Document ID: SEC-2013-0152-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Financial Industry Regulatory Authority, Inc.
Posted Date: 2013-01-25T05:00Z

[Federal Register Volume 78, Number 17 (Friday, January 25, 2013)]
[Notices]
[Pages 5522-5523]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-01486]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-68692; File No. SR-FINRA-2013-004]

Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing and Immediate Effectiveness of 
Proposed Rule Change To Delay the Implementation Date of FINRA Rule 
5350 (Stop Orders)

January 18, 2013.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on January 9, 2013, 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 delay the implementation date of FINRA Rule 
5350 (Stop Orders), as approved in SR-FINRA-2012-026, until March 4, 
2013.
    The text of the proposed rule change is available on FINRA's Web 
site at http://www.finra.org, at the principal office of FINRA and at 
the Commission's Public Reference Room.

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 these 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 aspects of such statements.

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

1. Purpose
    On September 4, 2012, the Commission approved FINRA Rule 5350 (Stop 
Orders),\4\ a new rule that replaces the stop order provisions of FINRA 
Rule 6140(h) and that generally provides that any order labeled as a 
``stop order'' or a ``stop limit order'' must be triggered based upon a 
transaction at the stop price, but permits firms to offer alternative 
order types with different triggers (e.g., a stop order triggered by a 
quotation at the stop price) so long as, among other things, the order 
type is not labeled as a stop order and is clearly distinguishable from 
a stop order.
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    \4\ See Securities Exchange Act Release No. 67778 (September 4, 
2012), 77 FR 55517 (September 10, 2012) (Order Approving File No. 
SR-FINRA-2012-026).
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    In SR-FINRA-2012-026, FINRA stated that the implementation date of 
new Rule 5350 would be no more than 150 days following Commission 
approval,\5\ which requires FINRA to designate an effective date of no 
later than February 1, 2013. Consistent with this timeframe, on 
November 2, 2012 and following industry consultation, FINRA announced 
an effective date for new Rule 5350 of January 21, 2013.\6\
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    \5\ See Securities Exchange Act Release No. 67085 (May 31, 
2012), 77 FR 33537 (June 6, 2012) (Notice of Filing File No. SR-
FINRA-2012-026).
    \6\ See Regulatory Notice 12-50 (November 2012).
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    FINRA recently has received requests from industry participants for 
additional time to prepare for compliance with the new rule. Members 
have indicated that, among other things, Hurricane Sandy and code 
freezes occurred during the preparation timeframe, which contributed to 
delays in members' efforts to finalize standard order nomenclature and 
order messaging standards. Thus, in light of recent events and in 
response to members' requests for additional time, FINRA is extending 
the January 21, 2013 effective date announced in Regulatory Notice 12-
50 until March 4, 2013.\7\
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    \7\ An effective date of March 4, 2013 is 181 days from 
Commission approval of SR-FINRA-2012-026.
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    FINRA has filed the proposed rule change for immediate 
effectiveness and has requested that the Commission waive the 
requirement that the proposed rule change not become operative for 30 
days after the date of the filing, such that FINRA may immediately 
announce a revised effective date of March 4, 2013.
2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the 
provisions of Section 15A(b)(6) of the Act,\8\ 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.
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    \8\ 15 U.S.C. 78o-3(b)(6).
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    FINRA understands that Hurricane Sandy and code freezes that 
occurred during the preparation timeframe contributed to delays in 
members' efforts to finalize standard order nomenclature and order 
messaging standards. Thus, in light of recent events and in response to 
members' requests for additional time, FINRA is

[[Page 5523]]

extending the effective date until March 4, 2013. FINRA, therefore, 
believes that the proposed rule change will promote the orderly 
coordination and implementation of technological and other changes to 
facilitate compliance with new FINRA Rule 5350.

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

    FINRA has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \9\ and Rule 19b-4(f)(6) thereunder.\10\ 
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 \11\ and Rule 19b-
4(f)(6)(iii) thereunder.\12\
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    \9\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \10\ 17 CFR 240.19b-4(f)(6).
    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(6)(iii). FINRA has requested that the 
Commission waive the requirement that FINRA provide 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 on which FINRA filed the 
proposed rule change pursuant to Rule 19b-4(f)(6)(iii). The 
Commission hereby grants this request.
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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 19b-4(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. FINRA has indicated 
that its members have been delayed in their efforts to finalize 
standard order nomenclature and order messaging standards, and have 
requested additional time to prepare for compliance with the new rule. 
The Commission notes that the proposed rule change does not present any 
new, unique, or substantive issues, but rather is merely delaying the 
implementation date of a proposed rule change the Commission previously 
approved, and that waiver of the 30-day operative delay will allow 
FINRA to announce the delayed implementation date to members 
immediately. The Commission believes that waiving the 30-day operative 
delay is consistent with the protection of investors and the public 
interest and, therefore, designates the proposed rule change 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 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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    At any time within 60 days of the filing of the 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. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule should be approved or disapproved.

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 email to rule-comments@sec.gov. Please include 
File Number SR-FINRA-2013-004 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-2013-004. This 
file number should be included on the subject line if email 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 10:00 a.m. and 
3:00 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-2013-004 and should be submitted 
on or before February 15, 2013.

    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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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-01486 Filed 1-24-13; 8:45 am]
BILLING CODE 8011-01-P