Federal Register / Vol. 74, No. 190 / Friday, October 2, 2009 / Notices 50991 

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

2 17 CFR 240.19b–4. 

3Amendment No. 1 was a partial amendment 

that: (1) Revised the description of the proposal to 

accurately reflect the proposed rule text; (2) 

amended the definition of ‘‘TRACE–Eligible 

Security’’ to remove a parenthetical that was 

inadvertently included in the original proposal; and 

(3) made minor technical edits to the purposed rule 

text. 

4Securities Exchange Act Release No. 59733 

(April 8, 2009), 74 FR 17709 (‘‘Notice’’). 

5See infra note 12. 

6See letter from Sharon Zackula, Associate Vice 

President and Associate General Counsel, FINRA, to 

Elizabeth M. Murphy, Secretary, Commission, dated 

August 26, 2009 (‘‘FINRA Response’’). 

7See infra Section III. 

Economic Injury (EIDL) Loan 

Application Deadline Date: 06/28/2010. 

ADDRESSES: Submit completed loan 

applications to: U.S. Small Business 

Administration, Processing And 

Disbursement Center, 14925 Kingsport 

Road, Fort Worth, TX 76155. 

FOR FURTHER INFORMATION CONTACT: A. 

Escobar, Office of Disaster Assistance, 

U.S. Small Business Administration, 

409 3rd Street, SW., Suite 6050, 

Washington, DC 20416. 

SUPPLEMENTARY INFORMATION: Notice is 

hereby given that as a result of the 

President’s major disaster declaration on 

09/26/2009, Private Non-Profit 

organizations that provide essential 

services of governmental nature may file 

disaster loan applications at the address 

listed above or other locally announced 

locations. 

The following areas have been 

determined to be adversely affected by 

the disaster: 

Primary Counties: 

Carroll, Catoosa, Chattooga, Cobb, 

Douglas, Gwinnett, Paulding, 

Stephens, Walker. 

The Interest Rates are: 

Percent 

Other (Including Non-Profit Organizations) With Credit Available 

Elsewhere: ................................ 4.500 

Businesses And Non-Profit Organizations Without Credit Available Elsewhere: ........................ 4.000 

The number assigned to this disaster for physical damage is 

118886 and for economic injury 

is 118896.

(Catalog of Federal Domestic Assistance 

Numbers 59002 and 59008) 

James E. Rivera, 

Acting Associate Administrator for Disaster 

Assistance. 

[FR Doc. E9–23776 Filed 10–1–09; 8:45 am] 

BILLING CODE 8025–01–P 

SMALL BUSINESS ADMINISTRATION 

Interest Rates 

The Small Business Administration 

publishes an interest rate called the 

optional ‘‘peg’’ rate (13 CFR 120.214) on 

a quarterly basis. This rate is a weighted 

average cost of money to the 

government for maturities similar to the 

average SBA direct loan. This rate may 

be used as a base rate for guaranteed 

fluctuating interest rate SBA loans. This 

rate will be 4.000 (4) percent for the 

October–December quarter of FY 2009. 

Pursuant to 13 CFR 120.921(b), the 

maximum legal interest rate for any 

third party lender’s commercial loan 

which funds any portion of the cost of 

a 504 project (see 13 CFR 120.801) shall 

be 6% over the New York Prime rate or, 

if that exceeds the maximum interest 

rate permitted by the constitution or 

laws of a given State, the maximum 

interest rate will be the rate permitted 

by the constitution or laws of the given 

State. 

Richard C. Blewett, 

Acting Director, Office of Financial 

Assistance. 

[FR Doc. E9–23772 Filed 10–1–09; 8:45 am] 

BILLING CODE P 

SECURITIES AND EXCHANGE 

COMMISSION 

[File No. 500–1] 

In the Matter of Emergent Health Corp.; 

Order of Suspension of Trading 

September 30, 2009. 

It appears to the Securities and 

Exchange Commission that there is a 

lack of current and accurate information 

concerning the securities of Emergent 

Health Corp. because questions have 

arisen regarding the company’s issuance 

of stock and trading in the company’s 

stock. 

The Commission is of the opinion that 

the public interest and the protection of 

investors require a suspension of trading 

in the securities of the above-listed 

company. 

Therefore, it is ordered, pursuant to 

Section 12(k) of the Securities Exchange 

Act of 1934, that trading in the 

securities of the above-listed company is 

suspended for the period from 9:30 a.m. 

EDT on September 30, 2009, through 

11:59 p.m. EDT, on October 13, 2009. 

By the Commission. 

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. E9–23882 Filed 9–30–09; 11:15 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60726; File No. SR–FINRA– 

2009–010] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Notice of Filing of 

Amendment No. 2 and Order Granting 

Accelerated Approval of a Proposed 

Rule Change, as Modified by 

Amendment No. 2 Thereto, Expanding 

TRACE To Include Agency Debt 

Securities and Primary Market 

Transactions 

September 28, 2009. 

