[Federal Register Volume 78, Number 234 (Thursday, December 5, 2013)]
[Notices]
[Pages 73214-73223]
[FR Doc No: 2013-29042]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-70962; File No. SR-NYSE-2013-76]

Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend Its Rules Concerning Communications With the Public To Harmonize
Them With Certain Financial Industry Regulatory Authority, Inc. Rules
and Make Other Conforming Changes

November 29, 2013.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Exchange Act'') and Rule 19b-4 thereunder,\2\ notice is
hereby given that on November 15, 2013, 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 substantially prepared
by the Exchange. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons. The
Exchange has designated the proposed rule change as constituting a
``non-controversial'' rule change under Exchange Act Rule 19b-
4(f)(6),\3\ which renders the proposal effective upon receipt of this
filing by the Commission.
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    \1\ 15 U.S.C.78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange proposes to amend its rules concerning communications
with the public to harmonize them with certain Financial Industry
Regulatory Authority, Inc. (``FINRA'') rules and make other conforming
changes. 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 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 Exchange proposes to amend its rules concerning communications
with the public to harmonize them with certain FINRA rules and make
other conforming changes. Set forth below are descriptions of the
harmonization process, the current NYSE rules, and the proposed NYSE
rules. Specifically, the Exchange proposes to (i) delete paragraphs
(a)(1), (d), (i), (j) and (l) of NYSE Rule 472, Supplementary Materials
472.10(1), (3), (4) and (5), and 472.90, and Interpretations 472/01 and
472/03 through 472/11; (ii) adopt new rule text that is substantially
similar to FINRA Rules 2210, 2212, and 9551; and (iii) make other
conforming changes.\4\
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    \4\ References to rules are to NYSE rules unless otherwise
indicated. The remaining provisions of Rule 472 and supplementary
material and interpretations not addressed in this proposal concern
research and would remain in place because FINRA and NYSE have not
yet harmonized their research rules.
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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 Exchange Act Rule 17d-2, the
Exchange, NYSER, and FINRA entered into an agreement (the
``Agreement'') to reduce regulatory duplication for their members by
allocating to FINRA certain regulatory responsibilities for NYSE rules
and rule interpretations (``FINRA Incorporated NYSE Rules''). NYSE MKT
LLC (``NYSE MKT'') became a party to the Agreement effective December
15, 2008.\5\
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    \5\ See Exchange Act Release No. 56148 (Jul. 26, 2007), 72 FR
42146 (Aug. 1, 2007) (order approving the Agreement); Exchange Act
Release No. 56147 (Jul. 26, 2007), 72 FR 42166 (Aug. 1, 2007) (order
approving the incorporation of certain NYSE Rules as ``Common
Rules''); Exchange Act Release No. 60409 (July 30, 2009), 74 FR
39353 (Aug. 6, 2009) (order approving the amended and restated
Agreement, adding NYSE MKT LLC as a party). Paragraph 2(b) of the
Agreement sets forth procedures regarding proposed changes by FINRA,
NYSE or NYSE MKT 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, the Exchange, and NYSE MKT 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\ FINRA
recently harmonized NASD and FINRA Incorporated NYSE Rules and
interpretations concerning communications with the public.\7\ In that
filing, FINRA adopted NASD Rules 2210 and 2211 and NASD Interpretive
Materials 2210-1 and 2210-3 through 2210-8 as FINRA Rules 2210 and 2212
through 2216 and deleted paragraphs (a)(1), (i), (j) and (l) of FINRA
Incorporated NYSE Rule 472, FINRA Incorporated NYSE Rule Supplementary
Materials 472.10(1), (3), (4) and (5) and 472.90, and FINRA
Incorporated NYSE Rule Interpretations 472/01 and 472/03 through 472/
11. FINRA's rule change became effective on February 4, 2013.\8\
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    \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, dated March 12, 2008.
    \7\ See Exchange Act Release No. 66681 (Mar. 29, 2012), 77 FR
20452 (Apr. 4, 2012).
    \8\ See FINRA Regulatory Notice 12-29.
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Current Communications With the Public Rules and Interpretations
    Rule 472(a)(1) requires that each advertisement, sales literature
or other similar type of communication that is generally distributed or
made available by a member organization to customers or the public be
approved in advance by an allied member, supervisory analyst, or
qualified person designated under the provisions of Rule 342(b)(1).
    Rule 472(d) requires that communications with the public be
retained in accordance with Rule 440.
    Rule 472(i) provides that no member organization may use any
communication that contains (i) any untrue statement or omission of a
material fact or is otherwise false or misleading; (ii) promises of
specific results, exaggerated or unwarranted claims; (iii) opinions for
which there is

