[Federal Register Volume 80, Number 157 (Friday, August 14, 2015)]
[Notices]
[Pages 48941-48949]
[FR Doc No: 2015-20006]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75655; File No. SR-FINRA-2015-029]

Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing of a Proposed Rule Change To Adopt
FINRA Rule 3210 (Accounts At Other Broker-Dealers and Financial
Institutions) in the Consolidated FINRA Rulebook

August 10, 2015.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'' or ``SEA'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby
given that on July 31, 2015, Financial Industry Regulatory Authority,
Inc. (``FINRA'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission'') the proposed rule change as described in
Items I, II, and III below, which Items have been substantially
prepared by FINRA. 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

    FINRA is proposing to adopt FINRA Rule 3210 (Accounts at Other
Broker-Dealers and Financial Institutions) in the Consolidated FINRA
Rulebook, and to delete NASD Rule 3050, Incorporated NYSE Rules 407 and
407A and Incorporated NYSE Rule Interpretations 407/01 and 407/02.
    The text of the proposed rule change is available on FINRA's Web
site at http://www.finra.org, at the principal office of FINRA 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, FINRA 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. FINRA has prepared summaries, set forth in sections A,
B, and C below, of the most significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

1. Purpose
    As part of the process of developing a new consolidated rulebook
(``Consolidated FINRA Rulebook''),\3\ FINRA is proposing to adopt a
new, consolidated rule addressing accounts opened or established by
associated persons of members at firms other than the firm with which
they are associated. FINRA proposes to adopt FINRA Rule 3210 (Accounts
at Other Broker-Dealers and Financial Institutions) in the Consolidated
FINRA Rulebook and to delete NASD Rule 3050, Incorporated NYSE Rules
407 and 407A and Incorporated NYSE Rule Interpretations 407/01 and 407/
02.\4\
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    \3\ The current FINRA rulebook consists of: (1) FINRA Rules; (2)
NASD Rules; and (3) rules incorporated from NYSE (``Incorporated
NYSE Rules'') (together, the NASD Rules and Incorporated NYSE Rules
are referred to as the ``Transitional Rulebook''). While the NASD
Rules generally apply to all FINRA members, the Incorporated NYSE
Rules apply only to those members of FINRA that are also members of
the NYSE (``Dual Members''). The FINRA Rules apply to all FINRA
members, unless such rules have a more limited application by their
terms. For more information about the rulebook consolidation
process, see Information Notice, March 12, 2008 (Rulebook
Consolidation Process).
    \4\ For convenience, the Incorporated NYSE Rules are referred to
as the ``NYSE Rules.''
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    Sound supervisory practices require that a member firm monitor
personal accounts opened or established outside of the firm by its
associated persons. Proposed FINRA Rule 3210 combines and streamlines
longstanding provisions of the NASD and NYSE rules that address this
area and would, in combination with FINRA's new FINRA Rule 3110(d)
governing securities transactions review and investigation,\5\ help
facilitate effective oversight of the specified trading activities of
associated persons of member firms. FINRA sought comment on the
proposal in a Regulatory Notice (the ``Notice'').\6\ FINRA has revised
the proposed rule as published in the Notice in response to
comments.\7\
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    \5\ New FINRA Rule 3110(d) (Transaction Review and
Investigation) sets forth requirements for supervisory procedures
for members to comply with the Insider Trading and Securities Fraud
Enforcement Act of 1988 (``ITSFEA'') (Pub. L. 100-704, 102 Stat.
4677). The Commission has approved FINRA Rule 3110(d) as part of
FINRA's new consolidated supervision rules, which became effective
on December 1, 2014. See Securities Exchange Act Release No. 71179
(December 23, 2013), 78 FR 79542 (December 30, 2013) (Order Granting
Approval of Proposed Rule Change; File No. SR-FINRA-2013-025)
(``Supervisory Rules Filing''); see also Regulatory Notice 14-10
(March 2014) (Consolidated Supervision Rules). Paragraph (d)(1) of
the rule requires that a member's supervisory procedures must
include a process for the review of securities transactions that is
reasonably designed to identify trades that may violate the
provisions of the Act, its regulations, or FINRA rules prohibiting
insider trading and manipulative and deceptive devices that are
effected for the accounts specified under paragraphs (d)(1)(A)
through (d)(1)(D) of the rule.
    \6\ See Regulatory Notice 09-22 (April 2009) (Personal
Securities Transactions).
    \7\ Comments are discussed in Item II.C of this filing. As
discussed further in Item II.C, commenters expressed concern that
Rule 3210, as proposed in the Notice, would be burdensome or
difficult to implement and that the rule should, informed by the
approach of current NASD Rule 3050, be revised to permit firms
flexibility to craft appropriate supervisory policies and procedures
taking into account their business models and the risk profiles of
their activities.
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(A) Background: NASD Rule 3050 and NYSE Rules 407 and 407A
    NASD Rule 3050 and NYSE Rules 407 and 407A are longstanding rules
that address specified accounts opened or established by associated
persons of members at firms other than the firm with which they are
associated.
    NASD Rule 3050 (designated in its original form as Section 28 of
the Rules of Fair Practice) was adopted to address this issue by
providing a means by which members would be informed of the extent and
nature of transactions effected by their employees or other associated
persons,\8\ so that members, in their own interest and in the interest
of their customers, might weigh the effect, if any, of such
transactions handled outside their firms.\9\ The rule imposes specified
obligations on member firms and associated persons.\10\ In short:
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    \8\ The terms ``person associated with a member'' and
``associated person of a member'' include, among others, registered
representatives. See paragraph (rr) of Article I of the FINRA By-
Laws.
    \9\ See Securities Exchange Act Release No. 4924 (August 21,
1953).
    \10\ FINRA historically has noted that the purpose of the rule
(originally designated Article III, Section 28 of the Rules of Fair
Practice) is to ``help member firms discharge their supervisory
responsibility over the securities activities conducted in their
associated persons' personal securities accounts.'' Securities
Exchange Act Release No. 23754 (October 28, 1986), 51 FR 40546
(November 7, 1986) (Proposed Rule Change; File No. SR-NASD-86-29).
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     Obligations of Member Firms: NASD Rule 3050(a) requires
that a member (called an ``executing member'') who knowingly executes a
transaction for the purchase or sale of a security for the account of a
person associated with another member (called an ``employer member''),
or for any account over which the associated person has discretionary
authority, must use reasonable diligence to determine that the
execution of the transaction will not adversely affect the interests of
the employer member. NASD Rule 3050(b) requires that, where an
executing member knows that a person associated with an employer member
has or will have a financial interest in, or discretionary authority
over, any existing or proposed account carried by the executing member,
the executing member must:
    (1) Notify the employer member in writing, prior to the execution
of a transaction for the account, of the executing member's intention
to open or maintain that account;
    (2) Upon written request by the employer member, transmit duplicate
copies of confirmations, statements, or other information with respect
to the account; and
    (3) Notify the person associated with the employer member of the
executing member's intention to provide the notice and information
required by (1) and (2).
     Obligations of Associated Persons: NASD Rules 3050(c) and
Rule 3050(d), in combination, address associated persons, whether they
open securities accounts or place securities orders through a member
firm other than their employer or whether they do so through other
types of financial services firms that are not FINRA members.\11\
Specifically:
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    \11\ NASD Rule 3050(e) provides that Rules 3050(c) and (d) apply
only to accounts or orders in which an associated person has a
financial interest or with respect to which the associated person
has discretionary authority.
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    (1) NASD Rule 3050(c) requires that a person associated with a
member, prior to opening an account or placing an initial order for the
purchase or sale of securities with another member, must notify both
the employer member and the executing member, in writing, of his or her
association with the other member. The rule provides that if the
account was established prior to the person's association with the
employer member, the person must notify both members in writing
promptly after becoming associated;
    (2) NASD Rule 3050(d) provides that if the associated person opens
a securities account or places an order for the purchase or sale of
securities with a broker-dealer that is registered pursuant to SEA
Section 15(b)(11) (a notice-registered broker-dealer), a domestic or
foreign investment adviser, bank, or other financial institution (that
is, firms that are not FINRA members), then he or she must: (i) Notify
his or her employer member in writing, prior to the execution of any
initial transactions, of the intention to open the account or place the
order; and (ii) upon written request by the employer member, request in
writing and assure that the notice-registered broker-dealer, investment
adviser, bank, or other financial institution provides the

