[Federal Register Volume 78, Number 172 (Thursday, September 5, 2013)]
[Notices]
[Pages 54694-54696]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-21536]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-70288; File No. SR-FINRA-2013-038]
Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Extend a TRACE Pilot Program in FINRA Rule
6730(e)(4)
August 29, 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 August 26, 2013, the 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 and
II below, which Items have been prepared by FINRA. FINRA has designated
the proposed rule change as constituting a ``non-controversial'' rule
change under paragraph (f)(6) of Rule 19b-4 under the Act,\3\ 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\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
FINRA is proposing to extend the pilot program in FINRA Rule
6730(e)(4) to October 23, 2015. The pilot program exempts from
reporting to the Trade Reporting and Compliance Engine (``TRACE'')
transactions in TRACE-Eligible Securities that are executed on a
facility of the New York Stock Exchange (``NYSE'') in accordance with
NYSE Rules 1400, 1401 and 86 and reported to NYSE in accordance with
NYSE's applicable trade reporting rules and disseminated publicly by
NYSE.
Below is the text of the proposed rule change. Proposed new
language is in italics; proposed deletions are in brackets.
* * * * *
[[Page 54695]]
6700. TRADE REPORTING AND COMPLIANCE ENGINE (TRACE)
* * * * *
6730. Transaction Reporting
(a) through (d) No Change.
(e) Reporting Requirements for Certain Transactions and Transfers
of Securities
The following shall not be reported:
(1) through (3) No Change.
(4) Provided that a data sharing agreement between FINRA and NYSE
related to transactions covered by this Rule remains in effect, for a
pilot program expiring on [October 25, 2013] October 23, 2015,
transactions in TRACE-Eligible Securities that are executed on a
facility of NYSE in accordance with NYSE Rules 1400, 1401 and 86 and
reported to NYSE in accordance with NYSE's applicable trade reporting
rules and disseminated publicly by NYSE.
(5) through (6) No Change.
(f) No Change.
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 pilot program set forth in FINRA Rule 6730(e)(4) exempts from
reporting to TRACE those transactions in TRACE-Eligible Securities that
are executed on a facility of NYSE in accordance with NYSE Rules 1400,
1401 and 86 and reported to NYSE in accordance with NYSE's applicable
trade reporting rules and disseminated publicly by NYSE, provided that
a data sharing agreement between FINRA and NYSE related to transactions
covered by the Rule remains in effect.\4\ The pilot program is
currently scheduled to expire on October 25, 2013.
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\4\ See Securities Exchange Act Release No. 54768 (November 16,
2006), 71 FR 67673 (November 22, 2006) (Order Approving Proposed
Rule Change; File No. SR-NASD-2006-110) (pilot program in FINRA Rule
6730(e)(4), subject to the execution of a data sharing agreement
addressing relevant transactions, became effective on January 9,
2007); Securities Exchange Act Release No. 59216 (January 8, 2009),
74 FR 2147 (January 14, 2009) (Notice of Filing and Immediate
Effectiveness of Proposed Rule Change; File No. SR-FINRA-2008-065)
(pilot program extended to January 7, 2011); Securities Exchange Act
Release No. 63673 (January 7, 2011), 76 FR 2739 (January 14, 2011)
(Notice of Filing and Immediate Effectiveness of Proposed Rule
Change; File No. SR-FINRA-2011-002) (pilot program extended to July
8, 2011); Securities Exchange Act Release No. 64665 (June 14, 2011),
76 FR 35933 (June 20, 2011) (Notice of Filing and Immediate
Effectiveness of Proposed Rule Change; File No. SR-FINRA-2011-025)
(pilot program extended to January 27, 2012); Securities Exchange
Act Release No. 66018 (December 21, 2011), 76 FR 81549 (December 28,
2011) (Notice of Filing and Immediate Effectiveness of Proposed Rule
Change; File No. SR-FINRA-2011-072) (pilot program extended to
October 26, 2012); and Securities Exchange Act Release No. 68076
(October 22, 2012), 77 FR 65431 (October 26, 2012) (Notice of Filing
and Immediate Effectiveness of Proposed Rule Change; File No. SR-
FINRA-2012-047) (pilot program extended to October 25, 2013).
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FINRA is proposing to extend the pilot program until October 23,
2015 to continue to exempt transactions in TRACE-Eligible Securities on
an NYSE facility (and as to which all the other conditions of the
exemption are met) from the TRACE reporting requirements. The extension
will provide additional time to analyze the impact of the exemption.
Without the extension, members would be subject to both FINRA's and
NYSE's trade reporting requirements with respect to these securities.
The proposed change thus serves to eliminate duplicative reporting
requirements for these securities and the resulting compliance costs
and burdens.
The proposed rule change would not expand or otherwise change the
pilot. FINRA notes that the success of the pilot program remains
dependent on FINRA's ability to continue to effectively conduct
surveillance on corporate debt trading in the over-the-counter market.
In this regard, the parties continue to share data related to the
transactions covered by FINRA Rule 6730(e)(4) as required by the Rule.
However, FINRA supports a regulatory construct that, in the future,
consolidates all last sale transaction information to provide better
price transparency and a more efficient means to engage in market
surveillance of TRACE-Eligible Securities transactions. The proposed
extension would allow the pilot program to continue to operate without
interruption while FINRA and NYSE continue to assess the effect of the
exemption and issues regarding the consolidation of market data, market
surveillance and price transparency.
FINRA has filed the proposed rule change for immediate
effectiveness. The implementation date will be October 25, 2013.
2. Statutory Basis
FINRA believes that the proposed rule change is consistent with the
provisions of Section 15A(b)(6) of the Act,\5\ which requires, among
other things, that FINRA rules must be designed to prevent fraudulent
and manipulative acts and practices, to promote just and equitable
principles of trade, and, in general, to protect investors and the
public interest. FINRA believes that the extension of the exemptive
provision protects investors and the public because transactions will
be reported, transparency will be maintained for these transactions,
and NYSE's agreement to share data with FINRA allows FINRA to continue
to conduct surveillance in the corporate debt securities market. In
addition, extending the exemptive provision permits members that are
subject to both FINRA's and NYSE's trade reporting requirements to
avoid a duplicative regulatory structure and the increased costs that
may be incurred as a result of duplicative requirements.
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\5\ 15 U.S.C. 78o-3(b)(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. FINRA believes that the
extension of the exemptive provision does not result in any burden on
competition since it allows members that are subject to both FINRA's
and NYSE's trade reporting requirements to avoid a duplicative
regulatory structure and the increased costs that may be incurred as a
result of duplicative requirements.
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
Because the foregoing 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 for 30 days from the date on which it was filed, or
such shorter time
[[Page 54696]]
as the Commission may designate, it has become effective pursuant to
Section 19(b)(3)(A) of the Act \6\ and Rule 19b-4(f)(6) thereunder.\7\
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\6\ 15 U.S.C. 78s(b)(3)(A).
\7\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change, along
with a brief description and text of the proposed rule change, at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
FINRA has satisfied this requirement.
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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.
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-2013-038 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-2013-038. 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, 100 F Street NE.,
Washington, DC 20549, on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available
for inspection and copying at the principal office 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-2013-038 and should be
submitted on or before September 26, 2013.
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\8\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\8\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-21536 Filed 9-4-13; 8:45 am]
BILLING CODE 8011-01-P