Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Modify Certain FINRA/Nasdaq Trade Reporting Facility Fees, 17810-17813 [2010-7842]
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17810
Federal Register / Vol. 75, No. 66 / Wednesday, April 7, 2010 / Notices
benefits of increased transparency and
access to more comprehensive trade
information in the OTC markets.
V. Accelerated Approval
The Commission finds good cause,
pursuant to Section 19(b)(2) of the
Act,48 for approving the proposed rule
change, as modified by Amendments
No. 1 and 2 thereto, prior to the 30th
day after the date of publication of
Amendment No. 2 in the Federal
Register. The changes proposed in
Amendment No. 2 are minor in nature
or respond to specific concerns raised
by commenters. In Amendment No. 2,
the Exchange proposed to change the
requirement to report the cancellation of
a trade executed during normal market
hours and canceled before 4 p.m. on the
date of execution from 90 seconds to 30
seconds in Rule 6282(j)(2)(A).49
Amendment No. 2 also reflects changes
approved in SR–FINRA–2009–082 to
the text of Rules 6380A(g)(2)(A),
6380B(f)(2)(A) and 6622(f)(2)(A).50
Accordingly, the Commission finds
that good cause exists to approve the
proposal, as modified by Amendments
Nos. 1 and 2, on an accelerated basis.
VI. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether Amendment No. 2 to
the proposed rule change is consistent
with the Act. Comments may be
submitted by any of the following
methods:
WReier-Aviles on DSKGBLS3C1PROD with NOTICES
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–FINRA–2009–061 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–2009–061. 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
48 15
U.S.C. 78s(b)(2).
requirement to report cancellations in 90
seconds was established by SR–FINRA–2009–082.
See Cancellations Order, supra note 8.
50 See Cancellations Order, supra note 8.
49 The
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Internet Web site (https://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, on official business
days between the hours of 10 a.m. and
3 p.m. Copies of the filing will also be
available for inspection and copying at
the principal office of FINRA.51 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 No.
SR–FINRA–2009–061 and should be
submitted on or before April 28, 2010.
VII. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act, that the
proposed rule change (SR–FINRA–
2009–061), as modified by Amendments
Nos. 1 and 2, be, and hereby is,
approved on an accelerated basis.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.52
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010–7843 Filed 4–6–10; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–61817; File No. SR–FINRA–
2010–011]
Self-Regulatory Organizations;
Financial Industry Regulatory
Authority, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Modify Certain FINRA/
Nasdaq Trade Reporting Facility Fees
March 31, 2010.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
51 The text of the proposed rule change, as
modified by Amendments Nos. 1 and 2, is available
on FINRA’s Web site at https://www.finra.org, on the
Commission’s Web site at https://www.sec.gov, at
FINRA, and at the Commission’s Public Reference
Room.
52 17 CFR 200.30–3(a)(12).
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(‘‘Act’’) 1 and Rule 19b–4 thereunder,2
notice is hereby given that on March 12,
2010, 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.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
FINRA is proposing to amend FINRA
Rule 7620A to modify certain fees
applicable to members that use the
FINRA/Nasdaq Trade Reporting Facility
(the ‘‘FINRA/Nasdaq TRF’’).
The text of the proposed rule change
is available on FINRA’s Web site at
https://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
Background
The FINRA/Nasdaq TRF is a facility
of FINRA that is operated by The
NASDAQ OMX Group, Inc. (‘‘NASDAQ
OMX’’) and utilizes Automated
Confirmation Transaction (‘‘ACT’’)
Service technology. In connection with
the establishment of the FINRA/Nasdaq
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A)(ii).
4 17 CFR 240.19b–4(f)(2).
2 17
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WReier-Aviles on DSKGBLS3C1PROD with NOTICES
TRF, FINRA and NASDAQ OMX
entered into a limited liability company
agreement (the ‘‘LLC Agreement’’).
Under the LLC Agreement, FINRA, the
‘‘SRO Member,’’ has sole regulatory
responsibility for the FINRA/Nasdaq
TRF. NASDAQ OMX, the ‘‘Business
Member,’’ is primarily responsible for
the management of the FINRA/Nasdaq
TRF’s business affairs, including
establishing pricing for use of the
FINRA/Nasdaq TRF, to the extent those
affairs are not inconsistent with the
regulatory and oversight functions of
FINRA. Additionally, the Business
Member is obligated to pay the cost of
regulation and is entitled to the profits
and losses, if any, derived from the
operation of the FINRA/Nasdaq TRF.
