Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing of Proposed Rule Change Relating to the Trading Activity Fee Rate for Transactions in Asset-Backed Securities, 4966-4968 [2011-1727]
Download as PDF
<![CDATA[
4966
Federal Register / Vol. 76, No. 18 / Thursday, January 27, 2011 / Notices
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were solicited
or received with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule
change: (1) Does not significantly affect
the protection of investors or the public
interest; (2) does not impose any
significant burden on competition; and
(3) by its terms does not become
operative for 30 days after the date of
this filing, or such shorter time as the
Commission may designate if consistent
with the protection of investors and the
public interest, the proposed rule
change has become effective pursuant to
Section 19(b)(3)(A) of the Act 7 and Rule
19b–4(f)(6)(iii) thereunder.8
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 (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–NYSEArca–2011–03 on the
subject line.
All submissions should refer to File
Number SR–NYSEArca–2011–03. 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, 100 F Street, NE.,
Washington, DC 20549–1090, 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 the
Exchange.9 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–NYSEArca–2011–03 and should be
submitted on or before February 17,
2011.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.10
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011–1726 Filed 1–26–11; 8:45 am]
BILLING CODE 8011–01–P
mstockstill on DSKH9S0YB1PROD with NOTICES
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–1090.
7 15
8 17
VerDate Mar<15>2010
17:51 Jan 26, 2011
Jkt 223001
9 The text of the proposed rule change is available
on the Commission’s Web site at https://
www.sec.gov.
10 17 CFR 200.30–3(a)(12).
PO 00000
Frm 00109
Fmt 4703
[Release No. 34–63751; File No. SR–FINRA–
2011–004]
Self-Regulatory Organizations;
Financial Industry Regulatory
Authority, Inc.; Notice of Filing of
Proposed Rule Change Relating to the
Trading Activity Fee Rate for
Transactions in Asset-Backed
Securities
January 21, 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
10, 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. 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 Section
1 of Schedule A to the FINRA By-Laws
to provide an alternative method of
calculating the Trading Activity Fee
(‘‘TAF’’) for transactions in Asset-Backed
Securities.
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, on the Commission’s
Web site at https://www.sec.gov, 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
Paper Comments
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6)(iii) requires a self-regulatory organization to
provide the Commission with 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
Exchange has fulfilled this requirement.
SECURITIES AND EXCHANGE
COMMISSION
Sfmt 4703
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.
1 15
2 17
E:\FR\FM\27JAN1.SGM
U.S.C. 78s(b)(1).
CFR 240.19b–4.
27JAN1
Federal Register / Vol. 76, No. 18 / Thursday, January 27, 2011 / Notices
mstockstill on DSKH9S0YB1PROD with NOTICES
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The TAF is one of the member
regulatory fees FINRA uses to fund its
member regulation activities, which
include examinations; financial
monitoring; and FINRA’s policymaking,
rulemaking, and enforcement activities.3
In general, the TAF is assessed for the
sale of all exchange registered securities
wherever executed (except debt
securities that are not TRAC-Eligible
Securities), over-the-counter equity
securities, security futures, TRACEligible Securities (provided that the
transaction is a Reportable TRACE
Transaction), and all municipal
securities subject to MSRB reporting
requirements. The rules governing the
TAF also include a list of transactions
exempt from the TAF.4 The current TAF
rates are $0.000075 per share for each
sale of a covered equity security, with
a maximum charge of $3.75 per trade;
$0.002 per contract for each sale of an
option; $0.04 per contract for each
round turn transaction of a security
future; and $0.00075 per bond for each
sale of a covered TRAC-Eligible Security
and/or municipal security, with a
maximum charge of $0.75 per trade. In
addition, if the execution price for a
covered security is less than the TAF
rate on a per share, per contract, or
round turn transaction basis, then no
TAF is assessed.
Currently, when reporting the size of
a corporate bond transaction to the
Trade Reporting and Compliance Engine
(‘‘TRACE’’), a member reports the
number of bonds (e.g., 10 bonds), and
the TRACE System, which is
programmed to reflect that one bond
equals $1,000 par value, calculates the
total dollar volume of the transaction
(e.g., 10 bonds x $1,000 = $10,000).5
Because of this reporting structure, the
TAF is assessed on a per-bond basis, but
the number of bonds is a proxy for the
size of the total dollar volume of a
transaction in $1,000 increments.
