geographically distant from another OSJ 

of the firm; 

• Whether the member organization’s 

registered persons are geographically 

dispersed; and 

• Whether the securities activities at 

such location are diverse or complex. 

Proposed Supplementary Material .03 

to Rule 3110 would provide additional 

guidance relating to proposed Rule 

3110(a)(4), which would require a 

member organization to designate one or 

more appropriately registered principals 

in each OSJ with the authority to carry 

out the supervisory responsibilities 

assigned to that office (‘‘on-site 

principal’’). The proposed 

Supplementary Material would provide 

that the designated on-site principal for 

each OSJ must have a physical presence, 

on a regular and routine basis, at each 

OSJ for which the principal has 

supervisory responsibilities. 

Consequently, there is a general 

presumption that a principal will not be 

designated and assigned to be the onsite principal pursuant to proposed Rule 

3110(a)(4) to supervise more than one 


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OSJ. If a member organization 

determines it is necessary to designate 

and assign one appropriately registered 

principal to be the on-site principal 

pursuant to proposed Rule 3110(a)(4) to 

supervise two or more OSJs, the member 

organization must take into 

consideration, among others, the 

following factors: 

• Whether the on-site principal is 

qualified by virtue of experience and 

training to supervise the activities and 

associated persons in each location; 

• Whether the on-site principal has 

the capacity and time to supervise the 

activities and associated persons in each 

location; 

• Whether the on-site principal is a 

producing registered representative; 

• Whether the OSJ locations are in 

sufficiently close proximity to ensure 

that the on-site principal is physically 

present at each location on a regular and 

routine basis; and 

• The nature of activities at each 

location, including size and number of 

associated persons, scope of business 

activities, nature and complexity of the 

products and services offered, volume of 

business done, the disciplinary history 

of persons assigned to such locations, 

and any other indicators of irregularities 

or misconduct. 

The proposed Supplementary 

Material would provide that a member 

organization must establish, maintain, 

and enforce written supervisory 

procedures regarding the supervision of 

all OSJs. In all cases where a member 

organization designates and assigns one 

on-site principal to supervise more than 

one OSJ, the member organization must 

document in the member organization’s 

written supervisory and inspection 

procedures the factors used to 

determine why the member organization 

considers such supervisory structure to 

be reasonable and the determination by 

the member organization will be subject 

to scrutiny. 

Proposed Supplementary Material .04 

to Rule 3110 would provide that a 

member organization is not required to 

conduct in-person meetings with each 

registered person or group of registered 

persons to comply with the annual 

compliance meeting (or interview) 

required by proposed Rule 3110(a)(7). A 

member organization that chooses to 

conduct compliance meetings using 

other methods (e.g., on-demand webcast 

or course, video conference, interactive 

classroom setting, telephone, or other 

electronic means) must ensure, at a 

minimum, that each registered person 

attends the entire meeting (e.g., an ondemand annual compliance webcast 

would require each registered person to 

use a unique user ID and password to 

gain access and use a technology 

platform to track the time spent on the 

webcast, provide click-as-you go 

confirmation, and have an attestation of 

completion at the end of a webcast) and 

is able to ask questions regarding the 

presentation and receive answers in a 

timely fashion (e.g., an on-demand 

annual compliance webcast that allows 

registered persons to ask questions via 

an email to a presenter or a centralized 

address or via a telephone hotline and 

receive timely responses directly or 

view such responses on the member 

organization’s intranet site). 

Proposed Supplementary Material .05 

to Rule 3110 would provide that a 

member organization may use a riskbased review system to comply with 

proposed Rule 3110(b)(2)’s requirement 

that a registered principal review all 

transactions relating to the investment 

banking or securities business of the 

member organization. A member 

organization would not be required to 

conduct detailed reviews of each 

transaction if it is using a reasonably 

designed risk-based review system that 

provides it with sufficient information 

to permit it to focus on the areas that 

pose the greatest numbers and risks of 

violation. 

