Document ID: SEC-2022-0205-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Financial Industry Regulatory Authority, Inc.
Posted Date: 2022-02-10T05:00Z

[Federal Register Volume 87, Number 28 (Thursday, February 10, 2022)]
[Notices]
[Pages 7883-7884]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-02784]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-94156; File No. SR-FINRA-2022-002]

Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change To Eliminate the Transaction Query Fee for the 
FINRA/Nasdaq TRF

February 4, 2022.
    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 January 31, 2022, the 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. 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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    FINRA is proposing to amend FINRA Rule 7620A (FINRA/Nasdaq Trade 
Reporting Facility Reporting Fees) to modify the query fee applicable 
to non-retail participants that use the FINRA/Nasdaq Trade Reporting 
Facility Carteret (the ``FINRA/Nasdaq TRF Carteret'') and the FINRA/
Nasdaq Trade Reporting Facility Chicago (the ``FINRA/Nasdaq TRF 
Chicago'') (collectively, the ``FINRA/Nasdaq TRF'').
    The text of the proposed rule change is available on FINRA's 
website 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 
Nasdaq, Inc. (``Nasdaq''). In connection with the establishment of the 
FINRA/Nasdaq TRF, FINRA and Nasdaq 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, the ``Business Member,'' is primarily 
responsible for the management of the FINRA/Nasdaq TRF's business 
affairs, including establishing pricing for use of the FINRA/Nasdaq 
TRF, to the extent those affairs are not inconsistent with the 
regulatory and oversight functions of FINRA. Additionally, 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.
    Pursuant to FINRA Rule 7620A (``Rule''), FINRA/Nasdaq TRF 
participants that do not constitute Retail Participants \3\ (such non-
Retail Participants are referred to herein as ``Participants'') must 
pay a $0.50/query fee for each FINRA/Nasdaq TRF transaction query. 
FINRA members use WebLink ACT/Nasdaq Workstation Post Trade 
(``WebLink'') \4\, Act Workstation (``Workstation'') \5\, and Nasdaq 
WorkX\TM\ (``WorkX'') \6\ in connection with FINRA/Nasdaq TRF 
reporting.\7\ According to the Business Member, these products permit 
members to perform data searches on reported transactions, which 
members use to monitor large volumes of data in furtherance of 
performing their regulatory responsibilities.
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    \3\ ``Retail Participants,'' as that term is defined in 
Supplementary Material .01 to Rule 7620A, is ``a participant in the 
FINRA/Nasdaq Trade Reporting Facility for which substantially all of 
its trade reporting activity on the FINRA/Nasdaq Trade Reporting 
Facility comprises Retail Orders.''
    \4\ WebLink ACT is a browser-based application that 
electronically facilitates trade reporting and clearing functions 
for trades reported to the FINRA/Nasdaq Trade Reporting Facility.
    \5\ Workstation is a web-based application that electronically 
facilitates trade reporting and clearing functions for trades 
reported to the FINRA/Nasdaq TRF. Workstation services include trade 
entry, trade scan, and uploads for bulk trade entry to support 
FINRA/Nasdaq TRF participant trade reporting in accordance with 
FINRA rules.
    \6\ WorkX is a re-platformed version of Workstation that 
simplifies regulatory responsibilities and enhances the user 
experience with improved workflow, system performance, and data 
visualization. WorkX also upgrades trade reporting and monitoring 
with a modern user interface using cloud-based technology. FINRA 
rules and FINRA/Nasdaq Trade Reporting Facility system processing 
are unchanged.
    \7\ FINRA notes that firms reporting to the FINRA/Nasdaq TRF pay 
Nasdaq associated user fees for WebLink, Workstation, and WorkX 
under Nasdaq rules. See, e.g., Equity 7 Pricing Schedule, Section 
115(e) of the Nasdaq Rule.
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    Nasdaq administers this Rule in its capacity as the Business Member 
and operator of the FINRA/Nasdaq TRF on behalf of FINRA,\8\ and Nasdaq 
collects all fees on behalf of the FINRA/Nasdaq TRF. Nasdaq has 
determined to modify the current schedule of fees by removing the 0.50/
query fee applicable to FINRA/Nasdaq TRF transaction queries performed 
using WebLink, Workstation, and WorkX, and FINRA is proposing to amend 
the Rule accordingly. Nasdaq has determined to eliminate this fee to 
allow users to make maximum use of the query tool available in WebLink,

[[Page 7884]]

Workstation, and WorkX, thereby supporting member compliance efforts.
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    \8\ FINRA's oversight of this function performed by the Business 
Member is conducted through a recurring assessment and review of TRF 
operations by an outside independent audit firm.
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    FINRA has filed the proposed rule change for immediate 
effectiveness. The operative date will be February 1, 2022.
2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the 
provisions of Section 15A(b)(5) of the Act,\9\ 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.
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    \9\ 15 U.S.C. 78o-3(b)(5).
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    FINRA believes that the proposed rule change is reasonable because 
it eliminates the existing query fee-permitting members to use the tool 
without incurring a separate charge. FINRA believes that the proposal 
is an equitable allocation of reasonable fees and is not unfairly 
discriminatory because removal of the query fee applies equally to all 
users of WebLink, Workstation, and WorkX, and it eliminates any 
impediment to users freely utilizing the query function-reducing 
members' costs associated with monitoring trade reporting activity and 
satisfying regulatory responsibilities. Moreover, participation in the 
FINRA/Nasdaq TRF is voluntary, as is the use of the query feature.

B. Self-Regulatory Organization's Statement on Burden on Competition

    FINRA does not believe that the proposed rule changes will result 
in any burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act.
Regulatory Need
    As discussed above, Nasdaq believes that eliminating this fee will 
increase the usability of the query tool. Nasdaq believes it is 
beneficial for users to be able to perform unlimited queries of their 
trade history at no cost in support of meeting their regulatory 
responsibilities.
Economic Baseline
    From October 2020 to September 2021, on average, approximately 200 
Participants paid on average $200 per month in WebLink, Workstation, 
and WorkX query charges.\10\
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    \10\ From October 2020 to September 2021, 303 Participants were 
charged WebLink, Workstation, or WorkX query fees for scan searches.
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Economic Impacts
    The proposed rule change would eliminate query charges to all firms 
using WebLink, Workstation, and WorkX services.\11\ The number of firms 
charged query fees each month varies based on the level of product 
usage and scans by individual subscribers. Assuming that, going 
forward, these same Participants maintain their existing levels of 
query activity, they stand to save on average $200 per month in query 
charges.
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    \11\ This discussion of economic impacts does not relate to any 
fee other than the $0.50/query fee that is proposed to be eliminated 
in the instant filing.
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    The potential net impact of the proposed rule change depends on 
whether Participants alter their query activity as a result of the 
proposed rule change. Thus, Participants who continue to perform 
queries in line with prior usage will reap corresponding benefits. 
However, to the extent that the proposed rule change results in 
Participants performing more queries, then the potential net benefit 
will be greater.
Alternatives Considered
    No other alternatives were considered for the proposed rule change.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were either solicited or 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 \12\ and paragraph (f)(2) of Rule 19b-4 
thereunder.\13\ 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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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 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 [email protected]. Please include 
File Number SR-FINRA-2022-002 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-2022-002. 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 website (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 website 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. 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-2022-002 and 
should be submitted on or before March 3, 2022.
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    \14\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-02784 Filed 2-9-22; 8:45 am]
BILLING CODE 8011-01-P