[Federal Register Volume 75, Number 215 (Monday, November 8, 2010)]
[Notices]
[Pages 68654-68656]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-28066]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-63223; File No. SR-FINRA-2010-054]
Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing and Immediate Effectiveness of
Proposed Rule Change To Extend the Operational Date of SR-FINRA-2009-
065
November 1, 2010.
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 October 27, 2010, 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, 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 period during which FINRA may make
the rule changes set forth in SR-FINRA-2009-065 and approved by the SEC
on February 22, 2010, effective to no later than June 1, 2011.\4\
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\4\ See Securities Exchange Act Release No. 61566 (February 22,
2010), 75 FR 9262 (March 1, 2010) (Order Approving File No. SR-
FINRA-2009-065) (hereinafter, ``SEC Order Approving TRACE
Expansion--Asset-Backed Securities'').
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The proposed rule change would not make any new changes to the text
of FINRA rules.
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
On October 1, 2009, FINRA filed SR-FINRA-2009-065, a proposed rule
change to expand the Trade Reporting and Compliance Engine (``TRACE'')
to designate asset-backed securities, mortgage-backed securities and
other similar securities (collectively, ``Asset-Backed Securities'') as
eligible for TRACE, and to establish reporting, fee and other
requirements for such securities. In SR-FINRA-2009-065, FINRA stated
that it would announce the effective date of the proposed rule change
in a Regulatory Notice to be published ``no later than 60 days
following Commission approval'' and the effective date would be ``no
later than 270 days following publication'' of the Regulatory Notice
announcing the Commission's approval.
The proposed rule change was published for notice and comment.\5\
FINRA filed its response to comments on December 22, 2009,\6\ and
Amendment No. 1 to SR-FINRA-2009-065 on January 19, 2010 (hereinafter,
SR-FINRA-2009-065 and Amendment No. 1 thereto are, together, the
``TRACE ABS filing'').\7\ The Commission
[[Page 68655]]
approved the TRACE ABS filing on February 22, 2010.\8\
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\5\ See Securities Exchange Act Release No. 60860 (October 21,
2009), 74 FR 55600 (October 28, 2009) (Notice of Filing of File No.
SR-FINRA-2009-065).
\6\ See Letter from Sharon Zackula, Associate Vice President and
Associate General Counsel, FINRA, to Elizabeth M. Murphy, Secretary,
SEC, dated December 22, 2009.
\7\ The TRACE ABS filing included amendments to: (a) Rule 6710
to amend the defined terms, ``Asset-Backed Security'' and ``TRACE-
Eligible Security'' to include Asset-Backed Securities as TRACE-
Eligible Securities, to amend several other defined terms, and to
add several new defined terms, most of which relate to Asset-Backed
Securities; (b) Rule 6730 to require the reporting of Asset-Backed
Securities transactions, to establish a six-month pilot period for
reporting such transactions no later than T + 1 during TRACE System
hours, and to amend certain requirements in connection with the
reporting of commissions, factors, transaction size and settlement
terms in Asset-Backed Securities transactions; (c) Rule 6750 to
provide that information on a transaction in a TRACE-Eligible
Security that is an Asset-Backed Security will not be disseminated;
(d) Rule 6760 to amend the notification requirements; (e) Rule 7730
to establish fees for reporting transactions in Asset-Backed
Securities; and (f) the Rule 6700 Series and Rule 7730 to
incorporate certain other technical, administrative and clarifying
changes.
\8\ See SEC Order Approving TRACE Expansion--Asset-Backed
Securities.
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On April 14, 2010, FINRA filed for immediate effectiveness SR-
FINRA-2010-019, a proposed rule change to extend by 45 days the
proposed implementation period for SR-FINRA-2009-065.\9\ On April 23,
2010, FINRA published Regulatory Notice 10-23 announcing Commission
approval of the TRACE ABS Filing. Regulatory Notice 10-23 briefly
described the rule changes, and, in reliance upon the 45-day extension
provided for in SR-FINRA-2010-019, announced that the effective date of
such rule changes would be February 14, 2011.
