Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing of Proposed Rule Change to Amend Certain Trade Reporting and Compliance Rules, 62128-62130 [2011-25861]

Download as PDF 62128 Federal Register / Vol. 76, No. 194 / Thursday, October 6, 2011 / Notices 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 changes 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 will also be available for inspection and copying at the principal office of the CHX. 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–CHX–2011–27 and should be submitted on or before October 27, 2011. IV. Solicitation of Comments Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposal is consistent with the Act. Comments may be submitted by any of the following methods: For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.16 Elizabeth M. Murphy, Secretary. 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 No. SR–CHX–2011–27 on the subject line. mstockstill on DSK4VPTVN1PROD with NOTICES of the proposed rule change, or such shorter time as designated by the Commission. The Exchange has satisfied this requirement. Under Rule 19b–4(f)(6) of the Act,14 a proposal does not become operative for 30 days after the date of its filing, or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest. The Commission is waiving the 30-day operative period for this filing so that it may become effective and operative upon filing.15 The Commission believes waiving the 30day operative delay is consistent with the protection of investors and the public interest as the waiver will allow the Exchange to implement the change right away. The proposed rule change eliminates references to DEA which limit the applicability of some rules to firms for which the CHX serves as DEA. These rules will now apply to all member firms. 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. SECURITIES AND EXCHANGE COMMISSION 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 No. SR–CHX–2011–27. This file number should be included on the subject line if e-mail is used. To help the 14 Id. 15 For purposes only of waiving the operative delay of this proposal, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). See also 17 CFR 200.30–3(a)(59). VerDate Mar<15>2010 16:07 Oct 05, 2011 Jkt 226001 [FR Doc. 2011–25795 Filed 10–5–11; 8:45 am] BILLING CODE 8011–01–P [Release No. 34–65459; File No. SR–FINRA– 2011–053] Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing of Proposed Rule Change to Amend Certain Trade Reporting and Compliance Rules September 30, 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 September 22, 2011, the Financial Industry Regulatory Authority, Inc. (‘‘FINRA’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) the proposed rule 16 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 PO 00000 Frm 00094 Fmt 4703 Sfmt 4703 change as described in Items I, II, and III 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 FINRA Rule 6730 regarding reporting a transaction in a TRACE-Eligible Security, other than a transaction in an Asset-Backed Security, on a nonbusiness day, and reporting size (volume), commission and settlement, in order for FINRA to consolidate all TRACE-Eligible Securities transaction processing and data management on a single technology platform, the Multi Product Platform (‘‘MPP’’). 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. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose Currently, TRACE-Eligible Securities that are Asset-Backed Securities are processed on FINRA’s enhanced technology platform, MPP.3 FINRA proposes certain amendments to the reporting requirements of Rule 6730 of the Trade Reporting and Compliance Engine (TRACE) rules that will permit FINRA to migrate all other TRACEEligible Securities to MPP. The proposed amendments are substantially similar to requirements that currently apply to transactions in Asset-Backed Securities, and will simplify reporting a 3 ‘‘TRACE-Eligible Security’’ and ‘‘Asset-Backed Security’’ are defined in, respectively, Rule 6710(a) and Rule 6710(m). E:\FR\FM\06OCN1.SGM 06OCN1 mstockstill on DSK4VPTVN1PROD with NOTICES Federal Register / Vol. 76, No. 194 / Thursday, October 6, 2011 / Notices transaction executed on a