Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing of a Proposed Rule Change Relating to Members' Filing Requirements Under FINRA Rule 6432 (Compliance With the Information Requirements of SEA Rule 15c2-11), 31774-31777 [2021-12480]
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Federal Register / Vol. 86, No. 113 / Tuesday, June 15, 2021 / Notices
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–92139; File No. SR–FINRA–
2021–014]
Self-Regulatory Organizations;
Financial Industry Regulatory
Authority, Inc.; Notice of Filing of a
Proposed Rule Change Relating to
Members’ Filing Requirements Under
FINRA Rule 6432 (Compliance With the
Information Requirements of SEA Rule
15c2–11)
June 9, 2021.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on May 28,
2021, the 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. 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 amend
members’ filing requirements under
FINRA Rule 6432 (Compliance with the
Information Requirements of SEA Rule
15c2–11).
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.
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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.
1 15
2 17
U.S.C. 78s(b)(1).
CFR 240.19b–4.
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A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
Background
FINRA is proposing amendments to
FINRA Rule 6432 in light of the SEC’s
amendments to Exchange Act Rule
15c2–11 (‘‘Rule 15c2–11’’). Rule 15c2–
11 sets forth the information review and
maintenance requirements for brokerdealers that publish quotations 3 in a
quotation medium 4 for securities in the
over the counter (‘‘OTC’’) market.5
Specifically, Rule 15c2–11 prohibits a
broker-dealer from publishing (or
submitting for publication) a quotation
for a security unless it has obtained and
reviewed specified current information
about the issuer whose security is the
subject of the quotation and has a
reasonable basis under the
circumstances for believing the
information is accurate in all material
respects and obtained from a reliable
source, unless otherwise permitted
under the rule.6
Rule 15c2–11 prescribes information
review requirements that are specific to
the type of issuer whose security is
sought to be quoted, with different
information requirements applicable to
prospectus issuers, Regulation A
issuers, reporting companies, exempt
foreign private issuers, and all other
issuers that do not fit into any of these
categories. Rule 15c2–11 also includes
several exceptions from these
information review requirements,
including, for example, an exception
from ongoing information review where
the security is the subject of continuous
quoting and meets other specified
conditions (known as the ‘‘piggyback’’
exception).
The amendments to Rule 15c2–11
make substantial changes to the prior
3 Rule 15c2–11 defines ‘‘quotation’’ as any bid or
offer at a specified price with respect to a security,
or any indication of interest by a broker or dealer
in receiving bids or offers from others for a security,
or any indication by a broker or dealer that wishes
to advertise its general interest in buying or selling
a particular security. See 17 CFR 240.15c2–11(e)(7).
4 ‘‘Quotation medium’’ means any ‘‘interdealer
quotation system’’ or any publication or electronic
communications network or other device that is
used by brokers or dealers to make known to others
their interest in transactions in any security,
including offers to buy or sell at a stated price or
otherwise, or invitations of offers to buy or sell. See
17 CFR 240.15c2–11(e)(8). ‘‘Interdealer quotation
system’’ means any system of general circulation to
brokers or dealers that regularly disseminates the
quotations of identified brokers or dealers. See 17
CFR 240.15c2–11(e)(3).
5 See generally 17 CFR 240.15c2–11.
6 17 CFR 240.15c2–11(a)(1)(i).
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framework.7 Among others, one
significant change that is relevant to the
instant filing is that broker-dealers are
now permitted to rely on the publicly
available determinations of certain
alternative trading systems that meet the
definition of a ‘‘qualified interdealer
quotation system’’ (‘‘Qualified IDQS’’) 8
with respect to the required information
review, the availability of specified
exceptions to Rule 15c2–11, and the
public availability of current issuer
information. Specifically, where a
Qualified IDQS undertakes the initial
review and makes a publicly available
determination concerning its review, as
set forth in Rule 15c2–11(a)(2), brokerdealers may, under Rule 15c2–
11(a)(1)(ii), initiate quotations in the
subject security within three business
days of the Qualified IDQS’s publicly
available determination.9 In addition,
amended Rule 15c2–11 permits brokerdealers to rely on the publicly available
determinations of a Qualified IDQS in
connection with the availability of the
following exceptions to Rule 15c2–11:
Paragraph (f)(1)’s exception for
exchange-traded securities; paragraph
(f)(3)’s exception for piggyback
eligibility; paragraph (f)(4)’s exception
for municipal securities; and paragraph
(f)(5)’s average daily trading volume and
asset test exception.10 Broker-dealers
also may rely on the publicly available
determinations of a Qualified IDQS in
connection with the public availability
of current issuer information, as
described in amended Rule 15c2–11’s
unsolicited quotation exception and its
piggyback exception,11 and their
publicly available determinations
regarding the availability of the
piggyback exception’s grace period.12
FINRA believes that the SEC’s
amendments to Rule 15c2–11
necessitate changes to FINRA Rule
6432, which sets forth the standards
applicable to member firms quoting
equity securities for demonstrating
compliance with Rule 15c2–11 (unless a
Rule 15c2–11 exception or exemption is
available). Under FINRA Rule 6432, no
member may quote a non-exchange7 See e.g., Adopting Release, infra note 21, at
68124–26.
8 Amended Rule 15c2–11 defines a ‘‘qualified
interdealer quotation system’’ as any ‘‘interdealer
quotation system’’ that meets the definition of an
‘‘alternative trading system’’ under Rule 300(a) of
Regulation ATS and operates pursuant to the
exemption from the definition of an ‘‘exchange’’
under Regulation ATS. See 17 CFR 240.15c2–
11(e)(6).
9 See 17 CFR 240.15c2–11(a)(2) and (a)(1)(ii).
10 See 17 CFR 240.15c2–11(f)(7).
11 See 17 CFR 240.15c2–11(f)(2)(iii)(B) and
(f)(3)(ii)(A)(1).
