Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend FINRA Rule 6191 To Modify the Web Site Data Publication Requirements Relating to the Regulation NMS Plan To Implement a Tick Size Pilot Program, 87603-87606 [2016-29045]

Download as PDF Federal Register / Vol. 81, No. 233 / Monday, December 5, 2016 / Notices Date vacated Agency name Organization name Position title Staff Assistant ................................ DS160058 06/26/2016 Department of Transportation ........ Office of International Information Programs. Office of the Secretary ................... Deputy White House Liaison ......... White House Liaison ...................... Senior Policy Advisor ..................... DT150081 DT150054 DY140047 06/11/2016 06/11/2016 06/25/2016 Department of the Treasury ........... Office of the Under Secretary for Terrorism and Financial Intelligence. Authority: 5 U.S.C. 3301 and 3302; E.O. 10577, 3 CFR, 1954–1958 Comp., p. 218. 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 Pavlik-Simon, 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. U.S. Office of Personnel Management. Beth F. Cobert, Acting Director. [FR Doc. 2016–29130 Filed 12–2–16; 8:45 am] BILLING CODE 6325–39–P SECURITIES AND EXCHANGE COMMISSION Dated: November 23, 2016. Robert W. Errett, Deputy Secretary. Submission for OMB Review; Comment Request [FR Doc. 2016–29087 Filed 12–2–16; 8:45 am] Upon Written Request Copies Available From: Securities and Exchange Commission, Office of FOIA Services, 100 F Street NE., Washington, DC 20549–2736 sradovich on DSK3GMQ082PROD with NOTICES Extension: Regulation S, SEC File No. 270–315, OMB Control No. 3235–0357 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. Regulation S (17 CFR 230.901 through 230.905) sets forth rules governing offers and sales of securities made outside the United States without registration under the Securities Act of 1933 (15 U.S.C. 77a et seq.). Regulation S clarifies the extent to which Section 5 of the Securities Act applies to offers and sales of securities outside of the United States. Regulation S is assigned one burden hour for administrative convenience. 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 VerDate Sep<11>2014 19:12 Dec 02, 2016 Jkt 241001 BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–79424; File No. SR–FINRA– 2016–042] Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend FINRA Rule 6191 To Modify the Web Site Data Publication Requirements Relating to the Regulation NMS Plan To Implement a Tick Size Pilot Program November 29, 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 November 15, 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 and II below, which Items have been prepared by FINRA. FINRA has designated the proposed rule change as constituting a ‘‘non-controversial’’ rule change under paragraph (f)(6) of Rule 19b–4 under the Act,3 which renders the proposal effective upon receipt of this filing by the Commission. The Commission is publishing this notice to 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 17 CFR 240.19b–4(f)(6). 2 17 PO 00000 Frm 00074 Fmt 4703 Sfmt 4703 Request No. 87603 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 amend FINRA Rule 6191 to modify the Web site data publication requirements relating to the Regulation NMS Plan to Implement a Tick Size Pilot Program (‘‘Plan’’). The text of the proposed rule change is available on FINRA’s Web site at http://www.finra.org, at the principal office of FINRA and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, FINRA included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. FINRA has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose On August 25, 2014, FINRA, and several other self-regulatory organizations (the ‘‘Participants’’) filed with the Commission, pursuant to Section 11A of the Act 4 and Rule 608 of Regulation NMS thereunder,5 the Plan to Implement a Tick Size Pilot Program.6 The Participants filed the Plan to comply with an order issued by the Commission on June 24, 2014.7 The Plan was published for comment in the Federal Register on November 7, 2014, 4 15 U.S.C. 78k–1. CFR 242.608. 6 See Letter from Brendon J. Weiss, Vice President, Intercontinental Exchange, Inc., to Secretary, Commission, dated August 25, 2014. 7 See Securities Exchange Act Release No 72460 (June 24, 2014), 79 FR 36840 (June 30, 2014). 