Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Extend the Expiration Date of FINRA Rule 0180 (Application of Rules to Security-Based Swaps), 3524-3526 [2019-01943]
Download as PDF
<![CDATA[
3524
Federal Register / Vol. 84, No. 29 / Tuesday, February 12, 2019 / Notices
At times, changes in Commission
priorities require alterations in the
scheduling of meeting items.
https://www.finra.org, at the principal
office of FINRA and at the
Commission’s Public Reference Room.
CONTACT PERSON FOR MORE INFORMATION:
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.
For further information and to ascertain
what, if any, matters have been added,
deleted or postponed; please contact
Brent J. Fields from the Office of the
Secretary at (202) 551–5400.
Dated: February 7, 2019.
Brent J. Fields,
Secretary.
[FR Doc. 2019–02117 Filed 2–8–19; 11:15 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–85062; File No. SR–FINRA–
2019–001]
Self-Regulatory Organizations;
Financial Industry Regulatory
Authority, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Extend the Expiration
Date of FINRA Rule 0180 (Application
of Rules to Security-Based Swaps)
February 6, 2019.
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 January
29, 2019, 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
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.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
FINRA is proposing to extend the
expiration date of FINRA Rule 0180
(Application of Rules to Security-Based
Swaps) to February 12, 2020. FINRA
Rule 0180 temporarily limits, with
certain exceptions, the application of
FINRA rules with respect to securitybased swaps.
The text of the proposed rule change
is available on FINRA’s website at
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 17 CFR 240.19b–4(f)(6).
2 17
VerDate Sep<11>2014
18:30 Feb 11, 2019
Jkt 247001
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
On July 1, 2011, the SEC issued an
Order granting temporary exemptive
relief (the ‘‘Temporary Exemptions’’)
from compliance with certain
provisions of the Exchange Act in
connection with the revision, pursuant
to Title VII of the Dodd-Frank Wall
Street Reform and Consumer Protection
Act (the ‘‘Dodd-Frank Act’’),4 of the
Exchange Act definition of ‘‘security’’ to
encompass security-based swaps.5
Consistent with the Commission’s
action, on July 8, 2011, FINRA filed for
immediate effectiveness FINRA Rule
0180,6 which, with certain exceptions,
is intended to temporarily limit the
application of FINRA rules 7 with
4 Public
Law 111–203, 124 Stat. 1376 (2010).
Securities Exchange Act Release No. 64795
(July 1, 2011), 76 FR 39927 (July 7, 2011) (Order
Granting Temporary Exemptions Under the
Securities Exchange Act of 1934 in Connection
With the Pending Revision of the Definition of
‘‘Security’’ To Encompass Security-Based Swaps,
and Request for Comment) (the ‘‘Exemptive
Release’’). The term ‘‘security-based swap’’ is
defined in Section 761 of the Dodd-Frank Act. See
also Securities Exchange Act Release No. 67453
(July 18, 2012), 77 FR 48207 (August 13, 2012)
(Further Definition of ‘‘Swap,’’ ‘‘Security-Based
Swap,’’ and ‘‘Security-Based Swap Agreement’’;
Mixed Swaps; Security-Based Swap Agreement
Recordkeeping).
6 See Securities Exchange Act Release No. 64884
(July 14, 2011), 76 FR 42755 (July 19, 2011) (Notice
of Filing and Immediate Effectiveness of Proposed
Rule Change; File No. SR–FINRA–2011–033)
(‘‘FINRA Rule 0180 Notice of Filing’’). See also
Securities Exchange Act Release No. 82480 (January
10, 2018), 83 FR 2480 (January 17, 2018) (Notice of
Filing and Immediate Effectiveness of Proposed
Rule Change; File No. SR–FINRA–2018–001)
(extending the expiration date of FINRA Rule 0180
to February 12, 2019).
