80 FR 30305 - Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Designation of a Longer Period for Commission Action on Proceedings To Determine Whether To Approve or Disapprove a Proposed Rule Change Relating to FINRA Rule 2241 (Research Analysts and Research Reports) in the Consolidated FINRA Rulebook

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 101 (May 27, 2015)

Page Range		30305-30306
FR Document		2015-12689

Federal Register, Volume 80 Issue 101 (Wednesday, May 27, 2015)

[Federal Register Volume 80, Number 101 (Wednesday, May 27, 2015)]
[Notices]
[Pages 30305-30306]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-12689]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75012; File No. SR-FINRA-2014-047]


Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Designation of a Longer Period for 
Commission Action on Proceedings To Determine Whether To Approve or 
Disapprove a Proposed Rule Change Relating to FINRA Rule 2241 (Research 
Analysts and Research Reports) in the Consolidated FINRA Rulebook

May 20, 2015.

I. Introduction

    On November 14, 2014, Financial Industry Regulatory Authority, Inc. 
(``FINRA'') filed with the Securities and Exchange Commission (``SEC'' 
or ``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule to adopt NASD Rule 2711 (Research Analysts and Research 
Reports) as a FINRA rule, with several modifications, amend NASD Rule 
1050 (Registration of Research Analysts) and Incorporated NYSE Rule 344 
to create an exception from the research analyst qualification 
requirement, and renumber NASD Rule 2711 as FINRA Rule 2241 in the 
consolidated FINRA rulebook. The proposal was published for comment in 
the Federal Register on November 24, 2014.\3\ The Commission received 
four comments on the original proposal.\4\ On February 19, 2015, FINRA 
filed Amendment No. 1 responding to these original comments received to 
the proposal as well as to propose amendments in response to these 
comments. The proposal, as amended by Amendment No. 1, was published 
for comment in the Federal Register on

[[Page 30306]]

March 18, 2015.\5\ On February 20, 2015, the Commission issued an order 
instituting proceedings pursuant to Section 19(b)(2)(B) of the Act \6\ 
to determine whether to approve or disapprove the proposal. This order 
was published for comment in the Federal Register on February 26, 
2015.\7\ The Commission received a further three comments regarding the 
proceedings or in response to Amendment No. 1,\8\ to which FINRA 
responded via letter on May 5, 2015.\9\
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Exchange Act Release No. 73622 (Nov. 18, 2014); 79 FR 69939 
(Nov. 24, 2014). On January 6, 2015, FINRA consented to extending 
the time period for the Commission to either approve or disapprove 
the proposed rule change, or to institute proceedings to determine 
whether to approve or disapprove the proposed rule change, to 
February 20, 2015.
    \4\ See Letter from Kevin Zambrowicz, Associate General Counsel 
& Managing Director and Sean Davy, Managing Director, SIFMA, dated 
Dec. 15, 2014, Letter from Hugh D. Berkson, President-Elect, Public 
Investors Arbitration Bar Association, dated Dec. 15, 2014, Letter 
from Stephanie R. Nicholas, WilmerHale, dated Dec. 16, 2014, and 
Letter from William Beatty, President and Washington (State) 
Securities Administrator, North American Securities Administrators 
Association, Inc., dated Dec. 19, 2014.
    \5\ Exchange Act Release No. 74488 (Mar. 12, 2015); 80 FR 14174 
(Mar. 18, 2015).
    \6\ 15 U.S.C. 78s(b)(2)(B).
    \7\ Exchange Act Release No. 74339 (Feb. 20, 2015); 80 FR 10528 
(Feb. 26, 2015). Specifically, the Commission instituted proceedings 
to allow for additional analysis of the proposed rule change's 
consistency with Section 15A(b)(9) of the Act, which requires that 
FINRA's rules be designed to, among other things, promote just and 
equitable principles of trade, remove impediments to and perfect the 
mechanism of a free and open market and a national market system, 
and, in general, to protect investors and the public interest, and 
Section 15D of the Act, which requires rules reasonably designed to 
address conflicts of interest that can arise when research analysts 
recommend equity securities in research reports and public 
appearances. See id.
    \8\ Letter from Egidio Mogavero, Managing Director and Chief 
Compliance Officer, JMP Securities, dated Mar. 19, 2015, Letter from 
Stephanie R. Nicholas, WilmerHale, dated Apr. 6, 2015, and Letter 
from William Beatty, President and Washington (State) Securities 
Administrator, North American Securities Administrators Association, 
Inc., dated Apr. 17, 2015.
    \9\ Letter from Philip Shaikun, Vice President and Associate 
General Counsel, FINRA, dated May 5, 2015.
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    Section 19(b)(2) of the Act \10\ provides that, after initiating 
approval or disapproval proceedings, the Commission shall issue an 
order approving or disapproving the proposed rule change not later than 
180 days after the date of publication of notice of filing of the 
proposed rule change. The Commission may extend the period for issuing 
an order approving or disapproving the proposed rule change, however, 
by not more than 60 days if the Commission determines that a longer 
period is appropriate and publishes the reasons for such determination. 
The proposal was published for comment in the Federal Register on 
November 24, 2014.\11\ The 180th day after publication of the notice of 
the filing of the proposed rule change in the Federal Register is May 
23, 2015 and the 240th day after publication of the notice of the 
filing of the proposed rule change in the Federal Register is July 22, 
2015.
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    \10\ 15 U.S.C. 78s(b)(2).
    \11\ See supra note 3 and accompanying text.
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    The Commission finds it appropriate to designate a longer period 
within which to issue an order approving or disapproving the proposed 
rule change so that it has sufficient time to consider the proposed 
rule change, including the matters raised in the comment letters to the 
proposed rule change.
    Accordingly, the Commission, pursuant to Section 19(b)(2) of the 
Act,\12\ designates July 22, 2015 as the date by which the Commission 
shall either approve or disapprove the proposed rule change (File No. 
SR-FINRA-2014-047).
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    \12\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(57).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-12689 Filed 5-26-15; 8:45 am]
 BILLING CODE 8011-01-P

