Document ID: SEC-2009-1113-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to the Use of Multiple Market Participant Symbols When Quoting or Trading OTC Equity Securities
Posted Date: 2009-08-07T04:00Z

[Federal Register: August 7, 2009 (Volume 74, Number 151)]
[Notices]               
[Page 39721-39723]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr07au09-110]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60414; File No. SR-FINRA-2009-051]

 
Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing and Immediate Effectiveness of 
Proposed Rule Change Relating to the Use of Multiple Market Participant 
Symbols When Quoting or Trading OTC Equity Securities

July 31, 2009.
    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 July 23, 2009, Financial Industry Regulatory Authority, Inc. 
(``FINRA'') (f/k/a National Association of Securities Dealers, Inc. 
(``NASD'')) filed with the Securities and Exchange Commission (``SEC'' 
or ``Commission'') the proposed rule change as described in Items I and 
II 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 adopt FINRA Rule 6480 on a pilot basis to 
address the use of multiple Market Participant Symbols (``MPIDs'') when 
quoting or trading OTC Equity Securities.\4\
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    \4\ For purposes of the proposed rule, the term ``OTC Equity 
Security'' is defined in FINRA Rule 6420.
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    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
    FINRA has two rules governing the use of multiple MPIDs on FINRA 
facilities: Rule 6160 (Multiple MPIDs for Trade Reporting Facility 
Participants) and Rule 6170 (Primary and Additional MPIDs for 
Alternative Display Facility Participants). The proposed rule change 
would adopt, on a pilot basis, a rule for the use of multiple MPIDs 
when quoting OTC Equity Securities or reporting

[[Page 39722]]

trades in such securities to the OTC Reporting Facility. The use of 
multiple MPIDs is currently permitted with respect to FINRA Trade 
Reporting Facilities and the Alternative Display Facility, and firms 
have requested that FINRA extend the use of multiple MPIDs to the OTC 
market so that members can use multiple MPIDs for a variety of back-
office purposes that would otherwise not be possible--for example, 
establishing separate clearing relationships for different types of 
securities (e.g., foreign and domestic securities). As is the case with 
respect to the market for exchange-listed securities, FINRA believes 
that there are legitimate business reasons for members to maintain 
multiple MPIDs in the OTC market and proposes to establish, on a pilot 
basis, a system whereby members can request and be granted multiple 
MPIDs for use in quoting and trading OTC Equity Securities. The 
proposed rule is substantially similar to Rule 6160 and, like that 
rule, would expire on January 29, 2010, unless extended.\5\
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    \5\ Rule 6160 was approved by the Commission in 2006 on a pilot 
basis. 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). The pilot period has been extended several times since 
the rule was originally adopted and currently expires on January 29, 
2010. See Securities Exchange Act Release No. 59183 (December 30, 
2008), 74 FR 842 (January 8, 2009); Securities Exchange Act Release 
No. 57217 (January 28, 2008), 73 FR 6234 (February 1, 2008); 
Securities Exchange Act Release No. 55206 (January 31, 2007), 72 FR 
5479 (February 6, 2007).
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    Like Rule 6160, proposed Rule 6480 provides that any member that 
wishes to use more than one MPID for purposes of quoting an OTC Equity 
Security or reporting trades to the OTC Reporting Facility must submit 
a written request to, and obtain approval from, FINRA Operations for 
such additional MPIDs. The rule also states that a member that posts a 
quotation in an OTC Equity Security and reports to a FINRA system a 
trade resulting from such posted quotation must utilize the same MPID 
for reporting purposes. 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. When requesting an 
additional MPID(s), a member 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 
member is using one or more additional MPIDs improperly or for purposes 
other than the purpose(s) identified by the member, FINRA staff retains 
full discretion to limit or withdraw its grant of the additional 
MPID(s) to such member.
    FINRA has filed the proposed rule change for immediate 
effectiveness and has requested that the SEC waive the requirement that 
the proposed rule change not become operative for 30 days after the 
date of the filing, such that FINRA can implement the proposed rule 
change immediately.
2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the 
provisions of Section 15A(b)(6) of the Act,\6\ 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 will 
create a system that will allow members to use multiple MPIDs when 
quoting and trading OTC Equity Securities with sufficient oversight by 
FINRA to ensure that the MPIDs are not being used improperly or in a 
way that would be detrimental to the marketplace.
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    \6\ 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 \7\ and Rule 19b-
4(f)(6) thereunder.\8\
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    \7\ 15 U.S.C. 78s(b)(3)(A).
    \8\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to provide the Commission 
with 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 of the 
proposed rule change, or such shorter time as designated by the 
Commission. FINRA has met this requirement.
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    FINRA has requested that the Commission waive the 30-day operative 
delay so that it may immediately extend the use of multiple MPIDs to 
the OTC market on a pilot basis. The Commission has determined that 
waiving the 30-day operative delay of FINRA's proposal is consistent 
with the protection of investors and the public interest because 
FINRA's proposed system for extending the use of multiple MPIDs to the 
OTC market is comparable to the pilot program currently in place for 
exchange-listed securities, which the Commission previously 
approved.\9\ Therefore, the Commission designates the proposal 
operative upon filing.\10\
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    \9\ See supra note 5.
    \10\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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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-2009-051 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-2009-051. 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

[[Page 39723]]

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 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 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-2009-051 and should be submitted on or before August 28, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-18976 Filed 8-6-09; 8:45 am]

BILLING CODE 8010-01-P