Proposed Supplementary Material .06 

to Rule 3110 would provide that, by 

employing risk-based principles, a 

member organization must decide the 

extent to which additional policies and 

procedures for the review of: 

• Incoming and outgoing written 

(including electronic) correspondence 

that fall outside of the subject matters 

listed in proposed Rule 3110(b)(4) are 

necessary for its business and structure. 

If a member organization’s procedures 

do not require that all correspondence 

be reviewed before use or distribution, 

the procedures must provide for: 

• The education and training of 

associated persons regarding the firm’s 

procedures governing correspondence; 

• The documentation of such 

education and training; and 

• Surveillance and follow-up to 

ensure that such procedures are 

implemented and followed. 

• Internal communications that are 

not of a subject matter that require 

review under Exchange rules and 

federal securities laws are necessary for 

its business and structure. 

Proposed Supplementary Material .07 

to Rule 3110 would provide that the 

evidence of review required in proposed 

Rule 3110(b)(4) must be chronicled 

either electronically or on paper and 

must clearly identify the reviewer, the 

internal communication or 

correspondence that was reviewed, the 

date of review, and the actions taken by 

the member organization as a result of 

any significant regulatory issues 

identified during the review. Merely 

opening a communication would not be 

sufficient review. 

Proposed Supplementary Material .08 

to Rule 3110 would provide that, in the 

course of the supervision and review of 

correspondence and internal 

communications required by proposed 

Rule 3110(b)(4), a supervisor/principal 

may delegate certain functions to 

persons who need not be registered. 

However, the supervisor/principal 

would remain ultimately responsible for 

the performance of all necessary 

supervisory reviews, irrespective of 

whether he or she delegates functions 

related to the review. Accordingly, 

supervisors/principals must take 

reasonable and appropriate action to 

ensure delegated functions are properly 

executed and should evidence 

performance of their procedures 

sufficiently to demonstrate overall 

supervisory control. 

Proposed Supplementary Material .09 

to Rule 3110 would provide that each 

member organization must retain the 

internal communications and 

correspondence of associated persons 

relating to the member organization’s 

investment banking or securities 

business for the period of time and 

accessibility specified in Rule 17a–4(b) 

under the Act. The names of the persons 

who prepared outgoing correspondence 

and who reviewed the correspondence 

must be ascertainable from the retained 

records, and the retained records must 

be readily available to the Exchange, 

upon request. 

Proposed Supplementary Material .10 

to Rule 3110 would provide that a 

member organization’s determination 

that it is not possible to comply with 

proposed Rules 3110(b)(6)(C)(i) or 

(b)(6)(C)(ii) prohibiting supervisory 

personnel from supervising their own 

activities and from reporting to, or 

otherwise having compensation or 

continued employment determined by, 

a person or persons they are supervising 

generally will arise in instances where: 

• The member organization is a sole 

proprietor in a single-person firm; 

• A registered person is the member 

organization’s most senior executive 

officer (or similar position); or 

• A registered person is one of several 

of the member organization’s most 

senior executive officers (or similar 

positions). 

Proposed Supplementary Material .11 

to Rule 3110 would provide that a 

member organization may use electronic 

media to satisfy its obligation to 

communicate its written supervisory 

procedures, and any amendment 


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thereto, pursuant to proposed Rule 

3110(b)(7), provided that: 

• The written supervisory procedures 

have been promptly communicated to, 

and are readily accessible by, all 

associated persons to whom such 

supervisory procedures apply based on 

their activities and responsibilities 

through, for example, the member 

organization’s intranet system; 

• All amendments to the written 

supervisory procedures are promptly 

posted to the member organization’s 

electronic media; 

• Associated persons are notified that 

amendments relevant to their activities 

and responsibilities have been made to 

the written supervisory procedures; 

• The member organization has 

reasonable procedures to monitor and 

maintain the security of the material 

posted to ensure that it cannot be 

altered by unauthorized persons; and 

• The member organization retains 

current and prior versions of its written 

supervisory procedures in compliance 

with the applicable record retention 

requirements of Rule 17a–4(e)(7) under 

the Act. 

