Federal Register / Vol. 74, No. 75 / Tuesday, April 21, 2009 / Notices 18271 

8 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3Securities Exchange Act Release No. 59519 

(March 5, 2009), 74 FR 10630 (‘‘Notice’’). 

4See letter from Beth N. Lowson, The Nelson Law 

Firm, LLC, to Elizabeth M. Murphy, Secretary, 

Commission, dated March 31, 2009 (‘‘Nelson 

Letter’’); letter from Sean C. Davy, Managing 

Director, Securities Industry and Financial Markets 

Association (‘‘SIFMA’’), to Elizabeth M. Murphy, 

Secretary, Commission, dated March 31, 2009 

(‘‘SIFMA Letter’’). 

5See infra Section III. 

6 15 U.S.C. 77c. 

7According to FINRA, if an insolvent corporation 

is reorganized under Chapter 11 of the U.S. 

Bankruptcy Code, new debt securities are often 

issued. The issuance is subject to the approval of 

the trustee and the securities are not required to be 

registered under the Securities Act. See 11 U.S.C. 

101 et seq. 

8 15 U.S.C. 77c(a)(9). For example, an issuer may 

exchange an issue of corporate debt securities that 

are registered under the Securities Act (and subject 

to both TRACE reporting and dissemination) for 

new securities that are not registered in reliance 

upon Section 3(a)(9), which permits such exchanges 

without registration of the new securities. Although 

the exchanged security was TRACE-eligible, the 

new security is not because it is not registered, as 

required by existing FINRA Rule 6710(a). 

9 15 U.S.C. 77c(a)(2). 

10Notice, 74 FR at 10631. 

11 17 CFR 230.144A. 

12See 17 CFR 230.144A(a)(1) (defining QIB). 

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– 

2009–023 and should be submitted on 

or before May 12, 2009. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.8

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–9058 Filed 4–20–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–59768; File No. SR–FINRA– 

2009–004] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Notice of Filing of 

Amendment No. 1 and Order Granting 

Accelerated Approval to Proposed 

Rule Change, as Modified by 

Amendment No. 1, To Expand the 

Definition of ‘‘TRACE–Eligible 

Security’’ 

April 14, 2009. 

I. Introduction 

On February 11, 2009, the Financial 

Industry Regulatory Authority, Inc. 

(‘‘FINRA’’) (f/k/a the National 

Association of Securities Dealers, Inc. 

(‘‘NASD’’)) filed with the Securities and 

Exchange Commission (‘‘Commission’’), 

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

Securities Exchange Act of 1934 

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

proposed rule change to expand the 

definition of ‘‘TRACE-eligible security’’ 

in FINRA Rule 6710(a). The proposed 

rule change was published for comment 

in the Federal Register on March 11, 

2009.3 The Commission received two 

comments on the proposal.4 On April 9, 

2009, FINRA filed Amendment No. 1 to 

the proposed rule change, in which 

FINRA also responded to the 

comments.5 The Commission is 

publishing this notice and order to 

solicit comments on Amendment No. 1 

and to approve the proposed rule 

change, as modified by Amendment No. 

1, on an accelerated basis. 

II. Description of the Proposed Rule 

Change 

The current definition of ‘‘TRACEeligible security’’ in Rule 6710(a) was 

adopted in 2002 and has not been 

amended. FINRA generally believes that 

this definition is sufficiently broad to 

require the reporting of, and provide 

price transparency for, a substantial 

portion of corporate debt securities that 

are eligible for public sale. However, 

FINRA has identified several situations 

where corporate debt securities that are 

eligible for public sale in the secondary 

market are trading without TRACE price 

transparency. According to FINRA, such 

securities are in many cases ‘‘exempted 

securities’’ under Section 3 of the 

Securities Act.6 For example, debt 

securities that are issued subject to the 

jurisdiction and approval of a court of 

competent jurisdiction in insolvency 

matters might be eligible for public sale 

but not TRACE-eligible because they are 

not registered under the Securities Act.7

In addition, debt securities issued as 

part of an issuer exchange offer effected 

pursuant to Section 3(a)(9) of the 

Securities Act 8 and those issued by a 

bank or other financial institutions 

under Section 3(a)(2) of the Securities 

Act 9 generally are not subject to TRACE 

reporting and dissemination for this 

reason. 

