29980 Federal Register / Vol. 87, No. 95 / Tuesday, May 17, 2022 / Notices 

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

2 17 CFR 240.19b–4. 

BILLING CODE 8011–01–C 

The estimate of average burden hours 

is made solely for the purposes of the 

Paperwork Reduction Act. The estimate 

is not derived from a comprehensive or 

even a representative survey or study of 

the costs of Commission rules. An 

agency may not conduct or sponsor, and 

a person is not required to respond to, 

a collection of information unless it 

displays a currently valid control 

number. 

The public may view background 

documentation for this information 

collection at the following website: 

www.reginfo.gov. Find this particular 

information collection by selecting 

‘‘Currently under 30-day Review—Open 

for Public Comments’’ or by using the 

search function. Written comments and 

recommendations for the proposed 

information collection should be sent 

within 30 days of publication of this 

notice by June 16, 2022. to (i) 

MBX.OMB.OIRA.SEC_desk_officer@

omb.eop.gov and (ii) David Bottom, 

Director/Chief Information Officer, 

Securities and Exchange Commission, 

c/o John Pezzullo, 100 F Street NE, 

Washington, DC 20549, or by sending an 

email to: PRA_Mailbox@sec.gov. 

Dated: May 11, 2022. 

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–10504 Filed 5–16–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–94891; File No. SR–FINRA– 

2022–011] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Notice of Filing of a 

Proposed Rule Change To Expand 

TRACE Reporting Requirements to 

Trades in U.S. Dollar-Denominated 

Foreign Sovereign Debt Securities 

May 11, 2022. 

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

Securities Exchange Act of 1934 

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

notice is hereby given that on May 6, 

2022, the Financial Industry Regulatory 

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

Securities and Exchange Commission 

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

rule change as described in Items I and 

II below, which Items have been 

prepared by FINRA. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of the Substance 

of the Proposed Rule Change 

FINRA is proposing to expand 

reporting requirements for the Trade 

Reporting and Compliance Engine 

(TRACE) to collect information on 

trades in foreign sovereign debt 

securities that are United States (U.S.) 

dollar-denominated. 

The text of the proposed rule change 

is available on FINRA’s website at 

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

office of FINRA and at the 

Commission’s Public Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, 

FINRA included statements concerning 

the purpose of and basis for the 

proposed rule change and discussed any 

comments it received on the proposed 

rule change. The text of these statements 

may be examined at the places specified 

in Item IV below. FINRA has prepared 

summaries, set forth in sections A, B, 

and C below, of the most significant 

aspects of such statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

FINRA is submitting this proposed 

rule change to amend certain rules in 

the Rule 6700 Series (Trade Reporting 

and Compliance Engine (TRACE)) to 

require members to report to TRACE 

transactions in U.S. dollar-denominated 

foreign sovereign debt securities. Under 

the proposal, trades in U.S. dollardenominated foreign sovereign debt 

securities would be subject to same-day 

reporting and would not be 

disseminated publicly. 

Background 

Currently, almost all U.S. dollardenominated debt securities traded in 


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Notes: 

l. The external costs of complying with Form 13F can vary among filers. Some filers use third-party vendors for a range of services in connection with filing reports on Form 

BF, while other filers use vendors for more limited pwposes such as providing more user-friendly versions of the list of section 13(f) Securities. For pwposes of the PRA, 

we estimate that each filer will spend an average of $300 on vendor services each year in connection with the filer's four quarterly reports on Form l3F-HR or Form l3F-NT, 

as applicable, in addition to the estimated vendor costs associated with any amendments. In addition, some filers engage outside legal services in connection with the 

preparation of requests for confidential treatment or analyses regarding possible requests, or in connection with the form's disclosure requirements. For pwposes of the PRA, 

we estimate that each manager filing reports on Form 13F-HR will incur S489 for one hour of outside legal services each year. 

2. $66 was the estimated wage rate for a compliance clerk in 2018. 

3. The estimate reduces the total burden hours associated with complying with the reporting requirements of Form BF-HR from 80.8 to 11 hours. We believe that this 

reduction adequately reflects the reduction in the time managers spend complying with Form 13F-HR as a result of advances in technology that have occurred since Form 13F 

was adopted. The revised estimate also assumes that an in-house compliance attorney would spend I hour annually on the preparation of the filing, as well as determining 

whether a 13(f) Confidential Treatment Request should be filed. The remaining 10 hours would be di"ided equally between a senior programmer and compliance clerk. 