Proposed Supplementary Material .12 

to Rule 3110 would provide that, in 

fulfilling its obligations under proposed 

Rule 3110(c), each member organization 

must conduct a review, at least 

annually, of the businesses in which it 

engages. The review must be reasonably 

designed to assist in detecting and 

preventing violations of and achieving 

compliance with applicable securities 

laws and regulations and with Exchange 

rules. Each member organization must 

establish and maintain supervisory 

procedures that must take into 

consideration, among other things, the 

firm’s size, organizational structure, 

scope of business activities, number and 

location of the firm’s offices, the nature 

and complexity of the products and 

services offered by the firm, the volume 

of business done, the number of 

associated persons assigned to a 

location, the disciplinary history of 

registered representatives or associated 

persons, and any indicators of 

irregularities or misconduct (i.e., ‘‘red 

flags’’), etc. The procedures established 

and reviews conducted must provide 

that the quality of supervision at remote 

locations is sufficient to ensure 

compliance with applicable securities 

laws and regulations and with Exchange 

rules. A member organization must be 

especially diligent in establishing 

procedures and conducting reasonable 

reviews with respect to a non-branch 

location where a registered 

representative engages in securities 

activities. Based on the factors outlined 

above, member organizations may need 

to impose reasonably designed 

supervisory procedures for certain 

locations or may need to provide for 

more frequent reviews of certain 

locations. 

Proposed Supplementary Material .13 

to Rule 3110 would provide additional 

guidance to proposed Rule 

3110(c)(1)(C), which would require a 

member organization to inspect on a 

regular periodic schedule every nonbranch location. In establishing a nonbranch location inspection schedule, 

there is a general presumption that a 

non-branch location will be inspected at 

least every three years, even in the 

absence of any indicators of 

irregularities or misconduct (i.e., ‘‘red 

flags’’). If a member organization 

establishes a longer periodic inspection 

schedule, the member organization must 

document in its written supervisory and 

inspection procedures the factors used 

in determining that a longer periodic 

inspection cycle is appropriate. 

Proposed Supplementary Material .14 

to Rule 3110 would provide that a 

member organization’s determination 

that it is not possible to comply with 

proposed Rule 3110(c)(3)(B) with 

respect to who is not allowed to conduct 

a location’s inspection will generally 

arise in instances where: 

• The member organization has only 

one office; or 

• The member organization has a 

business model where small or singleperson offices report directly to an OSJ 

manager who is also considered the 

offices’ branch office manager. 

Proposed Supplementary Material .15 

to Rule 3110 would provide a definition 

for ‘‘associated person’’ for the purposes 

of proposed Rule 3110. 

Proposed Rule 3120 (Supervisory 

Control System) 

Proposed Rule 3120(a), which is 

based on FINRA Rule 3120(a), would 

provide that each member organization 

must designate and specifically identify 

to the Exchange one or more principals 

who must establish, maintain, and 

enforce a system of supervisory control 

policies and procedures that: 

• Test and verify that the member 

organization’s supervisory procedures 

are reasonably designed with respect to 

the activities of the member 

organization and its associated persons, 

to achieve compliance with applicable 

securities laws and regulations, and 

with applicable Exchange rules; and 

• Create additional or amend 

supervisory procedures where the need 

is identified by such testing and 

verification. 

Similar to the requirements of current 

Rule 342.30, the designated principal or 

principals would be required to submit 

to the member organization’s senior 

management no less than annually, a 

report detailing each member 

organization’s system of supervisory 

controls, the summary of the test results 

and significant identified exceptions, 

and any additional or amended 

supervisory procedures created in 

response to the test results. 

Proposed Rule 3120(b) would provide 

that each report provided to senior 

management pursuant to proposed Rule 

3120(a) in the calendar year following a 

calendar year in which a member 

organization reported $200 million or 

more in gross revenue must include, to 

the extent applicable to the member 

organization’s business: 

• A tabulation of the reports 

pertaining to customer complaints and 

internal investigations made to the 

Exchange during the preceding year; 

and 

• Discussion of the preceding year’s 

compliance efforts, including 

procedures and educational programs, 

in each of the following areas: 

• Trading and market activities; 

• Investment banking activities; 

• Antifraud and sales practices; 

• Finance and operations; 

• Supervision; and 

• Anti-money laundering. 

