Information Memo - FINRA - Rules and Regulations

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Regulation M and Rule 392NYSE Alternext Rule 392 requires notification whenever a member or memberorganization acts as a lead underwriter of any offering of an NYSE Alternext-listedsecurity (a Regulation M Notice). The data required to be submitted as well as theformat to be used in providing the information are outlined in Rule 392. 3 The Rule alsorequires notification prior to the placing or transmitting of a stabilizing bid, any syndicatecovering transaction, and the imposition of any penalty bid. Rule 392 provides a list ofreporting criteria where applicable. In addition, Information Memo 08-53 was recentlyissued to clarify NYSE Rule 392 and PIPE reporting requirements. For additionalinformation on notification requirements for offerings, Rule 392, or the Regulation MNotice, please contact John Kroog, Director, NYSE Market Surveillance, at (212) 656-6532, or Lisa Neuner, Director, NYSE Market Surveillance, at (212) 656-5393.Customer Trade ConfirmationsNYSE Alternext Rule 409(a) provides that, except with the permission of NYSEAlternext, members and member organizations must send customers’ statements ofaccount showing security and money positions and entries at least quarterly to allaccounts having an entry, money or security position during the preceding quarter. Thisrule assures that customers receive notice of such transactions, positions and balanceson a regular basis.Firms are not required by the Rule to disclose the execution market on a clientconfirmation, however, any such disclosure must be accurate. As NYSE Alternext andNYSE are two distinct execution markets, NYSE Alternext and NYSE designations arenot interchangeable and the appropriate market center must be noted. If executions fora single order occur on both exchanges, a mixed market designation may be used. 4Please review Rule 409 and NYSE Information Memos 07-119 and 06-80. Foradditional, information please contact Gregory Taylor of FINRA at (646) 315-2920 or theFINRA Office of General Counsel at (202) 728-8071.Account Type IndicatorsFirms often associate Tag 47 with the now rescinded NYSE Rule 80A for purposes ofidentifying account types (e.g., “P” for principal, “A” for agency, “I” for individual, etc.)NYSE Alternext will use the same account type indicators as NYSE for equities.Currently, NYSE uses these same Tag 47 account type indicators for other forms ofreporting and supports these values. However, member organizations must be alert toaccount type changes and will be responsible for using the appropriate NYSE Alternextaccount types. NYSE Alternext Members should verify they are using the sixteen validvalues for Tag 47 available online athttp://www.nyse.com/pdfs/MatchPoint_FIX_Web_Cap_Requirements.pdf. For technicaltype information, testing arrangements and/or questions please contactConnectivity@nyx.com.34Please note that all spaces in “blank” on the applicable form must be appropriately filled in at thetime of filing. Any change to the information provided will necessitate an amended form. Formore information please see NYSE Information Memo 97-41.Under certain circumstances, members and member organizations may have relief from Rule10b-10 for average price, multiple capacity trade confirmations. For additional, informationplease review the information on the SEC website by going tohttp://www.sec.gov/divisions/marketreg/mr-noaction/ap030305.htm.
Rule 98NYSE Alternext is adopting a rule comparable to the recently approved new NYSE Rule98. 5 The Rule requires reporting of information regarding material investment bankingactivities in which the member organization or approved person has been engaged(e.g., underwriting, tender offers, mergers, acquisitions, recapitalizations, etc.) andmaterial research reports, recommendations, etc., pertaining to any security that hasbeen allocated to the DMM unit. Alternext Rule 98 requires reporting of informationabout determinations regarding whether the DMM should cease acting as DMM in theevent the DMM unit receives non-public information. Additionally, DMM units will berequired to report any actual breaches, or internal investigations of possible breaches,of the information barriers required by the rule. In particular, a DMM unit would berequired to conduct an internal investigation into any trading activity that may be a resultof a breach of information barriers required by the anticipated new NYSE Alternext Rule98. In addition, on a quarterly basis, a DMM unit would have to report in writing whetherit has commenced such an internal investigation, the quarterly progress of any openinvestigations, what remedial measures, if any, were taken, and the completion of anyinternal investigation, including the methodology and results of such investigation, anyinternal disciplinary action taken, and any referral of the matter to NYSE Alternext,another SRO, or the SEC. For additional information on new Rule 98 reporting, pleasecontact Sheldon Richter, Director, NYSE Market Surveillance, at (212) 656-3365. Foradditional information regarding other types of new Rule 98 reporting requirementsplease contact Sheila Rennert, Senior Counsel, NYSE Market Surveillance, at (212)656-2771, or Peter Bon Viso, Senior Counsel, NYSE Market Surveillance, at (212) 656-5621.Rule 460.10NYSE Alternext is also adopting a rule comparable to recently amended NYSE Rule460.10, which would apply only to the DMM and his DMM unit and not to his memberorganization or approved persons. The recently amended NYSE Rule 460.10 requiresthat the DMM unit report the beneficial ownership of more than 5% of an equity securitythat is allocated to it. The DMM unit would be required to update such reports if itsbeneficial ownership exceeds 10% or falls below 5%. In addition, the DMM unit wouldbe prohibited from acquiring, directly or indirectly, more than 25% of the outstandingshares in any security allocated to the specialist unit. These requirements would applyto DMM units operating under new Rule 98, as well as to DMM member organizationsthat continue to operate under Rule 98 Former. Please contact Sheldon Richter,Director, NYSE Market Surveillance, at (212) 656-3365, or Lisa Neuner, Director, NYSEMarket Surveillance, at (212) 656-5393, for additional information and reportingprocedures.Order Tracking System (“OTS”) Rules 132 A, 132B, and 132 CNYSE Alternext members will be subject to OTS reporting for NYSE Alternext-listedsecurities under NYSE Alternext Rules 132A, 132B and 132C. There is a grace periodextending until February 1, 2009, at which time firms must be compliant with such OTSreporting requirements. Firms are being provided with a grace period with theunderstanding that in the interim period NYSE Alternext order information and trade5Rule 98 Former, which is comparable to current Amex Rule 193, remains as an NYSE rule,but is not available for new entrants to become a DMM unit at the NYSE. Furtherinformation will be provided as to the applicability of new Rule 98 and/or Rule 98 Formeras they pertain to NYSE Alternext members.
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Information Memo - FINRA - Rules and Regulations

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