4. The $202.50 wage rate reflects current estimates of the blended hourly rate for an in-house senior programmer ($334) and in-house compliance cletk (S71). $202.50 is 

based on the following calculation: ($334+$71) / 2 - $202.50. The $334 per hour figure for a senior programmer is based on salary information for the securities industry 

compiled by the Securities Industry and Financial Markets Association's Office Salaries in the Securities Industry 2013 ("SIFMA Report"), modified by Commission staff to 

account for an 1800-hour work-year and inflation, and multiplied by 5.35 to account for bonuses, firm size, employee benefits and overhead. The $71 per hour figure for a 

compliance clerk is based on salary infonnation from the SIFMA Report, modified by Commission staff to account for an 1800-hour work-year and inflation, and multiplied 

by 2.93 to account for bonuses, firm size, employee benefits and overhead. 

5. The $368 per hour figure for a compliance attorney is based on salary information for the securities industry compiled by the Securities Industry and Financial Markets 

Associlllion 's omce Salaries in the Securities Industry 2013 ("SIFM A Report"), modi lied hy Commission stalT to account for an 1800-hour work-year and innation, and 

multiplied by 5.35 to account for bonuses, firm size, employee benefits and overhead. 

6. $789 includes an estimated $300 paid to a third-party vendor in connection with the Form 13F-HR filing as well as an estimated $489 for one hour of outside legal services. 

We estimate that Form 13F-HR filers will require some level of external legal counsel in connection with these filings. 

7. This estimate is based on the number of 13l'-IIRfilers as of December 2019. 

8. This estimate is based on the number of Form BF-NT filers as of December 2019. 

9. The revised estimate assumes that an in-house compliance attorney would spend 0.5 hours annually on the preparation of the filing amendment, as well as determining 

whether a 13(f) Confidential Treatment Request should be filed. The remaining 3.5 hours would be divided equally between a senior programmer and compliance clerk. 

10. 'Ibis estimate is based on the number of Form 13F amendments filed as of December 2019. 
Federal Register / Vol. 87, No. 95 / Tuesday, May 17, 2022 / Notices 29981 

3Rule 6710 (Definitions) generally defines a 

‘‘TRACE-Eligible Security’’ as a debt security that 

is U.S. dollar-denominated and is: (1) Issued by a 

U.S. or foreign private issuer, and, if a ‘‘restricted 

security’’ as defined in Securities Act Rule 

144(a)(3), sold pursuant to Securities Act Rule 

144A; (2) issued or guaranteed by an ‘‘Agency,’’ as 

defined in Rule 6710(k) or a ‘‘GovernmentSponsored Enterprise,’’ as defined in Rule 6710(n); 

or (3) a ‘‘U.S. Treasury Security,’’ as defined in Rule 

6710(p). The term ‘‘TRACE-Eligible Security’’ does 

not include a debt security that is issued by a 

foreign sovereign or a ‘‘Money Market Instrument,’’ 

as defined in Rule 6710(o). 

4The text of Rule 6710 incorporates the changes 

adopted in SR–FINRA–2019–008, which is yet to be 

implemented. 

5FINRA notes that its proposed definition of 

‘‘Foreign Sovereign Debt Security’’ relies on 

existing FINRA and SEC guidance. Specifically, 

FINRA published guidance in 2004 to clarify the 

distinction between foreign private and foreign 

sovereign issuers. As noted in that guidance, the 

term ‘‘foreign private issuer’’ means a foreign issuer 

that is not eligible to use the SEC’s Schedule B for 

registering a debt offering in the United States. See 

Notice to Members 04–90 (December 2004). 

6 ‘‘Supranational entity’’ would include multinational organizations such as the International 

Bank for Reconstruction & Development (World 

Bank), the Inter-American Development Bank, the 

Asian Development Bank, the African Development 

Bank, the International Finance Corporation, and 

the European Investment Bank. 

7Schedule B is used to register debt for issuance 

in the United States by foreign governments or 

political subdivisions of foreign governments, and 

in some cases supranational organizations, issuers 

of government-guaranteed securities, and certain 

other issuers closely aligned and identified with a 

sovereign. See 15 U.S.C. 77aa. 

8See e.g., TRACE Frequently Asked Questions 

#3.1.65 (providing that a member is not required to 

report a debt security to TRACE that is sold 

pursuant to Regulation S in an off-shore transaction; 

however, if a debt security originally sold in a 

Regulation S transaction is subsequently purchased 

or sold as part of a U.S. transaction, the transactions 

following the Regulation S transaction must be 

reported to TRACE). 

9See Rule 6710(t). ‘‘TRACE System Hours’’ 

means the hours the TRACE system is open, which 

are 8:00:00 a.m. Eastern Time through 6:29:59 p.m. 

Eastern Time on a business day, unless otherwise 

announced by FINRA. 

10FINRA notes that, if the proposed rule change 

is adopted, FINRA will take a measured approach 

to potential dissemination, as it has taken 

historically with other TRACE-Eligible Securities 

and would first analyze the regulatory data to 

determine the appropriate contours of a potential 

dissemination framework. 

11See Rule 6730(c). 