employer member with duplicate copies of confirmations, statements, or
other information concerning the account or order. NASD Rule 3050(d)
provides that if an account subject to Rule 3050(d) was established
prior to the person's association with the member, the person must
comply with the rule promptly after becoming associated;
    (3) NASD Rule 3050(f) provides that the requirements of Rule 3050
do not apply to transactions in unit investment trusts and variable
contracts or redeemable securities of companies registered under the
Investment Company Act of 1940, or to accounts which are limited to
transactions in such securities.
    NYSE Rule 407, similar in purpose to FINRA Rule 3050, addresses
transactions by and for employees of member firms \12\ as follows:
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    \12\ See note 10 supra. The NYSE noted that Rule 407 imposes
obligations as to specified personal accounts of employees and
associated persons and that one of the rule's purposes, among other
things, is to help deter and detect violations of applicable federal
securities laws and regulations. See NYSE Information Memo 09-50
(October 30, 2009) (Supervision of Trading in Proprietary, Employee
and Employee-Related Securities and Commodities Accounts).
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     NYSE Rule 407(a) is similar to NASD Rule 3050(b), except
that Rule 407(a) imposes a requirement to obtain the prior written
consent of the employer member.\13\ Specifically, the rule requires
that no member or member organization may, without the prior written
consent of the employer, open a securities or commodities account or
execute any transaction in which a member or employee associated with
another member or member organization is directly or indirectly
interested. The rule requires that duplicate confirmations and account
statements be sent promptly to the employer.
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    \13\ The term ``employer member'' is defined within the context
of the NASD rule, not the NYSE rule. For purposes of discussing NYSE
Rule 407, in this filing the term ``employer member'' is used
interchangeably with ``employer'' for convenience.
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     NYSE Rule 407(b) is similar to NASD Rules 3050(c) and (d),
except that, like NYSE Rule 407(a), it also sets forth a prior written
consent requirement. The rule requires that no member associated with a
member or member organization may establish or maintain any securities
or commodities account \14\ or enter into any securities transaction
with respect to which such person has any financial interest or the
power, directly or indirectly, to make investment decisions, at another
member or member organization, or a domestic or foreign non-member
broker-dealer, investment adviser, bank, other financial
institution,\15\ or otherwise without the prior written consent of
another person designated by the member or member organization to sign
such consents and review such accounts. The rule requires that persons
having accounts or effecting transactions as covered by the rule must
arrange for duplicate confirmations and statements (or their
equivalents) to be sent to a person designated by the member or member
organization to review such accounts and transactions. The rule further
requires that all such accounts and transactions must periodically be
reviewed by the member or member organization employer.\16\
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    \14\ NYSE Rule 407.11 states that the term ``securities or
commodities accounts'' as used in Rule 407(b) includes, but is not
limited to, limited or general partnership interests in investment
partnerships.
    \15\ NYSE Rule 407.13 states that, for purposes of the rule, the
term ``other financial institution'' includes, but is not limited
to, insurance companies, trust companies, credit unions and
investment companies.
    \16\ NYSE Rule 407.11 requires that members and member
organizations must develop and maintain written procedures for
reviewing such accounts and transactions and must assure that their
associated persons are not improperly recommending or marketing such
securities or products to others through members or member
organizations.
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     NYSE Rule 407.12 provides that the rule's requirement to
send duplicate confirmations and statements does not apply to
transactions in unit investment trusts and variable contracts or
redeemable securities of companies registered under the Investment
Company Act of 1940, or to accounts which are limited to transactions
in such securities, or to Monthly Investment Plan type accounts, unless
the employer member requests receipt of duplicate confirmations and
statements of such accounts. As such, the provision is similar to the
corresponding provisions under NASD Rule 3050(f), except that Rule
3050(f) wholly excepts the specified transactions and accounts from the
scope of Rule 3050.
    In addition, NYSE Rule 407A (Disclosure of All Member Accounts)
requires members (i.e., natural persons approved by the New York Stock
Exchange (the ``Exchange'') and designated by a member organization to
effect transactions on the floor of the Exchange or any facility
thereof) to promptly report to the Exchange any securities account,
including an error account, in which the member has, directly or
indirectly, any financial interest or the power to make investment
decisions. Such accounts include any account at a member or non-member
broker-dealer, investment adviser, bank or other financial institution.
NYSE Rule 407A also requires a member having such an account to notify
the financial institution that carries or services the account that it
is a NYSE member. In addition, the rule requires that members report to
the Exchange when any such securities account is closed.
    NYSE Rule 407A was adopted in 2001 as part of a series of
initiatives designed to strengthen the regulation of activities of NYSE
floor brokers.\17\ This rule expands the obligations placed upon
members under Rule 407 by requiring disclosure to the Exchange. These
reporting requirements were designed to provide the NYSE with current
information about where floor members carry securities accounts and to
enhance its ability to investigate quickly the trading of securities by
such members.
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    \17\ The Commission noted that these initiatives would aid the
NYSE in fulfilling some of the undertakings included in the NYSE's
1999 settlement with the SEC regarding failure to enforce compliance
with SEA Section 11(a) and SEA Rule 11a-1 and NYSE Rules 90, 95 and
111 with respect to activity of floor brokers. As noted by the
Commission, broadly, those provisions were aimed at preventing NYSE
floor broker members from exploiting their advantageous position on
the NYSE floor for personal gain to the detriment of the investing
public. See In the Matter of New York Stock Exchange, Inc.,
Securities Exchange Act Release No. 41574 (June 29, 1999),
Administrative Proceeding File No. 3-9925; Securities Exchange Act
Release No. 42381 (February 3, 2000), 65 FR 6673 (February 10, 2000)
(Notice of Filing of Proposed Rule Change; File No. SR-NYSE-99-25);
Securities Exchange Act Release No. 44769 (September 6, 2001), 66 FR
47710 (September 13, 2001) (Order Granting Approval to Proposed Rule
Change; File No. SR-NYSE-99-25).
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    NYSE Rule Interpretation 407/01 addresses the process for
determining whether the account of a spouse of an associated person
should be subject to NYSE Rule 407.
    NYSE Rule Interpretation 407/02 provides that NYSE Rule 407(b)
applies when an associated person is also a majority stockholder of a
non-public corporation that wishes to open a discretionary margin
account at another member.
(B) Proposed FINRA Rule 3210
    Proposed FINRA Rule 3210, consistent with the longstanding purposes
of NASD Rule 3050 and NYSE Rule 407,\18\ is designed to enable members
to monitor the personal accounts of their associated persons opened or
established outside of the member firm. The new rule, in combination
with new FINRA Rule 3110, takes the approach that a member is
responsible for supervising its associated persons' trading
activities.\19\

