Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to Rule 4553 and Fees for Access to Alternative Trading System Volume Information Published on FINRA's Web Site, 39811-39815 [2015-16860]
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39811
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Federal Register / Vol. 80, No. 132 / Friday, July 10, 2015 / Notices
lack of current and accurate information
concerning the securities of
International Hi-Tech Industries Inc.
(CIK No. 921887) (‘‘IHITF’’ 1), a
Canadian corporation with its principal
place of business in Vancouver, British
Columbia, Canada, with stock quoted on
OTC Link (previously, ‘‘Pink Sheets’’)
operated by OTC Markets Group Inc.
(‘‘OTC Link’’) because it has not filed
any periodic reports since the period
ended December 31, 2005. On June 28,
2013, the Division of Corporation
Finance (‘‘Corporation Finance’’) sent a
delinquency letter to IHITF requesting
compliance with its periodic reporting
obligations at the address shown in its
then-most recent filing with the
Commission, but IHITF did not receive
the delinquency letter due to its failure
to maintain a valid address on file with
the Commission as required by
Commission rules (Rule 301 of
Regulation S–T, 17 CFR 232.301 and
Section 5.4 of the EDGAR Filer Manual).
It appears to the Securities and
Exchange Commission that there is a
lack of current and accurate information
concerning the securities of Mark One
Global Industries, Inc. (CIK No.
1000791) (‘‘MKGLF’’), a British
Columbia corporation with its principal
place of business in Olathe, Kansas,
with stock quoted on OTC Link, because
it has not filed any periodic reports
since the period ended December 31,
2009. On April 29, 2013, Corporation
Finance sent a delinquency letter to
MKGLF requesting compliance with its
periodic reporting obligations at the
address shown in its then-most recent
filing with the Commission, but MKGLF
did not receive the delinquency letter
due to its failure to maintain a valid
address on file with the Commission as
required by Commission rules (Rule 301
of Regulation S–T, 17 CFR 232.301 and
Section 5.4 of the EDGAR Filer Manual).
It appears to the Securities and
Exchange Commission that there is a
lack of current and accurate information
concerning the securities of Nortel
Networks Corporation (CIK No. 72911)
(‘‘NRTLQ’’), a Canadian corporation
with its principal place of business in
Mississauga, Ontario, Canada, with
stock quoted on OTC Link, because it
has not filed any periodic reports since
the period ended June 30, 2012. On
October 17, 2014, Corporation Finance
sent a delinquency letter to NRTLQ
requesting compliance with its periodic
reporting obligations at the address
shown in its then-most recent filing
with the Commission which was
delivered.
It appears to the Securities and
Exchange Commission that there is a
lack of current and accurate information
concerning the securities of Silverado
Gold Mines Ltd. (CIK No. 731727)
(‘‘SLGLF’’), a defaulted British
Columbia corporation with its principal
place of business in Surrey, British
Columbia, Canada, with stock quoted on
OTC Link, because it has not filed any
periodic reports since the period ended
August 31, 2011. On September 13,
2013, Corporation Finance sent a
delinquency letter to SLGLF requesting
compliance with its periodic reporting
obligations at the address shown in its
then-most recent filing with the
Commission which was delivered.
The Commission is of the opinion that
the public interest and the protection of
investors require a suspension of trading
in the securities of the above-listed
companies. Therefore, it is ordered,
pursuant to Section 12(k) of the
Securities Exchange Act of 1934, that
trading in the securities of the abovelisted companies is suspended for the
period from 9:30 a.m. EDT on July 8,
2015, through 11:59 p.m. EDT on July
21, 2015.
By the Commission.
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2015–17015 Filed 7–8–15; 11:15 am]
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I. Self-Regulatory Organization’s
Statement of the Terms of the Substance
of the Proposed Rule Change
FINRA is proposing to remove Rule
4553 (Fees for ATS Data) from the
FINRA rulebook.
Below is the text of the proposed rule
change. Proposed new language is in
italics; proposed deletions are in
brackets.
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4000. FINANCIAL AND OPERATIONAL
RULES
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4500. BOOKS, RECORDS AND REPORTS
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4550. ATS Reporting
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[4553. Fees for ATS Data]
[(a) General]
[Fees are charged for ATS Data as set forth
in this Rule. Professionals and Vendors must
pay the subscription fee to receive ATS Data
in accordance with this Rule and execute
appropriate agreements with FINRA.]
July 6, 2015.
[(b) Professionals]
[(1) Professionals may subscribe for the
most currently published ATS Data and up
to five years of historical ATS Data in a
downloadable, pipe delimited format for a
twelve-month subscription fee of $12,000.
Such fee is not refundable or transferable.]
[(2) Payment of the Professional
subscription fee described in this paragraph
(b) provides the Professional with use of such
ATS Data to generate Derived Data.]
[(3) Professionals may distribute ATS Data
or Derived Data to their employees, affiliates,
or employees of affiliates but are prohibited
from providing ATS Data or Derived Data to
any third party.]
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 June 29,
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
‘‘establishing or changing a due, fee or
[(c) Vendors]
[(1) Vendors may subscribe for access to
the most currently published ATS Data and
up to five years of historical ATS Data in a
downloadable, pipe delimited format for a
twelve-month subscription fee of $18,000.
Such fee is not refundable or transferable.]
[(2) Payment of the Vendor subscription fee
described in this paragraph (c) provides the
Vendor with use of such ATS Data to
generate Derived Data.]
[(3) Vendors are prohibited from providing
ATS Data to any third party unless a
Professional subscription has been purchased
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–75365; File No. SR–FINRA–
2015–023]
Self-Regulatory Organizations;
Financial Industry Regulatory
Authority, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change Relating to Rule 4553 and
Fees for Access to Alternative Trading
System Volume Information Published
on FINRA’s Web Site
1 The short form of each issuer’s name is also its
ticker symbol.
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other charge’’ under Section
19(b)(3)(A)(ii) of the Act3 and Rule 19b–
4(f)(2) thereunder,4 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
2 17
U.S.C. 78s(b)(1).
CFR 240.19b–4.
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3 15
4 17
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U.S.C. 78s(b)(3)(A)(ii).
CFR 240.19b–4(f)(2).
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for each such third party in accordance with
paragraph (b) above.]
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[(d) Non-Professionals]
[(1) There shall be no charge paid by a
Non-Professional for access to the most
recently published four weeks of ATS Data;
however, such ATS Data will not be available
in a downloadable format.]
[(2) A Non-Professional must agree to terms
of use before accessing the ATS Data,
including that he or she receives and uses the
ATS Data solely for his or her personal, noncommercial use and will not otherwise
distribute the ATS Data or Derived Data to
other parties. The terms of use for NonProfessionals will be clearly posted on the
FINRA.org Web site, and access to the nonfee liable ATS Data content will require a
user to acknowledge the terms of use.]