12FINRA understands that some foreign 

sovereign debt securities may not have a CUSIP or 

CINS number but may have been assigned another 

type of identifier (e.g., an ISIN). To facilitate trade 

reporting of U.S. dollar-denominated foreign 

sovereign debt, where a CUSIP or CINS is not 

available, FINRA intends to permit members to 

report using a FINRA-assigned symbol that 

corresponds to the security’s other identifier(s) (e.g., 

the FINRA-assigned symbol would be associated 

with the ISIN on the Security Master List). FINRA 

notes that Rule 6730(a)(7) will continue to apply. 

Therefore, members remain obligated to make a 

good faith determination as to whether they have 

engaged in a reportable transaction in a TRACEEligible Security and, if the TRACE-Eligible 

Security is not entered in the TRACE system, the 

member must promptly notify and provide FINRA 

Operations the information required under Rule 

6760(b) prior to reporting the transaction. 

the U.S. are TRACE-Eligible Securities 3

and therefore are subject to TRACE 

reporting requirements. This includes 

the U.S. dollar-denominated debt of 

foreign private issuers. However, trades 

in the U.S. dollar-denominated debt of 

foreign sovereign issuers are not subject 

currently to TRACE reporting. 

The proposed rule change would 

enhance FINRA’s regulatory audit trail 

and provide FINRA with important 

transaction information on a growing 

segment of the market. As discussed 

further below, the U.S. dollardenominated foreign sovereign debt 

market is a large market segment. 

FINRA believes the proposed rule 

change would advance FINRA’s 

oversight of the fixed income markets 

without imposing significant burdens 

and costs on members, as FINRA 

understands that U.S. dollardenominated foreign sovereign debt 

securities generally trade at firms that 

already have TRACE reporting 

workflows in place. 

Proposed Amendments 

FINRA is proposing changes to the 

TRACE reporting rules to require that 

members report to TRACE transactions 

in U.S. dollar-denominated foreign 

sovereign debt securities for regulatory 

purposes. First, FINRA is proposing to 

amend paragraph (a) of Rule 6710 

(Definitions) 4 to include the term 

‘‘Foreign Sovereign Debt Security’’ in 

the definition of TRACE-Eligible 

Security. FINRA also would define 

‘‘Foreign Sovereign Debt Security’’ 5 in 

paragraph (kk) of Rule 6710 as a debt 

security issued or guaranteed by the 

government of a foreign country, any 

political subdivision of a foreign 

country (e.g., state, provincial, or 

municipal governments), or a 

supranational entity.6

With this proposal, FINRA would 

expand TRACE reporting requirements 

to include U.S. dollar-denominated debt 

of Schedule B-eligible issuers 7—i.e., 

U.S. dollar-denominated debt of foreign 

sovereign issuers that are not foreign 

private issuers. Accordingly, members 

no longer would be required to 

distinguish between foreign sovereign 

debt and foreign private issuer debt for 

purposes of TRACE reporting. In 

addition, we note that members’ 

reporting obligations for transactions 

with a foreign component would 

continue to follow existing guidance.8

FINRA also is proposing to amend Rule 

6730 (Transaction Reporting) to adopt a 

same-day reporting requirement for 

trades in U.S. dollar-denominated 

foreign sovereign debt. Under the 

proposed amendments, reportable 

transactions in foreign sovereign debt 

executed on a business day at or after 

12:00:00 a.m. Eastern Time (ET) through 

5:00:00 p.m. ET must be reported the 

same day during TRACE System Hours.9

Transactions executed on a business day 

after 5:00:00 p.m. ET but before the 

TRACE system closes must be reported 

no later than the next business day 

(T+1) during TRACE System Hours, 

and, if reported on T+1, designated ‘‘as/ 

of’’ and include the date of execution. 

Transactions executed on a business day 

at or after 6:30:00 p.m. ET through 

11:59:59 p.m. ET—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—must be reported the next business 

day (T+1) during TRACE System Hours, 

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

of execution. 

FINRA believes the same-day 

reporting requirement as opposed to a 

shorter reporting timeframe is 

appropriate because trades in U.S. 

dollar-denominated foreign sovereign 

debt securities would be reported for 

regulatory purposes only. To reflect this, 

FINRA is further proposing to amend 

Rule 6750 (Dissemination of 

Transaction Information) to specify that 

FINRA will not disseminate information 

on transactions in foreign sovereign debt 

securities at this time.10

FINRA notes that, under the proposal, 

members would be required to report 

specific items of transaction information 

in line with existing requirements for 

TRACE-Eligible Securities.11 Among 

other things, trade reports would be 

required to include: The CUSIP or CINS 

number, or FINRA-assigned TRACE 

symbol; 12 an identifier for the contraparty (either MPID, ‘‘A’’ for non-member 

affiliate, or ‘‘C’’ for customer); the side 

of the reporting party (buy or sell); the 

quantity of the transaction i.e., face 

value amount of the transaction); the 

price of the transaction expressed as a 

percentage of face/par value; the time of 

execution; the date of execution (for 

‘‘as/of’’ trades); the settlement date; any 

commission charged if the member is 

acting as agent; and any applicable trade 

modifiers. 