The rule begins by setting forth a requirement that an associated
person must obtain the prior written consent of his or her employer
when opening a specified account at another member or other financial
institution. Specifically, proposed FINRA Rule 3210(a) provides that no
person associated with a member (``employer member'') shall, without
the prior written consent of the member, open or otherwise establish at
a member other than the employer member (``executing member''), or at
any other financial institution,\20\ any account in which securities
transactions can be effected \21\ and in which the associated person
has a beneficial interest.\22\ Proposed FINRA Rule 3210.02 provides
that, for purposes of the rule, the associated person shall be deemed
to have a beneficial interest in any account that is held by: (a) The
spouse of the associated person; (b) a child of the associated person
or of the associated person's spouse, provided that the child resides
in the same household as or is financially dependent upon the
associated person; (c) any other related individual over whose account
the associated person has control; or (d) any other individual over
whose account the associated person has control and to whose financial
support the associated person materially contributes.\23\ The types of
accounts specified pursuant to proposed FINRA Rule 3210.02 are designed
to align with ``covered accounts'' as defined pursuant to new FINRA
Rule 3110(d)(4)(A) for purposes of the transaction review and
investigation provisions pursuant to Rule 3110(d)(1).\24\ Further,
FINRA believes the proposed language is consistent with the broad
approach of NASD Rule 3050 and NYSE Rule 407 as historically understood
to facilitate the monitoring of associated persons' personal and
related accounts.\25\ FINRA notes that the proposed new language
eliminates the language in the current rules that references accounts
or transactions where the associated person has ``the power, directly
or indirectly, to make investment decisions,'' as set forth in NYSE
Rule 407(b), and accounts where the associated person has
``discretionary authority,'' as set forth in NASD Rule 3050(b).\26\
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    \18\ See note 10 and note 12 supra.
    \19\ See Supervisory Rules Filing and note 5 supra. In this
connection, as discussed further in Item II.A.1(C) below, FINRA is
deleting the provision under NASD Rule 3050(a) as to the obligation
of the executing member to use reasonable diligence with respect to
the specified transactions.
    \20\ Based on NYSE Rule 407.13 and NASD Rule 3050(d), proposed
FINRA Rule 3210.05 provides that, for the purposes of the rule, the
terms ``other financial institution'' and ``financial institution
other than a member'' include, but are not limited to, any broker-
dealer that is registered pursuant to SEA Section 15(b)(11),
domestic or foreign non-member broker-dealer, investment adviser,
bank, insurance company, trust company, credit union and investment
company.
    \21\ In the interest of helping facilitate supervision of
securities transactions under new FINRA Rule 3110(d)(1), FINRA is
specifying ``any account in which securities transactions can be
effected'' so as to be clear that the proposed rule's scope includes
any account, regardless of type, where securities transactions can
take place as specified under the rule.
    \22\ As proposed in the Notice, the rule would have specified
accounts in which the associated person has a ``personal financial
interest.'' Commenters suggested that this language was unclear. See
Item II.C.2 of this filing. FINRA is proposing the term ``beneficial
interest'' because that term is an established and well-understood
standard. See, e.g., FINRA Rule 5130(i)(1), which defines
``beneficial interest'' to mean, in part, any economic interest,
such as the right to share in gains or losses. FINRA believes that
the proposed term is consistent with the purpose of NYSE Rule 407,
which in part addresses transactions in which the associated person
is ``directly or indirectly interested'' (NYSE Rule 407(a)) or with
respect to which the associated person ``has any financial
interest'' (NYSE Rule 407(b)) and with NASD Rules 3050(b) through
(d), which in part address accounts or transactions in which the
associated person has a ``financial interest.'' Further, the
proposed term would align the rule with ``beneficial interest'' as
specified under new FINRA Rule 3110(d)(1)(B), which, for purposes of
the transaction review and investigation provisions set forth under
new FINRA Rule 3110(d)(1), specifies in part accounts ``in which a
person associated with the member has a beneficial interest.'' See
note 5 supra.
    \23\ Some commenters expressed concerns as to addressing spouse
accounts in the proposed rule. FINRA notes that spouse accounts have
long been addressed under NYSE Rule Interpretation 407/01. See Item
II.C.2 of this filing.
    \24\ See note 5 supra.
    \25\ For example, with respect to the approach of the current
rules, as noted earlier, NYSE Rule Interpretation 407/01 addresses
spouse accounts. In the context of amendments to NASD Rule 3050
(then designated Article III, Section 28 of the Rules of Fair
Practice) adopted in 1983 that extended the rule to include accounts
over which the associated person exercises discretion, FINRA noted
its intent to enable the rule's scope to reach accounts of relatives
of associated persons where the associated person places the orders.
See Securities Exchange Act Release No. 19347 (December 16, 1982),
47 FR 58416 (December 30, 1982) (Proposed Rule Change; File No. SR-
NASD-82-25); Securities Exchange Act Release No. 19550 (February 28,
1983), 48 FR 9413 (March 4, 1983) (Order Approving Proposed Rule
Change; File No. SR-NASD-82-25). FINRA believes that because the
proposed rule specifies, in language that aligns with new FINRA Rule
3110(d)(4)(A), the types of personal relationships that would be
within the scope of ``beneficial interest,'' the rule's precise
parameters should be more clear.
    \26\ FINRA believes that this will serve to more clearly
demarcate the respective scope of the new rule vis-[agrave]-vis
current NASD Rule 3040, which addresses the obligations of
associated persons and members in connection with private securities
transactions. NASD Rule 3040(e)(1) defines private securities
transactions to include, in part, ``any securities transaction
outside the regular course or scope of an associated person's
employment with a member'' and excludes from the rule's specified
notification requirements, among other things, transactions subject
to the notification requirements of NASD Rule 3050. FINRA believes
that, to the extent associated persons make investment decisions or
have discretionary authority in contexts that involve private
securities transactions within the scope of NASD Rule 3040, as
opposed to accounts in which they have a beneficial interest as
specified by the new rule, such transactions are properly addressed
by the requirements set forth in Rule 3040 and other FINRA rules as
applicable. FINRA believes that this approach is consistent, as
noted earlier, with the historical approach of NASD Rule 3050 and
NYSE Rule 407 that is intended to facilitate monitoring of
associated persons' personal and related accounts.
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    Similar to the current rules, the new rule places notification
obligations on associated persons with respect to the executing member
or other financial institution. Specifically, proposed FINRA Rule
3210(b) is based in large part on NASD Rules 3050(c) and 3050(d) and
provides that any associated person, prior to opening or otherwise
establishing an account subject to the rule, must notify in writing the
executing member, or other financial institution, of his or her
association with the employer member.
    Also similar to the current rules, the new rule specifies
obligations for executing members. Specifically, proposed FINRA Rule
3210(c) is based in large part on NASD Rule 3050(b)(2) and provides
that an executing member must, upon written request by the employer
member, transmit duplicate copies of confirmations and statements, or
the transactional data contained therein, with respect to an account
subject to the rule.\27\
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    \27\ As published in the Notice, the proposed rule would have
required the employer member to instruct the associated person to
have the executing member provide the specified duplicate account
statements and confirmations to the employer member. As discussed
further in Item II.C.1 of this filing, commenters expressed concern
that the rule as proposed in the Notice would burden members with
collecting the specified information without regard to whether such
collection is warranted by the member's business model and risk
profile. In response to commenter suggestion, FINRA has revised the
proposed rule so that the specified information is provided upon
written request by the employer member, which is consistent with the
approach of current NASD Rule 3050 and which FINRA believes permits
members flexibility to craft appropriate supervisory policies and
procedures according to their business model and the risk profile of
their activities.
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    Similar to current provisions in NASD Rules 3050(c) and 3050(d),
the proposed rule makes allowance for accounts opened by an associated
person prior to his or her association with the employer member.
Specifically, proposed FINRA Rule 3210.01 provides that, if the account
was opened or otherwise established prior to the person's association
with the employer member, the associated person, within 30 calendar
days of becoming so associated, must obtain the written consent of the
employer member to maintain the account and must notify in writing the
executing member or other financial institution of his or her

