Federal Register / Vol. 77, No. 52 / Friday, March 16, 2012 / Notices 15827 

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

15 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3The terms TRACE–Eligible Security, Agency 

Pass-Through Mortgage-Backed Security and TBA 

are defined in, respectively, Rule 6710(a), Rule 

6710(v) and Rule 6710(u). 

4The term Historic TRACE Data is defined in 

Rule 7730(f)(4) and refers to aged TRACE 

transaction data, which will include TBA 

transaction data. 

5As defined in Rule 6710(v), an Agency PassThrough Mortgage-Backed Security means: 

A mortgage-backed security issued by an Agency 

or a Government-Sponsored Enterprise, for which 

the timely payment of principal and interest is 

guaranteed by an Agency or a GovernmentSponsored Enterprise, representing ownership 

interests in a pool or pools of residential mortgage 

loans with the security structured to ‘‘pass through’’ 

the principal and interest payments made by the 

mortgagees to the owners of the pool(s) on a pro rata 

basis. 

The terms Agency and Government-Sponsored 

Enterprise (‘‘GSE’’) are defined in, respectively, 

Rule 6710(k) and Rule 6710(n). 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system. The 

proposal appears reasonably designed to 

provide NYBX users flexibility and 

greater control over how their orders 

interact with available liquidity. The 

Commission notes that the proposal is 

consistent with the order protection rule 

of Regulation NMS, because an NYBX 

IOC order would not be permitted to 

trade through a protected quotation of 

another automated trading center. 

IV. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,14 that the 

proposed rule change (SR–NYSE–2012– 

01) be, and it hereby is, approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.15

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2012–6387 Filed 3–15–12; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–66577; File No. SR–FINRA– 

2012–020] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Notice of Filing of 

Proposed Rule Change Relating to 

Post-Trade Transparency for Agency 

Pass-Through Mortgage-Backed 

Securities Traded TBA 

March 12, 2012. 

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

Securities Exchange Act of 1934 (the 

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

notice is hereby given that, on March 1, 

2012, 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 and 

II 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 the 

FINRA Rule 6700 Series and Trade 

Reporting and Compliance Engine 

(‘‘TRACE’’) dissemination protocols 

regarding the reporting and 

dissemination of transactions in 

TRACE–Eligible Securities that are 

Agency Pass-Through Mortgage-Backed 

Securities that are traded to be 

announced (‘‘TBA’’) (‘‘TBA 

transactions’’); to amend FINRA Rule 

7730 regarding TRACE fees to provide 

for data fees for TBA transaction data; 

and to amend the FINRA Rule 6700 

Series and FINRA Rule 7730 to delete 

references to a pilot program that 

expired on November 18, 2011, and to 

incorporate other minor administrative, 

technical or clarifying changes.3

The text of the proposed rule change 

is available on FINRA’s Web site 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 

FINRA proposes amendments to the 

TRACE rules and dissemination 

protocols to provide greater 

transparency in TBA transactions. First, 

FINRA proposes to amend Rule 6730, to 

establish distinct requirements for 

reporting TBA transactions for which 

good delivery may be made (‘‘TBA 

transactions GD’’) and for reporting TBA 

transactions in products that are not 

traded for good delivery (‘‘TBA 

transactions NGD’’), and, in two stages, 

to reduce the time frames to report each 

type of TBA transaction and to make a 

related amendment to Rule 6710(u), the 

definition of ‘‘TBA,’’ to incorporate the 

concepts ‘‘for good delivery’’ and ‘‘not 

for good delivery.’’ Second, FINRA 

proposes to amend Rule 6750 to provide 

for the dissemination of TBA 

transactions and to establish, as part of 

TRACE dissemination protocols, a $25 

million dissemination cap for TBA 

transactions GD and a $10 million 

dissemination cap for TBA transactions 

NGD. Third, FINRA proposes to amend 

Rule 7730 to establish fees for current 

market data for TBA transactions and 

aged TBA transaction data.4 Finally, 

FINRA proposes to amend Rule 6730 to 

delete references to a pilot program that 

expired on November 18, 2011, and 

Rule 6730 and Rule 7730 to incorporate 

other minor administrative, technical or 

clarifying changes as described in 

greater detail below. 

TBA Transactions 

As provided in Rule 6710(u), TBA 

means 

‘‘to be announced’’ and refers to a 

transaction in an Agency Pass-Through 

Mortgage-Backed Security * * * where the 

parties agree that the seller will deliver to the 

buyer an Agency Pass-Through MortgageBacked Security of a specified face amount 

and coupon from a specified Agency or 

Government-Sponsored Enterprise program 

representing a pool (or pools) of mortgages 

(that are not specified by unique pool 

number).5

In a TBA transaction, the parties agree 

on a price for delivering a given volume 

of Agency Pass-Through MortgageBacked Securities at a specified future 

date. The distinguishing feature of a 

TBA transaction is that the actual 

identity of the securities to be delivered 

at settlement is not specified on the date 

of execution (‘‘Trade Date’’). Instead, the 

parties to the trade agree on only five 

general parameters of the securities to 

be delivered: issuer, mortgage type, 

maturity, coupon, and month of 

settlement. 

TBA transactions are ‘‘for good 

delivery’’ (‘‘GD’’) or ‘‘not for good 

delivery’’ (‘‘NGD’’). The GD and NGD 

distinctions and classifications are 

based on market standards and 

conventions that identify which 

mortgage pools (or combinations of 

mortgage pools) satisfy ‘‘good delivery’’ 

requirements, which were developed to 

facilitate the securitization of common 

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15828 Federal Register / Vol. 77, No. 52 / Friday, March 16, 2012 / Notices 

6 ‘‘Uniform Practices for the Clearance and 

Settlement of Mortgage-Backed Securities and Other 

Related Securities’’ (‘‘Uniform Practices 

Guidelines’’) is published by the Securities Industry 

and Financial Markets Association (‘‘SIFMA’’). 

7Pooled mortgage loans that are traded GD 

include, but are not limited to, those conforming to 

the Fannie Mae and Freddie Mac ‘‘Single Family’’ 

programs (i.e., single family mortgages identified by 

coupon ranges and maturities), and certain other 

products conforming to Fannie Mae, Freddie Mac 

or GNMA programs (e.g., the Gold Single Family, 

Balloon, Gold Balloon and Jumbo programs). Most 

newly issued Agency Pass-Through MortgageBacked Securities are eligible to be sold as TBA 

transactions GD. Examples of mortgage products not 

eligible for good delivery to settle a TBA transaction 

include, but are not limited to, interest only 

mortgages, project/construction loans, and certain 

non-conforming mortgages on single family 

residences. 