FINRA also notes that, if U.S. dollardenominated foreign sovereign debt 

securities become subject to TRACE 

reporting requirements, they would 

become subject to applicable transaction 

reporting fees. Specifically, U.S. dollardenominated foreign sovereign debt 

securities would be subject to trade 

reporting fees pursuant to paragraph 


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29982 Federal Register / Vol. 87, No. 95 / Tuesday, May 17, 2022 / Notices 

13See FINRA Rule 7730(b)(1). Rule 7730(b)(1) 

states that, except for certain securitized products, 

a member ‘‘shall be charged a trade reporting fee 

based upon a sliding scale ranging from $0.475 to 

$2.375 per transaction based on the size of the 

reported transaction.’’ 

14 15 U.S.C. 78o–3(b)(6). 

15 15 U.S.C. 78o–3(b)(5). 

16 15 U.S.C. 78o–3(b)(9). 

17 Data regarding U.S. dollar-denominated foreign 

sovereign and supranational debt was retrieved 

from Bloomberg on 3/16/2022 covering the period 

from January 1, 2012 through December 31, 2021. 

18These estimates are derived from data sourced 

from Bloomberg. The $10.1 trillion in U.S. 

corporate debt does not include debt securities 

defined as ‘‘Money Market Instruments’’ in Rule 

6710(o); these money market instruments are debt 

securities that, at issuance, have a maturity of one 

calendar year or less. 

19The estimates for U.S. Government (U.S. 

Treasury Securities and Agency Debt) issuance 

amounts are derived from data sourced from 

Securities Industry and Financial Markets 

Association (SIFMA). All other estimates and 

figures in the Economic Impact Assessment are 

derived from data sourced from Bloomberg. 

(b)(1) of Rule 7730 (Trade Reporting and 

Compliance Engine (TRACE)).13

Similarly, U.S. dollar-denominated 

foreign sovereign debt securities would 

become subject to FINRA’s Trading 

Activity Fee at the rate applicable to 

bonds, as set out in Section 1 of 

Schedule A to the FINRA By-Laws. 

If the Commission approves the filing, 

FINRA will announce the effective date 

of the proposed rule change in a 

Regulatory Notice. The effective date 

will be no later than 365 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,14 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, Section 15A(b)(5) of the 

Act,15 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, and Section 15A(b)(9) of the 

Act,16 which requires that FINRA rules 

not impose any burden on competition 

that is not necessary or appropriate. 

The proposed rule change is designed 

to provide FINRA with important 

transaction information on a growing 

segment of the debt market, consistent 

with Section 15A(b)(6). The proposal 

would do so by requiring members to 

report transactions in U.S. dollardenominated foreign sovereign debt 

securities for regulatory purposes. 

Issuance activity in U.S. dollardenominated foreign sovereign debt 

securities has accelerated in recent 

years, and FINRA believes that 

enhancing the audit trail with 

information on this growing market 

segment will support better informed 

surveillance and regulation. 

Pursuant to the proposal, members 

would become subject to trade reporting 

fees under Rule 7730 and FINRA’s 

Trading Activity Fee in connection with 

transactions in U.S. dollar-denominated 

foreign sovereign debt. The proposal 

would apply these fees, at established 

rates, equally to members reporting 

transactions in U.S. dollar-denominated 

sovereign debt securities. The proposed 

transaction reporting fees are consistent 

with FINRA’s existing framework under 

Rule 7730 and FINRA’s Trading Activity 

fee for similar types of transactions 

required to be reported to TRACE. 

Specifically, as noted above, 

transactions in U.S. dollar-denominated 

foreign sovereign debt securities would 

be charged a trade reporting fee as set 

forth in Rule 7730(b)(1), and U.S. dollardenominated foreign sovereign debt 

securities would become subject to the 

Trading Activity Fee at the rate 

applicable to bonds set out in Section 1 

of Schedule A to the FINRA By-Laws. 

Thus, FINRA believes that the proposed 

rule change is consistent with Section 

15A(b)(5). 

In addition, FINRA believes that U.S. 

dollar-denominated foreign sovereign 

debt securities generally trade at firms 

that already have TRACE reporting 

workflows in place. Accordingly, 

FINRA believes that the proposed rule 

change also is consistent with Section 

15A(b)(9), because it would allow 

FINRA to advance its regulatory goal of 

obtaining important transaction 

information on these securities through 

incremental measures that FINRA does 

not believe would impose significant 

burdens and costs on members. 

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. 

