Federal Register / Vol. 74, No. 72 / Thursday, April 16, 2009 / Notices 17709 

10 15 U.S.C. 78s(b)(3)(A)(iii). 

11 17 CFR 240.19b–4(f)(6). 

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

13 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

4(f)(6)(iii) requires the Exchange to give the 

Commission written notice of the Exchange’s intent 

to file the proposed rule change along with a brief 

description and text of the proposed rule change, 

at least five business days prior to the date of filing 

of the proposed rule change, or such shorter time 

as designated by the Commission. The Exchange 

has satisfied the pre-filing requirement. 

14 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3Amendment No. 1 was a partial amendment 

that: (i) Revised the definition of ‘‘Asset-backed 

security’’ set forth in the purpose section to 

accurately reflect the proposed rule text; (ii) 

amended the definition of ‘‘TRACE-eligible 

security’’ in both the purpose section and the rule 

text to remove a parenthetical that was 

inadvertently included in the original proposal; and 

(iii) made minor technical edits to the purposed 

rule text. 

system. NYSE Amex notes that the 

Exchange officer can adjust or nullify a 

transaction under the authority granted 

by this new provision only if the 

transaction meets the objective criteria 

for an obvious error under NYSE Amex 

rules. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

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 

No written comments were solicited 

or received with respect to the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The Exchange has filed the proposed 

rule change pursuant to Section 

19(b)(3)(A)(iii) of the Act 10 and Rule 

19b–4(f)(6) thereunder.11 Because the 

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 

prior to 30 days from the date on which 

it was filed, or such shorter time as the 

Commission may designate, if 

consistent with the protection of 

investors and the public interest, the 

proposed rule change has become 

effective pursuant to Section 19(b)(3)(A) 

of the Act 12 and Rule 19b–4(f)(6)(iii) 

thereunder.13

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission may summarily abrogate 

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. 

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

Number SR–NYSEAmex–2009–10 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–NYSEAmex–2009–10. This 

file number should be included on the 

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

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

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

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

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

available for inspection and copying in 

the Commission’s Public Reference 

Room, 100 F Street, NE., Washington, 

DC 20549, on official business days 

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

Copies of the filing also will be available 

for inspection and copying at the 

principal office of the Exchange. 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–NYSEAmex–2009–10 and 

should be submitted on or before 

May 7, 2009. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.14

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–8657 Filed 4–15–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–59733; File No. SR–FINRA– 

2009–010] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Notice of Filing of 

Proposed Rule Change and 

Amendment No. 1 Thereto To Expand 

TRACE To Include Agency Debt 

Securities and Primary Market 

Transactions 

April 8, 2009. 

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 18, 

2009, the Financial Industry Regulatory 

Authority, Inc. (‘‘FINRA’’) (f/k/a 

National Association of Securities 

Dealers, Inc. (‘‘NASD’’)) filed with the 

Securities and Exchange Commission 

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

rule change as described in Items I, II, 

and III below, which Items have been 

prepared by FINRA. On April 8, 2009, 

FINRA submitted Amendment No. 1 to 

the proposed rule change.3 The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change, as amended, 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 (except for 

Rules 6720 and 6740) and FINRA Rule 

7730 as follows: 

(1) In Rule 6710, to amend the defined 

terms (A) ‘‘TRACE-eligible security’’ in 

paragraph (a) to include securities 

issued or guaranteed by an agency or a 

government-sponsored enterprise 

(except securities issued by the U.S. 

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17710 Federal Register / Vol. 74, No. 72 / Thursday, April 16, 2009 / Notices 

Treasury) as TRACE-eligible debt 

securities under the Rule 6700 Series 

(the Trade Reporting and Compliance 

Engine (‘‘TRACE’’) rules), to delete 

certain criteria for TRACE-eligibility, 

and to restate the definition, including 

incorporating technical changes; (B) 

‘‘Reportable TRACE transaction’’ in 

paragraph (c) to include primary market 

transactions as reportable to TRACE and 

to incorporate technical changes; and 

(C) ‘‘Investment Grade’’ in paragraph (h) 

and ‘‘Non-Investment Grade’’ in 

paragraph (i) to classify unrated Agency 

debt securities, as defined herein, as 

Investment Grade securities for 

purposes of dissemination and to 

incorporate technical changes; 

(2) in Rule 6710, to add the defined 

terms, ‘‘Agency,’’ ‘‘Agency debt 

security,’’ ‘‘Asset-backed security,’’ 

‘‘Government-sponsored enterprise,’’ 

‘‘Money market instrument,’’ ‘‘U.S. 

Treasury security,’’ ‘‘List or fixed 

offering price transaction’’ and 

‘‘Takedown transaction,’’ as 

respectively, new paragraphs (k) 

through (r); 

(3) in Rule 6710, to make technical 

changes to the defined terms, ‘‘Trade 

Reporting and Compliance Engine,’’ 

‘‘Time of execution,’’ ‘‘Party to the 

transaction,’’ ‘‘TRACE Participant,’’ 

‘‘Introducing Broker,’’ and ‘‘Split-rated,’’ 

in respectively, paragraphs (b), (d), (e), 

(f), (g) and (j); 

(4) in Rule 6730, to establish end-ofday reporting requirements for primary 

market transactions that are List or fixed 

offering price transactions and 

Takedown transactions, to require 

indicators in transaction reports to 

distinguish secondary market 

transactions from primary market 

transactions and to further distinguish 

primary market transactions that are List 

or fixed offering price transactions and 

Takedown transactions from those that 

are not, and to incorporate other 

technical changes; 

(5) in Rule 6750, to provide that 

transaction information for List or fixed 

offering price transactions and 

Takedown transactions will not be 

disseminated, and to incorporate other 

technical changes; 

(6) in Rule 6760, to modify the 

information and notification 

requirements for newly issued TRACEeligible securities to provide for more 

timely notice from members to FINRA 

and to incorporate technical and 

clarifying changes; and 

(7) in Rule 7730, to establish reporting 

and market data fees for Agency debt 

securities transactions and primary 

market transactions at the same rates in 

effect for corporate bonds, to provide an 

exception for certain primary market 

transactions, and to incorporate 

technical changes. 

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 

I. Introduction 

FINRA believes that TRACE has had 

a positive impact on the corporate bond 

market and proposes to expand the 

scope of securities reportable to TRACE 

to increase transparency, enhance 

investor protection and foster market 

integrity across a larger portion of the 

debt market. For debt securities that 

currently are TRACE-eligible, TRACE 

has contributed to better pricing, more 

precise valuations and reduced investor 

costs. In addition, TRACE data has 

enhanced surveillance of the corporate 

bond market. 

