15352 Federal Register / Vol. 76, No. 54 / Monday, March 21, 2011 / Notices 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 61566 

(February 22, 2010), 75 FR 9262 (March 1, 2010) 

(Order Approving File No. SR–FINRA–2009–065) 

(‘‘TRACE ABS filing’’) and Regulatory Notice 10–23 

(April 2010). 

4See Securities Exchange Act Release No. 63223 

(November 1, 2010), 75 FR 68654 (November 8, 

Compliance with Rule 19b–4 is 

mandatory. Information received in 

response to Rule 19b–4 shall not be kept 

confidential; the information collected 

is public information. 

Written comments are invited on: (a) 

Whether the proposed collection of 

information is necessary for the proper 

performance of the functions of the 

Commission, including whether the 

information shall have practical utility; 

(b) the accuracy of the Commission’s 

estimates of the burden of the proposed 

collection of information; (c) ways to 

enhance the quality, utility, and clarity 

of the information to be collected; and 

(d) ways to minimize the burden of the 

collection of information on 

respondents, including through the use 

of automated collection techniques or 

other forms of information technology. 

Consideration will be given to 

comments and suggestions submitted in 

writing within 60 days of this 

publication. 

Comments should be directed to: 

Thomas Bayer, Chief Information 

Officer, Securities and Exchange 

Commission, c/o Remi Pavlik-Simon, 

6432 General Green Way, Alexandria, 

Virginia 22312 or send an e-mail to: 

PRA_Mailbox@sec.gov. Comments must 

be submitted within 60 days of this 

notice. 

Dated: March 15, 2011. 

Cathy H. Ahn, 

Deputy Secretary. 

[FR Doc. 2011–6513 Filed 3–18–11; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

Sunshine Act Meeting 

Notice is hereby given, pursuant to 

the provisions of the Government in the 

Sunshine Act, Public Law 94–409, that 

the Securities and Exchange 

Commission will hold a Closed Meeting 

on Thursday, March 24, 2011 at 2 p.m. 

Commissioners, Counsel to the 

Commissioners, the Secretary to the 

Commission, and recording secretaries 

will attend the Closed Meeting. Certain 

staff members who have an interest in 

the matters also may be present. 

The General Counsel of the 

Commission, or his designee, has 

certified that, in his opinion, one or 

more of the exemptions set forth in 

5 U.S.C. 552b(c)(3), (5), (7), (8), 9(B) and 

(10) and 17 CFR 200.402(a)(3), (5), (7), 

(8), 9(ii) and (10), permit consideration 

of the scheduled matters at the Closed 

Meeting. 

Commissioner Aguilar, as duty 

officer, voted to consider the items 

listed for the Closed Meeting in a closed 

session. 

The subject matter of the Closed 

Meeting scheduled for Thursday, March 

24, 2011 will be: 

Institution and settlement of 

injunctive actions; 

Institution and settlement of 

administrative proceedings; 

A regulatory matter regarding a 

financial institution; and 

Other matters relating to enforcement 

proceedings. 

At times, changes in Commission 

priorities require alterations in the 

scheduling of meeting items. 

For further information and to 

ascertain what, if any, matters have been 

added, deleted or postponed, please 

contact: 

The Office of the Secretary at (202) 

551–5400. 

March 17, 2011. 

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. 2011–6706 Filed 3–17–11; 4:15 pm] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–64084; File No. SR–FINRA– 

2011–012] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Notice of Filing of 

Proposed Rule Change Relating to 

TRACE Reporting of Asset-Backed 

Securities 

March 16, 2011. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 (‘‘Act’’ 

or ‘‘Exchange Act’’)1 and Rule 19b-4 

thereunder,2 notice is hereby given that 

on March 3, 2011, the 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, 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. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

FINRA is proposing to amend the 

FINRA Rule 6700 Series and FINRA 

Rule 7730: 

(1) In FINRA Rule 6710, to 

incorporate minor amendments to 

clarify, simplify or conform the defined 

terms, ‘‘TRACE–Eligible Security,’’ 

‘‘Reportable TRACE Transaction,’’ 

‘‘Agency Debt Security,’’ ‘‘Asset-Backed 

Security’’ and ‘‘TRACE System Hours’’; 

to add a defined term, ‘‘Securitizer’’; 

and, to delete the defined terms 

‘‘Sponsor’’ and ‘‘Issuing Entity’’; 

(2) In FINRA Rule 6730, (A) to revise, 

renumber and conform the text of 

parallel reporting provisions in FINRA 

Rule 6730(a); (B) to incorporate minor 

amendments regarding the duration and 

expiration of the pilot program (‘‘Pilot 

Program’’) for reporting Asset-Backed 

Securities transactions; (C) to 

consolidate reporting requirements for 

Asset-Backed Securities transactions 

that are executed other than during 

TRACE System Hours; (D) to simplify 

how settlement is reported for AssetBacked Securities transactions; (E) to 

add alternative reporting requirements 

for Asset-Backed Securities transactions 

that are collateralized mortgage 

obligation (‘‘CMO’’) or real estate 

mortgage investment conduit (‘‘REMIC’’) 

transactions that occur prior to the 

issuance of the CMO or REMIC (‘‘preissuance CMOs/REMICs’’); and (F) to 

incorporate other minor technical, 

conforming or clarifying amendments to 

the Rule; 

(3) In FINRA Rule 6760, to 

incorporate requirements that apply to 

Securitizers of Asset-Backed Securities, 

alternative notification requirements for 

pre-issuance CMOs/REMICs and minor 

technical, conforming or clarifying 

changes; and 

(4) In FINRA Rule 7730, to add the 

Financial Information eXchange (‘‘FIX’’) 

as a method to report transactions to 

TRACE, establish a system-related FIX 

fee, and incorporate a minor technical 

amendment. 

