Document ID: SEC-2020-1575-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Financial Industry Regulatory Authority, Inc.
Posted Date: 2020-10-07T04:00Z

[Federal Register Volume 85, Number 195 (Wednesday, October 7, 2020)]
[Notices]
[Pages 63314-63322]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-22097]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-90067; File No. SR-FINRA-2020-031]

Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing of a Proposed Rule Change To Adopt 
FINRA Rule 6439 (Requirements for Member Inter-Dealer Quotation 
Systems) and Delete the Rules Related to the OTC Bulletin Board Service

October 1, 2020.
    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 24, 2020, 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 and II below, which Items have been prepared by FINRA. 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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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    FINRA is proposing to delete the rules related to the OTC Bulletin 
Board[supreg] Service (``OTCBB'') and cease its operation, and to 
enhance the regulation of quotations in OTC Equity Securities by 
adopting new requirements for member inter-dealer quotation systems.
    The text of the proposed rule change is available on FINRA's 
website 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 is proposing new FINRA Rule 6439 (Requirements for Inter-
Dealer Quotation Systems) to expand and enhance the obligations of 
member firms that operate certain systems that regularly disseminate 
the quotations of identified broker-dealers in OTC Equity Securities 
\3\ (``inter-dealer quotation systems'').\4\ The proposed rule change 
also deletes the rules related to the OTCBB and ceases its operation, 
as further discussed below.
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    \3\ Rule 6420(f) defines ``OTC Equity Security'' as any equity 
security that is not an ``NMS stock'' as that term is defined in 
Rule 600(b)(47) of SEC Regulation NMS; provided, however, that the 
term ``OTC Equity Security'' shall not include any Restricted Equity 
Security. (The term ``Restricted Equity Security'' is defined in 
Rule 6420(k) to mean any equity security that meets the definition 
of ``restricted security'' as contained in Securities Act Rule 
144(a)(3).)
    \4\ See Rule 6420(c), which defines ``inter-dealer quotation 
system'' as ``any system of general circulation to brokers or 
dealers which regularly disseminates quotations of identified 
brokers or dealers.'' This definition tracks the SEC's definition of 
the same term in SEA Rule 15c2-11.
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Background
    Section 15A of the Act provides that FINRA, among other things, 
must have rules governing the form and content of quotations for 
securities sold otherwise than on an exchange, which includes OTC 
Equity Securities. Specifically, Section 15A(b)(11) requires that such 
rules be designed to: (1) Produce fair and informative quotations, (2) 
prevent fictitious or misleading quotations, and (3) promote orderly 
procedures for collecting, distributing, and publishing quotations.\5\ 
FINRA currently has in place extensive rules that govern the activity 
of member firms when they engage in quoting OTC Equity Securities. For 
example, the FINRA Rule 6400 Series (Quoting and Trading in OTC Equity 
Securities), among other things, provides a regulatory framework that 
governs the form and content of quotations; and FINRA maintains rules 
of general applicability that govern quoting and trading practices in 
the FINRA Rule 5200 Series (Quotation and Trading Obligations and 
Practices) (together, ``Quotation Governance Rules'').
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    \5\ 15 U.S.C. 78o-3(b)(11).
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    FINRA's Quotation Governance Rules generally prescribe limitations 
around

[[Page 63315]]

