Document ID: SEC-2009-0042-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes:  Financial Industry Regulatory Authority, Inc
Posted Date: 2009-01-08T05:00Z

[Federal Register: January 8, 2009 (Volume 74, Number 5)]
[Notices]               
[Page 840-842]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr08ja09-60]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59175; File No. SR-FINRA-2008-066]

 
Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing and Immediate Effectiveness of 
Proposed Rule Change To Reflect the Closing of the FINRA/NSX Trade 
Reporting Facility on December 31, 2008

December 30, 2008.
    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 December 23, 2008, Financial Industry Regulatory Authority, Inc. 
(``FINRA'') (f/k/a National Association of Securities Dealers, Inc. 
(``NASD'')) 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 submitted the 
proposed rule change under Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6) \3\ thereunder, which renders the proposal effective upon 
filing with 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's proposed rule change reflects the closing of the FINRA/NSX 
Trade Reporting Facility (the ``FINRA/NSX TRF'') as of the close of 
business on December 31, 2008. The text of the proposed rule change is 
attached as Exhibit 5.\4\
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    \4\ The Commission notes that while provided in Exhibit 5 to the 
filing, the text of the proposed rule change is not attached to this 
notice but is available at FINRA, the Commission's Public Reference 
Room, and at http://www.finra.org.
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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, 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,

[[Page 841]]

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
    The FINRA/NSX TRF was approved by the SEC \5\ and commenced 
operation in November 2006 to provide members a mechanism for reporting 
locked-in trades in NMS stocks, as defined in Rule 600(b)(47) of SEC 
Regulation NMS, effected otherwise than on an exchange. The National 
Stock Exchange, Inc. (``NSX''), the ``Business Member'' under the 
FINRA/NSX Trade Reporting Facility LLC Agreement (the ``LLC 
Agreement''),\6\ has determined to close the FINRA/NSX TRF for business 
reasons, and as of the close of business on December 31, 2008, the 
FINRA/NSX TRF will cease accepting trade reports.\7\
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    \5\ See Securities Exchange Act Release No. 54715 (November 6, 
2006), 71 FR 66354 (November 14, 2006) (order approving SR-NASD-
2006-108).
    \6\ FINRA notes that the LLC Agreement appears in its manual as 
the NASD/NSX Trade Reporting Facility LLC Agreement.
    \7\ Although the FINRA/NSX TRF will cease operating on December 
31, 2008, pursuant to the termination provisions in the LLC 
Agreement, the FINRA/NSX Trade Reporting Facility LLC will continue 
its corporate existence until no later than November 17, 2009.
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    FINRA members have been given notice of the anticipated closing and 
were further notified that any members using the FINRA/NSX TRF to 
report trades are required to find an alternative mechanism to satisfy 
their trade reporting obligations. FINRA and NSX staff are working to 
ensure that members reporting trades to the FINRA/NSX TRF are 
transitioned to another FINRA facility. Notwithstanding the closing of 
the FINRA/NSX TRF, FINRA is able to fulfill all of its regulatory 
obligations with respect to over-the-counter trade reporting through 
its other facilities, i.e., the Alternative Display Facility, the 
FINRA/Nasdaq Trade Reporting Facility and the FINRA/NYSE Trade 
Reporting Facility (the ``FINRA/NYSE TRF'').
    Accordingly, FINRA is proposing to delete the FINRA Rule 6300B and 
7200B Series relating to trade reporting to the FINRA/NSX TRF and the 
FINRA Rule 7600B Series relating to fees and credits for use of the 
FINRA/NSX TRF from the Consolidated FINRA Rulebook.\8\ FINRA also is 
proposing to delete the LLC Agreement from its manual. The proposed 
rule change will ensure that FINRA rules accurately reflect only the 
FINRA facilities that are available to members for trade reporting.
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    \8\ On September 25, 2008, the SEC approved proposed rule change 
SR-FINRA-2008-021, which adopts the NASD Marketplace Rules (the NASD 
Rule 4000 through 7000 Series) as the FINRA Rule 6000 through 7000 
Series in the Consolidated FINRA Rulebook. See Securities Exchange 
Act Release No. 58643 (September 25, 2008), 73 FR 57174 (October 1, 
2008) (order approving SR-FINRA-2008-021; SR-FINRA-2008-022; SR-
FINRA-2008-026; SR-FINRA-2008-028; and SR-FINRA-2008-029) (the 
``Consolidation Proposals''). The Consolidation Proposals were 
implemented on December 15, 2008. See Regulatory Notice 08-57 
(October 2008).
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    In addition, to eliminate gaps in the numbering of the Consolidated 
FINRA Rulebook, FINRA is proposing to renumber the FINRA Rule 6200C, 
7300C and 7600C Series relating to the FINRA/NYSE TRF as the Rule 
6200B, 7300B and 7600B Series. FINRA is proposing no substantive 
changes to those rules.\9\
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    \9\ On November 5, 2008, the SEC approved proposed rule change 
SR-FINRA-2008-011, which amends the FINRA Rule 6300B and 7200B 
Series (relating to the FINRA/NSX TRF) and the FINRA Rule 6300C and 
7200C Series (relating to the FINRA/NYSE TRF). See Securities 
Exchange Act Release No. 58903 (November 5, 2008), 73 FR 67905 
(November 17, 2008) (order approving SR-FINRA-2008-011); and 
Securities Exchange Act Release No. 58903A (November 13, 2008), 73 
FR 69700 (November 19, 2008) (correction to order approving SR-
FINRA-2008-011). The implementation date of SR-FINRA-2008-011 will 
be announced in a Regulatory Notice and will be between six and nine 
months from the date of SEC approval.
    Additionally, FINRA filed proposed rule change SR-FINRA-2008-060 
for immediate effectiveness on December 11, 2008 (available at 
http://www.finra.org/Industry/Regulation/RuleFilings/2008/P117527). 
SR-FINRA-2008-060 amends the FINRA Rule 6300B and 6300C Series and 
will be operative 30 days after the date of filing.
    The changes to the FINRA/NSX TRF rules adopted pursuant to SR-
FINRA-2008-011 and SR-FINRA-2008-060 will not be implemented. FINRA 
will file a separate proposed rule change to make conforming changes 
to the FINRA/NYSE TRF rules, as renumbered pursuant to this filing, 
in accordance with SR-FINRA-2008-011 and SR-FINRA-2008-060.
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    FINRA has filed the proposed rule change for immediate 
effectiveness and requested a waiver of the 30-day operative delay so 
that the proposed rule change will be operative on January 1, 2009.
2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the 
provisions of Section 15A(b)(6) of the Act,\10\ 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. FINRA believes that by deleting rules upon the closing 
of the FINRA/NSX TRF, the proposed rule change will prevent potential 
member confusion and trade reporting errors and violations.
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    \10\ 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

