Document ID: SEC-2014-2044-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Financial Industry Regulatory Authority, Inc.
Posted Date: 2014-12-08T05:00Z

[Federal Register Volume 79, Number 235 (Monday, December 8, 2014)]
[Proposed Rules]
[Pages 72743-72745]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-28641]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-73714; File No. SR-FINRA-2014-049]

Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change To Adopt FINRA Rule 2122 (Charges for Services 
Performed) in the Consolidated FINRA Rulebook

December 2, 2014.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on November 21, 2014, Financial Industry Regulatory Authority, Inc. 
(``FINRA'') 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 prepared by FINRA. FINRA has designated 
the proposed rule change as constituting a ``non-controversial'' rule 
change under paragraph (f)(6) of Rule 19b-4 under the Act,\3\ which 
renders the proposal effective upon receipt of this filing by the 
Commission. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    FINRA is proposing to adopt NASD Rule 2430 (Charges for Services 
Performed) as FINRA Rule 2122 (Charges for Services Performed) without 
any substantive changes. FINRA also proposes to update a cross-
reference within FINRA Rule 0150 accordingly.
    Below is the text of the proposed rule change. Proposed new 
language is in italics; proposed deletions are in brackets.
* * * * *

FINRA Rules

* * * * *

0150. Application of Rules to Exempted Securities Except Municipal 
Securities

    (a) through (b) No Change.
    (c) Unless otherwise indicated within a particular Rule, the 
following FINRA and NASD rules are applicable to transactions in, and 
business activities relating to, exempted securities, except municipal 
securities, conducted by members and associated persons: FINRA Rules 
2010, 2020, 2060, 2111, 2122, 2150, 2210, 2212, 2261, 2268, 2269, 
2320(g), 3110, 3220, 3270, 4120, 4130, 4210, 4311, 4330, 4360, 4510 
Series, 4530, 5160, 5210, 5220, 5230, 5310, 5340, 8110, 8120, 8210, 
8310, 8311, 8312, 8320, 8330 and 9552; NASD Rules IM-2210-2, 2340, 
[2430,] 2510, 3040, 3050 and 3140.
* * * * *

[2430] 2122. Charges for Services Performed

    Charges, if any, for services performed, including, but not limited 
to, miscellaneous services such as collection of monie[y]s due for 
principal, dividends, or interest; exchange or transfer of securities; 
appraisals, safe-keeping or custody of securities, and other 
services[,] shall be reasonable and not unfairly discriminatory 
[between] among customers.
* * * * *

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, FINRA included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. FINRA has prepared summaries, set forth in sections A, 
B, and C below, of the most significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    As part of the process of developing a new consolidated rulebook 
(``Consolidated FINRA Rulebook''),\4\ FINRA is proposing to transfer 
NASD Rule 2430 (Charges for Services Performed) into the Consolidated 
FINRA Rulebook as FINRA Rule 2122 (Charges for Services Performed) 
without any substantive changes. Proposed FINRA Rule 2122 states that 
charges, if any, for services performed, including, but not limited to, 
miscellaneous services such as collection of monies due for principal, 
dividends, or interest; exchange or transfer of securities; appraisals, 
safe-keeping or custody of securities, and other services shall be 
reasonable and not unfairly discriminatory among customers. Proposed 
FINRA Rule 2122 closely tracks the language of NASD Rule 2430 but makes 
non-substantive changes to the text of the NASD rule.\5\
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    \4\ The current FINRA rulebook consists of: (1) FINRA Rules; (2) 
NASD Rules; and (3) rules incorporated from New York Stock Exchange 
LLC (``NYSE'') (``Incorporated NYSE Rules'') (together, the NASD 
Rules and Incorporated NYSE Rules are referred to as the 
``Transitional Rulebook''). While the NASD Rules generally apply to 
all FINRA members, the Incorporated NYSE Rules apply only to those 
members of FINRA that are also members of the NYSE (``Dual 
Members''). The FINRA Rules apply to all FINRA members, unless such 
rules have a more limited application by their terms. For more 
information about the rulebook consolidation process, see 
Information Notice, March 12, 2008 (Rulebook Consolidation Process).
    \5\ FINRA previously solicited comment on a proposal to move 
NASD Rule 2430 to the Consolidated FINRA Rulebook with substantive 
changes. See Regulatory Notice 11-08 (February 2011); see also 
Regulatory Notice 13-07 (January 2013). Given that FINRA would like 
to proceed with the rulebook consolidation process expeditiously to 
provide greater clarity and regulatory efficiency to FINRA members, 
FINRA is proposing in this rule change to move NASD Rule 2430 to the 
FINRA rules without substantive changes, and will defer proposing 
any substantive changes to the rule for a future rule proposal.

