83 FR 46975 - Self-Regulatory Organizations; New York Stock Exchange LLC; Order Approving a Proposed Rule Change To Amend Rule 2 To Remove Requirement That a Registered Broker-Dealer Be a Member of the Financial Industry Regulatory Authority, Inc. or Another National Securities Exchange

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 83, Issue 180 (September 17, 2018)

Page Range		46975-46976
FR Document		2018-20076

Federal Register, Volume 83 Issue 180 (Monday, September 17, 2018)

[Federal Register Volume 83, Number 180 (Monday, September 17, 2018)]
[Notices]
[Pages 46975-46976]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-20076]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-84077; File No. SR-NYSE-2018-33]


Self-Regulatory Organizations; New York Stock Exchange LLC; Order 
Approving a Proposed Rule Change To Amend Rule 2 To Remove Requirement 
That a Registered Broker-Dealer Be a Member of the Financial Industry 
Regulatory Authority, Inc. or Another National Securities Exchange

September 11, 2018.

I. Introduction

    On July 25, 2018, the New York Stock Exchange LLC (``Exchange'' or 
``NYSE'') filed with the Securities and Exchange Commission 
(``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 change to amend Rule 2, ``Member,'' ``Membership,'' 
``Member Firm,'' etc., to remove the requirement that a registered 
broker-dealer be a member of the Financial Industry Regulatory 
Authority, Inc. (``FINRA'') or another national securities exchange. 
The proposed rule change was published for comment in the Federal 
Register on August 3, 2018.\3\ The Commission received one comment 
letter on the proposed rule change.\4\ This order approves the proposed 
rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 83740 (July 30, 
2018), 83 FR 38195 (August 3, 2018) (``Notice'').
    \4\ See Letter from Ray Delao, The Michael's Copanys.Inc [sic], 
dated August 15, 2018. The letter does not address the change that 
the NYSE is proposing to make to Rule 2.
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II. Description of the Proposed Rule Change

    As described in more detail in the Notice,\5\ the Exchange proposes 
to amend Rule 2 to remove a requirement that a registered broker-dealer 
be a member of FINRA or another national securities exchange to become 
a member of the Exchange. The Exchange proposes to amend Rule 2(b)(i) 
to define ``member organization'' as a ``registered broker or dealer 
(unless exempt pursuant to the Securities Exchange Act of 1934) . . . , 
including sole proprietors, partnerships, limited liability 
partnerships, corporations, and limited liability corporations, 
approved by the Exchange pursuant to Rule 311. A registered broker or 
dealer must also be approved by the Exchange and authorized to 
designate an associated natural person to effect transactions on the 
floor of the Exchange or any facility thereof.'' Furthermore, the 
Exchange proposes to amend Rule 2(b)(ii) to state: ``[t]he term `member 
organization' also includes any registered broker or dealer which does 
not own a trading license and agrees to be regulated by the Exchange as 
a member organization and which the Exchange has agreed to regulate.'' 
The Exchange noted that this proposed change will not result in ``any 
regulatory impact because member organizations will continue to be 
subject to a comprehensive regulatory regime regardless of whether they 
are a member of another [self-regulatory organization] or not'' and 
that the Exchange ``performs the necessary regulatory oversight of 
member organizations.'' \6\
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    \5\ See Notice, supra note 3.
    \6\ Id. at 38196.
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III. Discussion and Commission Findings

    After careful review, the Commission finds that the proposed rule 
change is consistent with the requirements of the Act \7\ and the rules 
and regulations thereunder applicable to a national

[[Page 46976]]

securities exchange.\8\ In particular, the Commission finds that the 
proposed rule change is consistent with Section 6(b)(2) of the Act,\9\ 
which states that ``any registered broker or dealer or natural person 
associated with a registered broker or dealer may become a member of 
such exchange and any person may become associated with a member 
thereof.'' The rule, as revised, is consistent with the statutory 
requirement. Thus, the Commission finds that the proposed amendment to 
Rule 2 is consistent with the Act.
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    \7\ 15 U.S.C. 78f.
    \8\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
    \9\ 15 U.S.C. 78f(b)(2).
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IV. Conclusion

    It is therefor ordered, pursuant to Section 19(b)(2) of the 
Act,\10\ that the proposed rule change (SR-NYSE-2018-33) be, and hereby 
is, approved.
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    \10\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-20076 Filed 9-14-18; 8:45 am]
BILLING CODE 8011-01-P

