25792 Federal Register / Vol. 74, No. 102 / Friday, May 29, 2009 / Notices 

17 15 U.S.C. 78o-4(b)(2)(C). 

18 Id. In approving this proposed rule change, the 

Commission notes that it has considered the 

proposed rule’s impact on efficiency, competition 

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

19 15 U.S.C. 78s(b)(2). 

20 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 No. 59696 

(April 2, 2009), 74 FR 16020 (‘‘Notice’’). 

4See Securities Exchange Act Release No. 56145 

(July 26, 2007), 72 FR 42169 (August 1, 2007), as 

amended by Securities Exchange Act Release No. 

56145A (May 30, 2008), 73 FR 32377 (June 6, 2008) 

(File No. SR–NASD–2007–023) (‘‘Consolidation 

Approval Order’’). 

5See supra note 3. 

the comment letters received, and the 

MSRB’s responses to the comment 

letters and finds that the proposed rule 

change is consistent with the 

requirements of the Act and the rules 

and regulations thereunder applicable to 

the MSRB and, in particular, the 

requirements of Section 15B(b)(2)(C) of 

the Act 17 and the rules and regulations 

thereunder. Section 15B(b)(2)(C) of the 

Act requires, among other things, that 

the MSRB’s rules be designed to prevent 

fraudulent and manipulative acts and 

practices, to promote just and equitable 

principles of trade, to foster cooperation 

and coordination with persons engaged 

in regulating, clearing, settling, 

processing information with respect to, 

and facilitating transactions in 

municipal securities, to remove 

impediments to and perfect the 

mechanism of a free and open market in 

municipal securities, and, in general, to 

protect investors and the public 

interest.18

In particular, the Commission finds 

that the proposed rule change is 

consistent with the Act because it 

would serve as an additional 

mechanism by which the MSRB works 

toward removing impediments to and 

helping to perfect the mechanisms of a 

free and open market in municipal 

securities by providing a centralized 

venue for free public access to primary 

market disclosure documents and 

transaction price information for the 

municipal securities market through 

EMMA. The proposed rule change 

would provide greater access to primary 

market disclosure documents and 

transaction price information about 

municipal securities information to all 

participants in the municipal securities 

market on an equal basis, thereby 

removing potential barriers to obtaining 

such information, and will allow the 

municipal securities industry to 

produce more accurate trade reporting 

and transparency. Broad access to 

primary market disclosure documents 

and price transparency information 

through the EMMA portal should also 

assist in preventing fraudulent and 

manipulative acts and practices by 

improving the opportunity for public 

investors to access material information 

about issuers, their securities and the 

prices at which such securities trade. 

Furthermore, free public access to 

disclosure and transaction price 

information should promote a more fair 

and efficient municipal securities 

market in which transactions are 

effected on the basis of material 

information available to all parties to 

such transactions, and thereby allow for 

fairer pricing of transactions. In 

addition, the electronic dissemination of 

primary market disclosure documents 

should enable issuers to reduce their 

issuance costs by eliminating the need 

to print and to distribute in paper 

official statements in connection with 

their primary offerings, thereby 

resulting in lower costs to issuers and 

savings to their citizens, lower expenses 

for underwriters, and potentially lower 

prices for investors. All of these factors 

serve to promote the statutory mandate 

of the MSRB to protect investors and the 

public interest. 

It is therefore ordered, pursuant to 

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

proposed rule change (SR–MSRB–2009– 

02), be, and it hereby is, approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.20

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–12442 Filed 5–28–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–59962; File No. SR–FINRA– 

2009–020] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Order Approving 

Proposed Rule Change Relating to the 

FINRA Regulation Board Composition 

and Conforming Changes to the FINRA 

Regulation By-Laws 

May 21, 2009. 

I. Introduction 

On March 27, 2009, 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 amend the By-Laws of FINRA 

Regulation, Inc. (‘‘FINRA Regulation’’) 

to modify the composition of the board 

of directors of FINRA Regulation 

(‘‘FINRA Regulation Board’’), to adopt 

changes to conform the FINRA 

Regulation By-Laws to the FINRA ByLaws, and to make various nonsubstantive or conforming changes. The 

proposed rule change was published for 

comment in the Federal Register on 

April 8, 2009.3 The Commission 

received no comments on the proposal. 

