Federal Register / Vol. 83, No. 114 / Wednesday, June 13, 2018 / Notices 27643 

12 17 CFR 240.19b–4(f)(6)(iii). 

13For purposes only of waiving the operative 

delay, the Commission has considered the proposed 

rule’s impact on efficiency, competition, and capital 

formation. See 15 U.S.C. 78c(f). 14 15 U.S.C. 78s(b)(2)(B). 

15 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

date of the filing. However, pursuant to 

Rule 19b–4(f)(6)(iii),12 the Commission 

may designate a shorter time if such 

action is consistent with the protection 

of investors and the public interest. In 

its filing with the Commission, Nasdaq 

has asked the Commission to waive the 

30-day operative delay so that the 

proposal may become operative 

immediately upon filing to allow 

Nasdaq to immediately list units issued 

by a company and its controlled 

subsidiary and compete with other 

exchanges for such listing. As noted 

above, Nasdaq states that the proposed 

rule will continue to impose all of the 

existing listing requirements applicable 

to units, supplemented by additional 

requirements and investor protections 

designed to address this specific type of 

unit. 

The Commission believes that waiver 

of the 30-day operative delay is 

consistent with the protection of 

investors and the public interest 

because the Paired Share Units for 

which Nasdaq proposes to adopt initial 

and continued listing requirements are 

substantially similar to the traditional 

units that may be listed pursuant to 

Nasdaq Rule 5225 and the additional 

requirements in the proposal address 

the specific characteristics of Paired 

Share Units and how Nasdaq’s existing 

listing rules will be applied. The 

Commission notes that a Paired Share 

Unit would consist of a share of 

common stock of a Company and a 

share of the common stock of a REIT 

that is that Company’s controlled 

subsidiary, which are attached and only 

can be traded together. The proposed 

listing requirements would be 

substantially similar to existing listing 

requirements for units, but with 

clarification about how certain aspects 

will apply to a Paired Share Unit and its 

components and additional 

requirements designed to address issues 

relating to this specific type of unit. 

Therefore, the Commission designates 

the proposed rule change operative 

upon filing.13

At any time within 60 days of the 

filing of such proposed rule change, the 

Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is necessary or appropriate in the 

public interest, for the protection of 

investors, or otherwise in furtherance of 

the purposes of the Act. If the 

Commission takes such action, the 

Commission shall institute proceedings 

under Section 19(b)(2)(B) 14 of the Act to 

determine whether the proposed rule 

change should be approved or 

disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

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

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

NASDAQ–2018–041 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–NASDAQ–2018–041. This 

file number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

internet website (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

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

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549 on official 

business days between the hours of 

10:00 a.m. and 3:00 p.m. Copies of such 

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number SR–NASDAQ–2018–041, and 

should be submitted on or before July 5, 

2018. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.15

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–12649 Filed 6–12–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–83393; File No. SR–FINRA– 

2018–023] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Notice of Filing of a 

Proposed Rule Change To Amend 

FINRA Rule 6730 Relating to ATS 

Reporting of Transactions to TRACE in 

U.S. Treasury Securities 

June 7, 2018. 

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

Securities Exchange Act of 1934 

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

notice is hereby given that on June 5, 

2018, Financial Industry Regulatory 

Authority, Inc. (‘‘FINRA’’) filed with the 

Securities and Exchange Commission 

(‘‘SEC’’ or ‘‘Commission’’) the proposed 

rule change as described in Items I, II, 

and III below, which Items have been 

prepared by FINRA. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

FINRA is proposing to amend Rule 

6730 to require alternative trading 

systems (‘‘ATSs’’) that report 

transactions in U.S. Treasury Securities 

to the Transaction Reporting and 

Compliance Engine (‘‘TRACE’’) to 

identify non-FINRA member subscribers 

on those transaction reports. 

The text of the proposed rule change 

is available on FINRA’s website at 

http://www.finra.org, at the principal 

office of FINRA and at the 

Commission’s Public Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, 

FINRA included statements concerning 

the purpose of and basis for the 

proposed rule change and discussed any 


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3See Securities Exchange Act Release No. 79116 

(October 18, 2016), 81 FR 73167 (October 24, 2016) 

(Order Granting Accelerated Approval of File No. 

SR–FINRA–2016–027). 

4See Regulatory Notice 16–39 (October 2016). 

