67408 Federal Register / Vol. 83, No. 248 / Friday, December 28, 2018 / Notices 

17 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

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 the 

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change; 

the Commission does not edit personal 

identifying information from 

submissions. 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–NYSENAT–2018–26 

and should be submitted on or before 

January 18, 2019. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.17

Brent J. Fields, 

Secretary. 

[FR Doc. 2018–28192 Filed 12–27–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

Proposed Collection; Comment 

Request 

Upon Written Request Copies Available 

From: Securities and Exchange 

Commission, Office of FOIA Services, 

100 F Street NE, Washington, DC 

20549–2736 

Extension: 

Rules 6a–1 and 6a–2, Form 1, SEC File No. 

270–0017, OMB Control No. 3235–0017 

Notice is hereby given that pursuant 

to the Paperwork Reduction Act of 1995 

(‘‘PRA’’) (44 U.S.C. 3501 et seq.), the 

Securities and Exchange Commission 

(‘‘Commission’’) is soliciting comments 

on the existing collection of information 

provided for in Rule 6a–1 (17 CFR 

240.6a–1), Rule 6a–2 (17 CFR 240.6a–2), 

and Form 1 (17 CFR 249.1) under the 

Securities Exchange Act of 1934 

(‘‘Exchange Act’’) (15 U.S.C. 78a et seq.). 

The Commission plans to submit this 

existing collection of information to the 

Office of Management and Budget 

(‘‘OMB’’) for extension and approval. 

The Exchange Act sets forth a 

regulatory scheme for national securities 

exchanges. Rule 6a–1 under the 

Exchange Act generally requires an 

applicant for initial registration as a 

national securities exchange to file an 

application with the Commission on 

Form 1. An exchange that seeks an 

exemption from registration based on 

limited trading volume also must apply 

for such exemption on Form 1. Rule 6a– 

2 under the Exchange Act requires 

registered and exempt exchanges: (1) To 

amend the Form 1 if there are any 

material changes to the information 

provided in the initial Form 1; and (2) 

to submit periodic updates of certain 

information provided in the initial Form 

1, whether such information has 

changed or not. The information 

required pursuant to Rules 6a–1 and 6a– 

2 is necessary to enable the Commission 

to maintain accurate files regarding the 

exchange and to exercise its statutory 

oversight functions. Without the 

information submitted pursuant to Rule 

6a–1 on Form 1, the Commission would 

not be able to determine whether the 

respondent has met the criteria for 

registration (or an exemption from 

registration) set forth in Section 6 of the 

Exchange Act. The amendments and 

periodic updates of information 

submitted pursuant to Rule 6a–2 are 

necessary to assist the Commission in 

determining whether a national 

securities exchange or exempt exchange 

is continuing to operate in compliance 

with the Exchange Act. 

Initial filings on Form 1 by 

prospective exchanges are made on a 

one-time basis. The Commission 

estimates that it will receive 

approximately one initial Form 1 filing 

per year and that each respondent 

would incur an average burden of 880 

hours to file an initial Form 1 at an 

average internal compliance cost per 

response of approximately $335,984. 

Therefore, the Commission estimates 

that the annual burden for all 

respondents to file the initial Form 1 

would be 880 hours (one response/ 

respondent × one respondent × 880 

hours/response) and an internal 

compliance cost of $335,984 (one 

response/respondent × one respondent x 

$335,984/response). 

There currently are 21 entities 

registered as national securities 

exchanges. The Commission estimates 

that each registered or exempt exchange 

files nine amendments or periodic 

updates to Form 1 per year, incurring an 

average burden of 25 hours to comply 

with Rule 6a–2. The SEC estimates that 

the average internal compliance cost for 

a national securities exchange per 

response would be approximately 

$8,365. The Commission estimates that 

the annual burden for all respondents to 

file amendments and periodic updates 

to the Form 1 pursuant to Rule 6a–2 is 

4,725 hours (21 respondents × 25 hours/ 

response × 9 responses/respondent per 

year) and an internal compliance cost of 

$1,580,985 (21 respondents × $8,365/ 

response × 9 responses/respondent per 

year). 

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 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. 

An agency may not conduct or 

sponsor, and a person is not required to 

respond to, a collection of information 

under the PRA unless it displays a 

currently valid OMB control number. 

Please direct your written comments 

to: Charles Riddle, Acting Director/Chief 

Information Officer, Securities and 

Exchange Commission, c/o Candace 

Kenner, 100 F Street NE, Washington, 

DC 20549, or send an email to: PRA_

Mailbox@sec.gov. 

Dated: December 21, 2018. 

Brent J. Fields, 

Secretary. 

[FR Doc. 2018–28316 Filed 12–27–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–84901; File No. SR–FINRA– 

2018–042] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Amend FINRA Rules 

7610A and 7620A To Modify Certain 

Fees and Credits Applicable to FINRA/ 

Nasdaq TRF Retail Participants 

December 20, 2018. 

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 December 


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3 15 U.S.C. 78s(b)(3)(A)(ii). 

4 17 CFR 240.19b–4(f)(2). 

5FINRA’s oversight of this function performed by 

the Business Member is conducted through a 

recurring assessment and review of TRF operations 

by an outside independent audit firm. 6To qualify as a ‘‘Retail Participant’’ and for 

special pricing under the Retail Participant fee 

schedule, a participant must complete and submit 

to Nasdaq, as the Business Member, an application. 

The application form requires the participant to 

attest to its qualifications as a Retail Participant on 

the FINRA/Nasdaq TRF in which it is a participant 

and for which it seeks Retail Participant pricing. 

The participant must also attest to its reasonable 

expectation that it will maintain its qualifications 

for a one year period following the date of 

attestation. Once a participant has been designated 

as a Retail Participant, it must complete and submit 

a written attestation to Nasdaq on an annual basis 

to retain its status as such. A Retail Participant must 

inform Nasdaq promptly if at any time it ceases to 

qualify or it reasonably expects that it will cease to 

qualify as a Retail Participant. 

7Pursuant to FINRA Rule 7260A.01, a ‘‘Retail 

Order’’ means ‘‘an order that originates from a 

natural person, provided that, prior to submission, 

no change is made to the terms of the order with 

respect to price or side of market and the order does 

not originate from a trading algorithm or any other 

computerized methodology.’’ 

8Market data is transmitted to three tapes based 

on the listing venue of the security: New York Stock 

Exchange securities (‘‘Tape A’’), NYSE American 

and regional exchange securities (‘‘Tape B’’), and 

Nasdaq Stock Market securities (‘‘Tape C’’). 

9Media eligible trade reports are those that are 

submitted to the FINRA/Nasdaq TRF for public 

dissemination by the Securities Information 

Processors (‘‘SIPs’’). By contrast, non-media trade 

reports are not submitted to the FINRA/Nasdaq TRF 

for public dissemination, but are submitted for 

regulatory and/or clearance and settlement 

purposes. 

