Document ID: SEC-2009-0284-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange LLC
Posted Date: 2009-03-04T05:00Z

[Federal Register: March 4, 2009 (Volume 74, Number 41)]
[Notices]               
[Page 9459-9461]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr04mr09-100]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59450; File No. SR-NYSE-2009-14]

 
Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change and Amendment No. 1 Thereto by 
New York Stock Exchange LLC Amending NYSE Rule 472 (Communications With 
the Public)

February 25, 2009.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that, on February 5, 2009, New York Stock Exchange LLC (``NYSE'' 
or the ``Exchange'') filed with the Securities and Exchange Commission 
(the ``Commission'') the proposed rule change as described in Items I 
and II, below, which Items have been prepared by the self-regulatory 
organization. The Exchange filed the proposal as a ``non-
controversial'' proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \4\ and Rule 19b-4(f)(6) thereunder.\5\ 
NYSE filed Amendment No. 1 to the proposed

[[Page 9460]]

rule change on February 12, 2009.\6\ 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.
    \4\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \5\ 17 CFR 240.19b-4(f)(6).
    \6\ Amendment No. 1 removed unnecessary language regarding the 
operative date of the proposed rule change.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend NYSE Rule 472 to conform with 
amendments to corresponding FINRA Incorporated NYSE Rule 472 (defined 
below) recently filed by the Financial Industry Regulatory Authority, 
Inc. (``FINRA'') and approved by the Commission.\7\
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    \7\ See Securities Exchange Act Release No. 59096 (December 12, 
2008), 73 FR 77085 (December 18, 2008) (order approving SR-FINRA-
2008-044). NYSE Alternext US LLC has submitted a companion rule 
filing to conform its corresponding Rule 472-NYSE Alternext Equities 
to the changes proposed in this filing. See SR-NYSEALTR 2009-10, 
submitted February 5, 2009).
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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 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 purpose of the proposed rule change is to amend NYSE Rule 472 
to conform with amendments to corresponding FINRA Incorporated NYSE 
Rule 472 recently filed by FINRA and approved by the Commission.
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, 
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 certain NYSE rules and rule 
interpretations (``FINRA Incorporated NYSE Rules'').\8\ As part of its 
effort to reduce regulatory duplication and relieve firms that are 
members of both FINRA and the Exchange of conflicting or unnecessary 
regulatory burdens, FINRA is now engaged in the process of reviewing 
and amending the Common Rules in order to create a consolidated FINRA 
rulebook.\9\
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    \8\ See Securities Exchange Act Release No. 56148 (July 26, 
2007), 72 FR 42146 (August 1, 2007) (order approving the Agreement) 
and Securities Exchange Act Release No. 56147 (July 26, 2007), 72 FR 
42166 (August 1, 2007) (SR-NASD-2007-054) (order approving the 
incorporation of certain NYSE Rules as ``Common Rules''). Paragraph 
2(b) of the 17d-2 Agreement sets forth procedures regarding proposed 
changes by either NYSE or FINRA to the substance of any of the 
Common Rules.
    \9\ 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.
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Proposed Conforming Amendments to NYSE Rules
    As discussed in more detail below, FINRA amended NASD Rules 2210 
and 2211 and FINRA Incorporated NYSE Rule 472. The NYSE hereby proposes 
to amend NYSE Rule 472 to conform to FINRA Incorporated NYSE Rule 472, 
as amended.
    FINRA amended NASD Rules 2210 (Communications with the Public) and 
2211 (Institutional Sales Material and Correspondence) and FINRA 
Incorporated NYSE Rule 472 (Communications with the Public) to remove, 
in certain circumstances, the pre-approval requirements for the use of 
``market letters.'' \10\
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    \10\ See Securities Exchange Act Release No. 59096 (December 12, 
2008), 73 FR 77085 (December 18, 2008).
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    Specifically, FINRA created a new definition of the term ``market 
letter'' in NASD Rule 2211 and modified the definition in FINRA 
Incorporated NYSE Rule 472 to mean any communication specifically 
excepted from the definition of ``research report'' under NASD Rule 
2711(a)(9)(A) and FINRA Incorporated NYSE Rule 472.10(2)(a). In 
addition, FINRA amended the definition of ``sales literature'' in NASD 
Rule 2210 to exclude market letters. FINRA also amended FINRA 
Incorporated NYSE Rule 472 to eliminate the requirement that a 
qualified person approve market letters in advance of distribution. 
Finally, FINRA amended the definition of ``correspondence'' in NASD 
Rule 2211 to include market letters (as well as any written letter or 
electronic mail message) distributed by a member to one or more of its 
existing retail customers and fewer than 25 prospective retail 
customers within any 30 calendar-day period.
    The Exchange correspondingly proposes to amend NYSE Rule 472 to 
conform to FINRA's approved amendments to the incorporated version of 
the Rule. Under the proposed amended NYSE Rule 472, members and member 
organizations would be permitted to distribute ``market letters,'' as 
redefined, to customers and the public without obtaining prior approval 
by a supervisory analyst or qualified person. As defined under the 
proposed amendments, ``market letters'' would comprise any 
communication that is excepted from the definition of ``research 
report'' contained in NYSE Rule 472.10(2)(a). As communications with 
the public, market letters remain subject to the supervision and review 
requirements of NYSE Rule 342.17, which require each member and member 
organization to establish written policies and procedures that are 
appropriate for their business, size, structure and customers for the 
review of such communications.\11\
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    \11\ FINRA has proposed to amend the current requirements 
governing the supervision and review of correspondence, including 
FINRA Incorporated NYSE Rule 342.17 and NASD Rule 3010. See 
Regulatory Notice 08-24 (May 2008).
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\12\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act,\13\ in particular, in that 
they are designed to prevent fraudulent and manipulative acts and 
practices, to promote just and equitable principles of trade, 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 rule change also supports the principles 
of Section 11A(a)(1) \14\ of the Act in that it seeks to ensure the 
economically efficient execution of securities transactions and fair 
competition among brokers and dealers and among exchange markets.
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    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(5).
    \14\ 15 U.S.C. 78k-1(a)(1).
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    In particular, the Exchange believes that the proposed rule change 
supports the objectives of the Act by providing greater harmonization 
between NYSE Rules and FINRA Rules (including Common Rules) of similar 
purpose, resulting in less burdensome and more