Earlier this year, the SEC approved
amendments to the TRACE reporting
requirements to include transactions in
Asset-Backed Securities.6 Under the
amendments, Asset-Backed Securities
will be TRAC-Eligible Securities, and
3 In addition to the TAF, the other member
regulatory fees are the Gross Income Assessment
and the Personnel Assessment.
4 See FINRA By-Laws, Schedule A, § 1(b)(2).
5 See FINRA Rule 6730(c)(2), (d)(2).
6 See Securities Exchange Act Release No. 61566
(February 22, 2010), 75 FR 9262 (March 1, 2010).
See also Regulatory Notice 10–23 (April 2010).
VerDate Mar<15>2010
17:51 Jan 26, 2011
Jkt 223001
transactions in Asset-Backed Securities
will generally be reportable to TRACE
and, thus, subject to the TAF. The
effective date of the amendments is May
16, 2011.7
Although some Asset-Backed
Securities are structured like
conventional corporate bonds (i.e.,
generally, one bond has a par (or
principal) value of $1,000), many are
structured differently. For example,
many Asset-Backed Securities are based
on financial assets that amortize, and
the principal (or face) value declines
over time. Accordingly, transactions in
Asset-Backed Securities will not be
reported to TRACE on a ‘‘per-bond’’
basis like conventional corporate bonds,
but rather will be reported based on the
original principal (or face) value of the
underlying security or the Remaining
Principal Balance.8
FINRA is proposing to conform the
TAF rate for sales of Asset-Backed
Securities to make it consistent with
how such transactions are reported to
TRACE rather than use the existing perbond rate. Consequently, FINRA is
proposing to base the TAF for sales of
Asset-Backed Securities on the size of
the transaction as reported to TRACE
(i.e., par value, or, where par value is
not used to determine the size of the
transaction, the lesser of original face
value or Remaining Principal Balance)
at a rate of $0.00000075 times the size
of the transaction as reported to TRACE,
with a maximum charge of $0.75 per
trade. Because, under the per-bond
method of calculation, one bond
represents $1,000 in par value, the TAF
rate across all Reportable TRACE
Transactions subject to the TAF will be
the same, regardless of whether the
transaction is in corporate bonds or
Asset-Backed Securities.
In addition to the amendment to the
TAF rate, FINRA is proposing technical
changes to capitalize certain terms in
the TAF rule to identify terms that are
defined elsewhere in the FINRA
Rulebook (e.g., TRAC-Eligible Security)
and to correct one rule cross-reference.
The effective date of the proposed
rule change will be the date the
proposed rule changes in SR–FINRA–
2009–065 become effective, which is
7 See Regulatory Notice 10–55 (October 2010). See
also Securities Exchange Act Release No. 63223
(November 1, 2010), 75 FR 68654 (November 8,
2010).
8 FINRA Rule 6710(aa) defines ‘‘Remaining
Principal Balance’’ for an Asset-Backed Security
backed by a pool of mortgages or other assets that
are self-amortizing, as ‘‘the total unpaid principal
balance of all such mortgages, or the equivalent
remaining value of such self-amortizing assets held
in the asset pool, at a specific time, such as the
Time of Execution.’’ See SR–FINRA–2009–065.
PO 00000
Frm 00110
Fmt 4703
Sfmt 4703
4967
currently anticipated to be May 16,
2011.9
2. Statutory Basis
FINRA believes that the proposed rule
change is consistent with the provisions
of Section 15A(b)(5) of the Act,10 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 rule change will clarify the
application of the TAF to sales of AssetBacked Securities and will ensure these
transactions are treated in the same way
as transactions reported to TRACE in
other types of fixed income securities.
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
Within 45 days of the date of
publication of this notice in the Federal
Register or within such longer period (i)
as the Commission may designate up to
90 days of such date if it finds such
longer period to be appropriate and
publishes its reasons for so finding or
(ii) as to which the self-regulatory
organization consents, the Commission
shall: (a) By order approve or
disapprove such proposed rule change,
or (b) institute proceedings to determine
whether the proposed rule change
should be disapproved.
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:
9 See Regulatory Notice 10–55 (October 2010). See
also Securities Exchange Act Release No. 63223
(November 1, 2010), 75 FR 68654 (November 8,
2010); Securities Exchange Act Release No. 61566
(February 22, 2010), 75 FR 9262 (March 1, 2010);
Regulatory Notice 10–23 (April 2010).
10 15 U.S.C. 78o–3(b)(5).
E:\FR\FM\27JAN1.SGM
27JAN1
4968
Federal Register / Vol. 76, No. 18 / Thursday, January 27, 2011 / 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–2011–004 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.
