Document ID: SEC-2012-1570-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Financial Industry Regulatory Authority, Inc.
Posted Date: 2012-09-24T04:00Z

[Federal Register Volume 77, Number 185 (Monday, September 24, 2012)]
[Notices]
[Pages 58880-58881]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-23449]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67880; File No. SR-FINRA-2012-043]

Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing and Immediate Effectiveness of 
Proposed Rule Change To Delete FINRA Rule 7064A (Late Fees)

September 18, 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 September 17, 2012, 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 constituting a ``non-
controversial'' rule change under Section 19(b)(3)(A) of the Act \3\ 
and Rule 19b-4(f)(6) 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of the 
Substance of the Proposed Rule Change

    FINRA is proposing to delete FINRA Rule 7640A (Late Fees).
    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/Nasdaq TRF is a facility of FINRA that is operated by The 
NASDAQ OMX Group, Inc. (``NASDAQ OMX''). In connection with the 
establishment of the FINRA/Nasdaq TRF, FINRA and NASDAQ OMX entered 
into a limited liability company agreement (the ``LLC Agreement''). 
Under the LLC Agreement, FINRA, the ``SRO Member,'' has sole regulatory 
responsibility for the FINRA/Nasdaq TRF. NASDAQ OMX, the ``Business 
Member,'' is primarily responsible for the management of the FINRA/
Nasdaq TRF's business affairs to the extent those affairs are not 
inconsistent with the regulatory and oversight functions of FINRA. As 
such, the Business Member establishes pricing for use of the FINRA/
Nasdaq TRF, and such pricing is implemented pursuant to FINRA rules 
that must be filed with the SEC and be consistent with the Act.\5\ In 
addition, the Business Member is obligated to pay the cost of 
regulation and is entitled to the profits and losses, if any, derived 
from the operation of the FINRA/Nasdaq TRF.\6\
---------------------------------------------------------------------------

    \5\ Because there are two FINRA Trade Reporting Facilities 
operated by different exchange Business Members competing for market 
share (the FINRA/Nasdaq TRF and the FINRA/NYSE TRF), FINRA does not 
take a position on whether the pricing for one TRF is more favorable 
or competitive than the pricing for the other TRF.
    \6\ FINRA notes that the same contractual arrangement is in 
place for the FINRA/NYSE TRF, with FINRA as the SRO Member and NYSE 
as the Business Member. The LLC agreements for the FINRA/Nasdaq TRF 
and the FINRA/NYSE TRF were submitted as part of the rule filings to 
establish the respective TRFs and can be found in the FINRA Manual.
---------------------------------------------------------------------------

    Under Rule 7640A, charges imposed by the FINRA/Nasdaq Trade 
Reporting Facility that are past due 45 days or more are subject to a 
late fee. This rule is identical to former NASD Rule 7080, which was 
applicable to charges

[[Page 58881]]

imposed by the Nasdaq Market Center prior to Nasdaq exchange 
registration and separation from FINRA (then NASD) in 2006. Prior to 
2006, the business decision was made not to assess late fees under NASD 
Rule 7080; however, the rule inadvertently was not deleted from the 
rulebook and subsequently was included in the FINRA/Nasdaq TRF rules. 
Because members historically have not been assessed late fees under 
this rule and the Business Member has determined not to do so in the 
future, FINRA is proposing to delete Rule 7640A.
2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the 
provisions of Section 15A of the Act,\7\ in general, and with Sections 
15A(b)(5) and (6) of the Act,\8\ in particular, which require, 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, and that FINRA rules not be designed to permit unfair 
discrimination between customers, issuers, brokers or dealers. FINRA 
believes that the proposed rule change is reasonable, equitable and 
non-discriminatory in that it is eliminating a fee provision that the 
Business Member has determined is not necessary and the change applies 
to all FINRA/Nasdaq TRF users.
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78o-3.
    \8\ 15 U.S.C. 78o-3(b)(5) and (6).
---------------------------------------------------------------------------

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 \9\ and Rule 19b-
4(f)(6) thereunder.\10\
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

    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.

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-2012-043 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-2012-043. 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 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; 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-2012-043, and should be submitted on or before October 15, 
2012.

For the Commission, by the Division of Trading and Markets, pursuant 
to delegated authority.\11\

    \11\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-23449 Filed 9-21-12; 8:45 am]
BILLING CODE 8011-01-P