The NYSE proposes to amend the definition of approved person to exclude foreign affiliates, eliminate the application process for approved persons, and make related technical and conforming changes.  NYSE-Regulation will announce the implementation date in an Information Memo. Current Rules. NYSE Rules 2 and 304 currently govern the definition of and application process for an approved person.  Those individuals meeting the definition requirements must apply to the Exchange for approval to register as an approved person.  This is intended requirement is intended to bring certain affiliates of Exchange member organizations within the Exchange’s jurisdiction and to subject such affiliates’ activities to Exchange rules to the extent their activities are related to the activities of the member organization.

“Approved Person”: Person, other than a member, principal executive or employee of a member organization, who controls a member organization or is engaged in a securities or kindred business that is controlled by or under common control with a member or member organization who has been approved by the Exchange as an approved person.”  Natural persons, as well as corporations, LLCs, partnerships, associations and other organized groups of persons can be an approved person.

By control, NYSE means having the the power to direct or cause the direction of management or policies, whether through ownership of securities, by contract or otherwise, and creates a rebuttable presumpution of control if the person has a right to vote 25% or more of the voting securities, etc.

Proposed Changes. As proposed, the definition of approved person in NYSE Rule 2 would exclude certain foreign affiliates because the Exchange believes that the current definition is overbroad and it's unnecessary to assert jurisdiction over a foreign  affiliate of a member organization that does not control a member organization.  Excluding such foreign affiliates from its jurisdiction, NYSE would be consistent with Rule 19g2-1 under the Securities Exchange Act of 1934, which provides, among other things, that an exchange is not required to enforce compliance with its rules against certain person. The rule change is not intended to eliminate certain controls in Exchange rules related to potential conflicts of interest associated with having a foreign affiliate under common  control with a member organization.   Accordingly, the Exchange proposes several amendments to its Rules - detailed in the rule filing. The Exchange also proposes to amend its rules to remove the requirement that the Exchange affirmatively approve each application to become an approved person.  If a person meets the definition of an approved person, as proposed, the Exchange will obtain jurisdiction by consent as described in the filing.  The Exchange believes that the current application process requires the submission of a substantial amount of information and documents related to member organization affiliates - unnecessary to carry out the Exchange’s regulatory responsibilities. In particular, because the Exchange no longer is the DEA for Exchange member organizations, it does not believe that it needs to engage in a detailed financial review of approved persons of its member organization applicants.  It further notes that other SROs do not require that such persons undergo such an application and approval process.  The Exchange, therefore, would remove all references to an approval process and the submission of an application for such approval from NYSE Rules 2, 304, 308, and 311. The Exchange also would eliminate use of the Forms AP-1 and AD-G. For further details:  [NYSE Rule Filing 12-2, 1/31/12].