Document ID: SEC-2009-0041-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes:  Financial Industry Regulatory Authority, Inc
Posted Date: 2009-01-08T05:00Z

[Federal Register: January 8, 2009 (Volume 74, Number 5)]
[Notices]               
[Page 842-844]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr08ja09-61]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59183; File No. SR-FINRA-2008-68]

 
Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing and Immediate Effectiveness of 
Proposed Rule Change To Extend the Pilot Regarding the Use of Multiple 
MPIDs on the Trade Reporting Facilities and the Alternative Display 
Facility

December 30, 2008.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that, on December 29, 2008, Financial Industry Regulatory Authority, 
Inc. (``FINRA'') (f/k/a National Association of Securities Dealers, 
Inc. (``NASD'')) filed with the Securities and Exchange Commission (the 
``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 constituting a ``non-
controversial'' rule change under paragraph (f)(6) of Rule 19b-4 under 
the Act,\3\ 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\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    FINRA is proposing to extend through January 29, 2010, the current 
rules regarding the use of multiple Market Participant Symbols 
(``MPIDs'') in FINRA Rules 6160 (with respect to Trade Reporting 
Facilities (``TRFs'')) and 6170 (with respect to the Alternative 
Display Facility (``ADF'')).
    The text of the proposed rule change is available at FINRA's Web 
site at http://www.finra.org, at the principal offices 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 those 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 parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
(a) FINRA Rule 6160
    Rule 6160 (Multiple MPIDs for Trade Reporting Facility 
Participants) provides that any Trade Reporting Facility Participant 
that wishes to use more than one MPID for purposes of reporting trades 
to a TRF must submit a written request to, and obtain approval from, 
FINRA Operations for such additional MPIDs. In addition, Supplementary 
Material to the rule states that FINRA considers the issuance of, and 
trade reporting with, multiple MPIDs to be a privilege and not a right. 
A Trade Reporting Facility Participant must identify the purpose(s) and 
system(s) for which the multiple MPIDs will be used. If FINRA 
determines that the use of multiple MPIDs is detrimental to the 
marketplace, or that a Trade Reporting Facility Participant is using 
one or more additional MPIDs improperly or for other than the 
purpose(s) identified by the Participant, FINRA staff retains full 
discretion to limit or withdraw its grant of the additional MPID(s) to 
such Trade

[[Page 843]]

