Document ID: SEC-2013-1676-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Financial Industry Regulatory Authority, Inc.
Posted Date: 2013-09-30T04:00Z

[Federal Register Volume 78, Number 189 (Monday, September 30, 2013)]
[Notices]
[Pages 60003-60005]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-23683]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-70483; File No. SR-FINRA-2013-040]

Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change to Extend the Limited Waiver of the TRACE 
Professional Real-Time Data Display Fee Pilot

September 24, 2013.
    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 September 17, 2013, the 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 
``establishing or changing a due, fee or other charge'' under Section 
19(b)(3)(A)(ii) of the Act \3\ and Rule 19b-4(f)(2) thereunder,\4\ 
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\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \4\ 17 CFR 240.19b-4(f)(2).
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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 7730(c)(1)(A)(i) to extend 
the pilot program to November 7, 2014. The pilot program provides a 
limited waiver of the Professional Real-Time Data Display Fee of $60 to 
access Real-Time Trade Reporting and Compliance Engine (``TRACE'') 
transaction data in connection with certain free trials of data 
products.
    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
    Pursuant to FINRA Rule 7730(c)(1)(A), FINRA charges a Professional 
$60 per month, per display application per Data Set \5\ of Real-Time 
\6\ TRACE transaction data. The fee waiver pilot program in FINRA Rule 
7730(c)(1)(A)(i) waives the $60 fee for one month for a Professional to 
access Real-Time TRACE transaction data in connection with a vendor's 
offer of a free trial of a data product that displays Real-Time TRACE 
transaction data.\7\
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    \5\ FINRA makes Real-Time TRACE transaction data available in 
three Data Sets--the Corporate Bond Data Set, the Agency Data Set 
and the ABS Data Set. A fourth Data Set, the Rule 144A Data Set, 
will become available in 2014. See Securities Exchange Act Release 
No. 70345 (September 6, 2013), 78 FR 56251 (September 12, 2013) 
(Order Approving File No. SR-FINRA-2013-029) (SEC approves a 
proposed rule change to disseminate transactions in TRACE-Eligible 
Securities that are effected pursuant to Rule 144A (17 CFR 239.144A) 
under the Securities Act of 1933 (15 U.S.C. 77a et seq.) and to 
establish the Rule 144A Data Set).
    \6\ Real-Time is defined in FINRA Rule 7730(f)(3).
    \7\ See Securities Exchange Act Release No. 68255 (November 19, 
2012), 77 FR 70515 (November 26, 2012) (Notice of Filing and 
Immediate Effectiveness of File No. SR-FINRA-2012-049) (proposed 
rule change establishing the fee waiver pilot program).
    In general, Real-Time TRACE transaction data is accessed not 
directly from FINRA but through a vendor, such as Bloomberg, L.P. 
and its Bloomberg display application, or other redistributors 
(collectively, ``vendors'') of financial market data. Under this 
arrangement, a Professional pays the vendor for the license to use 
the vendor's display application and if the display application 
displays Real-Time TRACE transaction data, the payment must include 
the applicable TRACE fee, which the vendor remits to FINRA. Vendors 
continually develop new products and offer free trials of such 
products to members and other Professional end users of market data. 
Such new products may display, among other data, Real-Time TRACE 
transaction data.
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    The fee waiver pilot program permits Professionals to access Real-
Time TRACE transaction data on a free trial basis in connection, and 
concurrently, with the free trial of the vendor's product. The pilot 
program will expire on November 8, 2013.
    FINRA proposes to extend the fee waiver pilot program approximately 
one year to November 7, 2014 to permit more time to assess the 
effectiveness of the pilot program. All other terms and conditions of 
the fee waiver pilot program would remain the same. The FINRA fee 
waiver would continue to be limited to one month (i.e., a period not 
longer than 31 days). In addition, the FINRA fee waiver would continue 
to be available to not more than four Professionals associated with, 
employed by, or otherwise affiliated with a member, employer or other 
person during one free trial period.\8\ As is currently the case, once 
the Real-Time Data Display Fee had been waived, a Professional and the 
member, employer or other person whom the Professional is associated 
with, employed by, or otherwise affiliated with would not be eligible 
for the FINRA fee waiver again in connection with another free trial 
offered by the same vendor until 12 months had lapsed from the last day 
of the prior fee waiver.\9\ However, a Professional and the member, 
employer or other person with whom the Professional is associated or 
otherwise affiliated would be eligible for a FINRA fee waiver in 
connection with a free trial offered by a different vendor regarding 
its data products.
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    \8\ The fee waiver pilot program is not applicable to 
Professionals associated with, employed by or otherwise affiliated 
with entities that obtain unlimited internal use of market data 
through any number of display applications by paying a flat fee of 
$7,500 (per month per Data Set) under Rule 7730(c)(1)(A) 
(``enterprise fee''). The enterprise fee structure is inconsistent 
with the limitation that the fee waiver apply to not more than four 
Professionals per entity per trial period.
    \9\ For example, if a Professional were granted a waiver for one 
month beginning on November 15, 2013, the Professional would not be 
eligible for another waiver in connection with another free trial 
offered by the same vendor until December 15, 2014.
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    FINRA has filed the proposed rule change for immediate 
effectiveness. The implementation date will be the date of filing.
2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the 
provisions of Section 15A(b)(6) of the Act,\10\ which requires, among 
other things, that

