Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing of a Proposed Rule Change To Amend FINRA Rule 6730 (Transaction Reporting) To Require Members To Report Transactions in TRACE-Eligible Securities as Soon as Practicable, 42149-42151 [2015-17402]

Download as PDF Federal Register / Vol. 80, No. 136 / Thursday, July 16, 2015 / Notices • Send an email to rule-comments@ sec.gov. Please include File Number SR– ICEEU–2015–010 on the subject line. SECURITIES AND EXCHANGE COMMISSION Paper Comments [Release No. 34–75428; File No. SR–FINRA– 2015–025] • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–ICEEU–2015–010. 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 filings will also be available for inspection and copying at the principal office of ICE Clear Europe and on ICE Clear Europe’s Web site at https:// www.theice.com/clear-europe/ regulation. 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–ICEEU– 2015–010 and should be submitted on or before August 6, 2015. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.13 Jill M. Peterson, Assistant Secretary. tkelley on DSK3SPTVN1PROD with NOTICES [FR Doc. 2015–17399 Filed 7–15–15; 8:45 am] BILLING CODE 8011–01–P Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing of a Proposed Rule Change To Amend FINRA Rule 6730 (Transaction Reporting) To Require Members To Report Transactions in TRACE-Eligible Securities as Soon as Practicable July 10, 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 July 2, 2015, Financial Industry Regulatory Authority, Inc. (‘‘FINRA’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by FINRA. 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 codify that members are required to report transactions in TRACE-Eligible Securities subject to dissemination as soon as practicable. 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. 1 15 13 17 CFR 200.30–3(a)(12). VerDate Sep<11>2014 17:39 Jul 15, 2015 2 17 Jkt 235001 PO 00000 U.S.C. 78s(b)(1). CFR 240.19b–4. Frm 00065 Fmt 4703 42149 A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose FINRA Rule 6730 (Transaction Reporting) generally requires that each FINRA member that is a Party to a Transaction 3 in a TRACE-Eligible Security 4 report the transaction within 15 minutes of the Time of Execution,5 unless a different time period for the security is otherwise specified in the rule, or the transaction report will be deemed ‘‘late.’’ Paragraph (a)(4) of Rule 6730 further provides that members have an ongoing obligation to report transaction information promptly, accurately and completely.6 FINRA is filing this proposed rule change to codify that members are expected to report transactions in TRACE-Eligible Securities that are subject to dissemination as soon as practicable following the Time of Execution, and must not deliberately delay their reporting.7 While FINRA provides a time period for members to conduct the necessary actions to report transactions, FINRA believes it is important for public price transparency that members do not delay reporting executed transactions and has conveyed this expectation to members.8 FINRA 3 Rule 6710(e) provides that a ‘‘Party to a Transaction’’ is an introducing broker-dealer, if any, an executing broker-dealer, or a customer. ‘‘Customer’’ includes a broker-dealer that is not a FINRA member. 4 Rule 6710(a) provides that a ‘‘TRACE-Eligible Security’’ is a debt security that is United States dollar-denominated and issued by a U.S. or foreign private issuer, and, if a ‘‘restricted security’’ as defined in Securities Act Rule 144(a)(3), sold pursuant to Securities Act Rule 144A; or is a debt security that is U.S. dollar-denominated and issued or guaranteed by an Agency as defined in paragraph (k) or a Government-Sponsored Enterprise as defined in paragraph (n). ‘‘TRACE-Eligible Security’’ does not include a debt security that is: Issued by a foreign sovereign, a U.S. Treasury Security as defined in paragraph (p), or a Money Market Instrument as defined in paragraph (o). 5 Among other things, Rule 6710(d) provides that the ‘‘Time of Execution’’ for a transaction in a TRACE-Eligible Security means the time when the Parties to a Transaction agree to all of the terms of the transaction that are sufficient to calculate the dollar price of the trade. 6 While a member may employ an agent for the purpose of submitting transaction information, the primary responsibility for the timely, accurate and complete reporting of transaction information remains the non-delegable duty of the member obligated to report the transaction. 7 FINRA Rule 6750 (Dissemination of Transaction Information) provides that FINRA will disseminate information on all transactions in TRACE-Eligible Securities, including transactions effected pursuant to Securities Act Rule 144A, immediately upon receipt of the transaction report, except as specified in the rule. 8 For example, in a Notice regarding TRACE trade reporting obligations for transactions in Asset- Continued Sfmt 4703 E:\FR\FM\16JYN1.SGM 16JYN1 42150 Federal Register / Vol. 80, No. 136 / Thursday, July 16, 2015 / Notices tkelley on DSK3SPTVN1PROD with NOTICES now proposes to amend Rule 6730 to provide in the rule text that each member that is a Party to a Transaction in a TRACE-Eligible Security that is subject to dissemination must report the transaction to TRACE as soon as practicable, but no later than within 15 minutes of the Time of Execution, or other timeframe specified in Rule 6730. Further, the proposed amendment includes new Supplementary Material .03 to provide additional guidance around FINRA’s