Order Granting Application by The Financial Information Forum and Security Traders Association for a Temporary Exemption Pursuant to Rule 606(c) of Regulation NMS Under the Exchange Act in Response to the Effects of COVID-19, 17927-17929 [2020-06621]
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Federal Register / Vol. 85, No. 62 / Tuesday, March 31, 2020 / Notices
any burden on intermarket competition
that is not necessary or appropriate in
furtherance of the purposes of the Act
because the proposed change applies
only to Cboe Options. To the extent that
the proposed changes make Cboe
Options a more attractive marketplace
for market participants at other
exchanges, such market participants are
welcome to become Cboe Options
market participants.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange neither solicited nor
received comments on the proposed
rule change.
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 8 and paragraph (f) of Rule
19b–4 9 thereunder. 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 will institute proceedings
to determine whether the proposed rule
change 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:
jbell on DSKJLSW7X2PROD with NOTICES
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
CBOE–2020–018 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–CBOE–2020–018. This file
number should be included on the
8 15
9 17
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f).
VerDate Sep<11>2014
19:01 Mar 30, 2020
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
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 the
filing also will be available for
inspection and copying at the principal
office of the Exchange. 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–CBOE–2020–018 and
should be submitted on or before April
21, 2020.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.10
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–06609 Filed 3–30–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–88478]
Order Granting Application by The
Financial Information Forum and
Security Traders Association for a
Temporary Exemption Pursuant to
Rule 606(c) of Regulation NMS Under
the Exchange Act in Response to the
Effects of COVID–19
March 25, 2020.
I. Introduction
The Financial Information Forum
(‘‘FIF’’) and Security Traders
Association (‘‘STA’’) have filed with the
Securities and Exchange Commission
(‘‘Commission’’) an application for an
10 17
Jkt 250001
PO 00000
exemption from certain requirements 1
of Rule 606 of Regulation NMS under
the Exchange Act in light of unforeseen
and uncertain demands on information
technology and other resources required
to respond to COVID–19.2
This order grants the following
temporary exemptive relief from certain
requirements of Rule 606, which is set
forth in greater detail below: (1) Brokerdealers are exempt from the requirement
to provide the public report covering the
first quarter of 2020 required by Rule
606(a) until May 29, 2020; (2) brokerdealers that engage in outsourced
routing activity are exempt from the
requirement to collect the monthly
customer-specific data required by Rule
606(b)(3) for such activity until June 1,
2020, and are exempt until July 29,
2020, from the requirement to provide a
customer-specific report of June 2020
outsourced routing data within seven
business days for customer requests for
such customer-specific reports that are
made on or before July 17, 2020.3
II. Background
On November 2, 2018, the
Commission adopted amendments to
Rule 606 of Regulation NMS under the
Exchange Act.4 Under Rule 606(a),
broker-dealers must provide quarterly,
aggregated public disclosure of their
routing and handling of orders
submitted on a held basis in NMS stock.
In addition, under Rule 606(b) a brokerdealer must, upon request of its
customer, provide customer-specific
disclosures related to the routing and
execution of the customer’s NMS stock
orders submitted on a not held basis for
the prior six months, subject to two de
minimis exceptions.
The Commission previously revised
the compliance dates for Rule 606 to
provide broker-dealers with additional
time to implement the systems and
other changes necessary to comply with
Rule 606. On April 30, 2019, the
Commission extended the compliance
date for the amendments to Rule 606 to
begin following September 30, 2019.5
1 See letter from James Toes, President & CEO,
STA, Chris Halverson, Chairman of the Board, STA,
and Christopher Bok, Director, FIF, to Brett
Redfearn, Director, Division of Trading and Markets
(‘‘Division’’), Commission, dated March 24, 2020
(‘‘FIF/STA Letter’’).
2 17 CFR 242.606.
3 Customer-specific reports of June 2020
outsourced routing data are due within seven
business days of customer requests made after July
17, 2020.
4 See Exchange Act Release No. 84528 (November
2, 2018), 83 FR 58338 (November 19, 2018)
(‘‘Adopting Release’’).
