Document ID: SEC-2010-0148-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Make Certain Non-Substantive Technical Changes to FINRA Rule 4521(d)
Posted Date: 2010-01-28T05:00Z

[Federal Register: January 28, 2010 (Volume 75, Number 18)]
[Notices]               
[Page 4596-4598]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr28ja10-104]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61408; File No. SR-FINRA-2010-004]

 
 Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing and Immediate Effectiveness of 
Proposed Rule Change To Make Certain Non-Substantive Technical Changes 
to FINRA Rule 4521(d)

January 22, 2010.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'' or ``SEA'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby 
given that on January 20, 2010, Financial Industry Regulatory 
Authority, Inc. (``FINRA'') filed with the Securities and Exchange 
Commission (``SEC'' or ``Commission'') the proposed rule change as 
described in Items I and II below, which Items have been prepared by 
FINRA. FINRA has designated the proposed rule change as constituting a 
``non-controversial'' rule change under paragraph (f)(6) of Rule 19b-4 
under the Act,\3\ which renders the proposal effective upon receipt of 
this filing by the Commission. 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\ 17 CFR 240.19b-4.
    \3\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    FINRA is proposing to make certain non-substantive technical 
changes to FINRA Rule 4521(d). The text of the proposed rule change is 
below. Proposed new language is italicized; proposed deletions are in 
brackets:
* * * * *
4000. FINANCIAL AND OPERATIONAL RULES
* * * * *
4500. BOOKS, RECORDS AND REPORTS
* * * * *
4520. Financial Records and Reporting Requirements
4521. Notifications, Questionnaires and Reports
    (a) through (c) No Change.
    (d)(1) No Change.
    (2) Each member carrying margin accounts for customers shall submit 
reports containing the following customer information:
    (A) No Change.
    (B) Total of all free credit balances in all cash accounts and all 
securities margin accounts.
    (3) For purposes of this paragraph (d):
    (A) Only free credit balances in cash and securities margin 
accounts shall be included in the member's report. Balances in short 
accounts and in [S]special [M]memorandum [A]accounts ([as defined in 
Section 2.2 of] see Regulation T [under the Exchange Act] of the Board 
of Governors of the Federal Reserve System) shall not be considered as 
free credit balances.
    (B) Reported debit or credit balance information shall not include 
the accounts of other [organizations that are] FINRA members, or of the 
associated persons of the member submitting the report where such 
associated person's account is excluded from the definition of customer 
pursuant to SEA Rule 15c3-3.
    (e) through (f) No Change.
    * * * Supplementary Material: ----------
    .01 No Change.
* * * * *

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

    In its filing with the Commission, FINRA 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. FINRA has prepared summaries, set forth in sections A, 
B, and C below, of the most significant parts of such statements.

[[Page 4597]]

