Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Extend the Expiration Date of FINRA Rule 0180 (Application of Rules to Security-Based Swaps), 2983-2985 [2015-00834]

Download as PDF Federal Register / Vol. 80, No. 13 / Wednesday, January 21, 2015 / Notices [FR Doc. 2015–00858 Filed 1–20–15; 8:45 am] BILLING CODE 8011–01–C SECURITIES AND EXCHANGE COMMISSION [Release No. 34–74051; File No. SR–NYSE– 2014–59] Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Designation of a Longer Period for Commission Action on a Proposed Rule Change Amending Rule 13 and Related Rules Governing Order Types and Modifiers, as Modified by Partial Amendment No. 1 rule change, as modified by Partial Amendment No. 1. Accordingly, the Commission, pursuant to Section 19(b)(2) of the Act,6 designates March 4, 2015, as the date by which the Commission should either approve or disapprove or institute proceedings to determine whether to disapprove the proposed rule change (File Number SR– NYSE–2014–59). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.7 Brent J. Fields, Secretary. [FR Doc. 2015–00836 Filed 1–20–15; 8:45 am] BILLING CODE 8011–01–P asabaliauskas on DSK5VPTVN1PROD with NOTICES January 14, 2015. On November 14, 2014, New York Stock Exchange LLC (‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’)1 and Rule 19b–4 thereunder,2 a proposed rule change to amend Exchange Rule 13 and other Exchange rules governing order types and order modifiers. The proposed rule change was published in the Federal Register on December 4, 2014.3 On December 22, 2014, the Exchange submitted Partial Amendment No. 1 to the Commission and filed the Partial Amendment No. 1 to the public comment file.4 The Commission has received no other comment on the proposal. Section 19(b)(2) of the Act 5 provides that, within 45 days of the publication of the notice of the filing of a proposed rule change, or within such longer period up to 90 days as the Commission may designate if it finds such longer period to be appropriate and publishes its reasons for so finding or as to which the self-regulatory organization consents, the Commission shall either approve the proposed rule change, disapprove the proposed rule change, or institute proceedings to determine whether the proposed rule change should be disapproved. The Commission is extending this 45-day time period. The Commission finds that it is appropriate to designate a longer period within which to take action on the proposed rule change so that it has sufficient time to consider the proposed 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 See Securities Exchange Act Release No. 73703 (December 4, 2014), 79 FR 72039. 4 See letter from Martha Redding, Chief Counsel, New York Stock Exchange, to Kevin M. O’Neill, Deputy Secretary, Commission, dated December 22, 2014. 5 15 U.S.C. 78s(b)(2). 2 17 VerDate Sep<11>2014 17:50 Jan 20, 2015 Jkt 235001 SECURITIES AND EXCHANGE COMMISSION [Release No. 34–74049; File No. SR–FINRA– 2015–001] Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Extend the Expiration Date of FINRA Rule 0180 (Application of Rules to Security-Based Swaps) January 14, 2015. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 notice is hereby given that on January 7, 2015, Financial Industry Regulatory Authority, Inc. (‘‘FINRA’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by FINRA. 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 expiration date of FINRA Rule 0180 (Application of Rules to Security-Based Swaps) to February 11, 2016. FINRA Rule 0180 temporarily limits, with certain exceptions, the application of 6 Id. 7 17 CFR 200.30–3(a)(31). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 17 CFR 240.19b–4(f)(6). 1 15 PO 00000 Frm 00072 Fmt 4703 Sfmt 4703 2983 FINRA rules with respect to securitybased swaps. 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 On July 1, 2011, the SEC issued an Order granting temporary exemptive relief (the ‘‘Temporary Exemptions’’) from compliance with certain provisions of the Exchange Act in connection with the revision, pursuant to Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the ‘‘Dodd-Frank Act’’),4 of the Exchange Act definition of ‘‘security’’ to encompass security-based swaps.5 Consistent with the Commission’s action, on July 8, 2011, FINRA filed for immediate effectiveness FINRA Rule 0180,6 which, with certain exceptions, is intended to temporarily limit the 4 Public Law 111–203, 124 Stat. 1376 (2010). Securities Exchange Act Release No. 64795 (July 1, 2011), 76 FR 39927 (July 7, 2011) (Order Granting Temporary Exemptions Under the Securities Exchange Act of 1934 in Connection With the Pending Revision of the Definition of ‘‘Security’’ To Encompass Security-Based Swaps, and Request for Comment) (the ‘‘Exemptive Release’’). The term ‘‘security-based swap’’ is defined in Section 761 of the Dodd-Frank Act. See also Securities Exchange Act Release No. 67453 (July 18, 2012), 77 FR 48207 (August 13, 2012) (Further Definition of ‘‘Swap,’’ ‘‘Security-Based Swap,’’ and ‘‘Security-Based Swap Agreement’’; Mixed Swaps; Security-Based Swap Agreement Recordkeeping). 6 See Securities Exchange Act Release No. 64884 (July 14, 2011), 76 FR 42755 (July 19, 2011) (Notice of Filing and Immediate Effectiveness of Proposed Rule Change; File No. SR–FINRA–2011–033) (‘‘FINRA Rule 0180 Notice of Filing’’). See also Securities Exchange Act Release No. 71287 (January 10, 2014), 79 FR 2924 (January 16, 2014) (Notice of Filing and Immediate Effectiveness of Proposed Rule Change; File No. SR–FINRA–2014–001) (extending the expiration date of FINRA Rule 0180 to February 11, 2015). 