Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend FINRA Rule 7620A (FINRA/Nasdaq Trade Reporting Facility Reporting Fees), 11337-11340 [2016-04635]
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11337
Federal Register / Vol. 81, No. 42 / Thursday, March 3, 2016 / Notices
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 will also be available for
inspection and copying at the principal
office of the Exchange. 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–EDGX–
2016–12 and should be submitted on or
before March 24, 2016.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.14
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016–04634 Filed 3–2–16; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–77243; File No. SR–FINRA–
2016–009]
Self-Regulatory Organizations;
Financial Industry Regulatory
Authority, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend FINRA Rule
7620A (FINRA/Nasdaq Trade Reporting
Facility Reporting Fees)
February 26, 2016.
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 February
23, 2016, 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.
I. Self-Regulatory Organization’s
Statement of the Terms of the Substance
of the Proposed Rule Change
FINRA is proposing to adjust one of
the thresholds required to qualify for the
Media/Contra fee cap under FINRA Rule
7620A (FINRA/Nasdaq Trade Reporting
Facility Reporting Fees).
Below is the text of the proposed rule
change. Proposed new language is in
italics; proposed deletions are in
brackets.
*
*
*
*
*
7000. CLEARING, TRANSACTION AND
ORDER DATA REQUIREMENTS, AND
FACILITY CHARGES
*
*
*
*
*
7600. DATA PRODUCTS AND
CHARGES FOR TRADE REPORTING
FACILITY SERVICES
7600A. DATA PRODUCTS AND
CHARGES FOR FINRA/NASDAQ
TRADE REPORTING FACILITY
SERVICES
*
*
*
*
*
7620A. FINRA/Nasdaq Trade Reporting
Facility Reporting Fees
The following charges shall be paid
by participants for use of the FINRA/
Nasdaq Trade Reporting Facility. In the
case of trades where the same market
participant is on both sides of a trade
report, applicable fees assessed on a
‘‘per side’’ basis will be assessed once,
rather than twice, and the market
participant will be assessed applicable
Non-Comparison/Accept (Non-Match/
Compare) Charges as the Executing
Party side only.
Non-Comparison/Accept (Non-Match/Compare) Charges
Tape:
A ........................................................................................................
B ........................................................................................................
C ........................................................................................................
Daily Average Number of Media/Executing Party Trades During the
Month Needed to Qualify for Cap:
2500.
2500.
2500.
Media/Executing Party
Monthly Charge:
($0.018) × (Number of Media/Executing Party Reports During the
Month).
Maximum Monthly Charge if Capped:
($0.018) × (Required Daily Average Number of Media/EP Trades
for Tape A, B or C) × (Number of Trading Days During the
Month).
Non-Media/Executing Party
mstockstill on DSK4VPTVN1PROD with NOTICES
Monthly Charge:
($0.018) × (Number of Non-Media/Executing Party Reports During
the Month).
Maximum Monthly Charge if Capped:
($0.018) × 2500 for Tape A, B or C × (Number of Trading Days
During the Month).
Media/Contra
Monthly Charge:
($0.013) × (Number of Media/Contra Reports During the Month) ....
14 17
2 17
1 15
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
3 15
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PO 00000
Maximum Monthly Charge if Capped:
($0.013) × 2500 for Tape A, B or C × (Number of Trading Days
During the Month).
CFR 240.19b–4.
U.S.C. 78s(b)(3)(A)(ii).
Frm 00165
Fmt 4703
Sfmt 4703
4 17
CFR 240.19b–4(f)(2).
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Federal Register / Vol. 81, No. 42 / Thursday, March 3, 2016 / Notices
Media/Contra Cap
Participants making markets in alternative trading systems registered pursuant to Regulation ATS will qualify for a fee cap applied to all trades
under Rule 7620A if they meet the following criteria on a monthly basis:
• Participant’s percentage of contra media trades must represent at least [5]35% of their total [TRF] FINRA/Nasdaq Trade Reporting Facility volume.
• Participant must be contra to a minimum of 1,000,000 trades in Tape A, 500,000 trades in Tape C and 250,000 trades in Tape B.
• Participant must complete an attestation form stating that they maintain a two-sided quote in each symbol traded on an alternative trading system registered pursuant to Regulation ATS and display a quotation size of at least one normal unit of trading (specific for each security) thereon. Participants will be audited by Nasdaq, Inc. periodically.
Maximum Monthly Charge if Capped .......................................................
$5,000 per Tape (A, B or C).
Non-Media/Contra
Monthly Charge:
($0.013) × (Number of Non-Media/Contra Reports During the
Month).
Standard Fees:
Clearing report to transfer a transaction fee charged by one member to another member pursuant to Rule 7230A(h).
