Document ID: SEC-2013-0145-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Financial Industry Regulatory Authority, Inc.
Posted Date: 2013-01-23T05:00Z

[Federal Register Volume 78, Number 15 (Wednesday, January 23, 2013)]
[Notices]
[Pages 4917-4918]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-01243]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-68675, File No. SR-FINRA-2012-053]

Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Order Approving Proposed Rule Change To Establish 
Optional TRACE Data Delivery Services and Related Fees

 January 16, 2013.

I. Introduction

    On November 30, 2012, 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 establish optional TRACE data delivery services 
and related fees. The proposed rule change was published for comment in 
the Federal Register on December 13, 2012.\3\ The Commission received 
no comments on the proposal. 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. 68387 (December 7, 
2012), 77 FR 74249 (December 13, 2012) (SR-FINRA-2012-053) (the 
``Notice'').
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II. Description of the Proposal

    FINRA utilizes the Trade Reporting and Compliance Engine 
(``TRACE'') to collect from its members and to publicly disseminate 
information on transactions in eligible fixed income securities. The 
FINRA Automated Data Delivery System (``FINRA ADDS'') is a secure Web 
site that provides a firm, by market participant identifier (``MPID''), 
access to TRACE trade journal files. These files are available for 
Asset-Backed Securities transactions and separately for corporate bonds 
and Agency Debt Securities (``Corporate/Agency Debt Securities''). The 
FINRA ADDS service is free, and there are no limits on the number of 
reports that a firm may request or the number of firm personnel 
associated with a specified MPID that may submit such requests.
    Currently, to access the transaction information in FINRA ADDS, 
entitled users of the MPID must submit a request for a trade journal 
file for a specified date, which must be within 30 calendar days prior 
to the date of the request. A single report is a trade journal file for 
one date listing all transactions to which the requesting MPID was a 
party that were reported on that date either in Asset-Backed Securities 
or Corporate/Agency Debt Securities. The FINRA ADDS report provides all 
of the transaction reports in which the MPID is a party to a 
transaction (whether the trade was reported by the firm or another 
member) on the specified date. If a firm uses multiple MPIDs, persons 
authorized to use the specified MPID must make the data request to 
FINRA ADDS and the data provided by FINRA ADDS is limited to 
transactions involving that MPID.
    FINRA has proposed to establish two new optional TRACE data 
delivery services, TRACE Data Delivery Plus and TRACE Data Delivery 
Secure File Transfer Protocol (``TRACE Data Delivery SFTP''), and fees 
in connection

[[Page 4918]]