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, on the Commission’s 

Web site at http://www.sec.gov, and at 

the Commission’s Public Reference 

Room. 

The proposed amendments set forth 

in Exhibit 5 are shown as changes to the 

FINRA Rule 6700 Series and FINRA 

Rule 7730 as amended by SR–FINRA– 

2009–065 (‘‘TRACE ABS filing’’), which 

was approved by the SEC on February 

22, 2010.3 The TRACE ABS filing is 

anticipated to become effective on May 

16, 2011.4 The proposed rule change 

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Federal Register / Vol. 76, No. 54 / Monday, March 21, 2011 / Notices 15353 

2010) (Notice of Filing and Immediate Effectiveness 

of SR–FINRA–2010–054 to Extend the 

Implementation Period for SR–FINRA–2009–065); 

Regulatory Notice 10–55 (October 2010) 

(establishing May 16, 2011 as the effective date). 

5See supra note 4. 

6 15 U.S.C. 78c(a)(77). 

7Public Law 111–203, 124 Stat. 1376 (2010). 

‘‘Asset-Backed Security’’ was added to the Act under 

Section 941(a) of Title IX of the Dodd-Frank Act. 

Under Section 3(a)(77)(A) of the Act, the term assetbacked security: 

Means a fixed-income or other security 

collateralized by any type of self-liquidating 

financial asset (including a loan, a lease, a 

mortgage, or a secured or unsecured receivable) that 

allows the holder of the security to receive 

payments that depend primarily on cash flow from 

the asset, including— 

(i) A collateralized mortgage obligation; 

(ii) A collateralized debt obligation; 

(iii) A collateralized bond obligation; 

(iv) A collateralized debt obligation of assetbacked securities; 

(v) A collateralized debt obligation of 

collateralized debt obligations; and 

(vi) A security that the Commission, by rule, 

determines to be an asset-backed security for 

purposes of this section; and * * * 

The definition of ‘‘asset-backed security’’ in 

Section 3(a)(77) of the Act (15 U.S.C. 78c(a)(77)) ‘‘is 

broader than the definition of ‘asset-backed 

security’ in Regulation AB and includes securities 

typically offered and sold in private transactions.’’ 

See Securities Act Release No. 9150 (October 13, 

2010), 75 FR 64182, 64183 (October 19, 2010) (File 

No. S7–26–10: Issuer Review of Assets in Offerings 

of Asset-Backed Securities); and SEC Regulation 

AB, Item 1101(c) (17 CFR 229.1101(c)). 

8Section 941(b) of Title IX of the Dodd-Frank Act 

added the definition of ‘‘securitizer’’ to the Act as 

Section 15G(a)(3) (15 U.S.C. 78o–11(a)(3)). 

9 15 U.S.C. 78o–11(a)(3). Section 15G(a)(3) of the 

Act provides that a securitizer is ‘‘(A) an issuer of 

an asset-backed security; or (B) a person who 

organizes and initiates an asset-backed securities 

transaction by selling or transferring assets, either 

directly or indirectly, including through an affiliate, 

to the issuer; and * * * ’’ 

10The Commission has stated that ‘‘[W]ith respect 

to registered transactions and the definitions of 

transaction parties in Regulation AB, sponsors and 

depositors both fall within the statutory definition 

of securitizer.’’ Securities Exchange Act Release No. 

63029 (October 4, 2010), 75 FR 62718, 62720 

(October 13, 2010) (File No. S7–24–10: Disclosure 

for Asset-Backed Securities Required by Section 

943 of the Dodd-Frank Wall Street Reform and 

Consumer Protection Act: Proposed Rule). In 

addition, the term ‘‘securitizer’’ ‘‘is not specifically 

limited to entities that undertake transactions that 

are registered under the Securities Act or conducted 

in reliance upon any particular exemption. 

Consequently, * * * [securitizer] is intended to 

apply to any entity or person that issues or 

organizes an * * * [asset-backed security] as 

specified in Section 15G(a)(3) of the Exchange Act.’’ 

Id. The SEC noted that entities included in the 

definition of securitizer included GovernmentSponsored Enterprises (GSEs) such as Fannie Mae, 

Freddie Mac, and municipal entities. Id. 

amends or supplements the TRACE 

reporting and other requirements that 

will apply to Asset-Backed Securities 

transactions, with certain exceptions 

regarding minor conforming and other 

technical proposed amendments. 

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 

On February 22, 2010, the SEC 

approved the TRACE ABS filing, which 

amends the FINRA Rule 6700 Series to 

define Asset-Backed Securities as 

TRACE–Eligible Securities and to 

require members to report transactions 

in such securities to TRACE, and, 

concomitantly, FINRA Rule 7730, to 

establish reporting fees for transactions 

in such securities. The rule amendments 

in the TRACE ABS filing currently are 

anticipated to become effective on May 

16, 2011.5 In the proposed rule change, 

FINRA proposes additional 

amendments to the FINRA Rule 6700 

Series and FINRA Rule 7730 to prepare 

for the reporting of Asset-Backed 

Securities transactions to TRACE. 

