Document ID: SEC-2012-0631-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Financial Industry Regulatory Authority, Inc.
Posted Date: 2012-04-19T04:00Z

[Federal Register Volume 77, Number 76 (Thursday, April 19, 2012)]
[Notices]
[Pages 23524-23527]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-9405]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-66804; File No. SR-FINRA-2012-021]

Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing of Proposed Rule Change Relating to 
Post-Trade Transparency for Agency Pass-Through Mortgage-Backed 
Securities Traded in Specified Pool Transactions and SBA-Backed Asset-
Backed Securities Transactions

April 13, 2012.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that, on April 2, 2012, the 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. 
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 the FINRA Rule 6700 Series and Trade 
Reporting and Compliance Engine (``TRACE'') dissemination protocols 
regarding the reporting and dissemination of transactions in TRACE-
Eligible Securities that are: (1) Agency Pass-Through Mortgage-Backed 
Securities traded in Specified Pool Transactions (``MBS Specified Pool 
transactions'') and (2) Asset-Backed Securities backed by loans 
guaranteed as to principal and interest by the Small Business 
Administration (``SBA-Backed ABS'') and traded either in Specified Pool 
Transactions or to be announced (``TBA'') (collectively, ``SBA-Backed 
ABS transactions'').\3\
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    \3\ The terms TRACE-Eligible Security, Agency Pass-Through 
Mortgage-Backed Security, Specified Pool Transaction, Asset-Backed 
Security and To Be Announced (``TBA'') are defined in, respectively, 
Rule 6710(a), Rule 6710(v), Rule 6710(x), Rule 6710(m) and Rule 
6710(u). The definition of SBA-Backed ABS is proposed in Rule 
6710(bb).
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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.\4\
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    \4\ The proposed rule text assumes the SEC approval of File No. 
SR-FINRA-2012-020, which proposed amendments to the FINRA Rule 6700 
Series to provide for the dissemination of transactions in TRACE-
Eligible Securities that are Agency Pass-Through Mortgage-Backed 
Securities that are traded TBA (``MBS TBA transactions''), subject 
to dissemination caps, and to reduce the reporting periods for such 
transactions. See Securities Exchange Act Release No. 66577 (March 
12, 2012), 77 FR 15827 (March 16, 2012) (Notice of Filing of File 
No. SR-FINRA-2012-020) (``TBA proposal'').
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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
    On March 1, 2012, FINRA filed the TBA proposal to provide for the 
dissemination of MBS TBA transactions, subject to dissemination caps, 
and concomitant reductions in the reporting periods for such 
transactions.\5\ FINRA is proposing to further expand transparency in 
the market for Asset-Backed Securities in this proposed rule change, 
which provides for the dissemination of MBS Specified Pool and SBA-
Backed ABS transactions, subject to dissemination caps, and concomitant 
reductions in the reporting periods for such transactions.
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    \5\ See supra note 4. The TBA proposal distinguished between MBS 
TBA transactions for good delivery (``MBS TBA transactions GD'') and 
not for good delivery (``MBS TBA transactions NGD''). In response to 
comments, FINRA proposed a longer period to timely report, and lower 
dissemination caps for, MBS TBA transactions NGD than the 
requirements proposed for MBS TBA transactions GD.
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    FINRA proposes to amend Rule 6730 to reduce, in two stages, the 
time frames to report MBS Specified Pool and SBA-Backed ABS 
transactions. FINRA also proposes minor clarifying amendments to Rule 
6730(a)(3)(D) and (E) to specify that the reporting requirements set 
forth therein apply solely to MBS TBA transactions. In connection with 
such changes, FINRA proposes amendments to the definitions of ``To Be 
Announced (`TBA'),'' ``Specified Pool Transaction,'' and ``Agency Pass-
Through Mortgage-Backed Security'' and a new defined term, ``SBA-Backed 
ABS.'' Finally, FINRA proposes to amend Rule 6750 to provide for the 
dissemination of MBS Specified Pool and SBA-Backed ABS transactions, 
and proposes to establish, as part of TRACE dissemination protocols, a 
$10 million dissemination cap for such transactions.