5See Rule 6750(c)(5). 

6See Regulatory Notice 14–53 (November 2014). 

There are limited exemptions available where all 

the counterparties are FINRA members, which 

would not apply where a transaction on an ATS 

involves a non-FINRA member. 

7See Treasury Department, A Financial System 

That Creates Economic Opportunities: Capital 

Markets, Report to President Donald J. Trump, 

Executive Order 13772 on Core Principles for 

Regulating the United States Financial System, at 

79–80 (October 2017) (‘‘Capital Markets Report’’), 

https://www.treasury.gov/press-center/pressreleases/Documents/A-Financial-System-CapitalMarkets-FINAL-FINAL.pdf. The Capital Markets 

Report cited the July 13, 2015 Joint Staff Report 

(‘‘Joint Staff Report’’ or ‘‘JSR’’) issued by the U.S. 

Department of the Treasury, the Board of Governors 

of the Federal Reserve System, the Federal Reserve 

Bank of New York, the SEC, and the U.S. 

Commodity Futures Trading Commission (InterAgency Working Group for Treasury Market 

Surveillance members (IAWG) or ‘‘official sector’’) 

in response to unusually high levels of volatility 

and a very rapid round-trip in prices that occurred 

in the market for U.S. Treasury Securities, futures, 

and other related financial products on October 15, 

2014, https://www.treasury.gov/press-center/pressreleases/Documents/Joint_Staff_Report_Treasury_

10-15-2015.pdf. 

8See JSR, at 50. 

9See Capital Markets Report, at 80. 

10 Id. The Capital Markets Report recommends 

‘‘closing the gap in the granularity of PTF data,’’ 

and also recommends requiring ATSs to identify 

‘‘customers’’ in their TRACE reports, which is a 

broader term than ‘‘PTFs.’’ FINRA staff intends to 

work with the staff of the Treasury Department to 

ensure the scope of the reporting requirement is 

appropriate and meets regulatory needs in light of 

the recommendations in the Capital Markets Report. 

11See JSR, at 45. 

12See 17 CFR 242.300(a). As is the case with 

FINRA Rule 6720(c) (Alternative rading Systems), 

any member that meets the definition of 

‘‘alternative trading system’’ set forth in Rule 300 

comments it received on the proposed 

rule change. The text of these statements 

may be examined at the places specified 

in Item IV below. FINRA has prepared 

summaries, set forth in sections A, B, 

and C below, of the most significant 

aspects of such statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

On October 18, 2016, the SEC 

approved a proposed rule change to 

require FINRA members to report 

secondary market transactions in U.S. 

Treasury Securities to TRACE,3 and on 

July 10, 2017, FINRA members began 

reporting transaction information on 

U.S. Treasury Security transactions 

through TRACE.4 As approved, TRACE 

transaction information in U.S. Treasury 

Securities is for regulatory purposes 

only and is not disseminated publicly.5

As with all TRACE reporting, 

transactions in U.S. Treasury Securities 

that occur on an ATS generally must be 

reported to TRACE by the 

counterparties, if they are FINRA 

members, and by the ATS itself.6 A 

significant amount of trading activity in 

U.S. Treasury Securities on ATSs 

involves market participants that are not 

registered as broker-dealers or are not 

FINRA members, including, for 

example, hedge funds, banks and 

principal trading firms (‘‘PTFs’’). As the 

U.S. Department of the Treasury 

(‘‘Treasury Department’’) noted in its 

recent Capital Markets Report, 

‘‘[t]rading activity [in U.S. Treasury 

Securities] on the major electronic 

interdealer platforms is dominated by 

PTFs, . . . . and collectively they 

account for over half of all transaction 

volumes in the interdealer broker 

segment of the [cash Treasury] 

market.’’ 7 Although the Capital Markets 

Report does not define a ‘‘PTF,’’ the 

Joint Staff Report identifies the 

following as typical characteristics of 

PTFs: (i) Principal investor; (ii) deploys 

proprietary automated trading strategies; 

(iii) low latency is typically a key 

element of the trading strategies; and 

(iv) may be registered as a broker-dealer 

but does not have clients as in a typical 

broker-dealer business model.8

Because each current ATS is a FINRA 

member, all of the trading activity in 

TRACE-Eligible Securities occurring on 

an ATS is required to be reported to 

TRACE by that ATS; however, the 

identities of non-FINRA members 

(including, but not limited to, hedge 

funds, banks and PTFs) trading on the 

ATSs are not reported because they are 

treated as customers, not FINRA 

members. Thus, while an ATS identifies 

a specific FINRA-member counterparty 

on its TRACE reports by that 

counterparty’s market participant 

identifier (‘‘MPID’’), for transactions 

involving non-FINRA members, the 

ATS reports the trade as a generic 

customer trade and identifies the 

counterparty only with a ‘‘C’’ identifier. 