As discussed in greater detail below, 

in FINRA Rule 6710, FINRA proposes 

minor amendments to five defined 

terms, an additional defined term, 

‘‘Securitizer,’’ and the deletion of two 

defined terms that are no longer 

necessary. In FINRA Rule 6730, FINRA 

proposes to: (A) Revise, renumber and 

conform the text of parallel reporting 

provisions in FINRA Rule 6730(a); (B) 

incorporate minor amendments 

regarding the duration and expiration of 

the Pilot Program for reporting AssetBacked Securities transactions; (C) 

consolidate reporting requirements for 

transactions in Asset-Backed Securities 

that are executed other than during 

TRACE System Hours; (D) simplify how 

settlement is reported for Asset-Backed 

Securities transactions; and (E) add 

alternative reporting requirements for 

Asset-Backed Securities transactions 

that are pre-issuance CMO/REMIC 

transactions. FINRA also proposes to 

add new FINRA Rule 6730(a)(6) to 

clarify a member’s obligation to provide 

information to FINRA Operations 

regarding a TRACE–Eligible Security 

when such security is not in the TRACE 

system, and to incorporate other minor 

technical or clarifying amendments to 

FINRA Rule 6730. In FINRA Rule 6760, 

FINRA proposes to incorporate 

requirements that apply to Securitizers 

of Asset-Backed Securities, alternative 

notification requirements for preissuance CMOs/REMICs, and minor 

technical, conforming or clarifying 

changes, and in FINRA Rule 7730, to 

add FIX as a method to report 

transactions to TRACE, establish a 

system-related fee for transactions 

reported to TRACE via FIX and make a 

technical amendment. 

FINRA Rule 6710 

FINRA proposes minor amendments 

to five defined terms in FINRA Rule 

6710, a new defined term, and the 

deletion of two defined terms that are 

no longer necessary, as set forth below. 

TRACE-Eligible Security. FINRA 

proposes minor technical amendments 

to the defined term ‘‘TRACE–Eligible 

Security’’ in FINRA Rule 6710(a), such 

as deleting unnecessary numbering. 

Asset-Backed Security. FINRA 

proposes to amend the defined term 

‘‘Asset-Backed Security’’ in FINRA Rule 

6710(m) to incorporate, in pertinent 

part, Section 3(a)(77) of the Act,6 a 

definition of asset-backed security 

added to the Act as part of the DoddFrank Wall Street Reform and Consumer 

Protection Act of 2010 (‘‘Dodd-Frank 

Act’’).7 As amended, FINRA Rule 

6710(m) would provide: 

‘‘Asset-Backed Security’’ means a security 

collateralized by any type of financial asset, 

such as a loan, a lease, a mortgage, or a 

secured or unsecured receivable, and 

includes but is not limited to an asset-backed 

security as defined in Section 3(a)(77)(A) of 

the Exchange Act, a synthetic asset-backed 

security and any residual tranche or interest 

of any security specified above, which 

tranche or interest is a debt security for 

purposes of Rule 6710(a) and the Rule 6700 

Series. 

The proposed amendment to the term 

‘‘Asset-Backed Security’’ clarifies, but 

does not broaden, the term. 

Securitizer. The Dodd-Frank Act also 

added a definition of ‘‘securitizer’’ in 

Section 15G(a)(3) of the Act,8 which 

FINRA proposes to incorporate in 

FINRA Rule 6710 as paragraph (s). In 

FINRA Rule 6710(s), ‘‘Securitizer’’ 

would have the same meaning it has in 

Section 15G(a)(3) of the Act.9

Reportable TRACE Transaction; 

Agency Debt Security. FINRA proposes 

to use the term ‘‘Securitizer,’’ which is 

broad and includes sponsors and 

issuers, among others,10 in lieu of the 

defined terms ‘‘Sponsor’’ and ‘‘Issuing 

Entity,’’ in ‘‘Reportable TRACE 

Transaction’’ in FINRA Rule 6710(c) and 

‘‘Agency Debt Security’’ in FINRA Rule 

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15354 Federal Register / Vol. 76, No. 54 / Monday, March 21, 2011 / Notices 

11 In FINRA Rule 6710(c) and FINRA Rule 

6710(l), FINRA substitutes the single term, 

‘‘Securitizer’’ for ‘‘Sponsor’’ and ‘‘Issuing Entity.’’ See 

also minor proposed amendments to Rule 6760, 

discussed infra. 

12As TRACE has expanded, FINRA Rule 6730 has 

been amended several times to incorporate 

additional reporting requirements. Before March 1, 

2010, all TRACE-Eligible Securities transactions 

were subject to a single reporting standard (and 

three exceptions relating to transactions executed 

when the TRACE System was not open) (see FINRA 

Rule 6730(a)(1) and FINRA Rule 6730(a)(2) through 

(a)(4)). On March 1, 2010, a second set of 

requirements for reporting List or Fixed Offering 

Price Transactions and Takedown Transactions 

became effective (T+1 reporting requirement for 

most transactions) (see FINRA Rule 6730(a)(5)). See 

Securities Exchange Act Release No. 60726 

(September 28, 2009), 74 FR 50991(October 2, 2009) 

(Order Approving File No. SR–FINRA–2009–010). 

See also Regulatory Notice 09–57 (September 2009). 

13The current general requirements set forth in 

FINRA Rule 6730(a)—requiring all Parties to a 

Transaction to report the transaction and for reports 

to be made within 15 minutes of the Time of 

Execution (except as otherwise provided)—would 

be retained. FINRA proposes to delete the statement 

that, ‘‘Specific trade reporting obligations during a 

24-hour cycle are set forth below.’’ 

