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Notice of Filing and Immediate Effectiveness FINRA

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Notice of Filing and Immediate Effectiveness FINRA Powered By Docstoc
					                                                                               Federal Register / Vol. 77, No. 51 / Thursday, March 15, 2012 / Notices                                                    15445

                                                IV. Conclusion                                          II. Self-Regulatory Organization’s                    organize Form NMA according to the 12
                                                  It is therefore ordered, pursuant to                  Statement of the Purpose of, and                      standards for membership enumerated
                                                Section 19(b)(2) of the Act,25 that the                 Statutory Basis for, the Proposed Rule                in NASD Rule 1014 (Department
                                                proposed rule change (SR–NYSEArca-                      Change                                                Decision) and further detailed below.5
                                                2012–04) be, and it hereby is, approved.                   In its filing with the Commission,                 The revisions also seek to group
                                                                                                        FINRA included statements concerning                  information requests on specific topics
                                                  For the Commission, by the Division of
                                                                                                        the purpose of and basis for the                      that currently are located throughout
                                                Trading and Markets, pursuant to delegated
                                                authority.26                                            proposed rule change and discussed any                existing Form NMA, as well as reduce
                                                Kevin M. O’Neill,                                       comments it received on the proposed                  current duplicative information requests
                                                                                                        rule change. The text of these statements             in Form NMA. Additionally, revised
                                                Secretary.
                                                                                                        may be examined at the places specified               Form NMA provides the following new
                                                [FR Doc. 2012–6231 Filed 3–14–12; 8:45 am]
                                                                                                        in Item IV below. FINRA has prepared                  user-friendly features intended to
                                                BILLING CODE 8011–01–P
                                                                                                        summaries, set forth in sections A, B,                reduce the administrative burden placed
                                                                                                        and C below, of the most significant                  on applicants:
                                                                                                        aspects of such statements.                             • Information fields, included in
                                                SECURITIES AND EXCHANGE
                                                                                                                                                              standards 1, 2, 8, and 12, that are pre-
                                                COMMISSION                                              A. Self-Regulatory Organization’s                     populated with information previously
                                                [Release No. 34–66555; File No. SR–FINRA–               Statement of the Purpose of, and                      provided by applicants to FINRA in
                                                2012–017]                                               Statutory Basis for, the Proposed Rule                other submissions (e.g., Central
                                                                                                        Change                                                Registration Depository (‘‘CRD’’®)
                                                Self-Regulatory Organizations;                                                                                entitlement forms and Form BD) or
                                                Financial Industry Regulatory                           1. Purpose
                                                                                                                                                              otherwise available to FINRA from CRD
                                                Authority, Inc.; Notice of Filing and                      Pursuant to NASD Rule 1012 (General
                                                                                                                                                              records (e.g., continuing education
                                                Immediate Effectiveness of Proposed                     Provisions) and NASD Rule 1013 (New
                                                                                                        Member Application and Interview),                    status), thereby minimizing the time
                                                Rule Change To Amend Online Form                                                                              necessary for applicants to complete the
                                                NMA, the Standardized Membership                        each applicant for FINRA membership
                                                                                                        must complete and electronically file                 new form;
                                                Application Form Applicants Must File                                                                           • Information fields, included in
                                                Pursuant to NASD Rule 1013 (New                         the standardized online Form NMA as
                                                                                                        part of its new member application. The               standards 2, 3, 5, 6, 8, and 12,
                                                Member Application and Interview)                                                                             requesting information that applicants
                                                                                                        standardized online Form NMA was
                                                March 9, 2012.                                          implemented several years ago to                      are currently required to provide during
                                                   Pursuant to Section 19(b)(1) of the                  streamline the new member application                 FINRA’s review of the new member
                                                Securities Exchange Act of 1934                         process and to assist applicants in                   application that were not included in
                                                (‘‘Act’’) 1 and Rule 19b–4 thereunder,2                 compiling a complete application                      current Form NMA but rather obtained
                                                notice is hereby given that on March 5,                 package by identifying and organizing                 during application review through
                                                2012, Financial Industry Regulatory                     the information and supporting                        requests from FINRA for additional
                                                Authority, Inc. (‘‘FINRA’’) (f/k/a                      documentation required by NASD Rule                   information. These information fields,
                                                National Association of Securities                      1013 into eight major sections: (1)                   which were added based on industry
                                                Dealers, Inc. (‘‘NASD’’)) filed with the                Section I (General Information); (2)                  and staff feedback on existing Form
                                                Securities and Exchange Commission                      Section II (Business Lines); (3) Section              NMA and the new member application
                                                (‘‘SEC’’ or ‘‘Commission’’) the proposed                III (Personnel); (4) Section IV (Net                  process should reduce the need for
                                                rule change as described in Items I and                 Capital and Sources of Funding); (5)                  extensive follow-up during the review
                                                II below, which Items have been                         Section V (Contractual and Business                   process which currently results in
                                                prepared by FINRA. FINRA has                            Arrangements); (6) Section VI (Policies               processing delays; and
                                                designated the proposed rule change as                  and Procedures); (7) Section VII                        • Information fields, included in all
                                                constituting a ‘‘non-controversial’’ rule               (Facilities); and (8) Section VIII                    standards except standard 9, allowing
                                                change under paragraph (f)(6) of Rule                   (Recordkeeping).                                      applicants to provide additional
                                                19b-4 under the Act,3 which renders the                    Prior to FINRA’s adoption of Form                  information, if applicable to their
                                                proposal effective upon receipt of this                 NMA, applicants would submit                          proposed business activities, structures,
                                                filing by the Commission. The                           inadequate or incomplete new member                   or circumstances.
                                                Commission is publishing this notice to                 applications that were subject to                       Below is a synopsis of the content of
                                                solicit comments on the proposed rule                   rejection pursuant to NASD Rule                       revised Form NMA, by standard, and its
                                                change from interested persons.                         1013(a)(3) as not substantially                       nexus to existing Form NMA:
                                                                                                        complete.4                                              • Standard 1 (Overview of the
                                                I. Self-Regulatory Organization’s
                                                                                                           FINRA is now proposing to revise                   Applicant):
                                                Statement of the Terms of the Substance
                                                                                                        Form NMA to further streamline the                      This standard seeks certain applicant
                                                of the Proposed Rule Change
                                                                                                        new member application process and to                 overview information currently
                                                   FINRA is proposing to amend online                                                                         contained primarily in Sections I
                                                Form NMA, the standardized                                 4 See Securities Exchange Act Release No. 53564    (General Information) and VII
                                                membership application form                             (March 29, 2006), 71 FR 16847 (April 4, 2006) (SR–    (Facilities) of existing Form NMA (e.g.,
                                                applicants must file pursuant to NASD                   NASD–2006–038) (Order Approving File No. SR–
                                                                                                        NASD–2006–038); NASD Notice to Members 06–16
                                                                                                                                                              formation information, identification of
                                                Rule 1013 (New Member Application                       (April 2006) (NASD Amends Rule 1013 to Adopt a
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                                                and Interview) as part of their new                     Standardized Application Form (Form NMA) to be          5 While NASD Rule 1014 sets forth 14 standards