Pursuant to the Rule’s Supplementary Material, 

the ‘‘Executing Party (EP)’’ is defined as the member 

with the trade reporting obligation under FINRA 

rules, and the ‘‘Contra (CP)’’ is defined as the 

member on the contra side of a trade report. 

10Additionally, the Rule provides for a monthly 

Participation Fee, from which Retail Participants 

are exempt. It also provides for two special fee cap 

programs—known as the ‘‘ATS Market Maker 

Media/Contra Party Cap’’ and the ‘‘ATS Market 

Maker Combined Media Activity Cap’’—for 

participants that make markets in an alternative 

trading system (‘‘ATS’’). 

11Retail Participants generally do not achieve 

Executing Party activity sufficient to qualify for cap 

programs due to the nature and scale of their retail 

businesses. Retail orders that originate from natural 

persons or from nonprofessional investors are not 

produced in the same volumes or notional amounts 

as are orders that originate from professional 

executing broker firms. To date, only one Retail 

Participant has achieved enough Executing Party 

activity to qualify for a cap. 

12Under the Rule, a transaction is attributable to 

a FINRA member if a trade report submitted to the 

FINRA/Nasdaq TRF that the FINRA/Nasdaq TRF 

then submits to either of the SIPs identifies the 

FINRA member as the Executing Party on the 

transaction. 

13For purposes of this Rule, the term ‘‘market 

share’’ means a percentage calculated by dividing 

the total number of shares represented by trades 

reported by a FINRA member to the FINRA/Nasdaq 

Continued 

17, 2018, 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. FINRA has 

designated the proposed rule change as 

‘‘establishing or changing a due, fee or 

other charge’’ under Section 

19(b)(3)(A)(ii) of the Act 3 and Rule 19b– 

4(f)(2) thereunder,4 which renders the 

proposal effective upon receipt of this 

filing by the Commission. 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 FINRA 

Rules 7610A and 7620A to modify 

certain fees and credits applicable to 

Retail Participants that use the FINRA/ 

Nasdaq Trade Reporting Facility 

Carteret (the ‘‘FINRA/Nasdaq TRF 

Carteret’’) and/or the FINRA/Nasdaq 

Trade Reporting Facility Chicago (the 

‘‘FINRA/Nasdaq TRF Chicago’’). Under 

FINRA rules and as used herein, the 

term ‘‘FINRA/Nasdaq TRF’’ means the 

FINRA/Nasdaq TRF Carteret, the 

FINRA/Nasdaq TRF Chicago, or both, as 

applicable, depending on the facility or 

facilities to which the participant elects 

to report. 

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 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The FINRA/Nasdaq TRF is a facility 

of FINRA that is operated by Nasdaq, 

Inc. (‘‘Nasdaq’’). In connection with the 

establishment of the FINRA/Nasdaq 

TRF, FINRA and Nasdaq entered into a 

limited liability company agreement 

(the ‘‘LLC Agreement’’). Under the LLC 

Agreement, FINRA, the ‘‘SRO Member,’’ 

has sole regulatory responsibility for the 

FINRA/Nasdaq TRF. Nasdaq, the 

‘‘Business Member,’’ is primarily 

responsible for the management of the 

FINRA/Nasdaq TRF’s business affairs, 

including establishing pricing for use of 

the FINRA/Nasdaq TRF, to the extent 

those affairs are not inconsistent with 

the regulatory and oversight functions of 

FINRA. Additionally, the Business 

Member is obligated to pay the cost of 

regulation and is entitled to the profits 

and losses, if any, derived from the 

operation of the FINRA/Nasdaq TRF. 

Pursuant to the FINRA Rule 7600A 

Series, FINRA/Nasdaq TRF participants 

are charged fees, may qualify for fee 

caps (Rule 7620A), and also may qualify 

for revenue sharing payments for trade 

reporting to the FINRA/Nasdaq TRF 

(Rule 7610A). These rules are 

administered by Nasdaq, in its capacity 

as the Business Member and operator of 

the FINRA/Nasdaq TRF on behalf of 

FINRA,5 and Nasdaq collects all fees on 

behalf of the FINRA/Nasdaq TRF. 

Pursuant to Supplementary Material 

.01 to FINRA Rule 7620A, a ‘‘Retail 

Participant’’ 6 is a participant ‘‘for which 

substantially all of its trade reporting 

activity on the FINRA/Nasdaq Trade 

Reporting Facility comprises Retail 

Orders.’’ 7 Under FINRA Rule 7620A, 

Retail Participants presently are subject 

to four categories of transaction-based 

fees, each of which is applicable to 

transactions on the three Tapes: 8 (1) 

Media/Executing Party; (2) Non-Media/ 

Executing Party; (3) Media/Contra Party; 

and (4) Non-Media/Contra Party.9 Rule 

7620A provides that for any of these 

categories of fees, a Retail Participant 

may qualify for a cap on the fees it 

would otherwise pay to report trades to 

a particular Tape during a given month, 

provided that during the month, the 

Retail Participant achieves a daily 

average number of Media/Executing 

Party trades of at least 2,500 in that 

same Tape.10 The uncapped fee rates 

and cap amounts that apply to Retail 

Participants are different from those that 

apply to non-Retail Participants under 

the Rule.11

Under Rule 7610A, FINRA members 

that report over-the-counter (‘‘OTC’’) 

transactions in NMS stocks to a FINRA/ 

Nasdaq TRF for public dissemination or 

‘‘media’’ purposes may receive quarterly 

transaction credits that equal a 

percentage of FINRA/Nasdaq TRF 

revenues that are attributable to the 

members’ transactions.12 The 

percentage of attributable revenue that a 

FINRA member may receive in the form 

of a transaction credit varies depending 

upon the extent of the member’s market 

share on the FINRA/Nasdaq TRF.13 The 


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TRF for media purposes during a given calendar 

quarter by the total number of shares represented 

by all trades reported to the Consolidated Tape 

Association or the Nasdaq Securities Information 

Processor, as applicable, during that quarter. Market 

Share is calculated separately for each tape. See 

Rule 7620A. The Rule notes, moreover, that if a 

FINRA member reports trades to both FINRA/ 

Nasdaq TRFs during a given calendar quarter, then 

‘‘market share’’ shall be calculated by dividing the 

total number of shares represented by trades 

reported by the member to both of the FINRA/ 

Nasdaq TRFs during that calendar quarter by the 

total number of shares represented by all trades 

reported to the Consolidated Tape Association or 

the Nasdaq SIP, as applicable, during that quarter. 

14Nasdaq understands, based upon Retail 

Participant feedback, that recent market share 

changes are attributable to disparities in pricing 

between the FINRA/Nasdaq TRF and the FINRA/ 

NYSE TRF. Due to pricing concerns, some Retail 

Participants have instructed their executing 

counterparties to shift their trade reporting activity 

from the FINRA/Nasdaq TRF to the FINRA/NYSE 

TRF. The proposed rule change seeks to lower 

Retail Participant pricing on the FINRA/Nasdaq 

TRF to render the FINRA/Nasdaq TRF a more 

attractive trade reporting venue for this market 

segment. 

schedule of transaction credits is as 

follows. (Presently, it does not 

distinguish among categories of FINRA/ 

Nasdaq TRF participants.) 