14The reporting requirements in proposed 

renumbered FINRA Rule 6730(a)(1) and 

subparagraphs (A) through (D) also would apply to 

primary market transactions that do not qualify for 

T + 1 reporting, consistent with current FINRA Rule 

6730(a)(1) through (4). 

15FINRA Rule 6730(a)(1)–(4) would be 

renumbered as Rule 6730(a)(1)(A)–(D), respectively. 

16The rule text would be set forth in two 

subparagraphs, proposed FINRA Rule 6730(a)(2)(A) 

and proposed FINRA Rule 6730(a)(2)(B). 

17FINRA Rule 6730(a)(6) would be renumbered 

as follows: FINRA Rule 6730(a)(6)(A)(i) would be 

renumbered as FINRA Rule 6730(a)(3)(A)(ii); FINRA 

Rule 6730(a)(6)(A)(ii) (the Pilot Program) would be 

renumbered as FINRA Rule 6730(a)(3)(A)(i); and 

FINRA Rule 6730(a)(6)(B) and FINRA Rule 

6730(a)(6)(B)(i)–(ii) would be renumbered as FINRA 

Rule 6730(a)(3)(B) and FINRA Rule 6730(a)(3)(B)(i)– 

(ii), respectively. As discussed infra, FINRA 

proposes to consolidate FINRA Rule 

6730(a)(6)(B)(ii) and FINRA Rule 6730(a)(6)(B)(iii) 

in renumbered FINRA Rule 6730(a)(3)(B)(ii), and 

delete FINRA Rule 6730(a)(6)(B)(iii). 

18After the Pilot Program expires, transactions in 

Asset-Backed Securities must be reported on the 

date of trade during TRACE System Hours, with 

certain exceptions. See FINRA Rule 6730(a)(6)(A)(i) 

(proposed renumbered FINRA Rule 

6730(a)(3)(A)(ii)). 

19As discussed infra, the Pilot Program is also 

incorporated in the proposed reporting 

requirements applicable to transactions in preissuance CMOs/REMICs (see proposed FINRA Rule 

6730(a)(3)(C)). The expiration of the Pilot Program 

will also necessitate modifications of systems and 

procedures in place to report such transactions. 

6710(l), and any other provisions in the 

FINRA Rule 6700 Series where Sponsor 

and/or Issuing Entity were used.11

TRACE System Hours. FINRA 

proposes to conform the time referenced 

in the defined term ‘‘TRACE System 

Hours’’ to times stated in the FINRA 

Rule 6700 Series generally (to include 

seconds) and also to relocate the defined 

term from FINRA Rule 6710(bb) to 

FINRA Rule 6710(t). FINRA Rule 

6710(bb) would be deleted. 

Sponsor; Issuing Entity. FINRA 

proposes to delete the defined terms 

‘‘Sponsor’’ in FINRA Rule 6710(s) and 

‘‘Issuing Entity’’ in FINRA Rule 6710(t), 

which are no longer necessary with the 

inclusion of the defined term 

Securitizer. 

FINRA Rule 6730 

As noted above, FINRA proposes 

certain amendments to FINRA Rule 

6730 regarding the reporting of AssetBacked Securities transactions to 

TRACE, and certain technical 

amendments, including restructuring 

and renumbering FINRA Rule 6730(a) 

and FINRA Rule 6730(a)(1) through 

(a)(8), to align parallel or similar 

reporting provisions. The proposed 

restructuring also includes minor 

technical amendments to conform the 

text of parallel or similar reporting 

provisions.12

FINRA Rule 6730(a); Proposed 

Renumbered FINRA Rule 6730(a)(1): 

Generally Applicable Reporting 

Requirements. FINRA Rule 6730(a) 

provides that TRACE-Eligible Securities 

transactions must be reported within 15 

minutes. FINRA Rule 6730(a)(1) through 

(3) set forth reporting requirements for 

transactions executed, respectively, on a 

business day during, after, and before 

TRACE System Hours, and FINRA Rule 

6730(a)(4) states such requirements for 

transactions executed on a weekend or 

a holiday. 

To restructure FINRA Rule 6730(a) to 

align parallel or similar reporting 

provisions, FINRA first proposes minor 

technical amendments to FINRA Rule 

6730(a),13 and to reorganize the 

reporting requirements of general 

applicability (i.e., applicable to 

corporate debt and Agency Debt 

Securities)14 that are set forth in FINRA 

Rule 6730(a)(1) through (a)(4). Amended 

FINRA Rule 6730(a)(1) would be titled, 

‘‘Reporting Requirements’’ and provide: 

‘‘Except as otherwise specifically 

provided in paragraph (a)(2) and 

paragraph (a)(3), transactions in TRACEEligible Securities must be reported as 

provided in this paragraph (a)(1).’’ 

FINRA Rule 6730(a)(1) through FINRA 

Rule 6730(a)(4) would be renumbered as 

subparagraphs of FINRA Rule 6730(a)(1) 

and include minor technical and 

conforming amendments to conform the 

rule text to similar or parallel provisions 

in FINRA Rule 6730(a).15

Proposed Renumbered FINRA Rule 

6730(a)(2)—List or Fixed Offering Price 

Transactions and Takedown 

Transactions. FINRA Rule 6730(a)(5), 

containing reporting requirements for 

List or Fixed Offering Price Transactions 

and Takedown Transactions, would be 

renumbered as FINRA Rule 6730(a)(2), 

and titled ‘‘Reporting Requirements— 

List or Fixed Offering Price Transactions 

and Takedown Transactions.’’ FINRA 

also proposes minor technical and 

conforming amendments to conform the 

rule text to similar or parallel provisions 

in FINRA Rule 6730(a).16

Proposed Renumbered FINRA Rule 

6730(a)(3)—Asset-Backed Securities. 

