4132 Federal Register / Vol. 86, No. 10 / Friday, January 15, 2021 / Notices 

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

2 17 CFR 240.19b–4. 

3Unless otherwise specified, capitalized terms 

used in this rule filing are defined as set forth in 

the Compliance Rule. 

4See Securities Exchange Act Release No. 90223 

(October 19, 2020), 85 FR 67576 (October 23, 2020) 

(‘‘Allocation Exemptive Order’’). 

5Section 1.1 of the CAT NMS Plan defines an 

‘‘Allocation Report’’ as ‘‘a report made to the 

Central Repository by an Industry Member that 

identifies the Firm Designated ID for any account(s), 

including subaccount(s), to which executed shares 

are allocated and provides the security that has 

been allocated, the identifier of the firm reporting 

the allocation, the price per share of shares 

allocated, the side of shares allocated, the number 

of shares allocated to each account, and the time of 

the allocation; provided for the avoidance of doubt, 

any such Allocation Report shall not be required to 

be linked to particular orders or executions.’’ 

6See letter from the Participants to Vanessa 

Countryman, Secretary, Commission, dated August 

27, 2020 (the ‘‘Exemption Request’’). 

Disasters can also disrupt supply 

chains, on which all people depend, 

and further aggravate food shortages. 

Developing compact and innovative 

advanced food system solutions can 

further enhance local production and 

reduce food supply chain challenges, 

providing new solutions for 

humanitarian responses to floods and 

droughts, and new technologies for 

rapid deployment following disasters. 

The Deep Space Food Challenge will 

identify technology solutions that can: 

• Help fill food gaps for a three-year 

round-trip mission with no resupply 

• Feed a crew of four (4) 

• Improve the accessibility of food on 

Earth, in particular, via production 

directly in urban centers and in 

remote and harsh environments 

• Achieve the greatest amount of food 

output with minimal inputs and 

minimal waste 

• Create a variety of palatable, 

nutritious, and safe foods that 

requires little processing time for 

crew members 

This Challenge seeks to incentivize 

Teams to develop novel technologies, 

systems and/or approaches for food 

production that need not meet the full 

nutritional requirements of future 

crews, but can contribute significantly 

to and be integrated into a 

comprehensive food system. 

I. Prize Amounts 

Up to 20 top scoring U.S. Teams that 

achieve a score in five or more of the 

scoring categories will receive $25,000 

USD each from NASA and be invited to 

compete in Phase 2 (should Phase 2 

open for competition). Teams must meet 

the eligibility requirements for the 

NASA Prize in order to be eligible to 

receive a prize from NASA. 

II. Eligibility To Participate and Win 

Prize Money 

To be eligible to win a prize, 

competitors must register and comply 

with all requirements in the Official 

Rules. Interested Teams should refer to 

the official Challenge website 

(www.deepspacefoodchallenge.org) for 

full details on eligibility and 

registration. 

III. Official Rules 

The complete official rules for the 

Deep Space Food Challenge can be 

found at: 

www.deepspacefoodchallenge.org. 

Nanette Smith, 

NASA Federal Register Liaison Officer. 

[FR Doc. 2021–00908 Filed 1–14–21; 8:45 am] 

BILLING CODE 7510–13–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–90887; File No. SR–FINRA– 

2021–001] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Amend the FINRA 

Rule 6800 Series (Consolidated Audit 

Trail Compliance Rule) Relating to 

Allocation Reporting Requirements 

January 11, 2021. 

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

Securities Exchange Act of 1934 

(‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on January 4, 

2021, 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 6800 Series, FINRA’s 

compliance rule (‘‘Compliance Rule’’) 

regarding the National Market System 

Plan Governing the Consolidated Audit 

Trail (the ‘‘CAT NMS Plan’’ or ‘‘Plan’’) 3

to be consistent with a conditional 

exemption granted by the Commission 

from certain allocation reporting 

requirements set forth in Sections 

6.4(d)(ii)(A)(1) and (2) of the CAT NMS 

Plan (‘‘Allocation Exemption’’).4

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 purpose of this proposed rule 

change is to amend the Rule 6800 Series 

to be consistent with the Allocation 

Exemption. The Commission granted 

the relief conditioned upon the 

Participants’ adoption of Compliance 

Rules that implement the alternative 

approach to reporting allocations to the 

Central Repository described in the 

Allocation Exemption (referred to as the 

‘‘Allocation Alternative’’). 

