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 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 (http://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 (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 20549–1090, 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 http:// 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 http://www.finra.org, at the principal office of FINRA, on the Commission’s Web site at http://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 (http://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 (http://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]


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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 http://www.finra.org, at the principal office of FINRA, on the 
Commission's Web site at http://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 (http://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 (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, 
all written statements with respect to the proposed rule change that 
are filed with the Commission, and all written communications relating 
to the proposed rule change between the Commission and any person, 
other than those that may be withheld from the public in accordance 
with the provisions of 5 U.S.C. 552, will be available for website 
viewing and printing in the Commission's Public Reference Room, 100 F 
Street, NE., Washington, DC 20549, on official business days between 
the hours of 10 a.m. and 3 p.m. Copies of 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