Percentage market share 

Percent of 

attributable 

revenue shared 

Tape A: 

Greater than or equal to 2% ........................................................................................................................................ 98 

Less than 2% but greater than or equal to 1% ............................................................................................................ 95 

Less than 1% but greater than or equal to 0.50% ....................................................................................................... 75 

Less than 0.50% but greater than or equal to 0.10% .................................................................................................. 20 

Less than 0.10% ........................................................................................................................................................... 0 

Tape B: 

Greater than or equal to 2% ........................................................................................................................................ 98 

Less than 2% but greater than or equal to 1% ............................................................................................................ 90 

Less than 1% but greater than or equal to 0.35% ....................................................................................................... 70 

Less than 0.35% but greater than or equal to 0.10% .................................................................................................. 10 

Less than 0.10% ........................................................................................................................................................... 0 

Tape C: 

Greater than or equal to 2% ........................................................................................................................................ 98 

Less than 2% but greater than or equal to 1% ............................................................................................................ 95 

Less than 1% but greater than or equal to 0.50% ....................................................................................................... 75 

Less than 0.50% but greater than or equal to 0.10% .................................................................................................. 20 

Less than 0.10% ........................................................................................................................................................... 0 

The Rule 7600A Series expressly 

provides that the schedules of credits 

and fees apply to reporting activity that 

occurs on either or both of the FINRA/ 

Nasdaq TRFs and a participant’s 

eligibility for any volume-based credits 

or fee caps will be determined based 

upon its aggregate reporting volume 

between the two FINRA/Nasdaq TRFs. 

Nasdaq, as the Business Member, has 

determined to make several 

amendments to the current schedules of 

fees, caps, and credits. There is 

substantial competition in the market 

for OTC trade reporting between the 

FINRA/Nasdaq TRF and the FINRA/ 

NYSE TRF, as evidenced by a recent 

shift in market share between these 

facilities.14 The proposed rule change 

responds to these competitive forces by 

reducing the fees that most Retail 

Participants pay to the FINRA/Nasdaq 

TRF. It also establishes a new 

transaction credit program that will be 

more accessible to Retail Participants 

than is the existing credit program. The 

proposed rule change also clarifies the 

fee schedule and corrects a 

typographical error in the existing fee 

schedule. Each of these proposed 

changes is described in detail below. 

General Clarification and 

Reorganization 

First, the proposed rule change 

clarifies Rule 7620A by adding roman 

numerals to each of the headings in the 

fee schedule and also letters and 

numbers to its subheadings. These 

proposed changes will render the fee 

schedule easier to read and understand, 

particularly when there is a need to 

cross-reference the various fee programs 

contained therein. 

The proposed rule change also moves 

the example of the operation of the fee 

schedule, which presently appears 

immediately under the heading ‘‘NonComparison/Accept (Non-Match/ 

Compare) Trade Report Fees and Caps 

on Trade Report Fees’’ (to be numbered 

‘‘II’’), to the subheading ‘‘Cap Qualifying 

Activity (Requisite Daily Average 

Media/Executing Party Trade Reporting 

Activity for a Participant to Qualify for 

Fee Caps in Paragraphs 1–4 Above)’’ (to 

be relocated to follow subparagraphs 1 

through 4 and numbered ‘‘II.A’’). 

Movement of this example is necessary 

because of other proposed changes to 

the Rule, to be discussed below, which 

will render the example applicable only 

under the fee program set forth in 

revised subparagraph II.A. As discussed 

below, the proposed rule change adds 

new examples that are tailored for the 

new Retail Participant fee programs that 

will be set forth in proposed 

subparagraphs II.B and II.C. 

Additionally, the proposed rule 

change adds a clarifying sentence 

beneath proposed paragraph II, which 

states that a participant’s activity that 

qualifies for more than one special fee 

program under the Rule will 

automatically receive the benefit of the 

lowest applicable fee rate or cap. The 

purpose of this sentence is to clarify 

how the fee schedule operates where 

multiple discounts or caps apply to the 

same activity on the FINRA/Nasdaq 

TRF. An example of the application of 

this principle is included in the Rule 

text, under proposed subparagraph II.C, 

and below. 

Lastly, the proposed rule change 

amends the definition of a ‘‘Retail 

Order,’’ in Supplementary Material .01 

to Rule 7620A, to clarify that it includes 

orders ‘‘on behalf of accounts that are 

held in a corporate legal form, such as 

an Individual Retirement Account, 

Corporation, or a Limited Liability 

Corporation that has been established 

for the benefit of an individual or group 

of related family members, provided 

that the order is submitted by an 

individual.’’ Although the existing 

definition arguably implies that a Retail 

Order already includes such orders, 


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15The proposed rule change would specify that 

if a participant in the FINRA/Nasdaq TRF is 

approved as a Retail Participant on or before the 

twenty-second day of a month, such approval will 

be deemed effective, for purposes of Rule 7620A, 

as of the first day of that month, whereas an 

approval that occurs after the twenty-second day of 

the month will be deemed effective the first day of 

the next month. If a participant in the FINRA/ 

Nasdaq TRF notifies Nasdaq, Inc. that it no longer 

qualifies as a Retail Participant during a given 

month, such notification shall be deemed effective, 

for purposes of Rule 7620A, as of the first day of 

the next month. 

16The structure of the proposed tiers differs 

within each Tape. The tiers are structured to enable 

Retail Participants to qualify for special pricing on 

Contra Party activity beginning at lower volumes on 

Tape B, where the FINRA/Nasdaq TRF has less 

such activity, and at higher volumes on Tapes A 

and C, where the FINRA/Nasdaq TRF has more 

such activity. 

prospective Retail Participants have 

requested the proposed clarification to 

eliminate any uncertainty in this regard. 

Special Pricing Programs for Retail 

Participants 

The proposed rule change will replace 

the existing pricing programs for Retail 

Participants with two new programs 

that are intended to substantially 

decrease the fees that many Retail 

Participants pay to the FINRA/Nasdaq 

TRF. The first new program is the Retail 

Participant Contra Party Fee Discount 

and Cap Program and the second one is 

the Retail Participant Combined Cap 

Program. These new pricing programs 

are described below.15

Retail Participant Contra Party Fee 

Discount and Cap Program 

The first proposed pricing program, 

which is set forth in a new 

subparagraph II.B, will focus on a Retail 

Participant’s Contra Party activity on the 

FINRA/Nasdaq TRF. Most of the activity 

in which Retail Participants engage on 

the FINRA/Nasdaq TRF is Contra Party 

activity, and this new program is 

intended to reduce substantially the fees 

that Retail Participants, and their 

clients, pay for engaging in such 

activity. 