[(e) Definitions]
[For purposes of this rule, the following
terms have the meaning set forth:]
[(1) ‘‘ATS Data’’ means Trading
Information published by FINRA on its Web
site.]
[(2) ‘‘Derived Data’’ means data that is
derived from ATS Data and that is not able
to be (A) reverse engineered by a reasonably
skilled user into ATS Data or (B) used as a
surrogate for ATS Data.]
[(3) ‘‘Non-Professional’’ means a natural
person who uses the ATS Data solely for his
or her personal, non-commercial use. A
‘‘Non-Professional’’ is not:]
[(A) registered nor qualified in any
capacity with the SEC, the Commodity
Futures Trading Commission, any state
securities agency, any securities exchange or
association, or any commodities or futures
contract market or association, nor an
employee of the above and, with respect to
any person identified in this subparagraph
(A), uses ATS Data for other than personal,
non-commercial use;]
[(B) engaged as an ‘‘investment adviser’’ as
that term is defined in Section 202(a)(11) of
the Investment Advisers Act (whether or not
registered or qualified under that Act), nor an
employee of the above and, with respect to
any person identified in this subparagraph
(B), uses ATS Data for other than personal,
non-commercial use;]
[(C) employed by a bank, insurance
company or other organization exempt from
registration under federal or state securities
laws to perform functions that would require
registration or qualification if such functions
were performed for an organization not so
exempt, nor any other employee of a bank,
insurance company or such other
organization referenced above and, with
respect to any person identified in this
subparagraph (C), uses ATS Data for other
than personal, non-commercial use; nor]
[(D) engaged in, nor has the intention to
engage in, any commercial redistribution of
all or any portion of the ATS Data or Derived
Data.]
[(4) ‘‘Professional’’ means any non-natural
person or any natural person that does not
meet the definition of ‘‘Non-Professional’’ in
subparagraph (3).]
[(5) ‘‘Trading Information’’ has the same
meaning as set forth in Rule 4552.]
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[(6) ‘‘Vendor’’ means a Professional who
distributes ATS Data or Derived Data to any
third party.]
*
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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 January 17, 2014, the SEC
approved a proposed rule change to (i)
adopt Rule 4552 (Alternative Trading
Systems—Trading Information for
Securities Executed Within the
Alternative Trading System) to require
alternative trading systems (‘‘ATSs’’) 5 to
report to FINRA weekly volume
information and number of trades
regarding securities transactions within
the ATS (‘‘ATS Data’’) and to publish
the ATS Data on a delayed basis on
FINRA’s Web site; 6 and (ii) amend
FINRA Rules 6160, 6170, 6480, and
6720 to require each ATS to acquire and
use a single, unique market participant
identifier (‘‘MPID’’) when reporting
information to FINRA (‘‘MPID
Requirement’’).7 The implementation
5 Regulation ATS defines an ‘‘alternative trading
system’’ as ‘‘any organization, association, person,
group of persons, or system: (1) That constitutes,
maintains, or provides a market place or facilities
for bringing together purchasers and sellers of
securities or for otherwise performing with respect
to securities the functions commonly performed by
a stock exchange within the meaning of [Exchange
Act Rule 3b–16]; and (2) That does not: (i) Set rules
governing the conduct of subscribers other than the
conduct of such subscribers’ trading on such
organization, association, person, group of persons,
or system; or (ii) Discipline subscribers other than
by exclusion from trading.’’ 17 CFR 242.300(a). Rule
4552 applies to any alternative trading system, as
that term is defined in Regulation ATS, that has
filed a Form ATS with the Commission. See Rule
4552(a).
6 FINRA subsequently filed a proposed rule
change to limit the reporting requirements in Rule
4552 to equity securities and exclude TRACEReportable Securities. See Securities Exchange Act
Release No. 71911 (April 9, 2014), 79 FR 21316
(April 15, 2014) (Notice of Filing and Immediate
Effectiveness of File No. SR–FINRA–2014–017).
7 See Securities Exchange Act Release No. 71341
(January 17, 2014), 79 FR 4213 (January 24, 2014)
(Order Approving File No. SR–FINRA–2013–042).
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date for the reporting requirements
under Rule 4552 was May 12, 2014, and
FINRA began publishing the ATS Data
for equity securities on its Web site on
June 2, 2014.8 On May 29, 2014, the SEC
approved Rule 4553, which established
a fee schedule for access to the ATS
Data.9 The proposed rule change deletes
Rule 4553.
Under Rule 4552, individual ATSs are
required to submit weekly reports to
FINRA regarding equity security volume
information within the ATS, including
share volume and number of trades for
both NMS stocks and OTC equity
securities.10 The first reports pursuant
to Rule 4552 were due to FINRA by May
28, 2014, covering the week of May 12–
16, 2014.11 After FINRA began receiving
the self-reported data from ATSs,
FINRA began publishing on its Web site,
on a delayed basis, the reported
information for each equity security for
each ATS with appropriate disclosures
that the published volume numbers are
based on ATS-submitted reports and not
on reports produced or validated by
FINRA.12 FINRA currently makes
available on its Web site the ATS Data
through weekly reports listing aggregate
volume and number of trades by
security for each ATS within the
designated time period.
Rule 4553 establishes three categories
of users of the ATS Data, each of which
is entitled to different levels and use of
data and is subject to a different fee
structure: (i) Non-Professionals; (ii)
Professionals; and (iii) Vendors.13
Under Rule 4553, the most recently
published four weeks of ATS Data is
accessible to Non-Professionals 14 at no
The MPID Requirement was subsequently amended
to permit the use of two MPIDs by a single ATS
provided each MPID is used only to report to either
the Trade Reporting and Compliance Engine
(‘‘TRACE’’) or one or more of FINRA’s equity
reporting facilities. See Securities Exchange Act
Release No. 71911 (April 9, 2014), 79 FR 21316
(April 15, 2014) (Notice of Filing and Immediate
Effectiveness of File No. SR–FINRA–2014–017).
8 The MPID Requirement was implemented on
February 2, 2015. See Securities Exchange Act
Release No. 73340 (October 10, 2014), 79 FR 62500
(October 17, 2014) (Notice of Filing and Immediate
Effectiveness of File No. SR–FINRA–2014–042).
9 See Securities Exchange Act Release No. 72280
(May 29, 2014), 79 FR 32351 (June 4, 2014) (Order
Approving File No. SR–FINRA–2014–018) (‘‘ATS
Fee Approval Order’’).
10 See Rule 4552(a), (d)(4).
11 See Regulatory Notice 14–07 (February 2014).
12 See Rule 4552(b).
13 Any individual seeking access to the ATS Data
on FINRA’s Web site must confirm that he or she
is either (i) a Non-Professional or (ii) a Professional
(or an affiliate or employee thereof) that has a
current Professional or Vendor subscription.
