38250 Federal Register / Vol. 74, No. 146 / Friday, July 31, 2009 / Notices 

proposed rule’s impact on efficiency, competition, 

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

7 15 U.S.C. 78f(b)(4). 

8 15 U.S.C. 78f(b)(5). 

9 15 U.S.C. 78f(b)(8). 

10 17 CFR 242.603(a). 

11NYSE Amex is an exclusive processor of NYSE 

Amex depth-of-book data under Section 3(a)(22)(B) 

of the Act, 15 U.S.C. 78c(a)(22)(B), which defines 

an exclusive processor as, among other things, an 

exchange that distributes information with respect 

to quotations or transactions on an exclusive basis 

on its own behalf. 

12Securities Exchange Act Release No. 59039 

(December 2, 2008), 73 FR 74770 (December 9, 

2008) (SR–NYSEArca–2006–21). In the NYSE Arca 

Order, the Commission describes in great detail the 

competitive factors that apply to non-core market 

data products. The Commission hereby incorporates 

by reference the data and analysis from the NYSE 

Arca Order into this order. 

13 Id. at 74771. 

14 Id. at 74782. 

15 Id. at 74781. 

16See Securities Exchange Act Release No. 59543 

(March 9, 2009), 74 FR 11159 (March 16, 2009) (SR– 

NYSE–2008–132). 

17 15 U.S.C. 78s(b)(2). 

18 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 60022 

(June 1, 2009), 74 FR 27361 (‘‘Notice’’). 

Commission finds that the proposal is 

consistent with Section 6(b)(4) of the 

Act,7 which requires that an exchange 

have rules that provide for the equitable 

allocation of reasonable dues, fees, and 

other charges among its members and 

other persons using its facilities and the 

requirements under Section 6(b)(5) 8

that the rules of an exchange be 

designed to promote just and equitable 

principles of trade, 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. 

The Commission also finds that the 

proposed rule change is consistent with 

the provisions of Section 6(b)(8) of the 

Act,9 which requires that the rules of an 

exchange not impose any burden on 

competition not necessary or 

appropriate in furtherance of the 

purposes of the Act. Finally, the 

Commission finds that the proposed 

rule change is consistent with Rule 

603(a) of Regulation NMS,10 adopted 

under Section 11A(c)(1) of the Act, 

which requires an exclusive processor 

that distributes information with respect 

to quotations for or transactions in an 

NMS stock to do so on terms that are 

fair and reasonable and that are not 

unreasonably discriminatory.11

Under this proposal, the Exchange 

would charge a $500 monthly fee to 

recipients of the NYSE Amex Order 

Imbalance Information datafeed. The 

$500 monthly fee would allow vendors 

to redistribute NYSE Amex Order 

Imbalance Information: (1) Without 

having to differentiate between 

professional subscribers and 

nonprofessional subscribers; (2) without 

having to account for the extent of 

access to data; (3) without having to 

procure contracts with its subscribers 

for the benefit of the Exchange; and (4) 

without having to report the number of 

its subscribers. 

