Document ID: SEC-2010-0434-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2010-03-22T04:00Z

[Federal Register: March 22, 2010 (Volume 75, Number 54)]
[Notices]               
[Page 13639-13641]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr22mr10-129]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61704; File No. SR-NYSEArca-2010-11]

 
Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by NYSE Arca, Inc. Amending Rule 
9.1(f)

March 15, 2010.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that, on March 1, 2010, NYSE Arca, Inc. (``NYSE Arca'' or the 
``Exchange'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I and 
II, below, which Items have been prepared by the self-regulatory 
organization. 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\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to modify its sharing in accounts rule to 
harmonize its requirements with the Financial Industry Regulatory 
Authority (``FINRA''). A copy of this filing is available on the 
Exchange's Web site at http://www.nyse.com, at the Exchange's principal 
office and at the Commission's Public Reference Room. The text of the 
proposed rule change is below. Proposed new language is in italics and 
proposed deletions are in [brackets].
Rules of NYSE Arca Equities, Inc.
* * * * *
    Rule 9.1(f). [Sharing Profits--Losses] Sharing in Accounts; Extent 
Permissible
    [No registered employee shall directly or indirectly take or 
receive a share in the profits of any customer's account or share in 
any losses sustained in any such account.]
    (1)(A) Except as provided in paragraph (2) no member or person 
associated with a member shall share directly or indirectly in the 
profits or

[[Page 13640]]

losses in any account of a customer carried by the member or any other 
member; provided, however, that a member or person associated with a 
member may share in the profits or losses in such an account if
    (i) such person associated with a member obtains prior written 
authorization from the member employing the associated person;
    (ii) such member or person associated with a member obtains prior 
written authorization from the customer; and
    (iii) such member or person associated with a member shares in the 
profits or losses in any account of such customer only in direct 
proportion to the financial contributions made to such account by 
either the member or person associated with a member.
    (B) Exempt from the direct proportionate share limitation of 
paragraph (1)(A)(iii) are accounts of the immediate family of such 
member or person associated with a member. For purposes of this Rule, 
the term ``immediate family'' shall include parents, mother-in-law or 
father-in-law, husband or wife, children or any relative to whose 
support the member or person associated with a member otherwise 
contributes directly or indirectly.
    (2) Notwithstanding the prohibition of paragraph (1), a member or 
person associated with a member that is acting as an investment adviser 
(whether or not registered as such) may receive compensation based on a 
share in profits or gains in an account if
    (A) such person associated with a member seeking such compensation 
obtains prior written authorization from the member employing the 
associated person;
    (B) such member or person associated with a member seeking such 
compensation obtains prior written authorization from the customer; and
    (C) all of the conditions in Rule 205-3 of the Investment Advisers 
Act of 1940 (as the same may be amended from time to time) are 
satisfied.
* * * * *

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 self-regulatory organization 
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
    In order to harmonize its sharing in accounts rule with FINRA 
rules, the Exchange proposes to delete NYSE Arca Rule 9.1(f), Sharing 
Profits--Losses, in its entirety, and replace it with the language of 
FINRA 2150(c), Sharing in Accounts; Extent Permissible. FINRA Rule 
2150(c) contains the same general prohibition as NYSE Arca Rule 9.1(f), 
but with additional limited exceptions. The Exchange proposes to add 
those limited exceptions in order to bring its rule in line with the 
FINRA rule.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) \4\ of the Act, in general, and furthers the 
objectives of Section 6(b)(5),\5\ in particular, in that it is designed 
to facilitate transactions in securities, to promote just and equitable 
principles of trade, to enhance competition, and to protect investors 
and the public interest. Specifically, the changes proposed herein, by 
harmonizing NYSE Arca rules with FINRA rules, provide NYSE Arca Members 
with a clearer regulatory scheme. The Exchange further notes that the 
changes proposed herein are neither novel nor controversial and are 
modeled on existing FINRA rules.
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    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act.

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 \6\ and Rule 19b-4(f)(6) thereunder.\7\ 
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 \8\ and Rule 19b-
4(f)(6)(iii) thereunder.\9\
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    \6\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \7\ 17 CFR 240.19b-4(f)(6).
    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires the Exchange to give the Commission written notice of the 
Exchange's intent to file the proposed rule change along with a 
brief description and text of the proposed rule change, at least 
five business days prior to the date of filing of the proposed rule 
change, or such shorter time as designated by the Commission. The 
Exchange has satisfied the pre-filing requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) \10\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b4(f)(6)(iii),\11\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest.
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    \10\ 17 CFR 240.19b-4(f)(6).
    \11\ 17 CFR 240.19b-4(f)(6)(iii).
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    The Exchange requests that the Commission waive the 30-day pre-
operative waiting period contained in Exchange Act Rule 19b-
4(f)(6)(iii).\12\ The Exchange requests this waiver so that these 
changes can be both immediately effective and operative, thus 
minimizing any confusion. As noted above, the changes proposed herein, 
by harmonizing NYSE Arca rules with FINRA rules, provide NYSE Arca 
Members with a clearer regulatory scheme. The Commission notes that the 
FINRA financial responsibility rules are currently in operation. The 
Commission believes that waiving the 30-day operative delay will permit 
the Exchange to harmonize its rules with the corresponding FINRA rule 
immediately, thus promoting clarity and minimizing confusion with 
respect to the requirements regarding guarantees and sharing in 
accounts.\13\ For this reason, the Commission designates the proposed 
rule change as operative upon filing. 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

[[Page 13641]]

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.
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    \12\ 17 CFR 240.19b-4(f)(6)(iii).
    \13\ For purposes only of waiving the 30-day operative delay of 
this proposal, the Commission has considered the proposed rule's 
impact on efficiency, competition, and capital formation. 15 U.S.C. 
78c(f).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change, as amended, 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 rule-comments@sec.gov. Please include 
File Number SR-NYSEArca-2010-11 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-NYSEArca-2010-11. 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 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 10 a.m. and 3 p.m. Copies of such filing also will be 
available for inspection and copying at the principal office of 
NYSEArca. 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-
NYSEArca-2010-11 and should be submitted on or before April 12, 2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-6149 Filed 3-19-10; 8:45 am]
BILLING CODE 8011-01-P