Economic Impact Assessment 

FINRA has undertaken an economic 

impact assessment, as set forth below, to 

analyze the potential economic impacts, 

including anticipated costs, benefits, 

and distributional and competitive 

effects, relative to the current baseline, 

and the alternatives FINRA considered 

in assessing how to best meet its 

regulatory objectives. 

Regulatory Objective 

FINRA is proposing that members be 

required to report transactions in U.S. 

dollar-denominated foreign sovereign 

debt securities to TRACE on a same-day 

basis, so that FINRA may better 

supervise the market. These foreign 

sovereign debt security transactions 

would not be disseminated publicly. 

Economic Baseline 

Members are not currently required to 

report transactions in U.S. dollardenominated foreign sovereign debt 

securities to TRACE. Therefore, there is 

no current TRACE data or reasonably 

complete alternative source with which 

to estimate the amount of trading 

volume that will become subject to 

reporting under the proposal. This 

analysis is therefore informed by 

available data on the issuance and 

amount outstanding of U.S. dollardenominated foreign sovereign debt 

obtained from other sources.17

As of December 31, 2021, the total 

amount outstanding of marketable U.S. 

dollar-denominated foreign sovereign 

debt was approximately $2.0 trillion 

across 2,400 securities issued by 163 

foreign sovereign governments. This 

compares to approximately $22.6 

trillion, $1.4 trillion, and $10.1 trillion, 

respectively, in marketable U.S. 

Treasury Securities, Agency Debt 

Securities, and U.S. corporate debt.18

In 2021, U.S. and foreign sovereign 

governments issued in aggregate 

approximately $6.1 trillion of 

marketable U.S. dollar-denominated 

debt. Foreign sovereign governments 

issued $259 billion of it, representing 

approximately 4.3% of the total amount, 

and the U.S. Government (U.S. Treasury 

Securities and Agency Debt Securities) 

issued the remaining amount, $5.83 

trillion.19 By comparison, foreign and 

domestic private issuers issued a total of 

$1.96 trillion in U.S. dollardenominated corporate debt in 2021. 

The number of U.S. dollardenominated foreign sovereign debt 

issuances has increased from 337 

unique securities in 2012 to 470 in 

2021. As shown in Figure 1, the top five 

non-U.S. government issuers of 

marketable U.S. dollar-denominated 

debt from January 1, 2017 through 

December 31, 2021 (measured by par 

value issued) are: Argentina, Saudi 

Arabia, the UAE, Egypt, and Austria. 

Austria has increased its issuance of 

sovereign U.S. dollar-denominated debt 

by more than six times between 2015 

and 2020, as measured by the number 

of unique securities (increasing from 22 


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Federal Register / Vol. 87, No. 95 / Tuesday, May 17, 2022 / Notices 29983 

to 134). Figure 2 illustrates the change 

in the issued amount of U.S. dollardenominated foreign sovereign debt 

from 2012 to 2021. 

BILLING CODE 8011–01–P 

At the end of 2021, the total amount 

outstanding of marketable U.S. dollardenominated supranational debt was 

approximately $733 billion across 

approximately 3,414 securities issued 

by 44 supranational organizations. The 

top five largest supranational issuers of 

marketable U.S. dollar-denominated 

debt from January 1, 2017 to December 

31, 2021 (measured by par value issued) 

is about 57.0% of the total amount 

outstanding. These five entities are: 

International Bank for Reconstruction 

and Development (‘‘IBRD’’), European 

Investment Bank (‘‘EIB’’), Asian 

Development Bank (‘‘ADB’’), InterAmerican Development Bank (‘‘IADB’’), 

and International Islamic Liquidity 

Management (‘‘IILM’’). 

Figure 3 shows that the number of 

supranational U.S. dollar-denominated 

debt issuances increased from 1,065 

unique securities in 2011 to 1,346 in 

2021. In 2021, out of a total of 21 

supranational organizations, IBRD 

issued the largest number of U.S. dollardenominated supranational debt 


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Figure 1. Number of foreign sovereign debt issuances in US dollars by country and year 

2012 2013 2014 201S 2016 2017 2018 2019 2020 2021 

Source: Data downloaded from Bloomberg on 03/16/2022. 

Figure 2. Par value of foreign sovereign debt by country and year of issuance 

120 

100 

0 

2012 2013 2014 2015 2016 2017 2019 2020 2021 

-Argentina -saudiArabla -UAE -Egypt -Austria -AIIOtherCountrles 

Source: Data downloaded from Bloomberg on 03/16/2022. 

400 

350 

300 

r 

., -. .!1⁄4? 

250 ;!Z 

0 ,:; 

= -u 6 

e ... 200 le <ll :1!5 

150 8~ 

1;,t= 

::>.?; ,:; 

100 Q, 

so 

0 
29984 Federal Register / Vol. 87, No. 95 / Tuesday, May 17, 2022 / Notices 

20See e.g., Douglas Cumming et al., Exchange 

Trading Rules and Stock Market Liquidity, 99 J. Fin. 