8See Good Delivery Guidelines, Section 11 

(‘‘General Characteristics of Standard Loans for 15 

and 30yr Fixed-Rate Single-Family TBA-eligible 

Pools,’’ listing 14 general characteristics of standard 

15-year or 30-year loans (e.g., fixed rate, first lien, 

and level payment).) 

9CUSIP means Committee on Uniform Security 

Identification Procedures. A CUSIP consists of nine 

characters. Positions 1 and 2 denote the product 

type (for example, 01 refers to single family loans, 

06 refers to balloon loans, and 16 refers to ARMs), 

and Position 3 identifies the Agency or GSE (F 

denotes Fannie Mae, R denotes Freddie Mac, N 

denotes GNMA I and H denotes GNMA II). 

Positions 4 through 8 are used to identify coupon, 

maturity in years and settlement month, and 

Position 9 is a check digit (i.e., a mathematical 

formula that checks the accuracy of the previous 8 

digits). 

10 James Vichery and Joshua Wright, TBA Trading 

and Liquidity in the Agency MBS Market, Federal 

Reserve Bank of New York Staff Reports, no. 468 

(August 2010), available at http:// 

www.newyorkfed.org/research/staff_reports/ 

sr468.pdf. 

11 In general, Asset-Backed Securities must be 

reported to TRACE under Rules 6730(a)(3)(A) and 

(B). Rule 6730(a)(3)(B)(i) addresses reporting 

requirements for Asset-Backed Securities 

transactions executed after 5:00 p.m. Eastern Time 

on a business day, and Rule 6730(a)(3)(B)(ii) 

addresses reporting requirements for Asset-Backed 

Securities transactions executed after TRACE 

System Hours, or on a weekend or a holiday, or 

other day on which the TRACE system is not open 

at any time during that day. However, for certain 

pre-issuance transactions in CMOs and REMICs, the 

applicable reporting provisions are set forth in Rule 

6730(a)(3)(C), and Rules 6730(a)(3)(A) and (B) do 

not apply. The terms Asset-Backed Security and 

TRACE System Hours are defined in, respectively, 

Rule 6710(m) and Rule 6710(t). 

12The term Time of Execution is defined in Rule 

6710(d). 

13Currently, transaction information on all types 

of securities that are TRACE-Eligible Securities, 

except Asset-Backed Securities, is disseminated as 

provided in Rule 6750(a). However, FINRA does not 

disseminate information on a transaction in a 

TRACE-Eligible Security that is (1) effected 

pursuant to Securities Act Rule 144A (17 CFR 

239.144A) under Rule 6750(b)(1); (2) a transfer of 

proprietary securities positions where the transfer 

(A) is effected in connection with a merger or direct 

or indirect acquisition and (B) is not in furtherance 

of a trading or investment strategy under Rule 

6750(b)(2); or (3) a List or Fixed Offering Price 

Transaction or a Takedown Transaction under Rule 

6750(b)(3). The terms List or Fixed Offering Price 

Transaction and Takedown Transaction are defined 

in, respectively, Rule 6710(q) and Rule 6710(r). 

14To accommodate member requests that rule 

changes requiring technology changes occur on a 

Friday, if possible, the proposed TBA GD Pilot 

Program and a similar pilot program for TBA 

transactions NGD will expire on a Friday (i.e., on 

the 180th day, if a Friday, or, if the 180th day is 

not a Friday, on the Friday next occurring that the 

TRACE system is open). 

15Minor exceptions to the general requirement to 

report TBA transactions GD no later than 45 

minutes from the Time of Execution are set forth 

in proposed Rule 6730(a)(3)(D)(i)a., c. and d. Under 

proposed Rule 6730(a)(3)(D)(i)a., transactions 

executed on a business day at or after 12:00 a.m. 

Eastern Time through 7:59:59 a.m. Eastern Time 

must be reported the same day no later than 45 

minutes after the TRACE system opens. Under 

proposed Rule 6730(a)(3)(D)(i)c., transactions 

executed on a business day less than 45 minutes 

before 6:30 p.m. Eastern Time (the time the TRACE 

system closes) must be reported no later than 45 

minutes after the TRACE system opens the next 

mortgage products, and to enhance and 

maintain the liquidity in the TBA 

market for such mortgage-backed 

securities. The conventions and 

standards for TBA transactions GD are 

set forth in the ‘‘Uniform Practices for 

the Clearance and Settlement of 

Mortgage-Related Securities and Other 

Related Securities’’, and particularly in 

Chapter 8 (‘‘Standard Requirements for 

Delivery on Settlements of Fannie Mae, 

Freddie Mac and Ginnie Mae 

Securities’’) (‘‘Good Delivery 

Guidelines’’)).6 For a TBA transaction to 

be GD, it must conform to certain GSE 

or Ginnie Mae program requirements 

regarding the mortgage loans and also 

meet certain other requirements, such as 

those regarding variance in the actual 

principal amount delivered compared to 

the principal amount of the trade, the 

number of pools that may be delivered 

at settlement, minimum original face 

amount of a pool, and final maturity 

guidelines regarding the maturity of the 

mortgage loans underlying the security, 

among others.7 Products traded TBA but 

that are not eligible according to the 

Good Delivery Guidelines are 

considered ‘‘not for good delivery.’’ 

