Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Extend a TRACE Pilot Program in FINRA Rule 6730(e)(4), 65431-65433 [2012-26339]
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emcdonald on DSK67QTVN1PROD with NOTICES
Federal Register / Vol. 77, No. 208 / Friday, October 26, 2012 / Notices
5. The Fund of Funds Adviser, or
trustee or Sponsor of an Investing Trust,
as applicable, will waive fees otherwise
payable to it by the Fund of Funds in
an amount at least equal to any
compensation (including fees received
pursuant to any plan adopted by a Fund
under rule 12b–1 under the Act)
received from a Fund by the Fund of
Funds Adviser, or trustee or Sponsor of
the Investing Trust, or an affiliated
person of the Fund of Funds Adviser, or
trustee or Sponsor of the Investing
Trust, other than any advisory fees paid
to the Fund of Funds Adviser, or trustee
or Sponsor of an Investing Trust, or its
affiliated person by the Fund, in
connection with the investment by the
Fund of Funds in the Fund. Any Fund
of Funds Sub-Adviser will waive fees
otherwise payable to the Fund of Funds
Sub-Adviser, directly or indirectly, by
the Investing Management Company in
an amount at least equal to any
compensation received from a Fund by
the Fund of Funds Sub-Adviser, or an
affiliated person of the Fund of Funds
Sub-Adviser, other than any advisory
fees paid to the Fund of Funds SubAdviser or its affiliated person by the
Fund, in connection with the
investment by the Investing
Management Company in the Fund
made at the direction of the Fund of
Funds Sub-Adviser. In the event that the
Fund of Funds Sub-Adviser waives fees,
the benefit of the waiver will be passed
through to the Investing Management
Company.
6. No Fund of Funds or Fund of
Funds Affiliate (except to the extent it
is acting in its capacity as an investment
adviser to a Fund) will cause a Fund to
purchase a security in an Affiliated
Underwriting.
7. The Board of each Fund, including
a majority of the non-interested Board
members, will adopt procedures
reasonably designed to monitor any
purchases of securities by the Fund in
an Affiliated Underwriting, once an
investment by a Fund of Funds in the
securities of the Fund exceeds the limit
of section 12(d)(1)(A)(i) of the Act,
including any purchases made directly
from an Underwriting Affiliate. The
Board will review these purchases
periodically, but no less frequently than
annually, to determine whether the
purchases were influenced by the
investment by the Fund of Funds in the
Fund. The Board will consider, among
other things: (a) Whether the purchases
were consistent with the investment
objectives and policies of the Fund; (b)
how the performance of securities
purchased in an Affiliated Underwriting
compares to the performance of
comparable securities purchased during
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a comparable period of time in
underwritings other than Affiliated
Underwritings or to a benchmark such
as a comparable market index; and (c)
whether the amount of securities
purchased by the Fund in Affiliated
Underwritings and the amount
purchased directly from an
Underwriting Affiliate have changed
significantly from prior years. The
Board will take any appropriate actions
based on its review, including, if
appropriate, the institution of
procedures designed to ensure that
purchases of securities in Affiliated
Underwritings are in the best interest of
shareholders.
8. Each Fund will maintain and
preserve permanently in an easily
accessible place a written copy of the
procedures described in the preceding
condition, and any modifications to
such procedures, and will maintain and
preserve for a period of not less than six
years from the end of the fiscal year in
which any purchase in an Affiliated
Underwriting occurred, the first two
years in an easily accessible place, a
written record of each purchase of
securities in Affiliated Underwritings
once an investment by a Fund of Funds
in the securities of the Fund exceeds the
limit of section 12(d)(1)(A)(i) of the Act,
setting forth from whom the securities
were acquired, the identity of the
underwriting syndicate’s members, the
terms of the purchase, and the
information or materials upon which
the Board’s determinations were made.
9. Before investing in a Fund in
excess of the limits in section
12(d)(1)(A), a Fund of Funds will
execute a FOF Participation Agreement
with the Fund stating that their
respective boards of directors or trustees
and their investment advisers, or trustee
and Sponsor, as applicable, understand
the terms and conditions of the order,
and agree to fulfill their responsibilities
under the order. At the time of its
investment in Shares of a Fund in
excess of the limit in section
12(d)(1)(A)(i), a Fund of Funds will
notify the Fund of the investment. At
such time, the Fund of Funds will also
transmit to the Fund a list of the names
of each Fund of Funds Affiliate and
Underwriting Affiliate. The Fund of
Funds will notify the Fund of any
changes to the list of the names as soon
as reasonably practicable after a change
occurs. The Fund and the Fund of
Funds will maintain and preserve a
copy of the order, the agreement, and
the list with any updated information
for the duration of the investment and
for a period of not less than six years
thereafter, the first two years in an
accessible place.
