Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Order Approving Proposed Rule Change To Make Available a New TRACE Security Activity Report, 37484-37485 [2017-16831]

Download as PDF 37484 Federal Register / Vol. 82, No. 153 / Thursday, August 10, 2017 / Notices 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–CHX– 2017–12, and should be submitted on or before August 31, 2017. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.45 Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017–16829 Filed 8–9–17; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–81318; File No. SR–FINRA– 2017–021] Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Order Approving Proposed Rule Change To Make Available a New TRACE Security Activity Report August 4, 2017. I. Introduction On June 19, 2017, the Financial Industry Regulatory Authority, Inc. (‘‘FINRA’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a proposed rule change to amend FINRA Rule 7730 (Trade Reporting and Compliance Engine (‘‘TRACE’’)) to make available a new ‘‘Security Activity Report.’’ The proposed rule change was published for comment in the Federal Register on June 29, 2017.3 The Commission received two comments on the proposal.4 On August 3, 2017, FINRA submitted a letter responding to comments.5 As discussed below, the 45 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 See Securities Exchange Act Release No. 81007 (June 23, 2017), 82 FR 29602 (June 29, 2017) (‘‘Notice’’). 4 See letters to Brent J. Fields, Secretary, Commission, from Bennett Golub, Chief Risk Officer, and Alexis Rosenblum, Director, BlackRock, Inc., dated July 20, 2017 (‘‘BlackRock Letter’’); and Sean Davy, Managing Director, Capital Markets Division, Securities Industry and Financial Markets Association (‘‘SIFMA’’), dated July 20, 2017 (‘‘SIFMA Letter’’). 5 See letter to Brent J. Fields, Secretary Commission, from Racquel L. Russell, Associate General Counsel, FINRA, dated August 3, 2017 (‘‘Response Letter’’). mstockstill on DSK30JT082PROD with NOTICES 1 15 VerDate Sep<11>2014 17:03 Aug 09, 2017 Jkt 241001 Commission is approving the proposed rule change. II. Description of the Proposal FINRA Rule 7730, among other things, sets forth the TRACE data products offered by FINRA. FINRA proposed to amend Rule 7730 to make available a new Security Activity Report, which will provide aggregated statistics by security for TRACE-Eligible Securities that are corporate or agency bonds (collectively ‘‘CA Bonds’’). FINRA stated that the Security Activity Report will include basic descriptive elements for each CA Bond, such as the issuer’s name and the security’s coupon and maturity date, as well as aggregate transaction statistics. These statistics will include par value volume and number of customer buy transactions, par value volume and number of customer sell transactions, and par value volume and number of interdealer transactions.6 FINRA noted that, currently, transactions whose volume is over the dissemination cap 7 becomes available only after 18 months as part of the Historic TRACE Data product.8 FINRA will provide the Security Activity Report on a 90-day delay to address potential confidentiality concerns. The Security Activity Report also will provide information regarding the number of unique MPIDs that report transactions in a particular security. The report will provide the aggregate activity of the five most active MPIDs in each CA Bond and the number of unique MPIDs for disseminated uncapped and 6 The Security Activity Report will reflect differing levels of par value volume detail depending on whether the transaction size is larger than the dissemination cap and whether there are more than six transactions occurring in a calendar month. Additionally, if a CA Bond has more than six transactions in a month, the par value volume traded would appear on the report within specified size categories along with a range of the number of transactions that occur within the specified volume size categories. These size categories will be announced in the Regulatory Notice which announces the effective date of the Security Activity Report. 7 Currently, the actual par value traded is publicly disseminated only if it is below the size cap in that asset class. For transactions in investment grade CA bonds over a $5 million par value, TRACE disseminates the size as ‘‘5MM+.’’ For transactions in non-investment grade corporate bonds over a $1 million par value, TRACE disseminates the size as ‘‘1MM+.’’ 8 The Commission notes that on June 23, 2017 it approved a proposed rule change to reduce the minimum delay from 18 months to six months for transactions included in the Historic TRACE Data Sets relating to CA Bonds. This approval occurred after the current proposed rule change was filed with the Commission. See Securities Exchange Act Release No. 81011 (June 23, 2017), 82 FR 29597 (June 29, 2017). The effective date of this change is October 2, 2017. See also, FINRA Regulatory Notice 17–23. PO 00000 Frm 00067 Fmt 4703 Sfmt 4703 capped transactions.9 In addition, the report will include the percentage, in aggregate, of the total number of transactions and the total par value volume traded by the top five MPIDs for each particular security. FINRA believes that the Security Activity Report might be useful for both business and regulatory purposes. For example, FINRA noted that members might use the information provided in the Security Activity Report to better ascertain their relative trading activity in particular CA Bonds. Interested parties also could use the information in the Security Activity Report in connection with regulatory obligations, such as assessing, classifying, and reviewing the liquidity risk of individual securities pursuant to Rule 22e–4 under the Investment Company Act.10 FINRA has stated that it will announce in a Regulatory Notice the effective date of the proposed rule change, which will be no later than 365 days following Commission approval.11 FINRA intends to establish a fee for the TRACE Security Activity Report in the future. The fee will be established pursuant to a separate rule filing. III. Summary of Comments and FINRA’s Response As previously noted, the Commission received two comment letters 12 and a FINRA Response Letter 13 on the proposed rule change. Both commenters expressed general support for the proposal and noted that the additional data provided by the Security Activity Report would assist in regulatory compliance with Rule 22e–4.14 One commenter raised concerns about the implementation, calculation, and the format of the Security Activity Report.15 This commenter noted that the delay period reduction for the Historic TRACE Data product from 18 months to six months had the potential to impact market participant behavior, and recommended delaying the implementation of the Security Activity 9 FINRA stated that the number of unique reporting MPIDs will be provided by displaying either the actual number of unique MPIDs where there are six or more unique MPIDs or as ‘‘1 to 5’’ where there are five or fewer reporting MPIDs. Specific market participants that engaged in the transactions will not be identified in the Security Activity Report. 