Pursuant to Rule 7620A, FINRA
members are charged fees for trade
reporting to the FINRA/Nasdaq TRF.
The current fee structure for reports of
‘‘locked-in trades’’ (i.e., trades that are
not submitted for ACT comparison and
do not require specific acceptance by
the contra party) is based on (1) the
number of reports submitted to the
FINRA/Nasdaq TRF in which the
member is identified as a party to the
trade; (2) whether the transaction is
‘‘media’’ eligible (i.e., the trade report is
submitted to FINRA for public
dissemination by the Securities
Information Processors); 5 (3) whether
the trade report is submitted for
clearance and settlement related
functions; and (4) whether the
transaction is in a non-Nasdaq
exchange-listed security that is reported
to one of the Consolidated Tape
Association (‘‘CTA’’) tapes.6 Members
must pay a fee for reports submitted to
the FINRA/Nasdaq TRF with respect to
media-eligible locked-in transactions in
non-Nasdaq exchange-listed (or CTA)
securities. A member that exceeds, in
any given month, a daily average of
5,000 media reports in which the
member is identified as the reporting
party is afforded a cap on its fees equal
to $145 ($0.029 multiplied by 5,000)
multiplied by the number of trading
days in the month. By contrast, there
5 ‘‘Non-media’’ reports are not submitted to FINRA
for public dissemination purposes, but are
submitted for regulatory and/or clearance and
settlement purposes.
6 Market data is transmitted to three tapes based
on the listing venue of the security: New York Stock
Exchange securities (‘‘Tape A’’), American Stock
Exchange and regional exchange securities (‘‘Tape
B’’), and Nasdaq Stock Market securities (‘‘Tape C’’).
Tape A and Tape B are generally referred to as the
Consolidated Tape.
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currently is no fee for the submission of
locked-in reports for media-eligible
transactions in Nasdaq-listed securities.
Proposed Fee Schedule
NASDAQ OMX, as the Business
Member, has determined to replace the
current fee schedule for reporting
‘‘locked-in’’ trades to the FINRA/Nasdaq
TRF with a new fee schedule applicable
to ‘‘Non-Comparison/Accept (NonMatch/Compare)’’ trades. Such trades
are defined as transactions that are not
subject to the ACT comparison process,
and they may be submitted as media or
non-media, clearing or non-clearing,
AGU (automated give-up), QSR
(Qualified Service Representative), onesided and internalized crosses.7
Accordingly, FINRA is proposing to
amend Rule 7620A to reflect the new fee
schedule. Under the proposed schedule,
for each media and non-media report
submitted to the FINRA/Nasdaq TRF,
both the member identified in the report
as the ‘‘Executing Party (EP)’’ and the
member identified as the ‘‘Contra (CP)’’
will be assessed a fee.8 Thus, the
proposed rule change establishes four
categories of fees (Media/Executing
Party, Non-Media/Executing Party,
Media/Contra and Non-Media/Contra),
and each category is applicable to
transactions in each of the three Tapes
(Tapes A, B and C).9 A member will be
assessed a transaction fee of $0.018 if it
is the Executing Party, and $0.013 if it
is the Contra, multiplied by the number
of same-type reports (i.e., media or nonmedia) submitted in a given month.
Additionally, the proposed fee
schedule includes a cap applicable to
each of the four new fee categories
based on the average daily volume of
reports submitted to a particular Tape.
To be eligible for a cap in a particular
7 FINRA is proposing to adopt Supplementary
Material in Rule 7260A to define a number of terms
used in the proposed fee schedule, including ‘‘NonComparison/Accept (Non-Match/Compare)’’ trades.
8 Pursuant to the proposed Supplementary
Material, the ‘‘Executing Party (EP)’’ is defined as
the member with the trade reporting obligation
under FINRA rules, and the ‘‘Contra (CP)’’ is defined
as the member on the contra side of a trade report.