association with the employer member.\28\
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    \28\ As published in the Notice, the proposed rule would have
specified 15 business days. In response to comment, the proposed
rule as revised specifies 30 calendar days so as to reduce burdens
on member firms and their associated persons. See Item II.C.3 of
this filing.
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    Similar to the current rules, the new rule makes allowance for
specified information that executing members need not transmit to
employer members. Specifically, proposed FINRA Rule 3210.03 is based in
large part on NYSE Rule 407.12 and NASD Rule 3050(f) and provides that
the requirement (pursuant to paragraph (c) of Rule 3210) that the
executing member provide the employer member, upon the employer
member's written request, with duplicate account confirmations and
statements, or the transactional data contained therein, shall not be
applicable to transactions in unit investment trusts, municipal fund
securities as defined under MSRB Rule D-12,\29\ qualified tuition
programs pursuant to Section 529 of the Internal Revenue Code and
variable contracts or redeemable securities of companies registered
under the Investment Company Act, as amended, or to accounts that are
limited to transactions in such securities, or to Monthly Investment
Plan type accounts.\30\
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    \29\ MSRB Rule D-12 defines municipal fund security to mean ``a
municipal security issued by an issuer that, but for the application
of Section 2(b) of the Investment Company Act of 1940, would
constitute an investment company within the meaning of Section 3 of
the Investment Company Act of 1940.''
    \30\ The approach to the referenced types of transactions
reflects a longstanding intention under the NASD and NYSE rule that
members not be burdened with information collection for transactions
that pose limited risk from the standpoint of the rule's supervisory
purposes. See, e.g., Securities Exchange Act Release No. 19347
(December 16, 1982), 47 FR 58416 (December 30, 1982) (Proposed Rule
Change; File No. SR-NASD-82-25). As discussed further in Item II.C.5
of this filing, the proposed requirement is largely as published in
the Notice. In response to commenter suggestion, FINRA has added
municipal fund securities as defined under MSRB Rule D-12 and
Section 529 plans to the transactions set forth under the rule.
FINRA is adding these transactions because FINRA believes these
types of products are reasonably classed with the types of
transactions specified under the current rule in posing limited risk
from the standpoint of the rule's supervisory purposes.
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    Proposed FINRA Rule 3210.04 is new and provides that, with respect
to an account subject to the rule at a financial institution other than
a member, the employer member must consider the extent to which it will
be able to obtain, upon written request, duplicate copies of
confirmations and statements, or the transactional data contained
therein, directly from the non-member financial institution in
determining whether to provide its written consent to an associated
person to open or maintain such account.\31\ FINRA believes that the
proposed requirement serves a valid regulatory purpose in view of the
employer member's responsibility for supervising its associated
persons' trading activities.
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    \31\ As published in the Notice, the proposed rule would have
required the associated person to provide an instruction to the non-
member financial institution to provide the specified information to
the employer member. As discussed further in Item II.C.1 of this
filing, FINRA believes that the requirement as revised permits
members flexibility to craft appropriate supervisory policies and
procedures in determining whether to provide written consent as to
the specified accounts at non-member financial institutions.
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(C) Deleted Requirements
    Proposed FINRA Rule 3210 deletes a number of requirements in NASD
Rule 3050 and NYSE Rule 407 that are rendered outdated by the new rule
or are otherwise addressed elsewhere by FINRA rules.
     The proposed rule eliminates NASD Rule 3050(a)'s
requirement that the executing member use reasonable diligence to
determine that the execution of the transaction will not ``adversely
affect the interests of the employer member.'' FINRA proposes to delete
this requirement because FINRA believes that it is appropriate for the
new rule, in combination with new FINRA Rule 3110,\32\ to take the
approach that the employer member is responsible for supervising its
associated persons' trading activities.\33\
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    \32\ See Supervisory Rules Filing.
    \33\ FINRA notes that, notwithstanding this approach, the rule
retains the longstanding duty of the executing member to assist the
employer member by providing the specified information upon request.
---------------------------------------------------------------------------