(1) Request for Exemptive Relief 

Pursuant to Section 6.4(d)(ii)(A) of the 

CAT NMS Plan, each Participant must, 

through its Compliance Rule, require its 

Industry Members to record and report 

to the Central Repository, if the order is 

executed, in whole or in part: (1) An 

Allocation Report; 5 (2) the SROAssigned Market Participant Identifier 

of the clearing broker or prime broker, 

if applicable; and the (3) CAT-Order-ID 

of any contra-side order(s). Accordingly, 

FINRA and the other Participants 

implemented Compliance Rules that 

require their Industry Members that are 

executing brokers to submit to the 

Central Repository, among other things, 

Allocation Reports and the SROAssigned Market Participant Identifier 

of the clearing broker or prime broker, 

if applicable. 

On August 27, 2020, the Participants 

submitted to the Commission a request 

for an exemption from certain allocation 

reporting requirements set forth in 

Sections 6.4(d)(ii)(A)(1) and (2) of the 

CAT NMS Plan (‘‘Exemption 

Request’’).6 In the Exemption Request, 

the Participants requested that they be 

permitted to implement the Allocation 

Alternative, which, as noted above, is an 

Federal Register / Vol. 86, No. 10 / Friday, January 15, 2021 / Notices 4133 

7 ‘‘A step-out allows a member to allocate all or 

part of a client’s position from a previously 

executed trade to the client’s account at another 

broker-dealer. In other words, a step-out functions 

as a client’s position transfer, rather than a trade; 

there is no exchange of shares and funds and no 

change in beneficial ownership.’’ See Trade 

Reporting Frequently Asked Questions, Section 

301, available at: www.finra.org/filing-reporting/ 

market-transparency-reporting/trade-reporting-faq. 

8Correspondent clearing flips are the movement 

of a position from an executing broker’s account to 

a different account for clearance and settlement, 

allowing a broker-dealer to execute a trade through 

another broker-dealer and settle the trade in its own 

account. See, e.g., The Depository Trust & Clearing 

Corporation, Correspondent Clearing, available at: 

www.dtcc.com/clearing-services/equitiestradecapture/correspondent-clearing. 

9See Securities Exchange Act Release No. 67457 

(July 18, 2012), 77 FR 45722, 45748 (August 1, 

2012). 

10The Participants did not request exemptive 

relief relating to the reporting of the SRO-Assigned 

Market Participant Identifier of clearing brokers. 

alternative approach to reporting 

allocations to the Central Repository. 

Under the Allocation Alternative, any 

Industry Member that performs an 

allocation to a client account would be 

required under the Compliance Rule to 

submit an Allocation Report to the 

Central Repository when shares/ 

contracts are allocated to a client 

account regardless of whether the 

Industry Member was involved in 

executing the underlying order(s). 

Under the Allocation Alternative, a 

‘‘client account’’ would be any account 

that is not owned or controlled by the 

Industry Member. 

In addition, under the Allocation 

Alternative, an ‘‘Allocation’’ would be 

defined as: (1) The placement of shares/ 

contracts into the same account for 

which an order was originally placed; or 

(2) the placement of shares/contracts 

into an account based on allocation 

instructions (e.g., subaccount 

allocations, delivery versus payment 

(‘‘DVP’’) allocations). Pursuant to this 

definition and the proposed Allocation 

Alternative, an Industry Member that 

performs an Allocation to an account 

that is not a client account, such as 

proprietary accounts and events 

including step-outs,7 or correspondent 

flips,8 would not be required to submit 

an Allocation Report to the Central 

Repository for that allocation, but could 

do so on a voluntary basis. Industry 

Members would be allowed to report 

Allocations to accounts other than client 

accounts; in that instance, such 

Allocations must be marked as 

Allocations to accounts other than client 

accounts. 

(a) Executing Brokers and Allocation 

Reports 

To implement the Allocation 

Alternative, the Participants requested 

exemptive relief from Section 

6.4(d)(ii)(A)(1) of the CAT NMS Plan, to 

the extent that the provision requires 

each Participant to, through its 

Compliance Rule, require its Industry 

Members that are executing brokers, 

who do not perform Allocations, to 

record and report to the Central 

Repository, if the order is executed, in 

whole or in part, an Allocation Report. 

Under the Allocation Alternative, when 

an Industry Member other than an 

executing broker (e.g., a prime broker or 

clearing broker) performs an Allocation, 

that Industry Member would be 

required to submit the Allocation Report 

to the Central Repository. When an 

executing broker performs an Allocation 

for an order that is executed, in whole 

or in part, the burden of submitting an 

Allocation Report to the Central 

Repository would remain with the 

executing broker under the Allocation 

Alternative. In certain circumstances 

this would result in multiple Allocation 

Reports—the executing broker (if selfclearing) or its clearing firm would 

report individual Allocation Reports 

identifying the specific prime broker to 

which shares/contracts were allocated 

and then each prime broker would itself 

report an Allocation Report identifying 

the specific customer accounts to which 

the shares/contracts were finally 

allocated. 