The vast majority of loans eligible for 

inclusion in TBA-delivered pools traded 

GD are known as standard loans. They 

are 15- and 30-year fixed-rate singlefamily loans with certain general 

characteristics set forth in the Good 

Delivery Guidelines.8 Other loans that 

are eligible for good delivery upon 

meeting specific criteria set forth in the 

Good Delivery Guidelines include 

Fannie Mae 11th District Cost of Funds 

Index (‘‘COFI’’) adjusted rate mortgages 

(‘‘ARMs’’) and Ginnie Mae ARMs. Also, 

TBA identification numbers assigned by 

the CUSIP Service Bureau distinguish 

the issuers and the various pool types, 

among other things, providing another 

means of identifying a transaction as a 

TBA transaction GD or a TBA 

transaction NGD.9

Together, the securitization process 

and the TBA market transform what is 

a fundamentally heterogeneous universe 

of individual mortgages and mortgage 

pools (with myriad credit and 

prepayment characteristics) into groups 

of fungible—and therefore liquid— 

fixed-income instruments.10

Reduction of TBA Transaction 

Reporting Period 

Currently, Asset-Backed Securities 

transactions (except certain pre-issuance 

transactions in collateralized mortgage 

obligations (‘‘CMOs’’) and real estate 

mortgage investment conduits 

(‘‘REMICs’’)) that are executed on a 

business day through 5:00 p.m. Eastern 

Time must be reported to TRACE on the 

Trade Date during TRACE System 

Hours, as provided in Rule 

6730(a)(3)(A)(ii).11 In contrast, 

secondary market transactions in all 

other TRACE-Eligible Securities must be 

reported within 15 minutes of the Time 

of Execution.12 With certain exceptions, 

transaction information on such 

TRACE-Eligible Securities is 

disseminated as soon as the transaction 

is reported, and the 15-minute reporting 

requirement results in meaningful price 

transparency for market participants 

trading such securities.13

In connection with proposing that 

TBA transactions be disseminated, 

FINRA proposes to reduce the reporting 

time frames for TBA transactions GD to 

provide market participants meaningful 

and timely price information about the 

more liquid and active TBA market 

segment. The proposed rule change also 

will reduce the reporting period for the 

less liquid and active TBA transactions 

NGD, but to a lesser extent, as discussed 

in greater detail below. In addition, 

FINRA proposes to reduce the reporting 

time frames proposed for TBA 

transactions GD and TBA transactions 

NGD in two stages to permit industry 

participants to adjust policies and 

procedures and to make required 

technological changes. 

TBA Transactions For Good Delivery. 

Proposed Rule 6730(a)(3)(D) sets forth 

the requirements to report TBA 

transactions GD. First, for a pilot 

program of approximately 180 days 

duration, the reporting period for TBA 

transactions GD would be reduced from 

no later than the close of the TRACE 

system on Trade Date to no later than 

45 minutes from the Time of Execution 

(‘‘TBA GD Pilot Program’’), as set forth 

in proposed Rule 6730(a)(3)(D)(i).14

Minor exceptions to the general 

requirements are set forth in proposed 

Rule 6730(a)(3)(D)(i)a., c. and d.15

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Federal Register / Vol. 77, No. 52 / Friday, March 16, 2012 / Notices 15829 

business day (T + 1), and if reported on T + 1, 

designated ‘‘as/of’’ and include the date of 

execution. Under proposed Rule 6730(a)(3)(D)(i)d., 

transactions executed on a business day at or after 

6:30 p.m. Eastern Time through 11:59:59 p.m. 

Eastern Time or on a Saturday, a Sunday, a federal 

or religious holiday or other day on which the 

TRACE system is not open at any time during that 

day (determined using Eastern Time) must be 

reported the next business day (T + 1), no later than 

45 minutes after the TRACE system opens, 

designated ‘‘as/of’’ and include the date of 

execution. 

16After the TBA GD Pilot Program expires, 

proposed Rule 6730(a)(3)(D)(ii), which incorporates 

by reference Rule 6730(a)(1), requires generally that 

TBA transactions be reported no later than 15 

minutes from the Time of Execution, with certain 

minor exceptions for transactions executed near the 

end of the TRACE System Hours, before and after 

TRACE System Hours, and on weekends and 

certain federal and religious holidays. See, e.g., 

Rule 6730(a)(1)(C) and Rule 6730(a)(1)(D). The 

exceptions are the same as those that apply to 

members reporting transactions in corporate bonds 

and Agency Debt Securities to TRACE. 

17Minor exceptions to the general requirement to 

report TBA transactions NGD no later than 120 

minutes from the Time of Execution are set forth 

in proposed Rule 6730(a)(3)(E)(i)a., c. and d. Under 

proposed Rule 6730(a)(3)(E)(i)a., transactions 

executed on a business day at or after 12:00 a.m. 

Eastern Time through 7:59:59 a.m. Eastern Time 

must be reported the same day no later than 120 

minutes after the TRACE system opens. Under 

proposed Rule 6730(a)(3)(E)(i)c., transactions 

executed on a business day less than 120 minutes 

before 6:30 p.m. Eastern Time (the time the TRACE 

system closes) must be reported no later than 120 

minutes after the TRACE system opens the next 

business day (T + 1), and if reported on T + 1, 

designated ‘‘as/of’’ and include the date of 

execution. Under proposed Rule 6730(a)(3)(E)(i)d., 

transactions executed on a business day at or after 

6:30 p.m. Eastern Time through 11:59:59 p.m. 

Eastern Time or on a Saturday, a Sunday, a federal 

or religious holiday or other day on which the 

TRACE system is not open at any time during that 

day (determined using Eastern Time) must be 

reported the next business day (T + 1), no later than 

120 minutes after the TRACE system opens, 

designated ‘‘as/of’’ and include the date of 

execution. 

18After the TBA NGD Pilot Program expires, there 

are minor exceptions to the 60-minute reporting 

time frame set forth in proposed Rule 

6730(a)(3)(E)(ii) for TBA transactions NGD executed 

near the end of the TRACE System Hours, before 

and after TRACE System Hours, and on weekends 

and certain federal and religious holidays. See 

proposed Rule 6730(a)(3)(E)(ii)a., c. and d. The 

exceptions are structured similarly to the 

exceptions to 15-minute reporting that FINRA 

proposes to apply to TBA transactions GD. 

Guidance previously published regarding 

reporting transactions in Asset-Backed Securities as 

soon as practicable, rather than queuing such 

reports until the end of the reporting time period, 

applies to members’ reporting obligations under the 

time frames proposed herein. See Trade Reporting 

Notice, dated May 10, 2011. 

19See Securities Exchange Act Release No. 61566 

(February 22, 2010), 75 FR 9262, 9265 (March 1, 

2010) (Order Approving File No. SR–FINRA–2009– 

065). 