5 See Exchange Act Release No. 85714 (April 24,
2019), 84 FR 18136 (April 30, 2019) (‘‘April 2019
Extension’’). The original compliance date set forth
CFR 200.30–3(a)(12).
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Continued
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Federal Register / Vol. 85, No. 62 / Tuesday, March 31, 2020 / Notices
On September 4, 2019, the Commission,
by the Division pursuant to delegated
authority, granted temporary
exemptions from amended Rule 606: (1)
To all broker-dealers, from the
requirement to collect the quarterly
public data on held orders until January
1, 2020 (with the first quarterly report
due by the end of April 2020); (2) to all
broker-dealers that engage in selfrouting activity, from the requirement to
collect the customer-specific monthly
data for not held orders until January 1,
2020 (with the first customer-specific
report of such data due seven business
days after February 15, 2020, for
customer requests made on or before
February 15, 2020); and (3) to all brokerdealers that engage in outsourced
routing activity, from the requirement to
collect the customer-specific monthly
data for not held orders until April 1,
2020 (with the first customer-specific
report of such data due seven business
days after May 15, 2020, for customer
requests made on or before May 15,
2020).6
FIF and STA request that the
Commission: (1) Delay to May 29, 2020,
the date by which broker-dealers must
provide the public report of first quarter
2020 data required by Rule 606(a); and
(2) extend to June 1, 2020, the date that
broker-dealers that outsource routing
must begin to collect the monthly
customer-specific data for not held NMS
stock orders required by Rule 606(b)(3),
and extend to July 29, 2020, the date by
which broker-dealers must provide the
customer-specific report of June 2020
data for customer requests that are made
on or before July 17, 2020.7 According
to FIF and STA, due to the challenges
posed by COVID–19, resources at firms
are currently focused on the safety of
employees and supporting investors,
Who?
jbell on DSKJLSW7X2PROD with NOTICES
Quarterly Public Reporting:
All routing broker-dealers .......
19:01 Mar 30, 2020
III. Order Granting Temporary
Exemptions
Rule 606(c) 9 authorizes the
Commission to conditionally or
unconditionally exempt any person,
security, or transaction, or any class or
classes of persons, securities, or
transactions, from any provision or
provisions of this section, if the
Commission determines that such
exemption is necessary or appropriate
in the public interest, and is consistent
with the protection of investors. The
Commission, by the Division pursuant
to delegated authority,10 is granting a
temporary exemption from certain of the
existing compliance dates that were set
forth in the September 2020 Extension.
The Commission believes that this
temporary relief is necessary or
appropriate in the public interest, and
consistent with the protection of
investors, given the unforeseen and
uncertain challenges, including
business continuity implementation and
market volatility, posed by COVID–19 to
broker-dealers that must comply with
the Rule 606 requirements to provide
reports of order handling and routing
data.
A. Rule 606(a)
The Commission has determined that
it is necessary or appropriate in the
public interest, and consistent with the
protection of investors, to provide
broker-dealers with a temporary
exemption until May 29, 2020, from the
requirement to provide the initial public
report of first quarter 2020 data for held
orders under Rule 606(a). Broker-dealers
have been required to collect the held
order data since January 1, 2020, but
they are not required to generate the
initial public report of that data until
the end of April 2020. Pursuant to this
exemption, a broker-dealer has an
additional month to prepare the public
report of first quarter 2020 held order
data.11
B. Rule 606(b)(3) for Broker-Dealers
Engaged in Outsourced Routing Activity
For substantially the same COVID–19related reasons, the Commission has
determined that it is necessary or
appropriate in the public interest, and
consistent with the protection of
investors, to provide broker-dealers that
outsource routing with a temporary
exemption until June 1, 2020, from the
requirement to collect the monthly
customer-specific data for their
outsourced routing activity, and until
July 29, 2020, from the requirement to
provide the first customer-specific
report of such data for customer
requests that are made on or before July
17.12 This first report would cover June
2020. Pursuant to this exemption, a
broker-dealer has two additional months
to prepare to collect the data required by
Rule 606(b)(3) for outsourced routing
activity and to prepare the first report
relating to outsourced routing activity.13
The chart below depicts the current
timing for reporting requirements under
amended Rule 606 as set forth in the
September 2019 Extension, as well as
the temporary exemptions being granted
herein:
What?