The Participants stated that granting 

exemptive relief from submitting 

Allocation Reports for executing brokers 

who do not perform an Allocation, and 

requiring the Industry Member other 

than the executing broker that is 

performing the Allocation to submit 

such Allocation Reports, is consistent 

with the basic approach taken by the 

Commission in adopting Rule 613 under 

the Exchange Act. Specifically, the 

Participants stated that they believe that 

the Commission sought to require each 

broker-dealer and exchange that touches 

an order to record the required data 

with respect to actions it takes on the 

order.9 Without the requested 

exemptive relief, executing brokers that 

do not perform Allocations would be 

required to submit Allocation Reports. 

In addition, the Participants stated that, 

because shares/contracts for every 

execution must be allocated to an 

account by the clearing broker in such 

circumstances, there would be no loss of 

information by shifting the reporting 

obligation from the executing broker to 

the clearing broker. 

(b) Identity of Prime Broker 

To implement the Allocation 

Alternative, the Participants also 

requested exemptive relief from Section 

6.4(d)(ii)(A)(2) of the CAT NMS Plan, to 

the extent that the provision requires 

each Participant to, through its 

Compliance Rule, require its Industry 

Members to record and report to the 

Central Repository, if an order is 

executed, in whole or in part, the SROAssigned Market Participant Identifier 

of the prime broker, if applicable. 

Currently, under the CAT NMS Plan, an 

Industry Member is required to report 

the SRO-Assigned Market Participant 

Identifier of the clearing broker or prime 

broker in connection with the execution 

of an order, and such information would 

be part of the order’s lifecycle, rather 

than in an Allocation Report that is not 

linked to the order’s lifecycle.10 Under 

the Allocation Alternative, the identity 

of the prime broker would be required 

to be reported by the clearing broker on 

the Allocation Report, and, in addition, 

the prime broker itself would be 

required to report the ultimate 

allocation, which the Participants 

believe would provide more complete 

information. 

The Participants stated that 

associating a prime broker with a 

specific execution, as is currently 

required by the CAT NMS Plan, does 

not reflect how the allocation process 

works in practice as allocations to a 

prime broker are done post-trade and 

are performed by the clearing broker of 

the executing broker. The Participants 

also stated that with the implementation 

of the Allocation Alternative, it would 

be duplicative for the executing broker 

to separately identify the prime broker 

for allocation purposes. 

The Participants stated that if a 

particular customer only has one prime 

broker, the identity of the prime broker 

can be obtained from the customer and 

account information through the DVP 

accounts for that customer that contain 

the identity of the prime broker. The 

Participants further stated that 

Allocation Reports related to those 

executions would reflect that shares/ 

contracts were allocated to the single 

prime broker. The Participants believe 

that there is no loss of information 

through the implementation of the 

Allocation Alternative compared to 

what is required in the CAT NMS Plan 

and that this approach does not 

decrease the regulatory utility of the 

CAT for single prime broker 

circumstances. 

In cases where a customer maintains 

relationships with multiple prime 

brokers, the Participants asserted that 

the executing broker will not have 

information at the time of the trade as 

to which particular prime broker may be 

4134 Federal Register / Vol. 86, No. 10 / Friday, January 15, 2021 / Notices 

11The Participants propose that for scenarios 

where the Industry Member responsible for 

reporting the Allocation has the FDID of the related 

new order(s) available, such FDID must be reported. 

This would include scenarios in which: (1) The 

FDID structure of the top account and subaccounts 

is known to the Industry Member responsible for 

reporting the Allocation(s); and (2) the FDID 

structure used by the IB/Correspondent when 

reporting new orders is known to the clearing firm 

reporting the related Allocations. 

12FINRA Rule 4512(c) states the for purposes of 

the rule, the term ‘‘institutional account’’ means the 

account of: (1) A bank, savings and loan association, 

insurance company or registered investment 

company; (2) an investment adviser registered 

either with the SEC under Section 203 of the 

Investment Advisers Act or with a state securities 

commission (or any agency or office performing like 

functions); or (3) any other person (whether a 

natural person, corporation, partnership, trust or 

otherwise) with total assets of at least $50 million. 

13FINRA proposes to renumber the definitions in 

Rule 6810 to accommodate the addition of this new 

definition of ‘‘Allocation’’ and the new definition 

of ‘‘Client Account’’ discussed below. 

allocated all or part of the execution. 