Because of this, as the Capital Markets 

Report noted, ‘‘[i]n essence, a significant 

portion of PTF activity is anonymized in 

the TRACE data.’’ 9 The Treasury 

Department therefore recommended 

‘‘closing the gap in the granularity of 

PTF data’’ by requiring ATSs that 

facilitate transactions in U.S. Treasury 

Securities ‘‘to identify customers in 

their reports of Treasury security 

transactions to TRACE.’’ 10

To assess the scope of non-FINRA 

member trading activity in U.S. 

Treasury Securities on ATSs, FINRA 

analyzed transaction data submitted to 

TRACE and found that, consistent with 

the views expressed in the Capital 

Markets Report, the majority of trades in 

U.S. Treasury Securities reported by 

ATSs do not identify the subscriber that 

is a counterparty to the trade. Because 

a significant portion of ATS trades in 

U.S. Treasury Securities involves 

unidentified counterparties, the trading 

data available to FINRA and the official 

sector is incomplete. Requiring specific 

subscriber information in ATS TRACE 

reports for transactions in U.S. Treasury 

Securities would enhance the 

information available to FINRA and the 

official sector and facilitate a better 

understanding U.S. Treasury market 

structure and liquidity. As the Treasury 

Department noted in the JSR, ‘‘an event 

like October 15 highlights the need to 

better understand various factors that 

are impacting liquidity in the U.S. 

Treasury market, especially during 

stressed market conditions . . . 

[including] . . . changes in 

intermediation, automated trading, 

regulation, and buy and sell-side 

participation that may have altered 

trading practices as well as the sources 

and characteristics of liquidity 

provision.’’ 11

In addition, FINRA believes that the 

proposed rule change would result in an 

improvement to the effectiveness of 

FINRA’s surveillance patterns from the 

standpoint of greater granularity and 

thus more accurate pattern detection, 

including the increased ability to 

identify potentially manipulative 

activity. For example, FINRA’s ability to 

detect wash sales or prearranged trading 

activity would be improved if the audit 

trail included the identity of the nonFINRA member counterparty rather than 

the generic customer indicator received 

today. The identity of the particular 

ATS subscriber allows the surveillance 

pattern to narrow down the potential 

universe of matching trades and thus 

more accurately detect instances of 

potential manipulation. As such, the 

additional detail that would be added to 

transaction reports by identifying nonFINRA member counterparties would 

enhance FINRA’s surveillance program 

for U.S. Treasury Securities. 

Consequently, as recommended in the 

Capital Markets Report, FINRA is 

proposing to require member ATSs with 

a minimum threshold of trading 

(‘‘covered ATS’’) to identify non-FINRA 

member subscribers associated with 

their TRACE trade reports in U.S. 

Treasury Securities. Specifically, FINRA 

proposes that a ‘‘covered ATS’’ would 

mean an ATS, as that term is defined in 

Rule 300 of SEC Regulation ATS,12 that 


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of Regulation ATS would be required to comply 

with the proposed rule change irrespective of 

whether such member is excepted from the 

requirements applicable to ATSs provided in Rule 

301(b) of Regulation ATS (e.g., such as where the 

member limits its securities activities to 

government securities). See 17 CFR 

242.301(a)()(ii)(A). 

13Based on a sample review period of Treasury 

transaction data reported to FINRA, the top six 

ATSs by volume would be considered ‘‘covered 

ATS’’ and account for over 99% of the trade reports 

submitted by ATSs to TRACE for U.S. Treasury 

Securities. 

14Some non-members may have multiple MPIDs 

assigned to them, for example if they use separate 

aggregation units or desks to access or trade through 

the ATS, in which case the unit assigned the MPID 

is the subscriber for purposes of this rule proposal. 

15 15 U.S.C. 78o–3(b)(6). 

16 15 U.S.C. 78o–3(b)(9). 