12 See 17 CFR 240.15c2–11(f)(3)(ii)(A)(1)–(2).
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listed security 13 in a quotation medium
unless the member has demonstrated
compliance with FINRA Rule 6432 and
the applicable requirements for
information maintenance under Rule
15c2–11 by making a filing with, and in
the form required by, FINRA (i.e., the
Form 211). The Form 211 is designed to
gather pertinent information regarding
the subject issuer and security, the
member’s knowledge of and
relationship with the issuer, and the
member’s intended quotation activities
with respect to the security. FINRA uses
the Form 211 in connection with its
oversight of member compliance with
Rule 15c2–11.
In response to the SEC’s amendments
to Rule 15c2–11, FINRA is proposing
amendments to FINRA Rule 6432—
primarily to account for the new role of
a Qualified IDQS.14 Specifically, the
instant filing includes three areas of
proposed amendments to FINRA Rule
6432: (i) The addition of a requirement
that a Qualified IDQS submit a modified
Form 211 filing to FINRA in connection
with each initial information review
that it conducts; (ii) the addition of a
requirement that a Qualified IDQS that
makes a publicly available
determination under Rule 15c2–11
submit a daily security file to FINRA
containing summary information for all
securities quoted on its system; and (iii)
other changes to FINRA Rule 6432 and
the Form 211 to further clarify the
operation of the rule and conform to
amended Rule 15c2–11.15 Each of these
13 The term ‘‘non-exchange-listed security’’ is
defined in FINRA Rule 6432(e) to mean any equity
security, other than a Restricted Equity Security,
that is not traded on any national securities
exchange. A ‘‘Restricted Equity Security’’ means
any equity security that meets the definition of
‘‘restricted security’’ as contained in Securities Act
Rule 144(a)(3). See 17 CFR 230.144.
14 While a Qualified IDQS is not obligated to
perform reviews and make publicly available
determinations under Rule 15c2–11, if it chooses to
do so, it must comply with the requirements of Rule
15c2–11. In the Adopting Release, among other
things, the SEC stated that it expects FINRA to
continue to monitor the operation of the OTC
market, including through oversight of Qualified
IDQSs. See Adopting Release, infra note 21, at
68132.
15 While the SEC’s amendments also update the
items of information that must be reviewed for the
different categories of issuers described in
paragraph (b) of Rule 15c2–11, the baseline
requirements largely remain unchanged. Likewise,
the paragraph (b) items of information required to
be submitted under FINRA Rule 6432 and the Form
211 will not change significantly but will be
updated to be consistent with amended Rule 15c2–
11. Therefore, for example, FINRA will make minor
updates to Form 211, including, for (b)(5)
submissions, to require historic information on the
name of the issuer and any predecessors (past five
years) and the address of the issuer’s principal
place of business (in addition to its principal
executive offices).
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aspects of the proposed rule change is
discussed in greater detail below.16
Qualified IDQS Modified Form 211
Submission Requirement
FINRA is proposing to adopt new
paragraph (b) under FINRA Rule 6432 to
establish an after-the-fact filing
requirement for a Qualified IDQS that
performs an initial review under Rule
15c2–11(a)(2). Under the proposed
provision, a Qualified IDQS must
demonstrate compliance with Rule
15c2–11 by making a filing with, and in
the form required by, FINRA no later
than 6:30:00 p.m. Eastern Time on the
business day following the Qualified
IDQS’s publicly available determination
under Rule 15c2–11(a)(2) (i.e., a
‘‘modified Form 211’’ filing). Like the
standard Form 211, the modified Form
211 would contain requests for the
items of information specified in Rule
15c2–11 for the type of issuer
involved.17
FINRA believes that requiring a
Qualified IDQS to submit a modified
Form 211 is appropriate because it
would provide FINRA with information
with which to perform oversight of a
Qualified IDQS’s compliance with the
initial information review requirements
of Rule 15c2–11 without involving any
additional delay for FINRA to review
and process the form prior to members
being permitted to initiate quotations in
reliance on the Qualified IDQS’s
publicly available determination.
FINRA would use the modified Form
211 filings submitted by a Qualified
IDQS to assess periodically the
adequacy of the Qualified IDQS’s
reviews.18 This new requirement would
supplement FINRA’s existing standard
Form 211 review process for quoting
16 FINRA will publish a Regulatory Notice with
technical details on the revised standard Form 211,
modified Form 211, and daily file submission
process.
17 Both the modified and standard Form 211s will
conform with the SEC’s amendments to Rule 15c2–
11, as applicable. See supra note 15. In addition,
like the standard Form 211, the modified Form 211
must be reviewed and signed by a principal of the
Qualified IDQS and the principal must certify,
among other things, that neither the firm nor its
associated persons have accepted or will accept any
payment or other consideration for filing the Form
211. See Regulatory Notice 14–26 (June 2014); see
also FINRA Rule 5250 (Payments for Market
Making).
18 In the Adopting Release, the SEC stated that a
Qualified IDQS, like a broker-dealer, must have a
reasonable basis under the circumstances to believe
that the paragraph (b) information is accurate in all
material respects and obtained from a reliable
source and, consistent with Rule 15c2–
11(a)(2)(iii)(A) and (B), the Qualified IDQS should
be alert to any red flags (i.e., information under the
circumstances that reasonably indicates that one or
more of the required items of information may be
materially inaccurate or from an unreliable source).
See Adopting Release, infra note 21, at 68170.
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31775
broker-dealer members, which would
continue to be applicable where a
broker-dealer is not relying on a
Qualified IDQS’s publicly available
determination with respect to an initial
review.19
Qualified IDQS Daily Security File
Submission Requirement
Under proposed Supplementary
Material .02 to FINRA Rule 6432, a
Qualified IDQS that makes publicly
available determinations under
amended Rule 15c2–11, including
regarding the availability of a Rule
15c2–11 exception, would be required
to submit a daily security file to FINRA.
