6922 Federal Register / Vol. 86, No. 14 / Monday, January 25, 2021 / Notices 

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

2 17 CFR 240.19b–4. 

3The Commission published notice of the 

proposed rule change in the Federal Register on 

April 8, 2019. See Exchange Act Release No. 85488 

(Apr. 2, 2019), 84 FR 13977 (‘‘Notice’’). On May 22, 

2019, the Commission designated a longer period 

within which to approve the proposed rule change, 

disapprove the proposed rule change, or institute 

proceedings to determine whether the proposed 

rule change should be disapproved. See Exchange 

Act Release No. 85911, 84 FR 24839 (May 29, 2019). 

On July 1, 2019, the Commission instituted 

proceedings under Section 19(b)(2)(B) of the Act, 15 

U.S.C. 78s(b)(2)(B), to determine whether to 

approve or disapprove the proposed rule change. 

See Exchange Act Release No. 86256, 84 FR 32506 

(Jul. 8, 2019). On October 3, 2019, FINRA filed 

Partial Amendment No. 1 to the proposed rule 

change, which was subsequently withdrawn on the 

same day due to a non-substantive administrative 

error. On October 3, 2019, FINRA filed partial 

Amendment No. 2 to the proposed rule change 

(‘‘Amendment No. 2’’). On October 4, 2019, the 

Commission issued a notice of filing of Amendment 

No. 2 to the proposed rule change and, pursuant to 

Section 19(b)(2) of the Act, the Commission 

designated a longer period for Commission action 

on proceedings to determine whether to disapprove 

the proposed rule change. See Exchange Act 

Release No. 87232, 84 FR 54712 (Oct. 10, 2019). 

4 17 CFR 200.30–3(a)(12). 

5See Exchange Act Release No. 87656, 84 FR 

67491 (Dec. 10, 2019). 

Polar Programs, National Science 

Foundation, 2415 Eisenhower Avenue, 

Alexandria, Virginia 22314. 

FOR FURTHER INFORMATION CONTACT: 

Nature McGinn, ACA Permit Officer, at 

the above address, 703–292–8030, or 

ACApermits@nsf.gov. 

SUPPLEMENTARY INFORMATION: The 

National Science Foundation, as 

directed by the Antarctic Conservation 

Act of 1978 (Pub. L. 95–541, 45 CFR 

670), as amended by the Antarctic 

Science, Tourism and Conservation Act 

of 1996, has developed regulations for 

the establishment of a permit system for 

various activities in Antarctica and 

designation of certain animals and 

certain geographic areas a requiring 

special protection. The regulations 

establish such a permit system to 

designate Antarctic Specially Protected 

Areas. 

Application Details 

Permit Application: 2021–008 

1. Applicant: Michael Gooseff, 4001 

Discovery Dr., Boulder, CO 80303. 

Activity for Which Permit is 

Requested: Enter Antarctic Specially 

Protected Areas. The applicant and 

agents would enter ASPA 131, Canada 

Glacier, Lake Fryxell, to continue 

operation of a previously installed, 

continuously recording stream gauge 

station, perform maintenance, conduct 

stream flow measurements and collect 

water quality samples near the stream 

gauge site. The applicant would collect 

water quality samples of the melt-water 

of the Canada Glacier and along the 

length of the stream to study in-stream 

biogeochemical processes. The 

applicant would collect a maximum of 

five moss samples per year using a 3 cm 

corer to a depth of about 3 cm and a 

maximum of five soil samples of 

approximately 200 g per year from 

which to extract nematodes. 

Photography, LIDAR, and other survey 

and monitoring techniques may be used 

to detect changes in the stream bed and 

algal mat distribution over time, and/or 

to monitor the change in the stream 

gauge system through time. The 

applicant and agents would also to enter 

ASPA 172, Lower Taylor Glacier and 

Blood Falls, to continue measurements 

of the Santa Fe Stream including: 

Stream-flow using velocity meters; pH, 

temperature, and conductivity via 

meters; and collection of water quality 

samples. The collection of water from 

the Blood Falls area would occur on the 

glacial moraine, not the glacier itself, 

and the sample would be small (<1 L) 

and comprised of both brine reservoir 

discharge (when present) and surface 

ice melt-water. 

Location: ASPA 131, Canada Glacier, 

Lake Fryxell, Taylor Valley, Victoria 

Land; ASPA 172, Lower Taylor Glacier 

and Blood Falls, Taylor Valley, 

McMurdo Dry Valleys, Victoria Land; 

McMurdo Dry Valleys, Antarctica. 

Dates of Permitted Activities: 

February 28, 2021–February 28, 2026. 

Permit Application: 2021–009 

2. Applicant: Daniel Costa, Ecology and 

Evolutionary Biology Department, 

University of California Santa Cruz, 

115 McAllister Way, Santa Cruz, 

CA 95062. 

Activity for Which Permit is 

Requested: Take, Harmful Interference, 

Enter Antarctic Specially Protected 

Areas, Import into USA. The applicant 

proposes to study the foraging behavior, 

habitat utilization, and physiology of 

leopard seals, and potentially additional 

Antarctic seal species, near Cape 

Shirreff in the Antarctic Peninsula. 

Additional seal species could include: 

Crabeater seals, Weddell seals, Antarctic 

fur seals, Ross seals, and southern 

elephant seals. The applicant would 

capture and tag 10–15 seals of each 

species, in each field season. Seals 

would be sedated and anesthetized 

during tagging and biological sample 

collection procedures. The tags to be 

attached to the seals with marine epoxy 

include a combined time-depth recorder 

and GPS receiver and a separate VHF 

radio tag. Other procedures would 

include: Flipper tagging, dye marking, 

collecting blood samples, measuring 

blood volume, measuring girth and 

length, and determining body 

composition by morphometric 

measurements. These procedures are 

currently authorized under National 

Marine Fisheries Service Marine 

Mammal Protection Act Permit No. 

19439. 

Location: ASPA 149, Cape Shirreff, 

Livingston Island, South Shetland 

Islands, Antarctic Peninsula. 

Dates of Permitted Activities: April 1, 

2021–December 31, 2023. 

Erika N. Davis, 

Program Specialist, Office of Polar Programs. 

[FR Doc. 2021–01471 Filed 1–22–21; 8:45 am] 

BILLING CODE 7555–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–90939; File No. SR–FINRA– 

2019–008] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Order Setting Aside 

Action by Delegated Authority and 

Approving a Proposed Rule Change, 

as Modified by Amendment No. 2, To 

Establish a Corporate Bond New Issue 

Reference Data Service 

January 15, 2021. 

I. Introduction 

On March 27, 2019, Financial 

Industry Regulatory Authority, Inc. 

(‘‘FINRA’’) filed with the Securities and 

Exchange Commission (‘‘Commission’’), 

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

Securities Exchange Act of 1934 

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

proposed rule change to establish a new 

issue reference data service for 

corporate bonds (‘‘New Issue Reference 

Data Service’’).3 Pursuant to the 

proposal, FINRA would require that 

underwriters report to FINRA a number 

of data elements for new issues in 

corporate debt securities and FINRA 

would disseminate such data to the 

public upon receipt. 

On December 4, 2019, the 

Commission, acting through authority 

delegated to the Division of Trading and 

Markets (‘‘Division’’),4 approved the 

proposed rule change, as modified by 

Amendment No. 2 (‘‘Approval Order’’).5


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Federal Register / Vol. 86, No. 14 / Monday, January 25, 2021 / Notices 6923 

6 17 CFR 201.431(e). See Letter to Stephanie 

Dumont, Senior Vice President and Director of 

Capital Markets Policy, FINRA (Dec. 12, 2019) 

(providing notice of receipt of notice of intention 

to petition for review of delegated action and stay 

of order), available at https://www.sec.gov/rules/ 

sro/finra/2019/34-87656-acknowledgementletter.pdf. 

7See Securities Exchange Act Release No. 88214, 

85 FR 9887 (Feb. 20, 2020). 

8See FINRA’s Statement in Support of Proposed 

Rule Change to Establish a Corporate Bond New 

Issue Reference Data (‘‘FINRA Statement’’). 

9See Corrected Statement of Bloomberg, L.P. in 

Opposition to Approval of the Proposed Rule 

Change (‘‘Petitioner Statement’’). Petitioner’s 

original written statement in opposition to the 

Approval Order was submitted on March 16, 2020. 

Petitioner stated that it submitted a corrected 

version on March 17, 2020 in order to correct nonsubstantive typographical errors and incorrect 

cross-references. 

10 17 CFR 201.452. 

11See Motion of Bloomberg, L.P. for Leave to 

Adduce Additional Evidence (‘‘Petitioner Motion’’). 

See also Declaration of Mark Flatman and 

Declaration of David Miao (collectively, 

‘‘Declarations’’). 

12See FINRA’s Opposition to Motion of 

Bloomberg, L.P. for Leave to Adduce Additional 

Evidence (‘‘FINRA Opposition’’). 

13See Reply of Bloomberg, L.P. in Support of its 

Motion for Leave to Adduce Additional Evidence. 

The Commission believes that allowing Petitioner 

to submit additional evidence would further the 

Commission’s ability to understand the arguments 

presented by both parties and their relation to 

FINRA’s proposal. Accordingly, the Commission 

grants the Petitioner Motion. The Declarations are 

considered below in Section III.A and Section III.C. 

14 15 U.S.C. 78s(b)(2)(C). 

15 17 CFR 201.700(b)(3). 

16 Id. 

17See id. See also 17 CFR 240.19b–4. 

18 15 U.S.C. 78o–3(b)(6). 

19 15 U.S.C. 78o–3(b)(9). 

20FINRA would amend the title of the Rule to 

‘‘Obligation to Provide Notice and Dissemination of 

Corporate Debt Security New Issue Reference Data.’’ 

21FINRA would amend Rule 6760(a)(1) to require 

that underwriters subject to the rule report required 

information for the purpose of providing market 

participants in the corporate debt security markets 

with reliable and timely new issue reference data 

to facilitate the trading and settling of these 

securities, in addition to the current purpose of 

Continued 

On December 18, 2019, Bloomberg, L.P. 

(‘‘Bloomberg’’ or ‘‘Petitioner’’) filed a 

petition for review of the Approval 

Order (‘‘Petition for Review’’). Pursuant 

to Commission Rule of Practice 431(e), 

the Approval Order was stayed by the 

filing with the Commission of a notice 

of intention to petition for review.6 On 

February 14, 2020, the Commission 

issued a scheduling order, pursuant to 

Commission Rule of Practice 431, 

granting the Petition for Review of the 

Approval Order and providing until 

March 16, 2020, for any party or other 

person to file a written statement in 

support of, or in opposition to, the 

Approval Order.7 On March 16, 2020, 

FINRA submitted a written statement in 

support of the Approval Order.8 On 

March 17, 2020, Petitioner submitted a 

corrected written statement in 

opposition to the Approval Order.9 On 

April 17, 2020, Petitioner submitted a 

Motion for Leave to Adduce Additional 

Evidence pursuant to Rule 452 of the 

Commission’s Rules of Practice,10

attaching the declarations of Mark 

Flatman and David Miao of Bloomberg, 

L.P.11 On April 24, 2020, FINRA 

submitted an Opposition to the 

Bloomberg, L.P. Motion.12 On April 29, 

2020, Petitioner submitted a Reply in 

Support of the Bloomberg, L.P. 

Motion.13

In response to the Petition for Review, 

the Commission has conducted a de 

novo review of FINRA’s proposal, giving 

careful consideration to the entire 

record—including FINRA’s amended 

proposal, the Petition for Review, and 

all comments and statements 

submitted—to determine whether the 

proposal is consistent with the 

requirements of the Act and the rules 

and regulations thereunder that are 

applicable to a national securities 

association. Under Section 19(b)(2)(C) of 

the Act, the Commission must approve 

the proposed rule change of a selfregulatory organization (‘‘SRO’’) if the 

Commission finds that the proposed 

rule change is consistent with the 

requirements of the Act and the 

applicable rules and regulations 

thereunder; if it does not make such a 

finding, the Commission must 

disapprove the proposed rule change.14

Additionally, under Rule 700(b)(3) of 

the Commission’s Rules of Practice, the 

‘‘burden to demonstrate that a proposed 

rule change is consistent with the Act 

and the rules and regulations issued 

thereunder . . . is on the self-regulatory 

organization that proposed the rule 

change.’’ 15 The description of a 

proposed rule change, its purpose and 

operation, its effect, and a legal analysis 

of its consistency with applicable 

requirements must all be sufficiently 

detailed and specific to support an 

affirmative Commission finding.16 Any 

failure of a self-regulatory organization 

to provide the information required by 

Rule 19b–4 and elicited on Form 19b– 

4 may result in the Commission not 

having a sufficient basis to make an 

affirmative finding that a proposed rule 

change is consistent with the Act and 

the rules and regulations thereunder 

that are applicable to the self-regulatory 

organization.17

The Commission has considered 

whether the proposal is consistent with 

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

the Act, which requires that the rules of 

a national securities association be 

designed to prevent fraudulent and 

manipulative acts and practices, to 

promote just and equitable principles of 

trade, to foster cooperation and 

coordination with persons engaged in 

regulating, clearing, settling, processing 

information with respect to, and 

facilitating transactions in securities, to 

remove impediments to and perfect the 

mechanism of a free and open market 

and a national market system, and, in 

general, to protect investors and the 

public interest, and not be designed to 

permit unfair discrimination between 

customers, issuers, brokers, or dealers, 

to fix minimum profits, to impose any 

schedule or fix rates of commissions, 

allowances, discounts, or other fees to 

be charged by its members, or to 

regulate by virtue of any authority 

conferred by the Act matters not related 

to the purposes of the Act or the 

administration of the association; 18 and 

Section 15A(b)(9) of the Act, which 

requires that the rules of a national 

securities association not impose any 

burden on competition not necessary or 

appropriate in furtherance of the 

purposes of the Act.19

For the reasons discussed further 

herein, FINRA has met its burden to 

show that the proposed rule change is 

consistent with the Act, and this order 

sets aside the Approval Order and 

approves FINRA’s proposed rule 

change, as amended. In particular, the 

Commission concludes that the record 

before the Commission demonstrates 

that FINRA’s New Issue Reference Data 

Service should promote just and 

equitable principles of trade and foster 

cooperation and coordination with 

persons engaged in regulating, clearing, 

settling, processing information with 

respect to, and facilitating transactions 

in newly issued corporate bonds, 

consistent with Section 15A(b)(6) of the 

Act. In addition, the record 

demonstrates that the New Issue 

Reference Data Service should not 

impose any burden on competition not 

necessary or appropriate in furtherance 

of the purposes of the Act. Therefore, 

and as explained further below, the 

Commission finds the proposal 

consistent with Sections 15A(b)(6) and 

15A(b)(9) of the Act. 

II. Summary of the Proposal 

FINRA proposes to establish the New 

Issue Reference Data Service, which 

would provide a central depository for 

public dissemination of new issue 

corporate bond reference data. FINRA 

proposes to amend Rule 6760 

(Obligation to Provide Notice) 20 to 

require that underwriters who are 

FINRA members and subject to Rule 

6760 21 to report to FINRA a number of 


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6924 Federal Register / Vol. 86, No. 14 / Monday, January 25, 2021 / Notices 

facilitating trade reporting and dissemination in 

TRACE-Eligible Securities, as that term is defined 

in Rule 6710(a). 

22FINRA proposes to move the definition of 

‘‘Corporate Debt Security,’’ which is currently 

located in FINRA Rule 2232 (Customer 

Confirmations), into the TRACE Rule Series 

(specifically Rule 6710 (Definitions)) and to make 

corresponding technical edits to Rule 2232 to refer 

to the relocated definition in Rule 6710. In addition, 

FINRA proposes to make two changes to the 

definition of ‘‘Corporate Debt Security,’’ which 

FINRA states are technical, non-substantive edits 

that reflect the original intent of the definition and 

are consistent with current FINRA guidance. See 

Notice, at 13978, n.6. Specifically, FINRA proposes 

to revise the current definition of Corporate Debt 

Security to (i) clarify that the definition is limited 

to TRACE-Eligible Securities, and (ii) update the 

definition to exclude Securitized Products (defined 

in Rule 6710(m)), rather than Asset-Backed 

Securities (defined in Rule 6710(cc)). 

23Rule 6760(b), proposed to be renumbered as 

Rule 6760(b)(1), currently requires the following 

information to be reported to FINRA: (A) The 

CUSIP number or if a CUSIP number is not 

available, a similar numeric identifier (e.g., a 

mortgage pool number); (B) the issuer name, or, for 

a Securitized Product, the names of the Securitizers; 

(C) the coupon rate; (D) the maturity; (E) whether 

Securities Act Rule 144A applies; (F) the time that 

the new issue is priced, and, if different, the time 

that the first transaction in the offering is executed; 

(G) a brief description of the issue (e.g., senior 

subordinated note, senior note); and (H) such other 

information FINRA deems necessary to properly 

implement the reporting and dissemination of a 

TRACE-Eligible Security, or if any of items (B) 

through (H) has not been determined or a CUSIP 

number (or a similar numeric identifier) is not 

assigned or is not available when notice must be 

given, such other information that FINRA deems 

necessary and is sufficient to identify the security 

accurately. 

24FINRA states that under proposed Rule 

6760(d), there may be some information collected 

under the rule for security classification or other 

purposes that would not be disseminated. This may 

include, for example, information about ratings that 

is restricted by agreement. In addition, CUSIP 

Global Services’ (‘‘CGS’’) information would not be 

disseminated to subscribers that do not have a valid 

license regarding use of CGS data. 

25See Amendment No. 2, at 4. FINRA originally 

proposed to make the corporate bond new issue 

reference data available to any person or 

organization for a fee of $250 per month for internal 

purposes only, and for a fee of $6,000 per month 

where the data are retransmitted or repackaged for 

delivery and dissemination to any outside person 

or organization. See Notice, at 13979. FINRA 

withdrew these proposed fees in Amendment No. 

2. See supra note 3. 

26 In approving this proposed rule change, the 

Commission has considered the proposed rule 

change’s impact on efficiency, competition, and 

capital formation. See 15 U.S.C. 78c(f). Petitioner 

stated that under Section 3(f) of the Act, the 

Commission’s review of FINRA’s proposal must 

include an assessment of overall costs and benefits. 

See Petitioner Statement, at 33. The Commission 

considers costs and benefits when it reviews SRO 

rule filings and has done so with respect to this 

proposal. The Commission addresses comments 

about economic effects of the proposed rule change 

on efficiency, competition, and capital formation, 

including the general costs and benefits of the 

proposal, below in Sections III.A.3; III.B.3, III.C.3; 

III.D.3; III.E.3 and III.F.3. 

27 It is the Commission’s understanding that such 

reference data include issuer and issue identifiers 

and details, such as maturity, coupon, par value, 

payment frequency, amortization details, call 

schedule and convertibility, among other reference 

data, which terms are required for identifying, 

valuing, and settling transactions in newly issued 

corporate bonds. See Recommendation, at 1. 

28See generally infra notes 31–42 and 89–102 

accompanying text. 

data elements, including some already 

specified by the rule, for new issues in 

Corporate Debt Securities as defined in 

FINRA’s rules.22 Proposed Rule 

6760(b)(2) would require that, in 

addition to the information required by 

Rule 6760(b)(1),23 for a new issue in a 

Corporate Debt Security, excluding 

bonds issued by religious organizations 

or for religious purposes, the following 

information must be reported, if 

applicable: (A) The International 

Securities Identification Number (ISIN); 

(B) the currency; (C) the issue date; (D) 

the first settle date; (E) the interest 

accrual date; (F) the day count 

description; (G) the coupon frequency; 

(H) the first coupon payment date; (I) a 

Regulation S indicator; (J) the security 

type; (K) the bond type; (L) the first 

coupon period type; (M) a convertible 

indicator; (N) a call indicator; (O) the 

first call date; (P) a put indicator; (Q) the 

first put date; (R) the minimum 

increment; (S) the minimum piece/ 

denomination; (T) the issuance amount; 

(U) the first call price; (V) the first put 

price; (W) the coupon type; (X) rating 

(TRACE Grade); (Y) a perpetual maturity 

indicator; (Z) a Payment-In-Kind (PIK) 

indicator; (AA) first conversion date; 

(BB) first conversion ratio; (CC) spread; 

(DD) reference rate; (EE) floor; and (FF) 

underlying entity ticker. 

FINRA proposes to require 

underwriters to report all data fields for 

Corporate Debt Securities, as defined in 

FINRA’s rules, prior to the first 

transaction in the security. FINRA 

would disseminate the corporate bond 

new issue reference data collected 

under Rule 6760 upon receipt.24 FINRA 

states that it will submit a separate filing 

to establish fees related to the New Issue 

Reference Data Service at a future date 

and will implement the service after 

those fees are adopted.25

III. Discussion and Commission 

Findings 

The Commission finds that the 

proposed rule change is consistent with 

the requirements of the Act and the 

rules and regulations thereunder 

applicable to a national securities 

association.26 The Commission 

therefore approves the proposed rule 

change, as amended. 

As discussed below, the Commission 

believes that currently there is an 

inefficiency in the collection and 

availability of reference data 27 for 

newly issued corporate bonds and that 

this inefficiency results in an 

information asymmetry in the market 

for newly issued corporate bond 

reference data that can disadvantage 

many market participants. While some 

market participants may have timely 

access to reference data by virtue of 

receiving it directly from underwriters 

or from those that obtain it from 

underwriters, many market participants 

do not. This information asymmetry 

inhibits these market participants from 

transacting in the secondary market for 

newly issued bonds, whether through 

electronic trading venues, over the 

phone or through other methods, at the 

time those bonds begin trading to the 

detriment of those market participants 

and the market for newly issued 

corporate bonds.28 The Commission 

believes it is important to make certain 

reference data available to market 

participants in a timely, accessible, and 

impartial manner, and further believes 

that FINRA’s proposal is reasonably 

designed to address this information 

asymmetry to the benefit of the 

marketplace. 

The Commission believes the 

requirement for underwriters to report 

the reference data fields to FINRA prior 

to the first transaction in the security, 

coupled with FINRA’s dissemination of 

the new issue reference data 

immediately upon receipt, will allow all 

market participants to have timely, basic 

information that is important for the 

identification, valuation, and settlement 

of a newly issued corporate bond in 

order to participate in trading in the 

secondary market without delay, 

whether through electronic trading 

venues, over the phone or through other 

methods. Improved reference data 

transparency should promote market 

efficiency and fair competition and 

enable broader participation by all 

market participants when a new issue 

corporate bond begins trading, which 

should also promote improved 

secondary market liquidity and lower 

costs when secondary trading begins. In 

sum, the Commission believes that 

FINRA’s proposal will ‘‘promote just 

and equitable principles of trade, foster 

cooperation and coordination with 

persons engaged in regulating, clearing, 

settling, processing information with 

respect to, and facilitating transactions 

in’’ newly issued corporate bonds, and 

‘‘remove impediments to and perfect the 

mechanism of a free and open market’’ 

with respect to the market in such 

securities, consistent with Section 

15A(b)(6) of the Act. Furthermore, the 

Commission will monitor the progress 

of the New Issue Reference Data Service 

and its use by market participants and 


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Federal Register / Vol. 86, No. 14 / Monday, January 25, 2021 / Notices 6925 

29Comments on the proposed rule change can be 

found at: https://www.sec.gov/comments/sr-finra2019-008/srfinra2019008.htm. 

