Document ID: SEC-2010-0843-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange LLC
Posted Date: 2010-06-10T04:00Z

[Federal Register: June 10, 2010 (Volume 75, Number 111)]
[Notices]               
[Page 32978-32980]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr10jn10-79]                         

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-62223; File No. SR-NYSE-2010-40]

 
Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Changes 
Deleting NYSE Rules 352(e)-(g) and Adopting New Rule 3240 To Correspond 
With Rule Changes Filed by the Financial Industry Regulatory Authority, 
Inc.

June 4, 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 May 17, 2010, New York Stock Exchange LLC (the 
``Exchange'' or ``NYSE'') filed with the Securities and Exchange 
Commission (the ``Commission'') the proposed rule changes as described 
in Items I, II, and III below, which Items have been substantially 
prepared by the Exchange. The Commission is publishing this notice to 
solicit comments on the proposed rule changes from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Changes

    The Exchange proposes to delete NYSE Rules 352(e)-(g) and adopt new 
Rule 3240 to correspond with rule changes filed by the Financial 
Industry Regulatory Authority, Inc. (``FINRA'')

[[Page 32979]]

and approved by the Commission.\4\ The text of the proposed rule 
changes is available at the Exchange, the Commission's Public Reference 
Room, and http://www.nyse.com.
---------------------------------------------------------------------------

    \4\ See Securities Exchange Act Release No. 61537 (February 18, 
2010), 75 FR 8772. (February 25, 2010) (order approving SR-FINRA-
2009-095).
---------------------------------------------------------------------------

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Changes

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of, and basis for, the proposed rule changes and 
discussed any comments it received on the proposed rule changes. 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 Changes

1. Purpose
    The purpose of the proposed rule changes is to delete NYSE Rules 
352(e)-(g) (Guarantees, Sharing in Accounts, and Loan Arrangements) and 
adopt new Rule 3240 (Borrowing From or Lending to Customers) to 
correspond with rule changes filed by FINRA and approved by the 
Commission.
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\
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    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\
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

Proposed Conforming Amendments to NYSE Rules
    FINRA adopted NASD Rule 2370 (Borrowing From or Lending to 
Customers), which governs lending arrangements between registered 
persons and their customers, as consolidated FINRA Rule 3240, subject 
to certain modifications.\7\ Because they are substantially similar to 
consolidated FINRA Rule 3240, FINRA also deleted FINRA Incorporated 
NYSE Rules 352(e)-(g).\8\
---------------------------------------------------------------------------

    \7\ See Securities Exchange Act Release No. 61537 (February 18, 
2010), 75 FR 8772 (February 25, 2010).
    \8\ Id.
---------------------------------------------------------------------------

    To harmonize the NYSE Rules with the approved consolidated FINRA 
Rules, the Exchange correspondingly proposes to delete NYSE Rules 
352(e)-(g) and replace them with proposed NYSE Rule 3240, which is 
substantially similar to the new FINRA Rule.\9\ As proposed, NYSE Rule 
3240 adopts the same language as FINRA Rule 3240, except for 
substituting for or adding to, as needed, the term ``member 
organization'' for the term ``member,'' and making corresponding 
technical changes. In addition, in order to ensure that both proposed 
NYSE Rule 3240 and FINRA Rule 3240 are fully harmonized, the Exchange 
also proposes to add Supplementary Material .02 to NYSE Rule 3240 to 
provide that, for the purposes of the rule, the term ``person 
associated with a member organization'' 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.
---------------------------------------------------------------------------

    \9\ NYSE Amex has submitted a companion rule filing amending its 
rules in accordance with FINRA's rule changes. See SR-NYSEAmex-2010-
47.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that the proposed rule changes are consistent 
with Section 6(b) of the Act,\10\ in general, and further the 
objectives of Section 6(b)(5) of the Act,\11\ in particular, in that 
they are 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.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    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 Dual 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.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule changes 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 Changes Received From Members, Participants, or Others

    No written comments were solicited or received with respect to the 
proposed rule changes.

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

    The Exchange has filed the proposed rule changes pursuant to 
Section 19(b)(3)(A)(iii) of the Act \12\ and Rule 19b-4(f)(6) 
thereunder.\13\ Because the proposed rule changes do 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 changes have become

[[Page 32980]]

effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \13\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

    A proposed rule change filed under Rule 19b-4(f)(6) \14\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\15\ 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. The Commission notes that 
the proposed rule changes are substantially identical to rule changes 
proposed by FINRA and approved by the Commission after an opportunity 
for public comment, and do not raise any new substantive issues.\16\ 
For these reasons, the Commission believes that waiver of the 30-day 
operative delay is consistent with the protection of investors and the 
public interest because it will promote greater harmonization between 
NYSE Rules and FINRA Rules of similar purpose, resulting in less 
burdensome and more efficient regulatory compliance for joint members 
and greater harmonization between NYSE Rules and FINRA Rules. 
Therefore, the Commission designates the proposed rule change effective 
and operative upon filing.\17\
---------------------------------------------------------------------------

    \14\ 17 CFR 240.19b-4(f)(6).
    \15\ 17 CFR 240.19b-4(f)(6)(iii).
    \16\ See supra note 7.
    \17\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of the proposed rule 
changes, the Commission may summarily abrogate such rule changes 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 
changes are 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-2010-40 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-2010-40. 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 changes that are 
filed with the Commission, and all written communications relating to 
the proposed rule changes 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 20549-1090 on official business days between the hours 
of 10 a.m. and 3 p.m. 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 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-NYSE-2010-40 and should be submitted on 
or before July 1, 2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
---------------------------------------------------------------------------

    \18\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-13931 Filed 6-9-10; 8:45 am]
BILLING CODE 8010-01-P