[Federal Register Volume 78, Number 189 (Monday, September 30, 2013)]
[Notices]
[Pages 60003-60005]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-23683]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-70483; File No. SR-FINRA-2013-040]
Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change to Extend the Limited Waiver of the TRACE
Professional Real-Time Data Display Fee Pilot
September 24, 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 September 17, 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, 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 Substance
of the Proposed Rule Change
FINRA is proposing to amend FINRA Rule 7730(c)(1)(A)(i) to extend
the pilot program to November 7, 2014. The pilot program provides a
limited waiver of the Professional Real-Time Data Display Fee of $60 to
access Real-Time Trade Reporting and Compliance Engine (``TRACE'')
transaction data in connection with certain free trials of data
products.
The text of the proposed rule change is available on FINRA's Web
site at http://www.finra.org, at the principal office of FINRA and at
the Commission's Public Reference Room.
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
Pursuant to FINRA Rule 7730(c)(1)(A), FINRA charges a Professional
$60 per month, per display application per Data Set \5\ of Real-Time
\6\ TRACE transaction data. The fee waiver pilot program in FINRA Rule
7730(c)(1)(A)(i) waives the $60 fee for one month for a Professional to
access Real-Time TRACE transaction data in connection with a vendor's
offer of a free trial of a data product that displays Real-Time TRACE
transaction data.\7\
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\5\ FINRA makes Real-Time TRACE transaction data available in
three Data Sets--the Corporate Bond Data Set, the Agency Data Set
and the ABS Data Set. A fourth Data Set, the Rule 144A Data Set,
will become available in 2014. See Securities Exchange Act Release
No. 70345 (September 6, 2013), 78 FR 56251 (September 12, 2013)
(Order Approving File No. SR-FINRA-2013-029) (SEC approves a
proposed rule change to disseminate transactions in TRACE-Eligible
Securities that are effected pursuant to Rule 144A (17 CFR 239.144A)
under the Securities Act of 1933 (15 U.S.C. 77a et seq.) and to
establish the Rule 144A Data Set).
\6\ Real-Time is defined in FINRA Rule 7730(f)(3).
\7\ See Securities Exchange Act Release No. 68255 (November 19,
2012), 77 FR 70515 (November 26, 2012) (Notice of Filing and
Immediate Effectiveness of File No. SR-FINRA-2012-049) (proposed
rule change establishing the fee waiver pilot program).
In general, Real-Time TRACE transaction data is accessed not
directly from FINRA but through a vendor, such as Bloomberg, L.P.
and its Bloomberg display application, or other redistributors
(collectively, ``vendors'') of financial market data. Under this
arrangement, a Professional pays the vendor for the license to use
the vendor's display application and if the display application
displays Real-Time TRACE transaction data, the payment must include
the applicable TRACE fee, which the vendor remits to FINRA. Vendors
continually develop new products and offer free trials of such
products to members and other Professional end users of market data.
Such new products may display, among other data, Real-Time TRACE
transaction data.
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The fee waiver pilot program permits Professionals to access Real-
Time TRACE transaction data on a free trial basis in connection, and
concurrently, with the free trial of the vendor's product. The pilot
program will expire on November 8, 2013.
FINRA proposes to extend the fee waiver pilot program approximately
one year to November 7, 2014 to permit more time to assess the
effectiveness of the pilot program. All other terms and conditions of
the fee waiver pilot program would remain the same. The FINRA fee
waiver would continue to be limited to one month (i.e., a period not
longer than 31 days). In addition, the FINRA fee waiver would continue
to be available to not more than four Professionals associated with,
employed by, or otherwise affiliated with a member, employer or other
person during one free trial period.\8\ As is currently the case, once
the Real-Time Data Display Fee had been waived, a Professional and the
member, employer or other person whom the Professional is associated
with, employed by, or otherwise affiliated with would not be eligible
for the FINRA fee waiver again in connection with another free trial
offered by the same vendor until 12 months had lapsed from the last day
of the prior fee waiver.\9\ However, a Professional and the member,
employer or other person with whom the Professional is associated or
otherwise affiliated would be eligible for a FINRA fee waiver in
connection with a free trial offered by a different vendor regarding
its data products.
