[Federal Register Volume 75, Number 114 (Tuesday, June 15, 2010)]
[Notices]
[Pages 33880-33882]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-14360]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-62239; File No. SR-NYSEAMEX-2010-4]


Self-Regulatory Organizations; NYSE Amex LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Deleting Rule 
405(4)--NYSE Amex Equities To Correspond With Rule Changes of the 
Financial Industry Regulatory Authority, Inc.

June 8, 2010.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on May 17, 2010, NYSE Amex LLC (the ``Exchange'' or ``NYSE Amex'') 
filed with the Securities and Exchange Commission (the ``Commission'') 
the proposed rule change as described in Items I, II, and III below, 
which Items have been substantially prepared by the Exchange. 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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to delete Rule 405(4)--NYSE Amex Equities to 
correspond with rule changes filed by the Financial Industry Regulatory 
Authority, Inc. (``FINRA'') and approved by the Commission.\3\ The text 
of the proposed rule change is available at the Exchange, the 
Commission's Public Reference Room, and http://www.nyse.com.
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    \3\ See Securities Exchange Act Release No. 61808 (March 31, 
2010), 75 FR 17456 (April 6, 2010) (order approving SR-FINRA-2010-
005).
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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 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 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 changes is to delete Rule 405(4)--
NYSE Amex Equities (Diligence as to Accounts) to correspond with rule 
changes 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, the 
New York Stock Exchange LLC (``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''). The Exchange became a party to the 
Agreement effective December 15, 2008.\4\
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    \4\ See Securities Exchange Act Release Nos. 56148 (July 26, 
2007), 72 FR 42146 (August 1, 2007) (order approving the Agreement); 
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''); and 60409 (July 30, 2009), 74 FR 39353 (August 6, 
2009) (order approving the amended and restated Agreement, adding 
NYSE Amex LLC as a party). Paragraph 2(b) of the Agreement sets 
forth procedures regarding proposed changes by FINRA, NYSE or NYSE 
Amex to the substance of any of the Common Rules.
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    As part of its effort to reduce regulatory duplication and relieve 
firms that are members of FINRA, NYSE and NYSE Amex 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.\5\
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    \5\ 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 Amex Equities Rules
    FINRA recently deleted FINRA Incorporated NYSE Rule 405(4) 
(Diligence as to Accounts), which required proper supervision of 
registered representatives handling common sales accounts in accordance 
with FINRA Incorporated NYSE Rule 342. FINRA Incorporated NYSE Rule 
405(4) provided that a member firm could facilitate the isolated 
liquidation of securities valued at $1,000 or less registered in the 
name of an individual who did not have an account with the firm, and 
which were not part of any distribution, through a common sales account 
set up for the purpose of handling such sales. Rule 405(4) further 
provided that, subject to certain requirements, such sales could be 
made on behalf of the customer without the member having to send a 
periodic account statement to the customer pursuant to Rule 409--NYSE 
Amex Equities.\6\
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    \6\ See Securities Exchange Act Release No. 61808 (March 31, 
2010), 75 FR 17456 (April 6, 2010).
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    In deleting FINRA Incorporated NYSE Rule 405(4), FINRA noted that 
the rule as written raised potential investor protection concerns and 
that certain terms in the rule would benefit from additional 
clarification. FINRA also

[[Page 33881]]

noted that, to the extent that the deletion of FINRA Incorporated NYSE 
Rule 405(4) eliminated the exception for member firms from sending 
periodic account statements to a customer, proposed FINRA Rule 2231, 
which relates to customer account statements, would authorize FINRA to 
exempt members from the provisions of FINRA Rule 2231 including the 
requirement to deliver periodic account statements.\7\
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    \7\ See Securities Exchange Act Release No. 61808 (March 31, 
2010), 75 FR 17456 (April 6, 2010). See also Securities Exchange Act 
Release No. 59921 (May 14, 2009), 74 FR 23912 (May 21, 2009) (SR-
FINRA-2009-028) (proposal to adopt FINRA Rule 2231).
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    In order to harmonize the NYSE Amex Equities Rules with the 
approved consolidated FINRA Rules, the Exchange proposes to delete Rule 
405(4)--NYSE Amex Equities.\8\ Notwithstanding the deletion of Rule 
405(4)--NYSE Amex Equities, Rules 405(1)-(2)--NYSE Amex Equities will 
continue to require member firms to properly supervise all registered 
representatives handling common sales accounts and any transactions 
executed therein. Finally, the Exchange believes that removing the 
exemption for member firms from the requirement to send customer 
account statements for the types of transactions described in Rule 
405(4)--NYSE Amex Equities will ensure a harmonized standard among 
NYSE, NYSE Amex, and FINRA, particularly since all NYSE Amex Equities 
member organizations with customers are also FINRA members and subject 
to FINRA rules. To the extent that FINRA Rule 2231 is approved, the 
Exchange will consider proposing to adopt a similar rule as part of the 
rule harmonization process.\9\
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    \8\ The NYSE has submitted a companion rule filing amending its 
rules in accordance with FINRA's rule changes. See SR-NYSE-2010-41.
    \9\ See also Securities Exchange Act Release No. 59921 (May 14, 
2009), 74 FR 23912 (May 21, 2009).
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2. Statutory Basis
    The Exchange believes that the proposed rule changes are consistent 
with Section 6(b) of the Act,\10\ in general, and further the 
objectives of Section 6(b)(5) of the Act,\11\ 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.
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    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposed rule changes support the 
objectives of the Act by providing greater harmonization between NYSE 
Amex Equities Rules and FINRA Rules of similar purpose, resulting in 
less burdensome and more 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 has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \12\ and Rule 19b-4(f)(6) thereunder.\13\ 
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.
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    \12\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \13\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) \14\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\15\ 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 hereby 
grants the Exchange's request.\16\ The Commission believes that waiving 
the 30-day operative delay is consistent with the protection of 
investors and the public interest because the proposed rule change will 
maintain the harmonization of NYSE Rules and previously approved FINRA 
Rules.
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    \14\ 17 CFR 240.19b-4(f)(6).
    \15\ 17 CFR 240.19b-4(f)(6)(iii).
    \16\ For the purposes only of waiving the 30-day operative 
delay, the Commission has considered the proposed rule change's 
impact on efficiency, competition, and capital formation. See 15 
U.S.C. 78(c)(f).
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    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-NYSEAMEX-2010-48 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-2010-48. 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). Comments are also available for Web site viewing and 
printing 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. 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-2010-48 and 
should be submitted on or before July 6, 2010.


[[Page 33882]]


    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-14360 Filed 6-14-10; 8:45 am]
BILLING CODE 8011-01-P