I. Introduction 

On March 18, 2009, the Financial 

Industry Regulatory Authority, Inc. 

(‘‘FINRA’’) (f/k/a National Association 

of Securities Dealers, Inc. (‘‘NASD’’)) 

filed with the Securities and Exchange 

Commission (‘‘SEC’’ or ‘‘Commission’’), 

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

Securities Exchange Act of 1934 (the 

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

proposed rule change to expand TRACE 

to include Agency Debt Securities and 

primary market transactions. On April 

8, 2009, FINRA filed Amendment No. 1 

to the proposal.3 The proposed rule 

change, as amended, was published for 

comment in the Federal Register on 

April 16, 2009.4 The Commission 

received eight comment letters in 

response to the proposed rule change.5

On August 26, 2009, FINRA responded 

to the comment letters 6 and filed 

Amendment No. 2 to the proposed rule 

change.7 The Commission is publishing 

this notice and order to solicit 

comments on Amendment No. 2 and to 

approve the proposed rule change, as 

modified by Amendment No. 2, on an 

accelerated basis. 

II. Description of the Proposal 

Currently, FINRA utilizes the Trade 

Reporting and Compliance Engine 

(‘‘TRACE’’) to collect and disseminate 

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8The term ‘‘List or Fixed Offering Price 

Transaction’’ means a primary market sale 

transaction sold on the first day of trading of a new 

issue: (i) by a sole underwriting, syndicate manager, 

syndicate member or selling group member at the 

published or stated list or fixed offering price, or 

(ii) in the case of a primary market sale transaction 

effected pursuant to Securities Act Rule 144A, by 

an initial purchaser, syndicate manager, syndicate 

member or selling group member at the published 

or stated fixed offering price. See proposed FINRA 

Rule 6710(q). 9The term ‘‘Takedown Transaction’’ means a 

primary market sale transaction sold on the first day 

of trading of a new issue: (i) by a sole underwriter 

or syndicate manager to a syndicate or selling group 

member at a discount from the published or stated 

list or fixed offering price, or (ii) in the case of a 

primary market sale transaction effected pursuant to 

Securities Act Rule 144A, by an initial purchaser 

or syndicate manager to a syndicate or selling group 

member at a discount from the published or stated 

fixed offering price. See proposed FINRA Rule 

6710(r). 

10See Amendment No. 2, infra Section III. 

11Under the proposal, for fee purposes, FINRA 

will distinguish TRACE transaction data as two data 

sets: one comprised of corporate bond transaction 

information and the other comprised of Agency 

Debt Security transaction information. The fee 

schedule set forth in FINRA Rule 7730 would apply 

to Agency Debt Securities and primary market 

transactions. Additionally, FINRA has proposed to 

amend the fees for ‘‘Web Browser Access,’’ which 

would vary depending on factors such as the 

number of users and whether the user(s) would 

have access to one or both data sets. 

12See letter from Robert F. Anderson, Senior 

Managing Director, Fixed Income Trading, dated 

April 17, 2009 (‘‘Anderson Letter’’); letter from Beth 

N. Lowson, The Nelson Law Firm, LLC, dated May 

5, 2009 (‘‘Nelson Letter’’); letter from Manisha 

Kimmel, Executive Director, Financial Information 

Forum, dated May 7, 2009 (‘‘FIF Letter’’); letter from 

Heather Traeger, Associate Counsel, Investment 

Company Institute, dated May 7, 2009 (‘‘ICI 

Letter’’); letter from Joseph W. Sack, Managing 

Director, Asset Management Group, Securities 

Industry and Financial Markets Association, dated 

May 7, 2009 (‘‘AMG–SIFMA Letter’’); letter from 

Sean C. Davy, Managing Director and Robert 

Toomey, Managing Director, and Associate General 

Counsel, Capital Markets Group of Securities 

Industry and Financial Markets Association, dated 

May 7, 2009 (‘‘CMG–SIFMA Letter’’); letter from 

Michael Decker and Mike Nicholas, Co-Chief 

Executive Officers, Regional Bond Dealers 

Association, dated May 7, 2009 (‘‘RBDA Letter’’); 

letter from Don Winton, Crews & Associates, Inc., 

dated May 22, 2009 (Crews Letter’’) (collectively, 

the ‘‘Comment Letters’’). 

13See Anderson Letter (supporting FINRA’s 

overall goal of improving bond market 

transparency); Nelson Letter (supporting the 

proposal because it provides for increased price 

transparency in the market by broadening the range 

of securities trades that must be reported and 

disseminated); AMG–SIFMA Letter (arguing that 

real-time prices would be helpful to large asset 

management firms with respect to trading activities, 

portfolio management, and valuation activities); ICI 

Letter (citing the benefits to investors in bonds and 

noting that transparency helps to improve price 

discovery and ensure the integrity of the debt 

markets). 

14See Crews Letter; FIF Letter. 

15See CMG–SIFMA Letter; RBDA Letter. 

16See CMG–SIFMA Letter, at 1–2; RBDA Letter, 

at 2. 