Specifically, where a Qualified IDQS
has made one or more publicly available
determinations described in Rule 15c2–
11(a)(2), (f)(2)(iii)(B), (f)(3)(ii)(A), or
(f)(7), the Qualified IDQS would be
required to submit to FINRA a daily
security file containing the following
information for all non-exchange-listed
equity securities quoted on its system:
• Security symbol;
• Issuer name;
• If the non-exchange-listed equity
security is being quoted pursuant to a
processed Form 211 under FINRA Rule
6432(a);
• If applicable, the type of publicly
available determination made by the
Qualified IDQS (e.g., an initial review
pursuant to Rule 15c2–11(a)(2), that the
required information is current and
publicly available under Rule 15c2–
11(f)(2)(iii)(B) or (f)(3)(ii)(A), or an
exception under Rule 15c2–11(f)(7)) and
the date on which such publicly
available determination was made by
the Qualified IDQS;
• With respect to a non-exchangelisted equity security for which the
Qualified IDQS has made a publicly
available determination under Rule
15c2–11(f)(7) relating to the availability
of the piggyback exception under Rule
15c2–11(f)(3), whether the issuer is a
shell company and, if a shell company,
the number of days remaining in the
applicable 18-month period under Rule
15c–2–11(f)(3)(i)(B)(2);
• If applicable, that the security is
being quoted pursuant to an exception
19 FINRA notes that a quoting member relying on
a Qualified IDQS would not be required to
separately submit any sort of Form 211 in
connection with its initiation of quotations
pursuant to Rule 15c2–11(a)(1)(ii). However,
members who are not relying on the initial review
of a Qualified IDQS would continue to be required
to submit the Form 211 to FINRA and receive
notification that the form has been processed prior
to initiating quotes in the subject security (and, as
described below, FINRA is proposing to amend
FINRA Rule 6432 to clarify that a quoting member
must receive notification from FINRA that a
standard Form 211 has been processed before
initiating or resuming quotations).
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that does not rely on the Qualified
IDQS’s publicly available determination
and, if so, identify the exception relied
upon by the subscriber; and
• Such other information as specified
by FINRA in a Regulatory Notice (or
similar communication).
FINRA would use the above
information as part of its oversight
program to perform surveillance and
periodic reviews of Qualified IDQS and
quoting member compliance with
amended Rule 15c2–11.
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Other Amendments
In addition to the two new proposed
requirements applicable to Qualified
IDQSs described above, the proposed
rule change also includes other
amendments to FINRA Rule 6432 to
further clarify the operation of the rule
and conform to amended Rule 15c2–11.
First, FINRA is amending language in
existing paragraphs (a) and (c)
(paragraph (c) is proposed to be
renumbered as paragraph (d)) to clarify
that a member must receive notification
from FINRA that a standard Form 211
has been processed before initiating or
resuming quotations in a quotation
medium (in the case of paragraph (a)) or
before entering a priced quotation for
the security (in the case of proposed
paragraph (d)). FINRA is making these
amendments to clarify existing member
obligations with respect to a standard
Form 211 under FINRA Rule 6432.
Second, FINRA Rule 6432(b)(1)
(proposed to be renumbered as
paragraph (c)(1)) will expand the
treatment currently allowed for
documents available through the SEC’s
Electronic Data Gathering, Analysis, and
Retrieval (‘‘EDGAR’’) system to
information available through the
website of a Qualified IDQS or its
affiliate broker-dealer. Currently,
members are required to file a copy of
the required issuer information with
FINRA except that, with respect to
information that is available through
EDGAR, the member instead is
permitted to provide identifying
information for each issuer report or
statement that was relied upon in
satisfying its obligations under FINRA
Rule 6432 and SEA Rule 15c2–11. This
allowance is intended to ease burdens
on broker-dealers when filing a Form
211. In light of the new role for
Qualified IDQSs under amended Rule
15c2–11, FINRA believes it is
appropriate to similarly permit members
to point FINRA to required information
where it is publicly available on the
website of a Qualified IDQS by
including in the filing the permanent
website address of the relevant
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document on the Qualified IDQS’s (or
its affiliate broker-dealer’s) website.
Third, FINRA is proposing to define
‘‘qualified inter-dealer quotation
system’’ in new paragraph (g) of FINRA
Rule 6432, consistent with the term’s
definition in SEA Rule 15c2–11(e)(6).
Fourth, to assist with oversight of
member compliance with Rule 15c2–11,
FINRA is proposing to require that
members include in the standard and
modified Form 211 the names of all
officers and directors of the subject
issuer. Finally, the proposed rule
change includes several technical and
non-substantive changes to update
cross-references to the renumbered
provisions of amended Rule 15c2–11 20
and to correct the numbering of
Supplementary Material .01 to FINRA
Rule 6432, which would not otherwise
substantively be modified (FINRA Rule
6432.01 would be corrected to read
‘‘.01’’ rather than ‘‘01.’’, per FINRA
rulebook style).
If the Commission approves the
proposed rule changes, the effective
date of the proposed rule changes will
be the same as the compliance date of
the SEC’s amendments to Rule 15c2–11
(except for paragraph (b)(5)(i)(M)),
including any extensions to such
compliance date.21
2. Statutory Basis
FINRA believes that the proposed rule
change is consistent with the provisions
of Section 15A(b)(6) of the Act,22 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 also believes that
the proposed rule change is consistent
with the provisions of Section
15A(b)(11) of the Act,23 which requires,
among other things, that FINRA’s rules
be designed to produce fair and
informative quotations, to prevent
fictitious or misleading quotations, and
to promote orderly procedures for
20 FINRA also will make corresponding language
and citation changes to the Form 211.
