Document ID: SEC-2013-0101-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE MKT LLC
Posted Date: 2013-01-17T05:00Z

[Federal Register Volume 78, Number 12 (Thursday, January 17, 2013)]
[Notices]
[Pages 3947-3949]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-00872]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-68630; File No. SR-NYSEMKT-2013-01]

Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and 
Immediate Effectiveness of Proposed Rule Change Amending Its Price List 
With Respect to Regulatory Fees Related to the Central Registration 
Depository, Which Are Collected by the Financial Industry Regulatory 
Authority, Inc.

January 11, 2013.
    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 January 2, 2013, NYSE MKT LLC (the ``Exchange'' or 
``NYSE MKT'') 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 amend its Price List (the ``Price List'') 
with respect to regulatory fees related to the Central Registration 
Depository (``CRD system''), which are collected by the Financial 
Industry Regulatory Authority, Inc. (``FINRA''). The Exchange proposes 
to implement the fee changes on January 2, 2013. The text of the 
proposed rule change is available on the Exchange's Web site at 
www.nyse.com, at the principal office of the Exchange, 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, 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend the Price List with respect to 
regulatory fees related to the CRD system, which are collected by 
FINRA.\4\ The Exchange proposes to implement the fee changes on January 
2, 2013.
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    \4\ The CRD system is the central licensing and registration 
system for the U.S. securities industry. The CRD system enables 
individuals and firms seeking registration with multiple states and 
self-regulatory organizations to do so by submitting a single form, 
fingerprint card and a combined payment of fees to FINRA. Through 
the CRD system, FINRA maintains the qualification, employment and 
disciplinary histories of registered associated persons of broker-
dealers.
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    Certain of the regulatory fees provided in the Price List are 
collected and retained by FINRA via the CRD system for the registration 
of employees of member organizations of the Exchange that are not FINRA 
members (``Non-FINRA Member Organizations''). The Exchange originally 
adopted fees for use of the CRD system in 2003.\5\ FINRA recently 
amended certain of the fees assessed for use of the CRD system, and 
those amendments will become effective January 2, 2013.\6\
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    \5\ See Securities Exchange Act Release No. 48066 (June 19, 
2003), 68 FR 38409 (June 27, 2003) (SR-Amex-2003-49).
    \6\ See Securities Exchange Act Release No. 67247 (June 25, 
2012), 77 FR 38866 (June 29, 2012) (SR-FINRA-2012-030).
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    The CRD system fees are user-based and there is no distinction in 
the cost incurred by FINRA if the user is a FINRA member or a Non-FINRA 
Member Organization. Accordingly, the Exchange is proposing to amend 
the fees in the Price List to mirror those assessed by FINRA, which 
will be implemented concurrently with the amended FINRA fees on January 
2, 2013.\7\ The proposed changes are as follows: \8\
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    \7\ The Exchange notes that it has only adopted the CRD system 
fees charged by FINRA to Non-FINRA Member Organizations when such 
fees are applicable. In this regard, certain FINRA CRD system fees 
and requirements are specific to FINRA members, but do not apply to 
NYSE MKT-only member organizations.
    \8\ The Exchange is proposing to delete the current fees and 
descriptions in their entirety and replace them with the updated 
fees and descriptions in a separate table that will include all the 
fees applicable to Non-FINRA Member Organizations, as discussed 
further below (corresponding footnotes in the Price List would also 
be designated as ``reserved''). In this regard, the Exchange is 
proposing a new subheading in the ``Regulatory Fees'' section of the 
Price List to differentiate between those fees that are applicable 
to all member organizations and those fees that are applicable only 
to Non-FINRA Member Organizations. The Exchange notes that member 
organizations that are also FINRA members are charged CRD system 
fees according to Section (4) of Schedule A to the FINRA By-laws.