Current requirement
Exemption
Aggregate public report on routing
held orders in NMS stocks and
orders for options contracts of
less than $50,000 *.
Data collection began Jan. 1,
2020; report covering Q1 2020
due Apr. 30, 2020.
Report covering Q1 2020 due
May 29, 2020.
in the Adopting Release was May 20, 2019. The
April 2019 Extension did not extend the original
compliance date for the amendment to Rule 605.
6 See Exchange Act Release No. 86874 (September
4, 2019), 84 FR 47625 (September 10, 2019)
(‘‘September 2019 Extension’’). As set forth in the
September 2019 Extension, ‘‘self-routing activity’’
refers to when a broker-dealer handles customers’
orders using its own systems and ‘‘outsourced
routing activity’’ refers to when a broker-dealer uses
the order routing systems of another broker-dealer.
7 See FIF/STA Letter, supra note 2. FIF and STA
did not request an extension of monthly customerspecific reporting for not held orders for self-routing
broker-dealers. See id. The reporting requirement
for self-routing activity has already come due and
is ongoing.
VerDate Sep<11>2014
and extensions of the near-time
compliance dates for implementation of
amended Rule 606 would allow brokerdealers to allocate resources towards
addressing those challenges as well as
issues associated with current market
volatility and mitigate potential risks to
firms’ regulatory systems that otherwise
would need to be modified and tested
to satisfy near-term implementation
milestones.8
Jkt 250001
8 Id.
9 17
CFR 242.606(c).
10 17 CFR 200.30–3(a)(69).
11 The Commission is granting the exemption as
requested by FIF and STA. See FIF/STA Letter,
supra note 2. Broker-dealers are still required to
collect the held order data required by Rule 606(a)
for the full second quarter of 2020, and to provide
the public report of that data by the end of July
2020.
12 The Commission is granting the exemption as
requested by FIF/STA. See FIF/STA Letter, supra
note 2.
13 Rule 606(b)(3) requires a broker-dealer to
provide a report to its customer within seven
business days of receiving the customer request.
PO 00000
Frm 00081
Fmt 4703
Sfmt 4703
Similar to the relief provided to broker-dealers in
the September 2019 Extension, the Commission
believes it is appropriate to provide broker-dealers
additional time to prepare the first report of June
data in response to customer requests received in
early July. Accordingly, the report for any request
received on or before July 17 would not be due until
July 29. For example, if a customer requests a report
of June 2020 data on July 1, 2020, the broker-dealer
is not required to provide the report within seven
business days of July 1, 2020; instead, the brokerdealer is required to provide the report no later than
July 29, 2020. The report for any request received
after July 17 would be due seven business days after
such request.
E:\FR\FM\31MRN1.SGM
31MRN1
17929
Federal Register / Vol. 85, No. 62 / Tuesday, March 31, 2020 / Notices
Who?
Monthly Customer-Specific Reporting (upon request):
Self-routing broker-dealers .....
Broker-dealers that outsource
routing (white-labeling).
What?
Current requirement
Exemption
Detailed customer-specific order
handling disclosures for NMS
stock orders submitted on a not
held basis.
.......................................................
Data collection began Jan. 1,
2020; first report (covering January) was due Feb. 25, 2020.
None.
Data collection begins Apr. 1,
2020; first report (covering
April) due May 27, 2020.
Data collection begins June 1,
2020; first report (covering
June) due July 29, 2020 for
customer requests made on or
before July 17.
* This requires disclosure of material aspects of broker-dealer’s relationship with routing venues, which includes the details of any arrangement
with a venue where the level of execution quality is negotiated for an increase or decrease in payment for order flow. See Adopting Release at
58376, n. 397.