the conduct of members that publish quotations in OTC Equity 
Securities, including quotations displayed on inter-dealer quotation 
systems. For example, FINRA has a number of rules modeled off the 
principles found in SEC Regulation NMS that apply to member quotation 
activities on inter-dealer quotation systems in OTC Equity Securities. 
These rules consist of: (1) Rule 6434 (Minimum Pricing Increment for 
OTC Equity Securities), which sets forth the permissible pricing 
increments for the display of quotations and acceptance of orders; (2) 
Rule 6437 (Prohibition from Locking or Crossing Quotations in OTC 
Equity Securities), which requires firms to avoid locking and crossing 
quotations within an inter-dealer quotation system; (3) Rule 6450 
(Restrictions on Access Fees), which establishes a cap on access fees 
imposed against a firm's published quotation; and (4) Rule 6460 
(Display of Customer Limit Orders), which requires an OTC market maker, 
subject to certain exceptions, to display the full size of customer 
limit orders that improve the price of the marker maker's displayed 
quotation or that represent more than a de minimis change in the size 
of the market maker's quote if at the best bid or offer.\6\ In 
addition, Rule 6433 (Minimum Quotation Size Requirements for OTC Equity 
Securities) generally provides that every member entering quotations in 
an inter-dealer quotation system must enter and honor those quotations 
for at least the minimum sizes defined in the rule.\7\ Further, Rule 
6432 (Compliance with the Information Requirements of SEA Rule 15c2-11) 
generally provides that members may not initiate or resume quotations 
in any ``quotation medium,'' \8\ which includes an ``inter-dealer 
quotation system,'' unless the member files a Form 211 with FINRA and 
complies with SEA Rule 15c2-11 (Initiation or resumption of quotations 
without specified information).\9\
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    \6\ See Securities Exchange Act Release No. 62359 (June 22, 
2010), 75 FR 37488 (June 29, 2010) (Order Approving File No. SR-
FINRA-2009-054) (approving the NMS-principled rules). These rules 
extended to the unlisted equity market certain protections 
previously applicable only to exchange-listed securities under the 
SEC's Regulation NMS and were adopted to enhance market quality and 
investor protection in the over-the-counter marketplace. See also 
Regulatory Notice 10-42 (September 2010).
    \7\ See Rule 6433.
    \8\ Rule 6420 defines ``quotation medium'' as ``any inter-dealer 
quotation system or any publication or electronic communications 
network or other device that is used by brokers or dealers to make 
known to others their interest in transactions in any OTC Equity 
Security, including offers to buy or sell at a stated price or 
otherwise, or invitations of offers to buy or sell.'' See Rule 
6420(j).
    \9\ SEA Rule 15c2-11(a) generally provides that, ``[a]s a means 
reasonably designed to prevent fraudulent, deceptive, or 
manipulative acts or practices, it shall be unlawful for a broker or 
dealer to publish any quotation for a security or, directly or 
indirectly, to submit any such quotation for publication, in any 
quotation medium . . . unless such broker or dealer has in its 
records the documents and information required [under this rule], 
and, based upon a review of the [required] information . . . has a 
reasonable basis under the circumstances for believing that the 
[required] information is accurate in all material respects, and 
that the sources of the [required] information are reliable.'' 17 
CFR 240.15c2-11(a).
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    The Rule 5200 Series also includes rules that govern quotation 
activity, including activity in OTC Equity Securities. For example, 
Rule 5210 (Publication of Transactions and Quotations) provides, among 
other things, that members are prohibited from publishing or 
circulating (or causing to be published or circulated) any notice or 
communication of any kind which purports to quote the bid price or ask 
price for any security, unless such member believes that such quotation 
represents a bona fide bid for, or offer of, such security (i.e., the 
``fictitious quotation'' prohibition). Rule 5210 applies to members 
that publish or circulate quotations, including on an ATS, and FINRA 
has published guidance to remind ATSs of their obligation to supervise 
activity that occurs on their platforms consistent with Rule 5210 and 
other FINRA rules.\10\ In addition, Rule 5220 (Offers at Stated Prices) 
generally prohibits members from making an offer to buy from or sell to 
any person any security at a stated price unless such member is 
prepared to purchase or sell, as the case may be, at such price and 
under such conditions as are stated at the time of such offer to buy or 
sell (i.e., the ``firm quote'' requirement).
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    \10\ See Regulatory Notice 18-25 (August 2018) (reminding firms, 
among other things, that ``[a]s a general matter, consistent with 
existing supervision obligations, FINRA expects that an ATS's 
supervisory system be reasonably designed to identify `red flags,' 
including potentially manipulative or non-bona fide trading that 
occurs on or through its systems'').
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    In addition to adopting and administering the Quotation Governance 
Rules, historically (since 1990), FINRA also expended substantial 
resources on operating the OTCBB, which is FINRA's inter-dealer 
quotation system available for use by broker-dealers to publish 
quotations in eligible OTC Equity Securities. The over-the-counter 
marketplace was very different when FINRA, then National Association of 
Securities Dealers, Inc. (NASD), first established the OTCBB. At that 
time, members largely relied on printed, rather than electronic, media 
for obtaining quotation information, and FINRA believed that the OTCBB 
would ``enhance the efficiency of pricing and foster competition within 
the inter-dealer market for a particular security.'' \11\ However, 
given technological advancements since 1990 and the subsequent increase 
in alternative electronic venues with more extensive functionality than 
the OTCBB, the level of quotation activity occurring on the OTCBB has 
continued to decline over the past several years and is now 
nonexistent. In fact, as of the date of this filing, the OTCBB does not 
display or widely disseminate quotation information on any OTC Equity 
Securities.
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    \11\ See Securities Exchange Act Release No. 25949 (July 28, 
1988), 53 FR 29096 (August 2, 1988) (Notice of Filing of File No. 
SR-NASD-88-19).
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    Thus, while FINRA believes that the Quotation Governance Rules 
continue to provide important safeguards for investors and play an 
important role in furthering market integrity in the over-the-counter 
marketplace, FINRA does not believe that continued operation of the 
OTCBB serves any benefit to investors or the marketplace, and that the 
resources being expended on maintaining the OTCBB system would be 
better directed elsewhere. Therefore, FINRA is proposing to delete the 
rules governing the OTCBB and cease its operation, and at the same time 
enhance the regulatory obligations related to quotations in OTC Equity 
Securities by proposing new Rule 6439, which would govern the 
activities of member inter-dealer quotation systems, as further 
discussed below.\12\
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    \12\ As discussed further in Item II.C. below, FINRA previously 
proposed enhancing regulation of member inter-dealer quotation 
systems and deleting the rules governing the OTCBB and ceasing its 
operation, but ultimately withdrew that filing. See Securities 
Exchange Release No. 72575 (July 9, 2014), 79 FR 41339 (July 15, 
2014) (Notice of Filing of File No. SR-FINRA-2014-030) (``2014 
Filing'').
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A. Proposed Enhanced Requirements for Member Inter-Dealer Quotation 
Systems

    As described above, FINRA's existing Quotation Governance Rules 
explicitly regulate the activities of OTC market makers \13\ and other 
members that display quotations on inter-dealer quotation systems, but 
generally do not directly provide quotation governance

[[Page 63316]]

