Document ID: SEC-2015-0741-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Financial Industry Regulatory Authority, Inc.
Posted Date: 2015-04-30T04:00Z

[Federal Register Volume 80, Number 83 (Thursday, April 30, 2015)]
[Notices]
[Pages 24302-24304]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-10039]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74807; File No. SR-FINRA-2015-008]

Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change To Delay the Implementation Date of Trade 
Reporting Amendments Approved Pursuant to SR-FINRA-2013-050

April 24, 2015.
    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 April 21, 2015, 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 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 the 
Substance of the Proposed Rule Change

    FINRA is proposing to delay the implementation date of amendments 
to the trade reporting rules relating to the Alternative Display 
Facility (``ADF'') and the Trade Reporting Facilities (``TRFs'') 
approved pursuant to SR-FINRA-2013-050. The proposed rule change would 
not make any changes to FINRA rules.
    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

[[Page 24303]]

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 12, 2013, FINRA filed proposed rule change SR-FINRA-
2013-050 to On November 12, 2013, FINRA filed proposed rule change SR-
FINRA-2013-050, which among other things, proposed to amend FINRA rules 
governing the reporting of over-the-counter (``OTC'') transactions in 
NMS stocks to the ADF and TRFs. The proposed rule change was approved 
by the Commission on February 27, 2014.\4\ The amendments to the ADF 
and TRF rules relating to millisecond reporting that were approved 
pursuant to SR-FINRA-2013-050 became effective on November 10, 2014.\5\
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    \4\ See Securities Exchange Act Release No. 71623 (February 27, 
2014), 79 FR 12558 (March 5, 2014) (Order Approving File No. SR-
FINRA-2013-050).
    \5\ The amendments to other rule sets approved pursuant to SR-
FINRA-2013-050 are also effective. Specifically, the amendments to 
the Order Audit Trail System rules became effective on April 7, 
2014, and the amendments to the OTC Reporting Facility rules became 
effective on November 17, 2014.
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    Pursuant to proposed rule change SR-FINRA-2014-039,\6\ FINRA 
proposed to implement the remaining amendments to the ADF and TRF trade 
reporting rules no later than April 30, 2015, and announced an 
effective date of April 20, 2015.\7\ Specifically, the amendments to 
the ADF and TRF rules (i) require firms to report an additional time 
field for Stop Stock transactions \8\ and transactions that reflect an 
execution price that is based on a prior reference point in time,\9\ 
and when reporting block transactions using the exception for 
Intermarket Sweep Orders (ISOs) (outbound) under SEC Rule 611 of 
Regulation NMS, if the time the firm routed the ISOs is different from 
the execution time; \10\ (ii) require firms to identify the original 
trade when reporting a reversal by including the control number and 
report date for the original trade report; \11\ (iii) require firms to 
report trades executed on non-business days and trades reported more 
than 365 days after trade date (T+365) to the ADF or a TRF (and not on 
``Form T'' through FINRA's Firm Gateway) and further to report non-
business day trades on an ``as/of'' basis by 8:15 a.m. the next 
business day with the unique trade report modifier to denote their 
execution outside normal market hours; \12\ (iv) provide that where 
both sides are submitting a clearing-only report to effectuate a step-
out, the member transferring out of the position must report a step-out 
and the member receiving the position must report a ``step-in''; \13\ 
and (v) address the processing of trades that are submitted for 
clearing.\14\ In addition, SR-FINRA-2013-050 made a number of non-
substantive technical and conforming changes to the ADF and TRF rules 
that were otherwise being amended.
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    \6\ See Securities Exchange Act Release No. 73289 (October 2, 
2014), 79 FR 60874 (October 8, 2014) (Notice of Filing and Immediate 
Effectiveness of File No. SR-FINRA-2014-039).
    \7\ See Regulatory Notice 14-21 (May 2014).
    \8\ See paragraph (F) of Rules 6282(a)(4), 6380A(a)(5) and 
6380B(a)(5). ``Stop stock transaction'' means a transaction 
resulting from an order in which a firm and another party agree that 
the order will be executed at a stop stock price or better, which 
price is based upon the prices at which the security is trading at 
the time the firm receives the order. See Rules 6220, 6320A and 
6320B.
    \9\ See paragraph (G) of Rules 6282(a)(4), 6380A(a)(5) and 
6380B(a)(5).
    \10\ See Rules 6282.03, 6380A.03 and 6380B.03.
    \11\ See Rules 6282(g), 6380A(g) and 6380B(f).
    \12\ See Rules 6282(a)(2), 6380A(a)(2) and 6380B(a)(2).
    \13\ See Rules 7130(g), 7230A(i) and 7230B(h).
    \14\ See Rules 7140, 7240A and 7240B.
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    Firms have requested additional time to make the systems changes 
necessary to comply with the new reporting requirements, and in 
particular, have indicated they need additional time to test the 
systems changes.\15\ Given the scope of the changes, FINRA believes 
that it is appropriate to extend the implementation date and is 
proposing to implement the changes to the ADF and TRF rules approved 
pursuant to SR-FINRA-2013-050 on July 13, 2015. FINRA believes that 
this will provide firms ample time to implement and test the changes, 
as it will afford firms approximately seven months from the date of 
updated technical specifications (technical specifications for the 
FINRA/NYSE TRF were published on December 17, 2014 and for the FINRA/
NASDAQ TRF on December 23, 2014) \16\ and more than three months of 
testing (testing became available on March 16, 2015 for the FINRA/NYSE 
TRF and April 1, 2015 for the FINRA/NASDAQ TRF).\17\
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    \15\ See, e.g., email dated February 12, 2015 from Manisha 
Kimmel, Managing Director, Financial Information Forum (``FIF''), 
requesting a delay of implementation of the amendments to the ADF 
and TRF rules approved pursuant to SR-FINRA-2013-050.
    \16\ Updated technical specifications have not yet been 
published for the ADF; however, we note that currently no member 
firms use the ADF for trade reporting to FINRA. FINRA anticipates 
publishing updated technical specifications for the ADF shortly.
    \17\ FINRA notes that this implementation schedule is consistent 
with FIF's recommendation in its comment letter on SR-FINRA-2013-050 
that FINRA release TRF technical specifications within seven months, 
and make available a robust test environment within three months, of 
the implementation date. See Letter from Manisha Kimmel, Executive 
Director, Financial Information Forum, to Elizabeth M. Murphy, 
Secretary, SEC, dated December 20, 2013.
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    Some firms also have requested that they be permitted to report in 
accordance with the amendments to the ADF and TRF rules prior to the 
implementation date. The TRFs and the ADF are unable to make the 
necessary systems changes available in production prior to July 13, 
2015 to accommodate voluntary reporting in accordance with the new 
reporting requirements by some firms, while other firms continue to 
report under the current reporting requirements. Therefore, all firms 
must begin reporting in accordance with the amendments on July 13, 
2015. As noted above, however, firms will have ample opportunity to 
test their systems changes and new reporting processes prior to July 
13, 2015.
    FINRA has filed the proposed rule change for immediate 
effectiveness and has requested that the Commission waive the 
requirement that the proposed rule change not become operative for 30 
days after the date of the filing. The operative date will be the date 
of filing of the proposed rule change.
2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the 
provisions of section 15A(b)(6) of the Act,\18\ 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 the proposed rule change is consistent 
with the Act in that it provides firms additional time to complete the 
systems changes necessary to comply with SR-FINRA-2013-050, which 
amendments will, among other things, ensure a more accurate and 
complete audit trail, enable FINRA to recreate more accurately members' 
market activity and enhance FINRA's ability to surveil on an automated 
basis for compliance with FINRA trade reporting and other rules.
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    \18\ 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. FINRA believes that providing 
adequate time