with these services. Firms would have the option to enroll in neither, 
one, or both of these services.
    TRACE Data Delivery Plus would provide greater access to TRACE 
trade journal files by allowing an MPID subscriber to obtain reports 
for Asset-Backed Securities or Corporate/Agency Debt Securities data 
for transactions to which the MPID was a party that were reported more 
than 30 calendar days before the MPID's request (i.e., transaction data 
in trade journal files no longer available through the free FINRA ADDS 
service).\4\ The subscriber would be able to download the requested 
report(s) on demand.\5\
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    \4\ As with the free FINRA ADDS service, firms interested in 
TRACE Data Delivery Plus must subscribe per MPID. To access 
transaction information for multiple MPIDs, a firm must obtain a 
subscription for each MPID.
    \5\ Subscribers to TRACE Data Delivery Plus also will have the 
option to obtain automated daily delivery of the subscriber's TRACE 
trade journal files to the FINRA ADDS Web site. The automated daily 
delivery of the subscriber's TRACE trade journal files to the Web 
site will not constitute a request for a report for purposes of 
calculating the monthly fee described below. In contrast, firms 
using the free FINRA ADDS service must submit a request for data 
(e.g., if an MPID wants daily delivery of the prior day's Asset-
Backed Security trade journal file, the MPID must log in each day 
and submit a request).
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    To provide TRACE Data Delivery Plus, FINRA has proposed to amend 
Rule 7730 to charge an MPID subscriber a monthly fee. The proposed 
monthly fee is based on two factors: (1) The average number of 
transactions per month to which the MPID was a party that was reported 
to TRACE in the prior calendar year, which number is used to categorize 
the MPID in one of four tiers; \6\ and (2) the number of FINRA ADDS 
reports received in a given month for transaction data that is no 
longer available through the free FINRA ADDS service (i.e., transaction 
data regarding transactions that were reported more than 30 calendar 
days prior to the date of the request) (``Plus reports'').\7\ The 
proposed monthly fees for Plus reports are:
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    \6\ Once assigned to a tier, a subscriber would remain in the 
tier for the remainder of the calendar year. For example, an MPID 
that subscribes in September 2012 would be assigned to a tier based 
upon the TRACE transactions reported in 2011 in which the MPID was a 
party, and would remain in that tier until December 31, 2012. In 
2013, the MPID would be re-evaluated and assigned to a tier for 2013 
fee purposes, based upon the MPID's trading in TRACE-Eligible 
Securities in 2012.
    \7\ A subscriber's monthly fee would be assessed each month and 
could vary, depending on the number of reports FINRA provides in 
response to the subscriber's requests. The fee would not be charged 
for data requests that FINRA is unable to provide. For example, 
FINRA ADDS would be unable to provide a report for a Corporate/
Agency Debt Securities trade journal file for a date prior to 
February 6, 2012, the date such securities were migrated from legacy 
TRACE technology to the Multi-Product Platform (``MPP'').

----------------------------------------------------------------------------------------------------------------
 Tier based on average number of transactions per
  month MPID subscriber was a party to in prior      0-5 Plus reports    6-25 Plus reports    > 25 Plus reports
                  calendar year                     received per month   received per month   received per month
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Tier 1: 10,000 +.................................                  $60                  $80                 $100
Tier 2: 3,000-9,999..............................                   40                   55                   70
Tier 3: 500-2,999................................                   20                   30                   40
Tier 4: <500.....................................                   10                   15                   20
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    TRACE Data Delivery SFTP is an optional service that would provide 
a subscribing firm with an automated interface to retrieve (without 
sending a request or query) its prior day's TRACE trade journal files 
from FINRA ADDS automatically via SFTP. FINRA has proposed to amend 
Rule 7730 to establish two fees to provide the TRACE Data Delivery 
SFTP: (1) A one-time set-up fee of $250 per subscriber; and (2) a 
monthly fee of $200 per subscriber.
    FINRA has indicated that it would announce the effective date of 
the proposed rule change in a Regulatory Notice to be published no 
later than 60 days following Commission approval, and that the 
effective date would be no later than 120 days following publication of 
the Regulatory Notice.

III. Discussion

    After carefully reviewing the proposal, 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\ 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, as well as with Section 
15A(b)(5) of the Act,\10\ which requires, among other things, that 
FINRA rules provide for the equitable allocation of reasonable dues, 
fees, and other charges among members and issuers and other persons 
using any facility or system which the association operates or 
controls.
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    \8\ In approving this proposed rule change, 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).
    \10\ 15 U.S.C. 78o-3(b)(5).
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    FINRA stated that it proposed the described optional data services 
in response to feedback from firms requesting access to more of their 
TRACE transaction history and increased flexibility to access such 
data.\11\ The Commission believes that the proposed rule change to 
establish these data delivery services is consistent with the Act 
because it will provide member firms with flexible access to more of 
their TRACE transaction history, thereby assisting them in overseeing 
their trading in fixed income securities. Further, the Commission 
believes that the proposed fees are consistent with the Act.
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    \11\ See Notice, 77 FR at 74250.
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IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\12\ that the proposed rule change (SR-FINRA-2012-053) is approved.
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    \12\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-01243 Filed 1-22-13; 8:45 am]
BILLING CODE 8011-01-P