The proposed rule change will 

expand TRACE to include Agency debt 

securities, as defined herein, and 

primary market transactions. FINRA 

proposes to add such securities to 

provide additional transparency and to 

foster the development of improvements 

observed in corporate bonds—improved 

pricing, narrower bid-ask spreads, 

reduced investor costs, and more 

precise valuations—across a broader 

portion of the debt market. Also, FINRA 

believes that the proposed expansion of 

TRACE, including certain primary 

market transactions that will not be 

disseminated, will enhance market 

surveillance. Many bonds have an 

intense period of trading during the 

primary offering and shortly thereafter, 

and the reporting of such transactions 

will permit FINRA to obtain 

information, observe patterns of trading, 

and otherwise engage in more in-depth 

surveillance of the debt market. 

The proposed rule change amends 

FINRA Rule 6700 Series (except for 

Rules 6720 and 6740) and FINRA Rule 

7730. The amendments to FINRA Rule 

6700 Series add to TRACE securities 

that are issued or guaranteed by a 

Government-sponsored enterprise or a 

U.S. government agency (except the U.S. 

Department of the Treasury or Assetbacked securities issued or guaranteed 

by an Agency or a Governmentsponsored enterprise) (collectively 

‘‘Agency debt securities’’) and primary 

market transactions. Certain primary 

market transactions that are defined as 

List or fixed offering price transactions 

and Takedown transactions will be 

subject to more flexible end-of-day 

reporting requirements, will not be 

disseminated, and will not be subject to 

reporting fees, if timely and accurately 

reported. 

In connection with the proposed 

expansion, FINRA amends the defined 

term ‘‘TRACE-eligible security’’ in Rule 

6710(a) to add Agency debt securities as 

TRACE-eligible securities, to delete 

certain criteria, and to restate the 

definition to clarify its scope and the 

exceptions. In addition, FINRA 

proposes amendments to other defined 

terms in Rule 6710, the most important 

of which are the amendments to the 

term ‘‘Reportable TRACE transaction’’ to 

permit reporting of primary market 

transactions to TRACE and their 

dissemination. Also, FINRA proposes to 

add several defined terms to Rule 6710 

that are related to the incorporation of 

Agency debt securities and primary 

market transactions in TRACE. Finally, 

FINRA will amend various currently 

defined terms in Rule 6710 to 

incorporate minor technical, stylistic or 

conforming changes. 

The proposed rule change includes 

amendments to Rule 6730, Rule 6750 

and Rule 6760. Rule 6730 contains 

reporting requirements and Rule 6750 

addresses the dissemination of 

transaction information and the 

exceptions thereto. Rule 6760 requires 

members to provide notice to FINRA of 

new TRACE-eligible securities. In Rule 

6730 and Rule 6750, generally, the 

proposed amendments address issues 

raised by the inclusion of primary 

market transactions. Certain primary 

market transactions—List or fixed 

offering price transactions and 

Takedown transactions—will be subject 

to end-of-day reporting under amended 

Rule 6730 and not subject to 

dissemination under amended Rule 

6750. The proposed amendments to 

Rule 6760 incorporate changes in the 

notification requirements and the 

notification deadlines to facilitate 

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Federal Register / Vol. 74, No. 72 / Thursday, April 16, 2009 / Notices 17711 

4On February 11, 2009, FINRA filed SR–FINRA– 

2009–004 to amend the definition of ‘‘TRACEeligible security’’ to eliminate the requirement that 

a TRACE-eligible security be registered under the 

Securities Act. In addition, FINRA also proposed to 

eliminate, with respect to transactions in TRACEeligible securities effected under Securities Act 

Rule 144A, the requirement that such securities be 

initially issued under Securities Act Section 4(2). 

See Securities Exchange Act Release No. 59519 

(March 5, 2009), 74 FR 10630 (March 11, 2009) 

(notice requesting comment on SR–FINRA–2009– 

004). 

5The term ‘‘government-sponsored enterprise’’ is 

defined in 2 U.S.C. 622(8) as: a corporate entity 

created by a law of the United States that— 

(A) (i) has a Federal charter authorized by law; 

(ii) is privately owned, as evidenced by capital 

stock owned by private entities or individuals; 

(iii) is under the direction of a board of directors, 

a majority of which is elected by private owners; 

(iv) is a financial institution with power to— 

(I) make loans or loan guarantees for limited 

purposes such as to provide credit for specific 

borrowers or one sector; and 

(II) raise funds by borrowing (which does not 

carry the full faith and credit of the Federal 

Government) or to guarantee the debt of others in 

unlimited amounts; and 

(B) (i) does not exercise powers that are reserved 

to the Government as sovereign (such as the power 

to tax or to regulate interstate commerce); 

(ii) does not have the power to commit the 

Government financially (but it may be a recipient 

of a loan guarantee commitment made by the 

Government); and 

(iii) has employees whose salaries and expenses 

are paid by the enterprise and are not Federal 

employees subject to title 5. 

Congress defined GSEs for purposes of the 

budgetary treatment of such entities in the Omnibus 

Reconciliation Act of 1990, Pub. L. No. 101–508, 

104 Stat. 1388, 607; 2 U.S.C. 622(8). 

6 5 U.S.C. 105 defines ‘‘executive agency’’ as: 

For purposes of this title (5 U.S.C. 101 et seq.) 

‘‘Executive agency’’ means an Executive 

department, a Government corporation, and an 

independent establishment. 

‘‘Executive department’’ is defined in U.S.C. 101 

as any of the major agencies or departments (e.g., 

The Department of State, the Department of the 

Treasury, the Department of Homeland Security, 

etc. The Secretaries of such agencies comprise the 

President’s Cabinet). ‘‘Government Corporation’’ is 

defined in 5 U.S.C. 103 as ‘‘a corporation owned or 

controlled by the Government of the United States. 

* * *’’ (e.g., the Pension Benefit Guaranty 

Corporation is a wholly owned government 

corporation). ‘‘Independent establishment’’ is 

defined in 5 U.S.C. 104 as (1) an establishment in 

the executive branch (other than the United States 

Postal Service or the Postal Regulatory Commission) 

which is not an Executive department, military 

department, Government corporation, or part 

thereof, or part of an independent establishment; 

and (2) the General Accounting Office.’’ (e.g., the 

Federal Reserve Banks are independent 

establishments). 

(The Departments of the Army, Navy and Air 

Force, which are defined as military departments, 

are not executive agencies, 5 U.S.C. 102.) 

members’ timely reporting of TRACEeligible securities. 

Regarding market data fees, FINRA 

will distinguish TRACE transaction data 

as data sets for organizational purposes 

only, one comprised solely of corporate 

bond transaction information (the 

‘‘Corporate Bonds Data Set’’) and a 

second comprised solely of Agency debt 

securities transaction information 

(‘‘Agency Data Set’’). The fee schedule 

currently in effect in Rule 7730 also will 

apply to Agency debt securities 

transactions and primary market 

transactions. However, members will 

not be charged a reporting fee when 

reporting a List or fixed offering price 

transaction or a Takedown transaction 

on a timely and accurate basis. 

