Document ID: SEC-2010-0307-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Notice of Filing and Order Granting Accelerated Approval of Proposed Rule Change by New York Stock Exchange LLC Changing Certain NYSE Rules and Rule Interpretations To Correspond With Rule Changes Filed by the Financial Industry Regulatory Authority, Inc.
Posted Date: 2010-03-02T05:00Z

[Federal Register Volume 75, Number 40 (Tuesday, March 2, 2010)]
[Notices]
[Pages 9472-9474]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-4228]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61557; File No. SR-NYSE-2010-10]

 Self-Regulatory Organizations; Notice of Filing and Order 
Granting Accelerated Approval of Proposed Rule Change by New York Stock 
Exchange LLC Changing Certain NYSE Rules and Rule Interpretations To 
Correspond With Rule Changes Filed by the Financial Industry Regulatory 
Authority, Inc.

February 22, 2010.
    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 16, 2010, New York Stock Exchange LLC (``NYSE'' 
or the ``Exchange'') 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 Exchange. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons and to approve the 
proposal on an accelerated basis.
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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 changes to certain NYSE Rules and Rule 
Interpretations to correspond with rule changes filed by the Financial 
Industry Regulatory Authority, Inc. (``FINRA'') and approved by the 
Commission.\4\ The Exchange proposes to apply these changes 
retroactively to February 8, 2010. The text of the proposed rule change 
is available at the Exchange, the Commission's Public Reference Room, 
and http://www.nyse.com.
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    \4\ See Securities Exchange Act Release No. 60933 (November 4, 
2009), 74 FR 58334 (November 12, 2009) (order approving SR-FINRA-
2008-067). FINRA also recently filed for immediate effectiveness to 
(i) adopt non-substantive technical changes to consolidated FINRA 
Rule 4521(d), and (ii) amend FINRA Incorporated NYSE Rule 312(g). 
See Securities Exchange Act Release No. 61408 (January 22, 2010), 75 
FR 4596 (January 28, 2010) (SR-FINRA-2010-004). See also SR-FINRA-
2010-008, filed on February 4, 2010. These changes are incorporated 
in this rule filing.
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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 Exchange 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of the proposed rule changes is to adopt changes to 
certain NYSE Rules and Rule Interpretations to correspond with rule 
changes filed by FINRA and approved by the Commission. The Exchange 
proposes to apply these changes retroactively to February 8, 2010, the 
same effective date for FINRA's rule changes.\5\ The Exchange states 
that making the proposed rule change retroactive to February 8, 2010 
would ensure that the proposed rule changes are operative and effective 
at the same time as FINRA's rule changes, that there are no regulatory 
gaps between the FINRA and NYSE Rules and that, as applicable, the NYSE 
Rules maintain their status as Common Rules under the 17d-2 
Agreement.\6\
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    \5\ See FINRA Regulatory Notice 09-71 (December 7, 2009).
    \6\ As provided in paragraph 2(b) of the 17d-2 Agreement, FINRA 
and NYSE will amend the list of Common Rules to conform to the rule 
changes proposed herein.
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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,\7\ 
NYSE, NYSER and FINRA entered into an agreement (the ``17d-2 
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 17d-2 
Agreement effective December 15, 2008.\8\
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    \7\ 15 U.S.C. 78a, et seq.
    \8\ See Securities Exchange Act Release Nos. 56148 (July 26, 
2007), 72 FR 42146 (August 1, 2007) (order approving the 17d-2 
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 17d-2 
Agreement, adding NYSE Amex LLC as a party). Paragraph 2(b) of the 
17d-2 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.\9\
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    \9\ 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 (``Common 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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[[Page 9473]]

