Self-Regulatory Organizations; Municipal Securities Rulemaking Board; Notice of Filing of Amendment No. 1 to Proposed Rule Change Consisting of Amendments to MSRB Rule G-14 To Shorten the Timeframe for Reporting Trades in Municipal Securities to the MSRB, 61516-61518 [2024-16796]
Download as PDF
<![CDATA[
61516
Federal Register / Vol. 89, No. 147 / Wednesday, July 31, 2024 / Notices
years, or three[two] or more years,
respectively, from the effectiveness of
this Supplementary Material .09),
except as provided in paragraph (b)(3) of
this Supplementary Material .09.
(3) Transactions Executed Less Than 5
Minutes Before TRACE System Closes
Transactions executed on a business
day less than 15, 10, or 5 minutes (the
15-, 10-, or 5-minute timeframe is
available for up to one year, up to
three[two] years, or three[two] or more
years, respectively, from the
effectiveness of this Supplementary
Material .09) before 6:30:00 p.m. Eastern
Time must be reported as soon as
practicable after the TRACE system
opens the next business day (T + 1), but
no later than within 15 minutes after the
TRACE system opens the next business
day, and if reported on T + 1, designated
‘‘as/of’’ and include the date of
execution.
(4) No Change.
2. FINRA Proposes To Make a
Correction to the Text of Proposed Rule
6730.09(b)(2)
Additionally, Partial Amendment No.
1 would make a correction to the
proposed rule text such that proposed
Rule 6730.09(b)(2) would require
reporting within the prescribed
timeframe from ‘‘the Time of Execution’’
rather than ‘‘after the TRACE system
opens.’’ 20 As originally proposed, for
transactions subject to the manual
trades exception that were executed on
a business day at or after 8:00:00 a.m.
Eastern Time (‘‘ET’’) through 6:29:59
p.m. ET (i.e., during TRACE system
hours), the rule text erroneously would
have required reporting ‘‘. . . as soon as
practicable, but no later than within 15,
10, or 5 minutes after the TRACE system
opens. . . .’’ 21 Partial Amendment No.
1 would correct the text of proposed
Rule 6730.09(b)(2) so that it requires
reporting of these transactions ‘‘. . . as
soon as practicable, but no later than
within 15, 10, or 5 minutes of the Time
of Execution. . . .’’ 22
lotter on DSK11XQN23PROD with NOTICES1
III. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change, as amended by Partial
Amendment No. 1, is consistent with
the Act. Comments may be submitted by
any of the following methods:
20 See
Partial Amendment No. 1 at 5.
proposed Rule 6730.09(b)(2).
22 See Partial Amendment No. 1 at 5.
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–2024–004 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–2024–004. 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 the filing also
will be available for inspection and
copying at the principal office of
FINRA. Do not include personal
identifiable information in submissions;
you should submit only information
that you wish to make available
publicly. We may redact in part or
withhold entirely from publication
submitted material that is obscene or
subject to copyright protection.
All submissions should refer to File
Number SR–FINRA–2024–004 and
should be submitted on or before
August 21, 2024.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.23
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024–16801 Filed 7–30–24; 8:45 am]
BILLING CODE 8011–01–P
21 See
VerDate Sep<11>2014
17:29 Jul 30, 2024
Jkt 262001
23 17
PO 00000
CFR 200.30–3(a)(12).
Frm 00120
Fmt 4703
Sfmt 4703
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–100589; File No. SR–
MSRB–2024–01]
Self-Regulatory Organizations;
Municipal Securities Rulemaking
Board; Notice of Filing of Amendment
No. 1 to Proposed Rule Change
Consisting of Amendments to MSRB
Rule G–14 To Shorten the Timeframe
for Reporting Trades in Municipal
Securities to the MSRB
July 25, 2024.