21 See Securities Exchange Act Release No. 89891
(September 16, 2020), 85 FR 68124 (October 27,
2020) (‘‘Adopting Release’’). The SEC specified a
compliance date for amended Rule 15c2–11 (except
for paragraph (b)(5)(i)(M)) of nine months after the
amended rule’s December 28, 2020 effective date,
which is September 28, 2021. See id. at 68172. The
compliance date for paragraph (b)(5)(i)(M) will be
two years after the December 28, 2020 effective
date, which is December 28, 2022. See id. at 68172
n.535.
22 15 U.S.C. 78o–3(b)(6).
23 15 U.S.C. 78o–3(b)(11).
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collecting, distributing, and publishing
quotations.
FINRA believes that, by amending
FINRA Rule 6432 and the Form 211 in
response to the SEC’s amendments to
Rule 15c2–11, the proposed rule change
will facilitate FINRA’s oversight of
member Qualified IDQSs, enhance
investor protection, and reduce burdens
on broker-dealers. The proposed rule
change would require a Qualified IDQS
to submit an after-the-fact, modified
Form 211 to FINRA in connection with
its publicly available determinations
regarding initial reviews. The proposed
amendments also would require a
Qualified IDQS that makes publicly
available determinations to submit a
daily security file containing specified
information for all non-exchange-listed
equity securities quoted on its system.
FINRA believes that the submission of
this information will allow FINRA to
effectively oversee the activities of its
members in the OTC market, including
of a Qualified IDQS’s compliance with
Rule 15c2–11’s obligations. In addition,
FINRA believes that the modified Form
211 requirement for Qualified IDQSs is
appropriate, including because, together
with the daily file, it will provide
FINRA with the information relied upon
by each Qualified IDQS as well as
consolidated daily Rule 15c2–11
compliance information, making a
focused, after-the-fact review more
manageable and able to be
accomplished in a shorter period of
time. FINRA believes that such
oversight will serve to complement the
amended Rule 15c2–11 framework
adopted by the SEC, and, therefore, is in
the public interest. Moreover,
permitting quoting members to rely on
a Qualified IDQS’s publicly available
determination to initiate quotations in a
security is consistent with the SEC’s
goals to reduce burdens on brokerdealers while maintaining investor
protection.
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.
Regulatory Need
This economic impact assessment is
intended to evaluate the economic
impact of the proposed changes to
FINRA Rule 6432. Amendments to
FINRA Rule 6432 are necessary to
facilitate FINRA oversight of member
compliance with amended SEA Rule
15c2–11. One key aspect of the
proposed rule change, resulting from the
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SEC’s changes to Rule 15c2–11, is the
addition of a modified Form 211
requirement that would be applicable to
a Qualified IDQS that engages in the
initial information review of a security.
The Qualified IDQS would be required
to submit the modified Form 211 to
FINRA by the end of the next business
day after the Qualified IDQS’s publicly
available determination was made.
Economic Baseline
The economic baseline considers
investor protection and members’
regulatory burden in the absence of the
proposed rule change in light of the
SEC’s amended rule. Among other
things, amended Rule 15c2–11 permits
a broker-dealer to rely on a Qualified
IDQS to perform the initial information
review required by the rule. Where a
broker-dealer subscriber is not relying
on the initial review of a Qualified
IDQS, it must submit a standard Form
211 to FINRA and await notification
that the form has been processed prior
to initiating quotations in the security.
SEA Rule 15c2–11 and FINRA Rule
6432 generally govern the quotation
conduct of broker-dealers initiating
quotes in equity securities in the OTC
market.24
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Economic Impacts
The proposed rule change would
likely improve FINRA’s oversight of the
OTC market given the amendments to
Rule 15c2–11. Specifically, by requiring
the Qualified IDQS to submit (i) an
after-the-fact, modified Form 211 filing
in connection with publicly available
determinations related to an initial
information review, and (ii) a daily
security file containing summary Rule
15c2–11-related information for each
security quoted on its system, FINRA
would have data necessary to monitor
for Rule 15c2–11 compliance by the
Qualified IDQSs and other members.
The daily security file also would
enhance FINRA’s surveillance
capabilities, which furthers investor
protection.
FINRA acknowledges that a Qualified
IDQS could incur some operational
costs in submitting the modified Form
211 filing and daily security file to
FINRA. Where the Qualified IDQS
decides to undertake an initial review,
the costs of filing a Form 211 would be
shifted from broker-dealer subscribers to
the Qualified IDQS.
24 There were 3,435 FINRA member firms as of
the end of 2020. Over the 2018 to 2020 period, an
average 11,018 OTC equity securities were quoted
with a price per year.
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Alternatives Considered
FINRA considered not implementing
a filing requirement for a Qualified
IDQS. FINRA determined that the afterthe-fact submission requirement strikes
an appropriate balance by providing
FINRA with important information with
which to oversee Qualified IDQS
compliance without involving the delay
of a FINRA processing time prior to the
initiation of quoting, consistent with the
SEC’s goals to reduce burdens on
broker-dealers while maintaining
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
Within 45 days of the date of
publication of this notice in the Federal
Register or within such longer period (i)
as the Commission may designate up to
90 days of such date if it finds such
longer period to be appropriate and
publishes its reasons for so finding or
(ii) as to which the self-regulatory
organization consents, the Commission
will:
(A) By order approve or disapprove
such proposed rule change, or
(B) institute proceedings to determine
whether the proposed rule change
should be 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–2021–014 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–2021–014. 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
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31777
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
a.m. and 3 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–
2021–014 and should be submitted on
or before July 6, 2021.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.25
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–12480 Filed 6–14–21; 8:45 am]
BILLING CODE 8011–01–P
SMALL BUSINESS ADMINISTRATION
[Disaster Declaration #16997 and #16998;
Alabama Disaster Number AL–00121]
Presidential Declaration of a Major
Disaster for Public Assistance Only for
the State of Alabama
Small Business Administration.