Comparison/Accept ...........................................................................
Late Report—T+N .............................................................................
Query .................................................................................................
Corrective Transaction Charge .........................................................
Maximum Monthly Charge if Capped:
($0.013) × 2500 for Tape A, B or C x (Number of Trading Days During
the Month).
$0.03/side.
$0.0144/side per 100 shares (minimum 400 shares; maximum 7,500
shares).
$0.288/trade (charged to the Executing Party).
$0.50/query.
$0.25/Cancel, Error, Inhibit, Kill, or ‘No’ portion of No/Was transaction,
paid by reporting side; $0.25/Break, Decline transaction, paid by
each party.
mstockstill on DSK4VPTVN1PROD with NOTICES
• • • Supplementary Material:
lll Confirmation Transaction (‘‘ACT’’)
Service technology. In connection with
.01 through .02 No Change.
the establishment of the FINRA/Nasdaq
*
*
*
*
*
TRF, FINRA and NASDAQ entered into
a limited liability company agreement
II. Self-Regulatory Organization’s
(the ‘‘LLC Agreement’’). Under the LLC
Statement of the Purpose of, and
Agreement, FINRA, the ‘‘SRO Member,’’
Statutory Basis for, the Proposed Rule
Change
has sole regulatory responsibility for the
FINRA/Nasdaq TRF. NASDAQ, the
In its filing with the Commission,
‘‘Business Member,’’ is primarily
FINRA included statements concerning
responsible for the management of the
the purpose of and basis for the
FINRA/Nasdaq TRF’s business affairs,
proposed rule change and discussed any
including establishing pricing for use of
comments it received on the proposed
the FINRA/Nasdaq TRF, to the extent
rule change. The text of these statements
those affairs are not inconsistent with
may be examined at the places specified
the regulatory and oversight functions of
in Item IV below. FINRA has prepared
FINRA. Additionally, the Business
summaries, set forth in sections A, B,
Member is obligated to pay the cost of
and C below, of the most significant
regulation and is entitled to the profits
aspects of such statements.
and losses, if any, derived from the
A. Self-Regulatory Organization’s
operation of the FINRA/Nasdaq TRF.
Statement of the Purpose of, and
Pursuant to the FINRA Rule 7600A
Statutory Basis for, the Proposed Rule
Series, FINRA members that are FINRA/
Change
Nasdaq TRF participants are charged
fees and may qualify for fee caps (Rule
1. Purpose
7620A) and also may qualify for revenue
Background
sharing payments for trade reporting to
the FINRA/Nasdaq TRF (Rule 7610A).
The FINRA/Nasdaq Trade Reporting
These rules are administered by
Facility (‘‘TRF’’) is a facility of FINRA
NASDAQ, in its capacity as the
that is operated by Nasdaq, Inc.
Business Member and operator of the
(‘‘NASDAQ’’) 5 and utilizes Automated
FINRA/Nasdaq TRF on behalf of
5 As approved by its board of directors and the
FINRA,6 and NASDAQ collects all fees
Commission, effective September 8, 2015, NASDAQ on behalf of the FINRA/Nasdaq TRF.
changed its legal name from The NASDAQ OMX
Group, Inc. to Nasdaq, Inc. See Nasdaq, Inc. Form
8–K Current Report (filed September 8, 2015)
(available at www.sec.gov/Archives/edgar/data/
1120193/000119312515314459/d48431d8k.htm).
FINRA and NASDAQ are in the process of
amending the LLC Agreement to reflect the name
change, and FINRA will file a separate proposed
VerDate Sep<11>2014
19:17 Mar 02, 2016
Jkt 238001
rule change to update the FINRA manual
accordingly.
6 FINRA’s oversight of this function performed by
the Business Member is conducted through a
recurring assessment and review of TRF operations
by an outside independent audit firm.
PO 00000
Frm 00166
Fmt 4703
Sfmt 4703
Pursuant to Rule 7620A, FINRA
members are charged fees for ‘‘NonComparison/Accept (Non-Match/
Compare)’’ trades. Such trades are
defined as transactions that are not
subject to the ACT Comparison process,
and they may be submitted as media or
non-media,7 clearing or non-clearing,
AGU (automated give-up), QSR
(Qualified Service Representative), onesided or internalized crosses.8 Under
the fee schedule there are four
categories of fees, each of which is
applicable to transactions of the three
Tapes: 9 (1) Media/Executing Party; (2)
Non-Media/Executing Party; (3) Media/
Contra; (4) Non-Media/Contra.10
FINRA recently filed a proposed rule
change 11 that would allow FINRA
7 Media eligible trade reports are those that are
submitted to the FINRA/Nasdaq TRF for public
dissemination by the Securities Information
Processors. By contrast, non-media trade reports are
not submitted to the FINRA/Nasdaq TRF for public
dissemination, but are submitted for regulatory and/
or clearance and settlement purposes.
