Document ID: SEC-2010-1159-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Amex LLC
Posted Date: 2010-08-02T04:00Z

[Federal Register: August 2, 2010 (Volume 75, Number 147)]
[Notices]               
[Page 45183-45185]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr02au10-138]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-62572; File No. SR-NYSEAmex-2010-72]

 
Self-Regulatory Organizations; NYSE Amex LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Deleting Rule 
123G--NYSE Amex Equities and Adopting New Rule 5290--NYSE Amex Equities 
to Correspond With Rule Changes Filed by the Financial Industry 
Regulatory Authority, Inc.

July 26, 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 July 19, 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 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 delete Rule 123G--NYSE Amex Equities and 
adopt new Rule 5290--NYSE Amex Equities to correspond with rule changes 
filed by the Financial Industry Regulatory Authority, Inc. (``FINRA'') 
and approved by the Commission.\4\ The text of the proposed rule change 
is available at the Exchange, at the Commission's Public Reference 
Room, on the Commission's Web site at http://www.sec.gov, and at http:/
/www.nyse.com.
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    \4\ See Securities Exchange Act Release No. 61071 (November 30, 
2009), 74 FR 64109 (December 7, 2009) (order approving SR-FINRA-
2009-067).
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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,

[[Page 45184]]

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 delete Rule 123G--
NYSE Amex Equities (Order Entry Practices) and adopt new Rule 5290 
(Order Entry and Execution Practices) 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, the 
New York Stock Exchange LLC (``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''). The Exchange 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 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, 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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Current Rule 123G--NYSE Amex Equities
    Rule 123G--NYSE Amex Equities provides that a member, member 
organization, principal executive, approved person, or registered or 
non-registered employee thereof, may not engage in conduct that has the 
intent or effect of unbundling or splitting orders for execution in 
order to maximize a monetary or in-kind payment received as a result of 
the execution of such orders. For purposes of the Rule, ``monetary or 
in-kind amounts'' include commissions, gratuities, payments for or 
rebate of fees, or any similar payments of value resulting from the 
entry of such orders.
Current FINRA Rule 5290
    In December 2009, FINRA adopted NASD Rule 3380 (Order Entry and 
Execution Practices), which governs certain order entry and/or 
execution practices, as consolidated FINRA Rule 5290, subject to 
certain modifications.\7\
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    \7\ See Securities Exchange Act Release No. 61071 (November 30, 
2009), 74 FR 64109 (December 7, 2009). In this filing FINRA also 
adopted NASD Rule 3120 (Use of Information Obtained in Fiduciary 
Capacity) as consolidated FINRA Rule 2060. The Exchange does not 
intend to adopt a corresponding rule at this time.
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    Consolidated FINRA Rule 5290 is substantially the same as Rule 
123G--NYSE Amex Equities; however, consolidated FINRA Rule 5290 applies 
to the unbundling or splitting of both orders and executions, whereas 
Rule 123G--NYSE Amex Equities applies only to order entry and not 
execution.
Proposed Conforming Amendments to NYSE Amex Equities Rules
    Even though Rule 123G--NYSE Amex Equities is not part of the Common 
Rules subject to the rulebook consolidation and harmonization process 
governed by the Agreement, the Exchange hereby proposes to delete Rule 
123G--NYSE Amex Equities and replace it with proposed Rule 5290--NYSE 
Amex Equities, which is substantially similar to the new FINRA Rule.\8\
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    \8\ NYSE has submitted a companion rule filing amending its 
rules in accordance with FINRA's rule changes. See SR-NYSE-2010-54.
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    As proposed, Rule 5290--NYSE Amex Equities adopts the same language 
as FINRA Rule 5290, 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 Rule 5290--NYSE Amex Equities and FINRA Rule 5290 
are fully harmonized, the Exchange also proposes to add Supplementary 
Material .01 to Rule 5290--NYSE Amex Equities 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 also notes that, upon adoption of proposed Rule 5290--
NYSE Amex Equities, it intends to add the Rule to the Agreement as a 
Common Rule for dual NYSE Amex/FINRA members.
2. Statutory Basis
    The Exchange believes that the proposed rule changes are consistent 
with Section 6(b) of the Act,\9\ in general, and further the objectives 
of Section 6(b)(5) of the Act,\10\ 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.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposed rule changes support the 
objectives of the Act by providing greater harmonization between NYSE 
Amex Equities Rules and FINRA Rules of similar purpose, resulting in 
less burdensome and more efficient regulatory compliance for joint 
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 Amex 
Equities Rules.

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.

[[Page 45185]]

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.\13\
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    \11\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \12\ 17 CFR 240.19b-4(f)(6).
    \13\ See id. In addition, Rule 19b-4(f)(6) requires a self-
regulatory organization to give the Commission written notice of its 
intent to file the proposed rule change at least five business days 
prior to the date of filing of the proposed rule change, or such 
shorter time as designated by the Commission. The Exchange has 
satisfied this requirement.
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    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 believes 
that waiving the 30-day operative delay is consistent with the 
protection of investors and the public interest, because such waiver 
will enable the Exchange to immediately implement new Rule 5290--NYSE 
Amex Equities to prevent any regulatory gaps between the NYSE Amex and 
FINRA rules. In addition, as noted by the Exchange, Rule 5290--NYSE 
Amex Equities is consistent with FINRA Rule 5290, which was previously 
approved by the Commission.\16\
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    \14\ 17 CFR 240.19b-4(f)(6).
    \15\ 17 CFR 240.19b-4(f)(6)(iii).
    \16\ See supra note 4. 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).
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    Accordingly, the Commission waives the 30-day operative delay 
requirement and designates the proposed rule change as operative upon 
filing with the Commission. At any time within 60 days of the filing of 
the proposed rule change, the Commission may summarily abrogate 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-NYSEAmex-2010-72 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-2010-72. 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, 100 F 
Street, NE., Washington, DC 20549, 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 
publicly available. All submissions should refer to File Number SR-
NYSEAmex-2010-72 and should be submitted on or before August 23, 2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-18891 Filed 7-30-10; 8:45 am]
BILLING CODE 8010-01-P