Notice.
AGENCY:
ACTION:
This is a Notice of the
Presidential declaration of a major
disaster for Public Assistance Only for
the State of Alabama (FEMA–4596–DR),
dated 06/08/2021.
Incident: Severe Storm, Straight-line
Winds, and Tornadoes.
Incident Period: 03/25/2021 through
03/26/2021.
DATES: Issued on 06/08/2021.
Physical Loan Application Deadline
Date: 08/09/2021.
SUMMARY:
25 17
E:\FR\FM\15JNN1.SGM
CFR 200.30–3(a)(12).
15JNN1
]]>Agencies
[Federal Register Volume 86, Number 113 (Tuesday, June 15, 2021)]
[Notices]
[Pages 31774-31777]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-12480]
[[Page 31774]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-92139; File No. SR-FINRA-2021-014]
Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing of a Proposed Rule Change Relating to
Members' Filing Requirements Under FINRA Rule 6432 (Compliance With the
Information Requirements of SEA Rule 15c2-11)
June 9, 2021.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on May 28, 2021, the 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. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
FINRA is proposing to amend members' filing requirements under
FINRA Rule 6432 (Compliance with the Information Requirements of SEA
Rule 15c2-11).
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
Background
FINRA is proposing amendments to FINRA Rule 6432 in light of the
SEC's amendments to Exchange Act Rule 15c2-11 (``Rule 15c2-11''). Rule
15c2-11 sets forth the information review and maintenance requirements
for broker-dealers that publish quotations \3\ in a quotation medium
\4\ for securities in the over the counter (``OTC'') market.\5\
Specifically, Rule 15c2-11 prohibits a broker-dealer from publishing
(or submitting for publication) a quotation for a security unless it
has obtained and reviewed specified current information about the
issuer whose security is the subject of the quotation and has a
reasonable basis under the circumstances for believing the information
is accurate in all material respects and obtained from a reliable
source, unless otherwise permitted under the rule.\6\
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\3\ Rule 15c2-11 defines ``quotation'' as any bid or offer at a
specified price with respect to a security, or any indication of
interest by a broker or dealer in receiving bids or offers from
others for a security, or any indication by a broker or dealer that
wishes to advertise its general interest in buying or selling a
particular security. See 17 CFR 240.15c2-11(e)(7).
\4\ ``Quotation medium'' means any ``interdealer quotation
system'' or any publication or electronic communications network or
other device that is used by brokers or dealers to make known to
others their interest in transactions in any security, including
offers to buy or sell at a stated price or otherwise, or invitations
of offers to buy or sell. See 17 CFR 240.15c2-11(e)(8).
``Interdealer quotation system'' means any system of general
circulation to brokers or dealers that regularly disseminates the
quotations of identified brokers or dealers. See 17 CFR 240.15c2-
11(e)(3).
\5\ See generally 17 CFR 240.15c2-11.
\6\ 17 CFR 240.15c2-11(a)(1)(i).
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Rule 15c2-11 prescribes information review requirements that are
specific to the type of issuer whose security is sought to be quoted,
with different information requirements applicable to prospectus
issuers, Regulation A issuers, reporting companies, exempt foreign
private issuers, and all other issuers that do not fit into any of
these categories. Rule 15c2-11 also includes several exceptions from
these information review requirements, including, for example, an
exception from ongoing information review where the security is the
subject of continuous quoting and meets other specified conditions
(known as the ``piggyback'' exception).
The amendments to Rule 15c2-11 make substantial changes to the
prior framework.\7\ Among others, one significant change that is
relevant to the instant filing is that broker-dealers are now permitted
to rely on the publicly available determinations of certain alternative
trading systems that meet the definition of a ``qualified interdealer
quotation system'' (``Qualified IDQS'') \8\ with respect to the
required information review, the availability of specified exceptions
to Rule 15c2-11, and the public availability of current issuer
information. Specifically, where a Qualified IDQS undertakes the
initial review and makes a publicly available determination concerning
its review, as set forth in Rule 15c2-11(a)(2), broker-dealers may,
under Rule 15c2-11(a)(1)(ii), initiate quotations in the subject
security within three business days of the Qualified IDQS's publicly
available determination.\9\ In addition, amended Rule 15c2-11 permits
broker-dealers to rely on the publicly available determinations of a
Qualified IDQS in connection with the availability of the following
exceptions to Rule 15c2-11: Paragraph (f)(1)'s exception for exchange-
traded securities; paragraph (f)(3)'s exception for piggyback
eligibility; paragraph (f)(4)'s exception for municipal securities; and
paragraph (f)(5)'s average daily trading volume and asset test
exception.\10\ Broker-dealers also may rely on the publicly available
determinations of a Qualified IDQS in connection with the public
availability of current issuer information, as described in amended
Rule 15c2-11's unsolicited quotation exception and its piggyback
exception,\11\ and their publicly available determinations regarding
the availability of the piggyback exception's grace period.\12\
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\7\ See e.g., Adopting Release, infra note 21, at 68124-26.
\8\ Amended Rule 15c2-11 defines a ``qualified interdealer
quotation system'' as any ``interdealer quotation system'' that
meets the definition of an ``alternative trading system'' under Rule
300(a) of Regulation ATS and operates pursuant to the exemption from
the definition of an ``exchange'' under Regulation ATS. See 17 CFR
240.15c2-11(e)(6).
\9\ See 17 CFR 240.15c2-11(a)(2) and (a)(1)(ii).
\10\ See 17 CFR 240.15c2-11(f)(7).
