Document ID: SEC-2010-1552-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Financial Industry Regulatory Authority, Inc.
Posted Date: 2010-10-13T04:00Z

[Federal Register: October 13, 2010 (Volume 75, Number 197)]
[Notices]               
[Page 62904-62905]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr13oc10-115]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63039; File No. SR-FINRA-2010-051]

 
 Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing and Immediate Effectiveness of 
Proposed Rule Change To Reconcile Certain Amendments Approved Pursuant 
to SR-FINRA-2009-061 and SR-FINRA-2010-003

October 5, 2010.
    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 October 1, 2010, 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 Substance 
of the Proposed Rule Change

    FINRA is proposing to make conforming changes to FINRA Rules 6420, 
6610, 6622, 7310 and 7410 to reconcile amendments approved pursuant to 
two recent proposed rule changes: SR-FINRA-2010-003, which was 
implemented on June 28, 2010, and SR-FINRA-2009-061, which will be 
implemented on November 1, 2010.
    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
    On September 16, 2009, FINRA filed proposed rule change SR-FINRA-
2009-061 to amend its trade reporting rules to (1) require that members 
report over-the-counter (``OTC'') equity transactions \4\ to FINRA 
within 30 seconds of execution and report certain trade cancellations 
to FINRA within 30 seconds of cancellation; (2) require that members 
report secondary market transactions in non-exchange-listed direct 
participation program (``DPP'') securities to FINRA within 30 seconds 
of execution; and (3) make certain conforming changes to the rules 
relating to the OTC Reporting Facility (``ORF''). In that filing, FINRA 
proposed, among other things, to amend Rules 6420, 6610, 6622, 6623, 
7310, 7330 and 7410. SR-FINRA-2009-061 was approved by the Commission 
on March 31, 2010,\5\ and will be implemented on November 1, 2010.
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    \4\ Specifically, OTC equity transactions are: (1) Transactions 
in NMS stocks, as defined in SEC Rule 600(b) of Regulation NMS, 
effected otherwise than on an exchange, which are reported through 
the Alternative Display Facility (``ADF'') or a Trade Reporting 
Facility (``TRF''); and (2) transactions in ``OTC Equity 
Securities,'' as defined in FINRA Rule 6420 (i.e., non-NMS stocks 
such as OTC Bulletin Board and Pink Sheets securities), which are 
reported through the OTC Reporting Facility (``ORF'').
    \5\ See Securities Exchange Act Release No. 61819 (March 31, 
2010), 75 FR 17806 (April 7, 2010) (Notice of Filing of Amendment 
No. 2 and Order Granting Accelerated Approval; File No. SR-FINRA-
2009-061).
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    On January 15, 2010, FINRA filed proposed rule change SR-FINRA-
2010-003, in pertinent part, to (1) amend Rules 6610, 6622, 6623, 7310 
and 7330 regarding reporting transactions in restricted equity 
securities to the ORF; and (2) update the definition of ``OTC Equity 
Security'' in Rules 6420 and 7410. SR-FINRA-2010-003 was approved by 
the Commission on April 23, 2010,\6\ and was implemented on June 28, 
2010. The underlying text of SR-FINRA-2010-003 did not reflect the 
amendments that were approved pursuant to SR-FINRA-2009-061,

[[Page 62905]]

because those changes will not be implemented until November 1, 2010.
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    \6\ See Securities Exchange Act Release No. 61979 (April 23, 
2010), 75 FR 23316 (May 3, 2010) (Order Approving Proposed Rule 
Change, as Modified by Amendment Nos. 1 and 2; File No. SR-FINRA-
2010-003).
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    Because of the timing of the aforementioned filings, certain of the 
amendments that were approved pursuant to SR-FINRA-2009-061 must be 
reconciled with the current rule text, as amended pursuant to SR-FINRA-
2010-003. This proposed rule change makes no material changes to the 
amendments that were approved pursuant to SR-FINRA-2009-061.\7\
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    \7\ Specifically, the amendments approved pursuant to SR-FINRA-
2009-061 and SR-FINRA-2010-003 overlap with respect to the rule text 
itself in Rules 6610, 6622(a)(9) (which is renumbered as Rule 
6622(a)(7) by SR-FINRA-2009-061), 7310(g) and 7410(l).
    In addition, both filings renumbered certain provisions in Rules 
6420 and 6622(a). This proposed rule change reflects conforming 
changes to reconcile the numbering of these provisions. To avoid 
potential confusion as a result of conflicting numbering, this 
proposed rule change reflects all of the amendments to Rule 6420 and 
paragraph (a) of Rule 6622 that were approved pursuant to SR-FINRA-
2009-061, irrespective of whether the rule text itself conflicts 
with the text as amended by SR-FINRA-2010-003. Because these 
amendments were previously approved by the Commission, FINRA is not 
re-proposing them in this filing and is including them herein solely 
for ease of reference.
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    In addition, SR-FINRA-2009-061 and SR-FINRA-2010-003 proposed 
identical amendments to Rule 6623, and both filings proposed to amend 
Rules 7310(j) and 7330(b). FINRA is proposing to retain the version of 
these provisions as amended by SR-FINRA-2010-003; therefore, this 
proposed rule change does not reflect any conforming changes to Rules 
6623, 7310(j) or 7330(b).
    Finally, FINRA is proposing in this filing an additional amendment 
that was not proposed in SR-FINRA-2010-003 or SR-FINRA-2009-061. FINRA 
is proposing a technical change to the title of the Rule 6620 Series to 
clarify that the series applies to the reporting of transactions in 
Restricted Equity Securities as well as OTC Equity Securities.
    FINRA has filed the proposed rule change for immediate 
effectiveness. The operative date of the proposed rule change will be 
November 1, 2010, the date on which SR-FINRA-2009-061 will be 
implemented.
2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the 
provisions of Section 15A(b)(6) of the Act,\8\ 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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    \8\ 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 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) of the Act \9\ and Rule 19b-
4(f)(6) thereunder.\10\
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6).
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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 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-2010-051 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-2010-051. 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 website 
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 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 publicly 
available. All submissions should refer to File Number SR-FINRA-2010-
051 and should be submitted on or before November 3, 2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-25740 Filed 10-12-10; 8:45 am]
BILLING CODE 8011-01-P