Document ID: SEC-2011-0430-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange LLC
Posted Date: 2011-04-01T04:00Z

[Federal Register Volume 76, Number 63 (Friday, April 1, 2011)]
[Notices]
[Pages 18285-18287]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-7652]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-64131; File No. SR-NYSE-2011-12]

Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Deleting NYSE Rule 346 and Adopting New Rule 3270 To Correspond With 
Rule Changes Filed by the Financial Industry Regulatory Authority, Inc.

March 28, 2011.
    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 March 14, 2011, New York Stock Exchange LLC (``NYSE'' or 
the ``SRO'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been substantially prepared by the SRO. 
The Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C.78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The SRO proposes to delete NYSE Rule 346 and adopt new Rule 3270 to 
correspond with rule changes filed by the Financial Industry Regulatory 
Authority, Inc. (``FINRA'') and approved by the Securities and Exchange 
Commission (the ``Commission'').\4\ The text of the proposed rule 
change is available at the NYSE, at the Commission's Public Reference 
Room, and on NYSE's Web site at http://www.nyse.com.
---------------------------------------------------------------------------

    \4\ See Securities Exchange Act Release No. 62762 (August 23, 
2010), 75 FR 53362 (August 31, 2010) (approval order).
---------------------------------------------------------------------------

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 NYSE included statements 
concerning the purpose of, and basis for, the

[[Page 18286]]

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 SRO 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, to delete NYSE Rule 346 
(Limitations--Employment and Association with Members and Member 
Organizations) and adopt new Rule 3270 (Outside Business Activities of 
Registered Persons), is to correspond with rule changes filed by FINRA 
and approved by the Commission.
Background
    On July 30, 2007, FINRA's predecessors, 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 
Securities Exchange Act of 1934, as amended (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''). NYSE Amex LLC 
(``NYSE Amex'') became a party to the Agreement effective December 15, 
2008.\5\
---------------------------------------------------------------------------

    \5\ See Securities Exchange Act Release Nos. 56148 (July 26, 
2007), 72 FR 42146 (August 1, 2007) (order approving the Agreement); 
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''); and 60409 (July 30, 2009), 74 FR 39353 (August 6, 
2009) (order approving the amended and restated Agreement, adding 
NYSE Amex LLC as a party). Paragraph 2(b) of the Agreement sets 
forth procedures regarding proposed changes by FINRA, NYSE or NYSE 
Amex to the substance of any of the Common Rules.
---------------------------------------------------------------------------

    As part of its effort to reduce regulatory duplication and relieve 
firms that are members of FINRA, NYSE and NYSE Amex 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\
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

Proposed Conforming Amendments to NYSE Rules
    FINRA adopted NASD Rule 3030 (Outside Business Activities of an 
Associated Person), which prohibits any registered person from being 
employed by or accepting any compensation from any person as a result 
of any outside business activity, other than passive investments, 
unless he has provided prompt written notice to his member firm, as 
consolidated FINRA Rule 3270 requires, subject to certain 
modifications. FINRA also deleted Incorporated NYSE Rule 346 as it is 
substantially similar to consolidated FINRA Rule 3270.\7\
---------------------------------------------------------------------------

    \7\ See fn. 4.
---------------------------------------------------------------------------

    To harmonize the NYSE Rules with the approved consolidated FINRA 
Rules, the SRO correspondingly proposes to delete NYSE Rule 346 and 
replace it with proposed NYSE Rule 3270, which is substantially similar 
to the new FINRA Rule.\8\ As proposed, NYSE Rule 3270 adopts the same 
language as FINRA Rule 3270, except for substituting for or adding to, 
as needed, the term ``member organization'' for the term ``member,'' 
and making corresponding technical changes.
---------------------------------------------------------------------------

    \8\ NYSE Amex has submitted a companion rule filing amending its 
rules in accordance with FINRA's rule changes. See SR-NYSEAmex-2011-
17.
---------------------------------------------------------------------------

2. Statutory Basis
    The SRO believes that the proposed rule changes are consistent with 
the provisions of Section 6(b) of the Act,\9\ in general, and further 
the objectives of Section 6(b)(5) of the Act,\10\ 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.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The SRO 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 SRO 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 Rules.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The SRO 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, as amended.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Other

    No written comments were solicited or received by the SRO with 
respect to the proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The SRO has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \11\ and Rule 19b-4(f)(6) thereunder.\12\ 
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, and is 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.
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \12\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

    A proposed rule change filed under Rule 19b-4(f)(6) \13\ 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 SRO has asked the 
Commission to waive the 30-day operative delay so that the proposal may 
become operative immediately upon filing.
---------------------------------------------------------------------------

    \13\ 17 CFR 240.19b-4(f)(6).
    \14\ 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------

    The SRO believes that this filing is non-controversial because it 
raises no novel issues and is consistent with the FINRA rule filing 
previously approved by the Commission on which it is based.\15\ In 
particular, the purpose of the proposed rule changes is to conform the 
NYSE Rules to FINRA's adoption of consolidated FINRA Rule 3270 in

[[Page 18287]]

furtherance of the consolidation of the member firm regulation 
functions of NYSER and FINRA. Except as specifically noted, and subject 
to such technical changes as are necessary to apply the Rule to the 
SRO, NYSE proposes to adopt the rule changes in the form that they were 
approved by the Commission for FINRA. Accordingly, the SRO believes 
that these rule changes are eligible for immediately effective 
treatment under the Commission's current procedures for processing rule 
filings.\16\ The SRO has requested an accelerated operative date for 
the proposed rule changes in order to avoid regulatory gaps between the 
FINRA and NYSE Rules and to further ensure that, as applicable, the 
NYSE Rules maintain their status as Common Rules under the 
Agreement.\17\ The Commission believes it is consistent with the 
protection of investors and the public interest to waive the 30-day 
operative delay for this reason, and hereby grants such a waiver.\18\
---------------------------------------------------------------------------

    \15\ See fn. 4.
    \16\ See Securities Exchange Act Release No. 58092 (July 3, 
2008), 73 FR 40143 (July 11, 2008) (concerning 17 CFR 200 and 241).
    \17\ As provided in paragraph 2(b) of the Agreement, FINRA and 
NYSE will amend the list of Common Rules to conform to the rule 
changes proposed herein. See fn. 5.
    \18\ For purposes of waiving the 30-day operative delay, the 
Commission has considered the proposed rule change's impact on 
efficiency, competition, and capital formation. 15 U.S.C. 78c(f).
---------------------------------------------------------------------------

    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 e-mail to rule-comments@sec.gov. Please include 
File Number SR-NYSE-2011-12 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-2011-12. 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 Web site viewing and 
printing 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 http://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-NYSE-2011-12 and should be submitted on 
or before April 22, 2011.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
---------------------------------------------------------------------------

    \19\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-7652 Filed 3-31-11; 8:45 am]
BILLING CODE 8011-01-P