Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Extend a TRACE Pilot Program in FINRA Rule 6730(e)(4), 54694-54696 [2013-21536]
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ehiers on DSK2VPTVN1PROD with NOTICES
54694
Federal Register / Vol. 78, No. 172 / Thursday, September 5, 2013 / Notices
Accounts’ assets, because his or her
interest in the Payment Enhancement
amount has not vested. With respect to
a Payment Enhancement recaptured
upon the exercise of the free look
privilege of the Contracts, Applicants
submit it would be unfair to allow an
owner exercising that privilege to retain
the Payment Enhancement under
Contracts that have been returned for a
refund after a period of only a few days.
If the Applicants could not deduct the
Payment Enhancement from the amount
returned to an individual during the free
look period, Applicants would bear the
loss on the value of the Payment
Enhancement if the contract value
dropped during the free look period. If
the Contracts are returned during the
free look period, Applicants also note
that a Contract owner is entitled to
retain any investment gain attributable
to the Payment Enhancement, even if
the Payment Enhancement is deducted.
Furthermore, the recapture of the
Payment Enhancement if the owner’s
death occurs within 12 months after
receipt of a Payment Enhancement, is
designed to provide the Insurance
Companies with a measure of protection
against ‘‘anti-selection.’’ The risk is that
an owner, with full knowledge of
impending death or serious illness, will
make very large payments to the
Contracts which, according to the
Applicants, could result in significant
financial exposure to the Applicants.
5. The recapture of a Payment
Enhancement could be viewed as
involving the redemption of redeemable
securities for a price other than one
based on the current net asset value of
a Separate Account. The recapture of
the Payment Enhancement does not
involve either of the harms that Rule
22c–1 was intended to address, namely:
(i) the dilution of the value of
outstanding redeemable securities of
registered investment companies
through their sale at a price below net
asset value or redemption or repurchase
at a price above it, and (ii) other unfair
results, including speculative trading
practices.
6. Applicants assert that the proposed
recapture of the Payment Enhancement
does not pose a threat of dilution. To
effect a recapture of a Payment
Enhancement, interests in an owner’s
contract will be redeemed at a price
determined on the basis of the current
net asset value. The amount recaptured
will equal the amount of the Payment
Enhancement that the Insurance
Company paid out of its general account
assets. Although the owner will be
entitled to retain any investment gain
attributable to a Payment Enhancement,
the amount of that gain will be
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14:10 Sep 04, 2013
Jkt 229001
determined on the basis of current net
asset value. Similarly, the owner will
bear any loss if investment performance
declines since the amount that is
recaptured will equal the amount of the
Payment Enhancement. Therefore, no
dilution will occur upon the recapture
of a Payment Enhancement.
7. Applicants also submit that the
second harm that Rule 22c–1 was
designed to address, namely speculative
trading practices calculated to take
advantage of backward pricing, will not
occur as a result of the recapture of a
Payment Enhancement because the
pricing of the bonus recapture will
occur on the basis of the net asset value
calculated in accordance with Rule 22c–
1 on the date of the recapture.
8. Applicants submit that their
request for an order that applies to any
Separate Account or any Future
Separate Account established by
American General and US Life in
connection with the issuance of
Contracts and Future Contracts, and
underwritten or distributed by the
Distributor or other broker-dealers, is
appropriate in the public interest.
Applicants request that the order sought
herein extend to any future insurance
company that will be the successor in
interest to American General or US Life.
Such an order would promote
competitiveness in the variable annuity
market by eliminating the need to file
redundant exemptive applications,
thereby reducing administrative
expenses and maximizing the efficient
use of Applicants’ resources. Investors
would not receive any benefit or
additional protection by requiring
Applicants to repeatedly seek exemptive
relief that would present no issue under
the Act that has not already been
addressed in this application. Having
Applicants file additional applications
would impair Applicants’ ability
effectively to take advantage of business
opportunities as they arise.
9. Applicants undertake that Future
Contracts funded by Separate Accounts
or by Future Separate Accounts that
seek to rely on the order issue pursuant
to the application will be substantially
similar to the Contracts in all material
respects.
Conclusion
For the reasons set forth in the
application, the Applicants assert that
the requested order meets the standards
set out in Section 6(c) of the Act and
that an order should, therefore, be
granted.