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\8\ The fee waiver pilot program is not applicable to
Professionals associated with, employed by or otherwise affiliated
with entities that obtain unlimited internal use of market data
through any number of display applications by paying a flat fee of
$7,500 (per month per Data Set) under Rule 7730(c)(1)(A)
(``enterprise fee''). The enterprise fee structure is inconsistent
with the limitation that the fee waiver apply to not more than four
Professionals per entity per trial period.
\9\ For example, if a Professional were granted a waiver for one
month beginning on November 15, 2013, the Professional would not be
eligible for another waiver in connection with another free trial
offered by the same vendor until December 15, 2014.
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FINRA has filed the proposed rule change for immediate
effectiveness. The implementation date will be the date of filing.
2. Statutory Basis
FINRA believes that the proposed rule change is consistent with the
provisions of Section 15A(b)(6) of the Act,\10\ which requires, among
other things, that
[[Page 60004]]
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, and
Section 15A(b)(5) of the Act,\11\ 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.
FINRA believes that the proposed extension of the pilot program, which
encourages additional Professionals to test and use Real-Time TRACE
transaction data, may promote more accurate and timely pricing and
valuations of debt securities by members, and may prevent fraudulent
and manipulative acts and practices regarding pricing and valuations,
for the protection of investors and the public interest.
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\10\ 15 U.S.C. 78o-3(b)(6).
\11\ 15 U.S.C. 78o-3(b)(5).
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FINRA believes that the extension of the pilot program providing
for a limited waiver of the monthly fee per display application for
access to Real-Time TRACE transaction data also results in reasonable
fees and financial benefits from fee waivers that are equitably
allocated. The financial benefit of the fee waiver would be available
to all Professionals that accept an offer to test a vendor data product
that includes Real-Time TRACE transaction data on a free trial basis.
Any Professional that tests data products during a free trial would be
eligible for and would benefit from the concurrent FINRA fee waiver,
subject to the proscriptions against a Professional obtaining multiple
free trials as previously described.
In addition, the financial benefit of the fee waiver would be
available for a very limited period (i.e., 31 days or less), such that
Professionals not eligible for the fee waiver are not unfairly or
inequitably affected. The proposed extension of the pilot period is
reasonable because the waiver of a standard FINRA fee, and the
financial benefit from such waiver, is of limited amount, duration
(i.e., one month) and application (i.e., only four Professionals per
member (or other end-user)), limited to concurrent free trials of data
products offered by vendors, and subject to restrictions on re-use, and
is being proposed to enhance a member's ability to access and test,
among other things, the uses of Real-Time TRACE transaction data to
determine if access to such Real-Time TRACE transaction data would
further its business needs.
Finally, the proposed extension of the fee waiver pilot program
does not unfairly discriminate between or among Professionals and
members (or other end-users) in that the waiver would be available to
any of such persons that accepts an offer to test a vendor data product
that includes Real-Time TRACE transaction data on a free trial basis,
subject to the limitations described above. The data vendor, rather
than FINRA, would decide initially whether to offer a free trial of its
data product to a particular Professional, member, or other end-user.
FINRA's role is limited to refusing to extend a fee waiver to a
particular person previously identified by the data vendor, due to the
prohibition against extending multiple fee waivers to the same person.
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
proposed extension of the fee waiver pilot program, which is designed
to encourage additional Professionals to test and use Real-Time TRACE
transaction data, may promote more accurate and timely pricing and
valuations of debt securities by members. Moreover, the extension of
the pilot program would not place an unreasonable fee burden on members
and other persons (i.e., Professionals) that currently subscribe to
receive Real-Time TRACE transaction data, nor confer an uncompetitive
benefit to Professionals taking advantage of the pilot program, in that
the fee waiver would be available for a very limited period (i.e., 31
days or less), and the financial impact of such a pilot program on
Professionals would be de minimis. In addition, the proposed rule
change does not place a burden on competition in that the financial
benefit of the fee waiver would be available in general to all
Professionals. Any Professional that tests data products during a free
trial would be eligible for and would benefit from the concurrent FINRA
fee waiver, subject to the proscriptions against a Professional
obtaining multiple free trials previously described.
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 \12\ and paragraph (f)(2) of Rule 19b-4
thereunder.\13\ 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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\12\ 15 U.S.C. 78s(b)(3)(A).
\13\ 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-2013-040 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-2013-040. 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
[[Page 60005]]
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-2013-040 and should be submitted on or before October 21,
2013.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
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\14\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-23683 Filed 9-27-13; 8:45 am]
BILLING CODE 8011-01-P