Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to the Trading Activity Fee Rate for Transactions in Security Futures, 61647-61649 [2012-24859]
Download as PDF
Federal Register / Vol. 77, No. 196 / Wednesday, October 10, 2012 / Notices
Exchange believes the proposed rule
change is also reasonable because it
makes clarifying changes to the Preface
and to footnotes and thereby provides
greater transparency to the Exchange’s
Schedule of Fees.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The proposed rule change does not
impose 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
The Exchange has not solicited, and
does not intend to solicit, comments on
this proposed rule change. The
Exchange has not received any
unsolicited written comments from
members or other interested parties.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section
19(b)(3)(A)(ii) of the Act.14 At any time
within 60 days of the filing of such
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. If the Commission
takes such action, the Commission shall
institute proceedings to determine
whether the proposed rule should be
approved or 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:
rmajette on DSK2TPTVN1PROD with NOTICES
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rulecomments@sec.gov. Please include File
Number SR–ISE–2012–73 on the subject
line.
Paper Comments
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
14 15
U.S.C. 78s(b)(3)(A)(ii).
VerDate Mar<15>2010
15:15 Oct 09, 2012
100 F Street NE., Washington, DC
20549–1090.
All submissions should refer to File
Number SR–ISE–2012–73. This file
number should be included on the
subject line if email 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
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. 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–ISE–
2012–73 and should be submitted on or
before October 31, 2012.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.15
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2012–24886 Filed 10–9–12; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–67971; File No. SR–FINRA–
2012–044]
Self-Regulatory Organizations;
Financial Industry Regulatory
Authority, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change Relating to the Trading
Activity Fee Rate for Transactions in
Security Futures
October 3, 2012.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
15 17
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CFR 200.30–3(a)(12).
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61647
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2
notice is hereby given that on
September 26, 2012, the Financial
Industry Regulatory Authority, Inc.
(‘‘FINRA’’) filed with the Securities and
Exchange Commission (‘‘Commission’’)
the proposed rule change as described
in Items I, II, and III below, which Items
have been prepared by FINRA. FINRA
has designated the proposed rule change
as ‘‘establishing or changing a due, fee
or other charge’’ under Section
19(b)(3)(A)(ii) of the Act 3 and Rule 19b–
4(f)(2) thereunder,4 which renders the
proposal effective upon filing with the
Commission. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
FINRA is proposing to amend Section
1 of Schedule A to the FINRA By-Laws
to adjust the rate of FINRA’s Trading
Activity Fee (‘‘TAF’’) for round turn
transactions in security futures.
The text of the proposed rule change
is available on FINRA’s Web site at
https://www.finra.org, at the principal
office of FINRA and at the
Commission’s Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission,
FINRA included statements concerning
the purpose of and basis for the
proposed rule change and discussed any
comments it received on the proposed
rule change. The text of these statements
may be examined at the places specified
in Item IV below. FINRA has prepared
summaries, set forth in sections A, B,
and C below, of the most significant
aspects of such statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
FINRA’s primary member fee
structure consists of the following: the
Personnel Assessment; the Gross
Income Assessment; and the TAF. These
fees are used to fund FINRA’s regulatory
activities, including examinations;
financial monitoring; and FINRA’s
policymaking, rulemaking, and
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A)(ii).
4 17 CFR 240.19b–4(f)(2).
2 17
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61648
Federal Register / Vol. 77, No. 196 / Wednesday, October 10, 2012 / Notices
enforcement activities.5 The proposed
rule change amends the TAF rate for
round turn transactions in security
futures to match the fee charged by the
National Futures Association (‘‘NFA’’).
FINRA initially adopted the TAF in
2002 as a replacement for an earlier
regulatory fee based on trades reported
to Nasdaq’s Automated Confirmation
Transaction system then in place.6
Currently, the TAF is generally assessed
on the sale of all exchange registered
securities wherever executed (except
debt securities that are not TRACEEligible Securities), over-the-counter
equity securities, security futures,
TRACE-Eligible Securities (provided
that the transaction is a Reportable
TRACE Transaction), and all municipal
securities subject to Municipal
Securities Rulemaking Board reporting
requirements. The rules governing the
TAF also include a list of transactions
exempt from the TAF, including
transactions in security futures held in
futures (as opposed to securities)
accounts.7
For transactions in security futures
held in securities accounts, members
must pay to FINRA a fee for each round
turn transaction (treated as including
one purchase and one sale of a contract
of sale for future delivery) of a security
future.8 The current TAF rate for
security futures transactions is $0.04 per
contract for each round turn
transaction.9
On June 1, 2012, the NFA submitted
an NFA Interpretive Notice to the
Commodity Futures Trading
Commission (‘‘CFTC’’) regarding the
NFA’s assessment fee on diminutive
notional value contracts and security
futures products.10 Pursuant to the NFA
Filing, effective September 1, 2012, the
NFA reduced its assessment fee on
security futures transactions from $0.04
per contract for each round turn
transaction to $0.00008 with a
minimum fee of $0.01 per round turn
transaction. The NFA Filing notes that
the $0.04 rate had been in place since
2002 and, when adopted, was intended
‘‘to ensure that NFA’s fees do not
provide a disincentive for customers to
carry [security futures products] in the
5 See
FINRA By-Laws, Schedule A, § 1(a).