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\9\ See Securities Exchange Act Release No. 61948 (April 20,
2010), 75 FR 22670 (April 29, 2010) (Notice of Filing and Immediate
Effectiveness of File No. SR-FINRA-2010-019 to Extend the
Implementation Period for SR-FINRA-2009-65).
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FINRA has determined that it would be beneficial to delay the
effective date of the TRACE ABS filing to no later than June 1, 2011.
FINRA will publish a Regulatory Notice no later than 30 days following
the operative date of this proposed rule change to announce the revised
effective date of the TRACE ABS filing, and to indicate that the
previously announced effective date, February 14, 2011, is no longer
valid.
The complexity and variety of structures of Asset-Backed Securities
present significant operational and technical challenges. For example,
new processes and systems are being developed and must be implemented
across the industry to assure the integrity of the Asset-Backed
Securities reference data that facilitates timely and accurate
reporting. In addition, FINRA believes that it is very important to
provide extended time for coordinated testing among firms and FINRA.
Accordingly, FINRA believes a delay of the effective date until no
later than June 1, 2011 is warranted.
FINRA has filed the proposed rule change for immediate
effectiveness and has requested that the SEC waive the requirement that
the proposed rule change not become operative for 30 days after the
date of the filing, such that FINRA can implement the proposed rule
change immediately.
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 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. The flexibility to establish an effective date no
later than June 1, 2011 to implement the TRACE ABS filing will allow
FINRA and members sufficient time to make additional necessary
enhancements to the TRACE system and member systems, and to engage in
coordinated testing of the technology. These steps will facilitate
timely and accurate reporting of transactions in Asset-Backed
Securities, and enhance FINRA's surveillance of the market in Asset-
Backed Securities for the protection of investors and in furtherance of
the public interest.
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\10\ 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.
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 Exchange represented that the proposed rule change qualifies
for immediate effectiveness pursuant to Section 19(b)(3)(A) of the
Exchange Act \11\ and Rule 19b-4(f)(6) thereunder \12\ because it: (i)
Does not significantly affect the protection of investors or the public
interest; (ii) does not impose any significant burden on competition;
and (iii) by its terms, does not become operative for 30 days from the
date on which it was filed, or such shorter time as the Commission may
designate if consistent with the protection of investors and the public
interest.\13\
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\11\ 15 U.S.C. 78s(b)(3)(A).
\12\ 17 CFR 240.19b-4(f)(6).
\13\ In addition, Rule 19b-4(f)(6)(iii) requires a self-
regulatory organization to submit to 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. The
Commission has waived the five-day pre-filing period in this case.
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The Exchange has requested that the Commission waive the 30-day
operative delay, so that the proposed rule change may become operative
upon filing. The Commission hereby grants the Exchange's request.\14\
The Commission believes that waiving the 30-day operative delay is
consistent with the protection of investors and the public interest.
The proposal appears reasonably designed to allow firms sufficient time
to make necessary systems and operational changes to facilitate the
timely and accurate reporting of Asset-Backed Securities transactions
as required by the TRACE ABS filing, and waiving the 30-day pre-
operative period will allow FINRA to communicate the new operative date
to its members without undue delay.
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\14\ For the purposes only of waiving the 30-day operative
delay, the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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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.
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 e-mail to [email protected]. Please include
File Number SR-FINRA-2010-054 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-2010-054. This
file number should be included on the subject line if e-mail is used.
To help the Commission process and review your comments more
efficiently, please use only one method. The Commission will
[[Page 68656]]
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 a.m. and 3 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-2010-054 and should be submitted on or before November 29,
2010.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
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\15\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-28066 Filed 11-5-10; 8:45 am]
BILLING CODE 8011-01-P