standards for a member inter-dealer quotation system on or through 
which such quotations are displayed. Given that all quotation activity 
in OTC Equity Securities occurs on member-operated inter-dealer 
quotation systems (rather than the, now essentially defunct, OTCBB), 
FINRA believes it is appropriate to adopt new rules directly tailored 
to such systems to ensure they have in place minimum standards. FINRA 
believes these proposed requirements complement the existing framework 
governing the form and content of quotations and are consistent with 
the goals and objectives of Section 17B of the Act \14\ regarding the 
facilitation of widespread dissemination of reliable and accurate 
quotation information in penny stocks.\15\
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    \13\ FINRA Rule 6420(g) defines ``OTC Market Maker'' as a member 
of FINRA that holds itself out as a market maker by entering 
proprietary quotations or indications of interest for a particular 
OTC equity security in any inter-dealer quotation system, including 
any system that the SEC has qualified pursuant to Section 17B of the 
Act. A member is an OTC market maker only in those OTC equity 
securities in which it displays market making interest via an inter-
dealer quotation system.
    \14\ See 15 U.S.C. 78q-2. Section 17B was enacted by Congress as 
part of the Securities Enforcement Remedies and Penny Stock Reform 
Act of 1990 (``Penny Stock Act''). Public Law 101-429, 104 Stat. 931 
(1990). See also Securities Exchange Act Release No. 30608 (April 
20, 1992), 57 FR 18004 (April 28, 1992) (``Penny Stock Release'') 
(adopting seven rules (the ``penny stock rules'') under the Exchange 
Act requiring broker-dealers engaging in certain transactions in 
low-priced OTC securities to provide customers with specified 
information).
    \15\ FINRA also separately intends to request that the 
Commission designate the FINRA OTC Reporting Facility (``ORF''), 
together with one or more member inter-dealer quotation system, as a 
Qualifying Electronic Quotation System (``QEQS'') for purposes of 
Exchange Act Rule 3a51-1(d)(1)(iii) and the penny stock rules 
adopted under Section 15(g) of the Exchange Act.
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    Proposed new Rule 6439 would apply to members that operate an 
``inter-dealer quotation system,'' as defined in Rule 6420 
(Definitions), where such system permits quotation updates on a real-
time basis. Specifically, the proposal would require that member inter-
dealer quotation systems: (1) Establish and prominently disclose to 
subscribers (and disclose to prospective subscribers upon request) its 
written policies and procedures relating to the collection and 
dissemination of quotation information in OTC Equity Securities; (2) 
establish and prominently disclose to subscribers its non-
discriminatory written standards for granting access to quoting and 
trading on its system (and disclose to prospective subscribers upon 
request); (3) establish written policies and procedures addressing 
subscriber unresponsiveness with respect to the display of firm 
quotations in OTC Equity Securities and the submission of reports to 
FINRA on a monthly basis that include specified order and response 
information; (4) make available to customers a written description of 
each OTC Equity Security order- or quotation-related data product 
offered by such member inter-dealer quotation system and related 
pricing information, including fees, rebates, discounts and cross-
product pricing incentives; and (5) provide FINRA with specified 
information concerning the integrity of their systems.
i. Quotation Collection and Dissemination
    Under paragraph (a) of proposed Rule 6439, a member inter-dealer 
quotation system would need to establish, maintain and enforce written 
policies and procedures relating to the collection and dissemination of 
quotation information in OTC Equity Securities on or through its 
system. The written policies and procedures would need to be reasonably 
designed to ensure that quotations received and disseminated are 
informative, reliable, accurate, firm, and treated in a not unfairly 
discriminatory manner, including by establishing non-discretionary 
standards under which quotations are prioritized and displayed. For 
example, a member inter-dealer quotation system would be required to 
address in its procedures its methodology for ranking quotations, 
including at a minimum, addressing factors such as price (including any 
applicable quote access fee), size, time, capacity and type of 
quotation (such as unpriced quotes and bid/offer wanted quotations). 
The member inter-dealer quotation system also would be required to 
include any other factors relevant to the ranking and display of 
quotations (e.g., reserve sizes, quotation updates, treatment of closed 
quotations, and quotation information imported from other systems). The 
proposed rule would require member inter-dealer quotation systems to 
prominently disclose these written policies and procedures, along with 
any material updates, modifications and revisions, to subscribers 
within five business days following the date of establishment of the 
policy or procedure or implementation of the material change and to 
provide them to prospective subscribers upon request.\16\ FINRA 
believes that requiring these policies and procedures would help ensure 
that member inter-dealer quotation systems have in place appropriate 
standards regarding the treatment of quotations received and would 
promote fair and orderly quotation activity in the unlisted equity 
market.\17\ In addition, requiring that member inter-dealer quotation 
systems prominently disclose these procedures will provide subscribers 
and, upon request, prospective subscribers, with important information 
relating to the member inter-dealer quotation system's quotation 
collection and dissemination procedures.
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    \16\ A member that is an inter-dealer quotation system at the 
time of the effective date of this proposed rule change would 
prominently disclose the required information to its subscribers 
upon the effective date of the Rule and, thereafter, within five 
business days of the implementation of any material update, 
modification or revision thereto.
    \17\ FINRA would examine for compliance with proposed Rule 6439, 
including by reviewing the adequacy of member inter-dealer quotation 
systems' written policies and procedures and written fair access 
standards required under this proposal. Specifically, depending upon 
the timing of implementation, FINRA would conduct a targeted exam of 
impacted member inter-dealer quotation systems after the initial 
effectiveness of the rule and incorporate a Rule 6439 review as part 
of the regular exam program for impacted member firms.
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ii. Fair Access
    Paragraph (b) of proposed Rule 6439 would require member inter-
dealer quotation systems to establish non-discriminatory written 
standards for granting access to quoting and trading in OTC Equity 
Securities on its system that do not unreasonably prohibit or limit any 
person in respect to access to services offered by such member inter-
dealer quotation system.\18\ This proposed requirement is consistent 
with the ``fair access'' requirements of SEC Regulation ATS but would 
apply to quoting and trading in all OTC Equity Securities on the member 
inter-dealer quotation system, regardless of the percentage of average 
daily volume that such member inter-dealer quotation system had in the 
security.\19\ The proposed rule would further require that member 
inter-dealer quotation systems prominently disclose these written 
standards, and any material updates, modifications and revisions 
thereto, to its subscribers within five business days following the 
date of establishment of the written standards or implementation of the 
material change and to provide them to prospective subscribers upon 
request.\20\ FINRA believes that this