Accordingly, it is ordered, pursuant to
Rule 606(c) of Regulation NMS under
the Exchange Act,14 that:
(1) Broker-dealers are exempt from the
requirement to provide the public report
of held order data for the first quarter of
2020 required by Rule 606(a) until May
29, 2020.
(2) Broker-dealers engaged in
outsourced routing activity are exempt
from the requirement to start collecting
the Rule 606(b)(3) data until June 1,
2020 for such activity. For customer
requests that are made on or before July
17, 2020, a broker-dealer is exempt from
the requirement to provide a Rule
606(b)(3) report for outsourced routing
activity covering June 2020 data until
July 29, 2020.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.15
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–06621 Filed 3–30–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–88476; File No. SR–
PEARL–2020–03]
Self-Regulatory Organizations; MIAX
PEARL, LLC; Notice of Designation of
Longer Period for Commission Action
on Proposed Rule Change To Adopt
Rules Governing the Trading of Equity
Securities
jbell on DSKJLSW7X2PROD with NOTICES
March 25, 2020.
On January 24, 2020, MIAX PEARL,
LLC (‘‘MIAX PEARL’’ or ‘‘Exchange’’)
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 adopt rules governing the
trading of equity securities. The
proposed rule change was published for
comment in the Federal Register on
February 12, 2020.3 The Commission
has received no comment letters on the
proposed rule change.
Section 19(b)(2) of the Act 4 provides
that within 45 days of the publication of
notice of the filing of a proposed rule
change, or within such longer period up
to 90 days as the Commission may
designate if it finds such longer period
to be appropriate and publishes its
reasons for so finding or as to which the
self-regulatory organization consents,
the Commission shall either approve the
proposed rule change, disapprove the
proposed rule change, or institute
proceedings to determine whether the
proposed rule change should be
disapproved. The 45th day for this filing
is March 28, 2020.
The Commission is extending the 45day time period for Commission action
on the proposed rule change. The
Commission finds that it is appropriate
to designate a longer period within
which to take action on the proposed
rule change so that it has sufficient time
to consider the proposed rule change.
Accordingly, pursuant to Section
19(b)(2)(A)(ii)(I) of the Act 5 and for the
reasons stated above, the Commission
designates May 12, 2020, as the date by
which the Commission shall either
approve, disapprove, or institute
proceedings to determine whether to
disapprove, the proposed rule change
(File No. SR–PEARL–2020–03).
CFR 242.606(c).
CFR 200.30–3(a)(69).
1 15 U.S.C. 78s(b)(1).
15 17
VerDate Sep<11>2014
19:01 Mar 30, 2020
Jkt 250001
[FR Doc. 2020–06610 Filed 3–30–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–88469; File No. SR–NSCC–
2020–801]
Self-Regulatory Organizations;
National Securities Clearing
Corporation; Notice of No Objection To
Advance Notice To Enhance the
Calculation of the Family-Issued
Securities Charge
March 25, 2020.
On January 28, 2020, National
Securities Clearing Corporation
(‘‘NSCC’’) filed with the Securities and
Exchange Commission (‘‘Commission’’)
advance notice SR–NSCC–2020–801
(‘‘Advance Notice’’) pursuant to Section
806(e)(1) of Title VIII of the Dodd-Frank
Wall Street Reform and Consumer
Protection Act, entitled Payment,
Clearing and Settlement Supervision
Act of 2010 (‘‘Clearing Supervision
Act’’) 1 and Rule 19b–4(n)(1)(i) 2 under
the Securities Exchange Act of 1934
(‘‘Exchange Act’’) 3 to amend the
calculation of NSCC’s existing margin
charge applied to long positions in
Family-Issued Securities 4 to address
certain risk presented by these
positions. The Advance Notice was
published for public comment in the
6 17
CFR 200.30–3(a)(31).
U.S.C. 5465(e)(1).
2 17 CFR 240.19b–4(n)(1)(i).
3 15 U.S.C. 78a et seq.