7 The current FINRA rulebook consists of: (1)
FINRA Rules; (2) NASD Rules; and (3) rules
incorporated from NYSE (‘‘Incorporated NYSE
Rules’’). While the NASD Rules generally apply to
5 See
PO 00000
Frm 00114
Fmt 4703
Sfmt 4703
respect to security-based swaps, thereby
helping to avoid undue market
disruptions resulting from the change to
the definition of ‘‘security’’ under the
Act.8
The Commission, noting the need to
avoid a potential unnecessary
disruption to the security-based swap
market in the absence of an extension of
the Temporary Exemptions, and the
need for additional time to consider the
potential impact of the revision of the
Exchange Act definition of ‘‘security’’ in
light of ongoing Commission
rulemaking efforts under Title VII of the
Dodd-Frank Act, issued an Order which
extended and refined the applicable
expiration dates for the previously
granted Temporary Exemptions.9 The
all FINRA members, the Incorporated NYSE Rules
apply only to those members of FINRA that are also
members of the NYSE. The FINRA Rules apply to
all FINRA members, unless such rules have a more
limited application by their terms. For more
information about the rulebook consolidation
process, see Information Notice, March 12, 2008
(Rulebook Consolidation Process).
8 In its Exemptive Release, the Commission noted
that the relief is targeted and does not include, for
instance, relief from the Act’s antifraud and antimanipulation provisions. FINRA has noted that
FINRA Rule 0180 is similarly targeted. For instance,
paragraph (a) of FINRA Rule 0180 provides that
FINRA rules shall not apply to members’ activities
and positions with respect to security-based swaps,
except for FINRA Rules 2010 (Standards of
Commercial Honor and Principles of Trade), 2020
(Use of Manipulative, Deceptive or Other
Fraudulent Devices), 3310 (Anti-Money Laundering
Compliance Program) and 4240 (Margin
Requirements for Credit Default Swaps). See also
paragraphs (b) and (c) of FINRA Rule 0180
(addressing the applicability of additional rules)
and FINRA Rule 0180 Notice of Filing.
9 See Securities Exchange Act Release No. 71485
(February 5, 2014), 79 FR 7731 (February 10, 2014)
(Order Extending Temporary Exemptions Under the
Securities Exchange Act of 1934 in Connection
With the Revision of the Definition of ‘‘Security’’
to Encompass Security-Based Swaps, and Request
for Comment) (‘‘2014 Extension Release’’) stating
that, for those expiring Temporary Exemptions
‘‘that are not directly linked to pending securitybased swap rulemakings, the Commission is
extending the expiration date until the earlier of
such time as the Commission issues an order or rule
determining whether any continuing exemptive
relief is appropriate for security-based swap
activities with respect to any of these Exchange Act
provisions or until three years following the
effective date of this Order.’’ The 2014 Extension
Release further stated that for each expiring
Temporary Exemption ‘‘that is related to pending
security-based swap rulemakings, the Commission
is extending the expiration date until the
compliance date for the related security-based
swap-specific rulemaking.’’ The Commission has
extended certain Temporary Exemptions that are
not directly linked to a security-based swap
rulemaking to February 5, 2020. See Securities
Exchange Act Release No. 84991 (January 25, 2019)
(Order Granting a Limited Exemption from the
Exchange Act Definition of ‘‘Penny Stock’’ for
Security-Based Swap Transactions between Eligible
Contract Participants; Granting a Limited
Exemption from the Exchange Act Definition of
‘‘Municipal Securities’’ for Security-Based Swaps;
and Extending Certain Temporary Exemptions
under the Exchange Act in Connection with the
E:\FR\FM\12FEN1.SGM
12FEN1
Federal Register / Vol. 84, No. 29 / Tuesday, February 12, 2019 / Notices
Commission previously noted that
extending the Temporary Exemptions
would facilitate a coordinated
consideration of these issues with the
relief provided pursuant to FINRA Rule
0180.10 In establishing Rule 0180, and
in extending the rule’s expiration date,
FINRA noted its intent, pending the
implementation of any SEC rules and
guidance that would provide greater
regulatory clarity in relation to securitybased swap activities, to align the
expiration date of FINRA Rule 0180
with the termination of relevant
provisions of the Temporary
Exemptions.11
The Commission’s rulemaking and
development of guidance in relation to
security-based swap activities is
ongoing. As such, FINRA believes it is
appropriate and in the public interest,
in light of the Commission’s goals as set
forth in the Exemptive Release, the 2014
Extension Release and the 2019
Extension Release, to extend FINRA
Rule 0180 for a limited period, to
February 12, 2020, so as to avoid undue
market disruptions resulting from the
change to the definition of ‘‘security’’
under the Act.12
FINRA has filed the proposed rule
change for immediate effectiveness and
has requested that the SEC waive the
requirement that the proposed rule
change not become operative for 30 days
after the date of the filing, so FINRA can
implement the proposed rule change on
February 12, 2019.