Under the Allocation Alternative, the 

executing broker (if self-clearing) or its 

clearing firm would report individual 

Allocation Reports identifying the 

specific prime broker to which shares/ 

contracts were allocated and then each 

prime broker would itself report an 

Allocation Report identifying the 

specific customer accounts where the 

shares/contracts were ultimately 

allocated. To determine the prime 

broker for a customer, a regulatory user 

would query the customer and account 

database using the customer’s CCID to 

obtain all DVP accounts for the CCID at 

broker-dealers. The Participants state 

that when a customer maintains 

relationships with multiple prime 

brokers, the customer typically has a 

separate DVP account with each prime 

broker, and the identities of those prime 

brokers can be obtained from the 

customer and account information. 

(c) Additional Conditions to Exemptive 

Relief 

In the Exemption Request, the 

Participants included certain additional 

conditions for the requested relief. 

Currently, the definition of Allocation 

Report in the CAT NMS Plan only refers 

to shares. To implement the Allocation 

Alternative, the Participants proposed to 

require that all required elements of 

Allocation Reports apply to both shares 

and contracts, as applicable, for all 

Eligible Securities. Specifically, 

Participants would require the reporting 

of the following in each Allocation 

Report: (1) The FDID for the account 

receiving the allocation, including 

subaccounts; (2) the security that has 

been allocated; (3) the identifier of the 

firm reporting the allocation; (4) the 

price per share/contracts of shares/ 

contracts allocated; (5) the side of 

shares/contracts allocated; (6) the 

number of shares/contracts allocated; 

and (7) the time of the allocation. 

Furthermore, to implement the 

Allocation Alternative, the Participants 

proposed to require the following 

information on all Allocation Reports: 

(1) Allocation ID, which is the internal 

allocation identifier assigned to the 

allocation event by the Industry 

Member; (2) trade date; (3) settlement 

date; (4) IB/correspondent CRD Number 

(if applicable); (5) FDID of new order(s) 

(if available in the booking system); 11

(6) allocation instruction time 

(optional); (7) if the account meets the 

definition of institution under FINRA 

Rule 4512(c); 12 (8) type of allocation 

(allocation to a custody account, 

allocation to a DVP account, step out, 

correspondent flip, allocation to a firm 

owned or controlled account, or other 

non-reportable transactions (e.g., option 

exercises, conversions); (9) for DVP 

allocations, custody broker-dealer 

clearing number (prime broker) if the 

custodian is a U.S. broker-dealer, DTCC 

number if the custodian is a U.S. bank, 

or a foreign indicator, if the custodian 

is a foreign entity; and (10) if an 

allocation was cancelled, a cancel flag, 

which indicates that the allocation was 

cancelled, and a cancel timestamp, 

which represents the time at which the 

allocation was cancelled. 

(2) Proposed Rule Changes to 

Implement Exemptive Relief 

On October 29, 2020, the Commission 

granted the exemptive relief requested 

in the Exemption Request. The 

Commission granted the relief 

conditioned upon the adoption of 

Compliance Rules that implement the 

reporting requirements of the Allocation 

Alternative. Accordingly, FINRA 

proposes the following changes to its 

Compliance Rule to implement the 

reporting requirements of the Allocation 

Alternative. 

(a) Definition of Allocation 

FINRA proposes to add a definition of 

‘‘Allocation’’ as new paragraph (c) to 

Rule 6810.13 Proposed paragraph (c) of 

Rule 6810 would define an ‘‘Allocation’’ 

to mean ‘‘(1) the placement of shares/ 

contracts into the same account for 

which an order was originally placed; or 

(2) the placement of shares/contracts 

into an account based on allocation 

instructions (e.g., subaccount 

allocations, delivery versus payment 

(‘‘DVP’’) allocations).’’ The SEC stated 

in the Allocation Exemption that this 

definition of ‘‘Allocation’’ is reasonable. 

(b) Definition of Allocation Report 

FINRA proposes to amend the 

definition of ‘‘Allocation Report’’ set 

forth in Rule 6810(c) (to be renumbered 

as Rule 6810(d)) to reflect the 

requirements of the Allocation 

Exemption. Rule 6810(c) defines the 

term ‘‘Allocation Report’’ to mean: 

A report made to the Central Repository by 

an Industry Member that identifies the Firm 

Designated ID for any account(s), including 

subaccount(s), to which executed shares are 

allocated and provides the security that has 

been allocated, the identifier of the firm 

reporting the allocation, the price per share 

of shares allocated, the side of shares 

allocated, the number of shares allocated to 

each account, and the time of the allocation; 

provided, for the avoidance of doubt, any 

such Allocation Report shall not be required 

to be linked to particular orders or 

executions. 