8 See FINRA Rule 7620A.01.
9 Market data is transmitted to three tapes based
on the listing venue of the security: New York Stock
Exchange securities (‘‘Tape A’’), American Stock
Exchange and regional exchange securities (‘‘Tape
B’’), and Nasdaq Stock Market securities (‘‘Tape
C’’). Tape A and Tape B are generally referred to
as the Consolidated Tape.
10 Pursuant to the rule’s Supplementary Material,
the ‘‘Executing Party (EP)’’ is defined as the member
with the trade reporting obligation under FINRA
rules, and the ‘‘Contra (CP)’’ is defined as the
member on the contra side of a trade report. These
positions formerly were identified in FINRA rules
as the ‘‘Market Maker’’ or ‘‘MM’’ side and the
‘‘Order Entry’’ or ‘‘OE’’ side, respectively. See
FINRA Rule 7620A.01.
11 See Securities Exchange Act Release No. 76556
(December 4, 2015), 80 FR 76724 (December 10,
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mstockstill on DSK4VPTVN1PROD with NOTICES
members that are a Contra Party to
qualify for a monthly fee cap of $5,000
per Tape applied to trades in each fee
category. Eligibility for the Media/
Contra fee cap is based on a FINRA
member’s trade reporting of Media/
Contra trades to the TRF and its
participation on an alternative trading
system registered pursuant to
Regulation ATS 12 (an ‘‘ATS’’) as a
market maker. Specifically, the FINRA
member must make markets on an ATS
by maintaining a two-sided quote. The
member also must complete and
provide a form to NASDAQ, in which
the member attests that (1) it maintains
two-sided quotes for each security that
the member maintains interest in within
each ATS and displays a quotation size
of at least one normal unit of trading
(specific for each security), and (2) it
will continue to meet the ATS-based
requirements to be eligible for the fee
cap. In addition, to qualify a FINRA
member must have its Media/Contra
trades equal, or exceed, 55% of its total
FINRA/Nasdaq TRF volume. Lastly, the
FINRA member must be contra to a
minimum of 1 million trades in Tape A,
500,000 trades in Tape C, and 250,000
trades in Tape B to qualify for the fee
cap in the securities of the Tapes,
respectively. NASDAQ, as the Business
Member, set the required level of trades
reported for each of the Tapes based on
the differing levels of overall trades
reported to the FINRA/Nasdaq TRF as
Contra Party.
Proposed Adjustment
In proposing the Media/Contra fee
cap, NASDAQ, as the Business Member,
advised FINRA that following
implementation, it would monitor the
fees paid by Contra Parties and would
consider whether any adjustments to the
fee cap or qualifying thresholds would
be appropriate. Since adopting the
Media/Contra fee cap, no FINRA
member has achieved the level of
Media/Contra trades to equal, or exceed,
55% of its total FINRA/Nasdaq TRF
volume. NASDAQ, as the Business
Member, designed the Media/Contra fee
cap to make pricing more competitive to
attract and retain participants on the
FINRA/Nasdaq TRF, and because no
FINRA member currently qualifies for
the Media/Contra fee cap, NASDAQ has
determined to reduce the level of
Media/Contra trades required to qualify
for the fee cap. Specifically, NASDAQ
has determined to reduce the level from
55% of the member’s total FINRA/
Nasdaq TRF volume to 35%. NASDAQ
2015) (Notice of Filing and Immediate Effectiveness
of File No. SR–FINRA–2015–053).
12 17 CFR 242.300–303.
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19:17 Mar 02, 2016
Jkt 238001
believes that reducing the level of
Media/Contra trades required to qualify
will make the fee cap more attainable
for FINRA members.
Accordingly, FINRA, as the SRO
Member, is proposing to amend Rule
7620A to reflect the proposed reduction
in the level of Media/Contra trades
required to qualify for the Media/Contra
fee cap. FINRA also is proposing a
technical amendment to clarify that the
reference to a member’s ‘‘total TRF
volume’’ means its total FINRA/Nasdaq
TRF volume.
FINRA has filed the proposed rule
change for immediate effectiveness. The
effective date will be the date of filing,
February 23, 2016.
2. Statutory Basis
FINRA believes that the proposed rule
change is consistent with the provisions
of Section 15A(b)(5) of the Act,13 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. NASDAQ, as the Business
Member, proposed the $5,000 per tape
Media/Contra fee cap for FINRA
members that could not qualify for a fee
cap under the then-current rules.