2. Statutory Basis
FINRA believes that the proposed rule
change is consistent with the provisions
of Section 15A(b)(6) of the Act,13 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. FINRA believes that the
proposed rule change would further the
purposes of the Act because, consistent
with the goals set forth by the
Commission in the Exemptive Release,
the 2014 Extension Release and the
Revision of the Definition of ‘‘Security’’ to
Encompass Security-Based Swaps) (‘‘2019
Extension Release’’).
10 See Securities Exchange Act Release No. 68864
(February 7, 2013), 78 FR 10218 (February 13, 2013)
(Order Extending Temporary Exemptions Under the
Securities Exchange Act of 1934 in Connection
With the Revision of the Definition of ‘‘Security’’
to Encompass Security-Based Swaps, and Request
for Comment).
11 See note 6 supra.
12 FINRA may amend the expiration date of
FINRA Rule 0180 based on any related Commission
action.
13 15 U.S.C. 78o–3(b)(6).
VerDate Sep<11>2014
18:30 Feb 11, 2019
Jkt 247001
2019 Extension Release, the proposed
rule change will help to avoid undue
market disruption that could result if
FINRA Rule 0180 expires before the
implementation of any SEC rules and
guidance that would provide greater
regulatory clarity in relation to securitybased swap activities.
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
believes that the proposed rule change
would prevent undue market disruption
that would otherwise result if securitybased swaps were, by virtue of the
expansion of the Act’s definition of
‘‘security’’ to encompass security-based
swaps, subject to the application of all
FINRA rules before the implementation
of any SEC rules and guidance that
would provide greater regulatory clarity
in relation to security-based swap
activities. FINRA believes that, by
extending the expiration of FINRA Rule
0180, the proposed rule change will
serve to promote regulatory clarity and
consistency, thereby reducing burdens
on the marketplace and facilitating
investor protection.
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
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) of the Act 14 and Rule 19b–
4(f)(6) thereunder.15
A proposed rule change filed under
Rule 19b–4(f)(6) normally does not
become operative prior to 30 days after
the date of the filing. However, pursuant
to Rule 19b–4(f)(6)(iii),16 the
Commission may designate a shorter
time if such action is consistent with the
protection of investors and the public
interest. FINRA has requested that the
14 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6).
16 17 CFR 240.19b–4(f)(6)(iii).
15 17
PO 00000
Frm 00115
Fmt 4703
Sfmt 4703
3525
Commission waive the 30-day operative
delay requirement so that the proposal
may become operative on February 12,
2019. The Commission hereby grants
the request. The proposed rule is
consistent with the goals set forth by the
Commission when it issued the
Exemptive Release, the 2014 Extension
Release and the 2019 Extension Release
and will help avoid undue market
interruption resulting from the change
of the definition of ‘‘security’’ under the
Act and the expiration of FINRA Rule
0180. Therefore, the Commission
believes it is consistent with the
protection of investors and the public
interest to waive the 30-day operative
delay requirement. Therefore the
Commission designates the proposal as
operative on February 12, 2019.
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
FINRA–2019–001 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–2019–001. 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 website (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
E:\FR\FM\12FEN1.SGM
12FEN1
3526
Federal Register / Vol. 84, No. 29 / Tuesday, February 12, 2019 / Notices
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 website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549, on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of such
filing also will be available for
inspection and copying at the principal
office of FINRA. All comments received
will be posted without change. Persons
submitting comments are cautioned that
we do not redact or edit personal
identifying information from comment
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–FINRA–
2019–001 and should be submitted on
or before March 5, 2019.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.17
Eduardo Aleman,
Deputy Secretary.
A.
Escobar, Office of Disaster Assistance,
U.S. Small Business Administration,
409 3rd Street SW, Suite 6050,
Washington, DC 20416, (202) 205–6734.