17See JSR, at 49. 

executed transactions in U.S. Treasury 

Securities with non-FINRA member 

subscribers of $10 billion or more in 

monthly par value, computed by 

aggregating buy and sell transactions, 

for any two months in the preceding 

calendar quarter.13 Pursuant to 

proposed Supplementary Material .07, 

each covered ATS would be required to 

provide FINRA a list of its non-FINRA 

member subscribers, as defined in Rule 

300 of SEC Regulation ATS, which 

would include entities such as PTFs, 

hedge funds and banks. Based on the 

lists provided by the ATSs, FINRA 

would then assign each non-FINRA 

member subscriber a unique MPID and 

provide that MPID to each covered ATS 

to which the non-FINRA member 

subscribes so that each non-FINRA 

member subscriber can be identified 

consistently across all ATSs.14 Under 

this approach, the confidentiality of an 

individual ATS’s subscriber list would 

be preserved because FINRA would 

provide each ATS a list of MPIDs based 

solely on the customer list provided to 

FINRA by that ATS. Each covered ATS 

would then use the assigned MPID in 

the contra-party field for purposes of 

identifying each non-FINRA member 

counterparty, as required by Rule 

6730(c)(6), in place of using the current 

designations for contra-party 

‘‘customer’’ or ‘‘non-member affiliate’’ 

identifiers. 

If an ATS becomes a covered ATS 

subsequent to the compliance date of 

the proposed rule, it must comply with 

new Supplementary Material .07 within 

60 calendar days of the end of the 

calendar quarter in which it becomes a 

covered ATS. FINRA believes that 60 

calendar days would afford sufficient 

time for a newly covered ATS to 

provide FINRA a list of, and obtain 

MPIDs for, its non-FINRA member 

subscribers, and to perform any 

programming changes necessary to 

accurately reflect in TRACE reports nonFINRA member counterparties using the 

MPIDs assigned by FINRA. 

Once an ATS becomes a ‘‘covered 

ATS’’ under the rule, it will remain 

within the scope of the definition. Thus, 

a covered ATS must continue to identify 

each non-FINRA member subscriber in 

the contra-party field using the MPID 

assigned by FINRA, irrespective of 

whether its volume of executed 

transactions in U.S. Treasury Securities 

with non-FINRA member subscribers 

falls below $10 billion in par value in 

the future. In removing the current 

differentiation between subscribers that 

are FINRA members and those that are 

not, and requiring the use of an MPID 

by the ATS when reporting transactions 

in U.S. Treasury Securities regardless of 

the subscriber’s status as a FINRA 

member, FINRA believes that the 

proposal would improve the 

completeness of the information on 

transactions in U.S. Treasury Securities 

available to FINRA and the official 

sector. 

Because a significant number of ATSs 

have minimal volume of executions 

with non-FINRA members in U.S. 

Treasury Securities, the proposed rule 

change would not apply to ATSs whose 

par value traded in U.S. Treasury 

Securities with non-FINRA member 

subscribers is below $10 billion per 

month for any two months in the 

preceding calendar quarter. FINRA 

believes that this approach is 

appropriate in that it limits the 

application of the proposed requirement 

to the member ATSs that are most active 

in trading U.S. Treasury Securities with 

non-FINRA members, and, as such, 

responsible for submitting most of the 

ATS trade reports for transactions in 

U.S. Treasury Securities against nonFINRA members. Limiting the proposed 

counterparty identification requirement 

in this manner balances the burdens 

associated with complying with the 

proposed rule (i.e., providing FINRA a 

list of all non-FINRA member 

subscribers, obtaining an MPID from 

FINRA, and using the assigned MPID in 

TRACE reporting), with the benefits 

sought to be achieved by the proposed 

requirement (i.e., additional granularity 

that will enhance the quality of the 

information available to FINRA and the 

official sector on transactions in U.S. 

Treasury Securities). 

FINRA does not believe that the 

absence of more detailed counterparty 

information from those ATSs with 

activity levels below the proposed 

threshold will materially affect the 

completeness of the audit trail. 

However, if approved, FINRA intends to 

monitor the continued appropriateness 

of the $10 billion dollar threshold to 

ensure that this amount remains 

relevant in light of market changes. In 

addition, FINRA intends to monitor the 

impact of this exception on its audit 

trail, as well as for any potential 

negative impacts or changes in ATS or 

non-member subscriber behavior. 