no reasonable basis; or (iv) projections or forecasts of future events
that are not clearly labeled as forecasts.
    Rule 472(j) sets forth specific standards for recommendations,
records of past performance, projections and predictions, comparisons,
dating reports, identification of sources, and testimonials.
    Rule 472(l) provides that other communications activities may
include, but are not limited to, conducting interviews with the media,
writing books, conducting seminars or lecture courses, writing
newspaper or magazine articles, or making radio/TV appearances. Member
organizations must establish specific written supervisory procedures
applicable to allied members and employees who engage in these types of
communications activities. These procedures must include provisions
that require prior approval of such activity by a person designated
under the provisions of Rule 342(b)(1). These types of activities are
subject to the general standards set forth in Rule 472(i). In addition,
any activity that includes discussion of specific securities is subject
to the specific standards in Rule 472(j).
    Supplementary Materials 472.10(1), (3), (4) and (5) define
``communication,'' ``advertisement,'' ``market letter,'' and ``sales
literature,'' respectively. Interpretations 472/01, 472/03, 472/04, and
472/05 provide additional interpretations relating to these
definitions. For purposes of Rule 472(a)(1), Supplementary Material
472.90 defines a ``qualified person'' as one who has passed an
examination acceptable to the Exchange. Rule Interpretation 472/06
addresses other communication activities, including public appearances.
Rule Interpretations 472/08 and 472/09 set forth general and specific
content standards. Rule Interpretations 472/07, 472/10, and 472/11
address material externally prepared, guidelines for ``discount''
communications, and other regulations, respectively.
Proposed Rule Change
    The Exchange proposes to delete the foregoing rules and
interpretations relating to communications with the public and adopt
the text of FINRA Rules 2210, 2212, and 9551, subject to certain
technical and conforming changes.\9\ As noted in Rule 0, NYSE rules
that refer to NYSER, NYSER 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 Agreement, as applicable. The Exchange does not propose to adopt
the text of FINRA Rules 2213, 2214, 2215, and 2216 because they cover
products that are not traded on the Exchange or a limited exception for
investment analysis tools that is not being adopted. These rules would
continue to apply to all Dual Members.
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    \9\ The technical and conforming changes are that the Exchange
would (i) substitute the term ``member organization'' for
``member,'' (ii) substitute the term ``Exchange'' for ``FINRA,''
(iii) change certain cross-references to FINRA rules to cross-
references to Exchange rules, and (iv) add supplementary material to
define the term ``associated person.''
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Communication Categories
    Under proposed Rule 2210(a), the following three communication
categories would be established:
     ``Institutional communication'' would include any written
(including electronic) communication that is distributed or made
available only to institutional investors, but does not include a
member organization's internal communications. ``Institutional
investor'' would include any (i) person described in FINRA Rule
4512(c), regardless of whether the person has an account with a member
organization; (ii) governmental entity or subdivision thereof; (iii)
employee benefit plan, or multiple employee benefit plans offered to
employees of the same employer, that meet the requirements of Section
403(b) or Section 457 of the Internal Revenue Code and in the aggregate
have at least 100 participants, but does not include any participant of
such plans; (iv) qualified plan, as defined in Exchange Act Section
3(a)(12)(C), or multiple qualified plans offered to employees of the
same employer, that in the aggregate have at least 100 participants,
but does not include any participant of such plans; (v) member
organization or registered person of such a member organization; and
(vi) person acting solely on behalf of any such institutional investor.
     ``Retail communication'' would include any written
(including electronic) communication that is distributed or made
available to more than 25 retail investors within any 30 calendar-day
period. ``Retail investor'' would include any person other than an
institutional investor, regardless of whether the person has an account
with the member organization.
     ``Correspondence'' would include any written (including
electronic) communication that is distributed or made available to 25
or fewer retail investors within any 30 calendar-day period.
    The proposed communication categories would replace the
communication categories currently defined in Supplementary Material
472.10(1), (3), (4) and (5).
Approval, Review and Recordkeeping Requirements
    Proposed Rule 2210(b)(1)(A) would require an appropriately
qualified registered principal of the member organization to approve
each retail communication before the earlier of its use or its filing
with the Exchange's Advertising Regulation Department (``Department'').
The principal registration required to approve particular
communications would depend upon the permissible activities for each
principal registration category. Current Rule 472(a)(1) requires prior
approval of certain communications by an allied member, Supervisory
Analyst, or qualified person designated under the provisions of Rule
342(b)(1), but the Exchange does not require member organizations to
file communications with the Exchange.
    Proposed Rule 2210(b)(1)(B) would provide that the requirements of
proposed Rule 2210(b)(1)(A) could be met by a Supervisory Analyst
approved pursuant to Rule 344 with respect to (i) research reports on
debt and equity securities; (ii) retail communications as described in
Rule 472.10(2)(a); and (iii) other research that does not meet the
definition of ``research report'' under Rule 472.10(2), provided that
the Supervisory Analyst has technical expertise in the particular
product area. A Supervisory Analyst may not approve a retail
communication that requires a separate registration unless the
Supervisory Analyst also has such other registration. As stated above,
current Rule 472(a)(1) requires prior approval of certain
communications by an allied member, Supervisory Analyst, or qualified
person designated under the provisions of Rule 342(b)(1). As such, the
proposed rule would be limited to approval by Supervisory Analysts only
and to certain types of communications.
    Proposed Rule 2210(b)(1)(C) would provide an exception from the
principal approval requirements of proposed Rule 2210(b)(1)(A) for
retail communications, if at the time that a member organization
intends to publish or distribute the retail communication (i) another
member organization has filed it with the Department and has received a
letter from the Department stating that it appears to be consistent
with applicable standards and (ii) the member organization using the
communication

in reliance on this exception has not materially altered it and will
not use it in a manner that is inconsistent with the conditions of the
Department's letter. The Exchange does not currently have a comparable
rule because the Exchange has not previously required member
organizations to file communications with the Exchange.
    Proposed Rule 2210(b)(1)(D) would except from the principal
approval requirements of proposed Rule 2210(b)(1)(A) three additional
categories of retail communications, provided that the member
organization supervises and reviews such communications in the same
manner as required for supervising and reviewing correspondence
pursuant to Rule 342. These communications include (i) any retail
communication that is excepted from the definition of ``research
report'' pursuant to Rule 472.10(2)(a), unless the communication makes
any financial or investment recommendation; (ii) any retail
communication that is posted on an online interactive electronic forum;
and (iii) any retail communication that does not make any financial or
investment recommendation or otherwise promote a product or service of
the member organization. Under current Rule 342, correspondence and
communications with the public are subject to all supervisory
provisions of the Exchange's rules. The proposed rule change would
specifically delineate these three categories of retail communications
that would be excepted from the additional principal approval
requirements under proposed Rule 2210.
    Proposed Rule 2210(b)(1)(E) would allow the Exchange, pursuant to
the Rule 9600 Series, to grant an exemption from the principal approval
requirements of proposed Rule 2210(b)(1)(A) for good cause shown after
taking into consideration all relevant factors, to the extent that the
exemption is consistent with the purposes of Rule 2210, the protection
of investors, and the public interest. Current Rule 9610 sets forth
procedures for exemptive relief; the Exchange proposes to amend Rule
9610 by adding a cross-reference to proposed Rule 2210, as described
below.
    Proposed Rule 2210(b)(1)(F) would require, notwithstanding any
other provision of Rule 2210, a registered principal to approve a
communication prior to the member organization's filing it with the
Department. The Exchange does not currently have a comparable rule
because the Exchange has not previously required member organizations
to file communications with the Exchange.
    Proposed Rules 2210(b)(2) and (3) generally would impose certain
supervisory and review requirements with regard to a member
organization's correspondence and institutional communications.
Proposed Rule 2210(b)(2) would subject all correspondence to the
supervision and review requirements already in place under Rule 342.
Proposed Rule 2210(b)(3) would require each member organization to
establish written procedures that are appropriate to its business,
size, structure, and customers for the review by an appropriately
qualified registered principal of institutional communications used by
the member organization and its associated persons. Such procedures
must be reasonably designed to ensure that institutional communications
comply with applicable standards. When such procedures do not require
review of all institutional communications prior to first use or
distribution, they must include provision for the education and
training of associated persons as to the firm's procedures governing
institutional communications, documentation of such education and
training, and surveillance and follow-up to ensure that such procedures
are implemented and adhered to. Evidence that these supervisory
procedures have been implemented and carried out must be maintained and
made available to the Exchange upon request. These requirements are
similar to current Rule 342.10(B)(v), which provides that
correspondence and communications with the public are subject to all
supervisory provisions of the Exchange's rules, and Rule 342.17, which
requires member organizations to develop written policies and
procedures that are appropriate for their business, size, structure and
customers in connection with the review of communications with the
public relating to their business. Rule 472(c) also requires each
member organization to establish written procedures reasonably designed
to ensure that allied members, member organizations and their employees
are in compliance with Rule 472, which includes both communications
with the public provisions and research provisions. While proposed Rule
2210(b)(3) would cover written procedures relating to communications
with the public, the Exchange would maintain Rule 472(c) to cover
written procedures for the research provisions that will remain in that
rule.
    Proposed Rule 2210(b)(4)(A) would set forth the recordkeeping
requirements for retail and institutional communications. This
provision would incorporate by reference the recordkeeping format,
medium and retention period requirements of Exchange Act Rule 17a-
4.\10\
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    \10\ Exchange Act Rule 17a-4(b) requires broker-dealers to
preserve certain records for a period of not less than three years,
the first two years in an easily accessible place. Among these
records, pursuant to Exchange Act Rule 17a-4(b)(4), are
``[o]riginals of all communications received and copies of all
communications sent (and any approvals thereof) by the member,
broker or dealer (including inter-office memoranda and
communications) relating to its business as such, including all
communications which are subject to rules of a self-regulatory
organization of which the member, broker or dealer is a member
regarding communications with the public. As used in this paragraph,
the term communications includes sales scripts.'' Exchange Act Rule
17a-4(f) permits broker-dealers to maintain and preserve these
records on ``micrographic media'' or by means of ``electronic
storage media,'' as defined in the rule and subject to a number of
conditions.
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    Proposed Rule 2210(b)(4)(A) specifies that such records would have
to include:
     A copy of the communication and the dates of first and (if
applicable) last use;
     The name of any registered principal who approved the
communication and the date that approval was given;
     In the case of a retail communication or institutional
communication that is not approved prior to first use by a registered
principal, the name of the person who prepared or distributed the
communication; \11\
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    \11\ To the extent clerical staff is employed in the preparation
or distribution of the communication, the records should include the
name of the person on whose behalf the communication was prepared or
distributed.
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     Information concerning the source of any statistical
table, chart, graph or other illustration used in the communication;
and
     For retail communications that would rely on the exception
under proposed Rule 2210(b)(1)(C), the name of the member organization
that filed the retail communication with the Department and a copy of
the Department's review letter.
    Current Rule 440 also incorporates by reference the recordkeeping
format, medium and retention period requirements of Exchange Act Rule
17a-4. Current Rule 472(d) provides that communications with the public
prepared or issued by a member organization must be retained in
accordance with Rule 440, and the names of the persons who prepared,
reviewed, and approved the material must be ascertainable from the
retained records, and those records must be