expectations regarding the timeliness of reports submitted to TRACE. Specifically, new Rule 6730.03 provides that members must adopt policies and procedures reasonably designed to comply with the requirement that transactions in TRACE-Eligible Securities that are subject to dissemination be reported as soon as practicable by implementing systems that commence the trade reporting process at the Time of Execution without delay. In addition, where a member has such reasonably designed policies, procedures and systems in place, the member generally will not be viewed as violating the ‘‘as soon as practicable’’ requirement because of delays in trade reporting that are due to extrinsic factors that are not reasonably predictable and where the member does not purposely intend to delay the reporting of the trade. In no event may a member purposely withhold trade reports, e.g., by programming its systems to delay reporting until the end of the reporting time period. The supplementary material also recognizes that members may manually report transactions in TRACE-Eligible Backed Securities (ABS), FINRA stated that, although firms have up to two business days to report transactions in ABSs, firms should submit reports as soon as practicable after the execution of a transaction and throughout the trading day, rather than queuing such reports until the end of the reporting time period. Trade Reporting Notice, May 10, 2011 (Reporting Asset-Backed Securities to the Trade Reporting and Compliance Engine). In addition, in Regulatory Notice 12–52 (December 2012), FINRA stated that transactions in securities subject to TRACE reporting requirements should be reported without delay, even though the TRACE rule generally allows for up to 15 minutes to report transactions in corporate and agency debt securities. See also Letter from Brant K. Brown, Associate General Counsel, FINRA, to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, dated August 29, 2012 (Letter Responding to Comments received on SR–FINRA– 2012–025). FINRA also has already codified the ‘‘as soon as practicable’’ requirement for the reporting of transactions to the equity trade reporting facilities, which require reporting as soon as practicable but no later than 10 seconds after execution. See FINRA Rules 6282 (governing transaction reporting on the ADF), 6380A (governing transaction reporting on the FINRA/ NASDAQ TRF), 6380B (governing transaction reporting on the FINRA/NYSE TRF) and 6622 (Transaction Reporting on the FINRA ORF). VerDate Sep<11>2014 17:39 Jul 15, 2015 Jkt 235001 Securities and, as a result, the trade reporting process may not be completed as quickly as where an automated trade reporting system is used. In these cases, FINRA will take into consideration the manual nature of the member’s trade reporting process in determining whether the member’s policies and procedures are reasonably designed to report the trade ‘‘as soon as practicable’’ after execution. FINRA believes that codifying this ‘‘as soon as practicable’’ requirement is necessary to promote consistent and timely reporting by all members and will improve the usefulness of disseminated TRACE information for investors. If the Commission approves the filing, FINRA will announce the effective date of the proposed rule change in a Regulatory Notice to be published no later than 60 days following Commission approval. The effective date will be no sooner than 30 days following publication of the Regulatory Notice announcing Commission approval. 2. Statutory Basis FINRA believes that the proposed rule change is consistent with the provisions of section 15A(b)(6) of the Act,9 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. In particular, the proposed rule would require that members report transactions in TRACEEligible Securities that are subject to dissemination as soon as practicable from the Time of Execution. FINRA believes it is important to ensure that members do not delay the reporting of executed transactions, particularly, for example, by imbedding into the trade reporting process deliberate delays until the end of the reporting time period. Specifically, the proposed rule change will help improve the value of transaction information for price transparency, which enhances its value for regulators, investors and other market participants. 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. PO 00000 9 15 U.S.C. 78o–3(b)(6). Frm 00066 Fmt 4703 Sfmt 4703 Economic Impact Assessment The proposed rule change seeks to codify that members are expected to report transactions in TRACE-Eligible Securities as soon as practicable following the Time of Execution, and must not deliberately delay their reporting. The economic baseline of the proposed rule change is the current rules and industry practice relating to trade reporting. As discussed above, the proposed rule change is consistent with FINRA’s current expectation that members submit trade reports as soon as practicable. Further, FINRA understands that the vast majority of firms that report transactions to TRACE have automated their trade reporting systems, which may facilitate their ability to comply with this rule. For example, based on a review of TRACE trade reporting data from January 2014 through December 2014, over 90% of trade reports in corporate and agency debt are submitted within five minutes of the time of execution, and 79% percent were reported within one minute. Approximately 71% of trade reports in securitized products are submitted within five minutes of execution, and over 55% were reported within one