FINRA proposes to amend this 

definition in two ways: (1) Applying the 

requirements for Allocation Reports to 

contracts in addition to shares; and (2) 

requiring the reporting of additional 

elements for the Allocation Report. 

(i) Shares and Contracts 

The requirements for Allocation 

Reports apply only to shares, as the 

definition of ‘‘Allocation Report’’ in 

Rule 6810(c) refers to shares, not 

contracts. In the Allocation Exemption, 

the Commission stated that applying the 

requirements for Allocation Reports to 

contracts in addition to shares is 

appropriate because CAT reporting 

requirements apply to both options and 

equities. Accordingly, the SEC stated 

that the Participants would be required 

to modify their Compliance Rules such 

that all required elements of Allocation 

Reports apply to both shares and 

contracts, as applicable, for all Eligible 

Securities. Therefore, FINRA proposes 

to amend Rule 6810(c) (to be 

renumbered as Rule 6810(d)) to apply to 

contracts, as well as shares. Specifically, 

FINRA proposes to add references to 

contracts to the definition of 

‘‘Allocation Report’’ to the following 

phrases: ‘‘the Firm Designated ID for 

any account(s), including subaccount(s), 

to which executed shares/contracts are 

allocated,’’ ‘‘the price per share/contract 

of shares/contracts allocated,’’ ‘‘the side 

of shares/contracts allocated,’’ and ‘‘the 

number of shares/contracts allocated to 

each account.’’ 

(ii) Additional Elements 

The Commission also conditioned the 

Allocation Exemption on the 

Participants amending their Compliance 

Rules to require the ten additional 

elements in Allocation Reports 

described above. Accordingly, FINRA 

Federal Register / Vol. 86, No. 10 / Friday, January 15, 2021 / Notices 4135 

14FINRA proposes to renumber Rule 

6830(a)(2)(A)(ii) and (iii) as Rule 6830(a)(2)(A)(i) 

and (ii) in light of the proposed deletion of Rule 

6830(a)(2)(A)(i). 

15As noted above, under the Allocation 

Alternative, for certain executions, the executing 

broker (if self-clearing) or its clearing firm would 

report individual Allocation Reports identifying the 

specific prime broker to which shares/contracts 

were allocated and then each prime broker would 

itself report an Allocation Report identifying the 

specific customer accounts to which the shares/ 

contracts were finally allocated. 

proposes to require these additional 

elements in Allocation Reports. 

Specifically, FINRA proposes to amend 

the definition of ‘‘Allocation Report’’ in 

Rule 6810(c) (to be renumbered as Rule 

6810(d)) to include the following 

elements, in addition to those elements 

currently required under the CAT NMS 

Plan: 

(6) The time of the allocation; (7) 

Allocation ID, which is the internal 

allocation identifier assigned to the 

allocation event by the Industry Member; (8) 

trade date; (9) settlement date; (10) IB/ 

correspondent CRD Number (if applicable); 

(11) FDID of new order(s) (if available in the 

booking system); (12) allocation instruction 

time (optional); (12) if account meets the 

definition of institution under FINRA Rule 

4512(c); (13) type of allocation (allocation to 

a custody account, allocation to a DVP 

account, step-out, correspondent flip, 

allocation to a firm owned or controlled 

account, or other non-reportable transactions 

(e.g., option exercises, conversions); (14) for 

DVP allocations, custody broker-dealer 

clearing number (prime broker) if the 

custodian is a U.S. broker-dealer, DTCC 

number if the custodian is a U.S. bank, or a 

foreign indicator, if the custodian is a foreign 

entity; and (15) if an allocation was 

cancelled, a cancel flag indicating that the 

allocation was cancelled, and a cancel 

timestamp, which represents the time at 

which the allocation was cancelled. 

(c) Allocation Reports 

(i) Executing Brokers That Do Not 

Perform Allocations 

The Commission granted the 

Participants an exemption from the 

requirement that the Participants, 

through their Compliance Rule, require 

executing brokers that do not perform 

Allocations to submit Allocation 

Reports. The Commission stated that it 

understands that executing brokers that 

are not self-clearing do not perform 

allocations themselves, and such 

allocations are handled by prime and/or 

clearing brokers, and these executing 

brokers therefore do not possess the 

requisite information to provide 

Allocation Reports. Accordingly, FINRA 

proposes to eliminate Rule 

6830(a)(2)(A)(i),14 which requires an 

Industry Member to record and report to 

the Central Repository an Allocation 

Report if the order is executed, in whole 

or in part, and to replace this provision 

with proposed Rule 6830(a)(2)(F) as 

discussed below. 