SUPPLEMENTARY INFORMATION: The notice
of the President’s major disaster
declaration for Private Non-Profit
organizations in the Commonwealth of
Virginia, dated 12/18/2018, is hereby
amended to include the following areas
as adversely affected by the disaster.
Primary Counties/Cities: Grayson, James
City, King William, Lancaster,
Martinsville City, Mecklenburg,
Middlesex, Northampton,
Westmoreland.
All other information in the original
declaration remains unchanged.
FOR FURTHER INFORMATION CONTACT:
(Catalog of Federal Domestic Assistance
Number 59008)
James Rivera,
Associate Administrator for Disaster
Assistance.
[FR Doc. 2019–02025 Filed 2–11–19; 8:45 am]
BILLING CODE 8025–01–P
SMALL BUSINESS ADMINISTRATION
[Disaster Declaration #15865 and #15866;
Minnesota Disaster Number MN–00066]
[FR Doc. 2019–01943 Filed 2–11–19; 8:45 am]
Presidential Declaration of a Major
Disaster for Public Assistance Only for
the State of Minnesota
BILLING CODE 8011–01–P
SMALL BUSINESS ADMINISTRATION
[Disaster Declaration #15845 and #15846;
Virginia Disaster Number VA–00079]
Presidential Declaration Amendment of
a Major Disaster for Public Assistance
Only for the Commonwealth of Virginia
U.S. Small Business
Administration.
ACTION: Amendment 1.
AGENCY:
This is an amendment of the
Presidential declaration of a major
disaster for Public Assistance Only for
the Commonwealth of Virginia (FEMA–
4411–DR), dated 12/18/2018.
Incident: Tropical Storm Michael.
Incident Period: 10/09/2018 through
10/16/2018.
DATES: Issued on 02/01/2019.
Physical Loan Application Deadline
Date: 02/19/2019.
Economic Injury (EIDL) Loan
Application Deadline Date: 09/18/2019.
ADDRESSES: Submit completed loan
applications to: U.S. Small Business
Administration, Processing and
Disbursement Center, 14925 Kingsport
Road, Fort Worth, TX 76155.
SUMMARY:
17 17
CFR 200.30–3(a)(12).
VerDate Sep<11>2014
18:30 Feb 11, 2019
Jkt 247001
Frm 00116
Fmt 4703
Sfmt 4703
The Interest Rates are:
Percent
For Physical Damage:
Non-Profit Organizations
with Credit Available
Elsewhere ......................
Non-Profit Organizations
without Credit Available
Elsewhere ......................
For Economic Injury:
Non-Profit Organizations
without Credit Available
Elsewhere ......................
2.500
2.500
2.500
The number assigned to this disaster
for physical damage is 158656 and for
economic injury is 158660.
(Catalog of Federal Domestic Assistance
Number 59008)
James Rivera,
Associate Administrator for Disaster
Assistance.
[FR Doc. 2019–01963 Filed 2–11–19; 8:45 am]
SMALL BUSINESS ADMINISTRATION
This is a Notice of the
Presidential declaration of a major
disaster for Public Assistance Only for
the State of Minnesota (FEMA–4414–
DR), dated 02/01/2019.
Incident: Severe Storms and Flooding.
Incident Period: 10/09/2018 through
10/11/2018.
DATES: Issued on 02/01/2019.
Physical Loan Application Deadline
Date: 04/02/2019.
Economic Injury (EIDL) Loan
Application Deadline Date: 11/01/2019.
ADDRESSES: Submit completed loan
applications to: U.S. Small Business
Administration, Processing and
Disbursement Center, 14925 Kingsport
Road, Fort Worth, TX 76155.
FOR FURTHER INFORMATION CONTACT: A.
Escobar, Office of Disaster Assistance,
U.S. Small Business Administration,
409 3rd Street SW, Suite 6050,
Washington, DC 20416, (202) 205–6734.
SUPPLEMENTARY INFORMATION: Notice is
hereby given that as a result of the
President’s major disaster declaration on
02/01/2019, Private Non-Profit
PO 00000
Primary Counties: Saint Louis
BILLING CODE 8025–01–P
U.S. Small Business
Administration.
ACTION: Notice.