The categories listed above are 

incorporated from the annual report 

content requirements of current Rule 

342.30, which apply to all member 

organizations regardless of revenue. The 

proposed rule change seeks to mitigate 

compliance costs and burdens with 

respect to proposed Rule 3120’s annual 

reporting requirements by requiring that 

only member organizations reporting 

$200 million or more in gross revenues 

in the preceding year include in their 

annual reports supplemental 

information from current Rule 342.30’s 

annual report content requirements. The 

Exchange also believes that the 

proposed threshold strikes the 

appropriate balance as it encompasses 

larger member organizations, member 

organizations engaged in significant 

underwriting activities and substantial 

trading activities or market making 

business, and member organizations 

with extensive sales platforms. 

Proposed Rule 3120(c) would provide 

that, for purposes of proposed Rule 

3120(b), ‘‘gross revenue’’ is defined as: 

• Total revenue as reported on 

FOCUS Form Part II or IIA (line item 

4030) less commodities revenue (line 

item 3990), if applicable; or 

• Total revenue as reported on 

FOCUS Form Part II CSE (line item 

4030) less, if applicable, 


tkelley on DSK3SPTVN1PROD with NOTICES
Federal Register / Vol. 79, No. 219 / Thursday, November 13, 2014 / Notices 67517 

• Commissions on commodity 

transactions (line item 3991); and 

• Commodities gains or losses (line 

items 3924 and 3904). 

Proposed Supplementary Material .01 

to Rule 3120 would provide a definition 

for ‘‘associated person’’ for the purposes 

of proposed Rule 3120. 

Proposed Rule 3150 (Holding of 

Customer Mail) 

Proposed Rule 3150(a) would provide 

that a member organization may hold 

mail for a customer who will not be 

receiving mail at his or her usual 

address, provided that: 

• The member organization receives 

written instructions from the customer 

that include the time period during 

which the member organization is 

requested to hold the customer’s mail. If 

the requested time period included in 

the instructions is longer than three 

consecutive months (including any 

aggregation of time periods from prior 

requests), the customer’s instructions 

must include an acceptable reason for 

the request (e.g., safety or security 

concerns). Convenience is not an 

acceptable reason for holding mail 

longer than three months; 

• The member organization: 

• Informs the customer in writing of 

any alternate methods, such as email or 

access through the member 

organization’s Web site, that the 

customer may use to receive or monitor 

account activity and information; and 

• Obtains the customer’s 

confirmation of the receipt of such 

information; and 

• The member organization verifies at 

reasonable intervals that the customer’s 

instructions still apply. 

Proposed Rule 3150(b) would provide 

that, during the time that a member 

organization is holding mail for a 

customer, the member organization 

must be able to communicate with the 

customer in a timely manner to provide 

important account information (e.g., 

privacy notices and the Securities 

Investor Protection Corporation 

information disclosures required by 

Rule 2266), as necessary. 

Proposed Rule 3150(c) would provide 

that a member organization holding a 

customer’s mail pursuant to proposed 

Rule 3150 must take actions reasonably 

designed to ensure that the customer’s 

mail is not tampered with, held without 

the customer’s consent, or used by an 

associated person of the member 

organization in any manner that would 

violate Exchange rules or the federal 

securities laws. 

The Exchange currently does not have 

a rule comparable to proposed Rule 

3150. The Exchange believes that 

adding proposed Rule 3150 would help 

protect customers. 

Proposed Supplementary Material .01 

to Rule 3150 would provide a definition 

for ‘‘associated person’’ for the purposes 

of proposed Rule 3150. 

Proposed Rule 3170 (Tape Recording of 

Registered Persons by Certain Firms) 

Proposed Rule 3170(a) would provide 

the following definitions for purposes of 

proposed Rule 3170: 

• The term ‘‘registered person’’ would 

mean any person registered with the 

Exchange. 