In addition to the amendments 

discussed above, the proposed rule 

change includes additional proposed 

technical or clarifying amendments to 

FINRA Rule 6700 Series (except for 

Rules 6720 and 6740) and FINRA Rule 

7730. 

II. Agency Debt Securities 

A. ‘‘TRACE-Eligible Security’’ and 

Related Rule 6710 Amendments 

Under Rule 6710(a), a ‘‘TRACEeligible security’’ is a U.S. dollar 

denominated bond, note or other debt 

instrument that is issued by a U.S. or 

foreign private issuer. The definition 

also requires that the debt security be 

registered under the Securities Act (or 

issued pursuant to Section 4(2) and 

purchased or sold in a transaction in 

compliance with Securities Act Rule 

144A transaction (‘‘Rule 144A 

transaction’’)); depository eligible under 

NASD Rule 11310(d); and Investment 

Grade or Non-Investment Grade as 

defined, respectively, in Rules 6710(h) 

and 6710(i).4

U.S. Treasury securities, foreign 

sovereign debt and securities issued by 

U.S. government agencies or similar 

entities, such as government 

corporations, are not TRACE-eligible 

securities. In addition, the defined term 

expressly excludes securities that are 

issued by a government-sponsored 

enterprise, or are asset-backed 

securities, mortgage-backed securities, 

collateralized mortgage obligations and 

money market instruments that at 

issuance have a maturity of one year or 

less. 

FINRA proposes to amend and restate 

the definition of ‘‘TRACE-eligible 

security’’ in Rule 6710(a). The most 

significant amendment expands the 

definition to include ‘‘Agency debt 

securities’’ as defined below as TRACEeligible securities. In addition, FINRA 

proposes to delete two criteria in the 

defined term as discussed below. 

1. Amendments to ‘‘TRACE–Eligible 

Security’’ To Include Agency Debt 

Securities 

FINRA proposes to expand the scope 

of the defined term, ‘‘TRACE-eligible 

security’’ to include Agency debt 

securities. Specifically, restated Rule 

6710(a) will include a debt security that 

‘‘is U.S. dollar denominated and issued 

or guaranteed by an Agency as defined 

in paragraph (k) or a Governmentsponsored enterprise as defined in 

paragraph (n)’’ as a TRACE-eligible 

security. The proposed inclusion of 

Agency debt securities as ‘‘TRACEeligible securities’’ does not require that 

such securities be registered under the 

Securities Act or issued pursuant to 

Securities Act Section 4(2) and 

purchased and sold pursuant to Rule 

144A. 

In connection with this amendment, 

FINRA also proposes to add the 

following defined terms to Rule 6710: 

‘‘Agency debt security,’’ ‘‘Agency,’’ 

‘‘Asset-backed security,’’ ‘‘Governmentsponsored enterprise,’’ and ‘‘U.S. 

Treasury security.’’ 

The proposed term ‘‘Agency debt 

security’’ is used to refer, collectively, to 

two types of securities that will be 

TRACE-eligible securities. ‘‘Agency debt 

security’’ as defined in proposed Rule 

6710(l) means: 

a debt security (i) issued or guaranteed by an 

Agency as defined in paragraph (k); or (ii) 

issued or guaranteed by a Governmentsponsored enterprise as defined in paragraph 

(n). The term excludes a U.S. Treasury 

security as defined in paragraph (p) and an 

Asset-backed security as defined in 

paragraph (m) where an Agency or a 

Government-sponsored enterprise is the 

sponsor of the trust or other entity that issues 

the Asset-backed security, or is the guarantor 

of the Asset-backed security. 

The two issuers (or guarantors) 

referenced in the term ‘‘Agency debt 

securities’’ are ‘‘Agencies’’ and 

‘‘Government-sponsored enterprises.’’ 

Under proposed Rule 6710(n), 

‘‘ ‘Government-sponsored enterprise’ 

(‘GSE’) has the same meaning as defined 

in 2 U.S.C. 622(8).’’ 5 Some of the most 

well-known GSEs include the Federal 

National Mortgage Association (‘‘Fannie 

Mae’’ or ‘‘FNMA’’), the Federal Home 

Loan Mortgage Corporation (‘‘FHLMC’’ 

or ‘‘Freddie Mac’’) and the various 

Federal Home Loan Banks. For purposes 

of the TRACE rules, securities issued or 

guaranteed by GSEs are included under 

the collective term, ‘‘Agency debt 

securities’’ although technically GSEs 

are instrumentalities of the U.S. 

government, and not agencies. 

The collective term, ‘‘Agency debt 

security,’’ also includes securities 

issued or guaranteed by an Agency. For 

purposes of the TRACE rules, under 

proposed Rule 6710(k), ‘‘Agency’’ 

means: a U.S. ‘‘executive agency’’ 6 as 

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17712 Federal Register / Vol. 74, No. 72 / Thursday, April 16, 2009 / Notices 

7The exclusion of such securities from the term 

‘‘Agency debt security’’ is consistent with the 

current limitations in the definition of TRACEeligible security, which excludes mortgage-backed, 

and asset-backed securities, and collateralized 

mortgage obligations. 

8FIPS stands for Fixed Income Pricing System. 

The FIPS rules were rescinded and the FIPS system 

was dismantled shortly after TRACE began. 

9Additional proposed amendments to Rule 6710 

are discussed, infra, at II.B., ‘‘Reporting and 

Dissemination’’ (regarding dissemination 

protocols), III. ‘‘Primary Market Transactions’’ 

(regarding primary market transactions), and IV. 

‘‘Other Changes’’ (regarding technical 

amendments). 

10Rule 6730(a)(1) through (4) provide exceptions 

to the 15-minute reporting requirement if a member 

executes a transaction while the TRACE system is 

closed or less than 15 minutes before the TRACE 

system will close. 

11Under Rule 6750, FINRA does not disseminate 

transactions in TRACE-eligible securities that are 

Securities Act Rule 144A transactions. 

12Under the protocols: (1) For Investment Grade 

transactions in sizes less than or equal to $5 million 

(by par value), actual volume is disseminated; and 

in sizes exceeding $5 million, a ‘‘$5 million+’’ 

capped volume indicator is disseminated; and, (2) 

for Non-Investment Grade transactions in sizes less 

than or equal to $1 million, actual volume is 

disseminated; and in sizes exceeding $1 million, a 

‘‘$1 million+’’ capped volume indicator is 

disseminated. 

defined in 5 U.S.C. 105 that is 

authorized to issue debt directly or 

through a related entity, such as a 

government corporation, or to guarantee 

the repayment of principal and/or 

interest of a debt security issued by 

another. The term excludes the U.S. 

