37076 Federal Register / Vol. 74, No. 142 / Monday, July 27, 2009 / Notices 

16 Id. at 40149. 

17See the Affiliation Orders, supra note 8. 

18For purposes of calculating the 60-day period 

within which the Commission may summarily 

abrogate the proposed rule change under Section 

19(b)(3)(C) of the Act, the Commission considers 

the period to commence on July 17, 2009, the date 

on which Nasdaq submitted Amendment No. 2. See 

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

19 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. 60083 

(June 10, 2009), 74 FR 28739. 

4The Exchange notes that orders rejected in 

accordance with this rule will be routed in the same 

manner as those rejected under the NMS tradethrough validation rule (Exchange Article 20, Rule 

5, Interpretations and Policies .03), which has 

already been approved by the Commission. 

such prior approval.’’ 16 Nasdaq believes 

the proposed rule change is ‘‘based on 

and similar to’’ the rule changes 

recently approved in the Affiliation 

Orders and furthers efforts to effectively 

address the concerns previously 

identified by the Commission regarding 

the potential for conflicts of interest and 

informational advantages when an 

exchange is affiliated with one of its 

market participants.17

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission may summarily abrogate 

such rule change if it appears to the 

Commission that such action is 

necessary or appropriate in the public 

interest, for the protection of investors, 

or otherwise in furtherance of the 

purposes of the Act.18

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

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

rules/sro.shtml); or 

• Send an e-mail to rulecomments@sec.gov. Please include File 

Number SR–NASDAQ–2009–065 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Elizabeth M. Murphy, Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–1090. 

All submissions should refer to File 

Number SR–NASDAQ–2009–065. This 

file number should be included on the 

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

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

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

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

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

available for inspection and copying in 

the Commission’s Public Reference 

Room, 100 F Street, NE., Washington, 

DC 20549 on official business days 

between the hours of 10 a.m. and 3 p.m. 

Copies of the filing also will be available 

for inspection and copying at the 

principal office of Nasdaq. 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–NASDAQ–2009–065 and 

should be submitted on or before 

August 17, 2009. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.19

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–17767 Filed 7–24–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60353; File No. SR–CHX– 

2009–02] 

Self-Regulatory Organizations; 

Chicago Stock Exchange, Inc.; Order 

Granting Approval of Proposed Rule 

Change Relating to the Rejection of 

Undisplayed Odd-Lot Orders From the 

Exchange’s Matching System 

July 21, 2009. 

On June 2, 2009, the Chicago Stock 

Exchange, Inc. (‘‘CHX’’ or the 

‘‘Exchange’’) 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: 

(1) Allow Exchange customers to specify 

whether odd-lot orders and unexecuted 

odd-lot remainders, that are not able to 

be immediately displayed, should 

remain in, or be rejected from, the 

Exchange’s Matching System, and (2) 

add a generic routing rule to clarify how 

any orders that are rejected from the 

Exchange’s Matching System, and 

routed away according to Participant 

instructions, will be handled. The 

proposed rule change was published for 

comment in the Federal Register on 

June 17, 2009.3 The Commission 

received no comments on the proposed 

rule change. This order approves the 

proposed rule change. 

The Exchange proposes to amend 

CHX Article 20, Rule 8 to allow 

Exchange Participants to specify 

whether odd-lot orders and unexecuted 

odd-lot remainders, that are not able to 

be immediately displayed, should 

remain in, or be rejected from, the 

Exchange’s Matching System. This 

preference could be set by the 

Participant on both a default and order 

by order basis. Orders remaining in the 

Matching System will continue to be 

ranked at the price and time at which 

they were originally received. Orders 

that are rejected from the Matching 

System shall either be sent back to the 

order sender or be routed to another 

destination according to each 

Participant’s instructions 4 or, if 

designated ‘‘do not route,’’ 

automatically cancelled. The Exchange 

also proposes that Participants that elect 

to have orders routed to another 

destination pursuant to this rule, or 

pursuant to Article 20, Rule 5 

(‘‘Prevention of Trade-throughs’’), agree 

to be bound by such transactions. 