• The term ‘‘disciplined firm’’ would 

mean: 

• A member organization that, in 

connection with sales practices 

involving the offer, purchase, or sale of 

any security, has been expelled from 

membership or participation in any 

securities industry SRO or is subject to 

an order of the SEC revoking its 

registration as a broker-dealer; 

• A futures commission merchant or 

introducing broker that has been 

formally charged by either the 

Commodity Futures Trading 

Commission or a registered futures 

association with deceptive 

telemarketing practices or promotional 

material relating to security futures, 

those charges have been resolved, and 

the futures commission merchant or 

introducing broker has been closed 

down and permanently barred from the 

futures industry as a result of those 

charges; or 

• A futures commission merchant or 

introducing broker that, in connection 

with sales practices involving the offer, 

purchase, or sale of security futures is 

subject to an order of the SEC revoking 

its registration as a broker or dealer. 

• The term ‘‘disciplinary history’’ 

would mean a finding of a violation by 

a registered person in the past five years 

by the SEC, an SRO, or a foreign 

financial regulatory authority of one or 

more of the following provisions (or 

comparable foreign provision) or rules 

or regulations thereunder: 

• Violations of the types enumerated 

in Section 15(b)(4)(E) of the Act; 

• Section 15(c) of the Act; 

• Section 17(a) of the Securities Act 

of 1933; 

• Rules 10b–5 and 15g–1 through 

15g–9 under the Act; 

• NASD Rule 2110 (Standards of 

Commercial Honor and Principles of 

Trade) or FINRA Rule 2010 (Standards 

of Commercial Honor and Principles of 

Trade) or NYSE Rule 2010 (Standards of 

Commercial Honor and Principles of 

Trade) or NYSE Rule 476(a)(6) (Failure 

to Observe High Standards of 

Commercial Honor and Just and 

Equitable Principles of Trade) (only if 

the finding of a violation of NASD Rule 

2110, FINRA Rule 2010, NYSE Rule 

2010 or NYSE Rule 476(a)(6) is for 

unauthorized trading, churning, 

conversion, material misrepresentations 

or omissions to a customer, frontrunning, trading ahead of research 

reports or excessive markups), FINRA 

Rule 5280 (Trading Ahead of Research 

Reports), NASD Rule 2120 (Use of 

Manipulative, Deceptive or Other 

Fraudulent Devices) or FINRA Rule 

2020 (Use of Manipulative, Deceptive or 

Other Fraudulent Devices) or NYSE 

Rule 2020 (Use of Manipulative, 

Deceptive or Other Fraudulent Devices) 

or NYSE Rule 476(a)(5) (effecting any 

transaction in, or inducing the purchase 

or sale of, any security by means of any 

manipulative, deceptive or other 

fraudulent device or contrivance), 

NASD Rule 2310 (Recommendations to 

Customers (Suitability)) or FINRA Rule 

2111 (Suitability) or NYSE Rule 405 

(Diligence as to Accounts), NASD Rule 

2330 (Customers’ Securities or Funds) 

or FINRA Rule 2150 (Improper Use of 

Customers’ Securities or Funds; 

Prohibition Against Guarantees and 

Sharing in Accounts) or NYSE Rule 

2150 (Improper Use of Customers’ 

Securities or Funds; Prohibition Against 

Guarantees and Sharing in Accounts), 

NASD Rule 2440 (Fair Prices and 

Commissions), NASD Rule 3010 

(Supervision) or FINRA Rule 3110 

(Supervision) or NYSE Rule 3110 

(Supervision) or NYSE Rule 342 

(Offices—Approval, Supervision and 

Control) (failure to supervise only for 

both NASD Rule 3010, FINRA Rule 

3110, NYSE Rule 3110 or Rule 342), 

NASD Rule 3310 (Publication of 

Transactions and Quotations) or FINRA 

Rule 5210 (Publication of Transactions 

and Quotations) or NYSE Rule 5210 

(Publication of Transactions and 

Quotations), and NASD Rule 3330 

(Payment Designed to Influence Market 

Prices, Other than Paid Advertising) or 

FINRA Rule 5230 (Payments Involving 

Publications that Influence the Market 

Price of a Security); and MSRB Rules G– 

19, G–30, and G–37(b) & (c). 

