23524 Federal Register / Vol. 77, No. 76 / Thursday, April 19, 2012 / Notices 

27 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, Specified 

Pool Transaction, Asset-Backed Security and To Be 

Announced (‘‘TBA’’) are defined in, respectively, 

Rule 6710(a), Rule 6710(v), Rule 6710(x), Rule 

6710(m) and Rule 6710(u). The definition of SBA– 

Backed ABS is proposed in Rule 6710(bb). 

4The proposed rule text assumes the SEC 

approval of File No. SR–FINRA–2012–020, which 

proposed amendments to the FINRA Rule 6700 

Series to provide for the dissemination of 

transactions in TRACE–Eligible Securities that are 

Agency Pass-Through Mortgage-Backed Securities 

that are traded TBA (‘‘MBS TBA transactions’’), 

subject to dissemination caps, and to reduce the 

reporting periods for such transactions. See 

Securities Exchange Act Release No. 66577 (March 

12, 2012), 77 FR 15827 (March 16, 2012) (Notice of 

Filing of File No. SR–FINRA–2012–020) (‘‘TBA 

proposal’’). 

5See supra note 4. The TBA proposal 

distinguished between MBS TBA transactions for 

good delivery (‘‘MBS TBA transactions GD’’) and 

not for good delivery (‘‘MBS TBA transactions 

NGD’’). In response to comments, FINRA proposed 

a longer period to timely report, and lower 

dissemination caps for, MBS TBA transactions NGD 

than the requirements proposed for MBS TBA 

transactions GD. 

information that you wish to make 

available publicly. All submissions 

should refer to File No. SR–Phlx–2012– 

47 and should be submitted on or before 

May 10, 2012. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.27

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2012–9404 Filed 4–18–12; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–66804; File No. SR–FINRA– 

2012–021] 

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 in Specified Pool 

Transactions and SBA–Backed AssetBacked Securities Transactions 

April 13, 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 April 2, 

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, 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 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: (1) 

Agency Pass-Through Mortgage-Backed 

Securities traded in Specified Pool 

Transactions (‘‘MBS Specified Pool 

transactions’’) and (2) Asset-Backed 

Securities backed by loans guaranteed 

as to principal and interest by the Small 

Business Administration (‘‘SBA–Backed 

ABS’’) and traded either in Specified 

Pool Transactions or to be announced 

(‘‘TBA’’) (collectively, ‘‘SBA–Backed 

ABS transactions’’).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.4

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 March 1, 2012, FINRA filed the 

TBA proposal to provide for the 

dissemination of MBS TBA transactions, 

subject to dissemination caps, and 

concomitant reductions in the reporting 

periods for such transactions.5 FINRA is 

proposing to further expand 

transparency in the market for AssetBacked Securities in this proposed rule 

change, which provides for the 

dissemination of MBS Specified Pool 

and SBA–Backed ABS transactions, 

subject to dissemination caps, and 

concomitant reductions in the reporting 

periods for such transactions. 

FINRA proposes to amend Rule 6730 

to reduce, in two stages, the time frames 

to report MBS Specified Pool and SBA– 

Backed ABS transactions. FINRA also 

proposes minor clarifying amendments 

to Rule 6730(a)(3)(D) and (E) to specify 

that the reporting requirements set forth 

therein apply solely to MBS TBA 

transactions. In connection with such 

changes, FINRA proposes amendments 

to the definitions of ‘‘To Be Announced 

(‘TBA’),’’ ‘‘Specified Pool Transaction,’’ 

and ‘‘Agency Pass-Through MortgageBacked Security’’ and a new defined 

term, ‘‘SBA–Backed ABS.’’ Finally, 

FINRA proposes to amend Rule 6750 to 

provide for the dissemination of MBS 

Specified Pool and SBA–Backed ABS 

transactions, and proposes to establish, 

as part of TRACE dissemination 

protocols, a $10 million dissemination 

cap for such transactions. 