Federal Register / Vol. 83, No. 180 / Monday, September 17, 2018 / Notices 46975

public/private entities. New knowledge Estimate of Burden: 100 hours per Financial Industry Regulatory
thus created is meaningfully linked to center for twelve centers for a total of Authority, Inc. (‘‘FINRA’’) or another
society. 1,200 hours. national securities exchange. The
STCs enable and foster excellent Respondents: Non-profit institutions; proposed rule change was published for
education, integrate research and federal government. comment in the Federal Register on
education, and create bonds between Estimated Number of Responses per August 3, 2018.3 The Commission
learning and inquiry so that discovery Report: One from each of the twelve received one comment letter on the
and creativity more fully support the centers. proposed rule change.4 This order
learning process. STCs capitalize on Comments: Comments are invited on approves the proposed rule change.
diversity through participation in center (a) whether the proposed collection of
II. Description of the Proposed Rule
activities and demonstrate leadership in information is necessary for the proper
Change
the involvement of groups performance of the functions of the
underrepresented in science and Agency, including whether the As described in more detail in the
engineering. information shall have practical utility; Notice,5 the Exchange proposes to
(b) the accuracy of the Agency’s amend Rule 2 to remove a requirement
Centers selected will be required to that a registered broker-dealer be a
estimate of the burden of the proposed
submit annual reports on progress and member of FINRA or another national
collection of information; (c) ways to
plans, which will be used as a basis for securities exchange to become a member
enhance the quality, utility, and clarity
performance review and determining of the Exchange. The Exchange proposes
of the information on respondents,
the level of continued funding. To to amend Rule 2(b)(i) to define ‘‘member
including through the use of automated
support this review and the organization’’ as a ‘‘registered broker or
collection techniques or other forms of
management of a Center, STCs will be dealer (unless exempt pursuant to the
information technology; and (d) ways to
required to develop a set of management Securities Exchange Act of 1934) . . . ,
minimize the burden of the collection of
and performance indicators for including sole proprietors, partnerships,
information on those who are to
submission annually to NSF via an NSF limited liability partnerships,
respond, including through the use of
evaluation technical assistance corporations, and limited liability
appropriate automated, electronic,
contractor. These indicators are both corporations, approved by the Exchange
mechanical, or other technological
quantitative and descriptive and may pursuant to Rule 311. A registered
collection techniques or other forms of
include, for example, the characteristics broker or dealer must also be approved
information technology.
of center personnel and students; by the Exchange and authorized to
sources of financial support and in-kind Dated: September 12, 2018.
designate an associated natural person
support; expenditures by operational Suzanne H. Plimpton,
to effect transactions on the floor of the
component; characteristics of industrial Reports Clearance Officer, National Science Exchange or any facility thereof.’’
and/or other sector participation; Foundation.
Furthermore, the Exchange proposes to
research activities; education activities; [FR Doc. 2018–20147 Filed 9–14–18; 8:45 am] amend Rule 2(b)(ii) to state: ‘‘[t]he term
knowledge transfer activities; patents, BILLING CODE 7555–01–P ‘member organization’ also includes any
licenses; publications; degrees granted registered broker or dealer which does
to students involved in Center activities; not own a trading license and agrees to
descriptions of significant advances and SECURITIES AND EXCHANGE be regulated by the Exchange as a
other outcomes of the STC effort. Part of COMMISSION member organization and which the
this reporting will take the form of a Exchange has agreed to regulate.’’ The
database which will be owned by the [Release No. 34–84077; File No. SR–NYSE–
2018–33] Exchange noted that this proposed
institution and eventually made change will not result in ‘‘any regulatory
available to an evaluation contractor. Self-Regulatory Organizations; New impact because member organizations
This database will capture specific York Stock Exchange LLC; Order will continue to be subject to a
information to demonstrate progress Approving a Proposed Rule Change To comprehensive regulatory regime
towards achieving the goals of the Amend Rule 2 To Remove regardless of whether they are a member
program. Such reporting requirements Requirement That a Registered Broker- of another [self-regulatory organization]
will be included in the cooperative Dealer Be a Member of the Financial or not’’ and that the Exchange ‘‘performs
agreement which is binding between the Industry Regulatory Authority, Inc. or the necessary regulatory oversight of
academic institution and the NSF. Another National Securities Exchange member organizations.’’ 6
Each Center’s annual report will
address the following categories of September 11, 2018. III. Discussion and Commission
activities: (1) Research, (2) education, Findings
I. Introduction
(3) knowledge transfer, (4) partnerships, After careful review, the Commission
(5) diversity, (6) management and (7) On July 25, 2018, the New York Stock finds that the proposed rule change is
budget issues. Exchange LLC (‘‘Exchange’’ or ‘‘NYSE’’) consistent with the requirements of the
filed with the Securities and Exchange Act 7 and the rules and regulations
For each of the categories the report Commission (‘‘Commission’’), pursuant
will describe overall objectives for the thereunder applicable to a national
to Section 19(b)(1) of the Securities
year, problems the Center has Exchange Act of 1934 (‘‘Act’’) 1 and Rule 3 See Securities Exchange Act Release No. 83740
encountered in making progress towards 19b-4 thereunder,2 a proposed rule (July 30, 2018), 83 FR 38195 (August 3, 2018)
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goals, anticipated problems in the change to amend Rule 2, ‘‘Member,’’ (‘‘Notice’’).
following year, and specific outputs and ‘‘Membership,’’ ‘‘Member Firm,’’ etc., to 4 See Letter from Ray Delao, The Michael’s