Securities Exchange Act Release No. 46416
(August 23, 2002), 67 FR 55901 (August 30, 2002).
7 See FINRA By-Laws, Schedule A, § 1(b)(2)(J).
8 See FINRA By-Laws, Schedule A, § 1(b)(3)(C).
9 See FINRA By-Laws, Schedule A, § 1. This rate
has been in place since October 1, 2002. See NASD
Notice to Members 02–75 (November 2002).
10 See NFA Notice to Members I–12–15 (July 20,
2012); NFA Filing from Thomas W. Sexton, Senior
Vice President and General Counsel, NFA, to David
A. Stawick, Office of the Secretariat, CFTC, dated
June 1, 2012 (‘‘NFA Filing’’).
rmajette on DSK2TPTVN1PROD with NOTICES
6 See
VerDate Mar<15>2010
15:15 Oct 09, 2012
Jkt 229001
futures accounts of NFA Member
firms.’’
To ensure that the TAF does not
create a disincentive to holding security
futures in securities accounts, FINRA is
proposing to amend the TAF rate for
security future transactions from $0.04
per contract for each round turn
transaction to $0.00008 per contract for
each round turn transaction, with a
minimum fee of $0.01 per round turn
transaction. FINRA believes that
amending the TAF rate on security
futures transactions to match the rate
charged on such transactions by the
NFA will ensure that transaction fees do
not influence the decision on whether to
hold security futures in a futures or in
a securities account.11
The implementation date of the
proposed rule change will be October 1,
2012. FINRA will announce the
implementation date of the proposed
rule change in a Regulatory Notice.
2. Statutory Basis
FINRA believes that the proposed rule
change is consistent with the provisions
of Section 15A(b)(5) of the Act,12 which
requires, among other things, that
FINRA rules provide for the equitable
allocation of reasonable dues, fees and
other charges among members and
issuers and other persons using any
facility or system that FINRA operates
or controls. Because of the NFA’s
amendment to its assessment fee for
transactions in security futures held in
futures accounts, FINRA believes that
the proposed rate change to the TAF is
now necessary to ensure that there is no
disincentive to hold security futures in
a security account because of the fees
charged on round turn transactions in
security futures.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
FINRA does not believe that the
proposed rule change will result in any
11 FINRA notes that the NFA Filing states that the
NFA was adjusting its assessment rate on security
futures, at least in part, to avoid having the
assessment rate provide a disincentive to holding
security futures in a futures account. The NFA
Filing notes that a disincentive could be created
because FINRA does not charge the security futures
TAF rate on trades in security futures that result in
delivery of the underlying securities ‘‘but rather
charges a securities fee that is capped at $4.50.’’ See
NFA Filing, supra note 10, at 4. Since the TAF was
adopted, FINRA has charged such transactions
based on the TAF equity rate structure rather than
the rate for round turn transactions in security
futures. See NASD Notice to Members 02–63,
Question 10 (September 2002); see also TAF
Frequently Asked Question 500.4, available at
www.finra.org/taf/faq. FINRA notes that it is not
changing this guidance; however, as of July 1, 2012,
the cap on the TAF assessment for transactions in
equity securities was increased to $5.95. See
Regulatory Notice 12–31 (June 2012).
12 15 U.S.C. 78o–3(b)(5).
PO 00000
Frm 00080
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Sfmt 4703
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
The foregoing rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act 13 and paragraph (f)(2) of Rule
19b–4 thereunder.14 At any time within
60 days of the filing of the proposed rule
change, the Commission 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. If the
Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
should be approved or 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 email to rulecomments@sec.gov. Please include File
Number SR–FINRA–2012–044 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–2012–044. This file
number should be included on the
subject line if email 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
13 15
14 17
E:\FR\FM\10OCN1.SGM
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(2).