[[Page 9461]]

efficient regulatory compliance for Dual Members.

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.

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 believes that the proposal qualifies for immediate 
effectiveness upon filing as a non-controversial rule change in 
accordance with Section 19(b)(3)(A) of the Act \15\ and Rule 19b-
4(f)(6) \16\ thereunder. The Exchange asserts that the proposed rule 
change (i) Will not significantly affect the protection of investors or 
the public interest, (ii) will not impose any significant burden on 
competition, and (iii) by its terms, will not become operative for 30 
days after the date of this filing, or such shorter time as the 
Commission may designate, if consistent with the protection of 
investors and the public interest. In addition, the Exchange provided 
the Commission with 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 of filing.
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    \15\ 15 U.S.C. 78s(b)(3)(A).
    \16\ 17 CFR 240.19b-4(f)(6).
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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 the filing. 
However, pursuant to Rule19b-4(f)(6)(iii),\17\ 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 immediately upon filing. The Exchange believes the 
waiver of this period will allow it to conform its rule to the FINRA 
NYSE Incorporated Rule without delay and ensure that there is no 
regulatory gap among those rules. The Commission has determined that 
waiving the 30-day operative delay of the Exchange's proposal is 
consistent with the protection of investors and the public interest 
because such waiver will allow the Exchange to promptly conform its 
rules to the FINRA NYSE Incorporated Rule and ensure elimination of any 
potential regulatory gap.\18\ Therefore, the Commission designates the 
proposal as operative upon filing. 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.
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    \17\ 17 CFR 240.19b-4(f)(6)(iii).
    \18\ 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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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-NYSE-2009-14 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NYSE-2009-14. 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 20549-1090. 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 http://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-NYSE-2009-14 and should be submitted on 
or before March 25, 2009.

    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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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-4557 Filed 3-3-09; 8:45 am]

BILLING CODE 8011-01-P