[Federal Register Volume 77, Number 112 (Monday, June 11, 2012)]
[Notices]
[Pages 34442-34445]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-14067]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67129; File No. SR-NYSEMKT-2012-06]


Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and 
Immediate Effectiveness of Proposed Rule Change Temporarily Suspending 
the Requirements of Exchange Rule 311--Equities and Related Exchange 
Equities Rules Concerning the Approval of New Member Organizations and 
Exchange Rule 353 and Related Exchange Rules Concerning the Approval of 
New ATP Holders in Order To Approve Apex Clearing Corporation, f/k/a 
Ridge Clearing and Outsourcing Solutions, Inc. as an Exchange Equities 
Member Organization and ATP Holder, Subject to Apex Clearing Complying 
With Exchange Rules for a New Member Organization and ATP Holder Within 
30 Calendar Days of the Date That Apex Clearing Is Provisionally 
Approved as an Exchange Equities Member Organization and ATP Holder

June 5, 2012.
    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 5, 2012, NYSE MKT LLC (the ``Exchange'' or ``NYSE 
MKT'') 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 temporarily suspend the requirements of 
(1) Exchange Rule 311--Equities and related Exchange Equities rules 
concerning the approval of new member organizations and (2) Exchange 
Rule 353 and related Exchange rules concerning the approval of new ATP 
Holders in order to approve Apex Clearing Corporation, f/k/a Ridge 
Clearing and Outsourcing Solutions, Inc. (``Apex Clearing'') as an 
Exchange Equities member organization and ATP Holder, subject to Apex 
Clearing complying with Exchange rules for a new member organization 
and ATP Holder within 30 calendar days of the date that Apex

[[Page 34443]]