30The Commission notes that FINRA’s proposal 

is generally consistent with a unanimous 

recommendation from the SEC Fixed Income 

Market Structure Advisory Committee (‘‘FIMSAC’’) 

made to the Commission on October 29, 2018. See 

Fixed Income Market Structure Advisory 

Committee Recommendation (October 29, 2018) 

available at https://www.sec.gov/spotlight/fixedincome-advisory-committee/fimsac-corporate-bondnew-issue-reference-data-recommendation.pdf 

(‘‘Recommendation’’). The FIMSAC is a federal 

advisory committee formed in November 2017 to 

provide the Commission with diverse perspectives 

on the structure and operations of the U.S. fixed 

income markets, as well as advice and 

recommendations on matters related to fixed 

income market structure. The FIMSAC’s charter is 

available at https://www.sec.gov/spotlight/fixedincome-advisory-committee/fimsac-charter-nov2019.pdf. The membership includes 23 individuals 

representing a range of perspectives on the fixed 

income markets including retail and institutional 

investors, corporate and municipal issuers, trading 

venues, institutional dealers, a retail dealer, a 

regional municipal securities dealer, a proprietary 

trading firm, a data provider, academics, and SROs. 

For a list of FIMSAC members, see https://

www.sec.gov/spotlight/fixed-income-advisorycommittee. 

consider whether further steps are 

necessary, including whether market 

participants should report certain data 

to the Commission. 

The Commission received a number 

of comment letters addressing the 

proposed rule change’s consistency with 

the Act, specifically focusing on (1) 

whether information asymmetry exists 

in the current marketplace for new issue 

reference data; (2) the requirements for 

information reporting and distribution 

under the proposal; (3) FINRA’s role as 

the centralized data source; (4) the 

proposal’s burden on underwriters; (5) 

the proposal’s effect on competition 

among reference data vendors; and (6) 

the lack of information regarding fees 

for the New Issue Reference Data 

Service.29 The Commission addresses 

each of these issues below. 

First, the Commission addresses 

comments regarding the justification for 

the proposal and the proposal’s 

consistency with Section 15A(b)(6) of 

the Act in Sections III.A, III.B and III.C 

below. The Commission believes that 

the record demonstrates three things 

clearly: (1) There is an inefficiency in 

the collection and availability of 

reference data that results in an 

information asymmetry in the corporate 

bond market that can impede secondary 

market trading by many market 

participants to their disadvantage 

because many market participants, 

including investors, intermediaries, 

trading platforms, and data vendors, do 

not have accurate, complete and timely 

access to corporate bond new issue 

reference data on the day a new issue 

begins trading in the secondary market; 

(2) the proposed New Issue Reference 

Data Service is reasonably designed to 

address this information asymmetry by 

providing reference data important for 

the identification, valuation, and 

settlement of newly issued corporate 

bonds to market participants when 

secondary trading begins; and (3) 

FINRA, as an SRO that is subject to 

Commission oversight, is an appropriate 

entity to provide market participants 

with accurate, complete, impartial and 

timely access to such corporate bond 

new issue reference data. As discussed 

further below, providing all market 

participants, including data vendors, on 

an impartial basis with basic 

information concerning a newly issued 

bond that market participants need in 

order to identify and value corporate 

bonds and settle corporate bond 

transactions should promote 

competition among market participants 

and improve the corporate bond 

market’s overall function by enabling a 

broader array of market participants and 

service providers to engage in this 

market on the day a newly issued 

corporate bond begins trading in the 

secondary market. As a result, the 

Commission finds that FINRA’s 

proposal is consistent with Section 

15A(b)(6) of the Act. 

Second, the Commission addresses 

comments that the proposed 

information required to be collected and 

the timing for reporting such 

information under the proposal would 

be burdensome to underwriters in 

Section III.D. As discussed below, the 

Commission finds that such burdens 

imposed on underwriters by the 

proposal, including smaller 

underwriters, would be limited because 

of such underwriters’ existing data 

collection and reporting practices with 

respect to the information FINRA 

proposes to be reported. Furthermore, 

the Commission believes that any 

burdens on underwriters are justified by 

the benefits of the proposal. 

Third, in Section III.E, the 

Commission addresses arguments raised 

that the proposal is inconsistent with 

Section 15A(b)(9) of the Act because it 

would burden competition by, among 

other things, reducing competition 

among reference data vendors and 

decreasing investment and innovation 

in the marketplace, ultimately leading to 

increased costs. The Commission finds 

that the proposal will not impose any 

burden on competition not necessary or 

appropriate in furtherance of the 

purposes of the Act. As explained 

below, the impact on competition is 

uncertain. It is possible that FINRA’s 

proposal will have a positive impact on 

competition among data vendors. 

Additionally, the limited set of data 

proposed to be reported and 

disseminated should not supplant the 

demand for a more comprehensive 

reference database with enhanced data 

sets that contain additional fields that 

are not reported to or disseminated by 

FINRA. As a result, the Commission 

believes any burden on competition 

would both be limited and justified by 

the evidence in the record 

demonstrating an information 

asymmetry that can disadvantage many 

market participants due to the lack of 

timely access to basic information that 

is important for the identification, 

valuation and settlement of newly 

issued corporate bonds at the time a 

bond begins trading in the secondary 

market. 

Finally, in Section III.F the 

Commission addresses arguments raised 

that (1) the Commission could not fully 

assess the proposal’s consistency with 

the Act without knowing either the 

proposed fees for, or the cost to build, 

the New Issue Reference Data Service; 

(2) separating the fee proposal into a 

subsequent filing allows FINRA to avoid 

regulatory and public scrutiny of the 

proposed fees; and (3) the Commission 

erred in failing to find that the proposal 

was consistent with Section 15A(b)(5) of 

the Act. As explained below, the 

Commission disagrees that it cannot 

adequately assess the proposal’s 

consistency with the Act and its 

economic effects without knowing the 

fees that FINRA will charge for the 

proposed reference data service or the 

costs to build such service. 

Furthermore, the proposed fees may be 

properly filed as an immediately 

effective fee filing pursuant to Section 

19 of the Act and the Commission is not 

required to make a finding that the 

proposal is consistent with Section 

15A(b)(5) of the Act. 

A. There is an Information Asymmetry 

That Exists in the Current Marketplace 

for Corporate Bond New Issue Reference 

Data That Can Disadvantage Many 

Market Participants 

1. Comments on the Proposal 

The Commission received several 

comments in support of and in 

opposition to FINRA’s proposal.30

Several commenters stated that 

currently there is no uniform, 

universally available mechanism for 

providing market participants with 

consistent and timely access to 

reference data about corporate bonds on 

the day a newly issued corporate bond 


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31See Recommendation at 2; Letter from Lynn 

Martin, President and COO, ICE Data Services, 

dated April 29, 2019 (‘‘ICE Data Letter’’), at 1–2; 

Letter from Marshall Nicholson and Thomas S. 

Vales, ICE Bonds dated April 29, 2019 (‘‘ICE Bonds 

Letter’’), at 1–2; Letter from John Plansky, Executive 

Vice President and Chief Executive Officer, Charles 

River Development, dated May 24, 2019 (‘‘Charles 

River Letter’’), at 2; and Letter from SEC Fixed 

Income Market Structure Advisory Committee, 

dated June 11, 2019 (‘‘FIMSAC Letter’’), at 1–2. 

32See Harris Letter, at 2. 33See FIMSAC Letter, at 2; ICE Bonds Letter, at 

2 (‘‘Certain electronic trading venues that are not 

registered as ATSs may have access to new issuance 

reference data obtained from affiliated corporate 

entities which process primary market trades prior 

to the dissemination of the reference data.’’). 34See ICE Bonds Letter, at 2. 35See ICE Data Letter, at 2; Letter from Larry 

Harris, Fred V. Keenan Chair in Finance, U.S.C. 

Marshall School of Business, dated May 17, 2019 

(‘‘Harris Letter’’), at 2–3; Charles River Letter, at 2; 

FIMSAC Letter, at 1–2. 36See ICE Data Letter, at 2; ICE Bonds Letter, at 

2; FIMSAC Letter, at 2; Harris Letter, at 2–6; Charles 

River Letter, at 2 (‘‘[T]he proposed data service will 

enhance transparency in a manner that benefits 

both buy-side investors and the financial markets as 

a whole, by facilitating access to new issuance 

reference data for corporate bonds. This is 

especially valuable to the fixed income market, 

which has historically been more opaque than other 

more liquid asset classes.’’). See also Transcript of 

FIMSAC Meeting (October 29, 2018), available at 

https://www.sec.gov/spotlight/fixed-incomeadvisory-committee/fimsac-102918transcript.txt 

(‘‘FIMSAC Transcript’’), Comments from Frederic 

Demesy, Refinitiv, at 0078 (‘‘[A]t the moment, we 

see that there are some market anomalies where 

some of the vendors have access to information 

much earlier than other vendors. And that creates 

basically competitive advantage on certain 

platforms, which is in my view not ideal for having 

a transparent market.’’). 

37See ICE Bonds Letter, at 2. 

38See FIMSAC Letter, at 1–2; ICE Data Latter, at 

2; Harris Letter, at 2–3; Charles River Letter, at 2. 

39See Charles River Letter, at 2. 

40See ICE Bonds Letter, at 2. 

41See ICE Data Letter, at 2. See also Harris Letter, 

at 3(‘‘[R]educing the costs of investment research 

will lead to more informative prices and lower 

liquidity costs as more market participants make 

better-informed decisions about what to buy, sell, 

and hold. . . . The value of the reference data and 

the low costs to the industry of requiring that they 

should be delivered in some machine-readable form 

provide an extraordinary strong foundation for the 

Commission to mandate [reference data collection 

and dissemination].’’); Charles River Letter, at 2 

(‘‘By providing market participants with direct 

access to new issuance reference data, the proposed 

service will reduce overall costs, while permitting 

third party vendors to retransmit and repackage the 

reference data for market participants who may opt 

for this service. The proposed service also will 

increase the efficiency and interoperability of the 

corporate bond market and help promote fair and 

open competition among market participants.’’). See 

also FIMSAC Transcript, supra note 36, Comments 

from Spencer Gallagher, ICE Data Services, at 0069– 

72 (‘‘there is one area that no investment or no level 

of ingenuity can solve and that is equal access to 

new issue reference data at or prior to first trade 

execution’’). 

42See Harris Letter, at 5. 

43See Letter from David R. Burton, Senior Fellow 

in Economic Policy, The Heritage Foundation, 

dated April 29, 2019 (‘‘Heritage Letter’’), at 1–2; 

Letter from Tom Quaadman, Executive Vice 

President, U.S. Chamber of Commerce, dated April 

29, 2019 (‘‘Chamber Letter’’), at 2; Letter from Tyler 

Gellasch, Executive Director, Healthy Markets 

Association, dated April 29, 2019 (‘‘Healthy 

Markets Letter’’), at 4–5; Letter from Greg Babyak, 

Global Head of Regulatory Affairs, Bloomberg, L.P., 

dated April 29, 2019 (‘‘Petitioner Letter’’), at 9–10. 

See also Letter from Tyler Gellasch, Executive 

Director, Healthy Markets Association, dated July 

29, 2019 (‘‘Healthy Markets Letter II’’), at 4–6; Letter 

from Tyler Gellasch, Executive Director, Healthy 

Markets Association, dated October 25, 2019 

(‘‘Healthy Markets Letter III’’); Letter from David R. 

Burton, Senior Fellow in Economic Policy, The 

Heritage Foundation, dated July 29, 2019 (‘‘Heritage 

Letter II’’), at 2; Letter from David R. Burton, Senior 

Fellow in Economic Policy, The Heritage 

Foundation, dated October 23, 2019 (‘‘Heritage 

Letter III’’), at 2; Letter from Tom Quaadman, 

Executive Vice President, U.S. Chamber of 

Commerce, dated July 29, 2019 (‘‘Chamber Letter 

II’’), at 3–4; Letter from Greg Babyak, Global Head 

of Regulatory Affairs, Bloomberg L.P., dated July 1, 

2019 (‘‘Petitioner Letter II’’), at 4–7; Letter from 

Greg Babyak, Global Head of Regulatory Affairs, 

Bloomberg L.P., dated July 29, 2019 (‘‘Petitioner 

Letter III’’), at 5–8; Letter from Greg Babyak, Global 

Head of Regulatory Affairs, Bloomberg L.P., dated 

October 24, 2019 (‘‘Petitioner Letter IV’’), at 4; 

Letter from Greg Babyak, Global Head of Regulatory 

Affairs, Bloomberg L.P., dated November 27, 2019 

(‘‘Petitioner Letter V’’), at 3–4; and Letter from 

David R. Burton, Senior Fellow in Economic Policy, 

The Heritage Foundation, dated March 13, 2020 

(‘‘Heritage Letter IV’’). 

44See Petitioner Letter, at 12–13; Petitioner Letter 

II at 4–6; Petitioner Letter III at 6–7; Petitioner 

Letter V, at 3. See also Petitioner Statement, at 2, 

(‘‘No evidence indicates that current methods of 

consensual information distribution are impeding 

electronic trading.’’). 

45See Petition for Review, at 19. 

46See Petitioner Statement, at 21–22. Petitioner 

also stated that while the proposal asserted barriers 

to entry, it mentioned only one such supposed 

barrier: the investment required to build a system 

to manage bond data. Petitioner argued that the fact 

that building a new business would require 

investment is not a barrier to entry and does not 

make a market uncompetitive. In addition, 

Petitioner stated that FINRA has not offered any 

evidence of the investment required to build such 

a system and how that would dissuade market 

entrants. See id. 

47See id. at 22–23. 

48See id., at 28. Petitioner stated that one 

anonymous person told FINRA it could not get the 

commences trading.31 One commenter 

noted that the current process for 

underwriters to provide data is 

‘‘tedious, prone to transcription errors, 

and must be repeated for every bond in 

which the reference data vendor or the 

end user is interested.’’ 32 Commenters 

also stated that currently underwriters 

and issuers do not provide reference 

data to all market participants at the 

same time.33 One commenter stated that 

new issue corporate bond terms and 

conditions today are often received 

delayed and incomplete.34

Commenters stated that access to 

reference data is necessary for valuing, 

trading and settling corporate bonds.35

As access to this reference data is not 

available to all market participants prior 

to the beginning of trading in a new 

issue, commenters asserted that certain 

market participants, including many 

investors, intermediaries, trading 

platforms, and reference data providers, 

are currently at a competitive 

disadvantage.36 One commenter stated 

that ‘‘[t]he information asymmetry 

which exists today adversely impacts 

the liquidity in the secondary markets 

for the first few hours or days of trading 

when significant trading occurs.’’ 37

Several commenters asserted that a 

centralized data reporting requirement 

for new corporate bond issues would 

increase the efficiency of the corporate 

bond market and reduce trading and 

research costs.38 One commenter stated 

that ‘‘the creation of the data service 

will enhance operational efficiencies for 

buy-side investors by ensuring reliable, 

consistent and timely access to data, 

necessary for the seamless trading and 

settlement of new issue corporate 

bonds’’ and ‘‘the proposed data service 

will help buy-side investors better 

manage their risk,’’ including ‘‘the 

reduced need for manual entries and 

overrides.’’ 39 One commenter stated 

that ‘‘[t]he timely dissemination of 

complete reference data will allow retail 

investors to have more timely access to 

newly issued bonds for purchase and/or 

price discovery, eliminating 

unnecessary information asymmetry.’’ 40

Another commenter noted that a 

‘‘centralized data reporting requirement 

for such issues could benefit the 

industry and investors by enhancing 

market transparency, potentially aiding 

liquidity, reducing trading costs, and 

lowering the cost of capital for 

issuers.’’ 41 One commenter further 

stated that mandated reference data 

collection and dissemination promotes 

capital formation by lowering the costs 

of valuing bonds so that prices more 

accurately reflect all available 

information.42

On the other hand, many commenters 

asserted that FINRA did not provide 

sufficient justification to support the 

need for the creation of the New Issue 

Reference Data Service as required 

under Section 15A(b)(6) of the Act.43 In 

particular, Petitioner argued that FINRA 

provided no evidence that there is a 

market structure problem that requires 

regulatory intervention 44 and that 

FINRA ‘‘failed to demonstrate a market 

failure limiting timely access to accurate 

data. . . .’’ 45 Petitioner also stated that 

FINRA has no basis for its theory that 

the market for data services is 

uncompetitive; 46 that FINRA’s assertion 

that customers for data services are 

dissatisfied is unsupported by 

evidence; 47 and that FINRA has 

provided no evidence that any trader or 

platform cannot get the information it 

demands, or that lack of information is 

impeding trading.48 Petitioner further 


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data it wanted from its current vendor and that 

FINRA has not reported any reason that the person 

could not fulfill its needs with a different, 

competing vendor. See id., at 28, n.19. 

49See Petition for Review, at 22; Petitioner 

Statement, at 24–28. Petitioner presented data 

regarding trading by alternative trading systems 

(‘‘ATSs’’) on pricing day to argue that electronic 

trading platforms can readily access new issue bond 

reference data, and that the market for new issue 

corporate bonds is healthy and already evolving in 

the manner that the FIMSAC desires. For example, 

this commenter provided data (for new issues from 

March 12, 2019 to April 11, 2019) demonstrating 

that ATSs arranged a trade in 43% of the new 

Jumbo-sized issues, 28% of the new Benchmarksized issues, and 11% of medium-sized issues on 

the day the bond was free to trade. See Petitioner 

Letter, at 12–13; Petitioner Statement, at 25, n.15. 

In addition, this commenter presented evidence 

that over the past year, the number of Jumbo-sized 

new issues that traded electronically on the day 

they were priced more than doubled to 30%. See 

Petitioner Letter II, at 4–6; Petitioner Letter III, at 

6; Petitioner Letter IV, at 4–5; Petitioner Statement, 

at 25, n.15. This commenter stated that since FINRA 

proposed its effort to standardize and centralize 

bond-reference data reporting, competition in this 

area has only increased, citing a recent effort by 

various financial institutions to streamline 

communications and data among market 

participants by connecting underwriters and 

investors. See Petitioner Letter IV, at 6. This 

commenter also pointed to an analysis from 

Greenwich Associates that it stated shows overall 

growth in ATS electronic corporate bond trading. 

See Petitioner Statement, at 25. This commenter 

further stated that based on data from February 

2020 compiled by the commenter’s market 

information, in mid-2018 the percentage of first-day 

trades over $250 million that were on ATSs 

increased to 39%, and electronic trading of the 

largest issues has steadily grown from 16% to over 

48%. See Petitioner Statement, at 27. 

50See Petitioner Statement, at 21, 24. 

51Petitioner stated that ‘‘there appears to be 

plenty of time to correct errors before they enter the 

settlement and clearing process’’ and presented 

evidence that over 91% of new issues settle three 

days or more after a new issue is priced and 66% 

settle four days or more after a new issue is priced. 

See Petitioner Letter, at 10–11. 

52See Petitioner Letter, at 9–14; Petitioner Letter 

II, at 4–7; Petitioner Letter III, at 5–8. Petitioner 

stated that market participants currently demand 

more reference data fields than FINRA is proposing 

to collect; thus the proposal will not avoid 

‘‘duplicative efforts’’ and may fragment the market. 

See Petitioner Letter, at 13–14. 

53See Petitioner Statement, at 3, 35. See also 

Heritage Letter V, at 2 (stating that FINRA has not 

conducted ‘‘even the most rudimentary cost-benefit 

analysis.’’). 

54See Heritage Letter V, at 2. 

55See FINRA Statement, at 3. 

56FINRA cited comment letters noting that there 

currently exist issues with the availability, 

completeness, and timeliness of new issue reference 

data; and that the current information asymmetry 

with respect to such data harms liquidity, execution 

quality and competition in the corporate bond 

market. See Letter from Alexander Ellenberg, 

Associate General Counsel, FINRA, dated October 

29, 2019 (‘‘Response Letter’’), at 5 (citing to Harris 

Letter; ICE Bonds Letter; ICE Data Letter; Charles 

River Letter; and FIMSAC Letter). See also supra 

notes 31–42 and accompanying text. 

57See FINRA Statement, at 3. See also Response 

Letter, at 3–4; Notice, at 13980–83. 

58See FINRA Statement, at 5; Response Letter, at 

4–5. See also Recommendation, supra note 30. 

59See FINRA Statement, at 6–7 (citing 

Recommendation, supra note 30). 

60See FINRA Statement, at 7. 

61See FINRA Statement, at 8. 