These positions formerly were identified in FINRA
rules as the ‘‘Market Maker’’ or ‘‘MM’’ side and the
‘‘Order Entry’’ or ‘‘OE’’ side, respectively.
FINRA notes that non-members (non-member
broker-dealers and customers) are not assessed fees
under FINRA rules.
9 The four categories of fees are independent of
each other and, as such, may be subsequently
adjusted individually. Any change to one or more
of these categories would be subject to a future
proposed rule change by FINRA.
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17811
Tape, a member must achieve a
minimum average daily volume of
media reports submitted to that Tape as
Executing Party in a given month. (The
proposed volume threshold for all three
Tapes is 2,500.) 10 Thus, the proposed
rule change would reduce the per unit
fee traditionally assessed (from $0.029
to $0.018 and $0.013, as applicable), as
well as the volume threshold required to
achieve a fee cap (from 5,000 to 2,500).
Trade reports in which the member
appears as the Contra Party do not
contribute to achievement of the cap.
However, if a member is eligible for a
cap based on media trade reports in
which it appears as the Executing Party,
then caps also would apply to media
reports in which that member appears
as the Contra Party, as well as to nonmedia reports where the member
appears as Executing Party or Contra
Party. Thus, once a member achieves a
cap (based on the number of Media/
Executing Party reports), under the
current proposal, the maximum number
of billable trade reports applicable to
each fee category is 2,500 for Tape A, B
or C. The maximum number of billable
Media/Executing Party reports will
always be equal to the daily average
number of Media/Executing Party trades
needed to qualify for a cap for Tape A,
B or C, as specified in the Rule. For each
of the other three fee categories (NonMedia/Executing Party, Media/Contra
and Non-Media/Contra), the maximum
number of billable trades also is
specified in the Rule and can be
adjusted independently of the Media/
Executing Party cap.11 Under the
current proposal, if a member is eligible
for the fee cap, it will be assessed a
maximum fee within each category
equal to the category fee (either $0.018
or $0.013) multiplied by 2,500
multiplied by the number of trading
days in the month.
The following table provides an
example of the fee schedule applicable
to a member that is ineligible for a fee
cap (based on 22 trading days in the
month):
10 Although the proposed fee schedule includes
identical average daily volume thresholds for all
three Tapes, the thresholds are independent of each
other and, as such, may be subsequently adjusted
individually. Any change to one or more of these
thresholds would be subject to a future proposed
rule change by FINRA.
11 Any change to one or more of these caps would
be subject to a future proposed rule change by
FINRA.
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Federal Register / Vol. 75, No. 66 / Wednesday, April 7, 2010 / Notices
NO FEE CAP—TAPE A
Average
daily
trades
Report type/side
Billable
trades
Rate
Cost
Media/EP .........................................................................................................................................
Non-Media/EP ..................................................................................................................................
Media/Contra ...................................................................................................................................
Non-Media/Contra ............................................................................................................................
2,100
4,000
3,000
2,100
2,100
4,000
3,000
2,100
$0.018
0.018
0.013
0.013
$832
1584
858
601
Total ..........................................................................................................................................
11,200
11,200
................
3,875
The following table provides an
example of the fee schedule applicable
to a member that is eligible for a fee cap
(based on 22 trading days in the month):
FEE CAP—TAPE A
Average
daily
trades
Report type/side
Billable
trades
Rate
Cost
4,000
4,000
4,000
4,000
2,500
2,500
2,500
2,500
$0.018
0.018
0.013
0.013
$990
990
715
715
Total ..........................................................................................................................................
WReier-Aviles on DSKGBLS3C1PROD with NOTICES
Media/EP .........................................................................................................................................
Non-Media/EP ..................................................................................................................................
Media/Contra ...................................................................................................................................
Non-Media/Contra ............................................................................................................................
16,000
10,000
................
3,410
FINRA notes that the proposed rule
change does not propose to modify the
other fees assessed under Rule 7620A,
specifically: the fee assessed a member
for submitting a clearing report to the
FINRA/Nasdaq TRF to transfer a
transaction fee pursuant to Rule
7230A(h); the ‘‘Comparison’’ fee; the
‘‘Late Report—T+N’’ fee; the ‘‘Query’’ fee;
and the ‘‘Corrective Transaction
Charge.’’