holiday or a weekend, the size of a transaction, commission, if charged, and settlement. FINRA believes that the proposed consolidation of all TRACE-Eligible Securities on MPP will improve TRACE reporting and provide several benefits to broker-dealers. First, the MPP program incorporates more current industry standards, conventions and terms, and the proposed amendments to Rule 6730 to incorporate those standards will clarify and simplify the reporting requirements, and reduce reporting errors and costs. For example, when quoting, trading and recording positions in books and records, generally, the size (volume) of a transaction or a position is stated as the total par or principal value, which is how size (volume) of a TRACE transaction would be reported on MPP.4 The proposed amendments should reduce the incidences of data ‘‘translations’’ made by a broker-dealer when transaction data is both recorded in internal firm systems and reported to TRACE, and therefore should reduce operational complexities and reporting errors and fees, improve compliance, and reduce system-related costs. Second, MPP will provide brokerdealers a wider range of options for reporting, most notably providing support for the Financial Information eXchange (‘‘FIX’’) protocol. Third, MPP provides enhanced functionality for the management of TRACE data. Brokerdealers will be able to access TRACEEligible Securities data with greater ease and more quickly, including obtaining real-time intra-day data changes or additions. Fourth, standardizing most of the reporting requirements for TRACEEligible Securities and consolidating all TRACE-Eligible Securities on a single improved platform will allow brokerdealers to maintain one interface for all TRACE reporting, which should permit broker-dealers to reduce the operational complexity of reporting, improve the accuracy overall of their TRACE reporting, and eliminate costs associated with maintaining multiple technology platforms. The proposed amendments to Rule 6730 regarding reporting a transaction executed on a holiday or a weekend, the size (volume) of a transaction, commission, if charged, and settlement are discussed below. In addition, the proposed rule change includes minor administrative, technical and clarifying changes. 4 Similarly, the proposed change in Rule 6730 regarding settlement, which would require reporting of the actual date of settlement and delete the use of modifiers that are required currently in many instances, may simplify reporting settlement. VerDate Mar<15>2010 16:07 Oct 05, 2011 Jkt 226001 62129 TRACE-Eligible Securities Transactions Executed on a Non-Business Day chronological order and to incorporate minor technical changes.8 Currently, as set forth in Rule 6730(a)(1)(D) and Rule 6730(a)(2)(B), transactions in TRACE-Eligible Securities, except Asset-Backed Securities, that are executed on a weekend, holiday or other day when the TRACE system is not open must be reported the next business day (T + 1), designated ‘‘as/of,’’ and are subject to two unique requirements. First, the date of execution (‘‘Trade Date’’) reported to TRACE is not the actual date the trade was executed; instead, a member must report as the Trade Date the day (i.e., T + 1) that the report must be timely submitted. Second, the execution time reported must be ‘‘12:01:00 a.m. Eastern Time’’ (‘‘00:01:00’’), instead of the actual Time of Execution.5 The two requirements were established at the inception of TRACE because, at that time, the TRACE system did not recognize any day on which the TRACE system is closed as a valid Trade Date, and the two requirements allow FINRA to distinguish transactions in TRACEEligible Securities executed on nonbusiness days from all other reported transactions. FINRA has enhanced the TRACE system to recognize, for all types of TRACE-Eligible Securities, any calendar date as a valid Trade Date.6 Accordingly, FINRA proposes to amend Rule 6730(a)(1)(D) and Rule 6730(a)(2)(B) to delete in both provisions the two unique requirements, which are no longer necessary, and to require members to report transactions executed on non-business days in the same manner that transactions executed after or before TRACE System Hours on