Second, after approximately 180 days, 

the TBA GD Pilot Program would expire 

and the reporting period would be 

reduced from no later than 45 minutes 

from the Time of Execution to no later 

than 15 minutes from the Time of 

Execution, as set forth in proposed Rule 

6730(a)(3)(D)(ii). Again, FINRA 

proposes to include certain limited 

exceptions to the reporting time frames 

for TBA transactions executed shortly 

before the TRACE system closes and 

when the TRACE system is closed.16

TBA Transactions Not For Good 

Delivery. The proposed reporting 

requirements that would apply to TBA 

transactions NGD are set forth in 

proposed Rule 6730(a)(3)(E). FINRA has 

been informed that TBA transactions 

NGD are in certain cases less automated 

and more operationally challenging, 

wherefore FINRA proposes a longer 

reporting time frame than for TBA 

transactions GD. First, for a pilot 

program of approximately 180 days 

duration, the reporting period for TBA 

transactions NGD would be reduced 

from no later than the close of the 

TRACE system on Trade Date to no later 

than 120 minutes from the Time of 

Execution (‘‘TBA NGD Pilot Program’’), 

as set forth in proposed Rule 

6730(a)(3)(E)(i). Minor exceptions to the 

general requirements would be set forth 

in proposed Rule 6730(a)(3)(E)(i)a., c. 

and d.17 Second, after approximately 

180 days, the TBA NGD Pilot Program 

would expire and the reporting period 

would be reduced from no later than 

120 minutes from the Time of Execution 

to no later than 60 minutes from the 

Time of Execution, as set forth in 

proposed Rule 6730(a)(3)(E)(ii). The 

provision also would include certain 

limited exceptions for TBA transactions 

executed shortly before the TRACE 

system closes and when the TRACE 

system is closed.18 After the 60-minute 

reporting requirement is implemented, 

FINRA will continue to review the 

reporting of TBA transactions NGD and 

may recommend further reductions in 

the reporting period. 

TBA Definition. In connection with 

establishing separate reporting 

requirements, and as discussed infra, 

separate dissemination caps for TBA 

transactions GD and TBA transactions 

NGD, FINRA proposes to amend the 

definition of ‘‘TBA’’ in Rule 6710(u) to 

incorporate the concepts that TBA 

transactions may be traded GD or NGD. 

FINRA also incorporates minor, 

technical changes to the defined term. 

As amended, Rule 6710(u) would 

provide as follows: 

‘‘To Be Announced’’ (‘‘TBA’’) means a 

transaction in an Agency Pass-Through 

Mortgage-Backed Security as defined in 

paragraph (v) where the parties agree that the 

seller will deliver to the buyer an Agency 

Pass-Through Mortgage-Backed Security of a 

specified face amount and coupon from a 

specified Agency or Government-Sponsored 

Enterprise program representing a pool (or 

pools) of mortgages (that are not specified by 

unique pool number), and includes TBA 

transactions ‘‘for good delivery’’ (‘‘GD’’) and 

TBA transactions ‘‘not for good delivery’’ 

(‘‘NGD’’). 

Dissemination of TBA Transaction Data 

Although members began reporting 

transactions in Asset-Backed Securities 

to TRACE on May 16, 2011, FINRA 

currently does not disseminate publicly 

any of the Asset-Backed Securities 

transaction data reported to TRACE. 

Specifically, Rule 6750(b)(4) provides 

that transaction information on TRACEEligible Securities that are Asset-Backed 

Securities will not be disseminated. 

However, when FINRA proposed the 

dissemination restrictions in Rule 

6750(b)(4) regarding Asset-Backed 

Securities, FINRA represented that it 

would study the Asset-Backed 

Securities data after transaction 

reporting began. In the Commission’s 

order approving the proposed rule 

change to define Asset-Backed 

Securities as TRACE-Eligible Securities 

and require reporting of Asset-Backed 

Securities transactions, the Commission 

noted FINRA’s intent to study AssetBacked Securities dissemination issues 

prior to making any proposal to 

disseminate some or all of such 

information, and the Commission’s 

historical support of efforts to improve 

post-trade transparency in the fixed 

income markets: 

FINRA believes that information on AssetBacked Securities transactions should be 

collected and analyzed before making any 

decision regarding the utility of such 

information for transparency purposes or the 

consequences of dissemination on this 

market. FINRA has stated that, after a period 

of study, it would file a proposed rule change 

if it determined that its study of the trading 

data provides a reasonable basis to seek 

dissemination of transaction information on 

Asset-Backed Securities. The Commission 

has historically been supportive of efforts to 

improve post-trade transparency in the fixed 

income markets and encourages FINRA to 

carry out that study.19

Since reporting began on May 16, 

2011, FINRA has reviewed AssetBacked Securities transaction data. The 

reported Asset-Backed Securities 

transaction data, as well as input from 

market participants as FINRA prepared 

to expand TRACE to include AssetBacked Securities, suggests that realtime disseminated TRACE transaction 

data should be expanded to include 

transaction information on TBA 

transactions. 

First, at the launch of Asset-Backed 

Securities reporting, certain market 

participants noted that TBA transactions 

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20The information is based upon FINRA’s review 

of all TBA transactions reported to TRACE from 

May 16, 2011 through October 28, 2011. 

21The information is based upon FINRA’s review 

of transactions in all TRACE-Eligible Securities, 

other than Agency Debt Securities, reported to 

TRACE from May 16, 2011 through October 28, 

2011. 

22From a review of all TBA transactions reported 

to TRACE from May 16, 2011 through July 31, 2011, 

the data shows that TBA transactions (with 

different issuers, different coupon rates, and 

different maturities) were priced consistently, 

relative to each other. 

23Rule 6750(b) would be amended to provide that 

FINRA will not disseminate information on a 

transaction in a TRACE-Eligible Security that is 

(4) An Asset-Backed Security, except an Agency 

Pass-Through Mortgage-Backed Security traded to 

be announced (‘‘TBA’’) (‘‘TBA transaction’’). 

24FINRA continues to review Asset-Backed 

Security transaction information in other sectors of 

the Asset-Backed Securities market and, at a later 

date, may propose that transactions in other AssetBacked Securities be disseminated. 

25The terms Investment Grade and NonInvestment Grade are defined in, respectively, Rule 

6710(h) and Rule 6710(i). 

26 In contrast, the existing caps for corporate 

Investment Grade bonds limit the display of actual 

size for approximately 1.6 percent of trades 

representing approximately 48 percent of total par 

value traded, and, for Agency Debt Securities, 

approximately six percent of trades representing 

approximately 74 percent of total par value traded. 

The information is based on a review of all TBA 

transactions, and transactions in Investment Grade 

corporate bonds and Agency Debt Securities 

reported to TRACE from May 16, 2011 through 

January 4, 2012. The term Agency Debt Security is 

defined in Rule 6710(l). 