NASDAQ OMX, as the Business
Member, has advised FINRA that it
believes that the proposed fee schedule
more equitably allocates the fees
assessed to members for their use of the
FINRA/Nasdaq TRF. Under current Rule
7620A, the fee burden can fall
disproportionately on certain parties
(e.g., reporting parties submitting
media-only reports (with no clearing) of
transactions in CTA securities and
contra parties to locked-in trades in
CTA securities). Under the proposed fee
schedule, both members identified as
parties to the trade in the trade report
will be assessed a fee. In addition, the
proposed fee schedule introduces fees
for reports of transactions in Nasdaqlisted securities, as well as non-media,
non-clearing trade reports, which have
historically not been assessed a fee.
NASDAQ OMX believes that extending
fees for the submission of these reports
is consistent with its goal of fairly and
equitably distributing the costs
associated with the operation and
maintenance of the FINRA/Nasdaq TRF.
Thus, the proposed fees for the
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submission of non-comparison trade
reports to the FINRA/Nasdaq TRF are
spread more equitably across parties
(Executing Party and Contra), as well as
report type (media and non-media) and
security type (Nasdaq-listed and nonNasdaq exchange-listed). NASDAQ
OMX believes that the proposed
reduction in fees is appropriate given
that the burden of paying for the use of
the FINRA/Nasdaq TRF will be shared
by all participants across the full range
of transactions.
FINRA has filed the proposed rule
change for immediate effectiveness.
FINRA is proposing that the operative
date of the proposed rule change will be
April 1, 2010.
2. Statutory Basis
FINRA believes that the proposed rule
change is consistent with the provisions
of Section 15A(b)(5) of the Act,12 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 fee schedule is fair and
provides an equitable allocation of fees
in that it will apply uniformly to all
FINRA members that use the FINRA/
Nasdaq TRF.
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
No written comments were either
solicited or 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)(ii) of the Act 13 and
paragraph (f)(2) of Rule 19b–4
thereunder.14 At any time within 60
days of the filing of the proposed rule
change, the Commission may summarily
abrogate 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
13 15
12 15
PO 00000
U.S.C. 78o–3(b)(5).
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14 17
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E:\FR\FM\07APN1.SGM
U.S.C. 78s(b)(3)(A)(ii).
CFR 240.19b–4(f)(2).
07APN1
Federal Register / Vol. 75, No. 66 / Wednesday, April 7, 2010 / Notices
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 (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–FINRA–2010–011 on the
subject line.
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–61815; File No. SR–
NYSEAmex–2010–32]
Self-Regulatory Organizations; NYSE
Amex LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change Extending the Pilot
Period To Receive Inbound Routes
From Archipelago Securities LLC
March 31, 2010.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
‘‘Act’’) and Rule 19b–4 thereunder,2
• Send paper comments in triplicate
notice is hereby given that, on March
to Elizabeth M. Murphy, Secretary,
29, 2010, NYSE Amex LLC (‘‘NYSE
Securities and Exchange Commission,
Amex’’ or the ‘‘Exchange’’) filed with the
100 F Street, NE., Washington, DC
Securities and Exchange Commission
20549–1090.
(the ‘‘Commission’’) the proposed rule
All submissions should refer to File
change as described in Items I and II,
Number SR–FINRA–2010–011. This file below, which Items have been prepared
number should be included on the
by the self-regulatory organization. The
subject line if e-mail is used. To help the Commission is publishing this notice to
Commission process and review your
solicit comments on the proposed rule
comments more efficiently, please use
change from interested persons.
only one method. The Commission will
post all comments on the Commission’s I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
Internet Web site (https://www.sec.gov/
the Proposed Rule Change
rules/sro.shtml). Copies of the
submission, all subsequent
The Exchange proposes to extend the
amendments, all written statements
pilot period of the Exchange’s prior
with respect to the proposed rule
approvals to receive inbound routes of
change that are filed with the
orders from Archipelago Securities LLC
(‘‘Arca Securities’’), an NYSE Amex
Commission, and all written
affiliated member. A copy of this filing
communications relating to the
is available on the Exchange’s Web site
proposed rule change between the
Commission and any person, other than at https://www.nyse.com, at the
Exchange’s principal office and at the
those that may be withheld from the
Commission’s Public Reference Room.