5 See E:\FR\FM\21JAN1.SGM 21JAN1 2984 Federal Register / Vol. 80, No. 13 / Wednesday, January 21, 2015 / Notices asabaliauskas on DSK5VPTVN1PROD with NOTICES application of FINRA rules 7 with respect to security-based swaps, thereby helping to avoid undue market disruptions resulting from the change to the definition of ‘‘security’’ under the Act.8 The Commission, noting the need to avoid a potential unnecessary disruption to the security-based swap market in the absence of an extension of the Temporary Exemptions, and the need for additional time to consider the potential impact of the revision of the Exchange Act definition of ‘‘security’’ in light of ongoing Commission rulemaking efforts under Title VII of the Dodd-Frank Act, issued an Order which extended and refined the applicable expiration dates for the previously granted Temporary Exemptions.9 The 7 The current FINRA rulebook consists of: (1) FINRA Rules; (2) NASD Rules; and (3) rules incorporated from NYSE (‘‘Incorporated NYSE Rules’’). While the NASD Rules generally apply to all FINRA members, the Incorporated NYSE Rules apply only to those members of FINRA that are also members of the NYSE. The FINRA Rules apply to all FINRA members, unless such rules have a more limited application by their terms. For more information about the rulebook consolidation process, see Information Notice, March 12, 2008 (Rulebook Consolidation Process). 8 In its Exemptive Release, the Commission noted that the relief is targeted and does not include, for instance, relief from the Act’s antifraud and antimanipulation provisions. FINRA has noted that FINRA Rule 0180 is similarly targeted. For instance, paragraph (a) of FINRA Rule 0180 provides that FINRA rules shall not apply to members’ activities and positions with respect to security-based swaps, except for FINRA Rules 2010 (Standards of Commercial Honor and Principles of Trade), 2020 (Use of Manipulative, Deceptive or Other Fraudulent Devices), 3310 (Anti-Money Laundering Compliance Program) and 4240 (Margin Requirements for Credit Default Swaps). See also paragraphs (b) and (c) of FINRA Rule 0180 (addressing the applicability of additional rules) and FINRA Rule 0180 Notice of Filing. 9 See Securities Exchange Act Release No. 71485 (February 5, 2014), 79 FR 7731 (February 10, 2014) (Order Extending Temporary Exemptions Under the Securities Exchange Act of 1934 in Connection With the Revision of the Definition of ‘‘Security’’ to Encompass Security-Based Swaps, and Request for Comment) (‘‘Temporary Exemptions Extension Release’’) stating that, for those expiring Temporary Exemptions ‘‘that are not directly linked to pending security-based swap rulemakings, the Commission is extending the expiration date until the earlier of such time as the Commission issues an order or rule determining whether any continuing exemptive relief is appropriate for security-based swap activities with respect to any of these Exchange Act provisions or until three years following the effective date of this Order.’’ The Temporary Exemptions Extension Release further stated that for each expiring Temporary Exemption ‘‘that is related to pending security-based swap rulemakings, the Commission is extending the expiration date until the compliance date for the related security-based swap-specific rulemaking.’’ See also Securities Exchange Act Release No. 71482 (February 5, 2014), 79 FR 7570 (February 10, 2014) (Extension of Exemptions for Security-Based Swaps) (extending the expiration dates in interim final rules that provide exemptions under the Securities Act of 1933 (the ‘‘Securities Act’’), the Exchange Act, and the Trust Indenture Act of 1939 VerDate Sep<11>2014 17:50 Jan 20, 2015 Jkt 235001 Commission previously noted that extending the Temporary Exemptions would facilitate a coordinated consideration of these issues with the relief provided pursuant to FINRA Rule 0180.10 In establishing Rule 0180, and in extending the rule’s expiration date, FINRA noted its intent, pending the implementation of any SEC rules and guidance that would provide greater regulatory clarity in relation to securitybased swap activities, to align the expiration date of FINRA Rule 0180 with the termination of relevant provisions of the Temporary Exemptions.11 The Commission’s rulemaking and development of guidance in relation to security-based swap activities is ongoing. As such, FINRA believes it is appropriate and in the public interest, in light of the Commission’s goals as set forth in the Exemptive Release and the Temporary Exemptions Extension Release, to extend FINRA Rule 0180 for a limited period, to February 11, 2016, so as to avoid undue market disruptions resulting from the change to the definition of ‘‘security’’ under the Act. As noted in the FINRA Rule 0180 Notice of Filing, FINRA will amend the expiration date of Rule 0180 in subsequent filings as necessary such that the expiration date will be coterminous with the termination of relevant provisions of the Temporary Exemptions. FINRA has filed the proposed rule change for immediate effectiveness. FINRA is proposing that the implementation date of the proposed rule change will be February 11, 2015. 2. Statutory Basis FINRA believes that the proposed rule change is consistent with the provisions of Section 15A(b)(6) of the Act,12 which requires, among other things, that FINRA rules must be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, and, in general, to protect investors and the public interest. FINRA believes that the proposed rule change would further the purposes of the Act because, consistent for those security-based swaps that prior to July 16, 2011 were security-based swap agreements and are defined as ‘‘securities’’ under the Securities Act and the Exchange Act as of July 16, 2011 due solely to the provisions of Title VII of the Dodd-Frank Act). 10 See Securities Exchange Act Release No. 68864 (February 7, 2013), 78 FR 10218 (February 13, 2013) (Order Extending Temporary Exemptions Under the Securities Exchange Act of 1934 in Connection With the Revision of the Definition of ‘‘Security’’ to Encompass Security-Based Swaps, and Request for Comment). 