I. Introduction
On January 12, 2024, the Municipal
Securities Rulemaking Board (‘‘MSRB’’)
filed with the Securities and Exchange
Commission (‘‘SEC’’ or ‘‘Commission’’),
pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (‘‘Act’’
or ‘‘Exchange Act’’) 1 and Rule 19b–4
thereunder,2 a proposed rule change to
(1) amend MSRB Rule G–14 (‘‘Rule G–
14’’), on reports of sales or purchases, to
(i) shorten the amount of time within
which brokers, dealers, and municipal
securities dealers (collectively,
‘‘dealers,’’ and each individually, a
‘‘dealer’’) must report most transactions
to the MSRB; and (ii) require dealers to
report certain transactions with a new
trade indicator, and make certain
clarifying amendments, and (2) make
conforming amendments to MSRB Rule
G–12, on uniform practice (‘‘Rule G–
12’’), and the MSRB’s Real-Time
Transaction Reporting System (‘‘RTRS’’)
Information Facility (‘‘IF–1’’) to reflect
the shortened reporting timeframe
(collectively, the ‘‘proposed rule
change’’).3 The proposed rule change
was published for comment in the
Federal Register on January 26, 2024.4
The Commission received comments
in response to the proposed rule
change.5 On April 22, 2024, the
Commission instituted proceedings
under Section 19(b)(2)(B) of the Act 6 to
determine whether to approve or
disapprove the proposed rule change.
On July 18, 2024, the Commission,
pursuant to Section 19(b)(2) of the Act,7
designated September 20, 2024, as the
date by which the Commission shall
either approve or disapprove the
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Exchange Act Release No. 99402 (Jan. 19,
2024), 89 FR 5384 (Jan. 26, 2024) (‘‘Notice’’).
4 Id. at 5384.
5 Comment letters received by the Commission
are available on our website at https://www.sec.gov/
comments/sr-msrb-2024-01/srmsrb202401.htm.
6 15 U.S.C. 78s(b)(2)(B).
7 15 U.S.C. 78s(b)(2).
2 17
E:\FR\FM\31JYN1.SGM
31JYN1
Federal Register / Vol. 89, No. 147 / Wednesday, July 31, 2024 / Notices
proposed rule change.8 On July 18,
2024, the MSRB responded to
comments 9 and filed Amendment No. 1
to the original proposed rule change
(‘‘Amendment No. 1’’). The text of
Amendment No. 1 is available on the
MSRB’s website.10
II. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Amendment
As described further below, the MSRB
filed Amendment No. 1 to amend the
proposed rule change to (i) revise the
definition of a ‘‘dealer with limited
trading activity’’ in proposed subsection
(d)(xi) of Rule G–14 RTRS Procedures 11
and (ii) modify the pace of phasing-in
the shortened reporting timeframe for a
‘‘trade with a manual component’’ in
proposed Supplementary Material
.02(b).
A. Exception for Dealers With Limited
Trading Activity
lotter on DSK11XQN23PROD with NOTICES1
The MSRB noted that upon further
review of the methodology used for
proposing a 1,800-trade threshold for
qualifying for the dealer with limited
trading activity exception in the original
proposed rule change, the MSRB had
determined to increase the threshold to
2,500 trades in connection with a
modification of its methodology.12
In establishing the original proposed
threshold of 1,800 trades, the MSRB
explained that it had used an approach,
consistent with other instances where
MSRB rules and related transparency
activities had been based on inter-dealer
trade activity, that relied solely on the
sell-side inter dealer trade reports to
avoid, for those specific purposes,
potential double counting if both the
sell-side and buy-side were used.13 The
MSRB stated that the calculations
discussed in the Notice underlying the
1,800-trade threshold in the proposed
definition of ‘‘dealer with limited
trading activity’’ resulted in a lower
threshold and did not fully account for
inter-dealer trade reports since only the
sell-side inter-dealer trade reports were
8 See Exchange Act Release No. 100557 (July 18,
2024), 89 FR 59951 (July 24, 2024) (‘‘Extension’’).
9 See Letter from Ernesto A. Lanza, Chief
Regulatory and Policy Officer, MSRB, to Secretary,
Commission, dated July 18, 2024, available at
https://www.sec.gov/comments/sr-msrb-2024-01/
srmsrb202401-491663-1411646.pdf.
10 Amendment No. 1 is available at https://
www.msrb.org/sites/default/files/2024-07/MSRB2024-01-A-1.pdf.
