[Federal Register Volume 78, Number 29 (Tuesday, February 12, 2013)]
[Notices]
[Pages 9979-9981]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-03104]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-68846; File No. SR-FINRA-2013-009]
Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing and Immediate Effectiveness of
Proposed Rule Change To Modify the ``Late Report--T+N'' Fee Applicable
to Members Using the FINRA/Nasdaq Trade Reporting Facility
February 6, 2013.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on February 1, 2013, Financial Industry Regulatory Authority, Inc.
(``FINRA'') filed with the Securities and Exchange Commission (``SEC''
or ``Commission'') the proposed rule change as described in Items I, II
and III below, which Items have been prepared by FINRA. FINRA has
designated the proposed rule change as ``establishing or changing a
due, fee or other charge'' under Section 19(b)(3)(A)(ii) of the Act \3\
and Rule 19b-4(f)(2) thereunder,\4\ which renders the proposal
effective upon receipt of this filing by the Commission. 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\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A)(ii).
\4\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of the
Substance of the Proposed Rule Change
FINRA is proposing to amend FINRA Rule 7620A to modify the ``Late
Report--T+N'' fee applicable to members that use the FINRA/Nasdaq Trade
Reporting Facility (the ``FINRA/Nasdaq TRF'').
Below is the text of the proposed rule change. Proposed new
language is in italics; proposed deletions are in brackets.
* * * * *
7000. CLEARING, TRANSACTION AND ORDER DATA REQUIREMENTS, AND FACILITY
CHARGES
* * * * *
7600. CHARGES FOR TRADE REPORTING FACILITY SERVICES
7600A. CHARGES FOR FINRA/NASDAQ TRADE REPORTING FACILITY SERVICES
* * * * *
7620A. FINRA/Nasdaq Trade Reporting Facility Reporting Fees
The following charges shall be paid by participants for use of
the FINRA/Nasdaq Trade Reporting Facility. In the case of trades
where the same market participant is on both sides of a trade
report, applicable fees assessed on a ``per side'' basis will be
assessed once, rather than twice, and the market participant will be
assessed applicable Non-Comparison/Accept (Non-Match/Compare)
Charges as the Executing Party side only.
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Non-Comparison/Accept (Non-Match/
Compare) Charges:
------------------------------------------------------------------------
Tape............................... Daily Average Number of Media/
Executing Party Trades During the
Month Needed to Qualify for Cap
A.................................. 2500
B.................................. 2500
C.................................. 2500
------------------------------------------------------------------------
Media/Executing Party
------------------------------------------------------------------------
Monthly Charge..................... Maximum Monthly Charge if Capped
($0.018) x (Number of Media/ ($0.018) x (Required Daily Average
Executing Party Reports During the Number of Media/EP Trades for Tape
Month). A, B or C) x (Number of Trading
Days During the Month)
------------------------------------------------------------------------
Non-Media/Executing Party
------------------------------------------------------------------------
Monthly Charge..................... Maximum Monthly Charge if Capped
($0.018) x (Number of Non-Media/ ($0.018) x 2500 for Tape A, B or C
Executing Party Reports During the x (Number of Trading Days During
Month). the Month)
------------------------------------------------------------------------
Media/Contra
------------------------------------------------------------------------
Monthly Charge..................... Maximum Monthly Charge if Capped
($0.013) x (Number of Media/Contra ($0.013) x 2500 for Tape A, B or C
Reports During the Month). x (Number of Trading Days During
the Month)
------------------------------------------------------------------------
Non-Media/Contra
------------------------------------------------------------------------
Monthly Charge..................... Maximum Monthly Charge if Capped
[[Page 9980]]
($0.013) x (Number of Non-Media/ ($0.013) x 2500 for Tape A, B or C
Contra Reports During the Month). x (Number of Trading Days During
the Month)
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Standard Fees:
Clearing report to transfer a $0.03/side
transaction fee charged by one
member to another member pursuant
to Rule 7230A(h).
Comparison/Accept.................. $0.0144/side per 100 shares
(minimum 400 shares; maximum 7,500
shares)
Late Report--T+N................... $0.288/[side] trade (charged to the
Executing Party)
Query.............................. $0.50/query
Corrective Transaction Charge...... $0.25/Cancel, Error, Inhibit, Kill,
or `No' portion of No/Was
transaction, paid by reporting
side; $0.25/Break, Decline
transaction, paid by each party
------------------------------------------------------------------------
* * * Supplementary Material:
.01 No Change.