     FINRA proposes to delete the account review requirements
set forth in NYSE Rule 407(b) and the requirements for written
procedures set forth in NYSE Rule 407.11 because these issues are
addressed by the proposed rule in combination with FINRA's new
supervisory rules, in particular new FINRA Rule 3110(d), which sets
forth the new supervisory framework for securities transactions review
and investigation.\34\
---------------------------------------------------------------------------

    \34\ See note 5 supra and Supervisory Rules Filing.
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     As noted earlier, NYSE Rule 407A was intended to address
activities of NYSE floor brokers. FINRA proposes to delete NYSE Rule
407A in its entirety from the Transitional Rulebook because proposed
FINRA Rule 3210 requires disclosure at the member firm level of the
same types of information that Rule 407A requires with respect to the
NYSE as to floor brokers. FINRA believes it is more appropriate to
require member firms to obtain the required information and to
supervise the accounts of their associated persons for improper
trading, rather than requiring that such information be sent directly
to FINRA. Moreover, as noted above, these reporting requirements were
designed to provide the NYSE with current information about where floor
members carry securities accounts and to enhance its ability to
investigate quickly the trading of securities by such members.
     FINRA proposes to delete NYSE Rule Interpretation 407/01
because it would be superseded by proposed FINRA Rule 3210.02, which as
noted earlier expressly provides, among other things, that an
associated person is deemed to have a beneficial interest in any
account that is held by the spouse of the associated person.
     FINRA proposes to delete NYSE Rule Interpretation 407/02
because it is rendered redundant by new FINRA Rule 3210(a), the scope
of which by its terms reaches accounts as specified by the rule in
which the associated person has a beneficial interest.
     FINRA proposes to delete language referring to accounts or
transactions where the associated person has ``the power, directly or
indirectly, to make investment decisions,'' as set forth in NYSE Rule
407(b), and accounts where the associated person has ``discretionary
authority,'' as set forth in NASD Rule 3050(b). As discussed above,
FINRA believes that, to the extent associated persons make investment
decisions or have discretionary authority in contexts that involve
private securities transactions within the scope of NASD Rule 3040, as
opposed to accounts in which they have a beneficial interest, such
transactions are properly addressed by the requirements set forth in
Rule 3040 and other FINRA rules as applicable.\35\
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    \35\ See note 26 supra.
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    If the Commission approves the proposed rule change, FINRA will
announce the implementation date of the proposed rule change in a
Regulatory Notice to be published no later than 90 days following
Commission approval. The implementation date will be no later than 365
days following Commission approval.
2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the
provisions of Section 15A(b)(6) of the Act,\36\ which requires, among
other things, that FINRA rules must be designed to prevent fraudulent
and manipulative acts and practices, to promote just and

equitable principles of trade, and, in general, to protect investors
and the public interest. FINRA believes that the proposed rule change
will further the purposes of the Act because, as part of the FINRA
rulebook consolidation process, the proposed rule change will help to
protect investors and the public interest by streamlining and
reorganizing existing rules that promote effective oversight of
accounts opened or established by associated persons of members at
firms other than the firm with which they are associated. By setting
forth the requirements pursuant to which associated persons will seek
the prior written consent of the employer member to open or otherwise
establish accounts as specified under the rule, and pursuant to which
the specified information will be transmitted to the employer member
upon the employer member's request, the proposed rule will facilitate
the supervision of the trading activities of associated persons within
the framework of FINRA's new supervisory rules as approved by the
Commission. The proposed rule will also help members ensure that such
activities, engaged in at executing members or other financial
institutions, do not violate provisions of the Act, its regulations, or
FINRA rules, thereby helping to ensure orderly markets.
---------------------------------------------------------------------------

    \36\ 15 U.S.C. 78o-3(b)(6).
---------------------------------------------------------------------------