The Commission has reviewed the 

proposal using the approach set forth in 

the NYSE Arca Order for non-core 

market data fees.12 In the NYSE Arca 

Order, the Commission stated that 

‘‘when possible, reliance on competitive 

forces is the most appropriate and 

effective means to assess whether the 

terms for the distribution of non-core 

data are equitable, fair and reasonable, 

and not unreasonably 

discriminatory.’’ 13 It noted that the 

‘‘existence of significant competition 

provides a substantial basis for finding 

that the terms of an exchange’s fee 

proposal are equitable, fair, reasonable, 

and not unreasonably or unfairly 

discriminatory.’’ 14 If an exchange ‘‘was 

subject to significant competitive forces 

in setting the terms of a proposal,’’ the 

Commission will approve a proposal 

unless it determines that ‘‘there is a 

substantial countervailing basis to find 

that the terms nevertheless fail to meet 

an applicable requirement of the 

Exchange Act or the rules 

thereunder.’’ 15

There are a variety of alternative 

sources of information that impose 

significant competitive pressures on the 

NYSE Amex in setting the terms for 

distributing its market data. The 

Commission believes that the 

availability of those alternatives, as well 

as the NYSE Amex’s compelling need to 

attract order flow, imposed significant 

competitive pressure on the NYSE 

Amex to act equitably, fairly, and 

reasonably in setting the terms of its 

proposal. In addition, the Commission 

recently determined that NYSE was 

subject to significant competitive forces 

in setting fees for a substantially similar 

non-core market data product—NYSE 

Order Imbalance Information 

datafeed.16

Because the NYSE Amex was subject 

to significant competitive forces in 

setting the terms of the proposal, the 

Commission will approve the proposal 

in the absence of a substantial 

countervailing basis to find that its 

terms nevertheless fail to meet an 

applicable requirement of the Act or the 

rules thereunder. An analysis of the 

proposal does not provide such a basis. 

IV. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,17 that the 

proposed rule change (SR–NYSEAmex– 

2009–26) is hereby approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.18

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–18275 Filed 7–30–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60377; File No. SR–FINRA– 

2009–031] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Order Approving 

Proposed Rule Change as Amended, 

Relating to the Reporting of Over-theCounter Transactions in Equity 

Securities Executed Outside Normal 

Market Hours 

July 23, 2009. 

I. Introduction 

On May 8, 2009, Financial Industry 

Regulatory Authority, Inc. (‘‘FINRA’’) 

(f/k/a National Association of Securities 

Dealers, Inc. (‘‘NASD’’)) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’), pursuant to Section 

19(b)(1) of the Securities Exchange Act 

of 1934 (‘‘Act’’) 1 and Rule 19b–4 

thereunder,2 a proposed rule change to 

amend FINRA trade reporting rules 

relating to over-the-counter transactions 

in equity securities executed outside 

normal market hours to (1) require that 

any trades executed during the hours 

that a FINRA Facility (the Alternative 

Display Facility (‘‘ADF’’), a Trade 

Reporting Facility (‘‘TRF’’) or the OTC 

Reporting Facility (‘‘ORF’’)) is closed be 

reported within 15 minutes of the 

opening of the Facility, i.e., 8:15 a.m. 

Eastern Time; and (2) conform the trade 

reporting requirements applicable to 

‘‘outside normal market hours’’ 

transacations across FINRA Facilities. 

On May 29, 2009, FINRA filed 

Amendment No. 1 to the proposed Rule 

Change. The proposed rule change was 

published for comment in the Federal 

Register on June 9, 2009.3 The 

Commission received no comment 

letters on the proposed rule change. 


PWALKER on DSK8KYBLC1PROD with NOTICES
Federal Register / Vol. 74, No. 146 / Friday, July 31, 2009 / Notices 38251 

4See Rules 6282(a)(2)(B); 6380A(a)(2)(C) and (D); 

6380B(a)(2)(C) and (D); and 6622(a)(3)(C). 

5See Notice, supra, note 3. 

6FINRA is proposing to amend paragraph (a)(1) 

and adopt new paragraph (a)(6) of Rule 6282 to 

conform to Rules 6380A(a)(4), 6380B(a)(4) and 

6622(a)(5). 

7See, e.g., Rules 6282(a)(4), 6380A(a)(2) and (5) 

and 6380B(a)(2) and (5). 

8 In approving this proposal, the Commission has 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

15 U.S.C. 78c(f). 

9 15 U.S.C. 78o–3(b)(6). 

This order approves the proposed rule 

change as amended. 

II. Description of the Proposed Rule 

Change 

FINRA is proposing to amend the 

trade reporting rules 4 to require that 

trades executed during the hours that 

the FINRA Facility is closed be reported 

within 15 minutes of the opening of the 

facility (i.e., 8:15 a.m. Eastern Time for 

all FINRA Facilities). Specifically, 

members would be required to report as 

follows: (1) Trades executed between 

midnight and 8 a.m. must be reported 

by 8:15 a.m. on trade date, and (2) trades 

executed between the close of the 

FINRA Facility (i.e., either 6:30 p.m. or 

8 p.m.) and midnight must be reported 

on an ‘‘as/of’’ basis the following 

business day by 8:15 a.m. These trades 

would be designated with the unique 

trade report modifier to denote their 

execution outside normal market hours. 

Any such trades not reported by 8:15 

a.m. would be marked with the ‘‘outside 

normal market hours trade reported 

late’’ modifier. 