• The term ‘‘tape recording’’ would 

include without limitation, any 

electronic or digital recording that meets 

the requirements of proposed Rule 3170. 

• The term ‘‘taping firm’’ would 

mean: 

• A member organization with at least 

five but fewer than ten registered 

persons, where 40% or more of its 

registered persons have been associated 

with one or more disciplined firms in a 

registered capacity within the last three 

years; 


tkelley on DSK3SPTVN1PROD with NOTICES
67518 Federal Register / Vol. 79, No. 219 / Thursday, November 13, 2014 / Notices 

20The Exchange also proposes to replace ‘‘allied 

member’’ in Rule 408 with ‘‘principal executive.’’ 

See note 11, supra. 

21The Exchange proposes to update a reference 

to Rules 17a–3 and 17a–4 under the Act. 

22The Exchange proposes to delete a reference to 

‘‘registered options representative.’’ 

23 15 U.S.C. 78f(b). 

24 15 U.S.C. 78f(b)(5). 

• A member organization with at least 

ten but fewer than twenty registered 

persons, where four or more of its 

registered persons have been associated 

with one or more disciplined firms in a 

registered capacity within the last three 

years; 

• A member organization with at least 

twenty registered persons where 20% or 

more of its registered persons have been 

associated with one or more disciplined 

firms in a registered capacity within the 

last three years. 

• For purposes of calculating the 

number of registered persons who have 

been associated with one or more 

disciplined firms in a registered 

capacity within the last three years 

pursuant to proposed Rule 3170(a)(5), 

member organizations should not 

include registered persons who: 

• Have been registered for an 

aggregate total of 90 days or less with 

one or more disciplined firms within 

the past three years; and 

• Do not have a disciplinary history. 

Proposed Rule 3170(b) would provide 

that each member organization that 

either is notified by the Exchange or 

otherwise has actual knowledge that it 

is a taping firm must establish, 

maintain, and enforce special written 

procedures for supervising the 

telemarketing activities of all of its 

registered persons. A taping firm 

required to establish, maintain, and 

enforce special written procedures 

pursuant to proposed Rule 3170(b) 

would be required to establish and 

implement the procedures within 60 

days of receiving notice from the 

Exchange or obtaining actual knowledge 

that it is a taping firm. The procedures 

required by proposed Rule 3170(b) 

would include procedures for tape 

recording all telephone conversations 

between the taping firm’s registered 

persons and both existing and potential 

customers and for reviewing the tape 

recordings to ensure compliance with 

applicable securities laws and 

regulations and applicable Exchange 

rules. The procedures must be 

appropriate for the taping firm’s 

business, size, structure, and customers, 

and must be maintained for a period of 

three years from the date that the taping 

firm establishes and implements the 

procedures. All tape recordings made 

pursuant to the requirements of 

proposed Rule 3170(b) must be retained 

for a period of not less than three years 

from the date the tape was created, the 

first two years in an easily accessible 

place. Each taping firm would be 

required to catalog the retained tapes by 

registered person and date. By the 30th 

day of the month following the end of 

each calendar quarter, each taping firm 

subject to the requirements of proposed 

Rule 3170(b) would be required to 

submit to the Exchange a report on the 

taping firm’s supervision of the 

telemarketing activities of its registered 

persons. 

Proposed Rule 3170(c) would provide 

that a member organization that 

becomes a taping firm for the first time 

may reduce its staffing levels to fall 

below the threshold levels within 30 

days after receiving notice from the 

Exchange pursuant to the provisions of 

proposed Rule 3170(b)(1) or obtaining 

actual knowledge that it is a taping firm, 

provided the member organization 

promptly notifies the Exchange’s 

Department of Member Regulation in 

writing of its becoming subject to the 

Rule. Once the member organization has 

reduced its staffing levels to fall below 

the threshold levels, it must not rehire 

a person terminated to accomplish the 

staff reduction for a period of 180 days. 