\11\ See 17 CFR 240.15c2-11(f)(2)(iii)(B) and (f)(3)(ii)(A)(1).
\12\ See 17 CFR 240.15c2-11(f)(3)(ii)(A)(1)-(2).
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FINRA believes that the SEC's amendments to Rule 15c2-11
necessitate changes to FINRA Rule 6432, which sets forth the standards
applicable to member firms quoting equity securities for demonstrating
compliance with Rule 15c2-11 (unless a Rule 15c2-11 exception or
exemption is available). Under FINRA Rule 6432, no member may quote a
non-exchange-
[[Page 31775]]
listed security \13\ in a quotation medium unless the member has
demonstrated compliance with FINRA Rule 6432 and the applicable
requirements for information maintenance under Rule 15c2-11 by making a
filing with, and in the form required by, FINRA (i.e., the Form 211).
The Form 211 is designed to gather pertinent information regarding the
subject issuer and security, the member's knowledge of and relationship
with the issuer, and the member's intended quotation activities with
respect to the security. FINRA uses the Form 211 in connection with its
oversight of member compliance with Rule 15c2-11.
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\13\ The term ``non-exchange-listed security'' is defined in
FINRA Rule 6432(e) to mean any equity security, other than a
Restricted Equity Security, that is not traded on any national
securities exchange. A ``Restricted Equity Security'' means any
equity security that meets the definition of ``restricted security''
as contained in Securities Act Rule 144(a)(3). See 17 CFR 230.144.
---------------------------------------------------------------------------
In response to the SEC's amendments to Rule 15c2-11, FINRA is
proposing amendments to FINRA Rule 6432--primarily to account for the
new role of a Qualified IDQS.\14\ Specifically, the instant filing
includes three areas of proposed amendments to FINRA Rule 6432: (i) The
addition of a requirement that a Qualified IDQS submit a modified Form
211 filing to FINRA in connection with each initial information review
that it conducts; (ii) the addition of a requirement that a Qualified
IDQS that makes a publicly available determination under Rule 15c2-11
submit a daily security file to FINRA containing summary information
for all securities quoted on its system; and (iii) other changes to
FINRA Rule 6432 and the Form 211 to further clarify the operation of
the rule and conform to amended Rule 15c2-11.\15\ Each of these aspects
of the proposed rule change is discussed in greater detail below.\16\
---------------------------------------------------------------------------
\14\ While a Qualified IDQS is not obligated to perform reviews
and make publicly available determinations under Rule 15c2-11, if it
chooses to do so, it must comply with the requirements of Rule 15c2-
11. In the Adopting Release, among other things, the SEC stated that
it expects FINRA to continue to monitor the operation of the OTC
market, including through oversight of Qualified IDQSs. See Adopting
Release, infra note 21, at 68132.
\15\ While the SEC's amendments also update the items of
information that must be reviewed for the different categories of
issuers described in paragraph (b) of Rule 15c2-11, the baseline
requirements largely remain unchanged. Likewise, the paragraph (b)
items of information required to be submitted under FINRA Rule 6432
and the Form 211 will not change significantly but will be updated
to be consistent with amended Rule 15c2-11. Therefore, for example,
FINRA will make minor updates to Form 211, including, for (b)(5)
submissions, to require historic information on the name of the
issuer and any predecessors (past five years) and the address of the
issuer's principal place of business (in addition to its principal
executive offices).
\16\ FINRA will publish a Regulatory Notice with technical
details on the revised standard Form 211, modified Form 211, and
daily file submission process.
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Qualified IDQS Modified Form 211 Submission Requirement
FINRA is proposing to adopt new paragraph (b) under FINRA Rule 6432
to establish an after-the-fact filing requirement for a Qualified IDQS
that performs an initial review under Rule 15c2-11(a)(2). Under the
proposed provision, a Qualified IDQS must demonstrate compliance with
Rule 15c2-11 by making a filing with, and in the form required by,
FINRA no later than 6:30:00 p.m. Eastern Time on the business day
following the Qualified IDQS's publicly available determination under
Rule 15c2-11(a)(2) (i.e., a ``modified Form 211'' filing). Like the
standard Form 211, the modified Form 211 would contain requests for the
items of information specified in Rule 15c2-11 for the type of issuer
involved.\17\
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\17\ Both the modified and standard Form 211s will conform with
the SEC's amendments to Rule 15c2-11, as applicable. See supra note
15. In addition, like the standard Form 211, the modified Form 211
must be reviewed and signed by a principal of the Qualified IDQS and
the principal must certify, among other things, that neither the
firm nor its associated persons have accepted or will accept any
payment or other consideration for filing the Form 211. See
Regulatory Notice 14-26 (June 2014); see also FINRA Rule 5250
(Payments for Market Making).
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FINRA believes that requiring a Qualified IDQS to submit a modified
Form 211 is appropriate because it would provide FINRA with information
with which to perform oversight of a Qualified IDQS's compliance with
the initial information review requirements of Rule 15c2-11 without
involving any additional delay for FINRA to review and process the form
prior to members being permitted to initiate quotations in reliance on
the Qualified IDQS's publicly available determination. FINRA would use
the modified Form 211 filings submitted by a Qualified IDQS to assess
periodically the adequacy of the Qualified IDQS's reviews.\18\ This new
requirement would supplement FINRA's existing standard Form 211 review
process for quoting broker-dealer members, which would continue to be
applicable where a broker-dealer is not relying on a Qualified IDQS's
publicly available determination with respect to an initial review.\19\
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\18\ In the Adopting Release, the SEC stated that a Qualified
IDQS, like a broker-dealer, must have a reasonable basis under the
circumstances to believe that the paragraph (b) information is
accurate in all material respects and obtained from a reliable
source and, consistent with Rule 15c2-11(a)(2)(iii)(A) and (B), the
Qualified IDQS should be alert to any red flags (i.e., information
under the circumstances that reasonably indicates that one or more
of the required items of information may be materially inaccurate or
from an unreliable source). See Adopting Release, infra note 21, at
68170.