MBS Specified Pool Transactions 

Generally, Agency Pass-Through 

Mortgage-Backed Securities are traded 

either TBA or in Specified Pool 

Transactions as defined in Rule 6710(v) 

and (x), respectively. In MBS Specified 

Pool transactions, on the date of trade 

(trade date), the seller agrees to deliver 

to the buyer a specific security 

identifiable by a unique identification 

number, which is backed by a specific 

pool (or pools) of mortgage loans, or 

other Agency Pass-Through MortgageBacked Securities, or a combination of 

such assets. MBS Specified Pool 

transactions differ from MBS TBA 

transactions in that, on trade date, in an 

MBS TBA transaction, the security to be 

delivered is described (e.g., program, 

interest rate, type of residential 

mortgage, maturity) but is not 

specifically identified (i.e., does not 

have a specific unique identification 

number), and will not be identified until 

shortly before settlement. While the 

majority of Agency Pass-Through 

Mortgage-Backed Securities are traded 

TBA, the daily volume of MBS 

Specified Pool transactions represents 

significant economic activity in 

mortgage-related securities, and FINRA 

believes that additional transparency in 

such securities is appropriate. The 

reported transaction data shows that 

MBS Specified Pool transaction pricing 

is strongly correlated to the pricing of 

the substantially larger market in MBS 

TBA transactions. Moreover, the two 

market sectors exhibit similar trading 

characteristics. For example, 

approximately 98 percent of the total 

volume in MBS Specified Pool 

transactions occurs in securities backed 

by single-family mortgage loans. 

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Federal Register / Vol. 77, No. 76 / Thursday, April 19, 2012 / Notices 23525 

6Certain programs also dominate both market 

segments. For example, over half of all transactions 

in MBS Specified Pool transactions occur in Fannie 

Mae program securities, and approximately 77 

percent of all transactions in MBS TBA transactions 

occur in Fannie Mae program securities. The data 

is based on FINRA staff review of all Asset-Backed 

Securities traded during a six-month period from 

May 16, 2011 through October 31, 2011. 

7SBA-Backed ABS transactions traded in 

Specified Pool Transactions account for 0.41 

percent of the combined total volume of all 

Specified Pool Transactions (which includes 

Agency Pass-Through Mortgage Backed-Securities 

and SBA-Backed ABS traded in Specified Pool 

Transactions). 

8As revised, Rule 6710(u) would provide: 

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

in an Agency Pass-Through Mortgage-Backed 

Security as defined in paragraph (v) or an SBABacked ABS as defined in paragraph (bb) where the 

parties agree that the seller will deliver to the buyer 

a security(ies) of a specified face amount and 

meeting certain other criteria but the specific 

security(ies) to be delivered at settlement is not 

specified at the Time of Execution, and includes 

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

TBA transactions ‘‘not for good delivery’’ (‘‘NGD’’). 

As revised, Rule 6710(x) would provide: 

‘‘Specified Pool Transaction’’ means a transaction 

in an Agency Pass-Through Mortgage-Backed 

Security as defined in paragraph (v) or an SBABacked ABS as defined in paragraph (bb) requiring 

the delivery at settlement of a pool(s) that is 

identified by a unique pool identification number 

at the Time of Execution. 

9As revised, Rule 6710(v) would provide: 

‘‘Agency Pass-Through Mortgage-Backed 

Security’’ means a type of Asset-Backed Security 

issued in conformity with a program of an Agency 

or a Government-Sponsored Enterprise (‘‘GSE’’), for 

which the timely payment of principal and interest 

is guaranteed by the Agency or GSE, representing 

ownership interest in a pool (or pools) of mortgage 

loans, other Agency Pass-Through Mortgage-Backed 

Securities, or a combination of such assets, and 

structured to ‘‘pass through’’ the principal and 

interest payments to the holders of the security on 

a pro rata basis. 

10The term Time of Execution is defined in Rule 

6710(d). 

11See Rule 6750(b) for exceptions to 

dissemination. See also supra note 4 regarding the 

TBA proposal and proposed dissemination of MBS 

TBA transactions. 

12See supra note 4. The TBA proposal, which 

was filed on March 1, 2012, proposes that MBS 

TBA transactions GD be reported generally within 

45 minutes of the Time of Execution during a sixmonth pilot program (reduced to 15 minutes after 

the pilot program expires), and MBS TBA 

transactions NGD be reported within 120 minutes 

during a six-month pilot program (reduced to 60 

minutes after the pilot program expires). Both 

proposed reporting requirements are subject to 

exceptions for transactions executed close to the 

end of the business day or when the TRACE system 

is not open. 

13Proposed Rule 6730(a)(3)(F)(i) and proposed 

Rule 6730(a)(3)(G)(i) each incorporate by reference 

Rule 6730(a)(3)(E)(i)a. through d., which provides 

for a 120-minute reporting time frame in Rule 

6730(a)(3)(E)(i)b. 

