Daily Rules, Proposed Rules, and Notices of the Federal Government
The Exchange proposes to delete NYSE Arca Equities Rule 4.3(c) and adopt new Rules 2262 and 2269 to harmonize with the rules of New York Stock Exchange LLC ("NYSE"), NYSE MKT LLC ("NYSE MKT"), and Financial Industry Regulatory Authority, Inc. ("FINRA"). The text of the proposed rule change is available on the Exchange's Web site at
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.
The Exchange proposes to delete NYSE Arca Equities Rule 4.3(c) and to adopt new Rules 2262 and 2269 to harmonize with the rules of New York Stock Exchange LLC ("NYSE"), NYSE MKT LLC ("NYSE MKT"), and Financial Industry Regulatory Authority, Inc. ("FINRA").
Current NYSE Arca Equities Rule 4.3(c) states that an ETP Holder shall not trade in (except on an unsolicited basis) or make recommendations with respect to its own securities or those of its parents or affiliates (other than registered investment companies) and any parents or affiliates of an ETP Holder shall not trade in (except on an unsolicited basis) or make recommendations with respect to its own securities or those of its affiliates, or those of the ETP Holder (other than registered investment companies). While the current NYSE Arca Equities Rule 4.3(c) restricts the trading and recommendation activities of the ETP Holder with respect to its own securities or those of its parents or affiliates, the rule does not cover transactions beyond those involving securities of parent or affiliate and does not contain a written disclosure requirement that is consistent with Rules 15c1-5 and 15c1-6 of the Act.
In 2009, FINRA adopted NASD Rules 2240 (Disclosure of Control Relationship
As proposed, because NYSE Arca Equities Rule 4.3(c) covers the same topic as FINRA Rules 2262 and 2269, the Exchange would delete NYSE Arca Equities Rule 4.3(c) and replace it with new Rules 2262 and 2269.
The Exchange believes that proposed NYSE Arca Equities Rules 2262 and 2269 would broaden protection of its Rules in a manner that will better protect customers through the additional disclosure requirements that the new proposed rules prescribe. In addition, by harmonizing the rules with FINRA, ETP Holders that are also members of FINRA will be subject to a single standard with respect to disclosure of trading or recommending securities in which an ETP Holder has an interest.
The Exchange believes the proposed rule change is consistent with Section 6(b) of the Act
The proposed changes are designed to protect investors and the public interest by broadening the protection of its Rules in a manner that will better protect customers whether or not a member or member organization makes a recommendation on a security for a customer and providing additional disclosures of potential conflicts of interest in transactions on the Exchange. With the additional disclosures of potential conflicts of interest in transactions where an ETP Holder is involved, the Exchange believes that investors will be better protected by being able to make more informed investment decisions and thus promote just and equitable principles of trade on the Exchange.
In addition, the Exchange believes that the proposed rule change supports the objectives of the Act by providing greater harmonization among Exchange Rules and the rules of NYSE, NYSE MKT, and FINRA 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 Rules, such changes are technical in nature and do not change the substance of the proposed NYSE Rules.
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.
No written comments were solicited or received with respect to the proposed rule change.
The Exchange has filed the proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act
A proposed rule change filed under Rule 19b-4(f)(6)
At any time within 60 days of the filing of such 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.
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:
* Use the Commission's Internet comment form (
* Send an email to
* Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549.