[Federal Register Volume 74, Number 200 (Monday, October 19, 2009)]
[Notices]
[Pages 53524-53526]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-25002]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-60807; File No. SR-FINRA-2009-064]
Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing and Order Granting Accelerated
Approval of Proposed Rule Change Relating to the Publication of Certain
Daily and Monthly Short Sale Data on the FINRA Web Site
October 9, 2009.
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 September 24, 2009, 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 and
II below, which Items have been substantially prepared by FINRA. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons and simultaneously
approving the proposed rule change on an accelerated basis.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
FINRA is proposing a rule change relating to the publication of
certain daily and monthly short sale data on the FINRA Web site. FINRA
is not proposing any textual changes to the By-Laws, Schedules to the
By-Laws, or Rules of FINRA.
The text of the proposed rule change is available on FINRA's Web
site at http://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
In coordination with SEC staff, FINRA is publishing on its Web
site: (1) aggregate daily short sale volume data by security for NMS
stocks \3\ and OTC Equity Securities,\4\ and (2) monthly short sale
transaction data by security for NMS stocks.\5\ Due to the more
[[Page 53525]]
manual, member-driven reporting structure inherent in the over-the-
counter market, FINRA notes that data imperfections may be more likely
than with similar reporting by the exchanges. FINRA is filing this
proposed rule change to describe the content and parameters of the
short sale data files that will be made publicly available on the FINRA
Web site.
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\3\ Rule 600 of SEC Regulation NMS defines ``NMS stock'' as any
``NMS security'' other than an option, and further defines ``NMS
security'' as any security or class of securities for which
transaction reports are collected, processed, and made available
pursuant to an effective transaction reporting plan, or an effective
national market system plan for reporting transactions in listed
options.
\4\ FINRA Rule 6420 defines ``OTC Equity Security'' as any non-
exchange-listed security and certain exchange-listed securities that
do not otherwise qualify for real-time trade reporting.
\5\ By letter dated July 2, 2009, and as discussed in subsequent
conversations, SEC staff requested that FINRA publish on its Web
site certain daily short sale volume files and monthly short sale
transaction files. SEC staff stated that it believes that the
publication of this data, and the resulting increased market
transparency, may help bolster investor confidence and thereby help
promote capital formation.
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Daily Short Sale Volume File
For each trading date, FINRA will post on its Web site the daily
short sale volume file within a reasonable amount of time after the end
of regular trading hours on that trading day.\6\ As a general rule,
aggregate short sale volume for equity securities executed and reported
to any of the FINRA Facilities during regular trading hours will be
included in the file.\7\ The daily short sale volume file will provide
information on the aggregate volume of short sales reported to a
consolidated tape out of the total volume of executed trades during
regular trading hours on each trading day.\8\
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\6\ See 17 CFR 242.600(b)(64) (defining ``regular trading
hours'').
\7\ Transactions may be reported through the Alternative Display
Facility (``ADF''), a Trade Reporting Facility (``TRF''), or through
the OTC Reporting Facility (``ORF''). The ADF, TRFs and ORF are
collectively referred to herein as the ``FINRA Facilities.'' Trades
in certain classes of securities, such as Rule 144A securities, are
reported to the ORF, but not disseminated. Non-disseminated
securities will not be included in either the daily short sale
volume file or the monthly short sale transaction file.
\8\ Certain OTC transactions (e.g., riskless principal and
agency transactions where one member is acting on behalf of another
member) are reported to FINRA in related tape and non-tape reports.
Tape reports are submitted to FINRA for public dissemination by the
appropriate exclusive Securities Information Processor (``SIP''),
while non-tape reports are submitted to FINRA, but are not submitted
to the SIP for public dissemination. FINRA will not be including
non-tape reports in either the daily short sale volume file or the
monthly short sale transaction file. Accordingly, in those instances
where the short sale indicator is only included in the related non-
tape report, the short sale data published in the daily and monthly
files may be under-inclusive. Similarly, the published figures will
not include odd lots since these transactions are not disseminated
to the consolidated tape.