MBS Specified Pool Transactions

    Generally, Agency Pass-Through Mortgage-Backed Securities are 
traded either TBA or in Specified Pool Transactions as defined in Rule 
6710(v) and (x), respectively. In MBS Specified Pool transactions, on 
the date of trade (trade date), the seller agrees to deliver to the 
buyer a specific security identifiable by a unique identification 
number, which is backed by a specific pool (or pools) of mortgage 
loans, or other Agency Pass-Through Mortgage-Backed Securities, or a 
combination of such assets. MBS Specified Pool transactions differ from 
MBS TBA transactions in that, on trade date, in an MBS TBA transaction, 
the security to be delivered is described (e.g., program, interest 
rate, type of residential mortgage, maturity) but is not specifically 
identified (i.e., does not have a specific unique identification 
number), and will not be identified until shortly before settlement. 
While the majority of Agency Pass-Through Mortgage-Backed Securities 
are traded TBA, the daily volume of MBS Specified Pool transactions 
represents significant economic activity in mortgage-related 
securities, and FINRA believes that additional transparency in such 
securities is appropriate. The reported transaction data shows that MBS 
Specified Pool transaction pricing is strongly correlated to the 
pricing of the substantially larger market in MBS TBA transactions. 
Moreover, the two market sectors exhibit similar trading 
characteristics. For example, approximately 98 percent of the total 
volume in MBS Specified Pool transactions occurs in securities backed 
by single-family mortgage loans.

[[Page 23525]]

 Similarly, for MBS TBA transactions, approximately 95 percent of the 
total volume occurs in securities backed by single-family mortgage 
loans.\6\ Accordingly, the data sets are complimentary and the 
dissemination of the additional pricing information for MBS Specified 
Pool transactions will further improve transparency in the Agency Pass-
Through Mortgage-Backed Securities market.
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    \6\ Certain programs also dominate both market segments. For 
example, over half of all transactions in MBS Specified Pool 
transactions occur in Fannie Mae program securities, and 
approximately 77 percent of all transactions in MBS TBA transactions 
occur in Fannie Mae program securities. The data is based on FINRA 
staff review of all Asset-Backed Securities traded during a six-
month period from May 16, 2011 through October 31, 2011.
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SBA-Backed ABS Transactions

    SBA-Backed ABSs are Asset-Backed Securities created from pooling 
loans made to small business by banks and other financial institutions 
in conformity with the program requirements of the Small Business 
Administration (``SBA''). Loans that meet the SBA's requirements are 
guaranteed by SBA as to the timely payment of principal and interest, 
and pools are then created to issue SBA-Backed Asset-Backed Securities.
    SBA-Backed ABS also are traded TBA and in Specified Pool 
Transactions.\7\ Like Agency Pass-Through Mortgage-Backed Securities 
discussed above, such TBA trading may occur because market participants 
may anticipate with some certainty the creation of loan pools and are 
aware of the pool characteristics, and the extent to which such loan 
pools are fungible with previously-settled SBA-Backed ABS. FINRA 
proposes that both types of SBA-Backed ABS transactions be subject to 
dissemination.
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    \7\ SBA-Backed ABS transactions traded in Specified Pool 
Transactions account for 0.41 percent of the combined total volume 
of all Specified Pool Transactions (which includes Agency Pass-
Through Mortgage Backed-Securities and SBA-Backed ABS traded in 
Specified Pool Transactions).
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Amendments to Defined Terms