27See Item II.C. for a discussion of SR–FINRA– 

2011–069. 

trade in a very liquid market and 

suggested that FINRA consider 

transparency in such transactions. 

Second, as FINRA reviewed and 

continues to review the data reported 

for Asset-Backed Securities, including 

TBA transactions, and studies the total 

volume of TBA transactions, the 

concentration of trading in such 

securities, and the pricing disparity 

among various types of Agency PassThrough Mortgage-Backed Securities 

traded TBA to understand their 

liquidity and fungibility, the data 

supports FINRA’s proposal to 

disseminate TBA transactions GD and 

TBA transactions NGD to increase 

transparency in this market. 

The market activity reported and 

reviewed reveals that the TBA market is 

generally active and liquid. In addition, 

the degree of fungibility is high, with 

substantial trading concentrated among 

a relatively small universe of securities 

as identified by a unique CUSIP number 

(hereinafter, ‘‘CUSIP’’ means the 

specific security identified by the 

unique CUSIP number). The TBA 

market has an average daily volume of 

$248 billion traded in close to 8,000 

average daily trades,20 and the average 

daily volume of all TBA transactions is 

approximately ten times the average 

daily volume of the entire corporate 

bond market.21 The vast majority of 

TBA transactions occur in TBA GD, 

accounting for 99.36 percent of all TBA 

transactions (correspondingly, TBA 

transactions NGD account for 0.64 

percent of all TBA transactions). The 

correlation among the prices of various 

TBA CUSIPs is high, and the price of 

one TBA transaction may be derived 

using available prices for TBA 

transactions for a different issuer, a 

different coupon rate, maturity, or a 

combination thereof.22

FINRA Rule 6750 

Rule 6750(b)(4) currently provides 

that transactions in Asset-Backed 

Securities are not subject to 

dissemination. FINRA proposes to 

amend the rule to disseminate 

information on TBA transactions GD 

and TBA transactions NGD, which 

would occur immediately upon receipt 

of a transaction report.23 Thus, 

information would be disseminated on 

TBA transactions GD within 45 minutes, 

or, after the expiration of the TBA GD 

Pilot Program, within 15 minutes of the 

Time of Execution, and, on TBA 

transactions NGD, within 120 minutes, 

or, after the expiration of the TBA NGD 

Pilot Program, within 60 minutes of the 

Time of Execution.24

Dissemination Caps 

Currently, there are two TRACE 

dissemination protocols in place, 

referred to as dissemination caps, under 

which the actual size of a transaction 

over a certain par value is not displayed 

in disseminated TRACE transaction 

data. For TRACE-Eligible Securities that 

are rated Investment Grade, the 

dissemination cap is $5 million 

(‘‘$5MM’’), and the size of transactions 

in excess of $5MM is displayed as 

‘‘$5MM+.’’ For TRACE-Eligible 

Securities that are rated Non-Investment 

Grade, the dissemination cap is $1 

million (‘‘$1MM’’), and the size of a 

transaction in excess of $1MM is 

displayed as ‘‘$1MM+.’’ 25

FINRA has analyzed the distribution 

of TBA transactions GD and TBA 

transactions NGD to determine an 

appropriate cap for these transactions. 

FINRA proposes to set a dissemination 

cap for a TBA transaction GD initially 

at $25 million. Accordingly, the size of 

a TBA transaction GD greater than $25 

million would be displayed in 

disseminated data as ‘‘$ 25MM+.’’ At 

this level, approximately 20 percent of 

trades in TBA transactions NG [sic] 

representing approximately 84 percent 

of total volume traded would be 

disseminated subject to the cap.26 For a 

TBA transaction NGD, FINRA proposes 

to set a $10 million dissemination cap 

initially, with size displayed in 

disseminated data as ‘‘$10MM+,’’ if the 

size of the TBA transaction NGD 

exceeded $10 million. At this level, 

approximately 42 percent of TBA 

transactions NGD representing 

approximately 85 percent of total 

volume traded would be disseminated 

subject to the cap. 

The $25 million dissemination cap for 

TBA transactions GD and the $10 

million dissemination cap for multiple 

types of less liquid and active TBA 

transactions are more conservative than 

the $50 million dissemination cap 

FINRA initially considered.27 FINRA 

believes that the more conservative caps 

will allow the marketplace time to 

adjust to the new levels of transparency. 

In setting these dissemination caps, 

FINRA took into account the liquidity 

and trading activity differences within 

each segments [sic] of TBA GD and TBA 

NGD. FINRA notes that most TBA 

transactions are for good delivery, and 

even with setting a dissemination cap at 

$25 million for such transactions, and a 

$10 million cap for a smaller and 

generally somewhat less liquid segment 

of the TBA market, price transparency 

in the TBA market will improve 

significantly. 

As dissemination of TBA transactions 

GD and TBA transactions NGD is 

implemented, FINRA will continue to 

review the volume of and liquidity in 

TBA transactions GD and TBA 

transactions NGD, and may recommend 

that the dissemination caps be set at 

higher levels to provide additional 

transparency to market participants. 

Data and Fees 

FINRA proposes to amend Rule 7730 

to make available the real-time 

disseminated TBA transaction data and 

the Historic TRACE Data for TBA 

transactions, and to establish the fees for 

such TBA transaction data. First, FINRA 

proposes to amend Rule 7730(c) to 

establish the Asset-Backed Security data 

set (‘‘ABS Data Set’’) as the third RealTime TRACE market data set. The ABS 

Data Set will be limited to information 

disseminated immediately upon receipt 

of a transaction report for either a TBA 

transaction GD or a TBA transaction 

NGD. The market data fee rates 

currently in effect for similar Real-Time 

TRACE market data sets (i.e., for the 

Corporate Bond Data Set and the 

Agency Data Set) in Rule 7730(c) would 

be extended to the ABS Data Set. 

Second, FINRA proposes to amend 

Rule 7730(d) to establish a third historic 

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Federal Register / Vol. 77, No. 52 / Friday, March 16, 2012 / Notices 15831 

28Reporting of Asset-Backed Securities 

transactions began on May 16, 2011. Given the 18- 

month delayed release of Historic TRACE Data, 

Historic ABS Data would become available for the 

first time in early 2013. 