62Specifically, FINRA pointed to (i) a statement 

by Richard McVey, MarketAxess, that ‘‘there are 

indeed gaps in corporate bond fixed income 

reference data, both in terms of when that data are 

available with different reference data providers, as 

well as sometimes the accuracy;’’ (ii) a statement 

from Spencer Gallagher, ICE Data Services, that 

‘‘there is one area that no investment or no level 

of ingenuity can solve and that is equal access to 

new issue reference data at or prior to first trade 

execution;’’ (iii) statements from Frederic Demesy, 

Refinitiv, that ‘‘at the moment, we see that there are 

some market anomalies where some of the vendors 

have access to information much earlier than other 

vendors,’’ and ‘‘that creates basically competitive 

advantage on certain platforms,’’ and that this 

disparity imposes ‘‘higher costs for our customers;’’ 

and (iv) statements from Alex Sedgwick, T. Rowe 

Price, noting that ‘‘[h]istorically we have noticed 

cases where a new issue does take time to get set 

up on some of our electronic trading platforms, and 

that means that we can’t necessarily go and use 

those electronic trading platforms right away.’’ See 

FINRA Statement, at 8–9; Response Letter, at 5 

(each citing to FIMSAC Transcript). 

stated that ‘‘the bond-trading market is 

already headed in the direction FINRA 

supports—without its intervention’’ and 

that ‘‘data and reporting show a clear 

acceleration in the marketplace toward 

electronic trading of new issues.’’ 49

Petitioner concluded that ‘‘the bond 

markets are healthy and growing 

robustly using existing market-based 

data services’’ and that ‘‘FINRA should 

not be allowed to oust market-based 

providers in favor of a regulatory utility 

without showing a substantial market 

failure.’’ 50

In addition, Petitioner stated that 

FINRA provided no evidence that the 

proposal would provide market 

participants with more complete, 

accurate, and timely data about new 

issues; reduce broken trades and 

errors; 51 or reduce costs or duplicated 

efforts.52 Petitioner stated that FINRA 

suggests a number of hypothetical 

benefits that might flow from the 

proposal, such as more accurate data, 

but that such benefits ‘‘are entirely 

speculative.’’ 53 Another commenter 

stated that ‘‘[b]efore intervening in the 

existing market for information and 

granting itself a potentially lucrative 

monopoly on providing this information 

to market participants, FINRA should be 

required to factually demonstrate that 

. . . [the] benefits [of the proposal] are 

so substantial and clear to overcome the 

strong presumption that private actors 

in competitive markets are the best 

means of providing goods and 

services.’’ 54

2. FINRA Response to Comments 

In its response to the petitioner, 

FINRA stated that its proposal is 

‘‘designed to address a particular 

problem in today’s market—namely, 

that a number of market participants are 

not reasonably able to gain access to 

timely, comprehensive, and accurate 

corporate bond new issue reference data 

when the bonds begin trading.’’ 55

FINRA stated that the record provides 

sufficient support for its proposal, and 

that this problem is identified by the 

Fixed Income Market Structure 

Advisory Committee (‘‘FIMSAC’’), by 

FINRA’s own independent outreach to a 

diverse set of market participants, by 

comments submitted in support of the 

proposal,56 and in FINRA’s data 

analysis.57

FINRA stated that the robust public 

record supporting the proposal begins 

with the unanimous FIMSAC 

Recommendation.58 FINRA stated that 

FIMSAC’s Technology and Electronic 

Trading Subcommittee 

(‘‘Subcommittee’’), which represents a 

cross-section of market participants, 

recognized that disparities exist among 

reference data vendors’ access to new 

issue reference data depending on 

several factors, including the vendors’ 

relationship with underwriters; that 

private data vendors are not obligated to 

provide impartial access to key new 

issue reference data; and that the 

resulting confusion increases 

transaction costs and impedes 

competition in the corporate bond 

markets.59 FINRA stated that to address 

these concerns, the Subcommittee 

recommended the establishment of a 

consolidated new issue reference data 

service that is made available to all 

subscribers in a timely fashion and 

recommended that FINRA operate the 

service and provide subscribers with 

impartial and commercially reasonable 

access, subject to applicable SRO 

regulation.60 FINRA stated that the 

Subcommittee received strong support 

for the Recommendation when it was 

presented for consideration by the full 

FIMSAC and from panelists who 

supported the Recommendation.61

FINRA pointed to statements by 

members of the FIMSAC and panelists 

at the FIMSAC meeting, including two 

data providers and an investment 

management firm, to refute the assertion 

that a well-functioning, competitive 

market currently exists for corporate 

new issue reference data, as suggested 

by some commenters, and to provide 

support that market participants bear 

the costs of the current information 

disparity.62 FINRA noted that the 

FIMSAC also subsequently reaffirmed 

the Recommendation in the FIMSAC 

Letter. 

In addition, FINRA stated that it 

performed its ‘‘own independent 

outreach to eleven market participants— 


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63See FINRA Statement, at 11; Response Letter, 

at 4; Notice, at 13980–81. FINRA stated that new 

issue reference data are generated by underwriters, 

aggregated by data providers, and then sold to 

various market participants for consumption, 

including trading and clearing firms, electronic 

trading platforms, broker-dealers and bond 

investors. FINRA stated that it conducted outreach 

to understand this dissemination process, direct 

and indirect costs imposed by the process and ways 

it might be improved. See Notice, at 13980. 

64See Response Letter, at 4. 

65See FINRA Statement, at 11; Response Letter, 

at 4; Notice, at 13981. 

66See FINRA Statement, at 11. 

67See FINRA Statement, at 11; Response Letter, 

at 4; Notice, at 13980, n.17. 

68See FINRA Statement, at 11–12; Notice, at 

13981. 

69See Response Letter, at 4; Notice, at 13980. 

70See FINRA Statement, at 21–22. 

71See FINRA Statement, at 22 (emphasis in 

original). 

72See FINRA Statement, at 22. 

73See Response Letter, at 6–7. 

74See id. 

75See id. See also FINRA Statement, at 22. FINRA 

found that for the first day of trading in corporate 

bond new issues, an ATS traded at most 3% of the 

11,518 newly issued bonds, and that over the 

subsequent 10 days after issuance, ATSs 

represented an increasing percentage of trading. Id. 

76See Petitioner Letter V, at 1–2; Petitioner 

Statement, at 25–26. 

77See FINRA Statement, at 22, 30. FINRA stated 

that while it recognizes the limitations of 

quantitative analysis given that TRACE data cannot 

currently identify trades on electronic trading 

platforms other than ATSs, such as trades 

facilitated by Petitioner, it continues to believe that, 

because ATSs represent one of the types of market 

participants that provided statements for the record 

of their difficulty receiving timely reference data 

access, this ATS analysis helps validate such 

qualitative evidence. See FINRA Statement, at 23. 

78See supra notes 53–54 and accompanying text. 

79See Response Letter, at 10. See also Notice, at 

13981–83 (providing FINRA’s Economic Impact 

Assessment). However, Petitioner stated that 

‘‘[d]eciding to excise the fee analysis, in the face of 

overwhelming negative commentary, belies 

FINRA’s claim to have provided a ‘detailed analysis 

of the Proposal’s anticipated costs and benefits.’ ’’ 

See Petitioner Letter V, at 4. See also Section III.F., 

infra. 

80See Notice, at 13981–83. 

81See Notice, at 13981. To support this statement, 

FINRA cited to various studies finding that TRACE 

implementation has demonstrated that transparency 

has facilitated trading and improved market quality. 

See FINRA’s website for a list of TRACE 

Independent Academic Studies, available at http:// 

www.finra.org/industry/trace/trace-independentacademic-studies. See id. at n.20. 

four data providers, three underwriters, 

two trading platforms, and two clearing 

firms—and heard the same problems as 

identified by the FIMSAC.’’ 63 Based on 

this outreach, FINRA determined that 

‘‘there is not currently consistent 

collection of new issue reference data 

according to established data standards, 

nor is there uniform distribution of the 

data to market participants in a timely 

manner.’’ 64 FINRA stated that its 

outreach indicated that data vendors 

receive new issue reference data 

through different channels at different 

times, and that as a result, market 

participants experience problems with 

trading and settling new issues of 

corporate bonds.65 For example, FINRA 

stated that if a trading platform does not 

have essential information about a new 

issue, it cannot identify the bond and 

set it up on its platform to trade.66

FINRA noted the experience of one 

trading platform that stated it could not 

facilitate trades in new issues on their 

first day of trading because the 

platform’s reference data provider 

would only provide reference data 

relating to new issues the morning after 

issuance.67 In addition, FINRA stated 

that if trading platforms, trading firms, 

or investors receive inconsistent 

reference data, there is an increased 

likelihood of broken trades and reduced 

efficiency reconciling data for purposes 

of trading, clearance, and settlement.68

FINRA found from its outreach that 

inaccurate reference data create 

inconsistencies in trading and 

settlement and increase transaction 

costs for trading platforms, clearing 

firms, and electronic trading 

platforms.69

In response to comments that the 

need for the proposal is negated by data 

on the growth of electronic bond 

trading, FINRA argued that such data do 

not mitigate the concerns that the 

proposal is designed to address— 

namely, the lack of broadly available 

and accessible new issue reference data 

on the first day of secondary market 

trading.70 FINRA stated that ‘‘electronic 

trading platforms may receive data and 

begin trading late, while still 

contributing to cumulative growth’’ and 

that ‘‘data on the overall growth of 

electronic trading says nothing about 

whether the rate of growth is impacted 

or inhibited by the costs of limited 

access to reference data on the first day 

of trading.’’ 71 FINRA argued that the 

growth of electronic trading in corporate 

bonds actually makes impartial access 

to these data even more important.72

In response to comments on the 

proposal, FINRA provided an analysis 

of corporate bond transactional data 

reported to FINRA’s Trade Reporting 

and Compliance Engine (‘‘TRACE’’), 

which FINRA stated is consistent with 

the problematic market conditions 

described by FIMSAC participants and 

commenters, and provides additional 

support for the proposal.73 Specifically, 

FINRA examined the time lapse 

between the first secondary market trade 

reported to TRACE and the first trade 

reported by ATSs for newly issued 

corporate bonds in 2018.74 FINRA 

found some ATSs experienced 

persistent lags between the first reported 

trades and first reported ATS trades, 

which FINRA stated suggested that 

some ATSs may not be receiving 

reference data in a timely fashion to 

allow them to set up new issues to begin 

trading on their platforms.75 In 

response, however, Petitioner stated that 

FINRA’s analysis is flawed in that the 

data (i) do not show that untimely 

reference data is the cause of differences 

in the timing of trading on different 

platforms; (ii) include all new issue 

bonds, rather than limiting the scope to 

large issues that are more likely to trade 

electronically; and (iii) ignore more 

current data that show movement 

toward electronic trading is accelerating 

rapidly in 2019.76 In response to this 

commenter’s objections, FINRA 

provided additional data from 2019, 

which it stated also demonstrate that 

some ATSs experienced persistent time 

lags before they began trading newly 

issued corporate bonds.77

In response to comments that FINRA 

did not provide an estimate of costs and 

benefits,78 FINRA stated in its Response 

Letter that it provided a detailed 

analysis of the proposal’s anticipated 

costs and benefits in its proposal.79

FINRA stated that it included an 

‘‘Economic Impact Assessment’’ in its 

proposal, which, among other things, 

described the current dissemination 

process of new issue reference data in 

the corporate bond market, benefits of 

the proposal, costs and negative impacts 

of the proposal, the anticipated effect of 

the proposal on competition among 

market participants and efficiency in the 

market, and alternative approaches 

considered by FINRA.80

In its proposal, FINRA stated that it 

expects that the New Issue Reference 

Data Service will increase the 

transparency of the corporate bond 

market, especially around the issuance 

period, and that such increased 

transparency will benefit the market, 

including investors, trading platforms, 

clearing firms, data providers, issuers, 

and underwriters, in a number of 

ways.81 Specifically, FINRA stated that 

such transparency would provide 

benefits by: (i) Providing potential 

buyers with the opportunity to evaluate 

the bonds for investment, especially 

right after issuance, which would likely 

increase investment choices; (ii) 

allowing index operators the 

opportunity to evaluate new bonds for 

timely inclusion, which would help 

ensure that the index accurately 

represents the concurrent bond market 

condition; (iii) reducing broken trades 


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82See Notice, at 13981. 

83See Notice, at 13982. 

84See id. See also Section III.D, infra. 

85See Notice, at 13982; FINRA Statement, at 18. 

86See Notice, at 13982. 

87See Notice, at 13982. See also Section III.C, 

infra. For example, there are many other data 

provided by reference data providers concerning a 

bond issue, such as issuer information (e.g., 

fundamentals data, capital structure data), specific 

bond rating, bond trade and selling restrictions, 

classification data (industry, legal entity, etc.), 

corporate action data, ESG (Environmental, Social 

& Governance) data, dividend data, instrument 

analytics data, and security ownership data. See 

e.g., IHS Markit Reference Data Bonds Factsheet, 

available at https://cdn.ihs.com/www/pdf/ 

Reference-Data-Bonds-factsheet.pdf; Bloomberg 

Reference Data Content and Data, available at 

https://www.bloomberg.com/professional/product/ 

reference-data/. 

88See generally supra notes 31–42 and 

accompanying text. 

89See Notice, at 13980–13981 (describing in 

FINRA’s Economic Impact Statement the current 

process for the collection and distribution of 

corporate bond reference data). The Commission 

notes that the process FINRA described in its Notice 

is consistent with the comments provided by 

reference data providers at the October 29, 2018 

FIMSAC meeting. See also FIMSAC Transcript, 

supra note 36, Comments from Spencer Gallagher, 

ICE Data Services, at 0069–72 (‘‘there is one area 

that no investment or no level of ingenuity can 

solve and that is equal access to new issue reference 

data at or prior to first trade execution’’). See 

generally FIMSAC Transcript, supra note 36 

(highlighting a detailed discussion among data 

vendors of the challenges with collecting and 

distributing reference data). 

90See FIMSAC Transcript, supra note 36, 

Comments from Bob LoBue, J.P. Morgan, at 0080– 

81 (‘‘We tend to not disseminate data to third party 

vendors off the corporate platform. I think the point 

of inaccuracies is the reason for that. So, we tend 

to use Bloomberg as our let’s ensure it is accurate, 

and then people can source that information from 

that venue.’’). Even if underwriters were to provide 

access to every market participant that sought to 

gain access to such information prior to the 

beginning of secondary market trading, that process 

would be inefficient as the underwriters would 

expend substantial effort providing such data to 

multiple parties and the recipients would likewise 

expend substantial effort to receive and ultimately 

utilize data from multiple parties. 

91 In the corporate bond market today, the 

Commission understands from market participants 

that Petitioner typically has the timeliest access to 

newly issued bond reference data on the first day 

a bond trades, as it enjoys the voluntary cooperation 

of underwriters. See FIMSAC Transcript, supra note 

36, Comments from Bob LoBue, J.P. Morgan, at 

0080–81 (‘‘And I think the Refinitiv team and the 

ICE team intimating a competitive advantage for 

Bloomberg, there is no question that we do 

undertake getting our securities set up on the 

Bloomberg trading platform because that is what the 

industry predominately uses to book our tickets.’’). 

See also FINRA Statement, at 3 (noting that 

Petitioner is the dominant private data vendor in 

today’s market for corporate bond new issue 

reference data and ‘‘often gains access to new issue 

reference data before other vendors and market 

participants.’’). In his declaration, David Miao, the 

Global Head of Fixed Income Data at Bloomberg, 

L.P., states that he is ‘‘not aware of any legal or 

structural barrier that prevents other vendors and 

market participants from accessing new issue 

reference data’’ and that ‘‘nothing prevents other 

vendors and market participants from accessing 

corporate bond new issue reference data in the 

same voluntary manner in which Bloomberg 

acquires it.’’ Based on the information available to 

the Commission, the Commission disagrees. The 

statements of one of the largest underwriters of 

corporate bonds in the United States are 

particularly informative: Mr. Lobue stated at the 

October 29, 2018 FIMSAC meeting that J.P. Morgan 

provides corporate bond reference data to Petitioner 

and does not provide it to other data vendors. See 

See FIMSAC Transcript, supra note 36, Comments 

from Bob LoBue, J.P. Morgan, at 0080–81. 92See e.g., supra notes 32–37; FIMSAC 

Transcript, supra note 36, Comments from Spencer 

Gallagher, ICE Data Services, at 0069–72 

(‘‘Distribution [of new issue reference data] is not 

consistent in both completeness of the content or 

timeliness of the delivery. . . . All said, none of 

the avenues [for securing new issue reference data], 

underwriter emails, new issue publishing 

announcement or issuer websites provide a 

comprehensive coverage in a timely manner. We 

piece all of this together as available to us. On the 

few cases where we see no information, we will see 

the data on Edgar, usually via prospectus. But that 

is well after the pricing event and clearly not 

sufficient for pre-trade and trade workflows.’’). 

and errors in trading due to inconsistent 

information; (iv) increasing trading 

speed by removing delays due to 

manually correcting reference data 

errors; (v) potentially increasing trading 

volumes that might otherwise be lost 

when traders do not have reference data 

on newly issued bonds, thereby 

increasing liquidity and lowering the 

cost of capital for issuers; (vi) providing 

data providers with a complete and 

accurate source of data and reducing the 

need for data providers to manually 

collect missing data or correct errors in 

the new issue reference data; (vii) 

increasing awareness of new issuances, 

which may help underwriters in 

marketing and underwriting; and (viii) 

reducing the need for underwriters to 

manually research other reference data 

sources for proper procurement of 

information.82

On the other hand, FINRA stated in 

its proposal that the New Issue 

Reference Data Service may impose 

costs on underwriters to report the 

additional reference data to FINRA 

through system upgrades or use of thirdparty vendors to report, and recognized 

that smaller underwriters may be 

burdened disproportionally.83 However, 

FINRA also stated that (i) it understands 

that underwriters do not anticipate 

incurring significant costs for reporting 

under the proposal and (ii) any 

additional burden on smaller 

underwriters may be alleviated because 

reporting to FINRA would reduce the 

need for underwriters to report to other 

parties and/or underwriters can leverage 

investments already made in the 

existing reporting system necessary 

under FINRA Rule 6760.84 In addition, 

FINRA noted that subscribers to 

FINRA’s New Issue Reference Data 

Service will incur a subscription fee and 

setup cost, and FINRA stated that it 

intends to price the service as a utility 

provider using a cost-based approach.85

Finally, FINRA stated that a centralized 

source of new issue reference data may 

create a single point of failure if data 

providers stop collecting data on their 

own and solely rely on FINRA’s data 

service.86 However, FINRA stated that it 

believes this is unlikely to happen 

because data providers will likely 

continue to collect a range of bond 

reference data beyond the limited fields 

provided by FINRA’s service.87

3. Commission Discussion and Findings 

The Commission understands that 

currently there is an inefficiency in the 

collection of reference data for newly 

issued corporate bonds and that this 

inefficiency results in an information 

asymmetry in the market for newly 

issued corporate bond reference data. 

This information asymmetry exists 

because some market participants have 

access to reference data necessary for 

identifying, valuing and settling newly 

issued corporate bonds at the time such 

bonds begin trading in the secondary 

market, while many other market 

participants lack that information at the 

time secondary trading begins. This 

information asymmetry inhibits many 

market participants from transacting in 

the secondary market for newly issued 

bonds at the time those bonds begin 

trading which can disadvantage those 

market participants.88

The collection of reference data by 

market participants currently is 

inefficient and the challenges associated 

with collecting this data and making it 

available broadly to market participants 

in time to trade in the secondary market 

are significant.89 While some market 

participants may have timely access to 

reference data directly from 

underwriters or from those that obtain it 

from underwriters, many market 

participants do not. Underwriters may 

be unwilling to distribute reference data 

to all market participants that desire it 

out of concern that distributing the data 

to multiple market participants 

increases the risk of inaccuracies.90

Market participants who do not have 

access to reference data from a vendor 

that has timely access to such data from 

underwriters or do not otherwise have 

the necessary relationships with 

underwriters 91 must expend substantial 

time and effort gathering information 

from multiple sources.92 For those that 

lack this access, the process of 

collecting data from multiple sources is 

time consuming, requires substantial 

effort in order to assure the 

completeness and accuracy of the 

information, and often results in 

participants having unequal access to 


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93See id. See also FIMSAC Transcript, supra note 

36, Comments from Spencer Gallagher, ICE Data 

Services, at 0069–72 (‘‘there is one area that no 

investment or no level of ingenuity can solve and 

that is equal access to new issue reference data at 

or prior to first trade execution’’); Comments from 

Spencer Gallagher, ICE Data Services, at 0069–72; 

Comments from Rick McVey, MarketAxess, at 0066 

(‘‘there is significant manual effort today in getting 

new issue information into various databases. And 

that is prone to error. Reference data errors lead 

directly to trading errors.’’). 

94See generally supra notes 31–42 and 

accompanying text for a discussion of commenter 

concerns about information asymmetry in the 

corporate bond market today that can disadvantage 

many market participants. 

95Petitioner stated that there is currently a trend 

in the marketplace toward electronic trading of new 

issues and therefore concluded that the bond 

markets are healthy and growing robustly using 

existing market-based data services and the 

proposal is unnecessary. See supra notes 49–50. 

Petitioner presented data concerning ATS trading in 

new issues purporting to suggest that there is no 

current access problem relating to new issue bond 

reference data. See supra note 49. In response, 

FINRA also presented TRACE data concerning 

ATSs and conducted its own analysis, which 

FINRA stated suggests that some ATSs may not be 

receiving reference data in a timely fashion to allow 

them to begin trading a newly issued corporate 

bond. See supra notes 73–75 and 77 and 

accompanying text. Petitioner disputed FINRA’s 

analysis as flawed. See supra note 76. The 

Commission believes that the analyses of electronic 

trading in corporate new issues by ATSs provided 

by Petitioner and FINRA are necessarily limited, as 

there are a number of electronic bond trading 

platforms that are not regulated as ATSs and there 

are a number of other types of market participants, 

including investors, intermediaries and data 

vendors that may not have timely access to newly 

issued bond reference data to identify, value and 

settle bonds on the first day of trading in the 

secondary market. Therefore, these analyses, which 

focus on ATS trading in new issues, are not 

reflective of the market for newly issued corporate 

bonds as a whole. 

96See ICE Data Letter, at 2; ICE Bonds Letter, at 

2; FIMSAC Letter, at 2. 

97See ICE Bonds Letter, at 2 (‘‘The timely 

dissemination of complete reference data will allow 

retail investors to have more timely access to newly 

issued bonds for purchase and/or price discovery, 

eliminating unnecessary information asymmetry.’’); 

Notice, at 13981 (discussing in FINRA’s Economic 

Impact Assessment a variety of reasons why market 

participants that lack timely reference data today 

are at a competitive disadvantage to those market 

participants that do have timely access to reference 

data). 

98See ICE Bonds Letter, at 2. 

99See e.g., ICE Bonds Letter at 2; FIMSAC Letter 

at 2; FINRA Notice at 13980; FIMSAC Transcript, 

supra note 36, Comments from Rick McVey, 

MarketAxess, at 0065 (recognizing that not all 

trading venues have timely access to reference data 

which results in some venues being able to trade 

the bonds when they begin trading in the secondary 

market while others cannot). 

100See ICE Data Letter, at 2 (‘‘a centralized data 

reporting requirement for such issues could benefit 

the industry and investors by enhancing market 

transparency, potentially aiding liquidity, reducing 

trading costs, and lowering the cost of capital for 

issuers’’); FIMSAC Letter, at 2. See also FIMSAC 

Transcript, supra note 36, Comments from Alex 

Sedgwick, T. Rowe Price, at 0084–85 (‘‘Electronic 

market-makers ultimately need this information to 

provide accurate pricing and accurate valuation for 

the prices that they are pushing out to the market. 

If this information is not available, that ultimately 

means that there are liquidity providers that may 

not be able to provide liquidity to us when those 

new issues are free to trade.’’). 

101See Goldstein, M.A., Hotchkiss, E.S., and 

Pedersen, D.J., 2019. Secondary market liquidity 

and primary market pricing of corporate bonds. 

Journal of Risk and Financial Management 12, 1– 

17. 