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proposed rule is appropriate given the significant role of member 
inter-dealer quotation systems in the over-the-counter market and will 
provide subscribers and prospective subscribers with additional 
information relating to the member inter-dealer quotation system's fair 
access standards.\21\
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    \18\ FINRA proposes that a member inter-dealer quotation system 
also must make and keep records of all grants of access including 
(for all subscribers) the reasons for granting such access and all 
denials or limitations of access and reasons (for each applicant) 
for denying or limiting access. A policy prohibiting or limiting 
access to services offered by the member inter-dealer quotation 
system due to non-payment by a subscriber would not be prohibited 
under the proposed rule.
    \19\ The fair access requirements in proposed Rule 6439 would 
apply to any member inter-dealer quotation system, regardless of its 
trading volume. Accordingly, while certain member inter-dealer 
quotation systems may already be subject to the volume-based fair 
access requirements in SEC Regulation ATS, Rule 6439 would ensure 
the application of such fair access requirements to all member 
inter-dealer quotation systems.
    \20\ A member that is an inter-dealer quotation system at the 
time of the effective date of this proposed rule change would 
prominently disclose the required information to its subscribers 
upon the effective date of the Rule and, thereafter, within five 
business days of the implementation of any material update, 
modification or revision thereto.
    \21\ See supra note 17.
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iii. Enhanced Firm Quote Compliance and Reporting
    Paragraphs (c) and (d) of proposed Rule 6439 include provisions 
that seek to enhance the regulatory regime around firm quote rule 
compliance for those member inter-dealer quotation systems that do not 
automatically execute all orders presented for execution against 
displayed quotations for which a member subscriber has a Rule 5220 
obligation. Specifically, paragraph (c) would require a member inter-
dealer quotation system to establish, maintain and enforce written 
policies and procedures that are reasonably designed to address 
instances of unresponsiveness when orders are presented to trade with 
firm quotations displayed in OTC Equity Securities on its system. This 
provision, as is the case with proposed paragraph (d), discussed below, 
would apply only to a member inter-dealer quotation system that does 
not automatically execute all orders presented for execution against 
displayed quotations for which a member subscriber has a Rule 5220 
obligation because there is no opportunity for unresponsiveness where 
orders are appropriately matched and auto-executed by the system.\22\
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    \22\ Where a system permits manual responses to orders received 
against a displayed quotation, unresponsiveness can occur. 
Currently, FINRA is aware of only one member inter-dealer quotation 
system that does not match and auto-execute, and thus would be 
subject to proposed Rule 6439 (c) and (d).
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    Currently, Rule 5220 and its associated Supplementary Material sets 
forth members' firm quote obligations by prohibiting members from 
making an offer to buy from or sell to any person any security at a 
stated price unless such member is prepared to purchase or sell, as the 
case may be, at such price and under such conditions as are stated at 
the time of such offer to buy or sell.\23\ A member's failure to 
respond to an order for which it has a firm quote obligation can 
disrupt the normal operation of the over-the-counter market.\24\
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    \23\ See Rule 5220.
    \24\ As stated in Rule 5220.01, ``if at the time an order for 
the purchase or sale of the quoted security is presented, the member 
is in the process of effecting a transaction in such quoted security 
and immediately after the completion of such transaction 
communicates a revised quotation size, such member shall not be 
obligated to purchase or sell the quoted security in an amount 
greater than such revised quotation size.''
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    Thus, FINRA is proposing to provide that a member inter-dealer 
quotation system that does not automatically execute all orders 
presented for execution against displayed quotations for which a member 
subscriber has a Rule 5220 obligation would be required to implement 
policies and procedures addressing unresponsiveness by its 
subscribers.\25\ At a minimum, these policies and procedures must 
specify an efficient process for (i) monitoring subscriber 
unresponsiveness; (ii) subscribers to submit complaints to the member 
inter-dealer quotation system regarding potential instances of 
unresponsiveness to an order; (iii) documenting the subscriber's 
rationale for unresponsiveness; and (iv) determining specified steps 
when an instance of or repeated order unresponsiveness may have 
occurred. Given that order unresponsiveness can disrupt the normal 
operation of the over-the-counter market, FINRA believes that requiring 
policies and procedures to address this activity would increase market 
efficiency and integrity and thus benefit investors.
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    \25\ See supra note 17.
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    To support FINRA's oversight of the over-the-counter market, FINRA 
also proposes to require reporting of aggregate and order-level 
information by member inter-dealer quotation systems that do not 
automatically execute all orders presented for execution against 
displayed quotations for which a member subscriber has a Rule 5220 
obligation. Specifically, proposed Rule 6439(d) would provide FINRA 
with additional information regarding the quotation activities 
occurring on member inter-dealer quotation system and would assist 
FINRA in surveilling for member compliance with firm quote obligations 
and unresponsiveness, which is an area in which FINRA regularly 
receives complaints.\26\ Proposed Rule 6439(d) would require that, on a 
monthly basis (in the form and manner prescribed by FINRA),\27\ each 
member inter-dealer quotation system subject to proposed paragraph (d) 
must provide to FINRA order and related response information for orders 
in OTC Equity Securities presented for execution against a displayed 
quotation for which a FINRA member subscriber has a Rule 5220 
obligation.\28\ Specifically, a member inter-dealer quotation system 
that does not automatically execute all orders presented for execution 
against displayed quotations for which a member subscriber has a Rule 
5220 obligation would be required to provide the following aggregated 
information to FINRA, categorized by FINRA member subscriber market 
participant identifier (MPID) across all symbols quoted by the MPID 
during the previous calendar month: (i) Total number of marketable 
orders presented for execution against the MPID's quotation; \29\ (ii) 
average execution (full or partial) time for marketable orders 
presented against the MPID's quotation based on the time an order is 
presented; (iii) total number of full or partial executions based on 
the time a marketable order is presented that are within specified 
execution timeframes; \30\ (iv) total number of marketable orders 
presented against the MPID's quotation that did not receive a full or 
partial execution; and (v) average response time of the highest 10% and 
highest 50% of the MPID's response times for marketable orders (for 
full or partial executions).\31\
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    \26\ For example, in 2018, FINRA received 119 complaints from 
members regarding instances of unresponsiveness to requests to 
execute against a displayed quotation. See infra note 42 and 
accompanying text.
    \27\ If the Commission approves the proposed rule change, FINRA 
would announce in a Regulatory Notice details about the required 
manner and timing of the submission of this information to FINRA.
    \28\ FINRA understands that communications on a member inter-
dealer quotation system that would be subject to proposed Rule 
6439(d) may be in the form of messages (i.e., the back and forth 
communications between market makers) and are treated as 
``negotiations'' by the system as they require trader intervention 
before a trade can occur. While such negotiation activities are 
considered ``orders'' for purposes of firm quote rule obligations 
and this proposed Rule, pursuant to current guidance, they are not 
considered ``orders'' for purposes of the Consolidated Audit Trail 
(CAT) at this time and no CAT reporting obligation exists until the 
terms and conditions of a trade have been agreed upon. See CAT FAQ 
J2.
    \29\ In this context, a ``marketable order'' refers to a message 
presented against a market maker's quote that is priced to be 
immediately executable.
    \30\ The proposed Rule would require that a member inter-dealer 
quotation system subject to proposed paragraph (d) report the total 
number of full or partial executions within the following execution 
timeframes: <5 seconds; >=5 seconds and <10 seconds; >=10 and <20 
seconds; and >=20 seconds.
    \31\ FINRA believes that some of this information already is 
generated by the member inter-dealer quotation system expected to be 
subject to this proposed provision. See supra note 22.
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    A member inter-dealer quotation system that is subject to proposed 
paragraph (d) also would be required to provide the following order-
level information for each order presented against an MPID's quotation 
during the previous calendar month: Buy/sell; security symbol; price; 
size; All or None indicator (yes or no); order entry firm