FINRA also is proposing certain 

amendments to conform the 

requirements for reporting ‘‘outside 

normal market hours’’ trades across 

FINRA Facilities. First, under current 

rules and system functionality, members 

are not permitted to submit to the 

FINRA/Nasdaq TRF and ORF a trade 

report with the ‘‘outside normal market 

hours’’ modifier during normal market 

hours. For example, if a member 

executes a trade at 9:29:00 a.m. and 

reports the trade at 9:30:15 a.m. (in 

compliance with the 90-second 

reporting requirement under FINRA 

rules), the FINRA/Nasdaq TRF and ORF 

will reject the trade report; the trade 

cannot be reported, and will not be 

disseminated, until after 4 p.m. By 

contrast, the ADF and FINRA/NYSE 

TRF permit the submission of trade 

reports with the ‘‘outside normal market 

hours’’ modifier throughout the day. 

With this change, the trade described in 

the example above can be reported to 

the ADF or FINRA/NYSE TRF and 

disseminated at 9:30:15 a.m. 

Accordingly, FINRA is proposing to 

amend Rules 6380A(a)(2)(A) and 

(a)(2)(C) relating to the FINRA/Nasdaq 

TRF and Rules 6622(a)(3)(A) and 

(a)(3)(C)(i) relating to the ORF to delete 

the requirement that ‘‘outside normal 

market hours’’ transactions that are not 

reported by 9:30 a.m. be reported after 

4 p.m. The proposed amendments are 

identical to the text of current Rules 

6282(a)(2)(A) and (a)(2)(B)(i) relating to 

the ADF. 

Additionally, FINRA is proposing 

conforming changes to Rules 

6380B(a)(2)(A) and (C) relating to the 

FINRA/NYSE TRF. Today, members 

submit trade reports with the ‘‘outside 

normal market hours’’ modifier to the 

FINRA/NYSE TRF throughout the day. 

However, FINRA stated that when the 

rules for this TRF were originally 

adopted, these provisions inadvertently 

were based on the rules relating to the 

FINRA/Nasdaq TRF, rather than the 

ADF. Thus, FINRA stated that the 

proposed amendments for the FINRA/ 

NYSE TRF do not represent a departure 

from current member reporting practices 

and systems functionality.5

In this regard, FINRA also is 

proposing to amend Rules 

6380A(a)(2)(D), 6380B(a)(2)(D) and 

6622(a)(3)(C)(ii) to require expressly that 

‘‘as/of’’ reports submitted pursuant to 

these provisions include the unique 

trade report modifier, as specified by 

FINRA, to denote their execution 

outside normal market hours. The 

proposed amendments conform to the 

text of current Rule 6282(a)(2)(C)(ii). 

Second, FINRA is proposing to amend 

Rules 6282(a), 6380A(a), 6380B(a) and 

6622(a) to consolidate the provisions 

relating to late trade reporting and make 

clear that trades that are required to be 

reported on trade date, but are not 

reported on trade date, must be reported 

on an ‘‘as/of’’ basis on a subsequent date 

(T+N) and shall be designated as late. 

This requirement applies to trades 

executed during normal market hours, 

as well as those ‘‘outside normal market 

hours’’ trades that are required by rule 

to be reported on trade date (i.e., trades 

executed between midnight and 9:30 

a.m. and between 4 p.m. and the close 

of the FINRA Facility at either 6:30 or 

8 p.m.). The proposed amendments also 

would make clear the requirement that 

‘‘outside normal market hours’’ trades 

that are required to be reported on an 

‘‘as/of’’ basis the following business day 

(T+1), but are not reported T+1, must be 

reported on a subsequent date (T+N) 

and shall be designated as late.6

Accordingly, FINRA is proposing to 

amend Rules 6380A(a)(2)(B), 

6380B(a)(2)(B) and 6622(a)(3)(B) to 

delete the duplicative requirement that 

transactions not reported by 8 p.m. on 

trade date must be reported on an ‘‘as/ 

of’’ basis the following business day 

(T+1). 

