
[Federal Register Volume 77, Number 112 (Monday, June 11, 2012)]
[Notices]
[Pages 34450-34453]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-14064]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67126; File No. SR-NYSE-2012-16]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Temporarily Suspending the Requirements of NYSE Rule 311 and Related 
NYSE Rules Concerning the Approval of New Member Organizations in Order 
To Approve Apex Clearing Corporation, f/k/a Ridge Clearing and 
Outsourcing Solutions, Inc. as an NYSE Member Organization, Subject to 
Apex Clearing Complying With Exchange Rules for a New Member 
Organization Within 30 Calendar Days of the Date That Apex Clearing Is 
Provisionally Approved as an NYSE Member Organization

June 5, 2012.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that June 5, 2012, New York Stock Exchange LLC (``NYSE'' or the 
``Exchange'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I and II 
below, which Items have been prepared by the self-regulatory 
organization. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C.78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to temporarily suspend the requirements of 
NYSE Rule 311 and related NYSE rules concerning the approval of new 
member organizations in order to approve Apex Clearing Corporation, f/
k/a Ridge Clearing and Outsourcing Solutions, Inc. (``Apex Clearing'') 
as an NYSE member organization, subject to Apex Clearing complying with 
Exchange rules for a new member organization within 30 calendar days of 
the date that Apex

[[Page 34451]]

Clearing is provisionally approved as an NYSE member organization. The 
Exchange is also proposing to accept Apex Clearing's assumption of all 
of the existing clearing agreements and arrangements currently in 
effect between Penson Financial Services Inc. (``PFSI'') and various 
other NYSE member organizations by execution of a global agreement 
thereto. The text of the proposed rule change is available on the 
Exchange's Web site at www.nyse.com, at the principal office of the 
Exchange, and at the Commission's Public Reference Room.

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

    In its filing with the Commission, the self-regulatory organization 
included statements concerning the purpose of, and basis for, the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of those statements may be examined at 
the places specified in Item IV below. The Exchange has prepared 
summaries, set forth in sections A, B, and C below, of the most 
significant parts of such statements.