Federal Register / Vol. 80, No. 101 / Wednesday, May 27, 2015 / Notices 30305

summarized below. The Commission post-effective amendment on Form N–3 SECURITIES AND EXCHANGE
plans to submit this existing collection is 155.2 hours per portfolio. The total COMMISSION
of information to the Office of annual hour burden for preparing and
Management and Budget for extension filing post-effective amendments is [Release No. 34–75012; File No. SR–FINRA–
and approval. 3,104 hours (10 post-effective 2014–047]
The title for the collection of amendments × 2 portfolios × 155.2
information is ‘‘Form N–3 (17 CFR hours per portfolio). The estimated Self-Regulatory Organizations;
239.17a and 274.11b) under the annual hour burden for preparing and Financial Industry Regulatory
Securities Act of 1933 (15 U.S.C. 77) Authority, Inc.; Notice of Designation
filing initial registration statements is 0
and under the Investment Company Act of a Longer Period for Commission
hours. The total annual hour burden for
of 1940 (15 U.S.C. 80a), Registration Action on Proceedings To Determine
Statement of Separate Accounts Form N–3, therefore, is estimated to be
3,104 hours (3,104 hours + 0 hours). Whether To Approve or Disapprove a
Organized as Management Investment Proposed Rule Change Relating to
Companies.’’ Form N–3 is the form used The information collection FINRA Rule 2241 (Research Analysts
by separate accounts offering variable requirements imposed by Form N–3 are and Research Reports) in the
annuity contracts which are organized mandatory. Responses to the collection Consolidated FINRA Rulebook
as management investment companies of information will not be kept
to register under the Investment confidential. An agency may not May 20, 2015.
Company Act of 1940 (‘‘Investment conduct or sponsor, and a person is not I. Introduction
Company Act’’) and/or to register their required to respond to a collection of
securities under the Securities Act of information unless it displays a On November 14, 2014, Financial
1933 (‘‘Securities Act’’). Form N–3 is currently valid control number. Industry Regulatory Authority, Inc.
also the form used to file a registration (‘‘FINRA’’) filed with the Securities and
statement under the Securities Act (and Written comments are invited on: (a) Exchange Commission (‘‘SEC’’ or
any amendments thereto) for variable Whether the proposed collection of ‘‘Commission’’), pursuant to Section
annuity contracts funded by separate information is necessary for the proper 19(b)(1) of the Securities Exchange Act
accounts which would be required to be performance of the functions of the of 1934 (‘‘Act’’) 1 and Rule 19b–4
registered under the Investment agency, including whether the thereunder,2 a proposed rule to adopt
Company Act as management information will have practical utility; NASD Rule 2711 (Research Analysts
investment companies except for the (b) the accuracy of the agency’s estimate and Research Reports) as a FINRA rule,
exclusion provided by Section 3(c)(11) of the burden of the collection of with several modifications, amend
of the Investment Company Act (15 information; (c) ways to enhance the NASD Rule 1050 (Registration of
U.S.C. 80a–3(c)(11)). Section 5 of the quality, utility, and clarity of the Research Analysts) and Incorporated
Securities Act (15 U.S.C. 77e) requires information collected; and (d) ways to NYSE Rule 344 to create an exception
the filing of a registration statement minimize the burden of the collection of from the research analyst qualification
prior to the offer of securities to the information on respondents, including requirement, and renumber NASD Rule
public and that the statement be through the use of automated collection 2711 as FINRA Rule 2241 in the
effective before any securities are sold, techniques or other forms of information consolidated FINRA rulebook. The
and Section 8 of the Investment proposal was published for comment in
technology. Consideration will be given
Company Act (15 U.S.C. 80a–8) requires the Federal Register on November 24,
to comments and suggestions submitted
a separate account to register as an 2014.3 The Commission received four
investment company. in writing within 60 days of this
publication. comments on the original proposal.4 On
Form N–3 also permits separate February 19, 2015, FINRA filed
accounts offering variable annuity Please direct your written comments Amendment No. 1 responding to these
contracts which are organized as to Pamela Dyson, Director/Chief original comments received to the
investment companies to provide Information Officer, Securities and proposal as well as to propose
investors with a prospectus and a Exchange Commission, C/O Remi amendments in response to these
statement of additional information Pavlik-Simon, 100 F Street NE., comments. The proposal, as amended
covering essential information about the Washington, DC 20549; or send an email by Amendment No. 1, was published for
separate account when it makes an to: PRA_Mailbox@sec.gov. comment in the Federal Register on
initial or additional offering of its
securities. Section 5(b) of the Securities Dated: May 20, 2015.
1 15 U.S.C. 78s(b)(1).
Act requires that investors be provided Robert W. Errett, 2 17 CFR 240.19b–4.
with a prospectus containing the Deputy Secretary. 3 Exchange Act Release No. 73622 (Nov. 18,
information required in a registration [FR Doc. 2015–12683 Filed 5–26–15; 8:45 am] 2014); 79 FR 69939 (Nov. 24, 2014). On January 6,
statement prior to the sale or at the time BILLING CODE 8011–01–P
2015, FINRA consented to extending the time
of confirmation or delivery of the period for the Commission to either approve or
disapprove the proposed rule change, or to institute
securities. The form also may be used by proceedings to determine whether to approve or
the Commission in its regulatory review, disapprove the proposed rule change, to February
inspection, and policy-making roles. 20, 2015.
Commission staff estimates that there 4 See Letter from Kevin Zambrowicz, Associate