10 17 CFR 270.22e–4. 11 In its Response Letter FINRA stated that it intends for the effective date for the Security Activity Report to be no sooner than February 1, 2018. See Response Letter at 2. 12 See supra note 4. 13 See supra note 5. 14 See SIFMA Letter at 1; BlackRock Letter at 1. 15 See SIFMA Letter at 2–3. E:\FR\FM\10AUN1.SGM 10AUN1 Federal Register / Vol. 82, No. 153 / Thursday, August 10, 2017 / Notices Report for at least six months from the effective date of the reduced delay period.16 FINRA disagreed that an additional implementation delay related to the Historic TRACE Data product was necessary for the Security Activity Report. FINRA stated that proposed features of the Security Activity Report, such as the 90-day publication delay and other grouping of activity reduce information leakage risks and mitigate any potential impacts.17 FINRA stated that it intends for the effective date of the Security Activity Report to be no sooner than February 1, 2018.18 This commenter also believed there would be confidentiality concerns if market concentration percentages were not aggregated across the top five MPIDs for each particular security.19 In its Response Letter, FINRA clarified and reiterated that the activity of the top five MPIDs will be expressed in aggregate figures.20 Finally, this commenter stated that it would be beneficial for FINRA to publicly share a draft template of the Security Activity Report so that market participants could educate themselves on the format and contents of the report.21 FINRA responded that it intends to post a file layout for the Security Activity Report on its Web site at least 30 days before the Security Activity Report’s effective date.22 IV. Discussion After careful consideration, the Commission finds that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities association.23 In particular, the Commission finds that the proposed rule change is consistent with Section 15A(b)(6) of the Act,24 which requires, among other things, that FINRA rules be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. The Commission does not believe that commenters raised any 16 See id. at 2. Response Letter at 2. 18 See id. 19 See SIFMA Letter at 2. 20 See Response Letter at 2. 21 See SIFMA Letter at 2–3. 22 See Response Letter at 2. 23 In approving this proposed rule change, the Commission has considered the proposed rule change’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 24 15 U.S.C. 78o–3(b)(6). mstockstill on DSK30JT082PROD with NOTICES 17 See VerDate Sep<11>2014 17:03 Aug 09, 2017 Jkt 241001 issue that would preclude approval of FINRA’s proposal. The Commission notes that the Security Activity Report does not require member firms to provide FINRA with any additional data. The product is optional and responds to consumer demand for a more useful market data product. Finally, the Security Activity Report appears reasonably designed to promote transparency while minimizing the potential for information leakage. IV. Conclusion It is therefore ordered pursuant to Section 19(b)(2) of the Act 25 that the proposed rule change (SR–FINRA– 2017–021) be, and hereby is, approved. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.26 Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017–16831 Filed 8–9–17; 8:45 am] 37485 address is U.S. Department of State, L/ PD, SA–5, Suite 5H03, Washington, DC 20522–0505. SUPPLEMENTARY INFORMATION: The foregoing determinations were made pursuant to the authority vested in me by the Act of October 19, 1965 (79 Stat. 985; 22 U.S.C. 2459), E.O. 12047 of March 27, 1978, the Foreign Affairs Reform and Restructuring Act of 1998 (112 Stat. 2681, et seq.; 22 U.S.C. 6501 note, et seq.), Delegation of Authority No. 234 of October 1, 1999, Delegation of Authority No. 236–3 of August 28, 2000 (and, as appropriate, Delegation of Authority No. 257–1 of December 11, 2015). I have ordered that Public Notice of these Determinations be published in the Federal Register. Alyson Grunder, Deputy Assistant Secretary for Policy, Bureau of Educational and Cultural Affairs, Department of State. [FR Doc. 2017–16853 Filed 8–9–17; 8:45 am] BILLING CODE 8011–01–P BILLING CODE 4710–05–P DEPARTMENT OF STATE DEPARTMENT OF STATE [Public Notice: 10081] [Public Notice: 10060] Notice of Determinations; Culturally Significant Objects Imported for Exhibition Determinations: ‘‘The Metropolis in Latin America, 1830– 1930’’ Exhibition 30-Day Notice of Proposed Information Collection: J–1 Visa Waiver Recommendation Application Notice is hereby given of the following determinations: I hereby determine that certain objects to be included in the exhibition ‘‘The Metropolis in Latin America, 1830– 1930,’’ imported from abroad for temporary exhibition within the United States, are of cultural significance. The objects are imported pursuant to loan agreements with the foreign owners or custodians. I also determine that the exhibition or display of the exhibit objects at the Getty Research Institute at the Getty Center, in Los Angeles, California, from on or about September 16, 2017, until on or about January 7, 2018; the Americas Society, in New York, New York, from on or about February 28, 2018, until on or about June 24, 2018, and at possible additional exhibitions or venues yet to be determined, is in the national interest. FOR FURTHER INFORMATION CONTACT: For further information, including a list of the imported objects, contact Julie Simpson in the Office of the Legal Adviser, U.S. Department of State (telephone: 202–632–6467) or email: section2459@state.gov. The mailing SUMMARY: 25 15 26 17 PO 00000 U.S.C. 78s(b)(2). CFR 200.30–3(a)(12). Frm 00068 Fmt 4703 Sfmt 4703 Notice of request for public comment. ACTION: The Department of State has submitted the information collection described below to the Office of Management and Budget (OMB) for approval. In accordance with the Paperwork Reduction Act of 1995 we are requesting comments on this collection from all interested individuals and organizations. The purpose of this Notice is to allow 30 days for public comment. DATES: The Department will accept comments from the public up to September 11, 2017. ADDRESSES: Direct comments to the Department of State Desk Officer in the Office of Information and Regulatory Affairs at the Office of Management and Budget (OMB). You may submit comments by the following methods: • Email: oira_submission@ omb.eop.gov. You must include the DS form number, information collection title, and the OMB control number in the subject line of your message. • Fax: 202–395–5806. Attention: Desk Officer for Department of State. FOR FURTHER INFORMATION CONTACT: Direct requests for additional information regarding the collection listed in this notice, including requests SUMMARY: E:\FR\FM\10AUN1.SGM 10AUN1