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[[Page 3948]]

     Increasing the disclosure processing fee from $95 to $110; 
\9\ and
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    \9\ See Section (4)(b)(3) of Schedule A to the FINRA By-laws 
effective on January 2, 2013. The updated description in the Price 
List for this fee would be ``additional processing of each initial 
or amended Form U4, Form U5 or Form BD that includes the initial 
reporting, amendment, or certification of one or more disclosure 
events or proceedings.'' As noted below, this would incorporate the 
applicability of the fee to Form BD processing.
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     Increasing the manual fingerprint processing fee from $13 
to $30.\10\
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    \10\ See Section (4)(b)(6) of Schedule A to the FINRA By-laws 
effective on January 2, 2013. The updated description in the Price 
List for this fee would be ``processing and posting to the CRD 
system each set of fingerprint results and identifying information 
that have been processed through another self-regulatory 
organization and submitted to FINRA.'' The Exchange also proposes to 
permanently remove the current $35 fee in the Price List for 
fingerprint processing. The fee for fingerprint processing by FINRA 
is addressed via the other fingerprint processing fees described 
herein and in the proposed changes to the Price List.
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    In addition to increasing the existing CRD system fees, FINRA 
adopted a new fee for the additional processing of each initial or 
amended Form BD that includes the initial reporting, amendment, or 
certification of one or more disclosure events or proceedings.\11\ 
Broker-dealers use Form BD to, among other things, report disclosure 
matters in which they or a control affiliate have been involved. Prior 
to the adoption of the new fee, FINRA did not have a fee designed to 
cover the costs associated with the review of Form BD, notwithstanding 
that the review is similar to that performed of broker-dealers' Forms 
U4 and U5. Such reviews include confirming that the matter is properly 
reported, reviewing any documentation submitted and determining whether 
additional documentation is required, conducting any necessary 
independent research and, depending on the matter reported, analyzing 
whether the event or proceeding subjects the individual or firm to a 
statutory disqualification pursuant to Section 3(a)(39) of the Act.\12\ 
FINRA adopted a $110 fee for the review of a Form BD, which mirrors the 
increased fee adopted for the review of Forms U4 and U5. As such, the 
Exchange is adopting the identical fee for FINRA's review of a Form BD 
submitted by Non-FINRA Member Organizations.\13\
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    \11\ See Section (4)(b)(3) of Schedule A to the FINRA By-laws 
effective on January 2, 2013.
    \12\ 15 U.S.C. 78c(a)(39).
    \13\ See supra note 9.
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    The Exchange also proposes to include in its Price List certain 
other fees that are charged by FINRA to FINRA members as well as Non-
FINRA Member Organizations. These fees are as follows: \14\
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    \14\ Non-FINRA Member Organizations have been charged CRD system 
fees since 2003. See supra note 5.
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     $100 for each initial Form U4 filed for the registration 
of a representative or principal; \15\
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    \15\ See Section (4)(b)(1) of Schedule A to the FINRA By-laws 
effective on January 2, 2013. This fee is assessed when a Non-FINRA 
Member Organization submits its first Initial, Transfer, Relicense, 
or Dual Registration Form U4 filing on behalf of a registered 
person. The current applicable fee is $85.
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     $15 for processing and posting to the CRD system each set 
of fingerprints submitted electronically to FINRA, plus any other 
charge that may be imposed by the U.S. Department of Justice for 
processing each set of fingerprints;\16\
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    \16\ See Section (4)(b)(4) of Schedule A to the FINRA By-laws 
effective on January 2, 2013. The current applicable fee is $13.
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     $30 for processing and posting to the CRD system each set 
of fingerprint cards submitted in non-electronic format to FINRA, plus 
any other charge that may be imposed by the U.S. Department of Justice 
for processing each set of fingerprints; \17\ and
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    \17\ See Section (4)(b)(5) of Schedule A to the FINRA By-laws 
effective on January 2, 2013. The current applicable fee is $13.
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     $45 annually for system processing for each registered 
representative and principal.\18\
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    \18\ See Section (4)(b)(7) of Schedule A to the FINRA By-laws 