[[Page 63318]]

MPID; system-generated order number (if any); order receipt time; time 
in force; position in queue for quote (e.g., IL1, IL2); response time; 
order response (e.g., execute, reject cancel, etc.); and executed 
quantity. Notwithstanding these requirements, proposed Rule 6439(d)(2) 
generally would provide that, to the extent that the above order-level 
information is or becomes CAT reportable under Rule 6830 (Industry 
Member Data Reporting), a member inter-dealer quotation system would 
not have a reporting obligation under proposed Rule 6439(d)(1)(B). 
Whether obtained pursuant to this proposed rule or through CAT, the 
information required by proposed Rule 6439(d)(1)(B) would bolster 
FINRA's ability to surveil for compliance with Rule 5220. Thus, FINRA 
believes that this proposed rule change would further the integrity of 
the over-the counter market.
iv. Order and Quotation Data Product Transparency
    Proposed Rule 6439(e) would require a member inter-dealer quotation 
system to provide on its website (or its affiliate distributor's 
website) a written description of each OTC Equity Security order- or 
quotation-related data product offered by such member inter-dealer 
quotation system and related pricing information, including fees, 
rebates, discounts and cross-product pricing incentives. Members would 
be required to keep the relevant website page(s) accurate and up-to-
date with respect to the required information, and to make such 
information available at least two business days in advance of offering 
the data product. The provision would make clear that this requirement 
would not preclude members from negotiating lower fees with customers, 
provided that the member discloses on the relevant website page(s) the 
circumstances under which it may do so. FINRA believes that this aspect 
of the proposal would help keep customers, other investors and market 
participants informed about the availability of member-offered order- 
or quotation-related data products for OTC Equity Securities on an 
ongoing basis.
v. System Integrity
    Finally, proposed Rule 6439(f) would require a member inter-dealer 
quotation system to provide FINRA with prompt notification when it 
reasonably becomes aware of any non-de minimis systems disruption that 
degrades, limits, or otherwise impacts the member inter-dealer 
quotation system's functionality with respect to trading or the 
dissemination of market data. Such notification would include, on a 
reasonable best efforts basis, a brief description of the event, its 
impact, and resolution efforts. Prompt receipt of this information 
would strengthen FINRA's oversight of the over-the-counter market by 
alerting FINRA to issues that could adversely affect the reliability, 
availability, or integrity of member inter-dealer quotation systems 
that support quoting and trading of OTC Equity Securities.
    To comply with this requirement, a member inter-dealer quotation 
system that is an SCI alternative trading system, as defined in Rule 
1000 of SEC Regulation SCI,\32\ could provide FINRA with the same 
information (or a duplicate copy of any notification) submitted to the 
SEC concerning the occurrence of, and updates on, a non-de minimis 
systems disruption SCI event pursuant to Rule 1002(b) of SEC Regulation 
SCI,\33\ promptly after filing the notification with the SEC. If a 
member inter-dealer quotation system is not an SCI alternative trading 
system, it could comply with this requirement by providing FINRA prompt 
notification when it reasonably becomes aware of any such systems 
disruption, and by providing periodic updates on the event and its 
resolution. As noted above, such notifications would include, on a 
reasonable best efforts basis, a brief description of the event, its 
impact, and resolution efforts. While this requirement is informed by 
the event reporting requirements established in Regulation SCI, it not 
intended to impose the formal reporting framework provided by SEC 
Regulation SCI, or otherwise extend or apply Regulation SCI, to a 
member inter-dealer quotation system not subject to it. FINRA would 
announce in a Regulatory Notice the methods and process by which 
members may provide systems disruption notifications to FINRA.
---------------------------------------------------------------------------

    \32\ See 17 CFR 242.1000.
    \33\ See 17 CFR 242.1002(b).
---------------------------------------------------------------------------

B. Proposed Deletion of OTCBB-Related Rules

    As discussed above, FINRA also is proposing to delete the FINRA 
Rule 6500 Series, which governs the operation of the OTCBB and cease 
its operation. Use of the OTCBB has declined precipitously over the 
years, such that the system now is essentially defunct. In fact, the 
OTCBB does not widely disseminate quotation information on any OTC 
Equity Securities. As a result, discontinuance of the OTCBB as an 
inter-dealer quotation system will not impact the current level of 
quotation information available for OTC Equity Securities, and FINRA 
strongly believes that there is no benefit to investors or the 
marketplace by continuing operation of the OTCBB. Further, FINRA notes 
that, where investors look to feeds that solely disseminate OTCBB data 
for quotation information on a particular OTC Equity Security, 
investors mistakenly may conclude that there are no current quotations 
in the security (when, in fact, there may be numerous quotations 
available elsewhere--i.e., on member-operated inter-dealer quotation 
systems). Therefore, FINRA believes that ceasing operation of the OTCBB 
would eliminate potential investor confusion regarding the availability 
of quotation information for OTC Equity Securities. For the same 
reasons, FINRA does not believe that the OTCBB, in its current state, 
furthers the goals and objectives of Section 17B of the Act \34\ and, 
therefore, does not meet the characteristics of a system described in 
Section 17B of the Act regarding the widespread dissemination of 
reliable and accurate quotation information with respect to ``penny 
stocks.'' \35\ However, since the inception of the OTCBB, non-self-
regulatory organization (``SRO'') entities that are member inter-dealer 
quotation systems have increased their participation in the collection 
and dissemination of quotation information in OTC equity securities, 
including for those OTC equity securities meeting the definition of 
``penny stock,'' and have made such quotation information available to 
investors and market participants. Thus, FINRA believes that 
discontinuance of the OTCBB as an inter-dealer quotation system will 
not have an appreciable impact on the current level of quotation 
transparency for OTC equity securities. Importantly, FINRA will 
continue to centralize last sale transaction reporting through the ORF 
and, therefore, will continue to operate a system that collects and 
disseminates transaction information on, and provides widespread 
dissemination of reliable and accurate last sale information with 
respect to, OTC equity securities, including penny

[[Page 63319]]

stocks.\36\ Thus, the objectives of Section 17B of the Act relating to 
the provision of price and volume information to investors and market 
participants will continue to be satisfied through FINRA's operation of 
the ORF.
---------------------------------------------------------------------------