Third, FINRA is proposing certain 

technical, non-material changes to 

conform the text of the rules relating to 

the reporting of trades executed outside 

normal market hours across FINRA 

Facilities. For example, FINRA is 

proposing to amend Rule 6282(a)(2) 

relating to the ADF and Rule 6622(a)(3) 

relating to the ORF to delete the specific 

references to the ‘‘.T’’ trade report 

modifier. This conforms to the trade 

reporting rules relating to the TRFs, as 

well as the other provisions of the ADF 

trade reporting rules, which do not refer 

to specific trade report modifier labels.7

Additionally, FINRA is proposing to 

renumber the subparagraphs in Rule 

6282(a)(2) relating to the ADF and Rule 

6622(a)(3) relating to the ORF to 

conform to the numbering of the 

subparagraphs in Rules 6380A(a)(2) and 

6380B(a)(2) relating to the TRFs. 

III. Discussion and Findings 

After careful review, 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.8 In particular, the 

Commission finds that the proposed 

rule change is consistent with the 

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

Act,9 which requires, among other 

things, that FINRA rules be designed to 

prevent fraudulent and manipulative 

acts and practices, to promote just and 

equitable principles of trade, and, in 

general, to protect investors and the 

public interest. 

The Commission believes that the 

proposed rule change will enhance 

market transparency by ensuring that 

these ‘‘outside normal market hours’’ 

trades are reported and disseminated 

closer to the actual execution time 

rather than reported at some later time 

during the trading day. As a result, 

market participants will have better 

information about the time of execution 

for such trades. For example, under 

current rules, a trade with the ‘‘outside 

normal market hours’’ modifier that is 

reported and disseminated at 9:20 a.m. 

could have been executed and reported 

real-time at 9:20 a.m., or it could have 

been executed at some point between 

midnight and the opening of the FINRA 

Facility at 8 a.m. There is currently 

nothing to distinguish a trade executed 

and reported at 9:20 a.m. from a trade 

executed between midnight and 8 a.m. 


PWALKER on DSK8KYBLC1PROD with NOTICES
38252 Federal Register / Vol. 74, No. 146 / Friday, July 31, 2009 / Notices 

10The Commission notes that in connection with 

these changes to the trade reporting rules FINRA is 

also moving language from Rule 6282(a)(1) to Rule 

6282(a)(6) concerning patterns or practices of late 

trade reporting. Rule 6282(a)(1) currently states that 

‘‘[a] pattern or practice of late trade reporting 

without exceptional circumstances shall be 

considered conduct inconsistent with high 

standards of commercial honor and just equitable 

principles of trade violation of Rule 2010.’’ The 

change FINRA is proposing would replace the word 

‘‘shall’’ with ‘‘may,’’ and applies the lower standard 

not only to a pattern or practice of late trade 

reporting outside of normal market hours, but to a 

pattern or practice of late trade reporting during 

normal market hours. Rule 6282 concerns 

transactions reported only to TRACS, and FINRA 

has informed the Commission staff that the change 

is designed to make the rule consistent with the 

FINRA/NASDAQ, FINRA/NYSE, and OTC Trade 

Reporting Facilities, all of which currently have the 

identical language to proposed Rule 6282(a)(6). 

Telephone call between Stephanie Dumont, Senior 

Vice President and Director of Capital Markets 

Policy, FINRA, and Kathy England, Assistant 

Director, Commission, May 29, 2009. The 

Commission expects FINRA to continue pursuing 

violations of its trade reporting rules and to 

continue, as appropriate, charging violations of 

Rule 2010 (Standards of Commercial Honor and 

Principles of Trade). The Commission notes that it 

has routinely upheld appeals from FINRA 

disciplinary actions when FINRA has charged 

respondents with violations of Rule 2010 based 

solely on an underlying violation of another SRO 

rule. See e.g., Stephen J. Gluckman, 54 S.E.C. 175, 

185 (1999), Exchange Act Release No. 41628 (July 

20, 1999). 

11 15 U.S.C. 78s(b)(2). 

12 17 CFR 200.30–3(a)(12). 

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

2 15 U.S.C. 78s(b)(3)(A)(iii). 

3 17 CFR 240.19b–4(f)(4). 