11 The MSRB stated that the revision to the
proposed definition of dealer with limited trading
activity does not have a material impact on the
MSRB’s economic analysis included in the original
proposed rule change. See Amendment No. 1 at 9.
12 See Amendment No. 1 at 7.
13 Id. at 7–8.
VerDate Sep<11>2014
17:29 Jul 30, 2024
Jkt 262001
taken into account.14 In order to
maintain comparability with the
threshold used by the Financial
Industry Regulatory Authority, Inc.
(‘‘FINRA’’) in its proposed definition of
‘‘member with limited trading
activity’’ 15 and in light of the plain
meaning of the language of the MRSB’s
proposed definition of ‘‘dealer with
limited trading activity,’’ the MSRB
explained that it had recalculated the
appropriate threshold for such
definition to be 2,500 trades, taking into
account both sell-side and buy-side
inter-dealer trade reports together with
reports of dealer trades with customers,
regardless of whether the dealer bought
or sold in the customer transaction.16
The MSRB also stated that Amendment
No. 1 would add clarifying language to
reflect that the threshold is based on
both sell-side and buy-side inter-dealer
and customer trade reports.17 Thus,
proposed subparagraph (d)(xi) of Rule
G–14 RTRS Procedures would define a
dealer with limited trading activity as a
dealer that, during at least one of the
two prior consecutive calendar years,
reported to an RTRS Portal fewer than
2,500 purchase or sale transactions with
customers or other dealers, excluding
certain exempted transactions as
specified therein.18 The MSRB further
noted that the proposed new threshold
would continue to account for only a
very small portion of the market volume
and therefore would have minimal
impact on overall trading.19
B. Exception for Trades With a Manual
Component
The MSRB noted concerns expressed
by commenters regarding potential
difficulties in achieving dramatically
shortened reporting timeframes for at
least some trades with a manual
component and whether dealers would
at 8.
Exchange Act Release No. 99404 (Jan. 19,
2024), 89 FR 5034 (Jan. 24, 2024) (‘‘FINRA Notice’’).
16 See Amendment No. 1 at 8. The MSRB
explained that reports of dealer trades with
customers, regardless of whether the dealer bought
or sold in the transaction, were included in the
original methodology and continue to be included
in the revised methodology. Based on this change
in methodology, the total number of trade reports
in 2022 has changed to 16.8 million when counting
both the buy-side and the sell-side trades for interdealer trades. Previously, when only counting the
sell side trades for inter-dealer trades, the total
number of reported trades in 2022 was 12.1 million.
See Amendment No. 1 n. 21.
17 See Amendment No. 1 at 8.
18 Id.
19 See Amendment No. 1 at 9. The MSRB stated
that the revised number of transactions under
Amendment No. 1 would be expected to continue
to capture approximately 1.5 percent of the trades
in the municipal securities markets in a given
calendar year, based on transaction data from
calendar year 2022.
PO 00000
14 Id.
15 See
Frm 00121
Fmt 4703
Sfmt 4703
61517
have sufficient time to make the
necessary changes to processes and
technology to achieve such shortened
timeframes, and determined to modify
the pace of phasing-in the shortened
reporting timeframe for trades with a
manual component to extend the period
during which such trades would be
reportable by no later than 10 minutes
after the Time of Trade from one year
to two years.20
The MSRB explained that
Amendment No. 1 would, in part,
amend proposed Supplementary
Material .02(b) to provide in clause (ii)
that a trade with a manual component
must be reported no later than 10
minutes after the Time of Trade for the
second and third calendar years (rather
than only the second year) from the
effective date of the proposed rule
change and to provide in clause (iii) that
a trade with a manual component would
become reportable no later than five
minutes after the Time of Trade after the
conclusion of the third calendar year
(rather than the second calendar year)
from the effective date of the proposed
rule change.21
The MSRB further explained that the
proposed rule change sets out a phasedin implementation of the exception for
manual trades that would provide for an
ultimate five-minute timeframe for the
reporting of such trades. The MSRB also
noted that no further reductions in such
timeframe, and no elimination of the
manual trade exception, could be
possible without additional formal
rulemaking by the MSRB that would be
filed with the Commission, and that any
such change would be subject to the
required notice and comment process
under Section 19 of the Exchange Act.22
Furthermore, the MSRB stated that it
would monitor the implementation of
the proposed rule change and, going
forward, would analyze trade data
related to the operation of the proposed
two new exceptions to, among other
things, determine whether the eventual
five-minute trade reporting timeframe
that would become applicable after two
years continues to be feasible and
appropriate in light of the empirical
data collected through the earlier phases
of implementation.23 The MSRB further
explained that it would be prepared to
take action to provide appropriate
guidance or undertake appropriate
modifications in connection with the
phase-in of the manual trade exception
should circumstances warrant any such
action, including, but not limited to
20 See
Amendment No. 1 at 9.
