[Federal Register Volume 84, Number 30 (Wednesday, February 13, 2019)]
[Notices]
[Pages 3842-3843]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-02116]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-85073; File No. SR-FINRA-2019-003]
Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing of a Proposed Rule Change Relating to
FINRA Rule 6750 (Dissemination of Transaction Information)
February 7, 2019.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on January 29, 2019, the Financial Industry Regulatory Authority, Inc.
(``FINRA'') filed with the Securities and Exchange Commission
(``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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
FINRA is proposing to amend FINRA Rule 6750 to provide that FINRA
may publish or distribute aggregated transaction information and
statistics on non-disseminated TRACE-Eligible Securities at no charge.
The text of the proposed rule change is available on FINRA's
website 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 the
Statutory Basis for, the Proposed Rule Change
1. Purpose
Rule 6750 (Dissemination of Transaction Information) (the ``Rule'')
generally provides for the dissemination of information on all
transactions in TRACE-Eligible Securities \3\ immediately upon receipt
of the transaction report,\4\ except as set forth in the Rule. Rule
6750(c) (Transaction Information Not Disseminated) specifies the
circumstances under which FINRA will not disseminate information on a
transaction in a TRACE-Eligible Security--i.e., non-member affiliate
trades; certain transfers of proprietary interests; List or Fixed
Offering Price or Takedown Transactions; \5\ certain Securitized
Products; \6\ and U.S. Treasury Securities.\7\
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\3\ Rule 6710 generally defines a ``TRACE-Eligible Security''
as: A debt security that is United States (``U.S.'') dollar-
denominated and is: (1) Issued by a U.S. or foreign private issuer,
and, if a ``restricted security'' as defined in Securities Act Rule
144(a)(3), sold pursuant to Securities Act Rule 144A; (2) issued or
guaranteed by an Agency as defined in Rule 6710(k) or a Government-
Sponsored Enterprise as defined in Rule 6710(n); or (3) a U.S.
Treasury Security as defined in Rule 6710(p). ``TRACE-Eligible
Security'' does not include a debt security that is issued by a
foreign sovereign or a Money Market Instrument as defined in Rule
6710(o).
\4\ FINRA generally requires members to report transactions in
any security that meets the definition of ``TRACE-Eligible
Security'' to the Trade Reporting and Compliance Engine (``TRACE''),
unless an exception applies. See Rule 6730 (Transaction Reporting).
\5\ List or Fixed Offering Price or Takedown Transactions are
primary market sale transactions on the first day of trading, as set
forth in Rule 6710(q) or 6710(r). Such transactions exclude all
Securitized Products (as defined in Rule 6710(m) except Asset-Backed
Securities (as defined in Rule 6710(cc)). See Rules 6710(q) and
6710(r).
\6\ Specifically, FINRA does not disseminate information on
transactions in collateralized mortgage-backed securities
(``CMBSs'') and collateralized debt obligations (``CDOs''). FINRA
may disseminate information on transactions in collateralized
mortgage obligations (``CMOs'') depending on the transaction size
and level of trading activity in the CMO. See Rule 6750(b).
\7\ ``U.S. Treasury Security'' means a security, other than a
savings bond, issued by the U.S. Department of the Treasury to fund
the operations of the federal government or to retire such
outstanding securities. The term also includes separate principal
and interest components of a U.S. Treasury Security that has been
separated pursuant to the Separate Trading of Registered Interest
and Principal of Securities (STRIPS) program operated by the U.S.
Department of Treasury. See Rule 6710(p).
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FINRA currently offers a number of real-time and historic TRACE
data products on disseminated transactions for a fee.\8\ FINRA also
publishes and distributes aggregated transaction information and
statistics on disseminated transactions at no charge. FINRA proposes to
amend the Rule to include supplementary material to clarify that,
notwithstanding Rule 6750(c), FINRA may, in its discretion, publish or
distribute aggregated transaction information and statistics on
[[Page 3843]]
TRACE-Eligible Securities that are not subject to dissemination, other
than U.S. Treasury Securities, at no charge (unless FINRA submits a
rule filing imposing a fee for such data). For example, FINRA may
publish aggregated transaction information and statistics on trades in
CMBSs and CDOs, including data on aggregate daily volume, aggregate
daily number of trades, and average price information, and such
information may be grouped within customer buy, customer sell, dealer-
to-dealer, year of issuance, investment rating, or other categories.
Under the proposal, FINRA would not identify individual market
participants or transactions. In addition, FINRA would not publish
aggregated transaction information and statistics by individual
securities. The proposed rule change would not apply to U.S. Treasury
Securities. FINRA believes that the proposed rule change will benefit
investors and market participants by providing additional information
on TRACE Eligible-Securities at no cost, while maintaining the
confidentiality of individual market participants and transactions.
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\8\ See Rule 7730 (Trade Reporting and Compliance Engine
(TRACE)).
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If the Commission approves the proposed rule change, the effective
date of the proposed rule change will be the date of 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,\9\ 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, and Section 15A(b)(9) of the Act,\10\ which requires
that FINRA rules not impose any burden on competition that is not
necessary or appropriate.
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\9\ 15 U.S.C. 78o-3(b)(6).
\10\ 15 U.S.C. 78o-3(b)(9).
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FINRA believes that the proposed rule change will promote greater
transparency for TRACE-Eligible Securities. FINRA believes the proposal
strikes an appropriate balance between providing insightful information
on TRACE-Eligible Securities at no charge while preserving the
confidentiality of individual market participant identities and
transactions. Accordingly, FINRA believes the proposal is in the public
interest and will help promote transparency.
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. Since the proposed amendment
clarifies FINRA's discretion in publishing or distributing aggregated
transaction information and statistics on TRACE-Eligible Securities,
FINRA believes that there are no direct or indirect impacts on member
firms and investors.
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 (http://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-FINRA-2019-003 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number SR-FINRA-2019-003. 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 (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 website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549 on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of such filing also will be available for inspection
and copying at the principal office of FINRA. All comments received
will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-FINRA-2019-003, and should be submitted
on or before March 6, 2019.
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\11\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-02116 Filed 2-12-19; 8:45 am]
BILLING CODE 8011-01-P