14 A ‘‘Non-Professional’’ is generally a natural
person who uses the ATS Data solely for his or her
personal, non-commercial use and is not: (i)
Registered or qualified in any capacity with the
SEC, the Commodity Futures Trading Commission,
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cost on FINRA’s Web site, and FINRA
provides a basic web display listing all
reporting ATSs and aggregate volume
and number of trades for each symbol in
which a trade was reported by the ATS
during the designated time period.15
Non-Professionals may access, at no
cost, the most recent four weeks of ATS
Data in a viewable, but not
downloadable, format. A NonProfessional must certify that he or she
is a ‘‘Non-Professional’’ within the
meaning of Rule 4553 and agree to
certain terms of use of the ATS Data,
including representations that he or she
receives and uses the ATS Data solely
for his or her personal, non-commercial
use, and conditions regarding use of the
data and prohibiting redistribution of
the data.
Under Rule 4553, Professionals are
required to pay an annual, enterprisewide subscription fee of $12,000 that is
non-transferable and renewable
annually to access the ATS Data.16 A
Professional who has paid the
subscription fee has access to the same
ATS Data available to NonProfessionals. However, a Professional
subscription allows a user access to the
27 most current weeks of published
reports (Non-Professionals are limited to
four weeks) as well as access to
historical ATS Data in a downloadable
format.17 The Professional subscription
allows an unlimited number of users
within the firm to access the ATS
any state securities agency, any securities exchange
or association, or any commodities or futures
contract market or association, nor an employee of
the above; (ii) engaged as an ‘‘investment adviser’’
as that term is defined in Section 202(a)(11) of the
Investment Advisers Act (whether or not registered
or qualified under that Act), nor an employee of the
above; (iii) employed by a bank, insurance company
or other organization exempt from registration
under federal or state securities laws to perform
functions that would require registration or
qualification if such functions were performed for
an organization not so exempt, nor any other
employee of a bank, insurance company or such
other organization referenced above; or (iv) engaged
in, or has the intention to engage in, any
commercial redistribution of all or any portion of
the ATS Data or Derived Data. See Rule 4552(e)(3);
see also 15 U.S.C. 80b–2(a)(11). Rule 4553(e)(2)
defines ‘‘Derived Data’’ as data that is derived from
ATS Data and that is not able to be (A) reverse
engineered by a reasonably skilled user into ATS
Data or (B) used as a surrogate for ATS Data.
Generally, non-commercial requests from
regulators, academics, and ad hoc requests from
media reporters are considered non-professional
usage under this definition.
15 See Rule 4553(d). FINRA also currently
produces quarterly reports summarizing the ATS
Data that are publicly available for no charge on
FINRA’s Web site.
16 See Rule 4553(b). A ‘‘Professional’’ is defined
as ‘‘any non-natural person or any natural person
that does not meet the definition of ‘NonProfessional.’ ’’ Rule 4553(e)(4).
17 The downloadable reports provide the same
data as the web-based reports but in pipe delimited
format.
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19:51 Jul 09, 2015
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Data.18 Thus, regardless of the size of
the entity in question, the subscription
fee for the entity is $12,000 for a twelvemonth subscription. Professionals are
not permitted to redistribute ATS Data
or Derived Data outside of the enterprise
(e.g., to their customers); however,
Professionals are permitted to distribute
ATS Data and Derived Data within the
enterprise (including the firm, any
affiliates of the firm, and employees
thereof). Professionals are required to
agree to the terms of FINRA’s ATS Data
Subscriber Agreement, which
establishes the terms and conditions of
access to the ATS Data.
Rule 4553 also includes a Vendor
subscription fee of $18,000 per year.19 A
Vendor subscription permits a Vendor
to redistribute the ATS Data or Derived
Data within and outside the enterprise;
however, a Vendor may provide this
data to a third party only if a yearly,
non-transferable, enterprise-wide
Professional subscription has been
purchased for each such third party.
Vendors must track specific users and
their entitlements (and annual
commitment term) and are subject to
regular audits to ensure accurate and
timely compliance with redissemination reporting and payment.
Vendors are responsible for reporting
entity usage as a result of their
redistribution of the data.
FINRA established the fee rates for
access to ATS Data by Professionals and
Vendors to recover the costs associated
with collecting, formatting, and
disseminating the data.20 FINRA noted,
when proposing the fee, that it did not
have an exact estimate as to how many
subscribers will ultimately pay to access
ATS Data and stated that FINRA
intended to reassess the fairness and
reasonableness of the fee once it had
experience with the actual usage and
ultimate fees paid to access ATS Data.21
After approximately one year of
receiving and disseminating the ATS
Data on FINRA’s Web site, FINRA has
reviewed the usage of the ATS Data and
the costs incurred and is proposing to
18 If the Professional is a FINRA member, the
member has access to the ATS Data so that all of
the member’s entitled users can access the ATS
Data under the member’s Central Registration
Depository number. Professionals that are not
FINRA members are provided with a single log-on
that may be shared within the entity and its
affiliates and employees, but may not be used
outside of the entity, its affiliates, and their
employees.
19 See Rule 4553(c). A ‘‘Vendor’’ is defined as ‘‘a
Professional who distributes ATS Data or Derived
Data to any third party.’’ Rule 4553(e)(6).
20 See ATS Fee Approval Order, supra note 9, 79
FR 32351, 32353.
21 See Securities Exchange Act Release No. 71919
(April 9, 2014), 79 FR 21324, 21327 (April 15, 2014)
(Notice of Filing File No. SR–FINRA–2014–018).
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39813
eliminate the fee for all potential users
and disseminate the ATS Data on its
Web site at no charge. FINRA has found
that there are significantly fewer firms
and data vendors accessing the ATS
Data than anticipated, which limits the
opportunities for broader dissemination
and analysis of the data FINRA makes
available. By making the ATS Data
available at no cost, FINRA believes
more data vendors and firms will access
the ATS Data and provide useful
statistics and analysis to the industry
and to individual investors and the
public. FINRA currently anticipates
making publicly available on its Web
site 27 weeks of online reports and up
to five years of historical reports
available in a downloadable format.22
As FINRA noted when it proposed
collecting and disseminating the ATS
Data, Rule 4552 was intended in part to
increase transparency in the over-thecounter market. Although Rule 4552 has
no doubt achieved this goal, particularly
by providing individual investors with
access to the ATS Data at no cost,
FINRA believes that transparency may
be even further enhanced by eliminating
the fee for Professionals and Vendors so
that individual investors and the public
can benefit from more detailed and
widely-available analysis of the ATS
Data. Consequently, FINRA is proposing
to eliminate the fee for Professionals
and Vendors and make the ATS Data
publicly available at no cost.