Agencies

[Federal Register Volume 82, Number 153 (Thursday, August 10, 2017)]
[Notices]
[Pages 37484-37485]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-16831]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-81318; File No. SR-FINRA-2017-021]


Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Order Approving Proposed Rule Change To Make Available 
a New TRACE Security Activity Report

August 4, 2017.

I. Introduction

    On June 19, 2017, the Financial Industry Regulatory Authority, Inc. 
(``FINRA'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change to amend FINRA Rule 7730 (Trade Reporting and 
Compliance Engine (``TRACE'')) to make available a new ``Security 
Activity Report.'' The proposed rule change was published for comment 
in the Federal Register on June 29, 2017.\3\ The Commission received 
two comments on the proposal.\4\ On August 3, 2017, FINRA submitted a 
letter responding to comments.\5\ As discussed below, the Commission is 
approving the proposed rule change.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 81007 (June 23, 
2017), 82 FR 29602 (June 29, 2017) (``Notice'').
    \4\ See letters to Brent J. Fields, Secretary, Commission, from 
Bennett Golub, Chief Risk Officer, and Alexis Rosenblum, Director, 
BlackRock, Inc., dated July 20, 2017 (``BlackRock Letter''); and 
Sean Davy, Managing Director, Capital Markets Division, Securities 
Industry and Financial Markets Association (``SIFMA''), dated July 
20, 2017 (``SIFMA Letter'').
    \5\ See letter to Brent J. Fields, Secretary Commission, from 
Racquel L. Russell, Associate General Counsel, FINRA, dated August 
3, 2017 (``Response Letter'').
---------------------------------------------------------------------------