11 See note 6 supra. 12 15 U.S.C. 78o–3(b)(6). PO 00000 Frm 00073 Fmt 4703 Sfmt 4703 with the goals set forth by the Commission in the Exemptive Release and in the Temporary Exemptions Extension Release, the proposed rule change will help to avoid undue market disruption that could result if FINRA Rule 0180 expires before the implementation of any SEC rules and guidance that would provide greater regulatory clarity in relation to securitybased swap activities. 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 proposed rule change would prevent undue market disruption that would otherwise result if securitybased swaps were, by virtue of the expansion of the Act’s definition of ‘‘security’’ to encompass security-based swaps, subject to the application of all FINRA rules before the implementation of any SEC rules and guidance that would provide greater regulatory clarity in relation to security-based swap activities. FINRA believes that, by extending the expiration of FINRA Rule 0180, the proposed rule change will serve to promote regulatory clarity and consistency, thereby reducing burdens on the marketplace and facilitating investor protection. 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 19(b)(3)(A) of the Act 13 and Rule 19b– 4(f)(6) 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 13 15 14 17 E:\FR\FM\21JAN1.SGM U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(6). 21JAN1 Federal Register / Vol. 80, No. 13 / Wednesday, January 21, 2015 / Notices 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. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.15 Brent J. Fields, Secretary. IV. Solicitation of Comments BILLING CODE 8011–01–P 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–2015–001 on the subject line. asabaliauskas on DSK5VPTVN1PROD with NOTICES Paper Comments • Send paper comments in triplicate to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–FINRA–2015-001. 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 such filing also will be available for inspection and copying at the principal office of FINRA. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–FINRA– 2015–001 and should be submitted on or before February 11, 2015. VerDate Sep<11>2014 17:50 Jan 20, 2015 Jkt 235001 [FR Doc. 2015–00834 Filed 1–20–15; 8:45 am] SECURITIES AND EXCHANGE COMMISSION [Release No. 34–74053; File No. SR–ICC– 2015–001] Self-Regulatory Organizations; ICE Clear Credit LLC; Notice of Filing of Proposed Rule Change To Revise ICC End-of-Day Price Discovery Policies and Procedures January 14, 2015. Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder 2 notice is hereby given that on January 5, 2015, ICE Clear Credit LLC (‘‘ICC’’) 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 primarily by ICC. 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 The principal purpose of the proposed rule change is to revise the ICC End-of-Day Price Discovery Policies and Procedures to incorporate enhancements to its price discovery process. This revision does not require any changes to the ICC Rules. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, ICC 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. ICC has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of these statements. 15 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 PO 00000 Frm 00074 Fmt 4703 Sfmt 4703 2985 A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change ICC proposes revising the ICC End-ofDay Price Discovery Policies and Procedures to incorporate enhancements to its price discovery process. ICC believes such revisions will facilitate the prompt and accurate clearance and settlement of securities transactions and derivative agreements, contracts, and transactions for which it is responsible. The proposed revisions are described in detail as follows. ICC currently utilizes a ‘‘cross and lock’’ algorithm as part of its price discovery process. Under this algorithm, standardized bids and offers derived from Clearing Participant (‘‘CP’’) submissions are matched by sorting them from highest to lowest and lowest to highest levels, respectively. This sorting process pairs the CP submitting the highest bid price with the CP submitting the lowest offer price, the CP submitting the second highest bid price with the CP submitting the secondlowest offer price, and so on. The algorithm then identifies crossed and/or locked markets. Crossed markets are the CP pairs generated by the sorting and ranking process for which the bid price of one CP is above the offer price of the matched CP. The algorithm identifies locked markets, where the bid and the offer are equal, in a similar fashion. Whenever there are crossed and/or locked matched markets, the algorithm applies a set of rules designed to identify standardized submissions that are ‘‘obvious errors.’’ The algorithm sets a high bid threshold equal to the preliminary end-of-day (‘‘EOD’’) level plus one EOD bid offer width (‘‘BOW’’), and a low offer threshold equal to the preliminary EOD level minus one EOD BOW. The algorithm considers a CP’s standardized submission to be an ‘‘obvious error’’ if the bid is higher than the high bid threshold, or the offer is lower than the low offer threshold. CP pairs identified by the algorithm as crossed or locked markets are required from time to time, under the End-of-Day Price Discovery Policies and Procedures, to enter into cleared trades with each other as part of the ICC EOD price discovery process (‘‘Firm Trade’’). Currently, ICC excludes standardized submissions it identifies as obvious errors from Firm Trades and does not use these submissions in its determination of published EOD levels. ICC proposes implementing consequences for CPs providing price discovery submissions deemed to be E:\FR\FM\21JAN1.SGM 21JAN1

