Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend FINRA Rule 7620A To Eliminate the No/Was Corrective Transaction Charge, 26546-26548 [2017-11752]
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26546
Federal Register / Vol. 82, No. 108 / Wednesday, June 7, 2017 / Notices
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–80843; File No. SR–FINRA–
2017–016]
Self-Regulatory Organizations;
Financial Industry Regulatory
Authority, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend FINRA Rule
7620A To Eliminate the No/Was
Corrective Transaction Charge
June 1, 2017.
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 May 23,
2017, 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 amend FINRA
Rule 7620A (FINRA/Nasdaq Trade
Reporting Facility Reporting Fees) to
eliminate the ‘‘No/Was’’ corrective
transaction charge from the fee schedule
for members that use the FINRA/Nasdaq
Trade Reporting Facility (the ‘‘FINRA/
Nasdaq TRF’’) in light of the elimination
of No/Was functionality.
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 ........................................................................................
Maximum Monthly Charge if Capped.
($0.018) × (Number of Media/Executing Party Reports During the
Month).
($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
Monthly Charge ........................................................................................
Maximum Monthly Charge if Capped.
($0.018) × (Number of Non-Media/Executing Party Reports During the
Month).
($0.018) × 2500 for Tape A, B or C × (Number of Trading Days During
the Month).
Media/Contra
Monthly Charge ........................................................................................
Maximum Monthly Charge if Capped.
($0.013) × (Number of Media/Contra Reports During the Month) ...........
($0.013) × 2500 for Tape A, B or C × (Number of Trading Days During
the Month).
sradovich on DSK3GMQ082PROD with 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 35% of their total FINRA/Nasdaq Trade Reporting Facility volume.
1 15
2 17
U.S.C. 78s(b)(1).
CFR 240.19b–4.
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16:37 Jun 06, 2017
3 15
4 17
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U.S.C. 78s(b)(3)(A)(ii).
CFR 240.19b–4(f)(2).
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Federal Register / Vol. 82, No. 108 / Wednesday, June 7, 2017 / Notices
26547
Non-comparison/accept (Non-match/compare) charges:
• 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) × (Number of Non-Media/Contra Reports During the Month) ...
($0.013) × 2500 for Tape A, B or C × (Number of Trading Days 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 .........................................................
• • • 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
sradovich on DSK3GMQ082PROD with NOTICES
1. Purpose
The FINRA/Nasdaq TRF is a facility
of FINRA that is operated by Nasdaq,
Inc. and utilizes Automated
Confirmation Transaction (‘‘ACT’’)
Service technology. In connection with
the establishment of the FINRA/Nasdaq
TRF, FINRA and Nasdaq, Inc. entered
into a limited liability company
agreement (the ‘‘LLC Agreement’’).5
5 As approved by its board of directors and the
Commission, effective September 8, 2015, The
NASDAQ OMX Group, Inc. changed its legal name
to Nasdaq, Inc. See Nasdaq, Inc. Form 8–K Current
VerDate Sep<11>2014
22:02 Jun 06, 2017
Jkt 241001
$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, or Kill[, or ‘‘No’’ portion of No/Was transaction], paid by reporting side; $0.25/Break, Decline transaction, paid
by each party.
Under the LLC Agreement, FINRA, the
‘‘SRO Member,’’ has sole regulatory
responsibility for the FINRA/Nasdaq
TRF. Nasdaq, Inc., 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.
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,
Inc., in its capacity as the Business
Member and operator of the FINRA/
Nasdaq TRF on behalf of FINRA,6 and
Nasdaq, Inc. collects all fees on behalf
of the FINRA/Nasdaq TRF.
Report (filed September 8, 2015) (available at
www.sec.gov/Archives/edgar/data/1120193/
000119312515314459/d48431d8k.htm). FINRA and
Nasdaq, Inc. 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.
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 00125
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FINRA/Nasdaq TRF participants are
required to correct trade reports that are
inaccurate and may use one of several
FINRA/Nasdaq TRF functions
(collectively referred to herein as
‘‘Corrective Transactions’’) to do so,
including ‘‘No/Was.’’ Firms would use a
No/Was submission to correct the
details of a trade reported earlier in the
day. Under FINRA Rule 7620A, FINRA/
Nasdaq TRF participants are assessed a
fee of $0.25 for Corrective Transactions,
including No/Was submissions. FINRA
notes that the Corrective Transaction fee
is the same, irrespective of the
functionality used to correct the trade.