II. Description of the Proposal

    FINRA Rule 7730, among other things, sets forth the TRACE data 
products offered by FINRA. FINRA proposed to amend Rule 7730 to make 
available a new Security Activity Report, which will provide aggregated 
statistics by security for TRACE-Eligible Securities that are corporate 
or agency bonds (collectively ``CA Bonds''). FINRA stated that the 
Security Activity Report will include basic descriptive elements for 
each CA Bond, such as the issuer's name and the security's coupon and 
maturity date, as well as aggregate transaction statistics. These 
statistics will include par value volume and number of customer buy 
transactions, par value volume and number of customer sell 
transactions, and par value volume and number of inter-dealer 
transactions.\6\ FINRA noted that, currently, transactions whose volume 
is over the dissemination cap \7\ becomes available only after 18 
months as part of the Historic TRACE Data product.\8\ FINRA will 
provide the Security Activity Report on a 90-day delay to address 
potential confidentiality concerns.
---------------------------------------------------------------------------

    \6\ The Security Activity Report will reflect differing levels 
of par value volume detail depending on whether the transaction size 
is larger than the dissemination cap and whether there are more than 
six transactions occurring in a calendar month. Additionally, if a 
CA Bond has more than six transactions in a month, the par value 
volume traded would appear on the report within specified size 
categories along with a range of the number of transactions that 
occur within the specified volume size categories. These size 
categories will be announced in the Regulatory Notice which 
announces the effective date of the Security Activity Report.
    \7\ Currently, the actual par value traded is publicly 
disseminated only if it is below the size cap in that asset class. 
For transactions in investment grade CA bonds over a $5 million par 
value, TRACE disseminates the size as ``5MM+.'' For transactions in 
non-investment grade corporate bonds over a $1 million par value, 
TRACE disseminates the size as ``1MM+.''
    \8\ The Commission notes that on June 23, 2017 it approved a 
proposed rule change to reduce the minimum delay from 18 months to 
six months for transactions included in the Historic TRACE Data Sets 
relating to CA Bonds. This approval occurred after the current 
proposed rule change was filed with the Commission. See Securities 
Exchange Act Release No. 81011 (June 23, 2017), 82 FR 29597 (June 
29, 2017). The effective date of this change is October 2, 2017. See 
also, FINRA Regulatory Notice 17-23.
---------------------------------------------------------------------------

    The Security Activity Report also will provide information 
regarding the number of unique MPIDs that report transactions in a 
particular security. The report will provide the aggregate activity of 
the five most active MPIDs in each CA Bond and the number of unique 
MPIDs for disseminated uncapped and capped transactions.\9\ In 
addition, the report will include the percentage, in aggregate, of the 
total number of transactions and the total par value volume traded by 
the top five MPIDs for each particular security.
---------------------------------------------------------------------------

    \9\ FINRA stated that the number of unique reporting MPIDs will 
be provided by displaying either the actual number of unique MPIDs 
where there are six or more unique MPIDs or as ``1 to 5'' where 
there are five or fewer reporting MPIDs. Specific market 
participants that engaged in the transactions will not be identified 
in the Security Activity Report.
---------------------------------------------------------------------------

    FINRA believes that the Security Activity Report might be useful 
for both business and regulatory purposes. For example, FINRA noted 
that members might use the information provided in the Security 
Activity Report to better ascertain their relative trading activity in 
particular CA Bonds. Interested parties also could use the information 
in the Security Activity Report in connection with regulatory 
obligations, such as assessing, classifying, and reviewing the 
liquidity risk of individual securities pursuant to Rule 22e-4 under 
the Investment Company Act.\10\
---------------------------------------------------------------------------

    \10\ 17 CFR 270.22e-4.
---------------------------------------------------------------------------

    FINRA has stated that it will announce in a Regulatory Notice the 
effective date of the proposed rule change, which will be no later than 
365 days following Commission approval.\11\ FINRA intends to establish 
a fee for the TRACE Security Activity Report in the future. The fee 
will be established pursuant to a separate rule filing.
---------------------------------------------------------------------------