Proposed Conforming Amendments to NYSE Rules
    FINRA recently adopted consolidated FINRA Rules 4110 (Capital 
Compliance), 4120 (Regulatory Notification and Business Curtailment), 
4130 (Regulation of Activities of Section 15C Member Organizations 
Experiencing Financial and/or Operational Difficulties), 4140 (Audit) 
and 4521 (Notifications, Questionnaires and Reports) as part of its 
rule set governing financial responsibility of member firms. FINRA also 
amended consolidated FINRA Rules 9557 (Procedures for Regulating 
Activities Under Rules 4110, 4120 and 4130 Regarding a Member 
Experiencing Financial or Operational Difficulties) and 9559 (Hearing 
Procedures for Expedited Proceedings Under the Rule 9550 Series), as 
well as Section 4(g) of Schedule A of the FINRA By-Laws to reflect the 
adoption of the new Rules.\10\
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    \10\ See Securities Exchange Act Release No. 61408 (January 22, 
2010), 75 FR 4596 (January 28, 2010). See also SR-FINRA-2010-008, 
filed on February 4, 2010.
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    Because they are incorporated with or replaced by these new 
consolidated FINRA Rules, FINRA also deleted and/or amended certain 
FINRA Incorporated NYSE Rules and Rule Interpretations, including 
312(g)--(h) (Changes Within Member Organizations), 313(d) (Submission 
of Partnership Articles--Submission of Corporate Documents), 313(d)/01 
-/02 (Opinion of Counsel), 325 (Capital Requirements Member 
Organizations), 325(c)(1)/01 (Long Put or Call Options), 326(a) (Growth 
Capital Requirement), 326(b) (Business Reduction Capital Requirement), 
326(c) (Unsecured Loans and Advances), 326(d) (Reduction of Elimination 
of Loans and Advances), 328 (Sale-And-Leasebacks, Factoring, Financing 
and Similar Arrangements), 416.20 (Questionnaires and Reports), 416/01 
(Gold and Silver Offerings), 418 (Audit), 420 (Reports of Borrowings 
and Subordinate Loans For Capital Purposes) and 421 (Periodic 
Reports).\11\
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    \11\ FINRA also deleted references to FINRA Incorporated NYSE 
Rules 313.14 (A-B-C agreements) and 313.18 (Sole board member 
provision) as part of its clean-up of Rule 313. See Securities 
Exchange Act Release No. 60933 (November 4, 2009), 74 FR 58334 
(November 12, 2009). The Exchange also proposes to delete those 
references in NYSE Rule 313.
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    To harmonize the NYSE Rules with the approved consolidated FINRA 
Rules, the Exchange correspondingly proposes to delete and/or amend 
NYSE Rules and Rule Interpretations 312(g)--(h), 313(d), 313(d)/01 -/
02, 325, 325(c)(1)/01, 326(a)--(d), 328, 416.20, 416/01, 418, 420 and 
421, and replace them with proposed NYSE Rules 4110, 4120, 4130, 4140 
and 4521, which are substantially similar to the new FINRA Rules.\12\
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    \12\ NYSE Amex has submitted a companion rule filing amending 
its rules in accordance with FINRA's rule changes. See SR-NYSEAmex-
2010-13.
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    As proposed, NYSE Rules 4110, 4120, 4130, 4140 and 4521 adopt the 
same language as the corresponding consolidated FINRA Rules, except for 
substituting for or adding to, as needed, the term ``Exchange'' for 
``FINRA'' and the term ``member organization'' for the term ``member'', 
and making corresponding technical changes that reflect the difference 
between NYSE's and FINRA's membership structures.
    In addition, the Exchange proposes other changes to the NYSE 
version of the Rules in order to apply them to the Exchange. First, in 
proposed NYSE Rules 4110(a) and 4140(a), the Exchange proposes to amend 
FINRA's version of the Rules referring to ``FINRA's Executive Vice 
President charged with oversight for financial responsibility, or his 
or her written officer delegate,'' to remove this language as it is 
inapplicable to the Exchange. As amended, the Exchange would retain the 
flexibility to arrange to have FINRA conduct the actual oversight and 
application of the proposed Rules pursuant to the 17d-2 Agreement or a 
Regulatory Services Agreement as warranted.
    Second, in proposed NYSE Rules 4110, 4120 and 4130, the Exchange 
proposes to add cross-references to NYSE Rule 475. Similar to FINRA 
Rule 9557, NYSE Rule 475 provides the Exchange with the ability to take 
summary action against a member or member organization that is facing 
financial or operational difficulties subject to certain due process 
considerations, including notice and an opportunity to be heard. The 
Exchange believes it should retain its current disciplinary procedures 
for addressing non-FINRA members and member organizations that face 
financial or operational difficulties.
    Finally, in proposed NYSE Rules 4140(b) and 4521(e), the Exchange 
proposes to amend the language from FINRA's version of the Rules 
referring to Schedule A, Section 4(g) of the FINRA By-Laws to simply 
incorporate the language of Section 4(g) into the NYSE version of the 
Rules. Accordingly, proposed NYSE Rules 4140(b) and 4521(e) specify 
that member organizations that fail to timely file any report, 
notification or information pursuant to those Rules will be subject to 
a late fee of $100 per day, for a period not to exceed 10 business 
days. Under the proposed Rules, requests for an extension of time must 
be submitted at least three business days prior to the due date of the 
report, notification or information required to be provided.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\13\ in general, and further the 
objectives of Section 6(b)(5) of the Act,\14\ in particular, in that it 
is 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. The Exchange 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 Common Members. 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 Rules. The Exchange states that making the proposed rule change 
retroactive to February 8, 2010 would ensure that the proposed rule 
changes are operative and effective at the same time as FINRA's rule 
changes, that there are no regulatory gaps between the FINRA and NYSE 
Rules and that, as applicable, the NYSE Rules maintain their status as 
Common Rules under the 17d-2 Agreement.
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    \13\ 15 U.S.C. 78f(b).
    \14\ 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 solicited or received with respect to the 
proposed rule change.