FINRA has filed the proposed rule
change for immediate effectiveness. The
implementation date will be July 13,
2015. FINRA staff is currently working
on changes to FINRA’s Web site to
enable all users to access the ATS Data
and to remove functionality that
currently limits access to the ATS Data
to either Non-Professionals or those
with paid subscriptions. FINRA
anticipates that these changes will be
made so that the ATS Data will be
publicly available beginning July 13,
2015. Until that time, the ATS Data will
continue to be available only to paid
subscribers or, in more limited formats,
to Non-Professionals consistent with
Rule 4553.23
22 There are no reports for time periods before the
implementation of Rule 4552.
23 Because the subscriptions purchased pursuant
to Rule 4553 are on an annual basis, some
subscribers’ annual subscriptions will lapse before
July 13, 2015. Those subscribers that choose to
renew their annual subscription for the amount
required under Rule 4553 before July 13, 2015, will
receive a pro rata refund as of July 13, 2015. Current
subscribers that have an annual subscription that
expires after July 13, 2015, will also receive a pro
rata refund. Thus, for example, if a firm purchased
an annual Professional subscription for $12,000 on
August 13, 2014, the firm will receive a $1,000
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2. Statutory Basis
FINRA believes that the proposed rule
change is consistent with the provisions
of Section 15A(b)(6) of the Act,24 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 and Section 15A(b)(5) of
the Act,25 which requires, among other
things, that FINRA rules provide for the
equitable allocation of reasonable dues,
fees and other charges among members
and issuers and other persons using any
facility or system that FINRA operates
or controls.
FINRA believes that, by eliminating
the fees imposed by Rule 4553 and
making the ATS Data available to the
public at no cost, more data vendors and
firms will use the ATS Data to provide
useful statistics and analysis to the
industry, individual investors, and the
public. This, in turn, will further
improve transparency in the over-thecounter market by making the ATS Data,
and analysis of the data, more widely
available not only for Professionals and
Vendors, but also for individual
investors who can benefit from more
detailed analysis of the ATS Data.
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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 eliminating the fee may, in
fact, remove potential burdens by
widening access to the ATS Data,
particularly for smaller firms that may
not have been able to pay the existing
Professional or Vendor fees.
Economic Impact Analysis
As described above, FINRA is
proposing to remove Rule 4553 to
eliminate the fee for all potential users
of ATS Data and disseminate the ATS
Data on its Web site at no charge.
Currently, FINRA makes this data
available on its Web site and charges
according to the three tiers described
above. In the presence of this proposed
rule change, the ATS Data will continue
to be made available, and FINRA will
seek no fees for its usage. FINRA
anticipates that the demand for the ATS
Data will increase in the absence of
professional and vendor fees.
refund for the period between July 13, 2015, and
August 13, 2015.
24 15 U.S.C. 78o–3(b)(6).
25 15 U.S.C. 78o–3(b)(5).
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FINRA believes that eliminating the
fee for Professionals and Vendors to
access ATS Data will extend the impact
of transparency in the over-the-counter
market and will not result in any burden
on FINRA members or the public. Yet,
investors may benefit from an
externality if the wider availability of
the ATS Data leads to an increased
production of relevant analysis by
professionals.26 Also, FINRA believes—
based on member firms’ and vendors’
feedback—that there is a wide range of
market participants that will start using
the ATS Data and benefit from it when
it is made available free of charge.
FINRA would incur no additional
costs as a result of the proposed rule
change, as FINRA already aggregates
and publishes the ATS Data on a weekly
basis; however, FINRA will forego the
revenue that partially covers the cost of
maintaining the ATS Data, although
both the cost and revenue have been
non-material since the data
dissemination started in June 2014.
FINRA’s experience in the past year
suggests that the marginal costs to
provide this information to the public is
de minimis, with no material impact to
its budget or members.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
Although written comments were not
solicited regarding the elimination of
Rule 4553, FINRA has received one
comment letter since the adoption of
Rule 4553 that addresses the current fee
structure for access to ATS Data.27 The
Securities Industry and Financial
Markets Association (‘‘SIFMA’’)
submitted a written comment letter in
response to Regulatory Notice 14–48 28
26 For example, one study showed that brokers’
order routing behavior, in search for best execution
for their clients, changed after the increased
transparency due to Rule 11Ac1–5, which requires
market centers to publish standardized execution
quality metrics. See Ekkehart Boehmer, Robert
Jennings & Li Wei, Public Disclosure and Private
Decisions: Equity Market Execution Quality and
Order Routing, 20 (2) Rev. Fin. Stud. 315 (March
2007).
27 FINRA notes that, although written comments
were not solicited regarding the current proposed
rule change to eliminate Rule 4553, comments
addressing the adoption of a fee for access to ATS
Data were received in response to the rule filings
proposing Rules 4552 and 4553, and these
commenters generally opposed the fee. See ATS Fee
Approval Order, supra note 9, 79 FR 32351, 32352;
see also Securities Exchange Act Release No. 71341
(January 17, 2014), 79 FR 4213 (January 24, 2014)
(Order Approving File No. SR–FINRA–2013–042).
28 In Regulatory Notice 14–48, FINRA requested
comment on a proposal to expand the ATS
transparency initiative to publish the remaining
equity volume executed over the counter, including
trading on non-ATS electronic trading systems and
PO 00000
Frm 00070
Fmt 4703
Sfmt 4703
that, among other things, noted that
SIFMA ‘‘continues to oppose FINRA
charging a fee to access the [ATS] data
and the fact that only a limited scope of
information is available for free on the
FINRA Web site.’’ 29 A copy of
Regulatory Notice 14–48 is attached as
Exhibit 2a.30 A copy of SIFMA’s
comment letter received in response to
the Regulatory Notice is attached as
Exhibit 2b.31 FINRA believes the
elimination of Rule 4553 would address
the concern raised by SIFMA in its
comment letter.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act 32 and paragraph (f)(2) of Rule
19b–4 thereunder.33 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–2015–023 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
internalized trades. See Regulatory Notice 14–48
(November 2014).
29 Letter from Theodore R. Lazo, Managing
Director and Associate General Counsel, SIFMA to
Marcia E. Asquith, Corporate Secretary, FINRA,
dated February 20, 2015.
30 The Commission notes that the Regulatory
Circular is not attached to this notice, but is
available on FINRA’s Web site.
31 The Commission notes that SIFMA’s comment
letter is not attached to this notice, but is available
on FINRA’s Web site, and on the Commission’s
Web site.
32 15 U.S.C. 78s(b)(3)(A).
33 17 CFR 240.19b–4(f)(x). [sic]
E:\FR\FM\10JYN1.SGM
10JYN1
Federal Register / Vol. 80, No. 132 / Friday, July 10, 2015 / Notices
Commission, 100 F Street NE.,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–FINRA–2015–023. 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
offices 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
makeavailable publicly. All submissions
should refer to File Number SR–FINRA–
2015–023, and should be submitted on
or before July 31, 2015.