If the Commission approves the 

proposed rule change, FINRA 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. 

The effective date will be no later than 

180 days following publication of the 

Regulatory Notice announcing 

Commission approval. ATSs would be 

required to submit a list of its nonmember subscribers to FINRA at least 60 

days in advance of the effective date. 

2. Statutory Basis 

FINRA believes that the proposed rule 

change is consistent with the provisions 

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

requires, among other things, that 

FINRA rules must be designed to 

prevent fraudulent and manipulative 

acts and practices, to promote just and 

equitable principles of trade, and, in 

general, to protect investors and the 

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

the Act,16 which requires that FINRA 

rules not impose any burden on 

competition that is not necessary or 

appropriate. FINRA believes that the 

proposed rule change will make TRACE 

reporting of U.S. Treasury Securities 

transactions more complete and thus 

enable FINRA to better identify 

potentially abusive trading activity in 

the Treasury market that is already 

reported to TRACE but is anonymized 

because of the existing limitations on 

customer identification. Because this 

activity by non-FINRA members 

constitutes a significant portion of ATS 

trading activity in U.S. Treasury 

Securities, the proposed rule change 

will significantly enhance FINRA’s 

surveillance efforts as well as the 

trading data available to the official 

sector. As the Commission has noted in 

the past, improved surveillance 

capabilities can help FINRA detect and 

deter fraudulent and manipulative acts 

and practices, and thus promote just 

and equitable principles of trade and the 

protection of investors and the public 

interest. In addition, this collection is 

the ‘‘type of additional data reporting to 

the official sector necessary to continue 

to effectively monitor the functioning of 

the Treasury market and meet the IAWG 

mission.’’ 17


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18See Securities Exchange Act Release No. 78359 

(July 19, 2016), 81 FR 48465 (July 25, 2016) (Notice 

of Filing of File No. SR–FINRA–2016–027). 

19The six ATSs had transaction volume of more 

than $10 billion in par value in all of the months 

in our sample period, while the remaining 11 ATSs 

never reached the threshold in any of the months. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

FINRA does not believe that the 

proposed rule change will result in any 

burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. 

Economic Impacts 

FINRA has undertaken an economic 

impact assessment, as set forth below, to 

analyze the need for the proposed 

rulemaking, the regulatory objective of 

the proposal, the economic baseline of 

analysis, the anticipated economic 

impacts, and the alternatives 

considered. 

(a) Purpose and Regulatory Objective 

The proposed change to Rule 6730 

would require ATSs that meet a 

minimum threshold of trading against 

non-FINRA member subscribers to 

identify such subscribers on TRACE 

transaction reports for U.S. Treasury 

Securities. FINRA proposes to require 

ATSs to identify such non-FINRA 

members on TRACE transaction reports 

to enhance the quality of the 

information available to FINRA and the 

official sector on transactions in U.S. 

Treasury Securities. 

(b) Economic Baseline 

As discussed above, FINRA members 

have been reporting transaction 

information on U.S. Treasury Securities 

to TRACE since July 10, 2017 and such 

information is used solely for FINRA 

and official sector use. Since then, a 

majority of the trades in this market can 

be attributed to non-FINRA members. 

Current TRACE reporting 

requirements enable FINRA to identify 

the ATS on which a transaction occurs 

as well as the other members that are 

parties to those transactions. However, 

FINRA does not have similar insight 

into the identity of the non-FINRA 

members that are parties to transactions 

on ATSs because such participants are 

identified as either a customer or a nonmember affiliate. 

The proposed rule change would 

apply to ATSs that report transactions 

in U.S. Treasury Securities to TRACE. 

As mentioned in FINRA’s filing that 

required the reporting of U.S. Treasury 

Securities transactions to TRACE, ‘‘[t]he 

Treasury cash market has been 

bifurcated between the inter-dealer 

market, in which dealers trade with one 

another, and the dealer-to-customer 

market, where customers may include 

asset managers, pension funds, 

insurance companies, and 

corporations.’’ 18 A number of entities 

that are not registered broker-dealers are 

currently part of the inter-dealer market 

but they are not identified in TRACE 

reports. 

(c) Economic Impacts 

FINRA believes that the proposed rule 

change to require ATSs to identify nonFINRA members in TRACE reports for 

U.S. Treasury Securities transactions 

should potentially impact a small 

number of ATSs (i.e., those whose 

activity is at or above the minimum 

threshold discussed above). 