    FINRA proposes to define ``SBA-Backed ABS'' in proposed Rule 
6710(bb) as an Asset-Backed Security issued in conformity with a 
program of the Small Business Administration (SBA), for which the 
timely payment of principal and interest is guaranteed by the SBA, 
representing ownership interest in a pool (or pools) of loans and 
structured to ``pass through'' the principal and interest payments made 
by the borrowers in such loans to the holders of the security on a pro 
rata basis.
    In connection with the proposed addition of the definition of SBA-
Backed ABS, FINRA also proposes amendments to the definitions of ``To 
Be Announced (`TBA')'' and ``Specified Pool Transaction'' in Rule 
6710(u) and Rule 6710(x), respectively. Both definitions currently 
apply only to Agency Pass-Through Mortgage-Backed Securities. As 
amended, both terms would include transactions in SBA-Backed ABS.\8\ In 
addition, FINRA proposes amendments to the definition of ``Agency Pass-
Through Mortgage-Backed Security'' in Rule 6710(v) to incorporate 
minor, technical changes to the defined term.\9\
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    \8\ As revised, Rule 6710(u) would provide:
    ``To Be Announced'' (``TBA'') means a transaction in an Agency 
Pass-Through Mortgage-Backed Security as defined in paragraph (v) or 
an SBA-Backed ABS as defined in paragraph (bb) where the parties 
agree that the seller will deliver to the buyer a security(ies) of a 
specified face amount and meeting certain other criteria but the 
specific security(ies) to be delivered at settlement is not 
specified at the Time of Execution, and includes TBA transactions 
``for good delivery'' (``GD'') and TBA transactions ``not for good 
delivery'' (``NGD'').
    As revised, Rule 6710(x) would provide:
    ``Specified Pool Transaction'' means a transaction in an Agency 
Pass-Through Mortgage-Backed Security as defined in paragraph (v) or 
an SBA-Backed ABS as defined in paragraph (bb) requiring the 
delivery at settlement of a pool(s) that is identified by a unique 
pool identification number at the Time of Execution.
    \9\ As revised, Rule 6710(v) would provide:
    ``Agency Pass-Through Mortgage-Backed Security'' means a type of 
Asset-Backed Security issued in conformity with a program of an 
Agency or a Government-Sponsored Enterprise (``GSE''), for which the 
timely payment of principal and interest is guaranteed by the Agency 
or GSE, representing ownership interest in a pool (or pools) of 
mortgage loans, other Agency Pass-Through Mortgage-Backed 
Securities, or a combination of such assets, and structured to 
``pass through'' the principal and interest payments to the holders 
of the security on a pro rata basis.
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Reduction of Reporting Period

    Currently, Asset-Backed Securities transactions (except certain 
pre-issuance transactions in collateralized mortgage obligations 
(``CMOs'') and real estate mortgage investment conduits (``REMICs'')) 
that are executed on a business day through 5:00 p.m. Eastern Time must 
be reported to TRACE on the Trade Date during TRACE System Hours, as 
provided in Rule 6730(a)(3)(A)(i), subject to the exceptions for 
transactions executed after 5:00 p.m. and during times when the TRACE 
System is not open in Rule 6730(a)(3)(A)(ii) and (iii). In contrast, 
secondary market transactions in all other TRACE-Eligible Securities 
must be reported within 15 minutes of the Time of Execution.\10\ With 
certain exceptions, transaction information on such TRACE-Eligible 
Securities is disseminated as soon as the transaction is reported, and 
the 15-minute reporting requirement results in meaningful price 
transparency for market participants trading such securities.\11\
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    \10\ The term Time of Execution is defined in Rule 6710(d).
    \11\ See Rule 6750(b) for exceptions to dissemination. See also 
supra note 4 regarding the TBA proposal and proposed dissemination 
of MBS TBA transactions.
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    As noted above, FINRA recently filed the TBA proposal, which is 
pending before the SEC. In the TBA proposal, FINRA proposes that MBS 
TBA transactions be disseminated, and, in connection with their 
dissemination, also proposes to reduce the time frames for timely 
reporting such transactions to provide market participants meaningful 
and timely price information about MBS TBA transactions.\12\
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    \12\ See supra note 4. The TBA proposal, which was filed on 
March 1, 2012, proposes that MBS TBA transactions GD be reported 
generally within 45 minutes of the Time of Execution during a six-
month pilot program (reduced to 15 minutes after the pilot program 
expires), and MBS TBA transactions NGD be reported within 120 
minutes during a six-month pilot program (reduced to 60 minutes 
after the pilot program expires). Both proposed reporting 
requirements are subject to exceptions for transactions executed 
close to the end of the business day or when the TRACE system is not 
open.
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    In connection with proposing that MBS Specified Pool and SBA-Backed 
ABS transactions be disseminated, FINRA proposes to reduce the 
reporting time frames for such transactions for the same reasons. FINRA 
also proposes that the reduction of the reporting time frames occur in 
two stages to permit industry participants time to adjust policies and 
procedures and to make required technological changes, as FINRA also 
proposed in the TBA proposal.
    Proposed Rule 6730(a)(3)(F) and proposed Rule 6730(a)(3)(G), 
respectively, set forth the requirements to report MBS Specified Pool 
and SBA-Backed ABS transactions. First, FINRA proposes to reduce the 
reporting period for MBS Specified Pool and SBA-Backed ABS transactions 
from no later than the close of the TRACE system on Trade Date to no 
later than two hours (i.e., 120 minutes) from the Time of Execution for 
the duration of the proposed MBS Specified Pool Pilot Program and the 
proposed SBA-Backed ABS Pilot Program in, respectively, proposed Rule 
6730(a)(3)(F)(i) and proposed Rule 6730(a)(3)(G)(i).\13\ Like