AGENCY:
SUMMARY:
organizations that provide essential
services of a governmental nature may
file disaster loan applications at the
address listed above or other locally
announced locations.
The following areas have been
determined to be adversely affected by
the disaster:
Data Collection Available for Public
Comments
60-Day notice and request for
comments.
ACTION:
The Small Business
Administration (SBA) intends to request
approval, from the Office of
Management and Budget (OMB) for the
collection of information described
below. The Paperwork Reduction Act
(PRA) requires federal agencies to
publish a notice in the Federal Register
concerning each proposed collection of
information before submission to OMB,
and to allow 60 days for public
comment in response to the notice. This
notice complies with that requirement.
SUMMARY:
Submit comments on or before
April 15, 2019.
DATES:
Send all comments to Mary
Frias, Office of Financial Assistance,
Small Business Administration, 409 3rd
Street SW, Washington, DC 20416.
ADDRESSES:
E:\FR\FM\12FEN1.SGM
12FEN1
]]>Agencies
[Federal Register Volume 84, Number 29 (Tuesday, February 12, 2019)]
[Notices]
[Pages 3524-3526]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-01943]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-85062; File No. SR-FINRA-2019-001]
Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Extend the Expiration Date of FINRA Rule 0180
(Application of Rules to Security-Based Swaps)
February 6, 2019.
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 January 29, 2019, 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 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 extend the expiration date of FINRA Rule 0180
(Application of Rules to Security-Based Swaps) to February 12, 2020.
FINRA Rule 0180 temporarily limits, with certain exceptions, the
application of FINRA rules with respect to security-based swaps.
The text of the proposed rule change is available on FINRA's
website at https://www.finra.org, at the principal office of FINRA and
at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, FINRA included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. FINRA has prepared summaries, set forth in sections A,
B, and C below, of the most significant aspects of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
On July 1, 2011, the SEC issued an Order granting temporary
exemptive relief (the ``Temporary Exemptions'') from compliance with
certain provisions of the Exchange Act in connection with the revision,
pursuant to Title VII of the Dodd-Frank Wall Street Reform and Consumer
Protection Act (the ``Dodd-Frank Act''),\4\ of the Exchange Act
definition of ``security'' to encompass security-based swaps.\5\
Consistent with the Commission's action, on July 8, 2011, FINRA filed
for immediate effectiveness FINRA Rule 0180,\6\ which, with certain
exceptions, is intended to temporarily limit the application of FINRA
rules \7\ with respect to security-based swaps, thereby helping to
avoid undue market disruptions resulting from the change to the
definition of ``security'' under the Act.\8\
---------------------------------------------------------------------------
\4\ Public Law 111-203, 124 Stat. 1376 (2010).
\5\ See Securities Exchange Act Release No. 64795 (July 1,
2011), 76 FR 39927 (July 7, 2011) (Order Granting Temporary
Exemptions Under the Securities Exchange Act of 1934 in Connection
With the Pending Revision of the Definition of ``Security'' To
Encompass Security-Based Swaps, and Request for Comment) (the
``Exemptive Release''). The term ``security-based swap'' is defined
in Section 761 of the Dodd-Frank Act. See also Securities Exchange
Act Release No. 67453 (July 18, 2012), 77 FR 48207 (August 13, 2012)
(Further Definition of ``Swap,'' ``Security-Based Swap,'' and
``Security-Based Swap Agreement''; Mixed Swaps; Security-Based Swap
Agreement Recordkeeping).
\6\ See Securities Exchange Act Release No. 64884 (July 14,
2011), 76 FR 42755 (July 19, 2011) (Notice of Filing and Immediate
Effectiveness of Proposed Rule Change; File No. SR-FINRA-2011-033)
(``FINRA Rule 0180 Notice of Filing''). See also Securities Exchange
Act Release No. 82480 (January 10, 2018), 83 FR 2480 (January 17,
2018) (Notice of Filing and Immediate Effectiveness of Proposed Rule
Change; File No. SR-FINRA-2018-001) (extending the expiration date
of FINRA Rule 0180 to February 12, 2019).