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on June 24,
2015, C2 Options Exchange,
Incorporated (the ‘‘Exchange’’ or ‘‘C2’’)
filed with the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I, II, and III below, which Items
have been prepared by the Exchange.
The Commission is publishing this
notice to solicit comments on the
proposed rule change from interested
persons.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.34
Brent J. Fields,
Secretary.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
[FR Doc. 2015–16860 Filed 7–9–15; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
mstockstill on DSK4VPTVN1PROD with NOTICES
[Release No. 34–75367; File No. SR–C2–
2015–017]
Self-Regulatory Organizations; C2
Options Exchange, Incorporated;
Notice of Filing and Immediate
Effectiveness of a Proposed Rule
Change To Correct an Inaccurate Rule
Reference
July 6, 2015.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
34 17
CFR 200.30–3(a)(12).
VerDate Sep<11>2014
19:51 Jul 09, 2015
Jkt 235001
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to correct an
inaccurate rule reference in its Fees
Schedule. The text of the proposed rule
change is available on the Exchange’s
Web site (https://www.c2exchange.com/
Legal/), at the Exchange’s Office of the
Secretary, 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, the
Exchange 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. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
1. Purpose
The Exchange proposes to make an
administrative change to correct an
incorrect rule reference in its Fees
Schedule. Specifically, the Exchange
notes it recently streamlined part of its
Fees Schedule by consolidating certain
sections in order to make the Fees
Schedule easier to read.3 In doing so,
the Exchange had to renumber Section
1C to current Section 1B. The Exchange
notes however, that it inadvertently did
not make a corresponding change to the
text in current Section 1B. Specifically,
Section 1B still references Section 1C in
two places. The Exchange seeks to fix
this error and insert the correct
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 74733
(April 15, 2015), 80 FR 76 [sic] (April 21, 2015).
reference (i.e., ‘‘Section 1B’’). No
substantive changes are being made by
the proposed rule change.
2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with the
Securities Exchange Act of 1934 (the
‘‘Act’’) and the rules and regulations
thereunder applicable to the Exchange
and, in particular, the requirements of
Section 6(b) of the Act.4 Specifically,
the Exchange believes the proposed rule
change is consistent with the Section
6(b)(5) 5 requirements that the rules of
an exchange be designed to prevent
fraudulent and manipulative acts and
practices, to promote just and equitable
principles of trade, to foster cooperation
and coordination with persons engaged
in regulating, clearing, settling,
processing information with respect to,
and facilitating transactions in
securities, to remove impediments to
and perfect the mechanism of a free and
open market and a national market
system, and, in general, to protect
investors and the public interest.
The Exchange believes correcting an
inaccurate rule reference will help to
avoid confusion, thereby removing
impediments to and perfecting the
mechanism of a free and open market
and a national market system.
Additionally, the Exchange notes that
no substantive changes are being made
by the proposed rule change.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
C2 does not believe that the proposed
rule change will impose any burden on
intramarket or intermarket competition
that is not necessary or appropriate in
furtherance of the purposes of the Act.
The proposed change to correct an
inaccurate rule reference and alleviate
confusion is not intended for
competitive reasons and only applies to
C2. The Exchange also notes that no
rights or obligations of Permit Holders
are affected by the change.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange neither solicited nor
received comments on the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section 19(b)(3)(A)
2 17
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Fmt 4703
Sfmt 4703
39815
4 15
5 15
E:\FR\FM\10JYN1.SGM
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
10JYN1
]]>Agencies
[Federal Register Volume 80, Number 132 (Friday, July 10, 2015)]
[Notices]
[Pages 39811-39815]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-16860]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-75365; File No. SR-FINRA-2015-023]
Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change Relating to Rule 4553 and Fees for Access to
Alternative Trading System Volume Information Published on FINRA's Web
Site
July 6, 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 June 29, 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 ``establishing or changing a
due, fee or other charge'' under Section 19(b)(3)(A)(ii) of the Act\3\
and Rule 19b-4(f)(2) thereunder,\4\ which renders the proposal
effective upon 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\ 15 U.S.C. 78s(b)(3)(A)(ii).
\4\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of the
Substance of the Proposed Rule Change
FINRA is proposing to remove Rule 4553 (Fees for ATS Data) from the
FINRA rulebook.
Below is the text of the proposed rule change. Proposed new
language is in italics; proposed deletions are in brackets.
* * * * *
4000. FINANCIAL AND OPERATIONAL RULES
* * * * *
4500. BOOKS, RECORDS AND REPORTS
* * * * *
4550. ATS Reporting
* * * * *
[4553. Fees for ATS Data]
[(a) General]
[Fees are charged for ATS Data as set forth in this Rule.
Professionals and Vendors must pay the subscription fee to receive
ATS Data in accordance with this Rule and execute appropriate
agreements with FINRA.]
[(b) Professionals]
[(1) Professionals may subscribe for the most currently
published ATS Data and up to five years of historical ATS Data in a
downloadable, pipe delimited format for a twelve-month subscription
fee of $12,000. Such fee is not refundable or transferable.]
[(2) Payment of the Professional subscription fee described in
this paragraph (b) provides the Professional with use of such ATS
Data to generate Derived Data.]
[(3) Professionals may distribute ATS Data or Derived Data to
their employees, affiliates, or employees of affiliates but are
prohibited from providing ATS Data or Derived Data to any third
party.]
[(c) Vendors]
[(1) Vendors may subscribe for access to the most currently
published ATS Data and up to five years of historical ATS Data in a
downloadable, pipe delimited format for a twelve-month subscription
fee of $18,000. Such fee is not refundable or transferable.]
[(2) Payment of the Vendor subscription fee described in this
paragraph (c) provides the Vendor with use of such ATS Data to
generate Derived Data.]
[(3) Vendors are prohibited from providing ATS Data to any third
party unless a Professional subscription has been purchased
[[Page 39812]]
for each such third party in accordance with paragraph (b) above.]
[(d) Non-Professionals]
[(1) There shall be no charge paid by a Non-Professional for
access to the most recently published four weeks of ATS Data;
however, such ATS Data will not be available in a downloadable
format.]
[(2) A Non-Professional must agree to terms of use before
accessing the ATS Data, including that he or she receives and uses
the ATS Data solely for his or her personal, non-commercial use and
will not otherwise distribute the ATS Data or Derived Data to other
parties. The terms of use for Non-Professionals will be clearly
posted on the FINRA.org Web site, and access to the non-fee liable
ATS Data content will require a user to acknowledge the terms of
use.]
[(e) Definitions]
[For purposes of this rule, the following terms have the meaning
set forth:]
[(1) ``ATS Data'' means Trading Information published by FINRA
on its Web site.]