* * * * *
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, FINRA 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 these statements may be examined at the places specified in
Item IV below. FINRA has prepared summaries, set forth in sections A,
B, and C below, of the most significant aspects of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The FINRA/Nasdaq TRF is a facility of FINRA that is operated by The
NASDAQ OMX Group, Inc. (``NASDAQ OMX'') and utilizes Automated
Confirmation Transaction (``ACT'') Service technology. In connection
with the establishment of the FINRA/Nasdaq TRF, FINRA and NASDAQ OMX
entered into a limited liability company agreement (the ``LLC
Agreement''). Under the LLC Agreement, FINRA, the ``SRO Member,'' has
sole regulatory responsibility for the FINRA/Nasdaq TRF. NASDAQ OMX,
the ``Business Member,'' is primarily responsible for the management of
the FINRA/Nasdaq TRF's business affairs, to the extent those affairs
are not inconsistent with the regulatory and oversight functions of
FINRA. As such, the Business Member establishes pricing for use of the
FINRA/Nasdaq TRF, and such pricing is implemented pursuant to FINRA
rules that must be filed with the SEC and be consistent with the
Act.\5\ In addition, the Business Member is obligated to pay the cost
of regulation and is entitled to the profits and losses, if any,
derived from the operation of the FINRA/Nasdaq TRF.\6\
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\5\ Because there are two FINRA Trade Reporting Facilities
operated by different exchange Business Members competing for market
share (the FINRA/Nasdaq TRF and the FINRA/NYSE TRF), FINRA does not
take a position on whether the pricing for one TRF is more favorable
or competitive than the pricing for the other TRF.
\6\ FINRA notes that the same contractual arrangement is in
place for the FINRA/NYSE TRF, with FINRA as the SRO Member and NYSE
as the Business Member. The LLC agreements for the FINRA/Nasdaq TRF
and the FINRA/NYSE TRF were submitted as part of the rule filings to
establish the respective TRFs and can be found in the FINRA Manual.
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Pursuant to Rule 7620A, FINRA members are charged certain fees for
trade reporting to the FINRA/Nasdaq TRF. Currently, the FINRA/Nasdaq
TRF imposes a ``Late Report--T+N'' fee of $0.288 on each party to a
late trade report that is submitted one or more days after trade date
(T+N). NASDAQ OMX, as the Business Member, has determined to modify
this fee. Under the proposed rule change, the Late Report--T+N fee
(which will remain set at $0.288) will be imposed only on the member
with the obligation to report the trade under FINRA rules (defined in
Rule 7620A as the ``Executing Party'').\7\ The responsibility for
reporting trades is imposed on only one party to the trade, and as
such, NASDAQ OMX, as the Business Member, has determined that the Late
Report--T+N trade report fee should only be imposed on one party to the
trade as well. The proposed rule change would ensure that the contra
party to a trade is not subject to a fee due to late trade reporting by
the Executing Party.
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\7\ Rule 7620A defines ``Executing Party (EP)'' as the member
with the trade reporting obligation under FINRA rules. Under FINRA
Rule 6380A(b), in a trade between a member and non-member or
customer, the member has the obligation to report the trade, and in
a trade between two members, the member that receives an order for
handling or execution or is presented an order against its quote,
does not subsequently re-route the order, and executes the
transaction, has the obligation to report the trade.
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FINRA has filed the proposed rule change for immediate
effectiveness. The operative date of the proposed rule change is the
date of filing, February 1, 2013.
2. Statutory Basis
FINRA believes that the proposed rule change is consistent with the
provisions of Section 15A of the Act,\8\ in general, and with Sections
15A(b)(5) and (6) of the Act,\9\ in particular, in that it provides 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, and is not designed to permit
unfair discrimination between customers, issuers, brokers or dealers.
All similarly situated members are subject to the same fee structure,
and access to the FINRA/Nasdaq TRF is offered on fair and non-
discriminatory terms. FINRA believes that the proposed rule change is
reasonable, consistent with an equitable allocation of fees and is not
unfairly discriminatory because it will reduce fees imposed on members
that are contra parties to a trade that has been reported late on a T+N
basis by the Executing Party and eliminate the circumstance where the
contra party is charged a fee even though it has no responsibility for
the late submission.
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\8\ 15 U.S.C. 78o-3.
\9\ 15 U.S.C. 78o-3(b)(5) and (6).
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B. Self-Regulatory Organization's Statement on Burden on Competition
FINRA does not believe that the proposed rule change will result in
any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act. The proposed rule change will
reduce the fees paid by some members, but will not result in a fee
increase for any members. Because the price change is not expected to
have a significant impact on
[[Page 9981]]
the fees paid by market participants, FINRA does not believe that the
change will affect the competitive standing of the FINRA/Nasdaq TRF or
members that use the facility to report trades to FINRA.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
Written comments were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A) of the Act \10\ and paragraph (f)(2) of Rule 19b-4
thereunder.\11\ 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.
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\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 17 CFR 240.19b-4(f)(2).
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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 [email protected]. Please include
File Number SR-FINRA-2013-009 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-FINRA-2013-009. 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 Room on
official business days between the hours of 10:00 a.m. and 3:00 p.m.
Copies of such filing also will be available for inspection and copying
at the principal offices of FINRA. 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-FINRA-2013-009, and should be submitted on or before
March 5, 2013.
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\12\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-03104 Filed 2-11-13; 8:45 am]
BILLING CODE 8011-01-P