Therefore, FINRA has proposed to 

amend Rule 6710(a), the definition of 

‘‘TRACE-eligible security,’’ by 

eliminating the requirement that such 

securities be ‘‘(1) registered under the 

Securities Act; or (2) issued pursuant to 

Section 4(2) of the Securities Act and 

purchased or sold pursuant to Securities 

Act Rule 144A.’’ This change would 

expand TRACE eligibility to include 

additional corporate debt securities that 

are eligible for public sale, and may 

have participation by retail investors. 

Moreover, FINRA notes that its 

obligation to conduct surveillance in the 

corporate bond market is not limited to 

transactions in securities that are 

registered under the Securities Act, and 

that its equity trade reporting rules 

generally apply to any equity securities 

eligible for public sale and do not 

consider registration a factor. FINRA 

believes that expanding TRACE 

eligibility in this manner ‘‘is vital to its 

mandate to regulate the market, to 

promote market integrity and to protect 

investors.’’ 10

FINRA also has proposed to add the 

phrase ‘‘and, if a ‘restricted security’ as 

defined in Securities Act Rule 

144(a)(3)’’ in place of the deleted 

language discussed in the preceding 

paragraph. Thus, if a security were a 

restricted security, it would be TRACEeligible if it were sold pursuant to Rule 

144A under the Securities Act 11

(assuming it meets the other 

requirements for TRACE eligibility). The 

current definition of TRACE-eligible 

security requires transaction reporting 

for some but not all of the large market 

in corporate debt securities that are 

restricted securities and sold to 

qualified institutional buyers 

(‘‘QIBs’’) 12 in transactions effected 

pursuant to Rule 144A. Although a 

significant number of restricted 

securities sold in Rule 144A 

transactions are preceded by an offering 

that is exempt under Section 4(2) of the 

Securities Act, the limitation in the 

current definition excludes other Rule 

144A transactions that FINRA believes 

should be reported. Consequently, 

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18272 Federal Register / Vol. 74, No. 75 / Tuesday, April 21, 2009 / Notices 

13See supra note 4. 

14See Nelson Letter at 1. 

15 17 CFR 230.901–905. 

16See SIFMA Letter at 1. 

17See id. at 2. 

18See Amendment No. 1 at 4. 

19FINRA noted, however, that providing 

notification to FINRA Operations would not be 

viewed as a mitigating factor or circumstance 

during any review of late trade reports, if FINRA 

determines that the member was obligated under 

Rule 6760 to provide notice to FINRA Operations 

at or prior to the initial issuance of the TRACEeligible security. See Amendment No. 1 at 4. 

20See id. at 5. 

21 In approving this proposal, the Commission has 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

15 U.S.C. 78c(f). 

22 15 U.S.C. 78o–3(b)(6). 

FINRA proposed to amend Rule 6710(a) 

to include as TRACE eligible a restricted 

security if it is ‘‘sold pursuant to 

Securities Act Rule 144A.’’ 

III. Summary of Comments and 

Amendment No. 1 

The Commission received two 

comments on the proposed rule 

change.13 One commenter expressed 

general support for FINRA’s efforts to 

broaden the range of securities that are 

subject to TRACE reporting and thus to 

increase price transparency in the 

corporate bond market generally. In 

addition, the commenter argued that the 

TRACE rules should be amended to 

eliminate from FINRA’s dissemination 

protocols the ‘‘volume caps’’ used when 

disseminating information on 

transactions above a certain size.14

FINRA declined to respond to that 

comment because it is not related to the 

proposed rule change. 

Another commenter argued that 

FINRA has ‘‘not provided any direction 

or clarity regarding the operational 

requirements’’ of reporting certain 

Regulation S 15 transactions that have 

not been assigned a CUSIP number. The 

commenter also expressed concerns that 

firms have not been able to assess the 

system changes necessary to comply 

with the proposed rule change, and 

therefore are unable to comment on 

what would be an appropriate 

implementation timeline.16 In addition, 

the commenter suggested that FINRA 

consider implementing a process for 

obtaining identifier information for 

securities (such as many Regulation S 

securities) for which no identifying 

information has previously been 

reported under FINRA Rule 6760, and 

requested that FINRA provide firms a 

reasonable grace period to report 

transactions in such securities.17

In response, FINRA stated that the 

proposed rule change does not require 

members to report bona fide off-shore 

Regulation S transactions to TRACE. If 

a security that is the subject of a 

Regulation S offering were subsequently 

part of a U.S. transaction that is required 

to be reported to TRACE, such securities 

generally would be assigned CUSIPs. 