102See Recommendation at 2. See also FIMSAC 

Transcript, supra note 36, Comments from Alex 

Sedgwick, T. Rowe Price, at 0084–85 (So, when 

. . . we are trading on the desk, we need to be able 

to measure our execution against benchmarks. If it 

takes more than a couple of hours or even more 

than a day for those benchmarks to become 

available, that is an area where we may not be able 

to do accurate trade cost analysis. And that is a very 

important sort of supporting piece of information as 

we think about best execution on the trading 

desk.’’); Comments from Frederic Demesy, Refinitiv, 

at 0078 (‘‘[A]t the moment, we see that there are 

some market anomalies where some of the vendors 

have access to information much earlier than other 

vendors. And that creates basically competitive 

advantage on certain platforms, which is in my 

view not ideal for having a transparent market. It 

also incurs higher costs for our customers. The first 

one would be on vendors. Market participants will 

have to source the data from multiple vendors to 

ensure that all the information is available, so [there 

are] duplicating costs. There is also an operational 

cost related in terms of data quality. So, when you 

onboard multiple feeds, ICE Data Service and 

Refinitiv data is not automatically in the same 

format. So, the customer has to develop operational 

efficiency tools to standardize the data on their 

platform. And third is when the market participant 

gets things wrong, it can have a huge impact, 

missing trade opportunities but also reputational 

risks that would be the worst.’’). 

103FINRA’s proposal was informed by FINRA’s 

outreach to a diverse set of market participants— 

including several data providers, underwriters and 

trading platforms—and responses from these market 

participants ‘‘demonstrated a regulatory need for 

consistent, uniform, and timely corporate bond new 

issue reference data.’’ See supra notes 63–69 and 

accompanying text. See also Response Letter, at 4; 

Notice, at 13980–81. The concerns of market 

participants, including data vendors, trading 

venues, and investors, regarding the lack of timely 

reference data are described in detail above. Based 

on this outreach, FINRA observed that various 

market segments may be lacking accurate, complete 

and timely reference data, including electronic 

trading platforms and smaller market participants 

that may not afford multiple data vendor 

subscriptions. See Response Letter, at 4. See also 

Notice, at 13980. 

104See e.g. Notice, at 13980, n.17 (‘‘According to 

one trading platform, its reference data provider 

would only provide data relating to new issues the 

morning after issuance, which resulted in the firm’s 

clients not being able to trade the bond when it 

began to trade.’’). Petitioner argued that nothing 

prevented this platform from fulfilling its needs 

with a different, competing vendor. See Petitioner 

Statement, at 28, n.19. However, as further 

discussed herein, in the present market different 

vendors may have access to different reference data 

relating to new issues as there is no requirement 

that underwriters or issuers provide the same 

reference data on the first day a bond 

trades in the secondary market, 

ultimately resulting in an unnecessary 

market inefficiency.93

The Commission believes that the 

information asymmetry and resulting 

market inefficiency that exists can 

disadvantage many market participants 

because it hinders timely market-wide 

participation in the secondary market 

when a newly issued bond begins to 

trade, potentially negatively impacting 

secondary market liquidity. Comments 

received from investors, trading 

platforms, and data vendors support this 

finding. Commenters stated that the 

inability to participate in the secondary 

market raised a number of concerns.94

First, market participants that are 

unable to trade newly issued bonds due 

to a lack of information, whether they be 

intermediaries, investors or trading 

platforms,95 are at a competitive 

disadvantage to other market 

participants that have the information 

and ability to trade newly issued bonds 

on the first day of secondary trading 

when significant trading occurs.96 These 

market participants have fewer 

investment options to meet their own 

business and investment needs or those 

of their customers relative to market 

participants that have access to 

reference data when a newly issued 

bond begins trading.97 For example, as 

stated by one commenter, many ‘‘retail 

investors and the broker dealers 

servicing them are disadvantaged by not 

being able to participate in the 

secondary markets during the critical 

time after a security is available to 

trade.’’ 98 Additionally, to the extent 

some electronic trading platforms do not 

have the information necessary to 

identify, value and settle newly issued 

corporate bonds when such bonds begin 

trading in the secondary market, these 

platforms may be at a competitive 

disadvantage to those that do have such 

information.99 Second, reduced 

participation in the secondary market 

due to this information asymmetry can 

adversely impact secondary market 

liquidity for newly issued bonds on the 

first day a bond trades and ultimately 

raise the cost of capital for issuers.100 It 

has been shown that corporate issuers 

pay more to issue bonds (i.e., bond 

offering yields are higher) when the 

expected liquidity in the secondary 

market is lower for those corporate 

bonds.101 Third, information asymmetry 

with respect to new issue reference data 

increases transaction and opportunity 

costs, which may be passed on to 

customers.102 The Commission also 

believes that the results of FINRA’s 

outreach 103 are consistent with the 

range of comments and statements 

concerning the lack of timely reference 

data and the resultant impact on many 

market participants’ ability to 

participate in the market on the first day 

a new issue trades in the secondary 

market, and the potentially negative 

impacts on liquidity that result.104


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information to all reference data providers or 

provide it at the same time. See supra notes 88–93 

and accompanying text. 

105See Credit Roundtable Letter, at 1; ICE Data 

Letter, at 2–3; SIFMA Letter, at 3; FIMSAC Letter, 

at 14; Letter from Christopher B. Killian, Managing 

Director, SIFMA, dated July 29, 2019 (‘‘SIFMA 

Letter II’’), at 2; Letter from Christopher B. Killian, 

Managing Director, SIFMA, dated October 24, 2019 

(‘‘SIFMA Letter III’’), at 2–3. 

106See Healthy Markets Letter, at 4, 6; Healthy 

Markets Letter III, at 2. 

107See Harris Letter, at 2, 66 (‘‘The fields on the 

FINRA list are sufficient to value most bonds. . . . 

I believe that FINRA chose the fields wisely.’’). 

108See FIMSAC Letter, at 7–8, 10, 12–13. 

FIMSAC proposed combining the Maturity and 

Perpetual Maturity indicators into one existing field 

(Maturity Date) and the 144A Eligible and 

Regulation S indicators into one new field (Series). 

In addition, FIMSAC recommended requiring the 

following additional data fields: First Conversion 

Date; First Conversion Ratio; Spread; Reference 

Rate; Floor; and Underlying. The FIMSAC also 

provided supporting rationale for the data fields 

included in the proposal and the suggested 

additional data fields. See FIMSAC Letter at 2–3 

and Schedule A. 

109See Petitioner Letter I, at 17; Petitioner Letter, 

III, at 11. 

110See id. 

111See Petitioner Letter I, at 18. 

112See Letter from Christopher B. Killian, 

Managing Director, SIFMA, dated April 29, 2019 

(‘‘SIFMA Letter’’), at 1–2. See also Letter from Cathy 

Scott, Director, Fixed Income Forum, on behalf of 

The Credit Roundtable, dated April 29, 2019 

(‘‘Credit Roundtable Letter’’), at 1 (cautioning that 

any data provision requirements on underwriters 

should not impede their ability to make markets in 

the new issue as soon as possible). 

113See Charles River Letter, at 2. See also Healthy 

Markets Letter, at 4 (‘‘[W]e do not disagree with 

FINRA’s determination to require uniform pre-first 

trade reporting.’’). 

114Two commenters requested that FINRA clarify 

the meaning of the ‘‘prior to the first transaction’’ 

deadline for reporting reference data to FINRA. See 

ICE Data Letter, at 2; ICE Bonds Letter, at 2. One 

commenter requested FINRA clarify the process for 

underwriters to correct erroneously reported 

reference data. See Letter from Salman Banaei, 

Executive Director, IHS Markit, dated April 29, 

2019 (‘‘IHS Markit Letter’’), at 2–3. Two 

commenters made technical suggestions regarding 

the methods for supplying and redistributing the 

required data. See SIFMA Letter, at 2; ICE Data 

Letter, at 3; SIFMA Letter III, at 2. 

115See Amendment No. 2, at 5 and Exhibit 3. See 

also Response Letter, at 12–13. 

116See Amendment No. 2, at 5 and Exhibit 3; 

Response Letter, at 13. FINRA stated that it also 

agrees with FIMSAC’s recommendation to combine 

the Maturity and Perpetual Maturity indicators into 

one existing field (Maturity Date) and marked the 

amended Exhibit 3 to reflect that the maturity and 

perpetual maturity indicator fields will be tied 

together as combined fields for purposes of 

reporting the information. See Amendment No. 2, 

at 5, n.9, and Exhibit 3; Response Letter, at 13, n.41. 

With respect to FIMSAC’s recommendation to 

combine the 144A Eligible and Regulation S 

indicator fields into a single ‘‘Series’’ field, FINRA 

stated that it believes it will be easier operationally 

to maintain the separate fields to limit potential 

confusion about other security offering types or 

issuances that may meet more than one offering 

type. See id. 

117See Response Letter, at 13. 

118See Amendment No. 2, at 5 and Exhibit 3; 

Response Letter, at 12–13. In particular, FINRA 

stated that it (i) provided additional guidance to 

clarify that the ratings data field does not require 

reporting specific ratings, but rather whether the 

security is Investment Grade or Non-Investment 

Grade, as those terms are defined in Rule 6710; and 

(ii) clarified the information to be reported for the 

security type, first coupon period type, minimum 

increment, and minimum piece/denomination data 

fields. See Amendment No. 2, at 5, n.10, and 

Exhibit 3; Response Letter, at 12–13, n.39. 

119See Response Letter, at 14. FINRA stated that 

‘‘[b]ased on conversations with underwriters, 

FINRA understands that underwriters do not 

anticipate incurring significant costs for reporting 

under this proposal.’’ See Notice, at 13982. 

120See Response Letter, at 14 (citing to ICE Bonds 

Letter, at 2; and ICE Data Letter). In response to 

comments requesting clarification on what the term 

‘‘first transaction’’ means, FINRA stated that ‘‘it 

means the time of execution of the first transaction 

of the offering (i.e., the time of execution for the 

first reported primary transaction in the security), 

as specified currently in Rule 6760.’’ See Response 

Letter, at 14. FINRA stated that it believes this 

position is consistent with the recommendation 

from ICE Data to provide clarification for the term 

Continued 

In sum, the record reflects that an 

information asymmetry that can 

disadvantage many market participants 

currently exists in the market for newly 

issued corporate bond reference data. In 

the Commission’s view, FINRA’s 

proposal, as discussed further below, is 

reasonably designed to address this 

information asymmetry in the current 

market to the benefit of the marketplace. 

B. The Proposal Is Reasonably Designed 

To Address Existing Information 

Asymmetry That can Disadvantage 

Many Market Participants by Providing 

Reference Data Important for the 

Identification, Valuation, and 

Settlement of Newly Issued Corporate 

Bonds When Secondary Trading Begins 

1. Comments on the Proposal 

The Commission received several 

comments relating to the proposed data 

fields required to be reported and the 

timing for submission of such data 

fields. Several commenters requested 

that FINRA make modifications to and/ 

or provide further clarity regarding 

certain data fields.105 One commenter 

stated that, while it did not disagree 

with or question the value of FINRA’s 

proposed data fields, FINRA should 

provide information to support its 

selections of each of the proposed data 

fields.106 One commenter stated that the 

proposal would not require the 

disclosure of any data that is not already 

disclosed in required security 

registration statements and other 

required filings.107 In its comment letter 

the FIMSAC recommended that FINRA 

combine certain proposed data fields 

and include six additional data 

fields.108 Petitioner stated that FINRA’s 

proposal to require underwriters to 

report both CUSIPs and ISINs would 

further entrench the monopoly enjoyed 

by CUSIP and ISIN, and would embed 

ISIN into the FINRA rulebook for the 

first time.109 Petitioner further stated 

that FINRA does not address the market 

consequences or additional costs to 

underwriters or end users that would 

result from mandating further usage of 

CUSIPs and ISINs.110 Petitioner 

recommended that FINRA consider 

allowing the use of free, open-source 

alternative security identifiers, such as 

the Financial Instrument Global 

Identifier (‘‘FIGI’’), in addition to or in 

the place of CUSIP and ISIN.111

One commenter stated that it could be 

challenging for underwriters to provide 

all of the data elements prior to the first 

trade and requested that the proposal be 

modified so that underwriters would 

only be required to report certain 

information prior to the first trade, with 

the remaining information required to 

be reported within 60 minutes of the 

first trade.112 On the other hand, one 

commenter stated that phased reporting 

of data elements causes material 

inefficiencies in the intake and 

consumption of data and that 

eliminating phased reporting will lead 

to more complete and consistent 

reference data.113

Commenters also requested various 

other clarifications to the proposal.114

2. FINRA Response to Comments 

In response to the FIMSAC Letter, 

FINRA incorporated the FIMSAC’s 

additional supporting rationale for the 

data fields into its filing and added the 

six additional data fields suggested by 

the FIMSAC.115 FINRA stated that it 

agrees that these six new fields are 

useful and appropriate to include in the 

proposal as they are important for 

settlement and valuation of floating rate 

notes and convertible bonds.116 FINRA 

further stated that it believes the six 

new fields would not materially 

increase the costs of the proposal on 

underwriters.117 In addition, in 

response to comments requesting 

clarification of certain data fields, 

Amendment No. 2 included additional 

detail relating to certain data fields.118

In response to comments regarding 

the timing of the reporting requirement, 

FINRA stated that it believes it is 

important to maintain the proposal’s 

pre-first transaction reporting 

requirement.119 FINRA stated that the 

purpose of the pre-first trade 

requirement is to facilitate the collection 

and dissemination of all proposed new 

issue reference data fields before 

secondary trading in a security begins, 

and recognized supporting comments 

on this point.120 FINRA stated that, as 


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‘‘first transaction’’ consistent with MSRB Rule G– 

34. See Response Letter at 14, n.45 (citing to ICE 

Data Letter, at 2). 

121See FINRA Statement, at 10–11. 

122See id. 

123See FINRA Response Letter, at 9, n.28. 

124See, e.g., SIFMA Letter III, at 2–3. 

125See Response Letter, at 12–13. 

126See id., at 14–15. 

127See id., at 15. 

128See Recommendation at Schedule A; FIMSAC 

Letter at Schedule A. The one field from the 

Recommendation that FINRA did not include is 

‘‘Calculation Types (CALT).’’ FINRA stated that it 

understands from industry outreach that this field 

leverages calculation methodology that is specific to 

one data vendor’s protocols and may not be readily 

available to all underwriters that would be required 

to report information to FINRA under Rule 6760, or 

to consumers of the data. See Notice, at 13978, n.8. 

129FINRA stated these additional fields were 

indicated by market participants as important in 

liquidity and risk assessment. See Notice, at 13978– 

79. See also Amendment No. 2, Exhibit 3. 

130See Notice, at 13978. The FINRA TRACE New 

Issue Form is used by firms to set up securities 

pursuant to firms’ existing obligations either under 

Rule 6760 or 6730 (Transaction Reporting). It allows 

for the submission of data fields required by these 

rules as well as additional data fields that 

underwriters often report voluntarily. As part of the 

proposal, FINRA would codify in Rule 6760 the 

specific fields that have been deemed necessary 

under current Rule 6760(b) and therefore are 

mandatory for successful submission of the TRACE 

New Issue Form. See Notice, at 13978, n.9. 

131See supra note 128 and accompanying text. 

132See, e.g., Harris Letter, at 6 (‘‘The fields on the 

FINRA list are sufficient to value most bonds. . . . 

I believe that FINRA chose the fields wisely.’’); ICE 

Data Letter, at 2 (‘‘ICE Data Services believes the 

scope of the Proposal is appropriate and we support 

the inclusion of the 30 data fields enumerated in 

the Proposal’s Exhibit 3.’’). 

133FINRA Rule 6760 currently requires 

underwriters to report to FINRA the following 

information: Issuer; Coupon; CUSIP Number; 

Maturity; 144A Eligibility Indicator; the time that a 

new issue is priced and, if different, the time that 

the first transaction in the offering is executed; a 

brief description of the issue; and such other 

information as FINRA deems necessary to properly 

implement the reporting and dissemination of a 

TRACE-Eligible Security. FINRA’s proposal will 

require that these data elements be reported to 

FINRA prior to the first transaction in the security 

in all instances. 

134See Amendment No. 2, Exhibit 3. Similar 

rationale for each data field was also put forth by 

the FIMSAC. See FIMSAC Letter, at Schedule A. In 

addition, in Amendment No. 2, FINRA set forth its 

rationale for including certain data fields currently 

required to be reported under Rule 6760, as follows: 

(1) Issuer—necessary for settlement and valuation 

purposes; the investor needs to know the issuing 

entity of the bond; (2) Coupon—needed for 

settlement and valuation purposes; the coupon rate 

is needed for accrual/interest/cash flow 

calculations; (3) CUSIP Number—needed to 

uniquely identify securities that trade, clear, and 

settle in North America, particularly in the United 

States; (4) Maturity—necessary for settlement and 

valuation purposes; this field is necessary in order 

to understand when the bond is due to pay back 

its principal at par; this field is used to back 

populate accruals and cash flows; and (5) 144A 

Eligible Indicator—necessary for settlement 

purposes; this field is needed to distinguish 144A 

securities for QIB eligible investors. See 

Amendment No. 2, Exhibit 3. See also FIMSAC 

Letter, at Schedule A. 

amended, it believes its proposal 

‘‘reflects a modest expansion of Rule 

6760 to include the basic set of essential 

new issue reference data fields that 

market participants require for pricing 

trading and settlement.’’ 121 FINRA 

stated that the proposed requirement for 

underwriters to report reference data for 

a new issue before the first trade in the 

bond, coupled with FINRA’s 

dissemination of the new issue 

reference data immediately upon 

receipt, ‘‘will allow market participants 

to receive the information in a timelier 

manner and more efficiently participate 

in market activity once a new issue 

begins secondary trading.’’ 122 In 

response to comments regarding the use 

of alternative securities identifiers, 

rather than CUSIP and ISIN, FINRA 

stated that it does not believe this 

element of the proposal requires new 

economic impact analysis since current 

FINRA Rule 6760 already requires 

underwriters to report a CUSIP number 

or a similar numeric identifier if a 

CUSIP number is not available.123

FINRA further stated that it 

recognizes that commenters have 

requested further clarification of several 

data fields,124 and that FINRA believes 

such requests can be addressed with 

guidance provided in the customary 

course of new rule implementation, and 

FINRA will continue to engage with 

market participants as required to 

provide such guidance.125 In addition, 

FINRA stated that it intends to 

implement functionality to allow for 

underwriters to correct previously 

submitted data to FINRA for a 

significant period after receiving the 

initial Rule 6760 submission and that 

FINRA will continue to engage with 

market participants on the appropriate 

business requirements for the reporting 

process.126 FINRA also stated that it 

may take a phased approach to 

implementation to promote compliance 

and data accuracy, where FINRA would 

make the reporting requirements 

effective for a brief time period to 

analyze and evaluate the accuracy of the 

reported data before implementing 

dissemination of the data.127

3. Commission Discussion and Findings 

By helping eliminate the existing 

information asymmetry in access to 

reference data, the proposed collection 

and dissemination of the proposed data 

elements should promote (i) 

competition among market participants 

by facilitating broader market 

participation in the secondary market of 

a newly issued corporate bond on the 

first day that bond trades, (ii) improved 

secondary market liquidity when a bond 

becomes available to trade in the 

secondary market and lower cost of 

capital for issuers, and (iii) lower other 

costs by providing data vendors with a 

more efficient method of collecting 

reference data and eliminating existing 

market inefficiencies. As discussed 

further below, the Commission believes 

eliminating the information asymmetry 

with respect to newly issued bond 

reference data is consistent with Section 

15A(b)(6) of the Act as it will ‘‘promote 

just and equitable principles of trade, 

foster cooperation and coordination 

with persons engaged in regulating, 

clearing, settling, processing 

information with respect to, and 

facilitating transactions in’’ newly 

issued corporate bonds, and ‘‘remove 

impediments to and perfect the 

mechanism of a free and open market’’ 

with respect to the market in such 

securities. FINRA’s proposal would 

require all FINRA member underwriters 

subject to Rule 6760 to report to FINRA 

32 new data elements for all new issues 

in Corporate Debt Securities, as defined 

in FINRA’s rules. The required data 

fields proposed to be reported and 

disseminated, together with data fields 

already specified in the current rule, 

reflect all but one of the fields that were 

described in the Recommendation and 

in the supplemental FIMSAC Letter,128

and include additional data fields 

identified by FINRA during its 

supplemental industry outreach.129 As 

stated by FINRA, several fields specified 

in the proposed rule change are already 

required to be reported or are reported 

voluntarily on the FINRA TRACE New 

Issue Form.130 In addition to the 

FIMSAC,131 a number of commenters 

agreed with the required data fields put 

forth by FINRA.132 FINRA set forth a 

detailed description of each new 

required data field 133 and the rationale 

for including the field, as follows: 134

• ISIN Number—needed to uniquely 

identify securities that are traded and 

settled internationally outside of North 

America. 

• Currency—necessary for settlement 

purposes in order to determine the 

currency of the principal, interest, or 

premium that will be paid or received 

at the time of distribution or settlement 

of a trade. 

• Issue Date/First Settlement Date— 

needed for settlement purposes; 

required in order to populate the first 

settlement date of the bond; needed in 

order to settle the bond trade between 

counterparties when trading new issues. 

• Interest Accrual Date—necessary for 

settlement and valuation purposes; 

needed in order to start the cash flow 

period of the coupon. 


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135The Commission believes that FINRA’s 

statement here is intended to convey that a bond’s 

issuance amount (e.g., the total par amount issued) 

is an important piece of information for market 

participants because the size of the issuance 

impacts a bond’s potential inclusion in ETFs and 

impacts a bond’s secondary market liquidity. 

136See supra notes 131–132. 