Each of the pilot programs would expire after 

approximately 180 days. To accommodate member 

requests that, if possible, rule changes requiring 

technology changes occur on a Friday, proposed 

Rule 6730(a)(3)(F)(i) and proposed Rule 

Continued 

Similarly, for MBS TBA transactions, 

approximately 95 percent of the total 

volume occurs in securities backed by 

single-family mortgage loans.6

Accordingly, the data sets are 

complimentary and the dissemination of 

the additional pricing information for 

MBS Specified Pool transactions will 

further improve transparency in the 

Agency Pass-Through Mortgage-Backed 

Securities market. 

SBA-Backed ABS Transactions 

SBA-Backed ABSs are Asset-Backed 

Securities created from pooling loans 

made to small business by banks and 

other financial institutions in 

conformity with the program 

requirements of the Small Business 

Administration (‘‘SBA’’). Loans that 

meet the SBA’s requirements are 

guaranteed by SBA as to the timely 

payment of principal and interest, and 

pools are then created to issue SBABacked Asset-Backed Securities. 

SBA-Backed ABS also are traded TBA 

and in Specified Pool Transactions.7

Like Agency Pass-Through MortgageBacked Securities discussed above, such 

TBA trading may occur because market 

participants may anticipate with some 

certainty the creation of loan pools and 

are aware of the pool characteristics, 

and the extent to which such loan pools 

are fungible with previously-settled 

SBA-Backed ABS. FINRA proposes that 

both types of SBA-Backed ABS 

transactions be subject to dissemination. 

Amendments to Defined Terms 

FINRA proposes to define ‘‘SBABacked ABS’’ in proposed Rule 6710(bb) 

as an Asset-Backed Security issued in 

conformity with a program of the Small 

Business Administration (SBA), for 

which the timely payment of principal 

and interest is guaranteed by the SBA, 

representing ownership interest in a 

pool (or pools) of loans and structured 

to ‘‘pass through’’ the principal and 

interest payments made by the 

borrowers in such loans to the holders 

of the security on a pro rata basis. 

In connection with the proposed 

addition of the definition of SBABacked ABS, FINRA also proposes 

amendments to the definitions of ‘‘To 

Be Announced (‘TBA’)’’ and ‘‘Specified 

Pool Transaction’’ in Rule 6710(u) and 

Rule 6710(x), respectively. Both 

definitions currently apply only to 

Agency Pass-Through Mortgage-Backed 

Securities. As amended, both terms 

would include transactions in SBABacked ABS.8 In addition, FINRA 

proposes amendments to the definition 

of ‘‘Agency Pass-Through MortgageBacked Security’’ in Rule 6710(v) to 

incorporate minor, technical changes to 

the defined term.9

Reduction of 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)(i), subject to the 

exceptions for transactions executed 

after 5:00 p.m. and during times when 

the TRACE System is not open in Rule 

6730(a)(3)(A)(ii) and (iii). In contrast, 

secondary market transactions in all 

other TRACE-Eligible Securities must be 

reported within 15 minutes of the Time 

of Execution.10 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.11

As noted above, FINRA recently filed 

the TBA proposal, which is pending 

before the SEC. In the TBA proposal, 

FINRA proposes that MBS TBA 

transactions be disseminated, and, in 

connection with their dissemination, 

also proposes to reduce the time frames 

for timely reporting such transactions to 

provide market participants meaningful 

and timely price information about MBS 

TBA transactions.12

In connection with proposing that 

MBS Specified Pool and SBA–Backed 

ABS transactions be disseminated, 

FINRA proposes to reduce the reporting 

time frames for such transactions for the 

same reasons. FINRA also proposes that 

the reduction of the reporting time 

frames occur in two stages to permit 

industry participants time to adjust 

policies and procedures and to make 

required technological changes, as 

FINRA also proposed in the TBA 

proposal. 

Proposed Rule 6730(a)(3)(F) and 

proposed Rule 6730(a)(3)(G), 

respectively, set forth the requirements 

to report MBS Specified Pool and SBA– 

Backed ABS transactions. First, FINRA 

proposes to reduce the reporting period 

for MBS Specified Pool and SBABacked ABS transactions from no later 

than the close of the TRACE system on 

Trade Date to no later than two hours 

(i.e., 120 minutes) from the Time of 

Execution for the duration of the 

proposed MBS Specified Pool Pilot 

Program and the proposed SBA-Backed 

ABS Pilot Program in, respectively, 

proposed Rule 6730(a)(3)(F)(i) and 

proposed Rule 6730(a)(3)(G)(i).13 Like 

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23526 Federal Register / Vol. 77, No. 76 / Thursday, April 19, 2012 / Notices 

6730(a)(3)(G)(i) provide that the MBS Specified 

Pool Pilot Program and the SBA-Backed ABS Pilot 

Program each would 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). 

