Document ID: SEC-2010-0308-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Notice of Filing and Order Granting Accelerated Approval of Proposed Rule Change by NYSE Amex LLC Changing Certain NYSE Amex Equities Rules 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 9468-9470]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-4229]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61556; File No. SR-NYSEAmex-2010-13]

Self-Regulatory Organizations; Notice of Filing and Order 
Granting Accelerated Approval of Proposed Rule Change by NYSE Amex LLC 
Changing Certain NYSE Amex Equities Rules 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, 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 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 Amex Equities Rules 
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 Amex Equities Rules 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 Exchange Rules and that, as applicable, Exchange 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\ 
the New York Stock Exchange LLC (``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''). The Exchange 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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[[Page 9469]]

    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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    Proposed Conforming Amendments to NYSE Amex Equities 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 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). Rule 313--NYSE Amex Equities does not have these references.
    FINRA also deleted certain FINRA Incorporated NYSE Rule 
Interpretations. See Securities Exchange Act Release No. 60933 
(November 4, 2009), 74 FR 58334 (November 12, 2009). The Exchange 
has not adopted a corresponding version of the NYSE Rule 
Interpretations and so those rule changes are not applicable to the 
Exchange and are not included in this filing.
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    To harmonize the NYSE Amex Equities Rules with the approved 
consolidated FINRA Rules, the Exchange correspondingly proposes to 
delete and/or amend Rules 312(g)-(h)-, 313(d)-, 325-, 326(a)-(d)-, 328-
, 416.20-, 418-, 420- and 421- NYSE Amex Equities, and replace them 
with proposed Rules 4110-, 4120-, 4130-, 4140- and 4521- NYSE Amex 
Equities, which are substantially similar to the new FINRA Rules.\12\
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    \12\ NYSE has submitted a companion rule filing amending its 
rules in accordance with FINRA's rule changes. See SR-NYSE-2010-10.
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    As proposed, Rules 4110-, 4120-, 4130-, 4140- and 4521- NYSE Amex 
Equities 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 Amex's and FINRA's membership 
structures.
    In addition, the Exchange proposes other changes to the NYSE Amex 
Equities version of the Rules in order to apply them to the Exchange. 
First, in proposed Rules 4110(a)- and 4140(a)- NYSE Amex Equities, 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 Rules 4110-, 4120- and 4130- NYSE Amex 
Equities, the Exchange proposes to add cross-references to NYSE Amex 
Disciplinary Rule 475. Similar to FINRA Rule 9557, NYSE Amex 
Disciplinary 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 Rules 4140(b)- and 4521(e)- NYSE Amex 
Equities, 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 Amex Equities version of the Rules. Accordingly, proposed Rules 
4140(b)- and 4521(e)- NYSE Amex Equities 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 Exchange Equities 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

[[Page 9470]]

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 
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 
Amex Equities Rules and that, as applicable, the NYSE Amex Equities 
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 
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-Amex 2010-13 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-2010-13. 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. Copies of the filing will also be 
available for inspection and copying at the NYSE Amex's principal 
office and on its Internet Web site at http://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-2010-13 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 proposed 
rule change is consistent with Section 6(b) of the Act,\15\ and 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 \16\ because the 
proposal will promote harmonization between the Exchange Equities Rules 
and FINRA Rules, resulting in less burdensome and more efficient 
regulatory compliance for Common Members. The Commission also believes 
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 \17\ and the rules and regulations thereunder 
applicable to a national securities exchange \18\ because: (1) The 
proposed rule changes will become operative and effective at the same 
time as FINRA's rule changes; (2) there will be no regulatory gaps 
between the FINRA and NYSE Amex Equities Rules; and (3) that, as 
applicable, the NYSE Amex Equities Rules will maintain their status as 
Common Rules under the 17d-2 Agreement. The Commission believes that 
these factors will further promote regulatory compliance and 
efficiency.
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    \15\ See 78f(b).
    \16\ See 78f(b)(5).
    \17\ 15 U.S.C. 78f.
    \18\ In approving this proposed rule change, the Commission has 
considered its impact on efficiency, competition, and capital 
formation. See 78c(f).
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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.\19\ 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 Amex Equities 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,\20\ 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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    \19\ 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.
    \20\ 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,\21\ that the proposed rule change, (SR-NYSEAmex-2010-13), is 
hereby approved on an accelerated basis.
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    \21\ See id.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\22\
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    \22\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-4229 Filed 3-1-10; 8:45 am]
BILLING CODE 8011-01-P