Agencies

[Federal Register Volume 80, Number 13 (Wednesday, January 21, 2015)]
[Notices]
[Pages 2983-2985]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2015-00834]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74049; File No. SR-FINRA-2015-001]


Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change To Extend the Expiration Date of FINRA Rule 0180 
(Application of Rules to Security-Based Swaps)

January 14, 2015.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on January 7, 2015, Financial Industry Regulatory Authority, Inc. 
(``FINRA'') filed with the Securities and Exchange Commission (``SEC'' 
or ``Commission'') the proposed rule change as described in Items I, 
II, and III below, which Items have been prepared by FINRA. 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    FINRA is proposing to extend the expiration date of FINRA Rule 0180 
(Application of Rules to Security-Based Swaps) to February 11, 2016. 
FINRA Rule 0180 temporarily limits, with certain exceptions, the 
application of FINRA rules with respect to security-based swaps.
    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
    On July 1, 2011, the SEC issued an Order granting temporary 
exemptive relief (the ``Temporary Exemptions'') from compliance with 
certain provisions of the Exchange Act in connection with the revision, 
pursuant to Title VII of the Dodd-Frank Wall Street Reform and Consumer 
Protection Act (the ``Dodd-Frank Act''),\4\ of the Exchange Act 
definition of ``security'' to encompass security-based swaps.\5\ 
Consistent with the Commission's action, on July 8, 2011, FINRA filed 
for immediate effectiveness FINRA Rule 0180,\6\ which, with certain 
exceptions, is intended to temporarily limit the