    \11\ In its Response Letter FINRA stated that it intends for the 
effective date for the Security Activity Report to be no sooner than 
February 1, 2018. See Response Letter at 2.
---------------------------------------------------------------------------

III. Summary of Comments and FINRA's Response

    As previously noted, the Commission received two comment letters 
\12\ and a FINRA Response Letter \13\ on the proposed rule change. Both 
commenters expressed general support for the proposal and noted that 
the additional data provided by the Security Activity Report would 
assist in regulatory compliance with Rule 22e-4.\14\ One commenter 
raised concerns about the implementation, calculation, and the format 
of the Security Activity Report.\15\ This commenter noted that the 
delay period reduction for the Historic TRACE Data product from 18 
months to six months had the potential to impact market participant 
behavior, and recommended delaying the implementation of the Security 
Activity

[[Page 37485]]

Report for at least six months from the effective date of the reduced 
delay period.\16\ FINRA disagreed that an additional implementation 
delay related to the Historic TRACE Data product was necessary for the 
Security Activity Report. FINRA stated that proposed features of the 
Security Activity Report, such as the 90-day publication delay and 
other grouping of activity reduce information leakage risks and 
mitigate any potential impacts.\17\ FINRA stated that it intends for 
the effective date of the Security Activity Report to be no sooner than 
February 1, 2018.\18\
---------------------------------------------------------------------------

    \12\ See supra note 4.
    \13\ See supra note 5.
    \14\ See SIFMA Letter at 1; BlackRock Letter at 1.
    \15\ See SIFMA Letter at 2-3.
    \16\ See id. at 2.
    \17\ See Response Letter at 2.
    \18\ See id.
---------------------------------------------------------------------------

    This commenter also believed there would be confidentiality 
concerns if market concentration percentages were not aggregated across 
the top five MPIDs for each particular security.\19\ In its Response 
Letter, FINRA clarified and reiterated that the activity of the top 
five MPIDs will be expressed in aggregate figures.\20\
---------------------------------------------------------------------------

    \19\ See SIFMA Letter at 2.
    \20\ See Response Letter at 2.
---------------------------------------------------------------------------

    Finally, this commenter stated that it would be beneficial for 
FINRA to publicly share a draft template of the Security Activity 
Report so that market participants could educate themselves on the 
format and contents of the report.\21\ FINRA responded that it intends 
to post a file layout for the Security Activity Report on its Web site 
at least 30 days before the Security Activity Report's effective 
date.\22\
---------------------------------------------------------------------------

    \21\ See SIFMA Letter at 2-3.
    \22\ See Response Letter at 2.
---------------------------------------------------------------------------

IV. Discussion

    After careful consideration, the Commission finds that the proposed 
rule change is consistent with the requirements of the Act and the 
rules and regulations thereunder applicable to a national securities 
association.\23\ In particular, the Commission finds that the proposed 
rule change is consistent with Section 15A(b)(6) of the Act,\24\ which 
requires, among other things, that FINRA rules be designed to prevent 
fraudulent and manipulative acts and practices, to promote just and 
equitable principles of trade, to remove impediments to and perfect the 
mechanism of a free and open market and a national market system, and, 
in general, to protect investors and the public interest. The 
Commission does not believe that commenters raised any issue that would 
preclude approval of FINRA's proposal. The Commission notes that the 
Security Activity Report does not require member firms to provide FINRA 
with any additional data. The product is optional and responds to 
consumer demand for a more useful market data product. Finally, the 
Security Activity Report appears reasonably designed to promote 
transparency while minimizing the potential for information leakage.
---------------------------------------------------------------------------

    \23\ In approving this proposed rule change, the Commission has 
considered the proposed rule change's impact on efficiency, 
competition, and capital formation. See 15 U.S.C. 78c(f).
    \24\ 15 U.S.C. 78o-3(b)(6).
---------------------------------------------------------------------------

IV. Conclusion

    It is therefore ordered pursuant to Section 19(b)(2) of the Act 
\25\ that the proposed rule change (SR-FINRA-2017-021) be, and hereby 
is, approved.
---------------------------------------------------------------------------

    \25\ 15 U.S.C. 78s(b)(2).
    \26\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\26\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-16831 Filed 8-9-17; 8:45 am]
 BILLING CODE 8011-01-P
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