Document ID: SEC-2010-0375-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Financial Industry Regulatory Authority, Inc.
Posted Date: 2010-03-11T05:00Z

[Federal Register: March 11, 2010 (Volume 75, Number 47)]
[Notices]               
[Page 11605-11607]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr11mr10-101]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61648; File No. SR-FINRA-2010-009]

 
Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing and Immediate Effectiveness of 
Proposed Rule Change To Provide Additional Relief Relating to Certain 
FINRA/Nasdaq Trade Reporting Facility and OTC Reporting Facility Fees

March 4, 2010.
    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 March 1, 2010, 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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[[Page 11606]]

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    FINRA is proposing to waive and issue a credit for fees that were 
charged to FINRA members under FINRA Rules 7620A and 7710 for the 
submission of ``as/of'' trade reports to the FINRA/Nasdaq Trade 
Reporting Facility (``FINRA/Nasdaq TRF'') and the OTC Reporting 
Facility (``ORF''), respectively, for trades executed on eight days in 
the months of August and September 2009. The relief proposed herein is 
in addition to the fee relief provided under SR-FINRA-2009-088. The 
proposed rule change does not require amendments to any FINRA rules.

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
    Pursuant to FINRA Rules 7620A and 7710, members are charged fees 
for trade reporting to the FINRA/Nasdaq TRF and ORF, respectively, and 
the fee for the submission of late trade reports, including ``as/of'' 
reports, is higher than the fee for the submission of timely trade 
reports. ``As/of'' reports are reports of trades that were executed on 
a date prior to the date they were reported.
    During the months of August and September 2009, various Automated 
Confirmation Transaction Service (``ACT'') technology issues impacted 
trade reporting to the FINRA/Nasdaq TRF and the ORF for a period of 
eight days: August 3, August 4, August 5, August 17, August 21, 
September 16, September 25 and September 28. Due to the ACT technology 
issues, members were unable to report trades on trade date and thus 
incurred higher than normal reporting charges due to the higher number 
of ``as/of'' reports that they were compelled to submit.
    On December 7, 2009, FINRA filed proposed rule change SR-FINRA-
2009-088, and on December 17, 2009, the SEC published notice of filing 
and immediate effectiveness of SR-FINRA-2009-088 in the Federal 
Register.\5\ In that filing, FINRA proposed to waive the fees for ``as/
of'' trade reports submitted on the following days in 2009: August 4, 
August 5, August 6, August 18, August 24, September 17, September 28 
and September 29. These dates are the next business day (T+1) following 
the days on which the ACT technology issues occurred. The relief 
proposed in SR-FINRA-2009-088 was based on the assumption that members 
that were unable to report on trade date due to ACT technology issues 
reported the trades on the following business day (T+1).
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    \5\ See Securities Exchange Act Release No. 61160 (December 14, 
2009), 74 FR 67284 (December 18, 2009) (Notice of Filing and 
Immediate Effectiveness of SR-FINRA-2009-088).
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    Subsequent to publication of notice in the Federal Register, 
however, FINRA obtained additional information from Nasdaq, the FINRA/
Nasdaq TRF ``Business Member'' and ACT technology provider, and it was 
determined that the scope of the relief provided under SR-FINRA-2009-
088 is too narrow. Some members that were unable to report on trade 
date did not, in fact, report on the following business day (T+1), but 
reported two (or perhaps more) days after trade date (T+2 or later). 
The relief provided under SR-FINRA-2009-088 does not reach these 
members.
    Accordingly, FINRA is proposing to waive the fees for all ``as/of'' 
trade reports submitted on T+2 or later to the FINRA/Nasdaq TRF and ORF 
that have a trade execution date of August 3, August 4, August 5, 
August 17, August 21, September 16, September 25 and September 28, 2009 
(i.e., the dates on which the ACT technology issues occurred). The 
proposed relief will apply to fees for ``as/of'' trade reports 
submitted through December 31, 2009. Members will be issued a credit 
for the fees on a future invoice.\6\
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    \6\ FINRA notes that a similar proposal to waive and issue a 
credit for certain cancel fees was the subject of a filing by NASDAQ 
OMX PHLX, Inc. See Securities Exchange Act Release No. 60853 
(October 21, 2009), 74 FR 55594 (October 28, 2009) (Notice of Filing 
and Immediate Effectiveness of File No. SR-PHLX-2009-89).
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    The proposed relief is in addition to the relief provided in SR-
FINRA-2009-088 for fees charged on ``as/of'' trade reports submitted on 
T+1. FINRA believes that such additional relief is appropriate in order 
to make all members whole, since the higher charges were the result of 
an ACT technology issue and not the fault of the member.
    FINRA has filed the proposed rule change for immediate 
effectiveness. The operative 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)(5) of the Act,\7\ 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 waiver and credit of the 
``as/of'' reporting fees is fair and equitable in that it will apply 
uniformly to all FINRA members that submitted ``as/of'' trade reports 
to the FINRA/Nasdaq TRF and ORF for trades with the designated trade 
dates.
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    \7\ 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 impose 
any burden on competition 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

    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)(ii) of the Act \8\ and paragraph (f)(2) of Rule 19b-4 
thereunder.\9\ 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.
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    \8\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \9\ 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:

[[Page 11607]]

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-2010-009 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-2010-009. 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 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 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 publicly 
available. All submissions should refer to File Number SR-FINRA-2010-
009 and should be submitted on or before April 1, 2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-5217 Filed 3-10-10; 8:45 am]
BILLING CODE 8011-01-P