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

    FINRA 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 Act. Commenters expressed concern
that the proposed rule change, as originally published in Regulatory
Notice 09-22, would have been burdensome to implement and would have
resulted in employer members being required to request information from
executing members and non-member financial institutions bearing little
or no relationship to the scope and nature of the employer member's
activities. In response to commenter suggestion, FINRA revised the
proposed rule so as to permit members discretion, consistent with their
supervisory obligations under new FINRA Rule 3110(d), to request the
specified information of executing members and non-member financial
institutions, thereby permitting members reasonable flexibility to
craft appropriate supervisory policies and procedures according to
their business model and the risk profile of their activities. The
proposed rule change as revised is thereby consistent with the approach
of current NASD Rule 3050, which commenter suggestion supported. FINRA
believes that because the proposed rule change, as revised, is
consistent with current requirements and longstanding practice, it will
not impose additional burdens on members.
    The proposed rule change permits members to implement supervisory
procedures that align with their business models, without diminishing
members' supervisory obligations with respect to the activities of
their associated persons. FINRA believes that this proposed approach
imposes less cost on members without reducing investor protections. In
addition, the proposed rule change deletes a number of requirements in
NASD Rule 3050 and NYSE Rule 407 that are rendered outdated by the
proposed new rule or are otherwise addressed elsewhere by other FINRA
rules, which further minimizes the potential compliance burden on
members in light of the objectives of the proposed rule change. FINRA
recognizes that providing such flexibility to members may require
increased monitoring of members' compliance with this rule as part of
FINRA's examination program.

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

    The proposed rule change was published for comment in Regulatory
Notice 09-22 (April 2009). A copy of the Notice is attached as Exhibit
2a. Thirty-three commenters responded to the Notice, and a list of the
commenters is attached as Exhibit 2b.\37\ Copies of the comment letters
received in response to the Notice are attached as Exhibit 2c.
---------------------------------------------------------------------------

    \37\ All references to commenters under this Item are to the
commenters as listed in Exhibit 2b.
---------------------------------------------------------------------------

1. Core Proposed Rule Requirements: Obligation To Provide Duplicate
Account Statements and Confirmations
    As published in the Notice, proposed FINRA Rule 3210(a) in part
would have required an employer member, as a condition to giving prior
written consent for opening or establishing an account pursuant to the
rule, to instruct the associated person to have the executing member
provide duplicate account statements and confirmations to the employer
member. Paragraph (b) set forth requirements pertaining to the
associated person's obligation to notify the executing member or other
financial institution in writing of his or her association with the
employer member. Paragraph (c) of the rule would have provided in part
that the executing member must promptly obtain and implement an
instruction from the associated person directing that duplicate account
statements and confirmations be provided to the employer member. (With
respect to accounts opened at a financial institution other than a
member, proposed FINRA Rule 3210.02 as published in the Notice would
have required the associated person to provide the instruction to the
financial institution.)
    Commenters generally expressed concern that, as published in the
Notice, the requirements of proposed Rules 3210(a), (b) and (c) and
3210.02, singly or in combination, are unnecessary for regulatory
purposes, are burdensome or difficult for firms to implement, or the
rule should be designed to permit members the discretion to determine
whether, based on their business model and the risk profile of their
activities, they need to require duplicate account statements and
confirmations to carry out their supervisory responsibilities.\38\ Some
of these commenters suggested that involving the associated person in
the process of requesting the required data vis-[agrave]-vis the
executing member creates supervisory risks.\39\ A number suggested that
it is better practice and more efficient to have the employer member
obtain the required data directly from the executing member or non-
member institution.\40\ A few of the commenters raised concerns about
potential difficulties in obtaining the required information from non-
members (including foreign non-members).\41\ Many questioned the
supervisory and regulatory value of requiring firms to collect data
pertaining to associated person accounts and transactions bearing
little or no relationship to the scope and nature of their firms'
activities.\42\ Some suggested that current NASD Rule 3050 generally
permits members to exercise such discretion and that retaining the
approach of the NASD rule would be conducive to more efficient use of
regulatory or supervisory resources.\43\
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    \38\ ACLI, CAI, Channel Capital, Charles Schwab, Farmers
Financial, FSI, GWFS, Hillard, IBSI, ICI, MWA, NAIBD, National
Planning, NMIS, NSCP, PFSI, PSI, Quasar, SIFMA, State Farm,
SunTrust, Sykes, UBS, WFA and Witthaut.
    \39\ National Planning, PSI, SIFMA and UBS.
    \40\ Charles Schwab, FSI, NMIS, SIFMA and UBS.
    \41\ Charles Schwab, SIFMA and UBS.
    \42\ ACLI, CAI, Farmers Financial, GWFS, Hillard, ICI, MWA,
National Planning, Quasar, State Farm, SunTrust, Sykes and Witthaut.
    \43\ CAI, Charles Schwab, Farmers Financial, FSI, National
Planning, PFSI and SunTrust.
---------------------------------------------------------------------------

    In response, FINRA agrees that the proposal as published in the
Notice raises issues with respect to the efficient use and conservation
of regulatory and

supervisory resources, as well as to implementation. FINRA has revised
proposed FINRA Rule 3210, consistent with NASD Rule 3050, to provide
that an executing member must, upon written request by an employer
member, transmit the duplicate copies of confirmations and statements,
or the transactional data contained therein.\44\ With respect to
accounts at a financial institution other than a member, FINRA has
revised the rule to provide that the employer member must consider the
extent to which it will be able to obtain, upon written request,
duplicate copies of confirmations and statements, or the transactional
data contained therein, directly from the institution in determining
whether to provide its written consent to an associated person to open
or maintain an account subject to the rule.\45\ FINRA believes that
this approach, based in large part on the longstanding approach of NASD
Rule 3050, should provide members reasonable flexibility to craft
appropriate supervisory policies and procedures according to their
business model and the risk profile of their activities. FINRA reminds
members that, in permitting such flexibility, the rule in no way
lessens members' supervisory obligations under FINRA rules with respect
to the activities of their associated persons.\46\
---------------------------------------------------------------------------

    \44\ See proposed FINRA Rule 3210(c).
    \45\ See proposed FINRA Rule 3210.04.
    \46\ See note 5 supra and Supervisory Rules Filing.
---------------------------------------------------------------------------