5 17 E:\FR\FM\05DEN1.SGM 05DEN1 87604 Federal Register / Vol. 81, No. 233 / Monday, December 5, 2016 / Notices sradovich on DSK3GMQ082PROD with NOTICES and approved by the Commission, as modified, on May 6, 2015.8 The Commission approved the Pilot on a two-year basis, with implementation to begin no later than May 6, 2016.9 On November 6, 2015, the SEC exempted the Participants from implementing the Pilot until October 3, 2016.10 Under the revised Pilot implementation date, the Pre-Pilot data collection period commenced on April 4, 2016. On September 13, 2016, the SEC exempted the Participants from the requirement to fully implement the Pilot on October 3, 2016, to permit the Participants to implement the pilot on a phased-in basis, as described in the Participants’ exemptive request.11 The Plan is designed to allow the Commission, market participants, and the public to study and assess the impact of increment conventions on the liquidity and trading of the common stock of small-capitalization companies. Each Participant is required to comply, and to enforce compliance by its member organizations, as applicable, with the provisions of the Plan. FINRA adopted rule amendments to implement the requirements of the Plan, including relating to the Plan’s data collection requirements and requirements relating to Web site data publication.12 Specifically, with respect to the Web site data publication requirements pursuant to Section VII and Appendices B and C to the Plan, FINRA Rule 6191(b)(2)(B) provides, among other things, that FINRA shall make the data required by Items I and II of Appendix B to the Plan, and collected pursuant to paragraph (b)(2)(A) of Rule 6191, publicly available on the FINRA Web site on a 8 See Securities Exchange Act Release No. 74892 (May 6, 2015), 80 FR 27513 (May 13, 2015) (‘‘Approval Order’’). 9 See Approval Order at 27533 and 27545. 10 See Securities Exchange Act Release No. 76382 (November 6, 2015), 80 FR 70284 (November 13, 2015). 11 See Letter from David S. Shillman, Associate Director, Division of Trading and Markets, Commission, to Eric Swanson, EVP, General Counsel and Secretary, Bats Global Markets, Inc., dated September 13, 2016; see also Letter from Eric Swanson, EVP, General Counsel and Secretary, Bats Global Markets, Inc., to Brent J. Fields, Secretary, Commission, dated September 9, 2016. 12 See, e.g., Securities Exchange Act Release No. 76484 (November 19, 2015), 80 FR 73858 (November 25, 2015) (Notice of Filing of File No. SR–FINRA–2015–048); see also Securities Exchange Act Release No. 77164 (February 17, 2016), 81 FR 9043 (February 23, 2016) (Notice of Filing of Partial Amendment No. 1 and Order Granting Accelerated Approval of File No. SR–FINRA–2015–048) (‘‘Accelerated Approval Order’’); see also Letter from David S. Shillman, Associate Director, Division of Trading and Markets, Commission, to Marcia E. Asquith, Senior Vice President and Corporate Secretary, FINRA, dated February 17, 2016. VerDate Sep<11>2014 19:12 Dec 02, 2016 Jkt 241001 monthly basis at no charge and shall not identify the Trading Center that generated the data. FINRA Rule 6191(b)(3)(C), provides, among other things, that FINRA shall make the data required by Item IV of Appendix B to the Plan, and collected pursuant to paragraph (b)(3)(A) of Rule 6191, publicly available on the FINRA Web site on a monthly basis at no charge and shall not identify the Trading Center that generated the data. FINRA Rule 6191(b)(4)(B) provides, among other things, that FINRA shall make aggregated data required by Appendix C to the Plan, and collected pursuant to paragraph (b)(4)(A) of Rule 6191, publicly available on the FINRA Web site on a monthly basis at no charge and shall not identify the Market Makers that generated the data or the individual securities. FINRA Rule 6191.12 provides, among other things, that the requirement that FINRA make certain data publicly available on the FINRA Web site pursuant to Appendix B and C to the Plan shall commence at the beginning of the Pilot Period. FINRA is proposing amendments to Rule 6191(b)(2)(B) (regarding Appendix B.I and B.II data), Rule 6191(b)(3)(C) (regarding Appendix B.IV data), and Rule 6191(b)(4)(B) (regarding Appendix C data), to provide that data required to be made available on FINRA’s Web site be published within 120 calendar days following month end. In addition, the proposed amendments to Rule 6191.12 would provide that, notwithstanding the provisions of paragraphs (b)(2)(B), (b)(3)(C) and (b)(4)(B), FINRA shall make data for the Pre-Pilot period publicly available on the FINRA Web site pursuant to Appendix B and C to the Plan by February 28, 2017.13 The proposed rule change also will provide that, with respect to Appendix C data, FINRA will aggregate and publish, categorized by Control Group and each Test Group: (1) Market Maker profitability statistics for Market Makers for which FINRA is the designated examining authority (‘‘DEA’’), (2) Market Maker profitability statistics collected from other Participants that are DEAs, and (3) Market Maker profitability statistics for Market Makers whose DEA is not a Participant.14 13 With respect to data for the Pilot Period, the requirement that FINRA make data publicly available on the FINRA Web site pursuant to Appendix B and C to the Plan shall continue to commence at the beginning of the Pilot Period. Thus, the first Web site publication date for Pilot Period data (covering October 2016) would be published on the FINRA Web site by February 28, 2017, which is 120 days following the end of October 2016. 