minute. FINRA recognizes that reporting within a short time frame may not mean that firms are reporting as soon as practicable, but does indicate general timeliness in reporting. FINRA has observed instances that appear to indicate firms have taken more time than is operationally necessary to report trades, which results in delays in transaction information reaching investors and other market participants, and may raise the possibility that certain firms may have intentionally delayed trade reporting, possibly to delay public dissemination of the trade. FINRA believes such conduct is inconsistent with the purpose of the trade reporting rules and further believes that explicitly prohibiting such conduct is important for the effective operation of the rule. Therefore, FINRA expects that the primary economic benefit arising from this proposed rule change will be a reduction in the delay between a transaction’s Time of Execution and when a member reports the trade to TRACE, which will result in more timely information being disseminated to investors and other market participants. FINRA also believes that the proposal will provide further clarity as to the operation of Rule 6730— particularly in clarifying that intentionally delaying trade reporting is E:\FR\FM\16JYN1.SGM 16JYN1 Federal Register / Vol. 80, No. 136 / Thursday, July 16, 2015 / Notices violative of a member’s ongoing obligation to report transaction information to TRACE promptly. FINRA anticipates that this rule will not impose any significant new compliance costs on members. 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 Within 45 days of the date of publication of this notice in the Federal Register or within such longer period (i) as the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the self-regulatory organization consents, the Commission will: (A) By order approve or disapprove such proposed rule change, or (B) institute proceedings to determine whether the proposed rule change should be 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: tkelley on DSK3SPTVN1PROD with NOTICES 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–2015–025 on the subject line. Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–FINRA–2015–025. 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 VerDate Sep<11>2014 17:39 Jul 15, 2015 Jkt 235001 Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission’s Public Reference Room, 100 F Street NE., Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be available for inspection and copying at the principal office of FINRA. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–FINRA– 2015–025 and should be submitted on or before August 6, 2015. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.10 Jill M. Peterson, Assistant Secretary. [FR Doc. 2015–17402 Filed 7–15–15; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [OMB Control No. 3235–0687, SEC File No. 270–638] Submission Collection; Comment Request Upon Written Request Copies Available From: Securities and Exchange Commission, Office of FOIA Services, 100 F Street NE., Washington, DC 20549–2736. Extension: Rule 239. Notice is hereby given that, pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.), the Securities and Exchange Commission (‘‘Commission’’) has submitted to the Office of Management and Budget this request for extension of the previously approved collection of information discussed below. Rule 239 (17 CFR 230.239) provides exemptions under the Securities Act of 1933 (15 U.S.C. 77a et seq.), the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) and the Trust Indenture Act of 1939 (U.S.C. 77aaa et seq.) for security-based swaps issued by certain clearing agencies satisfying PO 00000 10 17 certain conditions. The purpose of the information required by Rule 239 is to make certain information about security-based swaps that may be cleared by the registered or the exempt clearing agencies available to eligible contract participants and other market participants. We estimate that each registered or exempt clearing agency issuing security-based swaps in its function as a central counterparty will spend approximately 2 hours each time it provides or update the information in its agreements relating to security-based swaps or on its Web site. We estimate that each registered or exempt clearing agency will provide or update the information approximately 20 times per year. In addition, we estimate that 75% of the 2 hours per response (1.5 hours) is prepared internally by the clearing agency for a total annual reporting burden of 180 hours (1.5 hours per response × 20 times × 6 respondents). An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid control number. The public may view the background documentation for this information collection at the following Web site, www.reginfo.gov. Comments should be directed to: (i) Desk Officer for the Securities and Exchange Commission, Office of Information and Regulatory Affairs, Office of Management and Budget, Room 10102, New Executive Office Building, Washington, DC 20503, or by sending an email to: Shagufta_Ahmed@omb.eop.gov; and (ii) Pamela Dyson, Director/Chief Information Officer, Securities and Exchange Commission, c/o Remi PavlikSimon, 100 F Street NE., Washington, DC 20549 or send an email to: PRA_Mailbox@sec.gov. Comments must be submitted to OMB within 30 days of this notice. Dated: July 9, 2015. Brent J. Fields, Secretary. [FR Doc. 2015–17393 Filed 7–15–15; 8:45 am] BILLING CODE 8011–01–P CFR 200.30–3(a)(12). Frm 00067 Fmt 4703 Sfmt 9990 42151 E:\FR\FM\16JYN1.SGM 16JYN1