2. Personal Financial Interest of the Associated Person
    As published in the Notice, the accounts covered by proposed FINRA
Rule 3210 would have reached in part those in which the associated
person has a ``personal financial interest.'' The Notice stated that
``personal financial interest'' would as a general matter extend to a
spouse's account. Commenters expressed concern as to the scope and
meaning of the term ``personal financial interest'' and requested that
FINRA further define the term, limit its scope, or otherwise provide
more specific guidance.\47\ Several commenters suggested generally that
it would be more effective for the rule to speak to accounts with
respect to which the associated person exercises control or authority,
rather than having a ``personal financial interest.'' \48\
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    \47\ CAI, Charles Schwab, Farmers Financial, IBSI, ICI, NAIBD,
NMIS, NPB, NSCP and SIFMA.
    \48\ Charles Schwab, Farmers Financial, FSI, NMIS and SIFMA.
---------------------------------------------------------------------------

    In response, FINRA is proposing a standard that is consistent with
the purpose of NASD Rule 3050 and NYSE Rule 407 \49\ while also
aligning more clearly with new FINRA Rule 3110(d). Specifically, FINRA
has revised the proposed rule to extend to specified accounts in which
the associated person has a beneficial interest. As discussed earlier,
FINRA believes the term ``beneficial interest'' is appropriate because
that term is an established and well-understood standard \50\ and is
consistent with the terms ``directly or indirectly interested,'' as
used in NYSE Rule 407(a), ``has any financial interest,'' as used in
NYSE Rule 407(b), and accounts or transactions in which the associated
person has a ``financial interest,'' as applicable under NASD Rules
3050(b) through (d). Further, the proposed term would align the rule
with ``beneficial interest'' as specified under new FINRA Rule
3110(d)(1)(B), which, for purposes of the transaction review and
investigation provisions set forth under new FINRA Rule 3110(d)(1),
specifies in part accounts ``in which a person associated with the
member has a beneficial interest.'' \51\ In addition, FINRA is
proposing, as Supplementary Material .02 to the rule, to provide that
the associated person shall be deemed to have a beneficial interest in
any account that is held by: (a) The spouse of the associated person;
(b) a child of the associated person or of the associated person's
spouse, provided that the child resides in the same household as or is
financially dependent upon the associated person; (c) any other related
individual over whose account the associated person has control; or (d)
any other individual over whose account the associated person has
control and to whose financial support the associated person materially
contributes. As noted earlier, this proposed language is designed to
align with ``covered accounts'' as defined pursuant to new FINRA Rule
3110(d)(4)(A) for purposes of the transaction review and investigation
provisions pursuant to Rule 3110(d)(1).\52\
---------------------------------------------------------------------------

    \49\ See note 10 and note 12 supra.
    \50\ FINRA Rule 5130(i)(1) defines ``beneficial interest'' to
mean, in part, any economic interest, such as the right to share in
gains or losses. See note 22 supra.
    \51\ See note 5 supra.
    \52\ See proposed FINRA Rule 3210.02. Some commenters questioned
whether it is legally viable for the proposed rule to reach spouse
accounts. See Charles Schwab and NPB. In response, FINRA notes that
spouse accounts have long been addressed under NYSE Rule
Interpretation 407/01. Further, FINRA notes that the rule addresses
such accounts as a supervisory matter under FINRA rules for purposes
of investor protection and market integrity. See also note 5 supra
and new FINRA Rule 3110(d).
---------------------------------------------------------------------------

3. Accounts Opened Prior to Association With the Employer Member
    As published in the Notice, proposed FINRA Rule 3210.01 would have
required that if the associated person's account was opened or
otherwise established prior to his or her association with the employer
member, the associated person would be required to obtain the employer
member's written consent to maintain the account within 15 business
days of becoming so associated. Commenters suggested that the 15-
business-day requirement is too short or restrictive and that the rule
should require ``prompt'' notification by the associated person, as
under current NASD Rule 3050, or permit a longer specified period.\53\
One commenter believed that the rule should not cover previously opened
accounts at all.\54\
---------------------------------------------------------------------------

    \53\ ACLI, CAI, Charles Schwab, FSI, National Planning, NMIS,
NSCP, SIFMA and WFA.
    \54\ Fischer.
---------------------------------------------------------------------------

    In response, FINRA notes that it serves a valid regulatory purpose
that the proposed rule should extend to accounts opened prior to the
associated person's association with the employer member, given that
the associated person would have the ability to effect transactions in
such accounts. FINRA believes that it is reasonable, from the
standpoint of reducing burdens on member firms and their associated
persons, to permit a longer amount of time for notification with
respect to already-opened accounts and has accordingly revised the rule
to permit 30 calendar days.\55\
---------------------------------------------------------------------------

    \55\ See proposed FINRA Rule 3210.01.
---------------------------------------------------------------------------

4. Revocation of Consent To Maintain the Account
    As published in the Notice, proposed FINRA Rule 3210.04 would have
created a new requirement providing that if the employer member does
not receive the associated person's duplicate statements and
confirmations in a timely manner, the employer member would be required
to revoke its consent to maintaining the account and would be required
to so notify the executing member or other financial institution in
writing. The rule would have required the employer member to promptly
obtain records from the executing member that the account was closed.
    Commenters generally expressed concern that the proposed
requirement is burdensome, poses various difficulties as to
implementation, or that FINRA should provide guidance as to how
accounts should be closed

pursuant to the rule.\56\ In response, FINRA has reconsidered the
proposed requirement and agrees that it is not necessary, from the
standpoint of the rule's regulatory purpose, to prescribe how employer
members should respond to the delayed receipt, or non-receipt, of
duplicate copies of confirmations, statements or the transactional data
contained therein. First, FINRA believes that if an employer member
determines, pursuant to the rule, to request such information and does
not receive it in a timely fashion, then as a matter of sound
supervisory practice the employer member should have in place policies
and procedures to address the issue.\57\ Second, FINRA notes that the
proposed rule as revised requires executing members, upon written
request by an employer member, to transmit the duplicate copies of
confirmations and statements, or the transactional data contained
therein.\58\ Finally, FINRA takes note that many commenters requested
that FINRA Rule 3210 be designed to permit firms flexibility based upon
their business model and the risk profile of their activities.\59\ As
such, FINRA believes it is appropriate that employer members determine
for themselves what would constitute timely receipt of the information
required pursuant to the rule, provided such determination is
reasonable within the context of their overall supervisory obligations.
Accordingly, FINRA has deleted the requirement from the proposed rule
as revised.
---------------------------------------------------------------------------

