Document ID: SEC-2017-1825-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Financial Industry Regulatory Authority, Inc.
Posted Date: 2017-11-07T05:00Z

[Federal Register Volume 82, Number 214 (Tuesday, November 7, 2017)]
[Notices]
[Pages 51658-51660]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-24131]

[[Page 51658]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-81995; File No. SR-FINRA-2017-033]

Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing and Immediate Effectiveness of 
Proposed Rule Change To Establish Fees for the New TRACE Security 
Activity Report and End-of-Day TRACE Transaction File

November 1, 2017.
    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 October 24, 2017, 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 Rule 7730 to establish fees for the new 
TRACE Security Activity Report and End-of-Day TRACE Transaction File.
    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
    FINRA's TRACE data product offerings, set forth in Rule 7730 (Trade 
Reporting and Compliance Engine (TRACE)), include both real-time as 
well as historic data for most TRACE-eligible securities.\5\ The SEC 
recently approved a new (i) TRACE Security Activity Report and (ii) 
End-of-Day TRACE Transaction File.\6\ The new TRACE Security Activity 
Report is a monthly report that provides aggregated statistics by 
security for TRACE-Eligible Securities that are Corporate and Agency 
Bonds (``CA Bonds''). The report will contain basic descriptive 
security elements, aggregate par value volume information, number of 
transactions, number of unique market participant identifiers 
(``MPIDs''), and top 5 statistics for disseminated transactions in CA 
Bonds. The new End-of-Day TRACE Transaction File is a daily file 
available after the TRACE system closes that includes all transaction 
data disseminated as part of Real-Time TRACE transaction data on that 
day and is separately available for each data set for which Real-Time 
TRACE transaction data is available (i.e., the Corporate Bond Data Set, 
Agency Data Set, SP Data Set, and Rule 144A Data Set).
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    \5\ Rule 6710 (Definitions) provides that a ``TRACE-Eligible 
Security'' is a debt security that is United States (``U.S.'') 
dollar-denominated and issued by a U.S. or foreign private issuer, 
and, if a ``restricted security'' as defined in Securities Act Rule 
144(a)(3), sold pursuant to Securities Act Rule 144A; or is a debt 
security that is U.S. dollar-denominated and issued or guaranteed by 
an Agency as defined in paragraph (k) or a Government-Sponsored 
Enterprise as defined in paragraph (n); or a U.S. Treasury Security 
as defined in paragraph (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 paragraph (o).
    \6\ Id. [sic]
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    FINRA is now proposing to amend Rule 7730 to establish fees for the 
TRACE Security Activity Report and the End-of-Day TRACE Transaction 
File. FINRA is proposing to establish a fee of $750 per month for 
receipt of the TRACE Security Activity Report, unless the subscriber is 
a qualifying tax-exempt organization, in which case FINRA would charge 
$250 per month. FINRA also is proposing to establish a fee of $750 per 
month per data set for receipt of the End-of-Day TRACE Transaction 
File, unless the subscriber is a qualifying tax-exempt organization, in 
which case FINRA would charge $250 per month per data set. However, 
subscribers to the Vendor Real-Time Data Feed will not be charged a fee 
to receive the End-of-Day TRACE Transaction File for the Vendor Real-
Time data set(s) to which they have subscribed. FINRA believes that 
these fees are reasonable, and notes that subscribing to each product 
is optional for members and others.
    FINRA has filed the proposed rule change for immediate 
effectiveness. The effective date of the proposed rule change will be 
the date of effectiveness of the TRACE Security Activity Report and 
End-of-Day TRACE Transaction File.\7\
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    \7\ See Securities Exchange Act Release No. 81318 (August 4, 
2017), 82 FR 37484 (August 10, 2017) (Order Approving File No. SR-
FINRA-2017-021); see also Securities Exchange Act Release No. 81114 
(July 11, 2017), 82 FR 32728 (July 17, 2017) (Order Approving File 
No. SR-FINRA-2017-015). FINRA will announce the effective date of 
each data product in a Regulatory Notice. The effective date will be 
no later than 365 days following Commission approval of each 
respective data product.
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2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the 
provisions of Section 15A(b)(5) of the Act,\8\ 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.
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    \8\ 15 U.S.C. 78o-3(b)(5).
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    Pursuant to the proposal, FINRA will establish fees for (i) the 
TRACE Security Activity Report that will provide interested parties 
with a means for receiving aggregated statistics by security for CA 
Bonds, and (ii) the End-of-Day TRACE Transaction File that will provide 
interested parties with an alternative means of receiving the 
transaction information disseminated each trading day as part of the 
Real-Time TRACE transaction data product. The TRACE Security Activity 
Report will be made available to subscribers for a fee of $750 per 
month, or $250 per month for qualifying tax-exempt organizations. FINRA 
believes that the proposed fees are reasonable.
    The TRACE Security Activity Report is an entirely new report and is 
not comparable to any current FINRA TRACE data product offering. FINRA 
cannot at this time estimate the number of persons that may subscribe 
to the product. However, as indicated by the comment letters received 
by the Commission on the proposal to adopt

