[Federal Register Volume 87, Number 154 (Thursday, August 11, 2022)]
[Notices]
[Pages 49626-49628]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-17225]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-95438; File No. SR-FINRA-2022-017]


Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Order Approving a Proposed Rule Change To Amend FINRA 
Rule 6750 Regarding the Publication of Aggregated Transaction 
Information on U.S. Treasury Securities

August 5, 2022.

I. Introduction

    On June 23, 2022, 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 provide that FINRA may 
publish or distribute aggregated transaction information and statistics 
on U.S. Treasury Securities on a more frequent basis. The proposed rule 
change was published for comment in the Federal Register on July 1, 
2022.\3\ The Commission received one comment letter on the proposed 
rule change.\4\ 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. 95165 (June 27, 
2022), 87 FR 39573 (July 1, 2022) (``Notice'').
    \4\ See Letter from Stephen John Berger, Managing Director, 
Global Head of Government & Regulatory Policy, Citadel Securities, 
to Vanessa Countryman, Secretary, Commission (July 21, 2022) 
(``Citadel Letter''). Comment letters are available at: https://www.sec.gov/comments/sr-finra-2022-017/srfinra2022017.htm.
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II. Description of the Proposal

    On March 10, 2020 FINRA began posting on its website weekly, 
aggregate data on the trading volume of U.S. Treasury Securities \5\ 
reported to the

