Document ID: SEC-2017-1688-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Financial Industry Regulatory Authority, Inc.
Posted Date: 2017-10-11T04:00Z

[Federal Register Volume 82, Number 195 (Wednesday, October 11, 2017)]
[Notices]
[Pages 47274-47276]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-21846]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-81801; File No. SR-FINRA-2017-030]

Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change Relating to the Review Charges for Communications 
Filed With or Submitted to FINRA

October 3, 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 September 26, 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 Substance 
of the Proposed Rule Change

    FINRA is proposing to amend Section 13 of Schedule A to the FINRA 
By-Laws (``Section 13'') governing the review charges for 
communications filed with or submitted to FINRA's Advertising 
Regulation Department (the ``Department'') to account for upcoming 
technological changes that will allow Web sites to be filed in native 
format.
    Below is the text of the proposed rule change. Proposed new 
language is in italics; proposed deletions are in brackets.
* * * * *

Schedule A to the By-Laws of the Corporation

* * * * *
Section 13--Review Charge for Communications Filed or Submitted
    There shall be a review charge for each and every communication, 
whether in printed, video or other form, filed with or submitted to 
FINRA, except for items that are filed or submitted in response to a 
written request from FINRA's Advertising Regulation Department (``the 
Department'') issued pursuant to the spot check procedures set forth in 
FINRA rules, as follows: (1) For printed or Web site material reviewed, 
$125.00, plus $10.00 for each printed page or Web page reviewed in 
excess of 10 pages; and (2) for video or audio media, $125.00, plus 
$10.00 per minute for each minute of tape reviewed in excess of 10 
minutes.
    Where a member requests expedited review of material submitted to 
the Department there shall be a review charge of $600.00 per item plus 
$50.00 for each printed page or Web page reviewed in excess of 10 
pages. Expedited review shall be completed within three business days, 
not including the date the item is received by the Department, unless a 
shorter or longer period is agreed to by the Department. The Department 
may, in its sole discretion, refuse requests for expedited review.
* * * * *

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

[[Page 47275]]