readily available to the Exchange upon request. The Exchange proposes
to delete current Rule 472(d) because proposed Rule 2210(b)(4)(B) would
address recordkeeping requirements and cross-reference Rule 440 with
respect to correspondence recordkeeping requirements.
Filing Requirements and Review Procedures
    Proposed Rule 2210(c) would set forth the filing requirements and
review procedures for retail communications. The Exchange does not
currently require member organizations to file communications with the
Exchange, and as such, the Exchange does not currently have a
comparable rule.
    Proposed Rule 2210(c)(1)(A) would require a member organization to
file with the Department at least 10 business days prior to first use
any retail communication that is published or used in any electronic or
other public media, including any generally accessible Web site,
newspaper, magazine or other periodical, radio, television, telephone
or audio recording, video display, signs or billboards, motion
pictures, or telephone directories (other than routine listings). This
filing requirement continues for a period of one year beginning on the
date reflected in the Central Registration Depository (``CRD'') system
as the date that NYSE membership became effective. To the extent any
retail communication is a free writing prospectus that has been filed
with the Commission pursuant to Rule 433(d)(1)(ii), promulgated under
the Securities Act of 1933 (``Securities Act''), the member
organization may file such retail communication within 10 business days
of first use rather than at least 10 business days prior to first use.
    Proposed Rule 2210(c)(1)(B) would authorize the Department to
require a member organization to file all of its communications, or the
portion of the member organization's material relating to specific
types or classes of securities or services, with the Department at
least 10 business days prior to first use, if the Department determines
that the member organization has departed from the standards of the
proposed rule. The Department would notify the member organization in
writing of the types of communications to be filed and the length of
time such requirement is to be in effect. Any filing requirement
imposed would take effect 21 calendar days after service of the written
notice, during which time the member organization may request a hearing
under proposed Rule 9551 \12\ and Rule 9559.
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    \12\ As discussed below, the Exchange proposes to adopt Rule
9551, which is substantially similar to FINRA Rule 9551.
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    Proposed Rule 2210(c)(2) would require member organizations to file
retail communications concerning any registered investment company that
include self-created rankings and retail communications concerning
security futures at least 10 business days prior to first use and to
withhold them from use until any changes specified by the Department
have been made. The requirement to file retail communications
concerning security futures prior to first use would not apply to (i)
retail communications that are submitted to another self-regulatory
organization having comparable standards pertaining to such
communications and (ii) retail communications in which the only
reference to security futures is contained in a listing of the services
of a member organization. The Exchange does not propose to adopt the
text of FINRA 2210(c)(2)(C), which requires prior filing of retail
communications concerning bond mutual funds that include or incorporate
bond mutual fund volatility ratings as defined in FINRA Rule 2213 (the
text of which the Exchange also does not propose adopting) because it
covers products that are not traded on the Exchange, and FINRA Rule
2213 would continue to apply to all Dual Members.
    Proposed Rule 2210(c)(3)(A) would require retail communications
concerning registered investment companies (including mutual funds,
exchange-traded funds, variable insurance products, closed-end funds,
and unit investment trusts) to be filed within 10 business days of
first use or publication. In addition, the filing of any retail
communication that includes or incorporates a performance ranking or
performance comparison of the investment company with other investment
companies must include a copy of the ranking or comparison used in the
retail communication. Proposed Rule 2210(c)(3)(B) would require retail
communications concerning public direct participation programs to be
filed within 10 business days of first use or publication. The Exchange
does not propose to adopt the text of FINRA Rule 2210(c)(3)(C), which
requires prior filing of first use templates for written reports
produced by, or retail communications concerning an investment analysis
tool, as such term is defined in FINRA Rule 2214 (the text of which the
Exchange also does not propose adopting) because it covers a limited
exception for investment analysis tools that is not being adopted, and
FINRA Rule 2214 would continue to apply to all Dual Members. As such,
proposed Rule 2210(c)(3)(C) would be marked ``Reserved.''
    Proposed Rule 2210(c)(3)(D) would require member organizations to
file within 10 business days of first use retail communications
concerning collateralized mortgage obligations that are registered
under the Securities Act.
    Under proposed Rule 2210(c)(3)(E), member organizations would have
to file within 10 business days of first use all retail communications
concerning any security that is registered under the Securities Act and
that is derived from or based on a single security, a basket of
securities, an index, a commodity, a debt issuance or a foreign
currency, not included within the requirements of paragraphs (c)(1),
(c)(2) or subparagraphs (A) through (E) of paragraph (c)(3) of proposed
Rule 2210. This provision would exclude retail communications that are
already subject to a separate filing requirement found elsewhere in
proposed paragraph (c), such as retail communications concerning
registered investment companies or public direct participation
programs.
    Proposed Rule 2210(c)(4) would provide that, if a member
organization has filed a draft version or ``story board'' of a
television or video retail communication pursuant to a filing
requirement, then the member organization also must file the final
filmed version within 10 business days of first use or broadcast.
    Proposed Rule 2210(c)(5) would specify that a member organization
must provide with each filing the actual or anticipated date of first
use, the name, title and CRD number of the registered principal who
approved the communication, and the date of approval.
    Proposed Rule 2210(c)(6) would provide that each member
organization's written communications may be subject to a spot-check
procedure, and that member organizations must submit requested material
within the time frame specified by the Department.
    Proposed Rule 2210(c)(7)(A) would create a filing exclusion for
retail communications that previously have been filed with the
Department and that are to be used without material change. Proposed
Rule 2210(c)(7)(B) would create an exclusion for retail communications
that are based on templates that were previously filed with the
Department, the changes to