[(2) ``Derived Data'' means data that is derived from ATS Data
and that is not able to be (A) reverse engineered by a reasonably
skilled user into ATS Data or (B) used as a surrogate for ATS Data.]
[(3) ``Non-Professional'' means a natural person who uses the
ATS Data solely for his or her personal, non-commercial use. A
``Non-Professional'' is not:]
[(A) registered nor qualified in any capacity with the SEC, the
Commodity Futures Trading Commission, any state securities agency,
any securities exchange or association, or any commodities or
futures contract market or association, nor an employee of the above
and, with respect to any person identified in this subparagraph (A),
uses ATS Data for other than personal, non-commercial use;]
[(B) engaged as an ``investment adviser'' as that term is
defined in Section 202(a)(11) of the Investment Advisers Act
(whether or not registered or qualified under that Act), nor an
employee of the above and, with respect to any person identified in
this subparagraph (B), uses ATS Data for other than personal, non-
commercial use;]
[(C) employed by a bank, insurance company or other organization
exempt from registration under federal or state securities laws to
perform functions that would require registration or qualification
if such functions were performed for an organization not so exempt,
nor any other employee of a bank, insurance company or such other
organization referenced above and, with respect to any person
identified in this subparagraph (C), uses ATS Data for other than
personal, non-commercial use; nor]
[(D) engaged in, nor has the intention to engage in, any
commercial redistribution of all or any portion of the ATS Data or
Derived Data.]
[(4) ``Professional'' means any non-natural person or any
natural person that does not meet the definition of ``Non-
Professional'' in subparagraph (3).]
[(5) ``Trading Information'' has the same meaning as set forth
in Rule 4552.]
[(6) ``Vendor'' means a Professional who distributes ATS Data or
Derived Data to any third party.]
* * * * *
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 January 17, 2014, the SEC approved a proposed rule change to (i)
adopt Rule 4552 (Alternative Trading Systems--Trading Information for
Securities Executed Within the Alternative Trading System) to require
alternative trading systems (``ATSs'') \5\ to report to FINRA weekly
volume information and number of trades regarding securities
transactions within the ATS (``ATS Data'') and to publish the ATS Data
on a delayed basis on FINRA's Web site; \6\ and (ii) amend FINRA Rules
6160, 6170, 6480, and 6720 to require each ATS to acquire and use a
single, unique market participant identifier (``MPID'') when reporting
information to FINRA (``MPID Requirement'').\7\ The implementation date
for the reporting requirements under Rule 4552 was May 12, 2014, and
FINRA began publishing the ATS Data for equity securities on its Web
site on June 2, 2014.\8\ On May 29, 2014, the SEC approved Rule 4553,
which established a fee schedule for access to the ATS Data.\9\ The
proposed rule change deletes Rule 4553.
---------------------------------------------------------------------------
\5\ Regulation ATS defines an ``alternative trading system'' as
``any organization, association, person, group of persons, or
system: (1) That constitutes, maintains, or provides a market place
or facilities for bringing together purchasers and sellers of
securities or for otherwise performing with respect to securities
the functions commonly performed by a stock exchange within the
meaning of [Exchange Act Rule 3b-16]; and (2) That does not: (i) Set
rules governing the conduct of subscribers other than the conduct of
such subscribers' trading on such organization, association, person,
group of persons, or system; or (ii) Discipline subscribers other
than by exclusion from trading.'' 17 CFR 242.300(a). Rule 4552
applies to any alternative trading system, as that term is defined
in Regulation ATS, that has filed a Form ATS with the Commission.
See Rule 4552(a).
\6\ FINRA subsequently filed a proposed rule change to limit the
reporting requirements in Rule 4552 to equity securities and exclude
TRACE-Reportable Securities. See Securities Exchange Act Release No.
71911 (April 9, 2014), 79 FR 21316 (April 15, 2014) (Notice of
Filing and Immediate Effectiveness of File No. SR-FINRA-2014-017).
\7\ See Securities Exchange Act Release No. 71341 (January 17,
2014), 79 FR 4213 (January 24, 2014) (Order Approving File No. SR-
FINRA-2013-042). The MPID Requirement was subsequently amended to
permit the use of two MPIDs by a single ATS provided each MPID is
used only to report to either the Trade Reporting and Compliance
Engine (``TRACE'') or one or more of FINRA's equity reporting
facilities. See Securities Exchange Act Release No. 71911 (April 9,
2014), 79 FR 21316 (April 15, 2014) (Notice of Filing and Immediate
Effectiveness of File No. SR-FINRA-2014-017).
\8\ The MPID Requirement was implemented on February 2, 2015.
See Securities Exchange Act Release No. 73340 (October 10, 2014), 79
FR 62500 (October 17, 2014) (Notice of Filing and Immediate
Effectiveness of File No. SR-FINRA-2014-042).
\9\ See Securities Exchange Act Release No. 72280 (May 29,
2014), 79 FR 32351 (June 4, 2014) (Order Approving File No. SR-
FINRA-2014-018) (``ATS Fee Approval Order'').
---------------------------------------------------------------------------
Under Rule 4552, individual ATSs are required to submit weekly
reports to FINRA regarding equity security volume information within
the ATS, including share volume and number of trades for both NMS
stocks and OTC equity securities.\10\ The first reports pursuant to
Rule 4552 were due to FINRA by May 28, 2014, covering the week of May
12-16, 2014.\11\ After FINRA began receiving the self-reported data
from ATSs, FINRA began publishing on its Web site, on a delayed basis,
the reported information for each equity security for each ATS with
appropriate disclosures that the published volume numbers are based on
ATS-submitted reports and not on reports produced or validated by
FINRA.\12\ FINRA currently makes available on its Web site the ATS Data
through weekly reports listing aggregate volume and number of trades by
security for each ATS within the designated time period.
---------------------------------------------------------------------------
\10\ See Rule 4552(a), (d)(4).
\11\ See Regulatory Notice 14-07 (February 2014).
\12\ See Rule 4552(b).
---------------------------------------------------------------------------
Rule 4553 establishes three categories of users of the ATS Data,
each of which is entitled to different levels and use of data and is
subject to a different fee structure: (i) Non-Professionals; (ii)
Professionals; and (iii) Vendors.\13\ Under Rule 4553, the most
recently published four weeks of ATS Data is accessible to Non-
Professionals \14\ at no
[[Page 39813]]
cost on FINRA's Web site, and FINRA provides a basic web display
listing all reporting ATSs and aggregate volume and number of trades
for each symbol in which a trade was reported by the ATS during the
designated time period.\15\ Non-Professionals may access, at no cost,
the most recent four weeks of ATS Data in a viewable, but not
downloadable, format. A Non-Professional must certify that he or she is
a ``Non-Professional'' within the meaning of Rule 4553 and agree to
certain terms of use of the ATS Data, including representations that he
or she receives and uses the ATS Data solely for his or her personal,
non-commercial use, and conditions regarding use of the data and
prohibiting redistribution of the data.
