
[Federal Register Volume 77, Number 136 (Monday, July 16, 2012)]
[Notices]
[Pages 41849-41854]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-17173]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67372; File No. SR-NYSEARCA-2012-54]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Deleting the Rule 
Text of NYSE Arca Rule 9.20(b), Which Addresses Telemarketing, and 
Adopting New Rule Text to NYSE Arca Rule 9.20(b) To Conform to FINRA's 
Telemarketing Rule

July 10, 2012.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Exchange Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is 
hereby given that, on June 25, 2012, NYSE Arca, Inc. (the ``Exchange'' 
or ``NYSE Arca'') filed with the Securities and Exchange Commission 
(the ``Commission'') the proposed rule change as described in Items I, 
II and III below, which Items have been prepared by the Exchange. 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 delete the rule text of NYSE Arca Rule 
9.20(b), which addresses telemarketing, and adopt new rule text that is 
substantially similar to FINRA Rule 3230. 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 Exchange 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to delete the rule text of NYSE Arca Rule 
9.20(b), which addresses telemarketing, and adopt new rule text that is 
substantially similar to FINRA Rule 3230.\4\
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    \4\ See Securities Exchange Act Release No. 66279 (January 30, 
2012), 77 FR 5611 (February 3, 2012) (SR-FINRA-2011-059). FINRA's 
rule change will become effective on July 9, 2012. See FINRA 
Regulatory Notice 12-17.
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Proposed Rule Change
    The Exchange proposes to delete the rule text of NYSE Arca Rule 
9.20(b) and adopt new rule text to NYSE Arca Rule 9.20(b) to conform to 
the changes adopted by FINRA for telemarketing. FINRA adopted NASD Rule 
2212 as FINRA Rule 3230, taking into account FINRA Incorporated New 
York Stock Exchange LLC (``NYSE'') Rule 440A and NYSE Interpretation 
440A/01. FINRA Rule 3230 adds provisions that are substantially similar 
to Federal Trade Commission (``FTC'') rules that prohibit deceptive and 
other abusive telemarketing acts or practices.
    NYSE Arca Rule 9.20(b) and NASD Rule 2212 are similar rules that 
require members to maintain do-not-call lists, limit the hours of 
telephone solicitations and prohibit members from using deceptive and 
abusive acts and practices in connection with telemarketing. The 
Commission directed FINRA and the Exchange to enact these telemarketing 
rules in accordance with the Telemarketing Consumer Fraud and Abuse 
Prevention Act of 1994 (``Prevention Act'').\5\ The Prevention Act 
requires the Commission to promulgate, or direct any national 
securities exchange or registered securities association to promulgate, 
rules substantially similar to the FTC rules to prohibit deceptive and 
other abusive telemarketing acts or practices.\6\
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    \5\ 15 U.S.C. 6101-6108.
    \6\ 15 U.S.C. 6102.
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    In 2003, the FTC and the Federal Communications Commission 
(``FCC'') established requirements for sellers and telemarketers to 
participate in the national do-not-call registry.\7\ Pursuant to the 
Prevention Act, the Commission requested that FINRA and the Exchange 
amend their telemarketing rules to include a requirement that their 
members participate in the national do-not-call registry. In 2004, the 
Commission approved amendments to NASD Rule 2212 requiring member firms 
to participate in the national do-not-call registry.\8\ The following 
year, the Commission approved amendments to NYSE Arca Rule 9.20(b), 
which were similar to the NASD rule amendments, but included additional 
provisions regarding the use of caller identification information, pre-
recorded messages, telephone facsimiles and computer advertisements.\9\
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    \7\ See 68 FR 4580 (January 29, 2003); 68 FR 44144 (July 25, 
2003); CG Docket No. 02-278, FCC 03-153, (adopted June 26, 2003; 
released July 3, 2003).
    \8\ See Securities Exchange Act Release No. 49055 (January 12, 
2004), 69 FR 2801 (January 20, 2004) (Order Approving File No. SR-
NASD-2003-131).
    \9\ See Securities Exchange Act Release No. 54282 (August 8, 
2006), 71 FR 46534 (August 14, 2006) (Order Approving File No. SR-
PCX-2005-54).
