Document ID: SEC-2011-1035-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange LLC
Posted Date: 2011-07-20T04:00Z

[Federal Register Volume 76, Number 139 (Wednesday, July 20, 2011)]
[Notices]
[Pages 43366-43368]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-18195]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-64888; File No. SR-NYSE-2011-33]

Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Conforming Certain of Its Financial Responsibility and Related 
Operational Rules to a Recently-Approved Financial Industry Regulatory 
Authority Rule Change

July 14, 2011.
    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 July 13, 2011, 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 and II 
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 conform certain of its financial 
responsibility and related operational Rules to a recently-approved 
Financial Industry Regulatory Authority (``FINRA'') rule change.\4\ 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. 63375 (November 24, 
2010), 75 FR 74759 (December 1, 2010) (Notice of filing of SR-FINRA-
2010-061). See also Securities Exchange Act Release No. 63999 (March 
1, 2011), 76 FR 12380 (March 7, 2011) (Notice of filing of amendment 
number 1 and order granting accelerated approval of SR-FINRA-2010-
061).
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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 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 conform certain of its financial 
responsibility and related operational Rules to a recently-approved 
FINRA rule change.
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\
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    \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.
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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

[[Page 43367]]

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\
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    \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.
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    In connection with the rule consolidation efforts between the 
Exchange and FINRA, FINRA recently received approval for the adoption 
of certain financial responsibility and related operational rules in 
the consolidated FINRA Rules, including Rules 4150 (Guarantees by, or 
Flow Through Benefits for, Members), 4311 (Carrying Agreements), 4522 
(Periodic Security Counts, Verifications and Comparisons) and 4523 
(Assignment of Responsibility for General Ledger Accounts and 
Identification of Suspense Accounts) and for the deletion of NASD Rule 
3230, FINRA Incorporated NYSE Rules 322, 382, 440.10 and 440.20 and 
FINRA Incorporated NYSE Rule Interpretations 382/01 through 382/05, 
409(a)/01 and 440.20/01.\7\
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    \7\ See supra note 4.
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    The Exchange proposes to adopt the FINRA rule changes within its 
own Rules as follows. First, the Exchange proposes to delete the text 
of NYSE Rules 322, 382, Supplementary Material .10 and .20 to Rule 440 
and Rule Interpretations 382/01 through 382/05, 409(a)/01 and 440.20/
01.
    Second, the Exchange proposes to adopt the text of FINRA Rules 
4150, 4311, 4522 and 4523 as NYSE Rules 4150, 4311, 4522 and 4523, with 
certain technical changes. Specifically, for consistency with Exchange 
rules, the Exchange proposes to change all references to ``members'' to 
``member organizations.''
    Third, the Exchange proposes certain technical changes to delete 
cross-references to the NYSE Rules that are proposed to be deleted, as 
identified above, which will no longer be applicable or, in certain 
circumstances, replace them with cross-references to the newly proposed 
NYSE Rules, where applicable. The technical changes are proposed within 
NYSE Rules 86, 405, 409 and 416.
    The Exchange proposes that these changes be effective on the same 
date as FINRA makes FINRA Rules 4150, 4311, 4522 and 4523 effective.\8\
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    \8\ See FINRA Regulatory Notice 11-26. The implementation date 
is currently scheduled for August 1, 2011. NYSE Amex has also 
submitted a companion rule filing amending its rules in accordance 
with FINRA's rule changes. See SR-NYSEAmex-2011-51.
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2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the 
Act,\9\ in general, and furthers the objectives of Section 6(b)(5),\10\ 
in particular, in that it is designed to prevent fraudulent and 
manipulative acts and practices, to promote just and equitable 
principles of trade, to foster cooperation and coordination with 
persons engaged in facilitating transactions in securities, and to 
remove impediments to and perfect the mechanism of a free and open 
market and a national market system. Specifically, the Exchange 
believes that the proposed rule change supports the objectives of the 
Act by providing greater harmonization between NYSE Rules and FINRA 
Rules of similar purpose, resulting in less burdensome and more 
efficient regulatory compliance. 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.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 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. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \11\ and Rule 19b-4(f)(6) thereunder.\12\ 
Because the proposed rule change does 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 change has become 
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.
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    \11\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \12\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) \13\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b4(f)(6)(iii),\14\ 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 hereby 
grants that request. The proposed rule change provides greater 
harmonization between NYSE Rules and FINRA Rules of similar purpose. 
The Commission believes that such harmonization increases regulatory 
compliance while reducing the burden of such compliance. Waiving the 
30-day operative delay will enable this change to be implemented 
immediately so that the benefits associated with regulatory 
harmonization may be realized promptly. Therefore, the Commission 
believes it is consistent with the protection of investors and public 
interest to waive the 30-day operative delay and designates the 
proposal as operative upon filing.\15\
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    \13\ 17 CFR 240.19b-4(f)(6).
    \14\ 17 CFR 240.19b-4(f)(6)(iii).
    \15\ For purposes only of waiving the operative delay for this 
proposal, the Commission has considered the proposed rule's impact 
on efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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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.

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 e-mail to rule-comments@sec.gov. Please include 
File Number SR-NYSE-2011-33 on the subject line.

[[Page 43368]]

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-2011-33. 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 Room on official business 
days between the hours of 10 a.m. and 3 p.m. Copies of such filing also 
will be available for inspection and copying at the principal office of 
the Exchange. 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-2011-33 and 
should be submitted on or before August 10, 2011.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-18195 Filed 7-19-11; 8:45 am]
BILLING CODE 8011-01-P