61120 Federal Register / Vol. 79, No. 196 / Thursday, October 9, 2014 / Notices 

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

2 17 CFR 240.19b–4. 

3 17 CFR 240.19b–4(f)(6). 

4See Securities Exchange Act Release No. 67208 

(June 15, 2012), 77 FR 37458 (June 21, 2012) (Order 

Approving File No. SR–FINRA–2011–058, as 

amended); see also Securities Exchange Act Release 

No. 70839 (November 8, 2013), 78 FR 68893 

(November 15, 2013) (Notice of Filing and 

Immediate Effectiveness of a Proposed Rule Change 

to Extend the Tier Size Pilot of FINRA Rule 6433; 

File No. SR–FINRA–2013–049). 

5See Securities Exchange Act Release No. 65568 

(October 14, 2011), 76 FR 65307 (October 20, 2011) 

(Notice of Filing of File No. SR–FINRA–2011–058). 

6 ‘‘OTC Equity Security’’ means any equity 

security that is not an ‘‘NMS stock’’ as that term is 

defined in Rule 600(b)(47) of SEC Regulation NMS; 

provided, however, that the term OTC Equity 

Security shall not include any Restricted Equity 

Security. See FINRA Rule 6420. 

7See Securities Exchange Act Release No. 66819 

(April 17, 2012); 77 FR 23770 (April 20, 2012) 

(Notice of Filing of Amendment No. 1 to File No. 

SR–FINRA–2011–058). 

8See Securities Exchange Act Release No. 67208 

(June 15, 2012), 77 FR 37458 (June 21, 2012) (Order 

Approving File No. SR–FINRA–2011–058, as 

amended. 

9FINRA will continue to submit monthly data 

until the new Tier Size Pilot period expiration date 

of February 13, 2015. 

10The assessment is part of the SEC’s comment 

file for SR–FINRA–2011–058 and also is available 

on FINRA’s Web site at: http://www.finra.org/ 

Industry/Regulation/RuleFilings/2011/P124615 

(‘‘Pilot Assessment’’). 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73299; File No. SR–FINRA– 

2014–041] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Extend the Tier Size 

Pilot of FINRA Rule 6433 (Minimum 

Quotation Size Requirements for OTC 

Equity Securities) 

October 3, 2014. 

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 

September 30, 2014, the Financial 

Industry Regulatory Authority, Inc. 

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

Exchange Commission (‘‘SEC’’ or 

‘‘Commission’’) the proposed rule 

change as described in Items I, II and III 

below, which Items have been prepared 

by FINRA. FINRA has designated the 

proposed rule change as constituting a 

‘‘non-controversial’’ rule change under 

paragraph (f)(6) of Rule 19b–4 under the 

Act,3 which renders the proposal 

effective upon receipt of this filing by 

the Commission. 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 amend FINRA 

Rule 6433 (Minimum Quotation Size 

Requirements for OTC Equity 

Securities) to extend the Tier Size Pilot, 

which currently is scheduled to expire 

on November 14, 2014, for an additional 

three months, until February 13, 2015. 

The text of the proposed rule change 

is available on FINRA’s Web site at 

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

office of FINRA and at the 

Commission’s Public Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, 

FINRA included statements concerning 

the purpose of and basis for the 

proposed rule change and discussed any 

comments it received on the proposed 

rule change. The text of these statements 

may be examined at the places specified 

in Item IV below. FINRA has prepared 

summaries, set forth in sections A, B, 

and C below, of the most significant 

aspects of such statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

FINRA proposes to amend FINRA 

Rule 6433 (Minimum Quotation Size 

Requirements for OTC Equity 

Securities) (the ‘‘Rule’’) to extend, until 

February 13, 2015, the amendments set 

forth in File No. SR–FINRA–2011–058 

(‘‘Tier Size Pilot’’ or ‘‘Pilot’’), which 

currently are scheduled to expire on 

November 14, 2014.4

The Tier Size Pilot was filed with the 

SEC on October 6, 2011,5 to amend the 

minimum quotation sizes (or ‘‘tier 

sizes’’) for OTC Equity Securities.6

FINRA believed, and continues to 

believe, that the Pilot, among other 

things, would simplify the tier structure, 

facilitate the display of customer limit 

orders, and expand the scope of the 

Rule to apply to additional quoting 

participants. During the proposal 

process, the SEC received a number of 

comments, including some expressing 

concern regarding the potential impact 

of the proposed rule change, and, in 

response, FINRA submitted an 

amendment to revise the tiers and to 

implement the proposed revised tier 

sizes as a one-year pilot to allow FINRA 

and the SEC to better analyze the impact 

of the new tiers during the pilot period.7

FINRA also committed to collecting and 

providing to the Commission certain 

pre- and post-pilot data to assist in 

analyzing the impact of the Pilot.8 The 

data provision includes the collection 

and submission to the SEC of monthly 

information regarding: 

• The price of the first trade of each 

trading day executed at or after 9:30:00 

a.m., based on execution time. 

• The price of the last trade of each 

trading day executed at or before 4:00:00 

p.m., based on execution time. 

• Daily share volume. 

• Daily dollar volume. 

• Number of limit orders from 

customers and in total. 

• Percentage of the day that the size 

of the BBO equals the minimum quote 

size. 

• Number of market makers actively 

quoting. 