    \34\ Section 17B of the Act provides, among other things, that 
the Commission shall facilitate the widespread dissemination of 
reliable and accurate last sale and quotation information with 
respect to penny stocks.
    \35\ Under SEA Rule 3a51-1, ``penny stock'' is defined to, among 
other things, exclude securities that have a price of five dollars 
or more as determined either on a per transaction basis or, in the 
absence of a transaction, on the basis of the inside bid quotation 
for the security displayed on an automated quotation system that has 
the characteristics set forth in Section 17B(b)(2) of the Act or any 
other system that is designated by the Commission. See 17 CFR 
240.3a51-1.
    \36\ FINRA members generally are required to report trades in 
OTC equity securities to ORF within 10 seconds of execution and 
FINRA widely disseminates this transaction information in real-time.
---------------------------------------------------------------------------

    In advance of the discontinuance of the OTCBB, FINRA will take 
steps to ensure a smooth transition for issuers and members. 
Specifically, although there are no members currently using the OTCBB, 
FINRA will publicize announcements through the FINRA.org website.\37\ 
Thereafter, FINRA will continue to assess the widespread availability 
of quotation transparency to investors and market participants through 
non-SRO sources on a regular basis. If the availability of quotation 
information to investors significantly declines, FINRA will revisit 
and, if necessary, file a proposed rule change to establish an SRO-
operated inter-dealer quotation system (or other measure) to facilitate 
the type of widespread quotation transparency described in Section 17B 
of the Act.
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    \37\ FINRA notes that there currently are no OTCBB symbols.
---------------------------------------------------------------------------

    FINRA also is proposing to delete the text of Rule 7720 (OTC 
Bulletin Board Service), which currently sets forth the fees applicable 
to a broker-dealer that displays quotations or trading interest in the 
OTCBB. This rule no longer would be relevant if FINRA ceased the 
operation of the OTCBB in connection with this proposal. In addition, 
FINRA is proposing to amend Rule 9217 (Violations Appropriate for 
Disposition Under Plan Pursuant to SEA Rule 19d-1(c)(2)) to remove 
reference to Rule 6550 (Transaction Reporting), which FINRA is 
proposing to delete as part of this proposal.
    If the Commission approves the proposed rule change, FINRA will 
announce the effective date(s) of the proposed rule change in a 
Regulatory Notice. The effective date(s) may be phased, but will be no 
later than 365 days following Commission approval.
2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the 
provisions of Section 15A(b)(6) of the Act,\38\ which requires, among 
other things, that 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. FINRA also believes that the proposed rule change is 
consistent with the provisions of Section 15A(b)(11) of the Act,\39\ 
which requires that FINRA rules include provisions governing the form 
and content of quotations relating to securities sold otherwise than on 
a national securities exchange which may be distributed or published by 
any member or person associated with a member, and the persons to whom 
such quotations may be supplied, and that such rules be designed to 
produce fair and informative quotations, to prevent fictitious or 
misleading quotations, and to promote orderly procedures for 
collecting, distributing, and publishing quotations.
---------------------------------------------------------------------------

    \38\ 15 U.S.C. 78o-3(b)(6).
    \39\ See 15 U.S.C. 78o-3(b)(11).
---------------------------------------------------------------------------

    Specifically, proposed Rule 6439 would implement new requirements 
for member inter-dealer quotation systems by, among other things, 
requiring such members to establish procedures that govern the 
treatment of, and fair access to, quotations in OTC Equity Securities. 
Proposed Rule 6439 also would require members to address instances of 
unresponsiveness to orders when subscribers are posting firm quotations 
in OTC Equity Securities. These provisions are designed to promote just 
and equitable principles of trade, protect investors and the public 
interest, and enhance regulatory oversight of the form and content of 
quotations for OTC Equity Securities, consistent with Sections 
15A(b)(6) and (11). Given the significant role that member-operated 
inter-dealer quotation systems serve today in the marketplace for OTC 
Equity Securities, FINRA believes the proposed requirements would 
improve the reliability, integrity, fairness of, and access to 
quotations for OTC Equity Securities. FINRA also believes these 
proposed requirements are consistent with the Act because they would 
improve FINRA's oversight of member inter-dealer quotation systems.
    Further, FINRA believes that the proposed rule change is consistent 
with Section 17B of the Act.\40\ Section 17B was enacted by Congress as 
part of the Penny Stock Act, which was designed to remedy 
inefficiencies and address regulatory concerns caused by the lack of 
reliable market information on penny stocks traded over the counter 
and, in connection with this initiative, the Commission designated the 
OTCBB as a QEQS for purposes of the penny stock rules.\41\
---------------------------------------------------------------------------

    \40\ See 15 U.S.C. 78q-2.
    \41\ See Penny Stock Release, supra note 14.
---------------------------------------------------------------------------

    Due to the decline of OTCBB, as discussed above, FINRA is concerned 
that OTCBB is no longer a reliable source of complete quotation 
information for OTC equity securities and, therefore, operation of the 
system no longer furthers the purposes of Section 17B of the Act. FINRA 
believes that the proposed rule change would protect investors and the 
public interest by deleting the OTCBB rules and discontinuing its 
operation, because the OTCBB does not widely disseminate best bid or 
offer information for any securities. FINRA believes that ceasing 
operation of the OTCBB would remove potential investor confusion 
regarding the availability of quotation information for OTC Equity 
Securities and would allow FINRA to better allocate regulatory 
resources. FINRA believes that ceasing operation of the OTCBB, coupled 
with the proposed changes to improve the governance of member inter-
dealer quotation systems on or through which quotations in OTC equity 
securities are displayed, best serves and promotes the goals of Section 
17B of the Act with respect to the widespread availability of quotation 
information in penny stocks.