14 FINRA understands that some Market Makers may utilize a DEA that is not a Participant to the PO 00000 Frm 00075 Fmt 4703 Sfmt 4703 FINRA will make this data publicly available on the FINRA Web site at no charge and will not identify the Market Makers that generated the data or the individual securities. The purpose of delaying the publication of the Web site data is to address confidentiality concerns by providing for the passage of additional time between the market information reflected in the data and the public availability of such information.15 Likewise, the publication by FINRA of Market Maker profitability data on the FINRA Web site, including Market Makers for which FINRA is not the DEA, is intended to address confidentiality concerns with respect to the Appendix C data required to be made publicly available by the Participants. Although the Participants that are DEAs also would not have identified the Market Makers when publishing required Appendix C data, some of the Participants are DEAs for a very small number of Market Makers, and the published data from these DEAs raised concerns regarding the potential for identifying the Market Makers that correspond to those statistics.16 FINRA has filed the proposed rule change for immediate effectiveness and has requested that the Commission waive the 30-day operative delay. If the Commission waives the 30-day operative delay, the operative date of the proposed rule change will be the date of filing. 2. Statutory Basis FINRA believes that the proposed rule change is consistent with the provisions of Section 15A(b)(6) of the Act,17 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)(9) of Plan and that their DEA would not be subject to the Plan’s data collection requirements. Prior to this proposal, the Participants implemented rules that required members that were Market Makers whose DEA is not a Participant to the Plan to transmit transaction data for Market Maker profitability calculations to FINRA. See, e.g., Securities Exchange Act Release No. 77456 (March 28, 2016), 81 FR 18925 (April 1, 2016) (Notice of Filing of File No. SR–NASDAQ–2016–043). 15 See, e.g., Accelerated Approval Order at 9049. 16 FINRA notes that FINRA is the DEA for the vast majority of Market Makers, and, therefore, FINRA already would have been responsible for publishing aggregated data covering the profitability of the vast majority of Market Makers. In fact, FINRA is the DEA for all but fifteen of 115 Market Makers; thus, the majority of the publicly available Appendix C data would already have been aggregated and provided on the FINRA Web site. 17 15 U.S.C. 78o–3(b)(6). E:\FR\FM\05DEN1.SGM 05DEN1 Federal Register / Vol. 81, No. 233 / Monday, December 5, 2016 / Notices sradovich on DSK3GMQ082PROD with NOTICES the Act,18 which requires that FINRA rules not impose any burden on competition that is not necessary or appropriate. FINRA believes that this proposal is consistent with the Act because it is designed to assist the Participants in meeting their regulatory obligations pursuant to the Plan and is in furtherance of the objectives of the Plan, as identified by the SEC. FINRA believes that the instant proposal is consistent with the Act in that it is designed to address confidentiality concerns by permitting FINRA to delay Web site publication to provide for passage of additional time between the market information reflected in the data and the public availability of such information. In addition, in approving the Plan, the Commission recognized that requiring the publication of Market Maker data may raise confidentiality concerns, especially for Pilot Securities that may have a relatively small number of designated Market Makers.19 For this reason, the Commission modified the Plan so that the data that would be made publicly available would not contain profitability measures for each security, but would be aggregated by the Control Group and each Test Group. Thus, FINRA believes that the instant proposal is consistent with the Act in that it is designed to further address confidentiality concerns by permitting FINRA to aggregate and publish Market Maker profitability data for all Participant DEAs, including Market Makers for which FINRA is not the DEA. 