Document ID: SEC-2013-0463-0001
Agency: sec
Document Type: Notice
Title: Order Granting a Temporary Exemption Pursuant to the Securities Exchange Act
Posted Date: 2013-03-12T04:00Z

[Federal Register Volume 78, Number 48 (Tuesday, March 12, 2013)]
[Notices]
[Pages 15771-15773]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-05634]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-69060]

Order Granting a Temporary Exemption Pursuant to Section 36(a)(1) 
of the Securities Exchange Act of 1934 From the Filing Deadline 
Specified in Rule 613(a)(1) of the Exchange Act

March 7, 2013.
    Rule 613(a)(1) of the Securities Exchange Act of 1934 (``Exchange 
Act'') \1\ requires the Financial Industry Regulatory Authority, Inc. 
(``FINRA'') and the seventeen registered national securities exchanges 
(collectively, the ``SROs'') to ``jointly file on or before 270

[[Page 15772]]

days from the date of publication of the Adopting Release [for Rule 613 
of the Exchange Act \2\] in the Federal Register a national market 
system plan to govern the creation, implementation, and maintenance of 
a consolidated audit trail and central repository as required by [the 
rule].'' The Adopting Release for Rule 613 was published in the Federal 
Register on August 1, 2012,\3\ thus requiring the national market 
system plan (the ``NMS plan'') to be filed on or before April 28, 
2013.\4\ On February 8, 2013, the Commission received a request from 
the SROs, pursuant to Rule 0-12 under the Exchange Act,\5\ that the 
Securities and Exchange Commission (``Commission'') grant a temporary 
exemption under Section 36 of the Exchange Act,\6\ from the deadline 
specified in Rule 613(a)(1) of the Exchange Act \7\ for submitting the 
NMS plan to the Commission.\8\
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    \1\ 17 CFR 242.613(a)(1).
    \2\ 17 CFR 242.613.
    \3\ Securities Exchange Act Release No. 67457 (July 18, 2012), 
77 FR 45722 (August 1, 2012) (``Adopting Release'').
    \4\ April 28, 2013, is a Sunday. Therefore, in accordance with 
Rule 160(a) of the Commission Rules of Practice, the deadline for 
filing the NMS plan is Monday, April 29, 2013. The SROs, however, 
had established an earlier deadline for the filing of the NMS plan 
of Friday, April 26, 2013.
    \5\ 17 CFR 240.0-12.
    \6\ 15 U.S.C. 78mm(a)(1).
    \7\ 17 CFR 242.613(a)(1).
    \8\ See Letter from Robert L.D. Colby, Chief Legal Officer, 
FINRA, to Elizabeth M. Murphy, Secretary, Commission, dated February 
7, 2013 (the ``Request Letter'').
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    In the Request Letter, the SROs noted that Rule 613 requires that 
they include in the NMS plan ``cost estimates for the proposed 
solution, and a discussion of the costs and benefits of alternative 
solutions considered but not proposed.'' \9\ They also noted that Rule 
613 requires that the NMS plan include a discussion of ``[t]he process 
by which the [SROs] solicited views of their members and other 
appropriate parties regarding the creation, implementation, and 
maintenance of the consolidated audit trail, a summary of the views of 
such members and other parties, and how the [SROs] took such views into 
account in preparing the [NMS plan].'' \10\
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    \9\ See Request Letter (quoting Adopting Release, supra 3, at 
45725).
    \10\ See Request Letter (quoting 17 CFR 242.613(a)(1)(xi)).
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    In order to satisfy these requirements, the SROs believe that 
conducting a request for proposal (``RFP'') process is necessary prior 
to filing an NMS plan. The SROs believe that such a process will ensure 
that potential alternative solutions for creating the consolidated 
audit trail can be presented to the SROs for their consideration, and 
will provide the SROs with information necessary to prepare a detailed 
cost/benefit analysis as required by Rule 613. To ensure that the RFP 
process is effective, the SROs believe the concepts that will be 
contained in the RFP should be subject to public comment before the 
document is finalized and formally published. The SROs believe that 
public comment will ensure that the RFP addresses areas of concerns to 
the industry and the SROs, and will also provide potential bidders with 
information on the RFP prior to its formal publication. To this end, 
the SROs published an RFP concept document on December 5, 2012, and 
requested public feedback by January 18, 2013.\11\
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    \11\ See Request Letter.
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    The SROs stated in their Request Letter that they do not believe 
that the 270-day time period provided for in Rule 613(a)(1) provides 
sufficient time for the development of the RFP, formulation and 
submission of bids, and review and evaluation of such bids. The SROs 
also stated that they believe additional time beyond the 270 days 
provided for in Rule 613(a)(1) is necessary in order to provide 
sufficient time for effective consultation with and input from the 
industry and the public on the proposed solution chosen by the SROs for 
the creation of the consolidated audit trail at the conclusion of the 
RFP process and the NMS plan itself. The SROs believe that such a 
comment process is necessary in order to gather information needed to 
perform an effective cost/benefit analysis, including the estimated 
costs to broker-dealers and other market participants of building the 
consolidated audit trail in accord with the proposed solution, as well 
as to meaningfully assess and respond to the comments and draft the 
final NMS plan for submission to the Commission.
    In the Request Letter, the SROs provided the following estimated 
timeline, which is based on their current expectation for conducting 
the RFP process and drafting the NMS plan:

 December 5, 2012: The SROs published an RFP concept document 
for comment
 January 18, 2013: Deadline to submit comments on the RFP 
concept document made publicly available (i.e., a 45-day comment 
period)
 February 2013: The SROs will publish the final RFP for bids
 March 2013: The SROs will solicit public comment on certain 
portions of the draft NMS plan that are not dependent on the RFP 
process and can benefit from public comment
 April 2013: Deadline for submitting bids in response to the 
RFP
 July 2013: The SROs will select a proposed solution after 
reviewing and evaluating the RFP bids
 August 2013: The SROs will solicit public comment on other 
specific portions of the proposed NMS plan that the SROs believe can 
benefit from public comment and that incorporate the RFP process and 
the proposed solution, including soliciting estimates on industry costs
 October 2013: Comments must be submitted on the proposed 
solution (i.e., a 60-day comment period)
 December 6, 2013: The SROs file the proposed NMS plan with the 
Commission
    For the reasons set forth above, the SROs stated that a temporary 
exemption from the filing deadline until December 6, 2013 is 
``necessary to allow the SROs to conduct the thoughtful and 
comprehensive analysis this important regulatory initiative deserves.'' 
\12\ The SROs also stated their belief that ``the timeline outlined 
above will lead to a significantly better and more informed process 
and, as a result, the proposed solution will be the result of a more 
meaningful and careful analysis.'' \13\
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    \12\ See Request Letter.
    \13\ Id.
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    Section 36 of the Exchange Act \14\ authorizes the Commission, by 
rule, regulation, or order, to exempt, either conditionally or 
unconditionally, any person, security, or transaction, or any class or 
classes of persons, securities, or transactions, from any provision or 
provisions of the Exchange Act or any rule or regulation thereunder, to 
the extent that such exemption is necessary or appropriate in the 
public interest, and is consistent with the protection of investors.
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    \14\ 15 U.S.C. 78mm.
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    After considering the SROs' proposed process for developing the NMS 
plan, the Commission finds that it is appropriate in the public 
interest, and is consistent with the protection of investors, to grant 
the SROs a temporary exemption from the deadline for filing the NMS 
plan contained in Rule 613(a)(1) \15\ until December 6, 2013. The 
Commission understands that the creation of a consolidated audit trail 
is a significant undertaking and that a proposed NMS plan must include 
detailed information and discussion about many things, including the

[[Page 15773]]

methods for reporting the required data; a detailed estimate of the 
costs to plan sponsors and to members of the plan sponsors of creating, 
implementing, and maintaining the consolidated audit trail (including 
issues relating to funding of the consolidated audit trail); an 
analysis of the impact on competition, efficiency and capital formation 
of creating, implementing and maintaining the NMS plan; and a 
discussion of any reasonable alternative approaches that the plan 
sponsors considered including a description of any such alternative 
approach, the relative advantages and disadvantages of each such 
alternative, including an assessment of the alternative's costs and 
benefits, and the basis upon which the plan sponsors selected the 
approach in the NMS Plan submitted.\16\
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    \15\ As noted above, the current deadline for submitting the NMS 
plan is April 29, 2013. This deadline is calculated pursuant to Rule 
613(a)(1) which requires the NMS plan to be filed 270 days from the 
date of publication of the Adopting Release in the Federal Register. 
See note 4, supra.
    \16\ See Rule 613(a)(1).
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    Additionally, given that the planned RFP process as described in 
the Request Letter is expected to include multiple solicitations for 
public comment, the Commission believes that it is appropriate in the 
public interest and consistent with the protection of investors to 
provide the SROs with additional time. This additional time to complete 
the RFP process should allow the SROs to engage in a more thoughtful 
and comprehensive process for the development of an NMS plan. In this 
regard, the Commission notes that the additional time to solicit 
comment from the industry and the public at certain key points in the 
development of the NMS plan could identify issues that can be resolved 
earlier in the development of the consolidated audit trail and prior to 
filing the NMS plan with the Commission. In granting the SROs' request, 
the Commission expects the SROs to work diligently to adhere to the 
milestones specified by the SROs in the Request Letter. The Commission 
also expects the SROs to utilize the additional time to prepare a 
detailed and complete NMS plan for the Commission and the public to 
consider.
    Accordingly, it is hereby ordered, pursuant to Section 36 of the 
Exchange Act,\17\ that the SROs are temporarily exempted from the 
deadline for submitting the NMS plan to govern the creation, 
implementation, and maintenance of a consolidated audit trail and 
central repository contained in Rule 613(a)(1) until December 6, 2013.
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    \17\ 15 U.S.C. 78mm.

    By the Commission.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-05634 Filed 3-11-13; 8:45 am]
BILLING CODE 8011-01-P