137See ICE Data Letter, at 2, FIMSAC Letter, at 

2–3 and Schedule A and Harris Letter, at 6 (all 

commenting that FINRA’s proposal included the 

necessary data elements for achieving the purpose 

of enabling market participants to participate in the 

secondary market when trading begins). The 

Commission does not believe that requiring the 

reporting of CUSIP and ISIN will cause any change 

in the manner underwriters procure this 

information today or the extent to which market 

participants rely on this information to identify 

specific securities. As FINRA recognized, CUSIP is 

already required to be reported to FINRA under 

FINRA Rule 6760. See, e.g., FINRA Response Letter, 

at 9, n.28. Furthermore, both CUSIP and ISIN are 

widely used today as primary methods for 

identifying securities. While consideration could be 

given by FINRA to accept the reporting of other 

securities identifiers if FINRA decided to explore 

that in the future, the Commission agrees with 

comments that CUSIP and ISIN are currently 

necessary data elements for market participants to 

identify specific securities, thereby enabling their 

participation in the secondary market when these 

securities begin trading. See e.g., FIMSAC Letter, at 

Schedule A; FINRA Letter, at 6. Regarding 

comments concerning the collection of alternative 

securities identifiers such as FIGI, the Commission 

recognizes that freely available, open alternatives to 

proprietary identifiers do not entail fees for storage, 

use, and redistribution, as is frequently the case for 

proprietary identifiers. The Commission also 

recognizes there are challenges to the adoption of 

alternatives to proprietary identifiers such as CUSIP 

and ISIN that are in widespread use, such as the 

need for such alternative identifiers to be supported 

in reference data and clearance and settlement 

systems in order for them to be viable alternatives 

to proprietary identifiers. A future proposed rule 

change could seek to lessen reliance on proprietary 

identifiers for regulatory reporting, including 

regulatory reporting related to corporate bonds. The 

Commission notes that FINRA could, if appropriate, 

file a proposed rule change with the Commission 

to supplement or allow alternatives to the securities 

identifier information that it will be collecting 

pursuant to this proposal. Any such proposal would 

be informed by the public notice and comment 

process required by the Act. 

138There are many other data provided by data 

vendors that provide bond issue reference data, 

such as issuer information (e.g., fundamentals data, 

capital structure data), specific bond rating, bond 

trade and selling restrictions, classification data 

(industry, legal entity, etc.), corporate action data, 

ESG (Environmental, Social & Governance) data, 

dividend data, instrument analytics data, and 

security ownership data. See supra note 87. 

• Day Count Description—necessary 

for settlement and valuation purposes; 

needed to calculate the purchase 

accrued interest and coupon of the 

security. 

• Coupon Frequency—necessary for 

settlement and valuation purposes; 

needed to determine how often the 

coupon payment is made within the 

year and to calculate the purchase 

accrued interest and coupon payments. 

• First Coupon Payment Date— 

necessary for settlement and valuation 

purposes; needed to determine whether 

the coupon will have a short or long 

stub on its first coupon payment. 

• Regulation S Indicator –necessary 

for settlement purposes; needed to 

distinguish Regulation S securities for 

non-U.S. entities. 

• Security Type—needed to identify 

the type of security being traded and its 

terms/features. 

• Bond Type—necessary for valuation 

purposes; needed as the bond 

classification dictates the payout order 

in the event of an issuer default; 

determines the liquidation preference 

which specifically affects the valuation 

of the security. 

• First Coupon Period Type— 

necessary for settlement and valuation 

purposes; denotes whether the coupon 

will have a short or long stub on its first 

coupon payment depending on the 

security’s issue date. 

• Convertible Indicator—necessary 

for valuation purposes; needed to 

understand if the bond is convertible 

and to allow set up with the underlying 

equity and conversion price/conversion 

ratio. 

• First Conversion Date—necessary 

for valuation purposes; needed to 

determine when the bond may be 

converted into stock. 

• First Conversion Ratio—necessary 

for valuation purposes; needed to 

determine the number of shares into 

which each convertible bond can be 

converted. 

• Call Indicator—necessary for 

valuation purposes; needed in order to 

know if the bond has call feature(s); 

needed when the security is created and 

will also have an effect on its valuation. 

• First Call Date—necessary for 

valuation purposes; needed in order to 

know the first call date of the security 

and will have an effect on bond 

valuation. 

• Put Indicator—necessary for 

valuation purposes; needed in order to 

know if the bond has puttable feature(s); 

needed when the security is created and 

will also have an effect on its valuation. 

• First Put Date—necessary for 

valuation purposes; needed in order to 

know the first put date of the security 

and will have an effect on bond 

valuation. 

• Minimum Increment—necessary for 

settlement purposes; needed in order to 

understand the minimum incremental 

amount of bonds that an entity can buy 

and settle at the depository. 

• Minimum Piece/Denomination— 

necessary for settlement purposes; 

needed in order to understand the 

minimum tradeable amount of bonds 

that an entity can buy and settle at the 

depository. 

• Spread; Reference Rate & Floor— 

necessary for settlement and valuation 

purposes; needed to build a cash flow 

table for the security which determines 

the coupon for the period; directly 

affects the purchase accrued interest 

and future interest distributions; needed 

to calculate the purchase and interest 

accrued. 

• Underlying Entity Ticker— 

necessary for valuation purposes; 

needed to value convertible bonds. 

• Issuance Amount—addresses the 

size of the deal, which is a data attribute 

for index inclusion criteria across 

almost every fixed income index; would 

have influence on ETF, liquidity, etc.135

• First Call Price & First Put Price— 

critical for option adjusted spread (OAS) 

and average life calculations; represent 

important fields for most clients 

(especially retail investors) when they 

gauge re-investment risk. 

• Coupon Type—denotes potential 

complexity and predictable cash flow 

data. 

• Rating (TRACE Grade)—important 

to assess risk; FINRA utilizes ratings to 

determine TRACE grade (Investment 

Grade or Non-Investment Grade) which 

determines dissemination volume caps. 

• Perpetual Maturity Indicator— 

important for pre-trade compliance; 

yield calculations generally use first call 

on perpetual securities. 

• PIK Indicator—important for pretrade compliance as it indicates cash 

flow implications and risk for many 

investors. 

As set forth above, FINRA has 

explained (and several commenters 

have agreed) 136 that each data field is 

required to either identify, settle or 

value a newly issued corporate bond. 

The Commission agrees with FINRA’s 

rationale for requiring each data field, 

and believes that the required data 

fields are appropriately tailored to 

facilitate the identification, valuation 

and settlement of newly issued 

corporate bonds.137 Furthermore, as 

discussed in detail in Section III.E 

below, the Commission believes 

FINRA’s proposal encompasses a 

limited set of data that will enable 

broader market participation at the 

beginning of secondary market trading, 

but will not supplant the demand for 

more comprehensive data sets that 

contain additional fields not reported to 

or disseminated by FINRA.138

In addition, the Commission agrees 

that it is important that all required data 

elements for new issues in corporate 

debt securities be reported prior to the 

first transaction in the security so that 

market participants will be able to 

participate in the secondary market 


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6934 Federal Register / Vol. 86, No. 14 / Monday, January 25, 2021 / Notices 

139Currently, for information reported under Rule 

6760 for trade reporting purposes, the rule allows 

phased reporting in some cases. Specifically, for an 

offering of a security that is priced and begins 

trading on the same business day between 9:30 a.m. 

and 4:00 p.m. Eastern Time, Rule 6760 requires ‘‘as 

much of the information set forth in paragraph 

(b)(1) that is available prior to the execution of the 

first transaction of the offering, which must be 

sufficient to identify the security accurately, and 

such other information that FINRA deems necessary 

and provide all other information required under 

paragraph (b)(1) within 15 minutes of the Time of 

Execution of the first transaction.’’ See Rule 

6760(c). 

140The Commission recognizes that there may be 

an incremental burden on underwriters; however, 

the Commission believes this burden will be 

mitigated both by the existence of current reporting 

infrastructures and the fact that the data elements 

to be reported are likely already in the possession 

of underwriters, given the use of this information 

in the newly issued bond’s primary offering. See 

infra Section III.D.3. 

141See Notice, at 13979. FINRA noted that the 

Recommendation stated that managing 

underwriters should be required to report the data 

elements to FINRA no later than reporting such data 

elements to any third party not involved in the 

offering, including reference data vendors. See 

Recommendation, at 3. See also supra note 113 for 

supporting comment letters. 

142See Notice, at 13981. See also supra notes 31– 

42 and accompanying text. 

143See supra Section III.A.3. 

144See id. See also supra notes 90–104 and 

accompanying text for a discussion of concerns 

about information asymmetry in the corporate bond 

market today that can disadvantage many market 

participants. Petitioner argued that FINRA provided 

no evidence the proposal would reduce broken 

trade errors or reduce costs or duplicated efforts. 

See supra notes 51–52. In contrast, other 

commenters and market participants stated that 

FINRA’s proposed data service would reduce costs, 

eliminate duplicated efforts, and reduce trading 

errors, as market participants would no longer have 

to source data from multiple vendors or enter data 

manually. See supra notes 31–42 and 92–103 and 

accompanying text. As discussed herein, the 

Commission believes the proposal would benefit 

the corporate bond market by, among other things, 

lowering costs and potentially reducing trading 

errors. 

145See supra notes 37–41 and note 100. See also 

FIMSAC Transcript, supra note 36, Comments from 

Frederic Demesy, Refinitiv, at 0077–78 (‘‘[W]e see 

a transformation in the bond markets where in the 

past market participants were expecting the data to 

be available at the end of day or the timeliness was 

not as important as it is now. Now, a market 

participant wants to have the information when the 

bond prices to set up their platforms to be able to 

trade. They want to have updates intraday, and that 

is a very big difference from what happened maybe 

two, three or five years ago where end of day 

updates was enough for them to operate. Now, the 

market participants want information intraday. And 

that forces market vendors . . . to rethink the way 

we distribute the reference data. And obviously the 

more the bond trades electronically, the more 

market participants would want to have this 

information on time.’’); Comments from Alex 

Sedgwick, T. Rowe Price, at 0084–85 (‘‘Electronic 

market-makers ultimately need this information to 

provide accurate pricing and accurate valuation for 

the prices that they are pushing out to the market. 

If this information is not available, that ultimately 

means that there are liquidity providers that may 

not be able to provide liquidity to us when those 

new issues are free to trade.’’) 

146One commenter stated that FINRA should be 

required to demonstrate that the benefits of the 

proposal are so substantial and clear to overcome 

the strong presumption that private actors in 

competitive markets are the best means of providing 

goods and services. See supra note 54 and 

accompanying text. Pursuant to the Act, the 

Commission must approve an SRO’s proposed rule 

change if it finds that such proposed rule change 

is consistent with Act and the rules and regulations 

issued thereunder that are applicable to such 

organization. See Section 19(b)(2)(C)(i) of the Act. 

For the reasons set forth herein, the Commission 

finds that FINRA has made such a showing. 

147See supra Section III.A and notes 90–104 and 

accompanying text for a discussion of concerns 

about information asymmetry in the corporate bond 

market today that can disadvantage many market 

participants; and note 145 and accompanying text. 

As discussed above, timely availability of this data 

should promote (i) competition, (ii) improve 

secondary market liquidity and lower cost of capital 

and (iii) lower other costs. In addition, FINRA has 

clearly and explicitly stated that it will provide 

guidance in the course of new rule implementation 

to provide any further clarification required 

regarding data fields, and will engage with market 

participants as required to provide such guidance. 

FINRA has also clearly and explicitly stated that it 

will engage with market participants on the 

appropriate business requirements for the reporting 

process and has stated that it may take a phased 

approach to implementation to promote compliance 

and data accuracy. See supra notes 125–127 and 

accompanying text. 

148See Petitioner Letter, at 9–10. 

149See Petitioner Statement at 23. 

150See Petitioner Statement, at 24. 

promptly.139 FINRA stated this 

approach—to require uniform pre-first 

trade reporting 140—would allow FINRA 

to collect and make all of the data 

available immediately to market 

participants, resulting in a more 

consistent, timely, and complete data 

set that will support more efficient 

pricing, trading and settlement of 

bonds.141 As stated by FINRA and other 

commenters, improved reference data 

transparency should promote market 

efficiency and fair competition among 

all market participants by helping to 

ensure all market participants have 

access to consistent, timely and accurate 

reference data regarding newly issued 

corporate bonds.142 The Commission 

believes providing market participants 

with reference data important for their 

participation in the secondary market 

when a bond begins to trade should 

eliminate the information asymmetry 

described above, which would benefit 

the corporate bond market.143 Enabling 

broader participation by all market 

participants should promote (i) 

improved competition among market 

participants by providing all market 

participants with the ability to access 

the same investment options to meet 

their own business and investment 

needs or those of their customers at the 

time a bond becomes available in the 

secondary market, (ii) improved 

secondary market liquidity and lower 

the cost of capital for issuers as more 

market participants become able to 

participate in the secondary market on 

the first day of trading; and (iii) lower 

other costs by providing data vendors 

with a more efficient method of 

collecting reference data and 

eliminating existing market 

inefficiencies.144 Furthermore, the 

Commission agrees with commenters 

and believes that the provision of 

reference data will benefit all 

participants on electronic trading 

platforms, including investors and 

intermediaries, by enabling them to 

price and trade bonds based on 

consistent, accurate, and timely 

information, which is vital to meet the 

information needs of an increasingly 

electronic corporate bond market.145

For these reasons, the Commission 

believes that FINRA’s proposal is 

consistent with Section 15A(b)(6) of the 

Act as it will ‘‘promote just and 

equitable principles of trade, foster 

cooperation and coordination with 

persons engaged in regulating, clearing, 

settling, processing information with 

respect to, and facilitating transactions 

in’’ newly issued corporate bonds, and 

‘‘remove impediments to and perfect the 

mechanism of a free and open market’’ 

with respect to the market in such 

securities, consistent with Section 

15A(b)(6) of the Act.146 The 

Commission believes it is important for 

all required data fields to be reported to 

FINRA prior to the first transaction in 

the security because this requirement, 

coupled with FINRA’s dissemination of 

the new issue reference data 

immediately upon receipt, will allow all 

market participants to have timely, basic 

information that is important for the 

identification, valuation, and settlement 

of newly issued corporate bonds in 

order to participate in the secondary 

market without delay.147

C. FINRA as Centralized Data Source 

1. Comments on the Proposal 

Petitioner questioned whether a single 

SRO would provide more accurate, 

complete and timely service than 

competing private sector providers and 

noted that the impact of any errors in a 

centralized system would be 

magnified.148 Petitioner stated that ‘‘[i]f 

trades need more accurate, compete and 

timely data, they can switch to one of 

several major data providers.’’ 149

Petitioner stated that the Approval 

Order did not explain ‘‘why uniform (as 

opposed to accurate and accessible) data 

is necessary or desirable in a 

competitive market’’ and that ‘‘assuming 

uniformity were an important goal 

. . . , neither FINRA nor the [Approval 

Order] has explained why that justifies 

a sole-source provider.’’ 150 Petitioner 


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151See Petitioner Letter III, at 5–6; Petition for 

Review, at 31. This commenter further stated that 

the proposed centralized data service could achieve 

a dominant position regardless of whether an 

innovating company could have done a better job 

and that the proposed database, run as a ‘‘regulatory 

utility,’’ is likely to produce a service less valuable 

than what market-based providers would produce. 

See Petitioner Statement, at 37. 

152See Letter from Larry Tabb, TABB Group, 

dated May 15, 2019 (‘‘Tabb Letter’’), at 3. See also 

Petitioner Letter V, at 2. 

153See Petitioner Statement, at 24. 

154See Petitioner Statement, at 20. 

155See Petitioner Letter IV, at 5; Heritage Letter 

V, at 2. See also Petitioner Statement, at 31 (‘‘The 

[proposal] . . . creates an inherent conflict between 

a public regulator and the private parties it 

regulates.’’). 

156See Heritage Letter V, at 2. See also Petitioner 

Statement, at 31 (stating that pursuant to the 

proposal, FINRA ‘‘would coerce underwriters to 

surrender bond-reference data and would (at least 

implicitly) compel broker-dealers to buy FINRA’s 

data’’ and that if the proposed database costs more 

than expected or does not achieve the purported 

benefits, FINRA may be motivated to take steps to 

save its own finances that, ‘‘as a regulator, it is 

uniquely empowered to take.’’). In Section III.F 

below, the Commission discusses comments 

regarding FINRA’s potential fees for this service. 

157See FIMSAC Letter, at 4. The FIMSAC stated 

that data vendors are conflicted by competing 

commercial interests and should not be in a 

position to determine who can have access to data 

necessary to value, trade and settle a newly issued 

corporate bond. See id. Petitioner, which has both 

a data business and an electronic bond trading 

platform, responded to this comment, stating that 

there is no basis for FIMSAC’s claims that 

integrated firms are using their data business to 

harm competition in trading. Petitioner pointed to 

data showing that it holds only 3.2% of market 

share of domestic institutional electronic corporate 

bond trading, and argued that these data contradict 

any suggestion that the commenter has leveraged its 

data business to gain a competitive advantage for 

its electronic trading business. See Petitioner Letter 

II, at 2–4. 

158See, e.g., Healthy Markets Letter II, at 5; 

Petitioner Letter III, at 5–6; and Petitioner Letter IV, 

at 4 (citing to Larry Tabb, Tabb Forum, ‘‘An SECMandated Corporate Bond Monopoly Will Not Help 

Quality’’ (Mar. 21, 2019) (‘‘Tabb Study’’)). See also 

Petitioner Statement, at 29. 

159See Petitioner Statement, at 30. 

160See supra notes 148–152 and accompanying 

text. 

161See FINRA Statement, at 2. 

162See FINRA Statement, at 2 (citing 

Recommendation, supra note 30). In response, 

Petitioner stated that it submitted the Petitioner 

Motion and Declarations to rebut FINRA’s 

allegations of anti-competitive conduct. 

Specifically, Petitioner stated that the Declarations 

demonstrate that Petitioner does not restrict access 

to its reference data service based on firms’ 

willingness to use any of its trading services, or for 

any other anti-competitive reasons, and that 

Petitioner makes its reference data service broadly 

available on standard terms for standard use cases. 

See Petitioner Motion, at 10. FINRA, on the other 

hand, stated that the Declarations do not directly 

address the specific concerns expressed by the 

FIMSAC and are immaterial in light of the welldeveloped record. See FINRA Opposition, at 6–7. 

163See FINRA Statement, at 12. 

164See FINRA Statement, at 2–3 (citing 

Recommendation, supra note 30). FINRA further 

stated that Petitioner is the dominant private data 

vendor in today’s market for corporate bond new 

issue reference data and ‘‘often gains access to new 

issue reference data before other vendors and 

market participants.’’ See FINRA Statement, at 3. In 

response, Petitioner stated that neither the 

Recommendation nor the FIMSAC Letter suggested 

that one dominant private data vendor engaged in 

anti-competitive activity. See Petitioner Motion, at 

3. In addition, Petitioner stated that the 

Declarations ‘‘conclusively rebut the notion that 

Petitioner engages in an anticompetitive leveraging 

of the new bond issuance functionality on the 

Petitioner Terminal service to gain preferential 

access to reference data.’’ See Petitioner Motion, at 

9. On the other hand, FINRA stated that the 

Declarations neither directly address nor dispel the 

concerns expressed by the FIMSAC and others that 

underlie the proposed rule change. See FINRA 

Opposition, at 6–9. 

165Specifically, FINRA pointed to (i) a statement 

by Larry Harris, USC Marshall School of Business, 

that ‘‘FINRA is best equipped to solve this 

problem;’’ and (ii) a statement by Bob LoBue, J.P. 

Morgan, that the firm ‘‘could probably populate [its 

existing process for providing new issue reference 

data to FINRA] a little bit deeper.’’ See FINRA 

Statement, at 9 (citing to FIMSAC Transcript, supra 

note 36). 

further stated that private vendors will 

have a diminished incentive to gather, 

verify, organize, maintain, and provide 

reference data information, and that 

FINRA will not have the financial 

incentive to do so in a cost-effective 

manner or to improve its technology for 

collecting or distributing bond data, 

and, as a result, traders’ cost for bond 

reference data may increase.151 Another 

commenter opposed giving FINRA or 

any other utility or vendor a monopoly 

or competitive advantage in the 

collection and dissemination of 

corporate bond new issue reference 

data, stating that doing so may reduce 

the overall quality and timeliness, and 

increase the cost, of the data.152

Petitioner suggested that FINRA should 

have considered alternatives to the 

proposal, including ‘‘develop[ing] 

certification criteria for vendors, or 

common data standards for 

underwriters, at far less cost than the 

construction of a new service, and at far 

less risk of a single point of failure’’ 153

and stated that the proposal violates the 

Act because it does not foster 

cooperation with existing data vendors 

and providers.154

Petitioner and another commenter 

stated that the proposal creates a 

conflict of interest for FINRA and 

reduces FINRA’s standing as an 

independent regulatory force.155 The 

other commenter stated that FINRA has 

a pecuniary interest in promulgating the 

proposal and ‘‘can use its regulatory 

authority to force underwriters to 

provide it with information and then 

sell the information to market 

participants at a profit.’’ 156 On the other 

hand, FIMSAC stated it would be 

concerned by any alternative construct 

to FINRA’s proposal that would give 

increased market power to a single 

commercial data provider without a 

commensurate level of regulatory 

oversight.157

A number of commenters questioned 

the quality of FINRA’s current TRACE 

data, and pointed to a recent study that 

found that approximately 20% of entries 

had errors.158 Petitioner stated that 

‘‘[t]he best predictor of whether FINRA 

will be able to run an accurate data 

system is its experience with the TRACE 

system, an existing system that is 

simpler than the as-yet-unbuilt system 

FINRA proposes’’ and that ‘‘[n]othing in 

the record supports any inference that 

FINRA’s new system would outperform 

the 20% error rate cited in the . . . Tabb 

Study.’’ 159

2. FINRA Response to Comments 

In response to comments that private 

vendors should continue to provide this 

information rather than a single SRO,160

FINRA stated that ‘‘[a] key element of 

the [p]roposal is that FINRA, as a notfor-profit SRO, will provide a limited set 

of essential corporate bond new issue 

reference data as a public market utility 

on timely, reasonable, and nondiscriminatory terms to anyone who 

chooses to receive it.’’ 161 FINRA noted 

that, in contrast, ‘‘the private data 

vendors that today provide corporate 

bond new issue reference data are not 

bound by similar obligations, and the 

FIMSAC expressed particular concern 

that a dominant private data vendor has 

refused to license data, or has withheld 

it selectively, for anti-competitive 

reasons.’’ 162 FINRA stated that the 

current disparity among vendor access 

to reference data results from 

competitive barriers in the current 

market, ‘‘as underwriters have relatively 

few incentives to report to data vendors 

other than the prevalent incumbent data 

vendor, i.e., Petitioner.’’ 163 FINRA 

further noted that the FIMSAC was 

particularly concerned that ‘‘a dominant 

private vendor’s ability to restrict access 

to new issue reference data has 

immediate and direct downstream 

impacts on the ability of other market 

participants to perform critical market 

functions such as pricing, trading, 

clearing, and settling new issues once 

the bonds begin trading in the 

secondary market.’’ 164 FINRA stated 

that comments from members and 

panelists at the FIMSAC meeting also 

provided support for the 

Subcommittee’s recommended solution 

that FINRA establish and operate a 

consolidated, regulated data service.165

Furthermore, FINRA noted that the 

FIMSAC reaffirmed FINRA as ‘‘the most 

logical and impartial choice’’ to 


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166See FINRA Statement, at 9–10 (citing the 

FIMSAC Letter). FINRA further noted that the 

FIMSAC articulated a ‘‘concern that certain large 

reference data providers ‘have in the past, and 

could in the future, manage their data and trading 

businesses in a coordinated fashion—refusing to 

license their leading reference data products to 

trading platforms that they deem to be competitive 

with their own.’ ’’ See id. at 10 (citing FIMSAC 

Letter, at 3–4). 