Agencies

[Federal Register Volume 80, Number 136 (Thursday, July 16, 2015)]
[Notices]
[Pages 42149-42151]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-17402]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75428; File No. SR-FINRA-2015-025]


Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing of a Proposed Rule Change To Amend 
FINRA Rule 6730 (Transaction Reporting) To Require Members To Report 
Transactions in TRACE-Eligible Securities as Soon as Practicable

July 10, 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 July 2, 2015, Financial Industry Regulatory Authority, Inc. 
(``FINRA'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by FINRA. 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.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    FINRA is proposing to codify that members are required to report 
transactions in TRACE-Eligible Securities subject to dissemination as 
soon as practicable.
    The text of the proposed rule change is available on FINRA's Web 
site at https://www.finra.org, at the principal office of FINRA and at 
the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, FINRA included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. FINRA has prepared summaries, set forth in sections A, 
B, and C below, of the most significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    FINRA Rule 6730 (Transaction Reporting) generally requires that 
each FINRA member that is a Party to a Transaction \3\ in a TRACE-
Eligible Security \4\ report the transaction within 15 minutes of the 
Time of Execution,\5\ unless a different time period for the security 
is otherwise specified in the rule, or the transaction report will be 
deemed ``late.'' Paragraph (a)(4) of Rule 6730 further provides that 
members have an ongoing obligation to report transaction information 
promptly, accurately and completely.\6\
---------------------------------------------------------------------------

    \3\ Rule 6710(e) provides that a ``Party to a Transaction'' is 
an introducing broker-dealer, if any, an executing broker-dealer, or 
a customer. ``Customer'' includes a broker-dealer that is not a 
FINRA member.
    \4\ Rule 6710(a) provides that a ``TRACE-Eligible Security'' is 
a debt security that is United States dollar-denominated and issued 
by a U.S. or foreign private issuer, and, if a ``restricted 
security'' as defined in Securities Act Rule 144(a)(3), sold 
pursuant to Securities Act Rule 144A; or is a debt security that is 
U.S. dollar-denominated and issued or guaranteed by an Agency as 
defined in paragraph (k) or a Government-Sponsored Enterprise as 
defined in paragraph (n). ``TRACE-Eligible Security'' does not 
include a debt security that is: Issued by a foreign sovereign, a 
U.S. Treasury Security as defined in paragraph (p), or a Money 
Market Instrument as defined in paragraph (o).
    \5\ Among other things, Rule 6710(d) provides that the ``Time of 
Execution'' for a transaction in a TRACE-Eligible Security means the 
time when the Parties to a Transaction agree to all of the terms of 
the transaction that are sufficient to calculate the dollar price of 
the trade.
    \6\ While a member may employ an agent for the purpose of 
submitting transaction information, the primary responsibility for 
the timely, accurate and complete reporting of transaction 
information remains the non-delegable duty of the member obligated 
to report the transaction.
---------------------------------------------------------------------------

