Document ID: SEC-2010-1863-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ Stock Market LLC
Posted Date: 2010-12-09T05:00Z

[Federal Register Volume 75, Number 236 (Thursday, December 9, 2010)]
[Notices]
[Pages 76762-76763]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-30942]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63425; File No. SR-NASDAQ-2010-156]

Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend NASDAQ Rules 2270 and 2910 To Reflect Changes to Corresponding 
FINRA Rule

December 3, 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 1, The NASDAQ Stock Market LLC (the ``Exchange'' or 
``NASDAQ'') 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

    The Exchange is filing this proposed rule change to amend NASDAQ 
Rules 2270 and 2910 to reflect recent changes to a corresponding rule 
of the Financial Industry Regulatory Authority (``FINRA''). NASDAQ 
proposes to implement the proposed rule change immediately. [sic] The 
text of the proposed rule change is available at http://nasdaqomx.cchwallstreet.com, at the Exchange's principal office, 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 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 NASDAQ'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, NASDAQ initiated a process of 
modifying its rulebook to ensure that NASDAQ rules corresponding to 
FINRA/NASD rules continue to mirror them as closely as practicable. 
NASDAQ proposes to update its rules to reflect changes [sic] NASDAQ 
Rules 2270 and 2910 which corresponds to FINRA Rule 2261.
    NASDAQ Rule 2270 (Disclosure of Financial Condition to Customers) 
and NASDAQ Rule 2910 (Disclosure of Financial Condition to Other 
Members) formerly corresponded to NASD Rule 2270 (Disclosure of 
Financial Condition to Customers) and NASD Rule 2910 (Disclosure of 
Financial Condition to Other Members). In SR-FINRA-2009-081,\4\ FINRA 
re-designated NASD Rules 2270 and 2910 as FINRA Rule 2261 and made 
substantive amendments to strengthen and simplify the rules.
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    \4\ Securities Exchange Act Release No. 61540 (February 18, 
2010), 75 FR 8771 (February 25, 2010) (SR-FINRA-2008-081).
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    More specifically, the current NASDAQ Rule 2270, which incorporates 
NASD Rule 2270 by reference, requires that the members make information 
relative to a member's financial condition, as disclosed in its most 
recent balance sheet, available for inspection by any bona fide regular 
customer upon request. In FINRA SR-2009-081, [sic] FINRA provided 
members the option of delivering their balance sheet, in paper or 
electronic form, to customers who request it. Additionally, if the 
delivery is electronic, the requesting customer must provide consent to 
receive the balance sheet in electronic form to ensure that such 
information is accessible to the customer.
    This proposed filing also addresses NASDAQ Rule 2910, which 
compares to the former NASD Rule 2910. NASDAQ Rule 2910 requires that 
any member that is a party to an open transaction or who

[[Page 76763]]

has on deposit cash or securities of another member to furnish, upon 
the written request of the other member, a statement of its financial 
condition as disclosed in its most recently prepared balance sheet. In 
SR-FINRA-2009-081, FINRA amended NASD Rule 2910 and consolidated it 
within FINRA Rule 2261 to require that members provide to other members 
the balance sheet that was prepared in accordance with the member's 
usual practice or as required by state or federal securities laws or 
any corresponding rule or regulation. Also, FINRA amended the provision 
to require that members be permitted to provide their balance sheet to 
other members in paper or electronic form; however, this does not 
require obtaining consent of the other members for delivery.
    NASDAQ believes that NASDAQ Rule 2270 and 2910 should be 
consolidated and amended to reflect the provisions in the new FINRA 
2261. For clarification, this results in deleting NASDAQ Rules 2270 and 
2910. This will allow customers and other members to continue to have 
access to a copy of the member's most recent balance sheet at any time 
upon request while simplifying the provisions. NASDAQ is adopting the 
new FINRA rule in full by incorporating by reference FINRA Rule 2261 
into the proposed NASDAQ Rule 2261.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6 of the Act,\5\ in general, and with 
Sections 6(b)(5) of the Act,\6\ 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 NASDAQ Rules 2270 and 2910 to recent changes made 
to corresponding FINRA Rule 2261 to promote application of consistent 
regulatory standards.
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    \5\ 15 U.S.C. 78f.
    \6\ 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 \7\ and Rule 19b-
4(f)(6) thereunder.\8\
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    \7\ 15 U.S.C. 78s(b)(3)(A).
    \8\ 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 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 to 
determine whether the proposed rule should be approved or disapproved.

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-NASDAQ-2010-156 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-NASDAQ-2010-156. 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 Web site viewing and printing in 
the Commission's Public Reference Room. Copies of the filing also will 
be available for inspection and copying at the principal office of the 
Exchange. 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-
NASDAQ-2010-156 and should be submitted on or before December 30, 2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-30942 Filed 12-8-10; 8:45 am]
BILLING CODE 8011-01-P