FINRA Rule 6730(a)(6), containing 

reporting requirements for Asset-Backed 

Securities, would be renumbered as 

proposed FINRA Rule 6730(a)(3), and 

titled ‘‘Reporting Requirements—AssetBacked Securities Transactions.’’ 17

FINRA also proposes minor technical 

and conforming amendments to 

conform the rule text of renumbered 

FINRA Rule 6730(a)(3) to similar or 

parallel provisions in FINRA Rule 

6730(a). Finally, current FINRA Rule 

6730(a)(7) and current FINRA Rule 

6730(a)(8) would be renumbered, 

respectively, as FINRA Rule 6740(a)(4) 

and FINRA Rule 6730(a)(5). 

Pilot Program. FINRA Rule 

6730(a)(6)(A)(ii) (proposed renumbered 

FINRA Rule 6730(a)(3)(A)(i)) provides 

for a six-month Pilot Program for 

reporting transactions in Asset-Backed 

Securities, which extends the period for 

a member to timely report such 

transactions to no later than the next 

business day (T + 1) at any time during 

TRACE System Hours.18 The Pilot 

Program provides additional time for 

members to prepare and submit accurate 

transaction reports for Asset-Backed 

Securities on a temporary basis. 

FINRA proposes a technical 

amendment to the Pilot Program 

(proposed renumbered FINRA Rule 

6730(a)(3)(A)(i)) providing that the Pilot 

Program shall expire 180 days (instead 

of six months) following the 

commencement of the reporting of 

Asset-Backed Securities transactions, 

provided that if the 180th day is not a 

Friday, the Pilot Program will expire on 

the Friday next occurring (that the 

TRACE system is open) after the 180th 

day. FINRA proposes that the Pilot 

Program expire on a Friday in response 

to comments requesting that members 

and vendors be given additional time to 

incorporate the system changes that 

must be implemented at the termination 

of the Pilot Program.19

Asset-Backed Securities Transactions 

Executed on Non-Business Day. 

Currently, trades that are executed on a 

weekend, holiday or other day when the 

TRACE system is closed must be 

reported the next business day (T + 1), 

designated ‘‘as/of,’’ and are subject to 

two unique requirements. First, the date 

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20Also, when the reporting method used includes 

a ‘‘special price memo’’ field, the member must 

enter the actual date of execution and Time of 

Execution in the field. 

21See, e.g., FINRA Rule 6730(a)(4) (proposed 

renumbered FINRA Rule 6730(a)(1)(D)), FINRA 

Rule 6730(a)(5) (proposed renumbered FINRA Rule 

6730(a)(2)(B)), and FINRA Rule 6730(a)(6)(B)(iii). 

22Proposed renumbered FINRA Rule 

6730(a)(3)(B)(ii) would provide that any transaction 

in an Asset-Backed Security that is executed on a 

Saturday, Sunday, a Federal or religious holiday or 

other day on which the TRACE system is not open, 

or executed on a business day at or after 6:30:00 

p.m. Eastern Time through 11:59:59 p.m. Eastern 

Time must be reported not later than the next 

business day during TRACE System Hours, 

designated ‘‘as/of’’ and include the date of 

execution. 

23Under proposed FINRA Rule 6730(a)(3)(C)(i) 

and proposed FINRA Rule 6730(a)(3)(C)(ii), any 

transaction that is reported other than on the date 

of execution must be designated ‘‘as/of’’ and include 

the date of execution. 

24See proposed amendments to FINRA Rule 

6730(a)(4) (proposed renumbered Rule 

6730(a)(1)(D)), FINRA Rule 6730(a)(5) (proposed 

renumbered Rule 6730(a)(2)(B)), FINRA Rule 

6730(a)(6)(B)(ii) (proposed renumbered Rule 

6730(a)(3)(B)(ii)) and FINRA Rule 6730(a)(8) 

(proposed renumbered Rule 6730(a)(5)). 

of execution reported to TRACE is not 

the actual date of execution; instead, a 

member reports the date of execution as 

the same day (T + 1) that the report must 

be timely submitted. In addition, the 

execution time reported must be 

‘‘12:01:00 a.m. Eastern Time’’ 

(‘‘00:01:00’’), instead of the actual Time 

of Execution.20 These adaptations were 

incorporated when TRACE began 

because the TRACE system does not 

recognize any day on which the TRACE 

system is closed as a valid date of 

execution, and the two unique 

requirements permit FINRA to 

distinguish such non-business day 

transactions from all other reported 

transactions.21

FINRA has improved the TRACE 

system, which, for transactions in AssetBacked Securities, will recognize any 

calendar day, including days on which 

the TRACE system is not open, as a 

valid date of execution. Accordingly, 

FINRA proposes to streamline FINRA 

Rule 6730(a)(6) (proposed renumbered 

FINRA Rule 6730(a)(3)) regarding AssetBacked Securities Transactions, 

combining the requirements of FINRA 

Rule 6730(a)(6)(B)(ii) and FINRA Rule 

6730(a)(6)(B)(iii) in proposed 

renumbered FINRA Rule 

6730(a)(3)(B)(ii) because, with this 

system enhancement, the standards for 

reporting under both provisions are the 

same, and separate provisions are no 

longer necessary.22 FINRA Rule 

6730(a)(6)(B)(iii) would be deleted. 