4 Terms not defined herein are defined in NSCC’s
Rules and Procedures (‘‘Rules’’), available at https://
www.dtcc.com/∼/media/Files/Downloads/legal/
rules/nscc_rules.pdf.
1 12
2 17
CFR 240.19b–4.
Securities Exchange Act Release No. 88132
(February 6, 2020), 85 FR 8053.
4 15 U.S.C. 78s(b)(2).
5 15 U.S.C. 78s(b)(2)(A)(ii)(I).
3 See
14 17
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.6
J. Matthew DeLesDernier,
Assistant Secretary.
PO 00000
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]]>Agencies
[Federal Register Volume 85, Number 62 (Tuesday, March 31, 2020)]
[Notices]
[Pages 17927-17929]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-06621]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-88478]
Order Granting Application by The Financial Information Forum and
Security Traders Association for a Temporary Exemption Pursuant to Rule
606(c) of Regulation NMS Under the Exchange Act in Response to the
Effects of COVID-19
March 25, 2020.
I. Introduction
The Financial Information Forum (``FIF'') and Security Traders
Association (``STA'') have filed with the Securities and Exchange
Commission (``Commission'') an application for an exemption from
certain requirements \1\ of Rule 606 of Regulation NMS under the
Exchange Act in light of unforeseen and uncertain demands on
information technology and other resources required to respond to
COVID-19.\2\
---------------------------------------------------------------------------
\1\ See letter from James Toes, President & CEO, STA, Chris
Halverson, Chairman of the Board, STA, and Christopher Bok,
Director, FIF, to Brett Redfearn, Director, Division of Trading and
Markets (``Division''), Commission, dated March 24, 2020 (``FIF/STA
Letter'').
\2\ 17 CFR 242.606.
---------------------------------------------------------------------------
This order grants the following temporary exemptive relief from
certain requirements of Rule 606, which is set forth in greater detail
below: (1) Broker-dealers are exempt from the requirement to provide
the public report covering the first quarter of 2020 required by Rule
606(a) until May 29, 2020; (2) broker-dealers that engage in outsourced
routing activity are exempt from the requirement to collect the monthly
customer-specific data required by Rule 606(b)(3) for such activity
until June 1, 2020, and are exempt until July 29, 2020, from the
requirement to provide a customer-specific report of June 2020
outsourced routing data within seven business days for customer
requests for such customer-specific reports that are made on or before
July 17, 2020.\3\
---------------------------------------------------------------------------
\3\ Customer-specific reports of June 2020 outsourced routing
data are due within seven business days of customer requests made
after July 17, 2020.
---------------------------------------------------------------------------
II. Background
On November 2, 2018, the Commission adopted amendments to Rule 606
of Regulation NMS under the Exchange Act.\4\ Under Rule 606(a), broker-
dealers must provide quarterly, aggregated public disclosure of their
routing and handling of orders submitted on a held basis in NMS stock.
In addition, under Rule 606(b) a broker-dealer must, upon request of
its customer, provide customer-specific disclosures related to the
routing and execution of the customer's NMS stock orders submitted on a
not held basis for the prior six months, subject to two de minimis
exceptions.
---------------------------------------------------------------------------
\4\ See Exchange Act Release No. 84528 (November 2, 2018), 83 FR
58338 (November 19, 2018) (``Adopting Release'').
