Document ID: SEC-2010-0072-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX BX, Inc.
Posted Date: 2010-01-14T05:00Z

[Federal Register: January 14, 2010 (Volume 75, Number 9)]
[Notices]               
[Page 2170-2171]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr14ja10-108]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61298; File No. SR-BX-2009-087]

 
Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Amend 
Rules 2240 and 2250 To Reflect Changes to Corresponding FINRA Rules

January 6, 2010.
    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 30, 2009, NASDAQ OMX BX, Inc. (the ``Exchange'' or ``BX'') 
filed with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as described in Items I, II, and III below, which 
Items have been prepared by the Exchange. The Exchange has designated 
the proposed rule change as constituting a non-controversial rule 
change under Rule 19b-4(f)(6) under the Act,\3\ 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

    Pursuant to the provisions of Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act''),\4\ and Rule 19b-4 thereunder,\5\ NASDAQ 
OMX BX, Inc. (``BX'') is filing with the Securities and Exchange 
Commission (``Commission'') a proposed rule change to amend BX Rules 
2240 and 2250 to reflect recent changes to corresponding rules of the 
Financial Industry Regulatory Authority (``FINRA''). The text of the 
proposed rule change is available at http://
nasdaqomxbx.cchwallstreet.com, at the Exchange's principal office, and 
at the Commission's Public Reference Room.
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    \4\ 15 U.S.C. 78s(b)(1).
    \5\ 17 CFR 240.19b-4.
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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, the Exchange 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. The Exchange 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
    Many of BX's rules are based on rules of FINRA (formerly the 
National Association of Securities Dealers (``NASD'')). During 2008, 
FINRA embarked on an extended process of moving rules formerly 
designated as ``NASD Rules'' into a consolidated FINRA rulebook. In 
most cases, FINRA has renumbered these rules, and in some cases has 
substantively amended them. Accordingly, BX also proposes to initiate a 
process of modifying its rulebook to ensure that BX rules corresponding 
to FINRA/NASD rules continue to mirror them as closely as practicable. 
In some cases, it will not be possible for the rule numbers of BX rules 
to mirror corresponding FINRA rules, because existing or planned BX 
rules make use of those numbers. However, wherever possible, BX plans 
to update its rules to reflect changes to corresponding FINRA rules.
    This filing addresses BX Rule 2240 entitled ``Disclosure of Control 
Relationship with Issuer'' and 2250 entitled ``Disclosure of 
Participation or Interest in Primary or Secondary Distribution.'' BX 
Rule 2240 62 [sic] makes reference to NASD 2240 [sic] entitled 
``Disclosure of Control Relationship with Issuer.'' The Commission 
approved a proposed rule change to adopt NASD Rule 2240 as FINRA Rule 
2262, NASD Rule 2250 as FINRA Rule 2269 and NASD Rule 3340 as FINRA 
Rule 5260.\6\
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    \6\ Securities Exchange Act Release No. 60659 (September 11, 
2009), 74 FR 48117 (September 21, 2009) (SR-FINRA-2009-044).
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    FINRA transferred NASD Rule 2240 without material change into the 
Consolidated FINRA Rulebook as FINRA Rule 2262. FINRA Rule 2262 
provides that a member controlled by, controlling, or under common 
control with the issuer of any security must, before entering into any 
contract with or for a customer for the purchase or sale of such 
security, disclose to the customer the existence of such control; if 
such disclosure is not made in writing, it must be supplemented by 
written disclosure at or before the completion of the transaction.

[[Page 2171]]

    FINRA transferred NASD Rule 2250 without material change into the 
Consolidated FINRA Rulebook as FINRA Rule 2269. FINRA Rule 2269 
provides that if a member is acting as a broker for a customer, or is 
acting for both the customer and some other person, or is acting as a 
dealer and receives or has promise of receiving a fee from a customer 
for advising the customer with respect to securities, then the member 
must, at or before the completion of any transaction for or with the 
customer in any security in the primary or secondary distribution of 
which the member is participating or is otherwise financially 
interested, give the customer written notification of the existence of 
such participation or interest.
    FINRA transferred NASD Rule 3340 without material change into the 
Consolidated FINRA Rulebook as FINRA Rule 5260. FINRA Rule 5260 
prohibits members from, directly or indirectly, effecting transactions 
or publishing quotations or indications of interest (``IOIs'') in (1) 
any security with respect to which a trading halt is in effect; or (2) 
any security future when there is a regulatory trading halt in effect 
with respect to the underlying security. The trading and quoting 
conduct prohibited by Rule 3340 is triggered only when a trading halt 
is in effect. The rule also provides that, in the event that FINRA 
halts over-the-counter trading and quoting in NMS stocks because the 
Alternative Display Facility (``ADF'') or a Trade Reporting Facility 
(``TRF'') is unable to transmit real-time information to the applicable 
Securities Information Processor, members are not prohibited from 
trading through other markets for which trading is not halted.
    BX is proposing to amend BX Rule 2240 by renaming Rule 2240 to new 
Rule 2262. Also, BX is proposing to amend BX Rule 2250 by renaming Rule 
2250 to new Rule 2269. BX would delete current Rules 2240 and 2250. BX 
also proposes to amend the references to BX Rule 2240 and 2250 to 
instead state FINRA Rules 2262 and 2269 in the new Rules 2262 and 2269, 
respectively. Because Rule 3340 contains rule text that is 
substantially similar to Rule 5260, and does not incorporate Rule 5260 
by reference, no changes are necessary to Rule 3340.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6 of the Act,\7\ in general, and with 
Sections [sic] 6(b)(5) of the Act,\8\ in particular, in that the 
proposal is designed to prevent fraudulent and manipulative acts and 
practices, to promote just and equitable principles of trade, to foster 
cooperation and coordination with persons engaged in regulating, 
clearing, settling, processing information with respect to, and 
facilitating transactions in securities, to remove impediments to and 
perfect the mechanism of a free and open market and a national market 
system, and, in general, to protect investors and the public interest. 
The proposed changes will conform BX Rules 2240 and 2250 to recent 
changes made to corresponding FINRA rules and rename Rules 2240 and 
2250 to new Rules 2262 and 2269 respectively.
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    \7\ 15 U.S.C. 78f.
    \8\ 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 
result in any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act, as amended.

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

    Because the foregoing 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 for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \9\ and Rule 19b-
4(f)(6) thereunder.\10\
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6).
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    At any time within 60 days of the filing of the 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-BX-2009-087 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-BX-2009-087. 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,\11\ 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 also will be available for 
inspection and copying at the principal office of BX. 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-BX-2009-087 and should be 
submitted on or before February 4, 2010.
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    \11\ The text of the proposed rule change is available on the 
Commission's Web site at http://www.sec.gov/.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-539 Filed 1-13-10; 8:45 am]
BILLING CODE 8011-01-P