17See CMG–SIFMA Letter, at 1. 

counter transactions in corporate debt 

securities. FINRA has proposed to 

extend TRACE to include most primary 

market transactions as well as 

transactions in debt securities that are 

issued or guaranteed by a governmentsponsored enterprise or U.S. 

government agency (‘‘Agency Debt 

Securities’’). Specifically, the proposed 

rule change would: 

(1) In Rule 6710, amend the defined 

terms (a) ‘‘TRACE–Eligible Security’’ to 

include Agency Debt Securities; (b) 

‘‘Reportable TRACE Transaction’’ to 

include primary market transactions; 

and (c) ‘‘Investment Grade’’ and ‘‘NonInvestment Grade’’ to classify unrated 

Agency Debt Securities as investment 

grade securities for purposes of the 

dissemination provisions of the TRACE 

rules; 

(2) amend Rule 6710(a), to require 

members to provide FINRA certain 

information regarding debt securities 

that are not assigned CUSIPs, but 

otherwise meet TRACE eligibility 

standards; 

(3) in Rule 6710, delete the definition 

of ‘‘Money Market Instrument’’ 

embedded in the term ‘‘TRACE–Eligible 

Security’’ and add it as a separately 

defined term in new proposed Rule 

6710(o); 

(4) in Rule 6710, add the defined 

terms, ‘‘Agency,’’ ‘‘Agency Debt 

Security,’’ ‘‘Asset-Backed Security,’’ 

‘‘Government-Sponsored Enterprise,’’ 

‘‘Money Market Instrument,’’ ‘‘U.S. 

Treasury Security,’’ ‘‘List or Fixed 

Offering Price Transaction,’’ and 

‘‘Takedown Transaction;’’ 

(5) in Rule 6710, make certain 

technical changes to a number of the 

defined terms; 

(6) in Rule 6730, establish reporting 

requirements for primary market 

transactions that are List or Fixed 

Offering Price Transactions 8 or 

Takedown Transactions; 9

(7) in Rule 6750, provide that 

transaction information for List or Fixed 

Offering Price Transactions and 

Takedown Transactions will not be 

disseminated. FINRA has represented 

that it will study the reported data for 

these primary market transactions for a 

period of time after reporting begins 

and, at a later date, determine if 

dissemination of the information is 

appropriate and, if appropriate, develop 

a dissemination strategy; 

(8) in Rule 6760, amend the 

requirements for members to provide 

FINRA with notice of and information 

about new issuances of TRACE-Eligible 

Securities to facilitate timely reporting 

of such securities in both primary and 

secondary market transactions; 

(9) establish new Rule 6770, which 

would provide FINRA emergency 

authority, to be exercised in 

consultation with the Commission, that 

would permit FINRA to suspend the 

reporting and/or dissemination of 

certain transactions in TRACE-Eligible 

Securities, or the reporting of certain 

data elements that are otherwise 

required under Rule 6730 and/or the 

dissemination of certain data elements 

as market conditions warrant and for 

such period of time as FINRA deemed 

necessary; 10

(10) in Rule 7730, establish reporting 

and market data fees for Agency Debt 

Securities and primary market 

transactions generally at the same rates 

in effect for corporate bonds; 11 and 

(11) amend various rules in the 

FINRA Rule 6700 and 7730 series to 

reflect minor technical, stylistic, or 

confirming changes. 

In its filing with the Commission, 

FINRA acknowledged that its proposal 

to extend TRACE reporting to include 

Agency Debt Securities may result in 

certain trading desks having to report 

transactions to TRACE for the first time. 

Consequently, FINRA represented that it 

would continue to work with members 

and third-party vendors to ensure 

effective and efficient implementation. 

FINRA further stated that it will 

announce the effective date of the 

proposed rule change in a Regulatory 

Notice to be published no later than 60 

days following Commission approval. 

According to FINRA, the effective date 

will be no later than 180 days following 

publication of the Regulatory Notice 

announcing Commission approval. 

III. Summary of Comments and 

Amendment No. 2 

The Commission received eight 

comments on the proposed rule 

change.12 Four commenters expressed 

strong support for the proposal.13 Two 

other commenters were not opposed to 

FINRA’s proposal, but raised concerns 

regarding operation and 

implementation.14

Two commenters indicated support 

for more transparency in the fixed 

income markets, but opposed the 

proposed rule change.15 Both 

commenters believed that the market in 

Agency Debt Securities is highly liquid 

and questioned the need for expanding 

TRACE to cover it.16 One of the 

commenters stated that any expansion 

of TRACE to include Agency Debt 

Securities or primary market 

transactions would impose significant 

costs on firms that engage in such 

transactions.17

FINRA responded that, although 

multiple vendors provide data on 

Agency Debt Securities, there is no 

centralized public dissemination of 


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18FINRA Response, at 3. 

19See CMG–SIFMA Letter, at 5; RBDA Letter, at 

3; FIF Letter, at 3. 

20See FINRA Response, at 5. 

21See id. 

