Document ID: SEC-2010-0680-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange LLC
Posted Date: 2010-05-10T04:00Z

[Federal Register: May 10, 2010 (Volume 75, Number 89)]
[Notices]               
[Page 25902-25904]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr10my10-98]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-62015; File No. SR-NYSE-2010-23]

 
Self-Regulatory Organizations; New York Stock Exchange LLC; Order 
Approving Proposed Rule Change Deleting NYSE Rule 446 and Adopting New 
Rule 4370 To Correspond With Rule Changes Filed by the Financial 
Industry Regulatory Authority, Inc.

April 30, 2010.

I. Introduction

    On March 11, 2010, the New York Stock Exchange LLC (``NYSE'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) \1\ of the Securities 
Exchange Act

[[Page 25903]]

of 1934 (the ``Act''),\2\ and Rule 19b-4 thereunder,\3\ a proposed rule 
change to delete NYSE Rule 446 and adopt new Rule 4370 to correspond 
with rule changes filed by the Financial Industry Regulatory Authority, 
Inc. (``FINRA'') and approved by the Commission.\4\ The proposed rule 
change was published for comment in the Federal Register on March 26, 
2010.\5\ The Commission received no comments on the proposal. This 
order approves the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
    \4\ See Securities Exchange Act Release No. 60534 (August 19, 
2009), 74 FR 44410 (August 28, 2009) (order approving SR-FINRA-2009-
036) (``Release No. 34-60534'').
    \5\ See Securities Exchange Act Release No. 61743 (March 19, 
2010), 75 FR 14650.
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II. Description of the Proposal

    The Exchange proposes to delete NYSE Rule 446 and adopt new Rule 
4370 to correspond with rule changes filed by FINRA and approved by the 
Commission.\6\
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    \6\ See Release No. 34-60534, supra note 4.
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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.\7\
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    \7\ 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.\8\
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    \8\ 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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    In 2008, FINRA deleted FINRA Incorporated NYSE Rule 446 (Business 
Continuity and Contingency Plans) as substantively duplicative of NASD 
Rules 3510 (Business Continuity Plans) and 3520 (Emergency Contact 
Information).\9\ Correspondingly, the Exchange amended NYSE Rule 446 
(Business Continuity and Contingency Plans) to remove the existing text 
and incorporate NASD Rules 3510 and 3520 by reference.\10\ 
Subsequently, FINRA adopted, subject to certain amendments, NASD Rules 
3510 and 3520 as consolidated FINRA Rule 4370 (Business Continuity 
Plans and Emergency Contact Information).\11\
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    \9\ See Securities Exchange Act Release No. 58533 (September 12, 
2008), 73 FR 54652 (September 22, 2008) (order approving SR-FINRA-
2008-036).
    \10\ See Securities Exchange Act Release No. 58549 (September 
15, 2008), 73 FR 54444 (September 19, 2008) (order approving SR-
NYSE-2008-080).
    \11\ See Release No. 34-60534, supra note 4.
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    The Exchange correspondingly proposes to delete NYSE Rule 446 and 
replace it with proposed NYSE Rule 4370, which is substantially similar 
to the new FINRA Rule.\12\ The Exchange states that the purpose of this 
proposed rule change is to harmonize the NYSE Rules with the 
consolidated FINRA Rules. The Exchange states that, as proposed, NYSE 
Rule 4370 adopts the same language as FINRA Rule 4370, except for 
substituting for or adding to, as needed, 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. The Exchange also states that, in 
paragraph (f)(2) to proposed NYSE Rule 4370, the Exchange has added a 
cross-reference to NYSE Rule 416A to ensure that those Exchange members 
and member organizations that are not FINRA members are required to 
update the contact information for emergency personnel in accordance 
with NYSE Rules.
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    \12\ NYSE Amex submitted a companion rule filing amending its 
rules in accordance with FINRA's rule changes, which the Commission 
has approved. See Securities Exchange Act Release No. 62014 (April 
30, 2010) (SR-NYSE-Amex-2010-26).
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    The Exchange also proposes to add Supplementary Material .01 to 
NYSE Rule 4370 to provide that, for the purposes of the rule, the term 
``associated person'' 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. The Exchange states 
that this change is necessary to ensure that both proposed NYSE Rule 
4370 and FINRA Rule 4370 are fully harmonized.
    Finally, the Exchange proposes that the effective date for the 
proposed rule changes be retroactive to December 14, 2009, the same 
effective date for the corresponding FINRA rule changes.\13\ As a 
result, there should be no regulatory gaps between the FINRA and NYSE 
Rules and that, as applicable, the NYSE Rules would maintain their 
status as Common Rules under the Agreement.\14\
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    \13\ See FINRA Regulatory Notice 09-60 (October 15, 2009).
    \14\ As provided in paragraph 2(b) of the Agreement, FINRA and 
NYSE will amend the list of Common Rules to conform to the rule 
changes proposed herein.
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III. Discussion and Commission Findings

    After careful review, the Commission finds that the proposed rule 
change is consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to a national securities exchange. In 
particular, the Commission finds that the proposal is consistent with 
Section 6(b)(5) of the Act,\15\ which requires, among other things, 
that the rules of a national securities exchange be 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\
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    \15\ 15 U.S.C. 78f(b)(5).
    \16\ In approving the proposed rule change, the Commission notes 
that it has considered the proposed rule's impact on efficiency, 
competition, and capital formation. 15 U.S.C. 78c(f).
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    The Commission believes that the proposed rule change provides 
greater harmonization between NYSE Rules and FINRA Rules (including 
Common Rules) of similar purpose, resulting in less burdensome and more 
efficient regulatory compliance for NYSE members, including Dual 
Members. In addition, the Commission believes that retroactive 
application of the proposed rule change to December 14, 2009 is 
appropriate to assure that there are no regulatory gaps between FINRA 
and NYSE Rules, and that, as applicable, the NYSE Rules would maintain 
their status as Common Rules under the Agreement.

[[Page 25904]]

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\17\ that the proposed rule change (SR-NYSE-2010-23) be, and hereby 
is, approved.
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    \17\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-10953 Filed 5-7-10; 8:45 am]
BILLING CODE 8010-01-P