\19\ FINRA notes that a quoting member relying on a Qualified
IDQS would not be required to separately submit any sort of Form 211
in connection with its initiation of quotations pursuant to Rule
15c2-11(a)(1)(ii). However, members who are not relying on the
initial review of a Qualified IDQS would continue to be required to
submit the Form 211 to FINRA and receive notification that the form
has been processed prior to initiating quotes in the subject
security (and, as described below, FINRA is proposing to amend FINRA
Rule 6432 to clarify that a quoting member must receive notification
from FINRA that a standard Form 211 has been processed before
initiating or resuming quotations).
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Qualified IDQS Daily Security File Submission Requirement
Under proposed Supplementary Material .02 to FINRA Rule 6432, a
Qualified IDQS that makes publicly available determinations under
amended Rule 15c2-11, including regarding the availability of a Rule
15c2-11 exception, would be required to submit a daily security file to
FINRA. Specifically, where a Qualified IDQS has made one or more
publicly available determinations described in Rule 15c2-11(a)(2),
(f)(2)(iii)(B), (f)(3)(ii)(A), or (f)(7), the Qualified IDQS would be
required to submit to FINRA a daily security file containing the
following information for all non-exchange-listed equity securities
quoted on its system:
Security symbol;
Issuer name;
If the non-exchange-listed equity security is being quoted
pursuant to a processed Form 211 under FINRA Rule 6432(a);
If applicable, the type of publicly available
determination made by the Qualified IDQS (e.g., an initial review
pursuant to Rule 15c2-11(a)(2), that the required information is
current and publicly available under Rule 15c2-11(f)(2)(iii)(B) or
(f)(3)(ii)(A), or an exception under Rule 15c2-11(f)(7)) and the date
on which such publicly available determination was made by the
Qualified IDQS;
With respect to a non-exchange-listed equity security for
which the Qualified IDQS has made a publicly available determination
under Rule 15c2-11(f)(7) relating to the availability of the piggyback
exception under Rule 15c2-11(f)(3), whether the issuer is a shell
company and, if a shell company, the number of days remaining in the
applicable 18-month period under Rule 15c-2-11(f)(3)(i)(B)(2);
If applicable, that the security is being quoted pursuant
to an exception
[[Page 31776]]
that does not rely on the Qualified IDQS's publicly available
determination and, if so, identify the exception relied upon by the
subscriber; and
Such other information as specified by FINRA in a
Regulatory Notice (or similar communication).
FINRA would use the above information as part of its oversight
program to perform surveillance and periodic reviews of Qualified IDQS
and quoting member compliance with amended Rule 15c2-11.
Other Amendments
In addition to the two new proposed requirements applicable to
Qualified IDQSs described above, the proposed rule change also includes
other amendments to FINRA Rule 6432 to further clarify the operation of
the rule and conform to amended Rule 15c2-11. First, FINRA is amending
language in existing paragraphs (a) and (c) (paragraph (c) is proposed
to be renumbered as paragraph (d)) to clarify that a member must
receive notification from FINRA that a standard Form 211 has been
processed before initiating or resuming quotations in a quotation
medium (in the case of paragraph (a)) or before entering a priced
quotation for the security (in the case of proposed paragraph (d)).
FINRA is making these amendments to clarify existing member obligations
with respect to a standard Form 211 under FINRA Rule 6432.
Second, FINRA Rule 6432(b)(1) (proposed to be renumbered as
paragraph (c)(1)) will expand the treatment currently allowed for
documents available through the SEC's Electronic Data Gathering,
Analysis, and Retrieval (``EDGAR'') system to information available
through the website of a Qualified IDQS or its affiliate broker-dealer.
Currently, members are required to file a copy of the required issuer
information with FINRA except that, with respect to information that is
available through EDGAR, the member instead is permitted to provide
identifying information for each issuer report or statement that was
relied upon in satisfying its obligations under FINRA Rule 6432 and SEA
Rule 15c2-11. This allowance is intended to ease burdens on broker-
dealers when filing a Form 211. In light of the new role for Qualified
IDQSs under amended Rule 15c2-11, FINRA believes it is appropriate to
similarly permit members to point FINRA to required information where
it is publicly available on the website of a Qualified IDQS by
including in the filing the permanent website address of the relevant
document on the Qualified IDQS's (or its affiliate broker-dealer's)
website.
Third, FINRA is proposing to define ``qualified inter-dealer
quotation system'' in new paragraph (g) of FINRA Rule 6432, consistent
with the term's definition in SEA Rule 15c2-11(e)(6). Fourth, to assist
with oversight of member compliance with Rule 15c2-11, FINRA is
proposing to require that members include in the standard and modified
Form 211 the names of all officers and directors of the subject issuer.
Finally, the proposed rule change includes several technical and non-
substantive changes to update cross-references to the renumbered
provisions of amended Rule 15c2-11 \20\ and to correct the numbering of
Supplementary Material .01 to FINRA Rule 6432, which would not
otherwise substantively be modified (FINRA Rule 6432.01 would be
corrected to read ``.01'' rather than ``01.'', per FINRA rulebook
style).
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\20\ FINRA also will make corresponding language and citation
changes to the Form 211.
---------------------------------------------------------------------------
If the Commission approves the proposed rule changes, the effective
date of the proposed rule changes will be the same as the compliance
date of the SEC's amendments to Rule 15c2-11 (except for paragraph
(b)(5)(i)(M)), including any extensions to such compliance date.\21\
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\21\ See Securities Exchange Act Release No. 89891 (September
16, 2020), 85 FR 68124 (October 27, 2020) (``Adopting Release'').