---------------------------------------------------------------------------
\13\ Any individual seeking access to the ATS Data on FINRA's
Web site must confirm that he or she is either (i) a Non-
Professional or (ii) a Professional (or an affiliate or employee
thereof) that has a current Professional or Vendor subscription.
\14\ A ``Non-Professional'' is generally a natural person who
uses the ATS Data solely for his or her personal, non-commercial use
and is not: (i) Registered or qualified in any capacity with the
SEC, the Commodity Futures Trading Commission, any state securities
agency, any securities exchange or association, or any commodities
or futures contract market or association, nor an employee of the
above; (ii) engaged as an ``investment adviser'' as that term is
defined in Section 202(a)(11) of the Investment Advisers Act
(whether or not registered or qualified under that Act), nor an
employee of the above; (iii) employed by a bank, insurance company
or other organization exempt from registration under federal or
state securities laws to perform functions that would require
registration or qualification if such functions were performed for
an organization not so exempt, nor any other employee of a bank,
insurance company or such other organization referenced above; or
(iv) engaged in, or has the intention to engage in, any commercial
redistribution of all or any portion of the ATS Data or Derived
Data. See Rule 4552(e)(3); see also 15 U.S.C. 80b-2(a)(11). Rule
4553(e)(2) defines ``Derived Data'' as data that is derived from ATS
Data and that is not able to be (A) reverse engineered by a
reasonably skilled user into ATS Data or (B) used as a surrogate for
ATS Data. Generally, non-commercial requests from regulators,
academics, and ad hoc requests from media reporters are considered
non-professional usage under this definition.
\15\ See Rule 4553(d). FINRA also currently produces quarterly
reports summarizing the ATS Data that are publicly available for no
charge on FINRA's Web site.
---------------------------------------------------------------------------
Under Rule 4553, Professionals are required to pay an annual,
enterprise-wide subscription fee of $12,000 that is non-transferable
and renewable annually to access the ATS Data.\16\ A Professional who
has paid the subscription fee has access to the same ATS Data available
to Non-Professionals. However, a Professional subscription allows a
user access to the 27 most current weeks of published reports (Non-
Professionals are limited to four weeks) as well as access to
historical ATS Data in a downloadable format.\17\ The Professional
subscription allows an unlimited number of users within the firm to
access the ATS Data.\18\ Thus, regardless of the size of the entity in
question, the subscription fee for the entity is $12,000 for a twelve-
month subscription. Professionals are not permitted to redistribute ATS
Data or Derived Data outside of the enterprise (e.g., to their
customers); however, Professionals are permitted to distribute ATS Data
and Derived Data within the enterprise (including the firm, any
affiliates of the firm, and employees thereof). Professionals are
required to agree to the terms of FINRA's ATS Data Subscriber
Agreement, which establishes the terms and conditions of access to the
ATS Data.
---------------------------------------------------------------------------
\16\ See Rule 4553(b). A ``Professional'' is defined as ``any
non-natural person or any natural person that does not meet the
definition of `Non-Professional.' '' Rule 4553(e)(4).
\17\ The downloadable reports provide the same data as the web-
based reports but in pipe delimited format.
\18\ If the Professional is a FINRA member, the member has
access to the ATS Data so that all of the member's entitled users
can access the ATS Data under the member's Central Registration
Depository number. Professionals that are not FINRA members are
provided with a single log-on that may be shared within the entity
and its affiliates and employees, but may not be used outside of the
entity, its affiliates, and their employees.
---------------------------------------------------------------------------
Rule 4553 also includes a Vendor subscription fee of $18,000 per
year.\19\ A Vendor subscription permits a Vendor to redistribute the
ATS Data or Derived Data within and outside the enterprise; however, a
Vendor may provide this data to a third party only if a yearly, non-
transferable, enterprise-wide Professional subscription has been
purchased for each such third party. Vendors must track specific users
and their entitlements (and annual commitment term) and are subject to
regular audits to ensure accurate and timely compliance with re-
dissemination reporting and payment. Vendors are responsible for
reporting entity usage as a result of their redistribution of the data.
---------------------------------------------------------------------------
\19\ See Rule 4553(c). A ``Vendor'' is defined as ``a
Professional who distributes ATS Data or Derived Data to any third
party.'' Rule 4553(e)(6).
---------------------------------------------------------------------------
FINRA established the fee rates for access to ATS Data by
Professionals and Vendors to recover the costs associated with
collecting, formatting, and disseminating the data.\20\ FINRA noted,
when proposing the fee, that it did not have an exact estimate as to
how many subscribers will ultimately pay to access ATS Data and stated
that FINRA intended to reassess the fairness and reasonableness of the
fee once it had experience with the actual usage and ultimate fees paid
to access ATS Data.\21\
---------------------------------------------------------------------------
\20\ See ATS Fee Approval Order, supra note 9, 79 FR 32351,
32353.
\21\ See Securities Exchange Act Release No. 71919 (April 9,
2014), 79 FR 21324, 21327 (April 15, 2014) (Notice of Filing File
No. SR-FINRA-2014-018).
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After approximately one year of receiving and disseminating the ATS
Data on FINRA's Web site, FINRA has reviewed the usage of the ATS Data
and the costs incurred and is proposing to eliminate the fee for all
potential users and disseminate the ATS Data on its Web site at no
charge. FINRA has found that there are significantly fewer firms and
data vendors accessing the ATS Data than anticipated, which limits the
opportunities for broader dissemination and analysis of the data FINRA
makes available. By making the ATS Data available at no cost, FINRA
believes more data vendors and firms will access the ATS Data and
provide useful statistics and analysis to the industry and to
individual investors and the public. FINRA currently anticipates making
publicly available on its Web site 27 weeks of online reports and up to
five years of historical reports available in a downloadable
format.\22\
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\22\ There are no reports for time periods before the
implementation of Rule 4552.
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As FINRA noted when it proposed collecting and disseminating the
ATS Data, Rule 4552 was intended in part to increase transparency in
the over-the-counter market. Although Rule 4552 has no doubt achieved
this goal, particularly by providing individual investors with access
to the ATS Data at no cost, FINRA believes that transparency may be
even further enhanced by eliminating the fee for Professionals and
Vendors so that individual investors and the public can benefit from
more detailed and widely-available analysis of the ATS Data.
Consequently, FINRA is proposing to eliminate the fee for Professionals
and Vendors and make the ATS Data publicly available at no cost.