which are limited to updates of more recent statistical or other non-
narrative information. Proposed Rule 2210(c)(7)(C) would exclude retail
communications that do not make any financial or investment
recommendation or otherwise promote a product or service of the member
organization.\13\
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    \13\ This filing exception would have the same scope as the
proposed exception from the principal pre-use approval requirements
for retail communications that do not make any financial or
investment recommendation or otherwise promote a product or service
of the member organization. See Proposed Rule 2210(b)(1)(D)(iii).
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    Paragraphs (c)(7)(D), (E), (G) and (H) of proposed Rule 2210 would
create a filing exclusion for retail communications that do no more
than identify a national securities exchange symbol of the member
organization or identify a security for which the member organization
is a registered market maker; advertisements and sales literature that
do no more than identify the member organization or offer a specific
security at a stated price; certain ``tombstone'' advertisements
governed by Securities Act Rule 134; and press releases that are made
available only to members of the media.
    Proposed Rule 2210(c)(7)(F) would create a filing exclusion for
prospectuses, preliminary prospectuses, fund profiles, offering
circulars and similar documents that have been filed with the
Commission or any state, or that are exempt from such registration,
except that an investment company prospectus published pursuant to
Securities Act Rule 482 and a free writing prospectus that has been
filed with the Commission pursuant to Securities Act Rule 433(d)(1)(ii)
would not be considered a prospectus for purposes of this
exclusion.\14\
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    \14\ Securities Act Rule 433(d)(1)(ii) requires any offering
participant, other than the issuer, to file with the Commission a
free writing prospectus that is used or referred to by such offering
participant and distributed by or on behalf of such person in a
manner reasonably designed to lead to its broad unrestricted
dissemination.
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    Proposed Rule 2210(c)(7)(I) would create a filing exclusion for any
reprint or excerpt of any article or report issued by a publisher
(``reprint''), provided that the publisher is not an affiliate of the
member organization using the reprint or any underwriter or issuer of a
security mentioned in the reprint that the member organization is
promoting; neither the member organization using the reprint nor any
underwriter or issuer of a security mentioned in the reprint has
commissioned the reprinted article or report; and the member
organization using the reprint has not materially altered its contents
except as necessary to make the reprint consistent with applicable
regulatory standards or to correct factual errors.
    Paragraphs (c)(7)(J) and (K) of proposed Rule 2210 would create
filing exclusions for correspondence and institutional communications.
Proposed paragraph (c)(7)(L) would exclude from filing communications
that refer to types of investments solely as part of a listing of
products or services offered by the member organization.
    Proposed Rule 2210(c)(7)(M) would exclude from the filing
requirements retail communications that are posted on an online
interactive electronic forum. Proposed Rule 2210(c)(7)(N) would exclude
from the filing requirements press releases issued by closed-end
investment companies that are listed on the Exchange pursuant to
Section 202.06 of the NYSE Listed Company Manual (or any successor
provision).
    The Exchange does not propose to adopt FINRA Rule 2210(c)(8)
because Section 24(b) of the Investment Company Act of 1940 and Rule
24b-3 thereunder only apply to a registered national securities
association, i.e., FINRA. As such, Rule 2210(c)(8) would be marked
``Reserved.''
    Proposed Rule 2210(c)(9)(A) would allow the Exchange to exempt,
pursuant to the Rule 9600 Series, a member organization from the pre-
use filing requirements of paragraph (c)(1)(A) for good cause shown.
Proposed Rule 2210(c)(9)(B) would allow the Exchange to grant an
exemption from the filing requirements of paragraph (c)(3) for good
cause shown after taking into consideration all relevant factors,
provided that the exemption is consistent with the purposes of the
rule, the protection of investors, and the public interest. Generally,
this relief would be limited to the same extent as in proposed
paragraph (b)(1)(E), which would authorize the Exchange to grant
exemptive relief from the principal approval requirements in proposed
Rule 2210(b)(1)(A) for retail communications, subject to the same
standards.
Content Standards
    Proposed Rule 2210(d) would incorporate the current content
standards applicable to communications with the public that are found
in Rules 472(i) and (j) and Rule Interpretations 472/08 and 472/09,
subject to certain changes. Proposed Rule 2210(d)(1) is comparable to
the general standards for all communications in Rule 472(i) and Rule
Interpretation 472/08; however, the proposed rule would expand upon
these general standards.\15\
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    \15\ Consistent with the changes proposed by FINRA, the Exchange
does not propose to incorporate Rule Interpretations 472/07, 472/10,
and 472/11, which cover material externally prepared, guidelines for
``discount'' communications, and other regulations, respectively.
The Exchange does not believe that it is necessary to address these
types of communications with the public because they would be
covered by the general standards of the proposed rule.
---------------------------------------------------------------------------

    Proposed Rule 2210(d)(1)(A) would provide that all member
organization communications must be based on principles of fair dealing
and good faith, must be fair and balanced, and must provide a sound
basis for evaluating the facts in regard to any particular security or
type of security, industry, or service. In addition, the proposed rule
would provide that no member organization may omit any material fact or
qualification if the omission, in light of the context of the material
presented, would cause the communications to be misleading. Current
Rule 472(i), which sets forth the general content standards for all
communications, is comparable to the proposed rule.
    As with current Rule 472(i), which specifically prohibits
promissory statements, proposed Rule 2210(d)(1)(B) would prohibit a
member organization from making any false, exaggerated, unwarranted,
promissory or misleading statement or claim in any communication. In
addition, no member organization may publish, circulate or distribute
any communication that the member organization knows or has reason to
know contains any untrue statement of a material fact or is otherwise
false or misleading.
    Proposed Rule 2210(d)(1)(C) would allow information to be placed in
a legend or footnote only in the event that such placement would not
inhibit an investor's understanding of the communication. The Exchange
does not currently have a comparable rule with this specific
requirement.
    Proposed Rule 2210(d)(1)(D) would provide that member organizations
must ensure that statements are clear and not misleading within the
context in which they are made, and that they provide balanced
treatment of risks and potential benefits. In addition, communications
must be consistent with the risks of fluctuating prices and the
uncertainty of dividends, rates of return and yield inherent to
investments. The Exchange does not currently have a comparable rule
with this specific requirement.
    Proposed Rule 2210(d)(1)(E) would provide that member organizations
must consider the nature of the audience to