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
Background
    In April 2014, FINRA launched a retrospective review of its 
communications with the public rules to assess their effectiveness and 
efficiency. In December 2014, FINRA published a report on the 
assessment phase of the review.\5\ The report concluded that, while the 
rules have largely been effective in meeting their intended investor 
protection objectives, the rules and FINRA's administration of them 
could benefit from some updating to better align the investor 
protection benefits and the economic impacts.
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    \5\ See Retrospective Rule Review Report, Communications with 
the Public (December 2014), http://www.finra.org/sites/default/files/p602011.pdf.
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    To this end, the report recommended a combination of rule 
proposals, guidance and administrative measures, including systems 
upgrades, to enhance the effectiveness and efficiency of the rules with 
no reduction in investor protection. Pursuant to these recommendations, 
efforts have been underway to upgrade FINRA's Advertising Regulation 
Electronic Files (``AREF'') System, a web-based application accessed 
through the FINRA Firm Gateway that enables member firms to 
electronically submit communications with the public for review by 
FINRA's Advertising Regulation Department (``Department'').\6\ 
Currently, the AREF System accepts such submissions in a variety of 
file formats for print (e.g., .doc, .rtf, .txt), video (e.g., .mov, 
.mp4, .wmv), audio (e.g., .aif, .mp3, .wav) or other form (e.g., .pdf), 
but not for Web site or Web page communications in their native format 
(e.g., .html). Consequently, firms submitting Web site or Web page 
communications through the AREF System must convert them from native 
format to a format such as Portable Document Format (.pdf). This 
conversion process can be burdensome, sometimes resulting in voluminous 
.pdf pages. The impending upgrades to the AREF System will make the 
submission of Web site or Web page communications more efficient by 
including the capability to accept such communications in their native 
format.\7\ Each web address, a Uniform Resource Locator or URL, would 
be packaged within a compressed file format and submitted through the 
AREF System, then reviewed by the Department in an offline state. FINRA 
anticipates this upgraded AREF System capability to be operational by 
the fourth quarter of 2017.
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    \6\ FINRA Firm Gateway is an online compliance tool that 
provides consolidated access to FINRA applications and allows 
members to submit required filings electronically to meet their 
compliance and regulatory obligations.
    \7\ The upgrades to the AREF System would not impact the way in 
which mobile applications are currently submitted in video format.
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Proposed Rule Change
    FINRA Rule 2210 (Communications with the Public) requires members 
to file with the Department specified retail communications either 10 
business days prior to use or within 10 business days of first use, as 
applicable. For example, new members, for a period of one year 
beginning on the date their FINRA membership becomes effective, 
generally must file with the Department at least 10 business days prior 
to first use, any retail communication that is published or used in any 
electronic or other public media, including any generally accessible 
Web site.\8\ As another example, all members generally must file within 
10 business days of first use any retail communication, including a Web 
site communication that promotes or recommends a specific registered 
investment company or family of registered investment companies.\9\ The 
Department evaluates these and other communications subject to filing 
requirements or filed voluntarily by firms for compliance with 
applicable rules of FINRA, the SEC, the Municipal Securities Rulemaking 
Board and the Securities Investors Protection Corporation. Pursuant to 
the content standards of Rule 2210, the Department helps to ensure that 
all member firms' communications are based on principles of fair 
dealing and good faith, are fair and balanced, and provide a sound 
basis for evaluating the facts in regard to any particular security or 
type of security, industry or service. Among other things, FINRA rules 
prohibit member communications from including false, exaggerated, 
unwarranted, or misleading statements or claims.
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    \8\ See FINRA Rule 2210(c)(1).
    \9\ See FINRA Rule 2210(c)(3).
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    Currently, Section 13 imposes a review charge for each 
communication filed with or submitted to FINRA (except for items that 
are filed or submitted in response to a written request from the 
Department issued pursuant to the spot check procedures set forth in 
Rules 2210(c)(6) and 2220(c)(3)). The rates charged are based on the 
number of pages for printed material or the length of video or audio 
media. In addition, there are surcharges for expedited review. The 
proposed rule change would establish charges for submission of Web 
sites and Web pages in native format, in anticipation of the upgraded 
AREF System capabilities. It would establish rates of $125, plus $10 
for each Web page reviewed in excess of 10 pages. The charges for 
expedited reviews would be $600 per item plus $50 for each Web page 
reviewed in excess of 10 pages. For the purposes of the charging 
schedule, each distinct URL would be treated as a Web page. The 
proposed rates mirror the current rates for printed material, which 
would remain unchanged. Thus, the proposed rule change maintains parity 
in charging, irrespective of the form of filing or submission. FINRA 
notes that firms will not be obligated to file or submit Web site 
communications in native format. They may continue to convert those 
communications to a printed format and submit them at the unchanged 
printed page rate if they find that method more efficient or 
economical.
    FINRA has filed the proposed rule change for immediate 
effectiveness. FINRA will announce the implementation date of the 
proposed rule change in a Regulatory Notice.
2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the 
provisions of Section 15A(b)(5) of the Act,\10\ 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 is consistent 
with Section 15A(b)(5) of the Act in that it will establish a 
reasonable fee in conjunction with a technology upgrade that will 
permit more efficient filing and submission of electronic 
communications. Submission of communications in native format will be 
voluntary, and the proposed fee is consistent with current charges for 
communications submitted in other formats. Moreover, the proposed fee 
is equitably allocated among all members

[[Page 47276]]

that file or submit communications to the Department for review.
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    \10\ 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. The proposed rule change would 
not impose any additional reporting requirements or costs on firms. 
Members will not be obligated to submit communications in native format 
and therefore may choose to continue to file or submit communications 
as they do today, with the same attendant charges.
    To the extent that the conversion of Web site or Web page 
communications from native format to another format were viewed as 
burdensome among market participants, those participants will have the 
option to submit such communications in native format, which would 
permit members to mitigate any direct or indirect costs associated with 
such conversion.

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 \11\ and paragraph (f)(2) of Rule 19b-4 
thereunder.\12\ 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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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 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-2017-030 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-2017-030. 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 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-2017-030, and should 
be submitted on or before November 1, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2017-21846 Filed 10-10-17; 8:45 am]
 BILLING CODE 8011-01-P