[Federal Register Volume 76, Number 16 (Tuesday, January 25, 2011)]
[Notices]
[Pages 4403-4405]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-1434]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-63729; File No. SR-FINRA-2011-003]
Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing and Immediate Effectiveness of
Proposed Rule Change Extending the Pilot Period Regarding the Use of
Multiple MPIDs on FINRA Facilities
January 18, 2011.
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 January 5, 2011, 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 a rule change to extend through January 27,
2012, the current rules regarding the use of multiple Market
Participant Symbols (``MPIDs'') in FINRA Rules 6160 (with respect to
Trade Reporting Facilities (``TRFs'')), 6170 (with respect to the
Alternative Display Facility (``ADF'')), and 6480 (with respect to the
OTC Reporting Facility (``ORF'')).
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
FINRA has three rules governing the use of multiple MPIDs on FINRA
facilities: Rule 6160 (Multiple MPIDs for Trade Reporting Facility
Participants), Rule 6170 (Primary and Additional MPIDs for Alternative
Display Facility Participants), and Rule 6480 (Multiple MPIDs for
Quoting and Trading in OTC Equity Securities). The pilot period for all
three rules is scheduled to expire on January 28, 2011. FINRA believes
that there continue to be legitimate business reasons for members to
maintain multiple MPIDs for use on FINRA facilities. Consequently,
FINRA is proposing to extend the pilot period for each of the three
rules until January 27, 2012. FINRA is not proposing any other changes
to the rules at this time; however, FINRA notes that it intends to file
a proposed rule change within the next year that amends the rules
governing multiple MPIDs, including a proposed rule change to make the
rules permanent.
(1) Rule 6160
Rule 6160 provides that any Trade Reporting Facility Participant
that wishes to use more than one MPID for purposes of reporting trades
to a TRF must submit a written request to, and obtain approval from,
FINRA Operations for such additional MPIDs. In addition, Supplementary
Material to the rule states that FINRA considers the issuance of, and
trade reporting with, multiple MPIDs to be a privilege and not a right.
A Trade Reporting Facility Participant must identify the purpose(s) and
system(s) for which the multiple MPIDs will be used. If FINRA
determines that the use of multiple MPIDs is detrimental to the
marketplace, or that a Trade Reporting Facility Participant is using
one or more additional MPIDs improperly or for other than the
purpose(s) identified by the Participant, FINRA staff retains full
discretion to limit or withdraw its grant of the additional MPID(s) to
such Trade Reporting Facility Participant for purposes of reporting
trades to a TRF. FINRA believes that Rule 6160 is necessary to
consolidate the process of issuing, and tracking the use of, multiple
MPIDs used to report trades to TRFs.
Rule 6160 was approved by the Commission in 2006 on a pilot
basis.\4\ The pilot period has been extended several times since the
rule was originally adopted and currently expires on January 28,
2011.\5\
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\4\ See Securities Exchange Act Release No. 54715 (November 6,
2006), 71 FR 66354 (November 14, 2006); see also Securities Exchange
Act Release No. 54715A (November 14, 2006), 71 FR 67183 (November
20, 2006).
\5\ See Securities Exchange Act Release No. 61297 (January 6,
2010), 75 FR 2173 (January 14, 2010); Securities Exchange Act
Release No. 59183 (December 30, 2008), 74 FR 842 (January 8, 2009);
Securities Exchange Act Release No. 57217 (January 28, 2008), 73 FR
6234 (February 1, 2008); Securities Exchange Act Release No. 55206
(January 31, 2007), 72 FR 5479 (February 6, 2007).
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(2) Rule 6170
Rule 6170 provides that a Registered Reporting ADF ECN may request
additional MPIDs for displaying quotes and orders and reporting trades
through the ADF trade reporting facility, TRACS, for any ADF-Eligible
Security. Among other things, Registered Reporting ADF ECNs are
prohibited from using an additional MPID to accomplish indirectly what
they are prohibited from doing directly through their Primary MPID. In
addition, FINRA staff retains full discretion to determine whether a
bona fide regulatory and/or business need exists for being granted an
additional MPID privilege and to limit or withdraw the additional MPID
display privilege at any time. The procedures for requesting, and the
restrictions surrounding the use of, multiple MPIDs are set forth in
Supplementary Material to the rule.