Settlement. FINRA Rule 

6730(d)(4)(B)(ii) currently requires a 

member to report two items regarding 

the terms of settlement of an AssetBacked Securities transaction: (1) The 

actual date of settlement; and (2) an 

indicator that the transaction will settle 

‘‘regular way’’ (i.e., T + 3 or in 

conformity with the uniform practices 

established as ‘‘good delivery’’ for the 

specific Asset-Backed Security), or one 

indicating that the transaction will not 

be settled ‘‘regular way.’’ 

FINRA proposes to retain the 

requirement to report the actual date of 

settlement and delete the requirement to 

report the indicator, which will simplify 

the reporting of settlement in 

connection with Asset-Backed 

Securities transactions. 

Pre-Issuance CMO/REMIC 

Transactions. FINRA proposes to 

supplement the rules requiring members 

to report Asset-Backed Securities in 

FINRA Rule 6730(a)(6) (proposed 

renumbered FINRA Rule 6730(a)(3)) to 

include alternative reporting 

requirements for pre-issuance CMO/ 

REMIC transactions. Proposed FINRA 

Rule 6730(a)(3)(C)(i) provides that a preissuance CMO/REMIC transaction must 

be reported, during the Pilot Program, 

the earlier of: (i) the business day 

following the business day that the 

security is assigned a CUSIP, a similar 

numeric identifier or a FINRA symbol 

during TRACE System Hours, or (ii) the 

business day following the date of 

issuance of the security during TRACE 

System Hours. As provided in proposed 

FINRA Rule 6730(a)(3)(C)(ii), after the 

Pilot Program expires, such pre-issuance 

CMO/REMIC transactions must be 

reported the earlier of (i) the business 

day that the security is assigned a 

CUSIP, a similar numeric identifier or a 

FINRA symbol during TRACE System 

Hours (unless such identifier is assigned 

after 1:00:00 p.m. Eastern Time, and in 

such case, such transactions must be 

reported no later than the next business 

day during TRACE System Hours), or 

(ii) the date of issuance of the security 

during TRACE System Hours.23

The alternative reporting 

requirements in proposed FINRA Rule 

6730(a)(3)(C) differ from current TRACE 

reporting requirements and those that 

will apply generally to Asset-Backed 

Securities transactions in that, for preissuance CMO/REMIC transactions, the 

reporting period begins (or is triggered) 

on the date of issuance of the security 

(or, if earlier, the date the security is 

assigned an appropriate identifier), 

instead of the date and time of the 

member’s execution of the transaction. 

FINRA proposes this alternative 

approach because although pre-issuance 

CMO/REMIC transactions occur 

frequently, in many cases, a CUSIP or 

other identifier is not yet assigned or is 

difficult to assign (or cannot be 

assigned), because certain aspects of the 

collateral and structure of the CMO or 

REMIC are not finalized at the time of 

such transactions, and will not be 

finalized until shortly before the CMO 

or REMIC is actually issued. CMO and 

REMIC transactions that are not preissuance CMO/REMIC transactions— 

i.e., those executed on or after the date 

of issuance of the security—must be 

reported in compliance with FINRA 

Rule 6730(a)(6)(A) and (B) (proposed 

renumbered FINRA Rules 6730(a)(3)(A) 

and (B)) and may not be reported under 

the alternative reporting provisions 

(proposed FINRA Rule 6730(a)(3)(C)(i) 

and proposed FINRA Rule 

6730(a)(3)(C)(ii)). 

Other FINRA Rule 6730 Amendments. 

FINRA proposes to amend FINRA Rule 

6730 to state explicitly in new 

paragraph (a)(6) that when a member is 

a Party to a Transaction and makes a 

good faith determination that a 

transaction involves a TRACE–Eligible 

Security, if the TRACE–Eligible Security 

is not entered in the TRACE system, the 

member must promptly provide FINRA 

Operations the information required 

under FINRA Rule 6760(b) and 

thereafter report. The proposed 

amendment will incorporate in FINRA 

Rule 6730(a)(6) previous guidance 

regarding members’ obligations to take 

all the steps necessary to report a 

transaction to TRACE, including 

providing notification to FINRA 

Operations when circumstances so 

require. 

FINRA also proposes minor technical 

amendments to FINRA Rule 6730(a) 

regarding reporting transactions 

executed on weekends, Federal or 

religious holidays, or other days on 

which the TRACE system does not 

operate. FINRA Rule 6730(a) provisions 

would be amended to refer to 

transactions executed on ‘‘a Saturday, a 

Sunday, a Federal or religious holiday 

or other day on which the TRACE 

system is not open at any time during 

that day’’ (instead of transactions 

executed on ‘‘a Saturday, a Sunday or a 

Federal or religious holiday on which 

the TRACE system is closed’’).24

FINRA Rule 6760 

FINRA Rule 6760 requires a member 

that is a managing underwriter in an 

initial offering of a TRACE–Eligible 

Security (or, if a managing underwriter 

is not appointed, members that are 

underwriters or initial purchasers) to 

notify FINRA Operations of a new 

TRACE–Eligible Security. For AssetBacked Securities, a member Sponsor or 

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15356 Federal Register / Vol. 76, No. 54 / Monday, March 21, 2011 / Notices 

25FINRA notes that only a Securitizer that is also 

a FINRA member is required to provide notice 

under FINRA Rule 6760(a)(1), but all Securitizers, 

including non-member Securitizers, must be 

identified in the notice under FINRA Rule 6760(b). 

