Document ID: SEC-2011-0521-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX BX, Inc.
Posted Date: 2011-04-13T04:00Z

[Federal Register Volume 76, Number 71 (Wednesday, April 13, 2011)]
[Notices]
[Pages 20749-20750]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-8911]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-64261; File No. SR-BX-2011-021]

Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Amend 
Rules 2360, 2361, 2370, and 6951 To Reflect Changes to Corresponding 
FINRA Rules

April 8, 2011.
    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 April 1, 2011, 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 and II 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 the 
Substance of the Proposed Rule Change

    The Exchange is filing this proposed rule change to amend BX Rules 
2360 (Approval Procedures for Day-Trading Accounts); 2361 (Day-Trading 
Risk Disclosure Statement); 2370 (Borrowing From or Lending to 
Customers); and 6951 (Definitions) to make non-substantive changes that 
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, 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
    The Exchange is not making any substantive changes to the content 
of its rules. The purpose of this proposal is to update BX Rules 2360, 
2361, 2370, and 6951 to reflect proper cross-references to 
corresponding FINRA rules.
    BX based many of its rules on those of The NASDAQ Stock Market LLC 
(``NASDAQ''). Similarly, many of NASDAQ's rules are based on rules of 
FINRA (formerly the National Association of Securities Dealers 
(``NASD'')). As a consequence, many of BX's rules closely mirror those 
of FINRA. 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.
    In SR-FINRA-2009-059,\4\ FINRA adopted, with minor changes, NASD 
Rules 2360 and 2361 regarding day trading into the FINRA consolidated 
rulebook as FINRA Rules 2130 and 2270, respectively. FINRA Rules 2130 
and 2270, like former NASD Rules 2360 and 2361, define day-trading 
strategy and focus on members' obligations to disclose to non-
institutional customers the basic risks of engaging in a day-trading 
strategy and to assess the appropriateness of day-trading strategies 
for such customers. FINRA Rule 2130 creates an obligation on members 
that promote a day-trading strategy regarding account-opening approval 
procedures for non-institutional customers. FINRA Rule 2270 creates an 
obligation on such members to disclose to non-institutional customers 
the unique risks of engaging in a day-trading strategy. BX is, by this 
filing, updating the references in its Rules 2360 and 2361 from NASD 
Rules 2360 and 2361 to FINRA Rules 2130 and 2270.
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    \4\ See Securities Exchange Release No. 61059 (November 24, 
2009), 74 FR 62847 (December 1, 2009)(SR-FINRA-2009-059)(notice of 
filing and immediate effectiveness). See also Securities Exchange 
Release No. 59432 (February 23, 2009), 74 FR 9121 (March 2, 
2009)(SR-FINRA-2009-005)(notice of filing and immediate 
effectiveness regarding, among other things, updated rule cross-
references and other non-substantive technical changes to FINRA 
Rules 2360 and 2370).
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    BX is similarly updating the reference in its Rule 2370 from NASD 
Rule 2370 to FINRA Rule 3240.\5\ In SR-FINRA-2009-095,\6\ FINRA 
adopted, with minor

[[Page 20750]]

changes, NASD Rule 2370 regarding borrowing from or lending to 
customers into the FINRA consolidated rulebook as FINRA Rule 3240, and 
added record retention requirements. FINRA Rule 3240, like former NASD 
Rules 2370, focuses in general on the appropriateness of particular 
lending arrangements between FINRA member broker-dealers and their 
registered persons and customers (to the extent permitted by the 
member) and the potential for conflicts of interests between both the 
registered person and his or her customer and the registered person and 
the member with which he or she is associated.
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    \5\ BX is also deleting obsolete references in Rules 2360, 2361, 
and 2370 regarding FINRA being in the in the process of 
consolidating certain NASD rules into a new FINRA rulebook.
    \6\ See Securities Exchange Release No. 61537 (February 18, 
2010), 75 FR 8772 (February 25, 2010)(SR-FINRA-2009-095)(order 
approving, among other things, adoption of NASD Rule 2370 as FINRA 
Rule 3240).
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    Additionally, in SR-FINRA-2009-005,\7\ FINRA renumbered cross-
references in its rules from NYSE Rule 80A to NYSE Rule 132B on the 
basis of a New York Stock Exchange (``NYSE'' or NYSE Euronext'') rule 
proposal.\8\ In that proposal, NYSE rescinded its Rule 80A regarding 
index arbitration [sic] restrictions and repositioned the definitions 
of ``index arbitrage'' and ``program trading'' into NYSE Rule 132B. 
Because BX Rule 6951 refers in its definitions of index arbitrage and 
program trading to Rule 80A, BX is, by this filing, updating the 
references in its Rule 6951 from NYSE Rule 80A to 132B.
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    \7\ See Securities Exchange Release No. 59432 (February 23, 
2009), 74 FR 9121 (March 2, 2009)(SR-FINRA-2009-005)(notice of 
filing and immediate effectiveness).
    \8\ See Securities Exchange Release No. 56726 (October 31, 
2007), 72 FR 62719 (November 6, 2007)(SR-NYSE-2007-96)(notice of 
filing and immediate effectiveness).
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6 of the Act,\9\ in general, and with 
Sections 6(b)(5) of the Act,\10\ 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 2360, 2361, 2370, and 6951 to recent 
changes made to several corresponding FINRA rules, to promote 
application of consistent regulatory standards.
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    \9\ 15 U.S.C. 78f.
    \10\ 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 \11\ and Rule 19b-
4 (f)(6) thereunder.\12\
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 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.

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-2011-021 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-2011-021. 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 on 
official business days between the hours of 10 a.m. and 3 p.m. Copies 
of such filing also will be available for inspection and copying at the 
principal offices 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-BX-2011-021, and should be submitted on or before May 4, 
2011.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-8911 Filed 4-12-11; 8:45 am]
BILLING CODE 8011-01-P