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    As mentioned above, the Prevention Act requires the Commission to 
promulgate, or direct any national securities exchange or registered 
securities association to promulgate, rules substantially similar to 
the FTC rules to prohibit deceptive and other abusive telemarketing 
acts or practices.\10\ In 2011, Commission staff directed all exchanges 
and FINRA to conduct a review of their telemarketing rules and propose 
rule amendments that provide protections that are at least as strong as 
those provided by the FTC's telemarketing rules. FINRA's adoption of 
FINRA Rule 3230 reflects amendments to NASD Rule 2212 and FINRA 
Incorporated NYSE Rule 440A that update those rules to meet the 
standards of the Prevention Act.\11\
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    \10\ 15 U.S.C. 6102.
    \11\ See Securities Exchange Act Release No. 65645 (October 27, 
2011), 76 FR 67787 (November 2, 2011) (Order Approving File No. SR-
FINRA-2011-059).
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    The proposed rule change, as directed by the Commission staff, 
adopts provisions in proposed NYSE Arca Rule 9.20(b) that are 
substantially similar to the FTC's current rules that prohibit 
deceptive and other abusive telemarketing acts or practices as 
described below.\12\
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    \12\ The text of proposed NYSE Arca Rule 9.20(b) would be the 
same as FINRA Rule 3230, except that (i) the Exchange would 
substitute the terms ``OTP Firm'' and ``OTP Holder'' for ``member;'' 
and (ii) the Exchange would substitute the term ``Associated 
Person'' for ``person associated with a member.''
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Telemarketing Requirements
    Proposed NYSE Arca Rule 9.20(b)(1) provides that no OTP Firm, OTP 
Holder,

[[Page 41850]]

or Associated Person shall initiate any outbound telephone call \13\ 
to:
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    \13\ An ``outbound telephone call'' is a telephone call 
initiated by a telemarketer to induce the purchase of goods or 
services or to solicit a charitable contribution from a donor. A 
``customer'' is any person who is or may be required to pay for 
goods or services through telemarketing. A ``donor'' means any 
person solicited to make a charitable contribution. A ``person'' is 
any individual, group, unincorporated association, limited or 
general partnership, corporation, or other business entity. 
``Telemarketing'' means consisting of or relating to a plan, 
program, or campaign involving at least one outbound telephone call, 
for example cold-calling. The term does not include the solicitation 
of sales through the mailing of written marketing materials, when 
the person making the solicitation does not solicit customers by 
telephone but only receives calls initiated by customers in response 
to the marketing materials and during those calls takes orders only 
without further solicitation. For purposes of the previous sentence, 
the term ``further solicitation'' does not include providing the 
customer with information about, or attempting to sell, anything 
promoted in the same marketing materials that prompted the 
customer's call. See proposed NYSE Arca Rule 9.20(b)(13)(K), (N), 
(P), (Q), and (T); see also FINRA Rule 3230(m)(11), (14), (16), 
(17), and (20); and 16 CFR 310.2(f), (l), (n), (v), (w), and (dd).
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    (1) Any residence of a person before the hour of 8 a.m. or after 9 
p.m. (local time at the called party's location), unless the OTP Firm 
or OTP Holder has an established business relationship \14\ with the 
person pursuant to paragraph 9.20(b)(13)(L)(i), the OTP Firm or OTP 
Holder has received that person's prior express invitation or 
permission, or the person called is a broker or dealer;
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    \14\ An ``established business relationship'' is a relationship 
between an OTP Firm or OTP Holder and a person if (i) the person has 
made a financial transaction or has a security position, a money 
balance, or account activity with the OTP Firm or OTP Holder or at a 
clearing firm that provides clearing services to the OTP Firm or OTP 
Holder within the 18 months immediately preceding the date of an 
outbound telephone call; (b) the OTP Firm or OTP Holder is the 
broker-dealer of record for an account of the person within the 18 
months immediately preceding the date of an outbound telephone call; 
or (c) the person has contacted the OTP Firm or OTP Holder to 
inquire about a product or service offered by the OTP Firm or OTP 
Holder within the three months immediately preceding the date of an 
outbound telephone call. A person's established business 
relationship with an OTP Holder does not extend to the OTP Firm or 
OTP Holder's affiliated entities unless the person would reasonably 
expect them to be included. Similarly, a person's established 
business relationship with an OTP Firm or OTP Holder's affiliate 
does not extend to the OTP Firm or OTP Holder unless the person 
would reasonably expect the OTP Firm or OTP Holder to be included. 
