Document ID: SEC-2010-0681-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Amex LLC
Posted Date: 2010-05-10T04:00Z

[Federal Register: May 10, 2010 (Volume 75, Number 89)]
[Notices]               
[Page 25901-25902]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr10my10-97]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-62014; File No. SR-NYSEAMEX-2010-26]

 
Self-Regulatory Organizations; NYSE Amex LLC; Order Approving a 
Proposed Rule Change Deleting Rule 446--NYSE Amex Equities and Adopting 
New Rule 4370--NYSE Amex Equities To Correspond With Rule Changes Filed 
by the Financial Industry Regulatory Authority, Inc.

April 30, 2010.

I. Introduction

    On March 11, 2010, NYSE Amex LLC (``NYSE Amex'' or ``Exchange'') 
filed with the Securities and Exchange Commission (``Commission'') 
pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 1934 
(the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ a proposed rule change 
to delete Rule 446--NYSE Amex Equities and adopt new Rule 4370--NYSE 
Amex Equities to correspond with rule changes filed by the Financial 
Industry Regulatory Authority, Inc. (``FINRA'') and approved by the 
Commission.\4\ The proposed rule change was published for comment in 
the Federal Register on March 26, 2009.\5\ The Commission received no 
comments regarding the proposal. This order approves the proposed rule 
change.
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    \1\ 15 U.S.C.78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
    \4\ See Securities Exchange Act Release No. 60534 (August 19, 
2009), 74 FR 44410 (August 28, 2009) (order approving SR-FINRA-2009-
036) (``Release No. 34-60534'').
    \5\ See Securities Exchange Act Release No. 61744 (March 19, 
2010), 75 FR 14648.
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II. Description of the Proposal

    The Exchange proposes to delete Rule 446--NYSE Amex Equities and 
adopt new Rule 4370--NYSE Amex Equities to correspond with rule changes 
filed by the Financial Industry Regulatory Authority, Inc. (``FINRA'') 
and approved by the Commission.\6\
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    \6\ See Release No. 34-60534, supra note 4.
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III. Background

    On July 30, 2007, FINRA's predecessor, 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 Act, the 
New York Stock Exchange LLC (``NYSE''), NYSER and FINRA entered into an 
agreement (``Agreement'') to reduce regulatory duplication for their 
members by

[[Page 25902]]

allocating to FINRA certain regulatory responsibilities for certain 
NYSE rules and rule interpretations (``FINRA Incorporated NYSE 
Rules''). The Exchange became a party to the Agreement effective 
December 15, 2008.\7\
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    \7\ 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.
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    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.\8\
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    \8\ 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, 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.
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    In 2008, FINRA deleted FINRA Incorporated NYSE Rule 446 (Business 
Continuity and Contingency Plans) as substantively duplicative of NASD 
Rules 3510 (Business Continuity Plans) and 3520 (Emergency Contact 
Information).\9\ Correspondingly, the Exchange amended Rule 446--NYSE 
Amex Equities (Business Continuity and Contingency Plans) to remove the 
existing text and incorporate NASD Rules 3510 and 3520 by 
reference.\10\ Subsequently, FINRA adopted, subject to certain 
amendments, NASD Rules 3510 and 3520 as consolidated FINRA Rule 4370 
(Business Continuity Plans and Emergency Contact Information).\11\
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    \9\ See Securities Exchange Act Release No. 58533 (September 12, 
2008), 73 FR 54652 (September 22, 2008) (order approving SR-FINRA-
2008-036).
    \10\ See Securities Exchange Act Release No. 59022 (November 26, 
2008), 73 FR 73683 (December 3, 2008) (order approving SR-NYSEALTR-
2008-10).
    \11\ See Release No. 34-60534, supra note 4.
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    The Exchange correspondingly proposes to delete Rule 446--NYSE Amex 
Equities and replace it with proposed Rule 4370--NYSE Amex Equities, 
which is substantially similar to the new FINRA Rule.\12\ The Exchange 
states that the purpose of this is to harmonize the NYSE Amex Equities 
Rules with the consolidated FINRA Rules. The Exchange states that, as 
proposed, Rule 4370--NYSE Amex Equities adopts the same language as 
FINRA Rule 4370, except for substituting for or adding to, as needed, 
the term ``member organization'' for the term ``member,'' and making 
corresponding technical changes that reflect the difference between 
NYSE Amex's and FINRA's membership structures. The Exchange also states 
that, in paragraph (f)(2) to proposed NYSE Rule 4370--NYSE Amex 
Equities, the Exchange has added a cross-reference to Rule 416A--NYSE 
Amex Equities to ensure that those Exchange members and member 
organizations that are not FINRA members are required to update the 
contact information for emergency personnel in accordance with NYSE 
Amex Equities Rules.
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    \12\ New York Stock Exchange LLC submitted a companion rule 
filing amending its rules in accordance with FINRA's rule changes, 
which the Commission has approved. See Securities Exchange Act 
Release No. 62015 (April 30, 2010)(SR-NYSE-2010-23).
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    The Exchange also proposes to add Supplementary Material .01 to 
Rule 4370--NYSE Amex Equities to provide that, for the purposes of the 
rule, the term ``associated person'' shall have the same meaning as the 
terms ``person associated with a member'' or ``associated person of a 
member'' as defined in Article I (rr) of the FINRA By-Laws. The 
Exchange states that this change is necessary to ensure that both 
proposed Rule 4370--NYSE Amex Equities and FINRA Rule 4370 are fully 
harmonized.
    Finally, the Exchange proposes that the effective date for the 
proposed rule changes be retroactive to December 14, 2009, the same 
effective date for the corresponding FINRA rule changes.\13\ As a 
result, there should be no regulatory gaps between the FINRA and NYSE 
Amex Equities Rules and that, as applicable, the NYSE Amex Equities 
Rules would maintain their status as Common Rules under the 
Agreement.\14\
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    \13\ See FINRA Regulatory Notice 09-60 (October 15, 2009).
    \14\ 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.
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IV. Discussion and Commission Findings

    After careful review, the Commission finds that the proposed rule 
change is consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to a national securities exchange. 
Specifically, the Commission finds that the proposed rule change is 
consistent with Section 6(b)(5) of the Act,\15\ which requires, among 
other things, that the rules of a national securities exchange be 
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.\16\
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    \15\ 15 U.S.C. 78f(b)(5).
    \16\ In approving the proposed rule change, 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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    The Commission believes that the proposed rule change provides 
greater harmonization between NYSE Amex Equities Rules and FINRA Rules 
of similar purpose, resulting in less burdensome and more efficient 
regulatory compliance for NYSE Amex members. In addition, the 
Commission believes that retroactive application of the proposed rule 
change to December 14, 2009, is appropriate to assure that there are no 
regulatory gaps between FINRA and NYSE Amex Equities Rules, and that, 
as applicable, the NYSE Amex Rules would maintain their status as 
Common Rules under the Agreement.

V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\17\ that the proposed rule change (SR-NYSEAmex-2010-26), be, and 
hereby is, approved.
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    \17\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-10952 Filed 5-7-10; 8:45 am]
BILLING CODE 8011-01-P