Document ID: SEC-2016-1267-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Financial Industry Regulatory Authority, Inc.
Posted Date: 2016-07-20T04:00Z

[Federal Register Volume 81, Number 139 (Wednesday, July 20, 2016)]
[Notices]
[Pages 47229-47231]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-17097]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78327; File No. SR-FINRA-2016-026]

Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change to Update Rule Cross-References and Make Non-
Substantive Technical Changes to Certain FINRA Rules

July 14, 2016.
    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 July 7, 2016, 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 the 
Substance of the Proposed Rule Change

    FINRA is proposing to update cross-references and make other non-
substantive changes within FINRA rules, due in part to the adoption of 
a new consolidated FINRA rule.
    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
    FINRA has been developing a consolidated rulebook (``Consolidated 
FINRA Rulebook'').\4\ That process involves FINRA submitting to the 
Commission for approval a series of proposed rule changes over time to 
adopt rules in the Consolidated FINRA Rulebook. The phased adoption and 
implementation of those rules necessitates periodic amendments to 
update rule cross-references and other non-substantive changes in the 
Consolidated FINRA Rulebook.
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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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    The proposed rule change would make some of those changes, as well 
as other non-substantive changes unrelated to the adoption of rules in 
the Consolidated FINRA Rulebook.
    First, the proposed rule change would update rule cross-references 
to reflect the adoption of a consolidated investment company securities 
rule. On June 9, 2016, FINRA filed with the SEC a proposed rule change, 
for immediate effectiveness, to adopt NASD Rule 2830 as FINRA Rule 2341 
(Investment Company Securities), without any substantive changes. As 
part of that rule filing, FINRA also deleted in its entirety NASD Rule 
2830.\5\ Rule 2341 will be implemented on July 9, 2016. As such, the 
proposed rule change would update references to the new rule number in 
FINRA Rules 2320 (Variable Contracts of an Insurance Company) and 6630 
(Applicability of FINRA Rules to Securities Previously Designated as 
PORTAL Securities). The proposed rule change further would delete from 
the FINRA Manual the heading for the NASD Rule 2800 Series (Special 
Products) and the placeholder for NASD Rule 2870 (Reserved) to reflect 
that the NASD Rule 2800 Series \6\ has fully been consolidated into the 
FINRA rules.
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    \5\ See Securities Exchange Act Release No. 78130 (June 22, 
2016), 81 FR 42016 (June 28, 2016) (Notice of Filing and Immediate 
Effectiveness of File No. SR-FINRA-2016-019).
    \6\ See supra note 5.

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[[Page 47230]]

    Second, the proposed rule change would make technical changes to 
FINRA Rules 6191 (Compliance with Regulation NMS Plan to Implement a 
Tick Size Pilot Program) \7\ and 7440 (Recording of Order 
Information)\8\ to reflect FINRA Manual style convention changes and 
correct paragraph numbering. FINRA would also merge the Supplementary 
Material in Rule 6191(a) with and into the Supplementary Material in 
Rule 6191(b) to reflect FINRA Manual style convention.\9\
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    \7\ See Securities Exchange Act Release No. 77164 (February 17, 
2016), 81 FR 9043 (February 23, 2016) (Order Approving File No. SR-
FINRA-2015-048); see also Securities Exchange Act Release No. 77218 
(February 23, 2016), 81 FR 10290 (February 29, 2016) (Order 
Approving File No. SR-FINRA-2015-047).
    \8\ See Securities Exchange Act Release No. 77164 (February 17, 
2016), 81 FR 9043 (February 23, 2016) (Order Approving File No. SR-
FINRA-2015-048) and Securities Exchange Act Release No. 77523 (April 
5, 2016), 81 FR 21427 (April 11, 2016) (Order Approving File No. SR-
FINRA-2016-006).
    \9\ See supra note 7.
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    Finally, the proposed rule change would also delete from FINRA 
Funding Portal Rule 100 the reference to FINRA Dispute Resolution, Inc. 
to reflect the merger of FINRA Dispute Resolution, Inc. into and with 
FINRA.\10\
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    \10\ See Securities Exchange Act Release No. 76670 (December 16, 
2015), 80 FR 79632 (December 22, 2015) (Order Approving File No. SR-
FINRA-2015-034).
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    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 to coincide with the effective dates of the affected rules. The 
implementation date for the proposed changes to FINRA Rules 2320 and 
6630, Funding Portal Rule 100, and the proposed deletion of the NASD 
Rule 2800 Series heading and NASD Rule 2870 will be July 9, 2016. The 
implementation date for the changes to FINRA Rules 6191 and 7440 will 
be October 3, 2016 and August 1, 2016, respectively, to coincide with 
the implementation date of the rules.
2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the 
provisions of Section 15A(b)(6) of the Act,\11\ 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 the proposed rule change will provide 
greater clarity to members and the public regarding FINRA's rules.
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    \11\ 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. The proposed rule change brings 
clarity and consistency to FINRA rules without adding any burden on 
firms.

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.

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)(iii) of the Act \12\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\13\
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    \12\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \13\ 17 CFR 240.19b-4(f)(6).
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    Under Rule 19b-4(f)(6) of the Act,\14\ the proposal does not become 
operative for 30 days after the date of its filing, or such shorter 
time as the Commission may designate if consistent with the protection 
of investors and the public interest. FINRA has requested that the 
Commission waive the 30-day operative delay so that the proposed rule 
change will become operative on filing. FINRA stated that the proposed 
rule change updates cross-references and makes no substantive changes, 
and it would like to implement the change to coincide with the 
effective dates of the affected rules. For this reason, the Commission 
believes that waiver of the 30-day operative delay is consistent with 
the protection of investors and the public interest. Therefore, the 
Commission designates the proposed rule change to be operative upon 
filing.\15\
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    \14\ Id.
    \15\ For purposes only of waiving the 30-day operative delay, 
the Commission also 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: (i) 
Necessary or appropriate in the public interest; (ii) for the 
protection of investors; or (iii) 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-2016-026 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-FINRA-2016-026. 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

[[Page 47231]]

available publicly. All submissions should refer to File Number SR-
FINRA-2016-026, and should be submitted on or before August 10, 2016.
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    \16\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2016-17097 Filed 7-19-16; 8:45 am]
BILLING CODE 8011-01-P