effective on January 2, 2013. The current applicable fee is $30. The 
proposed system processing fee would become effective for the 2013 
Renewal Program. In this regard, as part of FINRA's 2013 Renewal 
Program, Preliminary Renewal Statements reflecting the proposed $45 
system processing fee will be made available in the fourth quarter 
of 2012.
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    The Exchange notes that the proposed change is not otherwise 
intended to address any other issues surrounding regulatory fees and 
that the Exchange is not aware of any problems that member 
organizations would have in complying with the proposed change.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\19\ in general, and furthers the 
objectives of Sections 6(b)(4) and 6(b)(5) of the Act,\20\ in 
particular, because it provides for the equitable allocation of 
reasonable dues, fees, and other charges among its members, issuers and 
other persons using its facilities and does not unfairly discriminate 
between customers, issuers, brokers or dealers.
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    \19\ 15 U.S.C. 78f(b).
    \20\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange believes that the change is reasonable because the 
proposed fees are identical to those adopted by FINRA for use of the 
CRD system for disclosure and the registration of FINRA members and 
their associated persons. As FINRA noted in amending its fees, it 
believed that the fees are reasonable based on the increased costs 
associated with operating and maintaining the CRD system, and listed a 
number of enhancements made since the last fee increase, including (1) 
Incorporation of various uniform registration form changes; (2) 
electronic fingerprint processing; (3) Web EFTTM, which 
allows subscribing firms to submit batch filings to the CRD system; and 
(4) increases in the number and types of reports available through the 
CRD system. These increased costs are similarly borne by FINRA when a 
Non-FINRA Member Organization uses the CRD system. FINRA further noted 
its belief that the proposed fees are reasonable because they help to 
ensure the integrity of the information in the CRD system, which is 
very important because the Commission, FINRA, other self-regulatory 
organizations and state securities regulators use the CRD system to 
make licensing and registration decisions, among other things.
    The Exchange also believes that the change is reasonable because it 
will provide greater specificity regarding the CRD system fees that are 
applicable to Non-FINRA Member Organizations. All similarly situated 
member organizations are subject to the same fee structure, and every 
member organization must use the CRD system for registration and 
disclosure. Accordingly, the Exchange believes that the fees collected 
for such use should likewise increase in lockstep with the fees 
assessed to FINRA members, as is proposed by the Exchange. The proposed 
change, like FINRA's proposal, is equitable and not unfairly 
discriminatory because it will result in the same regulatory fees being 
charged to all member organizations required to report information to 
the CRD system and for services performed by FINRA, regardless of 
whether or not such member organizations are FINRA members.

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. Specifically, the Exchange 
believes that the proposed change will result in the same regulatory 
fees being charged to all member organizations required to report 
information to the CRD system and for

[[Page 3949]]

services performed by FINRA, regardless of whether or not such member 
organizations are FINRA members.

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

    The foregoing rule change is effective upon filing pursuant to 
Section 19(b)(3)(A) \21\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \22\ thereunder, because it establishes a due, fee, or other 
charge imposed by NYSE MKT.
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    \21\ 15 U.S.C. 78s(b)(3)(A).
    \22\ 17 CFR 240.19b-4(f)(2).
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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. If the Commission 
takes such action, the Commission shall institute proceedings under 
Section 19(b)(2)(B) \23\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \23\ 15 U.S.C. 78s(b)(2)(B).
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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-NYSEMKT-2013-01 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-NYSEMKT-2013-01. 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 Room, 100 F Street NE., 
Washington, DC 20549, on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of such filing also will be available 
for inspection and copying at NYSE's principal office and on its 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-NYSEMKT-2013-01, and should be submitted on or before February 7, 
2013.
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    \24\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\24\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-00872 Filed 1-16-13; 8:45 am]
BILLING CODE 8011-01-P