Document ID: SEC-2012-2008-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Financial Industry Regulatory Authority, Inc.
Posted Date: 2012-12-06T05:00Z

[Federal Register Volume 77, Number 235 (Thursday, December 6, 2012)]
[Notices]
[Pages 72899-72901]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-29452]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-68325; File No. SR-FINRA-2012-051]

Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing and Immediate Effectiveness of 
Proposed Rule Change Relating to the Waiver of Certain TRACE Late Trade 
Reporting Fees Due to Hurricane Sandy

November 30, 2012.
    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 26, 2012, 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, II, and III below, which Items have been prepared 
by FINRA. FINRA has designated the proposed rule change as 
``establishing or changing a due, fee or other charge'' under Section 
19(b)(3)(A)(ii) of the Act \3\ and Rule 19b-4(f)(2) thereunder,\4\ 
which renders the proposal effective upon receipt of this filing by the 
Commission. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \4\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    FINRA is proposing to waive certain Trade Reporting and Compliance 
Engine (``TRACE'') late trade reporting fees specified in FINRA Rule 
7730(b)(3) due to disruptions in normal business operations as a result 
of Hurricane Sandy.
    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
    Transactions in TRACE-Eligible Securities, as defined in FINRA Rule 
6710(a), are required to be reported to FINRA within the time frames 
specified in FINRA Rule 6730(a). FINRA Rule 7730(b) sets forth the 
charges to be assessed against each member responsible for reporting 
such transactions. FINRA Rule 7730(b)(3) provides that members shall be 
charged a $3.00 per transaction late fee for those transactions that 
are not timely reported ``as/of'' as required by the FINRA Rule 6700 
Series. Due to significant disruptions in normal business operations as 
a result of Hurricane Sandy or Superstorm Sandy (``Sandy'') that made 
landfall along the mid-Atlantic Coast on October 29, 2012, FINRA 
proposes to waive such TRACE late trade reporting fees if a firm in an 
area affected by Sandy \5\ reported certain

[[Page 72900]]

transactions in TRACE-Eligible Securities late. The late trade 
reporting fee would be waived for transactions that were executed on 
Monday, October 29, 2012 or Tuesday, October 30, 2012, by firms located 
in the affected areas (or that have their fixed income operations in 
the affected areas), provided that the affected firms reported the 
transactions no later than Wednesday, October 31, 2012 by the TRACE 
system closing.\6\
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    \5\ An affected area means any area, such as a state or a 
county, that the President declared a major disaster or for which 
the President signed a federal emergency declaration as a result of 
Sandy (e.g., the state, or certain counties, of Connecticut, New 
York, New Jersey, Delaware, District of Columbia, Maryland, 
Massachusetts, New Hampshire, Pennsylvania, Rhode Island, Virginia 
and West Virginia) (the ``affected areas'').
    \6\ FINRA has identified a number of transactions that qualify 
for the waiver of the late trade reporting fee of $3.00, and 
proposes to credit those firms with the identified relevant 
transactions on their TRACE invoices for November 2012 (the 
``November Invoice''). However, upon receipt of the November 
Invoice, if a firm has not received credit for a transaction(s) it 
believes qualifies for the fee waiver because its fixed income 
operations are located in one of the affected areas, the firm should 
contact TRACE Data Services by emailing TRACEDataServices@finra.org 
or calling (888) 507-3665, and provide a list of such transactions 
and the reason why the firm believes such transactions qualify for 
the waiver.
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    FINRA has filed the proposed rule change for immediate 
effectiveness. The effective date and the implementation 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)(5) of the Act,\7\ which requires, among 
other things, that FINRA rules provide for the equitable allocation of 
reasonable dues, fees and other charges among members and issuers and 
other persons using any facility or system that FINRA operates or 
controls. FINRA believes that the proposed rule change to waive the 
late trade reporting fee for those firms that were adversely affected 
by Sandy is appropriate considering the lack of communications, 
transportation, electricity, facilities and available staff as a result 
of Sandy that hampered the ability of members in the affected areas (or 
with fixed income operations in the affected area) to meet their TRACE 
reporting deadlines. FINRA believes that this limited waiver results in 
reasonable fees and financial benefits from late trade reporting fee 
waivers that are equitably allocated. The financial benefit of the late 
trade reporting fee waiver would be available to all firms located in 
the affected areas (or that have their fixed income operations in the 
affected areas). In addition, the financial benefit of the late trade 
reporting fee waiver would be available for a very limited period 
(i.e., only for transactions that were executed on Monday, October 29, 
2012 or Tuesday, October 30, 2012 provided that such transactions were 
reported no later than Wednesday, October 31, 2012, by the TRACE system 
closing), such that members not eligible for the late trade reporting 
fee waiver are not unfairly or inequitably affected. The proposed rule 
change is reasonable because the waiver of a standard FINRA late trade 
reporting fee, and the financial benefit from such waiver is of limited 
amount, duration and application as noted above. Finally, the proposed 
late trade reporting fee waiver does not unfairly discriminate between 
or among members in that the waiver would be available to any such 
member in the affected areas that executed transactions on the relevant 
dates, provided that the firm reported the transaction(s) no later than 
Wednesday, October 31, 2012 by the TRACE system closing.
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    \7\ 15 U.S.C. 78o-3(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    FINRA does not believe that the proposed rule change will result in 
any burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act. FINRA believes that the 
proposed rule change to waive the late trade reporting fee for those 
firms that were adversely affected by Sandy is appropriate considering 
the lack of communications, transportation, electricity, facilities and 
available staff as a result of Sandy that hampered the ability of 
members in the affected areas (or with fixed income operations in the 
affected area) to meet their TRACE reporting deadlines. FINRA believes 
that the limited late trade reporting fee waiver would not place an 
unreasonable fee burden on members, nor confer an uncompetitive benefit 
to members that may have their late trade reporting fees waived, in 
that such waiver would be available for a very limited period (only for 
trades executed on Monday, October 29, 2012 or Tuesday, October 30, 
2012 provided that such transactions were reported no later than 
Wednesday, October 31, 2012, by the TRACE system closing), and the 
financial impact of such a waiver would be de minimis.

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 \8\ and paragraph (f)(2) of Rule 19b-4 
thereunder.\9\ 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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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(2).
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IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-FINRA-2012-051 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-FINRA-2012-051. 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

[[Page 72901]]

filing also will be available for inspection and copying at the 
principal office of FINRA. All comments received will be posted without 
change; the Commission does not edit personal identifying information 
from submissions. You should submit only information that you wish to 
make available publicly. All submissions should refer to File Number 
SR-FINRA-2012-051 and should be submitted on or before December 27, 
2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-29452 Filed 12-5-12; 8:45 am]
BILLING CODE 8011-01-P