business days are reported currently.7 FINRA also proposes to combine Rule 6730(a)(1)(B) and Rule 6730(a)(1)(D) as renumbered amended Rule 6730(a)(1)(D), and delete current Rule 6730(a)(1)(B). In addition, FINRA proposes to reorganize the reporting requirements in Rule 6730(a)(1)(A) through Rule 6730(a)(1)(C) in Size (Volume), Commission and Settlement Terms FINRA also proposes amendments to the technical requirements for reporting the size (volume) of a transaction, the commission, if any, and the settlement of transactions in TRACE-Eligible Securities, other than Asset-Backed Securities. Currently, FINRA requires members to report the size (volume) of a transaction in a TRACE-Eligible Security, other than an Asset-Backed Security, by reporting the number of bonds.9 For example, a sale of corporate bonds or Agency Debt Securities having a par or principal value of $10,000 is reported as a sale of 10 bonds.10 FINRA proposes to amend Rule 6730(c)(2) and Rule 6730(d)(2) to require a member to report the size of such transactions using the total par value or principal value traded, rather than the number of bonds.11 FINRA proposes a similar change to the reporting of commissions. Under current Rule 6730(c)(11) and Rule 6730(d)(1), in those cases where a commission is charged in a transaction in a TRACE-Eligible Security, the commission must be reported ‘‘stated in points per bond (e.g., for corporate bonds, 1 point equals $10.00 per bond).’’ 12 FINRA proposes to amend Rule 6730(c)(11) and Rule 6730(d)(1) to require members to report the total dollar amount of the commission, rather than the points per bond.13 FINRA also proposes to simplify the requirements for reporting the settlement of a TRACE-Eligible Security transaction. Currently, as provided in Rule 6730(d)(4)(B)(i), if a transaction, 5 ‘‘Time of Execution’’ is defined in Rule 6710(d). Also, when the reporting method used includes a ‘‘special price memo’’ field, the member must enter the actual date of execution and Time of Execution in such field. 6 Previously, FINRA modified the TRACE system to recognize any calendar date as a valid Trade Date, but only as to transactions in Asset-Backed Securities. (See Securities Exchange Act Release No. 64364 (April 28, 2011), 76 FR 25385 (May 4, 2011) (order approving File No. SR–FINRA–2011– 012).) The rule changes became effective on May 16, 2011. (See Regulatory Notice 11–20 (May 2011).) 7 ‘‘TRACE System Hours’’ is defined in Rule 6710(t). PO 00000 Frm 00095 Fmt 4703 Sfmt 4703 8 The reporting requirements now set forth in Rule 6730(a)(1)(C) will be set forth in Rule 6730(a)(1)(A), and Rule 6730(a)(1)(A) will be renumbered as Rule 6730(a)(1)(B), except the requirement relating to transactions executed less than 15 minutes before the TRACE System closes will be set forth separately as Rule 6730(a)(1)(C). 9 See Rule 6730(c)(2) and Rule 6730(d)(2). 10 ‘‘Agency Debt Security’’ is defined in Rule 6710(l). 11 Previously, FINRA adopted similar provisions for reporting the size (volume) of transactions in Asset-Backed Securities that do not amortize. (See Securities Exchange Act Release No. 61566 (February 22, 2010), 75 FR 9262 (March 1, 2010) (order approving File No. SR–FINRA–2009–065).) The rule changes became effective on May 16, 2011. (See Regulatory Notice 11–20 (May 2011).) 12 Rule 6730(d)(1). 13 Previously, FINRA adopted similar provisions for reporting a commission in a transaction in an Asset-Backed Security. (See Securities Exchange Act Release No. 61566 (February 22, 2010), 75 FR 9262 (March 1, 2010) (order approving File No. SR– FINRA–2009–065).) The rule changes became effective on May 16, 2011. (See Regulatory Notice 11–20 (May 2011).) E:\FR\FM\06OCN1.SGM 06OCN1 62130 Federal Register / Vol. 76, No. 194 / Thursday, October 6, 2011 / Notices other than a transaction in an AssetBacked Security, will not settle on T + 3, a member must report the settlement using one of three modifiers.14 To streamline the requirements regarding settlement, new Rule 6730(c)(12) will require a member simply to report the date of settlement.15 In addition, FINRA proposes to delete Rule 6730(d)(4)(B), which sets forth the three settlement modifiers that will no longer be used in TRACE