Department of the Treasury 

(‘‘Treasury’’) in the exercise of its 

authority to issue U.S. Treasury 

securities as defined in paragraph (p). 

Two examples of such Agencies are the 

Commodity Credit Corporation and the 

Export-Import Bank of the United States 

(issuing debt securities through its 

affiliate, the Private Export Funding 

Corporation, or ‘‘PEFCO’’). 

As noted previously, TRACE 

currently does not include U.S. 

Treasury securities, and this is not 

changed by the proposal to add Agency 

debt securities to TRACE. For purposes 

of TRACE, the defined term, ‘‘Agency,’’ 

‘‘excludes the U.S. Treasury (‘Treasury’) 

in the exercise of its authority to issue 

U.S. Treasury securities * * * .’’ In 

addition, the defined term, ‘‘Agency 

debt security,’’ specifically excludes 

U.S. Treasury securities. 

Certain Asset-backed securities are 

the second type of security that is 

excluded explicitly from the definition 

of Agency debt security. For purposes of 

TRACE, under proposed Rule 6710(l), 

Agency debt securities do not include 

Asset-backed securities ‘‘where an 

Agency or a Government-sponsored 

enterprise is the sponsor of the trust or 

other entity that issues the Asset-backed 

security, or is the guarantor of the Assetbacked security.’’ Instead, such a 

security is included as an ‘‘Asset-backed 

security’’ as defined in proposed Rule 

6710(m).7

For purposes of TRACE, ‘‘Assetbacked security’’ is defined broadly. 

Proposed Rule 6710(m) defines ‘‘Assetbacked security’’ to mean: 

asset-backed security as used in Securities 

Act Regulation AB, Section 1101(c), and 

other debt securities that are structured 

securities, synthetic asset-backed securities 

and/or instruments involving or based on the 

securitization of mortgages or other credits or 

assets. The term includes but is not limited 

to mortgage-backed securities, collateralized 

mortgage obligations, collateralized debt 

obligations, collateralized bond obligations, 

collateralized debt obligations of assetbacked securities and collateralized debt 

obligations of collateralized debt obligations. 

2. Other Amendments to ‘‘TRACE– 

Eligible Security’’ 

FINRA also proposes two 

amendments to Rule 6710(a), the 

definition of TRACE-eligible security, 

which are not specifically related to the 

expansion of TRACE to include Agency 

debt securities. Currently, the definition 

of a ‘‘TRACE-eligible security’’ includes 

criteria that such securities be 

‘‘Investment Grade or Non-Investment 

Grade’’ and ‘‘depository eligible 

securities under NASD Rule 11310(d).’’ 

When TRACE became effective in 2002, 

the reference to the credit quality in 

Rule 6710(a) made clear that TRACE 

applied to debt securities of any credit 

quality in contrast to the FIPS system, 

which TRACE replaced.8 Under FIPS, 

members were required to report limited 

transaction information for transactions 

in Non-Investment Grade securities 

only. FINRA proposes to delete 

‘‘Investment Grade or Non-Investment 

Grade’’ in Rule 6710(a) because it is no 

longer needed to clarify the scope of 

TRACE. 

FINRA also required that TRACEeligible securities be ‘‘depository 

eligible securities under NASD Rule 

11310(d)’’ when TRACE was 

implemented to assure that such 

securities would have CUSIPs to 

identify them clearly and easily within 

the TRACE system. Operational 

enhancements now permit FINRA to 

receive, store and retrieve transaction 

information for securities that are not 

assigned CUSIPs. FINRA proposes to 

delete the unnecessary criterion in Rule 

6710(a), which will permit FINRA to 

capture information on the few 

securities that are not assigned CUSIPs, 

but otherwise meet TRACE eligibility 

standards. 

FINRA proposes to restate the 

definition of ‘‘TRACE-eligible security’’ 

to incorporate all the changes discussed 

above and certain technical 

amendments. Among other things, 

FINRA proposes to delete the definition 

of a money market instrument, which is 

embedded in the term, ‘‘TRACE-eligible 

security,’’ and add it as a separately 

defined term in new proposed Rule 

6710(o) for stylistic consistency. The 

meaning of the term does not change. 

Proposed Rule 6710(a), as amended, 

will read as follows: 

‘‘TRACE-eligible security’’ means a debt 

security that is U.S. dollar-denominated, 

issued by a United States (‘‘U.S.’’) or foreign 

private issuer, and either registered under the 

Securities Act or issued pursuant to Section 

4(2) of the Securities Act and purchased or 

sold pursuant to Securities Act Rule 144A; or 

is a debt security that is U.S. dollar 

denominated and issued or guaranteed by an 

Agency as defined in paragraph (k) or a 

Government-sponsored enterprise as defined 

in paragraph (n). ‘‘TRACE-eligible security’’ 

does not include a debt security that is: 

(1) Issued by a foreign sovereign or is a 

U.S. Treasury security as defined in 

paragraph (p); 

(2) A restricted security as defined in 

Securities Act Rule 144(a)(3), except a 

restricted security that is issued pursuant to 

Section 4(2) of the Securities Act and 

purchased or sold in a transaction that is 

effected under Securities Act Rule 144A; 

(3) A Money market instrument as defined 

in paragraph (o); or 

(4) An Asset-backed security as defined in 

paragraph (m).9

B. Reporting and Dissemination 

Rule 6730 contains the reporting 

requirements, including information 

that must be reported, deadlines for 

timely reporting, certain reporting 

modifiers and exceptions to the 

reporting requirement. Agency debt 

securities will be subject to the 

reporting requirements currently set 

forth in Rule 6730. Under Rule 6730, 

members will be required to report 

transactions in Agency debt securities 

within 15 minutes of execution of the 

transactions, subject to the standard 

exceptions currently set forth in the 

Rule.10

Information on transactions in Agency 

debt securities will be disseminated by 

FINRA immediately upon receipt of 

transaction reports, which is the current 

requirement for corporate bond 

transactions under Rule 6750, subject to 

one exception for Securities Act Rule 

144A transactions.11 In addition, FINRA 

will continue to apply the current 

protocols that determine how volume 

information is disseminated.12

However, FINRA proposes to amend 

the defined term, ‘‘Investment Grade,’’ 

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Federal Register / Vol. 74, No. 72 / Thursday, April 16, 2009 / Notices 17713 

13FINRA proposes to delete text in Rule 6710(i) 

that was used to classify certain Non-Investment 

Grade corporate bonds to determine when 

dissemination of transaction information would 

occur. The text is no longer necessary because 

transaction information on such bonds began to be 

disseminated several years ago. FINRA proposes to 

delete the following rule text, including the 

footnote text set forth in the second paragraph 

below: 

and further classify it as being in one of the 

generic rating categories below the four highest 

such categories. If FINRA does not have sufficient 

information to make a judgment regarding the 

classification of an unrated TRACE-eligible 

security, for purposes of TRACE, FINRA will 

classify the TRACE-eligible security as having been 

rated B (or the equivalent rating of one or more 

NRSROs). 