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 notes that the proposed rule change implements the provisions of the Plan, and is designed to assist the Participants in meeting their regulatory obligations pursuant to the Plan. The proposal is intended to address confidentiality concerns that may adversely impact competition, especially for Pilot Securities that may have a relatively small number of designated Market Makers, by permitting FINRA to (1) delay Web site publication to provide for passage of additional time between the market information reflected in the data and the public availability of such information; 18 15 U.S.C. 78o–3(b)(9). Approval Order at 27543–27544. 19 See VerDate Sep<11>2014 19:12 Dec 02, 2016 Jkt 241001 and (2) aggregate and publish Market Maker profitability data for all Participant DEAs, including Market Makers for which FINRA is not the DEA. FINRA notes that the proposed change will not affect the data reporting requirements for members for which FINRA is the DEA.20 The proposal also does not alter the information required to be submitted to the SEC. 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.21 III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A) 22 of the Act and Rule 19b– 4(f)(6) thereunder.23 A proposed rule change filed under Rule 19b–4(f)(6) 24 normally does not become operative prior to 30 days after the date of the filing. However, pursuant to Rule 19b–4(f)(6)(iii),25 the Commission may designate a shorter time if such action is consistent with the protection of investors and the public interest. FINRA has filed the proposed rule change for immediate effectiveness and has requested that the Commission waive the requirement that the proposed rule change not become operative for 30 days after the date of the filing so that it may become operative immediately. FINRA notes that the proposed rule change implements the provisions of the Plan, and is designed to assist the Participants in meeting their regulatory obligations pursuant to the Plan. The proposal is intended to address confidentiality concerns by permitting FINRA to (1) delay Web site publication 20 See supra note 16. 21 Financial Information Forum (FIF) submitted a letter to the staff of the Commission, copying FINRA, raising concerns regarding the publication of certain Appendix B statistics on a disaggregated basis using a unique masked market participant identifier. See Letter from Mary Lou Von Kaenel, Managing Director, FIF, to David S. Shillman, Associate Director, Division of Trading and Markets, Commission, dated August 16, 2016, available at https://www.fif.com/comment-letters. 22 15 U.S.C. 78s(b)(3)(A). 23 17 CFR 240.19b–4(f)(6). 24 17 CFR 240.19b–4(f)(6). 25 17 CFR 240.19b–4(f)(6)(iii). PO 00000 Frm 00076 Fmt 4703 Sfmt 4703 87605 to provide for passage of additional time between the market information reflected in the data and the public availability of such information; and (2) aggregate and publish Market Maker profitability data for all Participant DEAs, including Market Makers for which FINRA is not the DEA. FINRA notes that the proposed change will not affect the data reporting requirements for members for which FINRA is the DEA.26 The proposal also does not alter the information required to be submitted to the SEC. The Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest because it will allow FINRA to implement these proposed changes that are intended to address confidentiality concerns. The Commission notes that the Pre-Pilot data is currently required to be published on November 30, 2016. Therefore, the Commission hereby waives the 30-day operative delay and designates the proposed rule change to be operative as of the date of this notice.27 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.28 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 (http://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– FINRA–2016–042 on the subject line. 26 See supra note 14. purposes only of waiving the operative delay for this proposal, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 28 15 U.S.C. 78s(b)(3)(C). 27 For E:\FR\FM\05DEN1.SGM 05DEN1 87606 Federal Register / Vol. 81, No. 233 / Monday, December 5, 2016 / Notices 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–2016–042. 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 (http://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– 2016–042, and should be submitted on or before December 27, 2016. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.29 Robert W. Errett, Deputy Secretary. [FR Doc. 2016–29045 Filed 12–2–16; 8:45 am] sradovich on DSK3GMQ082PROD with NOTICES BILLING CODE 8011–01–P 29 17 CFR 200.30–3(a)(12). VerDate Sep<11>2014 19:12 Dec 02, 2016 Jkt 241001 SECURITIES AND EXCHANGE COMMISSION [Release No. IA–4576; November 29, 2016; FILE NO.: 801–99358] In the Matter of Ajenifuja Investments, LLC, 5226 Klingle Street NW., Washington, DC 20016; Investment Advisers Act of 1940; Notice of Intention to Cancel Registration Pursuant to Section 203(H) of the Investment Advisers Act of 1940 Notice is given that the Securities and Exchange Commission (the ‘‘Commission’’) intends to issue an order, pursuant to Section 203(h) of the Investment Advisers Act of 1940 (the ‘‘Act’’), cancelling the registration of Ajenifuja Investments, LLC, hereinafter referred to as the registrant. Section 203(h) provides, in pertinent part, that if the Commission finds that any person registered under Section 203, or who has pending an application for registration filed under that section, is no longer in existence, is not engaged in business as an investment adviser, or is prohibited from registering as an investment adviser under section 203A, the Commission shall by order, cancel the registration of such person. The registrant indicated on its initial and its most recent Form ADV filings that it is relying on rule 203A–2(e) to register with the Commission, which provides an exemption from the prohibition on registration for an adviser that provides investment advice to all of its clients exclusively through the adviser’s interactive Web site, except that the adviser may advise fewer than 15 clients through other means during the preceding 12 months.1 The Commission believes, based on the facts it has, that the registrant did not at the time of the Form ADV filings and thereafter, advise clients through an interactive Web site as defined under the rule 2, and that it is therefore 1 Section 203A of the Act generally prohibits an investment adviser from registering with the Commission unless it meets certain requirements. Rule 203A–2 provides exemptions from the prohibition on Commission registration in section 203A of the Act. Rule 203A–2(e) exempts from the prohibition on Commission registration certain investment advisers that provide advisory services through the Internet, as described above. See Exemption for Certain Investment Advisers Operating Through the Internet, Investment Advisers Act Release No. 2091 (December 12, 2002), available at https://www.sec.gov/rules/final/ia2091.htm (‘‘Internet Adviser Exemption Adopting Release’’). Effective September 19, 2011, rule 203A– 2(f) was renumbered as rule 203A–2(e). See Rules Implementing Amendments to the Investment Advisers Act of 1940, Investment Advisers Act Release No. 3221 (June 22, 2011), available at http://www.sec.gov/rules/final/2011/ia-3221.pdf. 2 Rule 203A–2(e) defines ‘‘interactive Web site’’ as a Web site in which computer software-based PO 00000 Frm 00077 Fmt 4703 Sfmt 4703 prohibited from registering as an investment adviser under section 203A of the Act. Accordingly, the Commission believes that reasonable grounds exist for a finding that this registrant is not eligible to be registered with the Commission as an investment adviser and that the registration should be cancelled pursuant to section 203(h) of the Act. Any interested person may, by December 27, 2016, at 5:30 p.m., submit to the Commission in writing a request for a hearing on the cancellation, accompanied by a statement as to the nature of his or her interest, the reason for such request, and the issues, if any, of fact or law proposed to be controverted, and he or she may request that he or she be notified if the Commission should order a hearing thereon. Any such communication should be addressed: Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549. At any time after December 27, 2016, the Commission may issue an order cancelling the registration, upon the basis of the information stated above, unless an order for a hearing on the cancellation shall be issued upon request or upon the Commission’s own motion. Persons who requested a hearing, or who requested to be advised as to whether a hearing is ordered, will receive any notices and orders issued in this matter, including the date of the hearing (if ordered) and any postponements thereof. Any adviser whose registration is cancelled under delegated authority may appeal that decision directly to the Commission in accordance with rules 430 and 431 of the Commission’s rules of practice (17 CFR 201.430 and 431). For further information contact: Emily Rowland, Attorney-Adviser at 202–551– 6787 (Office of Investment Adviser Regulation). models or applications provide investment advice to clients based on personal information provided by each client through the Web site. An adviser relying on the exemption may not use its advisory personnel to elaborate or expand upon the investment advice provided by its interactive Web site, or otherwise provide investment advice to its Internet clients, except as permitted by the rule’s de minimis exception. Such exception permits an adviser relying on the rule to advise clients through means other than its interactive Web site, so long as the adviser had fewer than 15 of these nonInternet clients during the preceding 12 months. See Internet Adviser Exemption Adopting Release, id. E:\FR\FM\05DEN1.SGM 05DEN1