Econ. 651 (2011) (discussing the impact of trading 

rules on liquidity in the equity markets)); Howell 

E. Jackson & Mark J. Roe, Public and Private 

offerings (41 securities). Figure 4 

illustrates the increase in the number of 

U.S. dollar-denominated debt issuances 

by supranational organizations; 

specifically, issuances increased from 

$85.9 billion in 2012 to $172.4 billion 

in 2021. From January 1, 2017 through 

December 31, 2021, $114.02 billion was 

issued by the top five largest 

supranational issuers of U.S. dollardenominated debt (measured by par 

value issued). 

BILLING CODE 8011–01–C 

Based on discussions with brokerdealers that are active in multiple 

foreign sovereign debt markets, FINRA 

understands that market participants do 

not generally treat debt issued by a 

foreign sovereign in U.S. dollars as 

fungible with debt issued by the same 

foreign sovereign in local or other 

currencies; therefore, FINRA does not 

believe that members would seek to 

substitute U.S. dollar-denominated 

foreign sovereign debt securities with 

securities issued by the foreign 

sovereign in a foreign currency. 

Economic Impact 

Requiring members to report 

transactions in U.S. dollar-denominated 

foreign sovereign debt securities to 

TRACE would benefit regulatory 

oversight of the fixed income markets by 

providing FINRA with important data 

regarding member activity in this space. 

In particular, the receipt of the 

transaction price, par value traded, and 

other transaction information in TRACE 

would create a better-informed 

surveillance program to help detect 

fraud, manipulation, unfair pricing, and 

other potential misconduct. Academic 

studies have found a positive empirical 

relationship between the strength of 

market regulation and market quality in 

multiple jurisdictions, including the 

United States.20


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Figure 3. Number of debt issuances In US dollars by supranational organization and 

year of issuance 

200 

2012 2013 2014 2015 2016 2017 2-018 2019 2020 2021 

-!BRO -EIB lll!lllllllflAOB -IILM IIIIIIIIIIMIIAOB -AIIOtherSupranatlonals 

Source: Data downloaded from Bloomberg on 03/16/2022. 

Figure 4. Par value of debt by supranational organization and year of issuance 

2013 2014 2016 2017 2018 2019 2020 2021 

1,400 

1,200 ~ 

1.000 , l 

:@ ll! 

soo I a .. JI 

'S ii 

600 l .c .a 5 

i:ft 400 z = 

200 ! 

0 

2012 

-IBRD -EIB 

2015 

-ADB -111.M - IADB -All Other Supranationals 

Source: Data downloaded from Bloomberg on 03/16/2022. 
Federal Register / Vol. 87, No. 95 / Tuesday, May 17, 2022 / Notices 29985 

Enforcement of Securities Laws: Resource-Based 

Evidence, 93 J. Fin. Econ. 207 (2009) (discussing the 

correlation between public enforcement of 

securities laws and several market indicators, 

including trading volume and capital formation). 

21See supra note 10. 

22See Letter from Gerard O’Reilly, Co-CEO and 

Chief Investment Officer, Dimensional Fund 

Advisors LP, to Marcia E. Asquith, Office of the 

Corporate Secretary, FINRA, dated September 23, 

2019 (‘‘Dimensional’’); Letter from Peter Warms, 

Bloomberg L.P., to Marcia E. Asquith, Office of the 

Corporate Secretary, FINRA, dated September 24, 

2019 (‘‘Bloomberg’’); Letter from Christopher Bok, 

Director, Financial Information Forum, to Marcia E. 

Asquith, Office of the Corporate Secretary, FINRA, 

dated September 24, 2019 (‘‘FIF’’); and Letter from 

Christopher B. Killian, Managing Director, 

Securitization and Corporate Credit, SIFMA to 

Marcia E. Asquith, Office of the Corporate 

Secretary, FINRA, dated September 24, 2019 

(‘‘SIFMA’’). 

23See Bloomberg, Dimensional, and FIF. 

24See SIFMA. 

25See supra notes 5 and 7. 

26See supra note 8. 

27See SIFMA, FIF, and Bloomberg. 28See Dimensional. 

Potential concerns related to the 

dissemination of this transaction 

information are not relevant to this rule 

change because FINRA is not proposing 

that U.S. dollar-denominated foreign 

sovereign debt securities be 

disseminated at this time.21 Members 

engaged in (or that anticipate entering) 

this business may face some additional 

development costs to report these 

transactions to TRACE, but such costs 

are expected to be relatively modest 

because, if the members already have 

systems in place to report other types of 

TRACE-Eligible Securities, they may be 

able to leverage those systems in 

connection with the proposed reporting 

requirement. Members will incur costs 

from the fees associated with the 

TRACE reporting required by the 

proposal. FINRA is not able to estimate 

the anticipated aggregate amount that 

would be collected from members from 

these fees because there is no current 

TRACE data (or reasonably complete 

alternative source) with which to 

estimate the trading volume that will 

become subject to reporting under this 

proposal. 