[[Page 2984]]

application of FINRA rules \7\ with respect to security-based swaps, 
thereby helping to avoid undue market disruptions resulting from the 
change to the definition of ``security'' under the Act.\8\
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    \4\ Public Law 111-203, 124 Stat. 1376 (2010).
    \5\ See Securities Exchange Act Release No. 64795 (July 1, 
2011), 76 FR 39927 (July 7, 2011) (Order Granting Temporary 
Exemptions Under the Securities Exchange Act of 1934 in Connection 
With the Pending Revision of the Definition of ``Security'' To 
Encompass Security-Based Swaps, and Request for Comment) (the 
``Exemptive Release''). The term ``security-based swap'' is defined 
in Section 761 of the Dodd-Frank Act. See also Securities Exchange 
Act Release No. 67453 (July 18, 2012), 77 FR 48207 (August 13, 2012) 
(Further Definition of ``Swap,'' ``Security-Based Swap,'' and 
``Security-Based Swap Agreement''; Mixed Swaps; Security-Based Swap 
Agreement Recordkeeping).
    \6\ See Securities Exchange Act Release No. 64884 (July 14, 
2011), 76 FR 42755 (July 19, 2011) (Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change; File No. SR-FINRA-2011-033) 
(``FINRA Rule 0180 Notice of Filing''). See also Securities Exchange 
Act Release No. 71287 (January 10, 2014), 79 FR 2924 (January 16, 
2014) (Notice of Filing and Immediate Effectiveness of Proposed Rule 
Change; File No. SR-FINRA-2014-001) (extending the expiration date 
of FINRA Rule 0180 to February 11, 2015).
    \7\ The current FINRA rulebook consists of: (1) FINRA Rules; (2) 
NASD Rules; and (3) rules incorporated from NYSE (``Incorporated 
NYSE Rules''). While the NASD Rules generally apply to all FINRA 
members, the Incorporated NYSE Rules apply only to those members of 
FINRA that are also members of the NYSE. The FINRA Rules apply to 
all FINRA members, unless such rules have a more limited application 
by their terms. For more information about the rulebook 
consolidation process, see Information Notice, March 12, 2008 
(Rulebook Consolidation Process).
    \8\ In its Exemptive Release, the Commission noted that the 
relief is targeted and does not include, for instance, relief from 
the Act's antifraud and anti-manipulation provisions. FINRA has 
noted that FINRA Rule 0180 is similarly targeted. For instance, 
paragraph (a) of FINRA Rule 0180 provides that FINRA rules shall not 
apply to members' activities and positions with respect to security-
based swaps, except for FINRA Rules 2010 (Standards of Commercial 
Honor and Principles of Trade), 2020 (Use of Manipulative, Deceptive 
or Other Fraudulent Devices), 3310 (Anti-Money Laundering Compliance 
Program) and 4240 (Margin Requirements for Credit Default Swaps). 
See also paragraphs (b) and (c) of FINRA Rule 0180 (addressing the 
applicability of additional rules) and FINRA Rule 0180 Notice of 
Filing.
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    The Commission, noting the need to avoid a potential unnecessary 
disruption to the security-based swap market in the absence of an 
extension of the Temporary Exemptions, and the need for additional time 
to consider the potential impact of the revision of the Exchange Act 
definition of ``security'' in light of ongoing Commission rulemaking 
efforts under Title VII of the Dodd-Frank Act, issued an Order which 
extended and refined the applicable expiration dates for the previously 
granted Temporary Exemptions.\9\ The Commission previously noted that 
extending the Temporary Exemptions would facilitate a coordinated 
consideration of these issues with the relief provided pursuant to 
FINRA Rule 0180.\10\ In establishing Rule 0180, and in extending the 
rule's expiration date, FINRA noted its intent, pending the 
implementation of any SEC rules and guidance that would provide greater 
regulatory clarity in relation to security-based swap activities, to 
align the expiration date of FINRA Rule 0180 with the termination of 
relevant provisions of the Temporary Exemptions.\11\
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    \9\ See Securities Exchange Act Release No. 71485 (February 5, 
2014), 79 FR 7731 (February 10, 2014) (Order Extending Temporary 
Exemptions Under the Securities Exchange Act of 1934 in Connection 
With the Revision of the Definition of ``Security'' to Encompass 
Security-Based Swaps, and Request for Comment) (``Temporary 
Exemptions Extension Release'') stating that, for those expiring 
Temporary Exemptions ``that are not directly linked to pending 
security-based swap rulemakings, the Commission is extending the 
expiration date until the earlier of such time as the Commission 
issues an order or rule determining whether any continuing exemptive 
relief is appropriate for security-based swap activities with 
respect to any of these Exchange Act provisions or until three years 
following the effective date of this Order.'' The Temporary 
Exemptions Extension Release further stated that for each expiring 
Temporary Exemption ``that is related to pending security-based swap 
rulemakings, the Commission is extending the expiration date until 
the compliance date for the related security-based swap-specific 
rulemaking.'' See also Securities Exchange Act Release No. 71482 
(February 5, 2014), 79 FR 7570 (February 10, 2014) (Extension of 
Exemptions for Security-Based Swaps) (extending the expiration dates 
in interim final rules that provide exemptions under the Securities 
Act of 1933 (the ``Securities Act''), the Exchange Act, and the 
Trust Indenture Act of 1939 for those security-based swaps that 
prior to July 16, 2011 were security-based swap agreements and are 
defined as ``securities'' under the Securities Act and the Exchange 
Act as of July 16, 2011 due solely to the provisions of Title VII of 
the Dodd-Frank Act).
    \10\ See Securities Exchange Act Release No. 68864 (February 7, 
2013), 78 FR 10218 (February 13, 2013) (Order Extending Temporary 
Exemptions Under the Securities Exchange Act of 1934 in Connection 
With the Revision of the Definition of ``Security'' to Encompass 
Security-Based Swaps, and Request for Comment).
    \11\ See note 6 supra.
---------------------------------------------------------------------------