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–63737; File No. SR–
NYSEArca–2010–107]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Order Granting Approval of
Proposed Rule Change Relating to
Listing and Trading Shares of the
AdvisorShares Active Bear ETF
January 19, 2011.
I. Introduction
mstockstill on DSKH9S0YB1PROD with NOTICES
On November 23, 2010, NYSE Arca,
Inc. (‘‘Exchange’’) filed with the
Securities and Exchange Commission
All submissions should refer to File
Number SR–FINRA–2011–004. This file (‘‘Commission’’), pursuant to Section
19(b)(1) of the Securities Exchange Act
number should be included on the
1
subject line if e-mail is used. To help the of 1934 (‘‘Act’’) and Rule 19b–4
thereunder,2 a proposed rule change to
Commission process and review your
list and trade shares (‘‘Shares’’) of the
comments more efficiently, please use
AdvisorShares Active Bear ETF (the
only one method. The Commission will
‘‘Fund’’) under NYSE Arca Equities Rule
post all comments on the Commission’s
8.600. The proposed rule change was
Internet Web site (https://www.sec.gov/
published for comment in the Federal
rules/sro.shtml). Copies of the
Register on December 13, 2010.3 The
submission, all subsequent
Commission received no comments on
amendments, all written statements
the proposal. This order approves the
with respect to the proposed rule
proposed rule change.
change that are filed with the
II. Description of the Proposal
Commission, and all written
communications relating to the
The Exchange proposes to list and
proposed rule change between the
trade the Shares pursuant to NYSE Arca
Commission and any person, other than Equities Rule 8.600, which governs the
those that may be withheld from the
listing and trading of Managed Fund
public in accordance with the
Shares. The Shares will be offered by
provisions of 5 U.S.C. 552, will be
AdvisorShares Trust (‘‘Trust’’), a
available for website viewing and
statutory trust organized under the laws
printing in the Commission’s Public
of the State of Delaware and registered
Reference Room, 100 F Street, NE.,
with the Commission as an open-end
Washington, DC 20549, on official
management investment company.4 The
investment advisor to the Fund is
business days between the hours of 10
AdvisorShares Investments, LLC (the
a.m. and 3 p.m. Copies of such filing
also will be available for inspection and ‘‘Advisor’’). Ranger Alternative
Management, L.P. is the sub-advisor
copying at the principal office of
(‘‘Sub-Advisor’’) to the Fund and the
FINRA. All comments received will be
posted without change; the Commission portfolio manager. Foreside Fund
Services LLC is the distributor for the
does not edit personal identifying
Fund. The Bank of New York Mellon
information from submissions. You
Corporation is the administrator,
should submit only information that
you wish to make available publicly. All
1 15 U.S.C. 78s(b)(1).
submissions should refer to File No.
2 17 CFR 240.19b–4.
SR–FINRA–2011–004 and should be
3 See Securities Exchange Act Release No. 63447
submitted on or before February 17,
(December 7, 2010), 75 FR 77681 (‘‘Notice’’).
4 The Trust is registered under the Investment
2011.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.11
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011–1727 Filed 1–26–11; 8:45 am]
BILLING CODE 8011–01–P
11 17
CFR 200.30–3(a)(12).
VerDate Mar<15>2010
17:51 Jan 26, 2011
Jkt 223001
Company Act of 1940 (‘‘1940 Act’’). On September
22, 2010, the Trust filed with the Commission PostEffective Amendment No. 12 to Form N–1A under
the Securities Act of 1933 (15 U.S.C. 77a) and under
the 1940 Act relating to the Fund (File Nos. 333–
157876 and 811–22110) (the ‘‘Registration
Statement’’). The Trust has also filed an Amended
Application for an Order under Section 6(c) of the
1940 Act for exemptions from various provisions of
the 1940 Act and rules thereunder (File No. 812–
13677 dated May 28, 2010). The description of the
operation of the Trust and the Fund herein is based
on the Registration Statement.
PO 00000
Frm 00111
Fmt 4703
Sfmt 4703
custodian, transfer agent and fund
accounting agent for the Fund.
