Document ID: SEC-2015-0939-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Financial Industry Regulatory Authority, Inc.
Posted Date: 2015-06-02T04:00Z

[Federal Register Volume 80, Number 105 (Tuesday, June 2, 2015)]
[Notices]
[Pages 31429-31430]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-13378]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75058; File No. SR-FINRA-2015-012]

Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change To Clarify the Scope of the Definition of ``Asset-
Backed Security'' for Purposes of Reporting to FINRA's Trade Reporting 
and Compliance Engine (TRACE) System

May 28, 2015.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 \2\ thereunder, notice is hereby given 
that on May 19, 2015, Financial Industry Regulatory Authority, Inc. 
(``FINRA'') filed with the Securities and Exchange Commission 
(``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 clarify the scope of the definition of 
``Asset-Backed Security'' for purposes of reporting to FINRA's Trade 
Reporting and Compliance Engine (TRACE) system.
    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
    On November 13, 2013, FINRA proposed a revised definition of 
``Asset-Backed Security'' in Rule 6710 and also proposed new 
supplementary material to provide further guidance on the intended 
scope of the definition.\4\ In Amendment No. 1 to the Proposal, FINRA 
modified the definition of ``Asset-Backed Security'' to provide that 
the term excludes any securitized product backed by ``residential or 
commercial mortgage loans, mortgage-backed securities, or other 
financial assets derivative of mortgage-backed securities.'' \5\ 
However, a corresponding change to the supplementary material to delete 
such security types from the scope of Asset-Backed Security was not 
made at that time. FINRA is now proposing to amend Supplementary 
Material .01 of Rule 6710 to make clear that home equity loans and home 
equity lines of credit are not within the scope of the defined term 
``Asset-Backed Security.'' \6\
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    \4\ See Securities Exchange Act Release No. 70906 (November 20, 
2013), 78 FR 70602 (November 26, 2013) (Notice of Filing of File No. 
SR-FINRA-2013-046) (``Proposal'').
    \5\ See Amendment No. 1 to SR-FINRA-2013-046.
    \6\ TRACE dissemination of additional Asset-Backed Securities 
will begin on June 1, 2015. See Regulatory Notice 14-34 (August 
2014).
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    FINRA has filed the proposed rule change for immediate 
effectiveness. The implementation date of the proposed rule change will 
be June 1, 2015.
2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the 
provisions of Section 15A(b)(6) of the Act,\7\ 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 
clarify the intended scope and operation of the amendments adopted by 
SR-FINRA-2013-046 by making clear that home equity loans and home 
equity lines of credit are not within the scope of the definition of 
``Asset-Backed Security.''
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    \7\ 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. The proposed rule change 
clarifies the intended operation of an existing rule.

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 \8\ and Rule 19b-
4(f)(6) thereunder.\9\
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(6). As required under Rule 19b-
4(f)(6)(iii), FINRA provided the Commission with written notice of 
its intent to file the proposed rule change, along with a brief 
description and the 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.
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    FINRA has requested that the Commission waive the requirement that 
the rule change, by its terms, not become operative for 30 days after 
the date of the filing as set forth in Rule 19b-4(f)(6)(iii),\10\ so 
that the proposal may become operative on June 1, 2015, which is the 
date that TRACE dissemination of the additional Asset-Backed Securities 
information will begin. The Commission notes that the proposed rule 
change, by making a conforming change to Supplementary Material .01 of 
Rule 6710, would clarify the definition of Asset-Backed Security in 
that Rule. The Commission notes that without such a waiver there could 
be a period of time during which

[[Page 31430]]

Supplementary Material .01 and Rule 6710 are inconsistent and, as a 
result, there could be some ambiguity about the operative definition of 
Asset-Backed Security. Therefore, the Commission believes that waiving 
the operative delay for the proposed rule change and allowing it to be 
implemented on June 1, 2015, which is the date that the definition of 
Asset-Backed Security in Rule 6710 is effective and TRACE dissemination 
of Asset-Backed Security information begins, would be appropriate in 
the public interest and consistent with the protection of investors.
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    \10\ 17 CFR 240.19b-4(f)(6)(iii).
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    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.

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-2015-012 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-2015-012. 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-2015-012 and should be 
submitted on or before June 23, 2015.

    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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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-13378 Filed 6-1-15; 8:45 am]
 BILLING CODE 8011-01-P