In addition, the Exchange proposes to 

add a generic routing rule to clarify how 

any orders that are rejected from the 

Exchange’s Matching System, and 

routed away according to Participant 

instructions, will be handled. The use of 

routing services is optional and is 

available only to exchange Participants. 

In such cases, the Participant will be 

responsible for ensuring that it has a 

relationship with its chosen 

destinations to permit the requested 

access. The Exchange shall not have 

responsibility for the handling of the 

order by the other destination, but will 

report any execution or cancellation of 

the order by the other destination to the 

Participant that submitted the order, 

will notify the other venue of any 

cancellations or changes to the order 

submitted by the order-sending 

Participant and, if requested by the 

Participant and its chosen destination, 

will flip any executions into the 

Participants account, as necessary, and 


jlentini on DSKJ8SOYB1PROD with NOTICES
Federal Register / Vol. 74, No. 142 / Monday, July 27, 2009 / Notices 37077 

5For example, if the Exchange routes a 

participant’s buy order to the participant’s chosen 

destination (Router ABC) and Router ABC gets an 

execution of that order in another market against 

market maker XYZ, the first leg of the transaction 

(ABC buying from XYZ) will be reported to clearing 

by the other market. The Router ABC would send 

an execution report back to the Exchange (for 

routing to the original order-sending participant). 

Under this proposal, if the participant and Router 

ABC had requested, the Exchange would take the 

execution report and create a clearing-only record, 

flipping the execution from Router ABC’s account 

to the account of the order-sending participant 

(ABC selling to the order-sending participant). 

6 15 U.S.C. 78f(b)(4) 

7 15 U.S.C. 78f(b)(5) 

8 In approving this rule, the Commission notes 

that it has considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

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

9 15 U.S.C. 78f(b)(5). 

10See CHX Rules Article 20, Rule 5, 

Interpretations and Policies .03. 

11See Securities Exchange Act Release No. 54963 

(December 19, 2006), 71 FR 77834 (December 17, 

2006) (SR–CHX–2006–30). 

12 15 U.S.C. 78s(b)(2). 

13 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. 59784 

(April 17, 2009), 74 FR 18779 (April 24, 2009) 

(‘‘Notice’’). 

4See letter to Florence E. Harmon, Deputy 

Secretary, Commission, from Bari Havlik, Senior 

Vice President and Chief Compliance Officer, 

Charles Schwab & Co., Inc., dated May 15, 2009 

(‘‘Schwab Letter’’). 

5See letter to Elizabeth M. Murphy, Secretary, 

Commission, from Patricia Albrecht, Assistant 

General Counsel, FINRA, dated July 8, 2009 

(‘‘Response Letter’’). 

6Member firms use the Central Registration 

Depository (CRD), a Web based system, to submit 

the form on behalf of the associated person by 

typing the person’s name into the signature box on 

the electronic form. 

7The member, as part of its recordkeeping 

requirements pursuant to Rule 17a–4(e)(1) under 

the Act, would be required to retain the written 

acknowledgment and make it available promptly 

upon request. 

report that second leg of the awaymarket transaction to clearing.5

The Exchange will provide its Routing 

Services pursuant to the proposed rule 

and three separate agreements, to the 

extent that they are applicable to a 

specific routing decision and deemed 

necessary by the Exchange and/or a 

third-party broker-dealer providing 

connectivity to other markets. The 

Exchange will provide such Routing 

Services in compliance with its rules 

and with the provisions of the Act and 

the rules thereunder, including, but not 

limited to, the requirements of Sections 

6(b)(4) 6 and (5) 7 of the Act that the 

rules of a national securities exchange 

provide for the equitable allocation of 

dues, fees and other charges among its 

members and issues and other persons 

using its facilities, and not be designed 

to permit unfair discrimination between 

customers, issuers, brokers or dealers. 

