Document ID: SEC-2017-1098-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Financial Industry Regulatory Authority, Inc.
Posted Date: 2017-06-29T04:00Z

[Federal Register Volume 82, Number 124 (Thursday, June 29, 2017)]
[Notices]
[Pages 29620-29622]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-13584]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-81009; File No. SR-FINRA-2017-022]

Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing and Immediate Effectiveness of 
Proposed Rule Change To Waive Certain TRACE Reporting Fees

June 23, 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 June 21, 2017, Financial Industry Regulatory Authority, Inc. 
(``FINRA'') filed with the Securities and Exchange Commission (``SEC'' 
or ``Commission'') the proposed rule change as described in Items I, 
II, and III below, which Items have been prepared by FINRA. FINRA has 
designated the proposed rule change as ``establishing or changing a 
due, fee or other charge'' under Section 19(b)(3)(A)(ii) of the Act \3\ 
and Rule 19b-4(f)(2) thereunder,\4\ which renders the proposal 
effective upon receipt of this filing by the Commission. The Commission 
is publishing this notice to solicit comments on the proposed rule 
change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \4\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of the 
Substance of the Proposed Rule Change

    FINRA is proposing to waive fees under Rule 7730 for trade 
reporting to the Trade Reporting and Compliance Engine (``TRACE'') due 
to a TRACE system issue on February 16, 2017 and February 17, 2017. The 
proposed rule change does not make any changes to the text of FINRA 
rules.

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 Rule 6730 (Transaction Reporting) generally requires that 
members report trades in TRACE-Eligible Securities \5\ to TRACE. FINRA 
assesses fees in connection with TRACE reporting pursuant to Rule 7730, 
including for reporting trades, cancelling or correcting previously 
reported trades, and late reporting, as summarized below:
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    \5\ Rule 6710 provides that ``TRACE-Eligible Security'' means a 
debt security that is United States (``U.S.'') dollar-denominated 
and is: (1) Issued by a U.S. or foreign private issuer, and, if a 
``restricted security'' as defined in Securities Act Rule 144(a)(3), 
sold pursuant to Securities Act Rule 144A; (2) issued or guaranteed 
by an Agency as defined in paragraph (k) or a Government-Sponsored 
Enterprise as defined in paragraph (n); or (3) a U.S. Treasury 
Security as defined in paragraph (p), but does not include a debt 
security that is issued by a foreign sovereign or a Money Market 
Instrument as defined in paragraph (o).

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Trades up to and including     $0.475/trade. For Securitized Products
 $200,000 par value.            where par value is not used to determine
                                the size (volume) of a transaction, for
                                purposes of trade reporting fees, size
                                (volume) is the lesser of original face
                                value or Remaining Principal Balance (or
                                the equivalent) at the Time of Execution
                                of the transaction.

[[Page 29621]]

 
Trades over $200,000 and up    $0.000002375 times the par value of the
 to and including $999,999.99   transaction (i.e., $0.002375/$1000).
 par value.
Trades of $1,000,000 par       $2.375/trade.
 value or more.
All transactions in            $1.50/trade.
 Securitized Products that
 are Agency Pass-Through
 Mortgage-Backed Securities
 traded to be announced or
 SBA-Backed ABS traded to be
 announced.
Cancel/Correct...............  $1.50/trade.
``As/of'' Trade Late.........  $3/trade.
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    FINRA rules also provide that FINRA will disseminate information on 
all reported transactions for public transparency, unless the 
transaction is not subject to dissemination pursuant to Rule 6750 
(Dissemination of Transaction Information). FINRA is filing the instant 
proposed rule change to waive member trade reporting fees, cancel/
correct fees, and as-of/late fees in connection with a TRACE system 
issue that resulted in a number of transactions not being disseminated.
    Specifically, on February 16, 2017 and February 17, 2017, due to an 
inadvertent change to the configuration settings for a single TRACE-
Eligible Security, the TRACE system did not disseminate 68 trades that 
were subject to dissemination. On February 21, 2017, FINRA contacted 
the 12 members that reported the affected transactions and requested 
that these trades be cancelled and re-reported so that the transactions 
would be properly disseminated. All impacted trades were cancelled and 
re-reported between February 21st and February 23rd. In addition to the 
original trade reporting fees, impacted members were assessed trade 
reporting fees in connection with the corrective actions necessary to 
facilitate dissemination.
    To ensure that members are not charged for such additional 
submissions, FINRA is proposing to waive the TRACE reporting fees under 
Rule 7730 that were associated with the corrective trade reports 
between February 21st and February 23rd, including transaction 
reporting fees, cancel/correct fees, and as-of/late fees. Because the 
pertinent billing cycle ended on February 28, 2017, members impacted by 
the system glitch will receive appropriate credits during the July 2017 
billing cycle. FINRA believes it is equitable to provide this relief to 
members.
    FINRA has filed the proposed rule change for immediate 
effectiveness. The operative 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,\6\ 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 trade 
reporting fees under Rule 7730, as described herein, is appropriate in 
light of the TRACE system issue on February 16, 2017 and February 17, 
2017. FINRA does not believe that members should incur fees resulting 
from corrective trade reports submitted following the TRACE systems 
issue.
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    \6\ 15 U.S.C. 78o-3(b)(5).
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    FINRA believes that this limited waiver results in reasonable fees 
that are equitably allocated. In addition, the proposed trade reporting 
fee waiver does not unfairly discriminate between or among members in 
that the waiver is available to any impacted member that reported 
impacted transactions to TRACE on the relevant dates and who took the 
requested corrective actions that resulted in additional fees.

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 trade reporting fees is appropriate 
in light of the TRACE systems issue, which required members to take 
corrective action and resubmit transaction reports to TRACE. FINRA 
believes that the limited trade reporting fee waiver would not place an 
unreasonable fee burden on members, nor confer an uncompetitive benefit 
to members that have their trade reporting fees waived, in that such 
waiver would be applied only to the members that incurred additional 
TRACE fees in connection with the cancellation and re-reporting of 
impacted transactions.

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 \7\ and paragraph (f)(2) of Rule 19b-4 
thereunder.\8\ 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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    \7\ 15 U.S.C. 78s(b)(3)(A).
    \8\ 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 No. SR-FINRA-2017-022 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 No. SR-FINRA-2017-022. 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

[[Page 29622]]

only one method. The Commission will post all comments on the 
Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for Web site viewing and printing in 
the Commission's Public Reference Room, 100 F Street NE., Washington, 
DC 20549 on official business days between the hours of 10:00 a.m. and 
3:00 p.m. Copies of such filing also will be available for inspection 
and copying at the principal office of FINRA. All comments received 
will be posted without change; 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 No. SR-FINRA-2017-022, and should be submitted on 
or before July 20, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-13584 Filed 6-28-17; 8:45 am]
BILLING CODE 8011-01-P