Agencies

[Federal Register Volume 81, Number 233 (Monday, December 5, 2016)]
[Notices]
[Pages 87603-87606]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-29045]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79424; File No. SR-FINRA-2016-042]


Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change To Amend FINRA Rule 6191 To Modify the Web Site 
Data Publication Requirements Relating to the Regulation NMS Plan To 
Implement a Tick Size Pilot Program

November 29, 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 November 15, 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 and 
II below, which Items have been prepared by FINRA. FINRA has designated 
the proposed rule change as constituting a ``non-controversial'' rule 
change under paragraph (f)(6) of Rule 19b-4 under the Act,\3\ which 
renders the proposal effective upon receipt of this filing by the 
Commission. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

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

    FINRA is proposing to amend FINRA Rule 6191 to modify the Web site 
data publication requirements relating to the Regulation NMS Plan to 
Implement a Tick Size Pilot Program (``Plan'').
    The text of the proposed rule change is available on FINRA's Web 
site at http://www.finra.org, at the principal office of FINRA and at 
the Commission's Public Reference Room.

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

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

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

1. Purpose
    On August 25, 2014, FINRA, and several other self-regulatory 
organizations (the ``Participants'') filed with the Commission, 
pursuant to Section 11A of the Act \4\ and Rule 608 of Regulation NMS 
thereunder,\5\ the Plan to Implement a Tick Size Pilot Program.\6\ The 
Participants filed the Plan to comply with an order issued by the 
Commission on June 24, 2014.\7\ The Plan was published for comment in 
the Federal Register on November 7, 2014,

[[Page 87604]]

and approved by the Commission, as modified, on May 6, 2015.\8\ The 
Commission approved the Pilot on a two-year basis, with implementation 
to begin no later than May 6, 2016.\9\ On November 6, 2015, the SEC 
exempted the Participants from implementing the Pilot until October 3, 
2016.\10\ Under the revised Pilot implementation date, the Pre-Pilot 
data collection period commenced on April 4, 2016. On September 13, 
2016, the SEC exempted the Participants from the requirement to fully 
implement the Pilot on October 3, 2016, to permit the Participants to 
implement the pilot on a phased-in basis, as described in the 
Participants' exemptive request.\11\
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    \4\ 15 U.S.C. 78k-1.
    \5\ 17 CFR 242.608.
    \6\ See Letter from Brendon J. Weiss, Vice President, 
Intercontinental Exchange, Inc., to Secretary, Commission, dated 
August 25, 2014.
    \7\ See Securities Exchange Act Release No 72460 (June 24, 
2014), 79 FR 36840 (June 30, 2014).
    \8\ See Securities Exchange Act Release No. 74892 (May 6, 2015), 
80 FR 27513 (May 13, 2015) (``Approval Order'').
    \9\ See Approval Order at 27533 and 27545.
    \10\ See Securities Exchange Act Release No. 76382 (November 6, 
2015), 80 FR 70284 (November 13, 2015).
    \11\ See Letter from David S. Shillman, Associate Director, 
Division of Trading and Markets, Commission, to Eric Swanson, EVP, 
General Counsel and Secretary, Bats Global Markets, Inc., dated 
September 13, 2016; see also Letter from Eric Swanson, EVP, General 
Counsel and Secretary, Bats Global Markets, Inc., to Brent J. 
Fields, Secretary, Commission, dated September 9, 2016.
---------------------------------------------------------------------------

