[Federal Register Volume 74, Number 158 (Tuesday, August 18, 2009)]
[Notices]
[Pages 41763-41765]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-19730]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60457; File No. SR-NYSE-2009-76]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by New York Stock Exchange LLC 
Deleting NYSE Rule 409A and Adopting New Rule 2266 To Correspond With 
Rule Changes Recently Filed by the Financial Industry Regulatory 
Authority, Inc.

August 7, 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 July 28, 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 Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C.78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to proposes to [sic] delete NYSE Rule 409A 
and to adopt new Rule 2266 to correspond with rule changes recently 
filed by the Financial Industry Regulatory Authority, Inc. (``FINRA'') 
and approved by the Commission.\4\ The text of the proposed rule change 
is available at the Exchange, the Commission's Public Reference Room, 
and http://www.nyse.com.
---------------------------------------------------------------------------

    \4\ See Securities Exchange Act Release No. 59987 (May 27, 
2009), 74 FR 26902 (June 4, 2009) (order approving FINRA 2009-016).
---------------------------------------------------------------------------

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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of the proposed rule change is to delete NYSE Rule 409A 
and to adopt new Rule 2266 to correspond with rule changes 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'').\5\ 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 NASD and FINRA Incorporated NYSE Rules in order to 
create a consolidated FINRA rulebook.\6\
---------------------------------------------------------------------------

    \5\ 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.
    \6\ 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.
---------------------------------------------------------------------------

Proposed Conforming Amendments to NYSE Rules
    As discussed in more detail below, FINRA amended certain NASD and 
FINRA Incorporated NYSE Rules and adopted consolidated FINRA Rules to 
replace them. The NYSE hereby proposes to delete NYSE Rule 409A and to 
adopt new Rule 2266 to conform to the changes adopted by FINRA.\7\
---------------------------------------------------------------------------

    \7\ NYSE Amex LLC has submitted a companion rule filing to 
conform its corresponding NYSE Amex Equities Rules to the changes 
proposed in this filing. See SR-NYSE-Amex-2009-52, formally 
submitted July 28, 2009).

---------------------------------------------------------------------------

[[Page 41764]]

    In relevant part, FINRA adopted NASD Rule 2342 (SIPC Information) 
as consolidated FINRA Rule 2266.\8\ FINRA Rule 2266 requires all FINRA 
members, except for those members that are not Securities Investor 
Protection Corporation (``SIPC'') members or whose business consists 
exclusively of the sale of investments that are not subject to SIPC 
protection, to advise all new customers in writing at the time they 
open an account that they may obtain information about SIPC by 
contacting SIPC and to provide such customers with SIPC's contact 
information. Such information must also be provided annually to all 
existing customers. Where both an introducing firm and a clearing firm 
service the same account, the firms may assign these requirements to 
one or the other firm.\9\
---------------------------------------------------------------------------

    \8\ In its filing, FINRA also adopted NASD Rules 2130 (Obtaining 
an Order of Expungement of Customer Dispute Information from the 
Central Registration Depository (CRD System)), 2810 (Direct 
Participation Programs) and 3115 (Requirements for Alternative 
Trading Systems to Record and Transmit Order and Execution 
Information for Security Futures) as consolidated FINRA Rules 2080, 
2310 and 4551, respectively. See Securities Exchange Act Release No. 
59987 (May 27, 2009), 74 FR 26902 (June 4, 2009). NYSE is not 
adopting these FINRA Rules.
    \9\ See Securities Exchange Act Release No. 59987 (May 27, 
2009), 74 FR 26902 (June 4, 2009).
---------------------------------------------------------------------------

    Because it is substantively similar to this new FINRA Rule, FINRA 
deleted FINRA Incorporated NYSE Rule 409A (SIPC Disclosures). In 
particular, FINRA Incorporated NYSE Rule 409A requires member 
organizations to advise each customer in writing, upon the opening of 
an account and annually thereafter, that they may obtain information 
about SIPC and to provide such customers with SIPC's contact 
information. Similar to FINRA Rule 2266, where a clearing agreement is 
in place, these requirements may be assigned to either the introducing 
or clearing firm. However, FINRA Incorporated NYSE Rule 409A does not 
contain the exclusions in FINRA Rule 2266.\10\
---------------------------------------------------------------------------