‘‘B’’ is a rating of Standard & Poor’s, a division 

of the McGraw-Hill Companies, Inc. (‘‘S&P’’). S&P 

is a nationally recognized statistical rating 

organization. S&P’s ratings are proprietary to S&P 

and are protected by copyright and other 

intellectual property laws. S&P’s licenses ratings to 

FINRA. Ratings may not be copied or otherwise 

reproduced, repackaged, further transmitted, 

transferred, disseminated, redistributed or resold, or 

stored for subsequent use for any such purpose in 

whole or in part, in any form or manner or by any 

means whatsoever, by any person without S&P’s 

prior written consent. 

As amended, FINRA Rule 6710(i) will provide: 

‘‘Non-Investment Grade’’ means a TRACE-eligible 

security that, if rated by only one NRSRO, is rated 

lower than one of the four highest generic rating 

categories; or if rated by more than one NRSRO, is 

rated lower than one of the four highest generic 

rating categories by all or a majority of such 

NRSROs. Except as provided in paragraph (h), if a 

TRACE-eligible security is unrated, for purposes of 

TRACE, FINRA may otherwise classify the TRACEeligible security as a Non-Investment Grade 

security. 

14 In Rule 6710(c), the first phrase, ‘‘The term 

‘reportable TRACE transaction’ shall mean * * *’’ 

will be amended to read, ‘‘‘Reportable TRACE 

transaction’ means. * * *’’ 

15As amended, Rule 6710(c) will provide: 

‘‘ ‘Reportable TRACE transaction’ means any 

transaction in a TRACE-eligible security except 

transactions that are not reported as specified in 

Rule 6730(e).’’ 

16As noted, supra, at n. 9, exceptions to 15- 

minute reporting are provided in Rule 6730(a)(1) 

through (4) for trades that occur outside of TRACE 

system hours or immediately prior to its closing. 

in Rule 6710(h) to treat unrated Agency 

debt securities as Investment Grade 

securities for purposes of the abovereferenced dissemination protocols. 

FINRA also proposes conforming 

amendments regarding the treatment of 

such unrated securities in the term, 

‘‘Non-Investment Grade,’’ as defined in 

Rule 6710(i), and technical, stylistic 

amendments in both provisions. 

Specifically, in Rule 6710(h), FINRA 

proposes to add a final sentence and 

amend the penultimate sentence, both 

as set forth below to provide: 

If a TRACE-eligible security is unrated, 

FINRA may classify the TRACE-eligible 

security as an Investment Grade security. 

FINRA will classify an unrated Agency debt 

security as defined in paragraph (l) as an 

Investment Grade security for purposes of the 

dissemination of transaction volume. 

The other proposed change to Rule 

6710(h) is a technical, stylistic 

amendment to the first sentence, 

changing the first clause from, ‘‘The 

term ‘Investment Grade’ shall mean a 

TRACE-eligible security that, * * *’’ to 

‘‘ ‘Investment Grade’ means a TRACEeligible security that, * * * .’’ 

The proposed amendments to the 

defined term, ‘‘Non-Investment Grade,’’ 

will cross-reference in Rule 6710(i) the 

amendment regarding the treatment of 

unrated Agency debt securities 

proposed to Rule 6710(h). Also, FINRA 

proposes: (i) to make technical stylistic 

amendments to the first clause of Rule 

6710(i) similar to such amendments to 

be incorporated in Rule 6710(h) as 

described above; and (ii) to delete 

certain detailed rule text in Rule 6710(i) 

that is no longer necessary.13

FINRA recognizes that extending 

TRACE reporting to Agency debt 

securities may result in certain trading 

desks having to report transactions to 

TRACE for the first time. As has been 

the case since TRACE inception, FINRA 

plans to implement TRACE reporting 

requirements and dissemination of 

Agency debt securities in a deliberate, 

yet efficient manner. FINRA has worked 

regularly with, and will continue to 

work with, broker-dealers and third 

party vendors to ensure effective and 

efficient TRACE implementation. 

III. Primary Market Transactions 

Currently, broker-dealers are required 

to report only secondary market 

transactions to TRACE. To provide a 

more comprehensive audit trail, FINRA 

proposes amendments to FINRA Rule 

6700 Series to require broker-dealers to 

report all primary market transactions 

and designate such transactions with an 

identifier. FINRA proposes that all 

primary market transactions be reported 

because, for many bonds, the most 

active period of trading occurs during 

the primary offering and immediately 

afterward. To improve market 

surveillance of the debt markets, FINRA 

proposes that TRACE be expanded to 

include such transactions. 

A. Amendments To Add Primary Market 

Transactions 

FINRA proposes two rule 

amendments that will require members 

to report primary market transactions to 

TRACE. FINRA proposes to amend Rule 

6710(c) to delete the words ‘‘secondary 

market’’ in the defined term ‘‘Reportable 

TRACE transaction’’ and make technical 

conforming amendments. Deleting the 

words ‘‘secondary market’’ in Rule 

6710(c) will delete the limitation that 

currently does not allow the reporting of 

primary market transactions. 

The other proposed amendments to 

Rule 6710(c) will: (i) Incorporate 

technical and stylistic changes to the 

first clause of Rule 6710(c); 14 and (ii) 

conform a phrase in Rule 6710(c) with 

Rule 6730(e) by deleting the phrase, 

‘‘transactions exempt from reporting’’ 

and substituting ‘‘transactions that are 

not reported.’’ 15

An amendment to Rule 6730(e)(1) is 

also required to include primary market 

transactions in TRACE. FINRA proposes 

to amend paragraph (1) of Rule 6730(e) 

to delete the current exclusion from 

reporting for ‘‘[T]ransactions that are 

part of a primary distribution by an 

issuer.’’ 

B. Reporting Requirements 

Members will be required to report 

primary market transactions, except 

primary market transactions that are 

‘‘List or fixed offering price 

transactions’’ and ‘‘Takedown 

transactions,’’ within 15 minutes of the 

time of execution, in accordance with 

Rule 6730(a).16 However, FINRA 

proposes to liberalize the reporting 

requirements for List or fixed offering 

price transactions and Takedown 

transactions. 

List or fixed offering price transaction 

and Takedown transaction refer to two 

types of sale transactions that may occur 

during a primary offering: those 

executed at a previously fixed price, 

from a broker-dealer acting as an 

underwriter to a purchaser; and certain 

sale transactions among certain market 

professionals involved in the placement 

of the offered securities. For purposes of 

the TRACE rules, such transactions 

must occur on the first day of the 

offering. 

