[Federal Register Volume 76, Number 110 (Wednesday, June 8, 2011)]
[Notices]
[Pages 33388-33389]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-14062]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-64590; File No. SR-FINRA-2011-020]
Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Order Granting Approval of a Proposed Rule Change
Relating to FINRA's Trading Activity Fee Rate for Transactions in
Covered Equity Securities
June 2, 2011.
I. Introduction
On April 26, 2011, the Financial Industry Regulatory Authority,
Inc. (``FINRA'') filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (the ``Act'') \1\ and Rule 19b-4 thereunder,\2\ a
proposed rule change related to FINRA's Trading Activity Fee (``TAF'')
for transactions in Covered Securities. The proposed rule change was
published for comment in the Federal Register on May 3, 2011.\3\ The
Commission received no comments on the proposal. This order approves
the proposed rule change.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 64353 (April 27,
2011), 76 FR 24942 (``Notice'').
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II. Description of the Proposal
FINRA's proposal would amend Section 1 of Schedule A to the FINRA
By-Laws to adjust the rate of FINRA's TAF for transactions in Covered
Securities that are exchange-registered equity securities. Covered
Securities are defined in Section 1 of Schedule A to the FINRA By-Laws
as: exchange-registered securities wherever executed (except debt
securities that are not TRACE-Eligible Securities); OTC Equity
Securities; security futures; TRACE-Eligible Securities (provided that
the transaction is a Reportable TRACE Transaction); and all municipal
securities subject to Municipal Securities Rulemaking Board reporting
requirements. The rules governing the TAF also include a list of exempt
transactions.\4\ The TAF, along with the Personnel Assessment and the
Gross Income Assessment fees, are used to fund FINRA's regulatory
activities, including examinations; financial monitoring; and FINRA's
policymaking, rulemaking, and enforcement activities.\5\
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\4\ See FINRA By-Laws, Schedule A, Sec. 1(b)(2).
\5\ See FINRA By-Laws, Schedule A, Sec. 1(a).
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The current TAF rate is $0.000075 per share for each sale of a
Covered Security, with a maximum charge of
[[Page 33389]]
$3.75 per trade. In the Notice, the Exchange stated that over 95% of
TAF revenue is generated by transactions in Covered Securities that are
equity securities. Thus, FINRA's revenue from the TAF is substantially
affected by changes in trading volume in the equities markets and, due
to the substantial decrease in average daily share volumes since 2009,
FINRA has experienced a commensurate substantial decline in revenue
from the TAF. Accordingly, FINRA has proposed to increase the TAF rate
for Covered Securities that are equity securities by $0.000015 per
share, from $0.000075 per share to $0.000090 per share, with a
corresponding increase to the per-transaction cap for Covered
Securities that are equity securities from $3.75 to $4.50.\6\ FINRA
stated in the Notice that the TAF for covered securities that are
equity securities rate has not been adjusted in over six years, and
that the proposal is designed to ``stabilize revenue flows necessary to
support FINRA's regulatory mission.''
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\6\ Because transactions in Covered Securities that are equity
securities account for over 95% of TAF revenues, FINRA is not
proposing adjustments to the TAF rates for other types of Covered
Securities.
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FINRA proposes July 1, 2011 as the effective date of the adjusted
TAF and will announce the effective date of the proposed rule change in
a Regulatory Notice.
III. Discussion and Commission's Findings
After carefully considering the proposed rule change, the
Commission finds that it is consistent with the requirements of the Act
and the rules and regulations thereunder applicable to a national
securities association.\7\ In particular, the Commission finds that the
proposal is consistent with Section 15A(b)(5) of the Act,\8\ which
requires, among other things, that FINRA rules provide for the
equitable allocation of reasonable dues, fees, and other charges among
members and issuers and other persons using any facility or system that
FINRA operates or controls. The Commission believes that the proposal
is reasonably designed to secure adequate funding to support FINRA's
regulatory duties.
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\7\ In approving this proposal, the Commission has considered
the proposed rule's impact on efficiency, competition, and capital
formation. See 15 U.S.C. 78c(f).
\8\ 15 U.S.C. 78o-3(b)(5).
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IV. Conclusion
It Is Therefore Ordered, pursuant to Section 19(b)(2) of the
Act,\9\ that the proposed rule change (SR-FINRA-2011-020), be, and
hereby is, approved.
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\9\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\10\
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\10\ 17 CFR 200.30-3(a)(12).
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Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-14062 Filed 6-7-11; 8:45 am]
BILLING CODE 8011-01-P