Clearing is provisionally approved as an Exchange Equities member 
organization and ATP Holder. The Exchange is also proposing to accept 
Apex Clearing's assumption of all of the existing clearing agreements 
and arrangements currently in effect between Penson Financial Services 
Inc. (``PFSI'') and various other Exchange Equities member 
organizations and ATP Holders by execution of a global agreement 
thereto. The text of the proposed rule change is available on the 
Exchange's Web site at www.nyse.com, at the principal office of the 
Exchange, 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 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 Exchange proposes this rule filing to temporarily suspend the 
requirements of (1) Exchange Rule 311--Equities and related rules 
regarding the approval of member organizations and (2) Exchange Rule 
353 and related rules regarding the approval of ATP Holders in order to 
immediately approve Apex Clearing as an Exchange Equities member 
organization and ATP Holder. The Exchange proposes this temporary 
suspension on an emergency basis to ensure that Apex Clearing can 
continue the clearing operations of PFSI without unnecessary 
disruption, which could have a significant collateral impact to a 
number of other Exchange Equities member organizations and ATP Holders. 
The proposed temporary suspension is contingent upon Apex Clearing 
having complied with all new member organization and ATP Holder 
Exchange rules within 30 calendar days of the date Apex Clearing is 
provisionally approved as an Exchange Equities member organization and 
ATP Holder pursuant to this filing.
    On May 31, 2012, Apex Clearing Holdings, LLC (``Apex Holdings''), 
Apex Clearing Solutions, LLC, Broadridge Financial Solutions, Inc. 
(``Broadridge''), PFSI and Penson Worldwide, Inc. (``PWI'') (together, 
the ``Parties'') consummated a transaction resulting in a change in 
ownership of Apex Clearing.\4\ Broadridge, Apex Holdings, PWI and PFSI 
each made capital investments in Apex Holdings, the holding company 
parent of Apex Clearing. PFSI also assigned all of its U.S. clearing 
contracts and all customer and introducing broker proprietary accounts 
along with key personnel to Apex Clearing (the ``Transferring 
Accounts'').\5\
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    \4\ Prior to the Transaction, Apex Clearing's name was Ridge 
Clearing & Outsourcing Solutions, Inc. Prior to the transaction, 
Ridge Clearing & Outsourcing Solutions, Inc. contributed its 
outsourcing operations and all associated personnel and systems to 
its affiliated entity, Broadridge Securities Processing Solutions, 
LLC (``BSPS'') where it will continue to provide operations support 
and outsourcing services to a number of broker-dealers, including 
Apex Clearing.
    \5\ See Penson Worldwide, Inc. Form 8-K dated May 31, 2012.
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    As a result of the transaction, Apex Clearing, which is not an 
Exchange Equities member organization or an ATP Holder, will provide 
the clearing and execution services currently provided to the 
Transferring Accounts by PFSI. On May 31, 2012, Apex Clearing submitted 
an application for approval as an Exchange Equities member organization 
and as an ATP Holder. However because of the expedited nature of the 
transaction, Apex Clearing was unable to fully comply with Exchange 
Rule 311--Equities and related new member organization rules and 
Exchange Rule 353 and related new ATP Holder rules. Because of the need 
for seamless continuity with respect to the Transferring Accounts, Apex 
Clearing has requested that the Exchange temporarily suspend its new 
membership organization and ATP Holder rules in order to enable Apex 
Clearing's approval as a member organization on an expedited basis. 
Pursuant to its request, Apex Clearing will fully comply with the 
Exchange's new member organization and ATP Holder requirements within 
30 calendar days after provisional approval.
    Exchange Rules 311--Equities and 353 require any person who 
proposes to form a member organization or an ATP Holder to notify the 
Exchange in writing and submit such information as may be required by 
Exchange rules. When a corporate acquisition concerns an asset transfer 
only, and not an acquisition of the corporate entity, Exchange Equities 
member organization or ATP Holder status cannot be transferred to the 
acquiring entity. The entity that proposes to continue the acquired 
business operations of a member organization must be separately 
approved as an Exchange Equities member organization or ATP Holder.
Equities
    Among other things, to be approved as an Exchange Equities member 
organization, the applicant must:
     Provide the Exchange with a written application with the 
name and address of the applicant as well as a list of all proposed 
parties required to be approved or identified pursuant to Exchange 
Rules 304--Equities and 311--Equities (Rule 311.11--Equities).
     Ensure that all persons associated with the applicant who 
meet the requirements of approved persons under Exchange Rule 304--
Equities, consent to Exchange Equities jurisdiction as a member or 
approved person (Exchange Rules 304--Equities and 311(b)--Equities).
     Submit to the Exchange partnership or corporate documents 
as may be applicable including certificate of incorporation, by-laws, 
and other corporate documents (Exchange Rule 313.10--Equities and .20--
Equities).
     Provide the Exchange with an opinion of counsel that, 
among other things, the corporation is duly organized and its existing 
stock is validly issued and outstanding, and that the restrictions and 
provisions required by the Exchange on the transfer, issuance, 
conversion and redemption of its stock have been made legally effective 
(Exchange Rule 313.20--Equities).
    In addition, the Exchange reviews whether the applicant meets 
federal and Exchange capital requirements and whether it has adopted 
controls and procedures to comply with Exchange rules.
Options
    Among other things, to be approved as an ATP Holder, the applicant 
must:
     Provide the Exchange with a written application with the 
name and address of the applicant as well as a list of all proposed 
parties required to be approved or identified pursuant to Exchange 
Rules 353 and 356.
     Ensure that all persons associated with the applicant who 
meet the requirements of allied members and approved persons be 
approved (Exchange Rules 353, 355 and 356).
     Submit to the Exchange partnership or corporate documents 
as may be applicable including certificate of incorporation, by-laws, 
and other corporate documents (Exchange Rules 353 and 356).

[[Page 34444]]

