Document ID: SEC-2009-0878-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Financial Industry Regulatory Authority, Inc.
Posted Date: 2009-07-01T04:00Z

[Federal Register: July 1, 2009 (Volume 74, Number 125)]
[Notices]               
[Page 31471-31472]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr01jy09-106]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60168; File No. SR-FINRA-2009-043]

 
Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing and Immediate Effectiveness of 
Proposed Rule Change Relating to the Application of Transaction-Related 
Charges for Trade Reporting to the OTC Reporting Facility

June 24, 2009.
    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 June 17, 2009, Financial Industry Regulatory Authority, Inc. 
(``FINRA'') (f/k/a National Association of Securities Dealers, Inc. 
(``NASD'')) filed with the Securities and Exchange Commission (``SEC'' 
or ``Commission'') the proposed rule change as described in Items I and 
II below [sic], 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 7710 to clarify the 
application of transaction-related charges for trade reporting to the 
OTC Reporting Facility (``ORF'').
    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
    The FINRA Rule 7700 Series, among other things, sets forth the 
pricing schedule for the ORF, the OTC Bulletin Board, and the Trade 
Reporting and Compliance Engine Services. On March 1, 2007, FINRA filed 
a proposed rule change (SR-NASD-2007-018) for immediate effectiveness 
that deleted certain fee provisions from the FINRA

[[Page 31472]]

Rule 7700 Series \5\ and amended certain other provisions.\6\ In that 
filing, NASD Rule 7010(g) was renumbered as NASD Rule 7010, renamed, 
and amended to apply only to the ORF.\7\ The amendments became 
operative on March 5, 2007.\8\ As FINRA stated in the filing, the 
amendments made to the rule language were not intended to modify any of 
the charges relating to the ORF.
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    \5\ At the time of the rule filing, the FINRA Rule 7700 Series 
was the NASD Rule 7000 Series. The NASD Rule 7000 Series was 
renumbered as the FINRA Rule 7700 Series in 2008. See Securities 
Exchange Act Release No. 58643 (September 25, 2008), 73 FR 57174 
(October 1, 2008); see also FINRA Regulatory Notice 08-57 (October 
2008).
    \6\ See Securities Exchange Act Release No. 55538 (March 27, 
2007), 72 FR 15924 (April 3, 2007) (Notice of Filing and Immediate 
Effectiveness of SR-NASD-2007-018).
    \7\ NASD Rule 7010 was later renumbered as FINRA Rule 7710. See 
Securities Exchange Act Release No. 58643 (September 25, 2008), 73 
FR 57174 (October 1, 2008).
    \8\ See Securities Exchange Act Release No. 55538 (March 27, 
2007), 72 FR 15924 (April 3, 2007) (Notice of Filing and Immediate 
Effectiveness of SR-NASD-2007-018).
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    Although there was no intent to modify any charges in connection 
with reporting transactions to the ORF, the rule language, as amended, 
omits some securities from the rule because of the definition of ``OTC 
Equity Security'' in FINRA Rule 6420. The previous rule, NASD Rule 
7010(g), included a catch-all provision that applied a charge of 
$0.029/side to the ``reporting of all other transactions not subject to 
comparison.'' This language included, for example, PORTAL equity 
securities, which are reported to the ORF pursuant to the PORTAL rules 
in the FINRA Rule 6630 Series. The term ``OTC Equity Security,'' 
however, specifically excludes PORTAL securities and restricted 
securities from the definition.\9\ Thus, by using the defined term 
``OTC Equity Security,'' the rule was inadvertently amended to exclude 
PORTAL equity securities from the scope of the rule.
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    \9\ See FINRA Rule 6420(c), (d).
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    The proposed rule change would delete the reference to ``OTC Equity 
Security'' in FINRA Rule 7710 and clarify that the charge applies to 
the reporting of transactions in any security, not just OTC Equity 
Securities, to the ORF that are not subject to comparison through the 
ORF.
    FINRA has filed the proposed rule change for immediate 
effectiveness. The effective date and the implementation date will be 
the date of filing, June 17, 2009.
2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the 
provisions of Section 15A(b)(5) of the Act,\10\ 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 rule change clarifies the 
charges assessed with respect to transactions reported to the ORF and 
correctly reflects FINRA's intent when amending the rule in SR-NASD-
2007-018.
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    \10\ 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 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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act \11\ and paragraph (f)(2) of Rule 19b-4 
thereunder.\12\ 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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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 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 e-mail to rule-comments@sec.gov. Please include 
File Number SR-FINRA-2009-043 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-2009-043. 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 inspection 
and copying 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-2009-043 and should be 
submitted on or before July 21, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-15468 Filed 6-30-09; 8:45 am]

BILLING CODE 8010-01-P