4Commodity Futures Trading Commission 

Release No. 5662–09 (May 28, 2009). 5The clearing agreement is attached as Exhibit 5A 

to OCC’s rule filing with the Commission. OCC 

states that the clearing agreement is generally 

similar to corresponding agreements between OCC 

and other futures exchanges. 

and reported at 9:20 a.m. Under the 

proposed rule change, a trade executed 

between midnight and 8 a.m. that is 

reported at 9:20 a.m. would be marked 

late, thus distinguishing it from a trade 

executed and reported real-time at 9:20 

a.m. The Commission believes that this 

change will enhance market 

transparency by eliminating 

systematically imposed delays in the 

reporting of ‘‘outside normal market 

hours’’ trades to the FINRA/Nasdaq TRF 

and ORF. 

The Commission believes that by 

conforming the reporting requirements 

and systems functionality with respect 

to ‘‘outside normal market hours’’ trades 

across FINRA Facilities, the proposed 

rule change will promote more 

consistent trade reporting by members 

and a more complete and accurate audit 

trail.10

IV. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,11 that the 

proposed rule change (SR–FINRA– 

2009–031), as amended, be, and hereby 

is, approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.12

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–18270 Filed 7–30–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60386; File No. SR–OCC– 

2009–13] 

Self-Regulatory Organizations; The 

Options Clearing Corporation; Notice 

of Filing and Immediate Effectiveness 

of Proposed Rule Change Relating to 

the Clearance and Settlement of 

Treasury Futures Contracts 

July 24, 2009. 

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

Securities Exchange Act of 1934 

(‘‘Act’’),1 notice is hereby given that on 

July 1, 2009, The Options Clearing 

Corporation (‘‘OCC’’) filed with the 

Securities and Exchange Commission 

the proposed rule change as described 

in Items I, II, and III below, which Items 

have been prepared primarily by OCC. 

OCC filed the proposed rule change 

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

the Act 2 and Rule 19b–4(f)(4) 

thereunder 3 so that the proposal was 

effective upon filing with the 

Commission. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The proposed rule change will 

establish parameters for OCC to clear 

and settle futures contracts based on 

U.S. Treasury Notes and Bonds 

(‘‘Treasury Futures’’). 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, 

OCC included statements concerning 

the purpose of and basis for the 

proposed rule change and discussed any 

comments it received on the proposed 

rule change. The text of these statements 

may be examined at the places specified 

in Item IV below. OCC has prepared 

summaries, set forth in sections A, B, 

and C below, of the most significant 

aspects of such statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

The purpose of this proposed rule 

change is to establish new provisions to 

OCC’s rules in order for OCC to provide 

clearance and settlement services for 

Treasury Futures transactions that are 

proposed to be traded by ELX Futures 

LP. (‘‘ELX’’), an electronic futures 

market that was designated as a contract 

market by the Commodity Futures 

Trading Commission (‘‘CFTC’’) on May 

22, 2009.4 Under the terms of its 

clearing agreement with ELX dated 

December 5, 2008,5 OCC will operate as 

the exclusive provider of clearance and 

settlement services through physical 

delivery for Treasury Futures and other 

futures, futures options, or commodity 

options that may be traded on ELX. As 

such, ELX will send OCC matched trade 

data so that OCC can margin the 

contracts and inform ELX members their 

payment and securities delivery 

obligations. 

1. Delivery of Underlying Treasury 

Securities 

As detailed in proposed modifications 

to Chapter 13 of its Rules, OCC clearing 

members may satisfy their delivery 

obligations with respect to Treasury 

Futures by delivering different treasury 

securities provided the securities meet 

certain specifications. Since there is not 

an established delivery date to deliver 

the underlying treasury securities, OCC 

proposes to permit a seller of Treasury 

Futures to elect to deliver on any 

business day during the delivery month, 

which, in the case of certain Treasury 

Futures, includes up to the third 

business day of the following month. 

Delivery of the treasury securities 

underlying Treasury Futures will be 

effected directly between OCC clearing 

members rather than through the 

facilities of OCC. The delivery process 

will occur over a period of three 

business days and will be initiated by 

the submission of a delivery intent by 

the clearing member holding a short 

position in the Treasury Futures. After 

a delivery intent is submitted to OCC, 

OCC will assign the delivery intent to an 

open long position in Treasury Futures 

beginning with long positions with the 

oldest trading date. On the second 

business day of the delivery process, the 

delivering clearing members will be 


PWALKER on DSK8KYBLC1PROD with NOTICES