22See RBDA Letter, at 2–3. In a reverse inquiry, 

investors or dealers determine an amount and type 

of bond that they wish to purchase and approach 

the issuer with a request to buy debt securities with 

those features at a particular price. If the issuer 

agrees, the bonds are issued and purchased. 

23See RBDA Letter, at 3. 

24See FINRA Response, at 5. 

25See CMG–SIFMA Letter, at 4; FIF Letter, at 1. 

26See FINRA Response, at 5. 

27See FIF Letter, at 2–3. 

28See FINRA Response, at 6. 

29See CMG–SIFMA Letter, at 4. 

30See id., at 6–7. 

31See id., at 6. 

32See FIF Letter, at 3–4. 

33See FINRA Response, at 6. 

information regarding transactions in 

Agency Debt Securities. FINRA noted 

that the pre-trade information available 

is generally indicative, while post-trade 

information—whether via a subscriber 

service or at a publicly accessible Web 

site—is not available at all. FINRA 

concluded that ‘‘[t]he expansion of 

TRACE will create consolidated posttrade transparency in Agency Debt 

Securities, and the dissemination of 

transaction information will assist in 

price discovery and valuation processes 

for all market participants and provide 

retail investors access to price 

information current not readily 

available to non-professionals.’’18

Three commenters requested that the 

distinction between primary and 

secondary transactions be clarified for 

reporting purposes.19 In its original 

filing, FINRA proposed that member use 

one of three indicators when reporting 

transactions to distinguish between 

primary and secondary transactions, 

and to further distinguish List or Fixed 

Offering Price Transactions and 

Takedown Transactions from other 

primary market transactions. In 

response, FINRA revised Rule 

6730(d)(4)(D) to eliminate the proposed 

indicators for secondary market and 

primary market transactions that are not 

List or Fixed Offering Price Transactions 

or Takedown Transactions. The rule 

would retain the requirement that 

members use the remaining proposed 

indicator when reporting primary 

market transactions that are List or 

Fixed Offering Price Transactions and 

Takedown transactions.20 One 

commenter suggested that that the 

definition of List or Fixed Offering Price 

Transaction and Takedown Transaction 

be amended for reporting purposes to 

include primary market transactions 

that are executed after the day of 

pricing, but would otherwise qualify as 

a List or Fixed Offering Price 

Transaction or Takedown Transaction. 