The term ``account activity'' includes, but is not limited to, 
purchases, sales, interest credits or debits, charges or credits, 
dividend payments, transfer activity, securities receipts or 
deliveries, and/or journal entries relating to securities or funds 
in the possession or control of the OTP Firm or OTP Holder. The term 
``broker-dealer of record'' refers to the broker or dealer 
identified on a customer's account application for accounts held 
directly at a mutual fund or variable insurance product issuer. See 
proposed NYSE Arca Rule 9.20(b)(13)(A), (D), and (L); see also 16 
CFR 310.2(o) and FINRA Rule 3230(m)(1), (4), and (12).
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    (2) Any person that previously has stated that he or she does not 
wish to receive an outbound telephone call made by or on behalf of the 
OTP Firm or OTP Holder; \15\ or
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    \15\ This restriction was previously included under NYSE Arca 
Rule 9.20(b)(1). See the discussion below under Procedures.
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    (3) Any person who has registered his or her telephone number on 
the FTC's national do-not-call registry.
    The proposed rule change is substantially similar to the FTC's 
provisions regarding abusive telemarketing acts or practices.\16\ The 
FTC provided a discussion of the provision when it was adopted pursuant 
to the Prevention Act.\17\
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    \16\ See 16 CFR 310.4(b)(1)(iii)(A) and (B) and (c); see also 
FINRA Rule 3230(a).
    \17\ See Federal Trade Commission, Telemarketing Sales Rule, 68 
FR 4580 (Jan. 29, 2003) at 4628; and Federal Trade Commission, 
Telemarketing Sales Rule, 60 FR 43842 (Aug. 23, 1995) at 43855.
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National Do-Not-Call List Exceptions
    Proposed NYSE Arca Rule 9.20(b)(2) provides that an OTP Firm or OTP 
Holder making outbound telephone calls will not be liable for 
initiating any outbound telephone call to any person who has registered 
his or her telephone number on the FTC's national do-not-call registry 
if:
    (1) The OTP Firm or OTP Holder has an established business 
relationship with the recipient of the call; \18\
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    \18\ A person's request to be placed on the firm-specific do-
not-call list terminates the established business relationship 
exception to that national do-not-call list provision for that OTP 
Firm or OTP Holder even if the person continues to do business with 
the OTP Firm or OTP Holder.
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    (2) The OTP Firm or OTP Holder has obtained the person's prior 
express invitation or permission; \19\ or
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    \19\ Such permission must be evidenced by a signed, written 
agreement (which may be obtained electronically under the E-Sign Act 
(See 15 U.S.C. 7001 et seq.) between the person and OTP Firm or OTP 
Holder which states that the person agrees to be contacted by the 
OTP Firm or OTP Holder and includes the telephone number to which 
the calls may be placed.
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    (3) The Associated Person making the call has a personal 
relationship \20\ with the recipient of the call.
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    \20\ The term ``personal relationship'' means any family member, 
friend, or acquaintance of the person making an outbound telephone 
call. See proposed NYSE Arca Rule 9.20(b)(13)(R); see also FINRA 
Rule 3230(m)(18).
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    The proposed rule change modifies the established business 
relationship exception in NYSE Arca Rule 9.20(b) and the definition for 
``established business relationships,'' which is substantially similar 
to the FTC's definition of that term.\21\ In addition, the proposed 
rule change is substantially similar to the FTC's provision regarding 
an exception to the prohibition on making outbound telephone calls to 
persons on the FTC's do-not-call registry.\22\ The FTC provided a 
discussion of the provision when it was adopted pursuant to the 
Prevention Act.\23\
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    \21\ See supra note 14; see also FINRA Rule 3230(a).
    \22\ See 16 CFR 310.4(b)(1)(iii)(B); see also FINRA Rule 
3230(b).
    \23\ See Federal Trade Commission, Telemarketing Sales Rule, 68 
FR 4580 (Jan. 29, 2003) at 4628; and Federal Trade Commission, 
Telemarketing Sales Rule, 60 FR 43842 (Aug. 23, 1995) at 43854.