26See proposed FINRA Rule 6730(a)(3)(C)(i) and 

proposed FINRA Rule 6730(a)(3)(C)(ii). 27See supra note 4. 

a member Issuing Entity must provide 

notice. The notice must include certain 

information that clearly identifies the 

security, which FINRA uses to confirm 

information in the TRACE System or 

add the security to the TRACE system. 

Generally, the notice must be provided 

to FINRA Operations prior to the 

execution of the first transaction in the 

offering. FINRA proposes to amend 

FINRA Rule 6760 to incorporate 

requirements that apply to Securitizers 

of Asset-Backed Securities (and delete 

those applicable to Sponsors and 

Issuing Entities), to add alternative 

notification requirements for preissuance CMOs/REMICs and make other 

minor technical, conforming or 

clarifying changes. 

In FINRA Rule 6760(a), FINRA Rule 

6760(a)(1) would be amended such that, 

for Asset-Backed Securities, a member 

that is a Securitizer (instead of a 

member Sponsor or a member Issuing 

Entity) would be a managing 

underwriter for purposes of the Rule 

and required to provide notice under 

the Rule. References to Sponsors and 

Issuing Entities would be deleted. 

FINRA also proposes to amend FINRA 

Rule 6760(a)(2) to provide that FINRA 

will specify the method of 

communication or media that a member 

must use to provide the information to 

FINRA Operations under FINRA Rule 

6760, and to delete the requirement to 

provide such information by facsimile 

or e-mail. The proposed amendment to 

FINRA Rule 6760(a)(2) will provide 

FINRA the flexibility, as technology 

advances and systems change, to change 

quickly the method or media a member 

may use to comply with FINRA Rule 

6760. 

In FINRA Rule 6760(b), FINRA 

proposes that when a Securitizer 

provides notice regarding an AssetBacked Security, all Securitizers 

(instead of the Issuing Entity and the 

Sponsor) must be named in the notice.25

Also, FINRA proposes to transfer the 

requirement that a member make a good 

faith determination of TRACE eligibility 

before providing notice about a security 

to FINRA Operations from FINRA Rule 

6760(b) to FINRA Rule 6760(a)(1), and 

the deadline for providing timely notice, 

and the exceptions thereto, from FINRA 

Rule 6760(b) to proposed FINRA Rule 

6760(c). 

Proposed FINRA Rule 6760(c) would 

set forth the deadline for providing 

notice, and the exceptions thereto. The 

current provisions regarding the 

deadline for providing notice and the 

exceptions would be set forth in 

proposed FINRA Rule 6760(c)(1). In 

proposed FINRA Rule 6760(c)(2), 

FINRA would provide alternative notice 

requirements for Asset-Backed 

Securities that are CMOs or REMICs in 

which pre-issuance transactions will 

occur. As discussed above, proposed 

alternative reporting requirements for 

pre-issuance CMO/REMIC transactions 

provide that reporting deadlines will be 

calculated by reference to the earlier of 

the date of issuance (or, during the Pilot 

Program, the following day) or date of 

assignment of a CUSIP or another 

appropriate identifier (or, during the 

Pilot Program, the following day) due to 

the delays in the final structuring and 

issuance of such CMOs and REMICs.26

For the same reasons, FINRA proposes 

alternative notification requirements 

regarding CMOs and REMICs in which 

pre-issuance transactions will occur. 

Under proposed FINRA Rule 6760(c)(2), 

a member that is required to provide 

notice to FINRA Operations of such 

CMOs or REMICs must do so promptly 

on the date of issuance or other event 

that establishes the reference date that 

determines when a reporting period 

begins under proposed FINRA Rule 

6730(a)(3)(C)(i), which applies during 

the Pilot Program, or, after the 

expiration of the Pilot Program, under 

proposed FINRA Rule 6730(a)(3)(C)(ii). 

FINRA also proposes to incorporate 

technical and clarifying amendments to 

FINRA Rule 6760, including changes 

related to the restructuring of FINRA 

Rule 6760(a) and (b) and the addition of 

proposed FINRA Rule 6760(c). 

FINRA Rule 7730 

FINRA Rule 7730 sets forth fees 

applicable to reporting transactions to 

TRACE and purchasing TRACE data. 

FINRA proposes minor amendments to 

two provisions. Under FINRA Rule 

7730(a), members may report 

transactions in TRACE–Eligible 

Securities to TRACE using: (1) a TRACE 

Web browser; (2) a Computer-toComputer Interface (‘‘CTCI’’) (whether or 

not dedicated exclusively to TRACE); or 

(3) a third-party reporting intermediary, 

and incur system-related fees based 

upon the method selected. A member 

pays a system fee of $25 per month, per 

firm to report transactions in TRACE– 

Eligible Securities via CTCI as provided 

in FINRA Rule 7730(a)(2). FINRA 

proposes to amend FINRA Rule 7730(a), 

FINRA Rule 7730(a)(2) and the fee chart 

in Rule 7730 to add FIX as another 

method for reporting transactions in 

TRACE–Eligible Securities. FINRA 

proposes that the FIX line, like CTCI, 

would not be required to be dedicated 

exclusively to TRACE, and the systemrelated fee for reporting via FIX, like 

CTCI, would be $25 per month, per 

firm. FINRA also proposes minor, 

conforming, non-substantive 

amendments to FINRA Rule 7730(a). 