                                                membership application.                                 Used by All New Member Applicants); see also          for membership, Form NMA does not elicit specific
                                                                                                        Securities Exchange Act Release No. 55412 (March      information from the applicant regarding standards
                                                  25 15                                                 7, 2007), 72 FR 11414 (March 13, 2007) (Order         13 (FINRA does not possess information indicating
                                                        U.S.C. 78s(b)(2).
                                                  26 17
                                                                                                        Approving File No. SR–NASD–2007–015); NASD            that the applicant may circumvent the federal
                                                        CFR 200.30–3(a)(12).                            Notice to Members 07–20 (May 2007) (NASD              securities laws or FINRA rules) or 14 (the
                                                  1 15 U.S.C. 78s(b)(1).
                                                                                                        Amends Rules 1012 and 1013 to Require Applicants      application is consistent with the federal securities
                                                  2 17 CFR 240.19b–4.
                                                                                                        for Membership to Submit Applications Using           laws and FINRA rules). See NASD Rule 1014(a)(13)
                                                  3 17 CFR 240.19b–4(f)(6).                             Online Form NMA).                                     and (14).



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                                                15446                         Federal Register / Vol. 77, No. 51 / Thursday, March 15, 2012 / Notices

                                                business activities, types of customers                 systems descriptions, supervision                     information regarding the applicant’s CE
                                                (and/or counterparties), owners,                        arrangements of multiple locations,                   deficiency mitigation plan).
                                                officers, directors, and control persons,               business continuity plan documents).                     FINRA worked closely with an
                                                validation of clearing arrangements).                   The standard also incorporates requests               industry task force, comprised of seven
                                                  • Standard 2 (Licenses and                            for additional information (e.g.,                     representatives from small and large
                                                Registrations):                                         information relating to the use of social             firms, several of whom also act as
                                                  This standard consists of information                 media sites).                                         consultants, during the development of
                                                requests regarding licenses and                            • Standard 7 (Maintaining Adequate                 revised Form NMA.6 Among other
                                                registrations (e.g., required licenses and              Net Capital):                                         things, the task force’s input assisted
                                                registrations, two-principal requirement                   This standard includes information                 FINRA to make changes intended to
                                                waiver, Securities Information Center                   regarding an applicant’s net capital                  reduce applicants’ administrative
                                                exemption, other self-regulatory                        requirements currently requested                      burden when completing Form NMA.
                                                organization registrations) currently                   primarily in Section IV of existing Form              Overall, FINRA believes that revised
                                                contained primarily in Sections I and III               NMA (e.g., information on the nature                  Form NMA will facilitate more effective
                                                (Personnel) of existing Form NMA as                     and source of capital, additional                     and efficient application processing for
                                                well as incorporating additional                        funding plans, minimum net capital                    applicants.
                                                information requests (e.g., intent to                   requirements, future funding sources).                   FINRA has filed the proposed rule
                                                claim exemptions from registration or                      • Standard 8 (Financial Controls):                 change for immediate effectiveness. The
                                                seek examination waivers for                               This standard seeks information                    implementation date for the revised
                                                personnel).                                             regarding an applicant’s financial                    Form NMA will be July 23, 2012.
                                                  • Standard 3 (Compliance With                         controls currently requested primarily
                                                Securities Laws, Just and Equitable                     in Sections I, III, and VI of existing Form           2. Statutory Basis
                                                Principles of Trade):                                   NMA (e.g., information regarding the                     FINRA believes that the proposed rule
                                                  This standard consists of specific                    FINOP’s experience, financial controls,               change is consistent with the provisions
                                                requests for information (e.g.,                         FINOP outside business activity                       of Section 15A(b)(6) of the Act,7 which
                                                disciplinary history) contained in                      notification) as well as incorporates                 requires, among other things, that
                                                Sections I and III of existing Form NMA                 requests for additional information (e.g.,            FINRA rules must be designed to
                                                that FINRA considers necessary for the                  net capital deficiency plans).                        prevent fraudulent and manipulative