21 Id.
22 15
U.S.C. 78s. See Amendment No. 1 at 9.
Amendment No. 1 at 9.
23 See
E:\FR\FM\31JYN1.SGM
31JYN1
61518
Federal Register / Vol. 89, No. 147 / Wednesday, July 31, 2024 / Notices
potentially filing a proposed rule change
to extend the implementation period for
the eventual five-minute timeframe for
trades with a manual component.24
As noted by the MSRB, Amendment
No. 1 would provide for a modified
phase-in of the shortened reporting
timeframe for trades with a manual
component that the MSRB believes
would foster a more orderly transition to
more rapid reporting of manual trades.25
Additionally, the MSRB explained that
Amendment No. 1 would allow the
MSRB to undertake a more meaningful
and timely analysis of potential impacts
of the intermediate 10-minute reporting
stage in the phase-in process.26
Specifically, the MSRB observed the
extended timeframe would provide
more time and data for the MSRB to
understand whether any adverse
impacts have developed as a result of
the shortened reporting timeframe to 10
minutes so that the MSRB can
determine whether it should undertake
additional rulemaking to modify
implementation or phase-in of the final
step to a five-minute timeframe.27
III. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the filing as amended
by Amendment No. 1 is consistent with
the Act. Comments may be submitted by
any of the following methods:
lotter on DSK11XQN23PROD with NOTICES1
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–
MSRB–2024–01 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549.
All submissions should refer to File
Number SR–MSRB–2024–01. 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 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 MSRB. All comments
received will be posted without change;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. We may redact in
part or withhold entirely from
publication submitted material that is
obscene or subject to copyright
protection.
All submissions should refer to File
Number SR–MSRB–2024–01 and should
be submitted on or before August 21,
2024.
For the Commission, pursuant to delegated
authority.28
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024–16796 Filed 7–30–24; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–100601; File No. SR–
NYSEAMER–2024–44]
Self-Regulatory Organizations; NYSE
American LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Change To Establish Fees for the
NYSE American Aggregated Lite Data
Feed
July 25, 2024.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934
(‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that on July 11,
2024, NYSE American LLC (‘‘NYSE
American’’ or the ‘‘Exchange’’) filed
with the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I, II, and III below, which Items
have been prepared by the selfregulatory organization. The
Commission is publishing this notice to
24 Id.
25 Id.
28 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
at 10.
1 15
26 Id.
27 Id.
VerDate Sep<11>2014
17:29 Jul 30, 2024
Jkt 262001
PO 00000
Frm 00122
Fmt 4703
Sfmt 4703
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
The Exchange proposes to establish
fees for the NYSE American Aggregated
Lite data feed. The proposed rule
change is available on the Exchange’s
website at www.nyse.com, at the
principal office of the Exchange, 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, the
self-regulatory organization 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 those statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend the
NYSE American LLC Equities
Proprietary Market Data Fees Schedule
(‘‘Fee Schedule’’) and establish fees for
the NYSE American Aggregated Lite
(‘‘NYSE American Agg Lite’’) data feed,4
effective July 11, 2024.5
In summary, the NYSE American Agg
Lite is a NYSE American-only
frequency-based depth of book market
data feed of the NYSE American’s limit
order book for up to ten (10) price levels
on both the bid and offer sides of the
order book for securities traded on the
Exchange and for which the Exchange
reports quotes and trades under the
Consolidated Tape Association (‘‘CTA’’)
Plan or the Nasdaq/UTP Plan. The
NYSE American Agg Lite is a
compilation of limit order data that the
4 The proposed rule change establishing the
NYSE American Agg Lite data feed was
immediately effective on February 27, 2024. See
Securities Exchange Act Release No. 99690 (March
7, 2024), 89 FR 18445 (March 13, 2024) (SR–
NYSEAMER–2024–14) (Notice of Filing and
Immediate Effectiveness of Proposed Rule Change
To Establish the NYSE American Aggregated Lite
Market Data Feed).