10OCN1
Federal Register / Vol. 77, No. 196 / Wednesday, October 10, 2012 / Notices
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for Web site viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE.,
Washington, DC 20549, on official
business days between the hours of 10
a.m. and 3 p.m. Copies of such filing
also will be available for Web site
inspection and printing at the principal
office of FINRA. All comments received
will be posted without change; the
Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
publicly available. All submissions
should refer to File Number SR–FINRA–
2012–044 and should be submitted on
or before October 31, 2012.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.15
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2012–24859 Filed 10–9–12; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–67970; File No. SR–ICC–
2012–12]
Self-Regulatory Organizations; ICE
Clear Credit LLC; Order Approving
Proposed Rule Change To Amend
Schedule 502 of the ICE Clear Credit
Rules To Provide for Clearing of
Additional Single Name Investment
Grade CDS Contracts
rmajette on DSK2TPTVN1PROD with NOTICES
October 3, 2012.
I. Introduction
On August 9, 2012, ICE Clear Credit
LLC (‘‘ICC’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’) the proposed rule
change SR–ICC–2012–12 pursuant to
Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Act’’).1 The
proposed rule change was published for
comment in the Federal Register on
August 24, 2012.2 The Commission
received no comment letters. For the
15 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 Securities Exchange Act Release No. 34–67696
(August 20, 2012), 77 FR 51599 (August 24, 2012).
1 15
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15:15 Oct 09, 2012
Jkt 229001
reasons discussed below, the
Commission is granting approval of the
proposed rule change.
II. Description of the Proposal
The purpose of proposed rule change
is to provide for the clearance of the
following twenty additional investment
grade Standard North American
Corporate Single Name CDS contracts:
Nucor Corporation; V.F. Corporation;
The Procter & Gamble Company; Encana
Corporation; Weatherford International
Ltd.; Chevron Corporation; Nexen Inc.;
Energy Transfer Partners, L.P.; Apache
Corporation; Kimco Realty Corporation;
Prudential Financial, Inc.; Prologis, L.P.;
HCP, Inc.; Lincoln National
Corporation; The Travelers Companies,
Inc.; Textron Financial Corporation;
Textron Inc.; The Williams Companies,
Inc.; Pacific Gas and Electric Company;
and Starwood Hotels & Resorts
Worldwide, Inc. (the ‘‘Additional Single
Names’’).
As with the Standard North American
Corporate Single Names currently
cleared, ICC plans to provide for the
clearance of contracts with a
restructuring type of no restructuring,
standardized maturity dates up to the
10-year tenor and both standardized
coupons. One of the Additional Single
Names (Starwood Hotels & Resorts
Worldwide, Inc.) was recently added by
Markit as one of the one hundred
twenty-five single constituents of its
Markit CDX North American Investment
Grade Series 18 Index, and is not
currently being cleared by ICC. Another
of the Additional Single Names (Textron
Financial Corporation) is a constituent
of the Series 8 through 12 of the Markit
CDX North American Investment Grade
Index, and has not been cleared
previously by ICC. All other Additional
Single Names are not constituents of
Series 8 through 18 of the Markit CDX
North American Investment Grade
Index. The Additional Single Names do
not require any changes to the body of
the ICC Rules. ICC will clear the
Additional Single Names pursuant to
ICC’s existing Rules. The Additional
Single Names do not require any
changes to the ICC risk management
framework including the ICC margin
methodology, guaranty fund
methodology, pricing parameters, or
pricing model. The only change
submitted was the inclusion of the
Additional Single Names to Schedule
502 of the ICC Rules. The Additional
Single Names were reviewed by the ICC
Risk Department, the ICC Trading
Advisory Committee, and the ICC Risk
Committee.
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61649
III. Discussion
Section 19(b)(2)(C) of the Act 3 directs
the Commission to approve a proposed
rule change of a self-regulatory
organization if it finds that such
proposed rule change is consistent with
the requirements of the Act and the
rules and regulations thereunder
applicable to such organization.
Section 17A(b)(3)(F) of the Act 4
requires, among other things, that the
rules of a clearing agency be designed to
promote the prompt and accurate
clearance and settlement of securities
transactions and, to the extent
applicable, derivative agreements,
contracts, and transactions, and to
assure the safeguarding of securities and
funds which are in the custody or
control of the clearing agency or for
which it is responsible.
The proposed rule change is
consistent with the requirements of
Section 17A(b)(3)(F) and other
requirements of the Act.
IV. Conclusion
On the basis of the foregoing, the
Commission finds that the proposal is
consistent with the requirements of the
Act and in particular with the
requirements of Section 17A of the Act 5
and the rules and regulations
thereunder.
