Document ID: SEC-2009-1168-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange LLC
Posted Date: 2009-08-18T04:00Z

[Federal Register: August 18, 2009 (Volume 74, Number 158)]
[Notices]
[Page 41763-41765]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr18au09-83]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60457; File No. SR-NYSE-2009-76]

Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by New York Stock Exchange LLC
Deleting NYSE Rule 409A and Adopting New Rule 2266 To Correspond With
Rule Changes Recently Filed by the Financial Industry Regulatory
Authority, Inc.

August 7, 2009.

    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 July 28, 2009, New York Stock Exchange LLC (``NYSE'' 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 proposes to [sic] delete NYSE Rule 409A
and to adopt new Rule 2266 to correspond with rule changes recently
filed by the Financial Industry Regulatory Authority, Inc. (``FINRA'')
and approved by the Commission.\4\ The text of the proposed rule change
is available at the Exchange, the Commission's Public Reference Room,
and http://www.nyse.com.
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    \4\ See Securities Exchange Act Release No. 59987 (May 27,
2009), 74 FR 26902 (June 4, 2009) (order approving FINRA 2009-016).
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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
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of the proposed rule change is to delete NYSE Rule 409A
and to adopt new Rule 2266 to correspond with rule changes recently
filed by FINRA and approved by the Commission.
Background
    On July 30, 2007, FINRA's predecessor, the National Association of
Securities Dealers, Inc. (``NASD''), and NYSE Regulation, Inc.
(``NYSER'') consolidated their member firm regulation operations into a
combined organization, FINRA. Pursuant to Rule 17d-2 under the Act,
NYSE, NYSER and FINRA entered into an agreement (the ``Agreement'') to
reduce regulatory duplication for their members by allocating to FINRA
certain regulatory responsibilities for certain NYSE rules and rule
interpretations (``FINRA Incorporated NYSE Rules'').\5\ As part of its
effort to reduce regulatory duplication and relieve firms that are
members of both FINRA and the Exchange of conflicting or unnecessary
regulatory burdens, FINRA is now engaged in the process of reviewing
and amending the NASD and FINRA Incorporated NYSE Rules in order to
create a consolidated FINRA rulebook.\6\
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    \5\ See Securities Exchange Act Release No. 56148 (July 26,
2007), 72 FR 42146 (August 1, 2007) (order approving the Agreement)
and Securities Exchange Act Release No. 56147 (July 26, 2007), 72 FR
42166 (August 1, 2007) (SR-NASD-2007-054) (order approving the
incorporation of certain NYSE Rules as ``Common Rules''). Paragraph
2(b) of the 17d-2 Agreement sets forth procedures regarding proposed
changes by either NYSE or FINRA to the substance of any of the
Common Rules.
    \6\ FINRA's rulebook currently has three sets of rules: (1) NASD
Rules, (2) FINRA Incorporated NYSE Rules, and (3) consolidated FINRA
Rules. The FINRA Incorporated NYSE Rules apply only to those members
of FINRA that are also members of the NYSE (``Dual Members''), while
the consolidated FINRA Rules apply to all FINRA members. For more
information about the FINRA rulebook consolidation process, see
FINRA Information Notice, March 12, 2008.
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Proposed Conforming Amendments to NYSE Rules
    As discussed in more detail below, FINRA amended certain NASD and
FINRA Incorporated NYSE Rules and adopted consolidated FINRA Rules to
replace them. The NYSE hereby proposes to delete NYSE Rule 409A and to
adopt new Rule 2266 to conform to the changes adopted by FINRA.\7\
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    \7\ NYSE Amex LLC has submitted a companion rule filing to
conform its corresponding NYSE Amex Equities Rules to the changes
proposed in this filing. See SR-NYSE-Amex-2009-52, formally
submitted July 28, 2009).

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[[Page 41764]]

