Document ID: SEC-2019-1971-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Financial Industry Regulatory Authority, Inc.
Posted Date: 2019-12-30T05:00Z

[Federal Register Volume 84, Number 249 (Monday, December 30, 2019)]
[Notices]
[Pages 71986-71987]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-28084]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-87837; File No. SR-FINRA-2019-028]

Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Order Approving Proposed Rule Change To Allow FINRA To 
Publish or Distribute Aggregated Transaction Information and Statistics 
on U.S. Treasury Securities

December 20, 2019.

I. Introduction

    On November 12, 2019, the Financial Industry Regulatory Authority, 
Inc. (``FINRA'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change to amend FINRA Rule 6750 to allow FINRA to publish 
or distribute aggregated transaction information and statistics on U.S. 
Treasury Securities. The proposed rule change was published for comment 
in the Federal Register on November 20, 2019.\3\ The Commission 
received no comment letters on the proposed rule change. This order 
approves the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 87540 (November 14, 
2019), 84 FR 64147 (November 20, 2019) (``Notice'').
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II. Description of the Proposal

    Existing FINRA Rule 6750(a) provides that FINRA will publicly 
disseminate information regarding a transaction in a TRACE-Eligible 
Security \4\ immediately upon receipt of a transaction report, unless 
an exception applies. FINRA Rule 6750(c)(5) specifies that FINRA will 
not disseminate information on a transaction in a TRACE-Eligible 
Security that is a U.S. Treasury Security.\5\ Currently, Supplementary 
Material .01 to FINRA Rule 6750 provides that, notwithstanding FINRA 
Rule 6750(c), FINRA may publish or distribute aggregated transaction 
information and statistics on non-disseminated TRACE-Eligible 
Securities other than U.S. Treasury Securities at no charge, unless 
FINRA submits a rule filing to the Commission imposing a fee for such 
data.
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    \4\ FINRA Rule 6710(a) defines a ``TRACE-Eligible Security'' as 
a debt security that is 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 of 1933 Rule 144(a)(3), sold 
pursuant to Securities Act of 1933 Rule 144A; (2) issued or 
guaranteed by an Agency, as defined in FINRA Rule 6710(k) or a 
Government-Sponsored Enterprise as defined in FINRA Rule 6710(n); or 
(3) a U.S. Treasury Security, as defined in FINRA 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 FINRA Rule 6710(o).
    \5\ ``U.S. Treasury Security'' means a security, other than a 
savings bond, issued by the U.S. Department of the Treasury 
(``Treasury Department'') 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 have been separated pursuant to the Separate 
Trading of Registered Interest and Principal of Securities (STRIPS) 
program operated by the Treasury Department. See FINRA Rule 6710(p).
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    FINRA has proposed to amend Supplementary Material .01 to FINRA 
Rule 6750 to provide that FINRA may publish or distribute weekly 
aggregated transaction information and statistics on non-disseminated 
TRACE-Eligible Securities that are U.S. Treasury Securities. Pursuant 
to the proposed rule change, the aggregated U.S. Treasury Securities 
data would not be published or distributed by individual security, 
except for aggregated data that includes on-the-run U.S. Treasury 
Securities that may have had only one on-the-run security during the 
aggregated period.\6\ In addition, the aggregated data would not 
identify individual market participants or transactions. FINRA has 
proposed to provide the aggregated data on U.S. Treasury Securities at 
no charge, unless FINRA first establishes a fee for such data by 
submitting an appropriate rule filing, as is the case with the 
aggregated data for TRACE-Eligible Securities that are not U.S. 
Treasury Securities.
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    \6\ In the Notice, FINRA stated that it intends to publish 
weekly volume information aggregated by U.S. Treasury Security 
subtype (e.g., Bills, Floating Rate Notes, Treasury Inflation-
Protected Securities, and Nominal Coupons). FINRA further stated 
that the volume information may be grouped within dealer-to-
customer, ATS and dealer-to-dealer, remaining years to maturity, or 
other categories. See Notice, 84 FR at 64148.
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    FINRA has stated that the proposed rule change will become 
effective on the date of Commission approval.\7\
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    \7\ See id.
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III. Discussion and Commission Findings

    After careful consideration, the Commission finds that the proposed 
rule change is consistent with the requirements of the Act and the 
rules and regulations thereunder applicable to a national securities 
association.\8\ In particular, the Commission finds that the proposed 
rule change is consistent with Section 15A(b)(6) of the Act,\9\

[[Page 71987]]

which requires, among other things, that FINRA rules 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. The Commission believes that the 
proposal will benefit investors and market participants by facilitating 
greater transparency in the U.S. Treasury Security market by making 
publicly available aggregate trading volume for transactions in U.S. 
Treasury Securities that are reported to TRACE. The Commission believes 
that the proposal is reasonably designed to preserve the 
confidentiality of individual market participants and transactions. The 
Commission also notes that the proposed rule change would not impose 
any new cost on FINRA members, because any aggregate statistics that 
are published or distributed by FINRA pursuant to this rule change 
would be derived from information that members are already required to 
report to TRACE.
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    \8\ In approving this proposal, the Commission has considered 
the proposed rule's impact on efficiency, competition, and capital 
formation. See 15 U.S.C. 78c(f).
    \9\ 15 U.S.C. 78o-3(b)(6).
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    Pursuant to Section 19(b)(5) of the Act,\10\ the Commission 
consulted with and considered the views of the Treasury Department in 
determining to approve the proposed rule change. The Treasury 
Department indicated its support for the proposal.\11\ Pursuant to 
Section 19(b)(6) of the Act,\12\ the Commission has considered the 
sufficiency and appropriateness of existing laws and rules applicable 
to government securities brokers, government securities dealers, and 
their associated persons in approving the proposal. Currently there is 
not available, to the public or otherwise, a comprehensive source of 
aggregated volume data that reflects all major segments of the market 
for U.S. Treasury Securities.\13\ The proposed rule change would 
promote transparency in the market for U.S. Treasury Securities by 
enabling FINRA to publish or distribute certain aggregate information 
regarding transactions in U.S. Treasury Securities that are reported to 
TRACE.
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    \10\ 15 U.S.C. 78s(b)(5) (providing that the Commission ``shall 
consult with and consider the views of the Secretary of the Treasury 
prior to approving a proposed rule filed by a registered securities 
association that primarily concerns conduct related to transactions 
in government securities, except where the Commission determines 
that an emergency exists requiring expeditious or summary action and 
publishes its reasons therefor'').
    \11\ Email from Treasury Department staff to Michael Gaw, 
Assistant Director, Division of Trading and Markets, Commission 
(December 18, 2019).
    \12\ 15 U.S.C. 78s(b)(6).
    \13\ See Notice, 84 FR at 64149.
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IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\14\ that the proposed rule change (SR-FINRA-2019-028) is approved.
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    \14\ 15 U.S.C. 78s(b)(2).
    \15\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2019-28084 Filed 12-27-19; 8:45 am]
BILLING CODE 8011-01-P