    The Commission's rulemaking and development of guidance in relation 
to security-based swap activities is ongoing. As such, FINRA believes 
it is appropriate and in the public interest, in light of the 
Commission's goals as set forth in the Exemptive Release and the 
Temporary Exemptions Extension Release, to extend FINRA Rule 0180 for a 
limited period, to February 11, 2016, so as to avoid undue market 
disruptions resulting from the change to the definition of ``security'' 
under the Act. As noted in the FINRA Rule 0180 Notice of Filing, FINRA 
will amend the expiration date of Rule 0180 in subsequent filings as 
necessary such that the expiration date will be coterminous with the 
termination of relevant provisions of the Temporary Exemptions.
    FINRA has filed the proposed rule change for immediate 
effectiveness. FINRA is proposing that the implementation date of the 
proposed rule change will be February 11, 2015.
2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the 
provisions of Section 15A(b)(6) of the Act,\12\ which requires, among 
other things, that FINRA rules must be designed to prevent fraudulent 
and manipulative acts and practices, to promote just and equitable 
principles of trade, and, in general, to protect investors and the 
public interest. FINRA believes that the proposed rule change would 
further the purposes of the Act because, consistent with the goals set 
forth by the Commission in the Exemptive Release and in the Temporary 
Exemptions Extension Release, the proposed rule change will help to 
avoid undue market disruption that could result if FINRA Rule 0180 
expires before the implementation of any SEC rules and guidance that 
would provide greater regulatory clarity in relation to security-based 
swap activities.
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    \12\ 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 
proposed rule change would prevent undue market disruption that would 
otherwise result if security-based swaps were, by virtue of the 
expansion of the Act's definition of ``security'' to encompass 
security-based swaps, subject to the application of all FINRA rules 
before the implementation of any SEC rules and guidance that would 
provide greater regulatory clarity in relation to security-based swap 
activities. FINRA believes that, by extending the expiration of FINRA 
Rule 0180, the proposed rule change will serve to promote regulatory 
clarity and consistency, thereby reducing burdens on the marketplace 
and facilitating investor protection.

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 19(b)(3)(A) of the Act \13\ and Rule 19b-
4(f)(6) thereunder.\14\
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    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 17 CFR 240.19b-4(f)(6).
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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

[[Page 2985]]

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-2015-001 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-FINRA-2015[dash]001. 
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 such filing also will be 
available for inspection and copying at the principal office of FINRA. 
All comments received will be posted without change; the Commission 
does not edit personal identifying information from submissions. You 
should submit only information that you wish to make available 
publicly. All submissions should refer to File Number SR-FINRA-2015-001 
and should be submitted on or before February 11, 2015.

    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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Brent J. Fields,
Secretary.
[FR Doc. 2015-00834 Filed 1-20-15; 8:45 am]
BILLING CODE 8011-01-P
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