[[Page 23526]]

the reporting requirements currently in effect for other TRACE-Eligible 
Securities, FINRA also proposes exceptions to the 120-minute time frame 
for transactions executed near the end of the business day or when the 
TRACE system is not open.\14\ Second, after the pilot programs expire, 
the reporting periods for MBS Specified Pool and SBA-Backed ABS 
transactions would be reduced from no later than two hours (120 
minutes) from the Time of Execution to no later than one hour (60 
minutes) from the Time of Execution, as set forth in, respectively, 
proposed Rule 6730(a)(3)(F)(ii) and proposed Rule 
6730(a)(3)(G)(ii).\15\ Currently, 84 percent of MBS Specified Pool and 
SBA-Backed ABS transactions are reported within two hours of execution, 
and 75 percent are reported within one hour of execution.
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    \13\ Proposed Rule 6730(a)(3)(F)(i) and proposed Rule 
6730(a)(3)(G)(i) each incorporate by reference Rule 
6730(a)(3)(E)(i)a. through d., which provides for a 120-minute 
reporting time frame in Rule 6730(a)(3)(E)(i)b.
    Each of the pilot programs would expire after approximately 180 
days. To accommodate member requests that, if possible, rule changes 
requiring technology changes occur on a Friday, proposed Rule 
6730(a)(3)(F)(i) and proposed Rule 6730(a)(3)(G)(i) provide that the 
MBS Specified Pool Pilot Program and the SBA-Backed ABS Pilot 
Program each would expire on a Friday (i.e., on the 180th day, if a 
Friday, or, if the 180th day is not a Friday, on the Friday next 
occurring that the TRACE system is open).
    \14\ See proposed Rule 6730(a)(3)(F)(i) and proposed Rule 
6730(a)(3)(G)(i), which incorporate by reference Rule 
6730(a)(3)(E)(i)a., c. and d, which apply to transactions executed 
near the end of the business day or when the TRACE system is not 
open. Under Rule 6730(a)(3)(E)(i)a., transactions executed on a 
business day at or after 12:00 a.m. Eastern Time through 7:59:59 
a.m. Eastern Time must be reported the same day no later than 120 
minutes after the TRACE system opens. Under Rule 6730(a)(3)(E)(i)c., 
transactions executed on a business day less than 120 minutes before 
6:30 p.m. Eastern Time (the time the TRACE system closes) must be 
reported no later than 120 minutes after the TRACE system opens the 
next business day (T + 1), and if reported on T + 1, designated 
``as/of'' and include the date of execution. Under Rule 
6730(a)(3)(E)(i)d., transactions executed on a business day at or 
after 6:30 p.m. Eastern Time through 11:59:59 p.m. Eastern Time or 
on a Saturday, a Sunday, a federal or religious holiday or other day 
on which the TRACE system is not open at any time during that day 
(determined using Eastern Time) must be reported the next business 
day (T + 1), no later than 120 minutes after the TRACE system opens, 
designated ``as/of'' and include the date of execution.
    \15\ Proposed Rule 6730(a)(3)(F)(ii) and proposed Rule 
6730(a)(3)(G)(ii)--the ``post-pilot program'' reporting provisions--
incorporate by reference the reporting requirements set forth in 
Rule 6730(a)(3)(E)(ii)a. through d., including the exceptions to the 
requirement to report within 60 minutes that apply to transactions 
executed near the end of the business day or when the TRACE system 
is not open in Rule 6730(a)(3)(E)(ii)a., c. and d.
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    After the 60-minute reporting requirement is implemented, FINRA 
will continue to review the reporting of MBS Specified Pool and SBA-
Backed ABS transactions and may recommend further reductions in the 
reporting period.
    FINRA also proposes minor clarifying amendments to Rule 
6730(a)(3)(D) and (E) to specify that the reporting requirements set 
forth therein apply solely to MBS TBA transactions.

