Document ID: SEC-2011-1507-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Financial Industry Regulatory Authority, Inc.
Posted Date: 2011-10-05T04:00Z

[Federal Register Volume 76, Number 193 (Wednesday, October 5, 2011)]
[Notices]
[Pages 61773-61775]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-25674]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-65442; File No. SR-FINRA-2011-055]

Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing and Immediate Effectiveness of 
Proposed Rule Change Relating to the Extension of the Implementation 
Date for Expansion of the Order Audit Trail System to All NMS Stocks

September 29, 2011.
    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 27, 2011, 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 stated policy, 
practice, or interpretation with respect to the meaning, 
administration, or enforcement of an existing rule'' under Section 
19(b)(3)(A)(i) of the Act \3\ and Rule 19b-4(f)(1) thereunder,\4\ 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(i).
    \4\ 17 CFR 240.19b-4(f)(1).
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    FINRA is proposing to establish October 17, 2011, as the 
implementation date of the amendments to FINRA Rules 7410 and 7470 that 
the Commission approved on November 12, 2010.\5\
---------------------------------------------------------------------------

    \5\ See Securities Exchange Act Release No. 63311 (November 12, 
2010), 75 FR 70757 (November 18, 2010) (SR-FINRA-2010-044).
---------------------------------------------------------------------------

    The text of the proposed rule change is available on FINRA's Web 
site at http://www.finra.org, at the principal

[[Page 61774]]

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 filing the proposed rule change to establish October 17, 
2011, as the implementation date for the amendments to the Order Audit 
Trail System (``OATS'') rules expanding the OATS recording and 
reporting requirements to all NMS stocks.
    On November 12, 2010, the SEC approved SR-FINRA-2010-044, which 
amended FINRA Rules 7410 and 7470 to expand the OATS recording and 
reporting requirements to include all NMS stocks.\6\ On January 11, 
2011, FINRA published Regulatory Notice 11-03 announcing that the 
Commission approved the amendments and that FINRA was publishing a new 
version of the OATS Reporting Technical Specifications. Pursuant to the 
SEC's approval of SR-FINRA-2010-044 and the timing set forth in 
Regulatory Notice 11-03, the amendments to the OATS Rules were 
originally scheduled to begin to be phased in on July 11, 2011, six 
months after the publication of Regulatory Notice 11-03 and the revised 
OATS Reporting Technical Specifications. On April 26, 2011, FINRA filed 
a proposed rule change delaying the beginning of the implementation 
period until October 3, 2011.\7\
---------------------------------------------------------------------------

    \6\ See Securities Exchange Act Release No. 63311 (November 12, 
2010), 75 FR 70757 (November 18, 2010) (SR-FINRA-2010-044).
    \7\ See Securities Exchange Act Release No. 64369 (April 29, 
2011), 76 FR 25399 (May 4, 2011).
---------------------------------------------------------------------------

    The OATS test environment, which allows firms to voluntarily submit 
data to FINRA to test the adequacy of their reporting systems, was made 
available for members beginning on August 22, 2011, so that firms could 
begin testing the reporting of orders for all NMS stocks. After 
reviewing the results of firms' reporting in the test environment since 
that time, FINRA believes that firms, and the quality of the data 
submitted to OATS, would benefit from an additional two-week period 
during which firms can continue to test their systems changes. 
Consequently, FINRA is seeking to delay the implementation of the new 
OATS recording and reporting requirements for NMS stocks for an 
additional two weeks, until October 17, 2011, to give firms additional 
time to make necessary adjustments and changes to their systems, and to 
test those adjustments and changes in FINRA's test environment. FINRA 
believes that a two-week delay will help ensure that firms can comply 
with the expanded OATS recording and reporting requirements on the 
implementation date. Consequently, FINRA will begin to phase-in the new 
recording and reporting requirements beginning on October 17, 2011.
    FINRA has filed the proposed rule change for immediate 
effectiveness.
2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the 
provisions of Section 15A(b)(6) of the Act,\8\ which requires, among 
other things, that FINRA rules must be designed to prevent fraudulent 
and manipulative acts and practices, to promote just and equitable 
principles of trade, and, in general, to protect investors and the 
public interest. FINRA believes that extending the implementation date 
of the extension of the OATS Rules to all NMS stocks will ensure that 
firms have sufficient time to ensure that the necessary changes to 
their systems are implemented to enable the firms to comply with the 
new OATS recording and reporting requirements when they become 
effective. In addition, FINRA believes that extending the 
implementation date will improve the quality of the data submitted to 
FINRA once the proposed rule change is implemented.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78o-3(b)(6).
---------------------------------------------------------------------------

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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act \9\ and paragraph (f)(1) of Rule 19b-4 
thereunder.\10\ 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.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(1).
---------------------------------------------------------------------------

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 rule-comments@sec.gov. Please include 
File Number SR-FINRA-2011-055 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-2011-055. 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

[[Page 61775]]

communications relating to the proposed rule change between the 
Commission and any person, other than those that may be withheld from 
the public in accordance with the provisions of 5 U.S.C. 552, will be 
available for Web site viewing and printing in the Commission's Public 
Reference Room, 100 F Street, NE., Washington, DC 20549, on official 
business days between the hours of 10 a.m. and 3 p.m. Copies of 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-2011-055 and should be submitted on or before October 26, 
2011.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
---------------------------------------------------------------------------

    \11\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-25674 Filed 10-4-11; 8:45 am]
BILLING CODE 8011-01-P