Document ID: SEC-2012-0311-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Amex LLC
Posted Date: 2012-02-23T05:00Z

[Federal Register Volume 77, Number 36 (Thursday, February 23, 2012)]
[Notices]
[Pages 10791-10792]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-4151]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-66412; File No. SR-NYSEAMEX-2012-08]

Self-Regulatory Organizations; NYSE Amex LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Deleting NYSE Amex 
Equities Rule 319, Which Addresses Fidelity Bond Requirements, and 
Adopt New Rule Text That Is Substantially Similar to FINRA Rule 4360

February 16, 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 February 3, 2012, NYSE Amex LLC (the ``Exchange'' or 
``NYSE Amex'') 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 prepared by the self-regulatory 
organization. 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 NYSE Amex Equities Rule 319, which 
addresses fidelity bond requirements, and adopt new rule text that is 
substantially similar to FINRA Rule 4360. 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to delete NYSE Amex Equities Rule 319, which 
addresses fidelity bond requirements, and adopt new rule text that is 
substantially similar to FINRA Rule 4360.\4\
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    \4\ See Securities Exchange Act Release No. 63961 (February 24, 
2011), 76 FR 11542 (March 2, 2011) (SR-FINRA-2010-059). FINRA's rule 
change became effective on January 1, 2012. See FINRA Regulatory 
Notice 11-21.
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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, 
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\
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    \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.
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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.\6\
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    \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.
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Proposed Conforming Amendments to NYSE Amex Equities Rules
    The Exchange proposes to delete NYSE Amex Equities Rule 319 and 
adopt new NYSE Amex Equities Rule 4360 to conform to the changes 
adopted by FINRA for fidelity bonds.\7\ FINRA adopted NASD Rule 3020 as 
FINRA Rule 4360, taking into account NYSE Rule 319 and its 
Interpretation. FINRA Rule 4360 updates and clarifies fidelity bond 
requirements for member firms and better reflects current industry 
practices. The Rule requires each FINRA member that is required to join 
Securities Investor Protection Corporation to maintain blanket fidelity 
bond coverage with specified amounts of coverage based on the member 
organization's net capital requirement, with certain exceptions, and to 
maintain fidelity bond coverage that provides for per loss coverage 
without an aggregate limit of liability.
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    \7\ The purpose of a fidelity bond is to protect a member 
organization against certain types of losses, including, but not 
limited to, those caused by the malfeasance of its officers and 
employees, and the effect of such losses on the member 
organization's capital.
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    Because it covers the same topic as the new FINRA rule, FINRA 
deleted FINRA Incorporated NYSE Rule 319 and its Interpretation. In 
particular, NYSE Rule 319 and its Interpretation generally require 
member organizations to maintain minimum amounts of fidelity bond 
coverage for officers and employees, and that such coverage address 
losses incurred due to certain specified events. To harmonize the NYSE 
Amex Equities Rules with the approved FINRA Rules, the Exchange 
correspondingly proposes to delete NYSE Amex Equities Rule 319 and to 
adopt proposed NYSE Amex Equities Rule 4360. The text of proposed NYSE 
Amex Equities Rule 4360 would be the same as FINRA Rule 4360, except 
that the Exchange would substitute the term ``member organization'' for 
``member'' and ``Exchange'' for ``FINRA.''

[[Page 10792]]

2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the Act 
\8\ in general, and furthers the objectives of Section 6(b)(5) \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. Specifically, the Exchange 
believes that the proposed rule change supports the objectives of the 
Act by providing greater harmonization between NYSE Amex Equities Rules 
and FINRA Rules of similar purpose, resulting in less burdensome and 
more efficient regulatory compliance. In particular, all NYSE Amex 
member organizations that are subject to NYSE Amex Equities Rule 319 
are also subject to FINRA Rule 4360 and harmonizing these two rules 
would promote just and equitable principles of trade by requiring a 
single standard for fidelity bonds. 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 Amex Equities Rules. The Exchange also believes that the 
proposed rule change will update and clarify the requirements governing 
fidelity bonds, which will promote just and equitable principles of 
trade and help to protect investors.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(5).
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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 either 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 proposed rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.
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    \10\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \11\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) \12\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\13\ 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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    \12\ 17 CFR 240.19b-4(f)(6).
    \13\ 17 CFR 240.19b-4(f)(6)(iii).
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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-NYSEAMEX-2012-08 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-NYSEAMEX-2012-08. 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 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 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-NYSEAMEX-2012-08 and 
should be submitted on or before March 15, 2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-4151 Filed 2-22-12; 8:45 am]
BILLING CODE 8011-01-P