FINRA stated, however, that it would 

provide guidance on reporting 

obligations if certain TRACE-eligible 

securities had for some reason not been 

assigned a CUSIP number. Finally, 

FINRA stated that it would establish an 

effective date that will provide firms 

sufficient time to make any minor 

operational enhancements needed to 

report these types of transactions.18

FINRA also responded to the 

commenter’s request for a grace period 

to report transactions in securities 

offered under Regulation S and other 

securities that a member finds are not in 

the TRACE system at the time the 

member is required to report a 

transaction. FINRA responded that 

members that are a party to a transaction 

in a TRACE-eligible security are 

required to report the transaction, and if 

the CUSIP for a TRACE-eligible security 

is not in the TRACE system, a member 

must notify FINRA Operations 

promptly, provide the CUSIP and other 

identifying information, and thereafter 

report the member’s transaction. FINRA 

stated that it takes into account a delay 

in reporting that may occur if a member, 

upon trying to report a transaction, 

determines that the member first must 

notify FINRA Operations and provide 

the CUSIP and other identifying 

information for the security to be added 

to TRACE. Rather than supporting the 

proposed grace period, FINRA advises 

members to maintain a record of any 

notifications the member provides to 

FINRA Operations, which FINRA would 

view as a mitigating factor in reviewing 

the transaction report(s) in such security 

of members providing notification. 

FINRA further suggested that, where 

there has been prompt notification and 

reporting of a security as soon as 

possible after the security is included in 

TRACE, FINRA generally would not 

include such trades in any regulatory 

inquiry directed to the firm and that, 

generally, it would be unlikely for such 

late trades to form the factual basis for 

formal or informal action, absent other 

regulatory concerns or violations.19

Also in Amendment No. 1, FINRA 

deleted certain language from its Form 

19b–4 wherein it discussed the purpose 

of the proposed rule change.20 These 

revisions are non-substantive and do not 

affect the proposed rule text. 

IV. Discussion 

After carefully considering the 

proposal and the comments submitted, 

the Commission finds that the proposed 

rule change is consistent with the 

requirements of the Act and the rules 

and regulations thereunder applicable to 

a national securities association.21 In 

particular, the Commission finds that 

the proposed rule change is consistent 

with Section 15A(b)(6) of the Act,22

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. The Commission does 

not believe that the comments raise any 

issue that would preclude approval of 

the proposal. 

The Commission believes that it is 

reasonable and consistent with the Act 

for FINRA to broaden the definition of 

‘‘TRACE-eligible security’’ in the 

manner set forth in the proposal. The 

larger universe of transactions in 

corporate debt securities that are subject 

to TRACE reporting should result in 

greater transparency for market 

participants and the public. Including in 

the audit trail additional corporate debt 

securities that are eligible for public sale 

(and that otherwise meet the standards 

for TRACE eligibility) should enhance 

FINRA’s surveillance efforts, as FINRA’s 

obligation to conduct surveillance in the 

corporate bond market is not limited to 

transactions in securities that are 

registered under the Securities Act. 

In addition, the Commission believes 

that amending the definition of 

‘‘TRACE-eligible security’’ in Rule 

6710(a) to include all restricted 

securities sold pursuant to Rule 144A, 

rather than only those preceded by an 

offering exempt pursuant to Securities 

Act Section 4(2), is a reasonable 

expansion of TRACE reporting. The 

additional transaction data will allow 

FINRA to obtain a more complete audit 

trail of transactions in corporate debt 

securities. 

The Commission finds good cause for 

approving the proposed rule change, as 

modified by Amendment No. 1 thereto, 

before the thirtieth day after the date of 

publication of notice of filing of 

Amendment No. 1 in the Federal 

Register. Amendment No. 1 makes only 

minor non-substantive changes to the 

proposal, which otherwise was subject 

to a full comment period. Therefore, the 

Commission finds good cause, 

consistent with Section 19(b)(2) of the 

Act, to approve the proposal, as 

modified by Amendment No. 1, on an 

accelerated basis. 

mstockstill on PROD1PC66 with NOTICES

Federal Register / Vol. 74, No. 75 / Tuesday, April 21, 2009 / Notices 18273 

23 15 U.S.C. 78s(b)(2). 24 17 CFR 200.30–3(a)(12). 

V. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning Amendment No. 

1, including whether Amendment No. 1 

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 

No. SR–FINRA–2009–004 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–2009–004. 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 such 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–2009–004 and 

should be submitted on or before May 

12, 2009. 