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

1. Purpose
    The Exchange proposes this rule filing to temporarily suspend the 
requirements of NYSE Rule 311 and related rules regarding the approval 
of member organizations in order to immediately approve Apex Clearing 
as an NYSE member organization. The Exchange proposes this temporary 
suspension on an emergency basis to ensure that Apex Clearing can 
continue the clearing operations of PFSI without unnecessary 
disruption, which could have a significant collateral impact to a 
number of other member organizations. The proposed temporary suspension 
is contingent upon Apex Clearing having complied with all new member 
organization Exchange rules within 30 calendar days of the date Apex 
Clearing is provisionally approved as an NYSE member organization 
pursuant to this filing.
    On May 31, 2012, Apex Clearing Holdings, LLC (``Apex Holdings''), 
Apex Clearing Solutions, LLC, Broadridge Financial Solutions, Inc. 
(``Broadridge''), PFSI and Penson Worldwide, Inc. (``PWI'') (together, 
the ``Parties'') consummated a transaction resulting in a change in 
ownership of Apex Clearing.\4\ Broadridge, Apex Holdings, PWI and PFSI 
each made capital investments in Apex Holdings, the holding company 
parent of Apex Clearing. PFSI also assigned all of its U.S. clearing 
contracts and all customer and introducing broker proprietary accounts 
along with key personnel to Apex Clearing (the ``Transferring 
Accounts'').\5\
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    \4\ Prior to the Transaction, Apex Clearing's name was Ridge 
Clearing & Outsourcing Solutions, Inc. Prior to the transaction, 
Ridge Clearing & Outsourcing Solutions, Inc. contributed its 
outsourcing operations and all associated personnel and systems to 
its affiliated entity, Broadridge Securities Processing Solutions, 
LLC (``BSPS'') where it will continue to provide operations support 
and outsourcing services to a number of broker-dealers, including 
Apex Clearing.
    \5\ See Penson Worldwide, Inc. Form 8-K dated May 31, 2012.
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    As a result of the transaction, Apex Clearing, which is not an NYSE 
member organization, will provide the clearing and execution services 
currently provided to the Transferring Accounts by PFSI. On May 31, 
2012, Apex Clearing submitted an application for approval as an NYSE 
member organization. However because of the expedited nature of the 
transaction, Apex Clearing was unable to fully comply with NYSE Rule 
311 and related new member organization rules. Because of the need for 
seamless continuity with respect to the Transferring Accounts, Apex 
Clearing has requested that the Exchange temporarily suspend its new 
membership organization rules in order to enable Apex Clearing's 
approval as a member organization on an expedited basis. Pursuant to 
its request, Apex Clearing will fully comply with the Exchange's new 
member organization requirements within 30 calendar days after 
provisional approval.
    NYSE Rule 311 requires any person who proposes to form a member 
organization to notify the Exchange in writing and submit such 
information as may be required by NYSE rules. When a corporate 
acquisition concerns an asset transfer only, and not an acquisition of 
the corporate entity, NYSE member organization status cannot be 
transferred to the acquiring entity. The entity that proposes to 
continue acquired business operations of a member organization must be 
separately approved as an NYSE member organization.
    Among other things, to be approved as an NYSE member organization, 
the applicant must:
     Provide the Exchange with a written application with the 
name and address of the applicant as well as a list of all proposed 
parties required to be approved or identified pursuant to NYSE Rules 
304 and 311 (NYSE Rule 311.11).
     Ensure that all persons associated with the applicant who 
meet the requirements of approved persons under NYSE Rule 304, consent 
to NYSE jurisdiction as a member or approved person (NYSE Rules 304 and 
311(b)).
     Submit to the Exchange partnership or corporate documents 
as may be applicable including certificate of incorporation, by-laws, 
and other corporate documents (NYSE Rule 313.10 and .20).
     Provide the Exchange with an opinion of counsel that, 
among other things, the corporation is duly organized and its existing 
stock is validly issued and outstanding, and that the restrictions and 
provisions required by the Exchange on the transfer, issuance, 
conversion and redemption of its stock have been made legally effective 
(NYSE Rule 313.20).
    In addition, the Exchange reviews whether the applicant meets 
federal and NYSE capital requirements and whether it has adopted 
controls and procedures to comply with Exchange rules.
    Due to the amount of information an applicant is required to 
provide and have completed prior to being approved as a member 
organization, the member organization approval process generally takes 
several months to complete. The length of time varies based on the 
timing of the applicant's response to requests for information and 
documentation.
    As proposed, Apex Clearing will continue the clearing and certain 
other operations of PFSI as of June 6, 2012. In order to avoid 
interruption of the services PFSI currently provides to other Exchange 
member organizations, the NYSE believes that Apex Clearing should be 
approved immediately as an NYSE member organization. The Exchange notes 
that Apex Clearing is already a registered broker dealer and FINRA 
member, which are prerequisites for becoming an NYSE member 
organization. See NYSE Rule 2(b).
    The Exchange therefore proposes providing Apex Clearing with a 
temporary suspension of NYSE Rule 311 and related membership rules as 
they relate to approval to operate an NYSE member organization and 
approval of a proposed member organization's approved persons, and 
immediately approve Apex Clearing as a member organization. As proposed 
this temporary suspension is contingent upon:
     Apex Clearing providing the Exchange with sufficient 
information to confirm that Apex Clearing will meet its