The terms ‘‘List or fixed offering price 

transaction’’ and ‘‘Takedown 

transaction’’ are defined for purposes of 

TRACE in, respectively, proposed Rule 

6710(q) and (r). ‘‘List or fixed offering 

price transaction’’ is defined in Rule 

6710(q) to mean: 

a primary market sale transaction sold on the 

first day of trading of a new issue: (i) by a 

sole underwriter, syndicate manager, 

syndicate member or selling group member at 

the published or stated list or fixed offering 

price, or (ii) in the case of a primary market 

sale transaction effected pursuant to 

Securities Act Rule 144A, by an initial 

purchaser, syndicate manager, syndicate 

member or selling group member at the 

published or stated fixed offering price. 

‘‘Takedown transaction’’ is defined in 

Rule 6710(r) to mean: 

a primary market sale transaction sold on the 

first day of trading of a new issue: (i) by a 

sole underwriter or syndicate manager to a 

syndicate or selling group member at a 

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17714 Federal Register / Vol. 74, No. 72 / Thursday, April 16, 2009 / Notices 

17Under proposed Rule 6730(a)(5)(B)(iii), the 

reporting requirements for List or fixed price 

offering transactions or Takedown transactions that 

a broker-dealer executes on a Saturday, Sunday, or 

a federal or religious holiday when the TRACE 

system is closed include specific information 

requirements and have certain parallels to the 

reporting requirements for transactions reported 

under Rule 6730(a)(4). 

18The proposed amendments will harmonize 

substantially the TRACE reporting rules with 

current requirements under Municipal Securities 

Rulemaking Board (‘‘MSRB’’) Rule G–14 for 

reporting primary market transactions in municipal 

securities, and should reduce operational burdens 

to firms. For primary market transactions, as with 

Agency debt securities, FINRA will work with 

broker-dealers and third party vendors to ensure 

effective and cost efficient implementation. 

discount from the published or stated list or 

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

primary market sale transaction effected 

pursuant to Securities Act Rule 144A, by an 

initial purchaser or syndicate manager to a 

syndicate or selling group member at a 

discount from the published or stated fixed 

offering price. 

Under proposed Rule 6730(a)(5), 

members executing such List or fixed 

offering price transactions or Takedown 

transactions will have until the end of 

the business day—until the TRACE 

system closes—to report such 

transactions. If a primary offering prices 

after 5:00 p.m. Eastern Time and 

thereafter broker-dealers execute 

transactions that qualify as List or fixed 

offering price transactions or Takedown 

transactions, broker-dealers will have 

until the end of the next business day 

to report such transactions under Rule 

6730(a)(5)(B)(i). In addition, if brokerdealers execute transactions that are List 

or fixed offering price transactions or 

Takedown transactions at any time 

outside of the TRACE system hours, 

broker-dealers will have until the close 

of the TRACE system on the next 

business day to report such transactions 

under Rule 6730(a)(5)(B)(ii) and (iii).17

Price discovery is the most significant 

reason underlying the TRACE 

requirement for the reporting of 

transactions within 15 minutes of 

execution and thereafter, the immediate 

dissemination of such information. 

FINRA proposes to liberalize the 

reporting requirements for List or fixed 

offering price transactions and 

Takedown transactions, because, in 

most cases, the prices of such 

transactions will be the same, or subject 

to only minor differences based on the 

underwriting structure, and will not 

contribute meaningfully to price 

discovery. FINRA proposes end-of-day 

reporting for the two types of primary 

market transactions because FINRA 

does not believe that price transparency 

will be adversely affected. Moreover, the 

proposed end-of-day requirement will 

provide broker-dealers operational 

flexibility and will ease compliance 

burdens, particularly during the 

implementation of the proposed 

changes.18

All other primary market transactions, 

such as those that are effected at prices 

other than a fixed (or list) offering price 

and those that are effected at a fixed 

price other than on the first day of new 

issue trading, will be subject to the 15- 

minute reporting requirements and the 

exceptions thereto currently set forth in 

Rule 6730(a)(1) through (4). 

Currently, the TRACE data collected 

for surveillance, review, and research 

contains information on secondary 

market transactions only. With the 

inclusion of primary market transaction 

data, FINRA will require broker-dealers 

to assign one of three indicators in their 

trade reports under proposed 

subparagraph (D) of Rule 6730(d)(4). 

The indicators will distinguish primary 

market transactions from secondary 

market transactions and further 

distinguish List or fixed offering price 

transactions and Takedown transactions 

from other primary market transactions. 

C. Dissemination 

Generally, dissemination of 

transaction information for primary 

market transactions will be 

implemented at the same time FINRA 

implements reporting of such 

transactions. Dissemination will occur 

immediately upon receipt of transaction 

reports in primary market transactions 

as provided in Rule 6750(a), with one 

exception. Proposed Rule 6750(b)(2) 

provides that primary market 

transactions that are List or fixed 

offering price transactions or Takedown 

transactions will not be disseminated. 

FINRA will study the reported data for 

these primary market transactions for a 

period of time after reporting begins 

and, at a later date, determine if 

dissemination of the information is 

appropriate, and if appropriate, develop 

a dissemination strategy. 

In contrast, primary market 

transactions that are not List or fixed 

offering price transactions or Takedown 

transactions will be disseminated as 

soon as primary market transaction 

reporting begins. These transactions, 

such as certain ‘‘at-the-market’’ 

transactions, provide transparency 

about current market pricing that is 

otherwise not available to the public 

and many market participants. 

IV. Other Changes 

A. FINRA Rule 6760 

Currently, Rule 6760 requires 

members to notify FINRA regarding 

securities that are about to be offered in 

a primary offering if such securities are 

TRACE-eligible. In most cases, members 

must notify FINRA Operations by 5 p.m. 

Eastern Time on the business day before 

an offering begins, although for some 

types of offerings, the deadlines 

currently extend to 5 p.m. of the 

business day following the first offer 

date. FINRA must have this information 

in the TRACE system to facilitate timely 

transaction reporting by all members 

that have effected transactions in a 

newly issued TRACE-eligible security. 

FINRA proposes to amend the notice 

and information requirements in Rule 

6760 to facilitate members’ timely 

reporting of TRACE-eligible securities in 

both primary and secondary market 

transactions. Under Rule 6760(b), a 

broker-dealer providing notice will be 

required to include ‘‘the time the new 

issue is priced,’’ among other 

information requirements. In addition, 

the amendment requires that the 

information be provided ‘‘prior to the 

commencement of primary market 

transactions.’’ The amendment also 

recognizes that FINRA may require 

information not specifically listed in 

Rule 6760(b) if, among other things, a 

security will not be assigned a CUSIP. 