outcomes. remove the requirement that a registered
Copanys.Inc [sic], dated August 15, 2018. The letter
does not address the change that the NYSE is
Use of the Information: NSF will use broker-dealer be a member of the proposing to make to Rule 2.
the information to continue funding of 5 See Notice, supra note 3.

the Centers, and to evaluate the progress 1 15 U.S.C. 78s(b)(1). 6 Id. at 38196.

of the program. 2 17 CFR 240.19b-4. 7 15 U.S.C. 78f.

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46976 Federal Register / Vol. 83, No. 180 / Monday, September 17, 2018 / Notices

securities exchange.8 In particular, the Commodity Futures Trading regulating the activities of Members
Commission finds that the proposed Commission (‘‘CFTC’’) and requested who are registered as brokers or dealers
rule change is consistent with Section that the CFTC make a determination in SFPs under Section 15(b)(11) of the
6(b)(2) of the Act,9 which states that that review of the proposed rule change Exchange Act.6 NFA’s Interpretive
‘‘any registered broker or dealer or of NFA is not necessary.3 The CFTC has Notice 9050 applies to all Members who
natural person associated with a not yet made such determination. meet the criteria outlined in Interpretive
registered broker or dealer may become Notice 9050, including those that are
a member of such exchange and any I. Self-Regulatory Organization’s registered as security futures brokers or
person may become associated with a Description and Text of the Proposed dealers under Section 15(b)(11) of the
member thereof.’’ The rule, as revised, Rule Change Exchange Act.7
is consistent with the statutory NFA’s Interpretive Notice 9050 The risk disclosure statement for SFPs
requirement. Thus, the Commission entitled ‘‘NFA Compliance Rule 2– is a uniform statement that was jointly
finds that the proposed amendment to 30(b): Risk Disclosure Statement for developed in 2002 by NFA, FINRA, and
Rule 2 is consistent with the Act. Security Futures Contracts’’ a number of securities and futures
(‘‘Interpretive Notice 9050’’) requires exchanges. SEC staff recently contacted
IV. Conclusion
NFA Members and Associates NFA and requested a change to Section
It is therefor ordered, pursuant to (‘‘Member’’) who are registered as 6.1 of the Risk Disclosure Statement to
Section 19(b)(2) of the Act,10 that the brokers or dealers under Section reflect that SIPC coverage for cash
proposed rule change (SR–NYSE–2018– 15(b)(11) of the Exchange Act 4 to protection has increased from $100,000
33) be, and hereby is, approved. provide a disclosure statement for to $250,000. Accordingly, NFA’s
For the Commission, by the Division of security futures products (‘‘SFPs’’) to a amendment to Section 6.1 of
Trading and Markets, pursuant to delegated customer at or before the time the Interpretive Notice 9050 is a minor
authority.11 Member approves the account to trade amendment to correct the limit of SIPC
Eduardo A. Aleman, SFPs. The risk disclosure statement cash protection.
Assistant Secretary. contains, among other things, a section NFA is also amending Section 5.2 of
[FR Doc. 2018–20076 Filed 9–14–18; 8:45 am] on Securities Investor Protection Interpretive Notice 9050 to make a
BILLING CODE 8011–01–P Corporation (‘‘SIPC’’) coverage for cash stylistic change to delete a set of
protection. NFA is amending Section quotation marks around the qualifying
6.1 of Interpretive Notice 9050 to reflect abbreviation for National Securities
SECURITIES AND EXCHANGE that SIPC coverage for cash protection Clearing Corporation—NSCC. FINRA
COMMISSION has increased from $100,000 to staff notified NFA that it also intends to
$250,000. make the same modifications to its risk
[Release No. 34–84076; File No. SR–NFA–