public in accordance with the
provisions of 5 U.S.C. 552, will be
II. Self-Regulatory Organization’s
available for Web site viewing and
Statement of the Purpose of, and
printing in the Commission’s Public
Statutory Basis for, the Proposed Rule
Reference Room on official business
Change
days between the hours of 10 a.m. and
In its filing with the Commission, the
3 p.m. Copies of such filing also will be
self-regulatory organization included
available for inspection and copying at
statements concerning the purpose of,
the principal office of FINRA. All
and basis for, the proposed rule change
comments received will be posted
and discussed any comments it received
without change; the Commission does
on the proposed rule change. The text
not edit personal identifying
of those statements may be examined at
information from submissions. You
the places specified in Item IV below.
should submit only information that
you wish to make publicly available. All The Exchange has prepared summaries,
set forth in sections A, B, and C below,
submissions should refer to File
of the most significant parts of such
Number SR–FINRA–2010–011 and
statements.
should be submitted on or before April
28, 2010.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
For the Commission, by the Division of
Statutory Basis for, the Proposed Rule
Trading and Markets, pursuant to delegated
Change
authority.15
WReier-Aviles on DSKGBLS3C1PROD with NOTICES
Paper Comments
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010–7842 Filed 4–6–10; 8:45 am]
1. Purpose
Currently, Arca Securities is the
approved outbound order routing
BILLING CODE 8011–01–P
1 15
15 17
CFR 200.30–3(a)(12).
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15:18 Apr 06, 2010
2 17
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PO 00000
U.S.C. 78s(b)(1).
CFR 240.19b–4.
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17813
facility of the Exchange.3 Arca
Securities is also the approved
outbound order routing facility of the
New York Stock Exchange (‘‘NYSE’’) and
NYSE Arca, Inc. (‘‘NYSE Arca’’).4 The
Exchange has also been previously
approved to receive inbound routes of
orders by Arca Securities in its capacity
as an order routing facility of NYSE
Arca and the NYSE.5 The Exchange’s
authority to receive inbound routes of
orders by Arca Securities is subject to a
pilot period ending March 31, 2010.6
The Exchange hereby seeks to extend
the previously approved pilot period
(with the attendant obligations and
conditions) for an additional six
months, through September 30, 2010.
2. Statutory Basis
The proposed rule change is
consistent with Section 6(b) 7 of the
Securities Exchange Act of 1934 (the
‘‘Act’’), in general, and furthers the
objectives of Section 6(b)(5) 8 in
particular in that it is designed to
prevent fraudulent and manipulative
acts and practices, to promote just and
equitable principles of trade, to foster
cooperation and coordination with
persons engaged in facilitating
transactions in securities, and to remove
impediments to and perfect the
mechanism of a free and open market
and a national market system.
Specifically, the proposed rule change
will allow the Exchange to continue
receiving inbound routes of equities
orders from Arca Securities acting in its
3 See Securities Exchange Act Release No. 59009
(November 24, 2008), 73 FR 73363 (December 2,
2008) (order approving SR–NYSEALTR–2008–07);
see also, Securities Exchange Act Release No. 59473
(February 27, 2009) 74 FR 9853 (March 6, 2009)
(order approving SR–NYSEALTR–2009–18).
4 See Securities Exchange Act Release No. 55590
(April 5, 2007), 72 FR 18707 (April 13, 2007) (notice
of immediate effectiveness of SR–NYSE–2007–29);
see also, Securities Exchange Act Release No. 58680
(September 29, 2008), 73 FR 58283 (October 6,
2008) (order approving SR–NYSE–2008–76). See
Securities Exchange Act Release No. 53238 (July 28,
2006), 71 FR 44758 (August 7, 2006) (order
approving SR–NYSEArca–2006–13); see also,
Securities Exchange Act Release No. 52497
(September 22, 2005), 70 FR 56949 (September 29,
2005) (SR–PCX–2005–90); see also, Securities
Exchange Act Release No. 44983 (October 25, 2001),
66 FR 55225 (November 1, 2001) (SR–PCX–00–25);
see also, Securities Exchange Act Release No. 58681
(September 29, 2008), 73 FR 58285 (October 6,
2008) (order approving NYSEArca–2008–90).