Presently, a Retail Participant that 

engages in Contra Party activity on the 

FINRA/Nasdaq TRF pays the following 

fees. The monthly charge for a Retail 

Participant that engages in Media/ 

Contra Party (Non-Media/Contra Party) 

activity is $0.013 multiplied by the 

number of Media/Contra Party (NonMedia/Contra Party) trades that the 

participant reports to the FINRA/Nasdaq 

TRF during the month. Retail 

Participants qualify for a cap (on a per 

Tape basis) on Media/Contra Party 

(Non-Media/Contra Party) fees during a 

given month if they report to the 

FINRA/Nasdaq TRFs, on average, at 

least 2,500 Media/Executing Party 

trades per day in Tapes A, B, or C. If 

capped, Media/Contra Party (NonMedia/Contra Party) fees for a Retail 

Participant equal $0.013 multiplied by 

2,500 multiplied by the number of 

trading days during that month. 

The proposed rule change will largely 

replace this pricing scheme with a new 

one that will make it easier for Retail 

Participants to qualify for discounts or 

caps on their Contra Party activity. 

Specifically, a Retail Participant will be 

entitled to receive special tiered pricing 

on its Contra Party activity even when 

it has no corresponding Media/ 

Executing Party Activity. Under the 

proposed program, a Retail Participant 

will qualify for discounted or capped 

fees to the extent that it achieves, during 

a given month, a qualifying volume of 

average daily Contra Party activity 

(Media, Non-Media, or both) in a 

particular Tape. Within each Tape, a 

qualifying Retail Participant will receive 

a volume-based discount on its monthly 

uncapped Contra Party activity charges 

relative to the standard rate.16 For both 

Media/Contra Party and Non-Media/ 

Contra Party activity, the standard 

uncapped rate is the number of Media/ 

Contra Party (Non-Media/Contra Party) 

reports during the month multiplied by 

$0.013, whereas the discounted rates 

under the new program will be the 

number of Media/Contra Party (NonMedia/Contra Party) reports multiplied 

by the following: 

Tier 

Daily average number of 

executions during the 

month needed to qualify 

for tier 

Discounted rate 

(relative to standard 

rate) to be used to calculate monthly charge, if 

uncapped 

Tape A: 

1 ........................................................................................................................................ 50,000–100,000 $0.0120 

2 ........................................................................................................................................ 100,001–200,000 0.0072 

3 ........................................................................................................................................ 200,001–300,000 0.0052 

4 ........................................................................................................................................ >300,000 0.0050 

Tape B: 

1 ........................................................................................................................................ 15,000–30,000 0.0120 

2 ........................................................................................................................................ 30,001–60,000 0.0072 

3 ........................................................................................................................................ 60,001–100,000 0.0052 

4 ........................................................................................................................................ >100,000 0.0050 

Tape C: 

1 ........................................................................................................................................ 50,000–100,000 0.0120 

2 ........................................................................................................................................ 100,001–200,000 0.0072 

3 ........................................................................................................................................ 200,001–300,000 0.0052 

4 ........................................................................................................................................ >300,000 0.0050 

In addition, monthly fees for a Retail 

Participant’s qualifying Contra Party 

activity for each Tape will be capped at 

a maximum monthly amount if the 

Retail Participant qualifies for Tier 4 

pricing, as follows: 

Tier 

Daily average number of 

executions during the 

month needed to qualify 

for tier 

Maximum monthly 

charge, if capped 

Tape A: 

1 ........................................................................................................................................ 50,000–100,000 n/a 

2 ........................................................................................................................................ 100,001–200,000 n/a 


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17To date, only one Retail Participant has 

achieved the requisite Executing Party activity to 

also qualify it for a Contra Party cap. 

Tier 

Daily average number of 

executions during the 

month needed to qualify 

for tier 

Maximum monthly 

charge, if capped 

3 ........................................................................................................................................ 200,001–300,000 n/a 

4 ........................................................................................................................................ >300,000 $32,000 

Tape B: 

1 ........................................................................................................................................ 15,000–30,000 n/a 

2 ........................................................................................................................................ 30,001–60,000 n/a 

3 ........................................................................................................................................ 60,001–100,000 n/a 

4 ........................................................................................................................................ >100,000 11,000 

Tape C: 

1 ........................................................................................................................................ 50,000–100,000 n/a 

2 ........................................................................................................................................ 100,001–200,000 n/a 

3 ........................................................................................................................................ 200,001–300,000 n/a 

4 ........................................................................................................................................ >300,000 32,000 

These caps will replace the existing cap 

formulas that apply to Retail 

Participants for their Media/Contra 

Party and Non-Media Contra Party 

reporting activity (proposed 

subparagraphs II.3 and II.4). 

Example 1 

An example of the application of the 

proposed program is as follows. If in a 

given month with 20 trading days, a 

Retail Participant achieves an average 

daily execution volume on the FINRA/ 

Nasdaq TRF of 150,000 Media/Contra 

Party trades in Tape A, 20,000 Media/ 

Contra Party Trades in Tape B, and 

400,000 Media/Contra Party Trades in 

Tape C, then the Retail Participant 

would be entitled to receive the special 

Media/Contra Party pricing set forth in 

proposed subparagraph 3 with respect 

to its activity in Tape A (Tier 2), Tape 

B (Tier 1) and Tape C (Tier 4). As to 

Tape A, the Retail Participant would 

pay the uncapped discounted monthly 

charges applicable to Tier 2 (($.0072) × 

(the number of Media/Contra Party 

trades in Tape A during the month 

(150,000)) × (20 trading days) = $21,600. 

As to Tape B, the Retail Participant 

would pay the uncapped discounted 

monthly charges applicable to Tier 1, 

which would be $4,800 (($.012) × (the 

number of Media/Contra Party trades in 

Tape B during the month (20,000)) × (20 

trading days)). As to Tape C, the Retail 

Participant would pay the lesser of the 

uncapped discounted monthly charges 

applicable to Tier 4 (($.005) × (the 

number of Media/Contra Party trades in 

Tape C during the month (400,000)) × 

(20 trading days) = $40,000) or the Tier 

4 cap ($32,000), which would be 

$32,000. Assuming that these Media/ 

Contra Party transactions comprised all 

of the Retail Participant’s activity on the 

FINRA/Nasdaq TRF, then the Retail 

Participant’s total fees would be 

$58,400. 

By comparison, under the existing 

program, the Retail Participant would 

not receive the benefit of any cap on its 

Contra Party activity unless it also 

achieves at least 2,500 average daily 

Executing Party reports in each Tape 

during the month. If the Retail 

Participant does not achieve a cap on its 

Contra Party activity—as has been the 

case generally,17 then under the existing 

program, the Retail Participant would 

pay the standard rate. At the standard 

rate, the same Contra Party activity 

would cost the Retail Participant 

$39,000 in Tape A ($0.013 × 150,000 

average daily executions × 20 trading 

days), $5,200 in Tape B ($.013 × 20,000 

average daily executions × 20 trading 

days), and $104,000 in Tape C ($.013 × 

400,000 average daily executions × 20 

trading days), or a total of $148,200. 