The Commission finds that the 

proposed rule change is consistent with 

the requirements of the Act and the 

rules and regulations thereunder that 

are applicable to a national securities 

exchange.8 In particular, the 

Commission believes that the proposed 

rule change is consistent with Section 

6(b)(5) of the Act,9 in that it is designed 

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 securities, to 

remove impediments to and perfect the 

mechanism of a free and open market 

and a national market system, and, in 

general, to protect investors and the 

public interest. 

The Commission believes that the 

proposed rule change may increase the 

efficiency of Exchange Participants in 

seeking to execute their customers’ 

orders that are ineligible for execution 

or display in the Exchange’s Matching 

System. In particular, odd-lot orders 

that are not immediately displayed in 

the Matching System or orders that 

otherwise would be cancelled back to a 

participant may be sent directly to a 

destination chosen by the participant for 

handling. The Commission notes that 

the Exchange’s proposed generic routing 

rule will operate in the same manner as 

its current routing rule for orders 

rejected by the Exchange’s Matching 

System under its NMS trade-through 

validation rule,10 which was previously 

approved by the Commission.11

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,12 that the 

proposed rule change (SR–CHX–2009– 

02) be, and it hereby is, approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.13

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–17766 Filed 7–24–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60348; File No. SR–FINRA– 

2009–019] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Order Approving 

Proposed Rule Change To Adopt 

FINRA Rules 1010 (Electronic Filing 

Requirements for Uniform Forms) and 

2263 (Arbitration Disclosure to 

Associated Persons Signing or 

Acknowledging Form U4) in the 

Consolidated FINRA Rulebook 

July 20, 2009. 

I. Introduction 

On April 7, 2009, the Financial 

Industry Regulatory Authority, Inc. 

(‘‘FINRA’’) (f/k/a ‘‘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 adopt, subject to certain 

amendments, NASD Rule 1140 

(Electronic Filing Rules) as new FINRA 

Rule 1010 (Electronic Filing 

Requirements for Uniform Forms) and 

NASD Rule 3080 (Disclosure to 

Associated Persons When Signing Form 

U–4) as new FINRA Rule 2263 

(Arbitration Disclosure to Associated 

Persons Signing or Acknowledging 

Form U4) in the consolidated FINRA 

rulebook. The proposal was published 

for comment in the Federal Register on 

April 24, 2009.3 The Commission 

received one comment letter, on May 

15, 2009, on the proposal.4 FINRA 

responded to the commenter on July 8, 

2009.5 This order approves the 

proposed rule change. 

II. Description of the Proposal 

Proposed FINRA Rule 1010 

NASD’s Rule 1140 specifies that an 

electronic initial and transfer Form U4 

must be based on a signed Form U4, but 

the rule does not expressly state that the 

signatures must be manual. The 

proposed rule would require that every 

initial Form U4 and every Form U4 filed 

to transfer a registered person’s 

association from one firm to another 

firm be based on an original, manuallysigned Form U4 provided to the member 

by the person on whose behalf the Form 

U4 is being filed.6

The proposed rule change also 

modifies the signature requirement with 

respect to amendments to disclosure 

information in the Form U4. NASD’s 

Rule 1140 requires the associated 

person on whose behalf the filing is 

made to sign amendments to Form U4 

that provide disclosure information. 

Proposed FINRA Rule 1010 would 

permit a firm to file amendments to the 

Form U4 disclosure information without 

obtaining the registered person’s manual 

signature if the firm uses reasonable 

efforts to i) provide the registered 

person with a copy of the amended 

disclosure information before filing and 

ii) obtain the registered person’s written 

acknowledgment that the information 

has been received and reviewed, which 

may be accomplished electronically, 

before filing.7


jlentini on DSKJ8SOYB1PROD with NOTICES