However, as noted, NASDAQ has
determined that the level of Media/
Contra trades required to qualify for
[sic] fee cap is set too high, resulting in
no FINRA member qualifying for the fee
cap since its adoption. By reducing this
level from 55% to 35% of total FINRA/
Nasdaq TRF trades, NASDAQ has
advised FINRA that it believes that more
FINRA members will be able to qualify
for the Media/Contra fee cap and thus
the proposed reduction is reasonable.
The proposed reduction in the level of
Media/Contra trades required to qualify
for the Media/Contra fee cap is
equitably allocated because it will apply
to all FINRA members that use the
FINRA/Nasdaq TRF. Any FINRA
member that meets the reduced level of
Media/Contra trades together with the
other requirements under the Rule will
qualify for the capped fee.
As discussed in SR–FINRA–2015–
053, NASDAQ, as the Business Member,
advised FINRA that the Media/Contra
fee cap is not unfairly discriminatory
because the fee cap would most benefit
those Contra Parties that have
significant volume on the FINRA/
Nasdaq TRF and thus may pay larger
trade reporting fees than firms with
comparable ‘‘Executing Party’’ volume
that qualify for a fee cap. NASDAQ
13 15
PO 00000
U.S.C. 78o–3(b)(5).
Frm 00167
Fmt 4703
Sfmt 4703
11339
anticipates that the proposed rule
change will make the fee cap more
attainable for these Contra Parties. In
addition, FINRA members that are not
subject to capped fees can choose to
report trades to a competing TRF (or, in
this instance, a market maker may elect
to route its orders to an ATS that reports
to a competing TRF).
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. The
proposed rule change would not impose
new fees or fee rate increases on any
member firm, and will reduce the fees
paid by some members to the extent
they qualify under the new, lower
criteria. NASDAQ, as the Business
Member, has advised FINRA that the
estimated fee savings to member firms
that qualify for the Media/Contra fee
would be in the range of $0–$20,000 per
month per firm based on overall market
and participant activity and number of
trading days in the month. NASDAQ
has further advised FINRA that, based
on current trading practices, NASDAQ
estimates that approximately three to
eight member firms may be able to take
advantage of the fee reductions
associated with the Media/Contra fee
cap with the proposed reduction in the
level of trades required to qualify.
As discussed in SR–FINRA–2015–
053, FINRA members have trade
reporting alternatives other than the
FINRA/Nasdaq TRF, so to the extent the
proposed rule change is viewed as
burdensome among market participants,
those participants may choose not to
avail themselves of the fee cap and
maintain the status quo with respect to
fees or adjust their trading practices.
This would permit members to mitigate
any direct or indirect costs imposed by
this proposal. Moreover, by making the
fee cap more attainable, the proposed
rule change may promote competition
among FINRA members by reducing the
fee burden on certain FINRA members
who are unable to qualify for the
existing fee cap, and FINRA members
can choose their trading partners, which
determination may in part be based on
the fees of the particular TRF applicable
to Contra Parties. Lastly, FINRA does
not believe that the proposed rule
change burdens competition among
reporting facilities because each is free
to adjust their [sic] respective fees to
remain competitive with the FINRA/
Nasdaq TRF, to the extent the proposed
rule change makes the FINRA/Nasdaq
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Federal Register / Vol. 81, No. 42 / Thursday, March 3, 2016 / Notices
TRF a more attractive facility on which
to report trades.
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
The foregoing rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act 14 and paragraph (f)(2) of Rule
19b–4 thereunder.15 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:
mstockstill on DSK4VPTVN1PROD 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–2016–009 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–2016–009. 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
U.S.C. 78s(b)(3)(A).
15 17 CFR 240.19b–4(f)(2).
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for Web site viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE.,
Washington, DC 20549 on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of such
filing also will be available for
inspection and copying at the principal
office of FINRA. All comments received
will be posted without change; the
Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–FINRA–
2016–009, and should be submitted on
or before March 24, 2016.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.16
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016–04635 Filed 3–2–16; 8:45 am]
BILLING CODE 8011–01–P
SMALL BUSINESS ADMINISTRATION
Women-Owned Small Business
Federal Contract Program;
Identification of Eligible Industries
Small Business Administration.
Notice.
AGENCY:
ACTION:
In order to carry out the
Women-Owned Small Business Federal
Contract Program (WOSB Program), the
U.S. Small Business Administration
(SBA) was required by section 825 of
the National Defense Authorization Act
of 2015 to conduct a new study
identifying the industries in which
women-owned small businesses are
underrepresented in Federal contracting
and to report to Congress on the results
of that study by January 2, 2016. In
accordance with this statutory mandate,
SBA has provided this report to
Congress and with this notice, notifies
the public of the results of this study
and identifies the industries designated
by SBA as eligible for the WOSB
Program.
