Document ID: SEC-2009-1074-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Order Granting Approval of Proposed Rule Change to Repeal Incorporated NYSE Rule 134 (Differences and Omissions-Cleared Transactions) and NYSE Rule 440I (Records of Compensation Arrangements-Floor Brokerage) as Part of the Process To Develop the Consolidated FINRA Rulebook
Posted Date: 2009-07-30T04:00Z

[Federal Register: July 30, 2009 (Volume 74, Number 145)]
[Notices]               
[Page 38077-38078]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr30jy09-110]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60367; File No. SR-FINRA-2009-038]

 
Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Order Granting Approval of Proposed Rule Change to 
Repeal Incorporated NYSE Rule 134 (Differences and Omissions--Cleared 
Transactions) and NYSE Rule 440I (Records of Compensation 
Arrangements--Floor Brokerage) as Part of the Process To Develop the 
Consolidated FINRA Rulebook

July 22, 2009.
    On June 1, 2009, 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'') a proposed rule change pursuant to Section 19(b)(1) 
of the Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 
thereunder.\2\ Notice of the proposal was published for comment in the 
Federal Register on June 15, 2009.\3\ The Commission received no 
comments on the proposed rule change. 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 Release No. 60070 (June 8, 2009), 74 
FR 28302 (``Notice'').
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I. Description of the Proposal

    As part of the process of developing a new consolidated rulebook 
(``Consolidated FINRA Rulebook''),\4\ FINRA proposed not to transfer 
from the Transitional Rulebook to the FINRA Consolidated Rulebook two 
rules that are specific to the New York Stock Exchange LLC (``NYSE'') 
marketplace and relate primarily to activities by floor brokers. 
Specifically, FINRA proposed not to include in the Consolidated FINRA 
Rulebook NYSE Incorporated Rule 134 (Differences and Omissions--Cleared 
Transactions) and NYSE Incorporated Rule 440I (Records of Compensation 
Arrangements--Floor Brokerage).
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    \4\ 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 FINRA Information Notice, March 12, 2008 (Rulebook 
Consolidation Process).
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    As more fully described in the Notice, Incorporated NYSE Rule 134, 
sets forth procedures for clearing member firms to identify uncompared 
transactions and resolve them by making any necessary additions, 
deletions or changes to their data through the facilities of the NYSE 
Correction System. Further, NYSE Rule 134(d) requires floor brokers to 
maintain or participate in an error account in which all bona fide 
error transactions are processed and recorded.
    Incorporated NYSE Rule 440I also applies to floor brokers. As more 
fully described in the Notice, NYSE Rule 440I requires each member and 
member organization that is ``primarily engaged as an agent in 
executing transactions on the Floor of the Exchange'' to maintain 
certain records of compensation arrangements in excess of $5,000 per 
year.
    In the Notice, FINRA noted that the NYSE may choose to retain NYSE 
Rule 134 and Rule 440I for its own purposes. In addition, FINRA stated 
that it would announce the implementation date of the proposed rule 
change in a Regulatory Notice to be published no later than 90 days 
following Commission approval.

II. Discussion and Commission's Findings

    After careful review of the proposal, 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 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.\6\ The 
Commission notes that Dual Members remain subject to both the 
Consolidated FINRA Rulebook and the NYSE Rulebook. Therefore, FINRA's 
proposal to repeal from the Transitional Rulebook two Incorporated NYSE 
Rules that are specific to the NYSE marketplace does not relieve Dual 
Members of their obligation to comply with rules retained by the NYSE.
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    \5\ 15 U.S.C. 78o-3(b)(6).
    \6\ 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).
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III. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\7\ that the proposed rule change (SR-FINRA-

[[Page 38078]]

2009-038) 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. E9-18163 Filed 7-29-09; 8:45 am]

BILLING CODE 8010-01-P