FINRA has filed the proposed rule change for immediate
effectiveness. The implementation date will be July 13, 2015. FINRA
staff is currently working on changes to FINRA's Web site to enable all
users to access the ATS Data and to remove functionality that currently
limits access to the ATS Data to either Non-Professionals or those with
paid subscriptions. FINRA anticipates that these changes will be made
so that the ATS Data will be publicly available beginning July 13,
2015. Until that time, the ATS Data will continue to be available only
to paid subscribers or, in more limited formats, to Non-Professionals
consistent with Rule 4553.\23\
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\23\ Because the subscriptions purchased pursuant to Rule 4553
are on an annual basis, some subscribers' annual subscriptions will
lapse before July 13, 2015. Those subscribers that choose to renew
their annual subscription for the amount required under Rule 4553
before July 13, 2015, will receive a pro rata refund as of July 13,
2015. Current subscribers that have an annual subscription that
expires after July 13, 2015, will also receive a pro rata refund.
Thus, for example, if a firm purchased an annual Professional
subscription for $12,000 on August 13, 2014, the firm will receive a
$1,000 refund for the period between July 13, 2015, and August 13,
2015.
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[[Page 39814]]
2. Statutory Basis
FINRA believes that the proposed rule change is consistent with the
provisions of Section 15A(b)(6) of the Act,\24\ 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 and Section 15A(b)(5) of the Act,\25\ which requires,
among other things, that FINRA rules provide for the equitable
allocation of reasonable dues, fees and other charges among members and
issuers and other persons using any facility or system that FINRA
operates or controls.
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\24\ 15 U.S.C. 78o-3(b)(6).
\25\ 15 U.S.C. 78o-3(b)(5).
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FINRA believes that, by eliminating the fees imposed by Rule 4553
and making the ATS Data available to the public at no cost, more data
vendors and firms will use the ATS Data to provide useful statistics
and analysis to the industry, individual investors, and the public.
This, in turn, will further improve transparency in the over-the-
counter market by making the ATS Data, and analysis of the data, more
widely available not only for Professionals and Vendors, but also for
individual investors who can benefit from more detailed analysis of the
ATS Data.
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 eliminating
the fee may, in fact, remove potential burdens by widening access to
the ATS Data, particularly for smaller firms that may not have been
able to pay the existing Professional or Vendor fees.
Economic Impact Analysis
As described above, FINRA is proposing to remove Rule 4553 to
eliminate the fee for all potential users of ATS Data and disseminate
the ATS Data on its Web site at no charge. Currently, FINRA makes this
data available on its Web site and charges according to the three tiers
described above. In the presence of this proposed rule change, the ATS
Data will continue to be made available, and FINRA will seek no fees
for its usage. FINRA anticipates that the demand for the ATS Data will
increase in the absence of professional and vendor fees.
FINRA believes that eliminating the fee for Professionals and
Vendors to access ATS Data will extend the impact of transparency in
the over-the-counter market and will not result in any burden on FINRA
members or the public. Yet, investors may benefit from an externality
if the wider availability of the ATS Data leads to an increased
production of relevant analysis by professionals.\26\ Also, FINRA
believes--based on member firms' and vendors' feedback--that there is a
wide range of market participants that will start using the ATS Data
and benefit from it when it is made available free of charge.
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\26\ For example, one study showed that brokers' order routing
behavior, in search for best execution for their clients, changed
after the increased transparency due to Rule 11Ac1-5, which requires
market centers to publish standardized execution quality metrics.
See Ekkehart Boehmer, Robert Jennings & Li Wei, Public Disclosure
and Private Decisions: Equity Market Execution Quality and Order
Routing, 20 (2) Rev. Fin. Stud. 315 (March 2007).
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FINRA would incur no additional costs as a result of the proposed
rule change, as FINRA already aggregates and publishes the ATS Data on
a weekly basis; however, FINRA will forego the revenue that partially
covers the cost of maintaining the ATS Data, although both the cost and
revenue have been non-material since the data dissemination started in
June 2014. FINRA's experience in the past year suggests that the
marginal costs to provide this information to the public is de minimis,
with no material impact to its budget or members.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
Although written comments were not solicited regarding the
elimination of Rule 4553, FINRA has received one comment letter since
the adoption of Rule 4553 that addresses the current fee structure for
access to ATS Data.\27\ The Securities Industry and Financial Markets
Association (``SIFMA'') submitted a written comment letter in response
to Regulatory Notice 14-48 \28\ that, among other things, noted that
SIFMA ``continues to oppose FINRA charging a fee to access the [ATS]
data and the fact that only a limited scope of information is available
for free on the FINRA Web site.'' \29\ A copy of Regulatory Notice 14-
48 is attached as Exhibit 2a.\30\ A copy of SIFMA's comment letter
received in response to the Regulatory Notice is attached as Exhibit
2b.\31\ FINRA believes the elimination of Rule 4553 would address the
concern raised by SIFMA in its comment letter.
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\27\ FINRA notes that, although written comments were not
solicited regarding the current proposed rule change to eliminate
Rule 4553, comments addressing the adoption of a fee for access to
ATS Data were received in response to the rule filings proposing
Rules 4552 and 4553, and these commenters generally opposed the fee.
See ATS Fee Approval Order, supra note 9, 79 FR 32351, 32352; see
also Securities Exchange Act Release No. 71341 (January 17, 2014),
79 FR 4213 (January 24, 2014) (Order Approving File No. SR-FINRA-
2013-042).
\28\ In Regulatory Notice 14-48, FINRA requested comment on a
proposal to expand the ATS transparency initiative to publish the
remaining equity volume executed over the counter, including trading
on non-ATS electronic trading systems and internalized trades. See
Regulatory Notice 14-48 (November 2014).
\29\ Letter from Theodore R. Lazo, Managing Director and
Associate General Counsel, SIFMA to Marcia E. Asquith, Corporate
Secretary, FINRA, dated February 20, 2015.
\30\ The Commission notes that the Regulatory Circular is not
attached to this notice, but is available on FINRA's Web site.
\31\ The Commission notes that SIFMA's comment letter is not
attached to this notice, but is available on FINRA's Web site, and
on the Commission's Web site.
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III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A) of the Act \32\ and paragraph (f)(2) of Rule 19b-4
thereunder.\33\ At any time within 60 days of the filing of the
proposed rule change, the Commission summarily may temporarily suspend
such rule change if it appears to the Commission that such action is
necessary or appropriate in the public interest, for the protection of
investors, or otherwise in furtherance of the purposes of the Act. If
the Commission takes such action, the Commission shall institute
proceedings to determine whether the proposed rule should be approved
or disapproved.
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\32\ 15 U.S.C. 78s(b)(3)(A).
\33\ 17 CFR 240.19b-4(f)(x). [sic]
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-FINRA-2015-023 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange
[[Page 39815]]
Commission, 100 F Street NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-FINRA-2015-023. 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 offices 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-2015-023, and should
be submitted on or before July 31, 2015.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\34\
Brent J. Fields,
Secretary.
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\34\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2015-16860 Filed 7-9-15; 8:45 am]
BILLING CODE 8011-01-P
