Document ID: SEC-2015-0359-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Financial Industry Regulatory Authority, Inc.
Posted Date: 2015-02-27T05:00Z

[Federal Register Volume 80, Number 39 (Friday, February 27, 2015)]
[Notices]
[Pages 10733-10735]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2015-04084]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74349; File No. SR-FINRA-2015-004]

Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change To Adopt FINRA Rule 4517 (Member Filing and 
Contact Information Requirements) in the Consolidated FINRA Rulebook

February 23, 2015.
    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 February 12, 2015, 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, 
II, and III below, of which Items I and II 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 Rules 3170 (Mandatory Electronic 
Filing Requirements), 1150 (Executive Representative), and 1160 
(Contact Information Requirements) as FINRA Rule 4517 (Member Filing 
and Contact Information Requirements) without any substantive changes. 
FINRA also proposes to update references and cross-references within 
other FINRA rules accordingly.
    The text of the proposed rule change is available on FINRA's Web 
site at http://www.finra.org, at the principal office of FINRA 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, 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 Rules 3170 (Mandatory Electronic Filing Requirements), 1150 
(Executive Representative), and NASD Rule 1160 (Contact Information 
Requirements) into the Consolidated FINRA Rulebook as FINRA Rule 4517 
(Member Filing and Contact Information Requirements) without any 
substantive changes.
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    \4\ The current FINRA rulebook consists of (1) FINRA Rules; (2) 
NASD Rules; and (3) rules incorporated from 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).
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Proposed FINRA Rule 4517(a): Mandatory Electronic Filing Requirements
    Proposed FINRA Rule 4517(a) would transfer without substantive 
change NASD Rule 3170 (Mandatory Electronic Filing Requirements) which 
requires each member to file with or otherwise submit to FINRA, in such 
electronic format as FINRA may require, all regulatory notices or other 
documents required to be filed or otherwise submitted to FINRA, as 
specified by FINRA. FINRA will advise firms via the Regulatory Notice 
process or other similar communication, as appropriate, as to each 
regulatory notice or document that members will be required to file 
with or submit in electronic format to FINRA, the compliance date for 
the electronic filing or submission, and the requisite manner and 
format.\5\
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    \5\ The proposed rule change does not affect any current filing 
or submission requirements issued pursuant to NASD Rule 3170, which 
remain effective, subject to any future changes FINRA may make 
pursuant to proposed FINRA Rule 4517 once the rule becomes 
effective. See, e.g., Notice to Members 06-61 (November 2006) 
(announcing SEC approval of NASD Rule 3170 and specifying various 
financial notices to which NASD Rule 3170 would apply), Regulatory 
Notice 08-67 (November 2008) (requiring electronic submission of, 
among other things, qualification examination waivers pursuant to 
NASD Rule 3170), and Regulatory Notice 11-46 (October 2011) 
(requiring electronic submission of annual audit reports pursuant to 
NASD Rule 3170). See also Regulatory Notice 08-11 (March 2008) 
(addressing frequently asked questions on NASD Rule 3170).
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Proposed FINRA Rule 4517(b): Executive Representative
    Proposed FINRA Rule 4517(b) would transfer without substantive 
change NASD Rule 1150, the provision requiring that each member must 
identify, review and, if necessary, update its executive representative 
designation and contact information as required by Article IV, Section 
3 of the NASD By-Laws in the manner prescribed by NASD Rule 1160. The 
proposed rule would replace the references to the legacy NASD By-Laws 
and rule with FINRA By-Laws and rule.
Proposed FINRA Rule 4517(c): Review and Update of Contact Information
    Proposed FINRA Rule 4517(c) would transfer without substantive 
changes the requirements of NASD Rule 1160 (Contact Information 
Requirements). The only changes to the proposed rule text are minor 
editorial changes to reflect current nomenclature, and to assist and 
enhance readability. NASD Rule 1160 requires members to report and 
update contact information to FINRA via the ``NASD Contact System or 
such other means as NASD may specify,'' and to promptly comply with any 
FINRA request for the required contact information. Currently, NASD 
Rule 1160 supports members' compliance with NASD Rule 1150 (Executive 
Representative) and FINRA Rules 1250 (Continuing Education 
Requirements), 3310.02 (Review of Anti-Money Laundering Compliance 
Person Information), and 4370 (Business Continuity Plans and Emergency 
Contact Information), which all require members to provide FINRA with 
designated contact person information.
    Proposed FINRA Rule 4517(c) would require each member to report and 
update to FINRA all contact information applicable to the member that 
FINRA