This order approves the proposed rule 

change. 

II. Description of the Proposal 

On July 30, 2007, NASD and New 

York Stock Exchange Regulation, Inc. 

(‘‘NYSE Regulation’’), the regulatory 

subsidiary of the New York Stock 

Exchange, consolidated their member 

firm regulation operations into a 

combined organization, FINRA. As part 

of the consolidation, the Commission 

approved amendments to the NASD ByLaws to implement governance and 

related changes.4 The approved changes 

included a FINRA Board governance 

structure that balanced public and 

industry representation. FINRA 

Regulation (formerly known as NASD 

Regulation, Inc. (‘‘NASD Regulation’’)) 

is a subsidiary of FINRA that operates 

according to the Plan of Allocation and 

Delegation of Functions by NASD to 

Subsidiaries, as amended, which NASD 

adopted in 1996 when it formed NASD 

Regulation. FINRA Regulation’s ByLaws were not amended at the time of 

the consolidation, other than in a few 

sections where those By-Laws conflicted 

with the new FINRA By-Laws. 

The proposed rule change would 

modify the FINRA Regulation By-Laws 

to parallel more closely the composition 

and governance structure of the FINRA 

board of directors (‘‘FINRA Board’’). In 

addition, the proposed rule change 

would modify the FINRA Regulation 

By-Laws to reflect current business and 

legal practices concerning the 

administration and capital stock of 

FINRA Regulation. Furthermore, the 

proposed rule change would make nonsubstantive or conforming changes, 

including updating the FINRA 

Regulation By-Laws to reflect the 

corporate name change. A more detailed 

description of the proposed rule change 

is provided in the Notice.5 The 

Commission discusses below the most 

significant aspects of the proposed 

changes to the FINRA Regulation ByLaws. 

mstockstill on PROD1PC66 with NOTICES

Federal Register / Vol. 74, No. 102 / Friday, May 29, 2009 / Notices 25793 

6 In approving this proposal, the Commission has 

considered the proposed rule’s impact on 

efficiency, competition and capital formation. See 

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

7 15 U.S.C. 78o–3(b)(4). 

8See FINRA By-Laws, Article VII, Section 4 and 

XXII, Section 2(a). 

9See FINRA By-Laws, Article I(z), Article I(dd), 

Article I(xx) (defining Small Firm Governor, MidSize Firm Governor, and Large-Firm Governor), and 

Article VII, Section 4(a). 

10See proposed FINRA Regulation By-Laws, 

Article IV, Section 4.2 (Number of Directors). 

11See proposed FINRA Regulation By-Laws, 

Article IV, Section 4.3(a) (Qualifications). 

12See id. 

13See Consolidation Approval Order, supra note 

4. 

14See, e.g., Securities Exchange Act Release No. 

58324 (August 7, 2008), 73 FR 46936, 46941 

(August 12, 2008) (SR–BSE–2008–02, SR–BSE– 

2008–23, SR–BSE–2008–25, SR–BSECC–2008–01). 

15 15 U.S.C. 78o–3(b)(6). 

16 15 U.S.C. 78s(b)(2). 

17 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

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

4 17 CFR 240.19b–4(f)(6). 

5As defined in BATS Rule 1.5(bb). 

6As defined in BATS Rule 2.11. 

III. Discussion and Commission’s 

Findings 

After careful review of the proposed 

rule change, the Commission finds that 

the proposed rule change is consistent 

with the requirements of the Act and the 

rules and regulations thereunder 

applicable to a national securities 

association.6 In particular, the 

Commission finds that the proposed 

rule change is consistent with the 

provisions of Section 15A(b)(4) of the 

Act,7 which requires that FINRA rules 

be designed to assure a fair 

representation of FINRA’s members in 

the selection of its directors and the 

administration of its affairs. 