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For the Commission, by the Division of
Investment Management under delegated
authority.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2013–21562 Filed 9–4–13; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–70288; File No. SR–FINRA–
2013–038]
Self-Regulatory Organizations;
Financial Industry Regulatory
Authority, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Extend a TRACE Pilot
Program in FINRA Rule 6730(e)(4)
August 29, 2013.
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 August
26, 2013, the Financial Industry
Regulatory Authority, Inc. (‘‘FINRA’’)
filed with the Securities and Exchange
Commission (‘‘SEC’’ or ‘‘Commission’’)
the proposed rule change as described
in Items I and II below, which Items
have been prepared by FINRA. 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 23, 2015. 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.
Below is the text of the proposed rule
change. Proposed new language is in
italics; proposed deletions are in
brackets.
*
*
*
*
*
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 17 CFR 240.19b–4(f)(6).
2 17
E:\FR\FM\05SEN1.SGM
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Federal Register / Vol. 78, No. 172 / Thursday, September 5, 2013 / Notices
6700. TRADE REPORTING AND
COMPLIANCE ENGINE (TRACE)
*
*
*
*
*
6730. Transaction Reporting
(a) through (d) No Change.
(e) Reporting Requirements for
Certain Transactions and Transfers of
Securities
The following shall not be reported:
(1) through (3) No Change.
(4) Provided that a data sharing
agreement between FINRA and NYSE
related to transactions covered by this
Rule remains in effect, for a pilot
program expiring on [October 25, 2013]
October 23, 2015, 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.
(5) through (6) No Change.
(f) No Change.
• • • Supplementary Material:
.01
*
*
No Change.
*
*
*
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
ehiers on DSK2VPTVN1PROD with NOTICES
1. Purpose
The pilot program set forth in FINRA
Rule 6730(e)(4) exempts from reporting
to TRACE those 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
remains in effect.4 The pilot program is
4 See Securities Exchange Act Release No. 54768
(November 16, 2006), 71 FR 67673 (November 22,
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14:10 Sep 04, 2013
Jkt 229001
currently scheduled to expire on
October 25, 2013.
FINRA is proposing to extend the
pilot program until October 23, 2015 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
corporate debt trading in the over-thecounter 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.
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); and Securities
Exchange Act Release No. 68076 (October 22, 2012),
77 FR 65431 (October 26, 2012) (Notice of Filing
and Immediate Effectiveness of Proposed Rule
Change; File No. SR–FINRA–2012–047) (pilot
program extended to October 25, 2013).
PO 00000
Frm 00079
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54695
FINRA has filed the proposed rule
change for immediate effectiveness. The
implementation date will be October 25,
2013.
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 corporate 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. FINRA
believes that the extension of the
exemptive provision does not result in
any burden on competition since it
allows 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.
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
5 15
E:\FR\FM\05SEN1.SGM
U.S.C. 78o–3(b)(6).
05SEN1
54696
Federal Register / Vol. 78, No. 172 / Thursday, September 5, 2013 / Notices
as the Commission may designate, it has
become effective pursuant to Section
19(b)(3)(A) of the Act 6 and Rule 19b–
4(f)(6) thereunder.7
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:
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–
2013–038 and should be submitted on
or before September 26, 2013.
Sealed Envelope Service, which is part
of DTC’s Custody Service.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.8
Kevin M. O’Neill,
Deputy Secretary.
Purpose
In 2002, DTC launched the Sealed
Envelope Service (the ‘‘Service’’) as a
service extension to DTC’s Custody
Service.3 The Service was designed to
provide physical custody to Participants
for documents or instruments that are
not securities, such as loan agreements,
wills, deeds, mortgages, contracts and
option agreements. The Service strictly
prohibits the deposit of securities
certificates as well as tangible assets
such as currency, gold coins or jewelry.
DTC initially launched the Service in
response to a request from Participants
to assist in fully outsourcing their vaults
to DTC. Subsequently, there has not
been much use of the Service by
Participants, and it is, accordingly, not
economically efficient to maintain the
Service.
Currently, DTC allows for these nonsecurity items to be held in custody in
a sealed envelope in one of DTC’s
vaults. The envelopes are such that the
contents cannot be viewed when sealed.