29FINRA proposes not to add the clarification to 

the fee chart in Rule 7730. Also, FINRA proposes 

to delete a similar statement—‘‘The 2003 Historic 

Corporate Bond Data Set also includes the 2002 

Historic Corporate Bond Data Set.’’—in two sections 

of the fee chart in Rule 7730 summarizing Historic 

TRACE Data fees. Also, FINRA proposes to delete 

‘‘BTDS’’ in two sections of the fee chart in Rule 

7730 summarizing market data fees. 

30 15 U.S.C. 78o–3(b)(6). 31 15 U.S.C. 78o–3(b)(5). 

data product for TBA transactions 

(‘‘Historic ABS Data Set’’) similar to the 

data sets for corporate bonds (‘‘Historic 

Corporate Bond Data Set’’) and Agency 

Debt Securities (‘‘Historic Agency Data 

Set’’) referenced in the rule. FINRA also 

proposes to establish fees for the 

Historic ABS Data Set at the same rates 

currently in effect in Rule 7730(d) for 

the Historic Corporate Bond Data Set 

and the Historic Agency Data Set. The 

Historic ABS Data Set would include all 

TBA transactions effected as of or after 

May 16, 2011, and, among other things, 

would include uncapped volume 

information. However, like all other 

Historic TRACE Data, TBA transaction 

data included in the Historic ABS Data 

Set would be released subject to a delay 

of approximately 18 months from the 

date of the transaction.28

Other Rule Changes 

FINRA proposes to delete references 

to a pilot program that expired on 

November 18, 2011 in Rule 6730, and to 

incorporate other minor administrative, 

technical or clarifying changes in Rule 

6730 and Rule 7730, as discussed 

below. 

FINRA Rule 6730. FINRA proposes to 

add the sentence ‘‘Transactions in 

Asset-Backed Securities must be 

reported as provided in this paragraph 

(a)(3).’’ as the introductory sentence to 

Rule 6730(a)(3), and ‘‘General Reporting 

Requirements’’ as the caption for Rule 

6730(a)(3)(A). FINRA also proposes to 

add the phrase, ‘‘Except as provided in 

paragraphs (a)(3)(C), (a)(3)(D) and 

(a)(3)(E),’’ as introductory text to Rule 

6730(a)(3)(A), to indicate that AssetBacked Securities must be reported as 

provided in subparagraph (A) of Rule 

6730(a)(3), with the exceptions to the 

general requirements set forth in 

subparagraphs (C), (D) and (E) of Rule 

6730(a)(3). 

FINRA proposes to consolidate and 

otherwise amend Rule 6730(a)(3)(A) and 

(B) as follows: (a) To delete Rule 

6730(a)(3)(A)(i), the pilot program for 

Asset-Backed Securities transaction 

reporting that expired on November 18, 

2011 (‘‘ABS Pilot Program’’); (b) to 

delete a clause referencing the ABS Pilot 

Program and Rule 6730(a)(3)(C), and to 

delete ‘‘(ii)’’ and renumber the retained 

text as Rule 6730(a)(3)(A)(i); and (c) to 

delete the text in Rule 6730(a)(3)(B), 

except subparagraphs (i) and (ii) of Rule 

6730(a)(3)(B), and renumber Rule 

6730(a)(3)(B)(i) and (ii) as Rule 

6730(a)(3)(A)(ii) and (iii). 

FINRA proposes to amend Rule 

6730(a)(3)(C) as follows: (a) To add a 

caption, ‘‘Collateralized Mortgage 

Obligation and Real Estate Mortgage 

Investment Conduit Transactions;’’ (b) 

to delete the provisions relating to the 

ABS Pilot Program (i.e., Rule 

6730(a)(3)(C)(i), including 

subparagraphs a. and b.); (c) to add an 

introductory clause providing: 

‘‘Transactions in Asset-Backed 

Securities that are collateralized 

mortgage obligations (‘‘CMOs’’) or real 

estate mortgage investment conduits 

(‘‘REMICS’’) that are executed before the 

issuance of the security must be 

reported the earlier of:’’; (d) to retain in 

Rule 6730(a)(3)(C)(ii) subparagraphs a. 

and b. and the final sentence of Rule 

6730(a)(3)(C)(ii), and renumber 

subparagraphs a. and b. as 

subparagraphs (i) and (ii) of Rule 

6730(a)(3)(C); and (e) to delete, in Rule 

6730(a)(3)(C)(ii), ‘‘(ii)’’ and the phrase 

‘‘After the expiration of the Pilot 

Program in paragraph (a)(3)(A)(i), such 

transactions must be reported the earlier 

of:.’’ 

FINRA Rule 7730. In Rule 7730, 

FINRA proposes to add, in paragraphs 

(d)(1)(A)(ii) and (d)(1)(B)(ii) regarding 

Historic TRACE Data, a sentence to 

clarify that the 2011 Historic Agency 

Data Set also will include the 2010 

Historic Agency Data Set, and the 2013 

Historic ABS Data Set also will include 

the 2012 Historic ABS Data Set.29

FINRA also proposes minor technical 

amendments to Rule 7730(c) and (d) to 

reflect that the number of Data Sets and 

Historic Data Sets will increase from 

two to three, and other minor technical 

amendments to Rule 7730(b)(1) and 

Rule 7730(c) and (d). 

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 earlier than August 1, 

2012 and no later than 180 days 

following publication of the Regulatory 

Notice announcing Commission 

approval. 

2. Statutory Basis 

FINRA believes that the proposed rule 

change is consistent with the provisions 

of Section 15A(b)(6) of the Act,30 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)(5) of 

the Act,31 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. FINRA believes that the 

proposed rule change to increase fixed 

income market transparency is designed 

to prevent fraudulent and manipulative 

acts and practices, to promote just and 

equitable principles of trade, and, 

generally to protect investors and the 

public because transparency in TBA 

transactions will enhance the ability of 

investors and other market participants 

to identify and negotiate fair and 

competitive prices for Agency PassThrough Mortgage-Backed Securities, 

and because the dissemination of price 

and other TBA transaction information 

publicly will promote just and equitable 

principles of trade among participants 

in the more transparent market, and will 

aid in the prevention of fraudulent and 

manipulative acts and practices in the 

TBA market. 

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. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

On November 22, 2011, FINRA filed 

with the SEC SR–FINRA–2011–069 

(‘‘November 2011 Filing’’), a proposed 

rule change to amend the Rule 6700 

Series and TRACE dissemination 

protocols regarding the reporting and 

dissemination of TBA transactions. 