DATES: This notice is effective March 3,
2016. The designations of industries
contained in this notice apply to all
solicitations issued on or after the
effective date.
SUMMARY:
14 15
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19:17 Mar 02, 2016
16 17
Jkt 238001
PO 00000
CFR 200.30–3(a)(12).
Frm 00168
Fmt 4703
Sfmt 4703
Mr.
Leo Sanchez, Office of Government
Contracting, U.S. Small Business
Administration, 409 Third Street SW.,
Washington, DC 20416; (202) 619–1658;
wosb@sba.gov.
SUPPLEMENTARY INFORMATION:
FOR FURTHER INFORMATION CONTACT:
I. Background
Under section 8(m) of the Small
Business Act, 15 U.S.C. 637(m), SBA is
responsible for implementing and
administering the WOSB Program,
which went into effect on February 4,
2011. The purpose of the WOSB
Program is to ensure that women-owned
small businesses (WOSBs) have an
equal opportunity to participate in
Federal contracting and to help attain
the Federal government’s goal of
awarding five percent of its prime
contract dollars to WOSBs. The WOSB
Program authorizes Federal contracting
officers to restrict competition for an
acquisition to WOSBs if there is a
reasonable expectation that at least two
WOSBs will submit offers that meet the
requirements of the acquisition at a fair
and reasonable price and if the
acquisition is for a good or service
assigned a North American Industry
Classification System (NAICS) code in
which SBA has determined that WOSBs
are ‘‘substantially underrepresented.’’
The WOSB Program also authorizes
contracting officers to award a sole
source contract assigned such a NAICS
code to a WOSB if only one WOSB can
be identified that can perform the
contract at a fair and reasonable price.
In addition, Economically
Disadvantaged Women-Owned Small
Businesses (EDWOSBs) can likewise
receive set-asides and sole source
awards similar to those described above
for WOSBs, and in a larger set of
industries where SBA has determined
that WOSBs are ‘‘underrepresented’’ but
not substantially so.
In order to identify the industries
eligible for set-asides under the WOSB
Program, the Small Business Act
required the SBA Administrator to
conduct a study to identify those
industries in which small business
concerns owned and controlled by
women are underrepresented in Federal
contracting. 15 U.S.C. 637(m)(4). SBA
awarded a contract to the KauffmanRAND Institute for Entrepreneurship
Public Policy (RAND) to complete a
study of the underrepresentation of
WOSBs in Federal prime contracts by
industry code. RAND published the
study in April 2007.1 Prior to the
1 The RAND study is available to the public at
https://www.RAND.org/pubs/technical_reports/
TR442.
E:\FR\FM\03MRN1.SGM
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Agencies
[Federal Register Volume 81, Number 42 (Thursday, March 3, 2016)]
[Notices]
[Pages 11337-11340]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-04635]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-77243; File No. SR-FINRA-2016-009]
Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Amend FINRA Rule 7620A (FINRA/Nasdaq Trade
Reporting Facility Reporting Fees)
February 26, 2016.
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 February 23, 2016, 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.
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\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).
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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 adjust one of the thresholds required to
qualify for the Media/Contra fee cap under FINRA Rule 7620A (FINRA/
Nasdaq Trade Reporting Facility Reporting Fees).
Below is the text of the proposed rule change. Proposed new
language is in italics; proposed deletions are in brackets.
* * * * *
7000. CLEARING, TRANSACTION AND ORDER DATA REQUIREMENTS, AND FACILITY
CHARGES
* * * * *
7600. DATA PRODUCTS AND CHARGES FOR TRADE REPORTING FACILITY SERVICES
7600A. DATA PRODUCTS AND CHARGES FOR FINRA/NASDAQ TRADE REPORTING
FACILITY SERVICES
* * * * *
7620A. FINRA/Nasdaq Trade Reporting Facility Reporting Fees
The following charges shall be paid by participants for use of the
FINRA/Nasdaq Trade Reporting Facility. In the case of trades where the
same market participant is on both sides of a trade report, applicable
fees assessed on a ``per side'' basis will be assessed once, rather
than twice, and the market participant will be assessed applicable Non-
Comparison/Accept (Non-Match/Compare) Charges as the Executing Party
side only.
------------------------------------------------------------------------
------------------------------------------------------------------------
Non-Comparison/Accept (Non-Match/Compare) Charges
------------------------------------------------------------------------
Tape: Daily Average Number of Media/
Executing Party Trades During
the Month Needed to Qualify
for Cap:
A.................................. 2500.
B.................................. 2500.
C.................................. 2500.