14See proposed Rule 6730(a)(3)(F)(i) and 

proposed Rule 6730(a)(3)(G)(i), which incorporate 

by reference Rule 6730(a)(3)(E)(i)a., c. and d, which 

apply to transactions executed near the end of the 

business day or when the TRACE system is not 

open. Under 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 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 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. 

15Proposed Rule 6730(a)(3)(F)(ii) and proposed 

Rule 6730(a)(3)(G)(ii)—the ‘‘post-pilot program’’ 

reporting provisions—incorporate by reference the 

reporting requirements set forth in Rule 

6730(a)(3)(E)(ii)a. through d., including the 

exceptions to the requirement to report within 60 

minutes that apply to transactions executed near 

the end of the business day or when the TRACE 

system is not open in Rule 6730(a)(3)(E)(ii)a., c. and 

d. 

16See supra note 4. Beginning on the later of 

August 1, 2012, or 180 days following publication 

by FINRA of the Regulatory Notice announcing SEC 

approval of the TBA proposal, FINRA will 

disseminate such MBS TBA transaction data. 

17See Securities Exchange Act Release No. 61566 

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

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

065). 

18Liquidity as measured by par value traded is 

comparable to corporate bonds. Although MBS TBA 

transactions account for approximately 93 percent 

of all trading in Agency Pass-Through MortgageBacked Securities, the average daily volume of MBS 

Specified Pool transactions is significant— 

approximately $17.5 billion is traded daily on 

average, in approximately 3,000 trades per day. The 

information is based upon FINRA’s review of AssetBacked Securities transactions reported to TRACE 

from May 16, 2011 through October 31, 2011. 

19See supra note 4. 20FINRA 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. 21The dissemination caps for Investment Grade 

corporate 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 6 

percent of trades representing approximately 74 

percent of total par value traded. The dissemination 

cap for Non-Investment Grade corporate bonds 

limits the display of actual size for approximately 

15 percent of trades representing approximately 84 

percent of total par value traded. The information 

is based on a review of all transactions in 

Investment Grade corporate bonds, Agency Debt 

Securities and Non-Investment Grade corporate 

bonds reported to TRACE from May 16, 2011 

through January 4, 2012. 

The terms Investment Grade, Non-Investment 

Grade and Agency Debt Security are defined in, 

respectively, Rule 6710(h), Rule 6710(i) and Rule 

6710(l). 

the reporting requirements currently in 

effect for other TRACE-Eligible 

Securities, FINRA also proposes 

exceptions to the 120-minute time frame 

for transactions executed near the end of 

the business day or when the TRACE 

system is not open.14 Second, after the 

pilot programs expire, the reporting 

periods for MBS Specified Pool and 

SBA-Backed ABS transactions would be 

reduced from no later than two hours 

(120 minutes) from the Time of 

Execution to no later than one hour (60 

minutes) from the Time of Execution, as 

set forth in, respectively, proposed Rule 

6730(a)(3)(F)(ii) and proposed Rule 

6730(a)(3)(G)(ii).15 Currently, 84 percent 

of MBS Specified Pool and SBA-Backed 

ABS transactions are reported within 

two hours of execution, and 75 percent 

are reported within one hour of 

execution. 

After the 60-minute reporting 

requirement is implemented, FINRA 

will continue to review the reporting of 

MBS Specified Pool and SBA-Backed 

ABS transactions and may recommend 

further reductions in the reporting 

period. 

FINRA also proposes minor clarifying 

amendments to Rule 6730(a)(3)(D) and 

(E) to specify that the reporting 

requirements set forth therein apply 

solely to MBS TBA transactions. 