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65431
10. Before approving any advisory
contract under section 15 of the Act, the
board of directors or trustees of each
Investing Management Company,
including a majority of the noninterested directors or trustees, will find
that the advisory fees charged under
such contract are based on services
provided that will be in addition to,
rather than duplicative of, the services
provided under the advisory contract(s)
of any Fund in which the Investing
Management Company may invest.
These findings and their basis will be
recorded in the minute books of the
appropriate Investing Management
Company.
11. Any sales charges and/or service
fees with respect to shares of a Fund of
Funds will not exceed the limits
applicable to a fund of funds as set forth
in NASD Conduct Rule 2830.
12. No Fund will acquire securities of
an investment company or company
relying on section 3(c)(1) or 3(c)(7) of
the Act in excess of the limits contained
in section 12(d)(1)(A) of the Act, except
to the extent that the Fund acquires
securities of another investment
company pursuant to exemptive relief
from the Commission permitting the
Fund to acquire securities of one or
more investment companies for shortterm cash management purposes.
For the Commission, by the Division of
Investment Management, under delegated
authority.
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2012–26344 Filed 10–25–12; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–68076; File No. SR–FINRA–
2012–047]
Self-Regulatory Organizations;
Financial Industry Regulatory
Authority, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Extend a TRACE Pilot
Program in FINRA Rule 6730(e)(4)
October 22, 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 October
12, 2012, 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
1 15
2 17
E:\FR\FM\26OCN1.SGM
U.S.C. 78s(b)(1).
CFR 240.19b–4.
26OCN1
65432
Federal Register / Vol. 77, No. 208 / Friday, October 26, 2012 / Notices
have been prepared by FINRA. FINRA
has designated the proposed rule change
as constituting a ‘‘non-controversial’’
rule change under paragraph (f)(6) of
Rule 19b–4 under the Act,3 which
renders the proposal effective upon
receipt of this filing by the Commission.
The Commission is publishing this
notice to solicit comments on the
proposed rule change from interested
persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
FINRA is proposing to extend the
pilot program in FINRA Rule 6730(e)(4)
to October 25, 2013. The pilot program
exempts from reporting to the Trade
Reporting and Compliance Engine
(‘‘TRACE’’) transactions in TRACEEligible Securities that are executed on
a facility of the New York Stock
Exchange (‘‘NYSE’’) in accordance with
NYSE Rules 1400, 1401 and 86 and
reported to NYSE in accordance with
NYSE’s applicable trade reporting rules
and disseminated publicly by NYSE.
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.
emcdonald on DSK67QTVN1PROD with NOTICES
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The pilot program set forth in FINRA
Rule 6730(e)(4) exempts from reporting
to TRACE transactions in TRACEEligible Securities that are executed on
a facility of NYSE in accordance with
NYSE Rules 1400, 1401 and 86 and
reported to NYSE in accordance with
NYSE’s applicable trade reporting rules
and disseminated publicly by NYSE,
provided that a data sharing agreement
between FINRA and NYSE related to
transactions covered by the Rule
3 17
CFR 240.19b–4(f)(6).
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remains in effect.4 The pilot program is
currently scheduled to expire on
October 25, 2012.
FINRA is proposing to extend the
pilot program until October 25, 2013 to
continue to exempt transactions in
TRACE-Eligible Securities on an NYSE
facility (and as to which all the other
conditions of the exemption are met)
from the TRACE reporting requirements.
The extension will provide additional
time to analyze the impact of the
exemption. Without the extension,
members would be subject to both
FINRA’s and NYSE’s trade reporting
requirements with respect to these
securities. The proposed change thus
serves to eliminate duplicative reporting
requirements for these securities and the
resulting compliance costs and burdens.
The proposed rule change would not
expand or otherwise change the pilot.
FINRA notes that the success of the
pilot program remains dependent on
FINRA’s ability to continue to
effectively conduct surveillance on debt
trading in the over-the-counter market.
In this regard, the parties continue to
share data related to the transactions
covered by FINRA Rule 6730(e)(4) as
required by the Rule. However, FINRA
supports a regulatory construct that, in
the future, consolidates all last sale
transaction information to provide
better price transparency and a more
efficient means to engage in market
surveillance of TRACE-Eligible
Securities transactions. The proposed
extension would allow the pilot
program to continue to operate without
interruption while FINRA and NYSE
continue to assess the effect of the
exemption and issues regarding the
consolidation of market data, market
surveillance and price transparency.