Dissemination

Amendment to Rule 6750

    Although members began reporting transactions in Asset-Backed 
Securities to TRACE on May 16, 2011, FINRA currently does not 
disseminate publicly any of the Asset-Backed Securities transaction 
data reported to TRACE as provided in Rule 6750(b)(4). However, as 
noted above, FINRA has filed the TBA proposal, in which FINRA proposes 
to disseminate MBS TBA transactions, which represent approximately 87 
percent of the average daily volume traded in all Asset-Backed 
Securities.\16\ Following the submission of the TBA proposal, FINRA 
continued to examine transactions in Asset-Backed Securities to 
determine if FINRA should propose to disseminate additional Asset-
Backed Securities, and will continue its review and research. The SEC 
has been supportive of such efforts.\17\
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    \16\ See supra note 4. Beginning on the later of August 1, 2012, 
or 180 days following publication by FINRA of the Regulatory Notice 
announcing SEC approval of the TBA proposal, FINRA will disseminate 
such MBS TBA transaction data.
    \17\ See Securities Exchange Act Release No. 61566 (February 22, 
2010), 75 FR 9262, 9265 (March 1, 2010) (Order Approving File No. 
SR-FINRA-2009-065).
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    Among other things, FINRA has reviewed the data reported for Asset-
Backed Securities, including MBS Specified Pool and SBA-Backed ABS 
transactions, and studied the total volume of MBS Specified Pool and 
SBA-Backed ABS transactions, the concentration of trading in such 
securities, and the pricing disparity among various types of MBS 
Specified Pool and SBA-Backed ABS transactions to understand their 
liquidity and fungibility. The market activity reported and reviewed 
reveals that for MBS Specified Pool transactions, the market is 
generally active and liquid, and with liquidity comparable to that of 
corporate bonds.\18\ Based on the review, FINRA believes that it is 
appropriate to provide for the dissemination of MBS Specified Pool and 
SBA-Backed ABS transactions, and such dissemination will benefit market 
participants by improving transparency in both market segments.
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    \18\ Liquidity as measured by par value traded is comparable to 
corporate bonds. Although MBS TBA transactions account for 
approximately 93 percent of all trading in Agency Pass-Through 
Mortgage-Backed Securities, the average daily volume of MBS 
Specified Pool transactions is significant--approximately $17.5 
billion is traded daily on average, in approximately 3,000 trades 
per day. The information is based upon FINRA's review of Asset-
Backed Securities transactions reported to TRACE from May 16, 2011 
through October 31, 2011.
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    FINRA proposes to amend Rule 6750 to provide for the dissemination 
of MBS Specified Pool and SBA-Backed ABS transactions, with 
dissemination occurring immediately upon receipt of a transaction 
report. Specifically, Rule 6750(b)(4) would be amended to provide that 
FINRA will not disseminate information on a transaction in a TRACE-
Eligible Security that is an Asset-Backed Security, except: (A) an 
Agency Pass-Through Mortgage-Backed Security; and (B) an SBA-Backed 
ABS.\19\ Thus, information would be disseminated on MBS Specified Pool 
and SBA-Backed ABS transactions within 120 minutes, or, after the 
expiration of the applicable pilot program, within 60 minutes of the 
Time of Execution.\20\
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    \19\ See supra note 4.
    \20\ FINRA continues to review Asset-Backed Security transaction 
information in other sectors of the Asset-Backed Securities market 
and, at a later date, may propose that transactions in other Asset-
Backed Securities be disseminated.
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Dissemination Caps

    FINRA has TRACE dissemination protocols in place, referred to as 
dissemination caps, under which the actual size of a transaction over a 
certain par value is not displayed in disseminated TRACE transaction 
data. For TRACE-Eligible Securities that are rated Investment Grade, 
the dissemination cap is $5 million (``$5MM''), and the size of 
transactions in excess of $5MM is displayed as ``$5MM+.'' For TRACE-
Eligible Securities that are rated Non-Investment Grade, the 
dissemination cap is $1 million (``$1MM''), and the size of a 
transaction in excess of $1MM is displayed as ``$1MM+.'' \21\ Upon the 
approval and effectiveness of the TBA proposal: (1) The dissemination 
cap will be $25 million (``$25MM'') for MBS TBA transactions GD, and 
the size of transactions in excess of $25MM will be displayed as 
``$25MM+,'' and (2) the