reporting, and references to such modifiers in Rule 6730(d)(4)(C). FINRA also will renumber Rule 6730(d)(4)(C), Rule 6730(d)(4)(D) and Rule 6730(d)(4)(E) accordingly.16 Finally, FINRA proposes minor technical amendments to Rule 6730(a) through (d), including amendments to Rule 6730(b)(2) and Rule 6730(c)(7) to delete redundant or unnecessary text and Rule 6730(d)(2) to clarify existing text. FINRA will announce the effective date of the proposed rule change in a Regulatory Notice to be published no later than 60 days following Commission approval. The effective date will be no later than 180 days following publication of the Regulatory Notice announcing Commission approval. 2. Statutory Basis mstockstill on DSK4VPTVN1PROD with NOTICES FINRA believes that the proposed rule change is consistent with the provisions of Section 15A(b)(6) of the Act,17 which requires, among other things, that FINRA rules must be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, and, in general, to protect investors and the public interest. FINRA believes that the proposed rule change will facilitate more timely and accurate reporting of the terms of transactions in TRACEEligible Securities for the protection of 14 Current Rule 6730(c)(12) will be renumbered as Rule 6730(c)(13). If a trade will not settle on T + 3, the three modifiers that are used to indicate the day the transaction will be settled are ‘‘.c’’ (date of execution), ‘‘.nd’’ (T + 1), or ‘‘.sNN’’ (settlement on a date other than the date of execution, T + 1 or T + 3). 15 Previously, FINRA adopted a similar requirement in connection with transactions in Asset-Backed Securities. (See Securities Exchange Act Release No. 61566 (February 22, 2010), 75 FR 9262 (March 1, 2010) (order approving File No. SR– FINRA–2009–065) and Securities Exchange Act Release No. 64364 (April 28, 2011), 76 FR 25385 (May 4, 2011) (order approving File No. SR– FINRA–2011–012)). The rule changes in both rule filings became effective on May 16, 2011. (See Regulatory Notice 11–20 (May 2011).) 16 Rule 6730(d)(4)(C), Rule 6730(d)(4)(D) and Rule 6730(d)(4)(E) will be renumbered, respectively, as Rule 6730(d)(4)(B), Rule 6730(d)(4)(C) and Rule 6730(d)(4)(D). 17 15 U.S.C. 78o–3(b)(6). VerDate Mar<15>2010 16:07 Oct 05, 2011 Jkt 226001 investors and in furtherance of the public interest. 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: 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–2011–053 on the subject line. rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission’s Public Reference Room, 100 F Street, NE., Washington, DC 20549, on official business days between the hours of 10 a.m. and 3 p.m. Copies of the filing will also 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–2011–053 and should be submitted on or before October 27, 2011. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.18 Elizabeth M. Murphy, Secretary. [FR Doc. 2011–25861 Filed 10–5–11; 8:45 am] BILLING CODE 8011–01–P SMALL BUSINESS ADMINISTRATION [Disaster Declaration #12815 and #12816] Texas Disaster Number TX–00381 U.S. Small Business Administration. ACTION: Amendment 5. AGENCY: This is an amendment of the Presidential declaration of a major disaster for the State of Texas (FEMA– 4029–DR), dated 09/09/2011. Paper Comments Incident: Wildfires. Incident Period: 08/30/2011 and • Send paper comments in triplicate continuing. to Elizabeth M. Murphy, Secretary, Effective Date: 09/28/2011. Securities and Exchange Commission, Physical Loan Application Deadline 100 F Street, NE., Washington, DC Date: 11/08/2011. 20549–1090. EIDL Loan Application Deadline Date: All submissions should refer to File 06/06/2012. Number SR–FINRA–2011–053. This file ADDRESSES: Submit completed loan number should be included on the subject line if e-mail is used. To help the applications to: U.S. Small Business Administration, Processing and Commission process and review your Disbursement Center, 14925 Kingsport comments more efficiently, please use only one method. The Commission will Road, Fort Worth, TX 76155. post all comments on the Commission’s 18 17 CFR 200.30–3(a)(12). Internet Web site (https://www.sec.gov/ PO 00000 Frm 00096 Fmt 4703 Sfmt 4703 SUMMARY: E:\FR\FM\06OCN1.SGM 06OCN1