General Counsel & Managing Director and Sean
mstockstill on DSK4VPTVN1PROD with NOTICES

are zero initial registration statements
Davy, Managing Director, SIFMA, dated Dec. 15,
and 10 post-effective amendments to 2014, Letter from Hugh D. Berkson, President-Elect,
initial registration statements filed on Public Investors Arbitration Bar Association, dated
Form N–3 annually and that the average Dec. 15, 2014, Letter from Stephanie R. Nicholas,
number of portfolios referenced in each WilmerHale, dated Dec. 16, 2014, and Letter from
William Beatty, President and Washington (State)
post-effective amendment is 2. The Securities Administrator, North American
Commission further estimates that the Securities Administrators Association, Inc., dated
hour burden for preparing and filing a Dec. 19, 2014.

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30306 Federal Register / Vol. 80, No. 101 / Wednesday, May 27, 2015 / Notices

March 18, 2015.5 On February 20, 2015, disapproving the proposed rule change (additions are italicized; deletions are
the Commission issued an order so that it has sufficient time to consider [bracketed])
instituting proceedings pursuant to the proposed rule change, including the * * * * *
Section 19(b)(2)(B) of the Act 6 to matters raised in the comment letters to
determine whether to approve or the proposed rule change. Chicago Board Options Exchange,
disapprove the proposal. This order was Incorporated
Accordingly, the Commission,
published for comment in the Federal pursuant to Section 19(b)(2) of the Rules
Register on February 26, 2015.7 The Act,12 designates July 22, 2015 as the * * * * *
Commission received a further three date by which the Commission shall
comments regarding the proceedings or either approve or disapprove the Rule 6.53C. Complex Orders on the
in response to Amendment No. 1,8 to proposed rule change (File No. SR– Hybrid System
which FINRA responded via letter on FINRA–2014–047).
May 5, 2015.9 (a)–(b) No change.
For the Commission, by the Division of (c) Complex Order Book
Section 19(b)(2) of the Act 10 provides
Trading and Markets, pursuant to delegated
that, after initiating approval or authority.13 (i) Routing of Complex orders: The
disapproval proceedings, the Exchange will determine which classes
Robert W. Errett,
Commission shall issue an order and which complex order origin [types]
Deputy Secretary.
approving or disapproving the proposed codes (i.e., non-broker-dealer public
rule change not later than 180 days after [FR Doc. 2015–12689 Filed 5–26–15; 8:45 am]
customers that are not Voluntary
the date of publication of notice of filing BILLING CODE 8011–01–P Professional Customers or Professional
of the proposed rule change. The Customers, non-broker-dealer public
Commission may extend the period for customers that are Voluntary
issuing an order approving or SECURITIES AND EXCHANGE Professional Customers or Professional
disapproving the proposed rule change, COMMISSION Customers, broker-dealers that are not
however, by not more than 60 days if Market-Makers or specialists on an
the Commission determines that a [Release No. 34–75003; File No. SR–CBOE– options exchange, and/or Market-
longer period is appropriate and 2015–045] Makers or specialists on an options
publishes the reasons for such exchange) are eligible for entry into the
Self-Regulatory Organizations;
determination. The proposal was COB and whether such complex orders
Chicago Board Options Exchange,
published for comment in the Federal can route directly to the COB and/or
Incorporated; Notice of Filing of a
Register on November 24, 2014.11 The from PAR to the COB. Complex orders
Proposed Rule Change Relating to
180th day after publication of the notice not eligible to route to COB (either
Rule 6.53C and Complex Orders on the
of the filing of the proposed rule change directly or from PAR to COB) will route
Hybrid System
in the Federal Register is May 23, 2015 to PAR or at the order entry firm’s