5 The Exchange originally filed to amend the Fee
Schedule on May 13, 2024 (SR–NYSEAMER–2024–
31). SR–NYSEAMER–2024–31 was subsequently
withdrawn and replaced by this filing.
E:\FR\FM\31JYN1.SGM
31JYN1
]]>Agencies
[Federal Register Volume 89, Number 147 (Wednesday, July 31, 2024)]
[Notices]
[Pages 61516-61518]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-16796]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-100589; File No. SR-MSRB-2024-01]
Self-Regulatory Organizations; Municipal Securities Rulemaking
Board; Notice of Filing of Amendment No. 1 to Proposed Rule Change
Consisting of Amendments to MSRB Rule G-14 To Shorten the Timeframe for
Reporting Trades in Municipal Securities to the MSRB
July 25, 2024.
I. Introduction
On January 12, 2024, the Municipal Securities Rulemaking Board
(``MSRB'') filed with the Securities and Exchange Commission (``SEC''
or ``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'' or ``Exchange Act'') \1\ and Rule 19b-4
thereunder,\2\ a proposed rule change to (1) amend MSRB Rule G-14
(``Rule G-14''), on reports of sales or purchases, to (i) shorten the
amount of time within which brokers, dealers, and municipal securities
dealers (collectively, ``dealers,'' and each individually, a
``dealer'') must report most transactions to the MSRB; and (ii) require
dealers to report certain transactions with a new trade indicator, and
make certain clarifying amendments, and (2) make conforming amendments
to MSRB Rule G-12, on uniform practice (``Rule G-12''), and the MSRB's
Real-Time Transaction Reporting System (``RTRS'') Information Facility
(``IF-1'') to reflect the shortened reporting timeframe (collectively,
the ``proposed rule change'').\3\ The proposed rule change was
published for comment in the Federal Register on January 26, 2024.\4\
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Exchange Act Release No. 99402 (Jan. 19, 2024), 89 FR
5384 (Jan. 26, 2024) (``Notice'').
\4\ Id. at 5384.
---------------------------------------------------------------------------
The Commission received comments in response to the proposed rule
change.\5\ On April 22, 2024, the Commission instituted proceedings
under Section 19(b)(2)(B) of the Act \6\ to determine whether to
approve or disapprove the proposed rule change.
---------------------------------------------------------------------------
\5\ Comment letters received by the Commission are available on
our website at https://www.sec.gov/comments/sr-msrb-2024-01/srmsrb202401.htm.
\6\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------
On July 18, 2024, the Commission, pursuant to Section 19(b)(2) of
the Act,\7\ designated September 20, 2024, as the date by which the
Commission shall either approve or disapprove the
[[Page 61517]]
proposed rule change.\8\ On July 18, 2024, the MSRB responded to
comments \9\ and filed Amendment No. 1 to the original proposed rule
change (``Amendment No. 1''). The text of Amendment No. 1 is available
on the MSRB's website.\10\
---------------------------------------------------------------------------
\7\ 15 U.S.C. 78s(b)(2).
\8\ See Exchange Act Release No. 100557 (July 18, 2024), 89 FR
59951 (July 24, 2024) (``Extension'').
\9\ See Letter from Ernesto A. Lanza, Chief Regulatory and
Policy Officer, MSRB, to Secretary, Commission, dated July 18, 2024,
available at https://www.sec.gov/comments/sr-msrb-2024-01/srmsrb202401-491663-1411646.pdf.
\10\ Amendment No. 1 is available at https://www.msrb.org/sites/default/files/2024-07/MSRB-2024-01-A-1.pdf.
