[Federal Register Volume 75, Number 123 (Monday, June 28, 2010)]
[Notices]
[Pages 36730-36732]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-15649]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-62354; File No. SR-NYSEAmex-2010-5]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by NYSE Amex LLC Amending Rule 0 
To Provide That Certain References in Exchange Rules Should Be 
Understood To Also Include FINRA, as Applicable

June 22, 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 June 14, 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 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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[[Page 36731]]

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

    The Exchange proposes to amend Rule 0 to provide that certain 
references in Exchange rules should be understood to also include 
FINRA, as applicable. The text of the proposed rule change is available 
at the Exchange, the Commission's Web site at http://www.sec.gov, the 
Commission's Public Reference Room, and http://www.nyse.com.

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
    The purpose of this proposed rule change is to amend Rule 0 to 
provide that certain references in Exchange rules should be understood 
to also include FINRA, as applicable. Specifically, proposed Rule 0(c) 
sets forth that the Exchange and FINRA are parties to a Regulatory 
Services Agreement (``RSA'') pursuant to which FINRA has agreed to 
perform certain of the Exchange's member regulatory functions on behalf 
of the Exchange \4\ and that Exchange rules that refer to NYSE 
Regulation, Inc., NYSE Regulation staff or departments, Exchange staff, 
and Exchange departments should be understood as also referring to 
FINRA staff and FINRA departments acting on behalf of the Exchange 
pursuant to the RSA, as applicable. The proposed new rule further 
provides that notwithstanding that the Exchange has entered into an RSA 
with FINRA to perform certain of the Exchange's member regulatory 
functions, the Exchange shall retain ultimate legal responsibility for, 
and control of, such functions.
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    \4\ The Exchange and FINRA are also party to an allocation plan 
pursuant to Section 17(d)(1) of the Securities Exchange Act of 1934 
and Rule 17d-2 thereunder.
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Background
    NYSE Group, NYSE Regulation, Inc. (``NYSE Regulation''), NYSE Amex, 
New York Stock Exchange LLC (``NYSE''), and NYSE Arca, Inc. (``NYSE 
Arca'') (collectively, the ``NYSE Group Exchanges'') anticipate 
entering into an RSA and an allocation plan pursuant to Section 
17(d)(1) of the Securities Exchange Act of 1934 and Rule 17d-2 
thereunder that together, when effective, will result in consolidating 
with FINRA essentially all member regulatory functions that are 
currently performed by NYSE Regulation on behalf of the Exchange and 
the other NYSE Group Exchanges.\5\ The evolution and increasing 
fragmentation of the securities markets has heightened the need for 
effective cross-market, cross-product oversight, and the Exchange 
believes that as a centralized regulatory utility, FINRA is well 
positioned to perform such consolidated regulatory services. Among 
other things, FINRA will conduct examinations and surveillance of 
member and member firm conduct under Exchange rules, investigate and 
enforce violations of Exchange rules, and conduct disciplinary 
proceedings arising out of such enforcement actions. NYSE Regulation 
currently performs the Exchange's regulatory functions pursuant to a 
regulatory services agreement.\6\
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    \5\ NYSE Regulation will continue to have ultimate authority (as 
between itself and FINRA) regarding the proper interpretation of the 
rules of the NYSE Group Exchanges. NYSE Regulation will also 
continue to be responsible for listing regulation at the NYSE 
Exchanges.
    \6\ NYSE Regulation currently performs the regulatory functions 
of NYSE Amex and NYSE Arca pursuant to RSAs and of NYSE pursuant to 
delegated authority.
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Proposed Rule
    In connection with the FINRA Consolidation, the Exchange proposes 
to amend Rule 0 to add section (c) to the Rule. As proposed, Rule 0(c) 
sets forth that (i) the Exchange and FINRA are parties to an RSA 
pursuant to which FINRA has agreed to perform certain of the Exchange's 
member regulatory functions on behalf of the Exchange; and (ii) 
Exchange rules that refer to NYSE Regulation, Inc., NYSE Regulation 
staff or departments, Exchange staff, and Exchange departments should 
be understood as also referring to FINRA staff and FINRA departments 
acting on behalf of the Exchange pursuant to the RSA, as applicable. 
Additionally, proposed Rule 0(c) would set forth that notwithstanding 
that the Exchange has entered into an RSA with FINRA to perform certain 
of the Exchange's member regulatory functions, the Exchange shall 
retain ultimate legal responsibility for, and control of, such 
functions. As noted above, the Exchange will be consolidating 
essentially all member regulatory functions with FINRA, in order to 
enhance cross-market, cross-product regulatory oversight and address 
the increasing market fragmentation. In connection therewith, FINRA is 
hiring substantially all the management and staff from NYSE Regulation 
who do market surveillance and enforcement for the NYSE Group 
Exchanges, so that the expertise related to those functions will reside 
with FINRA. Thus, the Exchange will necessarily rely on FINRA to 
determine the manner by which the regulatory services will be provided 
and the appropriate regulatory action to be taken to address particular 
matters. While the Exchange will have oversight rights with respect to 
FINRA's performance under the RSA, it will not exercise day to day 
control of such functions.
    The proposed rule text is substantially identical to Nasdaq Rule 
0130.
2. Statutory Basis
    The Exchange believes that the proposed rule changes [sic] are 
consistent with Section 6(b) of the Act,\7\ in general, and further the 
objectives of Section 6(b)(5) of the Act,\8\ in particular, in that 
they [sic] 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 Exchange believes that the proposed rule changes 
[sic] support the objectives of the Act by providing greater 
transparency to members and member organizations that FINRA will be 
providing regulatory services on behalf of the Exchange and that 
therefore the entity contacting members and member organization in 
connection with such regulation may be FINRA, even if an Exchange rule 
specifies that NYSE Regulation or the Exchange will be performing such 
function.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 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.

[[Page 36732]]

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

    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 for 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 \9\ and Rule 19b-
4(f)(6) \10\ thereunder.
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 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 this requirement.
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    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 that waiving the 30-day operative delay 
is consistent with the protection of investors and the public interest, 
because such waiver will enable the Exchange to implement new Rule 0(c) 
commensurate with its entering into the RSA. In addition, as noted by 
the Exchange, the proposal is consistent with the rules of other self-
regulatory organizations previously approved by the Commission.\11\ For 
these reasons, the Commission designates the proposed rule change as 
operative upon filing.\12\
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    \11\ See Nasdaq Rule 0130 and BATS Rule 8.1(d).
    \12\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(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-2010-57 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-2010-57. 
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 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-NYSEAmex-2010-57 and should be submitted on or before 
July 19, 2010.
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    \13\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-15649 Filed 6-25-10; 8:45 am]
BILLING CODE 8010-01-P