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FINRA expects to begin publishing the daily short sale volume file
on a going forward basis in October 2009, but no later than the end of
fourth quarter 2009.\9\ Specifically, the Short Sale Volume File will
include the following fields: \10\
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\9\ While initial publication of the daily short sale volume
file will not commence until fourth quarter 2009, once published,
the data will include daily files from August 3rd, 2009. FINRA will
retain one year of historical short sale data from the date of
initial publication onward on a rolling basis.
\10\ The filename will contain the trading date and the
reporting SRO (EEEEshvolYYYYMMDD.txt where EEEE represents the
reporting SRO and YYYYMMDD represents the date).
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Field name Field description
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Date............................................ Trade date (YYYYMMDD).
Symbol.......................................... Trading symbol.
Short Volume.................................... Aggregate reported
share volume of
executed short sale
trades during regular
trading hours.
Total Volume.................................... Aggregate reported
share volume of all
executed trades
during regular
trading hours.
Market.......................................... CTA market identifier.
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FINRA will not incorporate trading information into the daily short
sale volume file that has not been executed and reported within the
trading day.\11\ Further, FINRA will not retroactively apply ``as of''
and ``reversal'' transactions to update the daily statistics.
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\11\ While members generally are required to report trades in
equity securities to FINRA within 90 seconds, a firm could
improperly delay reporting of short sales until well after the
close, which would result in the under-reporting of over-the-counter
short sale volume. Delaying the reporting of trades for such a
purpose would be considered a violation of the applicable trade
reporting rules and Rule 2010 (Standards of Commercial Honor and
Principles of Trade).
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Monthly Short Sale Transaction File
For each trading month, FINRA will post on its Web site a monthly
short sale transaction file by no later than the last day of the
following calendar month that includes, among other things, trade
details including the transaction time, price and number of shares for
every short sale transaction in an NMS stock. The monthly short sale
transaction file request is similar to, but not the same as, the
instructions for the Regulation SHO Pilot data.\12\ FINRA began
publishing the monthly short sale transaction, with the initial file
for the month of August 2009 posted on September 30, 2009 (the last day
of the following calendar month).
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\12\ See Securities Exchange Act Release No. 50104 (July 28,
2004), 69 FR 48032 (Aug. 6, 2004).
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FINRA's monthly short sale transaction file includes all short
sales reported to a TRF or the ADF and reported by FINRA to a tape
plan.\13\ Unlike the daily short sale volume file, the monthly short
sale transaction file includes short sale transactions that are
reported both during regular trading hours as well as after-hours.
While FINRA is not including reversals in the monthly short sale
transaction file, the original reversed trade is included. FINRA is
also including in each monthly transaction file any ``as of'' trades
that were executed and reported within each given month.
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\13\ See supra note 8.
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The Monthly Short Sale Transaction files contain the following
information: \14\
\14\ The data files will include a ``link indicator'' field,
which would provide a market center defined character variable to
flag records that may have been difficult to match to tape data.
This indicator was intended to allow for the dissection of trades
that are bulk-reported to the tape; however, because FINRA does not
bulk report trades to the tape, this field is not applicable and,
therefore, will be left blank.
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--Market center: As reported on the tape.\15\
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\15\ The ADF, NYSE TRF and NASDAQ TRF files are currently
separately designated. FINRA intends at a later date to consolidate
the TRF and ADF files in a user-friendly manner.
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--Ticker symbol: CT/CQ, TAQ, or symbols used for trading by the market
center.
--Report Date: Date that the trade was reported to the tape.
--Reported Trade Time: In military time, Eastern Time.
--Size of the Trade: Number of shares in mixed or round lots as
reported to the tape.
--Price of the Trade: Exactly as reported to the tape.
Other Issues
Once the Daily Short Sale Volume File is made publicly available at
the end of each trading day, FINRA notes that users of such data should
not expect the daily and monthly data to reconcile because, among other
things, monthly transaction data will include reporting through the end
of FINRA transaction reporting hours that terminate as late as 8 p.m.,
while daily volume reports will only include volume reported during
regular trading hours.
