Document ID: SEC-2017-2003-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Financial Industry Regulatory Authority, Inc.
Posted Date: 2017-12-06T05:00Z

[Federal Register Volume 82, Number 233 (Wednesday, December 6, 2017)]
[Notices]
[Pages 57639-57641]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-26222]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82189; File No. SR-FINRA-2017-034]

Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change Relating to the Trade Reporting Facility Limited 
Liability Company Agreements

November 30, 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 November 21, 2017, Financial Industry Regulatory Authority, Inc. 
(``FINRA'') filed with the Securities and Exchange Commission 
(``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 concerned solely with the 
administration of the self-regulatory organization under Section 
19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-4(f)(3) 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)(iii).
    \4\ 17 CFR 240.19b-4(f)(3).
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I. Self-Regulatory Organization's Statement of the Terms of the 
Substance of the Proposed Rule Change

    FINRA is proposing to make technical changes to FINRA's Trade 
Reporting Facility limited liability company agreements, as they appear 
in the FINRA Manual, to reflect the second amendment and restatement of 
such agreements.
    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 Trade Reporting Facilities (``TRFs'') are facilities that 
FINRA members use to report over-the-counter (``OTC'') transactions in 
NMS stocks in accordance with FINRA rules. There currently are two 
TRFs: The FINRA/Nasdaq TRF and the FINRA/NYSE TRF.\5\ The operation of 
each TRF is

[[Page 57640]]

governed by a Limited Liability Company Agreement (the ``TRF LLC 
Agreement'') between FINRA and the respective ``Business Member,'' each 
of which is itself an affiliate of a self-regulatory organization 
(``SRO''). The TRF LLC Agreements, which were submitted as part of the 
rule filings to establish the respective TRFs and were subsequently 
amended and restated,\6\ appear in the FINRA Manual.
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    \5\ The establishment of each TRF was subject to a proposed rule 
change filed with the Commission. See Securities Exchange Act 
Release No. 54084 (June 30, 2006), 71 FR 38935 (July 10, 2006) 
(Order Approving File No. SR-NASD-2005-087); and Securities Exchange 
Act Release No. 55325 (February 21, 2007), 72 FR 8820 (February 27, 
2007) (Notice of Filing and Immediate Effectiveness of File No. SR-
NASD-2007-011).
    \6\ See Securities Exchange Act Release No. 62064 (May 10, 
2010), 75 FR 27606 (May 17, 2010) (Notice of Filing and Immediate 
Effectiveness of File No. SR-FINRA-2010-020).
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    Under each TRF LLC Agreement, FINRA is the ``SRO Member'' and has 
sole regulatory responsibility for the TRF, including real-time 
monitoring and T+1 surveillance, development and enforcement of trade 
reporting rules and submission of proposed rule changes to the 
Commission. The Business Member under each TRF LLC Agreement is 
primarily responsible for the management of the TRF's business affairs, 
which may not be conducted in a manner inconsistent with the regulatory 
and oversight functions of FINRA. Among other things, the Business 
Member establishes pricing for the TRF and is obligated to pay the cost 
of regulation and is entitled to the profits and losses, if any, 
derived from operation of the TRF. The Business Member also provides 
the ``user facing'' front-end technology used to operate the TRF and 
transmit in real time trade report data directly to the NMS securities 
information processors (``SIPs'') and to FINRA for audit trail 
purposes.
    FINRA and the TRF Business Members recently executed second amended 
and restated TRF LLC Agreements to reflect the change in name of each 
Business Member. Specifically, the FINRA/Nasdaq TRF Business Member, 
formerly NASDAQ OMX Group, Inc., is now known as Nasdaq, Inc., and the 
FINRA/NYSE TRF Business Member, formerly NYSE Market, Inc., is now 
known as NYSE Market (DE), Inc.
    As part of the second amended and restated TRF LLC Agreements, 
FINRA and the Business Members also updated the schedules relating to 
the respective TRF officers and directors. Schedule C of each TRF LLC 
Agreement is the management agreement that all TRF directors must 
sign.\7\ Rather than reflect the executed version of the management 
agreement, Schedule C of each TRF LLC Agreement now reflects the form 
of management agreement only and new Schedule E of each TRF LLC 
Agreement specifically identifies the directors of the TRF (each of 
whom, as noted above, is required to sign the management agreement that 
appears at Schedule C). Schedule D of each TRF LLC Agreement identifies 
the officers of the TRF and was updated as part of the second amended 
and restated agreement. Also as part of the second amendment and 
restatement of the agreements, FINRA and the Business Members revised 
Section 27 of each TRF LLC Agreement to expressly provide that the 
parties may update Schedules D and E from time to time by notice, 
without also needing to amend and restate the TRF LLC Agreement.
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    \7\ Pursuant to each TRF LLC Agreement, the TRF board of 
directors is comprised of three directors. The Business Member is 
entitled to designate two directors and the SRO Member is entitled 
to designate one director.
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    FINRA is proposing to make technical changes to the TRF LLC 
Agreements, as they appear in the FINRA Manual, to reflect the second 
amended and restated TRF LLC Agreements.\8\ The terms and conditions of 
the second amended and restated TRF LLC Agreements are identical to 
those of the first amended and restated TRF LLC Agreements.
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    \8\ FINRA also is proposing a conforming change to Rule 7640A(a) 
(Data Products Offered by NASDAQ) to reflect the change in name from 
The NASDAQ OMX Group, Inc. to Nasdaq, Inc.
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    In addition, because the parties may update Schedules D and E from 
time to time, without needing to also amend and restate the TRF LLC 
Agreements, FINRA is proposing to provide the current schedules--with 
the current lists of TRF officers and directors--on FINRA's public Web 
site, rather than in the FINRA Manual.\9\ FINRA believes that this 
would obviate the need to submit a proposed rule change each time there 
is a change in the officers or directors of the TRF. Thus, in lieu of 
reflecting the schedules themselves, the FINRA Manual will provide that 
FINRA maintains current Schedules D and E on its public Web site. FINRA 
will post the current Schedules D and E promptly upon the filing of the 
proposed rule change and going forward will promptly update its Web 
site to reflect any future updates to the Schedules.
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    \9\ FINRA anticipates that the current schedules will be 
accessible from the TRF page of the FINRA public Web site: http://www.finra.org/industry/trf.
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    Set forth in the table below is a current list of FINRA/Nasdaq TRF 
officers and directors, as reflected in Schedules D and E, 
respectively, of the FINRA/Nasdaq TRF LLC Agreement:

------------------------------------------------------------------------
                   Name                                 Title
------------------------------------------------------------------------
                  Officers of The FINRA/Nasdaq TRF LLC
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Paul Roland...............................  President
Joan C. Conley............................  Secretary
Peter Strandell...........................  Treasurer
Michael Caramico..........................  Assistant Treasurer
Amy Kohn..................................  Vice President
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                  Directors of The FINRA/Nasdaq TRF LLC
------------------------------------------------------------------------
John Zecca (designated by the Business Member)
Tal Cohen (designated by the Business Member)
Thomas Gira (designated by the SRO Member)
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    Set forth in the table below is a current list of FINRA/NYSE TRF 
officers and directors, as reflected in Schedules D and E, 
respectively, of the FINRA/NYSE TRF LLC Agreement:

------------------------------------------------------------------------
                   Name                                 Title
------------------------------------------------------------------------
                   Officers of The FINRA/NYSE TRF LLC
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Robert Hill...............................  President
Scott Hill................................  Chief Financial Officer
Doug Foley................................  Senior Vice President
Karen Lorentz.............................  Vice President
Martin Hunter.............................  Senior Vice President, Tax &
                                             Treasury
Elizabeth King............................  General Counsel & Secretary
Martha Redding............................  Assistant Secretary
Andrew Surdykowski........................  Assistant Secretary
Sandra Kerr...............................  Senior Tax Director
David Nevin...............................  Senior Treasury Director
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                   Directors of The FINRA/NYSE TRF LLC
------------------------------------------------------------------------
Paul Adcock (designated by the Business Member)
Robert Hill (designated by the Business Member)
Thomas Gira (designated by the SRO Member)
------------------------------------------------------------------------

    As noted above, current Schedules D and E will be posted on FINRA's 
public Web site and will not appear in the FINRA Manual. Going forward, 
changes to these schedules will only be reflected on FINRA's public Web 
site.
    FINRA has filed the proposed rule change for immediate 
effectiveness. The effective date will be the date of filing
2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the 
provisions of Section 15A(b)(6) of the Act,\10\ which requires, among 
other things, that FINRA rules must be designed to prevent fraudulent 
and manipulative

[[Page 57641]]

acts and practices, to promote just and equitable principles of trade, 
and, in general, to protect investors and the public interest. FINRA 
believes that the proposed rule change will enhance the information 
available to members and the public regarding FINRA's TRF LLC 
Agreements in that the current agreements will be reflected in the 
FINRA manual and updated Schedules D and E will be readily available on 
FINRA's public Web site. Thus, the proposed rule change will ensure 
that the most current information regarding the TRF LLC Agreements will 
be readily available to members and the public.
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    \10\ 15 U.S.C. 78o-3(b)(6).
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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. The proposed rule change makes 
technical changes to the TRF LLC Agreements, as they appear in the 
FINRA Manual, to reflect the second amended and restated agreements 
executed by the parties. The terms and conditions of the TRF LLC 
Agreements have not changed. Accordingly, FINRA does not believe that 
there are any material economic impacts associated with the proposed 
rule change.

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 \11\ and paragraph (f)(3) of Rule 19b-4 
thereunder.\12\ 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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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(3).
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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-2017-034 on the subject line.

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-2017-034. 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 the 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-2017-034, and should 
be submitted on or before December 27, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-26222 Filed 12-5-17; 8:45 am]
BILLING CODE 8011-01-P