Document ID: SEC-2009-1132-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Financial Industry Regulatory Authority, Inc.
Posted Date: 2009-08-11T04:00Z

[Federal Register: August 11, 2009 (Volume 74, Number 153)]
[Notices]               
[Page 40278-40279]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr11au09-141]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60432; File No. SR-FINRA-2009-053]

 
 Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing and Immediate Effectiveness of 
Proposed Rule Change To Amend Incorporated NYSE Rules 12 and 282 To 
Conform to Amendments Made by NYSE

August 4, 2009.
    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 30, 2009, 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 filing with 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 amend Incorporated NYSE Rules 12 (``Business 
Day'') and 282 (Buy-in Procedures) \4\ to conform to rule changes by 
the New York Stock Exchange LLC (``NYSE'') to its versions of Rules 12 
and 282.\5\
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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 FINRA Information Notice, March 12, 2008 (Rulebook 
Consolidation Process).
    \5\ See Securities Exchange Act Release No. 60216 (July 1, 
2009), 74 FR 33283 (July 10, 2009) (Notice of Filing and Immediate 
Effectiveness of SR-NYSE-2009-59).
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    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 is proposing changes to Incorporated NYSE Rules 12 \6\ and 
282 \7\ to conform these rules to amendments made by NYSE to allow 
customers to transmit orders for execution on the NYSE with the 
settlement instructions of ``cash'', ``next day'' and ``seller's 
option'' (collectively referred to herein as ``non-regular way 
settlement'') directly to a Floor broker for manual execution.
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    \6\ Incorporated NYSE Rule 12 defines the term ``business day.''
    \7\ Incorporated NYSE Rule 282 sets forth buy-in procedures.
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    According to the NYSE filing,\8\ after adopting amendments in March 
2009 requiring that all orders submitted to the NYSE be submitted for 
regular way settlement (i.e., settlement on the third business day 
following trade date),\9\ the NYSE recognized that there was a 
continuing need for the availability of orders with non-regular way 
settlement instructions. NYSE customers have expressed that certain 
trading strategies and/or expiration of certain trading instruments 
(e.g., rights and warrants) require the ability to submit orders to the 
NYSE that contain instructions for execution with non-regular way 
settlement. To accommodate the needs of its customers, the NYSE adopted 
NYSE Rule 14 (Non-Regular Way Settlement Instructions for Orders) to 
allow customers to directly transmit an order containing instructions 
for cash, next day and seller's option settlement to a Floor broker for 
representation in the trading crowd. In addition, the NYSE added Rule 
14 references to several NYSE rules that relate in some way to these 
settlement instructions.
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    \8\ See supra note 5.
    \9\ See Securities Exchange Act Release No. 59446 (February 25, 
2009), 74 FR 9323 (March 3, 2009) (Notice of Filing and Immediate 
Effectiveness of SR-NYSE-2009-17).
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    Under the NYSE filing, references to proposed NYSE Rule 14 (Non-
Regular Way Settlement Instructions for Orders) and non-regular way 
settlement instructions were added to NYSE Rule 12 (``Business Day''), 
and specific provisions related to orders submitted with cash 
settlement instructions were added to NYSE Rule 282 (Buy-in 
Procedures).
    FINRA is making conforming changes to Incorporated NYSE Rules 12 
and 282 to ensure consistency with NYSE's versions of Rules 12 and 
282.\10\
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    \10\ Pursuant to Rule 17d-2 under the Exchange Act, NASD, NYSE, 
and NYSE Regulation, Inc., entered into an agreement (``Agreement'') 
to reduce regulatory duplication for firms that are Dual Members by 
allocating certain regulatory responsibilities for selected NYSE 
rules from NYSE Regulation to FINRA. The Agreement includes a list 
of all those rules (``Common Rules'') for which FINRA has assumed 
examination, enforcement and surveillance responsibilities under the 
Agreement relating to compliance by Dual Members to the extent that 
such responsibilities involve member firm regulation. See Securities 
Exchange Act Release No. 56148 (July 26, 2007), 72 FR 42146 (August 
1, 2007) (Notice of Filing and Order Approving and Declaring 
Effective a Plan for the Allocation of Regulatory Responsibilities). 
The Common Rules are the same NYSE rules that FINRA has incorporated 
into its rulebook. See Securities Exchange Act Release No. 56147 
(July 26, 2007), 72 FR 42166 (August 1, 2007) (Notice of Filing and 
Order Granting Accelerated Approval of Proposed Rule Change to 
Incorporate Certain NYSE Rules Relating to Member Firm Conduct; File 
No. SR-NASD-2007-054).

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[[Page 40279]]

    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, such 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,\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 that the proposed rule change is 
necessary and appropriate to restore the ability of NYSE market 
participants to enter orders with other than ``regular way'' settlement 
instructions and maintain consistency with the NYSE's amendments to its 
Rules 12 and 282.
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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.

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 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 after the date of the filing, or such shorter time as the 
Commission may designate, if consistent with the protection of 
investors and the public interest, it has become effective pursuant to 
Section 19(b)(3)(A) \12\ of the Act and Rule 19b-4(f)(6) 
thereunder.\13\
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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) normally does 
not become operative until 30 days after the date of filing.\14\ 
However, Rule 19b-4(f)(6)(iii) \15\ permits the Commission to designate 
a shorter time if such action is 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 may become operative immediately. Specifically, FINRA states 
that waiving the 30-day operative delay will allow FINRA's Incorporated 
NYSE Rules to maintain their status as Common Rules under the 
Agreement. Accordingly, the Commission believes that allowing the 
proposed rule change to become operative immediately is consistent with 
the protection of investors and the public interest, because it will 
enable FINRA to maintain consistency between its rules and NYSE's rules 
for purposes of the Agreement.\16\
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    \14\ Id.
    \15\ 17 CFR 240.19b-4(f)(6)(iii). In addition, Rule 19b-
4(f)(6)(iii) 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. FINRA has satisfied this requirement.
    \16\ 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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    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-FINRA-2009-053 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-FINRA-2009-053. 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 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-2009-053 and should be 
submitted on or before September 1, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-19142 Filed 8-10-09; 8:45 am]

BILLING CODE 8010-01-P