                                                applicant to demonstrate compliance                        • Standard 9 (Written Procedures):                 acts and practices, to promote just and
                                                with the requirements of this standard                     This standard seeks information                    equitable principles of trade, and, in
                                                in the revised Form NMA and also                        regarding an applicant’s written                      general, to protect investors and the
                                                incorporates additional information                     procedures currently requested in                     public interest. The proposed change
                                                requests (e.g., state or federal orders or              Sections III, VI, and VIII (Recordkeeping             restructures the content of existing Form
                                                decrees, statements of claims, settlement               System) of existing Form NMA (e.g.,                   NMA to make the requested information
                                                agreements).                                            written supervisory procedures
                                                  • Standard 4 (Contractual and                                                                               and documentation more consistent
                                                                                                        (‘‘WSP’’), WSP checklist, sample reports              with the standards in NASD Rule 1014
                                                Business Relationships):
                                                  This standard includes the                            to support supervision and financial                  against which they are evaluated and
                                                information requests regarding an                       controls, heightened supervisory                      elicits information that applicants are
                                                applicant’s contractual and business                    procedures attestation).                              currently required to provide during
                                                relationships currently contained in                       • Standard 10 (Supervisory                         FINRA’s review of the new member
                                                Sections I, IV (Net Capital and Sources                 Structure):                                           application. FINRA believes that revised
                                                of Funding) and V (Contractual and                         This standard seeks information                    Form NMA will reduce new member
                                                Business Arrangements) of existing                      regarding an applicant’s supervisory                  applicants’ administrative burden and
                                                Form NMA (e.g., description of                          structure currently requested in                      ensure a more streamlined and efficient
                                                contractual arrangements, expense                       Sections I and III of the existing Form               membership application process for
                                                sharing agreements, financing                           NMA (e.g., information regarding                      both FINRA and applicants.
                                                arrangements, fidelity bonds or fidelity                supervisors’ experience and duties,
                                                                                                        chief compliance officers’ experience,                B. Self-Regulatory Organization’s
                                                bond applications, support and service                                                                        Statement on Burden on Competition
                                                agreements, auditor information).                       non-FINOP outside business activities
                                                  • Standard 5 (Facilities):                            notifications).                                         FINRA does not believe that the
                                                  This standard consists of information                    • Standard 11 (Books and Records):                 proposed rule change will result in any
                                                requests regarding an applicant’s                          This standard seeks information                    burden on competition that is not
                                                facilities primarily contained in Section               regarding an applicant’s books and                    necessary or appropriate in furtherance
                                                VII of existing Form NMA (e.g., space                   records currently requested primarily in              of the purposes of the Act.
                                                sharing arrangements, leasing or sub-                   Section VIII of existing Form NMA (e.g.,
                                                                                                                                                              C. Self-Regulatory Organization’s
                                                leasing arrangements). This standard                    recordkeeping system, sample books
                                                                                                                                                              Statement on Comments on the
                                                also incorporates requests for additional               and records, recordkeeping service
                                                                                                                                                              Proposed Rule Change Received From
                                                information (e.g., authorizations to                    providers).
                                                                                                                                                              Members, Participants, or Others
                                                sublet, deeds of ownership).                               • Standard 12 (Continuing
                                                  • Standard 6 (Communications and                      Education):                                             Written comments were neither
                                                Operational Systems):                                      This standard seeks information                    solicited nor received.
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                                                  This standard includes information                    regarding an applicant’s continuing
                                                requests regarding an applicant’s                       education (‘‘CE’’) obligations currently                6 The task force also assisted FINRA in creating