which the communication will be directed and must provide details and
explanations appropriate to the audience. The Exchange does not
currently have a comparable rule with this specific requirement.
    Proposed Rule 2210(d)(1)(F) would provide that communications may
not predict or project performance, imply that past performance will
recur or make any exaggerated or unwarranted claim, opinion or
forecast; provided, however, the following would not be prohibited:
     A hypothetical illustration of mathematical principles,
provided that it does not predict or project the performance of an
investment or investment strategy; and
     A price target contained in a research report on debt or
equity securities, provided that the price target has a reasonable
basis, the report discloses the valuation methods used to determine the
price target, and the price target is accompanied by disclosure
concerning the risks that may impede achievement of the price target.
    The Exchange does not propose to adopt the text of FINRA Rule
2210(d)(1)(F)(ii), which references an investment analysis tool, or a
written report produced by an investment analysis tool, that meets the
requirements of FINRA Rule 2214 (the text of which the Exchange also
does not propose adopting) because it covers a limited exception for
investment analysis tools that is not being adopted, and FINRA Rule
2214 would continue to apply to all Dual Members. As such, text of
proposed Rule 2210(d)(1)(F)(ii) would correspond to the text of FINRA
Rule 2210(d)(1)(F)(iii).
    Current Rule 472(j)(3) provides that any projection or prediction
must contain the bases or assumptions upon which they are made and must
indicate that the bases or assumptions of the materials upon which such
projections and predictions are made are available upon request. The
proposed rule would make a blanket prohibition against predictions and
projections and carve out certain exemptions.
    Proposed Rule 2210(d)(2) would provide that any comparison in
retail communications between investments or services must disclose all
material differences between them, including (as applicable) investment
objectives, costs and expenses, liquidity, safety, guarantees or
insurance, fluctuation of principal or return, and tax features.
Similarly, current Rule 472(j)(4) provides that any comparison of one
member organization's service, personnel, facilities or charges with
those of other firms must be factually supportable.
    Rule 2210(d)(3) would require all retail communications and
correspondence to (i) prominently disclose the name of the member
organization, and would allow a fictional name by which the member
organization is commonly recognized or which is required by any state
or jurisdiction; (ii) reflect any relationship between the member
organization and any non-member organization that, or individual who,
also is named in the communication; and (iii) if the communication
includes other names, reflect which products and services are offered
by the member organization. Proposed Rule 2210(d)(3) would apply these
standards to correspondence as well as to retail communications. A
member organization would be permitted to use the name under which the
member organization's broker-dealer business is conducted as disclosed
on the member organization's Form BD, as well as a fictional name by
which the member organization is commonly recognized or which is
required by any state or jurisdiction. The proposed rule would not
apply to ``blind'' advertisements used to recruit personnel. The
Exchange does not currently have a comparable rule with these specific
requirements.
    Proposed Rule 2210(d)(4)(A) would specify that in retail
communications and correspondence, references to tax-free or tax-exempt
income must indicate which income taxes apply, or which do not, unless
income is free from all applicable taxes, and provides an example of
income from an investment company investing in municipal bonds that is
free from federal income tax but subject to state or local income
taxes. The Exchange does not currently have a comparable rule with
these specific requirements.
    Proposed Rule 2210(d)(4)(B) would prohibit communications from
characterizing income or investment returns as tax-free or exempt from
income tax when tax liability is merely postponed or deferred, such as
when taxes are payable upon redemption. The Exchange does not currently
have a comparable rule with these specific requirements.
    Proposed Rule 2210(d)(4)(C) would add new language concerning
comparative illustrations of the mathematical principles of tax-
deferred versus taxable compounding. First, the illustration would have
to depict both the taxable investment and the tax-deferred investment
using identical investment amounts and identical assumed gross
investment rates of return, which may not exceed 10 percent per annum.
Second, the illustration would have to use and identify actual federal
income tax rates. Third, the illustration would be permitted (but not
required) to reflect an actual state income tax rate, provided that the
communication prominently discloses that the illustration is applicable
only to investors that reside in the identified state. Fourth, the tax
rates used in the illustration that is intended for a target audience
would have to reasonably reflect its tax bracket or brackets as well as
the tax character of capital gains and ordinary income. Fifth, if the
illustration covers an investment's payout period, the illustration
would have to reflect the impact of taxes during this period. Sixth,
the illustration could not assume an unreasonable period of tax
deferral. Seventh, the illustration would have to include the following
disclosures, as applicable:
     The degree of risk in the investment's assumed rate of
return, including a statement that the assumed rate of return is not
guaranteed;
     The possible effects of investment losses on the relative
advantage of the taxable versus tax-deferred investments;
     The extent to which tax rates on capital gains and
dividends would affect the taxable investment's return;
     The fact that ordinary income tax rates will apply to
withdrawals from a tax-deferred investment;
     Its underlying assumptions; \16\
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    \16\ These assumptions may include, for example, the age at
which an investor may begin withdrawing funds from a tax-deferred
account, the actual federal tax rates applied in the hypothetical
taxable illustration, any state income tax rate applied in the
illustration, and the charges associated with the hypothetical
investment.
---------------------------------------------------------------------------

     The potential impact resulting from federal or state tax
penalties (e.g., for early withdrawals or use on non-qualified
expenses); and
     That an investor should consider his or her current and
anticipated investment horizon and income tax bracket when making an
investment decision, as the illustration may not reflect these factors.

The Exchange does not currently have a comparable rule with these
specific requirements.
    Proposed Rule 2210(d)(5) would require retail communications and
correspondence that present the performance of a non-money market
mutual fund, to disclose the fund's maximum sales charge and operating
expense ratio as set forth in the fund's current prospectus fee table.
The Exchange does not currently have a

comparable rule with these specific requirements.
    Proposed Rule 2210(d)(6)(A) would provide that, if any testimonial
in a communication concerns a technical aspect of investing, the person
making the testimonial must have the knowledge and experience to form a
valid opinion. This requirement would be identical to current Rule
472(j)(7)(iv).
    Proposed Rule 2210(d)(6)(B) would require any retail communications
and correspondence that provide a testimonial concerning the investment
advice or investment performance of a member organization or its
products to prominently disclose (i) the fact that the testimonial may
not be representative of the experience of other customers, (ii) the
fact that the testimonial is no guarantee of future performance or
success, and (iii) if more than $100 in value is paid for the
testimonial, the fact that it is a paid testimonial. The proposed rule
would be substantially the same as current Rule 472(j)(7)(i)-(iii),
except that Rule 472(j)(7)(iii) refers instead to a ``nominal amount.''
    Proposed Rule 2210(d)(7) would apply to retail communications that
contain a recommendation. Proposed Rule 2210(d)(7)(A) would require
disclosure of certain specified conflicts of interest to the extent
applicable. Retail communications that include a recommendation of
securities must have a reasonable basis for the recommendation and must
disclose, if applicable, the following: (i) That at the time the
communication was published or distributed, the member organization was
making a market in the security being recommended, or in the underlying
security if the recommended security is an option or security future,
or that the member organization or associated persons will sell to or
buy from customers on a principal basis; (ii) that the member
organization or any associated person that is directly and materially
involved in the preparation of the content of the communication has a
financial interest in any of the securities of the issuer whose
securities are recommended, and the nature of the financial interest
(including, without limitation, whether it consists of any option,
right, warrant, future, long or short position), unless the extent of
the financial interest is nominal; and (iii) that the member
organization was manager or co-manager of a public offering of any
securities of the issuer whose securities were recommended within the
past 12 months. The proposed rule would be more detailed than current
Rule 472(j)(1), which covers recommendations.
    Proposed Rule 2210(d)(7)(B) would require a member organization to
provide, or offer to furnish upon request, available investment
information supporting the recommendation, and if the recommendation is
for a corporate equity security, to provide the price at the time the
recommendation is made. The proposed rule is comparable to current Rule
472(j)(1), which provides that when recommending the purchase, sale or
switch of specific securities, supporting information must be provided
or offered, and the market price at the time the recommendation is made
must be indicated.
    Proposed Rule 2210(d)(7)(C) would amend the provisions governing
communications that include past recommendations, which are currently
found in Rule 472(j)(2). The proposed standards mirror those found in
Rule 206(4)-1(a)(2) under the Investment Advisers Act of 1940
(``Advisers Act''), which apply to investment adviser advertisements
that contain past recommendations.\17\
---------------------------------------------------------------------------

    \17\ Proposed Rule 2210(d)(7)(C), like Advisers Act Rule 206(4)-
1(a)(2), generally would prohibit retail communications from
referring to past specific recommendations of the member
organization that were or would have been profitable to any person.
The proposed rule would allow, however, a retail communication or
correspondence to set out or offer to furnish a list of all
recommendations as to the same type, kind, grade or classification
of securities made by the member organization within the immediately
preceding period of not less than one year. The list would have to
provide certain information regarding each recommended security and
include a prescribed cautionary legend warning investors not to
assume that future recommendations will be profitable.
---------------------------------------------------------------------------