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Safe Harbor Provision
    Proposed NYSE Arca Rule 9.20(b)(3) provides that an OTP Firm, OTP 
Holder, or Associated Person making outbound telephone calls will not 
be liable for initiating any outbound telephone call to any person who 
has registered his or her telephone number on the FTC's national do-
not-call registry if the OTP Firm, OTP Holder, or Associated Person 
demonstrates that the violation is the result of an error and that as 
part of the OTP Firm or OTP Holder's routine business practice, it 
meets the following standards:
    (1) The OTP Firm or OTP Holder has established and implemented 
written procedures to comply with the national do-not-call rules;
    (2) The OTP Firm or OTP Holder has trained its personnel, and any 
entity assisting in its compliance, in procedures established pursuant 
to the national do-not-call rules;
    (3) The OTP Firm or OTP Holder has maintained and recorded a list 
of telephone numbers that it may not contact; and
    (4) The OTP Firm or OTP Holder uses a process to prevent outbound 
telephone calls to any telephone number on any list established 
pursuant to the do-not-call rules, employing a version of the national 
do-not-call registry obtained from the administrator of the registry no 
more than 31 days prior to the date any call is made, and maintains 
records documenting this process.
    The proposed rule change is substantially similar to the FTC's safe 
harbor to the prohibition on making outbound telephone calls to persons 
on the FTC's national do-not-call registry.\24\ The FTC provided a 
discussion of the provision when it was adopted pursuant to the 
Prevention Act.\25\
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    \24\ See 16 CFR 310.4(b)(1)(iii)(B); see also FINRA Rule 
3230(c).
    \25\ See Federal Trade Commission, Telemarketing Sales Rule, 68 
FR 4580 (Jan. 29, 2003) at 4628; and Federal Trade Commission, 
Telemarketing Sales Rule, 60 FR 43842 (Aug. 23, 1995) at 43855.
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Procedures
    Proposed NYSE Arca Rule 9.20(b)(4) adopts procedures that OTP Firms 
and OTP Holders must institute to comply

[[Page 41851]]

with NYSE Arca Rule 9.20(b)(1) prior to engaging in telemarketing. 
These procedures are substantially similar to the procedural 
requirements under NYSE Arca Rule 9.20(b)(4); however, the proposed 
rule change deletes the requirement that an OTP Holder honor a firm-
specific do-not-call request for five years from the time the request 
is made. Additionally, the proposed rule change clarifies that the 
request not to receive further calls would come from a person. The 
procedures must meet the following minimum standards:
    (1) OTP Firms and OTP Holders must have a written policy for 
maintaining their do-not-call lists.
    (2) Personnel engaged in any aspect of telemarketing must be 
informed and trained in the existence and use of the OTP Firm or OTP 
Holder's do-not-call list.
    (3) If an OTP Firm or OTP Holder receives a request from a person 
not to receive calls from that OTP Firm or OTP Holder, the OTP Firm or 
OTP Holder must record the request and place the person's name, if 
provided, and telephone number on its do-not-call list at the time the 
request is made.\26\
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    \26\ OTP Firms and OTP Holders must honor a person's do-not-call 
request within a reasonable time from the date the request is made, 
which may not exceed 30 days from the date of the request. If these 
requests are recorded or maintained by a party other than the OTP 
Firm or OTP Holder on whose behalf the outbound telephone call is 
made, the OTP Firm or OTP Holder on whose behalf the outbound 
telephone call is made will still be liable for any failures to 
honor the do-not-call request.
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    (4) OTP Firms, OTP Holders, or Associated Persons making an 
outbound telephone call must make certain caller disclosures set forth 
in NYSE Arca Rule 9.20(b)(4)(D).
    (5) In the absence of a specific request by the person to the 
contrary, a person's do-not-call request shall apply to the OTP Firm or 
OTP Holder making the call, and will not apply to affiliated entities 
unless the consumer reasonably would expect them to be included given 
the identification of the call and the product being advertised.
    (6) An OTP Firm or OTP Holder making outbound telephone calls must 
maintain a record of a person's request not to receive further calls.
    Inclusion of this requirement to adopt these procedures will not 
create any new obligations on OTP Firms or OTP Holders, as they are 
already subject to identical provisions under FCC telemarketing 
regulations.\27\
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    \27\ See 47 CFR 64.1200(d); see also FINRA Rule 3230(d).
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Wireless Communications
    Proposed NYSE Arca Rule 9.20(b)(5) states that the provisions set 
forth in the rule are applicable to OTP Firms and OTP Holders 
telemarketing or making telephone solicitations calls to wireless 
telephone numbers. In addition, proposed NYSE Arca Rule 9.20(b)(5) 
clarifies that the application of the rule also applies to Associated 
Persons making outbound telephone calls to wireless telephone 
numbers.\28\
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    \28\ See also FINRA Rule 3230(e).
