Document ID: SEC-2010-0433-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Amex LLC
Posted Date: 2010-03-22T04:00Z

[Federal Register: March 22, 2010 (Volume 75, Number 54)]
[Notices]               
[Page 13623-13625]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr22mr10-122]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61705; File No. SR-NYSEAmex-2010-23]

 
Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by NYSE Amex LLC Amending Rule 
390

March 15, 2010.
    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 March 5, 2010, NYSE Amex LLC (``NYSE Amex'' 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 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 amend its sharing in accounts rule to 
harmonize its requirements with those of the Financial Industry 
Regulatory Authority (``FINRA''). A copy of this filing is available on 
the Exchange's Web site at http://www.nyse.com, at the Exchange's 
principal office and at the Commission's Public Reference Room. The 
text of the proposed rule change is below. Proposed new language is in 
italics and proposed deletions are in [brackets].
Rules of NYSE Amex, Inc.
* * * * *
    Rule 390. [Assumption of Loss Prohibited] Prohibition Against 
Guarantees and Sharing in Accounts
    (a) Prohibition Against Guarantees
    No member or member organization shall guarantee any customer 
against loss in his account. [or take or receive directly or indirectly 
a share in the profits of any customer's account or share in any losses 
sustained in any such account. For the purposes of this rule the term 
customer shall not be deemed to include the member or member 
organization or any joint, group, or syndicate account with such member 
or member organization.]
    (b) Sharing in Accounts; Extent Permissible
    (1)(A) Except as provided in paragraph (2) no member or person 
associated with a member shall share directly or indirectly in the 
profits or losses in any account of a customer carried by the member or 
any other member; provided, however, that a member or person associated 
with a member may share in the profits or losses in such an account if
    (i) such person associated with a member obtains prior written 
authorization from the member employing the associated person;
    (ii) such member or person associated with a member obtains prior 
written authorization from the customer; and
    (iii) such member or person associated with a member shares in the 
profits or losses in any account of such customer only in direct 
proportion to the financial contributions made to such account by 
either the member or person associated with a member.
    (B) Exempt from the direct proportionate share limitation of 
paragraph (1)(A)(iii) are accounts of the immediate family of such 
member or person associated with a member. For

[[Page 13624]]

purposes of this Rule, the term ``immediate family'' shall include 
parents, mother-in-law or father-in-law, husband or wife, children or 
any relative to whose support the member or person associated with a 
member otherwise contributes directly or indirectly.
    (2) Notwithstanding the prohibition of paragraph (1), a member or 
person associated with a member that is acting as an investment adviser 
(whether or not registered as such) may receive compensation based on a 
share in profits or gains in an account if
    (A) such person associated with a member seeking such compensation 
obtains prior written authorization from the member employing the 
associated person;
    (B) such member or person associated with a member seeking such 
compensation obtains prior written authorization from the customer; and
    (C) all of the conditions in Rule 205-3 of the Investment Advisers 
Act of 1940 (as the same may be amended from time to time) are 
satisfied.
* * * * *

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
    Pursuant to Rule 17d-2 under the Securities Exchange Act of 1934, 
the American Stock Exchange, LLC (n/k/a NYSE Amex, LLC), the Boston 
Stock Exchange, Inc., the Chicago Board Options Exchange, Inc., the 
International Securities Exchange, LLC, Financial Industry Regulatory 
Authority, Inc., The NASDAQ Stock Market LLC, the New York Stock 
Exchange, LLC, NYSE Arca, Inc., and the Philadelphia Stock Exchange, 
Inc. (collectively the ``Options Self Regulatory Council''), entered 
into an agreement dated June 5, 2008 (the ``17d-2 Agreement'') to 
allocate regulatory responsibility for common rules. By this proposal, 
the Exchange seeks to harmonize its `Sharing in Accounts' rule with 
FINRA's rule for purposes of the 17d-2 Agreement.
    In order to maintain substantial similarity with FINRA rules, the 
Exchange proposes to delete the language of NYSE Amex Rule 390 related 
to sharing in the profits and losses of a customer account, and replace 
it with the language of FINRA 2150(c), Sharing in Accounts; Extent 
Permissible. FINRA Rule 2150(c) contains the same prohibition against 
sharing in accounts as NYSE Amex Rule 390, but with additional limited 
exceptions. The general prohibition contained in NYSE Amex Rule 390 
against sharing in the profits or losses of a customer account is 
currently covered by the 17d-2 Agreement. However, the limited 
exceptions of FINRA Rule 2150(c) are not covered by the 17d-2 
Agreement. The Exchange proposes to add those limited exceptions in 
order to harmonize its rule with the FINRA rule and add those limited 
exceptions to the 17d-2 Agreement. The portion of the rule prohibiting 
the guarantee of a customer against loss will remain in place.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) \4\ of the 
Act, in general, and furthers the objectives of Section 6(b)(5) \5\ in 
particular in that it 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 facilitating transactions in securities, and to 
remove impediments to and perfect the mechanisms of a free and open 
market and a national market system. Specifically, the changes proposed 
herein, by harmonizing NYSE Amex rules with FINRA rules, provide NYSE 
Amex Members with a clearer regulatory scheme. The Exchange further 
notes that the changes proposed herein are neither novel nor 
controversial and are modeled on existing FINRA rules.
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    \4\ 15 U.S.C. 78f(b).
    \5\ 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.

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 \6\ and Rule 19b-4(f)(6) thereunder.\7\ 
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 \8\ and Rule 19b-
4(f)(6)(iii) thereunder.\9\
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    \6\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \7\ 17 CFR 240.19b-4(f)(6).
    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires the Exchange to give the Commission written notice of the 
Exchange's 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 of the proposed rule 
change, or such shorter time as designated by the Commission. The 
Exchange has satisfied the pre-filing requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) \10\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\11\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest.
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    \10\ 17 CFR 240.19b-4(f)(6).
    \11\ 17 CFR 240.19b-4(f)(6)(iii).
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    The Exchange requests that the Commission waive the 30-day pre-
operative waiting period contained in Exchange Act Rule 19b-
4(f)(6)(iii).\12\ The Exchange requests this waiver so that these 
changes can be both immediately effective and operative, thus 
minimizing any possible confusion. The Exchange believes that by 
harmonizing NYSE Amex rules with FINRA rules, NYSE Amex Members will be 
provided with a clearer regulatory scheme. The Commission believes that 
waiving the 30-day operative delay will permit the Exchange to 
harmonize its rules with the corresponding FINRA rule immediately, thus 
promoting

[[Page 13625]]

clarity with respect and minimizing confusion with respect to the 
requirements regarding guarantees and sharing in accounts.\13\ The 
Commission notes that the FINRA financial responsibility rules are 
currently in operation. For these reasons, the Commission designates 
the proposed rule change 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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    \12\ 17 CFR 240.19b-4(f)(6)(iii).
    \13\ For purposes only of waiving the 30-day operative delay of 
this proposal, the Commission has considered the proposed rule's 
impact on efficiency, competition, and capital formation. 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-NYSEAmex-2010-23 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-NYSEAmex-2010-23. 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 Section, 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 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-NYSEAmex-2010-23 and should be submitted 
on or before April 12, 2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-6150 Filed 3-19-10; 8:45 am]
BILLING CODE 8011-01-P