    Proposed Rule 2210(d)(7)(D) expressly would exclude from its
coverage communications that meet the definition of ``research report''
or that are public appearances by a research analyst for purposes of
Rule 472 and that include all of the applicable disclosures required by
that rule. Proposed Rule 2210(d)(7)(D) also would exclude any
communication that recommends only registered investment companies or
variable insurance products.\18\ The Exchange does not currently have a
comparable rule regarding registered investment companies.
---------------------------------------------------------------------------

    \18\ The Exchange is proposing to exclude communications that
recommend only registered investment companies or variable insurance
products because it believes that recommendations of these products
do not raise the same kinds of conflicts of interest as
recommendations of other types of securities, since they are pooled
investment vehicles rather than securities of a single issuer.
---------------------------------------------------------------------------

    Under proposed Rule 2210(d)(8), prospectuses, preliminary
prospectuses, fund profiles and similar documents that have been filed
with the Commission would not be subject to the standards of proposed
Rule 2210(d); provided, however, that the standards would apply to an
investment company prospectus published pursuant to Securities Act Rule
482 and a free writing prospectus that has been filed with the
Commission pursuant to Securities Act Rule 433(d)(1)(ii). The Exchange
does not currently have a comparable rule.
Certain Text Not Adopted
    The Exchange does not propose to adopt the text of FINRA Rule
2210(e), which relates to limitations on the use of FINRA's name and
any other corporate name owned by FINRA. The Exchange does not propose
to adopt the text of FINRA Rule 2210(e)(2) because that provision
relates to over-the-counter transactions, which the Exchange does not
regulate. Lastly, the Exchange does not propose to adopt the text of
FINRA Rule 2210(e)(3) because the Exchange has not previously imposed a
requirement on member organizations to provide a link to the Exchange's
Web site in connection with its indication of NYSE membership, and the
Exchange does not believe it is necessary to impose such a restriction
at this time. FINRA Rule 2210(e)(3) would continue to apply to all Dual
Members. As such, Rule 2210(e) would be marked ``Reserved.''
Public Appearances
    Proposed Rule 2210(f) sets forth the general standards that would
apply to public appearances. Public appearances would have to meet the
general ``fair and balanced'' standards of proposed Rule 2210(d)(1).
The disclosure requirements applicable to recommendations in proposed
Rule 2210(d)(7) would apply if the public appearance included a
recommendation of a security. The proposed rule also would require
member organizations to establish appropriate written policies and
procedures to supervise public appearances, and clarify that scripts,
slides, handouts or other written (including electronic) materials used
in connection with public appearances are considered communications for
purposes of proposed Rule 2210. The proposed requirement to establish
supervisory policies and procedures for public appearances would be
consistent with Rule 472(l) and Rule Interpretation 472/06, which
covers other communications activities.
Violations of Other Rules
    Proposed Rule 2210(g) would provide that any violation by a member
organization of any rule of the

Commission or the Securities Investor Protection Corporation applicable
to member organization communications would be deemed a violation of
proposed Rule 2210. FINRA Rule 2210(g) also applies to violations of
Municipal Securities Rulemaking Board (``MSRB'') rules because FINRA
enforces such rules. Because the Exchange does not enforce MSRB rules,
the reference to MSRB rules would not be included in proposed Rule
2210(g).
Use of Investment Companies Rankings in Retail Communications
    The Exchange proposes to adopt the text of FINRA Rule 2212, which
would cover the use of investment company rankings in retail
communications. The Exchange currently does not have a comparable rule.
    Proposed Rule 2212(a) would define ``Ranking Entity'' as ``any
entity that provides general information about investment companies to
the public, that is independent of the investment company and its
affiliates, and whose services are not procured by the investment
company or any of its affiliates to assign the investment company a
ranking.''
    Proposed Rule 2212(b) would provide that member organizations may
not use investment company rankings in any retail communication other
than (i) rankings created and published by Ranking Entities or (ii)
rankings created by an investment company or an investment company
affiliate but based on the performance measurements of a Ranking
Entity. Rankings in retail communications also would have to conform to
the requirements described below.
    Proposed Rule 2212(c) would require certain disclosures in retail
communications. A headline or other prominent statement must not state
or imply that an investment company or investment company family is the
best performer in a category unless it is actually ranked first in the
category. All retail communications containing an investment company
ranking also would have to disclose prominently:
     The name of the category (e.g., growth);
     The number of investment companies or, if applicable,
investment company families, in the category;
     The name of the Ranking Entity and, if applicable, the
fact that the investment company or an affiliate created the category
or subcategory;
     The length of the period (or the first day of the period)
and its ending date; and
     Criteria on which the ranking is based (e.g., total
return, risk-adjusted performance).
    In addition, all retail communications containing an investment
company ranking would have to disclose:
     The fact that past performance is no guarantee of future
results;
     For investment companies that assess front-end sales
loads, whether the ranking takes those loads into account;
     If the ranking is based on total return or the current
Commission standardized yield, and fees have been waived or expenses
advanced during the period on which the ranking is based, and the
waiver or advancement had a material effect on the total return or
yield for that period, a statement to that effect;
     The publisher of the ranking data (e.g., ``ABC Magazine,
June 2011''); and
     If the ranking consists of a symbol (e.g., a star system)
rather than a number, the meaning of the symbol (e.g., a four-star
ranking indicates that the fund is in the top 30% of all investment
companies).
    Proposed Rule 2212(d) would provide that any investment company
ranking included in a retail communication must be, at a minimum,
current to the most recent calendar quarter ended prior to use or
submission for publication. If no ranking that meets this requirement
is available from the Ranking Entity, then a member organization would
only be able to use the most current ranking available from the Ranking
Entity unless use of the most current ranking would be misleading, in
which case no ranking from the Ranking Entity may be used. In addition,
except for money market mutual funds:
     Retail communications may not present any ranking that
covers a period of less than one year, unless the ranking is based on
yield;
     An investment company ranking based on total return must
be accompanied by rankings based on total return for a one year period
for investment companies in existence for at least one year; one and
five year periods for investment companies in existence for at least
five years; and one, five and ten year periods for investment companies
in existence for at least ten years supplied by the same Ranking
Entity, relating to the same investment category, and based on the same
time period; provided that, if rankings for such one, five and ten year
time periods are not published by the Ranking Entity, then rankings
representing short, medium and long term performance must be provided
in place of rankings for the required time periods; and
     An investment company ranking based on yield may be based
only on the current Commission standardized yield and must be
accompanied by total return rankings for the time periods specified in
Rule 2212(d)(2)(B).
    Proposed Rule 2212(e) would provide specific requirements with
respect to categories. The choice of category (including a subcategory
of a broader category) on which the investment company ranking is based
must be one that provides a sound basis for evaluating the performance
of the investment company. An investment company ranking must be based
only on (i) a published category or subcategory created by a Ranking
Entity or (ii) a category or subcategory created by an investment
company or an investment company affiliate, but based on the
performance measurements of a Ranking Entity. Retail communications
must not use any category or subcategory that is based upon the asset
size of an investment company or investment company family, whether or
not it has been created by a Ranking Entity.
    Proposed Rule 2212(f) would provide that investment company
rankings for more than one class of investment company with the same
portfolio must be accompanied by prominent disclosure of the fact that
the investment companies or classes have a common portfolio and
different expense structures.
    Proposed Rule 2212(g) would provide that retail communications may
contain rankings of investment company families, provided that these
rankings comply with proposed Rule 2212, and further provided that no
retail communication for an individual investment company may provide a
ranking of an investment company family unless it also prominently
discloses the various rankings for the individual investment company
supplied by the same Ranking Entity, as described in proposed Rule
2212(d)(2)(B). For purposes of Rule 2212, the term ``investment company
family'' would mean any two or more registered investment companies or
series thereof that hold themselves out to investors as related
companies for purposes of investment and investor services.
    Proposed Rule 2212(h) would specify that Rule 2212 would not apply
to any reprint or excerpt of any article or report that is excluded
from the Exchange's Advertising Regulation Department filing
requirements pursuant to Rule 2210(c)(7)(I).