Information relating to market maker or supplemental liquidity
provider status is not currently included in the trade report
submission; thus, FINRA currently is unable to separately identify
[[Page 53526]]
the trades of equity market makers and supplemental liquidity providers
in the monthly short sale transaction file. Therefore, the ``short
type'' field will include a value of ``S'' in all cases.
FINRA will retain on the FINRA Web site one year of historical
monthly short sale transaction data beginning with the data published
on September 30, 2009.
The proposed rule change will become effective upon Commission
approval.
2. Statutory Basis
FINRA believes that the proposed rule change is consistent with the
provisions of Section 15A(b)(6) of the Act,\16\ which requires, among
other things, that FINRA rules must be designed to prevent fraudulent
and manipulative acts and practices, to promote just and equitable
principles of trade, and, in general, to protect investors and the
public interest. FINRA believes that the publication of the requested
short sale data will result in increased market transparency, providing
additional market information to investors and other interested
parties.
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\16\ 15 U.S.C. 78o-3(b)(6).
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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.
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. Commission's Findings and Order Granting Accelerated Approval of
Proposed Rule Change
Pursuant to Section 19(b)(2) of the Act,\17\ the Commission may not
approve any proposed rule change prior to the 30th day after the date
of publication of the notice of filing thereof, unless the Commission
finds good cause for so doing and publishes its reasons for so finding.
FINRA also has requested that the Commission find good cause for
approving the proposed rule change prior to the 30th day after
publication in the Federal Register. For the Commission to approve a
proposed rule change proposed by a national securities association
(i.e., FINRA), the proposed rule change must be consistent with the
requirements of the Act, including Section 15A(b)(6) of the Act,\18\
and the rules and regulations thereunder. Section 15A(b)(6) of the Act
requires, among other things, that the rules of a national securities
association 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.
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\17\ 15 U.S.C. 78s(b)(2).
\18\ 15 U.S.C. 78o-3(b)(6).
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After careful consideration, the Commission finds that FINRA's
proposed rule change relating to the publication of certain daily and
monthly short sale data on the FINRA Web site is consistent with the
requirements of the Act,\19\ including Section 15A(b)(6) of the
Act.\20\ In particular, the Commission finds that FINRA's proposed rule
change is consistent with Section 15A(b)(6) of the Act \21\ in that it
is designed to protect investors and the public interest. The
Commission notes that the proposed rule change will facilitate public
access to short sale data, increase market transparency and thereby
promote capital formation.
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\19\ In approving this proposed rule change, the Commission has
considered its impact on efficiency, competition, and capital
formation. See 15 U.S.C. 78c(f).
\20\ 15 U.S.C. 78o-3(b)(6).
\21\ 15 U.S.C. 78o-3(b)(6).
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The Commission also finds that accelerated approval is appropriate.
More specifically, accelerated approval will allow FINRA to facilitate
public access to information related to short sale volume and
transaction data, which many self-regulatory organizations are already
publishing on their respective Web sites.
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 (http://www.sec.gov/rules/sro.shtml); or
Send an e-mail to [email protected]. Please include
File Number SR-FINRA-2009-064 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-FINRA-2009-064. This
file number should be included on the subject line if e-mail 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 Web site (http://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 inspection
and copying 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; the Commission does not edit
personal identifying information from submissions. You should submit
only information that you wish to make available publicly. All
submissions should refer to File Number SR-FINRA-2009-064 and should be
submitted on or before November 9, 2009.
V. Conclusion
For the foregoing reasons, pursuant to Section 19(b)(2) of the
Act,\22\ the Commission finds good cause to approve the proposed rule
change on an accelerated basis.
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\22\ 15 U.S.C. 78s(b)(2).
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It is hereby ordered, pursuant to Section 19(b)(2) of the Act,\23\
that the proposed rule change (SR-FINRA-2009-064) be, and hereby is,
approved on an accelerated basis. For the Commission, by the Division
of Trading and Markets, pursuant to delegated authority.\24\
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\23\ 15 U.S.C. 78s(b)(2).
\24\ 17 CFR 200.30-3(a)(12).
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-25002 Filed 10-16-09; 8:45 am]
BILLING CODE 8011-01-P