---------------------------------------------------------------------------
The Commission previously revised the compliance dates for Rule 606
to provide broker-dealers with additional time to implement the systems
and other changes necessary to comply with Rule 606. On April 30, 2019,
the Commission extended the compliance date for the amendments to Rule
606 to begin following September 30, 2019.\5\
[[Page 17928]]
On September 4, 2019, the Commission, by the Division pursuant to
delegated authority, granted temporary exemptions from amended Rule
606: (1) To all broker-dealers, from the requirement to collect the
quarterly public data on held orders until January 1, 2020 (with the
first quarterly report due by the end of April 2020); (2) to all
broker-dealers that engage in self-routing activity, from the
requirement to collect the customer-specific monthly data for not held
orders until January 1, 2020 (with the first customer-specific report
of such data due seven business days after February 15, 2020, for
customer requests made on or before February 15, 2020); and (3) to all
broker-dealers that engage in outsourced routing activity, from the
requirement to collect the customer-specific monthly data for not held
orders until April 1, 2020 (with the first customer-specific report of
such data due seven business days after May 15, 2020, for customer
requests made on or before May 15, 2020).\6\
---------------------------------------------------------------------------
\5\ See Exchange Act Release No. 85714 (April 24, 2019), 84 FR
18136 (April 30, 2019) (``April 2019 Extension''). The original
compliance date set forth in the Adopting Release was May 20, 2019.
The April 2019 Extension did not extend the original compliance date
for the amendment to Rule 605.
\6\ See Exchange Act Release No. 86874 (September 4, 2019), 84
FR 47625 (September 10, 2019) (``September 2019 Extension''). As set
forth in the September 2019 Extension, ``self-routing activity''
refers to when a broker-dealer handles customers' orders using its
own systems and ``outsourced routing activity'' refers to when a
broker-dealer uses the order routing systems of another broker-
dealer.
---------------------------------------------------------------------------
FIF and STA request that the Commission: (1) Delay to May 29, 2020,
the date by which broker-dealers must provide the public report of
first quarter 2020 data required by Rule 606(a); and (2) extend to June
1, 2020, the date that broker-dealers that outsource routing must begin
to collect the monthly customer-specific data for not held NMS stock
orders required by Rule 606(b)(3), and extend to July 29, 2020, the
date by which broker-dealers must provide the customer-specific report
of June 2020 data for customer requests that are made on or before July
17, 2020.\7\ According to FIF and STA, due to the challenges posed by
COVID-19, resources at firms are currently focused on the safety of
employees and supporting investors, and extensions of the near-time
compliance dates for implementation of amended Rule 606 would allow
broker-dealers to allocate resources towards addressing those
challenges as well as issues associated with current market volatility
and mitigate potential risks to firms' regulatory systems that
otherwise would need to be modified and tested to satisfy near-term
implementation milestones.\8\
---------------------------------------------------------------------------
\7\ See FIF/STA Letter, supra note 2. FIF and STA did not
request an extension of monthly customer-specific reporting for not
held orders for self-routing broker-dealers. See id. The reporting
requirement for self-routing activity has already come due and is
ongoing.
\8\ Id.
---------------------------------------------------------------------------
III. Order Granting Temporary Exemptions
Rule 606(c) \9\ authorizes the Commission to conditionally or
unconditionally exempt any person, security, or transaction, or any
class or classes of persons, securities, or transactions, from any
provision or provisions of this section, if the Commission determines
that such exemption is necessary or appropriate in the public interest,
and is consistent with the protection of investors. The Commission, by
the Division pursuant to delegated authority,\10\ is granting a
temporary exemption from certain of the existing compliance dates that
were set forth in the September 2020 Extension. The Commission believes
that this temporary relief is necessary or appropriate in the public
interest, and consistent with the protection of investors, given the
unforeseen and uncertain challenges, including business continuity
implementation and market volatility, posed by COVID-19 to broker-
dealers that must comply with the Rule 606 requirements to provide
reports of order handling and routing data.
---------------------------------------------------------------------------
\9\ 17 CFR 242.606(c).
\10\ 17 CFR 200.30-3(a)(69).
---------------------------------------------------------------------------
A. Rule 606(a)
The Commission has determined that it is necessary or appropriate
in the public interest, and consistent with the protection of
investors, to provide broker-dealers with a temporary exemption until
May 29, 2020, from the requirement to provide the initial public report
of first quarter 2020 data for held orders under Rule 606(a). Broker-
dealers have been required to collect the held order data since January
1, 2020, but they are not required to generate the initial public
report of that data until the end of April 2020. Pursuant to this
exemption, a broker-dealer has an additional month to prepare the
public report of first quarter 2020 held order data.\11\
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\11\ The Commission is granting the exemption as requested by
FIF and STA. See FIF/STA Letter, supra note 2. Broker-dealers are
still required to collect the held order data required by Rule
606(a) for the full second quarter of 2020, and to provide the
public report of that data by the end of July 2020.
