Document ID: SEC-2009-0953-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Financial Industry Regulatory Authority, Inc.
Posted Date: 2009-07-13T04:00Z

[Federal Register: July 13, 2009 (Volume 74, Number 132)]
[Notices]               
[Page 33492-33494]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr13jy09-138]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60239; File No. SR-FINRA-2009-045]

 
Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing of Proposed Rule Change Relating to 
Transaction-Related Charges for Trade Reporting to the OTC Reporting 
Facility

July 2, 2009.
    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 July 1, 2009, Financial Industry Regulatory Authority, Inc. 
(``FINRA'') (f/k/a National Association of Securities Dealers, Inc. 
(``NASD'')) filed with the Securities and Exchange Commission (``SEC'' 
or ``Commission'') the proposed rule change as described in Items I, 
II, and III below. 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.

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[[Page 33493]]

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    FINRA is proposing to clarify the application of transaction-
related charges for trade reporting to the OTC Reporting Facility 
(``ORF'') pursuant to FINRA Rule 7710.
    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
    The FINRA Rule 7700 Series, among other things, sets forth the 
pricing schedule for the ORF, the OTC Bulletin Board, and the Trade 
Reporting and Compliance Engine Services. On March 1, 2007, FINRA filed 
a proposed rule change (SR-NASD-2007-018) for immediate effectiveness 
that deleted certain fee provisions from the FINRA Rule 7700 Series \3\ 
and amended certain other provisions.\4\ In that filing, NASD Rule 
7010(g) was renumbered as NASD Rule 7010, renamed, and amended to apply 
only to the ORF.\5\ The amendments became operative on March 5, 
2007.\6\ As FINRA stated in the filing, the amendments made to the rule 
language were not intended to modify any of the charges relating to the 
ORF.
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    \3\ At the time of the rule filing, the FINRA Rule 7700 Series 
was the NASD Rule 7000 Series. The NASD Rule 7000 Series was 
renumbered as the FINRA Rule 7700 Series in 2008. See Securities 
Exchange Act Release No. 58643 (September 25, 2008), 73 FR 57174 
(October 1, 2008); see also FINRA Regulatory Notice 08-57 (October 
2008).
    \4\ See Securities Exchange Act Release No. 55538 (March 27, 
2007), 72 FR 15924 (April 3, 2007) (Notice of Filing and Immediate 
Effectiveness of SR-NASD-2007-018).
    \5\ NASD Rule 7010 was later renumbered as FINRA Rule 7710. See 
Securities Exchange Act Release No. 58643 (September 25, 2008), 73 
FR 57174 (October 1, 2008).
    \6\ See Securities Exchange Act Release No. 55538 (March 27, 
2007), 72 FR 15924 (April 3, 2007) (Notice of Filing and Immediate 
Effectiveness of SR-NASD-2007-018).
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    Although there was no intent to modify any charges in connection 
with reporting transactions to the ORF, the rule language, as amended 
by SR-NASD-2007-018, omitted some securities from the rule because of 
the definition of ``OTC Equity Security'' in FINRA Rule 6420. The 
previous rule, NASD Rule 7010(g), included a catch-all provision that 
applied a charge of $0.029/side to the ``reporting of all other 
transactions not subject to comparison.'' This language included, for 
example, PORTAL equity securities, which are reported to the ORF 
pursuant to the PORTAL rules in the FINRA Rule 6630 Series. The term 
``OTC Equity Security,'' however, specifically excludes PORTAL 
securities and restricted securities from the definition.\7\ Thus, by 
using the defined term ``OTC Equity Security'' from March 5, 2007, 
until June 17, 2009, PORTAL equity securities were inadvertently 
omitted from the scope of the rule language.\8\
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    \7\ See FINRA Rule 6420(c), (d).
    \8\ On June 17, 2009, FINRA filed a proposed rule change for 
immediate effectiveness that deleted the reference to OTC Equity 
Securities in the rule. See Securities Exchange Act Release No. 
60168 (June 24, 2009), 74 FR 31471 (July 1, 2009).
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    The proposed rule change deletes the prior reference to ``OTC 
Equity Security'' in FINRA Rule 7710 to clarify that, from March 5, 
2007, until June 17, 2009, the transaction reporting charges imposed 
pursuant to the rule applied to the reporting of transactions in any 
security, not just OTC Equity Securities, to the ORF that were not 
subject to comparison through the ORF.
    FINRA is proposing that the operative date of the proposed rule 
change be retroactive from March 5, 2007, to June 17, 2009.
2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the 
provisions of Section 15A(b)(5) of the Act,\9\ 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 rule change clarifies the 
charges that were assessed with respect to transactions that were 
reported to the ORF from March 5, 2007, until June 17, 2009, and 
correctly reflects FINRA's intent when it amended the rule in SR-NASD-
2007-018.
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    \9\ 15 U.S.C. 78o-3(b)(5).
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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

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) By order approve such proposed rule change, or
    (B) Institute proceedings to determine whether the proposed rule 
change should be disapproved.

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-2009-045 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-2009-045. 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 33494]]

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-2009-045 and should be submitted on or before August 3, 2009.
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    \10\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
Elizabeth M. Murphy,
Secretary.
[FR Doc. E9-16448 Filed 7-10-09; 8:45 am]

BILLING CODE 8010-01-P