FINRA responded that it did not believe 

that the definition should be amended 

but, rather proposed to amend the 

deadline for reporting all List or Fixed 

Offering Price Transactions or 

Takedown Transactions to no later than 

T+1 during TRACE system hours. By 

extending the reporting period to T+1, 

FINRA would eliminate the distinction 

between a transaction executed in 

connection with an offering priced 

before 5 p.m. ET and a transaction 

executed as part of an offering priced on 

the same day but after 5 p.m. ET when 

the TRACE system is closed. FINRA 

believes this change will address 

operational concerns without negatively 

impacting regulatory surveillance or 

market transparency.21

One commenter also raised a 

compliance concern with regard to 

reverse inquiries.22 The commenter 

argued that complying with the 

proposed requirement to notify FINRA 

about new issues ‘‘prior to the 

commencement of primary market 

transactions’’ would be impossible in 

the case of a reverse inquiry, because 

the new issue materializes and the 

primary market transaction takes place 

precisely upon the agreement of the 

issuer to sell bonds at the terms 

proposed by the investor. Accordingly, 

the commenter recommended that 

FINRA amend Rule 6760 so that 

underwriting broker-dealers would be 

required to notify FINRA within 15 

minutes of commencement of primary 

market trading after the underwriting of 

the new issue, in the instances where it 

is not possible to do so prior to the 

commencement of primary market 

transactions.23

In response, FINRA proposed to 

amend Rule 6760 so that if a member is 

involved in an intraday offering that is 

priced and commences between 9:30 

a.m. and 4 p.m. ET, the member would 

be permitted to provide FINRA 

Operations the required information 

available prior to the execution of the 

first transaction in the distribution or 

offering. All other information required 

under the rule would have to be 

provided within 15 minutes of the time 

of execution of the first transaction in 

such distribution or offering.24

Two commenters stated that firms 

should be permitted to rely on the 

TRACE Issue Master to determine if a 

security is TRACE-eligible.25 FINRA 

responded that it has often stated that it 

a firm’s obligation under Rule 6730 is to 

report transactions in securities that 

meet the definition of TRACE-Eligible 

Security. FINRA further stated that if a 

firm has a reporting obligation under 

Rule 6730 in a security that is a TRACEEligible Security but is not included in 

the TRACE Issue Master, the firm must 

notify FINRA immediately and provide 

the CUSIP and other information 

necessary for FINRA to update the 

TRACE Issue Master, allowing the firm 

to report its transaction to TRACE 

promptly and comply with its 

obligations under FINRA Rule 6730.26

Additionally, one commenter objected 

to including securities without a CUSIP 

as TRACE-eligible due increased costs 

and potential reporting errors, and 

questioned whether incorporating such 

securities into TRACE would contribute 

to meaningful price discovery.27 FINRA 

responded that only a small number of 

securities trade without a CUSIP and 

that, where a security is not identified 

by a CUSIP, FINRA would work with 

members to ensure effective and 

efficient reporting.28

With regard to the expansion of 

TRACE to include primary market 

transactions, one commenter noted that 

such expansion would impose 

operational and compliance issues and 

require firms to engage in extensive and 

costly systems development.29

Consequently, the commenter urged 

FINRA to provide up to 18 months from 

the publication date of the technical 

specifications to accommodate 

necessary technical systems changes.30

The commenter further recommended a 

phased-in compliance implementation 

process, whereby the expanded 

reporting requirements for transactions 

in Agency Debt Securities be 

implemented first, followed by 

reporting in primary market transactions 

for corporate bonds and primary market 

transactions for Agency Debt Securities, 

respectively.31 Another commenter 

stated that 12 months would be needed 

for systems development and testing 

before the requirement for TRACE 

reporting of Agency Debt Securities and 

primary market transactions is 

enforced.32

In response, FINRA recognized that 

implementation of the proposal may 

create short-term operational issues and 

require a number of permanent 

modifications to reporting and other 

technology systems. FINRA stated that it 

will work with members to address 

issues and provide them sufficient 

notice to modify their reporting 

systems.33

One commenter raised the concern 

that such expansion may cause 

competitive disparities between FINRA 

member firms, which are subject to 

TRACE reporting, and bank government 


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34See CMG–SIFMA Letter, at 3. 

35See id. 

36See FINRA Response, at 7. 

37See CMG–SIFMA Letter, at 4. 

38See RBDA Letter, at 4. 

39See FINRA Response, at 7. 

40See CMG–SIFMA Letter, at 5; RBDA Letter, at 

4–5; Crews Letter, at 1–2; FIF Letter, at 2. 

41See CMG–SIFMA Letter, at 5. 

42See FINRA Response, at 6. 

43See, e.g., FINRA Response, at 3. 

44See FINRA Response, at 8. 

45See CMG–SIFMA Letter, at 3; RBDA Letter, at 

3. 

securities dealers, which are not.34

Further, the commenter asserted that 

bank dealers would have an advantage 

over FINRA members in competing for 

the business of institutional investors 

that wish to keep their trading activity 

confidential.35 In response, FINRA 

noted the statutory requirement that a 

proposed rule not impose any burden 

on competition not necessary or 

appropriate in furtherance of the Act 

and stated its belief that it is axiomatic 

that increasing transparency in a 

securities trading market appropriately 

furthers the purposes of the Act. 

Consequently, FINRA believes such 

comments are without merit.36

Two commenters requested that 

TRACE fees related to Agency Debt 

Securities be reduced to the extent that 

such fees are not necessary to cover 

FINRA’s expenses in connection with 

the collection and dissemination of 

TRACE data.37 Another commenter 

argued that charging a separate fee for 

the use of Agency Debt Securities data 

is unwarranted, and urged the 

Commission to require FINRA to offer 

data on corporate debt securities and 

Agency Debt Securities as a single data 

set, priced no higher than the current 

rate for corporate bond data.38 FINRA 

responded that it will undertake review 

of the fee structure for Agency Debt 

Securities after implementation of the 

proposal, when FINRA can accurately 

assess the trading volume and demand 

for Agency Debt Securities data.39

Four commenters raised concerns 

about trade modifications in TRACE.40

The commenters suggested that firms 

acting in good faith should be able to 

modify, cancel, or correct trade reports 

without incurring fees or penalties and 

that the TRACE platform be enhanced to 

allow modifications to trades submitted, 

rather than full re-submissions, which 

could help eliminate duplicative 

reporting.41 In response, FINRA asserted 

that modifications of trade reports are 

not relevant to the proposed rule 

change, but that FINRA reviews 

operational issues raised by firms on an 

ongoing basis and will take the issue 

under consideration.42 FINRA also 

declined to address other commenters’ 

concerns that were outside the scope of 

the proposal, including commenter 

recommendations regarding 

dissemination protocols.43

In Amendment No. 2, FINRA 

proposed limited amendments to 

various proposed reporting, 

dissemination, and notification 

provisions in the Rule 6700 series, and 

to Rule 7730. FINRA further proposed to 

add new Rule 6770 to provide 

emergency authority to FINRA, in 

consultation with the Commission, to 

suspend reporting and/or dissemination 

of certain transactions in TRACE– 

Eligible Securities. 