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Trade Reporting And Compliance Engine (TRACE).\6\ FINRA is proposing to 
amend paragraph (b) of Supplementary Material .01 to FINRA Rule 6750 to 
delete the word ``weekly'' so as to permit more frequent publication of 
aggregated U.S. Treasury Security transaction information and 
statistics, such as on a daily basis.\7\
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    \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).
    \6\ See, e.g., Supplementary Material .01(b) to FINRA Rule 6750; 
FINRA Press Release, FINRA Launches New Data on Treasury Securities 
Trading Volume, available at https://www.finra.org/media-center/newsreleases/2020/finra-launches-new-data-treasury-securities-trading-volume.
    \7\ On July 10, 2017, FINRA members began reporting information 
on transactions in U.S. Treasury Securities to TRACE. Information 
reported to TRACE regarding individual transactions in U.S. Treasury 
Securities is used for regulatory and other official sector purposes 
and is not published or disseminated. Pursuant to FINRA Rule 6750 
(Dissemination of Transaction Information) FINRA may, at its 
discretion, publish or distribute weekly aggregated transaction 
information and statistics on U.S. Treasury Securities at no charge 
(unless FINRA submits a rule filing imposing a fee for such data). 
FINRA states it has received favorable feedback on the weekly 
aggregated trading volume data for U.S. Treasury Securities that is 
currently made available on its website and that, in consultation 
with the Treasury Department, it now believes it would be 
appropriate to increase the frequency by which this aggregated data 
is made available. See Notice, supra note 3, 87 FR at 39573.
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    FINRA states that the more frequent aggregated U.S. Treasury 
Security data would continue to not identify individual market 
participants or transactions, and that FINRA would continue to not 
publish aggregated transaction information and statistics by individual 
U.S. Treasury Security (except for the category of on-the-run U.S. 
Treasury Securities because there is only one on-the-run security at a 
time for each subtype and maturity).\8\ FINRA also states that the 
aggregate U.S. Treasury Security data would continue to be provided at 
no charge (unless FINRA first submits an appropriate rule filing 
establishing a fee for this data).\9\ FINRA states that the proposed 
rule change will become effective on the date of Commission 
approval.\10\
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    \8\ See Notice, supra note 3, 87 FR at 39573-74. See also Rule 
6750.01(b) (providing that aggregated transaction information and 
statistics on U.S. Treasury Securities will 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) and will not 
identify individual market participants or transactions).
    \9\ See Notice, supra note 3, 87 FR at 39574; Supplementary 
Material .01(b) to FINRA Rule 6750.
    \10\ 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.\11\ In particular, the Commission finds that the proposed 
rule change is consistent with Section 15A(b)(6) of the Act,\12\ 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.
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    \11\ 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).
    \12\ 15 U.S.C. 78o-3(b)(6).
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    The Commission received one comment letter in response to the 
proposal.\13\ This commenter states that dissemination of more frequent 
aggregated transaction information will facilitate a better and more 
timely understanding of overall trading activity in U.S. Treasury 
securities and will improve the efficiency of the U.S. Treasury 
market.\14\ The commenter further states that FINRA's proposal is 
another positive incremental step in enhancing transparency in the U.S. 
Treasury market.\15\
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    \13\ See Citadel Letter, supra note 4 at 1.
    \14\ See Citadel Letter, supra note 4 at 1.
    \15\ See Citadel Letter, supra note 4 at 1.
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    The Commission believes that the proposal will benefit investors 
and market participants by providing them with timelier insights into 
activity in the U.S. Treasury Securities markets while maintaining the 
confidentiality of individual market participants and transactions. The 
proposal would enable FINRA, in its discretion, to publish or 
distribute at no charge (unless FINRA submits a rule filing imposing a 
fee for such data) aggregated transaction information and statistics on 
TRACE-Eligible Securities \16\ that are U.S. Treasury Securities on a 
more frequent basis than the weekly cadence provided under the current 
rule. FINRA represents it has received favorable feedback on the weekly 
aggregated trading volume data for U.S. Treasury Securities that is 
currently made available on its website and, in that, in consultation 
with the Treasury Department, FINRA now believes it would be 
appropriate to increase the frequency within which this aggregated data 
is made available.\17\ The Commission believes that the more frequent 
availability of such aggregated transaction information on U.S. 
Treasury Securities would provide greater overall transparency into the 
market for U.S. Treasury Securities.
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    \16\ ``TRACE-Eligible Security'' means 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 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). See FINRA 
Rule 6710(a).
    \17\ See Notice, supra note 3, 87 FR at 39573.
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    The Commission also believes that the proposal is reasonably 
designed to preserve the confidentiality of individual market 
participants and transactions, as aggregated transaction information 
and statistics on U.S. Treasury Securities 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), and would not 
identify individual market participants or transactions.\18\ In 
addition, FINRA represents that the proposed rule change would not 
impose any additional requirements on firms, because any aggregate 
statistics that are published or distributed by FINRA pursuant to this 
rule change would be derived from trade reports already required to be 
submitted to TRACE.\19\
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    \18\ See Notice, supra note 3, 87 FR at 39573-74; Supplementary 
Material .01(b) to FINRA Rule 6750.
    \19\ See Notice, supra note 3, 87 FR at 39574.
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    Pursuant to Section 19(b)(5) of the Act,\20\ 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.\21\ Pursuant to 
Section 19(b)(6) of the Act,\22\ the

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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.
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    \20\ See 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'').
    \21\ See Email from U.S. Treasury Department staff to Justin 
Pica, Division of Trading and Markets, Commission (August 4, 2022). 
See also Quarterly Refunding Statement of U.S. Treasury Department 
Assistant Secretary for Financial Markets Josh Frost (August 3, 
2022) (stating that ``Treasury supports [FINRA's] recent proposed 
rule change to publish the aggregated U.S. Treasury Security 
transaction information and statistics on a more frequent basis'') 
available at https://home.treasury.gov/news/press-releases/jy0908.
    \22\ 15 U.S.C. 78s(b)(6).
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    The proposal will benefit investors and market participants by 
promoting greater transparency into the U.S. Treasury Securities market 
while also maintaining the confidentiality of individual market 
participants and transactions.

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\23\ that the proposed rule change (SR-FINRA-2022-017) is approved.
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    \23\ 15 U.S.C. 78s(b)(2).
    \24\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\24\
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-17225 Filed 8-10-22; 8:45 am]
BILLING CODE 8011-01-P