    In addition, the Exchange reviews whether the applicant meets 
federal and Exchange capital requirements and whether it has adopted 
controls and procedures to comply with Exchange rules.
    Due to the amount of information an applicant is required to 
provide and have completed prior to being approved as a member 
organization or ATP Holder, the member organization and ATP Holder 
approval process generally takes several months to complete. The length 
of time varies based on the timing of the applicant's response to 
requests for information and documentation.
    As proposed, Apex Clearing will continue the clearing and certain 
other operations of PFSI as of June 6, 2012. In order to avoid 
interruption of the services PFSI currently provides to other Exchange 
Equities member organizations and ATP Holders, the Exchange believes 
that Apex Clearing should be approved immediately as an Exchange 
Equities member organization and ATP Holder. The Exchange notes that 
Apex Clearing is already a registered broker dealer and FINRA member, 
which are prerequisites for becoming an Exchange Equities member 
organization. See Exchange Rule 2(b)--Equities.
    The Exchange therefore proposes providing Apex Clearing with a 
temporary suspension of Exchange Rule 311--Equities and related 
membership rules as they relate to approval to operate an Exchange 
Equities member organization and approval of a proposed member 
organization's approved persons, and immediately approve Apex Clearing 
as a member organization. Similarly, the Exchange proposes providing 
Apex Clearing with a temporary suspension of Exchange Rule 353 and 
related ATP Holder rules as they relate to approval to operate as an 
ATP Holder and approval of a proposed ATP Holder's approved persons, 
and immediately approve Apex Clearing as an ATP Holder. As proposed 
this temporary suspension is contingent upon:
     Apex Clearing providing the Exchange with sufficient 
information to confirm that Apex Clearing will meet its capital 
requirements as an Exchange Equities member organization and ATP 
Holder; and
     Within 30 calendar days of Apex Clearing's approval as an 
Exchange Equities member organization and ATP Holder under this 
proposed filing, Apex Clearing and its approved persons will have 
complied with the Exchange's new member organization and ATP Holder 
requirements as set forth in Exchange Rules 304--Equities, 311--
Equities through 313--Equities, 353, 355 and 356.
    As proposed, if Apex Clearing does not comply with all applicable 
Exchange Equities member organization application requirements and ATP 
Holder requirements within 30 calendar days of the effective date of 
this filing, its status as an approved Exchange Equities member 
organization and ATP Holder will no longer be effective.
    In addition, the Exchange proposes to accept Apex Clearing to 
assume all existing clearing agreements and arrangements currently in 
effect with other Exchange Equities member organizations and ATP 
Holders by execution of global agreements thereto.\6\ Notice of such 
assumption will be provided to impacted member organizations through 
issuance of Trader and/or Information Notices prior to the effective 
date thereof.
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    \6\ See Exchange 954NY.
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2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
Section 6(b) \7\ of the Securities Exchange Act of 1934 (the ``Act''), 
in general, and furthers the objectives of Section 6(b)(5) \8\ in 
particular in that it is designed to promote just and equitable 
principles of trade, to prevent fraudulent and manipulative acts, to 
remove impediments to and to perfect the mechanism for a free and open 
market and a national market system and, in general, to protect 
investors and the public interest. The Exchange believes that 
permitting the expeditious approval of Apex Clearing as an Exchange 
Equities member organization and an ATP Holder will avoid interruption 
of the services PFSI currently provides to other Exchange member 
organizations and ATP Holders. Based on information and representations 
provided by Apex Clearing, a temporary suspension of certain Exchange 
membership rules is needed based on the expedited nature of the 
transaction to enable seamless continuity with respect to the 
transferring accounts. Consequently, the Exchange believes that 
temporary suspension of its member organization and ATP Holder 
requirements so that Apex Clearing can be approved immediately as an 
Exchange Equities member organization and an ATP Holder will help to 
foster cooperation and coordination with persons engaged in 
facilitating transactions in securities and is consistent with the Act.
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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.

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 \9\ and Rule 19b-4(f)(6) thereunder.\10\ 
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 \11\ and Rule 19b-
4(f)(6)(iii) thereunder.\12\
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    \9\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \10\ 17 CFR 240.19b-4(f)(6).
    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(6)(iii). In addition, Rule 19b-
4(f)(6)(iii) 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 Commission is waiving this five-day pre-filing 
requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) \13\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\14\ 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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    \13\ 17 CFR 240.19b-4(f)(6).
    \14\ 17 CFR 240.19b-4(f)(6)(iii).
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    The Exchange has asked the Commission to waive the 30-day operative 
delay so that the proposed rule change may become operative immediately 
upon filing. The Commission notes that the Exchange is proposing that 
certain of its rules relating to membership requirements be

[[Page 34445]]

temporarily suspended so that Apex Clearing can be provisionally 
approved as an Exchange Equities member organization and ATP Holder. 
The proposed relief does not exempt Apex Clearing from Exchange rule 
requirements governing Exchange Equities member organizations and ATP 
Holders. Apex Clearing would have a 30 calendar day grace period within 
which to apply for and be approved under relevant Exchange rules. 
Moreover, the Commission believes that waiver of the 30-day operative 
delay is appropriate to ensure a smooth transition of PFSI operations 
to Apex Clearing. In particular, given the rapidity with which events 
have developed, waiver of the 30-day operative delay is necessary to 
avoid significant disruption to PFSI's existing customers and the 
market generally. Therefore, the Commission believes that waiving the 
30-day operative delay is consistent with the protection of investors 
and the public interest and designates the proposed rule change as 
operative upon filing.\15\
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    \15\ 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 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. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule should be approved or disapproved.

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 email to [email protected]. Please include 
File Number SR-NYSEMKT-2012-06 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-NYSEMKT-2012-06. This 
file number should be included on the subject line if email 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, 100 F Street NE., 
Washington, DC 20549, on official business days between the hours of 
10:00 a.m. and 3:00 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-NYSEMKT-2012-06 and should 
be submitted on or before July 2, 2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-14067 Filed 6-8-12; 8:45 am]
BILLING CODE 8011-01-P