Between July 10, 2017 and March 31, 

2018, there were 17 ATSs on which U.S. 

Treasury Securities were traded. A 

significant amount of the trading 

volume, involved at least one market 

participant not registered as a brokerdealer. Six of these ATSs had 

transaction volume of $10 billion or 

more in par value in at least two months 

in a given calendar quarter against nonFINRA members and would have been 

subject to the requirement had the 

proposed rule been in place.19 The total 

trading volume of the six ATSs against 

non-FINRA member subscribers 

accounted for more than 99.9% of 

trading by non-FINRA member 

subscribers across all ATSs. 

FINRA reached out to several ATSs to 

inquire about the potential sources of 

costs. ATSs that are most active in 

trading of U.S. Treasury Securities with 

non-FINRA members, and hence may 

have volumes at or above the proposed 

volume threshold, may potentially need 

to update the existing systems or build 

new systems and develop protocols in 

order to provide FINRA with a list of all 

non-FINRA member subscribers, obtain 

a corresponding list of MPIDs from 

FINRA, and use the assigned MPIDs in 

TRACE reporting. FINRA understands 

that the proposed requirement would 

also entail quality assurance testing 

relating to identifying clients and 

matching the assigned MPIDs with the 

client list. 

FINRA also considered the potential 

impacts of the proposed identification 

requirement on non-FINRA member 

subscribers. To the extent that such 

participants prefer avoiding 

identification in TRACE reporting, they 

may shift some or all of their trading 

activity to other ATSs that are below the 

threshold. Non-FINRA member 

subscribers may also incur search costs 

or may have to pay a liquidity premium 

in case there is lighter trading on such 

ATSs. 

Alternatively, trading may shift to 

FINRA-registered broker-dealers that are 

not ATSs or to venues that are not under 

FINRA jurisdiction, such as banks, and 

thus have no reporting obligations to 

TRACE. However, based on 

conversations with the industry, FINRA 

understands that most trading in this 

market is electronic and member firms 

and non-FINRA venues do not currently 

have the capability to facilitate the 

volume of orders and trades that FINRAmember ATSs can facilitate through 

electronic systems. FINRA cannot 

predict if non-FINRA member market 

participants will ultimately find it more 

beneficial to establish an alternative 

venue that is not required to report to 

TRACE, but will monitor for such a 

potential outcome. 

(d) Alternatives Considered 

FINRA considered various approaches 

to identifying non-FINRA members that 

are parties to reported transactions in 

U.S. Treasury Securities and engaged in 

discussions with ATSs and other 

stakeholders. One alternative 

considered was to require each ATS to 

provide a monthly list of all of its nonFINRA member subscribers and identify 

each of its customers on TRACE reports 

for U.S. Treasury Securities. This 

approach, which would cover the 

broadest range of subscribers, would 

identify all of an ATS’s subscribers 

regardless of the ATS’s amount of 

trading activity. Another alternative 

considered was to require each ATS to 

provide FINRA with its order book 

information, including providing each 

customer’s order book activity rather 

than identifying individual customers 

on TRACE trade reports. FINRA would 

then link the order book information to 

the trade reports. Like the first option, 

this alternative would provide FINRA 

with complete insight into each 

customer’s activity on the ATS; 

however, FINRA would be compiling 

the transaction data from the order book 

information submitted by ATSs, rather 

than having the ATSs identify 

customers when reporting to TRACE. 

However, the analysis of the 

transaction data and careful 

consideration of the trade-offs between 

the costs associated with collecting 

transaction or order book information 

from each ATS and the incremental 

value the information brings to the 

surveillance program, concluded that 

the proposed approach would cover a 

significant amount of non-FINRA 

member customer activity, and enhance 

the quality of the information available 


amozie on DSK3GDR082PROD with NOTICES1
Federal Register / Vol. 83, No. 114 / Wednesday, June 13, 2018 / Notices 27647 

2017 CFR 200.30–3(a)(12). 

to FINRA and the official sector on 

transactions in U.S. Treasury Securities. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

Written comments were neither 

solicited nor received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Within 45 days of the date of 

publication of this notice in the Federal 

Register or within such longer period (i) 

as the Commission may designate up to 

90 days of such date if it finds such 

longer period to be appropriate and 

publishes its reasons for so finding or 

(ii) as to which the self-regulatory 

organization consents, the Commission 

will: 