Thus, under the existing fee schedule, 

the Retail Participant in this example 

would pay roughly 2.45 times more for 

its Contra Party activity on the FINRA/ 

Nasdaq TRF than it would under the 

proposed rule change. 

Retail Participant Combined Cap 

Program 

The second proposed pricing 

program, which is set forth in a new 

subparagraph II.C, is a Retail Participant 

Combined Cap Program, which will 

apply to Retail Participants that engage 

in Media/Executing Party activity in 

addition to Contra Party activity on the 

FINRA/Nasdaq TRF. 

Presently, a Retail Participant may 

qualify for a cap on its Media (NonMedia)/Executing Party activity separate 

and apart from the cap on its Contra 

Party activity. For Media/Executing 

Party (Non-Media/Executing Party) fees, 

the monthly charge for a Retail 

Participant is $0.018 multiplied by the 

number of Media/Executing Party (NonMedia/Executing Party) trades that the 

Retail Participant reports to the FINRA/ 

Nasdaq TRF during that month. Such 

fees are capped once the Retail 

Participant reports to the FINRA/Nasdaq 

TRF, on average, at least 2,500 Media/ 

Executing Party trades per day in Tapes 

A, B, or C during that month. If capped 

for trades in a particular Tape, Media/ 

Executing Party (Non-Media/Executing 

Party) fees for a Retail Participant equal 

$0.018 multiplied by 2,500 multiplied 

by the number of trading days during 

that month. 

The proposed rule change would 

eliminate this cap program because it is 

ill-suited for Retail Participants. The 

existing Retail Participant Executing 

Party pricing programs were adapted 

from programs that were based on 

Executing Party activity among nonRetail Participants, i.e., participants 

whose activity on the FINRA/Nasdaq 

TRF consists of Executing Party activity, 

primarily, and Contra Party activity, 

secondarily. However, Retail 

Participants’ typical activity on the 

FINRA/Nasdaq TRF is the opposite of 

non-Retail Participants—it is almost 

exclusively limited to Contra Party 

activity. As such, the existing 

programs—which require a Retail 

Participant to engage in a threshold 

level of Media/Executing Party activity 

to qualify for a cap on either its 

Executing Party or its Contra Party 

activity—are ineffective. Indeed, only 

one Retail Participant to date has 

achieved enough Media/Executing Party 

activity to qualify for a cap. 

The proposed rule change would 

replace the existing Executing Party 

programs with a new Combined Activity 

Cap that is tailored specifically to the 

behavior of Retail Participants. That is, 

for Retail Participants that engage 

primarily in Contra Party activity on the 

FINRA/Nasdaq TRF, the proposed 

program would not disqualify them 

from any special pricing—as does the 

existing program—if they fail to engage 

in Executing Party activity. For Retail 

Participants that do engage in Executing 


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18Unlike the existing program, which measures a 

Retail Participant’s average daily executions during 

the prior month, the proposed program will 

measure activity over the course of the immediately 

preceding prior three months. Thus, to qualify for 

the proposed program, Retail Participants will be 

required to sustain their daily average activity level 

for a longer period of time than they do presently. 

This longer qualification period is intended to 

ensure that the program applies to Retail 

Participants that are maintaining or increasing 

Executing party activity, rather than those that have 

only episodic activity. This time period also aligns 

with the schedules for dividend reinvestment 

programs, which often are the basis for Executing 

Party activity. 

19The proposed rule change would specify that 

if a participant in the FINRA/Nasdaq TRF is 

approved as a Retail Participant after the first day 

of a calendar quarter, such approval will be deemed 

effective, for purposes of Rule 7610A, as of the first 

day of the next calendar quarter. Likewise, if a 

participant in the FINRA/Nasdaq TRF notifies 

Nasdaq, Inc. that it no longer qualifies as a Retail 

Participant after the first day of a calendar quarter, 

such notification shall be deemed effective, for 

purposes of Rule 7610A, as of the first day of the 

next calendar quarter. 

20See Securities Exchange Act Release No. 83866 

(Aug. 16, 2018), 83 FR 42545 (Aug. 22, 2018) 

(Notice of Filing and Immediate Effectiveness of 

File No. SR–FINRA–2018–029). 

Party activity, the proposed program 

would cap their combined Executing 

Party and Contra Party activity for the 

month. 

Specifically, the proposed rule change 

would establish a new three-tiered 

combined fee cap. Tier 1 would cap at 

$50,000 a Retail Participant’s fees for its 

total Executing Party and Contra Party 

activity during a month. To qualify for 

the Tier 1 cap, a Retail Participant 

would need to achieve between 1,000 

and 2,000 average daily Media/ 

Executing Party trades across all three 

Tapes during the immediately preceding 

three month period.18 (This qualifying 

level of Media/Executing Party activity 

is notably less than the existing 

threshold requirement of 2,500 average 

daily Media/Executing Party trades.) 

Tier 2 would cap a Retail Participant’s 

total monthly fees at $25,000. To qualify 

for the Tier 2 cap, a Retail Participant 

would need to achieve between 2,001 

and 4,000 average daily Media/ 

Executing Party trades across all three 

Tapes during the immediately preceding 

three month period. Finally, Tier 3 of 

the new program would cap a Retail 

participant’s total monthly fees at 

$15,000. To qualify for the Tier 3 cap, 

a Retail Participant would need to 

achieve more than 4,000 average daily 

Media/Executing Party trades across all 

three Tapes during the immediately 

preceding three month period. 

Example 2 

The following is an example of the 

application of the Retail Participant 

Combined Activity Cap. Assume that a 

Retail Participant has the same level of 

Contra Party activity during a month as 

described in Example 1 above. Assume 

also that, in addition to this Contra 

Party activity, the Retail Participant also 

achieves, during the immediately 

preceding three month period, an 

average of 1,500 Media/Executing Party 

trade reports per day in Tape A, 500 

Media/Executing Party trade reports per 

day in Tape B, and 100 Media/ 

Executing Party trade reports per day in 

Tape C. In this scenario, the Retail 

Participant’s aggregate 2,100 average 

daily Media/Executing Party trades 

across all three Tapes would qualify it 

for the Tier 2 Retail Participant 

Combined Activity Cap of $25,000. The 

capped fee would cover all of the Retail 

Participant’s Executing Party and Contra 

Party activity for the month. Thus, the 

Retail Participant would pay the 

$25,000 combined cap in lieu of paying 

$58,400 for its Contra Party activity 

under the proposed Retail Participant 

Contra Party Fee Discount and Cap 

Program (as described in Example 1). 

This is because the Retail Participant 

would receive the benefit of the lowest 

applicable fee for its activity on the 

FINRA/Nasdaq TRF. 