---------------------------------------------------------------------------
II. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Amendment
As described further below, the MSRB filed Amendment No. 1 to amend
the proposed rule change to (i) revise the definition of a ``dealer
with limited trading activity'' in proposed subsection (d)(xi) of Rule
G-14 RTRS Procedures \11\ and (ii) modify the pace of phasing-in the
shortened reporting timeframe for a ``trade with a manual component''
in proposed Supplementary Material .02(b).
---------------------------------------------------------------------------
\11\ The MSRB stated that the revision to the proposed
definition of dealer with limited trading activity does not have a
material impact on the MSRB's economic analysis included in the
original proposed rule change. See Amendment No. 1 at 9.
---------------------------------------------------------------------------
A. Exception for Dealers With Limited Trading Activity
The MSRB noted that upon further review of the methodology used for
proposing a 1,800-trade threshold for qualifying for the dealer with
limited trading activity exception in the original proposed rule
change, the MSRB had determined to increase the threshold to 2,500
trades in connection with a modification of its methodology.\12\
---------------------------------------------------------------------------
\12\ See Amendment No. 1 at 7.
---------------------------------------------------------------------------
In establishing the original proposed threshold of 1,800 trades,
the MSRB explained that it had used an approach, consistent with other
instances where MSRB rules and related transparency activities had been
based on inter-dealer trade activity, that relied solely on the sell-
side inter dealer trade reports to avoid, for those specific purposes,
potential double counting if both the sell-side and buy-side were
used.\13\ The MSRB stated that the calculations discussed in the Notice
underlying the 1,800-trade threshold in the proposed definition of
``dealer with limited trading activity'' resulted in a lower threshold
and did not fully account for inter-dealer trade reports since only the
sell-side inter-dealer trade reports were taken into account.\14\ In
order to maintain comparability with the threshold used by the
Financial Industry Regulatory Authority, Inc. (``FINRA'') in its
proposed definition of ``member with limited trading activity'' \15\
and in light of the plain meaning of the language of the MRSB's
proposed definition of ``dealer with limited trading activity,'' the
MSRB explained that it had recalculated the appropriate threshold for
such definition to be 2,500 trades, taking into account both sell-side
and buy-side inter-dealer trade reports together with reports of dealer
trades with customers, regardless of whether the dealer bought or sold
in the customer transaction.\16\ The MSRB also stated that Amendment
No. 1 would add clarifying language to reflect that the threshold is
based on both sell-side and buy-side inter-dealer and customer trade
reports.\17\ Thus, proposed subparagraph (d)(xi) of Rule G-14 RTRS
Procedures would define a dealer with limited trading activity as a
dealer that, during at least one of the two prior consecutive calendar
years, reported to an RTRS Portal fewer than 2,500 purchase or sale
transactions with customers or other dealers, excluding certain
exempted transactions as specified therein.\18\ The MSRB further noted
that the proposed new threshold would continue to account for only a
very small portion of the market volume and therefore would have
minimal impact on overall trading.\19\
---------------------------------------------------------------------------
\13\ Id. at 7-8.
\14\ Id. at 8.
\15\ See Exchange Act Release No. 99404 (Jan. 19, 2024), 89 FR
5034 (Jan. 24, 2024) (``FINRA Notice'').
\16\ See Amendment No. 1 at 8. The MSRB explained that reports
of dealer trades with customers, regardless of whether the dealer
bought or sold in the transaction, were included in the original
methodology and continue to be included in the revised methodology.
Based on this change in methodology, the total number of trade
reports in 2022 has changed to 16.8 million when counting both the
buy-side and the sell-side trades for inter-dealer trades.
Previously, when only counting the sell side trades for inter-dealer
trades, the total number of reported trades in 2022 was 12.1
million. See Amendment No. 1 n. 21.
\17\ See Amendment No. 1 at 8.
\18\ Id.
\19\ See Amendment No. 1 at 9. The MSRB stated that the revised
number of transactions under Amendment No. 1 would be expected to
continue to capture approximately 1.5 percent of the trades in the
municipal securities markets in a given calendar year, based on
transaction data from calendar year 2022.