VI. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,23 that the 

proposed rule change (File No. SR– 

FINRA–2009–004), as modified by 

Amendment No. 1 thereto, be, and 

hereby is, approved on an accelerated 

basis. 

For the Commission, by the Division of 

Trading and Markets, pursuant delegated 

authority.24

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–9059 Filed 4–20–09; 8:45 am] 

BILLING CODE 8010–01–P 

SOCIAL SECURITY ADMINISTRATION 

[Docket No. SSA–2009–0025] 

Future Systems Technology Advisory 

Panel Meeting 

AGENCY: Social Security Administration 

(SSA). 

ACTION: Notice of third panel meeting. 

DATES: May 12, 2009, 9:15 a.m.–5 p.m. 

and May 13, 2009, 8:30 a.m.–12 p.m. 

Location: The Westin Alexandria. 

ADDRESSES: 400 Courthouse Square, 

Alexandria, VA 22314. 

SUPPLEMENTARY INFORMATION: 

Type of Meeting: The meeting is open 

to the public. 

Purpose: The Panel, under the Federal 

Advisory Committee Act of 1972, as 

amended, (hereinafter referred to as ‘‘the 

FACA’’) shall report to and provide the 

Commissioner of Social Security 

independent advice and 

recommendations on the future of 

systems technology and electronic 

services at the agency five to ten years 

into the future. The Panel will 

recommend a road map to aid SSA in 

determining what future systems 

technologies may be developed to assist 

in carrying out its statutory mission. 

Advice and recommendations can relate 

to SSA’s systems in the area of Internet 

application, customer service, or any 

other arena that would improve SSA’s 

ability to serve the American people. 

Agenda: The Panel will meet on 

Tuesday, May 12, 2009 from 9:15 a.m. 

until 5 p.m. and Wednesday, May 13, 

2009 from 8:30 a.m. to 12 p.m. The 

agenda will be available on the Internet 

at http://www.ssa.gov/fstap/index.htm 

or available by e-mail or fax on request, 

one week prior to the starting date. 

During the third meeting, the Panel 

will have outside experts address items 

of interest and other relevant topics to 

the Panel. This additional information 

will further the Panel’s deliberations 

and the effort of the Panel 

subcommittees. 

Public comments will be heard on 

Tuesday, May 12, 2009, from 4:30 p.m. 

until 5 p.m. Individuals interested in 

providing comments in person should 

contact the Panel staff as outlined below 

to schedule a time slot. Members of the 

public must schedule a time slot in 

order to comment. In the event public 

comments do not take the entire 

scheduled time period, the Panel may 

use that time to deliberate or conduct 

other Panel business. Each individual 

providing public comment will be 

acknowledged by the Chair in the order 

in which they are scheduled to testify 

and is limited to a maximum fiveminute, verbal presentation. In addition 

to or in lieu of public comments 

provided in person, individuals may 

provide written comments to the panel 

for their review and consideration. 

Comments in written or oral form are for 

informational purposes only for the 

Panel. Public comments will not be 

specifically addressed or receive a 

written response by the Panel. 

Contact Information: Records are kept 

of all proceedings and will be available 

for public inspection by appointment at 

the Panel office. Anyone requiring 

information regarding the Panel should 

contact the staff by: 

Mail addressed to SSA, Future 

Systems Technology Advisory Panel, 

Room 800, Altmeyer Building, 6401 

Security Boulevard, Baltimore, MD 

21235–0001; Telephone at 410–965– 

6011; Fax at 410–965–0201; or E-mail to 

FSTAP@ssa.gov. 

Dated: April 15, 2009. 

Dianne L. Rose, 

Designated Federal Officer, Future Systems 

Technology Advisory Panel. 

[FR Doc. E9–9149 Filed 4–20–09; 8:45 am] 

BILLING CODE 4191–02–P 

DEPARTMENT OF TRANSPORTATION 

Maritime Administration 

[Docket No. MARAD–2009 0037 

Requested Administrative Waiver of 

the Coastwise Trade Laws 

AGENCY: Maritime Administration, 

Department of Transportation. 

ACTION: Invitation for public comments 

on a requested administrative waiver of 

the Coastwise Trade Laws for the vessel 

Island Flyer. 

SUMMARY: As authorized by 46 U.S.C. 

12121, the Secretary of Transportation, 

as represented by the Maritime 

Administration (MARAD), is authorized 

to grant waivers of the U.S.-build 

requirement of the coastwise laws under 

mstockstill on PROD1PC66 with NOTICES