[[Page 34452]]

capital requirements as an NYSE member organization; and
     Within 30 calendar days of Apex Clearing's approval as an 
NYSE member organization under this proposed filing, Apex Clearing and 
its approved persons will have complied with the Exchange's new member 
organization requirements as set forth in NYSE Rules 304 and 311-313.
    As proposed, if Apex Clearing does not comply with all applicable 
NYSE member organization application requirements within 30 calendar 
days of the effective date of this filing, its status as an approved 
NYSE member organization will no longer be effective.
    In addition, the Exchange proposes to accept Apex Clearing to 
assume all existing clearing agreements and arrangements currently in 
effect with other NYSE member organizations by execution of global 
agreements thereto. Notice of such assumption will be provided to 
impacted member organizations through issuance of Trader and/or 
Information Notices prior to the effective date thereof.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
Section 6(b) \6\ of the Securities Exchange Act of 1934 (the ``Act''), 
in general, and furthers the objectives of Section 6(b)(5) \7\ in 
particular in that it is designed to promote just and equitable 
principles of trade, to prevent fraudulent and manipulative acts, to 
remove impediments to and to perfect the mechanism for a free and open 
market and a national market system and, in general, to protect 
investors and the public interest. The Exchange believes that 
permitting the expeditious approval of Apex Clearing as an NYSE member 
organization will avoid interruption of the services PFSI currently 
provides to other Exchange member organizations. Based on information 
and representations provided by Apex Clearing, a temporary suspension 
of certain NYSE membership rules is needed based on the expedited 
nature of the transaction to enable seamless continuity with respect to 
the transferring accounts. Consequently, the NYSE believes that 
temporary suspension of its member organization requirements so that 
Apex Clearing can be approved immediately as an NYSE member 
organization will help to foster cooperation and coordination with 
persons engaged in facilitating transactions in securities and is 
consistent with the Act.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competion.

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

    No written comments were solicited or received with respect to the 
proposed rule change.

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

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \8\ and Rule 19b-4(f)(6) thereunder.\9\ 
Because the proposed rule change does not: (i) Significantly affect the 
protection of investors or the public interest; (ii) impose any 
significant burden on competition; and (iii) become operative prior to 
30 days from the date on which it was filed, or such shorter time as 
the Commission may designate, if consistent with the protection of 
investors and the public interest, the proposed rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act \10\ and Rule 19b-
4(f)(6)(iii) thereunder.\11\
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    \8\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \9\ 17 CFR 240.19b-4(f)(6).
    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(6)(iii). In addition, Rule 19b-
4(f)(6)(iii) requires a self-regulatory organization to give the 
Commission written notice of its intent to file the proposed rule 
change at least five business days prior to the date of filing of 
the proposed rule change, or such shorter time as designated by the 
Commission. The Commission is waiving this five-day pre-filing 
requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) \12\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\13\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest.
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    \12\ 17 CFR 240.19b-4(f)(6).
    \13\ 17 CFR 240.19b-4(f)(6)(iii).
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    The Exchange has asked the Commission to waive the 30-day operative 
delay so that the proposed rule change may become operative immediately 
upon filing. The Commission notes that the Exchange is proposing that 
certain of its rules relating to membership requirements be temporarily 
suspended so that Apex Clearing can be provisionally approved as an 
NYSE member organization. The proposed relief does not exempt Apex 
Clearing from Exchange rule requirements governing member 
organizations. Apex Clearing would have a 30 calendar day grace period 
within which to apply for and be approved under relevant Exchange 
rules. Moreover, the Commission believes that waiver of the 30-day 
operative delay is appropriate to ensure a smooth transition of PFSI 
operations to Apex Clearing. In particular, given the rapidity with 
which events have developed, waiver of the 30-day operative delay is 
necessary to avoid significant disruption to PFSI's existing customers 
and the market generally. Therefore, the Commission believes that 
waiving the 30-day operative delay is consistent with the protection of 
investors and the public interest and designates the proposed rule 
change as operative upon filing.\14\
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    \14\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule should be approved or disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-NYSE-2012-16 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSE-2012-16. This file

[[Page 34453]]

number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549, on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available 
for inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-NYSE-2012-16 and should be 
submitted on or before July 2, 2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-14064 Filed 6-8-12; 8:45 am]
BILLING CODE 8011-01-P