FINRA maintains that the proposed 

amendments to the Rule 6700 series 

address many of the substantive issues 

raised by commenters.44 The proposed 

amendments would extend the period to 

report primary market transactions that 

are List or Fixed Offering Price 

Transactions or Takedown Transactions 

to the close of the TRACE system on 

T+1, and simplify the reporting of all 

transactions by eliminating two of three 

proposed indicators. In addition, the 

proposed amendments would modify 

Rule 6760, providing greater flexibility 

to underwriters (or other persons 

designated in the rule) that are required 

to provide FINRA Operations notice and 

are engaged in an offering that is priced 

and commences between 9:30 a.m. and 

4 p.m. ET. In conjunction with this 

change, a member would be required to 

indicate in its notice to FINRA 

Operations the time that the new issue 

is priced and, if different, the time that 

primary transactions in the new issue 

commence. FINRA also has proposed 

certain other minor changes, including 

non-substantive, clarifying, or 

formatting changes to the Rule 6700 

Series and Rule 7730. 

Rule 6730 

FINRA originally proposed that 

primary market transactions that are List 

or Fixed Offering Price Transactions or 

Takedown Transactions be reported by 

the end of the day on the day such 

securities were priced, if the pricing 

occurred by 5 p.m. In Amendment No. 

2, FINRA is revising two provisions of 

Rule 6730 regarding the reporting of 

such transactions to address certain 

concerns raised by the commenters. 

Specifically, FINRA has proposed to 

extend the reporting period by a full 

day, requiring members to report List or 

Fixed Offering Price Transactions and 

Takedown Transactions not later than 

T+1 during TRACE system hours, with 

limited exceptions for transactions that 

occur on weekends or holidays. For List 

or Fixed Offering Price Transactions or 

Takedown Transactions that are priced 

on a Saturday, Sunday, or a federal or 

religious holiday on which the TRACE 

system is closed, Rule 6730(a)(5) as 

revised by Amendment No. 2 would 

require a member to report the 

transaction the next business day at any 

time during TRACE system hours. 

Second, FINRA originally proposed 

that members use one of three indicators 

when reporting transactions in TRACEEligible Securities in proposed amended 

Rule 6730(d)(4)(D). The purpose was to 

distinguish between primary and 

secondary market transactions, as 

primary market transactions would be 

reported for the first time, and to 

distinguish List or Fixed Offering Price 

Transactions and Takedown 

Transactions from other primary market 

transactions. Certain commenters raised 

issues regarding the use of the three 

proposed indicators.45

In Amendment No. 2, FINRA has 

proposed to amend Rule 6730(d)(4)(D) 

to eliminate the proposed indicators for 

secondary market transactions and for 

primary market transactions that are not 

List or Fixed Offering Price Transactions 

or Takedown Transactions. Rule 

6730(d)(4)(D) would retain the 

requirement that members use the 

remaining proposed indicator when 

reporting primary market transactions 

that are List or Fixed Offering Price 

Transactions and Takedown 

Transactions. The remaining indicator 

will enable FINRA to identify 

transaction information received for 

such transactions that will be 

disseminated, which FINRA proposed 

in the original rule filing. In addition, 

FINRA will use the indicator for 

surveillance purposes to determine if 

members are properly categorizing 

transactions as List or Fixed Offering 

Price Transactions and Takedown 

Transactions, and to determine if a 

member is selecting the indicator 

inappropriately to obtain the advantages 

of more relaxed reporting requirements 

or to avoid dissemination of selected 

reported transactions. 

Rule 6760 

In its original proposal, FINRA 

proposed to amend the notice and 

information reporting requirements in 

Rule 6760. Specifically, a member 

providing notice would be required to 

include ‘‘the time the new issue is 

priced.’’ Additionally, the original 

proposal required that information be 

provided ‘‘prior to the commencement 

of primary market transactions.’’ In 

Amendment No. 2, FINRA proposes to 


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46Rule 6760 does not apply to secondary 

offerings or distributions. 

47See Amendment No. 2, at 6. 

48 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). 

49 15 U.S.C. 78o–3(b)(6). 

50See Securities Exchange Act Release No. 43873 

(January 23, 2001) 66 FR 8131, 8136 (January 29, 

2001). 

51 15 U.S.C. 78o–3(b)(6). 

52 15 U.S.C. 78k–1(a)(1)(C)(iii). 

amend the notification requirements for 

new TRACE-Eligible Securities in Rule 

6760 in response to comments. The 

most significant amendment to Rule 

6760, in Rule 6760(b), provides more 

flexibility for underwriters (or other 

designated persons) that are required to 

give notice to FINRA Operations 

regarding a new TRACE-Eligible 

Security that is the subject of an offering 

that is priced and commences on the 

same business day between 9:30 a.m. 

and 4 p.m. ET. The proposed 

amendment would require the 

underwriter (or other designated person) 

to provide FINRA Operations as much 

of the information required under the 

rule that is available prior to the 

execution of the first transaction in the 

distribution or offering, and all other 

information required under Rule 6760 

within 15 minutes of the time of 

execution of the first transaction in such 

distribution or offering.46

FINRA also has proposed two 

additional amendments to the member 

notification requirements in Rule 

6760(b). In response to comments 

regarding the operational difficulties of 

complying with TRACE requirements 

for securities not having a CUSIP 

number, FINRA proposes to amend Rule 

6760(b) to permit the underwriter (or 

another designated person) providing 

the notice to submit, in lieu of a CUSIP, 

‘‘a similar numeric identifier (or a 

TRACE symbol, which is assigned by 

FINRA upon request).’’ Also, FINRA 

originally proposed that an underwriter 

(or another designated person) notify 

FINRA Operations of the time that a 

new issue is priced. In Amendment No. 