5 See Securities Exchange Act Release No. 58673
(September 29, 2008), 73 FR 57707 (October 3,
2008) (order approving SR–Amex–2008–62). See
also, Securities Exchange Act Release No. 58705
(October 1, 2008), 73 FR 58995 (October 8, 2008)
(order approving SR–AMEX–2008–63).
6 See Securities Exchange Act Release No. 61269
(December 31, 2009), 75 FR 1097 (January 8, 2010)
(notice of immediate effectiveness of SR–
NYSEAmex–2009–91).
7 15 U.S.C. 78f(b).
8 15 U.S.C. 78f(b)(5).
E:\FR\FM\07APN1.SGM
07APN1
]]>Agencies
[Federal Register Volume 75, Number 66 (Wednesday, April 7, 2010)]
[Notices]
[Pages 17810-17813]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-7842]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-61817; File No. SR-FINRA-2010-011]
Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing and Immediate Effectiveness of
Proposed Rule Change To Modify Certain FINRA/Nasdaq Trade Reporting
Facility Fees
March 31, 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 March 12, 2010, 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 7620A to modify certain fees
applicable to members that use the FINRA/Nasdaq Trade Reporting
Facility (the ``FINRA/Nasdaq TRF'').
The text of the proposed rule change is available on FINRA's Web
site at https://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
Background
The FINRA/Nasdaq TRF is a facility of FINRA that is operated by The
NASDAQ OMX Group, Inc. (``NASDAQ OMX'') and utilizes Automated
Confirmation Transaction (``ACT'') Service technology. In connection
with the establishment of the FINRA/Nasdaq
[[Page 17811]]
TRF, FINRA and NASDAQ OMX entered into a limited liability company
agreement (the ``LLC Agreement''). Under the LLC Agreement, FINRA, the
``SRO Member,'' has sole regulatory responsibility for the FINRA/Nasdaq
TRF. NASDAQ OMX, the ``Business Member,'' is primarily responsible for
the management of the FINRA/Nasdaq TRF's business affairs, including
establishing pricing for use of the FINRA/Nasdaq TRF, to the extent
those affairs are not inconsistent with the regulatory and oversight
functions of FINRA. Additionally, the Business Member is obligated to
pay the cost of regulation and is entitled to the profits and losses,
if any, derived from the operation of the FINRA/Nasdaq TRF.
Pursuant to Rule 7620A, FINRA members are charged fees for trade
reporting to the FINRA/Nasdaq TRF. The current fee structure for
reports of ``locked-in trades'' (i.e., trades that are not submitted
for ACT comparison and do not require specific acceptance by the contra
party) is based on (1) the number of reports submitted to the FINRA/
Nasdaq TRF in which the member is identified as a party to the trade;
(2) whether the transaction is ``media'' eligible (i.e., the trade
report is submitted to FINRA for public dissemination by the Securities
Information Processors); \5\ (3) whether the trade report is submitted
for clearance and settlement related functions; and (4) whether the
transaction is in a non-Nasdaq exchange-listed security that is
reported to one of the Consolidated Tape Association (``CTA'')
tapes.\6\ Members must pay a fee for reports submitted to the FINRA/
Nasdaq TRF with respect to media-eligible locked-in transactions in
non-Nasdaq exchange-listed (or CTA) securities. A member that exceeds,
in any given month, a daily average of 5,000 media reports in which the
member is identified as the reporting party is afforded a cap on its
fees equal to $145 ($0.029 multiplied by 5,000) multiplied by the
number of trading days in the month. By contrast, there currently is no
fee for the submission of locked-in reports for media-eligible
transactions in Nasdaq-listed securities.
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\5\ ``Non-media'' reports are not submitted to FINRA for public
dissemination purposes, but are submitted for regulatory and/or
clearance and settlement purposes.
\6\ Market data is transmitted to three tapes based on the
listing venue of the security: New York Stock Exchange securities
(``Tape A''), American Stock Exchange and regional exchange
securities (``Tape B''), and Nasdaq Stock Market securities (``Tape
C''). Tape A and Tape B are generally referred to as the
Consolidated Tape.
