[Federal Register Volume 84, Number 249 (Monday, December 30, 2019)]
[Notices]
[Pages 71986-71987]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-28084]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-87837; File No. SR-FINRA-2019-028]
Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Order Approving Proposed Rule Change To Allow FINRA To
Publish or Distribute Aggregated Transaction Information and Statistics
on U.S. Treasury Securities
December 20, 2019.
I. Introduction
On November 12, 2019, the Financial Industry Regulatory Authority,
Inc. (``FINRA'') filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a
proposed rule change to amend FINRA Rule 6750 to allow FINRA to publish
or distribute aggregated transaction information and statistics on U.S.
Treasury Securities. The proposed rule change was published for comment
in the Federal Register on November 20, 2019.\3\ The Commission
received no comment letters on the proposed rule change. This order
approves the proposed rule change.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 87540 (November 14,
2019), 84 FR 64147 (November 20, 2019) (``Notice'').
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II. Description of the Proposal
Existing FINRA Rule 6750(a) provides that FINRA will publicly
disseminate information regarding a transaction in a TRACE-Eligible
Security \4\ immediately upon receipt of a transaction report, unless
an exception applies. FINRA Rule 6750(c)(5) specifies that FINRA will
not disseminate information on a transaction in a TRACE-Eligible
Security that is a U.S. Treasury Security.\5\ Currently, Supplementary
Material .01 to FINRA Rule 6750 provides that, notwithstanding FINRA
Rule 6750(c), FINRA may publish or distribute aggregated transaction
information and statistics on non-disseminated TRACE-Eligible
Securities other than U.S. Treasury Securities at no charge, unless
FINRA submits a rule filing to the Commission imposing a fee for such
data.
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\4\ FINRA Rule 6710(a) defines a ``TRACE-Eligible Security'' as
a debt security that is 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 of 1933 Rule 144(a)(3), sold
pursuant to Securities Act of 1933 Rule 144A; (2) issued or
guaranteed by an Agency, as defined in FINRA Rule 6710(k) or a
Government-Sponsored Enterprise as defined in FINRA Rule 6710(n); or
(3) a U.S. Treasury Security, as defined in FINRA 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 FINRA Rule 6710(o).
\5\ ``U.S. Treasury Security'' means a security, other than a
savings bond, issued by the U.S. Department of the Treasury
(``Treasury Department'') 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 have been separated pursuant to the Separate
Trading of Registered Interest and Principal of Securities (STRIPS)
program operated by the Treasury Department. See FINRA Rule 6710(p).
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FINRA has proposed to amend Supplementary Material .01 to FINRA
Rule 6750 to provide that FINRA may publish or distribute weekly
aggregated transaction information and statistics on non-disseminated
TRACE-Eligible Securities that are U.S. Treasury Securities. Pursuant
to the proposed rule change, the aggregated U.S. Treasury Securities
data would not be published or distributed by individual security,
except for aggregated data that includes on-the-run U.S. Treasury
Securities that may have had only one on-the-run security during the
aggregated period.\6\ In addition, the aggregated data would not
identify individual market participants or transactions. FINRA has
proposed to provide the aggregated data on U.S. Treasury Securities at
no charge, unless FINRA first establishes a fee for such data by
submitting an appropriate rule filing, as is the case with the
aggregated data for TRACE-Eligible Securities that are not U.S.
Treasury Securities.
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\6\ In the Notice, FINRA stated that it intends to publish
weekly volume information aggregated by U.S. Treasury Security
subtype (e.g., Bills, Floating Rate Notes, Treasury Inflation-
Protected Securities, and Nominal Coupons). FINRA further stated
that the volume information may be grouped within dealer-to-
customer, ATS and dealer-to-dealer, remaining years to maturity, or
other categories. See Notice, 84 FR at 64148.
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FINRA has stated that the proposed rule change will become
effective on the date of Commission approval.\7\
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\7\ See id.
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III. Discussion and Commission Findings
After careful consideration, the Commission finds that the proposed
rule change is consistent with the requirements of the Act and the
rules and regulations thereunder applicable to a national securities
association.\8\ In particular, the Commission finds that the proposed
rule change is consistent with Section 15A(b)(6) of the Act,\9\
[[Page 71987]]
which requires, among other things, that FINRA rules 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. The Commission believes that the
proposal will benefit investors and market participants by facilitating
greater transparency in the U.S. Treasury Security market by making
publicly available aggregate trading volume for transactions in U.S.
Treasury Securities that are reported to TRACE. The Commission believes
that the proposal is reasonably designed to preserve the
confidentiality of individual market participants and transactions. The
Commission also notes that the proposed rule change would not impose
any new cost on FINRA members, because any aggregate statistics that
are published or distributed by FINRA pursuant to this rule change
would be derived from information that members are already required to
report to TRACE.
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\8\ In approving this proposal, the Commission has considered
the proposed rule's impact on efficiency, competition, and capital
formation. See 15 U.S.C. 78c(f).
\9\ 15 U.S.C. 78o-3(b)(6).
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Pursuant to Section 19(b)(5) of the Act,\10\ the Commission
consulted with and considered the views of the Treasury Department in
determining to approve the proposed rule change. The Treasury
Department indicated its support for the proposal.\11\ Pursuant to
Section 19(b)(6) of the Act,\12\ the Commission has considered the
sufficiency and appropriateness of existing laws and rules applicable
to government securities brokers, government securities dealers, and
their associated persons in approving the proposal. Currently there is
not available, to the public or otherwise, a comprehensive source of
aggregated volume data that reflects all major segments of the market
for U.S. Treasury Securities.\13\ The proposed rule change would
promote transparency in the market for U.S. Treasury Securities by
enabling FINRA to publish or distribute certain aggregate information
regarding transactions in U.S. Treasury Securities that are reported to
TRACE.
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\10\ 15 U.S.C. 78s(b)(5) (providing that the Commission ``shall
consult with and consider the views of the Secretary of the Treasury
prior to approving a proposed rule filed by a registered securities
association that primarily concerns conduct related to transactions
in government securities, except where the Commission determines
that an emergency exists requiring expeditious or summary action and
publishes its reasons therefor'').
\11\ Email from Treasury Department staff to Michael Gaw,
Assistant Director, Division of Trading and Markets, Commission
(December 18, 2019).
\12\ 15 U.S.C. 78s(b)(6).
\13\ See Notice, 84 FR at 64149.
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IV. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\14\ that the proposed rule change (SR-FINRA-2019-028) is approved.
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\14\ 15 U.S.C. 78s(b)(2).
\15\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2019-28084 Filed 12-27-19; 8:45 am]
BILLING CODE 8011-01-P