In addition to the Corrective
Transaction fee, reporting firms are also
assessed the applicable fee for
submission of the corrected or
replacement trade report.7
On September 15, 2016, Nasdaq, Inc.,
as the Business Member, provided
notice that effective October 31, 2016,
the FINRA/Nasdaq TRF would no
longer support No/Was functionality.8
According to Nasdaq, Inc., the No/Was
logic added complexity to the system
with no real benefit, since the
7 Due to their nature, Corrective Transactions
consume system capacity and staff resources
disproportionate to those required for standard
reporting transactions, and disproportionate to the
fee imposed for standard reporting functions. Thus,
to cover a portion of the costs of processing
Corrective Transactions, the FINRA/Nasdaq TRF
assesses a Corrective Transaction Charge to such
transactions.
8 See Nasdaq Equity Trader Alert #2016–179
(available at http://www.nasdaqtrader.com/
TraderNews.aspx?id=ETA2016-179).
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Federal Register / Vol. 82, No. 108 / Wednesday, June 7, 2017 / Notices
sradovich on DSK3GMQ082PROD with NOTICES
functionality may be replicated by
FINRA/Nasdaq TRF participants by
simply cancelling the original report
and submitting a corrected report.
Nasdaq, Inc. has advised FINRA that
prior to the disablement of the
functionality, the volume of No/Was
transactions was de minimis. For
example, there were fewer than 850 No/
Was submissions on average per month
during the period from January through
July 2016. By contrast, there were
841,000 total Corrective Transaction
submissions on average per month
during that same period (i.e., No/Was
submissions accounted for
approximately one tenth of one percent
of all Corrective Transaction
submissions).
To ensure that the fee schedule under
FINRA rules accurately reflects current
FINRA/Nasdaq TRF functionality,
FINRA is proposing to eliminate the
reference to No/Was submissions for
purposes of the Corrective Transaction
charge under Rule 7620A.
FINRA has filed the proposed rule
change for immediate effectiveness. The
effective date will be the date of filing,
May 23, 2017.
2. Statutory Basis
FINRA believes that the proposed rule
change is consistent with the provisions
of section 15A(b)(5) of the Act,9 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. All similarly situated
members are subject to the same fee
structure, and access to the FINRA/
Nasdaq TRF is offered on fair and nondiscriminatory terms.
Nasdaq, Inc., as the Business Member,
has advised FINRA that it eliminated
No/Was functionality effective October
31, 2016 to reduce complexity in the
FINRA/Nasdaq TRF system and that
such functionality can readily be
replicated by participants. The proposed
rule change merely deletes the reference
to No/Was Corrective Transactions in
Rule 7620A to ensure that the fee
schedule accurately reflects current
FINRA/Nasdaq TRF functionality. As
such, the proposed rule change provides
for the equitable allocation of reasonable
fees for use of the FINRA/Nasdaq 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
9 15
U.S.C. 78o–3(b)(5).
VerDate Sep<11>2014
16:37 Jun 06, 2017
Jkt 241001
necessary or appropriate in furtherance
of the purposes of the Act. The
proposed rule change merely deletes the
reference to No/Was Corrective
Transactions in Rule 7620A to ensure
that the fee schedule accurately reflects
current FINRA/Nasdaq TRF
functionality. As discussed above, No/
Was functionality was eliminated, but
may be replicated by FINRA/Nasdaq
TRF participants by simply canceling
the incorrect trade report and
submitting a corrected trade report, and
firms would incur the same charge,
irrespective of the type of Corrective
Transaction submitted.10 As such, the
proposed rule change will have no fee
impact on firms for Corrective
Transaction submissions to the FINRA/
Nasdaq TRF.11
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 12 and paragraph (f)(2) of
Rule 19b–4 thereunder.13 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.
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:
10 Also,
as discussed above, the volume of No/
Was transactions was de minimis prior to the
disablement of the functionality, accounting for
approximately one tenth of one percent of all
Corrective Transaction submissions from January
through July 2016.