Failure To Comply With Public Communication Standards
    The Exchange recently adopted certain disciplinary and procedural
rules modeled on the rules of FINRA; however, at that time, the
Exchange did not propose to adopt the text of FINRA Rule 9551, which
then concerned failure to comply with public communication standards in
NASD Rule 2210.\19\ As such, Rule 9551 is currently marked
``Reserved.'' As a result of the Exchange's proposed adoption of Rule
2210, the Exchange proposes to adopt the text of FINRA Rule 9551 as
Rule 9551, with certain conforming changes.
---------------------------------------------------------------------------

    \19\ See Exchange Act Release No. 69045 (Mar 5, 2013), 78 FR
15394 (Mar 11, 2013).
---------------------------------------------------------------------------

    Proposed Rule 9551(a) would provide that the Exchange staff may
issue a written notice requiring a member organization to file
communications with the Department at least 10 days prior to use if the
Exchange staff determines that the member organization has departed
from the standards of Rule 2210. Proposed Rule 9551(b) would provide
that, except as otherwise provided, the Exchange staff would serve the
member organization with such notice in accordance with NYSE Rule 9134.
When counsel for the member organization or other person authorized to
represent others under Rule 9141 agrees to accept service of such
notice, then the Exchange staff may serve notice on counsel or such
other person authorized to represent others under Rule 9141 as
specified in Rule 9134.
    Proposed Rule 9551(c) would provide that a notice issued under the
proposed rule would state the specific grounds and include the factual
basis for the Exchange action. The notice would state when the Exchange
action will take effect. The notice would state that the respondent may
file a written request for a hearing with the Office of Hearing
Officers pursuant to Rule 9559. The notice also would inform the
respondent of the applicable deadline for filing a request for a
hearing and would state that a request for a hearing must set forth
with specificity any and all defenses to the Exchange action. In
addition, the notice would explain that, pursuant to Rules 8310(a) and
9559(n), a Hearing Officer or, if applicable, Hearing Panel, may
approve, modify or withdraw any and all sanctions or limitations
imposed by the notice, and may impose any other fitting sanction.
    Proposed Rule 9551(d) would provide that pursuant to proposed Rule
2210(c)(1)(B), the pre-use filing requirement referenced in a notice
issued and served under the proposed rule would become effective 21
days after service of the notice, unless stayed by a request for a
hearing pursuant to Rule 9559. FINRA Rule 9551(e) also includes a
cross-reference to FINRA Rule 2220(c)(2), which relates to options
communications. The Exchange does not propose to adopt the text of
FINRA Rule 2220 so this cross-reference is not included in the proposed
rule.
    Proposed Rule 9551(e) would provide that a member organization
served with a notice under the proposed rule may file with the Office
of Hearing Officers a written request for a hearing pursuant to Rule
9559. A request for a hearing would be made before the effective date
of the notice, as indicated in proposed Rule 9551(d). A request for a
hearing must set forth with specificity any and all defenses to the
Exchange action.
    Proposed Rule 9551(f) would provide that if a member organization
does not timely request a hearing, the pre-use filing requirements
specified in the notice would become effective 21 days after service of
the notice and the notice would constitute final Exchange action.
    Proposed Rule 9551(g) would provide that a member organization that
is subject to a pre-use filing requirement under the proposed rule may
file a written request for modification or termination of the
requirement. Such request would be filed with the head of the Exchange
department or office that issued the notice or, if another Exchange
department or office is named as the party handling the matter on
behalf of the issuing department or office, with the head of the
Exchange department or office that is so designated. The head of the
appropriate department or office may grant relief for good cause shown.
Conforming Changes
    The Exchange also proposes to make certain conforming changes to
Rules 342, 9559, and 9610. Specifically, the Exchange proposes to amend
Supplementary Materials .10(B) and .17 to Rule 342, which covers the
approval, supervision, and control of offices, to include a cross-
reference to proposed Rule 2210 in addition to the current cross-
references to Rule 472 in that rule. The Exchange also proposes to
amend the definition of ``branch office'' in Supplementary Material .10
to Rule 342 to replace references to ``advertisements'' and ``sales
literature'' with references to ``retail communications.'' The Exchange
proposes to amend Rule 9559, which covers hearing procedures for
expedited proceedings under the Rule 9550 Series, to include cross-
references to proposed Rule 9551. The Exchange proposes to amend Rule
9610(a), which permits member organizations to apply for exemptive
relief from other NYSE rules, to include a cross-reference to proposed
Rule 2210. The Exchange notes that FINRA Rules 9559 and 9610 include
cross-references to FINRA Rules 9551 and 2210, respectively.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent
with Exchange Act Section 6(b),\20\ in general, and furthers the
objectives of Exchange Act Section 6(b)(5),\21\ in particular, because
it is designed to promote just and equitable principles of trade and to
remove impediments to and perfect the mechanism of a free and open
market and a national market system. Specifically, the Exchange
believes that the proposed rule change supports the objectives of the
Exchange Act by providing greater harmonization between NYSE rules and
FINRA rules of similar purpose, resulting in less burdensome and more
efficient regulatory compliance. In particular, NYSE member
organizations that are also FINRA members are subject to Rule 472 and
FINRA Rules 2210, 2212, and 9551, and harmonizing these rules by
adopting proposed Rules 2210, 2212, and 9551 would promote just and
equitable principles of trade by requiring a single standard for
communications with the public. The Exchange believes that to the
extent the Exchange has proposed changes that differ from the FINRA
version of the NYSE rules, such changes are generally technical in
nature and do not change the substance of the proposed rules. The
Exchange also believes that the proposed rule change would update and
add specificity to the requirements governing communications with the
public, which would promote just and equitable principles of trade and
help to protect investors. As such, the Exchange believes the proposed
rule change meets the requirements of Exchange Act Section 6(b)(5).
---------------------------------------------------------------------------

    \20\ 15 U.S.C. 78f(b).
    \21\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will
result in any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Exchange Act. The
Exchange believes that the proposed rule change is not intended to
address competitive issues but rather to achieve greater consistency
between the Exchange's rules and FINRA's rules.