4 See Securities Exchange Act Release No. 54768
(November 16, 2006), 71 FR 67673 (November 22,
2006) (Order Approving Proposed Rule Change; File
No. SR–NASD–2006–110) (pilot program in FINRA
Rule 6730(e)(4), subject to the execution of a data
sharing agreement addressing relevant transactions,
became effective on January 9, 2007); Securities
Exchange Act Release No. 59216 (January 8, 2009),
74 FR 2147 (January 14, 2009) (Notice of Filing and
Immediate Effectiveness of Proposed Rule Change;
File No. SR–FINRA–2008–065) (pilot program
extended to January 7, 2011); Securities Exchange
Act Release No. 63673 (January 7, 2011), 76 FR
2739 (January 14, 2011) (Notice of Filing and
Immediate Effectiveness of Proposed Rule Change;
File No. SR–FINRA–2011–002) (pilot program
extended to July 8, 2011); Securities Exchange Act
Release No. 64665 (June 14, 2011), 76 FR 35933
(June 20, 2011) (Notice of Filing and Immediate
Effectiveness of Proposed Rule Change; File No.
SR–FINRA–2011–025) (pilot program extended to
January 27, 2012); Securities Exchange Act Release
No. 66018 (December 21, 2011), 76 FR 81549
(December 28, 2011) (Notice of Filing and
Immediate Effectiveness of Proposed Rule Change;
File No. SR–FINRA–2011–072) (pilot program
extended to October 26, 2012).
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Fmt 4703
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FINRA has filed the proposed rule
change for immediate effectiveness and
has requested that the SEC waive the
requirement that the proposed rule
change not become operative for 30 days
after the date of the filing, such that
FINRA can implement the proposed
rule change immediately.
2. Statutory Basis
FINRA believes that the proposed rule
change is consistent with the provisions
of Section 15A(b)(6) of the Act,5 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
extension of the exemptive provision
protects investors and the public
because transactions will be reported,
transparency will be maintained for
these transactions, and NYSE’s
agreement to share data with FINRA
allows FINRA to continue to conduct
surveillance in the debt securities
market. In addition, extending the
exemptive provision permits members
that are subject to both FINRA’s and
NYSE’s trade reporting requirements to
avoid a duplicative regulatory structure
and the increased costs that may be
incurred as a result of duplicative
requirements.
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
Because the foregoing proposed rule
change does not: (i) Significantly affect
the protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) become
operative for 30 days from the date on
which it was filed, or such shorter time
as the Commission may designate, it has
become effective pursuant to Section
5 15
E:\FR\FM\26OCN1.SGM
U.S.C. 78o–3(b)(6).
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Federal Register / Vol. 77, No. 208 / Friday, October 26, 2012 / Notices
19(b)(3)(A) of the Act 6 and Rule 19b–
4(f)(6) thereunder.7
FINRA has requested that the
Commission waive the 30-day operative
delay so that the pilot program, which
exempts transactions in TRACE-Eligible
Securities on an NYSE facility (and as
to which all the other conditions of the
exemption are met) from the TRACE
reporting requirements, remains in
effect without interruption. The
Commission believes that waiving the
30-day operative delay is consistent
with the protection of investors and the
public interest because such action will
allow the benefits of the pilot program
to continue without interruption.
Therefore, the Commission hereby
waives the 30-day operative delay and
designates the proposal operative upon
filing.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 (h https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
FINRA–2012–047 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–2012–047. This file
6 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6) requires a self-regulatory organization to give
the Commission 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. FINRA has
satisfied this requirement.
8 For purposes only of waiving the 30-day
operative delay, the Commission has considered the
proposed rule’s impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
emcdonald on DSK67QTVN1PROD with NOTICES
7 17
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15:01 Oct 25, 2012
Jkt 229001
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 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 Number SR–FINRA–
2012–047 and should be submitted on
or before November 16, 2012.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.9
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2012–26339 Filed 10–25–12; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–68081; File No. SR–MSRB–
2012–07]
Self-Regulatory Organizations;
Municipal Securities Rulemaking
Board; Order Approving a Proposed
Rule Change To Amend the Real-Time
Transaction Reporting System
Information System and Subscription
Service
October 22, 2012.
I. Introduction
On August 24, 2012, the Municipal
Securities Rulemaking Board (‘‘MSRB’’)
filed with the Securities and Exchange
Commission (‘‘Commission’’), pursuant
to Section 19(b)(1) of the Securities
9 17
PO 00000
CFR 200.30–3(a)(12).