In addition, FINRA proposes to 

correct a technical error regarding 

reporting fees in FINRA Rule 7730(b)(1) 

and the fee chart. FINRA Rule 

7730(b)(1) and the fee chart set forth 

three tiers of reporting fees. Currently, 

both provide that the middle tier 

reporting fee applies to trades ‘‘between 

$200,001 and $999,999 par value’’ 

(which are charged a reporting fee of 

$0.000002375 times the par value of the 

transaction (i.e., $0.002375/$1000)). 

FINRA proposes to correct the middle 

tier reporting fee to correctly state that 

such middle tier reporting fee is 

applicable to ‘‘trades over $200,000 and 

up to and including $999,999.99 par 

value.’’ 

Finally, FINRA has received questions 

regarding the Factor that will be used to 

calculate a reporting fee for a 

transaction in an Asset-Backed Security 

that will be assessed based on the 

Remaining Principal Balance of the 

security. The Remaining Principal 

Balance will be calculated using the 

Factor submitted by the member, if the 

member is required to report a Factor 

under FINRA Rule 6730(d)(2), and, in 

fact, does report such Factor, or if no 

Factor is reported, using the Factor that 

FINRA has adopted and incorporated in 

the TRACE system, which will be the 

Factor that FINRA has identified as the 

most current Factor publicly available 

for such Asset-Backed Security at the 

Time of Execution. Also, FINRA will 

not recalculate reporting fee amounts 

due to FINRA for Asset-Backed 

Securities transactions after FINRA has 

identified the appropriate Factor for the 

specified Asset-Backed Security and 

calculated the fee based on such Factor. 

FINRA will announce the effective 

date of the proposed rule change in a 

Regulatory Notice to be published no 

later than 60 days following 

Commission approval. The effective 

date of the proposed rule change will be 

the date that the proposed rule changes 

in the TRACE ABS filing become 

effective, which is currently anticipated 

to be May 16, 2011.27

2. Statutory Basis 

FINRA believes that the proposed rule 

change is consistent with the provisions 

mstockstill on DSKH9S0YB1PROD with NOTICES

Federal Register / Vol. 76, No. 54 / Monday, March 21, 2011 / Notices 15357 

28 15 U.S.C. 78o–3(b)(6). 29 17 CFR 200.30–3(a)(12). 

of Section 15A(b)(6) of the Act,28 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 

proposed rule change will facilitate 

more timely and accurate reporting of 

transactions in Asset-Backed Securities 

to TRACE, and enhance FINRA’s 

surveillance of the debt market in 

connection with Asset-Backed 

Securities transactions for the protection 

of investors and in furtherance of the 

public interest. 

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. 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 

shall: (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 e-mail to rulecomments@sec.gov. Please include File 

Number SR–FINRA–2011–012 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–2011–012. 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 Web site 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 will 

also 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 No. 

SR–FINRA–2011–012 and should be 

submitted on or before April 11, 2011. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.29

Cathy H. Ahn, 

Deputy Secretary. 

[FR Doc. 2011–6567 Filed 3–18–11; 8:45 am] 

BILLING CODE 8011–01–P 

SMALL BUSINESS ADMINISTRATION 

Revocation of License of Small 

Business Investment Company 

Pursuant to the authority granted to 

the United States Small Business 

Administration by the Wind-Up Order 

of the United States District Court of the 

Eastern District of New York, dated July 

15, 2009, the United States Small 

Business Administration hereby revokes 

the license of Sterling/Carl Marks 

Capital, Inc., a New York corporation, to 

function as a small business investment 

company under the Small Business 

Investment Company License No. 

02020517 issued to Sterling/Carl Marks 

Capital, Inc., on October 3, 1988 and 

said license is hereby declared null and 

void as of July 15, 2009. 

Dated: March 4, 2011. 

Sean J. Greene, 

Associate Administrator for Investment, 

United States Small Business Administration. 

[FR Doc. 2011–6475 Filed 3–18–11; 8:45 am] 

BILLING CODE 8025–01–P 

SMALL BUSINESS ADMINISTRATION 

[Disaster Declaration #12468 and #12469] 

Utah Disaster #UT–00009 

AGENCY: U.S. Small Business 

Administration. 

ACTION: Amendment 1. 

SUMMARY: This is an amendment of the 

Presidential declaration of a major 

disaster for Public Assistance Only for 

the State of Utah (FEMA–1955–DR), 

dated 02/11/2011. 

Incident: Severe Winter Storms and 

Flooding. 

Incident Period: 12/20/2010 through 

12/24/2010. 

Effective Date: 03/11/2011. 

Physical Loan Application Deadline 

Date: 04/12/2011. 

Economic Injury (EIDL) Loan 

Application Deadline Date: 11/14/2011. 

ADDRESSES: Submit completed loan 

applications to: U.S. Small Business 

Administration, Processing and 

Disbursement Center, 14925 Kingsport 

Road, Fort Worth, TX 76155. 

FOR FURTHER INFORMATION CONTACT: A. 

Escobar, Office of Disaster Assistance, 

U.S. Small Business Administration, 

409 3rd Street, SW., Suite 6050, 

Washington, DC 20416. 

SUPPLEMENTARY INFORMATION: The notice 

of the President’s major disaster 

declaration for Private Non-Profit 

organizations in the State of Utah, dated 

02/11/2011, is hereby amended to 

include the following areas as adversely 

affected by the disaster. 

Primary Counties: Garfield. 

All other information in the original 

declaration remains unchanged. 

mstockstill on DSKH9S0YB1PROD with NOTICES