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B. Rule 606(b)(3) for Broker-Dealers Engaged in Outsourced Routing
Activity
For substantially the same COVID-19-related reasons, the Commission
has determined that it is necessary or appropriate in the public
interest, and consistent with the protection of investors, to provide
broker-dealers that outsource routing with a temporary exemption until
June 1, 2020, from the requirement to collect the monthly customer-
specific data for their outsourced routing activity, and until July 29,
2020, from the requirement to provide the first customer-specific
report of such data for customer requests that are made on or before
July 17.\12\ This first report would cover June 2020. Pursuant to this
exemption, a broker-dealer has two additional months to prepare to
collect the data required by Rule 606(b)(3) for outsourced routing
activity and to prepare the first report relating to outsourced routing
activity.\13\
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\12\ The Commission is granting the exemption as requested by
FIF/STA. See FIF/STA Letter, supra note 2.
\13\ Rule 606(b)(3) requires a broker-dealer to provide a report
to its customer within seven business days of receiving the customer
request. Similar to the relief provided to broker-dealers in the
September 2019 Extension, the Commission believes it is appropriate
to provide broker-dealers additional time to prepare the first
report of June data in response to customer requests received in
early July. Accordingly, the report for any request received on or
before July 17 would not be due until July 29. For example, if a
customer requests a report of June 2020 data on July 1, 2020, the
broker-dealer is not required to provide the report within seven
business days of July 1, 2020; instead, the broker-dealer is
required to provide the report no later than July 29, 2020. The
report for any request received after July 17 would be due seven
business days after such request.
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The chart below depicts the current timing for reporting
requirements under amended Rule 606 as set forth in the September 2019
Extension, as well as the temporary exemptions being granted herein:
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Who? What? Current requirement Exemption
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Quarterly Public Reporting:
All routing broker-dealers....... Aggregate public report Data collection began Report covering Q1 2020
on routing held orders Jan. 1, 2020; report due May 29, 2020.
in NMS stocks and covering Q1 2020 due
orders for options Apr. 30, 2020.
contracts of less than
$50,000 *.
[[Page 17929]]
Monthly Customer-Specific Reporting
(upon request):
Self-routing broker-dealers...... Detailed customer- Data collection began None.
specific order Jan. 1, 2020; first
handling disclosures report (covering
for NMS stock orders January) was due Feb.
submitted on a not 25, 2020.
held basis.
Broker-dealers that outsource ....................... Data collection begins Data collection begins
routing (white-labeling). Apr. 1, 2020; first June 1, 2020; first
report (covering report (covering June)
April) due May 27, due July 29, 2020 for
2020. customer requests made
on or before July 17.
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* This requires disclosure of material aspects of broker-dealer's relationship with routing venues, which
includes the details of any arrangement with a venue where the level of execution quality is negotiated for an
increase or decrease in payment for order flow. See Adopting Release at 58376, n. 397.
Accordingly, it is ordered, pursuant to Rule 606(c) of Regulation
NMS under the Exchange Act,\14\ that:
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\14\ 17 CFR 242.606(c).
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(1) Broker-dealers are exempt from the requirement to provide the
public report of held order data for the first quarter of 2020 required
by Rule 606(a) until May 29, 2020.
(2) Broker-dealers engaged in outsourced routing activity are
exempt from the requirement to start collecting the Rule 606(b)(3) data
until June 1, 2020 for such activity. For customer requests that are
made on or before July 17, 2020, a broker-dealer is exempt from the
requirement to provide a Rule 606(b)(3) report for outsourced routing
activity covering June 2020 data until July 29, 2020.
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\15\ 17 CFR 200.30-3(a)(69).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-06621 Filed 3-30-20; 8:45 am]
BILLING CODE 8011-01-P