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

1. Purpose
    On November 4, 2009, the Commission approved FINRA Rule 4521 
(Notifications, Questionnaires and Reports) as part of a new, 
consolidated set of financial responsibility rules \4\ for inclusion in 
FINRA's consolidated rulebook (``Consolidated FINRA Rulebook'').\5\ 
FINRA announced in Regulatory Notice 09-71 that the new financial 
responsibility rules will be implemented on February 8, 2010.\6\
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    \4\ See Regulatory Notice 09-71 (December 2009) (SEC Approves 
Consolidated FINRA Rules Governing Financial Responsibility). See 
also Securities Exchange Act Release No. 60933 (November 4, 2009), 
74 FR 58334 (November 12, 2009) (Order Granting Approval to Proposed 
Rule Change; File No. SR-FINRA-2008-067).
    \5\ The current FINRA rulebook consists of (1) FINRA Rules; (2) 
NASD Rules; and (3) rules incorporated from NYSE (``Incorporated 
NYSE Rules'') (together, the NASD Rules and Incorporated NYSE Rules 
are referred to as the ``Transitional Rulebook''). While the NASD 
Rules generally apply to all FINRA members, the Incorporated NYSE 
Rules apply only to those members of FINRA that are also members of 
the NYSE (``Dual Members''). The FINRA Rules apply to all FINRA 
members, unless such rules have a more limited application by their 
terms. For more information about the rulebook consolidation 
process, see Information Notice, March 12, 2008 (Rulebook 
Consolidation Process).
    \6\ See note 4.
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    FINRA Rule 4521(d) sets forth certain reporting requirements for 
members carrying margin accounts for customers. The proposed rule 
change would make several non-substantive technical changes to the 
rule. FINRA Rule 4521(d)(2)(B) would be revised to clarify that members 
must submit the total of all free credit balances in all cash accounts 
and all securities margin accounts. Similarly, in FINRA Rule 
4521(d)(3)(A) ``margin accounts'' would be revised to read ``securities 
margin accounts.'' Further, the reference to special memorandum 
accounts in FINRA Rule 4521(d)(3)(A) would be revised to align with 
Regulation T of the Board of Governors of the Federal Reserve System. 
Lastly, in FINRA Rule 4521(d)(3)(B) ``other organizations that are 
FINRA members'' would be revised to read ``other FINRA members.''
    FINRA has filed the proposed rule change for immediate 
effectiveness and has requested that the SEC waive the requirement that 
the proposed rule change not become operative for 30 days after the 
date of the filing, such that FINRA can implement the proposed rule 
change on February 8, 2010.
2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the 
provisions of Section 15A(b)(6) of the Act,\7\ which requires, among 
other things, that FINRA rules must be designed to prevent fraudulent 
and manipulative acts and practices, to promote just and equitable 
principles of trade, and, in general, to protect investors and the 
public interest. FINRA believes that the proposed rule change is 
consistent with the purposes of the Act because it will provide greater 
clarity to members and the public regarding FINRA's rules.
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    \7\ 15 U.S.C. 78o-3(b)(6).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    FINRA does not believe that the proposed rule change will result in 
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

    Written comments were neither solicited nor received.

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

    Because the foregoing 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 for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \8\ and Rule 19b-
4(f)(6) thereunder.\9\
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under 19b-4(f)(6) normally does not 
become operative prior to 30 days after the date of filing. However, 
Rule 19b-4(f)(6)(iii) \10\ permits the Commission to designate a 
shorter time if such action is consistent with the protection of 
investors and the public interest. As noted above, on November 4, 2009, 
the Commission approved FINRA 4521 (Notifications, Questionnaires and 
Reports) as part of a new, consolidated set of financial responsibility 
rules.\11\ FINRA has requested that the Commission waive the 30-day 
operative delay set forth in Rule 19b-4(f)(6)(iii) under the Act \12\ 
in order for the rule to become operative upon filing. The Commission 
notes that the proposed rule changes makes technical non-substantive 
changes to Rule 4521. The Commission further notes that the operative 
date of FINRA 4150 is February 8, 2009.\13\ The Commission believes 
that the earlier operative date is consistent with the protection of 
investors and the public interest because the proposed rule change 
permits FINRA to implement the rule without further delay and in time 
for the operative date of the financial responsibility rules.\14\
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    \10\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires that a self-regulatory organization submit to the 
Commission written notice of its intent to file the proposed rule 
change, along with a brief description and text of 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 Commission notes that FINRA has satisfied the five-
day pre-filing notice requirement.
    \11\ See notes 4 and 5.
    \12\ 17 CFR 240.19b-4(f)(6)(iii).
    \13\ See FINRA Regulatory Notice 09-71 (December 2009).
    \14\ For purposes only of waiving the 30-day operative delay of 
this proposal, the Commission has considered the proposed rule's 
impact on efficiency, competition, and capital formation. 15 U.S.C. 
78c(f).
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    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-FINRA-2010-004 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-FINRA-2010-004. This 
file number should be included on the subject line if e-mail is used. 
To help the Commission process and review your

[[Page 4598]]

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 inspection and copying 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 FINRA. 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-FINRA-2010-004 and should be submitted on or before February 18, 
2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-1662 Filed 1-27-10; 8:45 am]
BILLING CODE 8011-01-P