29840 Federal Register / Vol. 83, No. 123 / Tuesday, June 26, 2018 / Notices 

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

2 17 CFR 240.19b–4. 

3 17 CFR 240.19b–4(f)(6). 

4See Securities Exchange Act Release No. 59955 

(May 22, 2009), 74 FR 25586 (May 28, 2009) (Order 

Approving File No. SR–FINRA–2009–012) 

(‘‘Approval Order’’). 

5 In March 2012, the SEC approved amendments 

to FINRA Rule 4240 that, among other things, limit 

at this time the rule’s application to credit default 

swaps that are security-based swaps. See Securities 

Exchange Act Release No. 66527 (March 7, 2012), 

77 FR 14850 (March 13, 2012) (Order Approving 

File No. SR–FINRA–2012–015). 

6See Securities Exchange Act Release No. 81035 

(June 27, 2017), 82 FR 30914 (July 3, 2017) (Notice 

of Filing and Immediate Effectiveness of File No. 

SR–FINRA–2017–019). 

7See Approval Order, 74 FR at 25588–89. 

8See Dodd-Frank Wall Street Reform and 

Consumer Protection Act, Public Law 111–203, 124 

Stat. 1376 (2010). 

9The terms ‘‘swap’’ and ‘‘security-based swap’’ 

are defined in Sections 721 and 761 of the DoddFrank Act. The Commodity Futures Trading 

Commission (‘‘CFTC’’) and the Commission jointly 

have approved rules to further define these terms. 

See Securities Exchange Act Release No. 67453 

(July 18, 2012), 77 FR 48208 (August 13, 2012) 

(Joint Final Rule; Interpretations; Request for 

Comment on an Interpretation: Further Definition of 

‘‘Swap,’’ ‘‘Security-Based Swap,’’ and ‘‘SecurityBased Swap Agreement’’; Mixed Swaps; SecurityBased Swap Agreement Recordkeeping). See also 

Securities Exchange Act Release No. 66868 (April 

27, 2012), 77 FR 30596 (May 23, 2012) (Joint Final 

Rule; Joint Interim Final Rule; Interpretations: 

Further Definition of ‘‘Swap Dealer,’’ ‘‘SecurityBased Swap Dealer,’’ ‘‘Major Swap Participant,’’ 

‘‘Major Security-Based Swap Participant,’’ and 

‘‘Eligible Contract Participant’’). 

10See, e.g., Securities Exchange Act Release No. 

79833 (January 18, 2017), 82 FR 8467 (January 25, 

2017) (Order Extending Certain Temporary 

Exemptions Under the Securities Exchange Act of 

1934 in Connection With the Revision of the 

Definition of ‘‘Security’’ To Encompass SecurityBased Swaps and Request for Comment); Securities 

Exchange Act Release No. 67177 (June 11, 2012), 77 

FR 35625 (June 14, 2012) (Notice of Statement of 

General Policy with Request for Public Comment: 

Statement of General Policy on the Sequencing of 

the Compliance Dates for Final Rules Applicable to 

Security-Based Swaps Adopted Pursuant to the 

Securities Exchange Act of 1934 and the DoddFrank Wall Street Reform and Consumer Protection 

Act); Securities Exchange Act Release No. 68071 

(October 18, 2012), 77 FR 70214 (November 23, 

2012) (Proposed Rule: Capital, Margin, and 

Segregation Requirements for Security-Based Swap 

Dealers and Major Security-Based Swap 

Participants and Capital Requirements for BrokerDealers). See also Securities Exchange Act Release 

No. 71958 (April 17, 2014), 79 FR 25194 (May 2, 

2014) (Proposed Rule: Recordkeeping and Reporting 

Requirements for Security-Based Swap Dealers, 

Major Security-Based Swap Participants, and 

Broker-Dealers; Capital Rule for Certain SecurityBased Swap Dealers). 