Frm 00076
Fmt 4703
Sfmt 4703
65433
Exchange Act of 1934 (‘‘Act’’) 1 and Rule
19b-4 thereunder,2 a proposed rule
change to enhance the transaction data
publicly disseminated from the RealTime Transaction Reporting System
(‘‘RTRS’’) information system. The
proposed rule change was published for
comment in the Federal Register on
September 12, 2012.3 The Commission
received three comment letters
regarding the proposed rule change.4
This order approves the proposed rule
change.
II. Description of the Proposal
RTRS is a facility for the collection
and dissemination of information about
transactions occurring in the municipal
securities markets. MSRB Rule G–14
requires brokers, dealers, and municipal
securities dealers (collectively,
‘‘dealers’’) to report all transactions in
municipal securities to RTRS within
fifteen minutes of the time of trade, with
limited exceptions. The MSRB makes
transaction information available to the
public through subscription services as
well as for free on the Electronic
Municipal Market Access (‘‘EMMA®’’)
Web site.
Currently, transaction information
disseminated from RTRS includes the
exact par value on all transactions with
a par value of $1 million or less, but
includes an indicator of ‘‘1MM+’’ in
place of the exact par value on
transactions where the par value is
greater than $1 million. The exact par
value of transactions having a par value
greater than $1 million is disseminated
from RTRS five business days later. The
MSRB implemented this approach in
response to concerns that, given the
prevalence of thinly traded securities in
the municipal securities market, it is
sometimes possible to identify
institutional investors and dealers by
the exact par value included on trade
reports.5
The MSRB now proposes to include
in transaction data publicly
disseminated from RTRS in real-time
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 Securities Exchange Act Release No. 67792
(September 6, 2012), 77 FR 56244 (SR–MSRB–
2012–07) (‘‘Notice’’).
4 See Letters from Dorothy Donohue, Deputy
General Counsel–Securities Regulation, Investment
Company Institute, to Elizabeth M. Murphy,
Secretary, Commission, dated September 28, 2012;
Michael Nicholas, Chief Executive Officer, Bond
Dealers of America, to Elizabeth M. Murphy,
Secretary, Commission, dated October 3, 2012; and
Michael Decker, Managing Director and Co-Head of
Municipal Securities, Securities Industry and
Financial Markets Association, to Elizabeth M.
Murphy, Secretary, Commission, dated October 3,
2012. All three commenters supported the proposed
rule change.
5 See Notice, supra note 3, at 56245.
2 17
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]]>Agencies
[Federal Register Volume 77, Number 208 (Friday, October 26, 2012)]
[Notices]
[Pages 65431-65433]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-26339]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-68076; File No. SR-FINRA-2012-047]
Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing and Immediate Effectiveness of
Proposed Rule Change To Extend a TRACE Pilot Program in FINRA Rule
6730(e)(4)
October 22, 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 October 12, 2012, 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
[[Page 65432]]
have been prepared by FINRA. FINRA has designated the proposed rule
change as constituting a ``non-controversial'' rule change under
paragraph (f)(6) of Rule 19b-4 under the Act,\3\ which renders the
proposal effective upon receipt of this filing by the Commission. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
FINRA is proposing to extend the pilot program in FINRA Rule
6730(e)(4) to October 25, 2013. The pilot program exempts from
reporting to the Trade Reporting and Compliance Engine (``TRACE'')
transactions in TRACE-Eligible Securities that are executed on a
facility of the New York Stock Exchange (``NYSE'') in accordance with
NYSE Rules 1400, 1401 and 86 and reported to NYSE in accordance with
NYSE's applicable trade reporting rules and disseminated publicly by
NYSE.
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
The pilot program set forth in FINRA Rule 6730(e)(4) exempts from
reporting to TRACE transactions in TRACE-Eligible Securities that are
executed on a facility of NYSE in accordance with NYSE Rules 1400, 1401
and 86 and reported to NYSE in accordance with NYSE's applicable trade
reporting rules and disseminated publicly by NYSE, provided that a data
sharing agreement between FINRA and NYSE related to transactions
covered by the Rule remains in effect.\4\ The pilot program is
currently scheduled to expire on October 25, 2012.