167See supra note 153 and accompanying text. 

168See Response Letter, at 10. However, one 

commenter stated that FINRA offers no reason why 

vendors would continue to fund their own research 

in addition to paying for FINRA’s information. See 

Petitioner Letter V, at 3. See also Section III.E for 

a discussion of the proposal’s impacts on 

competition. 

169See supra note 153 and accompanying text. 

170See FINRA Statement, at 25. See also Notice, 

at 13979 (‘‘FINRA alternatively considered 

maintaining the Rule’s phased reporting approach 

for offerings in corporate debt securities subject to 

the proposal, with certain core information required 

prior to the first trade and an extended 60-minute 

window for remaining information, given the 

additional data fields that would be required to be 

reported under the proposal. However, FINRA 

believes that the proposed approach to require 

uniform pre-first trade reporting better supports the 

stated goals in the FIMSAC Recommendation to 

increase the efficiency of the corporate bond market 

and promote fair competition among all market 

participants.’’); 13982–83 (‘‘FINRA also considered 

whether there was an appropriate alternative 

approach that involved an expansion of the DTCC’s 

NIIDS service to include corporate new issue 

reference data. However, based on operational and 

commercial reasons, including inefficiencies with 

integrating the existing FINRA reporting 

infrastructure with a separate DTCC infrastructure, 

FINRA concluded that expanding the current 

existing FINRA reporting and dissemination 

framework was a more effective and efficient 

approach . . .’’). 

171See FINRA Statement, at 25. 

172See supra notes 155–157 and accompanying 

text. 

173See Response Letter, at 10. 174See id. 175See id. 176See FINRA Statement, at 2; Response Letter, 

at 9. See also Section 15A(b)(6) of the Act, 15 U.S.C. 

78o–3(b)(6). 

177See Response Letter, at 9–10. For example, 

FINRA makes available to the public all transaction 

data in corporate bonds through TRACE. See 

FINRA’s TRACE Overview, available at https://

www.finra.org/sites/default/files/TRACE_

Overview.pdf. See also FINRA Statement, at 2. 

FINRA also makes details about corporate and 

agency debt securities available to FINRA members 

and provides a tool to the public that enables them 

to analyze and compare the costs of owning mutual 

funds. See TRACE OTC Corporate Bonds and 

Agency Debt User Guide, available at https://

www.finra.org/sites/default/files/TRAQS-CA-userguide-v4.7.pdf.pdf; FINRA Fund Analyzer, available 

at https://tools.finra.org/fund_analyzer/. 

178See FINRA Statement, at 2. 

179See FINRA Statement, at 2. 

180See supra notes 148, 158–159 and 

accompanying text. 

181See Response Letter, at 10–11; FINRA 

Statement, at 23–22. Specifically, with respect to 

the Tabb Study cited by certain commenters, FINRA 

stated that it is not clear what TRACE data was used 

for the analysis or which point in time during the 

trading day was used to compare TRACE data with 

the vendor’s data. In addition, FINRA stated that 

the analysis does not explain which of the two 

sources (TRACE or the vendor) were deemed 

accurate (it only references ‘‘reconciliation 

differences’’) or whether the differences included 

cases where data were not present yet in either 

system. See id. In response, Petitioner stated that 

FINRA’s response is ‘‘puzzling’’ as the Tabb Study 

states that it used the ‘‘initial release’’ of FINRA’s 

own ‘‘TRACE Corporate and Agency Master file,’’ 

and stated that neither FINRA nor any other 

commenter contests that the concern is with the 

inaccuracy of FINRA’s data. See Petitioner Letter V, 

at 2. 

182See Response Letter, at 10–11; FINRA 

Statement, at 23–22. 

183See id. 

184See id. In response, Petitioner stated that 

FINRA’s reliance on unspecified ‘‘systemvalidated’’ data is not enough to refute the historical 

evidence of ‘‘a high error rate for comparatively 

simple data.’’ See Petitioner Letter V, at 3. 

185See FINRA Statement, at 24. 

establish and operate the data service in 

its comment letter, as FINRA would 

provide the data impartially ‘‘to all 

market participants on objective and 

non-discriminatory terms.’’ 166 While 

FINRA acknowledged that the proposed 

data service may create a potential 

single point of failure,167 FINRA stated 

it continues to believe any concerns 

about the risks of consolidation do not 

outweigh the benefits of the data 

service, and that vendors are likely to 

continue collecting corporate bond new 

issue reference data.168

In response to comments that there 

exist alternatives to the proposal that 

would be less costly,169 FINRA noted 

that it considered alternatives and 

explained its rationale for the choices it 

made in its proposal.170 FINRA further 

stated that Petitioner’s analysis that an 

SRO’s proposed rule change cannot be 

approved if some alternative might also 

accomplish the same goal is flawed.171

In response to comments regarding 

alleged conflicts of interest and FINRA 

acting in a commercial rather than a 

regulatory role,172 FINRA stated that, as 

a non-profit registered securities 

association and SRO, it does not intend 

to compete with or displace private data 

vendors.173 FINRA added that it did not 

initiate the proposal for commercial 

benefit but did so in response to a 

specific recommendation and regulatory 

need identified by the FIMSAC.174

FINRA stated that the proposal is 

designed to achieve a clear regulatory 

objective—to provide more timely and 

accurate consolidation and 

dissemination of key corporate bond 

new issue reference data.175

Furthermore, FINRA noted that under 

Section 15A of the Act, it is charged 

with a number of responsibilities 

including, among others, removing 

impediments to a free and open market 

and fostering clearance, settlement, and 

information processing with respect to 

transactions in corporate bonds and 

other securities.176 FINRA stated that, in 

light of this mandate, the collection, 

consolidation and dissemination of 

fundamental security information is not 

a novel role for a registered securities 

association, and FINRA routinely 

provides other types of basic security 

information to the marketplace to, 

among other things, facilitate the 

clearing and settlement of securities and 

improve transparency.177 FINRA also 

noted that SRO regulation of new issue 

reference data is not novel, as the same 

kind of new issue reference data for 

municipal bonds are made available 

under rules adopted by the MSRB, 

which is charged with a similar 

mandate as FINRA in the municipal 

securities market.178 FINRA concluded 

that it believes that the establishment of 

a corporate bond new issue reference 

data service fits squarely within the 

scope of FINRA’s affirmative regulatory 

authority under the Act.179

In response to comments concerning 

the risk of consolidating the proposed 

corporate bond new issue reference data 

with FINRA and the timeliness and 

accuracy of current TRACE data,180

FINRA stated that there is key 

information missing from the analysis 

on which these commenters rely, and 

without such information it is difficult 

for FINRA to provide a meaningful 

response to the analysis.181 FINRA 

stated that based on its own review of 

TRACE and the same vendor’s data, 

FINRA found different results, 

including a significant number of 

instances where it received data not yet 

available from the vendor.182 FINRA 

also stated that it would expect 

substantially fewer reconciliation 

differences if the proposal is approved 

because FINRA believes a number of the 

differences found in the analysis may 

have resulted from data fields that are 

not currently system-validated.183 In 

contrast, FINRA stated that the 

corporate bond new issue reference data 

fields would become system-validated 

under this proposal, as FINRA would 

employ systemic and operational checks 

for all of the data fields to determine if 

any fields are either missing or not 

conforming to expected format or 

standards at the time of submission.184

Furthermore, FINRA stated that 

FINRA’s long history of successfully 

providing critical TRACE data to the 

markets since 2002 negates any 

concerns about TRACE’ s accuracy.185

3. Commission Discussion and Findings 

a. Centralized Database Provider 

The Commission believes that FINRA 

is an appropriate entity to operate a 

centralized database for newly issued 

corporate bond reference data because 

of its status as a regulated SRO and its 


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186See infra notes 193–197 and accompanying 

text. 187As discussed above, in the corporate bond 

market today, the Commission understands from 

market participants that Petitioner typically has the 

timeliest access to newly issued bond reference data 

on the first day a bond trades, as it enjoys the 

voluntary cooperation of underwriters. See supra 

note 91. While market participants and others have 

expressed concerns that Petitioner is engaged in 

anti-competitive conduct in the market for newly 

issued corporate bond reference data, the 

Commission is not making any findings herein 

regarding whether Petitioner has actually engaged 

in such conduct. See supra notes 162 and 164 and 

accompanying text. 

188 In contrast to the corporate bond market, the 

municipal securities market and Treasury market 

have centralized mechanisms in place that provide 

market-wide access to information about newly 

issued securities on the first day of trading. MSRB 

Rule G–34 requires municipal securities 

underwriters to submit new issue information for 

municipal bonds to the New Issue Information 

Dissemination Service (‘‘NIIDS’’), which is operated 

by the Depository Trust and Clearing Corporation 

(‘‘DTCC’’). The FIMSAC noted that this information 

includes ten data elements required to set up an 

issue in the NIIDS, as well as up to 70 additional 

data elements. See Recommendation, at 1. In the 

Treasury market, the U.S. Department of the 

Treasury publishes details about upcoming 

issuances in a new issue calendar and immediately 

following each auction. 

189See supra Section III.A.3 and Section III.B.3. 

One commenter argued that FINRA should have 

considered alternatives to the proposal to address 

information asymmetries in the market for newly 

issued corporate reference data. But, as discussed 

above, the Act requires that the Commission 

approve an SRO’s proposed rule change if it finds 

that such proposed rule change is consistent with 

Act and the rules and regulations issued thereunder 

that are applicable to such organization. See Section 

19(b)(2)(C)(i) of the Act. For the reasons set forth 

herein, the Commission finds that FINRA has made 

such a showing. 

190See 15 U.S.C. 78o–3. See also FIMSAC Letter, 

at 3 (recognizing the importance of the operator of 

a reference data to be subject these standards of 

conduct). 191Pursuant to Section 15A of the Act, FINRA, as 

a registered securities association, must establish 

rules that generally: (1) Are designed to prevent 

fraud and manipulation, promote just and equitable 

principles of trade, foster cooperation and 

coordination with persons engaged in regulating, 

clearing, settling, processing information with 

respect to, and facilitating transactions in securities, 

remove impediments to and perfect the mechanism 

of a free and open market and a national market 

system, and, in general, protect investors and the 

public interest; (2) provide for the equitable 

allocation of reasonable fees; (3) do not permit 

unfair discrimination; (4) do not impose any 

unnecessary or inappropriate burden on 

competition; and (5) with limited exceptions, allow 

any broker-dealer to become a member. See 5 U.S.C. 

78s(g). 

192See 5 U.S.C. 78s(g). 

193See FINRA Regulation Notice 19–12 (April 12, 

2019), available at https://www.sec.gov/spotlight/ 

fixed-income-advisory-committee/finra-regulatorynotice-trace-19-12.pdf. In addition, FINRA makes 

details about corporate and agency debt securities 

available to FINRA members. See TRACE OTC 

Corporate Bonds and Agency Debt User Guide, 

available at https://www.finra.org/sites/default/ 

files/TRAQS-CA-user-guide-v4.7.pdf.pdf. 

194See, e.g., FIMSAC Letter, at 3; Hendrik 

Bessembinder, William Maxwell, and Kumar 

Venkataraman, ‘‘Market Transparency, Liquidity 

Externalities, and Institutional Trading Costs in 

Corporate Bonds,’’ Journal of Financial Economics 

82, 251–288 (2006), available at https://doi.org/ 

10.1016/j.jfineco.2005.10.002; Michael A. 

Goldstein, Edith S. Hotchkiss, and Erik R. Sirri, 

‘‘Transparency and Liquidity: A Controlled 

Experiment on Corporate Bonds,’’ The Review of 

Financial Studies 20, 235–273 (2007), available at 

https://doi.org/10.1093/rfs/hhl020; Amy K. 

Edwards, Lawrence E. Harris, and Michael S. 

Piwowar, ‘‘Corporate Bond Market Transaction 

Costs and Transparency,’’ The Journal of Finance 

62, 1421–1451 (2007), available at https://doi.org/ 

10.1111/j.1540-6261.2007.01240.x; and Dominique 

C. Badoer and Cem Demiroglu, ‘‘The Relevance of 

Credit Ratings in Corporate Bond Markets,’’ The 

Review of Financial Studies 32, 42–74 (2018), 

available at https://doi.org/10.1093/rfs/hhy031. 

195See In the Matter of National Association of 

Securities Dealers, Inc., Order Instituting Public 

Proceedings Pursuant to Section 19(h)(1) of the 

Securities Exchange Act of 1934, Making Findings 

and Imposing Remedial Sanctions, Exchange Act 

Release No. 37538 (August 8, 1996), Administrative 

Proceeding File No. 3–9056 and Report Pursuant to 

Section 21(a) of the Securities Exchange Act of 1934 

Regarding the NASD and The Nasdaq Stock Market 

LLC (‘‘Nasdaq’’). See also Securities Exchange Act 

Release No. 39729 (March 6, 1998), 63 FR 12559 

(March 13, 1998) (order approving proposed rules 

comprising OATS) (‘‘OATS Approval Order’’). 

196 Id. See also Securities Exchange Act Release 

No. 63311 (November 12, 2010), 75 FR 70757 

(November 18, 2010) (SR–FINRA–2010–044) (order 

approving proposed rule change by FINRA relating 

to the expansion of OATS to all NMS stocks). While 

OATS data are not disseminated to the public, it is 

used by FINRA to recreate events in the lifecycle 

of an order and monitor the trading activity of 

member firms. See https://www.finra.org/filingreporting/market-transparency-reporting/orderaudit-trail-system-oats. 

197The Commission also notes that the FIMSAC 

considered various alternatives to FINRA in its 

deliberations, including private sector providers, 

and settled on FINRA because it believed that 

FINRA was the most logical and impartial choice 

because it is subject to regulatory oversight by the 

Commission and because of underwriters’ existing 

reporting mechanisms with FINRA. See FIMSAC 

Letter, at 3. 

accompanying regulatory obligations, 

and because of its demonstrated 

experience with the establishment and 

maintenance of databases used by the 

public.186 There is an information 

asymmetry in the market for newly 

issued corporate bond reference data.187

Specifically, there is a lack of broadly 

available and accessible new issue 

reference data on the first day of 

secondary market trading that impedes 

the efficiency and competition in the 

current marketplace.188 The 

Commission finds that FINRA’s 

proposed reporting requirements and 

dissemination protocol of such data are 

reasonably designed to address this 

information asymmetry by facilitating 

access to timely and accurate new issue 

corporate bond reference data, 

consistent with Section 15A of the 

Act.189

The Commission believes that 

FINRA’s status as an SRO will help 

ensure that it operates the New Issue 

Reference Data Service in a manner that 

will address the current information 

asymmetry in reference data availability 

on the first day of secondary market 

trading. Importantly, Section 15A of the 

Act will require FINRA to provide the 

New Issue Reference Data Service to 

market participants in a manner that is 

not unfairly discriminatory and on 

terms that are equitable and 

reasonable.190 Furthermore, as an SRO, 

the Commission oversees FINRA to 

ensure that it is carrying out its 

regulatory responsibilities. The 

Commission has the ability to review 

FINRA’s proposed rule changes for 

consistency with the Act, which would 

include any proposed changes with 

respect to the operation of the New 

Issue Reference Data Service and, as 

discussed below, any proposed fees for 

accessing the database.191 The 

Commission also oversees FINRA 

through inspections of its operations 

and programs. Finally, FINRA has an 

obligation to operate consistent with 

requirements under the Act and with its 

own rules, and is required to enforce 

compliance by its members with the 

federal securities laws and FINRA’s own 

rules.192

In addition to being subject to a 

comprehensive regulatory regime, 

FINRA has extensive experience with 

collecting data from its members and 

disseminating such data to the public. 

For example, TRACE, which FINRA has 

operated since 2002, provides 

information to investors and other 

market participants about secondary 

market trades in corporate bonds and 

other debt securities that it collects from 

its member firms. Currently, TRACE 

disseminates information to the 

marketplace about corporate bond 

trades, including trade price and size, 

immediately upon receipt.193 U.S. 

secondary trading markets have greatly 

benefitted from the increased 

transparency that have resulted from 

FINRA’s establishment, management 

and expansion of TRACE.194 In 

addition, FINRA currently operates the 

Order Audit Trail System (‘‘OATS’’), 

which was established in 1996.195

Pursuant to FINRA Rules, FINRA’s 

members report data to OATS to create 

an integrated audit trail of order, quote, 

and trade information for all NMS 

stocks and OTC equity securities.196 The 

Commission believes that the New Issue 

Reference Data Service would be an 

appropriate extension of the data 

services that FINRA provides to the 

public and would benefit from FINRA’s 

experience in collecting and 

disseminating data to the public; the 

Commission also notes that the proposal 

is limited to reference data regarding 

TRACE-eligible bonds.197


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198See supra notes 148, 151–152, and 158–159 

and accompanying text. 

199The Commission believes that data vendors 

will continue to compete for the provision of data 

services and expects that market participants will 

turn to a variety of sources for their data needs 

depending on the facts and circumstances at hand. 

See infra Section III.E for a discussion of the 

proposal’s impact on competition. 

200See, e.g., infra note 216 and accompanying 

text. 

201See, e.g., FIMSAC Letter, at 3 and infra note 

216 and accompanying text (describing the 

potential for underwriters to change their current 

practices by reporting reference data to FINRA 

only). 

202As discussed above, the Commission oversees 

FINRA by, among other things, conducting 

inspections of its operations and programs to 

examine whether FINRA is operating consistent 

with Act requirements and its own rules. See supra 

Section III.C.3.a. 

203See supra notes 158–159 and accompanying 

text. 

204 In particular, FINRA states that the analysis 

does not explain which of the two sources (TRACE 

or the vendor) were deemed accurate (it only 

references ‘‘reconciliation differences’’) or whether 

the differences included cases where data were not 

present yet in either system. See Response Letter, 

at 11. 

205See id. 

206The Commission is not taking a position on 

the accuracy of either commenters’ or FINRA’s 

statements regarding error rates. 207See supra notes 193–197 and accompanying 

text. 208See Response Letter, at 11–15. 209 In addition, as discussed below, the 

Commission believes that data vendors will likely 

continue to compete in the market for data. In 

addition to potentially competing in the market for 

new issue reference data by operating as they do 

today, these data vendors will also continue to 

compete based on differing value added services 

related to the required information and also based 

on additional data fields, data updates, and services 

related to the data and that such competition 

should continue to spur innovation and allay 

concerns regarding a single point of failure and 

error rates. See infra Section III.E.3. 

b. Data Quality and Resilience 

Some commenters have expressed 

concerns that the New Issue Reference 

Data Service will harm corporate bond 

reference data quality and resilience, 

noting that (1) it would create a single 

point of failure, (2) FINRA would not be 

incentivized to maintain high quality 

data, and (3) current error rates in 

TRACE is evidence that FINRA’s 

reference database will not be 

reliable.198 The Commission is not 

persuaded by these arguments. 

Regarding concerns about a single point 

of failure, it is not clear to the 

Commission that FINRA’s New Issue 

Reference Data Service will indeed be a 

single point of failure.199 While some 

have suggested that FINRA’s proposal 

would increase efficiencies due to the 

consolidation of reference data within 

one entity,200 it is the Commission’s 

judgment that it is premature to draw 

conclusions about the impact of 

FINRA’s proposal on the manner in 

which underwriters currently distribute 

data or how other data vendors conduct 

business or customers’ demand for other 

data vendors’ services. FINRA’s 

proposal does not disrupt the ability of 

underwriters to continue reporting new 

issue reference data to data vendors. 

Because underwriters already have 

these data reporting processes in place 

and have incurred the costs of 

establishing those processes, 

underwriters may choose to continue to 

provide new issue reference data to data 

vendors as well as to FINRA. Should 

that be the case, private data vendors 

will continue to be incentivized to 

invest in their current methods of 

collection and distribution and concerns 

about a single point of failure will be 

mitigated. If market participants do in 

fact change their current practices and 

report new issue reference data to 

FINRA only,201 the Commission 

believes that FINRA’s experience with 

establishing and maintaining databases 

such as TRACE and OATS and the 

Commission’s regulatory oversight of 

FINRA will ensure that the New Issue 

Reference Data Service is designed and 

operated consistent with the Act.202

The Commission also believes that 

FINRA will be incented to build and 

maintain a high quality New Issue 

Reference Data Service. As discussed 

previously, it is possible that the current 

business processes for new issue 

reference data distribution remain, 

which would impose competitive 

pressures on FINRA to provide high 

quality new issue reference data. If 

FINRA does become the sole source of 

new issue reference data, however, the 

Commission believes that FINRA will 

build and maintain a high quality New 

Issue Reference Data Service, mitigating 

concerns about data quality and 

resilience, because of (i) FINRA’s 

experience with the establishment and 

maintenance of databases such as 

TRACE and OATS, (ii) its status and 

regulatory obligations as a regulated 

SRO, and (iii) the Commission’s 

oversight of FINRA, including our 

inspection and examination functions. 

Finally, the Commission is not 

persuaded that commenters’ concerns 

about error rates in TRACE data call into 

question the ability of FINRA to build 

and maintain a reliable reference 

database. As discussed above, 

commenters have expressed concerns 

about FINRA’s proposed reference 

database, arguing that ‘‘reconciliation 

differences’’ show that FINRA’s current 

collection of bond data contains a high 

incidence of errors.203 On the other 

hand, FINRA has argued that 

‘‘reconciliation differences’’ do not 

necessarily mean errors nor demonstrate 

that FINRA’s current collection of data 

has a high incidence of errors.204

Furthermore, FINRA states that it found 

different results based on its own review 

of TRACE data, including a significant 

number of instances where it received 

data not yet available from the 

vendor.205 This FINRA analysis suggests 

that a number of the ‘‘reconciliation 

differences’’ deemed to reflect FINRA 

errors may in fact be the simple result 

of FINRA possessing certain data that 

was not yet available to the vendor. 