    FINRA is filing this proposed rule change to codify that members 
are expected to report transactions in TRACE-Eligible Securities that 
are subject to dissemination as soon as practicable following the Time 
of Execution, and must not deliberately delay their reporting.\7\ While 
FINRA provides a time period for members to conduct the necessary 
actions to report transactions, FINRA believes it is important for 
public price transparency that members do not delay reporting executed 
transactions and has conveyed this expectation to members.\8\ FINRA

[[Page 42150]]

now proposes to amend Rule 6730 to provide in the rule text that each 
member that is a Party to a Transaction in a TRACE-Eligible Security 
that is subject to dissemination must report the transaction to TRACE 
as soon as practicable, but no later than within 15 minutes of the Time 
of Execution, or other timeframe specified in Rule 6730. Further, the 
proposed amendment includes new Supplementary Material .03 to provide 
additional guidance around FINRA's expectations regarding the 
timeliness of reports submitted to TRACE. Specifically, new Rule 
6730.03 provides that members must adopt policies and procedures 
reasonably designed to comply with the requirement that transactions in 
TRACE-Eligible Securities that are subject to dissemination be reported 
as soon as practicable by implementing systems that commence the trade 
reporting process at the Time of Execution without delay. In addition, 
where a member has such reasonably designed policies, procedures and 
systems in place, the member generally will not be viewed as violating 
the ``as soon as practicable'' requirement because of delays in trade 
reporting that are due to extrinsic factors that are not reasonably 
predictable and where the member does not purposely intend to delay the 
reporting of the trade. In no event may a member purposely withhold 
trade reports, e.g., by programming its systems to delay reporting 
until the end of the reporting time period.
---------------------------------------------------------------------------

    \7\ FINRA Rule 6750 (Dissemination of Transaction Information) 
provides that FINRA will disseminate information on all transactions 
in TRACE-Eligible Securities, including transactions effected 
pursuant to Securities Act Rule 144A, immediately upon receipt of 
the transaction report, except as specified in the rule.
    \8\ For example, in a Notice regarding TRACE trade reporting 
obligations for transactions in Asset-Backed Securities (ABS), FINRA 
stated that, although firms have up to two business days to report 
transactions in ABSs, firms should submit reports as soon as 
practicable after the execution of a transaction and throughout the 
trading day, rather than queuing such reports until the end of the 
reporting time period. Trade Reporting Notice, May 10, 2011 
(Reporting Asset-Backed Securities to the Trade Reporting and 
Compliance Engine). In addition, in Regulatory Notice 12-52 
(December 2012), FINRA stated that transactions in securities 
subject to TRACE reporting requirements should be reported without 
delay, even though the TRACE rule generally allows for up to 15 
minutes to report transactions in corporate and agency debt 
securities. See also Letter from Brant K. Brown, Associate General 
Counsel, FINRA, to Elizabeth M. Murphy, Secretary, Securities and 
Exchange Commission, dated August 29, 2012 (Letter Responding to 
Comments received on SR-FINRA-2012-025). FINRA also has already 
codified the ``as soon as practicable'' requirement for the 
reporting of transactions to the equity trade reporting facilities, 
which require reporting as soon as practicable but no later than 10 
seconds after execution. See FINRA Rules 6282 (governing transaction 
reporting on the ADF), 6380A (governing transaction reporting on the 
FINRA/NASDAQ TRF), 6380B (governing transaction reporting on the 
FINRA/NYSE TRF) and 6622 (Transaction Reporting on the FINRA ORF).
---------------------------------------------------------------------------