\7\ The current FINRA rulebook consists of: (1) FINRA Rules; (2)
NASD Rules; and (3) rules incorporated from NYSE (``Incorporated
NYSE Rules''). While the NASD Rules generally apply to all FINRA
members, the Incorporated NYSE Rules apply only to those members of
FINRA that are also members of the NYSE. The FINRA Rules apply to
all FINRA members, unless such rules have a more limited application
by their terms. For more information about the rulebook
consolidation process, see Information Notice, March 12, 2008
(Rulebook Consolidation Process).
\8\ In its Exemptive Release, the Commission noted that the
relief is targeted and does not include, for instance, relief from
the Act's antifraud and anti-manipulation provisions. FINRA has
noted that FINRA Rule 0180 is similarly targeted. For instance,
paragraph (a) of FINRA Rule 0180 provides that FINRA rules shall not
apply to members' activities and positions with respect to security-
based swaps, except for FINRA Rules 2010 (Standards of Commercial
Honor and Principles of Trade), 2020 (Use of Manipulative, Deceptive
or Other Fraudulent Devices), 3310 (Anti-Money Laundering Compliance
Program) and 4240 (Margin Requirements for Credit Default Swaps).
See also paragraphs (b) and (c) of FINRA Rule 0180 (addressing the
applicability of additional rules) and FINRA Rule 0180 Notice of
Filing.
---------------------------------------------------------------------------
The Commission, noting the need to avoid a potential unnecessary
disruption to the security-based swap market in the absence of an
extension of the Temporary Exemptions, and the need for additional time
to consider the potential impact of the revision of the Exchange Act
definition of ``security'' in light of ongoing Commission rulemaking
efforts under Title VII of the Dodd-Frank Act, issued an Order which
extended and refined the applicable expiration dates for the previously
granted Temporary Exemptions.\9\ The
[[Page 3525]]
Commission previously noted that extending the Temporary Exemptions
would facilitate a coordinated consideration of these issues with the
relief provided pursuant to FINRA Rule 0180.\10\ In establishing Rule
0180, and in extending the rule's expiration date, FINRA noted its
intent, pending the implementation of any SEC rules and guidance that
would provide greater regulatory clarity in relation to security-based
swap activities, to align the expiration date of FINRA Rule 0180 with
the termination of relevant provisions of the Temporary Exemptions.\11\
---------------------------------------------------------------------------
\9\ See Securities Exchange Act Release No. 71485 (February 5,
2014), 79 FR 7731 (February 10, 2014) (Order Extending Temporary
Exemptions Under the Securities Exchange Act of 1934 in Connection
With the Revision of the Definition of ``Security'' to Encompass
Security-Based Swaps, and Request for Comment) (``2014 Extension
Release'') stating that, for those expiring Temporary Exemptions
``that are not directly linked to pending security-based swap
rulemakings, the Commission is extending the expiration date until
the earlier of such time as the Commission issues an order or rule
determining whether any continuing exemptive relief is appropriate
for security-based swap activities with respect to any of these
Exchange Act provisions or until three years following the effective
date of this Order.'' The 2014 Extension Release further stated that
for each expiring Temporary Exemption ``that is related to pending
security-based swap rulemakings, the Commission is extending the
expiration date until the compliance date for the related security-
based swap-specific rulemaking.'' The Commission has extended
certain Temporary Exemptions that are not directly linked to a
security-based swap rulemaking to February 5, 2020. See Securities
Exchange Act Release No. 84991 (January 25, 2019) (Order Granting a
Limited Exemption from the Exchange Act Definition of ``Penny
Stock'' for Security-Based Swap Transactions between Eligible
Contract Participants; Granting a Limited Exemption from the
Exchange Act Definition of ``Municipal Securities'' for Security-
Based Swaps; and Extending Certain Temporary Exemptions under the
Exchange Act in Connection with the Revision of the Definition of
``Security'' to Encompass Security-Based Swaps) (``2019 Extension
Release'').
\10\ See Securities Exchange Act Release No. 68864 (February 7,
2013), 78 FR 10218 (February 13, 2013) (Order Extending Temporary
Exemptions Under the Securities Exchange Act of 1934 in Connection
With the Revision of the Definition of ``Security'' to Encompass
Security-Based Swaps, and Request for Comment).