(A) By order approve or disapprove 

such proposed rule change, or 

(B) institute proceedings to determine 

whether the proposed rule change 

should be disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

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

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

FINRA–2018–023 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–FINRA–2018–023. This file 

number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

internet website (http://www.sec.gov/

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

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

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549, on official 

business days between the hours of 

10:00 a.m. and 3:00 p.m. Copies of such 

filing also will be available for 

inspection and copying at the principal 

office of FINRA. All comments received 

will be posted without change. Persons 

submitting comments are cautioned that 

we do not redact or edit personal 

identifying information from comment 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File Number SR–FINRA– 

2018–023, and should be submitted on 

or before July 5, 2018. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.20

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–12648 Filed 6–12–18; 8:45 am] 

BILLING CODE 8011–01–P 

DEPARTMENT OF STATE 

[Public Notice: 10447] 

Notice of Determinations; Culturally 

Significant Objects Imported for 

Exhibition Determinations: ‘‘Truth and 

Beauty: The Pre-Raphaelites and the 

Old Masters’’ Exhibition 

SUMMARY: Notice is hereby given of the 

following determinations: I hereby 

determine that certain objects to be 

included in the exhibition ‘‘Truth and 

Beauty: The Pre-Raphaelites and the Old 

Masters,’’ 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 Fine Arts Museums of San 

Francisco, Legion of Honor Museum, 

San Francisco, California, from on or 

about June 30, 2018, until on or about 

September 30, 2018, and at possible 

additional exhibitions or venues yet to 

be determined, is in the national 

interest. I have ordered that Public 

Notice of these determinations be 

published in the Federal Register. 

FOR FURTHER INFORMATION CONTACT: Julie 

Simpson, Attorney-Adviser, Office of 

the Legal Adviser, U.S. Department of 

State (telephone: 202–632–6471; email: 

section2459@state.gov). The mailing 

address is U.S. Department of State, 

L/PD, SA–5, Suite 5H03, Washington, 

DC 20522–0505. 

SUPPLEMENTARY INFORMATION: The 

foregoing determinations were made 

pursuant to the authority vested in me 

by the Act of October 19, 1965 (79 Stat. 

985; 22 U.S.C. 2459), E.O. 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, and 

Delegation of Authority No. 236–3 of 

August 28, 2000. 

Marie Therese Porter Royce, 

Assistant Secretary for Educational and 

Cultural Affairs, Department of State. 

[FR Doc. 2018–12720 Filed 6–12–18; 8:45 am] 

BILLING CODE 4710–05–P 

DEPARTMENT OF STATE 

[Public Notice: 10452] 

Notice of Determinations; Culturally 

Significant Object Imported for 

Exhibition Determinations: Exhibition 

of the ‘‘Wagner Garden Carpet’’ 

SUMMARY: Notice is hereby given of the 

following determinations: I hereby 

determine that a certain object, entitled 

the ‘‘Wagner Garden Carpet,’’ to be 

exhibited in the Department of Islamic 

Art of The Metropolitan Museum of Art 

and at the Museum of Fine Arts, 

Houston, and imported from abroad for 

temporary exhibition within the United 

States, is of cultural significance. The 

object is imported pursuant to loan 

agreements with the foreign owner or 

custodian. I also determine that the 

exhibition or display of the exhibit 

object at The Metropolitan Museum of 

Art, New York, New York, from on or 

about July 10, 2018, until on or about 

October 7, 2018, at the Museum of Fine 

Arts, Houston, in Houston, Texas, from 

on or about November 2, 2018, until on 

or about March 24, 2019, and at possible 

additional exhibitions or venues yet to 

be determined, is in the national 

interest. I have ordered that Public 

Notice of these determinations be 

published in the Federal Register. 

FOR FURTHER INFORMATION CONTACT: Julie 

Simpson, Attorney-Adviser, Office of 

the Legal Adviser, U.S. Department of 

State (telephone: 202–632–6471; email: 

section2459@state.gov). The mailing 

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

PD, SA–5, Suite 5H03, Washington, DC 

20522–0505. 

SUPPLEMENTARY INFORMATION: The 

foregoing determinations were made 

pursuant to the authority vested in me 


amozie on DSK3GDR082PROD with NOTICES1