[[Page 60004]]

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)(5) of the Act,\11\ 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 that FINRA operates or controls. 
FINRA believes that the proposed extension of the pilot program, which 
encourages additional Professionals to test and use Real-Time TRACE 
transaction data, may promote more accurate and timely pricing and 
valuations of debt securities by members, and may prevent fraudulent 
and manipulative acts and practices regarding pricing and valuations, 
for the protection of investors and the public interest.
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    \10\ 15 U.S.C. 78o-3(b)(6).
    \11\ 15 U.S.C. 78o-3(b)(5).
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    FINRA believes that the extension of the pilot program providing 
for a limited waiver of the monthly fee per display application for 
access to Real-Time TRACE transaction data also results in reasonable 
fees and financial benefits from fee waivers that are equitably 
allocated. The financial benefit of the fee waiver would be available 
to all Professionals that accept an offer to test a vendor data product 
that includes Real-Time TRACE transaction data on a free trial basis. 
Any Professional that tests data products during a free trial would be 
eligible for and would benefit from the concurrent FINRA fee waiver, 
subject to the proscriptions against a Professional obtaining multiple 
free trials as previously described.
    In addition, the financial benefit of the fee waiver would be 
available for a very limited period (i.e., 31 days or less), such that 
Professionals not eligible for the fee waiver are not unfairly or 
inequitably affected. The proposed extension of the pilot period is 
reasonable because the waiver of a standard FINRA fee, and the 
financial benefit from such waiver, is of limited amount, duration 
(i.e., one month) and application (i.e., only four Professionals per 
member (or other end-user)), limited to concurrent free trials of data 
products offered by vendors, and subject to restrictions on re-use, and 
is being proposed to enhance a member's ability to access and test, 
among other things, the uses of Real-Time TRACE transaction data to 
determine if access to such Real-Time TRACE transaction data would 
further its business needs.
    Finally, the proposed extension of the fee waiver pilot program 
does not unfairly discriminate between or among Professionals and 
members (or other end-users) in that the waiver would be available to 
any of such persons that accepts an offer to test a vendor data product 
that includes Real-Time TRACE transaction data on a free trial basis, 
subject to the limitations described above. The data vendor, rather 
than FINRA, would decide initially whether to offer a free trial of its 
data product to a particular Professional, member, or other end-user. 
FINRA's role is limited to refusing to extend a fee waiver to a 
particular person previously identified by the data vendor, due to the 
prohibition against extending multiple fee waivers to the same person.

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. FINRA believes that the 
proposed extension of the fee waiver pilot program, which is designed 
to encourage additional Professionals to test and use Real-Time TRACE 
transaction data, may promote more accurate and timely pricing and 
valuations of debt securities by members. Moreover, the extension of 
the pilot program would not place an unreasonable fee burden on members 
and other persons (i.e., Professionals) that currently subscribe to 
receive Real-Time TRACE transaction data, nor confer an uncompetitive 
benefit to Professionals taking advantage of the pilot program, in that 
the fee waiver would be available for a very limited period (i.e., 31 
days or less), and the financial impact of such a pilot program on 
Professionals would be de minimis. In addition, the proposed rule 
change does not place a burden on competition in that the financial 
benefit of the fee waiver would be available in general to all 
Professionals. Any Professional that tests data products during a free 
trial would be eligible for and would benefit from the concurrent FINRA 
fee waiver, subject to the proscriptions against a Professional 
obtaining multiple free trials previously described.

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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act \12\ and paragraph (f)(2) of Rule 19b-4 
thereunder.\13\ At any time within 60 days of the filing of the 
proposed rule change, the Commission summarily may temporarily suspend 
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. If 
the Commission takes such action, the Commission shall institute 
proceedings to determine whether the proposed rule should be approved 
or disapproved.
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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f)(2).
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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-2013-040 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-2013-040. 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 Web site (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 Web site viewing and 
printing in the Commission's Public

[[Page 60005]]

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 
the 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 available publicly. All submissions should refer to File Number 
SR-FINRA-2013-040 and should be submitted on or before October 21, 
2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-23683 Filed 9-27-13; 8:45 am]
BILLING CODE 8011-01-P