III. Solicitation of Comments

    Interested persons are invited to submit written data, views, and

[[Page 9474]]

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-2010-10 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-2010-10. 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 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-2010-10 and should be submitted on 
or before March 23, 2010.

IV. Commission's Findings and Order Granting Accelerated Approval of 
Proposed Rule Change

    After careful consideration, the Commission finds that the 
Exchange's proposal to retroactively apply the proposed rule change to 
February 8, 2010 is consistent with the requirements of the Section 6 
of the Act\15\ and the rules and regulations thereunder applicable to a 
national securities exchange.\16\ In particular, the Commission 
believes that the proposed rule change is consistent with Section 
6(b)(5) in particular, in that it is 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.\17\ Approving 
the proposed rule change, and making such approval retroactive to 
February 8, 2010, would ensure that the proposed rule changes are 
operative and effective at the same time as FINRA's rule changes, that 
there are no regulatory gaps between the FINRA and NYSE Rules and that, 
as applicable, the NYSE Rules maintain their status as Common Rules 
under the 17d-2 Agreement
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    \15\ 15 U.S.C. 78f.
    \16\ In approving this proposed rule change, the Commission has 
considered its impact on efficiency, competition, and capital 
formation. See 78c(f).
    \17\ See 15 U.S.C. 78f(b)(5).
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    The Exchange has requested that the Commission find good cause for 
approving the proposed rule change prior to the thirtieth day after 
publication of the notice thereof in the Federal Register. The 
Commission believes that good cause exists for accelerated approval of 
the proposed rule change because it raises no novel issues and is 
consistent with the FINRA rule filings previously approved by or filed 
with the Commission on which it is based.\18\ Except as has been 
specifically noted and subject to a number of technical changes 
necessary to apply the Rules to the Exchange, the proposed rule changes 
will conform certain NYSE Rules and Rule Interpretations to FINRA's 
amendments to corresponding FINRA Incorporated NYSE Rules and Rule 
Interpretations and FINRA's adoption of consolidated FINRA Rules 4110, 
4120, 4130, 4140 and 4521 in furtherance of the consolidation of the 
member firm regulation functions of NYSER and FINRA. Accordingly, the 
Commission finds good cause, pursuant to Section 19(b)(2) of the 
Act,\19\ for approving the proposed rule change prior to the thirtieth 
day after publication of the notice thereof in the Federal Register.
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    \18\ See Securities Exchange Act Release No. 61408 (January 22, 
2010), 75 FR 4596 (January 28, 2010). See also SR-FINRA-2010-008, 
filed on February 4, 2010.
    \19\ See 15 U.S.C. 78s(b)(2).
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V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\20\ that the proposed rule change, (SR-NYSE-2010-10), is hereby 
approved on an accelerated basis.
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    \20\ See id.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\21\
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    \21\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-4228 Filed 3-1-10; 8:45 am]
BILLING CODE 8011-01-P