Dissemination 

Amendment to Rule 6750 

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 as 

provided in Rule 6750(b)(4). However, 

as noted above, FINRA has filed the 

TBA proposal, in which FINRA 

proposes to disseminate MBS TBA 

transactions, which represent 

approximately 87 percent of the average 

daily volume traded in all Asset-Backed 

Securities.16 Following the submission 

of the TBA proposal, FINRA continued 

to examine transactions in Asset-Backed 

Securities to determine if FINRA should 

propose to disseminate additional 

Asset-Backed Securities, and will 

continue its review and research. The 

SEC has been supportive of such 

efforts.17

Among other things, FINRA has 

reviewed the data reported for AssetBacked Securities, including MBS 

Specified Pool and SBA-Backed ABS 

transactions, and studied the total 

volume of MBS Specified Pool and 

SBA-Backed ABS transactions, the 

concentration of trading in such 

securities, and the pricing disparity 

among various types of MBS Specified 

Pool and SBA-Backed ABS transactions 

to understand their liquidity and 

fungibility. The market activity reported 

and reviewed reveals that for MBS 

Specified Pool transactions, the market 

is generally active and liquid, and with 

liquidity comparable to that of corporate 

bonds.18 Based on the review, FINRA 

believes that it is appropriate to provide 

for the dissemination of MBS Specified 

Pool and SBA-Backed ABS transactions, 

and such dissemination will benefit 

market participants by improving 

transparency in both market segments. 

FINRA proposes to amend Rule 6750 

to provide for the dissemination of MBS 

Specified Pool and SBA-Backed ABS 

transactions, with dissemination 

occurring immediately upon receipt of a 

transaction report. Specifically, Rule 

6750(b)(4) would be amended to 

provide that FINRA will not 

disseminate information on a 

transaction in a TRACE-Eligible 

Security that is an Asset-Backed 

Security, except: (A) an Agency PassThrough Mortgage-Backed Security; and 

(B) an SBA-Backed ABS.19 Thus, 

information would be disseminated on 

MBS Specified Pool and SBA-Backed 

ABS transactions within 120 minutes, 

or, after the expiration of the applicable 

pilot program, within 60 minutes of the 

Time of Execution.20

Dissemination Caps 

FINRA has 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+.’’ 21 Upon the 

approval and effectiveness of the TBA 

proposal: (1) The dissemination cap will 

be $25 million (‘‘$25MM’’) for MBS 

TBA transactions GD, and the size of 

transactions in excess of $25MM will be 

displayed as ‘‘$25MM+,’’ and (2) the 

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22See supra note 4. 

23See supra note 4. The proposed dissemination 

caps for MBS TBA transactions GD would limit 

display of actual size for approximately 20 percent 

of trades representing approximately 84 percent of 

par value traded and for MBS TBA transactions 

NGD would limit the display of actual size for 

approximately 42 percent of trades representing 

approximately 85 percent of par value traded. The 

information is based on a review of all MBS TBA, 

MBS Specified Pool and SBA-Backed ABS 

transactions reported to TRACE from May 16, 2011 

through January 4, 2012. 

24 15 U.S.C. 78o–3(b)(6). 25 17 CFR 200.30–3(a)(12). 

dissemination cap will be $10 million 

(‘‘$10MM’’) for MBS TBA transactions 

NGD, and the size of transactions in 

excess of $10MM will be displayed as 

‘‘$10MM+.’’ 22

FINRA has analyzed the distribution 

of MBS Specified Pool and SBA-Backed 

ABS transactions to determine an 

appropriate dissemination cap for these 

transactions, and proposes to set a 

dissemination cap for each of MBS 

Specified Pool and SBA-Backed ABS 

transactions initially at $10 million 

(‘‘$10MM’’). Accordingly, the size of 

MBS Specified Pool and SBA-Backed 

ABS transactions greater than $10 

million would be displayed in 

disseminated data as ‘‘$10MM+.’’ At 

this level approximately nine percent of 

transactions and approximately 80 

percent of par value traded would be 

disseminated subject to the $10MM 

cap.23 FINRA believes that these 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 in these segments. 

As dissemination of MBS Specified 

Pool and SBA-Backed ABS transactions 

is implemented, FINRA will continue to 

review the volume of and liquidity in 

these securities, and may recommend 

that the dissemination caps be set at 

higher levels to provide additional 

transparency to market participants. 

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,24 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 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 MBS 

Specified Pool and SBA-Backed ABS 

transactions will enhance the ability of 

investors and other market participants 

to identify and negotiate fair and 

competitive prices for these securities, 

and because the dissemination of price 

and other 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 

Asset-Backed Securities 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 

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 rulecomments@sec.gov. Please include File 

Number SR–FINRA–2012–021 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–2012–021. 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–2012–021 and 

should be submitted on or before May 

10, 2012. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.25

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2012–9405 Filed 4–18–12; 8:45 am] 

BILLING CODE 8011–01–P 

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