Document ID: SEC-2014-1744-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Financial Industry Regulatory Authority, Inc.
Posted Date: 2014-10-16T04:00Z

[Federal Register Volume 79, Number 200 (Thursday, October 16, 2014)]
[Notices]
[Pages 62221-62223]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-24546]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-73332 ; File No. SR-FINRA-2014-043]

Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change to Adopt as Permanent the Limited Fee Waiver Pilot 
Program Pursuant to FINRA Rule 7730

October 9, 2014.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934

[[Page 62222]]

(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on October 3, 2014, 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 FINRA Rule 7730(c)(1)(A) to adopt as 
permanent the limited fee waiver pilot program, which provides a one 
month waiver of the Professional Real-Time Data Display Fee, permitting 
professionals to access real-time Trade Reporting and Compliance Engine 
(``TRACE'') transaction data on a trial basis.
    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, Proposed Rule Change

1. Purpose
    On November 7, 2012, FINRA filed an immediately effective rule 
change to implement, as a one-year pilot, a limited fee waiver to 
permit certain market participants to access real-time TRACE 
transaction data for an initial trial period of one month under 
specified conditions.\5\
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    \5\ See Securities Exchange Act Release No. 68255 (November 19, 
2012), 77 FR 70515 (November 26, 2012) (Notice of Filing and 
Immediate Effectiveness of File No. SR-FINRA-2012-049) (``Free Trial 
Pilot'' or ``Pilot'').
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    Specifically, the Pilot provides that, where a member, vendor or 
other redistributor (collectively, ``vendors'') offers a professional a 
free trial of a data product that includes access to real-time TRACE 
transaction data, FINRA will waive the Professional Real-Time Data 
Display Fee that normally would be assessed pursuant to FINRA Rule 
7730(c)(1)(A) for a period of no longer than 31 days, concurrent with a 
free trial of the vendor's product.\6\ Under the Pilot, up to four 
professionals associated with, employed by, or otherwise affiliated 
with a member, employer or other person may receive the FINRA fee 
waiver during the free trial.\7\
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    \6\ Pursuant to FINRA Rule 7730(c)(1)(A), FINRA assesses charges 
for professional users of $60 per month per Data Set, per display 
application to access real-time TRACE transaction data. In general, 
real-time TRACE transaction data is accessed not directly from FINRA 
but through a vendor, such as Bloomberg, L.P. and its Bloomberg 
display application. Under these types of arrangements, a 
professional user pays the vendor for the license to use the 
vendor's display application and if the display application displays 
real-time TRACE transaction data, the vendor must remit the 
applicable TRACE fee to FINRA.
    \7\ In addition, after FINRA has waived the fee in connection 
with a free trial offered by a member, vendor or other 
redistributor, a professional and the member, employer, or other 
person whom the professional is associated with, employed by or 
otherwise affiliated with, may not use the waiver again for that 
member, vendor or other distributor until 12 months has lapsed from 
the last day of the prior waiver.
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    The Pilot originally was scheduled to operate for a period of one 
year, but was extended for an additional year and currently is 
scheduled to expire on November 7, 2014.\8\ FINRA proposes to adopt as 
permanent the Free Trial Pilot program subject to the same terms and 
conditions that applied during the pilot period. Thus, the fee waiver 
would continue to: (1) Be limited to a period not longer than 31 days; 
(2) be available to not more than four professionals associated with, 
employed by, or otherwise affiliated with a member, employer or other 
person during the free trial period; \9\ and provide that, once the 
real-time data display fee has been waived, a professional and the 
member, employer or other person whom the professional is associated 
with, employed by, or otherwise affiliated with, would not be eligible 
for the FINRA fee waiver again in connection with another free trial 
offered by the same vendor until 12 months had lapsed from the last day 
of the prior fee waiver.\10\
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    \8\ See Securities Exchange Act Release No. 70483 (September 24, 
2013), 78 FR 60003 (September 30, 2013) (Notice of Filing and 
Immediate Effectiveness of a Proposed Rule Change to Extend the 
Limited Waiver of the TRACE Professional Real-Time Data Display Fee 
Pilot; File No. SR-FINRA-2013-040).
    \9\ The fee waiver pilot program is not applicable to 
professionals associated with, employed by or otherwise affiliated 
with entities that obtain unlimited internal use of market data 
through any number of display applications by paying a flat fee of 
$7,500 (per month per Data Set) under Rule 7730(c)(1)(A) (i.e., 
``enterprise fee''). The enterprise fee structure is inconsistent 
with the limitation that the fee waiver may apply to not more than 
four professionals per entity, per trial period.
    \10\ For example, if a professional were granted a waiver for 
one month beginning on November 15, 2014, the professional would not 
be eligible for another waiver in connection with another free trial 
offered by the same vendor until December 15, 2015.
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    However, a professional and the member, employer or other person 
with whom the professional is associated or otherwise affiliated would 
be eligible for the FINRA fee waiver in connection with a free trial 
offered by a different vendor regarding such vendor's data products.
    FINRA has filed the proposed rule change for immediate 
effectiveness. The implementation date will be the date of filing.
2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the 
provisions of Section 15A(b)(6) of the Act,\11\ 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, and Section 15A(b)(5) of the Act,\12\ 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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    \11\ 15 U.S.C. 78o-3(b)(6).
    \12\ 15 U.S.C. 78o-3(b)(5).
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    FINRA believes that adopting the Free Trial Pilot as a permanent 
program, which encourages additional professionals to test and use 
real-time TRACE transaction data, may promote more accurate and timely 
pricing and valuations of debt securities by members, and may prevent 
fraudulent and manipulative acts and practices regarding pricing and 
valuations for the protection of investors and the public interest. The 
fee waiver also enhances a member's ability to access and test the uses 
of real-time TRACE transaction

[[Page 62223]]

data to determine if the data would further its business needs.
    The fee waiver has operated on a pilot basis for two years, and 
FINRA has not experienced problems with its implementation or 
administration. FINRA believes that permanently adopting the Pilot, 
with the same conditions under which it has been operating, preserves 
these potential benefits for all professionals that participate in a 
free trial of a vendor data product that includes real-time TRACE 
transaction data. Any professional that tests data products during a 
free trial would be eligible for and would benefit from the concurrent 
FINRA fee waiver, consistent with the previously discussed conditions 
applicable to eligibility for the fee waiver program.

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 fee waiver program does not 
unfairly discriminate between or among professionals and members (or 
other end-users) in that the waiver would be available to any person 
that participates in a vendor's free trial that includes real-time 
TRACE transaction data, subject to the conditions described above.

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 \13\ and paragraph (f)(2) of Rule 19b-4 
thereunder.\14\ 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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    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 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-2014-043 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549.

All submissions should refer to File Number SR-FINRA-2014-043. 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, 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; 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-2014-043 and should be 
submitted on or before November 6, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-24546 Filed 10-15-14; 8:45 am]
BILLING CODE 8011-01-P