and the 240th day after publication of May 20, 2015. discretion to the order entry firm’s
the notice of the filing of the proposed Pursuant to Section 19(b)(1) of the booth.
rule change in the Federal Register is Securities Exchange Act of 1934 (the (ii)–(iv) No change.
July 22, 2015. ‘‘Act’’),1 and Rule 19b–4 thereunder,2 (d) Process for Complex Order RFR
The Commission finds it appropriate Auction: Prior to routing to the COB or
notice is hereby given that on May 12,
to designate a longer period within once on PAR, eligible complex orders
2015, Chicago Board Options Exchange,
which to issue an order approving or may be subject to an automated request
Incorporated (the ‘‘Exchange’’ or
5 Exchange Act Release No. 74488 (Mar. 12,
‘‘CBOE’’) filed with the Securities and for responses (‘‘RFR’’) auction process.
2015); 80 FR 14174 (Mar. 18, 2015). Exchange Commission (the (i) For purposes of paragraph (d):
6 15 U.S.C. 78s(b)(2)(B). ‘‘Commission’’) the proposed rule (1) No Change.
7 Exchange Act Release No. 74339 (Feb. 20, 2015); change as described in Items I, II, and
(2) A ‘‘COA-eligible order’’ means a
80 FR 10528 (Feb. 26, 2015). Specifically, the III below, which Items have been
Commission instituted proceedings to allow for complex order that, as determined by
prepared by the Exchange. The
additional analysis of the proposed rule change’s the Exchange on a class-by-class basis,
consistency with Section 15A(b)(9) of the Act, Commission is publishing this notice to
is eligible for a COA considering the
which requires that FINRA’s rules be designed to, solicit comments on the proposed rule
order’s marketability (defined as a
among other things, promote just and equitable change from interested persons.
principles of trade, remove impediments to and number of ticks away from the current
perfect the mechanism of a free and open market I. Self-Regulatory Organization’s market), size, complex order type (as
and a national market system, and, in general, to Statement of the Terms of Substance of defined in paragraphs (a) and (b) above)
protect investors and the public interest, and
Section 15D of the Act, which requires rules
the Proposed Rule Change and complex order origin [types] codes
reasonably designed to address conflicts of interest (as defined in subparagraph (c)(i)
that can arise when research analysts recommend
The Exchange proposes to modify above). Complex orders processed
equity securities in research reports and public Rule 6.53C, Complex Orders on the through a COA may be executed
appearances. See id. Hybrid System, to give the Exchange the without consideration to prices of the
8 Letter from Egidio Mogavero, Managing Director
flexibility to distinguish between same complex orders that might be
and Chief Compliance Officer, JMP Securities, Professional and non-Professional
dated Mar. 19, 2015, Letter from Stephanie R. available on other exchanges.
Nicholas, WilmerHale, dated Apr. 6, 2015, and orders for the purposes of determining
* * * * *
mstockstill on DSK4VPTVN1PROD with NOTICES

Letter from William Beatty, President and eligibility for COA. The text of the
Washington (State) Securities Administrator, North proposed rule change is provided The text of the proposed rule change
American Securities Administrators Association, below. is also available on the Exchange’s Web
Inc., dated Apr. 17, 2015. site (http://www.cboe.com/AboutCBOE/
9 Letter from Philip Shaikun, Vice President and

Associate General Counsel, FINRA, dated May 5, 12 15 U.S.C. 78s(b)(2). CBOELegalRegulatoryHome.aspx), at
2015. 13 17 CFR 200.30–3(a)(57). the Exchange’s Office of the Secretary,
10 15 U.S.C. 78s(b)(2). 1 15 U.S.C. 78s(b)(1). and at the Commission’s Public
11 See supra note 3 and accompanying text. 2 17 CFR 240.19b–4. Reference Room.

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Document Created: 2015-12-15 15:36:16
Document Modified: 2015-12-15 15:36:16

Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Notices
FR Citation		80 FR 30305