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Rule 311. Formation and Approval of Member Organizations

This version was introduced with the filing of SR-FINRA-2017-007 which has been approved by the SEC. The effective date for this version has not yet been determined.

(a) Any person who proposes to form a member organization and any member organization which proposes to admit therein any approved person shall notify the Exchange in writing before any such formation or admission and shall submit such information as may be required by the Rules of the Exchange. No such member organization shall become or remain a member organization unless all persons required to be approved are so approved and execute such agreements with the Exchange as the Rules of the Exchange may prescribe.
(b) The Board of Directors shall not approve a partnership or corporation as a member organization unless:
(1) each director of such corporation is a member, principal executive or an approved person; and
(2) every person who controls such corporation is a member, principal executive or approved person; and
(3) every natural person who is a general partner in such partnership is a member or principal executive and every other person who controls such partnership is a member, principal executive or approved person; and
(4) every person who engages in a securities or kindred business and is controlled by or under common control with such partnership or corporation is an approved person; and
(5) The Board of Directors of such corporation designates "principal executives"; and
(6) such partnership or corporation complies with such additional requirements as the rules of the Exchange may prescribe.
(7) every employee who is associated as a member with such member organization is designated with a title, such as vice president, consistent with his responsibilities and the usage of titles within such organization.
(c) In the case of existing corporations making application to become member corporations, there shall be submitted to the Exchange:
(1) A certified list of all holders of record of each class of stock, giving the name and address of the holder and the number of shares of each class of such stock held;
(2) A certified list of all persons who are to become members, principal executives, directors or approved persons,
(3) A certified list of all persons designated as principal executives of the corporation.
In the case of corporations proposed to be organized, similar information shall be submitted to the Exchange.
(d) The approval of a corporation as a member corporation constitutes only a revocable privilege and confers on the corporation no right or interest of any nature whatsoever to continue as a member corporation.
(e) No member corporation shall issue any publicly held security in the form of non-voting common stock unless the Exchange determines that the non-voting common stock has normal and appropriate preferences which entitle it to be regarded as preferred stock.
(f) Every member firm shall be a partnership and every member corporation shall be a corporation created or organized under the laws of, and shall maintain its principal place of business in, the United States or any State thereof. The Exchange may, in its discretion, and on such terms and conditions as the Exchange may prescribe, approve as a member organization entities that have characteristics essentially similar to corporations, partnerships, or both. Such entities, and persons associated therewith shall, upon approval, be fully, formally and effectively subject to the jurisdiction, and to the Rules of the Exchange to the same extent and degree as are any other member organization and person associated therewith.
(g) Each member organization shall execute and file with the Exchange a written agreement in a form acceptable to the Exchange evidencing
(1) the authority of any member who is an officer or employee of such member organization to transact business on the Floor on behalf of such member organization, and
(2) such member organization's responsibility and obligation with respect to any contract entered into on the Floor by any such member.
Amendments.
March 26, 1970.
July 11, 1974, effective July 18, 1974.
August 9, 1976.
July 13, 1978.
April 2, 1979.
January 21, 1981.
March 29, 1989.
September 13, 1994.
February 27, 2006, effective March 8, 2006 (NYSE-2005-77), amended by SR-FINRA-2008-034 eff. Jan. 1, 2008.
Amended by SR-FINRA-2008-036.

• • • Supplementary Material: --------------

.10 Rescinded effective February 15, 1979. (See Rule 351 for reporting requirements.)
.11 Application

The papers required to be submitted prior to approval of the formation or admission of a member organization are as follows:
(1) Letter giving name and address of proposed or existing organization, date of proposed formation or admission, and names of all proposed or present officers and other parties required to be approved by the Exchange under Rules 304 and 311; and
(2) individually executed applications by all parties whose approval by the Exchange is required.
The papers required to be submitted prior to approval of the admission to an existing member organization of any party requiring the approval of the Exchange under Rules 304 and 311, are as follows:
(1) Letter stating name of such proposed party and proposed date of admission to member organization; and
(2) an individually executed application by such proposed party.
.12 Authorization and Statement of Understanding

Each member organization, or proposed member organization, must submit the following authorization and statement of understanding executed by each natural person requiring the approval of the Exchange under Rule 304:
"In connection with my current application, I authorize the New York Stock Exchange, Inc. and any agent acting on its behalf, to conduct an investigation of my character, credit worthiness, ability, business activities, educational background, previous employment and reasons for termination thereof.

"I authorize and request any and all of my former employers, and any other person to furnish to the Exchange, and any agent acting on its behalf, any information that they may have concerning my character, credit worthiness, ability, business activities, educational background, general reputation, previous employment and reasons for termination thereof . . . Moreover, I hereby release each such employer and each such other person from any and all liability of whatsoever nature by reason of furnishing such information to the Exchange and any agent acting on its behalf.

"Further, I recognize that I will be the subject of an investigative report ordered by the Exchange and acknowledge that I have been informed of my right to request information from the Exchange concerning the nature and scope of the investigation requested."
.13 Agreement with the Exchange

Each member corporation and each member and approved person of the corporation must agree with the Exchange that if any person required to be approved by the Exchange as a member or approved person fails or ceases to be so approved, the corporation may be deprived by the Exchange of all the privileges of a member corporation unless the corporation redeems or converts the stock held by such person as required under Rule 312.
.14 Partnership agreements

For information regarding the submission of copies of proposed partnership articles, see ¶2313.10.
.15 Corporate documents

For information regarding the submission of copies of proposed or existing corporate documents and other agreements, see ¶2313.20.
.16 Filing With Agent

Any filing or submission required under this rule which is made with a properly authorized agent acting on behalf of the Exchange shall for purposes of this rule be deemed to be a filing with the Exchange.

Amendments.
March 26, 1970.
July 11, 1974, effective July 18, 1974.
August 9, 1976.
July 13, 1978.
April 2, 1979.
January 21, 1981.
March 29, 1989.
September 13, 1994.
February 27, 2006, effective March 8, 2006 (NYSE-2005-77), amended by SR-FINRA-2008-034 eff. Jan. 1, 2008.
Amended by SR-FINRA-2008-036 eff. Nov. 11, 2008.
Amended by SR-FINRA-2017-007.

Selected Notice: 08-64.

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