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,6 that the
proposed rule change (File No. SR–ICC–
2012–12) be, and hereby is, approved.7
For the Commission by the Division of
Trading and Markets, pursuant to delegated
authority.8
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2012–24858 Filed 10–9–12; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[ File No. 500–1 ]
Order of Suspension of Trading; In the
Matter of Liberty Silver Corp.
October 5, 2012.
It appears to the Securities and
Exchange Commission that there is a
lack of current and accurate information
concerning the securities of Liberty
3 15
U.S.C. 78s(b)(2)(C).
U.S.C. 78q–1(b)(3)(F).
5 15 U.S.C. 78q–1.
6 15 U.S.C. 78s(b)(2).
7 In approving the proposed rule change, the
Commission considered the proposal’s impact on
efficiency, competition and capital formation. 15
U.S.C. 78c(f).
8 17 CFR 200.30–3(a)(12).
4 15
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Agencies
[Federal Register Volume 77, Number 196 (Wednesday, October 10, 2012)]
[Notices]
[Pages 61647-61649]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-24859]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-67971; File No. SR-FINRA-2012-044]
Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing and Immediate Effectiveness of
Proposed Rule Change Relating to the Trading Activity Fee Rate for
Transactions in Security Futures
October 3, 2012.
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 26, 2012, the Financial Industry Regulatory Authority,
Inc. (``FINRA'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by FINRA. FINRA has
designated the proposed rule change as ``establishing or changing a
due, fee or other charge'' under Section 19(b)(3)(A)(ii) of the Act \3\
and Rule 19b-4(f)(2) thereunder,\4\ which renders the proposal
effective upon filing with the Commission. 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.
\3\ 15 U.S.C. 78s(b)(3)(A)(ii).
\4\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------
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 adjust the rate of FINRA's Trading Activity Fee (``TAF'')
for round turn transactions in security futures.
The text of the proposed rule change is available on FINRA's Web
site at https://www.finra.org, at the principal office of FINRA and at
the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, FINRA included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. FINRA has prepared summaries, set forth in sections A,
B, and C below, of the most significant aspects of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
FINRA's primary member fee structure consists of the following: the
Personnel Assessment; the Gross Income Assessment; and the TAF. These
fees are used to fund FINRA's regulatory activities, including
examinations; financial monitoring; and FINRA's policymaking,
rulemaking, and
[[Page 61648]]
enforcement activities.\5\ The proposed rule change amends the TAF rate
for round turn transactions in security futures to match the fee
charged by the National Futures Association (``NFA'').
---------------------------------------------------------------------------
\5\ See FINRA By-Laws, Schedule A, Sec. 1(a).
---------------------------------------------------------------------------
FINRA initially adopted the TAF in 2002 as a replacement for an
earlier regulatory fee based on trades reported to Nasdaq's Automated
Confirmation Transaction system then in place.\6\ Currently, the TAF is
generally assessed on the sale of all exchange registered securities
wherever executed (except debt securities that are not TRACE-Eligible
Securities), over-the-counter equity securities, security futures,
TRACE-Eligible Securities (provided that the transaction is a
Reportable TRACE Transaction), and all municipal securities subject to
Municipal Securities Rulemaking Board reporting requirements. The rules
governing the TAF also include a list of transactions exempt from the
TAF, including transactions in security futures held in futures (as
opposed to securities) accounts.\7\
---------------------------------------------------------------------------
\6\ See Securities Exchange Act Release No. 46416 (August 23,
2002), 67 FR 55901 (August 30, 2002).
\7\ See FINRA By-Laws, Schedule A, Sec. 1(b)(2)(J).
---------------------------------------------------------------------------
For transactions in security futures held in securities accounts,
members must pay to FINRA a fee for each round turn transaction
(treated as including one purchase and one sale of a contract of sale
for future delivery) of a security future.\8\ The current TAF rate for
security futures transactions is $0.04 per contract for each round turn
transaction.\9\
---------------------------------------------------------------------------
\8\ See FINRA By-Laws, Schedule A, Sec. 1(b)(3)(C).
\9\ See FINRA By-Laws, Schedule A, Sec. 1. This rate has been
in place since October 1, 2002. See NASD Notice to Members 02-75
(November 2002).