    \56\ CAI, Charles Schwab, FSI, ICI, J.A. Glynn, National
Planning, NSCP, Pagemill, SIFMA, UBS and WFA.
    \57\ FINRA notes that, with respect to accounts at non-member
financial institutions, the proposed rule as revised provides that
the employer must consider the extent to which it will be able to
obtain, upon written request, duplicate copies of confirmations and
statements, or the transactional data contained therein, directly
from the non-member financial institution in determining whether to
provide its written consent to an associated person to open or
maintain such an account.
    \58\ See proposed FINRA Rule 3210(c).
    \59\ See, e.g., Item II.C.1 of this filing.
---------------------------------------------------------------------------

5. Transactions and Accounts Not Subject to Transmission Requirement
    As published in the Notice, proposed FINRA Rule 3210.03 would have
provided that the requirement to provide to the employer member
duplicate account statements and confirmations is not applicable to
transactions in unit investment trusts and variable contracts or
redeemable securities of companies registered under the Investment
Company Act, as amended, or to accounts that are limited to
transactions in such securities, or to Monthly Investment Plan type
accounts, unless the employer member requests receipt of such duplicate
account statements and confirmations.
    Commenters suggested that, because they believe the referenced
types of transactions and accounts pose little in the way of
supervisory risk, they should be exempted from the proposed rule's
requirements altogether, similar to the provisions under current NASD
Rule 3050(f), or that the proposed rule should expand and update types
of transactions and accounts that would be exempted from the rule.\60\
---------------------------------------------------------------------------

    \60\ ACLI, CAI, Charles Schwab, FSI, Hillard, National Planning,
NMIS, NPB, Pacific Select, SIFMA and UBS.
---------------------------------------------------------------------------

    FINRA appreciates members' concern that the new rule should adhere
closely to the current NASD requirement. However, FINRA believes that
the proposed approach, similar to that reflected in NYSE Rule 407.12,
serves a valid regulatory and supervisory purpose, specifically, that
the associated person must obtain the employer member's prior written
consent with respect to the referenced transactions and accounts, in
the manner and to the extent required by the proposed rule.
Accordingly, FINRA is proposing FINRA Rule 3210.03 largely as published
in the Notice. Some commenters made specific suggestions as to the
types of transactions and accounts that should be excluded from the
requirement that the executing member provide duplicate account
confirmations and statements to the employer member upon the employer
member's written request.\61\ In response, FINRA has added municipal
fund securities as defined under MSRB Rule D-12 and qualified Section
529 plans to the referenced types of transactions, as FINRA believes
that, of the suggestions proffered, these are similar to the types of
transactions specified under current NASD Rule 3050(f) and NYSE Rule
407.12 in posing limited risk from the standpoint of the rule's
supervisory purposes. Accordingly, proposed FINRA Rule 3210.03 as
revised provides that the requirement (pursuant to paragraph (c) of the
proposed rule) that the executing member provide the employer member,
upon the employer member's written request, with duplicate account
confirmations and statements, or the transactional data contained
therein, shall not be applicable to transactions in unit investment
trusts, municipal fund securities as defined under MSRB Rule D-12,
qualified tuition programs pursuant to Section 529 of the Internal
Revenue Code and variable contracts or redeemable securities of
companies registered under the Investment Company Act, as amended, or
to accounts that are limited to transactions in such securities, or to
Monthly Investment Plan type accounts.
---------------------------------------------------------------------------

    \61\ Four commenters specifically suggested qualified Section
529 plans under the Internal Revenue Code. See CAI, FSI, NMIS and
SIFMA. One suggested all municipal fund securities. See FSI. One
suggested in addition ETFs and registered insurance products. See
CAI.
---------------------------------------------------------------------------

6. Information Gathering, Processes and Controls
    The Notice requested comment on the methodologies that members
employ to obtain information pursuant to NASD Rule 3050 and NYSE Rule
407 and the processes and controls that members implement upon receipt
of the required information.
    Commenters suggested the rule should not impose requirements as to
the methodologies that members must use (e.g., receiving the
information electronically versus in hard copy) or otherwise limit
flexibility as to receiving and handling the information.\62\ One
commenter suggested FINRA should encourage firms to use a consistent
electronic format in transmitting the information.\63\ One suggested
the proposed rule should state that the information can be received in
electronic format.\64\ One requested that FINRA specify in the rule a
retention period for information received pursuant to the rule.\65\
---------------------------------------------------------------------------

    \62\ FSI, H & L Equities, ICI, Investors Security, NAIBD, NPB,
NSCP, Pagemill, PSI and Taurus.
    \63\ Pacific Select.
    \64\ FSI.
    \65\ H & L Equities.
---------------------------------------------------------------------------

    In response to comments, FINRA has determined not to specify in the
proposed rule any particular methodology. To this end, FINRA has
revised proposed FINRA Rule 3210(c) to provide for transmission of
``duplicate copies of confirmations and statements, or the
transactional data contained therein.'' FINRA does not propose to
specify in the rule a particular retention period because such concerns
are adequately addressed elsewhere under SEA Rule 17a-4 and FINRA Rule
4511 as appropriate.
7. Implementation Period
    Several commenters suggested that FINRA should permit an extended
period for implementation of the proposed rule once approved.\66\ In
response, in establishing an implementation date, FINRA will take into
account that firms would need to modify their compliance systems to
reflect the new rule's requirements. As stated earlier in this filing,
FINRA will

announce such implementation date in a Regulatory Notice.
---------------------------------------------------------------------------

    \66\ ACLI, CAI, FSI and SIFMA.
---------------------------------------------------------------------------

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

    Within 45 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 self-regulatory organization consents, the Commission will:
    (A) By order approve or disapprove 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 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_ADDRESS>Please include
File Number SR-FINRA-2015-029 on the subject line.

Paper Comments

     Send paper comments in triplicate to Robert W. Errett,
Deputy Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.

All submissions should refer to File Number SR-FINRA-2015-029. 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 such filing also will be available
for inspection and copying at the principal office of FINRA. 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-FINRA-2015-029 and should be
submitted on or before September 4, 2015.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\67\
---------------------------------------------------------------------------

    \67\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-20006 Filed 8-13-15; 8:45 am]
 BILLING CODE 8011-01-P