The Commission approved Rule 6170 on a pilot basis on August 11,
2006.\6\ The pilot period has been extended several times since the
rule was
[[Page 4404]]
originally adopted and currently expires on January 28, 2011.\7\
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\6\ See Securities Exchange Act Release No. 54307 (August 11,
2006), 71 FR 47551 (August 17, 2006). By its terms, the initial
pilot period expired on January 26, 2007, to coincide with the
expiration of the ADF pilot period. See Securities Exchange Act
Release No. 53699 (April 21, 2006), 71 FR 25271 (April 28, 2006). On
January 26, 2007, the Commission approved a proposed rule change to
make the ADF rules permanent. See Securities Exchange Act Release
No. 55181 (January 26, 2007), 72 FR 5093 (February 2, 2007).
\7\ See Securities Exchange Act Release No. 61297 (January 6,
2010), 75 FR 2173 (January 14, 2010); Securities Exchange Act
Release No. 59183 (December 30, 2008), 74 FR 842 (January 8, 2009);
Securities Exchange Act Release No. 57217 (January 28, 2008), 73 FR
6234 (February 1, 2008); Securities Exchange Act Release No. 55206
(January 31, 2007), 72 FR 5479 (February 6, 2007).
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(3) Rule 6480
Like Rule 6160, Rule 6480 provides that any member that wishes to
use more than one MPID for purposes of quoting an OTC Equity Security
or reporting trades to the ORF must submit a written request to, and
obtain approval from, FINRA Operations for such additional MPIDs. The
rule also states that a member that posts a quotation in an OTC Equity
Security and reports to a FINRA system a trade resulting from such
posted quotation must utilize the same MPID for reporting purposes. In
addition, Supplementary Material to the rule states that FINRA
considers the issuance of, and trade reporting with, multiple MPIDs to
be a privilege and not a right. When requesting an additional MPID(s),
a member must identify the purpose(s) and system(s) for which the
multiple MPIDs will be used. If FINRA determines that the use of
multiple MPIDs is detrimental to the marketplace, or that a member is
using one or more additional MPIDs improperly or for purposes other
than the purpose(s) identified by the member, FINRA staff retains full
discretion to limit or withdraw its grant of the additional MPID(s) to
such member.
FINRA adopted Rule 6480 on a pilot basis on July 23, 2009.\8\ The
pilot period was extended and expires on January 28, 2011.\9\
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\8\ See Securities Exchange Act Release No. 60414 (July 31,
2009), 74 FR 39721 (August 7, 2009).
\9\ See Securities Exchange Act Release No. 61297 (January 6,
2010), 75 FR 2173 (January 14, 2010).
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FINRA has filed the proposed rule change for immediate
effectiveness. The implementation date of the proposed rule change will
be January 28, 2011.
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. FINRA believes that the proposed rule change is
consistent with these requirements because it will provide a process by
which members can request, and FINRA can properly allocate, the use of
additional MPIDs for displaying quotes and orders through the ADF or
reporting trades to a TRF or the ORF.
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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
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 as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A) of the Act\11\ and Rule 19b-
4(f)(6) thereunder.\12\
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\11\ 15 U.S.C. 78s(b)(3)(A).
\12\ 17 CFR 240.19b-4(f)(6).
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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. FINRA has provided
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.
FINRA asks that the Commission waive the 30-day pre-operative
waiting period contained in Exchange Act Rule 19b-4(f)(6)(iii).\13\
FINRA requests this waiver in order to prevent a lapse in the current
pilots.
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\13\ 17 CFR 240.19b-4(f)(6)(iii).
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The Commission acknowledges that the proposal presents no novel
issues, and that it will provide a benefit to market participants by
avoiding a temporary lapse in the pilot programs. For these reasons,
the Commission believes it is consistent with the protection of
investors and the public interest to waive the 30-day operative delay,
and hereby grants such waiver.\14\
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\14\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule change's impact on
efficiency, competition, and capital formation. 15 U.S.C. 78c(f).
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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 e-mail to [email protected]. Please include
File Number SR-FINRA-2011-003 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-2011-003. 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 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 such 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 publicly
available. All submissions should refer to File Number SR-FINRA-2011-
003 and
[[Page 4405]]
should be submitted on or before February 15, 2011.
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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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-1434 Filed 1-24-11; 8:45 am]
BILLING CODE 8011-01-P