2, FINRA has proposed to add to such 

requirement that a member provide the 

time that the first transaction of the 

distribution or offering of the new issue 

is executed, if the time is different from 

the time of pricing of the new issue. The 

amended notification requirement 

would enable FINRA to determine if 

members comply with Rule 6760 to 

provide notification when required. 

FINRA believes that members’ timely 

notification to FINRA Operations of new 

TRACE-Eligible Securities that are about 

to be offered plays a significant part of 

the process of continuously updating 

the TRACE system, and members that 

fail to comply with Rule 6760 impair 

the reporting of transactions by other 

members and adversely affect price 

transparency in the security during the 

most active or one of the most active 

trading periods in the security. 

Proposed Rule 6770 

In Amendment No. 2, FINRA 

proposed new Rule 6770, which would 

provide FINRA emergency authority to 

suspend the reporting and/or 

dissemination of certain transactions in 

TRACE-Eligible Securities, or the 

reporting of certain data elements that 

are otherwise required under Rule 6730 

and/or the dissemination of certain data 

elements, as market conditions warrant 

and for such period of time as FINRA 

deems necessary. FINRA represented 

that each action that FINRA might 

consider under proposed Rule 6770 

would be subject to review and 

discussion with the Commission prior 

to FINRA’s use of such authority.47

Although FINRA does not anticipate 

that such emergency authority would be 

used, FINRA believes it is prudent for 

such authority to be in place. 

Other Amendments 

Finally, in Amendment No. 2, FINRA 

proposed to incorporate nonsubstantive, technical, clarifying and 

formatting amendments in the Rule 

6700 series and Rule 7730. 

IV. Discussion 

After carefully considering the 

proposal and the comments submitted, 

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.48 In 

particular, the Commission finds that 

the proposed rule change is consistent 

with Section 15A(b)(6) of the Act,49

which requires, among other things, that 

FINRA rules must be designed to 

prevent fraudulent and manipulative 

acts and practices, to promote just and 

equitable principles of trade, and, in 

general, to protect investors and the 

public interest. The Commission does 

not believe that the comments raise any 

issue that would preclude approval of 

the proposal. Indeed, the Commission 

believes that the proposal promotes the 

goals of transparency, increased price 

discovery, and debt market integrity 

cited by several commenters. 

In originally approving TRACE, the 

Commission stated that price 

transparency plays a fundamental role 

in promoting fairness and efficiency of 

U.S. capital markets and that market 

surveillance was a fundamental means 

of promoting fairness and confidence in 

those markets.50 To further those goals, 

the Commission believes that it is 

reasonable and consistent with the Act 

for FINRA to expand TRACE in the 

manner set forth in the proposal. 

Prior to TRACE’s implementation, the 

NASD did not have routine access to 

comprehensive transaction information 

for the over-the-counter corporate bond 

market, even though the NASD bore 

responsibility for surveilling and 

regulating that market. Similarly, with 

respect to the over-the-counter market 

for Agency Debt Securities and for 

primary market bond transactions, 

FINRA currently does not possess the 

comprehensive transaction information 

that would help it carry out its statutory 

duties to regulate the market. Expanding 

TRACE to include Agency Debt 

Securities and primary market 

transactions will assist FINRA in 

fulfilling its mandate in Section 

15A(b)(6) of the Act 51 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. 

Furthermore, the Commission 

believes that the proposal is consistent 

with Section 11A(a)(1)(C)(iii) of the 

Act,52 in which Congress found that it 

is in the public interest and appropriate 

for the protection of investors and the 

maintenance of fair and orderly markets 

to assure the availability to brokers, 

dealers, and investors of information 

with respect to quotations and 

transactions in securities. This proposal 

furthers this goal by increasing the 

amount of public information available 

in the over-the-counter market for debt 

securities. By increasing public 

availability of information about 

additional categories of debt, this 

proposal is reasonably designed to 

encourage greater participation in the 

market by retail and institutional 

investors, which should contribute to 

deeper markets and increased 

competition. Moreover, the additional 

transaction data reported to TRACE will 

allow FINRA to obtain a more complete 

audit trail of transactions in the market 

for TRACE-Eligible Securities. Although 

the Commission acknowledges the 

potential for firms covered by these new 

reporting requirements to incur 

additional compliance burdens and 

costs, the Commission believes that any 

such burdens are substantially 

outweighed by the overall benefits of 

increased transparency and access to 


pwalker on DSK8KYBLC1PROD with NOTICES
50996 Federal Register / Vol. 74, No. 190 / Friday, October 2, 2009 / Notices 

53 15 U.S.C. 78o–3(b)(5). 

54 15 U.S.C. 78s(b)(2). 

