Document ID: SEC-2012-0222-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2012-02-08T05:00Z

[Federal Register Volume 77, Number 26 (Wednesday, February 8, 2012)]
[Notices]
[Pages 6613-6615]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-2833]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-66311; File No. SR-NYSEARCA-2012-07]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Deleting the Text 
of NYSE Arca Equities Rule 5.2(b)(1) and Adopting New NYSE Arca 
Equities Rule 5190 That Is Substantially the Same as Financial Industry 
Regulatory Authority Rule 5190

February 2, 2012.
    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 January 23, 2012, NYSE Arca, Inc. (the ``Exchange'' or 
``NYSE Arca'') 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 Exchange. 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 delete the text of NYSE Arca Equities Rule 
5.2(b)(1) and adopt new NYSE Arca Equities Rule 5190 that is 
substantially the same as Financial Industry Regulatory Authority 
(``FINRA'') Rule 5190. The text of the proposed rule change is 
available at the Exchange, the Commission's Public Reference Room, and 
www.nyse.com.

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
    The Exchange proposes to delete the text of NYSE Arca Equities Rule 
5.2(b)(1) and adopt new NYSE Arca Equities Rule 5190 that is 
substantially the same as FINRA Rule 5190.\4\ The proposed rule change 
will further harmonize the Exchange's rules with the rules of FINRA, 
NYSE, and NYSE Amex. The Exchange believes the proposed rule change 
will help reduce duplicative reporting requirements for ETP holders who 
are also FINRA members and/or NYSE or NYSE Amex member organizations, 
because ETP Holders will not be required to submit an additional 
Regulation M notification to the Exchange if they have already provided 
a notification to FINRA, NYSE, or NYSE Amex pursuant to their 
respective rules.
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    \4\ See Securities Exchange Act Release No. 58514 (September 11, 
2008), 73 FR 54190 (September 18, 2008) (SR-FINRA-2008-039). The 
Exchange's affiliates, New York Stock Exchange LLC (``NYSE'') and 
NYSE Amex LLC (``NYSE Amex''), previously adopted versions of FINRA 
Rule 5190; See Securities Exchange Act Release Nos. 59965 (May 21, 
2009), 74 FR 25783 (May 29, 2009) (SR-NYSE-2009-25) and 59975 (May 
26, 2009), 74 FR 26449 (June 2, 2009) (SR-NYSEALTR-2009-26).
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Background
    NYSE Arca Equities Rule 5.2(b)(1) requires ETP Holders that act as 
a lead underwriter of an offering to notify the Exchange of such 
offering in the form and manner as required by the Exchange, including 
the information specified in the rule. NYSE Arca Equities Rule 
5.2(b)(1) covers the same material as FINRA Rule 5190, which was 
adopted to consolidate certain Regulation M-related notification 
requirements and applies uniformly to distributions of listed and 
unlisted securities.\5\ FINRA Rule 5190 imposes certain notice 
requirements on members participating in distributions of listed and 
unlisted securities, and is designed to ensure that FINRA receives 
pertinent distribution-related information from its members in a timely 
fashion to facilitate its Regulation M compliance program. FINRA 
recently amended FINRA Rule 5190 to clarify members' notice obligations 
under the rule.\6\ NYSE and NYSE Amex Equities each adopted a version 
of FINRA Rule 5190 for their respective markets, which incorporate

[[Page 6614]]