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Proposed Fee Schedule
NASDAQ OMX, as the Business Member, has determined to replace the
current fee schedule for reporting ``locked-in'' trades to the FINRA/
Nasdaq TRF with a new fee schedule applicable to ``Non-Comparison/
Accept (Non-Match/Compare)'' trades. Such trades are defined as
transactions that are not subject to the ACT comparison process, and
they may be submitted as media or non-media, clearing or non-clearing,
AGU (automated give-up), QSR (Qualified Service Representative), one-
sided and internalized crosses.\7\
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\7\ FINRA is proposing to adopt Supplementary Material in Rule
7260A to define a number of terms used in the proposed fee schedule,
including ``Non-Comparison/Accept (Non-Match/Compare)'' trades.
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Accordingly, FINRA is proposing to amend Rule 7620A to reflect the
new fee schedule. Under the proposed schedule, for each media and non-
media report submitted to the FINRA/Nasdaq TRF, both the member
identified in the report as the ``Executing Party (EP)'' and the member
identified as the ``Contra (CP)'' will be assessed a fee.\8\ Thus, the
proposed rule change establishes four categories of fees (Media/
Executing Party, Non-Media/Executing Party, Media/Contra and Non-Media/
Contra), and each category is applicable to transactions in each of the
three Tapes (Tapes A, B and C).\9\ A member will be assessed a
transaction fee of $0.018 if it is the Executing Party, and $0.013 if
it is the Contra, multiplied by the number of same-type reports (i.e.,
media or non-media) submitted in a given month.
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\8\ Pursuant to the proposed Supplementary Material, the
``Executing Party (EP)'' is defined as the member with the trade
reporting obligation under FINRA rules, and the ``Contra (CP)'' is
defined as the member on the contra side of a trade report. These
positions formerly were identified in FINRA rules as the ``Market
Maker'' or ``MM'' side and the ``Order Entry'' or ``OE'' side,
respectively.
FINRA notes that non-members (non-member broker-dealers and
customers) are not assessed fees under FINRA rules.
\9\ The four categories of fees are independent of each other
and, as such, may be subsequently adjusted individually. Any change
to one or more of these categories would be subject to a future
proposed rule change by FINRA.
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Additionally, the proposed fee schedule includes a cap applicable
to each of the four new fee categories based on the average daily
volume of reports submitted to a particular Tape. To be eligible for a
cap in a particular Tape, a member must achieve a minimum average daily
volume of media reports submitted to that Tape as Executing Party in a
given month. (The proposed volume threshold for all three Tapes is
2,500.) \10\ Thus, the proposed rule change would reduce the per unit
fee traditionally assessed (from $0.029 to $0.018 and $0.013, as
applicable), as well as the volume threshold required to achieve a fee
cap (from 5,000 to 2,500).
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\10\ Although the proposed fee schedule includes identical
average daily volume thresholds for all three Tapes, the thresholds
are independent of each other and, as such, may be subsequently
adjusted individually. Any change to one or more of these thresholds
would be subject to a future proposed rule change by FINRA.
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Trade reports in which the member appears as the Contra Party do
not contribute to achievement of the cap. However, if a member is
eligible for a cap based on media trade reports in which it appears as
the Executing Party, then caps also would apply to media reports in
which that member appears as the Contra Party, as well as to non-media
reports where the member appears as Executing Party or Contra Party.
Thus, once a member achieves a cap (based on the number of Media/
Executing Party reports), under the current proposal, the maximum
number of billable trade reports applicable to each fee category is
2,500 for Tape A, B or C. The maximum number of billable Media/
Executing Party reports will always be equal to the daily average
number of Media/Executing Party trades needed to qualify for a cap for
Tape A, B or C, as specified in the Rule. For each of the other three
fee categories (Non-Media/Executing Party, Media/Contra and Non-Media/
Contra), the maximum number of billable trades also is specified in the
Rule and can be adjusted independently of the Media/Executing Party
cap.\11\ Under the current proposal, if a member is eligible for the
fee cap, it will be assessed a maximum fee within each category equal
to the category fee (either $0.018 or $0.013) multiplied by 2,500
multiplied by the number of trading days in the month.
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\11\ Any change to one or more of these caps would be subject to
a future proposed rule change by FINRA.