---------------------------------------------------------------------------
\4\ See Securities Exchange Act Release No. 54768 (November 16,
2006), 71 FR 67673 (November 22, 2006) (Order Approving Proposed
Rule Change; File No. SR-NASD-2006-110) (pilot program in FINRA Rule
6730(e)(4), subject to the execution of a data sharing agreement
addressing relevant transactions, became effective on January 9,
2007); Securities Exchange Act Release No. 59216 (January 8, 2009),
74 FR 2147 (January 14, 2009) (Notice of Filing and Immediate
Effectiveness of Proposed Rule Change; File No. SR-FINRA-2008-065)
(pilot program extended to January 7, 2011); Securities Exchange Act
Release No. 63673 (January 7, 2011), 76 FR 2739 (January 14, 2011)
(Notice of Filing and Immediate Effectiveness of Proposed Rule
Change; File No. SR-FINRA-2011-002) (pilot program extended to July
8, 2011); Securities Exchange Act Release No. 64665 (June 14, 2011),
76 FR 35933 (June 20, 2011) (Notice of Filing and Immediate
Effectiveness of Proposed Rule Change; File No. SR-FINRA-2011-025)
(pilot program extended to January 27, 2012); Securities Exchange
Act Release No. 66018 (December 21, 2011), 76 FR 81549 (December 28,
2011) (Notice of Filing and Immediate Effectiveness of Proposed Rule
Change; File No. SR-FINRA-2011-072) (pilot program extended to
October 26, 2012).
---------------------------------------------------------------------------
FINRA is proposing to extend the pilot program until October 25,
2013 to continue to exempt transactions in TRACE-Eligible Securities on
an NYSE facility (and as to which all the other conditions of the
exemption are met) from the TRACE reporting requirements. The extension
will provide additional time to analyze the impact of the exemption.
Without the extension, members would be subject to both FINRA's and
NYSE's trade reporting requirements with respect to these securities.
The proposed change thus serves to eliminate duplicative reporting
requirements for these securities and the resulting compliance costs
and burdens.
The proposed rule change would not expand or otherwise change the
pilot. FINRA notes that the success of the pilot program remains
dependent on FINRA's ability to continue to effectively conduct
surveillance on debt trading in the over-the-counter market. In this
regard, the parties continue to share data related to the transactions
covered by FINRA Rule 6730(e)(4) as required by the Rule. However,
FINRA supports a regulatory construct that, in the future, consolidates
all last sale transaction information to provide better price
transparency and a more efficient means to engage in market
surveillance of TRACE-Eligible Securities transactions. The proposed
extension would allow the pilot program to continue to operate without
interruption while FINRA and NYSE continue to assess the effect of the
exemption and issues regarding the consolidation of market data, market
surveillance and price transparency.
FINRA has filed the proposed rule change for immediate
effectiveness and has requested that the SEC waive the requirement that
the proposed rule change not become operative for 30 days after the
date of the filing, such that FINRA can implement the proposed rule
change immediately.
2. Statutory Basis
FINRA believes that the proposed rule change is consistent with the
provisions of Section 15A(b)(6) of the Act,\5\ 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 extension of the exemptive
provision protects investors and the public because transactions will
be reported, transparency will be maintained for these transactions,
and NYSE's agreement to share data with FINRA allows FINRA to continue
to conduct surveillance in the debt securities market. In addition,
extending the exemptive provision permits members that are subject to
both FINRA's and NYSE's trade reporting requirements to avoid a
duplicative regulatory structure and the increased costs that may be
incurred as a result of duplicative requirements.
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\5\ 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
Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section
[[Page 65433]]
19(b)(3)(A) of the Act \6\ and Rule 19b-4(f)(6) thereunder.\7\
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\6\ 15 U.S.C. 78s(b)(3)(A).
\7\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
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.
FINRA has satisfied this requirement.
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FINRA has requested that the Commission waive the 30-day operative
delay so that the pilot program, which exempts transactions in TRACE-
Eligible Securities on an NYSE facility (and as to which all the other
conditions of the exemption are met) from the TRACE reporting
requirements, remains in effect without interruption. The Commission
believes that waiving the 30-day operative delay is consistent with the
protection of investors and the public interest because such action
will allow the benefits of the pilot program to continue without
interruption. Therefore, the Commission hereby waives the 30-day
operative delay and designates the proposal operative upon filing.\8\
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\8\ For purposes only of waiving the 30-day operative delay, the
Commission has considered the proposed rule's impact on efficiency,
competition, and capital formation. See 15 U.S.C. 78c(f).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form ( https://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-FINRA-2012-047 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-2012-047. 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 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 Number SR-FINRA-2012-047 and should be
submitted on or before November 16, 2012.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\9\
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\9\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-26339 Filed 10-25-12; 8:45 am]
BILLING CODE 8011-01-P