FINRA also proposes a series of minor 

clarifying changes to the Rule. The 

proposed amendments require that the 

notice be provided to FINRA Operations 

by the managing underwriter, or if a 

managing underwriter is not appointed, 

an underwriter, or, if there are no 

underwriters, an initial purchaser. 

When multiple underwriters or initial 

purchasers participate in the offering 

and there is no lead, all are liable under 

Rule 6760 to provide notice to FINRA 

Operations, but the parties may agree to 

submit a single notice. Also, the 

proposed rule change includes 

amendments to delete the word 

‘‘secondary’’ in the first line of 

paragraph Rule 6760 (a)(1), delete 

references to ‘‘TRACE Operations 

Center’’ in the rule and substitute the 

term ‘‘FINRA Operations,’’ and amend 

the rule title to read, ‘‘Obligation To 

Provide Notice.’’ 

B. Technical and Conforming 

Amendments 

FINRA also proposes several minor 

technical, stylistic, or conforming 

changes as follows. In Rule 6710, in the 

first paragraph, after the sentence, ‘‘The 

terms used in this Rule 6700 Series shall 

have the same meaning as those defined 

in the FINRA By-Laws and rules unless 

otherwise specified.,’’ FINRA will add 

the following sentence: ‘‘For the 

purposes of this Rule 6700 Series, the 

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Federal Register / Vol. 74, No. 72 / Thursday, April 16, 2009 / Notices 17715 

19As noted above, FINRA proposes to incorporate 

the same technical and stylistic changes to 

paragraphs (d), (e), (f), (g) and (j) of Rule 6710. The 

initial phrase of Rule 6710(d), which provides, 

‘‘The term ‘time of execution’ for a transaction in 

a TRACE-eligible security shall be * * *’’ will be 

amended to read, ‘‘ ‘Time of execution’ for a 

transaction in a TRACE-eligible security means. 

* * *’’ The initial phrase of Rule 6710(e), which 

provides, ‘‘The term ‘party to a transaction’ shall 

mean * * *’’ will be amended to read, ‘‘ ‘Party to 

a transaction’ means. * * *’’ The initial phrase of 

Rule 6710(f), which provides, ‘‘The term ‘TRACE 

Participant’ shall mean * * *’’ will be amended to 

read, ‘‘ ‘TRACE Participant’ means. * * *’’ The 

initial phrase of Rule 6710(g) will be amended to 

read, ‘‘The term ‘Introducing Broker’ shall mean 

* * *’’ will be amended to read, ‘‘ ‘Introducing 

Broker’ means. * * *’’ The initial phrase of Rule 

6710(j), which provides, ‘‘The term ‘split-rated’ 

shall mean * * *’’ will be amended to read, 

‘‘ ‘Split-rated’ means. * * *’’ 

As discussed previously, FINRA proposes the 

same technical and stylistic amendments to 

paragrahs (c), (h) and (i) of Rule 6710. 

20As amended, Rule 6730(a) will provide: 

Each member that is a Party to a transaction in 

a TRACE-eligible security must report the 

transaction. A member must report transaction 

information within 15 minutes of the time of 

execution, except as otherwise provided below, or 

the transaction report will be ‘‘late.’’ The member 

must transmit the report to TRACE during the hours 

the TRACE system is open, which are 8 a.m. Eastern 

Time through 6:29:59 p.m. Eastern Time, unless 

otherwise announced by FINRA (‘‘TRACE system 

hours’’). Specific trade reporting obligations during 

a 24-hour cycle are set forth below. 

21Such proposed changes will be incorporated in 

Rule 7730(c)(1)(A), the Bond Trade Dissemination 

Service (‘‘BTDS’’) Professional Real-Time Data 

Display Fee; Rule 7730(c)(1)(B), the Vendor RealTime Data Feed Fee and Snapshot Real-Time 

TRACE Data Fee; and Rule 7730(c)(1)(C), the 

Vendor Real-Time Data Feed Fee (for certain TaxExempt Organizations). 

22By definition, market data does not include 

information on transactions that are required to be 

reported but are not subject to dissemination. 

Currently, Securities Act Rule 144A transactions are 

accorded this treatment and under the proposed 

rule change, primary market transactions that are 

List or fixed offering price transactions and 

Takedown transactions also will not be 

disseminated, and, thus, will not be included in 

data packages. 

23 15 U.S.C. 78o–3(b)(6). 

24 15 U.S.C. 78o–3(b)(5). 

following terms have the following 

meaning:’’ 

In Rule 6710, in paragraphs (b), (d), 

(e), (f), (g) and (j), which set forth 

various defined terms, FINRA proposes 

to incorporate conforming technical and 

stylistic changes to the first line of text 

of each defined term. The amendments 

to each defined term reflect the stylistic 

changes shown as follows for Rule 

6710(b). The initial phrase of Rule 

6710(b), which provides, ‘‘The term 

‘Trade Reporting and Compliance 

Engine’ or ‘TRACE’ shall mean * * *’’ 

will be amended to read, ‘‘ ‘Trade 

Reporting and Compliance Engine’ or 

‘TRACE’ means. * * *’’ 19

In Rule 6710(e), the phrase, ‘‘[F]or 

purposes of this Rule,’’ will be deleted. 

In Rule 6730(a), FINRA will add a new 

first sentence providing, ‘‘Each member 

that is a party to a transaction in a 

TRACE-eligible security must report the 

transaction.’’ Other minor technical 

changes are also proposed in the same 

paragraph, including clarifying the term 

‘‘TRACE system hours.’’ 20 Paragraphs 

(5) and (6) of Rule 6730(a) are 

renumbered as paragraphs (6) and (7), 

and, in paragraph (7), a cross reference 

to new paragraph (a)(5) is added. Also, 

in Rule 6750, FINRA proposes minor 

technical changes to paragraph (b), 

including revising the header by 

deleting ‘‘Securities Act Rule 144A 

Transactions’’ and substituting the new 

header, ‘‘Transaction Information Not 

Disseminated.’’ 

IV. Fees 

FINRA proposes to amend Rule 7730 

to establish reporting and market data 

fees for Agency debt securities 

transactions and primary market 

transactions. Generally, the fees 

proposed for Agency debt securities are 

equivalent to the fees charged for 

corporate bonds. Primary market 

transactions, whether in corporate 

bonds or Agency debt securities, will be 

subject to the same reporting fees 

currently in effect, with one exception. 

FINRA proposes not to charge a 

reporting fee for the timely and accurate 

reporting of primary market transactions 

that are List or fixed offering price 

transactions or Takedown transactions 

as provided in amendments to Rule 

7730(b)(1). However, the fees that are 

currently in effect for late reports and 

corrections will apply to such 

transactions. Eliminating the standard 

reporting fee for such transactions 

should reduce the cost of compliance 

for firms as they implement changes to 

report such transactions. 