Agencies

[Federal Register Volume 76, Number 194 (Thursday, October 6, 2011)]
[Notices]
[Pages 62128-62130]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-25861]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-65459; File No. SR-FINRA-2011-053]


Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing of Proposed Rule Change to Amend 
Certain Trade Reporting and Compliance Rules

September 30, 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 September 22, 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, II, and III 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 FINRA Rule 6730 regarding reporting a 
transaction in a TRACE-Eligible Security, other than a transaction in 
an Asset-Backed Security, on a non-business day, and reporting size 
(volume), commission and settlement, in order for FINRA to consolidate 
all TRACE-Eligible Securities transaction processing and data 
management on a single technology platform, the Multi Product Platform 
(``MPP'').
    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.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    Currently, TRACE-Eligible Securities that are Asset-Backed 
Securities are processed on FINRA's enhanced technology platform, 
MPP.\3\ FINRA proposes certain amendments to the reporting requirements 
of Rule 6730 of the Trade Reporting and Compliance Engine (TRACE) rules 
that will permit FINRA to migrate all other TRACE-Eligible Securities 
to MPP. The proposed amendments are substantially similar to 
requirements that currently apply to transactions in Asset-Backed 
Securities, and will simplify reporting a

[[Page 62129]]

transaction executed on a holiday or a weekend, the size of a 
transaction, commission, if charged, and settlement.
---------------------------------------------------------------------------

    \3\ ``TRACE-Eligible Security'' and ``Asset-Backed Security'' 
are defined in, respectively, Rule 6710(a) and Rule 6710(m).
---------------------------------------------------------------------------

    FINRA believes that the proposed consolidation of all TRACE-
Eligible Securities on MPP will improve TRACE reporting and provide 
several benefits to broker-dealers. First, the MPP program incorporates 
more current industry standards, conventions and terms, and the 
proposed amendments to Rule 6730 to incorporate those standards will 
clarify and simplify the reporting requirements, and reduce reporting 
errors and costs. For example, when quoting, trading and recording 
positions in books and records, generally, the size (volume) of a 
transaction or a position is stated as the total par or principal 
value, which is how size (volume) of a TRACE transaction would be 
reported on MPP.\4\ The proposed amendments should reduce the 
incidences of data ``translations'' made by a broker-dealer when 
transaction data is both recorded in internal firm systems and reported 
to TRACE, and therefore should reduce operational complexities and 
reporting errors and fees, improve compliance, and reduce system-
related costs. Second, MPP will provide broker-dealers a wider range of 
options for reporting, most notably providing support for the Financial 
Information eXchange (``FIX'') protocol. Third, MPP provides enhanced 
functionality for the management of TRACE data. Broker-dealers will be 
able to access TRACE-Eligible Securities data with greater ease and 
more quickly, including obtaining real-time intra-day data changes or 
additions. Fourth, standardizing most of the reporting requirements for 
TRACE-Eligible Securities and consolidating all TRACE-Eligible 
Securities on a single improved platform will allow broker-dealers to 
maintain one interface for all TRACE reporting, which should permit 
broker-dealers to reduce the operational complexity of reporting, 
improve the accuracy overall of their TRACE reporting, and eliminate 
costs associated with maintaining multiple technology platforms.
---------------------------------------------------------------------------

    \4\ Similarly, the proposed change in Rule 6730 regarding 
settlement, which would require reporting of the actual date of 
settlement and delete the use of modifiers that are required 
currently in many instances, may simplify reporting settlement.
---------------------------------------------------------------------------

    The proposed amendments to Rule 6730 regarding reporting a 
transaction executed on a holiday or a weekend, the size (volume) of a 
transaction, commission, if charged, and settlement are discussed 
below. In addition, the proposed rule change includes minor 
administrative, technical and clarifying changes.
TRACE-Eligible Securities Transactions Executed on a Non-Business Day
    Currently, as set forth in Rule 6730(a)(1)(D) and Rule 
6730(a)(2)(B), transactions in TRACE-Eligible Securities, except Asset-
Backed Securities, that are executed on a weekend, holiday or other day 
when the TRACE system is not open must be reported the next business 
day (T + 1), designated ``as/of,'' and are subject to two unique 
requirements. First, the date of execution (``Trade Date'') reported to 
TRACE is not the actual date the trade was executed; instead, a member 
must report as the Trade Date the day (i.e., T + 1) that the report 
must be timely submitted. Second, the execution time reported must be 
``12:01:00 a.m. Eastern Time'' (``00:01:00''), instead of the actual 
Time of Execution.\5\ The two requirements were established at the 
inception of TRACE because, at that time, the TRACE system did not 
recognize any day on which the TRACE system is closed as a valid Trade 
Date, and the two requirements allow FINRA to distinguish transactions 
in TRACE-Eligible Securities executed on non-business days from all 
other reported transactions.
---------------------------------------------------------------------------