---------------------------------------------------------------------------
B. Exception for Trades With a Manual Component
The MSRB noted concerns expressed by commenters regarding potential
difficulties in achieving dramatically shortened reporting timeframes
for at least some trades with a manual component and whether dealers
would have sufficient time to make the necessary changes to processes
and technology to achieve such shortened timeframes, and determined to
modify the pace of phasing-in the shortened reporting timeframe for
trades with a manual component to extend the period during which such
trades would be reportable by no later than 10 minutes after the Time
of Trade from one year to two years.\20\
---------------------------------------------------------------------------
\20\ See Amendment No. 1 at 9.
---------------------------------------------------------------------------
The MSRB explained that Amendment No. 1 would, in part, amend
proposed Supplementary Material .02(b) to provide in clause (ii) that a
trade with a manual component must be reported no later than 10 minutes
after the Time of Trade for the second and third calendar years (rather
than only the second year) from the effective date of the proposed rule
change and to provide in clause (iii) that a trade with a manual
component would become reportable no later than five minutes after the
Time of Trade after the conclusion of the third calendar year (rather
than the second calendar year) from the effective date of the proposed
rule change.\21\
---------------------------------------------------------------------------
\21\ Id.
---------------------------------------------------------------------------
The MSRB further explained that the proposed rule change sets out a
phased-in implementation of the exception for manual trades that would
provide for an ultimate five-minute timeframe for the reporting of such
trades. The MSRB also noted that no further reductions in such
timeframe, and no elimination of the manual trade exception, could be
possible without additional formal rulemaking by the MSRB that would be
filed with the Commission, and that any such change would be subject to
the required notice and comment process under Section 19 of the
Exchange Act.\22\
---------------------------------------------------------------------------
\22\ 15 U.S.C. 78s. See Amendment No. 1 at 9.
---------------------------------------------------------------------------
Furthermore, the MSRB stated that it would monitor the
implementation of the proposed rule change and, going forward, would
analyze trade data related to the operation of the proposed two new
exceptions to, among other things, determine whether the eventual five-
minute trade reporting timeframe that would become applicable after two
years continues to be feasible and appropriate in light of the
empirical data collected through the earlier phases of
implementation.\23\ The MSRB further explained that it would be
prepared to take action to provide appropriate guidance or undertake
appropriate modifications in connection with the phase-in of the manual
trade exception should circumstances warrant any such action,
including, but not limited to
[[Page 61518]]
potentially filing a proposed rule change to extend the implementation
period for the eventual five-minute timeframe for trades with a manual
component.\24\
---------------------------------------------------------------------------
\23\ See Amendment No. 1 at 9.
\24\ Id.
---------------------------------------------------------------------------
As noted by the MSRB, Amendment No. 1 would provide for a modified
phase-in of the shortened reporting timeframe for trades with a manual
component that the MSRB believes would foster a more orderly transition
to more rapid reporting of manual trades.\25\ Additionally, the MSRB
explained that Amendment No. 1 would allow the MSRB to undertake a more
meaningful and timely analysis of potential impacts of the intermediate
10-minute reporting stage in the phase-in process.\26\ Specifically,
the MSRB observed the extended timeframe would provide more time and
data for the MSRB to understand whether any adverse impacts have
developed as a result of the shortened reporting timeframe to 10
minutes so that the MSRB can determine whether it should undertake
additional rulemaking to modify implementation or phase-in of the final
step to a five-minute timeframe.\27\
---------------------------------------------------------------------------
\25\ Id. at 10.
\26\ Id.
\27\ Id.
---------------------------------------------------------------------------
III. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the filing as
amended by Amendment No. 1 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-MSRB-2024-01 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549.
All submissions should refer to File Number SR-MSRB-2024-01. 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 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 MSRB. All comments received
will be posted without change; the Commission does not edit personal
identifying information from submissions. You should submit only
information that you wish to make available publicly. We may redact in
part or withhold entirely from publication submitted material that is
obscene or subject to copyright protection.
All submissions should refer to File Number SR-MSRB-2024-01 and
should be submitted on or before August 21, 2024.
For the Commission, pursuant to delegated authority.\28\
---------------------------------------------------------------------------
\28\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-16796 Filed 7-30-24; 8:45 am]
BILLING CODE 8011-01-P
