Document ID: SEC-2010-0074-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Financial Industry Regulatory Authority, Inc.
Posted Date: 2010-01-14T05:00Z

[Federal Register: January 14, 2010 (Volume 75, Number 9)]
[Notices]               
[Page 2173-2175]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr14ja10-110]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61297; File No. SR-FINRA-2009-094]

 
Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing and Immediate Effectiveness of 
Proposed Rule Change Relating To Extending the Pilot Period Regarding 
the Use of Multiple MPIDs on FINRA Facilities

January 6, 2010.
    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 December 29, 2009, 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    FINRA is proposing to extend through January 28, 2011, the current 
rules regarding the use of multiple Market Participant Symbols 
(``MPIDs'') in FINRA Rules 6160 (with respect to Trade Reporting 
Facilities (``TRFs'')), 6170 (with respect to the Alternative Display 
Facility (``ADF'')), and 6480 (with respect to the OTC Reporting 
Facility (``ORF'')).
    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 has three rules governing the use of multiple MPIDs on FINRA 
facilities: Rule 6160 (Multiple MPIDs for Trade Reporting Facility 
Participants), Rule 6170 (Primary and Additional MPIDs for Alternative 
Display Facility Participants), and Rule 6480 (Multiple MPIDs for 
Quoting and Trading in OTC Equity Securities). The pilot period for all 
three rules is scheduled to expire on January 29, 2010. FINRA believes 
that there continue to be legitimate business reasons for members to 
maintain multiple MPIDs for use on FINRA facilities. Consequently, 
FINRA is proposing to extend the pilot period for each of the three 
rules until January 28, 2011. FINRA is not proposing any other changes 
to the rules at this time.
(a) Rule 6160
    Rule 6160 provides that any Trade Reporting Facility Participant 
that wishes to use more than one MPID for purposes of reporting trades 
to a TRF must submit a written request to, and obtain approval from, 
FINRA Operations for such additional MPIDs. In addition, Supplementary 
Material to the rule states that FINRA considers the issuance of, and 
trade reporting with, multiple MPIDs to be a privilege and not a right. 
A Trade Reporting Facility Participant must identify the purpose(s) and 
system(s) for which the multiple MPIDs will be used. If FINRA 
determines that the use of multiple MPIDs is detrimental to the 
marketplace, or that a Trade Reporting Facility Participant is using 
one or more additional MPIDs improperly or for other than the 
purpose(s) identified by the Participant, FINRA staff retains full 
discretion to limit or withdraw its grant of the additional MPID(s) to 
such Trade Reporting Facility Participant for purposes of reporting 
trades to a TRF. FINRA believes that Rule 6160 is necessary to 
consolidate the process of issuing, and tracking the use of, multiple 
MPIDs used to report trades to TRFs.
    Rule 6160 was approved by the Commission in 2006 on a pilot 
basis.\4\

[[Page 2174]]