(ii) Industry Members That Perform 

Allocations 

The Allocation Exemption requires 

the Participants to amend their 

Compliance Rules to require Industry 

Members to provide Allocation Reports 

to the Central Repository any time they 

perform Allocations to a client account, 

whether or not the Industry Member 

was the executing broker for the trades. 

Accordingly, the Commission 

conditioned the Allocation Exemption 

on the Participants adopting 

Compliance Rules that require prime 

and/or clearing brokers to submit 

Allocation Reports when such brokers 

perform allocations, in addition to 

requiring executing brokers that perform 

allocations to submit Allocation 

Reports. The Commission determined 

that such exemptive relief would 

improve efficiency and reduce the costs 

and burdens of reporting allocations for 

Industry Members because the reporting 

obligation would belong to the Industry 

Member with the requisite information, 

and executing brokers that do not have 

the information required on an 

Allocation Report would not have to 

develop the infrastructure and processes 

required to obtain, store and report the 

information. The Commission stated 

that this exemptive relief should not 

reduce the regulatory utility of the CAT 

because an Allocation Report would 

still be submitted for each executed 

trade allocated to a client account, 

which in certain circumstances could 

still result in multiple Allocation 

Reports,15 just not necessarily by the 

executing broker. 

In accordance with the Allocation 

Exemption, FINRA proposes to add 

proposed Rule 6830(a)(2)(F) to the 

Compliance Rule. Proposed Rule 

6830(a)(2)(F) would require Industry 

Members to record and report to the 

Central Repository ‘‘an Allocation 

Report any time the Industry Member 

performs an Allocation to a Client 

Account, whether or not the Industry 

Member was the executing broker for 

the trade.’’ 

(iii) Client Accounts 

In the Allocation Exemption, the 

Commission also exempted the 

Participants from the requirement that 

they amend their Compliance Rules to 

require Industry Members to report 

Allocations for accounts other than 

client accounts. The Commission 

believes that allocations to client 

accounts, and not allocations to 

proprietary accounts or events such as 

step-outs and correspondent flips, 

provide regulators the necessary 

information to detect abuses in the 

allocation process because it would 

provide regulators with detailed 

information regarding the fulfillment of 

orders submitted by clients, while 

reducing reporting burdens on brokerdealers. For example, Allocation 

Reports would be required for 

allocations to registered investment 

advisor and money manager accounts. 

The Commission further believes that 

the proposed approach should facilitate 

regulators’ ability to distinguish 

Allocation Reports relating to 

allocations to client accounts from other 

Allocation Reports because Allocations 

to accounts other than client accounts 

would have to be identified as such. 

This approach could reduce the time 

CAT Reporters expend to comply with 

CAT reporting requirements and lower 

costs by allowing broker-dealers to use 

existing business practices. 

To clarify that an Industry Member 

must report an Allocation Report solely 

for Allocations to a client account, 

proposed Rule 6830(a)(2)(F) specifically 

references ‘‘Client Accounts,’’ as 

discussed above. In addition, FINRA 

proposes to add a definition of ‘‘Client 

Account’’ as proposed Rule 6810(l). 

Proposed Rule 6810(l) would define a 

‘‘Client Account’’ to mean ‘‘for the 

purposes of an Allocation and 

Allocation Report, any account or 

subaccount that is not owned or 

controlled by the Industry Member.’’ 

(d) Identity of Prime Broker 

FINRA also proposes to amend Rule 

6830(a)(2)(A)(ii) to eliminate the 

requirement for executing brokers to 

record and report the SRO-Assigned 

Market Participant Identifier of the 

prime broker. Rule 6830(a)(2)(A)(ii) 

states that each Industry Member is 

required to record and report to the 

Central Repository, if the order is 

executed, in whole or in part, the ‘‘SROAssigned Market Participant Identifier 

of the clearing broker or prime broker, 

if applicable.’’ FINRA proposes to delete 

the phrase ‘‘or prime broker’’ from this 

provision. Accordingly, each Industry 

Member that is an executing broker 

would no longer be required to report 

the SRO-Assigned Market Participant 

Identifier of the prime broker. 

As the Commission noted in the 

Allocation Exemption, exempting the 

Participants from the requirement that 

they, through their Compliance Rules, 

4136 Federal Register / Vol. 86, No. 10 / Friday, January 15, 2021 / Notices 

16 15 U.S.C. 78o–3(b)(6). 

17 15 U.S.C. 78o–3(b)(9). 

18See Securities Exchange Act Release No. 79318 

(November 15, 2016), 81 FR 84696, 84697 

(November 23, 2016). 

19 15 U.S.C. 78s(b)(3)(A). 