As discussed above, FINRA 

understands that market participants do 

not generally treat debt issued by a 

foreign sovereign in U.S. dollars as 

fungible with debt issued by the same 

foreign sovereign in local or other 

currencies; therefore, FINRA does not 

believe that firms would be likely to 

avoid the proposed reporting 

requirements by shifting trading to 

foreign sovereign debt denominated in 

another currency. 

FINRA estimates that the benefit from 

improved surveillance of member 

trading activity in U.S. dollardenominated foreign sovereign debt 

securities outweighs the costs to 

members associated with complying 

with the proposed reporting 

requirement. 

Alternatives Considered 

No alternatives were considered. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

The proposed rule change was 

published for comment in Regulatory 

Notice 19–25 (July 2019). Four 

comments were received in response to 

the Regulatory Notice.22 A copy of the 

Regulatory Notice and copies of the 

comment letters received in response to 

the Regulatory Notice are available on 

FINRA’s website at http://

www.finra.org. Three commenters were 

generally supportive of the expansion of 

TRACE to cover U.S. dollardenominated foreign sovereign debt 23

and one commenter neither supported 

nor opposed the proposal,24 as 

discussed below. 

SIFMA and FIF requested clarification 

on the scope of the proposal, including 

regarding the definition of ‘‘political 

subdivision.’’ As discussed above, a 

political subdivision is, for example, a 

state, provincial or municipal 

government. FINRA notes that, as a 

practical matter, the proposal would 

remove the current need for members to 

distinguish between U.S. dollardenominated foreign sovereign debt and 

U.S. dollar-denominated foreign private 

issuer debt, because transactions in both 

categories of debt would be subject to 

reporting under the proposal (so long as 

the security otherwise meets the 

definition of ‘‘TRACE-Eligible 

Security’’). In addition, as discussed 

above, the proposal would expand 

TRACE reporting to include U.S. dollardenominated debt of Schedule Beligible issuers—i.e., U.S. dollardenominated debt of foreign sovereign 

issuers that are not foreign private 

issuers.25 In addition, the proposal 

would not alter FINRA’s approach to the 

regulatory reporting framework, 

including for reporting trades in foreign 

private issuer debt, or reporting trades 

in debt issued pursuant to SEC 

Regulation S.26

SIFMA, FIF and Bloomberg noted that 

CUSIPs may not be available for all U.S. 

dollar-denominated foreign sovereign 

debt securities at the time they become 

TRACE-Eligible Securities and they 

suggested that FINRA permit members 

to report using alternative identifiers.27

As noted above, FINRA intends to 

provide a FINRA-assigned symbol that 

corresponds to one or more non-CUSIP 

identifiers (e.g., ISIN). 

Dimensional advocated for a 15- 

minute reporting requirement and for 

public dissemination of transaction 

information on U.S. dollar-denominated 

foreign sovereign debt securities.28 In 

contrast, SIFMA noted potential issues 

regarding public dissemination, 

including risks to liquidity and an 

incomplete data set, and believed that a 

same-day reporting requirement was 

appropriate because the proposal 

impacted new securities and operational 

processes. FINRA continues to believe 

that same-day reporting is appropriate at 

this time because these transactions will 

not initially be publicly disseminated. 

FINRA intends to take a similar 

measured approach to potential 

dissemination that it has taken 

historically with other TRACE-Eligible 

Securities and, therefore, would first 

analyze the regulatory data to determine 

the appropriate contours of a potential 

dissemination framework. 

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 

up to 90 days of such date (i) as the 

Commission may designate 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 rule-comments@

sec.gov. Please include File Number SR– 

FINRA–2022–011 on the subject line. 


khammond on DSKJM1Z7X2PROD with NOTICES
29986 Federal Register / Vol. 87, No. 95 / Tuesday, May 17, 2022 / Notices 

29 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78a et seq. 

2 15 U.S.C. 78c(a)(71). 

3See Exchange Act Section 3(a)(71)(D). 

4See Exchange Act Rule 3a71–2(a); Further 

Definition of ‘‘Swap Dealer,’’ ‘‘Security-Based Swap 

Dealer,’’ ‘‘Major Swap Participant,’’ ‘‘Major 

Security-Based Swap Participant’’ and ‘‘Eligible 

Contract Participant,’’ Release No. 34–66868 (Apr. 

27, 2012) [77 FR 30596, 30727 (May 23, 2012)]. 