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Outsourcing Telemarketing
    NYSE Arca Rule 9.20(b)(6) states that if an OTP Firm or OTP Holder 
uses another entity to perform telemarketing services on its behalf, 
the OTP Firm or OTP Holder remains responsible for ensuring compliance 
with all provisions contained in the rule. Proposed NYSE Arca Rule 
9.20(b)(6) also clarifies that OTP Firms and OTP Holders must consider 
whether the entity or person that an OTP Firm or OTP Holder uses for 
outsourcing, must be appropriately registered or licensed, where 
required.\29\
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    \29\ See also FINRA Rule 3230(f).
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Caller Identification Information
    Proposed NYSE Arca Rule 9.20(b)(7) provides that any OTP Firm or 
OTP Holder that engages in telemarketing must transmit or cause to be 
transmitted the telephone number, and, when made available by the OTP 
Firm or OTP Holder's telephone carrier, the name of the OTP Firm or OTP 
Holder, to any caller identification service in use by a recipient of 
an outbound telephone call. The telephone number so provided must 
permit any person to make a do-not-call request during regular business 
hours. In addition, any OTP Firm or OTP Holder that engages in 
telemarketing is prohibited from blocking the transmission of caller 
identification information.\30\
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    \30\ Caller identification information includes the telephone 
number and, when made available by the OTP Firm or OTP Holder's 
telephone carrier, the name of the OTP Firm or OTP Holder.
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    These provisions are similar to the caller identification provision 
in the FTC rules.\31\ Inclusion of these caller identification 
provisions in this proposed rule change will not create any new 
obligations on OTP Firms or OTP Holders, as they are already subject to 
identical provisions under FCC telemarketing regulations.\32\
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    \31\ See 16 CFR 310.4(a)(8); see also FINRA Rule 3230(g).
    \32\ See 47 CFR 64.1601(e).
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Unencrypted Consumer Account Numbers
    Proposed NYSE Arca Rule 9.20(b)(8) prohibits an OTP Firm, OTP 
Holder, or Associated Person from disclosing or receiving, for 
consideration, unencrypted consumer account numbers for use in 
telemarketing. The proposed rule change is substantially similar to the 
FTC's provision regarding unencrypted consumer account numbers.\33\ The 
FTC provided a discussion of the provision when it was adopted pursuant 
to the Prevention Act.\34\ Additionally, the proposed rule change 
defines ``unencrypted'' as not only complete, visible account numbers, 
whether provided in lists or singly, but also encrypted information 
with a key to its decryption. The proposed definition is substantially 
similar to the view taken by the FTC.\35\
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    \33\ See 16 CFR 310.4(a)(6); see also FINRA Rule 3230(h).
    \34\ See Federal Trade Commission, Telemarketing Sales Rule, 68 
FR 4580 (January 29, 2003) at 4615.
    \35\ See id. at 4616.
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Submission of Billing Information
    The proposed rule change provides that, for any telemarketing 
transaction, no OTP Firm, OTP Holder, or Associated Person may submit 
billing information \36\ for payment without the express informed 
consent of the customer. Proposed NYSE Arca Rule 9.20(b)(9) requires, 
for any telemarketing transaction, an OTP Firm, OTP Holder, or 
Associated Person to obtain the express informed consent of the person 
to be charged and to be charged using the identified account. If the 
telemarketing transaction involves preacquired account information \37\ 
and a free-to-pay conversion \38\ feature, the OTP Firm, OTP Holder, or 
Associated Person must:
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    \36\ The term ``billing information'' means any data that 
enables any person to access a customer's or donor's account, such 
as a credit or debit card number, a brokerage, checking, or savings 
account number, or a mortgage loan account number. See proposed NYSE 
Arca Rule 9.20(b)(13)(C).
    \37\ The term ``preacquired account information'' means any 
information that enables an OTP Firm, OTP Holder, or Associated 
Person to cause a charge to be placed against a customer's or 
donor's account without obtaining the account number directly from 
the customer or donor during the telemarketing transaction pursuant 
to which the account will be charged. See proposed NYSE Arca Rule 
9.20(b)(13)(S).