The Fund’s investment objective is to
seek capital appreciation through short
sales of domestically-traded equity
securities. The Sub-Advisor seeks to
achieve that objective by short selling a
portfolio of liquid mid- and large-cap
U.S. exchange-traded equity securities,
exchange-traded funds (‘‘ETFs’’)
registered pursuant to the 1940 Act and
exchange-traded products (‘‘ETPs’’),
including exchange-traded notes
(‘‘ETNs’’).5 The Fund generally targets
composition of 20–50 equity short
positions, with an average individual
position size generally ranging between
2–7% of the aggregate portfolio
exposure. ETPs may be used to gain
exposure in instances when the SubAdvisor has a more bearish posture with
respect to the broad market and will
typically range between 10–15% of the
Fund’s portfolio. ETFs registered
pursuant to the 1940 Act or other
exchange-traded products not registered
pursuant to the 1940 Act will be utilized
to manage exposure to broad indexes or
certain sectors. The Fund may invest in
U.S. government securities and U.S.
Treasury zero-coupon bonds. To
respond to adverse market, economic,
political or other conditions, the Fund
may invest 100% of its total assets,
without limitation, for extended periods
if desired, in high-quality short-term
debt securities and money market
instruments, depending on the SubAdvisor’s assessment of market
conditions.
The Exchange represents that the
Shares will be subject to NYSE Arca
Equities Rule 8.600, which includes the
initial and continued listing criteria
applicable to Managed Fund Shares,6
and will comply with Rule 10A–3 under
the Act,7 as provided by NYSE Arca
Equities Rule 5.3. Additional
information regarding the Trust and the
Shares, including investment strategies,
risks, creation and redemption
procedures, fees, portfolio holdings
disclosure policies, distributions and
5 The Fund may sell short only equity securities
traded in the U.S. on registered exchanges. The
Fund will not purchase or borrow illiquid securities
or securities registered pursuant to Rule 144A
under the Securities Act of 1933.
6 The Exchange states that a minimum of 100,000
Shares will be outstanding at the commencement of
trading on the Exchange, and the Exchange will
obtain a representation from the issuer of the Shares
that the net asset value (‘‘NAV’’) per Share will be
calculated daily and that the NAV and the
Disclosed Portfolio will be made available to all
market participants at the same time. See Notice,
supra note 3.
7 17 CFR 240.10A–3.
E:\FR\FM\27JAN1.SGM
27JAN1
]]>Agencies
[Federal Register Volume 76, Number 18 (Thursday, January 27, 2011)]
[Notices]
[Pages 4966-4968]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-1727]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-63751; File No. SR-FINRA-2011-004]
Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing of Proposed Rule Change Relating to
the Trading Activity Fee Rate for Transactions in Asset-Backed
Securities
January 21, 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 10, 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. The Commission is
publishing this notice to solicit comments on the proposed rule change
from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
FINRA is proposing to amend Section 1 of Schedule A to the FINRA
By-Laws to provide an alternative method of calculating the Trading
Activity Fee (``TAF'') for transactions in Asset-Backed Securities.
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, on the
Commission's Web site at https://www.sec.gov, 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.
[[Page 4967]]
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The TAF is one of the member regulatory fees FINRA uses to fund its
member regulation activities, which include examinations; financial
monitoring; and FINRA's policymaking, rulemaking, and enforcement
activities.\3\ In general, the TAF is assessed for the sale of all
exchange registered securities wherever executed (except debt
securities that are not TRAC-Eligible Securities), over-the-counter
equity securities, security futures, TRAC-Eligible Securities (provided
that the transaction is a Reportable TRACE Transaction), and all
municipal securities subject to MSRB reporting requirements. The rules
governing the TAF also include a list of transactions exempt from the
TAF.\4\ The current TAF rates are $0.000075 per share for each sale of
a covered equity security, with a maximum charge of $3.75 per trade;
$0.002 per contract for each sale of an option; $0.04 per contract for
each round turn transaction of a security future; and $0.00075 per bond
for each sale of a covered TRAC-Eligible Security and/or municipal
security, with a maximum charge of $0.75 per trade. In addition, if the
execution price for a covered security is less than the TAF rate on a
per share, per contract, or round turn transaction basis, then no TAF
is assessed.
---------------------------------------------------------------------------
\3\ In addition to the TAF, the other member regulatory fees are
the Gross Income Assessment and the Personnel Assessment.
\4\ See FINRA By-Laws, Schedule A, Sec. 1(b)(2).
---------------------------------------------------------------------------
Currently, when reporting the size of a corporate bond transaction
to the Trade Reporting and Compliance Engine (``TRACE''), a member
reports the number of bonds (e.g., 10 bonds), and the TRACE System,
which is programmed to reflect that one bond equals $1,000 par value,
calculates the total dollar volume of the transaction (e.g., 10 bonds x
$1,000 = $10,000).\5\ Because of this reporting structure, the TAF is
assessed on a per-bond basis, but the number of bonds is a proxy for
the size of the total dollar volume of a transaction in $1,000
increments.