    FINRA has filed the proposed rule change pursuant to Section 
19(b)(3)(A) of the Act \11\ and subparagraph (f)(6) of Rule 19b-4 
thereunder.\12\ Because FINRA has designated the foregoing proposed 
rule change as one that: (1) Does not significantly affect the 
protection of investors or the public interest; (2) does not impose any 
significant burden on competition; and (3) does not become operative 
for 30 days from the date of filing, 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) 
thereunder.\13\
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(6).
    \13\ As required under Rule 19b-4(f)(6)(iii), the Exchange has 
provided the Commission with written notice of its intent to file 
the proposed rule change at least five business days prior to the 
filing of the proposed rule change.
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    A proposed rule change filed under Rule 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) permits the Commission to designate a 
shorter time if such action is consistent with the protection of 
investors and the public interest. FINRA has asked the Commission to 
waive the 30-day operative delay to expedite the deletion of rules that 
apply to the FINRA/NSX TRF, a FINRA facility that will cease operations 
on December 31, 2008. FINRA believes that the deletion of the rule will 
prevent potential member confusion, and trade reporting errors and 
violations.
    The Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest 
because the proposal will delete rules that apply to the FINRA/NSX TRF, 
a FINRA facility that will cease operations

[[Page 842]]

on December 31, 2008.\14\ Accordingly, the Commission believes that the 
proposal will ensure that FINRA's rules accurately reflect the FINRA 
trade reporting facilities that will be in operation currently and 
available to accept trade reports. For these reasons, the Commission 
designates the proposal to be operative on filing with the Commission.
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    \14\ 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. 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 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-2008-066 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-FINRA-2008-066. 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 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 the filing will also be available for 
inspection and copying at the principal office of the self-regulatory 
organization. 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-2008-066 and should be submitted on or before January 29, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
Florence E. Harmon,
Acting Secretary.
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    \15\ 17 CFR 200.30-3(a)(12).
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[FR Doc. E9-82 Filed 1-7-09; 8:45 am]

BILLING CODE 8011-01-P