    In relevant part, FINRA adopted NASD Rule 2342 (SIPC Information)
as consolidated FINRA Rule 2266.\8\ FINRA Rule 2266 requires all FINRA
members, except for those members that are not Securities Investor
Protection Corporation (``SIPC'') members or whose business consists
exclusively of the sale of investments that are not subject to SIPC
protection, to advise all new customers in writing at the time they
open an account that they may obtain information about SIPC by
contacting SIPC and to provide such customers with SIPC's contact
information. Such information must also be provided annually to all
existing customers. Where both an introducing firm and a clearing firm
service the same account, the firms may assign these requirements to
one or the other firm.\9\
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    \8\ In its filing, FINRA also adopted NASD Rules 2130 (Obtaining
an Order of Expungement of Customer Dispute Information from the
Central Registration Depository (CRD System)), 2810 (Direct
Participation Programs) and 3115 (Requirements for Alternative
Trading Systems to Record and Transmit Order and Execution
Information for Security Futures) as consolidated FINRA Rules 2080,
2310 and 4551, respectively. See Securities Exchange Act Release No.
59987 (May 27, 2009), 74 FR 26902 (June 4, 2009). NYSE is not
adopting these FINRA Rules.
    \9\ See Securities Exchange Act Release No. 59987 (May 27,
2009), 74 FR 26902 (June 4, 2009).
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    Because it is substantively similar to this new FINRA Rule, FINRA
deleted FINRA Incorporated NYSE Rule 409A (SIPC Disclosures). In
particular, FINRA Incorporated NYSE Rule 409A requires member
organizations to advise each customer in writing, upon the opening of
an account and annually thereafter, that they may obtain information
about SIPC and to provide such customers with SIPC's contact
information. Similar to FINRA Rule 2266, where a clearing agreement is
in place, these requirements may be assigned to either the introducing
or clearing firm. However, FINRA Incorporated NYSE Rule 409A does not
contain the exclusions in FINRA Rule 2266.\10\
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    \10\ See Securities Exchange Act Release No. 59987 (May 27,
2009), 74 FR 26902 (June 4, 2009).
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    FINRA deleted FINRA Incorporated NYSE Rule 409A because it believes
that FIRNA [sic] Rule 2266, which includes the exclusionary provisions
for non-SIPC members or members that sell exclusively non-SIPC
securities, is the more appropriate rule for its members.\11\
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    \11\ See Securities Exchange Act Release No. 59987 (May 27,
2009), 74 FR 26902 (June 4, 2009).
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    To harmonize the NYSE Rules with the approved FINRA Rules, the
Exchange correspondingly proposes to delete NYSE Rule 409A and to adopt
proposed NYSE Rule 2266, which is substantially similar to the new
FINRA Rule. As proposed, NYSE Rule 2266 adopts the same language as
FINRA Rule 2266, except for substituting for or adding to, as needed,
the term ``member organization'' for the term ``member'', and making
corresponding technical changes. As with the consolidated FINRA Rule,
under proposed NYSE Rule 2266 Exchange members and member organizations
will be required to provide SIPC disclosures to all new customers upon
opening an account and to existing customers on an annual basis.
2. Statutory Basis
    The Exchange believes that the proposed rule changes are consistent
with Section 6(b) of the Act,\12\ in general, and further the
objectives of Section 6(b)(5) of the Act,\13\ in particular, in that
they are designed to prevent fraudulent and manipulative acts and
practices, to promote just and equitable principles of trade, 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 proposed rule changes also support the principles
of Section 11A(a)(1) \14\ of the Act in that they seek to ensure the
economically efficient execution of securities transactions and fair
competition among brokers and dealers and among exchange markets.
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    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(5).
    \14\ 15 U.S.C. 78k-1(a)(1).
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    The Exchange believes that the proposed rule changes support the
objectives of the Act by providing greater harmonization between NYSE
Rules and FINRA Rules (including Common Rules) of similar purpose,
resulting in less burdensome and more efficient regulatory compliance
for Dual Members. To the extent the Exchange has proposed changes that
differ from the FINRA version of the Rule, such changes are technical
in nature and do not change the substance of the proposed NYSE Rule.

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 \15\ and Rule 19b-4(f)(6) thereunder.\16\
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 and Rule 19b-
4(f)(6)(iii) thereunder.\17\
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    \15\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \16\ 17 CFR 240.19b-4(f)(6).
    \17\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file 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 requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) \18\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b4(f)(6)(iii),\19\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has asked
the Commission to waive the 30-day operative delay so that the proposal
may become operative immediately upon filing. The Commission believes
waiving the 30-day operative delay is consistent with the protection of
investors and the public interest. Acceleration of the operative date
will allow the immediate change of the NYSE's rule to make it
consistent with the FINRA rule, thereby making compliance for dual
members less burdensome. For these reasons, the Commission designates
the proposal to be effective and operative upon filing.\20\
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    \18\ 17 CFR 240.19b-4(f)(6).
    \19\ 17 CFR 240.19b-4(f)(6)(iii).
    \20\ For purposes only of waiving the 30-day operative delay of
the 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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[[Page 41765]]

    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.

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 rule-comments@sec.gov. Please include
File Number SR-NYSE-2009-76 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-NYSE-2009-76. 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 NYSE. 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-NYSE-2009-76 and should be
submitted on or before September 8, 2009.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\21\
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    \21\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-19730 Filed 8-17-09; 8:45 am]

BILLING CODE 8010-01-P