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.
Economic Impact Assessment
    FINRA has undertaken an economic impact assessment, as set forth 
below, to analyze the potential economic impacts, including anticipated 
costs, benefits, and distributional and competitive effects, relative 
to the current baseline, and the alternatives FINRA considered in 
assessing how to best meet its regulatory objectives.
Regulatory Need
    As discussed above, FINRA is proposing to delete the OTCBB rules 
and discontinue its operation and adopting new requirements for member 
inter-dealer quotation systems to enhance the regulation of quotation 
activity in OTC Equity Securities. The proposed amendments are intended 
to achieve a more robust regulatory framework around member inter-
dealer quotation systems.
Economic Baseline
    As mentioned above, the level of quotation activity occurring on 
the OTCBB has significantly declined over the past several years and is 
now nonexistent. Of the 352,698 average trades per day reported in all 
OTC

[[Page 63320]]

Equity Securities in August 2020 (with a total of 7,406,664 trades 
reported in all OTC Equity Securities for the month), none were related 
to quotation activity on the OTCBB. No member firms have quoted on the 
OTCBB since October 29, 2019. Because all quotation activity in OTC 
Equity Securities now occurs on member inter-dealer quotation systems, 
FINRA's increased oversight of these systems would be beneficial from 
market integrity and investor protection perspectives.
    As of August 2020, FINRA is aware of two member inter-dealer 
quotation systems: Global OTC and OTC Link. An average of 4,227,157 and 
13,370,896 quotations were posted on Global OTC and OTC Link, 
respectively, per day in August 2020, leading to an average of 24,408 
and 9,567 trades on Global OTC and OTC Link, respectively, per day. In 
that same month, an average of 5,968 and 11,586 symbols were quoted on 
Global OTC and OTC Link, respectively, per day.
    FINRA previously proposed amendments substantially similar to 
proposed Rule 6439(a) and (b), which would require that member inter-
dealer quotation systems adopt and prominently disclose written 
policies and procedures around the collection and dissemination of 
quotation information in OTC Equity Securities and establish and 
prominently disclose non-discriminatory written standards for granting 
access to quoting and trading on member inter-dealer quotation systems, 
respectively. As discussed in Item 5 below, when previously proposed, 
these aspects of the proposal did not appear to be controversial 
because they were not opposed by commenters. FINRA understands that 
member inter-dealer quotation systems already have established and 
adopted policies and procedures regarding quote collection and 
dissemination. FINRA also notes that member inter-dealer systems that 
are alternative trading systems already may be subject to similar fair 
access standards pursuant to Regulation ATS (when they reach certain 
volume thresholds), which potentially could simplify compliance with 
regard to the fair access requirements under the instant proposal.
    With respect to proposed Rule 6439(c) and (d) regarding firm quote 
compliance and reporting, FINRA would use the collected information in 
connection with its program regarding compliance with Rule 5220. 
Currently, aggrieved members may contact FINRA to report instances of 
unresponsiveness.\42\ In addition, FINRA understands that, while some 
of the order and response information required by the proposal may not 
be maintained in the required form by the impacted member inter-dealer 
quotation system at present, other aspects of the proposed required 
information already is collected and provided to subscribers. With 
respect to proposed Rule 6439(e) regarding data product and pricing 
transparency, FINRA understands that member inter-dealer quotation 
systems or affiliate distributors currently provide information 
regarding their data products and the associated fees on their 
websites. In addition, with respect to proposed Rule 6439(f) regarding 
system integrity, if a member inter-dealer quotation system already is 
subject to SEC Regulation SCI, it already is required to report to the 
SEC the same type of information that would be required to be reported 
to FINRA under the proposal. For a member inter-dealer quotation system 
not already required to report this information to the SEC, the 
proposed rule would apply a new notification requirement.
---------------------------------------------------------------------------

    \42\ In 2018 and 2019, FINRA received 119 and 53 complaints, 
respectively, regarding unresponsiveness to attempts to execute 
against displayed a quote, and in 2020, FINRA has received 37 such 
complaints as of September 15, 2020.
---------------------------------------------------------------------------

Economic Impact
Costs
    Due to the non-existent quoting activity on the OTCBB, FINRA does 
not believe that discontinued operation of the system would impose a 
material cost on members, as member firms were never required to 
maintain connectivity to the OTCBB. In addition, due to the more 
extensive functionalities on member inter-dealer quotation systems, 
FINRA believes that member inter-dealer quotation systems can serve as 
substitutes for the OTCBB. Furthermore, FINRA will continue to 
centralize last sale transaction reporting through the ORF, and, 
consequently, will continue to collect and disseminate transaction 
information on last sale information of OTC Equity Securities, 
including penny stocks. FINRA does not expect that members would change 
their behavior in terms of where they seek liquidity as a result of the 
proposed amendments and notes that dealers already use these other 
platforms for virtually all quoting in OTC Equity Securities.
    Member inter-dealer quotation systems could potentially incur costs 
associated with establishing, adopting, and prominently disclosing 
procedures and standards pursuant to the requirements in proposed Rules 
6439 (a) and (b), to the extent that existing procedures and standards 
are not sufficient to comply with the requirements of the proposed rule 
or are not prominently disclosed. Member inter-dealer quotation systems 
also could potentially incur costs associated with the proposals 
related to firm quote compliance and reporting and system integrity. 
The potential impact of these provisions could be different for each 
member inter-dealer quotation system. For example, the proposals 
relating to firm quote compliance and reporting only apply to member 
inter-dealer quotation systems that do not automatically execute all 
orders presented against a displayed quotation on their system (because 
there is no opportunity for unresponsiveness where orders appropriately 
are matched and automatically executed by the system). However, where a 
member inter-dealer quotation system permits manual responses to orders 
received against a displayed quotation, unresponsiveness can occur, and 
the system would incur the costs associated with complying with the 
proposed enhancements. In the current regime, FINRA is aware of only 
one member inter-dealer quotation system that does not automatically 
execute all orders on its system, and thus would have to comply with 
proposed Rules 6439(c) and (d).
    With respect to proposed Rule 6439(e) regarding data product and 
pricing transparency, FINRA understands that member inter-dealer 
quotation systems or affiliate distributors currently provide 
information regarding their data products and the associated fees on 
their websites. Member inter-dealer quotation systems could potentially 
incur costs associated with complying with the requirements in proposed 
Rules 6439(e) to the extent that existing disclosures are not 
sufficient to comply with the requirements of the proposed rule.
    In addition, the potential impact of the proposed system disruption 
reporting requirement in proposed Rule 6439(f) would vary based on 
whether a member inter-dealer quotation system is subject to SEC 
Regulation SCI. For a member inter-dealer quotation system that is 
subject to SEC Regulation SCI, FINRA expects that the proposed 
requirements would impose no material additional costs. For a member 
inter-dealer quotation system that is not subject to SEC Regulation 
SCI, the proposed requirements could impose limited additional costs, 
as the member inter-dealer quotation system would be required to 
develop a new process for promptly reporting systems disruptions