55 15 U.S.C. 78s(b)(2). 

56 17 CFR 200.30–3(a)(12). 

more comprehensive trade information 

in the fixed income markets. 

The Commission further finds that the 

proposed fees for: (1) Reporting of 

Agency Debt Securities and primary 

market transactions, (2) receipt of 

market data for Agency Debt Securities 

and primary market transactions, and 

(3) subscribing to ‘‘Web Browser 

Access’’ for TRACE reporting and/or 

market data receipt are consistent with 

Section 15A(b)(5) of the Act, which 

requires, among other things, that 

FINRA rules provide for the equitable 

allocation of reasonable dues, fees, and 

other charges among members and 

issuers and other persons using any 

facility or system that FINRA operates 

or controls.53 These fees are similar to 

those that currently apply to corporate 

debt securities. 

V. Accelerated Approval 

The Commission finds good cause, 

pursuant to Section 19(b)(2) of the 

Act,54 for approving the proposed rule 

change, as modified by Amendment No. 

2 thereto, prior to the 30th day after the 

date of publication in the Federal 

Register. The changes proposed in 

Amendment No. 2 are minor and 

technical in nature or designed to 

respond to specific concerns raised by 

commenters. With respect to the 

proposed provision that would permit 

FINRA to suspend TRACE reporting or 

dissemination in certain emergency 

circumstances, the Commission notes 

that such authority could be exercised 

only in consultation with the 

Commission. Accordingly, the 

Commission finds that good cause exists 

to approve the proposal, as modified by 

Amendment No. 2, on an accelerated 

basis. 

VI. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether Amendment No. 2 to 

the proposed rule change is consistent 

with the Act. Comments may be 

submitted by any of the following 

methods: 

Electronic Comments 

• Use the Commission’s Internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an e-mail to rulecomments@sec.gov. Please include File 

Number SR–FINRA–2009–010 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Elizabeth M. Murphy, Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington DC 

20549–1090. 

All submissions should refer to File 

Number SR–FINRA–2009–010. This file 

number should be included on the 

subject line if e-mail is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

Internet Web site (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for inspection and copying in 

the Commission’s Public Reference 

Room, 100 F Street, NE., Washington, 

DC 20549, on official business days 

between the hours of 10 a.m. and 3 p.m. 

Copies of the filing will also be available 

for inspection and copying at the 

principal office of FINRA. All comments 

received will be posted without change; 

the Commission does not edit personal 

identifying information from 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File No. SR–FINRA– 

2009–010 and should be submitted on 

or before October 23, 2009. 

VII. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,55 that the 

proposed rule change (SR–FINRA– 

2009–010), as modified by Amendments 

Nos. 1 and 2, be, and hereby is, 

approved on an accelerated basis. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.56

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–23729 Filed 10–1–09; 8:45 am] 

BILLING CODE 8011–01–P 

DEPARTMENT OF STATE 

[Public Notice 6778] 

Culturally Significant Objects Imported 

for Exhibition Determinations: 

‘‘Rembrandt’s People’’ 

SUMMARY: Notice is hereby given of the 

following determinations: Pursuant to 

the authority vested in me by the Act of 

October 19, 1965 (79 Stat. 985; 22 U.S.C. 

2459), Executive Order 12047 of March 

27, 1978, the Foreign Affairs Reform and 

Restructuring Act of 1998 (112 Stat. 

2681, et seq.; 22 U.S.C. 6501 note, et 

seq.), Delegation of Authority No. 234 of 

October 1, 1999, Delegation of Authority 

No. 236 of October 19, 1999, as 

amended, and Delegation of Authority 

No. 257 of April 15, 2003 [68 FR 19875], 

I hereby determine that the objects in 

the exhibition: ‘‘Rembrandt’s People’’ 

imported from abroad for temporary 

exhibition within the United States, are 

of cultural significance. The objects are 

imported pursuant to loan agreements 

with the foreign owners or custodians. 

I also determine that the exhibition or 

display of the exhibit objects at the 

Wadsworth Atheneum Museum of Art, 

Hartford, CT, from on or about October 

10, 2009, until on or about January 24, 

2010, and at possible additional 

exhibitions or venues yet to be 

determined, is in the national interest. 

Public Notice of these Determinations is 

ordered to be published in the Federal 

Register. 

FOR FURTHER INFORMATION CONTACT: For 

further information, including a list of 

the exhibit objects, contact Julie 

Simpson, Attorney-Adviser, Office of 

the Legal Adviser, U.S. Department of 

State (telephone: 202–632–6467). The 

address is U.S. Department of State, L/ 

PD, SA–5, 2200 C Street, NW., Suite 

5H03, Washington, DC 20522–0505. 

Dated: September 28, 2009. 

Maura M. Pally, 

Deputy Assistant Secretary for Professional 

and Cultural Exchanges, Bureau of 

Educational and Cultural Affairs, Department 

of State. 

[FR Doc. E9–23813 Filed 10–1–09; 8:45 am] 

BILLING CODE 4710–05–P 


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