---------------------------------------------------------------------------
\5\ See FINRA Rule 6730(c)(2), (d)(2).
---------------------------------------------------------------------------
Earlier this year, the SEC approved amendments to the TRACE
reporting requirements to include transactions in Asset-Backed
Securities.\6\ Under the amendments, Asset-Backed Securities will be
TRAC-Eligible Securities, and transactions in Asset-Backed Securities
will generally be reportable to TRACE and, thus, subject to the TAF.
The effective date of the amendments is May 16, 2011.\7\
---------------------------------------------------------------------------
\6\ See Securities Exchange Act Release No. 61566 (February 22,
2010), 75 FR 9262 (March 1, 2010). See also Regulatory Notice 10-23
(April 2010).
\7\ See Regulatory Notice 10-55 (October 2010). See also
Securities Exchange Act Release No. 63223 (November 1, 2010), 75 FR
68654 (November 8, 2010).
---------------------------------------------------------------------------
Although some Asset-Backed Securities are structured like
conventional corporate bonds (i.e., generally, one bond has a par (or
principal) value of $1,000), many are structured differently. For
example, many Asset-Backed Securities are based on financial assets
that amortize, and the principal (or face) value declines over time.
Accordingly, transactions in Asset-Backed Securities will not be
reported to TRACE on a ``per-bond'' basis like conventional corporate
bonds, but rather will be reported based on the original principal (or
face) value of the underlying security or the Remaining Principal
Balance.\8\
---------------------------------------------------------------------------
\8\ FINRA Rule 6710(aa) defines ``Remaining Principal Balance''
for an Asset-Backed Security backed by a pool of mortgages or other
assets that are self-amortizing, as ``the total unpaid principal
balance of all such mortgages, or the equivalent remaining value of
such self-amortizing assets held in the asset pool, at a specific
time, such as the Time of Execution.'' See SR-FINRA-2009-065.
---------------------------------------------------------------------------
FINRA is proposing to conform the TAF rate for sales of Asset-
Backed Securities to make it consistent with how such transactions are
reported to TRACE rather than use the existing per-bond rate.
Consequently, FINRA is proposing to base the TAF for sales of Asset-
Backed Securities on the size of the transaction as reported to TRACE
(i.e., par value, or, where par value is not used to determine the size
of the transaction, the lesser of original face value or Remaining
Principal Balance) at a rate of $0.00000075 times the size of the
transaction as reported to TRACE, with a maximum charge of $0.75 per
trade. Because, under the per-bond method of calculation, one bond
represents $1,000 in par value, the TAF rate across all Reportable
TRACE Transactions subject to the TAF will be the same, regardless of
whether the transaction is in corporate bonds or Asset-Backed
Securities.
In addition to the amendment to the TAF rate, FINRA is proposing
technical changes to capitalize certain terms in the TAF rule to
identify terms that are defined elsewhere in the FINRA Rulebook (e.g.,
TRAC-Eligible Security) and to correct one rule cross-reference.
The effective date of the proposed rule change will be the date the
proposed rule changes in SR-FINRA-2009-065 become effective, which is
currently anticipated to be May 16, 2011.\9\
---------------------------------------------------------------------------
\9\ See Regulatory Notice 10-55 (October 2010). See also
Securities Exchange Act Release No. 63223 (November 1, 2010), 75 FR
68654 (November 8, 2010); Securities Exchange Act Release No. 61566
(February 22, 2010), 75 FR 9262 (March 1, 2010); Regulatory Notice
10-23 (April 2010).
---------------------------------------------------------------------------
2. Statutory Basis
FINRA believes that the proposed rule change is consistent with the
provisions of Section 15A(b)(5) of the Act,\10\ 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 rule change will clarify the
application of the TAF to sales of Asset-Backed Securities and will
ensure these transactions are treated in the same way as transactions
reported to TRACE in other types of fixed income securities.
---------------------------------------------------------------------------
\10\ 15 U.S.C. 78o-3(b)(5).
---------------------------------------------------------------------------
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
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission shall:
(a) By order approve or disapprove such proposed rule change, or (b)
institute proceedings to determine whether the proposed rule change
should be disapproved.
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:
[[Page 4968]]
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-2011-004 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-2011-004. 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 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 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 available
publicly. All submissions should refer to File No. SR-FINRA-2011-004
and should be submitted on or before February 17, 2011.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
---------------------------------------------------------------------------
\11\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-1727 Filed 1-26-11; 8:45 am]
BILLING CODE 8011-01-P