------------------------------------------------------------------------
Media/Executing Party
------------------------------------------------------------------------
Monthly Charge: Maximum Monthly Charge if
Capped:
($0.018) x (Number of Media/ ($0.018) x (Required Daily
Executing Party Reports During the Average Number of Media/EP
Month). Trades for Tape A, B or C)
x (Number of Trading Days
During the Month).
------------------------------------------------------------------------
Non-Media/Executing Party
------------------------------------------------------------------------
Monthly Charge: Maximum Monthly Charge if
Capped:
($0.018) x (Number of Non-Media/ ($0.018) x 2500 for Tape A,
Executing Party Reports During the B or C x (Number of Trading
Month). Days During the Month).
------------------------------------------------------------------------
Media/Contra
------------------------------------------------------------------------
Monthly Charge: Maximum Monthly Charge if
Capped:
($0.013) x (Number of Media/Contra ($0.013) x 2500 for Tape A,
Reports During the Month). B or C x (Number of Trading
Days During the Month).
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[[Page 11338]]
Media/Contra Cap
------------------------------------------------------------------------
Participants making markets in alternative trading systems registered
pursuant to Regulation ATS will qualify for a fee cap applied to all
trades under Rule 7620A if they meet the following criteria on a
monthly basis:
Participant's percentage of contra media trades must
represent at least [5]35% of their total [TRF] FINRA/Nasdaq Trade
Reporting Facility volume..
Participant must be contra to a minimum of 1,000,000 trades
in Tape A, 500,000 trades in Tape C and 250,000 trades in Tape B..
Participant must complete an attestation form stating that
they maintain a two-sided quote in each symbol traded on an
alternative trading system registered pursuant to Regulation ATS
and display a quotation size of at least one normal unit of trading
(specific for each security) thereon. Participants will be audited
by Nasdaq, Inc. periodically..
------------------------------------------------------------------------
Maximum Monthly Charge if Capped....... $5,000 per Tape (A, B or C).
------------------------------------------------------------------------
Non-Media/Contra
------------------------------------------------------------------------
Monthly Charge: Maximum Monthly Charge if
Capped:
($0.013) x (Number of Non-Media/ ($0.013) x 2500 for Tape A, B
Contra Reports During the Month). or C x (Number of Trading Days
During the Month).
Standard Fees:
Clearing report to transfer a $0.03/side.
transaction fee charged by one
member to another member pursuant
to Rule 7230A(h).
Comparison/Accept.................. $0.0144/side per 100 shares
(minimum 400 shares; maximum
7,500 shares).
Late Report--T+N................... $0.288/trade (charged to the
Executing Party).
Query.............................. $0.50/query.
Corrective Transaction Charge...... $0.25/Cancel, Error, Inhibit,
Kill, or `No' portion of No/
Was transaction, paid by
reporting side; $0.25/Break,
Decline transaction, paid by
each party.
------------------------------------------------------------------------
Supplementary Material:---------------------
.01 through .02 No Change.
* * * * *
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, FINRA included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. FINRA has prepared summaries, set forth in sections A,
B, and C below, of the most significant aspects of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
Background
The FINRA/Nasdaq Trade Reporting Facility (``TRF'') is a facility
of FINRA that is operated by Nasdaq, Inc. (``NASDAQ'') \5\ and utilizes
Automated Confirmation Transaction (``ACT'') Service technology. In
connection with the establishment of the FINRA/Nasdaq TRF, FINRA and
NASDAQ entered into a limited liability company agreement (the ``LLC
Agreement''). Under the LLC Agreement, FINRA, the ``SRO Member,'' has
sole regulatory responsibility for the FINRA/Nasdaq TRF. NASDAQ, the
``Business Member,'' is primarily responsible for the management of the
FINRA/Nasdaq TRF's business affairs, including establishing pricing for
use of the FINRA/Nasdaq TRF, to the extent those affairs are not
inconsistent with the regulatory and oversight functions of FINRA.
Additionally, the Business Member is obligated to pay the cost of
regulation and is entitled to the profits and losses, if any, derived
from the operation of the FINRA/Nasdaq TRF.
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\5\ As approved by its board of directors and the Commission,
effective September 8, 2015, NASDAQ changed its legal name from The
NASDAQ OMX Group, Inc. to Nasdaq, Inc. See Nasdaq, Inc. Form 8-K
Current Report (filed September 8, 2015) (available at www.sec.gov/Archives/edgar/data/1120193/000119312515314459/d48431d8k.htm).
FINRA and NASDAQ are in the process of amending the LLC
Agreement to reflect the name change, and FINRA will file a separate
proposed rule change to update the FINRA manual accordingly.