    The supplementary material also recognizes that members may 
manually report transactions in TRACE-Eligible Securities and, as a 
result, the trade reporting process may not be completed as quickly as 
where an automated trade reporting system is used. In these cases, 
FINRA will take into consideration the manual nature of the member's 
trade reporting process in determining whether the member's policies 
and procedures are reasonably designed to report the trade ``as soon as 
practicable'' after execution. FINRA believes that codifying this ``as 
soon as practicable'' requirement is necessary to promote consistent 
and timely reporting by all members and will improve the usefulness of 
disseminated TRACE information for investors.
    If the Commission approves the filing, FINRA will announce the 
effective date of the proposed rule change in a Regulatory Notice to be 
published no later than 60 days following Commission approval. The 
effective date will be no sooner than 30 days following publication of 
the Regulatory Notice announcing Commission approval.
 2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the 
provisions of section 15A(b)(6) of the Act,\9\ 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. In particular, the proposed rule would require that 
members report transactions in TRACE-Eligible Securities that are 
subject to dissemination as soon as practicable from the Time of 
Execution. FINRA believes it is important to ensure that members do not 
delay the reporting of executed transactions, particularly, for 
example, by imbedding into the trade reporting process deliberate 
delays until the end of the reporting time period. Specifically, the 
proposed rule change will help improve the value of transaction 
information for price transparency, which enhances its value for 
regulators, investors and other market participants.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78o-3(b)(6).
---------------------------------------------------------------------------

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.
Economic Impact Assessment
    The proposed rule change seeks to codify that members are expected 
to report transactions in TRACE-Eligible Securities as soon as 
practicable following the Time of Execution, and must not deliberately 
delay their reporting.
    The economic baseline of the proposed rule change is the current 
rules and industry practice relating to trade reporting. As discussed 
above, the proposed rule change is consistent with FINRA's current 
expectation that members submit trade reports as soon as practicable. 
Further, FINRA understands that the vast majority of firms that report 
transactions to TRACE have automated their trade reporting systems, 
which may facilitate their ability to comply with this rule.
    For example, based on a review of TRACE trade reporting data from 
January 2014 through December 2014, over 90% of trade reports in 
corporate and agency debt are submitted within five minutes of the time 
of execution, and 79% percent were reported within one minute. 
Approximately 71% of trade reports in securitized products are 
submitted within five minutes of execution, and over 55% were reported 
within one minute.
    FINRA recognizes that reporting within a short time frame may not 
mean that firms are reporting as soon as practicable, but does indicate 
general timeliness in reporting. FINRA has observed instances that 
appear to indicate firms have taken more time than is operationally 
necessary to report trades, which results in delays in transaction 
information reaching investors and other market participants, and may 
raise the possibility that certain firms may have intentionally delayed 
trade reporting, possibly to delay public dissemination of the trade. 
FINRA believes such conduct is inconsistent with the purpose of the 
trade reporting rules and further believes that explicitly prohibiting 
such conduct is important for the effective operation of the rule.
    Therefore, FINRA expects that the primary economic benefit arising 
from this proposed rule change will be a reduction in the delay between 
a transaction's Time of Execution and when a member reports the trade 
to TRACE, which will result in more timely information being 
disseminated to investors and other market participants. FINRA also 
believes that the proposal will provide further clarity as to the 
operation of Rule 6730--particularly in clarifying that intentionally 
delaying trade reporting is

[[Page 42151]]

violative of a member's ongoing obligation to report transaction 
information to TRACE promptly. FINRA anticipates that this rule will 
not impose any significant new compliance costs on members.

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

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) By order approve or disapprove such proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule 
change should be 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-2015-025 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-FINRA-2015-025. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549, on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available 
for inspection and copying at the principal office of FINRA. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-FINRA-2015-025 and should be 
submitted on or before August 6, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
---------------------------------------------------------------------------

    \10\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2015-17402 Filed 7-15-15; 8:45 am]
BILLING CODE 8011-01-P
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.