Retail Participant Securities Transaction 

Credit 

The proposed rule change would 

amend Rule 7610A to establish a new 

category of transaction credits tailored 

to Retail Participants. Much like the 

existing fee program discussed above, 

the existing transaction credit program 

set forth in Rule 7610A was not 

designed with Retail Participants in 

mind because participants are entitled 

to credits only to the extent that they 

engage in substantial amounts of Media/ 

Executing Party activity. For example, 

those participants with less than 0.10% 

market share on the FINRA/Nasdaq TRF 

presently receive no credits for any 

revenue that is attributable to their 

Media/Executing Party activity in any 

Tape. 

The proposed rule change would 

make the transaction credit program 

available to Retail Participants that 

achieve even low levels of Media/ 

Executing Party activity during a given 

quarter. Under the proposed rule 

change, Retail Participants that achieve 

less than 0.10 percent market share on 

the FINRA/Nasdaq TRFs on any of the 

three Tapes would be entitled to receive 

credits equal to 75 percent of the 

revenue that is attributable to their 

Media/Executing Party activity in Tape 

A and Tape C and credits equal to 70 

percent of attributable revenue in Tape 

B. Retail Participants that achieve a 

market share of between 0.10 percent 

and less than 0.50 percent in Tape A or 

Tape C would receive credits equal to 

75 percent of attributable revenue in 

that Tape (versus 20 percent of 

attributable revenue for other 

participants). Retail Participants that 

achieve a market share of between 0.10 

percent and less than 0.35 percent in 

Tape B would receive credits equal to 

70 percent of attributable revenue in 

that Tape (versus 10 percent of 

attributable revenue for other 

participants). For higher market shares, 

Retail Participants in all Tapes would 

receive the same percentage shares of 

attributable revenue as would other 

participants.19

The proposal to tailor the transaction 

credit program to Retail Participants 

would provide another mechanism—in 

addition to lower fees and fee caps—to 

lower the overall costs to Retail 

Participants of participating in the 

FINRA/Nasdaq TRF, particularly for 

Retail Participants with a greater scope 

and volume of activity. 

Clarification to ATS Market Maker 

Media/Contra Party Cap 

Lastly, the proposed rule change 

would amend the ATS Market Maker 

Media/Contra Party Cap, which 

currently is set forth in subparagraph 5 

and would be renumbered as 

subparagraph D, to correct a 

typographical error and also clarify the 

provision. This cap program provides 

for participants making markets in 

alternative trading systems registered 

pursuant to Regulation ATS to qualify 

for a fee cap on all their trades in a 

month if they meet three criteria. 

Presently in the Rule, the second 

criterion is that the ‘‘Participant must be 

contra to a minimum of 1,000,000 trades 

in Tape A, 500,000 trades in Tape C or 

250,000 trades in Tape B.’’ Prior to the 

reorganization of the fee schedule, 

effective September 1, 2018, this 

provision stated that to qualify for the 

program, ‘‘Participant must be contra to 

a minimum of 1,000,000 trades in Tape 

A, 500,000 trades in Tape C and 250,000 

trades in Tape B.’’ (Emphasis added.) 20

Upon reorganizing the fee schedule, the 

‘‘and’’ in this provision was 

inadvertently changed to ‘‘or.’’ The 

proposed rule change corrects that 

unintended error. 

Additionally, the proposed rule 

change further amends this criterion 

due to concern that it could be 

misinterpreted (as corrected above) to 

mean that qualification for the cap 

requires a participant to meet minimum 

Contra Party trade reporting volumes in 

all three Tapes. In fact, the criterion is 

intended to mean that to qualify for the 

cap with respect to trade reports in a 


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21 15 U.S.C. 78o–3(b)(5). 

22See Securities Exchange Act Release No. 83866 

(Aug. 16, 2018), 83 FR 42545 (Aug. 22, 2018) 

(Notice of Filing and Immediate Effectiveness of 

File No. SR–FINRA–2018–029). 

particular Tape, a participant must meet 

the minimum trade volume threshold 

for that Tape. The proposed revised and 

corrected text is as follows: 

Participant must be contra to a minimum 

number of trades during the month in a 

particular Tape to qualify for a cap on trades 

in that Tape. The minimum number of 

monthly trades for each Tape are as follows: 

1,000,000 trades in Tape A, 500,000 trades in 

Tape C and 250,000 trades in Tape B. 

FINRA has filed the proposed rule 

change for immediate effectiveness. The 

operative date will be January 1, 2019. 

2. Statutory Basis 

FINRA believes that the proposed rule 

changes [sic] are consistent with the 

provisions of Section 15A(b)(5) of the 

Act,21 which requires, among other 

things, that FINRA rules provide for the 

equitable allocation of reasonable dues, 

fees and other charges among members 

and issuers and other persons using any 

facility or system that FINRA operates 

or controls. 

First, FINRA believes that the 

proposed elimination of the existing 

Retail Participant pricing programs 

under Rule 7620A and adoption of new 

programs that are better aligned with 

and tailored to the behavioral profile of 

Retail Participants is an equitable 

allocation of reasonable fees. The 

existing pricing programs for Retail 

Participants were established by carving 

Retail Participants out from the general 

pricing programs applicable to all 

participants. The existing pricing 

programs were not designed with Retail 

Participants in mind, but instead are 

geared toward participants that engage 

in Executing Party activity primarily, 

and Contra Party activity secondarily. 

The behavioral profile of Retail 

Participants is the opposite of nonRetail Participants, such as ATS market 

makers and wholesalers. Retail 

Participants engage primarily, if not 

exclusively, in Contra Party activity on 

the FINRA/Nasdaq TRF. However, the 

only aspect of the Retail Participant 

programs that distinguishes them from 

their non-Retail Participant counterparts 

is the fact that their pricing is frozen at 

pre-September 2018 levels. Because the 

Retail Participant programs were 

designed for non-Retail Participants, the 

existing Retail Participant programs 

have proven to be ineffective in 

accomplishing their objectives of 

lowering fees for Retail Participants and 

their retail customers. That is, the 

existing programs require Retail 

Participants to achieve at least 2,500 

average daily Media/Executing Party 

trades to qualify for caps on either their 

Executing Party or their Contra Party 

activity fees, but Retail Participants 

generally do not generate enough 

Executing Party activity to trigger the 

caps. To date, only one Retail 

Participant has qualified for a cap. 

Moreover, the ineffectiveness of the 

existing Retail Participant programs in 

lowering fees has led certain Retail 

Participants to direct their executing 

counterparties to stop reporting their 

trades to the FINRA/Nasdaq TRF and to 

report them instead to the FINRA/NYSE 

TRF, which does not charge Contra 

Parties that are not also reporting 

parties. 

The two proposed Retail Participant 

fee programs address the ineffectiveness 

of the existing programs by aligning 

fees, discounts, and caps with the 

activities in which Retail Participants 

engage on the FINRA/Nasdaq TRF. First 

and foremost in this regard, the 

proposed rule change introduces a 

tiered system of caps—as well as 

discounts, when caps are not 

economical to the Retail Participant— 

that become more favorable as the level 

of the Retail Participant’s Contra Party 

activity increases. The proposed rule 

change also eliminates the requirement 

that a Retail Participant must engage in 

a threshold level of Media/Executing 

Party activity to qualify for discounts or 

caps on their Contra Party activity. 