Specifically, FINRA proposed to 

disseminate TBA transactions 

immediately upon FINRA’s receipt of a 

TBA transaction report, and to establish 

a $50 million dissemination cap such 

that when transactions over $50 million 

were disseminated, the size displayed 

for such transactions would be capped 

at $50 million and displayed as 

‘‘$50MM+.’’ In connection with 

proposing to disseminate TBA 

transactions, FINRA proposed to reduce 

the period to report TBA transactions to 

15 minutes, in two stages. First, for a 

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15832 Federal Register / Vol. 77, No. 52 / Friday, March 16, 2012 / Notices 

32FINRA also proposed to amend Rule 7730 

regarding TRACE fees to provide for data fees for 

TBA transaction data, Rule 6730 to delete 

references to a pilot program that expired on 

November 18, 2011, and Rule 6730 and Rule 7730 

to incorporate other minor administrative, technical 

or clarifying changes. 

33See Securities Exchange Act Release No. 65877 

(December 2, 2011), 76 FR 76777 (December 8, 

2011) (Notice of Filing of File No. SR–FINRA– 

2011–069). The comment period closed on 

December 29, 2011. 

34See Letter from Chris Killian, Managing 

Director, Securitization, Securities Industry and 

Financial Markets Association (‘‘SIFMA’’), to 

Elizabeth M. Murphy, Secretary, SEC, dated 

December 22, 2011. 

35For example, at the proposed cap of $25 

million, approximately 21 percent of trades and 

approximately 85 percent of volume would be 

capped for transactions in TBA transactions GD 

backed by eligible 30-year mortgage loans, 

approximately 15 percent of trades and 

approximately 78 percent of volume would be 

capped for transactions in TBA transactions GD 

backed by eligible 15-year mortgage loans, and 

approximately 20 percent of trades and 

approximately 67 percent of volume would be 

capped for transactions in TBA transactions GD 

backed by other types of eligible loans having other 

maturities. 

pilot period of approximately 180 days, 

FINRA proposed to require members to 

report TBA transactions no later than 45 

minutes from the Time of Execution, 

and after the pilot period expired, to 

report no later than 15 minutes from the 

Time of Execution. FINRA proposed to 

announce the effective date of the 

proposed rule change in a Regulatory 

Notice to be published no later than 60 

days following Commission approval, 

and that the effective date would be no 

later than 180 days following 

publication of the Regulatory Notice 

announcing Commission approval.32 A 

copy of the Form 19b–4 and original 

Exhibit 5 of the November 2011 Filing 

is attached as Exhibit 2a. 

On December 8, 2011, the November 

2011 Filing was published for comment 

in the Federal Register.33 A copy of the 

Federal Register release is attached as 

Exhibit 2b. The SEC received one 

comment letter in response,34 a copy of 

which is attached as Exhibit 2c. The 

commenter raised concerns regarding: 

(1) The proposed $50 million 

dissemination cap and its potential 

impact on various segments of the TBA 

market; (2) the proposed reporting time 

frames; and (3) the implementation time 

frame for the proposed rule change. 

FINRA withdrew the November 2011 

Filing on March 1, 2012, prior to filing 

a response to comments. Accordingly, 

the comments to the November 2011 

Filing and FINRA’s responses are 

discussed below. 

Dissemination Cap 

The commenter states that the TBA 

market is a collection of distinct trading 

markets for distinct trading products, 

with material differences in liquidity. 

For example, the commenter stated that 

in products such as ARMs, mortgages 

with 40-year maturities, and project 

loans, the volume issued is very low in 

comparison to standard 30-year fixed 

rate mortgages that trade for good 

delivery, and consequently, liquidity in 

TBA transactions backed by such 

products is lower. In addition, the 

commenter states that a volume cap of 

$50 million is generally too high for 

even the most liquid segments of the 

TBA market, and recommends that 

FINRA adopt a $25 million 

dissemination cap (or a lesser cap) for 

the most liquid TBA products (pools to 

be comprised of standard, 30-year, fixed 

rate mortgages for good delivery), a $10 

million dissemination cap for pools of 

15-year mortgages, and a $1 million to 

$5 million cap for other products traded 

TBA (e.g., pools of high coupon fixed 

rate mortgages, ARMs, project loans, 

jumbo loans and reverse mortgages). 

The commenter notes that, in making its 

recommendations, it does not have 

access to the transaction data cited by 

FINRA regarding trading volume. 

After careful consideration of the 

commenter’s concerns, FINRA proposes 

two lower dissemination caps herein. 

Based on FINRA’s review of the TBA 

trading data, discussions with member 

firms, and the commenter’s concern that 

liquidity may be adversely affected if 

the originally proposed dissemination 

cap is adopted, FINRA has proposed to 

lower the dissemination cap to $25 

million for all TBA transactions GD and 

to $10 million for all TBA transactions 

NGD. Although the commenter 

recommends multiple dissemination 

caps based upon factors such as 

mortgage maturity and coupon, FINRA 

believes that the commenter’s approach 

would result in investor confusion and 

operational complexities that are 

unnecessary to address the issues raised 

by the commenter. FINRA’s proposal to 

adopt a two-pronged approach to the 

dissemination caps for products traded 

TBA is much less complex and, at the 

same time, allows FINRA to address 

most of the commenter’s concerns 

regarding liquidity, providing a lower 

dissemination cap for those products 

that generally are the least liquid, 

without establishing multiple caps and 

standards. The reduction of the 

dissemination cap to $25 million for 

TBA transactions GD, and for multiple 

types of less liquid TBA transactions 

NGD to $10 million is a more 

conservative metric than initially 

proposed, which FINRA believes is 

appropriate at the onset. In setting these 

dissemination caps, FINRA took into 

account the liquidity and activity 

differences in coupons and maturities 

within each segments [sic] of TBA 

transactions GD and TBA transactions 

NGD.35 FINRA notes that even with the 

reduction of the dissemination cap for 

TBA transactions GD from $50 million 

to $25 million for such transactions, and 

a $10 million cap for a small and 

generally somewhat less liquid segment, 

price transparency in the TBA market 

will improve significantly. 

Reporting Time Frames 

The commenter states that the 

proposed time frames for reporting 

certain less liquid products, such as 

ARMs, project loans and reverse 

mortgages, within the proposed 

accelerated time frames will not be 

possible absent a cumbersome and 

potentially risky manual trade reporting 

process. The commenter notes that 

manual processing raises compliance, 

audit and workflow related concerns, 

and may result in additional TRACE 

reporting errors. For these reasons, the 

commenter recommends that the 

reporting deadline for these products 

remain at the close of business on the 

date of execution. 