The FINRA By-Laws provide that the 

FINRA Board currently must consist of 

the Chief Executive Officer of FINRA, 

the Chief Executive Officer of NYSE 

Regulation, eleven Public Governors 

and ten Industry Governors, including a 

Floor Member Governor, an 

Independent Dealer/Insurance Affiliate 

Governor, an Investment Company 

Affiliate Governor, three Small Firm 

Governors, one Mid-Size Firm 

Governor, and three Large-Firm 

Governors.8 The Small Firm Governors, 

Mid-Size Firm Governor, and LargeFirm Governors are elected by members 

of FINRA according to their 

classification as a Small Firm, Mid-Size 

Firm or Large Firm.9

The proposed rule change would 

provide that the FINRA Regulation 

Board continue to consist of between 5 

and 15 members,10 and that FINRA 

Regulation Board members be elected 

by, and drawn exclusively from, the 

FINRA Board. Additionally, the 

proposed rule change would require 

that the FINRA Regulation Board, like 

the FINRA Board, have a greater number 

of Public Directors than Industry 

Directors.11 In addition, to ensure fair 

representation on the FINRA Regulation 

Board, the proposed rule change also 

would require that at least two, and not 

less than 20%, of the Directors of the 

FINRA Regulation Board be Small, MidSize, or Large Firm Governors.12 The 

Commission notes that it previously 

found the composition of the FINRA 

Board to be consistent with the fair 

representation requirement of Section 

15A(b)(4) of the Act.13 The Commission 

further notes that it has previously 

found a requirement that at least 20% of 

directors represent the exchange’s 

members to be consistent with the fair 

representation requirement applicable 

to national securities exchanges under 

Section 6(b)(3) of the Act.14

Accordingly, the Commission believes 

that the requirement that the FINRA 

Regulation Board be composed of at 

least two, and not less than 20%, of 

FINRA Regulation’s Directors be Small 

Firm, Mid-Size Firm or Large-Firm 

Governors is consistent with Section 

15A(b)(4) of the Act. 

The Commission also finds that the 

proposed rule change is consistent with 

the provisions of Section 15A(b)(6) of 

the Act,15 which requires, among other 

things, that FINRA rules must be 

designed to prevent fraudulent and 

manipulative acts and practices, to 

promote just and equitable principles of 

trade, and, in general, to protect 

investors and the public interest. The 

Commission believes that the proposed 

changes to the FINRA Regulation ByLaws should allow the FINRA 

Regulation Board to operate in a more 

effective and efficient manner by, 

among other things, having a similar 

composition and a complementary 

governance structure to the FINRA 

Board. 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,16 that the 

proposed rule change (SR–FINRA– 

2009–020) be, and it hereby is, 

approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.17

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–12444 Filed 5–28–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–59967; File No. SR–BATS– 

2009–015] 

Self-Regulatory Organizations; BATS 

Exchange, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Amend BATS Rule 

11.13, Entitled ‘‘Order Execution’’ 

May 21, 2009. 

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

Securities Exchange Act of 1934 (the 

‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on May 19, 

2009, BATS Exchange, Inc. (‘‘BATS’’ or 

the ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I and II 

below, which Items have been prepared 

by the Exchange. The Exchange has 

designated this proposal as a ‘‘noncontroversial’’ proposed rule change 

pursuant to Section 19(b)(3)(A) of the 

Act 3 and Rule 19b–4(f)(6)(iii) 

thereunder,4 which renders it effective 

upon filing with the Commission. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange is proposing to amend 

BATS Rule 11.13, entitled ‘‘Order 

Execution,’’ to provide Users 5 of the 

Exchange with another option with 

respect to the Exchange’s method of 

processing the unfilled balance of a 

limit order that returns to the Exchange 

and is posted to the BATS Book after 

being routed away to one or more away 

Trading Centers 6 for execution. 

The text of the proposed rule change 

is available at the Exchange’s Web site 

at http://www.batstrading.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 

mstockstill on PROD1PC66 with NOTICES