20 17 CFR 240.19b–4(f)(6). 

require executing brokers to provide the 

SRO-Assigned Market Participant 

Identifier of the prime broker is 

appropriate because, as stated by the 

Participants, allocations are done on a 

post-trade basis and the executing 

broker will not have the requisite 

information at the time of the trade. 

Because an executing broker, in certain 

circumstances, does not have this 

information at the time of the trade, this 

relief relieves executing brokers of the 

burdens and costs of developing 

infrastructure and processes to obtain 

this information in order to meet the 

contemporaneous reporting 

requirements of the CAT NMS Plan. 

As the Commission noted in the 

Allocation Exemption, although 

executing brokers would no longer be 

required to provide the prime broker 

information, regulators will still be able 

to determine the prime broker(s) 

associated with orders through querying 

the customer and account information 

database. If an executing broker has only 

one prime broker, the identity of the 

prime broker can be obtained from the 

customer and account information 

associated with the executing broker. 

For customers with multiple prime 

brokers, the identity of the prime 

brokers can be obtained from the 

customer and account information 

which will list the prime broker, if there 

is one, that is associated with each 

account. 

FINRA has filed the proposed rule 

change for immediate effectiveness. The 

proposed rule change will be operative 

30 days after the date of the filing. 

2. Statutory Basis 

FINRA believes that the proposed rule 

change is consistent with the provisions 

of Section 15A(b)(6) of the Act,16 which 

requires, among other things, that 

FINRA rules must be designed to 

prevent fraudulent and manipulative 

acts and practices, to promote just and 

equitable principles of trade, and, in 

general, to protect investors and the 

public interest, and Section 15A(b)(9) of 

the Act,17 which requires that FINRA 

rules not impose any burden on 

competition that is not necessary or 

appropriate. 

FINRA believes that the proposed rule 

change is consistent with the Act 

because it is consistent with, and 

implements, the Allocation Exemption, 

and is designed to assist FINRA and its 

Industry Members in meeting regulatory 

obligations pursuant to the Plan. In 

approving the Plan, the SEC noted that 

the Plan ‘‘is necessary and appropriate 

in the public interest, for the protection 

of investors and the maintenance of fair 

and orderly markets, to remove 

impediments to, and perfect the 

mechanism of a national market system, 

or is otherwise in furtherance of the 

purposes of the Act.’’ 18 To the extent 

that the proposed rule change 

implements the Plan, and applies 

specific requirements to Industry 

Members, FINRA believes that it 

furthers the objectives of the Plan, as 

identified by the SEC, and is therefore 

consistent with the Act. 

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. FINRA notes 

that the proposed rule change is 

consistent with the Allocation 

Exemption and is designed to assist 

FINRA in meeting its regulatory 

obligations pursuant to the Plan. FINRA 

also notes that the proposed rule change 

will apply equally to all Industry 

Members. FINRA anticipates no new 

costs to member firms reporting to the 

CAT as a result of this proposed rule 

change, because any related costs have 

already been built in the technical 

specifications previously determined 

and shared broadly in conformance with 

the CAT NMS Plan and the Allocation 

Exemption. In addition, FINRA and all 

national securities exchanges are 

proposing this amendment to their 

Compliance Rules. Therefore, this is not 

a competitive rule filing and does not 

impose a burden on competition. 

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 

Because the foregoing proposed rule 

change does not: (i) Significantly affect 

the protection of investors or the public 

interest; (ii) impose any significant 

burden on competition; and (iii) become 

operative for 30 days from the date on 

which it was filed, or such shorter time 

as the Commission may designate, it has 

become effective pursuant to Section 

19(b)(3)(A) of the Act 19 and Rule 19b4(f)(6) thereunder.20

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–2021–001 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–2021–001. 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 

Federal Register / Vol. 86, No. 10 / Friday, January 15, 2021 / Notices 4137 

21 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

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

4 17 CFR 240.19b–4(f)(6). 

5For example, if the Exchange becomes aware of 

a transaction fee billing error on January 4, 2021, 

the Exchange will resolve the error by crediting or 

debiting Members based on the fees or rebates that 

should have been applied to any impacted 

transactions during October, November and 

December 2020. The Exchange notes that because 

it bills in arrears, the Exchange would be able to 

correct the error in advance of issuing the January 

2021 invoice and therefore, transactions impacted 

through the date of discovery (in this example, 

January 4, 2021) and thereafter, would be billed 

correctly. 

6See e.g. Securities Exchange Act Release No. 

87650 (December 3, 2019), 84 FR 67304 (December 

9, 2019) (SR–NYSECHX–2019–024); Securities 

Exchange Act Release No. 84430 (October 16, 2018), 

83 FR 53347 (October 22, 2018) (SR–NYSENAT– 

2018–23); and Securities Exchange Act Release No. 