Moreover, the Commission does not 

believe that the disputed comments 

concerning existing TRACE error rates 

call into question the ability of FINRA 

to build and maintain a reliable 

reference database for the following 

additional reasons.206 First, as discussed 

above, FINRA has an established track 

record of creating reliable databases of 

information gathered from its member 

firms and made available to the 

public.207 Additionally, FINRA has 

explicitly and clearly stated that it will 

engage with market participants on the 

appropriate business requirements for 

the reporting process, it intends to 

implement functionality to allow for 

underwriters to correct previously 

submitted data to FINRA for a 

significant period after receiving the 

initial Rule 6760 submission, it may 

take a phased approach to 

implementation to promote compliance 

and data accuracy, and data reported to 

FINRA will be system-validated.208 The 

Commission expects FINRA to do these 

things and believes that FINRA is 

committed to establishing a reliable 

reference database, consistent with its 

statutory and regulatory obligations 

under the Act, and the Commission will 

continue to monitor closely FINRA’s 

work and implementation of the New 

Issue Reference Data Service.209

Furthermore, as discussed above, the 

Commission oversees FINRA as an SRO 

and, to the extent that it is operating the 

database in a manner that violates the 

Act or the rules and regulations 

thereunder, the Commission will have 

recourse. 

D. Burden on Underwriters 

1. Comments on the Proposal 

Commenters expressed concerns 

about how FINRA’s proposal might 

impact the underwriters that will be 

required to provide FINRA with new 

reference data elements for newly 

issued corporate bonds. One commenter 

argued that the proposal would increase 

regulatory and liability burdens for 


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210See Chamber Letter, at 4 (‘‘Underwriters 

would face potential liability for errors in reporting 

and calculation, while there is no clear benefit for 

this increased burden.’’); Letter from Tom 

Quaadman, Executive Vice President, U.S. Chamber 

of Commerce, dated October 24, 2019 (‘‘Chamber 

Letter III’’), at 2. 

211See Petitioner Letter IV, at 5. See also 

Chamber Letter III, at 3. Petitioner presented 

evidence of the size of underwritten investment 

grade corporate bonds in 2019, stating that ‘‘through 

October 7, 33 underwriters have each underwritten 

more than $1 billion (notional) year to date, while 

59 other underwriters also have priced issues 

during 2019—overwhelmingly for small issues of 

less than $25 million’’ and stated that FINRA has 

failed to address the differential impact of the 

proposed new compliance burden on different sized 

underwriters. See Petitioner Letter IV, at 5, n.10. 

212See Heritage Letter V, at 2. 

213See Petitioner Statement, at 17–18 

214See FIMSAC Letter, at 3. As discussed above, 

it is the Commission’s judgment that it is premature 

to draw conclusions about the impact of FINRA’s 

proposal on the manner in which underwriters 

currently distribute data. See supra notes 200–202 

and accompanying text. 

215See Notice, at 13982. 

216See id. 

217See, e.g., Recommendation, at 3 (‘‘The 

FIMSAC recognizes that the creation of this service 

will impose costs on FINRA and the underwriters. 

Based on available information, the FIMSAC 

believes that the costs would be small relative to the 

value of the service as the required information to 

be reported is similar to the information that 

underwriters already provide directly to reference 

data vendors.’’). See also supra notes 215–216 and 

accompanying text. 

218Rule 6760(b), proposed to be renumbered as 

Rule 6760(b)(1), currently requires the following 

information to be reported to FINRA: (A) The 

CUSIP number or if a CUSIP number is not 

available, a similar numeric identifier (e.g., a 

mortgage pool number); (B) the issuer name, or, for 

a Securitized Product, the names of the Securitizers; 

(C) the coupon rate; (D) the maturity; (E) whether 

Securities Act Rule 144A applies; (F) the time that 

the new issue is priced, and, if different, the time 

that the first transaction in the offering is executed; 

(G) a brief description of the issue (e.g., senior 

subordinated note, senior note); and (H) such other 

information FINRA deems necessary to properly 

implement the reporting and dissemination of a 

TRACE-Eligible Security, or if any of items (B) 

through (H) has not been determined or a CUSIP 

number (or a similar numeric identifier) is not 

assigned or is not available when notice must be 

given, such other information that FINRA deems 

necessary and is sufficient to identify the security 

accurately. See FINRA Rule 6760. 

219 Indeed, the purpose behind FIMSAC’s 

recommendation to have FINRA establish this 

database, as opposed to another entity, was to 

minimize any burdens on underwriters by utilizing 

existing reporting infrastructures. See 

Recommendation supra note 30; FIMSAC Letter, at 

3. 

220See supra note 91. The Commission believes 

that it would be rare for an underwriter involved 

in the distribution of debt securities to be able to 

act as an underwriter and broker-dealer without 

having this information immediately available for 

its engagement with customers. Additionally, the 

Commission understands that technical 

implementation may require a phased approach, as 

stated by FINRA, to promote compliance and data 

accuracy. See Response Letter, at 15; supra notes 

125–127 and accompanying text (describing 

FINRA’s implementation plans). 

221One commenter raised concerns about 

underwriters facing potential liability for errors in 

reporting. See supra note 210. While the 

Commission recognizes that underwriters may be 

subject to antifraud liability or FINRA enforcement 

actions, the Commission notes that the information 

to be provided to FINRA under this proposal is a 

subset of the information underwriters currently 

provide to investors in the primary offering. For this 

reason, the Commission believes that the risk of 

potential additional liability for reporting this 

subset of information to FINRA is minimized. 

222See IHS Markit Letter, at 3. 

223See supra Section III.B.3. See also FIMSAC 

Transcript, supra note 36, Comments from Larry 

Harris, at 0111 (noting that the burden on 

underwriters ‘‘though it might be twice as large, is 

Continued 

underwriters without any clear 

benefit.210 This commenter and 

Petitioner argued that the proposed 

rule’s compliance burden would 

disproportionately impact smaller 

underwriters.211 Another commenter 

stated that FINRA should be required to 

demonstrate ‘‘that the benefits to 

information purchasers [of the proposal] 

would materially outweigh the 

unrecompensed costs imposed on 

underwriters.’’ 212 Petitioner argued that 

FINRA must include information 

regarding underwriter’s costs of 

preparing for new infrastructure and 

compliance obligations.213

On the other hand, FIMSAC stated 

that it heard from underwriters that it 

would be relatively easy for them to 

report the new issue reference data to 

FINRA given their current established 

reporting mechanisms to TRACE and 

that underwriters could thereby avoid 

the duplicative effort involved in 

sending the same data multiple times to 

various reference data providers.214

2. Response to Comments 

In its proposal, FINRA stated that 

‘‘[b]ased on conversations with 

underwriters, FINRA understands that 

underwriters do not anticipate incurring 

significant costs for reporting under this 

proposal.’’ 215 In addition, FINRA 

acknowledged the concern that 

underwriters that underwrite fewer 

deals may be disproportionally 

burdened if there are fixed costs 

associated with amending an 

underwriter’s reporting system to meet 

the additional requirements of the 

proposal, but stated that any such 

additional burden ‘‘may be alleviated 

because reporting to FINRA would 

reduce or eliminate the need for 

underwriters to report to other parties, 

or by the fact that underwriters can 

leverage investments already made in 

the existing reporting system necessary 

under Rule 6760.’’ 216

3. Commission Discussion and Findings 

The Commission believes that any 

burdens imposed on underwriters by 

the proposal, including smaller 

underwriters, would be limited because 

of such underwriters’ existing data 

collection and reporting practices with 

respect to the information FINRA 

proposes to be reported.217 First, the 

Commission believes, and no 

commenter has disputed, that all 

underwriters, including small 

underwriters, should be able to leverage 

their existing infrastructure used to 

connect and report to FINRA with 

respect to the information required 

under the proposal. Underwriters today 

are already required to report certain 

data elements related to new issue 

bonds to FINRA pursuant to the 

requirements of current Rule 6760.218

All underwriters of Corporate Debt 

Securities, as defined in FINRA’s rules, 

have already developed data reporting 

mechanisms to FINRA for purposes of 

transmitting required data concerning 

these securities.219

Second, the Commission believes that 

underwriters today are already 

collecting the additional information 

required under the 32 data elements in 

the proposal, and are already reporting 

such information to at least one private 

vendor on the first day a bond trades, 

given the need for this information by 

investors in the newly issued bond’s 

primary offering.220 Underwriters 

should be able to leverage their existing 

data collection and reporting 

infrastructures to FINRA and private 

data vendors in order to meet their 

obligations under the proposal to report 

additional information to FINRA.221

Furthermore, because underwriters 

currently have infrastructure in place to 

report certain information to FINRA and 

the information required by the 

proposal to private data vendors, they 

are already incurring costs to update 

and maintain this existing 

infrastructure. As a result, the 

Commission believes the initial set-up 

costs resulting from the proposal on 

underwriters will be small and there 

would be no or very little additional 

ongoing costs as a result of the proposal 

that are not already being incurred by 

underwriters. 

The Commission also notes that 

underwriters may also be able to 

efficiently leverage the services of thirdparty vendors to comply with FINRA’s 

new reporting requirements, as one 

commenter suggested.222 Moreover, the 

Commission believes that the 

incremental burden on underwriters to 

set up and maintain infrastructure to 

comply with FINRA’s proposal, if any, 

is justified by the benefits to the market 

of eliminating information asymmetries, 

which should improve efficiency and 

competition.223


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still extremely small and very, very small in 

comparison to the value of these data.’’). 

224See supra note 139. 

225See, e.g., Healthy Markets Letter II, at 5–6; 

Petitioner Letter III, at 8–11; Heritage Letter II; at 

2–3; Petitioner Letter IV, at 4. 

226See Heritage Letter, at 1–2; Heritage Letter V, 

at 3; Chamber Letter, at 2; Petitioner Letter, at 

2–3; Healthy Markets Letter II, at 5; Tabb Letter, at 

2–3. See also Petitioner Statement, at 3, 32–34. 

227See Petition for Review, at 29. 

228See Petitioner Statement, at 20. 

229See id. at 21. 

230See Petitioner Letter II, at 1. See also 

Petitioner Letter IV, at 5. This commenter compared 

the proposal to a previous FINRA proposal to create 

a facility to consolidate all quotation data in the 

over-the-counter equities market, which was 

ultimately withdrawn by FINRA. See Petitioner 

Letter V, at 3–4 (citing Securities Exchange Act 

Release No. 60999 (November 13, 2009), 74 FR 

61183 (November 23, 2009) (SR–FINRA–2009–077) 

(Notice of Filing of Proposed Rule Change Relating 

to the Restructuring of Quotation Collection and 

Dissemination for OTC Equity Securities). 

231See Petition for Review, at 28, 30. See 

Petitioner Statement, at 32–33; 36. 

232See Petitioner Statement, at 38. 

233See FIMSAC Letter, at 3; Harris Letter at 4. 

234See Harris Letter, at 4. 

235See Harris Letter at 4 (noting that such 

additional data include ratings and indications of 

whether an issuer is currently in default, in an 

agreement to merge, or negotiating such an 

agreement). One commenter who argued the 

proposal would diminish competition amongst 

reference data providers nevertheless stated that 

market participants currently demand more 

reference data fields than FINRA is proposing to 

collect. See Petitioner Letter, at 13–14. 

236See Response Letter, at 8–9. See also Notice, 

at 13982. 

237See FINRA Statement, at 3; Response Letter, 

at 9. 

238See FINRA Statement, at 3–4; Response Letter, 

at 9. 

239See FINRA Statement, at 4, 27; Response 

Letter, at 8 (citing to Harris Letter; FIMSAC Letter; 

ICE Data Letter; Charles River Letter). See also 

supra notes 233–234 and accompanying text. 

240See FINRA Statement, at 4, 28. 

241See FINRA Statement, at 25 (citing SEC Staff 

Memorandum, Current Guidance on Economic 

Analysis in SEC Rulemakings, at 11 (March 16, 

2012)). 

242Specifically, FINRA cited to statements at the 

FIMSAC meeting and comment letters submitted in 

response to the proposal noting that the status quo 

currently results in higher costs for customers and 

that the proposal will reduce overall costs. See 

FINRA Statement, at 25–26 (citing to statements of 

Frederic Demesy, Refinitiv, FIMSAC Transcript, 

supra note 36; Harris Letter, at 4; and Charles River 

Letter). As further discussed below, FINRA has 

expressly and clearly committed that its fees for the 

New Issue Reference Data Service will be costbased. See FINRA Statement, at 18. In its filing with 

the Commission to adopt fees for the New Issue 

Reference Data Service, FINRA will be required to 

set forth why such cost-based fees meet the 

requirements of the Act, and the Commission will 

evaluate FINRA’s eventual fee application based on 

Finally, the proposal would require 

uniform pre-first trade reporting to 

FINRA. Currently, for information 

reported under Rule 6760 for trade 

reporting purposes, the rule generally 

requires pre-first trade reporting but 

allows some information to be reported 

within 15 minutes of the first-trade.224

The Commission recognizes that there 

may be an incremental burden on 

underwriters to report certain 

information earlier than they were 

previously required; however, the 

Commission believes this burden will 

be mitigated both by the existence of 

current reporting infrastructures 

discussed above and the fact that the 

data elements to be reported are already 

in the possession of underwriters, given 

the use of this information in the newly 

issued bond’s primary offering. 

E. Competition 

1. Comments on the Proposal 

Several commenters argued that the 

proposal fails to adequately explain why 

the rule’s burden on competition is 

necessary or appropriate consistent with 

Section 15A(b)(9) of the Act.225 A 

number of commenters asserted that the 

proposal would inappropriately 

displace competition among private 

sector reference data providers, which 

would impose costs on the market and 

could ultimately impede the quality of 

data available to market participants.226

Petitioner stated that the proposal 

would ‘‘both limit vendors’ demand and 

make it harder for vendors to obtain and 

distribute information from 

underwriters mandated to provide the 

information to FINRA.’’ 227 Petitioner 

stated that the proposal would establish 

a rival data service that would be a 

‘‘government-privileged quasimonopoly enjoying the advantage of 

compulsory access to data that marketbased services must compete for.’’ 228

This commenter argued that 

‘‘[s]upplanting the current competitive 

system in favor of a compulsory 

government service’’ is inconsistent 

with the Act.229

Petitioner stated that the proposal 

‘‘would expand a key regulator’s 

commercial role into new lines of 

heretofore competitive private business’’ 

and stressed ‘‘the likely chilling effect 

that this would have on investment and 

innovation.’’ 230 This commenter stated 

that the proposal would chill future 

innovation and investment ‘‘through the 

threat of SROs commandeering private 

markets’’ and that ‘‘FINRA’s willingness 

to enter new markets and provide new 

services undermines the incentives for 

private actors to invest and 

innovate.’’ 231 Petitioner stated that it 

and other similar companies have spent 

‘‘tens of thousands of hours and 

millions of dollars over decades 

building attractive bond-reference data 

services’’ and that ‘‘FINRA’s attempt to 

appropriate the space would cause 

incumbent providers to hesitate before 

investing more in capital-markets 

innovation.’’ 232

In contrast, commenters asserted that 

because of the limited set of data 

proposed to be captured by FINRA, the 

proposal would not supplant private 

sector market data providers.233 One of 

these commenters asserted that 

providing reference data in a manner 

similar to that proposed by FINRA 

promotes competition by reducing costs 

and barriers to entry for new entrants in 

the reference data provider market.234

This commenter noted that data vendors 

currently sell reference data products 

that provide data in addition to FINRA’s 

proposed required data fields.235

2. FINRA Response to Comments 

In response, FINRA reiterated that the 

proposed data service is not designed to 

affect the opportunity for private third 

party vendors to compete and is rather 

intended to promote competition among 

new reference data providers by, among 

other things, lowering barriers to entry 

and allowing competition on other 

dimensions, such as additional fields, 

updates to existing data based on 

subsequent events related to the 

security, presentation, ease of access, 

and integration with other data sets and 

systems deemed valuable by market 

participants.236 FINRA stated that its 

proposed data service is narrowly 

tailored to provide only the basic fields 

of reference data that are essential for 

trading and settling newly issued 

corporate bonds.237 FINRA argued that 

because of the proposal’s narrow scope, 

it would not interfere with private data 

vendors’ ability to compete to provide 

more enriched and value-added data, 

including data with supplementary 

fields and other value-added services.238

FINRA noted that several commenters 

responding to the proposal, including 

those that operate alongside Petitioner 

in both the markets for reference data 

and trading services, agreed that the 

proposal would not displace reference 

data providers or chill private market 

investments and would instead enhance 

competition among market participants, 

level the playing field, and reduce 

overall costs.239 FINRA also noted that 

competition among reference data 

providers continues to exist in the 

municipal bond market, where there has 

long been a centralized, SRO-mandated 

data service similar to that proposed by 

FINRA.240

FINRA also stated that a key indicator 

of enhanced competition is the ability to 

reduce prices,241 and noted that a 

number of market participants stated 

that the proposal will lower the costs to 

obtain new issue reference data.242


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the requirements of the Act and assess FINRA’s 

proposed cost-based formula. See infra Section 

III.F.3.b. 

243See FINRA Statement, at 12. 

244See FINRA Statement, at 26. FINRA further 

argued that if an entity is a dominant incumbent 

and creates barriers to entry for users of its service, 

then impacting that entity’s standing may be 

required to promote competition and relieve 

inappropriate burdens on competition. FINRA 

noted that the FIMSAC expressed particular 

concern that a dominant reference data vendor has 

limited other market participants’ access to its data 

for anti-competitive purposes. See FINRA 

Statement, at 26 (citing FIMSAC Letter, at 4). 

245See Notice, at 13981; FIMSAC Transcript, 

supra note 36, Comments from Frederic Demesy, 

Refinitiv, at 0078 (‘‘[A]t the moment, we see that 

there are some market anomalies where some of the 

vendors have access to information much earlier 

than other vendors. And that creates basically 

competitive advantage on certain platforms, which 

is in my view not ideal for having a transparent 

market.’’), Comments from Spencer Gallagher, ICE 

Data Services, at 0069–72 (‘‘there is one area that 

no investment or no level of ingenuity can solve 

and that is equal access to new issue reference data 

at or prior to first trade execution’’); Harris Letter, 

at 4–5 (describing anticipated pro-competitive 

impacts of the proposal on the data vendor market). 

246See supra note 216 and accompanying text. 

247As discussed in more detail in this section, the 

Commission expects that data vendors will 

continue to provide enhanced data services (e.g., 

adding additional data and making various 

analytical calculations based on the data in the New 

Issue Reference Data Service) to customers, and that 

market participants will turn to a variety of sources 

for their data needs depending on the facts and 

circumstances at hand. 

248See, e.g., Response Letter, at 9. 

249See Harris Letter at 4 (noting that such 

additional data include ratings and indications of 

whether an issuer is currently in default, in an 

agreement to merge, or negotiating such an 

agreement). Petitioner, who argued the proposal 

would diminish competition amongst reference 

data providers, nevertheless stated that market 

participants currently demand more reference data 

fields than FINRA is proposing to collect. See 

Petitioner Letter, at 13–14. 

250For a description of various data vendor’s 

bond reference data offerings, see e.g. https://

www.bloomberg.com/professional/product/ 

reference-data/; https://www.theice.com/marketdata/pricing-and-analytics/reference-data; https://

www.refinitiv.com/en/financial-data/market-data/ 

reference-data; and https://www.ftserussell.com/ 

data/fixed-income-data. 

FINRA stated it believes the proposal 

will promote competition in the markets 

both for reference data and trading in 

that providing all data vendors with 

timely access to a basic set of new issue 

reference data will level the playing 

field and allow vendors to compete on 

other value-added dimensions, which in 

turn will lower the costs of timely and 

impartial access to essential data (a 

barrier to entry) for trading firms.243

FINRA also argued that competition law 

is meant to protect competition, not 

competitors, and that a rule proposal 

does not burden competition in a 

market for services simply because it 

may impact the standing of one market 

competitor.244

3. Commission Discussion and Findings 

The Commission believes that 

FINRA’s proposal is designed to address 

an information asymmetry in the market 

for newly issued corporate bond 

reference data. Specifically, there is a 

lack of broadly available and accessible 

new issue reference data on the first day 

of secondary market trading that 

impedes the efficiency and competition 

in the current marketplace. The 

Commission believes that FINRA’s 

proposal will improve competition 

among market participants, including 

investors, data vendors, and trading 

platforms, by providing all market 

participants with the ability to access 

the same investment products to meet 

their own business and investment 

needs or those of their customers at the 

time a bond becomes available in the 

secondary market. The Commission 

believes that the burden on competition 

imposed on private data vendors by the 

proposal should be minimal and is 

necessary or appropriate to further the 

purposes of Section 15A(b)(6) of the 

Act, namely to promote just and 

equitable principles of trade and foster 

cooperation and coordination with 

persons engaged in regulating, clearing, 

settling, processing information with 

respect to, and facilitating transactions 

in, newly issued corporate bonds. 

First, as discussed above, the impact 

of FINRA’s proposal on the manner in 

which underwriters currently distribute 

data or how other data vendors conduct 

business is uncertain. It is possible, for 

example, that FINRA’s proposal could 

have a positive impact on competition 

by lowering barriers to entry among data 

providers and enabling them to compete 

on a more level playing field.245

Additionally, for those vendors or 

market participants that may be getting 

reference data from underwriters 

directly, there is nothing in FINRA’s 

proposal that prohibits underwriters 

from continuing to provide new issue 

reference data to data vendors as they 

do currently. Because underwriters 

already have these data reporting 

processes in place and have incurred 

the costs of establishing those processes, 

it is possible that despite the creation of 

a new database by FINRA, underwriters 

will continue to provide new issue 

reference data as they do today. Should 

that be the case, private data vendors 

will continue to enjoy the benefits of 

any investments made to acquire newly 

issued corporate bond reference data, 

which should limit any competitive 

impacts of FINRA’s proposal. 

If market participants do in fact 

change their current practices and 

report new issue reference data to 

FINRA only,246 the Commission 

believes that FINRA’s proposal will 

impose a limited burden on 

competition.247 There is nothing in 

FINRA’s proposal that would require 

market participants to purchase the 

reported data directly from FINRA. The 

FINRA proposal only applies to new 

issue corporate bond data and does not 

contemplate collecting and 

disseminating other data not collected 

by FINRA (as described further below) 

or updates to these data throughout the 

life of the bond. For this reason, the 

Commission believes market 

participants would continue to procure 

data provided by parties other than 

FINRA. In addition, the Commission 

believes that many market participants 

may ultimately continue to rely on their 

existing data vendors as a single source 

for all security-specific data and rely on 

those vendors to incorporate the data 

proposed to be collected by FINRA. 

Otherwise, these market participants 

could incur the costs of collecting and 

maintaining two data sets—the data 

available from FINRA and the range of 

other data available from other data 

vendors as discussed further below. 