On or prior to reducing staffing levels 

pursuant to proposed Rule 3170(c), a 

member organization would be required 

to provide the Exchange’s Department of 

Member Regulation with written notice 

identifying the terminated person(s). 

Proposed Rule 3170(d) would provide 

that, pursuant to the Rule 9600 Series, 

the Exchange could, in exceptional 

circumstances, taking into consideration 

all relevant factors, exempt any taping 

firm unconditionally or on specified 

terms and conditions from the 

requirements of proposed Rule 3170. A 

taping firm seeking an exemption would 

be required to file a written application 

pursuant to the Rule 9600 Series within 

30 days after receiving notice from the 

Exchange or obtaining actual knowledge 

that it is a taping firm. A member 

organization that becomes a taping firm 

for the first time could elect to reduce 

its staffing levels pursuant to the 

provisions of proposed Rule 3170(c) or, 

alternatively, to seek an exemption 

pursuant to proposed Rule 3170(d), as 

appropriate. A taping firm would not be 

able to seek relief from proposed Rule 

3170 by both reducing its staffing levels 

pursuant to proposed Rule 3170(c) and 

requesting an exemption. 

The Exchange does not currently have 

a rule comparable to proposed Rule 

3170. The Exchange believes that 

adopting proposed Rule 3170 will 

provide for more effective supervision 

of member organizations that have a 

significant number of registered persons 

with disciplinary history, thereby 

resulting is enhanced customer 

protection. 

Conforming Changes 

The Exchange also proposes to make 

certain conforming changes to Rules 36, 

70, 86, 345, 405, 407, 408,20 410, 416A, 

472, 476A, 2210, and 9217 to delete or 

update cross-references to the proposed 

rules as applicable. The Exchange also 

proposes certain technical changes 

within Rule 86 21 and 345.10 22 that are 

unrelated to this proposal. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

Section 6(b) of the Act,23 in general, and 

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

of the Act,24 in particular, because it is 

designed to promote just and equitable 

principles of trade and to remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system. 

Specifically, the Exchange believes that 

the proposed rule change supports the 

objectives of the Act by providing 

greater harmonization between 

Exchange rules and FINRA rules of 

similar purpose, resulting in less 

burdensome and more efficient 

regulatory compliance. In particular, 

Exchange member organizations that are 

also FINRA members are subject to 

Exchange supervisory rules and FINRA 

Rules 3110, 3120, 3150, and 3170, and 

harmonizing these rules by adopting 

proposed Rules 3110, 3120, 3150, and 

3170 would promote just and equitable 

principles of trade by requiring a single 

standard for supervision. The Exchange 

believes that to the extent the Exchange 

has proposed changes that differ from 

the FINRA version of the Exchange 

rules, such changes are generally 

technical in nature and do not change 

the substance of the proposed rules. The 

Exchange also believes that the 

proposed rule change will update and 

add specificity to the requirements 

governing supervision, which will 

promote just and equitable principles of 

trade and help to protect investors. As 

such the Exchange believes that the 

proposed rule change meets the 

requirements of Section 6(b)(5) of the 

Act. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange 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. The 


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Federal Register / Vol. 79, No. 219 / Thursday, November 13, 2014 / Notices 67519 

25 15 U.S.C. 78s(b)(3)(A)(iii). 

26 17 CFR 240.19b–4(f)(6). 

27 17 CFR 240.19b–4(f)(6). 

28 17 CFR 240.19b–4(f)(6)(iii). 

29For purposes 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). 

30 15 U.S.C. 78s(b)(2)(B). 