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[[Page 72744]]

    FINRA also proposes to update a cross-reference within FINRA Rule 
0150 to reflect the transfer of NASD Rule 2430 to FINRA Rule 2122.
    FINRA has filed the proposed rule change for immediate 
effectiveness pursuant to Section 19(b)(3) of the Act \6\ and paragraph 
(f)(6) of Rule 19b-4 thereunder,\7\ in that the proposed rule change 
does not significantly affect the protection of investors or the public 
interest; does not impose any significant burden on competition; and 
does not become operative for 30 days after filing or such shorter time 
as the Commission may designate. FINRA has requested that the SEC waive 
the requirement that the proposed rule change not become operative for 
30 days after the date of the filing so that FINRA can implement the 
proposed rule change immediately.
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    \6\ 15 U.S.C. 78s(b)(3).
    \7\ 17 CFR 240.19b-4(f)(6).
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2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the 
provisions of Section 15A(b)(6) of the Act,\8\ 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, and Section 15A(b)(9) of the Act,\9\ which requires 
that FINRA rules not impose any burden on competition that is not 
necessary or appropriate in furtherance of the Act. FINRA believes that 
this proposed rule change, which does not substantively change the 
rule, is consistent with the Act because it is being undertaken 
pursuant to the rulebook consolidation process, which is designed to 
provide additional clarity and regulatory efficiency to FINRA members 
by consolidating the applicable NASD, Incorporated NYSE, and FINRA 
rules into one rule set.
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    \8\ 15 U.S.C. 78o-3(b)(6).
    \9\ 15 U.S.C. 78o-3(b)(9).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    FINRA does not believe that the proposed rule change will result in 
any burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act. As noted above, this proposal 
will not substantively change either the text or application of the 
rule. FINRA would like to proceed with the rulebook consolidation 
process expeditiously, which it believes will provide additional 
clarity and regulatory efficiency to members.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    Written comments were neither solicited nor received with respect 
to this proposal to transfer NASD Rule 2430 into the Consolidated FINRA 
Rulebook without any substantive changes.\10\
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    \10\ But see note 5 supra.
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III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \11\ and Rule 19b-
4(f)(6) thereunder.\12\
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19(b)(3)(A) of the Act \13\ 
normally does not become operative prior to 30 days after the date of 
the filing. However, pursuant to Rule 19b-4(f)(6)(iii),\14\ the 
Commission may designate a shorter time if such action is consistent 
with the protection of investors and the public interest. FINRA has 
asked the Commission to waive the 30-day operative delay so that the 
proposal may become operative upon filing. The Commission believes that 
waiving the 30-day operative delay is consistent with the protection of 
investors and the public interest. Because FINRA is proposing to 
transfer NASD Rule 2430 (Charges for Services Performed) into the 
Consolidated FINRA Rulebook as FINRA Rule 2122 (Charges for Services 
Performed) without any substantive changes, and because the rulebook 
consolidation process is designed to provide additional clarity and 
regulatory efficiency to members, the Commission believes that a waiver 
of the requirement is appropriate so that the rule change may become 
operative immediately. Therefore, the Commission hereby waives the 30-
day operative delay and designates the proposal operative upon 
filing.\15\
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    \13\ Id.
    \14\ 17 CFR 240.19b-4(f)(6)(iii).
    \15\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of the 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 to 
determine whether the proposed rule 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-FINRA-2014-049 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-FINRA-2014-049. 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 Room, 100 F Street NE., 
Washington, DC 20549, on official business days between the hours of

[[Page 72745]]

10:00 a.m. and 3:00 p.m. Copies of such filing also will be available 
for inspection and copying at the principal office of FINRA. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly.
    All submissions should refer to File Number SR-FINRA-2014-049 and 
should be submitted on or before December 29, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-28641 Filed 12-5-14; 8:45 am]
BILLING CODE 8011-01-P