                                                communications and operational                          requested in Section VI of existing Form              a new online Form CMA for continuing member
                                                systems currently in Sections VI                        NMA (e.g., firm element owner                         applicants. See SR–FINRA–2012–018 (February 28,
                                                                                                                                                              2012) (proposed rule change amending NASD Rules
                                                (Policies and Procedures) and VII of                    identification, CE checklist, CE needs                1012 and 1017 to adopt a new standardized online
                                                existing Form NMA (e.g.,                                assessment) as well as incorporates                   Form CMA).
                                                communications and operational                          additional requests for information (e.g.,              7 15 U.S.C. 78o–3(b)(6).




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                                                                                Federal Register / Vol. 77, No. 51 / Thursday, March 15, 2012 / Notices                                          15447

                                                III. Date of Effectiveness of the                         Commission, and all written                           I. Self-Regulatory Organization’s
                                                Proposed Rule Change and Timing for                       communications relating to the                        Statement of Terms of Substance of the
                                                Commission Action                                         proposed rule change between the                      Proposed Rule Change
                                                   Because the foregoing proposed rule                    Commission and any person, other than                   CME is proposing to amend the fee
                                                change does not: (i) Significantly affect                 those that may be withheld from the                   schedule that currently applies to its
                                                the protection of investors or the public                 public in accordance with the                         OTC Interest Rate Swap clearing
                                                interest; (ii) impose any significant                     provisions of 5 U.S.C. 552, will be                   offering. The text of the proposed
                                                burden on competition; and (iii) become                   available for Web site viewing and                    changes is attached as Exhibit 5 to the
                                                operative for 30 days from the date on                    printing in the Commission’s Public                   proposed rule change, which is
                                                which it was filed, or such shorter time                  Reference Room, 100 F Street NE.,                     available on CME’s Web site at http://
                                                as the Commission may designate, it has                   Washington, DC 20549, on official                     www.cmegroup.com/market-regulation/
                                                become effective pursuant to Section                      business days between the hours of 10                 rule-filings.html.
                                                19(b)(3)(A) of the Act 8 and Rule 19b–                    a.m. and 3 p.m. Copies of such filing
                                                4(f)(6) thereunder.9                                      also will be available for inspection and             II. Self-Regulatory Organization’s
                                                   At any time within 60 days of the                      copying at the principal office of                    Statement of Purpose of, and Statutory
                                                filing of the proposed rule change, the                   FINRA. All comments received will be                  Basis for, the Proposed Rule Change
                                                Commission summarily may                                  posted without change; the Commission                   In its filing with the Commission,
                                                temporarily suspend such rule change if                   does not edit personal identifying                    CME included statements concerning
                                                it appears to the Commission that such                    information from submissions. You                     the purpose and basis for the proposed
                                                action is necessary or appropriate in the                 should submit only information that                   rule change and discussed any
                                                public interest, for the protection of                    you wish to make available publicly. All              comments it received on the proposed
                                                investors, or otherwise in furtherance of                 submissions should refer to File                      rule change. The text of these statements
                                                the purposes of the Act. If the                           Number SR–FINRA–2012–017 and                          may be examined at the places specified
                                                Commission takes such action, the                         should be submitted on or before April                in Item IV below. CME has prepared
                                                Commission shall institute proceedings                    5, 2012.                                              summaries, set forth in sections A, B,
                                                to determine whether the proposed rule                      For the Commission, by the Division of              and C below, of the most significant
                                                should be approved or disapproved.                        Trading and Markets, pursuant to delegated            aspects of such statements.
                                                                                                          authority.10
                                                IV. Solicitation of Comments                                                                                    A. Self-Regulatory Organization’s
                                                                                                          Kevin M. O’Neill,
                                                  Interested persons are invited to                                                                             Statement of Purpose of, and Statutory
                                                                                                          Deputy Secretary.
                                                submit written data, views and                                                                                  Basis for, the Proposed Rule Change
                                                                                                          [FR Doc. 2012–6233 Filed 3–14–12; 8:45 am]
                                                arguments concerning the foregoing,                                                                                CME currently offers clearing for