DTC does not open any sealed
envelopes, but x-rays all packages and
envelopes received to assure [sic] no
dangerous contents. DTC also assigns a
user-CUSIP number for tracking and
record keeping purposes. The
depositing Participant is required to list
the contents of the envelope on the
outside of the envelope. Participants
balance their sealed envelopes daily
with DTC in the same manner as they
presently do for securities held in the
Custody Service. DTC does not verify
the contents of the envelope and this
has presented a concern since DTC has
no way of knowing whether the
contents qualify for the Service.
Electronic Comments
[FR Doc. 2013–21536 Filed 9–4–13; 8:45 am]
• 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–2013–038 on the subject line.
BILLING CODE 8011–01–P
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–2013–038. 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
ehiers on DSK2VPTVN1PROD with NOTICES
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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14:10 Sep 04, 2013
Jkt 229001
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–70291; File No. SR–DTC–
2013–10]
Self-Regulatory Organizations; The
Depository Trust Company; Notice of
Filing of Proposed Rule Change in
Order To Terminate the Sealed
Envelope Service, Which Is Part of The
Depository Trust Company’s Custody
Service
August 30, 2013.
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 August
22, 2013, The Depository Trust
Company (‘‘DTC’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change described in Items I, II and III
below, which Items have been prepared
primarily by DTC. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Clearing Agency’s Statement of the
Terms of Substance of the Proposed
Rule Change
As more fully discussed below, the
proposed rule change is to terminate the
8 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
Frm 00080
Fmt 4703
(A) Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
3 Securities Exchange Act Release No. 46018 (Jun.
3, 2002), 67 FR 39454 (Jun. 7, 2002) (SR–DTC–
2002–03).
1 15
PO 00000
II. Clearing Agency’s Statement of the
Purpose of, and Statutory Basis for, the
Proposed Rule Change
In its filing with the Commission,
DTC 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. DTC has prepared
summaries, set forth in sections (A), (B),
and (C) below, of the most significant
aspects of such statements.
Sfmt 4703
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Agencies
[Federal Register Volume 78, Number 172 (Thursday, September 5, 2013)]
[Notices]
[Pages 54694-54696]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-21536]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-70288; File No. SR-FINRA-2013-038]
Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Extend a TRACE Pilot Program in FINRA Rule
6730(e)(4)
August 29, 2013.
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 August 26, 2013, the Financial Industry Regulatory Authority, Inc.
(``FINRA'') filed with the Securities and Exchange Commission (``SEC''
or ``Commission'') the proposed rule change as described in Items I and
II below, which Items have been prepared by FINRA. 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 23, 2015. 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.
Below is the text of the proposed rule change. Proposed new
language is in italics; proposed deletions are in brackets.
* * * * *
[[Page 54695]]
6700. TRADE REPORTING AND COMPLIANCE ENGINE (TRACE)
* * * * *
6730. Transaction Reporting
(a) through (d) No Change.
(e) Reporting Requirements for Certain Transactions and Transfers
of Securities
The following shall not be reported:
(1) through (3) No Change.
(4) Provided that a data sharing agreement between FINRA and NYSE
related to transactions covered by this Rule remains in effect, for a
pilot program expiring on [October 25, 2013] October 23, 2015,
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.
(5) through (6) No Change.
(f) No Change.
Supplementary Material:
.01 No Change.
* * * * *
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 those 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, 2013.
---------------------------------------------------------------------------
\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); and Securities Exchange Act Release No. 68076
(October 22, 2012), 77 FR 65431 (October 26, 2012) (Notice of Filing
and Immediate Effectiveness of Proposed Rule Change; File No. SR-
FINRA-2012-047) (pilot program extended to October 25, 2013).
---------------------------------------------------------------------------
FINRA is proposing to extend the pilot program until October 23,
2015 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 corporate 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. The implementation date will be October 25, 2013.
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 corporate 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. FINRA believes that the
extension of the exemptive provision does not result in any burden on
competition since it allows 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.
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
[[Page 54696]]
as the Commission may designate, it has become effective pursuant to
Section 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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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 rule-comments@sec.gov. Please include
File Number SR-FINRA-2013-038 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-2013-038. 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-2013-038 and should be
submitted on or before September 26, 2013.
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\8\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\8\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-21536 Filed 9-4-13; 8:45 am]
BILLING CODE 8011-01-P