    \38\ The term ``free-to-pay conversion'' means, in an offer or 
agreement to sell or provide any goods or services, a provision 
under which a customer receives a product or service for free for an 
initial period and will incur an obligation to pay for the product 
or service if he or she does not take affirmative action to cancel 
before the end of that period. See proposed NYSE Arca Rule 
9.20(b)(13)(M).
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    (1) Obtain from the customer, at a minimum, the last four digits of 
the account number to be charged;
    (2) Obtain from the customer an express agreement to be charged and 
to be charged using the identified account number; and

[[Page 41852]]

    (3) Make and maintain an audio recording of the entire 
telemarketing transaction.
    For any other telemarketing transaction involving preacquired 
account information, the OTP Firm, OTP Holder, or Associated Person 
must:
    (1) Identify the account to be charged with sufficient specificity 
for the customer to understand what account will be charged; and
    (2) Obtain from the customer an express agreement to be charged and 
to be charged using the identified account number.
    The proposed rule change is substantially similar to the FTC's 
provision regarding the submission of billing information.\39\ The FTC 
provided a discussion of the provision when it was adopted pursuant to 
the Prevention Act.\40\
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    \39\ See 16 CFR 310.4(a)(7); see also FINRA Rule 3230(i).
    \40\ See Federal Trade Commission, Telemarketing Sales Rule, 68 
FR 4580 (January 29, 2003) at 4615.
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Abandoned Calls
    Proposed NYSE Arca Rule 9.20(b)(10) prohibits an OTP Firm, OTP 
Holder, or Associated Person from abandoning \41\ any outbound 
telemarketing call. The abandoned calls prohibition is subject to a 
``safe harbor'' under proposed subparagraph (10)(B) that requires:
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    \41\ An outbound telephone call is ``abandoned'' if the called 
person answers it and the call is not connected to an OTP Firm, OTP 
Holder, or Associated Person within two seconds of the called 
person's completed greeting.
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    (1) The OTP Firm, OTP Holder, or Associated Person to employ 
technology that ensures abandonment of no more than three percent of 
all calls answered by a person, measured over the duration of a single 
calling campaign, if less than 30 days, or separately over each 
successive 30-day period or portion thereof that the campaign 
continues;
    (2) The OTP Firm, OTP Holder, or Associated Person, for each 
telemarketing call placed, allows the telephone to ring for at least 15 
seconds or four rings before disconnecting an unanswered call;
    (3) Whenever an Associated Person is not available to speak with 
the person answering the telemarketing call within two seconds after 
the person's completed greeting, the OTP Firm, OTP Holder, or 
Associated Person promptly plays a recorded message stating the name 
and telephone number of the OTP Firm, OTP Holder, or Associated Person 
on whose behalf the call was placed; and
    (4) The OTP Firm or OTP Holder to maintain records documenting 
compliance with the ``safe harbor.''
    The proposed rule change is substantially similar to the FTC's 
provisions regarding abandoned calls.\42\ The FTC provided a discussion 
of the provisions when they were adopted pursuant to the Prevention 
Act.\43\
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    \42\ See 16 CFR 310.4(b)(1)(iv); see also 16 CFR 310.4(b)(4).
    \43\ See Federal Trade Commission, Telemarketing Sales Rule, 68 
FR 4580 (January 29, 2003) at 4641.
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Prerecorded Messages
    Proposed NYSE Arca Rule 9.20(b)(11) prohibits an OTP Firm, OTP 
Holder, or Associated Person from initiating any outbound telemarketing 
call that delivers a prerecorded message without a person's express 
written agreement \44\ to receive such calls. The proposed rule change 
also requires that all prerecorded telemarketing calls provide 
specified opt-out mechanisms so that a person can opt out of future 
calls. The prohibition does not apply to a prerecorded message 
permitted for compliance with the ``safe harbor'' for abandoned calls 
under proposed subparagraph (10)(B).
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    \44\ The express written agreement must: (a) Have been obtained 
only after a clear and conspicuous disclosure that the purpose of 
the agreement is to authorize the OTP Firm or OTP Holder to place 
prerecorded calls to such person; (b) have been obtained without 
requiring, directly or indirectly, that the agreement be executed as 
a condition of purchasing any good or service; (c) evidence the 
willingness of the called person to receive calls that deliver 
prerecorded messages by or on behalf of the OTP Firm or OTP Holder; 
and (d) include the person's telephone number and signature (which 
may be obtained electronically under the E-Sign Act).