31 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release Nos. 72688 

(July 28, 2014), 79 FR 44941 (SR–BATS–2014–028); 

72690 (July 28, 2014), 79 FR 44929 (SR–BYX–2014– 

Continued 

Exchange believes that the proposed 

rule change is not intended to address 

competitive issues but rather to achieve 

greater consistency between the 

Exchange’s rules and FINRA’s rules 

concerning supervision. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were solicited 

or received with respect to the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The Exchange has filed the proposed 

rule change pursuant to Section 

19(b)(3)(A)(iii) of the Act 25 and Rule 

19b–4(f)(6) thereunder.26 Because the 

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 

prior to 30 days from the date on which 

it was filed, or such shorter time as the 

Commission may designate, if 

consistent with the protection of 

investors and the public interest, the 

proposed rule change has become 

effective pursuant to Section 19(b)(3)(A) 

of the Act and Rule 19b–4(f)(6)(iii) 

thereunder. 

A proposed rule change filed under 

Rule 19b–4(f)(6) 27 normally does not 

become operative prior to 30 days after 

the date of the filing. However, pursuant 

to Rule 19b4(f)(6)(iii),28 the Commission 

may designate a shorter period of time 

if such action is consistent with the 

protection of investors and the public 

interest. The Exchange has asked the 

Commission to waive the 30-day 

operative delay so that the proposal may 

become operative immediately upon 

filing. 

The Commission believes that 

waiving the 30-day operative delay is 

consistent with the protection of 

investors and the public interest, 

because it allows the Exchange to 

immediately conform its supervision 

rules to corresponding FINRA rules. 

This will ensure that Dual Members 

generally will be subject to a single set 

of rules governing supervision. As noted 

by the Exchange, the proposal would 

harmonize NYSE and FINRA rules, 

resulting in less burdensome and more 

efficient regulatory compliance. In 

addition, the proposal will update and 

add specificity to the Exchange’s 

requirements governing supervision, 

which will promote just and equitable 

principles of trade and help to protect 

investors. For these reasons, the 

Commission designates the proposed 

rule change to be operative upon 

filing.29

At any time within 60 days of the 

filing of such proposed rule change, the 

Commission summarily may 

temporarily suspend 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. If the 

Commission takes such action, the 

Commission shall institute proceedings 

under Section 19(b)(2)(B) 30 of the Act to 

determine whether the proposed rule 

change should be approved or 

disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

comment form (http://www.sec.gov/

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

NYSE–2014–56 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Brent J. Fields, Secretary, Securities 

and Exchange Commission, 100 F Street 

NE., Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–NYSE–2014–56. This file 

number should be included on the 

subject line if email 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 Section, 100 F Street NE., 

Washington, DC 20549–1090, on official 

business days between the hours of 

10:00 a.m. and 3:00 p.m. Copies of the 

filing will also be available for 

inspection and copying at the NYSE’s 

principal office. All comments received 

will be posted without change; the 

Commission does not edit personal 

identifying information from 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File Number SR–NYSE– 

2014–56 and should be submitted on or 

before December 4, 2014. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.31

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2014–26815 Filed 11–12–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73549; File Nos. SR–BATS– 

2014–028; SR–BYX–2014–011; SR–EDGA– 

2014–16; SR–EDGX–2014–19] 

Self-Regulatory Organizations; BATS 

Exchange, Inc.; BATS Y-Exchange, 

Inc.; EDGA Exchange, Inc.; EDGX 

Exchange, Inc.; Notice of Withdrawal 

of Proposed Rule Changes To 

Establish a New Market Data Product 

Called the BATS One Feed 

November 6, 2014. 

On July 14, 2014, BATS Exchange, 

Inc. (‘‘BATS’’), EDGA Exchange, Inc. 

(‘‘EDGA’’), and EDGX Exchange, Inc. 

(‘‘EDGX’’) and, on July 18, 2014, BATS 

Y-Exchange, Inc. (together with BATS, 

EDGA, and EDGX, the ‘‘Exchanges’’) 

each 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

proposed rule changes to establish the 

same new market data product called 

the BATS One Feed. The proposed rule 

changes were published for comment in 

the Federal Register on August 1, 2014.3


tkelley on DSK3SPTVN1PROD with NOTICES