In response to the commenter’s 

concerns regarding reporting 

transactions in instruments such as 

certain ARMS, project loans and reverse 

mortgages, FINRA proposes to modify 

the reporting requirements herein. 

Specifically, for TBA transactions NGD, 

FINRA proposes to extend the 

previously proposed time frames to 

report (i.e., 45 minutes from the Time of 

Execution, then after expiration of a 

pilot program, 15 minutes from the 

Time of Execution). In this proposed 

rule change, FINRA proposes to require 

members to report such transactions 

initially no later than two hours from 

the Time of Execution, then, after 

expiration of the proposed TBA NGD 

Pilot Program, no later than one hour 

from the Time of Execution. FINRA 

retains the reporting time frame initially 

proposed for TBA transactions GD. 

FINRA believes that proposing the 

longer reporting time frames for TBA 

transactions NGD will facilitate timely 

trade reporting, and accommodate 

current differences in members’ 

systems, trade processing and other 

work flows. However, given that more 

than half of TBA transactions NGD 

currently are reported within one hour 

from the time of execution, FINRA 

believes that in the long term members 

will be able to report all TBA 

transactions within 15 minutes from the 

Time of Execution. 

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Federal Register / Vol. 77, No. 52 / Friday, March 16, 2012 / Notices 15833 

36 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78k–1. 

2 17 CFR 242.608. 

3The OPRA Plan is a national market system plan 

approved by the Commission pursuant to Section 

11A of the Act and Rule 608 thereunder (formerly 

Rule 11Aa3–2). See Securities Exchange Act 

Release No. 17638 (March 18, 1981), 22 SE.C. 

Docket 484 (March 31, 1981). The full text of the 

OPRA Plan is available at http:// 

www.opradata.com. 

The OPRA Plan provides for the collection and 

dissemination of last sale and quotation information 

on options that are traded on the participant 

exchanges. The nine participants to the OPRA Plan 

are BATS Exchange, Inc., Chicago Board Options 

Exchange, Incorporated, C2 Options Exchange, 

Incorporated, International Securities Exchange, 

LLC, NASDAQ OMX BX, Inc., NASDAQ OMX 

PHLX, Inc., NASDAQ Stock Market LLC, NYSE 

Amex, Inc., and NYSE Arca, Inc. 

4OPRA defines a ‘‘Subscriber,’’ in general, as an 

entity or person that receives OPRA data but does 

not redistribute it to third parties, and defines a 

‘‘Nonprofessional Subscriber’’ as a Subscriber who 

is a ‘‘Nonprofessional.’’ OPRA’s definition of the 

term ‘‘Nonprofessional’’ is stated in its forms of 

‘‘Electronic Subscriber Agreement’’ and ‘‘Hardcopy 

Subscriber Agreement.’’ These forms are available 

on OPRA’s Web site, www.opradata.com. 

5OPRA’s Fee Schedule provides that a Vendor 

may determine the fee that it pays with respect to 

its distribution of current OPRA data to a 

Nonprofessional Subscriber in one of two ways: 

either the Vendor may pay OPRA’s flat monthly 

Nonprofessional Subscriber Fee (currently $1.00/ 

month, proposed in this filing to be increased to 

$1.25/month), or the Vendor may count the 

Nonprofessional Subscriber’s queries for OPRA data 

and pay Usage-based Vendor Fees based on the 

actual usage of OPRA data by the Nonprofessional 

Subscriber, subject to a cap that OPRA has always 

set at the amount of the Nonprofessional Subscriber 

Fee. Many Vendors prefer to pay the flat 

Nonprofessional Subscriber Fee, even though their 

aggregate fees on the basis of Usage-based Vendor 

Continued 

Implementation 

The commenter requested that the 

effective date of the November 2011 

Filing be no earlier than August 1, 2012, 

to allow members to make necessary 

changes to internal systems, policies 

and procedures. FINRA intends to take 

into account the operational challenges 

associated with the proposal in 

establishing the effective date of this 

proposed rule change and will work 

with members to minimize the 

operational burdens of implementation. 

FINRA also has amended the stated 

implementation period to provide that 

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 earlier than August 1, 

2012 and no later than 180 days 

following publication of the Regulatory 

Notice announcing Commission 

approval. 

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 rulecomments@sec.gov. Please include File 

Number SR–FINRA–2012–020 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–2012–020. 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 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 Web site 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 the filing also 

will 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 

Number SR–FINRA–2012–020 and 

should be submitted on or before April 

6, 2012. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.36

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2012–6444 Filed 3–15–12; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–66564; File No. SR–OPRA– 

2012–02] 

Options Price Reporting Authority; 

Notice of Filing and Immediate 

Effectiveness of Proposed Amendment 

to the Plan for Reporting of 

Consolidated Options Last Sale 

Reports and Quotation Information To 

Amend OPRA’s Fee Schedule 

March 9, 2012. 

Pursuant to Section 11A of the 

Securities Exchange Act of 1934 

(‘‘Act’’) 1 and Rule 608 thereunder,2

notice is hereby given that on March 8, 

2012, the Options Price Reporting 

Authority (‘‘OPRA’’) submitted to the 

Securities and Exchange Commission 

(‘‘Commission’’) an amendment to the 

Plan for Reporting of Consolidated 

Options Last Sale Reports and 

Quotation Information (‘‘OPRA Plan’’).3

The proposed amendment would revise 

OPRA’s Nonprofessional Subscriber Fee 

and Usage-based Vendor Fee and adopt 

a new Enterprise Rate Nonprofessional 

Subscriber Fee. The Commission is 

publishing this notice to solicit 

comments from interested persons on 

the proposed OPRA Plan amendment. 

I. Description and Purpose of the Plan 

Amendment 

The purpose of the amendment is to 

make a set of changes in OPRA’s Fee 

Schedule as follows: OPRA’s 

Nonprofessional Subscriber Fee would 

be increased from $1.00 per 

Nonprofessional Subscriber 4 per month 

to $1.25 per Nonprofessional Subscriber 

per month. The cap on OPRA’s Usagebased Vendor Fees for receipt of OPRA 

data by Nonprofessional Subscribers 

would be increased commensurately to 

$1.25 per Nonprofessional Subscriber 

per month.5 OPRA would also establish 

mstockstill on DSK4VPTVN1PROD with NOTICES