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    The proposed rule change is substantially similar to the FTC's 
provisions regarding prerecorded messages.\45\ The FTC provided a 
discussion of the provisions when they were adopted pursuant to the 
Prevention Act.\46\
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    \45\ See 16 CFR 310.4(b)(1)(v); see also FINRA Rule 3230(k).
    \46\ See Federal Trade Commission, Telemarketing Sales Rule, 73 
FR 51164 (August 29, 2008) at 51165.
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Credit Card Laundering
    Proposed NYSE Arca Rule 9.20(b)(12) prohibits credit card 
laundering, the practice of depositing into the credit card system \47\ 
a sales draft that is not the result of a credit card transaction 
between the cardholder \48\ and the OTP Firm or OTP Holder. Except as 
expressly permitted, the proposed rule change prohibits an OTP Firm, 
OTP Holder, or Associated Person from:
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    \47\ The term ``credit card system'' means any method or 
procedure used to process credit card transactions involving credit 
cards issued or licensed by the operator of that system. The term 
``credit card'' means any card, plate, coupon book, or other credit 
device existing for the purpose of obtaining money, property, labor, 
or services on credit. The term ``credit'' means the right granted 
by a creditor to a debtor to defer payment of debt or to incur debt 
and defer its payment. See proposed NYSE Arca Rule 9.20(b)(13)(G), 
(H), and (J).
    \48\ The term ``cardholder'' means a person to whom a credit 
card is issued or who is authorized to use a credit card on behalf 
of or in addition to the person to whom the credit card is issued. 
See proposed NYSE Arca Rule 9.20(b)(13)(F).
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    (1) Presenting to or depositing into, the credit card system for 
payment, a credit card sales draft \49\ generated by a telemarketing 
transaction that is not the result of a telemarketing credit card 
transaction between the cardholder and the OTP Firm or OTP Holder;
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    \49\ The term ``credit card sales draft'' means any record or 
evidence of a credit card transaction. See proposed NYSE Arca Rule 
9.20(b)(13)(I).
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    (2) Employing, soliciting, or otherwise causing a merchant,\50\ or 
an employee, representative or agent of the merchant, to present to or 
to deposit into the credit card system for payment, a credit card sales 
draft generated by a telemarketing transaction that is not the result 
of a telemarketing credit card transaction between the cardholder and 
the merchant; or
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    \50\ The term ``merchant'' means a person who is authorized 
under written contract with an acquirer to honor or accept credit 
cards, or to transmit or process for payment credit card payments, 
for the purchase of goods or services or a charitable contribution. 
The term ``acquirer'' means a business organization, financial 
institution, or an agent of a business organization or financial 
institution that has authority from an organization that operates or 
licenses a credit card system to authorize merchants to accept, 
transmit, or process payment by credit card through the credit card 
system for money, goods or services, or anything else of value. A 
``charitable contribution'' means any donation or gift of money or 
any other thing of value, for example a transfer to a pooled income 
fund. See proposed NYSE Arca Rule 9.20(b)(13)(B) and (N).
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    (3) Obtaining access to the credit card system through the use of a 
business relationship or an affiliation with a merchant, when such 
access is not authorized by the merchant agreement \51\ or the 
applicable credit card system.
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    \51\ The term ``merchant agreement'' means a written contract 
between a merchant and an acquirer to honor or accept credit cards, 
or to transmit or process for payment credit card payments, for the 
purchase of goods or services or charitable contribution. See 
proposed NYSE Arca Rule 9.20(b)(13)(O).
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    The proposed rule change is substantially similar to the FTC's 
provisions regarding credit card laundering.\52\ The FTC provided a 
discussion of the provisions when they were adopted pursuant to the 
Prevention Act.\53\
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    \52\ See 16 CFR 310.2; see also FINRA Rule 3230(l).
    \53\ See Federal Trade Commission, Telemarketing Sales Rule, 60 
FR 43842 (August 23, 1995) at 43852.
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Definitions
    Proposed NYSE Arca Rule 9.20(b)(13) adopts the following 
definitions, which are substantially similar to the FTC's definitions 
of these terms: ``acquirer,''

[[Page 41853]]

``billing information,'' ``caller identification service,'' 
``cardholder,'' ``charitable contribution,'' ``credit,'' ``credit 
card,'' ``credit card sales draft,'' ``credit card system,'' 
``customer,'' ``donor,'' ``established business relationship,'' ``free-
to-pay conversion,'' ``merchant,'' ``merchant agreement,'' ``outbound 
telephone call,'' ``person,'' ``preacquired account information,'' and 
``telemarketing''.\54\ The FTC provided a discussion of each definition 
when they were adopted pursuant to the Prevention Act.