11 FINRA also believes that the elimination of the
No/Was functionality itself had little to no cost
impact on firms, and did not result in any burden
on competition that is not necessary or appropriate
in furtherance of the purposes of the Act.
12 15 U.S.C. 78s(b)(3)(A).
13 17 CFR 240.19b–4(f)(2).
PO 00000
Frm 00126
Fmt 4703
Sfmt 9990
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–2017–016 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–2017–016. 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–
2017–016, and should be submitted on
or before June 28, 2017.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.14
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–11752 Filed 6–6–17; 8:45 am]
BILLING CODE 8011–01–P
14 17
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]]>Agencies
[Federal Register Volume 82, Number 108 (Wednesday, June 7, 2017)]
[Notices]
[Pages 26546-26548]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-11752]
[[Page 26546]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-80843; File No. SR-FINRA-2017-016]
Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Amend FINRA Rule 7620A To Eliminate the No/Was
Corrective Transaction Charge
June 1, 2017.
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 May 23, 2017, Financial Industry Regulatory Authority, Inc.
(``FINRA'') filed with the Securities and Exchange Commission (``SEC''
or ``Commission'') the proposed rule change as described in Items I,
II, and III below, which Items have been prepared by FINRA. FINRA has
designated the proposed rule change as ``establishing or changing a
due, fee or other charge'' under section 19(b)(3)(A)(ii) of the Act \3\
and Rule 19b-4(f)(2) thereunder,\4\ which renders the proposal
effective upon receipt of this filing by the Commission. The Commission
is publishing this notice to solicit comments on the proposed rule
change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A)(ii).
\4\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of the
Substance of the Proposed Rule Change
FINRA is proposing to amend FINRA Rule 7620A (FINRA/Nasdaq Trade
Reporting Facility Reporting Fees) to eliminate the ``No/Was''
corrective transaction charge from the fee schedule for members that
use the FINRA/Nasdaq Trade Reporting Facility (the ``FINRA/Nasdaq
TRF'') in light of the elimination of No/Was functionality.
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/Executing ($0.018) x (Required Daily
Party Reports During the Month). Average Number of Media/EP
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, B
Executing Party Reports During the or C x (Number of Trading Days
Month). 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, B
Reports During the Month). or C x (Number of Trading Days
During the Month).
------------------------------------------------------------------------
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 35% of their total FINRA/Nasdaq
Trade Reporting Facility volume.
[[Page 26547]]
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/Contra ($0.013) x 2500 for Tape A, B
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,
or 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
The FINRA/Nasdaq TRF is a facility of FINRA that is operated by
Nasdaq, Inc. and utilizes Automated Confirmation Transaction (``ACT'')
Service technology. In connection with the establishment of the FINRA/
Nasdaq TRF, FINRA and Nasdaq, Inc. entered into a limited liability
company agreement (the ``LLC Agreement'').\5\ Under the LLC Agreement,
FINRA, the ``SRO Member,'' has sole regulatory responsibility for the
FINRA/Nasdaq TRF. Nasdaq, Inc., 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.
---------------------------------------------------------------------------
\5\ As approved by its board of directors and the Commission,
effective September 8, 2015, The NASDAQ OMX Group, Inc. changed its
legal name 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,
Inc. 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.
---------------------------------------------------------------------------
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, Inc., in its capacity as the Business Member
and operator of the FINRA/Nasdaq TRF on behalf of FINRA,\6\ and Nasdaq,
Inc. collects all fees on behalf of the FINRA/Nasdaq TRF.
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
FINRA/Nasdaq TRF participants are required to correct trade reports
that are inaccurate and may use one of several FINRA/Nasdaq TRF
functions (collectively referred to herein as ``Corrective
Transactions'') to do so, including ``No/Was.'' Firms would use a No/
Was submission to correct the details of a trade reported earlier in
the day. Under FINRA Rule 7620A, FINRA/Nasdaq TRF participants are
assessed a fee of $0.25 for Corrective Transactions, including No/Was
submissions. FINRA notes that the Corrective Transaction fee is the
same, irrespective of the functionality used to correct the trade. In
addition to the Corrective Transaction fee, reporting firms are also
assessed the applicable fee for submission of the corrected or
replacement trade report.\7\
---------------------------------------------------------------------------
\7\ Due to their nature, Corrective Transactions consume system
capacity and staff resources disproportionate to those required for
standard reporting transactions, and disproportionate to the fee
imposed for standard reporting functions. Thus, to cover a portion
of the costs of processing Corrective Transactions, the FINRA/Nasdaq
TRF assesses a Corrective Transaction Charge to such transactions.