\11\ See note 6 supra.
---------------------------------------------------------------------------
The Commission's rulemaking and development of guidance in relation
to security-based swap activities is ongoing. As such, FINRA believes
it is appropriate and in the public interest, in light of the
Commission's goals as set forth in the Exemptive Release, the 2014
Extension Release and the 2019 Extension Release, to extend FINRA Rule
0180 for a limited period, to February 12, 2020, so as to avoid undue
market disruptions resulting from the change to the definition of
``security'' under the Act.\12\
---------------------------------------------------------------------------
\12\ FINRA may amend the expiration date of FINRA Rule 0180
based on any related Commission action.
---------------------------------------------------------------------------
FINRA has filed the proposed rule change for immediate
effectiveness and has requested that the SEC waive the requirement that
the proposed rule change not become operative for 30 days after the
date of the filing, so FINRA can implement the proposed rule change on
February 12, 2019.
2. Statutory Basis
FINRA believes that the proposed rule change is consistent with the
provisions of Section 15A(b)(6) of the Act,\13\ 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. FINRA believes that the proposed rule change would
further the purposes of the Act because, consistent with the goals set
forth by the Commission in the Exemptive Release, the 2014 Extension
Release and the 2019 Extension Release, the proposed rule change will
help to avoid undue market disruption that could result if FINRA Rule
0180 expires before the implementation of any SEC rules and guidance
that would provide greater regulatory clarity in relation to security-
based swap activities.
---------------------------------------------------------------------------
\13\ 15 U.S.C. 78o-3(b)(6).
---------------------------------------------------------------------------
B. Self-Regulatory Organization's Statement on Burden on Competition
FINRA does not believe that the proposed rule change will result in
any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act. FINRA believes that the
proposed rule change would prevent undue market disruption that would
otherwise result if security-based swaps were, by virtue of the
expansion of the Act's definition of ``security'' to encompass
security-based swaps, subject to the application of all FINRA rules
before the implementation of any SEC rules and guidance that would
provide greater regulatory clarity in relation to security-based swap
activities. FINRA believes that, by extending the expiration of FINRA
Rule 0180, the proposed rule change will serve to promote regulatory
clarity and consistency, thereby reducing burdens on the marketplace
and facilitating investor protection.
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
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) of the Act \14\ and Rule 19b-
4(f)(6) thereunder.\15\
---------------------------------------------------------------------------
\14\ 15 U.S.C. 78s(b)(3)(A).
\15\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
A proposed rule change filed under Rule 19b-4(f)(6) normally does
not become operative prior to 30 days after the date of the filing.
However, pursuant to Rule 19b-4(f)(6)(iii),\16\ the Commission may
designate a shorter time if such action is consistent with the
protection of investors and the public interest. FINRA has requested
that the Commission waive the 30-day operative delay requirement so
that the proposal may become operative on February 12, 2019. The
Commission hereby grants the request. The proposed rule is consistent
with the goals set forth by the Commission when it issued the Exemptive
Release, the 2014 Extension Release and the 2019 Extension Release and
will help avoid undue market interruption resulting from the change of
the definition of ``security'' under the Act and the expiration of
FINRA Rule 0180. Therefore, the Commission believes it is consistent
with the protection of investors and the public interest to waive the
30-day operative delay requirement. Therefore the Commission designates
the proposal as operative on February 12, 2019.
---------------------------------------------------------------------------
\16\ 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------
At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-FINRA-2019-001 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-2019-001. 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 website (https://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule
[[Page 3526]]
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 website viewing and printing in the Commission's Public
Reference Room, 100 F Street NE, Washington, DC 20549, on official
business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of
such filing also will be available for inspection and copying at the
principal office of FINRA. All comments received will be posted without
change. Persons submitting comments are cautioned that we do not redact
or edit personal identifying information from comment submissions. You
should submit only information that you wish to make available
publicly. All submissions should refer to File Number SR-FINRA-2019-001
and should be submitted on or before March 5, 2019.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
---------------------------------------------------------------------------
\17\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Eduardo Aleman,
Deputy Secretary.
[FR Doc. 2019-01943 Filed 2-11-19; 8:45 am]
BILLING CODE 8011-01-P
