Document ID: SEC-2014-0688-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE MKT, LLC
Posted Date: 2014-04-28T04:00Z

[Federal Register Volume 79, Number 81 (Monday, April 28, 2014)]
[Notices]
[Pages 23393-23395]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-09526]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-71988; File No. SR-NYSEMKT-2014-34]

Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and 
Immediate Effectiveness of Proposed Rule Change Deleting NYSE MKT Rule 
343--Equities to Harmonize the NYSE MKT's Rules With Changes by 
Financial Industry Regulatory Authority, Inc. to Amend the Uniform 
Branch Office Registration Form

April 22, 2014.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given 
that on April 11, 2014, NYSE MKT LLC (``Exchange'' or ``NYSE MKT'') 
filed with the Securities and Exchange Commission (``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 NYSE MKT Rule 343--Equities to 
harmonize the NYSE MKT's rules with changes by Financial Industry 
Regulatory Authority, Inc. (``FINRA'') to amend the Uniform Branch 
Office Registration Form (``Form BR''). The text of the proposed rule 
change is available on the Exchange's Web site at www.nyse.com, at the 
principal office of the Exchange, 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, the self-regulatory organization 
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. 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 Exchange proposes to delete NYSE MKT Rule 343--Equities to 
harmonize the NYSE MKT's rules with changes by FINRA to Form BR.
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 (``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 NYSE rules and rule interpretations (``FINRA 
Incorporated NYSE Rules''). NYSE MKT LLC (``NYSE MKT'') became a party 
to the Agreement effective December 15, 2008.
    As part of its effort to reduce regulatory duplication and relieve 
firms that are members of FINRA, the Exchange, and NYSE 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.\4\ FINRA recently 
harmonized NASD and FINRA Incorporated NYSE Rules and interpretations 
concerning supervision.\5\ FINRA's supervisory rule changes will become 
effective on December 1, 2014.\6\
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    \4\ 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 (``Dual Members''), 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.
    \5\ See Securities Exchange Act Release No. 71179 (December 23, 
2013), 78 FR 79542 (December 30, 2013) (SR-FINRA-2013-025).
    \6\ See FINRA Regulatory Notice 14-10.
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    As part of this filing, FINRA deleted NYSE Rule 343 and its 
interpretation.\7\

[[Page 23394]]

These provisions set forth certain pre-approval requirements for space 
sharing.\8\ As part of the harmonization process, FINRA determined that 
a pre-approval process was no longer necessary and instead NASD's 
notice filing model would be utilized.
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    \7\ NYSE Rule 343 is virtually identical to NYSE MKT Rule 343--
Equities except for certain technical differences. The Exchange does 
not have a separate set of rule interpretations.
    \8\ NYSE MKT Rule 343(a)--Equities provides that, unless 
otherwise permitted by the Exchange, an office or foreign 
incorporated branch of a member or member organization may not be 
occupied jointly with any other broker or dealer, investment 
advisor, or other person who conducts a securities or commodities 
business with the public. Certain types of office space arrangements 
that are deemed permissible are described in the rule. NYSE MKT Rule 
343(b)--Equities provides that members and member organizations may 
share office space with any person who is not a broker or dealer, an 
investment advisor, or who does not conduct a securities or 
commodities business with the public. NYSE MKT Rule 343(c)--Equities 
provides that, unless otherwise permitted by the Exchange, the main 
office of every member organization must remain open for business on 
every full business day during the trading hours on the Exchange. 
Supplementary Material 343.10--Equities provides additional guidance 
relating to office space arrangements.
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    FINRA also recently amended Form BR, which is used by firms to 
register their branch offices with FINRA, the Exchange, and 
participating states via the Central Registration Depository.\9\ Among 
other things, the amendments to Form BR eliminated Section 6, which 
incorporates space sharing arrangement questions relating to NYSE MKT 
Rule 343--Equities. The changes to Form BR will become effective on 
April 7, 2014.\10\
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    \9\ See Securities Exchange Act Release No. 71626 (February 27, 
2014), 79 FR 12547 (March 5, 2014) (SR-FINRA-2013-051).
    \10\ See FINRA Regulatory Notice 14-11.
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Proposed Rule Change
    As a result of the proposed changes to Form BR, there will no 
longer be a mechanism to collect the information used for the space 
sharing pre-approval process under NYSE MKT Rule 343--Equities, and as 
such, the Exchange proposes to delete NYSE MKT Rule 343--Equities 
effective on the same date that FINRA makes its changes to Form BR 
effective, April 7, 2014, rather than the date that the supervisory 
rule changes become effective, December 1, 2014. The Exchange notes 
that it will be submitting a proposed rule change to harmonize the 
remaining NASD and FINRA Incorporated NYSE Rules and interpretations 
concerning supervision to coincide with FINRA's December 1, 2014 
effective date. The Exchange will announce both effective dates via an 
Information Memo.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\11\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act,\12\ in particular, because it 
is designed to promote just and equitable principles of trade and to 
remove impediments to and perfect the mechanism of a free and open 
market and a national market system. Specifically, the Exchange 
believes that the proposed rule change supports the objectives of the 
Act by providing greater harmonization between Exchange rules and FINRA 
rules and forms of similar purpose, resulting in less burdensome and 
more efficient regulatory compliance. In particular, deleting NYSE MKT 
Rule 343--Equities would promote just and equitable principles of trade 
by harmonizing the Exchange's rules with the Form BR, which is used by 
the Commission, SROs, and states.
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    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(5).
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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. The proposed rule change is 
not intended to address competitive issues but rather to achieve 
greater consistency between the Exchange's rules and Form BR.

 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.

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 \13\ and Rule 19b-4(f)(6) thereunder.\14\ 
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.
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    \13\ 15 U.S.C. 78s(b)(3)(A)(iii). As required under Rule 19b-
4(f)(6)(iii), the Exchange provided the Commission with written 
notice of its intent to file the proposed rule change, along with a 
brief description and the 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.
    \14\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) \15\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b4(f)(6)(iii),\16\ 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 upon filing. The Commission believes that waiving 
the 30-day operative delay is consistent with the protection of 
investors and the public interest, as it will harmonize NYSE MKT's 
rules with FINRA Rules at the same time that the revised Form BR 
becomes operative, thus helping to eliminate confusion regarding broker 
obligations.\17\ Therefore, the Commission designates the proposed rule 
change to be operative upon filing. At any time within 60 days of the 
filing of such 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 under Section 19(b)(2)(B) \18\ 
of the Act to determine whether the proposed rule change should be 
approved or disapproved.
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    \15\ 17 CFR 240.19b-4(f)(6).
    \16\ 17 CFR 240.19b-4(f)(6)(iii).
    \17\ For purposes only of waiving the 30-day operative delay, 
the Commission has also considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
    \18\ 15 U.S.C. 78s(b)(2)(B).
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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-NYSEMKT-2014-34 on the subject line.

[[Page 23395]]

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-NYSEMKT-2014-34. 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 the filing will also be available 
for inspection and copying at the NYSE's principal office and on its 
Internet Web site at www.nyse.com. 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-NYSEMKT-2014-34 and should be submitted on or before May 
19, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
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    \19\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-09526 Filed 4-25-14; 8:45 am]
BILLING CODE 8011-01-P