11 15 U.S.C. 78o–3(b)(6). 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–83474; File No. SR–FINRA– 

2018–025] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Extend the 

Implementation of FINRA Rule 4240 

(Margin Requirements for Credit 

Default Swaps) 

June 20, 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 11, 

2018, the Financial Industry Regulatory 

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

Securities and Exchange Commission 

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

rule change as described in Items I, II, 

and III below, which Items have been 

prepared by FINRA. FINRA has 

designated the proposed rule change as 

constituting a ‘‘non-controversial’’ rule 

change under paragraph (f)(6) of Rule 

19b–4 under the Act,3 which renders 

the proposal effective upon receipt of 

this filing by 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 

FINRA is proposing to extend to July 

18, 2019 the implementation of FINRA 

Rule 4240. FINRA Rule 4240 

implements an interim pilot program 

with respect to margin requirements for 

certain transactions in credit default 

swaps that are security-based swaps. 

The text of the proposed rule change 

is available on FINRA’s website at 

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

office of FINRA, and at the 

Commission’s Public Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, 

FINRA included statements concerning 

the purpose of and basis for the 

proposed rule change and discussed any 

comments it received on the proposed 

rule change. The text of these statements 

may be examined at the places specified 

in Item IV below. FINRA has prepared 

summaries, set forth in sections A, B, 

and C below, of the most significant 

aspects of such statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

On May 22, 2009, the Commission 

approved FINRA Rule 4240,4 which 

implements an interim pilot program 

(the ‘‘Interim Pilot Program’’) with 

respect to margin requirements for 

certain transactions in credit default 

swaps (‘‘CDS’’).5 On June 14, 2017, 

FINRA filed a proposed rule change for 

immediate effectiveness extending the 

implementation of FINRA Rule 4240 to 

July 18, 2018.6

As explained in the Approval Order, 

FINRA Rule 4240, coterminous with 

certain Commission actions, was 

intended to address concerns arising 

from systemic risk posed by CDS, 

including, among other things, risks to 

the financial system arising from the 

lack of a central clearing counterparty to 

clear and settle CDS.7 On July 21, 2010, 

the Dodd-Frank Wall Street Reform and 

Consumer Protection Act (the ‘‘DoddFrank Act’’) was signed into law.8 Title 

VII of the Dodd-Frank Act established a 

comprehensive new regulatory 

framework for swaps and security-based 

swaps,9 including certain CDS. The 

legislation was intended, among other 

things, to enhance the authority of 

regulators to implement new rules 

designed to reduce risk, increase 

transparency, and promote market 

integrity with respect to such products. 

The Commission and the CFTC have 

proposed or adopted rules with respect 

to swaps and security-based swaps 

pursuant to Title VII of the Dodd-Frank 

Act.10 FINRA believes it is appropriate 

to extend the Interim Pilot Program for 

a limited period, to July 18, 2019, in 

light of the continuing development of 

the CDS business and ongoing 

regulatory developments. FINRA is 

considering proposing additional 

amendments to the Interim Pilot 

Program. 

FINRA has filed the proposed rule 

change for immediate effectiveness. 

FINRA is proposing that the 

implementation date of the proposed 

rule change will be July 18, 2018. The 

proposed rule change will expire on 

July 18, 2019. 

2. Statutory Basis 

FINRA believes that the proposed rule 

change is consistent with the provisions 

of Section 15A(b)(6) of the Act,11 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. FINRA believes that the 

proposed rule change is consistent with 

the Act because, in light of the 

continuing development of the CDS 

business and ongoing regulatory 

developments, extending the 

implementation of the margin 

requirements as set forth by FINRA Rule 


sradovich on DSK3GMQ082PROD with NOTICES
Federal Register / Vol. 83, No. 123 / Tuesday, June 26, 2018 / Notices 29841 

12 15 U.S.C. 78s(b)(3)(A). 

