Document ID: SEC-2010-0102-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Order Approving Proposed Rule Change To Adopt FINRA Rule 5330 (Adjustment of Orders) in the Consolidated FINRARulebook
Posted Date: 2010-01-19T05:00Z

[Federal Register Volume 75, Number 11 (Tuesday, January 19, 2010)]
[Notices]
[Page 2899]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-819]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61338; File No. SR-FINRA-2009-084]

Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Order Approving Proposed Rule Change To Adopt FINRA 
Rule 5330 (Adjustment of Orders) in the Consolidated FINRA Rulebook

January 12, 2010.
    On November 24, 2009, the Financial Industry Regulatory Authority, 
Inc. (``FINRA'') (f/k/a National Association of Securities Dealers, 
Inc. (``NASD'')) filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change to adopt NASD Rule 3220 (Adjustment of Open 
Orders) as a FINRA rule in the consolidated FINRA rulebook with several 
changes and to renumber NASD Rule 3220 as FINRA Rule 5330 in the 
consolidated FINRA rulebook. The proposed rule change was published for 
comment in the Federal Register on December 8, 2009.\3\ 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\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 61083 (December 1, 
2009), 74 FR 64774.
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    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 association.\4\ In 
particular, the Commission finds that the proposed rule change is 
consistent with the provisions of Section 15A(b)(6) of the Act,\5\ 
which requires, among other things, that FINRA rules 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.
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    \4\ In approving this proposal, the Commission has considered 
the proposed rule's impact on efficiency, competition and capital 
formation. See 15 U.S.C. 78c(f).
    \5\ 15 U.S.C. 78o-3(b)(6).
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    The Commission believes that the proposed rule change is 
appropriate to continue to set forth how members are to adjust the 
terms of open orders when such orders involve a security that is 
subject to a dividend, payment, or distribution. The Commission notes 
that members will be prohibited from executing or permitting the 
execution of such open orders without first reconfirming the order with 
the customer when the value of a distribution cannot be determined. The 
Commission also notes that members will now be required to cancel all 
orders (both buy and sell), rather than just open orders, if a security 
is the subject of a reverse split. Members also will be required to 
notify a customer with a pending order that is not otherwise required 
to be adjusted under the rule when his or her order is the subject of a 
reverse split. The Commission believes that the proposed rule change 
will conform FINRA Rule 5330 with current trading practices, including 
the conversion from fractional to decimal trading increments. The 
Commission further believes that the proposed rule change will bring 
uniformity and harmonization to the treatment of open orders by 
conforming FINRA Rule 5330 with comparable rules of other self-
regulatory organizations.\6\
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    \6\ See, e.g., Nasdaq Rule 4761 and NYSE-Arca Rule 7.39.
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    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\7\ that the proposed rule change (SR-FINRA-2009-084) be, and it 
hereby is, approved.
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    \7\ 15 U.S.C. 78s(b)(2)

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12)
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-819 Filed 1-15-10; 8:45 am]
BILLING CODE 8011-01-P