Document ID: SEC-2019-0112-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Financial Industry Regulatory Authority, Inc.
Posted Date: 2019-02-13T05:00Z

[Federal Register Volume 84, Number 30 (Wednesday, February 13, 2019)]
[Notices]
[Pages 3842-3843]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-02116]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-85073; File No. SR-FINRA-2019-003]

Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing of a Proposed Rule Change Relating to 
FINRA Rule 6750 (Dissemination of Transaction Information)

February 7, 2019.
    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 January 29, 2019, the Financial Industry Regulatory Authority, Inc. 
(``FINRA'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I, II, 
and III 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    FINRA is proposing to amend FINRA Rule 6750 to provide that FINRA 
may publish or distribute aggregated transaction information and 
statistics on non-disseminated TRACE-Eligible Securities at no charge.
    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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    Rule 6750 (Dissemination of Transaction Information) (the ``Rule'') 
generally provides for the dissemination of information on all 
transactions in TRACE-Eligible Securities \3\ immediately upon receipt 
of the transaction report,\4\ except as set forth in the Rule. Rule 
6750(c) (Transaction Information Not Disseminated) specifies the 
circumstances under which FINRA will not disseminate information on a 
transaction in a TRACE-Eligible Security--i.e., non-member affiliate 
trades; certain transfers of proprietary interests; List or Fixed 
Offering Price or Takedown Transactions; \5\ certain Securitized 
Products; \6\ and U.S. Treasury Securities.\7\
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    \3\ Rule 6710 generally defines a ``TRACE-Eligible Security'' 
as: A debt security that is United States (``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 Government-
Sponsored Enterprise as defined in Rule 6710(n); or (3) a U.S. 
Treasury Security as defined in Rule 6710(p). ``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).
    \4\ FINRA generally requires members to report transactions in 
any security that meets the definition of ``TRACE-Eligible 
Security'' to the Trade Reporting and Compliance Engine (``TRACE''), 
unless an exception applies. See Rule 6730 (Transaction Reporting).
    \5\ List or Fixed Offering Price or Takedown Transactions are 
primary market sale transactions on the first day of trading, as set 
forth in Rule 6710(q) or 6710(r). Such transactions exclude all 
Securitized Products (as defined in Rule 6710(m) except Asset-Backed 
Securities (as defined in Rule 6710(cc)). See Rules 6710(q) and 
6710(r).
    \6\ Specifically, FINRA does not disseminate information on 
transactions in collateralized mortgage-backed securities 
(``CMBSs'') and collateralized debt obligations (``CDOs''). FINRA 
may disseminate information on transactions in collateralized 
mortgage obligations (``CMOs'') depending on the transaction size 
and level of trading activity in the CMO. See Rule 6750(b).
    \7\ ``U.S. Treasury Security'' means a security, other than a 
savings bond, issued by the U.S. Department of the Treasury to fund 
the operations of the federal government or to retire such 
outstanding securities. The term also includes separate principal 
and interest components of a U.S. Treasury Security that has been 
separated pursuant to the Separate Trading of Registered Interest 
and Principal of Securities (STRIPS) program operated by the U.S. 
Department of Treasury. See Rule 6710(p).
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    FINRA currently offers a number of real-time and historic TRACE 
data products on disseminated transactions for a fee.\8\ FINRA also 
publishes and distributes aggregated transaction information and 
statistics on disseminated transactions at no charge. FINRA proposes to 
amend the Rule to include supplementary material to clarify that, 
notwithstanding Rule 6750(c), FINRA may, in its discretion, publish or 
distribute aggregated transaction information and statistics on

[[Page 3843]]

TRACE-Eligible Securities that are not subject to dissemination, other 
than U.S. Treasury Securities, at no charge (unless FINRA submits a 
rule filing imposing a fee for such data). For example, FINRA may 
publish aggregated transaction information and statistics on trades in 
CMBSs and CDOs, including data on aggregate daily volume, aggregate 
daily number of trades, and average price information, and such 
information may be grouped within customer buy, customer sell, dealer-
to-dealer, year of issuance, investment rating, or other categories. 
Under the proposal, FINRA would not identify individual market 
participants or transactions. In addition, FINRA would not publish 
aggregated transaction information and statistics by individual 
securities. The proposed rule change would not apply to U.S. Treasury 
Securities. FINRA believes that the proposed rule change will benefit 
investors and market participants by providing additional information 
on TRACE Eligible-Securities at no cost, while maintaining the 
confidentiality of individual market participants and transactions.
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    \8\ See Rule 7730 (Trade Reporting and Compliance Engine 
(TRACE)).
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    If the Commission approves the proposed rule change, the effective 
date of the proposed rule change will be the date of 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,\9\ which requires, among 
other things, that FINRA rules must be designed to prevent fraudulent 
and manipulative acts and practices, to promote just and equitable 
principles of trade, and, in general, to protect investors and the 
public interest, and Section 15A(b)(9) of the Act,\10\ which requires 
that FINRA rules not impose any burden on competition that is not 
necessary or appropriate.
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    \9\ 15 U.S.C. 78o-3(b)(6).
    \10\ 15 U.S.C. 78o-3(b)(9).
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    FINRA believes that the proposed rule change will promote greater 
transparency for TRACE-Eligible Securities. FINRA believes the proposal 
strikes an appropriate balance between providing insightful information 
on TRACE-Eligible Securities at no charge while preserving the 
confidentiality of individual market participant identities and 
transactions. Accordingly, FINRA believes the proposal is in the public 
interest and will help promote transparency.

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. Since the proposed amendment 
clarifies FINRA's discretion in publishing or distributing aggregated 
transaction information and statistics on TRACE-Eligible Securities, 
FINRA believes that there are no direct or indirect impacts on member 
firms and investors.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    Written comments were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) By order approve 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-2019-003 on the subject line.

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-2019-003. 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 such 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-2019-003, and should be submitted 
on or before March 6, 2019.
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    \11\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-02116 Filed 2-12-19; 8:45 am]
BILLING CODE 8011-01-P