---------------------------------------------------------------------------
On June 1, 2012, the NFA submitted an NFA Interpretive Notice to
the Commodity Futures Trading Commission (``CFTC'') regarding the NFA's
assessment fee on diminutive notional value contracts and security
futures products.\10\ Pursuant to the NFA Filing, effective September
1, 2012, the NFA reduced its assessment fee on security futures
transactions from $0.04 per contract for each round turn transaction to
$0.00008 with a minimum fee of $0.01 per round turn transaction. The
NFA Filing notes that the $0.04 rate had been in place since 2002 and,
when adopted, was intended ``to ensure that NFA's fees do not provide a
disincentive for customers to carry [security futures products] in the
futures accounts of NFA Member firms.''
---------------------------------------------------------------------------
\10\ See NFA Notice to Members I-12-15 (July 20, 2012); NFA
Filing from Thomas W. Sexton, Senior Vice President and General
Counsel, NFA, to David A. Stawick, Office of the Secretariat, CFTC,
dated June 1, 2012 (``NFA Filing'').
---------------------------------------------------------------------------
To ensure that the TAF does not create a disincentive to holding
security futures in securities accounts, FINRA is proposing to amend
the TAF rate for security future transactions from $0.04 per contract
for each round turn transaction to $0.00008 per contract for each round
turn transaction, with a minimum fee of $0.01 per round turn
transaction. FINRA believes that amending the TAF rate on security
futures transactions to match the rate charged on such transactions by
the NFA will ensure that transaction fees do not influence the decision
on whether to hold security futures in a futures or in a securities
account.\11\
---------------------------------------------------------------------------
\11\ FINRA notes that the NFA Filing states that the NFA was
adjusting its assessment rate on security futures, at least in part,
to avoid having the assessment rate provide a disincentive to
holding security futures in a futures account. The NFA Filing notes
that a disincentive could be created because FINRA does not charge
the security futures TAF rate on trades in security futures that
result in delivery of the underlying securities ``but rather charges
a securities fee that is capped at $4.50.'' See NFA Filing, supra
note 10, at 4. Since the TAF was adopted, FINRA has charged such
transactions based on the TAF equity rate structure rather than the
rate for round turn transactions in security futures. See NASD
Notice to Members 02-63, Question 10 (September 2002); see also TAF
Frequently Asked Question 500.4, available at www.finra.org/taf/faq.
FINRA notes that it is not changing this guidance; however, as of
July 1, 2012, the cap on the TAF assessment for transactions in
equity securities was increased to $5.95. See Regulatory Notice 12-
31 (June 2012).
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The implementation date of the proposed rule change will be October
1, 2012. FINRA will announce the implementation date of the proposed
rule change in a Regulatory Notice.
2. Statutory Basis
FINRA believes that the proposed rule change is consistent with the
provisions of Section 15A(b)(5) of the Act,\12\ which requires, among
other things, that FINRA rules provide for the equitable allocation of
reasonable dues, fees and other charges among members and issuers and
other persons using any facility or system that FINRA operates or
controls. Because of the NFA's amendment to its assessment fee for
transactions in security futures held in futures accounts, FINRA
believes that the proposed rate change to the TAF is now necessary to
ensure that there is no disincentive to hold security futures in a
security account because of the fees charged on round turn transactions
in security futures.
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\12\ 15 U.S.C. 78o-3(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
FINRA does not believe that the proposed rule change will result in
any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
Written comments were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A) of the Act \13\ and paragraph (f)(2) of Rule 19b-4
thereunder.\14\ At any time within 60 days of the filing of the
proposed rule change, the Commission 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. If
the Commission takes such action, the Commission shall institute
proceedings to determine whether the proposed rule should be approved
or disapproved.
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\13\ 15 U.S.C. 78s(b)(3)(A).
\14\ 17 CFR 240.19b-4(f)(2).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
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 email to rule-comments@sec.gov. Please include
File Number SR-FINRA-2012-044 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-2012-044. This
file number should be included on the subject line if email 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
[[Page 61649]]
amendments, all written statements with respect to the proposed rule
change that are filed with the Commission, and all written
communications relating to the proposed rule change between the
Commission and any person, other than those that may be withheld from
the public in accordance with the provisions of 5 U.S.C. 552, will be
available for Web site viewing and printing in the Commission's Public
Reference Room, 100 F Street NE., Washington, DC 20549, on official
business days between the hours of 10 a.m. and 3 p.m. Copies of such
filing also will be available for Web site inspection and printing at
the principal office of FINRA. All comments received will be posted
without change; the Commission does not edit personal identifying
information from submissions. You should submit only information that
you wish to make publicly available. All submissions should refer to
File Number SR-FINRA-2012-044 and should be submitted on or before
October 31, 2012.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
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\15\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-24859 Filed 10-9-12; 8:45 am]
BILLING CODE 8011-01-P