2018–04] NFA is also amending Interpretive disclosure statement to cover its
Notice 9050 to incorporate one other members.
Self-Regulatory Organizations; non-substantive change. The text of the Amendments to NFA Interpretive
National Futures Association; Notice proposed rule changes to Interpretive Notice 9050 were previously filed with
of Filing and Immediate Effectiveness Notice 9050 is found in Exhibit 4. the SEC in SR–NFA–2002–05, Exchange
of Proposed Change to the Interpretive Act Release No. 34–46613 (Oct. 7, 2002),
II. Self-Regulatory Organization’s 67 FR 64176 (Oct. 17, 2002); SR–NFA–
Notice to National Futures Association Statement of the Purpose of, and
Compliance Rule 2–30(b): Risk 2002–06, Exchange Act Release No. 34–
Statutory Basis for the Proposed Rule 47150 (Jan. 9, 2003), 68 FR 2381 (Jan.
Disclosure Statement for Security
Change 16, 2003); SR–NFA–2007–07, Exchange
Futures Contracts
In its filing with the Commission, Act Release No. 34–57142 (Jan. 14,
September 11, 2018. NFA included statements concerning 2008), 73 FR 3502 (Jan. 18, 2008); SR–
Pursuant to Section 19(b)(7) of the the purpose of and basis for the NFA–2010–02, Exchange Act Release
Securities Exchange Act of 1934 proposed rule change and discussed any No. 34–62624 (Aug. 2, 2010), 75 FR
(‘‘Exchange Act’’),1 and Rule 19b–7 comments it received on the proposed 47666 (Aug. 6, 2010); SR–NFA–2010–
thereunder,2 notice is hereby given that rule change. The text of these statements 03, Exchange Act Release No. 34–62651
on August 31, 2018, National Futures may be examined at the places specified (Aug. 4, 2010), 75 FR 48393 (Aug. 10,
Association (‘‘NFA’’) filed with the in Item IV below. NFA has prepared 2010); and [sic] SR–NFA–2014–02,
Securities and Exchange Commission summaries, set forth in sections A, B, Exchange Act Release No. 34–71980
(‘‘SEC’’ or ‘‘Commission’’) the proposed and C below, of the most significant (Apr. 21, 2014), 79 FR 23027 (Apr. 25,
rule change described in Items I, II, and aspects of such statements. 2014); and SR–NFA–2018–03, Exchange
III below, which Items have been Act Release No. 34–83589 (July 3, 2018),
prepared by NFA. The Commission is A. Self-Regulatory Organization’s
83 FR 31804 (July 9, 2018).
publishing this notice to solicit Statement of the Purpose of, and
comments on the proposed rule change Statutory Basis for the Proposed Rule 2. Statutory Basis
from interested persons. Change The proposed rule change is
On August 21, 2018, NFA also filed 1. Purpose authorized by, and consistent with,
this proposed rule change with the Section 15A(k)(2)(B) of the Exchange
Section 15A(k) of the Exchange Act 5 Act.8 That Section requires NFA to have
8 In approving this proposed rule change, the makes NFA a national securities rules that are designed to prevent
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Commission has considered the proposed rule’s association for the limited purpose of fraudulent and manipulative acts and
impact on efficiency, competition, and capital
formation. See 15 U.S.C. 78c(f). 3 See Letter dated August 21, 2018 from Carol A.
practices, to promote just and equitable
9 15 U.S.C. 78f(b)(2).
Wooding, NFA’s Vice President and General principles of trade, and, in general, to
10 15 U.S.C. 78s(b)(2).
Counsel to Christopher J. Kirkpatrick, Office of the
11 17 CFR 200.30–3(a)(12). Secretariat, CFTC. 6 15 U.S.C. 78o(b)(11).
1 15 U.S.C. 78s(b)(7). 4 15 U.S.C. 78o(b)(11). 7 Id.
2 17 CFR 240.19b–7. 5 15 U.S.C. 78o–3(k). 8 15 U.S.C. 78o–3(k)(2)(B).

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Document Created: 2018-09-15 01:37:40
Document Modified: 2018-09-15 01:37:40

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		83 FR 46975