79060 (October 6, 2016), 81 FR 70716 (October 13, 

2016) (SR–ISEGemini–2016–11). 

7See e.g., MEMX LLC, Rule 15.3, IEX Rule 

15.120, Nasdaq Rule Equity 7, Section 70, Nasdaq 

BX Rule Equity 7, Section 111, and Nasdaq PHLX 

Rule Equity 7, Section 2. 

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– 

2021–001, and should be submitted on 

or before February 5, 2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.21

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–00821 Filed 1–14–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–90901; File No. SR– 

CboeEDGX–2020–064] 

Self-Regulatory Organizations; Cboe 

EDGX Exchange, Inc.; Notice of Filing 

and Immediate Effectiveness of a 

Proposed Rule Change To Establish a 

Policy Relating to Billing Errors 

January 11, 2021. 

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

Securities Exchange Act of 1934 (the 

‘‘Act’’),1 and Rule 19b-4 thereunder,2

notice is hereby given that on December 

31, 2020, Cboe EDGX Exchange, Inc. 

(the ‘‘Exchange’’ or ‘‘EDGX’’) filed with 

the Securities and Exchange 

Commission (the ‘‘Commission’’) the 

proposed rule change as described in 

Items I and II below, which Items have 

been prepared by the Exchange. The 

Exchange filed the proposal as a ‘‘noncontroversial’’ proposed rule change 

pursuant to Section 19(b)(3)(A)(iii) of 

the Act 3 and Rule 19b–4(f)(6) 

thereunder.4 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 

The Exchange proposes to amend its 

options and equities fees schedules to 

adopt a provision relating to billing 

errors and fee disputes. 

The text of the proposed rule change 

is also available on the Exchange’s 

website (http://markets.cboe.com/us/ 

options/regulation/rule_filings/edgx/), 

at the Exchange’s Office of the 

Secretary, 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, the 

Exchange 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. The 

Exchange 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 Exchange proposes to amend its 

options and equities fees schedules to 

adopt a provision relating to billing 

errors and fee disputes. Particularly, the 

Exchange proposes to provide that after 

three calendar months, all fees and 

rebates assessed by the Exchange would 

be considered final. More specifically, 

the Exchange would adopt language in 

the fees schedules that would provide 

that all fees and rebates assessed prior 

to the three full calendar months before 

the month in which the Exchange 

becomes aware of a billing error shall be 

considered final. Particularly, the 

Exchange will resolve an error by 

crediting or debiting Members and NonMembers based on the fees or rebates 

that should have been applied in the 

three full calendar months preceding 

the month in which the Exchange 

became aware of the error, including to 

all impacted transactions that occurred 

during those months.5 The Exchange 

will apply the three month look back 

regardless of whether the error was 

discovered by the Exchange or by a 

Member or Non-Member that submitted 

a fee dispute to the Exchange. The 

Exchange also proposes to provide all 

disputes concerning fees and rebates 

assessed by the Exchange would have to 

be submitted to the Exchange in writing 

and accompanied by supporting 

documentation. 

The purpose of the proposed change 

is to encourage Members and NonMembers to promptly review their 

Exchange invoices so that any disputed 

charges can be addressed in a timely 

manner. The Exchange notes that it 

provides Members with both daily and 

monthly fee reports and thus believes 

they should be aware of any potential 

billing errors within three months. 

Requiring that Members and NonMembers submit disputes in writing and 

provide supporting documentation 

encourages them to promptly review 

their invoices so that any disputed 

charges can be addressed in a timely 

manner while the information and data 

underlying those charges (e.g., 

applicable fees and order information) is 

still easily and readily available. This 

practice will avoid issues that may arise 

when Members or Non-Members do not 

dispute an invoice in a timely manner 

and will conserve Exchange resources 

that would have to be expended to 

resolve untimely billing disputes. As 

such, the proposed rule change would 

alleviate administrative burdens related 

to billing disputes, which could divert 

staff resources away from the 

Exchange’s regulatory and business 

purposes. The proposed rule change to 

provide all fees and rebates are final 

after three calendar months also 

provides both the Exchange and 

Members and Non-Members finality and 

the ability to close their books after a 

known period of time. 

The Exchange notes that a number of 

exchanges have explicitly stated that 

they consider all fees to be final after a 

similar period of time.6 Additionally, 

several other exchanges have adopted 

similar provisions in their rules that 

provide for a process for Members and 

Non-Members to submit fee disputes.7

The proposed billing policy will apply 

to all charges and rebates reflected in 

the Exchange’s fees schedules. 

2. Statutory Basis 

The Exchange believes the proposed 

rule change is consistent with the