Reporting Facility Participant for purposes of reporting trades to a 
TRF. FINRA believes that Rule 6160 is necessary to consolidate the 
process of issuing, and tracking the use of, multiple MPIDs used to 
report trades to TRFs.
    The Commission initially approved Rule 6160 (formerly NASD Rule 
5140 and IM-5140) on a pilot basis on November 6, 2006.\4\ By its 
terms, the pilot period expired on January 26, 2007. In 2007 and 2008, 
the pilot period was extended for additional one-year periods until 
January 25, 2008 and January 30, 2009, respectively.\5\ FINRA believes 
that an additional one-year extension until January 29, 2010, is 
necessary to provide additional time to analyze the use of multiple 
MPIDs on the TRFs. FINRA is not proposing any other changes to the 
pilot as this time.
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    \4\ See Securities Exchange Act Release No. 54715 (November 6, 
2006), 71 FR 66354 (November 14, 2006); see also Securities Exchange 
Act Release No. 54715A (November 14, 2006), 71 FR 67183 (November 
20, 2006) (correcting original approval order).
    \5\ See Securities Exchange Act Release No. 55206 (January 31, 
2007), 72 FR 5479 (February 6, 2007) and Securities Exchange Act 
Release No. 57217 (January 28, 2008), 73 FR 6234 (February 1, 2008), 
respectively.
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(b) FINRA Rule 6170
    Rule 6170 (Primary and Additional MPIDs for Alternative Display 
Facility Participants) provides that a Registered Reporting ADF ECN may 
request additional MPIDs for displaying quotes and orders and reporting 
trades through the ADF trade reporting facility, TRACS, for any ADF-
Eligible Security. Registered Reporting ADF ECNs that are permitted the 
use of additional MPIDs for displaying quotes and orders are subject to 
the same rules applicable to the member's first quotation (i.e., ECNs 
that display one or more additional quotes/orders are required to 
comply with all rules applicable to ECNs in their display of quotes/
orders). Registered Reporting ADF ECNs also are prohibited from using 
an additional MPID to accomplish indirectly what they are prohibited 
from doing directly through their Primary MPID. In addition, FINRA 
staff retains full discretion to determine whether a bona fide 
regulatory and/or business need exists for being granted an additional 
MPID privilege and to limit or withdraw the additional MPID display 
privilege at any time. The procedures for requesting, and the 
restrictions surrounding the use of, multiple MPIDs are set forth in 
Supplementary Material to the rule.
    Rule 6170 (formerly NASD Rule 4613A(b) and IM-4613A-1) was adopted 
on a pilot basis on August 11, 2006.\6\ By its terms, the initial pilot 
period expired on January 26, 2007.\7\ In 2007 and 2008, the pilot 
period was extended for additional one-year periods until January 25, 
2008 and January 30, 2009, respectively.\8\ FINRA believes that an 
additional one-year extension until January 29, 2010, is necessary to 
provide additional time to analyze the use of multiple MPIDs on the 
ADF. FINRA is not proposing any other changes to the pilot as this 
time.
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    \6\ See Securities Exchange Act Release No. 54307 (August 11, 
2006), 71 FR 47551 (August 17, 2006).
    \7\ The expiration of the pilot period coincided with the 
expiration of the ADF pilot period. See Securities Exchange Act 
Release No. 53699 (April 21, 2006), 71 FR 25271 (April 28, 2006). On 
January 26, 2007, the Commission approved a proposed rule change to 
make the ADF rules permanent. See Securities Exchange Act Release 
No. 55181 (January 26, 2007), 72 FR 5093 (February 2, 2007).
    \8\ See Securities Exchange Act Release No. 55206 (January 31, 
2007), 72 FR 5479 (February 6, 2007) and Securities Exchange Act 
Release No. 57217 (January 28, 2008), 73 FR 6234 (February 1, 2008), 
respectively.
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    FINRA has filed the proposed rule change for immediate 
effectiveness. The implementation date of the proposed rule change will 
be January 30, 2009.
2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the 
provisions of Section 15A(b)(6) of the Act,\9\ 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 believes that the proposed rule change is 
consistent with these requirements because it will provide a process by 
which ECNs (in the case of the ADF) and Trade Reporting Facility 
Participants (in the case of TRFs) can request, and FINRA can properly 
allocate, the use of additional MPIDs for displaying quotes and orders 
through the ADF or reporting trades to a TRF.
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    \9\ 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.

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

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \10\ and Rule 19b-
4(f)(6) thereunder.\11\
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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change, along 
with a brief description and text of the proposed rule change, at 
least five business days prior to the date of filing. FINRA complied 
with this requirement.
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission may summarily abrogate 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.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://
www.sec.gov/rules/sro.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-FINRA-2008-68 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-2008-68. This file 
number should be included on the subject line if e-mail is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/
sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the

[[Page 844]]

Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for inspection and copying in the 
Commission's Public Reference Room, 100 F Street, NE., Washington, DC 
20549, on official business days between the hours of 10 a.m. and 3 
p.m. Copies of the filing will also be available for inspection and 
copying at the principal office of the self-regulatory organization. 
All comments received will be posted without change; the Commission 
does not edit personal identifying information from submissions. You 
should submit only information that you wish to make available 
publicly. All submissions should refer to File Number SR-FINRA-2008-68 
and should be submitted on or before January 29, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
Florence E. Harmon,
Acting Secretary.
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    \12\ 17 CFR 200.30-3(a)(12).
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[FR Doc. E9-83 Filed 1-7-09; 8:45 am]

BILLING CODE 8011-01-P