    The Plan is designed to allow the Commission, market participants, 
and the public to study and assess the impact of increment conventions 
on the liquidity and trading of the common stock of small-
capitalization companies. Each Participant is required to comply, and 
to enforce compliance by its member organizations, as applicable, with 
the provisions of the Plan.
    FINRA adopted rule amendments to implement the requirements of the 
Plan, including relating to the Plan's data collection requirements and 
requirements relating to Web site data publication.\12\ Specifically, 
with respect to the Web site data publication requirements pursuant to 
Section VII and Appendices B and C to the Plan, FINRA Rule 
6191(b)(2)(B) provides, among other things, that FINRA shall make the 
data required by Items I and II of Appendix B to the Plan, and 
collected pursuant to paragraph (b)(2)(A) of Rule 6191, publicly 
available on the FINRA Web site on a monthly basis at no charge and 
shall not identify the Trading Center that generated the data. FINRA 
Rule 6191(b)(3)(C), provides, among other things, that FINRA shall make 
the data required by Item IV of Appendix B to the Plan, and collected 
pursuant to paragraph (b)(3)(A) of Rule 6191, publicly available on the 
FINRA Web site on a monthly basis at no charge and shall not identify 
the Trading Center that generated the data. FINRA Rule 6191(b)(4)(B) 
provides, among other things, that FINRA shall make aggregated data 
required by Appendix C to the Plan, and collected pursuant to paragraph 
(b)(4)(A) of Rule 6191, publicly available on the FINRA Web site on a 
monthly basis at no charge and shall not identify the Market Makers 
that generated the data or the individual securities. FINRA Rule 
6191.12 provides, among other things, that the requirement that FINRA 
make certain data publicly available on the FINRA Web site pursuant to 
Appendix B and C to the Plan shall commence at the beginning of the 
Pilot Period.
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    \12\ See, e.g., Securities Exchange Act Release No. 76484 
(November 19, 2015), 80 FR 73858 (November 25, 2015) (Notice of 
Filing of File No. SR-FINRA-2015-048); see also Securities Exchange 
Act Release No. 77164 (February 17, 2016), 81 FR 9043 (February 23, 
2016) (Notice of Filing of Partial Amendment No. 1 and Order 
Granting Accelerated Approval of File No. SR-FINRA-2015-048) 
(``Accelerated Approval Order''); see also Letter from David S. 
Shillman, Associate Director, Division of Trading and Markets, 
Commission, to Marcia E. Asquith, Senior Vice President and 
Corporate Secretary, FINRA, dated February 17, 2016.
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    FINRA is proposing amendments to Rule 6191(b)(2)(B) (regarding 
Appendix B.I and B.II data), Rule 6191(b)(3)(C) (regarding Appendix 
B.IV data), and Rule 6191(b)(4)(B) (regarding Appendix C data), to 
provide that data required to be made available on FINRA's Web site be 
published within 120 calendar days following month end. In addition, 
the proposed amendments to Rule 6191.12 would provide that, 
notwithstanding the provisions of paragraphs (b)(2)(B), (b)(3)(C) and 
(b)(4)(B), FINRA shall make data for the Pre-Pilot period publicly 
available on the FINRA Web site pursuant to Appendix B and C to the 
Plan by February 28, 2017.\13\
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    \13\ With respect to data for the Pilot Period, the requirement 
that FINRA make data publicly available on the FINRA Web site 
pursuant to Appendix B and C to the Plan shall continue to commence 
at the beginning of the Pilot Period. Thus, the first Web site 
publication date for Pilot Period data (covering October 2016) would 
be published on the FINRA Web site by February 28, 2017, which is 
120 days following the end of October 2016.
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    The proposed rule change also will provide that, with respect to 
Appendix C data, FINRA will aggregate and publish, categorized by 
Control Group and each Test Group: (1) Market Maker profitability 
statistics for Market Makers for which FINRA is the designated 
examining authority (``DEA''), (2) Market Maker profitability 
statistics collected from other Participants that are DEAs, and (3) 
Market Maker profitability statistics for Market Makers whose DEA is 
not a Participant.\14\ FINRA will make this data publicly available on 
the FINRA Web site at no charge and will not identify the Market Makers 
that generated the data or the individual securities.
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    \14\ FINRA understands that some Market Makers may utilize a DEA 
that is not a Participant to the Plan and that their DEA would not 
be subject to the Plan's data collection requirements. Prior to this 
proposal, the Participants implemented rules that required members 
that were Market Makers whose DEA is not a Participant to the Plan 
to transmit transaction data for Market Maker profitability 
calculations to FINRA. See, e.g., Securities Exchange Act Release 
No. 77456 (March 28, 2016), 81 FR 18925 (April 1, 2016) (Notice of 
Filing of File No. SR-NASDAQ-2016-043).
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    The purpose of delaying the publication of the Web site data is to 
address confidentiality concerns by providing for the passage of 
additional time between the market information reflected in the data 
and the public availability of such information.\15\ Likewise, the 
publication by FINRA of Market Maker profitability data on the FINRA 
Web site, including Market Makers for which FINRA is not the DEA, is 
intended to address confidentiality concerns with respect to the 
Appendix C data required to be made publicly available by the 
Participants. Although the Participants that are DEAs also would not 
have identified the Market Makers when publishing required Appendix C 
data, some of the Participants are DEAs for a very small number of 
Market Makers, and the published data from these DEAs raised concerns 
regarding the potential for identifying the Market Makers that 
correspond to those statistics.\16\
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    \15\ See, e.g., Accelerated Approval Order at 9049.
    \16\ FINRA notes that FINRA is the DEA for the vast majority of 
Market Makers, and, therefore, FINRA already would have been 
responsible for publishing aggregated data covering the 
profitability of the vast majority of Market Makers. In fact, FINRA 
is the DEA for all but fifteen of 115 Market Makers; thus, the 
majority of the publicly available Appendix C data would already 
have been aggregated and provided on the FINRA Web site.
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    FINRA has filed the proposed rule change for immediate 
effectiveness and has requested that the Commission waive the 30-day 
operative delay. If the Commission waives the 30-day operative delay, 
the operative date of the proposed rule change will be the date of 
filing.
2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the 
provisions of Section 15A(b)(6) of the Act,\17\ 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)(9) of