• Number of executions from a limit 

order and number of limit orders at the 

BBO or better by tier size from a 

customer and in total. 

• Liquidity/BBO metrics 

• Time-weighted quoted spread. 

• Effective spread. 

• Time-weighted quoted depth 

(number of shares) at the inside. 

• Time-weighted quoted depth (dollar 

value of shares) at the inside. 

In addition to submitting the above 

data to the Commission, which FINRA 

has provided on a monthly basis for the 

duration of the Pilot,9 FINRA also 

committed to providing to the 

Commission an assessment on the 

operation of the Tier Size Pilot that, 

among other things, would address the 

impact of the Pilot, the concerns raised 

by commenters during the rule filing 

process, and whether the Pilot has 

resulted in the desired effects. FINRA 

submitted this assessment on September 

13, 2013. The assessment utilized Pilot 

data covering the period from November 

12, 2012 through June 30, 2013.10 As 

noted in the assessment, FINRA believes 

that the analysis of the data generally 

showed that the Tier Size Pilot had a 

neutral to positive impact on OTC 

market quality for the majority of OTC 

Equity Securities and tiers. FINRA also 

found that there was an increase of 13% 

in the number of customer limit orders 

that met the minimum quotation sizes to 

be eligible for display under the Pilot 

tiers (for all tiers combined). 

FINRA also observed certain impacts 

that appeared to be temporary. 

Specifically, FINRA noted that, while 

some large market makers initially 

reduced the number of securities 

actively quoted on a priced basis, the 

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Federal Register / Vol. 79, No. 196 / Thursday, October 9, 2014 / Notices 61121 

11 15 U.S.C. 78o–3(b)(6). 

12 15 U.S.C. 78o–3(b)(11). 

13 15 U.S.C. 78s(b)(3)(A). 

14 17 CFR 240.19b–4(f)(6). Rule 19b–4(f)(6) 

requires a self-regulatory organization to give the 

Commission written notice of its intent to file 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 this 

requirement. 15 17 CFR 200.30–3(a)(12). 

number of market makers providing 

quotes gradually reversed over time as 

the Pilot progressed. Thus, to allow 

additional time to observe the operation 

of the Pilot and to provide the SEC with 

data over a longer time period so that 

the effects of the Pilot could be more 

thoroughly reviewed, FINRA filed an 

extension for another year, extending 

the period from November 12, 2013 

until November 14, 2014. 

The purpose of this filing is to extend 

the operation of the Tier Size Pilot for 

an additional three month period, until 

February 13, 2015, to provide FINRA 

with additional time to consider the 

implications of the data collected since 

June 30, 2013 and to determine whether 

FINRA will propose that the Pilot tiers 

be adopted as permanent. 

FINRA has filed the proposed rule 

change for immediate effectiveness. The 

effective date of the proposed rule 

change will be the date of filing. 

2. Statutory Basis 

FINRA believes that the proposed rule 

change is consistent with the provisions 

of Section 15A(b)(6) of the Act,11 which 

requires, among other things, that 

FINRA rules must be designed to 

prevent fraudulent and manipulative 

acts and practices, to promote just and 

equitable principles of trade, and, in 

general, to protect investors and the 

public interest. FINRA also believes that 

the proposed rule change is consistent 

with the provisions of Section 

15A(b)(11) of the Act.12 Section 

15A(b)(11) requires that FINRA rules 

include provisions governing the form 

and content of quotations relating to 

securities sold otherwise than on a 

national securities exchange which may 

be distributed or published by any 

member or person associated with a 

member, and the persons to whom such 

quotations may be supplied. 

FINRA believes that the extension of 

the Tier Size Pilot for an additional 

three months is consistent with the Act 

in that it would provide the 

Commission and FINRA with additional 

data and more time to undertake a 

thorough review of the submitted data. 

FINRA believes this additional time will 

facilitate FINRA’s consideration of the 

impact of the Pilot using data after June 

30, 2013, and determination of the 

appropriateness of making the Pilot tiers 

permanent. 

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 

Because the foregoing 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 for 30 days from the date on 

which it was filed, or such shorter time 

as the Commission may designate, it has 

become effective pursuant to Section 

19(b)(3)(A) of the Act 13 and Rule 19b– 

4(f)(6) thereunder.14

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission summarily may 

temporarily suspend 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. If the 

Commission takes such action, the 

Commission shall institute proceedings 

to determine whether the proposed rule 

should be approved or disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

comment form (http://www.sec.gov/

rules/sro.shtml); or 

• Send an email to rulecomments@sec.gov. Please include File 

Number SR–FINRA–2014–041 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Brent J. Fields, Secretary, Securities 

and Exchange Commission, 100 F Street 

NE., Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–FINRA–2014–041. This file 

number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

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

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

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

available for Web site viewing and 

printing in the Commission’s Public 

Reference Room, 100 F St. NE., 

Washington, DC 20549, on official 

business days between the hours of 

10:00 a.m. and 3:00 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– 

2014–041, and should be submitted on 

or before October 30, 2014. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.15

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2014–24102 Filed 10–8–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73296; File No. SR–BATS– 

2014–044] 

Self-Regulatory Organizations; BATS 

Exchange, Inc.; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change to Rules 11.13 and 21.9 

of BATS Exchange, Inc. 

October 3, 2014. 

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

Securities Exchange Act of 1934 (the 

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