Document ID: SEC-2016-1935-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Financial Industry Regulatory Authority, Inc.
Posted Date: 2016-11-03T04:00Z

[Federal Register Volume 81, Number 213 (Thursday, November 3, 2016)]
[Notices]
[Pages 76683-76685]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-26509]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79190; File No. SR-FINRA-2016-040]

Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change To Amend FINRA Rule 7730 To Establish a Fee for 
the Academic Corporate Bond TRACE Data Product

October 28, 2016.
    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 October 25, 2016, 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 to establish a fee for 
the Academic Corporate Bond TRACE Data product.
    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.

[[Page 76684]]

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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    FINRA's TRACE data product offerings, set forth in Rule 7730 (Trade 
Reporting and Compliance Engine (TRACE)), include both real-time as 
well as historic data for most TRACE-eligible securities. The SEC 
recently approved a new TRACE data product composed of enhanced 
historic data available solely to academics (i.e., requests originating 
from an institution of higher education).\5\ The new TRACE data 
product--Academic Corporate Bond TRACE Data -- will contain 
transaction-level data on historic transactions in corporate bonds and 
will include masked counterparty information.\6\ Specifically, 
``Academic Corporate Bond TRACE Data'' means historic transaction-level 
data on all transactions in corporate bonds reported to TRACE (except a 
transaction that is a List or Fixed Offering Price Transaction, as 
defined in Rule 6710(q), or a Takedown Transaction, as defined in Rule 
6710(r)), including Rule 144A transactions in corporate bonds, with 
elements to be determined from time to time by FINRA in its discretion 
and as stated in a Regulatory Notice or other equivalent 
publication.\7\
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    \5\ See Securities Exchange Act Release No. 78759 (September 2, 
2016), 81 FR 62222 (September 8, 2016) (``Order Approving File No. 
SR-FINRA-2016-024'').
    \6\ See Rule 7730(g)(5).
    \7\ See supra note 6.
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    The Academic Corporate Bond TRACE Data will be delayed a minimum of 
36 months and will not include Market Participant Identifiers 
(``MPIDs''), but will substitute a masked dealer identifier for each 
MPID included in the data.\8\ Applicants for Academic Corporate Bond 
TRACE Data will be required to execute appropriate agreements with 
FINRA.\9\
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    \8\ See supra note 6.
    \9\ See Rule 7730(e).
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    FINRA is now proposing to amend FINRA Rule 7730 (Trade Reporting 
and Compliance Engine (TRACE)) to establish fees for the Academic 
Corporate Bond TRACE Data product. FINRA is proposing to establish a 
data fee of $500 per calendar year (with a single set-up fee of $500) 
for receipt of the Academic Corporate Bond TRACE Data product. FINRA 
believes that this fee is reasonable, and notes that the subscription 
fee for the Historic TRACE Data Sets is $500 per year (per data set), 
with a single fee of $1,000 for development and set-up to receive 
Historic TRACE Data for qualifying tax-exempt organizations.
    FINRA has filed the proposed rule change for immediate 
effectiveness. The effective date of the proposed rule change will be 
the date of effectiveness of the Academic Corporate Bond TRACE Data 
product.\10\
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    \10\ See Order Approving File No. SR-FINRA-2016-024. FINRA will 
announce the effective date of the Academic Corporate Bond TRACE 
Data product in a Regulatory Notice to be published no later than 90 
days following Commission approval. The effective date will be no 
later than 270 days following publication of that Regulatory Notice.
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2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the 
provisions of Section 15A(b)(5) of the Act,\11\ 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)(5).
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    Pursuant to the proposal, FINRA will establish fees to make 
available to institutions of higher education an enhanced historic 
TRACE data product that will include transaction-level data on 
corporate bonds on a 36-month delayed basis with masked MPIDs. Academic 
Corporate Bond TRACE Data will be made available only to institutions 
of higher education for a fee of $500 per calendar year (with a single 
set-up fee of $500). FINRA believes that the proposed fees are 
reasonable, and notes that the fees will be applied equally to all 
institutions of higher education that choose to subscribe to the data 
product. Thus, FINRA believes that the proposed rule change is 
consistent with the Act.

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 proposal to create a new 
Academic Corporate Bond TRACE Data product would not impose any 
additional reporting requirements or costs on firms and, as a result, 
would have no direct impact on firms. The proposal to establish fees in 
connection with the new Academic Corporate Bond TRACE Data product 
applies only to institutions of higher education that choose to 
subscribe to the data product, and the proposed fees will apply equally 
to all such subscribers.
C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others
    FINRA solicited comment on a proposal to establish an enhanced 
historic data product with masked dealer identifiers in Regulatory 
Notice 15-26, including the proposal of a $500 fee per data set and a 
one-time initial set-up fee of $500. FINRA received four comment 
letters in response to the Regulatory Notice.\12\ A copy of the 
Regulatory Notice is attached as Exhibit 2a. A list of comment letters 
received in response to the Regulatory Notice is attached as Exhibit 
2b. Copies of the comment letters received in response to the 
Regulatory Notice are attached as Exhibit 2c. Of the four comment 
letters received, none of the commenters discussed the $500 fee per 
data set or the single set-up fee of $500.
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    \12\ See Letter from Michael Nicholas, Chief Executive Officer, 
Bond Dealers of America, to Marcia E. Asquith, Corporate Secretary, 
FINRA, dated August 24, 2015 (``BDA''), letter from Luis Palacios, 
Director of Research Services, The Wharton School, to Marcia E. 
Asquith, Corporate Secretary, FINRA, dated September 10, 2015 
(``Wharton''), letter from David L. Cohen, Managing Director & 
Associate General Counsel, and Sean Davy, Managing Director, 
Securities Industry and Financial Markets Association, to Marcia E. 
Asquith, Corporate Secretary, FINRA, dated September 11, 2015 
(``SIFMA''), and letter from Carrie Devorah, Founder, The Center for 
Copyrights Integrity, to Marcia E. Asquith, Corporate Secretary, 
FINRA, dated September 14, 2015 (``CCI'').
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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

[[Page 76685]]

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-2016-040 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 20549-1090.
    All submissions should refer to File Number SR-FINRA-2016-040. 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-2016-040, and should 
be submitted on or before November 25, 2016.
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    \15\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
Brent J. Fields,
Secretary.
[FR Doc. 2016-26509 Filed 11-2-16; 8:45 am]
 BILLING CODE 8011-01-P