13 17 CFR 240.19b–4(f)(6). 14 17 CFR 200.30–3(a)(12). 

4240 will help to stabilize the financial 

markets. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

FINRA does not believe that the 

proposed rule change will result in any 

burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. FINRA 

believes that extending the 

implementation of FINRA Rule 4240 for 

a limited period, to July 18, 2019, in 

light of the continuing development of 

the CDS business and ongoing 

regulatory developments, helps to 

promote stability in the financial 

markets and regulatory certainty for 

members. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

Written comments were neither 

solicited nor received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Because the foregoing proposed rule 

change does not: (i) Significantly affect 

the protection of investors or the public 

interest; (ii) impose any significant 

burden on competition; and (iii) become 

operative for 30 days from the date on 

which it was filed, or such shorter time 

as the Commission may designate, it has 

become effective pursuant to Section 

19(b)(3)(A) of the Act 12 and Rule 19b– 

4(f)(6) thereunder.13

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is necessary or appropriate in the 

public interest, for the protection of 

investors, or otherwise in furtherance of 

the purposes of the Act. If the 

Commission takes such action, the 

Commission shall institute proceedings 

to determine whether the proposed rule 

should be approved or disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

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

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

FINRA–2018–025 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Eduardo Aleman, Assistant Secretary, 

Securities and Exchange Commission, 

100 F Street NE, Washington, DC 

20549–1090. 

All submissions should refer to File 

Number SR–FINRA–2018–025. 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 

a.m. and 3 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– 

2018–025 and should be submitted on 

or before July 17, 2018. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.14

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–13614 Filed 6–25–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

Submission for OMB Review; 

Comment Request 

Upon Written Request, Copies Available 

From: Securities and Exchange 

Commission, Office of FOIA Services, 

Washington, DC 20549–2736 

Extension: 

Rule 15g–3, SEC File No. 270–346, OMB 

Control No. 3235–0392 

Notice is hereby given that pursuant 

to the Paperwork Reduction Act of 1995 

(‘‘PRA’’) (44 U.S.C. 3501 et seq.), the 

Securities and Exchange Commission 

(‘‘Commission’’) has submitted to the 

Office of Management and Budget 

(‘‘OMB’’) a request for approval of 

extension of the existing collection of 

information provided for in Rule 15g– 

3—Broker or dealer disclosure of 

quotations and other information 

relating to the penny stock market (17 

CFR 240.15g–3) under the Securities 

Exchange Act of 1934 (15 U.S.C. 78a et 

seq.). 

Rule 15g–3 requires that brokers and 

dealers disclose to customers current 

quotation prices or similar market 

information in connection with 

transactions in penny stocks. The 

purpose of the rule is to increase the 

level of disclosure to investors 

concerning penny stocks generally and 

specific penny stock transactions. 

The Commission estimates that 

approximately 195 broker-dealers will 

spend an average of 87 hours annually 

to comply with this rule. Thus, the total 

compliance burden is approximately 

16,965 burden-hours per year. 

Rule 15g–3 contains record retention 

requirements. Compliance with the rule 

is mandatory. The required records are 

available only to the examination staff 

of the Commission and the self 

regulatory organizations of which the 

broker-dealer is a member. 

An agency may not conduct or 

sponsor, and a person is not required to 

respond to, a collection of information 

under the PRA unless it displays a 

currently valid OMB control number. 

The public may view background 

documentation for this information 

collection at the following website: 

www.reginfo.gov. Comments should be 

directed to: (i) Desk Officer for the 

Securities and Exchange Commission, 

Office of Information and Regulatory 

Affairs, Office of Management and 

Budget, Room 10102, New Executive 

Office Building, Washington, DC 20503 

or by sending an email to: Shagufta_

Ahmed@omb.eop.gov; and (ii) Pamela 

Dyson, Director/Chief Information 

Officer, Securities and Exchange 


sradovich on DSK3GMQ082PROD with NOTICES