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The following table provides an example of the fee schedule
applicable to a member that is ineligible for a fee cap (based on 22
trading days in the month):
[[Page 17812]]
No Fee Cap--Tape A
------------------------------------------------------------------------
Average
Report type/side daily Billable Rate Cost
trades trades
------------------------------------------------------------------------
Media/EP.................... 2,100 2,100 $0.018 $832
Non-Media/EP................ 4,000 4,000 0.018 1584
Media/Contra................ 3,000 3,000 0.013 858
Non-Media/Contra............ 2,100 2,100 0.013 601
-------------------------------------------
Total................... 11,200 11,200 ......... 3,875
------------------------------------------------------------------------
The following table provides an example of the fee schedule
applicable to a member that is eligible for a fee cap (based on 22
trading days in the month):
Fee Cap--Tape A
------------------------------------------------------------------------
Average
Report type/side daily Billable Rate Cost
trades trades
------------------------------------------------------------------------
Media/EP.................... 4,000 2,500 $0.018 $990
Non-Media/EP................ 4,000 2,500 0.018 990
Media/Contra................ 4,000 2,500 0.013 715
Non-Media/Contra............ 4,000 2,500 0.013 715
-------------------------------------------
Total................... 16,000 10,000 ......... 3,410
------------------------------------------------------------------------
FINRA notes that the proposed rule change does not propose to
modify the other fees assessed under Rule 7620A, specifically: the fee
assessed a member for submitting a clearing report to the FINRA/Nasdaq
TRF to transfer a transaction fee pursuant to Rule 7230A(h); the
``Comparison'' fee; the ``Late Report--T+N'' fee; the ``Query'' fee;
and the ``Corrective Transaction Charge.''
NASDAQ OMX, as the Business Member, has advised FINRA that it
believes that the proposed fee schedule more equitably allocates the
fees assessed to members for their use of the FINRA/Nasdaq TRF. Under
current Rule 7620A, the fee burden can fall disproportionately on
certain parties (e.g., reporting parties submitting media-only reports
(with no clearing) of transactions in CTA securities and contra parties
to locked-in trades in CTA securities). Under the proposed fee
schedule, both members identified as parties to the trade in the trade
report will be assessed a fee. In addition, the proposed fee schedule
introduces fees for reports of transactions in Nasdaq-listed
securities, as well as non-media, non-clearing trade reports, which
have historically not been assessed a fee. NASDAQ OMX believes that
extending fees for the submission of these reports is consistent with
its goal of fairly and equitably distributing the costs associated with
the operation and maintenance of the FINRA/Nasdaq TRF. Thus, the
proposed fees for the submission of non-comparison trade reports to the
FINRA/Nasdaq TRF are spread more equitably across parties (Executing
Party and Contra), as well as report type (media and non-media) and
security type (Nasdaq-listed and non-Nasdaq exchange-listed). NASDAQ
OMX believes that the proposed reduction in fees is appropriate given
that the burden of paying for the use of the FINRA/Nasdaq TRF will be
shared by all participants across the full range of transactions.
FINRA has filed the proposed rule change for immediate
effectiveness. FINRA is proposing that the operative date of the
proposed rule change will be April 1, 2010.
2. Statutory Basis
FINRA believes that the proposed rule change is consistent with the
provisions of Section 15A(b)(5) of the Act,\12\ 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 fee schedule is fair and
provides an equitable allocation of fees in that it will apply
uniformly to all FINRA members that use the FINRA/Nasdaq TRF.
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\12\ 15 U.S.C. 78o-3(b)(5).
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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
No written comments were either solicited or 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)(ii) of the Act \13\ and paragraph (f)(2) of Rule 19b-4
thereunder.\14\ At any time within 60 days of the filing of the
proposed rule change, the Commission may summarily abrogate 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.
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\13\ 15 U.S.C. 78s(b)(3)(A)(ii).
\14\ 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
[[Page 17813]]
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 (https://www.sec.gov/rules/sro.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-FINRA-2010-011 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-2010-011. 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 (https://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 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-2010-011 and should be submitted on or before April 28, 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. 2010-7842 Filed 4-6-10; 8:45 am]
BILLING CODE 8011-01-P