Moreover, the proposed rule change 

introduces a Retail Participant 

Combined Activity Cap that would 

provide Retail Participants with a cap 

on their combined monthly activity on 

the FINRA/Nasdaq TRF to the extent 

that they have Media/Executing Party 

activity. This Combined Activity Cap in 

many cases would be more favorable 

than the Contra Activity cap for Retail 

Participants that also have Executing 

Party activity. 

For similar reasons, FINRA believes 

that the proposed rule change to 

establish a new securities transaction 

credit program under Rule 7610A that is 

tailored to Retail Participants is an 

equitable allocation of reasonable fees. 

The existing securities transaction 

program is generally inaccessible to 

Retail Participants, insofar as they 

generally engage in low levels of Media/ 

Executing Party activity. The proposed 

rule change would enable Retail 

Participants with even low levels of 

Media/Executing Party activity to 

receive credits for engaging in such 

activity. It also would increase the 

percentage of revenue sharing that 

occurs at these low levels of activity 

relative to the percentage that other 

types of participants receive with the 

same market shares. As such, the 

proposed rule change would provide 

another mechanism to lower the overall 

costs to Retail Participants of 

participating in the FINRA/Nasdaq TRF. 

The proposed new programs to 

benefit Retail Participants specifically 

are not unfairly discriminatory. 

Effective September 1, 2018, a distinct 

category of Retail Participant pricing for 

the FINRA/Nasdaq TRF was established 

in recognition of the fact that customers 

of Retail Participants generally include 

individual investors who trade less 

frequently than do other categories of 

customers. Accordingly, Retail 

Participants often report fewer trades to 

the FINRA/Nasdaq TRF than other 

participants. As such, the fees that 

Retail Participants (and their customers) 

pay should be better tailored to their 

activity on the FINRA/Nasdaq TRF.22

However, the existing programs have 

not achieved their objective of reducing 

costs for Retail Participants. 

Because the existing programs have 

not succeeded in reducing costs to 

Retail Participants relative to the 

FINRA/NYSE TRF (which also 

competes for Contra Party business and 

does not charge Contra Parties that are 

not also reporting parties), several Retail 

Participants have requested that their 

executing counterparties report their 

trades to the FINRA/NYSE TRF rather 

than the FINRA/Nasdaq TRF. The 

proposed rule change is designed to 

further reduce the costs to Retail 

Participants on the FINRA/Nasdaq TRF 

in an effort to stem, if not reverse, this 

loss of retail business to the FINRA/ 

NYSE TRF. 

The proposed changes also are not 

unfairly discriminatory in that they will 

be available to all FINRA members that 

use the FINRA/Nasdaq TRF and meet 

the threshold requirements to qualify for 

the terms of the programs. The programs 

themselves are designed to be accessible 

to most, if not all, existing Retail 

Participants, including those with both 

low and high levels of activity on the 

FINRA/Nasdaq TRF. 

Additionally, the proposed rule 

change would reorganize and clarify 

Rule 7620A so that it is easier to 

comprehend and presented in a more 

logical order. The reorganization will 

also ensure that examples of the 

application of the Rule are placed in the 

paragraphs where they will be 

applicable going forward. 

The proposed rule change also would 

amend the definition of a ‘‘Retail Order’’ 

in Supplementary Material .01 to Rule 

7620A to clarify that this term includes 


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orders that originate from accounts that 

exist in corporate form for the benefit of 

individuals, provided that individuals 

submit the orders. Although it is 

reasonable to interpret the existing 

definition of a Retail Order to include 

an order that originates from an 

individual retirement account or 

another corporate account that exists for 

the benefit of an individual, the 

proposed rule change will eliminate any 

uncertainty in this regard. Moreover, the 

proposed rule change will aid 

prospective Retail Participants in 

understanding their obligations as such. 

The proposed clarifying language 

derives from the definition of a 

‘‘Designated Retail Order’’ in Nasdaq 

Rule 7018 [sic], which is reasonable 

because the concepts are similar. This 

proposed change is equitable and not 

unfairly discriminatory because it 

merely makes a non-substantive 

technical clarification to the meaning of 

‘‘Retail Order.’’ 

Finally, the proposed rule change 

would correct an unintended 

typographical error that occurred when 

Rule 7620A was reorganized effective 

September 1, 2018. FINRA, Nasdaq, and 

all FINRA/Nasdaq TRF participants 

have an interest in FINRA maintaining 

rules for its trade reporting facilities that 

are accurate and free of errors. Likewise, 

FINRA believes that clarifying the ATS 

Market Maker Media/Contra Party Cap 

will avoid confusion as to the number 

of Contra Party trades in a particular 

Tape that are required to qualify for the 

cap for that Tape. 

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. 

Regulatory Need 

Nasdaq, as the Business Member and 

operator of the FINRA/Nasdaq TRF, 

collects all fees on behalf of the FINRA/ 

Nasdaq TRF. As discussed above, 

Nasdaq has observed an increase in 

competition in the market for OTC trade 

reporting, and in response to 

competitive forces, determined to 

reduce fees for most Retail Participants 

that report trades to the FINRA/Nasdaq 

TRFs and establish a new transaction 

credit program that will be more 

accessible to such participants. 

Economic Baseline 

As discussed above, pursuant to 

FINRA Rule 7620A, Retail Participants 

in the FINRA/Nasdaq TRF are currently 

subject to four categories of fees, each of 

which is applicable to transactions on 

the three Tapes: (1) Media/Executing 

Party; (2) Non-Media/Executing Party; 

(3) Media/Contra Party; (4) and NonMedia/Contra Party. The rule also 

provides fee caps for Retail Participants 

for a particular Tape during a given 

month, provided that during the month, 

the Retail Participant achieves a daily 

average number of Media/Executing 

Party trades of at least 2,500 in the same 

Tape. 

There are currently fifteen 

participants who are either approved or 

being considered for the Retail 

Participant program, that cumulatively 

represent approximately 25% of total 

reporting activity in the FINRA/Nasdaq 

TRF over the past 12 months. However, 

due to the nature and scale of retail 

businesses, to date, only one Retail 

Participant had sufficient reporting 

activity to qualify for a cap. 

Also, pursuant to Rule 7610A, FINRA 

members that report OTC transactions 

in NMS stocks to a FINRA/Nasdaq TRF 

for public dissemination or ‘‘media’’ 

purposes may receive quarterly 

transaction credits that equal a 

percentage of FINRA/Nasdaq TRF 

revenues that are attributable to the 

members’ transactions. However, the 

current rule does not distinguish among 

categories of FINRA/Nasdaq TRF 

participants. Due to Retail Participants’ 

relatively smaller reporting activity 

compared to that of non-Retail 

Participants, Retail Participants have 

not received transactions credits in the 

past. 