[[Page 23527]]

dissemination cap will be $10 million (``$10MM'') for MBS TBA 
transactions NGD, and the size of transactions in excess of $10MM will 
be displayed as ``$10MM+.'' \22\
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    \21\ The dissemination caps for Investment Grade corporate bonds 
limit the display of actual size for approximately 1.6 percent of 
trades representing approximately 48 percent of total par value 
traded, and, for Agency Debt Securities, approximately 6 percent of 
trades representing approximately 74 percent of total par value 
traded. The dissemination cap for Non-Investment Grade corporate 
bonds limits the display of actual size for approximately 15 percent 
of trades representing approximately 84 percent of total par value 
traded. The information is based on a review of all transactions in 
Investment Grade corporate bonds, Agency Debt Securities and Non-
Investment Grade corporate bonds reported to TRACE from May 16, 2011 
through January 4, 2012.
    The terms Investment Grade, Non-Investment Grade and Agency Debt 
Security are defined in, respectively, Rule 6710(h), Rule 6710(i) 
and Rule 6710(l).
    \22\ See supra note 4.
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    FINRA has analyzed the distribution of MBS Specified Pool and SBA-
Backed ABS transactions to determine an appropriate dissemination cap 
for these transactions, and proposes to set a dissemination cap for 
each of MBS Specified Pool and SBA-Backed ABS transactions initially at 
$10 million (``$10MM''). Accordingly, the size of MBS Specified Pool 
and SBA-Backed ABS transactions greater than $10 million would be 
displayed in disseminated data as ``$10MM+.'' At this level 
approximately nine percent of transactions and approximately 80 percent 
of par value traded would be disseminated subject to the $10MM cap.\23\ 
FINRA believes that these caps will allow the marketplace time to 
adjust to the new levels of transparency. In setting these 
dissemination caps, FINRA took into account the liquidity and trading 
activity in these segments.
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    \23\ See supra note 4. The proposed dissemination caps for MBS 
TBA transactions GD would limit display of actual size for 
approximately 20 percent of trades representing approximately 84 
percent of par value traded and for MBS TBA transactions NGD would 
limit the display of actual size for approximately 42 percent of 
trades representing approximately 85 percent of par value traded. 
The information is based on a review of all MBS TBA, MBS Specified 
Pool and SBA-Backed ABS transactions reported to TRACE from May 16, 
2011 through January 4, 2012.
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    As dissemination of MBS Specified Pool and SBA-Backed ABS 
transactions is implemented, FINRA will continue to review the volume 
of and liquidity in these securities, and may recommend that the 
dissemination caps be set at higher levels to provide additional 
transparency to market participants.
    FINRA will announce the effective date of the proposed rule change 
in a Regulatory Notice to be published no later than 60 days following 
Commission approval. The effective date will be no earlier than August 
1, 2012, and no later than 180 days following publication of the 
Regulatory Notice announcing Commission approval.
2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the 
provisions of Section 15A(b)(6) of the Act,\24\ 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 to 
increase fixed income market transparency is designed to prevent 
fraudulent and manipulative acts and practices, to promote just and 
equitable principles of trade, and, generally to protect investors and 
the public because transparency in MBS Specified Pool and SBA-Backed 
ABS transactions will enhance the ability of investors and other market 
participants to identify and negotiate fair and competitive prices for 
these securities, and because the dissemination of price and other 
information publicly will promote just and equitable principles of 
trade among participants in the more transparent market, and will aid 
in the prevention of fraudulent and manipulative acts and practices in 
the Asset-Backed Securities market.
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    \24\ 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

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) By order approve or disapprove such proposed rule change, or
    (B) Institute proceedings to determine whether the proposed rule 
change should be 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-2012-021 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-2012-021. 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 
a.m. and 3 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-2012-021 and should be 
submitted on or before May 10, 2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\25\
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    \25\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-9405 Filed 4-18-12; 8:45 am]
BILLING CODE 8011-01-P