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On September 15, 2016, Nasdaq, Inc., as the Business Member,
provided notice that effective October 31, 2016, the FINRA/Nasdaq TRF
would no longer support No/Was functionality.\8\ According to Nasdaq,
Inc., the No/Was logic added complexity to the system with no real
benefit, since the
[[Page 26548]]
functionality may be replicated by FINRA/Nasdaq TRF participants by
simply cancelling the original report and submitting a corrected
report. Nasdaq, Inc. has advised FINRA that prior to the disablement of
the functionality, the volume of No/Was transactions was de minimis.
For example, there were fewer than 850 No/Was submissions on average
per month during the period from January through July 2016. By
contrast, there were 841,000 total Corrective Transaction submissions
on average per month during that same period (i.e., No/Was submissions
accounted for approximately one tenth of one percent of all Corrective
Transaction submissions).
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\8\ See Nasdaq Equity Trader Alert #2016-179 (available at
http://www.nasdaqtrader.com/TraderNews.aspx?id=ETA2016-179).
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To ensure that the fee schedule under FINRA rules accurately
reflects current FINRA/Nasdaq TRF functionality, FINRA is proposing to
eliminate the reference to No/Was submissions for purposes of the
Corrective Transaction charge under Rule 7620A.
FINRA has filed the proposed rule change for immediate
effectiveness. The effective date will be the date of filing, May 23,
2017.
2. Statutory Basis
FINRA believes that the proposed rule change is consistent with the
provisions of section 15A(b)(5) of the Act,\9\ 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. All similarly situated members are subject to the same fee
structure, and access to the FINRA/Nasdaq TRF is offered on fair and
non-discriminatory terms.
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\9\ 15 U.S.C. 78o-3(b)(5).
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Nasdaq, Inc., as the Business Member, has advised FINRA that it
eliminated No/Was functionality effective October 31, 2016 to reduce
complexity in the FINRA/Nasdaq TRF system and that such functionality
can readily be replicated by participants. The proposed rule change
merely deletes the reference to No/Was Corrective Transactions in Rule
7620A to ensure that the fee schedule accurately reflects current
FINRA/Nasdaq TRF functionality. As such, the proposed rule change
provides for the equitable allocation of reasonable fees for use of the
FINRA/Nasdaq 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 merely
deletes the reference to No/Was Corrective Transactions in Rule 7620A
to ensure that the fee schedule accurately reflects current FINRA/
Nasdaq TRF functionality. As discussed above, No/Was functionality was
eliminated, but may be replicated by FINRA/Nasdaq TRF participants by
simply canceling the incorrect trade report and submitting a corrected
trade report, and firms would incur the same charge, irrespective of
the type of Corrective Transaction submitted.\10\ As such, the proposed
rule change will have no fee impact on firms for Corrective Transaction
submissions to the FINRA/Nasdaq TRF.\11\
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\10\ Also, as discussed above, the volume of No/Was transactions
was de minimis prior to the disablement of the functionality,
accounting for approximately one tenth of one percent of all
Corrective Transaction submissions from January through July 2016.
\11\ FINRA also believes that the elimination of the No/Was
functionality itself had little to no cost impact on firms, and did
not result in any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act.
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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.
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 \12\ and paragraph (f)(2) of Rule 19b-4 thereunder.\13\
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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\12\ 15 U.S.C. 78s(b)(3)(A).
\13\ 17 CFR 240.19b-4(f)(2).
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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-2017-016 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-2017-016. 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-2017-016, and should
be submitted on or before June 28, 2017.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
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\14\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-11752 Filed 6-6-17; 8:45 am]
BILLING CODE 8011-01-P