    \10\ See Securities Exchange Act Release No. 59987 (May 27, 
2009), 74 FR 26902 (June 4, 2009).
---------------------------------------------------------------------------

    FINRA deleted FINRA Incorporated NYSE Rule 409A because it believes 
that FIRNA [sic] Rule 2266, which includes the exclusionary provisions 
for non-SIPC members or members that sell exclusively non-SIPC 
securities, is the more appropriate rule for its members.\11\
---------------------------------------------------------------------------

    \11\ See Securities Exchange Act Release No. 59987 (May 27, 
2009), 74 FR 26902 (June 4, 2009).
---------------------------------------------------------------------------

    To harmonize the NYSE Rules with the approved FINRA Rules, the 
Exchange correspondingly proposes to delete NYSE Rule 409A and to adopt 
proposed NYSE Rule 2266, which is substantially similar to the new 
FINRA Rule. As proposed, NYSE Rule 2266 adopts the same language as 
FINRA Rule 2266, except for substituting for or adding to, as needed, 
the term ``member organization'' for the term ``member'', and making 
corresponding technical changes. As with the consolidated FINRA Rule, 
under proposed NYSE Rule 2266 Exchange members and member organizations 
will be required to provide SIPC disclosures to all new customers upon 
opening an account and to existing customers on an annual basis.
2. Statutory Basis
    The Exchange believes that the proposed rule changes are consistent 
with Section 6(b) of the Act,\12\ in general, and further 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 changes also support the principles 
of Section 11A(a)(1) \14\ of the Act in that they seek to ensure the 
economically efficient execution of securities transactions and fair 
competition among brokers and dealers and among exchange markets.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(5).
    \14\ 15 U.S.C. 78k-1(a)(1).
---------------------------------------------------------------------------

    The Exchange believes that the proposed rule changes support 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 efficient regulatory compliance 
for Dual Members. To the extent the Exchange has proposed changes that 
differ from the FINRA version of the Rule, such changes are technical 
in nature and do not change the substance of the proposed NYSE Rule.

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 \15\ and Rule 19b-4(f)(6) thereunder.\16\ 
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 and Rule 19b-
4(f)(6)(iii) thereunder.\17\
---------------------------------------------------------------------------

    \15\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \16\ 17 CFR 240.19b-4(f)(6).
    \17\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file 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 requirement.
---------------------------------------------------------------------------

    A proposed rule change filed under Rule 19b-4(f)(6) \18\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b4(f)(6)(iii),\19\ 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 Commission believes 
waiving the 30-day operative delay is consistent with the protection of 
investors and the public interest. Acceleration of the operative date 
will allow the immediate change of the NYSE's rule to make it 
consistent with the FINRA rule, thereby making compliance for dual 
members less burdensome. For these reasons, the Commission designates 
the proposal to be effective and operative upon filing.\20\
---------------------------------------------------------------------------

    \18\ 17 CFR 240.19b-4(f)(6).
    \19\ 17 CFR 240.19b-4(f)(6)(iii).
    \20\ For purposes only of waiving the 30-day operative delay of 
the proposal, the Commission has considered the proposed rule's 
impact on efficiency, competition and capital formation. 15 U.S.C. 
78c(f).

---------------------------------------------------------------------------

[[Page 41765]]

    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 [email protected]. Please include 
File Number SR-NYSE-2009-76 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-NYSE-2009-76. 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, 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 NYSE. 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-2009-76 and should be 
submitted on or before September 8, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\21\
---------------------------------------------------------------------------

    \21\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-19730 Filed 8-17-09; 8:45 am]
BILLING CODE 8010-01-P