The SEC specified a compliance date for amended Rule 15c2-11 (except
for paragraph (b)(5)(i)(M)) of nine months after the amended rule's
December 28, 2020 effective date, which is September 28, 2021. See
id. at 68172. The compliance date for paragraph (b)(5)(i)(M) will be
two years after the December 28, 2020 effective date, which is
December 28, 2022. See id. at 68172 n.535.
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2. Statutory Basis
FINRA believes that the proposed rule change is consistent with the
provisions of Section 15A(b)(6) of the Act,\22\ 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 also believes that the proposed rule change is
consistent with the provisions of Section 15A(b)(11) of the Act,\23\
which requires, among other things, that FINRA's rules be designed to
produce fair and informative quotations, to prevent fictitious or
misleading quotations, and to promote orderly procedures for
collecting, distributing, and publishing quotations.
---------------------------------------------------------------------------
\22\ 15 U.S.C. 78o-3(b)(6).
\23\ 15 U.S.C. 78o-3(b)(11).
---------------------------------------------------------------------------
FINRA believes that, by amending FINRA Rule 6432 and the Form 211
in response to the SEC's amendments to Rule 15c2-11, the proposed rule
change will facilitate FINRA's oversight of member Qualified IDQSs,
enhance investor protection, and reduce burdens on broker-dealers. The
proposed rule change would require a Qualified IDQS to submit an after-
the-fact, modified Form 211 to FINRA in connection with its publicly
available determinations regarding initial reviews. The proposed
amendments also would require a Qualified IDQS that makes publicly
available determinations to submit a daily security file containing
specified information for all non-exchange-listed equity securities
quoted on its system. FINRA believes that the submission of this
information will allow FINRA to effectively oversee the activities of
its members in the OTC market, including of a Qualified IDQS's
compliance with Rule 15c2-11's obligations. In addition, FINRA believes
that the modified Form 211 requirement for Qualified IDQSs is
appropriate, including because, together with the daily file, it will
provide FINRA with the information relied upon by each Qualified IDQS
as well as consolidated daily Rule 15c2-11 compliance information,
making a focused, after-the-fact review more manageable and able to be
accomplished in a shorter period of time. FINRA believes that such
oversight will serve to complement the amended Rule 15c2-11 framework
adopted by the SEC, and, therefore, is in the public interest.
Moreover, permitting quoting members to rely on a Qualified IDQS's
publicly available determination to initiate quotations in a security
is consistent with the SEC's goals to reduce burdens on broker-dealers
while maintaining investor protection.
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.
Regulatory Need
This economic impact assessment is intended to evaluate the
economic impact of the proposed changes to FINRA Rule 6432. Amendments
to FINRA Rule 6432 are necessary to facilitate FINRA oversight of
member compliance with amended SEA Rule 15c2-11. One key aspect of the
proposed rule change, resulting from the
[[Page 31777]]
SEC's changes to Rule 15c2-11, is the addition of a modified Form 211
requirement that would be applicable to a Qualified IDQS that engages
in the initial information review of a security. The Qualified IDQS
would be required to submit the modified Form 211 to FINRA by the end
of the next business day after the Qualified IDQS's publicly available
determination was made.
Economic Baseline
The economic baseline considers investor protection and members'
regulatory burden in the absence of the proposed rule change in light
of the SEC's amended rule. Among other things, amended Rule 15c2-11
permits a broker-dealer to rely on a Qualified IDQS to perform the
initial information review required by the rule. Where a broker-dealer
subscriber is not relying on the initial review of a Qualified IDQS, it
must submit a standard Form 211 to FINRA and await notification that
the form has been processed prior to initiating quotations in the
security. SEA Rule 15c2-11 and FINRA Rule 6432 generally govern the
quotation conduct of broker-dealers initiating quotes in equity
securities in the OTC market.\24\
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\24\ There were 3,435 FINRA member firms as of the end of 2020.
Over the 2018 to 2020 period, an average 11,018 OTC equity
securities were quoted with a price per year.
---------------------------------------------------------------------------
Economic Impacts
The proposed rule change would likely improve FINRA's oversight of
the OTC market given the amendments to Rule 15c2-11. Specifically, by
requiring the Qualified IDQS to submit (i) an after-the-fact, modified
Form 211 filing in connection with publicly available determinations
related to an initial information review, and (ii) a daily security
file containing summary Rule 15c2-11-related information for each
security quoted on its system, FINRA would have data necessary to
monitor for Rule 15c2-11 compliance by the Qualified IDQSs and other
members. The daily security file also would enhance FINRA's
surveillance capabilities, which furthers investor protection.
FINRA acknowledges that a Qualified IDQS could incur some
operational costs in submitting the modified Form 211 filing and daily
security file to FINRA. Where the Qualified IDQS decides to undertake
an initial review, the costs of filing a Form 211 would be shifted from
broker-dealer subscribers to the Qualified IDQS.
Alternatives Considered
FINRA considered not implementing a filing requirement for a
Qualified IDQS. FINRA determined that the after-the-fact submission
requirement strikes an appropriate balance by providing FINRA with
important information with which to oversee Qualified IDQS compliance
without involving the delay of a FINRA processing time prior to the
initiation of quoting, consistent with the SEC's goals to reduce
burdens on broker-dealers while maintaining 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
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
(A) By order approve or disapprove such proposed rule change, or
(B) institute proceedings to determine whether the proposed rule
change should be 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 [email protected]. Please include
File Number SR-FINRA-2021-014 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-2021-014. 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 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 a.m. and 3
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-2021-014 and should be submitted on or before July 6, 2021.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\25\
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\25\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-12480 Filed 6-14-21; 8:45 am]
BILLING CODE 8011-01-P