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Pursuant to the FINRA Rule 7600A Series, FINRA members that are
FINRA/Nasdaq TRF participants are charged fees and may qualify for fee
caps (Rule 7620A) and also may qualify for revenue sharing payments for
trade reporting to the FINRA/Nasdaq TRF (Rule 7610A). These rules are
administered by NASDAQ, in its capacity as the Business Member and
operator of the FINRA/Nasdaq TRF on behalf of FINRA,\6\ and NASDAQ
collects all fees on behalf of the FINRA/Nasdaq TRF.
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\6\ FINRA's oversight of this function performed by the Business
Member is conducted through a recurring assessment and review of TRF
operations by an outside independent audit firm.
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Pursuant to Rule 7620A, FINRA members are charged fees for ``Non-
Comparison/Accept (Non-Match/Compare)'' trades. Such trades are defined
as transactions that are not subject to the ACT Comparison process, and
they may be submitted as media or non-media,\7\ clearing or non-
clearing, AGU (automated give-up), QSR (Qualified Service
Representative), one-sided or internalized crosses.\8\ Under the fee
schedule there are four categories of fees, each of which is applicable
to transactions of the three Tapes: \9\ (1) Media/Executing Party; (2)
Non-Media/Executing Party; (3) Media/Contra; (4) Non-Media/Contra.\10\
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\7\ Media eligible trade reports are those that are submitted to
the FINRA/Nasdaq TRF for public dissemination by the Securities
Information Processors. By contrast, non-media trade reports are not
submitted to the FINRA/Nasdaq TRF for public dissemination, but are
submitted for regulatory and/or clearance and settlement purposes.
\8\ See FINRA Rule 7620A.01.
\9\ Market data is transmitted to three tapes based on the
listing venue of the security: New York Stock Exchange securities
(``Tape A''), American Stock Exchange and regional exchange
securities (``Tape B''), and Nasdaq Stock Market securities (``Tape
C''). Tape A and Tape B are generally referred to as the
Consolidated Tape.
\10\ Pursuant to the rule's Supplementary Material, the
``Executing Party (EP)'' is defined as the member with the trade
reporting obligation under FINRA rules, and the ``Contra (CP)'' is
defined as the member on the contra side of a trade report. These
positions formerly were identified in FINRA rules as the ``Market
Maker'' or ``MM'' side and the ``Order Entry'' or ``OE'' side,
respectively. See FINRA Rule 7620A.01.
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FINRA recently filed a proposed rule change \11\ that would allow
FINRA
[[Page 11339]]
members that are a Contra Party to qualify for a monthly fee cap of
$5,000 per Tape applied to trades in each fee category. Eligibility for
the Media/Contra fee cap is based on a FINRA member's trade reporting
of Media/Contra trades to the TRF and its participation on an
alternative trading system registered pursuant to Regulation ATS \12\
(an ``ATS'') as a market maker. Specifically, the FINRA member must
make markets on an ATS by maintaining a two-sided quote. The member
also must complete and provide a form to NASDAQ, in which the member
attests that (1) it maintains two-sided quotes for each security that
the member maintains interest in within each ATS and displays a
quotation size of at least one normal unit of trading (specific for
each security), and (2) it will continue to meet the ATS-based
requirements to be eligible for the fee cap. In addition, to qualify a
FINRA member must have its Media/Contra trades equal, or exceed, 55% of
its total FINRA/Nasdaq TRF volume. Lastly, the FINRA member must be
contra to a minimum of 1 million trades in Tape A, 500,000 trades in
Tape C, and 250,000 trades in Tape B to qualify for the fee cap in the
securities of the Tapes, respectively. NASDAQ, as the Business Member,
set the required level of trades reported for each of the Tapes based
on the differing levels of overall trades reported to the FINRA/Nasdaq
TRF as Contra Party.
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\11\ See Securities Exchange Act Release No. 76556 (December 4,
2015), 80 FR 76724 (December 10, 2015) (Notice of Filing and
Immediate Effectiveness of File No. SR-FINRA-2015-053).
\12\ 17 CFR 242.300-303.
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Proposed Adjustment
In proposing the Media/Contra fee cap, NASDAQ, as the Business
Member, advised FINRA that following implementation, it would monitor
the fees paid by Contra Parties and would consider whether any
adjustments to the fee cap or qualifying thresholds would be
appropriate. Since adopting the Media/Contra fee cap, no FINRA member
has achieved the level of Media/Contra trades to equal, or exceed, 55%
of its total FINRA/Nasdaq TRF volume. NASDAQ, as the Business Member,
designed the Media/Contra fee cap to make pricing more competitive to
attract and retain participants on the FINRA/Nasdaq TRF, and because no
FINRA member currently qualifies for the Media/Contra fee cap, NASDAQ
has determined to reduce the level of Media/Contra trades required to
qualify for the fee cap. Specifically, NASDAQ has determined to reduce
the level from 55% of the member's total FINRA/Nasdaq TRF volume to
35%. NASDAQ believes that reducing the level of Media/Contra trades
required to qualify will make the fee cap more attainable for FINRA
members.