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    \54\ See proposed NYSE Arca Rule 9.20(b)(13)(B), (C), (E), (F), 
(G), (H), (I), (J), (K), (L), (M), (N), (O), (P), (Q), (S), and (T); 
and 16 CFR 310.2(a), (c), (d), (e), (f), (h), (i), (j), (k), (l), 
(n), (o), (p), (s), (t), (v), (w), (x), and (dd); see also FINRA 
Rule 3230(m)(2), (3), (5), (6), (7), (8), (9), (10), (11), (12), 
(13), (14), (15), (16), (17), (19), and (20). The proposed rule 
change also adopts definitions of ``account activity,'' ``broker-
dealer of record,'' and ``personal relationship'' that are 
substantially similar to FINRA's definitions of these terms. See 
proposed NYSE Arca Rule 9.20(b)(13)(A), (D), and (R) and FINRA Rule 
3230(m)(1), (4), and (18); see also 47 CFR 64.1200(t)(14) (FCC's 
definition of ``personal relationship'').
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    The Exchange proposes make the new rule text to NYSE Arca Rule 
9.20(b) effective on the same date as FINRA makes FINRA Rule 3230 
effective.\55\
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    \55\ See supra note 4.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Exchange Act \56\ in general, and furthers the 
objectives of Section 6(b)(5) \57\ in particular, in that it is 
designed to prevent fraudulent and manipulative acts and practices, to 
promote just and equitable principles of trade, to foster cooperation 
and coordination with persons engaged in facilitating transactions in 
securities, and to remove impediments to and perfect the mechanism of a 
free and open market and a national market system. Specifically, the 
Exchange believes that the proposed rule change supports the objectives 
of the Exchange Act by providing greater harmonization between NYSE 
Arca Rules and FINRA Rules of similar purpose, resulting in less 
burdensome and more efficient regulatory compliance. In particular, 
NYSE Arca OTP Holders that are also FINRA members are subject to both 
NYSE Arca Rule 9.20(b) and FINRA Rule 3230 and harmonizing these two 
rules would promote just and equitable principles of trade by requiring 
a single standard for telemarketing. In addition, adopting new rule 
text to NYSE Arca Rule 9.20(b) will assure that the Exchange's rules 
governing telemarketing meet the standards set forth in the Prevention 
Act. To the extent the Exchange has proposed changes that differ from 
the FINRA version of the NYSE Arca Rules, it believes such changes are 
technical in nature and do not change the substance of the proposed 
NYSE Arca Rule. The Exchange also believes that the proposed rule 
change will update and clarify the requirements governing 
telemarketing, which will promote just and equitable principles of 
trade and help to protect investors.
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    \56\ 15 U.S.C. 78f(b).
    \57\ 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 competition that is not necessary or appropriate 
in furtherance of the purposes of the Exchange Act.

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

    The Exchange neither solicited nor received written comments 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 Exchange Act \58\ and Rule 19b-4(f)(6) 
thereunder.\59\ 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 
Exchange Act and Rule 19b-4(f)(6)(iii) thereunder.
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    \58\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \59\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) \60\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b4(f)(6)(iii),\61\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has asked 
the Commission to waive the 30-day operative delay so that the proposal 
may become operative immediately upon filing.
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    \60\ 17 CFR 240.19b-4(f)(6).
    \61\ 17 CFR 240.19b-4(f)(6)(iii).
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    At any time within 60 days of the filing of such 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 Exchange Act.

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 Exchange 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-NYSEARCA-2012-54 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-NYSEARCA-2012-54. This 
file 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 Section, 100 F Street 
NE., Washington, DC 20549-1090 on official business days between the 
hours of 10 a.m. and 3 p.m. Copies of the filing will also be available 
for inspection and copying at the NYSE's principal office and on its 
Internet Web site at www.nyse.com. 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.

[[Page 41854]]

    All submissions should refer to File Number SR-NYSEARCA-2012-54 and 
should be submitted on or before August 6, 2012.
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    \62\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\62\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-17173 Filed 7-13-12; 8:45 am]
BILLING CODE 8011-01-P