[[Page 24304]]

for firms to make and test the systems changes necessary to comply with 
SR-FINRA-2013-050 will benefit all interested parties.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    A copy of the request for a delay from FIF is attached to the 
filing submitted by the Exchange but not attached to the published 
notice of this filing. In response to FIF's request, as discussed 
above, FINRA is proposing to delay implementation of the amendments to 
the ADF and TRF rules approved under SR-FINRA-2013-050 to July 13, 
2015. FINRA believes that the revised implementation date will provide 
members additional time to make the necessary system changes while 
balancing the need to implement the amendments without undue delay.

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 \19\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\20\
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    \19\ 15 U.S.C. 78s(b)(3)(A).
    \20\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file 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. 
The Exchange has satisfied this requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) normally does 
not become operative for 30 days after the date of filing.\21\ However, 
Rule 19b-4(f)(6)(iii) permits the Commission to designate a shorter 
time if such action is consistent with the protection of investors and 
the public interest.\22\ FINRA has requested that the Commission waive 
the 30-day operative delay so that FINRA can immediately delay the 
implementation dates, as provided in this proposal.
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    \21\ 17 CFR 240.19b-4(f)(6)(iii).
    \22\ Id.
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    The Commission believes that the waiver of the 30-day operative 
delay is consistent with the protection of investors and the public 
interest as it will allow FINRA to extend the implementation dates of 
certain changes approved pursuant to SR-FINRA-2013-050 in a timely 
manner. Therefore, the Commission designates the proposal operative 
upon filing.\23\
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    \23\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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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: (i) 
Necessary or appropriate in the public interest; (ii) for the 
protection of investors; or (iii) otherwise in furtherance of the 
purposes of the Act.\24\ If the Commission takes such action, the 
Commission shall institute proceedings to determine whether the 
proposed rule change should be approved or disapproved.\25\
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    \24\ 15 U.S.C. 78s(b)(3)(C).
    \25\ Id.
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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-2015-008 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-2015-008. 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-2015-008, and should 
be submitted on or before May 21, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\26\
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    \26\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-10039 Filed 4-29-15; 8:45 am]
 BILLING CODE 8011-01-P