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
Exchange Act Section 19(b)(3)(A)(iii) \22\ and Rule 19b-4(f)(6)
thereunder.\23\ 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, it has become
effective pursuant to Exchange Act Section 19(b)(3)(A) and Rule 19b-
4(f)(6)(iii) thereunder.
---------------------------------------------------------------------------

    \22\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \23\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

    A proposed rule change filed under Rule 19b-4(f)(6) \24\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\25\ 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.
---------------------------------------------------------------------------

    \24\ 17 CFR 240.19b-4(f)(6).
    \25\ 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------

    The Commission believes that waiving the 30-day operative delay is
consistent with the protection of investors and the public interest,
because it would allow the Exchange to immediately conform its rules to
corresponding FINRA rules. This will ensure that Dual Members generally
will be subject to a single set of rules governing communications with
the public. As noted by the Exchange, the proposal would harmonize NYSE
and FINRA rules. In addition, the proposal would update and add
specificity to the Exchange's requirements governing communications
with the public, which are designed to help protect customers of all
NYSE members. For these reasons, the Commission designates the proposed
rule change to be operative upon filing.\26\
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    \26\ For purposes 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).
---------------------------------------------------------------------------

    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 Exchange Act. If the
Commission takes such action, the Commission shall institute
proceedings under Exchange Act Section 19(b)(2)(B) \27\ to determine
whether the proposed rule change should be approved or disapproved.
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    \27\ 15 U.S.C. 78s(b)(2)(B).
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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 Exchange 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_ADDRESS>Please include
File Number SR-NYSE-2013-76 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-2013-76. 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 Section, 100 F Street
NE., Washington, DC 20549-1090, on official business days between the
hours of 10:00 a.m. and 3:00 p.m. Copies of the filing will also 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-
NYSE-2013-76 and should be submitted on or before December 26, 2013.
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    \28\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\28\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-29042 Filed 12-4-13; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register: August 22, 2006 (Volume 71, Number 162)]
[Notices]
[Page 48958-48959]
[DOCID:fr22au06-104]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54319; File No. SR-NASD-2006-060]

 Self-Regulatory Organizations: National Association of
Securities Dealers, Inc.; Notice of Filing of Proposed Rule Change To
Require Members To File Regulatory Notices With NASD Electronically

August 15, 2006.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'' or ``Exchange Act'') \1\ and Rule 19b-4 under the Act,\2\
notice is given that on May 16, 2006, the National Association of
Securities Dealers, Inc. (``NASD'') filed with the Securities and
Exchange Commission (``Commission'') the proposed rule change as
described in Items I, II, and III below. These items have been prepared
by NASD. 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

    NASD proposes to adopt NASD Rule 3170 to provide NASD with the
authority to require member firms to file or submit electronically with
NASD any regulatory notice or other document that member firms are
required to file with (or otherwise submit to) NASD. NASD may specify
the electronic format to be used. The proposed rule change does not
specify the particular regulatory notices or documents that NASD will
require members to file electronically. Instead, NASD's proposed rule
change would give NASD authority to require members to file or submit
electronically with NASD any specified regulatory notice or document.
NASD plans to require members to file certain specified notices with
NASD via an electronic, Internet-based receiving and processing system
(``System''), using templates developed by NASD for each notice. The
System will be available to members on NASD's Internet Web site.
    Below is the text of the proposed rule change. Proposed new
language is in italic.
* * * * *

3170. Mandatory Electronic Filing Requirements

    Each member shall be required to file with NASD, or otherwise
submit to NASD, in such electronic format as NASD may require, all
regulatory notices or other documents required to be filed or otherwise
submitted to NASD, as specified by NASD.
* * * * *

II. Self-Regulatory Organization's Statement Concerning the Proposed
Rule Change

    In its filing with the Commission, NASD 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 these statements may be examined at the places specified in
Item IV below. NASD has prepared summaries, set forth in sections A, B,
and C below, of the most significant aspects of the 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 provide NASD with the
authority to require member firms to file or submit electronically with
NASD any regulatory notice or other document that member firms are
required to file with (or otherwise submit to) NASD. NASD may specify
the electronic format to be used. The proposed rule change does not
specify the particular regulatory notices or documents that NASD will
require members to file electronically. Instead, NASD's proposed rule
change would give NASD authority to require members to file or submit
electronically with NASD any specified regulatory notice or document.
    Upon approval of the rule change, NASD will issue a Notice to
Members and other member communications, as appropriate, to advise its
members which regulatory notices or documents members will be required
to file or submit electronically to NASD and the date on which
electronic filing or submission of these notices or documents will be
required. These communications will also advise members that as of the
specified date, electronic filing or submission of the specified
regulatory notices or documents will be mandatory, and that NASD will
no longer accept facsimile or other non-electronic transmissions of
these notices or documents.
    NASD notes that, upon approval of the proposed rule change, NASD,
as a member's designated examining authority, examining authority, or
regulatory authority that examines the firm as to financial
responsibility (``DEA''), plans to require members to file certain
notices that must be filed with NASD under the following Exchange Act
Rules electronically:\3\
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    \3\ NASD has requested relief from the Commission with respect
to these Exchange Act rules. Electronic filing of notices with NASD
does not affect requirements in those rules to file notices with the
Commission or other securities regulatory agencies.
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     Rule 15c3-1(e)--Withdrawals of equity capital
     Rule 15c3-3(i)--Special Reserve Bank Account
     Rule 17a-4(f)(2)(i); Rule 17a-4(f)(3)(vii)--Electronic
storage media
     Rule 17a-5(f)(4)--Replacement of accountant
     Rule 17a-11(b)--Net capital deficiency
     Rule 17a-11(c)(1)--Aggregate indebtedness is in excess of
1200 percent of net capital

     Rule 17a-11(c)(2)--Net capital is less than 5 percent of
aggregate debit items
     Rule 17a-11(c)(3)--Net capital is less than 120 percent of
required minimum dollar amount
     Rule 17a-11(d)--Failure to make and keep current books and
records
     Rule 17a-11(e)--Material inadequacy in accounting systems,
internal controls, or practices and procedures
    NASD members will be required to file these specified notices with
NASD via an electronic, Internet-based receiving and processing system
(``System''), using templates developed by NASD for each notice. The
System will be available to members on NASD's Internet Web site.
2. Statutory Basis
    NASD believes that the proposed amendment to NYSE Rule 418 is
consistent with Section 6(b) of the Act \4\ in general, and furthers
the objectives of Section 6(b)(5) of the Act \5\ in particular, in that
it is designed to promote just and equitable principles of trade, to
foster cooperation and coordination with persons engaged in
facilitating transactions in securities, and to remove impediments and
perfect the mechanism of a free and open market and to protect
investors and the public interest. NASD believes that the electronic
filing of notices is cost-saving and efficient and that it will enhance
the speed and efficiency of processing the filings and reduce
administrative costs.
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    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    NASD does not believe that the proposed rule change will impose any
inappropriate burden on competition.

C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others

    Written comments were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action

    Pursuant to Section 19(b)(2) of the Act,\6\ within 35 days of the
date of publication of this notice in the Federal Register or within
such longer period (i) as the Commission may designate up to 90 days of
such date if it finds such longer period to be appropriate and
publishes its reasons for so finding or (ii) as to which the Exchange
consents, the Commission will:
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    \6\ 15 U.S.C. 78f(b)(2).
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    (A) By order approve such proposed rule change, or
    (B) Institute proceedings to determine whether the proposed rule
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and
arguments concerning the proposed rule change, 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 e-mail to<EMAIL_ADDRESS>Please include File

Number SR-NASD-2006-060 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
    All submissions should refer to File Number SR-NASD-2006-060. 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 Section, 100 F Street,
Washington, DC 20549. Copies of the filings will also be available for
inspection and copying at the principal office of the NASD. 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-NASD-2006-060 and should be
submitted on or before September 12, 2006.
    For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(12).

Nancy M. Morris,
Secretary.
[FR Doc. E6-13812 Filed 8-21-06; 8:45 am]

BILLING CODE 8010-01-P