[[Page 87605]]

the Act,\18\ which requires that FINRA rules not impose any burden on 
competition that is not necessary or appropriate.
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    \17\ 15 U.S.C. 78o-3(b)(6).
    \18\ 15 U.S.C. 78o-3(b)(9).
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    FINRA believes that this proposal is consistent with the Act 
because it is designed to assist the Participants in meeting their 
regulatory obligations pursuant to the Plan and is in furtherance of 
the objectives of the Plan, as identified by the SEC. FINRA believes 
that the instant proposal is consistent with the Act in that it is 
designed to address confidentiality concerns by permitting FINRA to 
delay Web site publication to provide for passage of additional time 
between the market information reflected in the data and the public 
availability of such information.
    In addition, in approving the Plan, the Commission recognized that 
requiring the publication of Market Maker data may raise 
confidentiality concerns, especially for Pilot Securities that may have 
a relatively small number of designated Market Makers.\19\ For this 
reason, the Commission modified the Plan so that the data that would be 
made publicly available would not contain profitability measures for 
each security, but would be aggregated by the Control Group and each 
Test Group. Thus, FINRA believes that the instant proposal is 
consistent with the Act in that it is designed to further address 
confidentiality concerns by permitting FINRA to aggregate and publish 
Market Maker profitability data for all Participant DEAs, including 
Market Makers for which FINRA is not the DEA.
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    \19\ See Approval Order at 27543-27544.
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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 notes that the proposed 
rule change implements the provisions of the Plan, and is designed to 
assist the Participants in meeting their regulatory obligations 
pursuant to the Plan.
    The proposal is intended to address confidentiality concerns that 
may adversely impact competition, especially for Pilot Securities that 
may have a relatively small number of designated Market Makers, by 
permitting FINRA to (1) delay Web site publication to provide for 
passage of additional time between the market information reflected in 
the data and the public availability of such information; and (2) 
aggregate and publish Market Maker profitability data for all 
Participant DEAs, including Market Makers for which FINRA is not the 
DEA. FINRA notes that the proposed change will not affect the data 
reporting requirements for members for which FINRA is the DEA.\20\ The 
proposal also does not alter the information required to be submitted 
to the SEC.
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    \20\ See supra note 16.
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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.\21\
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    \21\ Financial Information Forum (FIF) submitted a letter to the 
staff of the Commission, copying FINRA, raising concerns regarding 
the publication of certain Appendix B statistics on a disaggregated 
basis using a unique masked market participant identifier. See 
Letter from Mary Lou Von Kaenel, Managing Director, FIF, to David S. 
Shillman, Associate Director, Division of Trading and Markets, 
Commission, dated August 16, 2016, available at https://www.fif.com/comment-letters.
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III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) \22\ of the Act and Rule 19b-
4(f)(6) thereunder.\23\
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    \22\ 15 U.S.C. 78s(b)(3)(A).
    \23\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) \24\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\25\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest. FINRA has filed the 
proposed rule change for immediate effectiveness and has requested that 
the Commission waive the requirement that the proposed rule change not 
become operative for 30 days after the date of the filing so that it 
may become operative immediately.
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    \24\ 17 CFR 240.19b-4(f)(6).
    \25\ 17 CFR 240.19b-4(f)(6)(iii).
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    FINRA notes that the proposed rule change implements the provisions 
of the Plan, and is designed to assist the Participants in meeting 
their regulatory obligations pursuant to the Plan. The proposal is 
intended to address confidentiality concerns by permitting FINRA to (1) 
delay Web site publication to provide for passage of additional time 
between the market information reflected in the data and the public 
availability of such information; and (2) aggregate and publish Market 
Maker profitability data for all Participant DEAs, including Market 
Makers for which FINRA is not the DEA. FINRA notes that the proposed 
change will not affect the data reporting requirements for members for 
which FINRA is the DEA.\26\ The proposal also does not alter the 
information required to be submitted to the SEC.
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    \26\ See supra note 14.
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    The Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest 
because it will allow FINRA to implement these proposed changes that 
are intended to address confidentiality concerns. The Commission notes 
that the Pre-Pilot data is currently required to be published on 
November 30, 2016. Therefore, the Commission hereby waives the 30-day 
operative delay and designates the proposed rule change to be operative 
as of the date of this notice.\27\
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    \27\ For purposes only of waiving the operative delay for this 
proposal, the Commission has considered the proposed rule's impact 
on efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act.\28\ 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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    \28\ 15 U.S.C. 78s(b)(3)(C).
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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 (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR- FINRA-2016-042 on the subject line.

[[Page 87606]]

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-2016-042. 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 (http://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-2016-042, and should 
be submitted on or before December 27, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\29\
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    \29\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-29045 Filed 12-2-16; 8:45 am]
 BILLING CODE 8011-01-P