    \5\ ``Time of Execution'' is defined in Rule 6710(d). Also, when 
the reporting method used includes a ``special price memo'' field, 
the member must enter the actual date of execution and Time of 
Execution in such field.
---------------------------------------------------------------------------

    FINRA has enhanced the TRACE system to recognize, for all types of 
TRACE-Eligible Securities, any calendar date as a valid Trade Date.\6\ 
Accordingly, FINRA proposes to amend Rule 6730(a)(1)(D) and Rule 
6730(a)(2)(B) to delete in both provisions the two unique requirements, 
which are no longer necessary, and to require members to report 
transactions executed on non-business days in the same manner that 
transactions executed after or before TRACE System Hours on business 
days are reported currently.\7\ FINRA also proposes to combine Rule 
6730(a)(1)(B) and Rule 6730(a)(1)(D) as renumbered amended Rule 
6730(a)(1)(D), and delete current Rule 6730(a)(1)(B). In addition, 
FINRA proposes to reorganize the reporting requirements in Rule 
6730(a)(1)(A) through Rule 6730(a)(1)(C) in chronological order and to 
incorporate minor technical changes.\8\
---------------------------------------------------------------------------

    \6\ Previously, FINRA modified the TRACE system to recognize any 
calendar date as a valid Trade Date, but only as to transactions in 
Asset-Backed Securities. (See Securities Exchange Act Release No. 
64364 (April 28, 2011), 76 FR 25385 (May 4, 2011) (order approving 
File No. SR-FINRA-2011-012).) The rule changes became effective on 
May 16, 2011. (See Regulatory Notice 11-20 (May 2011).)
    \7\ ``TRACE System Hours'' is defined in Rule 6710(t).
    \8\ The reporting requirements now set forth in Rule 
6730(a)(1)(C) will be set forth in Rule 6730(a)(1)(A), and Rule 
6730(a)(1)(A) will be renumbered as Rule 6730(a)(1)(B), except the 
requirement relating to transactions executed less than 15 minutes 
before the TRACE System closes will be set forth separately as Rule 
6730(a)(1)(C).
---------------------------------------------------------------------------

Size (Volume), Commission and Settlement Terms
    FINRA also proposes amendments to the technical requirements for 
reporting the size (volume) of a transaction, the commission, if any, 
and the settlement of transactions in TRACE-Eligible Securities, other 
than Asset-Backed Securities.
    Currently, FINRA requires members to report the size (volume) of a 
transaction in a TRACE-Eligible Security, other than an Asset-Backed 
Security, by reporting the number of bonds.\9\ For example, a sale of 
corporate bonds or Agency Debt Securities having a par or principal 
value of $10,000 is reported as a sale of 10 bonds.\10\ FINRA proposes 
to amend Rule 6730(c)(2) and Rule 6730(d)(2) to require a member to 
report the size of such transactions using the total par value or 
principal value traded, rather than the number of bonds.\11\
---------------------------------------------------------------------------

    \9\ See Rule 6730(c)(2) and Rule 6730(d)(2).
    \10\ ``Agency Debt Security'' is defined in Rule 6710(l).
    \11\ Previously, FINRA adopted similar provisions for reporting 
the size (volume) of transactions in Asset-Backed Securities that do 
not amortize. (See Securities Exchange Act Release No. 61566 
(February 22, 2010), 75 FR 9262 (March 1, 2010) (order approving 
File No. SR-FINRA-2009-065).) The rule changes became effective on 
May 16, 2011. (See Regulatory Notice 11-20 (May 2011).)
---------------------------------------------------------------------------

    FINRA proposes a similar change to the reporting of commissions. 
Under current Rule 6730(c)(11) and Rule 6730(d)(1), in those cases 
where a commission is charged in a transaction in a TRACE-Eligible 
Security, the commission must be reported ``stated in points per bond 
(e.g., for corporate bonds, 1 point equals $10.00 per bond).'' \12\ 
FINRA proposes to amend Rule 6730(c)(11) and Rule 6730(d)(1) to require 
members to report the total dollar amount of the commission, rather 
than the points per bond.\13\
---------------------------------------------------------------------------