Furthermore, the information that 

FINRA will require to be reported is a 

limited set of data, leaving data vendors 

with space to continue competing on a 

variety of fronts. For example, reference 

data providers could offer additional 

value add-ons with respect to data 

reported to FINRA, such as additional 

data concerning the newly issued bond, 

enhanced presentation, analytical 

capabilities, ease of access, and 

integration with other data sets and 

systems.248 In addition, data vendors 

could offer additional services relating 

to the data, such as enhanced data 

scrubbing, if their customers demand 

such services. Indeed, as stated by one 

commenter, data vendors currently sell 

data products that provide data in 

addition to FINRA’s proposed required 

data fields, and these additional data 

presumably provide value to their 

customers.249 In addition, the 

Commission understands that data 

vendors currently offer various services 

beyond the initial supply of the data set, 

such as the integration of such data into 

other data sets and systems, and data 

vendors would presumably continue to 

offer such services relating to the 

required reference data.250

The Commission concludes that the 

limited set of data proposed to be 

reported and disseminated to allow for 

the identification, valuation and 

settlement of new issue corporate bonds 

is unlikely to supplant the demand for 


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251See FIMSAC Letter, at 3. There are many other 

data provided by reference data providers 

concerning a bond issue, such as issuer information 

(e.g., fundamentals data, capital structure data), 

specific bond rating, bond trade and selling 

restrictions, classification data (industry, legal 

entity, etc.), corporate action data, ESG 

(Environmental, Social & Governance) data, 

dividend data, instrument analytics data, and 

security ownership data. See e.g., IHS Markit 

Reference Data Bonds Factsheet, available at 

https://cdn.ihs.com/www/pdf/Reference-DataBonds-factsheet.pdf; Bloomberg Reference Data 

Content and Data, available at https://

www.bloomberg.com/professional/product/ 

reference-data/. 

252See Amendment No. 2, at 4. 

253See Petitioner Letter IV, at 6–9; Chamber 

Letter III at 2–3; Letter from John Thornton, CoChair, et al., Committee on Capital Markets 

Regulation, dated October 22, 2019 (‘‘Committee 

Letter II’’), at 2–3; Committee Letter III, at 2; 

Heritage Letter III, at 2–3; Healthy Markets Letter III, 

at 2; SIFMA Letter III, at 3–4; Petitioner Letter V, 

at 4–5; Petitioner Statement, at 34–36. 

254See Petitioner Letter IV, at 6–9; Chamber 

Letter III at 2–3; Committee Letter II at 2–3; 

Committee Letter III, at 2; Heritage Letter III, at 2– 

3; Healthy Markets Letter III at 2; SIFMA Letter III 

at 3–4; and Petitioner Letter V, at 4–5. Some 

commenters pointed to the Commission’s recent 

proposed rule change to amend Regulation NMS to 

rescind a provision that allows a proposed 

amendment to a national market system plan 

(‘‘NMS plan’’) that establishes or changes a fee or 

other charge to become effective upon filing, and 

argued that the concerns voiced by the Commission 

in that proposal are applicable to FINRA’s current 

proposal. See Petitioner Letter IV, at 8; Chamber 

Letter III at 2; Committee Letter II at 2–3 (citing to 

Commission, Proposed Rule, ‘‘Rescission of 

Effective-Upon Filing Procedure for NMS Plan Fee 

Amendments,’’ 84 FR 54794 (Oct. 11, 2019) 

(‘‘Proposed Regulation NMS Fee Amendment’’)). 

See also Petitioner Statement, at 17–19. 

255See Petition for Review, at 16; Petitioner 

Statement, at 18. 

256See Petitioner Statement, at 17; Petitioner 

Letter V, at 4. 

257See Petitioner Letter IV, at 6–9; Chamber 

Letter III at 2–3; Letter from John Thornton, CoChair, et al., Committee on Capital Markets 

Regulation, dated October 22, 2019 (‘‘Committee 

Letter II’’), at 2–3; Committee Letter III, at 2; 

Heritage Letter III, at 2–3; Healthy Markets Letter III, 

at 2; SIFMA Letter III, at 3–4; Petitioner Letter V, 

at 4–5; Petitioner Statement, at 34–36. 

258See Petitioner Statement, at 35. 

259See Petitioner Statement, at 14, 36. 

260See id. Petitioner also noted that FINRA’s own 

representative acknowledged that FINRA’s current 

TRACE system could not support a new data 

service and instead FINRA would need to build 

new reporting, validation and distribution 

infrastructure. See id., at 5–6 (citing to statements 

by Ola Persson, FINRA, FIMSAC Transcript, supra 

note 36, (‘‘Speaking for FINRA, not the effort on 

behalf of the underwriters, but speaking for FINRA, 

we would have some work to do. The technology 

today does not lend itself very well to this. We 

would need to create the ability for underwriters to 

come in, give us partial information and have the 

ability to edit their own records, et cetera. Today, 

that is a . . . bit of a one-way street. . . . We would 

also need to create a separate distribution channel 

for this. . . .’’). 

261See id. at 2, 12. See also Letter from Hal. S. 

Scott, President, Committee on Capital Markets 

Regulation, dated March 16, 2020 (‘‘Committee 

Letter III’’), at 2 (‘‘[B]ecause the [proposal] does not 

specify its proposed fees and underlying cost, the 

SEC cannot conduct the informed cost-benefit 

analysis necessary for approval . . .’’); Heritage 

Letter V, at 2 (stating that FINRA should be required 

to demonstrate ‘‘that the benefits to information 

purchasers would materially outweigh the 

unrecompensed costs imposed on 

underwriters. . . .’’). 

262See Petition for Review, at 12–13; Petitioner 

Statement, at 11–13. 

263See Petition for Review, at 13; Petitioner 

Statement, at 13. 

264See Petitioner Statement, at 11. This 

commenter further argued that the proposal cannot 

satisfy the requirements of Section 15(A)((b)(5) of 

a more comprehensive reference 

database with enhanced data sets that 

contain additional fields not reported to 

or disseminated by FINRA and 

additional services related to such data 

not provided by FINRA.251 The 

Commission believes that while 

FINRA’s proposal will provide certain 

basic information for a bond on an 

impartial basis to market participants to 

allow for the identification, valuation, 

and settlement of newly-issued bonds, 

market participants will continue to 

require additional data and value-added 

services from reference data providers 

beyond what will be provided by 

FINRA. As such, the Commission 

believes that reference data providers 

will continue to compete and innovate 

in order to meet the additional needs of 

their customers, allaying commenters’ 

concerns regarding potential increased 

costs, decreased data quality, and a 

chilling on investment and innovation. 

For these reasons, the Commission 

believes that the potential benefits of the 

proposal discussed above, including 

furtherance of the purposes of Section 

15A(b)(6), justify the minimal 

competitive burden on reference data 

vendors that may result from this 

proposal. The Commission thus finds 

that the proposal is consistent with 

Section 15A(b)(9) of the Act, and does 

not impose any burden on competition 

not necessary or appropriate in 

furtherance of the purposes of the Act. 

F. Fees 

1. Comments on the Proposal 

As discussed above, in Amendment 

No. 2, FINRA withdrew the proposed 

subscription fees for receipt of corporate 

new issue reference data from the 

proposal and stated that it would submit 

a separate filing to establish fees related 

to the new issue reference data service 

at a future date and will implement the 

service after those fees become 

effective.252 In particular, several 

commenters believed that removal of 

fees from the proposal was 

problematic.253 These commenters 

stated that eliminating the fees from the 

proposal amounts to procedural 

maneuvering in order to avoid scrutiny, 

as any subsequent fee filing submitted 

by FINRA will be immediately effective 

upon filing with the Commission.254

Petitioner stated that ‘‘FINRA should 

not be allowed to circumvent the Act’s 

requirement of an affirmative finding of 

compliance with [Section] 15A(b)(5) by 

dodging the many comments critical of 

its unjustified fees.’’ 255 This commenter 

further stated that ‘‘[b]y segregating and 

delaying the fee justification, the 

[a]mended [p]roposal would relieve 

FINRA of the burden of proving the 

reasonableness of the fees and charges 

associated with its new service.’’ 256

In addition, these commenters stated 

that the proposed fees form a critical 

part of FINRA’s proposed newly issued 

bond-reference data service and that the 

Commission and the public cannot 

assess whether the benefits of the 

proposal outweigh the costs and 

competitive burdens without knowing 

the fees that FINRA would charge for 

the service.257 Petitioner further stated 

that FINRA has failed to provide any 

quantitative estimate for any costs that 

the proposal would impose.258 This 

commenter stated that FINRA failed to 

include any information regarding the 

cost of developing and operating the 

new data system and provided no 

information about whether the costs of 

the service for traders will be higher or 

lower than current prices.259 This 

commenter argued that FINRA must 

include information regarding the cost 

of building and operating the new 

reference data service, which FINRA 

proposes to pass on to market 

participants.260 Petitioner concluded 

that ‘‘lacking any evidence from FINRA 

about the costs of its proposed data 

service, the Commission cannot approve 

the [proposal] consistent with the 

requirements of the Act.’’ 261

Petitioner further stated that the 

Commission erred in the Approval 

Order by not making a finding under 

Section 15A(b)(5) of the Act that the 

proposal provides for the equitable 

allocation of reasonable dues, fees, and 

other charges among members and 

issuers and other persons using any 

facility or system which FINRA operates 

or controls.262 This commenter stated 

that ‘‘[t]o the extent the [Approval] 

Order suggests that requirement applies 

only to a ‘proposed fee filing’ . . . it is 

wrong’’ and, rather, that Section 

15A(b)(5) applies to all the rules of the 

national securities association.263

Petitioner argued that the Commission 

must determine whether FINRA’s 

current proposal provides for the 

equitable allocation of reasonable 

charges.264


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the Act because FINRA has failed to provide any 

information regarding fees or an analysis of costs or 

‘‘margins.’’ See Petitioner Statement, at 2, 13–16. 

265See FINRA Statement, at 17; Response Letter, 

at 12, n.35. FINRA stated that it removed the fees 

so that it could further evaluate the appropriate fee 

structure in light of comments received, as well as 

new Commission staff guidance on SRO fee filings 

published after FINRA’s initial proposal. See 

FINRA Statement, at 17. 

266See FINRA Statement, at 17–18. 

267See FINRA Statement, at 18. 

268See id. 

269See FINRA Statement, at 18; Response Letter, 

at 12. 

270See FINRA Statement, at 19–21 (citing to 

Section 19(b)(3)(A) of the Act, Section 15(A)((b)(5) 

of the Act, and various immediately effective 

proposed rule changes filed by SROs to adopt fees). 

271The Commission notes that SROs are required 

by Section 19(b) of the Act and Rule 19b–4 

thereunder to file proposed rule changes with the 

Commission on Form 19b–4. The Act provides that 

a proposed rule change may not take effect unless 

it is approved by the Commission pursuant to 

Section 19(b)(2) of the Act, or it becomes 

immediately effective upon filing pursuant to 

Section 19(b)(3)(A) of the Act. Furthermore, Section 

19(b)(3)(A) of the Act states ‘‘a proposed rule 

change shall take effect upon filing with the 

Commission if designated by the self-regulatory 

organization as . . . establishing or changing a due, 

fee, or other charge imposed by the self-regulatory 

organization on any person, whether or not the 

person is a member of the self-regulatory 

organization. . . .’’ See 15 U.S.C. 78s(b)(3)(A). Rule 

19b–4(f) under the Act specifies the types of 

proposed rule changes that may become 

immediately effective upon filing with the 

Commission, and includes those properly 

designated by the SROs as ‘‘establishing or 

changing a due, fee, or other charge imposed by the 

self-regulatory organization.’’ See Rule 19b–4(f)(2) 

under the Act. 

272Furthermore, in contrast to Petitioner’s 

assertion, FINRA has the burden of demonstrating 

that a proposed fee is consistent with the Act and 

the rules and regulations thereunder, regardless of 

whether the proposed fee is effective upon filing 

with the Commission. See Securities and Exchange 

Commission Rules of Practice, Rule 700(b)(3) (17 

CFR 201.700(b)(3)). See also supra note 256. 

273See Section 19(b)(3)(C) of the Act, authorizing 

the Commission at any time within 60 days of the 

date of filing of a proposed rule change pursuant 

to Section 19(b)(1) of the Act, to summarily 

temporarily suspend the change in the rules of an 

SRO 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, and 

Section 19(b)(2)(B) of the Act, setting forth a notice 

Continued 

2. FINRA Response to Comments 

In response, FINRA stated that it did 

not withdraw the fees from the current 

proposal to avoid subjecting the fees to 

further public comment, but rather so it 

could further evaluate an appropriate 

fee structure for the data service.265

FINRA stated that it believed that ‘‘with 

additional time, it could better assess 

the costs it incurs to develop the data 

service, and also better forecast the 

number of expected subscribers,’’ and 

that this information would help it to 

better determine the proposed fees for 

the data service.266

FINRA stated that it has committed to 

pricing the data service as a utility, 

using a cost-based formula, meaning 

that it will tie the subscription price of 

the data service to FINRA’s costs and 

that FINRA will allow all market 

participants to subscribe to the data 

service on reasonable, disclosed terms, 

as required of SROs.267 In addition, 

FINRA stated that it will not employ 

discriminatory pricing or unreasonably 

refuse anyone access to the data, unlike 

the anti-competitive practices the 

FIMSAC noted have been observed in 

the current private market.268

FINRA stated that any new fees would 

be filed with the Commission in 

advance of the implementation of the 

newly issued corporate bond new issue 

reference data service and would be 

subject to applicable Commission rule 

filing requirements under the Act.269 In 

addition, FINRA argued that Petitioner’s 

contentions that the proposal cannot be 

approved without including the 

proposed fees and that the Commission 

erred by not making an affirmative 

finding under Section 15A(b)(5) of the 

Act are is inconsistent with the plain 

text of the Act and longstanding 

Commission precedent.270

3. Commission Discussion and Findings 

A number of commenters expressed 

concerns about the lack of information 

regarding fees for the New Issue 

Reference Data Service, including (a) the 

appropriateness of separating the fees 

into a separate immediately effective 

filing; (b) the ability of the Commission 

to assess the proposal’s consistency 

with the Act without knowing either the 

proposed fees for the service or the 

potential costs to FINRA for building 

the service; and (c) the application of 

Section 15A(b)(5) to the proposal. The 

Commission addresses each of these 

issues below. 

a. Fee Filings 

The Commission disagrees that 

separating the fee proposal into a 

subsequent filing would allow FINRA to 

avoid regulatory and public scrutiny of 

the proposed fees.271 FINRA cannot 

charge fees for the proposed data service 

until the Commission receives a 

proposed rule change that complies 

with the Act and Commission rules 

concerning proposed fee changes. All 

proposed rule changes, including 

proposed fee changes, are subject to 

public notice and comment and must be 

consistent with the Act. As required by 

Section 19(b)(1) of the Act, the 

Commission must publish notice of all 

proposed rule changes and must give 

interested persons an opportunity to 

comment, whether or not such proposed 

rule change is immediately effective or 

not. The instructions to Form 19b–4 

state that the form ‘‘is intended to elicit 

information necessary for the public to 

provide meaningful comment on the 

proposed rule change . . . and for the 

Commission to determine whether the 

proposed rule change . . . is consistent 

with the requirements of the Act and the 

rules and regulations thereunder . . . as 

applicable to the self- regulatory 

organization and in accordance with the 

requirements for each type of filing.’’ A 

proposed fee filing must fully and fairly 

describe the operation of the applicable 

fee (including its effect on market 

participants) and do so in sufficient 

detail so that the public can understand 

the proposal sufficiently to provide 

meaningful comment and the 

Commission can determine whether the 

proposal is consistent with the Act. 

While FINRA may file its eventual fees 

for the New Issue Reference Data 

Service as immediately effective 

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

Act, the fee filing will be subject to the 

same notice and comment requirements 

as a proposed rule change that is not 

eligible to be filed as immediately 

effective. Thus, use of the immediately 

effective fee filing process will not allow 

FINRA to avoid commenter scrutiny for 

its proposed fees for the service. 

A proposed fee filing by a national 

securities association such as FINRA 

must also address all relevant statutory 

requirements, including Section 

15A(b)(5) of the Act which requires that 

‘‘[t]he rules of the association provide 

for the equitable allocation of reasonable 

dues, fees, and other charges among 

members and issuers and other persons 

using any facility or system which the 

association operates or controls;’’ 

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

requires, in part, that the rules of an 

association are ‘‘not designed to permit 

unfair discrimination between 

customers, issuers, brokers, or dealers;’’ 

and Section 15A(b)(9)of the Act, which 

requires, in part, that the rules of an 

association ‘‘not impose any burden on 

competition not necessary or 

appropriate in furtherance of the 

purposes of this title.’’ Regardless of 

whether a fee proposed by FINRA is 

effective upon filing with the 

Commission, the Commission assesses 

whether or not the fee proposal is 

consistent with the Act.272 If the 

Commission determines that a fee filing 

merits further review, the Commission 

may temporarily suspend it and issue an 

order instituting proceedings to 

determine whether to approve or 

disapprove the proposal.273 Such a 


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6944 Federal Register / Vol. 86, No. 14 / Monday, January 25, 2021 / Notices 

and hearing procedure for an order instituting 

proceedings. 274See generally Sections III.A and III.B; supra 

notes 31–42, 89–102 and 139–145 and 

accompanying text. 

275See supra note 273 and accompanying text. 

276See supra note 266 and accompanying text. 

277See supra notes 259–261 and accompanying 

text. 

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

2 17 CFR 240.19b–4. 

determination would be informed by 

any comments received on a fee filing. 

Therefore, the Commission does not 

believe that FINRA’s use of the 

immediately effective fee filing process 

would allow FINRA to avoid regulatory 

scrutiny for its proposed fees for the 

service. 

Finally, while the Commission 

outlined various concerns relating to 

effective-upon-filing fee changes for 

NMS plans under Rule 608(b) in the 

Proposed Regulation NMS Fee 

Amendment, we do not believe those 

concerns call into question our 

approach here. Fee filings in this 

context are governed by Section 19 of 

the Act rather than Rule 608. More 

importantly, as stated above, the 

Commission assesses whether or not 

any fee proposal filed under Section 19 

of the Act is consistent with the Act. If 

the Commission determines that a fee 

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

merits further review, which may be 

informed by the required notice and 

comment process, the Commission may 

temporarily suspend it and issue an 

order instituting proceedings to 

determine whether to approve or 

disapprove the proposal. 

b. Assessment of Proposal’s Consistency 

With the Act 

The Commission further disagrees 

that it cannot adequately assess the 

proposal’s consistency with the Act and 

its economic effects without knowing 

the fees that FINRA will charge for the 

proposed reference data service or the 

costs to build the service. The 

Commission has evaluated the 

economic effects, including the 

qualitative costs and benefits, of the 

proposal based on the record before it 

and has concluded that there is a lack 

of broadly available and accessible new 

issue reference data on the first day of 

secondary market trading that impedes 

the efficiency and competition in the 

current marketplace, and that FINRA’s 

proposal would address this 

information asymmetry to the benefit of 

the market and market participants.274

The Commission’s consideration of the 

proposal’s economic effects, including 

the burden on underwriters, the 

proposal’s impact on competition 

among market participants, including 

other data vendors, and its impact on 

efficiency and capital formation, as 

discussed above, is based upon the 

understanding that the fees assessed 

will be consistent with the Act and will 

be assessed using a cost-based formula. 

It is reasonable for the Commission to 

assume that any future fees assessed 

will be consistent with the Act because, 

as discussed above, if it believes such 

fees are not consistent with the Act, the 

Commission must suspend and 

disapprove them.275 The Commission 

will evaluate FINRA’s eventual fee 

application based on the requirements 

of the Act and assess FINRA’s proposed 

cost-based formula. It is that fee filing 

that will merit a consideration of 

FINRA’s cost to build the New Issue 

Reference Data Service because the costs 

of the system, which will be better 

known once the system is built, will be 

necessary to assess whether FINRA has 

proposed a fee for that service that is 

consistent with the Act, including 

Section 15A(b)(5).276 FINRA has 

expressly and clearly committed that its 

fees will be cost-based, and it will be 

required to set forth why such costbased fees meet the requirements of the 

Act. While commenters have raised 

concerns regarding FINRA’s costs to 

build and operate the new reference 

data service,277 should FINRA 

hypothetically build a New Issue 

Reference Data Service at a high cost 

that would be unreasonable to pass on 

to end-users, FINRA would not be able 

to make a showing that any such fees 

proposed to be assessed on the basis of 

its cost to build the service are 

reasonable, as required by Section 

15A(b)(5) of the Act. In such a case, as 

discussed above, the Commission would 

suspend and disapprove the proposal. 

c. Application of Section 15A(b)(5) to 

FINRA’s Proposal 

The Commission disagrees with one 

commenter’s argument that the 

Commission is required to make a 

finding under Section 15A(b)(5) of the 

Act that the current proposal ‘‘provides 

for the equitable allocation of reasonable 

dues, fees, and other charges among 

members and issuers and other persons 

using any facility or system which the 

association operates or controls.’’ The 

plain language of the Act necessitates 

that the proposal involve a due, fee or 

other charge in order to make such a 

finding concerning Section 15A(b)(5) of 

the Act. 

IV. Conclusion 

For the foregoing reasons, the 

Commission finds that the proposed 

rule change is consistent with the Act 

and the rules and regulations 

thereunder applicable to a national 

securities association. 

It is therefore ordered, pursuant to 

Rule 431 of the Commission’s Rules of 

Practice, that the earlier action taken by 

delegated authority, Exchange Act 

Release No. 87656 (December 4, 2019), 

84 FR 67491 (December 10, 2019), is set 

aside and, pursuant to Section 19(b)(2) 

of the Act, the proposed rule change 

(SR–FINRA–2019–008), as modified by 

Amendment No. 2, hereby is approved. 

By the Commission. 

Vanessa A. Countryman, 

Secretary. 

[FR Doc. 2021–01438 Filed 1–22–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–90937; File No. SR–MIAX– 

2021–01] 

Self-Regulatory Organizations; Miami 

International Securities Exchange LLC; 

Notice of Filing and Immediate 

Effectiveness of a Proposed Rule 

Change To Amend Exchange Rule 

1308, Supervision of Accounts, To 

Adopt Temporary Rules To Extend the 

Time by Which Members Must 

Complete Their Branch Office 

Inspections for the Calendar Year 2020 

and To Provide Temporary Remote 

Inspection Relief for Their Office 

Inspections for Calendar Years 2020 

and 2021 

January 15, 2021. 

Pursuant to the provisions of 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 08, 2021, Miami 

International Securities Exchange, LLC 

(‘‘MIAX Options’’ or the ‘‘Exchange’’) 

filed with the Securities and Exchange 

Commission (‘‘Commission’’) a 

proposed rule change as described in 

Items I, II, and III below, which Items 

have been prepared by the Exchange. 

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 is filing a proposal to 

amend Exchange Rule 1308, 

Supervision of Accounts, to: (1) Remove 

obsolete rule text; and (2) adopt 

temporary rules to extend the time by 


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