Economic Impacts 

The proposed rule change replaces 

the existing retail Participant Pricing 

Program with two new programs, 

‘‘Retail Participant Contra Party Fee 

Discount and Cap Program’’ and ‘‘Retail 

Participant Combined Cap Program,’’ 

which are designed to reduce the fees 

that most Retail Participants pay to the 

FINRA/Nasdaq TRF. 

As mentioned above, there are fifteen 

current and prospective Retail 

Participants that could potentially 

benefit from the reduced fees under the 

proposed Retail Participant programs. 

While Example 1 above illustrates the 

potential reduction in fees for a given 

volume in all Tapes, the potential 

reduction in fees in each Tape ranges 

from a few hundred dollars to 

approximately $50,000. The reduction 

in fees could be larger if the Participant 

qualifies for both the reduced fees and 

the combined cap. Currently, only one 

Retail Participant would have the 

sufficient activity to qualify for the 

Retail Participant Combined Cap 

Program based on its historical activity. 

Going forward, however, as a result of 

the proposal, additional Retail 

Participants may increase their 

Executing Party activity on the FINRA/ 

Nasdaq TRF and potentially become 

eligible for transaction credits or the 

Retail Participant Combined Cap 

Program. 

FINRA analyzed data provided by 

Nasdaq that contain monthly fees 

incurred by fifteen current and 

prospective Retail Participants that 

reported OTC trades to FINRA/Nasdaq 

TRF over a one year period from July 

2017 through June 2018. The data 

included the estimated reduction in fees 

that would have occurred under the 

proposed fee and cap schedule 

assuming that the reporting behavior 

would be the same under the current 

and the proposed schedule. The 

analysis demonstrated that there would 

be no reduction in fees for ten of the 

fifteen current and prospective Retail 

Participants, since their level of 

reporting activity would not qualify 

them for the discounts (although such 

Retail Participants would, at a 

minimum, be exempt from the $350 per 

month Participant Fee). The remaining 

five participants would observe average 

monthly reduction in fees that range 

from $390 to $111,856. 

The proposed rule change also opens 

up the transaction credit program to 

Retail Participants that achieve even 

low levels of Executing Party activity 

during a given quarter. In the four 

quarters between July 2017 and June 

2018, four Retail Participants would 

have sufficient market share to qualify 

for transaction credits. The quarterly 

credits would range from $55 to $11,007 

across all Tapes, with a median credit 

of $4,749. 

The potential net impact of the 

proposed rule change depends on 

whether participants alter their 

reporting activity across TRFs to be 

eligible for the fee caps. To the extent 

that the proposed reduction in fees 

provide [sic] net benefits, they may 

choose to shift their reporting from 

FINRA/NYSE TRF to FINRA/Nasdaq 

TRF. The net impact would also depend 

on whether the proposed fee caps create 

an optimal reporting strategy to be 

eligible for a specific cap to maximize 

the overall savings for all trade types 

reported to the FINRA/Nasdaq TRFs. 

Finally, FINRA notes that the 

proposed fee and fee cap changes occur 

within the context of a competitive 

environment in which the various trade 

reporting facilities vie for market share. 

The FINRA/NYSE TRF is free to adjust 

its fees and fee cap programs in 

response to the changes proposed herein 

to render them more attractive relative 


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23 15 U.S.C. 78s(b)(3)(A). 

24 17 CFR 240.19b–4(f)(2). 25 17 CFR 200.30–3(a)(12). 

to the FINRA/Nasdaq TRF. If any 

existing or prospective participant in 

FINRA/Nasdaq TRF determines that the 

new fees or fee cap thresholds are less 

attractive or are unfavorable relative to 

fees and fee cap programs applicable to 

the FINRA/NYSE TRF, such 

participants may choose to report to the 

FINRA/NYSE TRF in lieu of the FINRA/ 

Nasdaq TRF, in which case the FINRA/ 

Nasdaq TRFs would lose market share. 

However, the impact of differences in 

fees and fee cap programs across the 

TRFs on a participant’s decision to 

prefer one TRF over the other may be 

limited by the set of functionalities each 

TRF provides. 

Alternatives Considered 

No other alternatives were considered 

for the proposed rule change. 

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 

The foregoing rule change has become 

effective pursuant to Section 19(b)(3)(A) 

of the Act 23 and paragraph (f)(2) of Rule 

19b–4 thereunder.24 At any time within 

60 days of the filing of the proposed rule 

change, the Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is necessary or appropriate in the 

public interest, for the protection of 

investors, or otherwise in furtherance of 

the purposes of the Act. If the 

Commission takes such action, the 

Commission shall institute proceedings 

to determine whether the proposed rule 

should be approved or 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 rule-comments@

sec.gov. Please include File Number SR– 

FINRA–2018–042 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–2018–042. 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 the 

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– 

2018–042, and should be submitted on 

or before January 18, 2019. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.25

Brent J. Fields, 

Secretary. 

[FR Doc. 2018–28198 Filed 12–27–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

Proposed Collection; Comment 

Request 

Upon Written Request Copies Available 

From: Securities and Exchange 

Commission, Office of FOIA Services, 

100 F Street NE, Washington, DC 

20549–2736. 

Extension: 

Form ID. SEC File No. 270–291, OMB 

Control No. 3235–0328 

Notice is hereby given that, pursuant 

to the Paperwork Reduction Act of 1995 

(44 U.S.C. 3501 et seq.), the Securities 

and Exchange Commission 

(‘‘Commission’’) is soliciting comments 

on the collection of information 

summarized below. The Commission 

plans to submit this existing collection 

of information to the Office of 

Management and Budget for extension 

and approval. 

Form ID (OMB Control No. 3235– 

0328; SEC File No. 270–291) is used by 

companies and other entities to apply 

for identification numbers and access 

codes used in conjunction with the 

EDGAR electronic filing system. The 

information provided on Form ID is an 

essential part of the security of the 

EDGAR system. Form ID must be filed 

every time a registrant or other person 

obtains or changes an identification 

number. Form ID is filed by all persons 

that are required to file information 

electronically on EDGAR, including but 

not limited to, individuals, companies, 

other for-profit organizations, or 

governmental entities. We estimate that 

approximately 46,842 filers file Form ID 

annually and that it takes approximately 

0.15 hours per response to prepare for 

a total of 7,027 annual burden hours. 

Written comments are invited on: (a) 

Whether this proposed collection of 

information is necessary for the proper 

performance of the functions of the 

agency, including whether the 

information will have practical utility; 

(b) the accuracy of the agency’s estimate 

of the burden of the collection of 

information; (c) ways to enhance the 

quality, utility, and clarity of the 

information 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. 

An agency may not conduct or 

sponsor, and a person is not required to 

respond to, a collection of information 

unless it displays a currently valid 

control number. 

Please direct your written comment to 

Charles Riddle, Acting Director/Chief 

Information Officer, Securities and 

Exchange Commission, c/o Candace 

Kenner, 100 F Street NE, Washington, 

DC 20549 or send an email to: PRA_

Mailbox@sec.gov. 


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