Accordingly, FINRA, as the SRO Member, is proposing to amend Rule
7620A to reflect the proposed reduction in the level of Media/Contra
trades required to qualify for the Media/Contra fee cap. FINRA also is
proposing a technical amendment to clarify that the reference to a
member's ``total TRF volume'' means its total FINRA/Nasdaq TRF volume.
FINRA has filed the proposed rule change for immediate
effectiveness. The effective date will be the date of filing, February
23, 2016.
2. Statutory Basis
FINRA believes that the proposed rule change is consistent with the
provisions of Section 15A(b)(5) of the Act,\13\ 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. NASDAQ, as the Business Member, proposed the $5,000 per tape
Media/Contra fee cap for FINRA members that could not qualify for a fee
cap under the then-current rules. However, as noted, NASDAQ has
determined that the level of Media/Contra trades required to qualify
for [sic] fee cap is set too high, resulting in no FINRA member
qualifying for the fee cap since its adoption. By reducing this level
from 55% to 35% of total FINRA/Nasdaq TRF trades, NASDAQ has advised
FINRA that it believes that more FINRA members will be able to qualify
for the Media/Contra fee cap and thus the proposed reduction is
reasonable. The proposed reduction in the level of Media/Contra trades
required to qualify for the Media/Contra fee cap is equitably allocated
because it will apply to all FINRA members that use the FINRA/Nasdaq
TRF. Any FINRA member that meets the reduced level of Media/Contra
trades together with the other requirements under the Rule will qualify
for the capped fee.
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\13\ 15 U.S.C. 78o-3(b)(5).
---------------------------------------------------------------------------
As discussed in SR-FINRA-2015-053, NASDAQ, as the Business Member,
advised FINRA that the Media/Contra fee cap is not unfairly
discriminatory because the fee cap would most benefit those Contra
Parties that have significant volume on the FINRA/Nasdaq TRF and thus
may pay larger trade reporting fees than firms with comparable
``Executing Party'' volume that qualify for a fee cap. NASDAQ
anticipates that the proposed rule change will make the fee cap more
attainable for these Contra Parties. In addition, FINRA members that
are not subject to capped fees can choose to report trades to a
competing TRF (or, in this instance, a market maker may elect to route
its orders to an ATS that reports to a competing TRF).
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. The proposed rule change would
not impose new fees or fee rate increases on any member firm, and will
reduce the fees paid by some members to the extent they qualify under
the new, lower criteria. NASDAQ, as the Business Member, has advised
FINRA that the estimated fee savings to member firms that qualify for
the Media/Contra fee would be in the range of $0-$20,000 per month per
firm based on overall market and participant activity and number of
trading days in the month. NASDAQ has further advised FINRA that, based
on current trading practices, NASDAQ estimates that approximately three
to eight member firms may be able to take advantage of the fee
reductions associated with the Media/Contra fee cap with the proposed
reduction in the level of trades required to qualify.
As discussed in SR-FINRA-2015-053, FINRA members have trade
reporting alternatives other than the FINRA/Nasdaq TRF, so to the
extent the proposed rule change is viewed as burdensome among market
participants, those participants may choose not to avail themselves of
the fee cap and maintain the status quo with respect to fees or adjust
their trading practices. This would permit members to mitigate any
direct or indirect costs imposed by this proposal. Moreover, by making
the fee cap more attainable, the proposed rule change may promote
competition among FINRA members by reducing the fee burden on certain
FINRA members who are unable to qualify for the existing fee cap, and
FINRA members can choose their trading partners, which determination
may in part be based on the fees of the particular TRF applicable to
Contra Parties. Lastly, FINRA does not believe that the proposed rule
change burdens competition among reporting facilities because each is
free to adjust their [sic] respective fees to remain competitive with
the FINRA/Nasdaq TRF, to the extent the proposed rule change makes the
FINRA/Nasdaq
[[Page 11340]]
TRF a more attractive facility on which to report trades.
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
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A) of the Act \14\ and paragraph (f)(2) of Rule 19b-4
thereunder.\15\ 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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\14\ 15 U.S.C. 78s(b)(3)(A).
\15\ 17 CFR 240.19b-4(f)(2).
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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-2016-009 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-2016-009. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549 on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of such filing also will be available
for inspection and copying at the principal office of FINRA. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-FINRA-2016-009, and should
be submitted on or before March 24, 2016.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-04635 Filed 3-2-16; 8:45 am]
BILLING CODE 8011-01-P