[[Page 10734]]

requires via the Firm Gateway[supreg] or such other means as FINRA may 
specify. Member firms already use the Firm Gateway, a web-based tool 
that provides consolidated access to FINRA regulatory and filing 
applications, to access the FINRA Contact System. Proposed FINRA Rule 
4517(c) would reflect the current nomenclature of a FINRA application 
that has been in use by its members since 2007.\6\
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    \6\ See FINRA News Release, Clicking on Compliance: FINRA 
Launches Firm Gateway (Oct. 11, 2007).
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    In addition, proposed FINRA Rule 4517(c)(1) would require a member 
to update its contact information promptly, but in any event not later 
than 30 days following any change in such information, and review, and 
if necessary, update the required contact information within 17 
business days after the end of each calendar year. This proposed 
provision replaces the nearly identical provision in NASD Rule 1160(b) 
but with a minor editorial change to delete the phrase ``via the NASD 
Contact System or such other means as NASD may specify'' from the 
proposed rule text, because the phrase already appears in proposed 
paragraph (c). Furthermore, proposed FINRA Rule 4517(c)(2) would 
require that each firm comply promptly with any FINRA request for the 
required contact information, but in any event not later than 15 days 
following the request, or such longer period that may be agreed to by 
FINRA staff. This proposed provision replaces the nearly identical 
provision in NASD Rule 1160(c) but with the minor editorial change from 
NASD Rule 1160(c)'s ``such information'' to ``the required contact 
information'' to enhance the readability of the proposed rule. As with 
NASD Rule 1160, the proposed rule change would not relieve firms from 
any separate requirements to update such information.\7\
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    \7\ For example, a member must identify, among others, its Chief 
Executive Officer and Chief Compliance Officer on Form BD, and 
promptly update such information by submitting an amendment whenever 
the information becomes inaccurate or incomplete for any reason. See 
also Article IV, Section 1(c) of the FINRA By-Laws, requiring each 
member to ensure that its membership application is kept current at 
all times by supplementary amendments, and to file such amendment no 
later than 30 days after learning of the facts or circumstances 
giving rise to the amendment.
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    The proposed rule change would also replace all references to NASD 
Rules 1150 and 1160 in FINRA Rules 1250 (Continuing Education 
Requirements), 3310.02 (Review of Anti-Money Laundering Compliance 
Person Information), 4370 (Business Continuity Plans and Emergency 
Contact Information), and 9217 (Violations Appropriate for Disposition 
Under Plan Pursuant to SEA Rule 19d-1(c)(2)) with references to 
proposed FINRA Rule 4517 accordingly.
    FINRA has filed the proposed rule change for immediate 
effectiveness and 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.
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. FINRA believes that the proposed rule change, which 
does not substantively change the rules, 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).
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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 
rules. 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 Rules 1150, 1160 and 3170 into the 
Consolidated FINRA Rulebook without any substantive changes.\9\
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    \9\ FINRA previously solicited comment on a proposal to adopt 
FINRA Rule 4540 (Member Information and Data Reporting and Filing 
Requirements) which, among other things, would have incorporated the 
substance of NASD Rules 1160 and 3170, and deleted NASD Rule 1150. 
See Regulatory Notice 09-02 (January 2009). 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 adopt 
NASD Rules 1150, 1160 and 3170 without substantive changes, and will 
consider at a later date whether to propose substantive changes to 
these rules. FINRA has determined to transfer NASD Rule 1150 into 
the Consolidated FINRA Rulebook rather than delete its content in 
the interest of providing clarity to member firms of their 
obligation under the FINRA By-Laws to appoint an Executive 
Representative. One commenter to Regulatory Notice 09-02 suggested 
that FINRA extend from 17 business days to 30 days the period in 
which a member must annually review and update its contact 
information. See Letter from Dale E. Brown, Financial Services 
Institute, to Marcia E. Asquith, FINRA, dated February 20, 2009. The 
proposed rule change, however, would retain NASD Rule 1160's 
requirement that a member update its contact information promptly, 
but no later than 30 days following any change in the information, 
and annually verify the information within 17 business days after 
the end of the calendar year. As FINRA stated when it proposed NASD 
Rule 1160, the 17-business day window is consistent with the 
requirement that a member's FOCUS report be submitted within 17 
business days after the end of each quarter. See Securities Exchange 
Act Release No. 55810 (May 24, 2007), 72 FR 30404 (May 31, 2007) 
(Notice of Filing of File No. SR-NASD-2007-034). FINRA reminds its 
members to annually review and update, if necessary, their 
designated contact information through several ways such as 
announcements and alerts in the Firm Gateway, and electronic 
communications to the firm's Chief Compliance Officer(s) and 
Executive Representative.
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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 \10\ and Rule 19b-
4(f)(6) thereunder.\11\
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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Section 19(b)(3)(A) of the Act 
\12\ normally does not become operative prior to 30 days after the date 
of the filing. However, pursuant to Rule 19b-4(f)(6)(iii),\13\ 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

[[Page 10735]]

NASD Rule 3170 (Mandatory Electronic Filing Requirements), NASD Rule 
1150 (Executive Representative), and NASD Rule 1160 (Contact 
Information Requirements) into the Consolidated FINRA rulebook as FINRA 
Rule 4517 (Member Filing and Contact Information Requirements) without 
any substantive changes, to update cross-references accordingly and 
reflect current nomenclature, and to thereby clarify FINRA's rules, 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 
effective upon filing.\14\
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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f)(6)(iii).
    \14\ For 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).
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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-2015-004 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-2015-004. 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 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-2015-
004, and should be submitted on or before March 20, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2015-04084 Filed 2-26-15; 8:45 am]
BILLING CODE 8011-01-P