FINRA will distinguish TRACE 

transaction data as two data sets, one 

comprised solely of corporate bond 

transaction information (the ‘‘Corporate 

Bonds Data Set’’) and a second data set 

comprised solely of Agency debt 

securities transaction information 

(‘‘Agency Data Set’’) for organizational 

purposes only. Market data fees will be 

charged for each Data Set, as provided 

in amended Rule 7730(c)(1)(A), (B) and 

(C).21 Each Data Set will include the 

relevant transaction data, including 

primary market transactions in such 

securities, provided that the primary 

market transactions are subject to 

dissemination.22

Generally, the proposed fees for the 

Agency Data Set will be set at the same 

rates currently in effect for corporate 

bond market data (to be sold in the 

future as the Corporate Bonds Data Set). 

For example, in Rule 7730(c)(1)(B), the 

current Vendor Real-Time Data Feed 

Fee is $1500 per month for receipt of 

continuous Real-Time TRACE 

transaction data for internal, nondisplay use for corporate bonds for 

persons or organizations other than 

qualifying Tax-Exempt Organizations. 

FINRA proposes to charge $1500 per 

month for the same data package for the 

Agency Data Set. A vendor that desires 

to obtain a real-time data feed for both 

Data Sets will pay $3,000 per month 

($1500 for the Corporate Bonds Data Set 

and $1500 for the Agency Data Set). 

One ‘‘System Related Fee,’’ for ‘‘Web 

Browser Access,’’ as set forth in FINRA 

Rule 7730(a)(1), provides access for 

reporting, but also includes an 

embedded charge for access to market 

data. FINRA proposes to amend the 

‘‘Web Browser Access’’ fee in FINRA 

Rule 7730(a)(1) to set one fee for 

professionals that want a reporting 

system plus access to one Data Set and 

a second, higher fee for those desiring 

a reporting system plus access to both 

Data Sets. 

FINRA proposes to continue its policy 

to provide Non-Professionals access at 

no charge to all or any portion of any 

data, whether from one or both Data 

Sets, under proposed amendments to 

Rule 7730(c)(2). 

Finally, FINRA also proposes minor 

technical and clarifying amendments to 

Rule 7730. 

FINRA will announce the effective 

date of the proposed rule change in a 

Regulatory Notice to be published no 

later than 60 days following 

Commission approval. The effective 

date will be no later than 180 days 

following publication of the Regulatory 

Notice announcing Commission 

approval. 

2. Statutory Basis 

FINRA believes that the proposed rule 

change is consistent with the provisions 

of Section 15A(b)(6) of the Act,23 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 15(A)(b)(5) 

of the Act,24 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 in that: (i) The 

proposed rule change will increase 

transparency in the debt market 

mstockstill on PROD1PC66 with NOTICES

17716 Federal Register / Vol. 74, No. 72 / Thursday, April 16, 2009 / Notices 

25 17 CFR 200.30–3(a)(12). 

significantly, will enhance the ability of 

institutional investors, retail investors 

and broker-dealers to compare and 

negotiate prices in Agency debt 

securities transactions, and will 

enhance FINRA’s surveillance of the 

debt market in connection with primary 

market transactions and Agency debt 

securities generally; and (ii) the 

proposed fee proposal provides for 

reporting and market data fees that are 

reasonable and mirror the fees currently 

in effect for corporate bonds, and 

provides for the equitable allocation of 

such fees and charges among members 

and other professional market 

participants, qualifying Tax-Exempt 

Organizations and public data 

consumers. 

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 35 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 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 e-mail to rulecomments@sec.gov. Please include File 

Number SR–FINRA–2009–010 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Elizabeth M. Murphy, Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–1090. 

All submissions should refer to File 

Number SR–FINRA–2009–010. This file 

number should be included on the 

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

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

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

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

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

available for inspection and copying in 

the Commission’s Public Reference 

Room, 100 F Street, NE., Washington, 

DC 20549, on official business days 

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

Copies of the filing will also be available 

for inspection and copying at the 

principal office of FINRA. All comments 

received will be posted without change; 

the Commission does not edit personal 

identifying information from 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File No. SR–FINRA– 

2009–010 and should be submitted on 

or before May 7, 2009. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.25

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–8656 Filed 4–15–09; 8:45 am] 

BILLING CODE 8010–01–P 

DEPARTMENT OF STATE 

[Public Notice 6581] 

Bureau of Educational and Cultural 

Affairs (ECA) Request for Grant 

Proposals (RFGP): Congressionally 

Mandated—One-Time Grants 

Program—Competition B— 

Professional, Cultural, and Youth OneTime Grants Program 

Announcement Type: New Grant. 

Funding Opportunity Number: ECA/ 

PE/C–09–One-time-Comp. B 

Catalog of Federal Domestic 

Assistance Number: 00.000. 

Key Dates: 

Application Deadline: May 14, 2009. 

Executive Summary: This competition 

is one of two competitions that the 

Bureau of Educational and Cultural 

Affairs is conducting as directed in the 

FY–2009 Omnibus Appropriation (Pub. 

L. 111–8) under Division H of the 

Department of State, Foreign 

Operations, and Related Programs 

Appropriations Act, under ‘‘Educational 

and Cultural Exchange Programs’’ in 

support of a $6 million ‘‘competitive 

one-time grants program.’’ All 

applications must be submitted by 

public or private non-profit 

organizations, meeting the provisions 

described in Internal Revenue code 

section 26 U.S.C. 501(c)(3). Total 

funding for this ‘‘one-time grants 

program’’ is $6 million dollars. $3.9 

million will be dedicated to this 

competition, (Competition B— 

Professional, Cultural and Youth Onetime Grants Program—reference number 

ECA/PE/C–09–One-time-Comp. B), and 

$2.1 million will be dedicated to and 

announced simultaneously in a separate 

RFGP, (Competition A—Academic 

Programs One-time Grants Program— 

reference number ECA/A–09–One-timeComp. A). Please note: The Bureau 

reserves the right to reallocate funds it 

has initially allocated to each of these 

two competitions, based upon factors 

such as the number of applications 

received and responsiveness to the 

review criteria outlined in each of the 

solicitations. 

Applicants may submit only one 

proposal (TOTAL) to one of the two 

competitions referenced above. In 

addition, applicants under this 

competition (either ECA/PE/C–09–Onetime-Comp.B or ECA/A–09–One-timeComp. A) may only apply to administer 

one of the listed activities (total). If 

multiple proposals are received from the 

same applicant, all submissions will be 

declared technically ineligible and will 

be given no further consideration in the 

review process. Eligible applicants are 

strongly encouraged to read both RFGPs 

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