all of the elements of FINRA Rule 5190 plus add Exchange-specific 
notification requirements in NYSE and NYSE Amex Equities Rules 5190(e).
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    \5\ See Securities Exchange Act Release No. 58514 (September 11, 
2008), 73 FR 54190 (September 18, 2008) (SR-FINRA-2008-039).
    \6\ See Securities Exchange Act Release No. 62970 (September 22, 
2010), 75 FR 59771 (September 28, 2010) (SR-FINRA-2010-037).
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    Pursuant to a regulatory services agreement, FINRA performs certain 
regulatory services on behalf of NYSE Arca, NYSE, and NYSE Amex, 
including review of Regulation M-related notification requirements 
under NYSE Arca Equities Rule 5.2(b)(1), NYSE Rule 5190, and NYSE Amex 
Equities Rule 5190. Under the current rule and as provided for pursuant 
to NYSE Arca Equities Rule 0, all notifications to the Exchange under 
NYSE Arca Rule 5.2(b)(1) are submitted directly to FINRA. Accordingly, 
when a common member of NYSE Arca and FINRA or common member of NYSE 
Arca and NYSE and NYSE Amex equities have Regulation M-related 
notification requirements, FINRA receives two submissions from that 
same common member--one notification pursuant to NYSE Arca Equities 
Rule 5.2(b)(1) and a separate Rule 5190 notification that meets the 
requirements of FINRA Rule 5190, NYSE Rule 5190, and NYSE Amex Equities 
Rule 5190. The content of these notifications is substantially the 
same, albeit in different formats.
Proposed Rule Change
    The Exchange proposes to harmonize its Regulation M-related 
notification rules with the rules of FINRA, NYSE, and NYSE Amex 
Equities both to provide uniformity in the marketplace as well as to 
reduce duplicative reporting obligations for the same subject matter. 
Accordingly, the Exchange proposes to adopt NYSE Arca Equities Rule 
5190, which is based on both FINRA Rule 5190, and NYSE and NYSE Amex 
Equities Rule 5190.
    Similar to NYSE Arca Equities Rule 5.2(b)(1), proposed NYSE Arca 
Equities Rule 5190 would require, in part, that an ETP Holder acting as 
a manager (or in a similar capacity) of an offering to provide the 
following information:
     The ETP Holder's determination as to whether a one-day or 
five-day restricted period applies under Rule 101 of SEC Regulation M 
and the basis for such determination, including the contemplated date 
and time of the commencement of the restricted period, the listed 
security name and symbol, and identification of the distribution 
participants and affiliated purchasers, no later than the business day 
prior to the first complete trading session of the applicable 
restricted period, unless later notification is necessary under 
specific circumstances;
     The pricing of the distribution, including the listed 
security name and symbol, the type of security, the number of shares 
offered, the offering price, the last sale before the distribution, the 
pricing basis, the SEC effective date and time, the trade date, the 
restricted period, and identification of the distribution participants 
and affiliated purchasers, no later than the close of business the next 
business day following the pricing of the distribution, unless later 
notification is necessary under specific circumstances; and
     The cancellation or postponement of any distribution for 
which prior notification of commencement of the restricted period has 
been submitted under paragraph (c)(1)(A), immediately upon the 
cancellation or postponement of such distribution. If no ETP Holder is 
acting as a manager (or in a similar capacity) of such distribution, 
then each ETP Holder that is a distribution participant or affiliated 
purchaser shall provide the notice required under paragraph (c)(1), 
unless another ETP Holder has assumed responsibility in writing for 
compliance therewith.
    Proposed NYSE Arca Equities Rule 5190 is substantially similar to 
FINRA Rule 5190, except that the term ``member'' has been replaced with 
``ETP Holder'' and ``stabilizing bids'' have been added to the proposed 
rule, which is consistent with NYSE Rule 5190(e) and NYSE Amex Equities 
Rule 5190(e). The Exchange notes that proposed NYSE Arca Equities Rule 
5190(e) incorporates the concepts currently set forth in NYSE Arca 
Equities Rule 5.2(b)(1)(B).
    Consistent with current practice that notifications ``to the 
Exchange'' are submitted directly to FINRA, notification under proposed 
NYSE Arca Equities Rule 5190 may be satisfied via third-party data 
communication facilitators or emailed directly to FINRA's Regulatory 
Trading Official Desk at secondaryofferings@finra.org. Further, because 
notifications submitted pursuant to FINRA Rule 5190 or NYSE Rule 5190 
will meet the requirements of NYSE Arca Equities Rule 5190, such 
notifications will also satisfy the notification requirements of NYSE 
Arca Equities Rule 5190.\7\ ETP Holders, therefore, need not make 
duplicative filings to the Exchange if notifications have been 
submitted to FINRA pursuant to NYSE or FINRA rules.
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    \7\ On June 14, 2010, FINRA and the Exchange entered into a 
Regulatory Services Agreement that sets forth, pursuant to the 
Statement of Work, certain regulatory services including 
surveillance and investigation functions.
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2. Statutory Basis
    The proposed rule change is consistent with the Act,\8\ in general, 
and furthers the objectives of Section 6(b)(5) of the Act,\9\ in 
particular, in that it is designed to prevent fraudulent and 
manipulative acts and practices, to promote just and equitable 
principles of trade, to foster cooperation and coordination with 
persons engaged in facilitating transactions in securities, and to 
remove impediments to and perfect the mechanism of a free and open 
market and a national market system.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposed rule change supports the 
objectives of the Act by providing greater harmonization between NYSE 
Arca Equities Rules and FINRA Rules of similar purpose, resulting in 
less burdensome and more efficient regulatory compliance for dual 
members of both SROs. To the extent the Exchange has proposed changes 
that differ from the FINRA version of the rules, such changes are 
technical in nature and do not change the substance of the proposed 
NYSE Arca Equities rules.

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 \10\ and Rule 19b-4(f)(6) thereunder.\11\ 
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

[[Page 6615]]

proposed rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act \12\ and Rule 19b-4(f)(6)(iii) thereunder.\13\
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    \10\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \11\ 17 CFR 240.19b-4(f)(6).
    \12\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \13\ 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 the proposed rule 
change, or such shorter time as designated by the Commission. The 
Exchange has satisfied this requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) normally does 
not become operative prior to 30 days after the date of the filing. 
However, pursuant to Rule 19b4(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. The Exchange has asked 
the Commission to waive the 30-day operative delay so that the proposal 
may become operative immediately upon filing.
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    \14\ 17 CFR 240.19b-4(f)(6)(iii).
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    The Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest 
because such waiver would reduce redundancies associated with 
Regulation M filings. This reduces unneeded regulatory burdens on 
members and may help ease review of these filings. For these reasons, 
the Commission designates the proposed rule change as operative 
immediately upon filing with the Commission.\15\
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    \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 such 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.

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-NYSEARCA-2012-07 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-2012-07. 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 inspection and 
copying in the Commission's Public Reference Section, 100 F Street NE., 
Washington, DC 20549-1090. Copies of the filing will also be available 
for inspection and copying at the NYSE's principal office and on its 
Internet Web site at www.nyse.com. 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-2012-07 and should be submitted on or before 
February 29, 2012.
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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\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-2833 Filed 2-7-12; 8:45 am]
BILLING CODE 8011-01-P