5The higher phase-in levels of de minimis 

security-based swap dealing activity are not 

available to the extent that a person engages in 

security-based swap dealing activity with 

counterparties that are natural persons, other than 

natural persons who qualify as eligible contract 

participants by virtue of section 1a(18)(A)(xi)(II) of 

the Commodity Exchange Act, 7 U.S.C. 

1a(18)(A)(xi)(II). See Exchange Act Rule 3a71– 

2(a)(2)(i). 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–FINRA–2022–011. This file 

number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

internet website (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

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

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549, on official 

business days between the hours of 

10:00 a.m. and 3:00 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. Persons 

submitting comments are cautioned that 

we do not redact or edit personal 

identifying information from comment 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File Number SR–FINRA– 

2022–011 and should be submitted on 

or before June 7, 2022. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.29

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–10508 Filed 5–16–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–94896/May 11, 2022] 

Data Collection Initiation Date and 

Contingent Phase-In Termination Date 

for the De Minimis Notional Thresholds 

of Security-Based Swap Dealing 

AGENCY: Securities and Exchange 

Commission. 

ACTION: Commission announcement. 

SUMMARY: The definition of ‘‘securitybased swap dealer’’ is subject to a de 

minimis exception whereby a person is 

deemed not to be a security-based swap 

dealer as a result of security-based swap 

dealing activity that falls below certain 

de minimis thresholds. These de 

minimis thresholds are subject to 

temporarily higher, phase-in levels of 

security-based swap dealing activity 

that will be in effect until the ‘‘phasein termination date.’’ The phase-in 

termination date will be determined in 

part by reference to a ‘‘data collection 

initiation date.’’ The Commission is 

making this announcement to confirm 

that the data collection initiation date 

was November 8, 2021, and, absent 

additional Commission action, the 

phase-in termination date shall be 

November 8, 2026. 

DATES: The data collection initiation 

date referenced in 17 CFR 240.3a71–2 

and 240.3a71–2A, was November 8, 

2021. Absent additional action by the 

Commission pursuant to 17 CFR 

240.3a71–2(a)(2)(ii)(A), the phase-in 

termination date will be November 8, 

2026. 

FOR FURTHER INFORMATION CONTACT: 

Carol McGee, Assistant Director, Laura 

Compton, Senior Special Counsel, 

Office of Derivatives Policy, Division of 

Trading and Markets, at (202) 551–5870. 

SUPPLEMENTARY INFORMATION: For 

purposes of this announcement, the 

Commission uses the following terms: 

Commission reference CFR citation (17 CFR) 

Securities Exchange Act of 1934 1 (‘‘Exchange Act’’): 

Rule 3a71–2 ...................................................................................... § 240.3a71–2. 

Rule 3a71–2(a) .................................................................................. § 240.3a71–2(a). 

Rule 3a71–2(a)(1)(i) .......................................................................... § 240.3a71–2(a)(1)(i). 

Rule 3a71–2(a)(1)(ii) ......................................................................... § 240.3a71–2(a)(1)(ii). 

Rule 3a71–2(a)(2)(i) .......................................................................... § 240.3a71–2(a)(2)(i). 

Rule 3a71–2(a)(2)(ii)(A) .................................................................... § 240.3a71–2(a)(2)(ii)(A). 

Rule 3a71–2(a)(2)(ii)(B) .................................................................... § 240.3a71–2(a)(2)(ii)(B). 

Rule 3a71–2(a)(2)(iii) ........................................................................ § 240.3a71–2(a)(2)(iii). 

Rule 3a71–2A .................................................................................... § 240.3a71–2A. 

Rule 3a71–2A(a)(1) ........................................................................... § 240.3a71–2A(a)(1). 

Rule 3a71–2A(b) through (c) ............................................................ §§ 240.3a71–2A(b) through (c). 

Rule 3a71–2A note ........................................................................... § 240.3a71–2A note. 

Regulation SBSR .............................................................................. §§ 242.900 through 242.909. 

Background 

Section 3(a)(71) of the Exchange Act 2

defines the term ‘‘security-based swap 

dealer’’ (‘‘SBSD’’) and provides in 

relevant part that a person shall be 

deemed not to be an SBSD as a result 

of security-based swap dealing activity 

that falls below certain de minimis 

thresholds.3 In 2012, the Commission 

adopted Exchange Act Rule 3a71–2(a), 

which provides that to qualify for this 

de minimis exception, all security-based 

swap positions connected with the 

person’s and its affiliates’ dealing 

activity over the immediately preceding 

twelve months must fall below three 

separate thresholds.4 Two of the 

thresholds are subject to temporarily 

higher, phase-in levels of aggregate gross 

notional amounts of de minimis 

security-based swap dealing activity.5

For credit default swaps that are 

security-based swaps, the de minimis 

threshold is an aggregate gross notional 


khammond on DSKJM1Z7X2PROD with NOTICES