                                                                                                          BILLING CODE 8011–01–P
                                                including whether the proposed rule                                                                             certain OTC Interest Rate Swap
                                                change is consistent with the Act.                                                                              products. The filing proposes to amend
                                                Comments may be submitted by any of                       SECURITIES AND EXCHANGE                               the current fee schedule that applies to
                                                the following methods:                                    COMMISSION                                            CME’s OTC Interest Rate Swap (‘‘IRS’’)
                                                Electronic Comments                                                                                             clearing fees. The proposed changes are
                                                                                                          [Release No. 34–66554; File No. SR–CME–               related to fees and therefore will become
                                                  • Use the Commission’s Internet                         2012–04]                                              effective immediately. However, the
                                                comment form (http://www.sec.gov/
                                                                                                                                                                proposed fee changes will become
                                                rules/sro.shtml); or                                      Self-Regulatory Organizations;
                                                  • Send an email to rule-                                                                                      operative as of March 12, 2012, and by
                                                                                                          Chicago Mercantile Exchange, Inc.;                    their terms will expire on September 30,
                                                comments@sec.gov. Please include File                     Notice of Filing and Immediate
                                                Number SR–FINRA–2012–017 on the                                                                                 2012.
                                                                                                          Effectiveness of Proposed Rule                           The proposed fee changes will
                                                subject line.                                             Change To Amend the Fee Schedule                      temporarily modify CME’s current OTC
                                                Paper Comments                                            Applicable to Its OTC Interest Rate                   IRS clearing fee schedule so that all
                                                                                                          Swap Clearing Offering
                                                  • Send paper comments in triplicate                                                                           house accounts of CME IRS Clearing
                                                to Elizabeth M. Murphy, Secretary,                        March 9, 2012.                                        Members will be charged a flat fee of
                                                Securities and Exchange Commission,                          Pursuant to Section 19(b)(1) of the                $250 per ticket on a preallocation basis
                                                100 F Street NE., Washington, DC                          Securities Exchange Act of 1934                       between March 12, 2012, and September
                                                20549–1090.                                               (‘‘Act’’),1 and Rule 19b–4 thereunder,2               30, 2012, for any trades accepted for
                                                All submissions should refer to File                      notice is hereby given that on March 1,               clearing where the effective date of the
                                                Number SR–FINRA–2012–017. This file                       2012, Chicago Mercantile Exchange Inc.                trade is prior to the date the trade was
                                                number should be included on the                          (‘‘CME’’) filed with the Securities and               accepted for clearing (‘‘backloaded
                                                subject line if email is used. To help the                Exchange Commission (‘‘Commission’’)                  trades’’). The temporary fee rates will
                                                Commission process and review your                        the proposed rule change described in                 apply to all CME IRS Clearing members
                                                comments more efficiently, please use                     Items I, II and III below, which items                submitting backloaded trades to CME
                                                only one method. The Commission will                      have been prepared primarily by CME.                  for clearing during the applicable time
                                                post all comments on the Commission’s                     CME filed the proposed rule change                    period.
                                                Internet Web site (http://www.sec.gov/                    pursuant to Section 19(b)(3)(A)(ii) 3 of                 CME believes the temporary
                                                                                                                                                                modification to the CME IRS Fee
srobinson on DSK4SPTVN1PROD with NOTICES




                                                rules/sro.shtml). Copies of the                           the Act and Rule 19b–4(f)(2) 4
                                                submission, all subsequent                                thereunder.                                           Schedule will encourage IRS Clearing
                                                amendments, all written statements                                                                              members to submit additional volume
                                                with respect to the proposed rule                           10 17 CFR 200.30–3(a)(12).
                                                                                                                                                                into the system to ensure readiness and
                                                change that are filed with the                              1 15 U.S.C. 78s(b)(1).                              help build open interest ahead of a
                                                                                                            2 17 CFR 240.19b–4.                                 regulatory mandate.
                                                  8 15   U.S.C. 78s(b)(3)(A).                               3 15 U.S.C. 78s(b)(3)(A)(ii).                          CME has also certified the proposed
                                                  9 17   CFR 240.19b–4(f)(6).                               4 17 CFR 240.19b–4(f)(2).                           rule changes that are the subject of this


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