The pilot period has been extended several times since the rule was 
originally adopted and currently expires on January 29, 2010.\5\
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    \4\ See Securities Exchange Act Release No. 54715 (November 6, 
2006), 71 FR 66354 (November 14, 2006); see also Securities Exchange 
Act Release No. 54715A (November 14, 2006), 71 FR 67183 (November 
20, 2006).
    \5\ See Securities Exchange Act Release No. 59183 (December 30, 
2008), 74 FR 842 (January 8, 2009); Securities Exchange Act Release 
No. 57217 (January 28, 2008), 73 FR 6234 (February 1, 2008); 
Securities Exchange Act Release No. 55206 (January 31, 2007), 72 FR 
5479 (February 6, 2007).
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(b) Rule 6170
    Rule 6170 provides that a Registered Reporting ADF ECN may request 
additional MPIDs for displaying quotes and orders and reporting trades 
through the ADF trade reporting facility, TRACS, for any ADF-Eligible 
Security. Registered Reporting ADF ECNs that are permitted the use of 
additional MPIDs for displaying quotes and orders are subject to the 
same rules applicable to the member's first quotation (i.e., ECNs that 
display one or more additional quotes/orders are required to comply 
with all rules applicable to ECNs in their display of quotes/orders). 
Registered Reporting ADF ECNs are also prohibited from using an 
additional MPID to accomplish indirectly what they are prohibited from 
doing directly through their Primary MPID. In addition, FINRA staff 
retains full discretion to determine whether a bona fide regulatory 
and/or business need exists for being granted an additional MPID 
privilege and to limit or withdraw the additional MPID display 
privilege at any time. The procedures for requesting, and the 
restrictions surrounding the use of, multiple MPIDs are set forth in 
Supplementary Material to the rule.
    The Commission approved Rule 6170 on a pilot basis on August 11, 
2006.\6\ The pilot period has been extended several times since the 
rule was originally adopted and currently expires on January 29, 
2010.\7\
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    \6\ See Securities Exchange Act Release No. 54307 (August 11, 
2006), 71 FR 47551 (August 17, 2006). By its terms, the initial 
pilot period expired on January 26, 2007, to coincide with the 
expiration of the ADF pilot period. See Securities Exchange Act 
Release No. 53699 (April 21, 2006), 71 FR 25271 (April 28, 2006). On 
January 26, 2007, the Commission approved a proposed rule change to 
make the ADF rules permanent. See Securities Exchange Act Release 
No. 55181 (January 26, 2007), 72 FR 5093 (February 2, 2007).
    \7\ See Securities Exchange Act Release No. 59183 (December 30, 
2008), 74 FR 842 (January 8, 2009); Securities Exchange Act Release 
No. 57217 (January 28, 2008), 73 FR 6234 (February 1, 2008); 
Securities Exchange Act Release No. 55206 (January 31, 2007), 72 FR 
5479 (February 6, 2007).
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(c) Rule 6480
    Like Rule 6160, Rule 6480 provides that any member that wishes to 
use more than one MPID for purposes of quoting an OTC Equity Security 
or reporting trades to the ORF must submit a written request to, and 
obtain approval from, FINRA Operations for such additional MPIDs. The 
rule also states that a member that posts a quotation in an OTC Equity 
Security and reports to a FINRA system a trade resulting from such 
posted quotation must utilize the same MPID for reporting purposes. In 
addition, Supplementary Material to the rule states that FINRA 
considers the issuance of, and trade reporting with, multiple MPIDs to 
be a privilege and not a right. When requesting an additional MPID(s), 
a member must identify the purpose(s) and system(s) for which the 
multiple MPIDs will be used. If FINRA determines that the use of 
multiple MPIDs is detrimental to the marketplace, or that a member is 
using one or more additional MPIDs improperly or for purposes other 
than the purpose(s) identified by the member, FINRA staff retains full 
discretion to limit or withdraw its grant of the additional MPID(s) to 
such member.
    FINRA adopted Rule 6480 on a pilot basis on July 23, 2009, and the 
pilot period expires on January 29, 2010.\8\
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    \8\ See Securities Exchange Act Release No. 60414 (July 31, 
2009), 74 FR 39721 (August 7, 2009).
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    FINRA has filed the proposed rule change for immediate 
effectiveness. The implementation date of the proposed rule change will 
be January 29, 2010.
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. FINRA believes that the proposed rule change is 
consistent with these requirements because it will provide a process by 
which members can request, and FINRA can properly allocate, the use of 
additional MPIDs for displaying quotes and orders through the ADF or 
reporting trades to a TRF or the ORF.
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    \9\ 15 U.S.C. 78o-3(b)(6).
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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 \10\ and Rule 19b-
4(f)(6) thereunder.\11\
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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(6).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission may summarily abrogate 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.

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-2009-094 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-2009-094. 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

[[Page 2175]]

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 publicly available. All submissions should refer to File Number 
SR-FINRA-2009-094 and should be submitted on or before February 4, 
2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-538 Filed 1-13-10; 8:45 am]
BILLING CODE 8011-01-P