[[Page 51659]]

the TRACE Security Activity Report,\9\ FINRA believes that there will 
be some interest in the report, including in connection with compliance 
efforts with respect to regulatory obligations under the Investment 
Company Act of 1940.\10\ FINRA believes that the fee of $750 per month 
is reasonable given the costs to be incurred by FINRA in developing the 
report and providing ongoing administrative, functional and technical 
support to subscribers, while still being priced at an amount that 
should allow it to be accessible to interested parties. FINRA also 
notes that, for a qualifying tax-exempt organization, the fee for the 
TRACE Security Activity Report will be $250 per month. Where feasible, 
FINRA generally endeavors to provide TRACE data products to qualifying 
tax-exempt organizations at a reduced subscription fee to encourage 
access to TRACE data to facilitate bond market research.
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    \9\ See letter to Brent J. Fields, Secretary, Commission, from 
Bennett Golub, Chief Risk Officer, and Alexis Rosenblum, Director, 
BlackRock, Inc., dated July 20, 2017; and letter to Robert W. 
Errett, Deputy Secretary, Commission, from Sean Davy, Managing 
Director, Capital Markets Division, Securities Industry and 
Financial Markets Association, dated July 20, 2017.
    \10\ 17 CFR 270.22e-4.
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    The End-of-Day TRACE Transaction File will be made available to 
subscribers for a fee of $750 per month per data set, $250 per month 
per data set for qualifying tax-exempt organizations, or at no cost to 
subscribers to the Vendor Real-Time Data Feed for the Vendor Real-Time 
data set(s) to which they have subscribed. FINRA believes that the 
proposed fees are reasonable. FINRA currently charges $1,500 per month 
per data set for the Vendor Real-Time Data Feed. The End-of-Day TRACE 
Transaction File will provide access to all of the transactions that 
were disseminated via the Real-Time Data Feed throughout the trading 
day, but in a single file only available at the end of the trading day. 
This option not only provides a lower-priced alternative to the Vendor 
Real-Time Data Feed, it also requires less technological infrastructure 
from subscribers. Given the current fees established for this somewhat 
related product, FINRA believes that the proposed fee of $750 per month 
per data set is reasonable, which is half of the cost of the Vendor 
Real-Time Data Feed. FINRA also believes this fee is reasonable given 
the costs to be incurred by FINRA in developing the report and 
providing ongoing administrative, functional and technical support to 
subscribers. FINRA also notes that any current subscribers to Vendor 
Real-Time Data will not be charged a fee for receipt of the End-of-Day 
TRACE Transaction File for the Vendor Real-Time data set(s) to which 
they have subscribed. FINRA cannot at this time estimate the number of 
persons that may subscribe to the product; however, as stated in the 
Notice, some market participants have indicated that a simpler 
alternative that allows them to receive transaction information once a 
day in an end-of-day file would be useful.\11\ As is the case with the 
TRACE Security Activity Report, FINRA will make the End-of-Day TRACE 
Transaction File available to qualifying tax-exempt organizations at a 
reduced subscription fee (of $250 per month per data set) to encourage 
access to TRACE data to facilitate bond market research.
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    \11\ See Securities Exchange Act Release No. 80805 (May 30, 
2017), 82 FR 25862 (June 5, 2017) (Notice of Filing of File No. SR-
FINRA-2017-015) (``Notice'').
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    FINRA believes that the proposed fees are reasonable, and notes 
that the fees will be applied equally to all similarly situated 
interested parties that choose to subscribe to either data product. 
Thus, FINRA believes that the proposed rule change is consistent with 
the Act.

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. The proposal to establish fees 
in connection with the new TRACE Security Activity Report and End-of-
Day TRACE Transaction File applies only to members that choose to 
subscribe to these data products, and the proposed fees for each data 
product will apply equally to all similarly situated subscribers. 
Subscribers to the Vendor Real-Time Data Feed will not be charged a fee 
to receive the End-of-Day TRACE Transaction File for the Vendor Real-
Time data set(s) to which they have subscribed.

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 [email protected]. Please include 
File Number SR-FINRA-2017-033 on the subject line.

Paper Comments

     Send paper comments in triplicate to Robert W. Errett, 
Deputy Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-FINRA-2017-033. 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 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 such filing also will be available 
for inspection and copying at the principal office of FINRA. All 
comments received will be posted without change. Persons submitting 
comments are cautioned that we do not redact or edit personal

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identifying information from comment submissions. You should submit 
only information that you wish to make available publicly. All 
submissions should refer to File Number SR-FINRA-2017-033 and should be 
submitted on or before November 28, 2017.

    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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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-24131 Filed 11-6-17; 8:45 am]
 BILLING CODE 8011-01-P