[Federal Register Volume 76, Number 13 (Thursday, January 20, 2011)]
[Notices]
[Pages 3684-3686]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-1078]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-63709; File No. SR-FINRA-2011-001]
Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing and Immediate Effectiveness of
Proposed Rule Change To Provide Additional Time To Report Certain
Reportable TRACE Transactions and Waive Certain Transaction Reporting
Fees
January 12, 2011.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
[[Page 3685]]
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on January 4, 2011, 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 ``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 provide additional time (until February 28,
2011) for members to trade report certain TRACE transactions and waive
transaction reporting fees concomitant with such transactions reported
by that date. The proposed rule change would not make any change to the
text of FINRA rules.
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 the
Statutory Basis for, the Proposed Rule Change
1. Purpose
On September 28, 2009, the SEC approved SR-FINRA-2009-010 \5\
which, among other things, amended the FINRA Rule 6700 Series to: (1)
Expand TRACE to include Agency Debt Securities \6\ as TRACE-Eligible
Securities \7\ and primary market transactions as Reportable TRACE
Transactions; \8\ (2) delete the criterion that TRACE-Eligible
Securities must be ``depository eligible securities under NASD Rule
11310(d),'' effectively introducing TRACE reporting obligations for
securities not assigned a common industry recognized identifier
(``CUSIP''); and (3) require members to report transactions in Agency
Debt Securities and primary market transactions. This rule change to
the FINRA Rule 6700 Series, as amended, became effective on March 1,
2010.\9\
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\5\ See Securities Exchange Act Release No. 60726 (September 28,
2009), 74 FR 50991 (October 2, 2009) (Order Approving File No. SR-
FINRA-2009-010).
\6\ See Rule 6710(l) for the definition of ``Agency Debt
Security.''
\7\ See Rule 6710(a) for the definition of ``TRACE-Eligible
Security.''
\8\ Rule 6710 (Definitions) provides that ``Reportable TRACE
Transaction'' means any transaction in a TRACE-Eligible Security
except transactions that are not reported as specified in Rule
6730(e). See FINRA Rule 6710(c).
\9\ See Regulatory Notice 09-57 (September 29, 2009) (SEC
Approves Amendments Expanding TRACE to Include Agency Debt
Securities and Primary Market Transactions).
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Due to operational and technical challenges introduced by trade
reporting in securities not assigned a CUSIP, changes were needed to
firms' processes as well as to the TRACE system to facilitate TRACE
trade reporting for those securities. TRACE-related changes were
implemented by FINRA on December 1, 2010. FINRA is filing this proposed
rule change to provide limited relief from the new TRACE trade
reporting requirements (and transaction reporting fee obligations) for
those Reportable TRACE Transactions in securities not identified by a
CUSIP effected from March 1, 2010 (the effective date of SR-FINRA-2009-
010) through November 30, 2010 (``Covered Reportable TRACE
Transactions''). FINRA is providing additional time (until February 28,
2011) for members to trade report Covered Reportable TRACE Transactions
and waiving transaction reporting fees concomitant with such
transactions reported by that date.\10\
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\10\ Specifically, members will not be required to pay a Trade
Reporting Fee or ``As Of'' Trade Late Fee under Rule 7730(b)
(Transaction Reporting Fees) with respect to Covered Reportable
TRACE Transactions if such transactions are reported to TRACE by
February 28, 2011.
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FINRA has filed the proposed rule change for immediate
effectiveness. The operative 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)(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.
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\11\ 15 U.S.C. 78o-3(b)(5).
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FINRA believes that the proposed rule change is appropriate in
recognition of the operational and technical challenges introduced by
trade reporting in securities not assigned a CUSIP. Therefore, delaying
members' trade reporting obligations until February 28, 2011 for
Covered Reportable TRACE Transactions and waiving the transaction
reporting fees applicable to such transactions provides a balanced
resolution while requiring that all Covered Reportable TRACE
Transactions are ultimately reported to FINRA.
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 foregoing rule change is effective upon filing pursuant to
Section 19(b)(3)(A) of the Act \12\ and subparagraph (f)(2) of Rule
19b-4 thereunder,\13\ because it establishes a due, fee, or other
charge imposed on its members by FINRA.
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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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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.
[[Page 3686]]
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-2011-001 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-2011-001. 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 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 website
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-2011-001
and should be submitted on or before February 10, 2011.
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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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-1078 Filed 1-19-11; 8:45 am]
BILLING CODE 8011-01-P