[[Page 63321]]

to FINRA. However, FINRA intends this to be a streamlined reporting 
requirement that applies once the member inter-dealer quotation system 
reasonably becomes aware of an event; this proposal is not intended to 
impose the formal reporting framework provided by SEC Regulation SCI, 
or otherwise extend or apply Regulation SCI, to a member inter-dealer 
quotation system not subject to it. To the extent that such costs are 
passed on to the member inter-dealer quotation system's subscribers, 
firms potentially could observe an increase in costs associated with 
quoting and trading on these platforms. Such increase in costs may be 
reflected in fees imposed on the subscribers.
Benefits
    Although no member firms have posted quotes on the OTCBB since 
October 29, 2019, some firms may still be connected to the OTCBB. To 
the extent that member firms incur costs associated with OTCBB 
connectivity, firms may gain cost savings from no longer maintaining a 
connection.
    Given the importance of compliance with the firm quote rule, FINRA 
would anticipate benefits to market integrity through improved 
oversight of firm quote rule compliance from requiring a member inter-
dealer quotation system that does not automatically execute all orders 
presented for execution against quotations displayed on its platform to 
establish policies and procedures to address instances of subscriber 
unresponsiveness and report order and response message information to 
FINRA on a monthly basis.
    FINRA expects that the proposed amendments would enhance investor 
protection in the OTC equity space through increased oversight of 
member inter-dealer quotation systems. Because member inter-dealer 
quotation systems facilitate virtually all of the quoting activity in 
this market, the proposed amendments, and how they apply to member 
inter-dealer quotation systems with different functionalities, would 
potentially provide protection for clients of all types of member 
inter-dealer quotation systems. With respect to the proposed system 
integrity requirements, as noted above, FINRA believes these 
requirements would enhance FINRA's oversight of the systems a member 
inter-dealer quotation system uses, thereby promoting the reliability 
and availability of such systems.
Alternatives Considered
    No other alternatives were considered for the proposed amendments.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    FINRA previously proposed amendments substantially similar to 
certain aspects of the instant filing.\43\ However, the previous rule 
filing was withdrawn as FINRA continued to consider what changes to the 
governance of the over-the-counter marketplace were appropriate. Below 
is a discussion of the comments FINRA previously received on the 
substantially similar items being re-proposed in the instant filing.
---------------------------------------------------------------------------

    \43\ See 2014 Filing, supra note 12.
---------------------------------------------------------------------------

    As it is proposing in the instant filing, FINRA previously proposed 
ceasing operation of the OTCBB and deleting the Rule 6500 Series and 
related rules. Commenters supported this aspect of the proposal.\44\ 
For example, OTC Markets stated that ``FINRA's OTCBB no longer provides 
broker-dealers with an effective service for pricing securities, and 
market participants will be better served by FINRA regulating 
Qualifying IQSs instead of expending resources trying to operate the 
OTCBB.'' Global OTC stated that it agreed ``that OTCBB volume and 
relevance has dissipated over the last few years'' and therefore did 
not object to closure of the OTCBB and related deletion of the Rule 
6500 Series.
---------------------------------------------------------------------------

    \44\ See Letter from Daniel Zinn, General Counsel, OTC Markets 
Group Inc., to Secretary, SEC, dated August 5, 2014 (``OTC 
Markets''); Letter from Barry Scadden, Vice President, Global OTC, 
to Kevin M. O'Neill, Deputy Secretary, SEC, dated October 10, 2014 
(``Global OTC''); Letter from Michael R. Trocchio, Sidley Austin 
LLP, to Brent J. Fields, Secretary, SEC, dated November 4, 2014 
(``Sidley Austin on behalf of OTC Markets'').
---------------------------------------------------------------------------

    FINRA also previously proposed rules substantively similar to 
proposed Rules 6439(a) (relating to the collection and dissemination of 
quotation information) and (b) (relating to fair access standards). 
Commenters generally supported the proposal relating to the collection 
and dissemination of quotation information, and no commenters opposed 
this aspect of the proposal. For example, OTC Markets stated that this 
aspect of the proposal, among others, ``has as its focus the improved 
fairness of the dissemination or availability of quotation 
information'' and would ``provide additional transparency to the market 
and ensure fair access to quotation related services and data.'' 
Commenters also supported the proposal relating to fair access 
standards. For example, OTC Markets stated that it already had policies 
in place that it believed would satisfy the requirements of the 
proposed rule change because it was subject to the fair access 
provisions under SEC Regulation ATS. This commenter also noted that, 
because the proposal's fair access requirements mirror those in SEC 
Regulation ATS, the requirements are appropriately tailored to ensure 
non-discriminatory availability of access to the system without 
unnecessarily burdening the ATS.
    Finally, FINRA previously proposed a rule that required member 
inter-dealer quotation systems to provide FINRA with a written 
description of each quotation-related data product that it offers, and 
all related pricing information.\45\ Commenters supported this aspect 
of the proposal, and no commenters opposed this aspect of the proposal. 
For example, OTC Markets stated that this proposal would ``ensure a 
baseline of reliable, accurate information available to all investors'' 
and Global OTC noted that the information would provide more 
transparency to market participants, and pointed out that ``similar 
requirements already exist in the exchange space.''
---------------------------------------------------------------------------

    \45\ The instant proposal instead would require member inter-
dealer quotation systems to post this information on their website 
page(s), rather than providing it to FINRA.
---------------------------------------------------------------------------

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period up to 90 days (i) as the 
Commission may designate 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 or disapprove 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 email to rule-comments@sec.gov. Please include 
File Number SR-FINRA-2020-031 on the subject line.

[[Page 63322]]

Paper Comments

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

All submissions should refer to File Number SR-FINRA-2020-031. 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 website (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 website 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 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. Persons submitting comments are cautioned that 
we do not redact or edit personal 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-2020-031 and should be submitted on or before October 28, 2020.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\46\
---------------------------------------------------------------------------

    \46\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-22097 Filed 10-6-20; 8:45 am]
BILLING CODE 8011-01-P