    \12\ Rule 6730(d)(1).
    \13\ Previously, FINRA adopted similar provisions for reporting 
a commission in a transaction in an Asset-Backed Security. (See 
Securities Exchange Act Release No. 61566 (February 22, 2010), 75 FR 
9262 (March 1, 2010) (order approving File No. SR-FINRA-2009-065).) 
The rule changes became effective on May 16, 2011. (See Regulatory 
Notice 11-20 (May 2011).)
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    FINRA also proposes to simplify the requirements for reporting the 
settlement of a TRACE-Eligible Security transaction. Currently, as 
provided in Rule 6730(d)(4)(B)(i), if a transaction,

[[Page 62130]]

other than a transaction in an Asset-Backed Security, will not settle 
on T + 3, a member must report the settlement using one of three 
modifiers.\14\ To streamline the requirements regarding settlement, new 
Rule 6730(c)(12) will require a member simply to report the date of 
settlement.\15\ In addition, FINRA proposes to delete Rule 
6730(d)(4)(B), which sets forth the three settlement modifiers that 
will no longer be used in TRACE reporting, and references to such 
modifiers in Rule 6730(d)(4)(C). FINRA also will renumber Rule 
6730(d)(4)(C), Rule 6730(d)(4)(D) and Rule 6730(d)(4)(E) 
accordingly.\16\
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    \14\ Current Rule 6730(c)(12) will be renumbered as Rule 
6730(c)(13). If a trade will not settle on T + 3, the three 
modifiers that are used to indicate the day the transaction will be 
settled are ``.c'' (date of execution), ``.nd'' (T + 1), or ``.sNN'' 
(settlement on a date other than the date of execution, T + 1 or T + 
3).
    \15\ Previously, FINRA adopted a similar requirement in 
connection with transactions in Asset-Backed Securities. (See 
Securities Exchange Act Release No. 61566 (February 22, 2010), 75 FR 
9262 (March 1, 2010) (order approving File No. SR-FINRA-2009-065) 
and Securities Exchange Act Release No. 64364 (April 28, 2011), 76 
FR 25385 (May 4, 2011) (order approving File No. SR-FINRA-2011-
012)). The rule changes in both rule filings became effective on May 
16, 2011. (See Regulatory Notice 11-20 (May 2011).)
    \16\ Rule 6730(d)(4)(C), Rule 6730(d)(4)(D) and Rule 
6730(d)(4)(E) will be renumbered, respectively, as Rule 
6730(d)(4)(B), Rule 6730(d)(4)(C) and Rule 6730(d)(4)(D).
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    Finally, FINRA proposes minor technical amendments to Rule 6730(a) 
through (d), including amendments to Rule 6730(b)(2) and Rule 
6730(c)(7) to delete redundant or unnecessary text and Rule 6730(d)(2) 
to clarify existing text.
    FINRA will announce the effective date of the proposed rule change 
in a Regulatory Notice to be published no later than 60 days following 
Commission approval. The effective date will be no later than 180 days 
following publication of the Regulatory Notice announcing Commission 
approval.
2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the 
provisions of Section 15A(b)(6) of the Act,\17\ which requires, among 
other things, that FINRA rules must be designed to prevent fraudulent 
and manipulative acts and practices, to promote just and equitable 
principles of trade, and, in general, to protect investors and the 
public interest. FINRA believes that the proposed rule change will 
facilitate more timely and accurate reporting of the terms of 
transactions in TRACE-Eligible Securities for the protection of 
investors and in furtherance of the public interest.
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    \17\ 15 U.S.C. 78o-3(b)(6).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    FINRA does not believe that the proposed rule change will result in 
any burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    Written comments were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    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:

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-2011-053 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-2011-053. 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, 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. 
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-2011-053 
and should be submitted on or before October 27, 2011.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
Elizabeth M. Murphy,
Secretary.
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    \18\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2011-25861 Filed 10-5-11; 8:45 am]
BILLING CODE 8011-01-P
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