Document ID: SEC-2007-1447-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: Financial Industry Regulatory Authority, Inc.
Posted Date: 2007-10-17T04:00Z

[Federal Register: October 17, 2007 (Volume 72, Number 200)]
[Notices]               
[Page 58920-58922]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr17oc07-120]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56644; File No. SR-FINRA-2007-016]

 
Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change To Reflect the Closing of the NASD/BSE Trade 
Reporting Facility

October 11, 2007.
    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 9, 2007, the Financial Industry Regulatory Authority, Inc. 
(``FINRA'') (f/k/a the National Association of Securities Dealers, Inc. 
(``NASD'')) 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 substantially by FINRA. FINRA 
has submitted the proposed rule change under Section 19(b)(3)(A) of the 
Act \3\ and Rule 19b-4(f)(6) thereunder,\4\ which renders the proposal 
effective upon filing with the Commission.\5\ 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).
    \4\ 17 CFR 240.19b-4(f)(6).
    \5\ FINRA has asked the Commission to waive the 30-day operative 
delay provided in Rule 19b-4(f)(6)(iii). 17 CFR 240.19b-
4(f)(6)(iii).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    FINRA proposes to delete in their entirety the NASD Rule 4000D, 
6000D, and 7000D Series and the Limited Liability Company Agreement of 
The NASD/BSE Trade Reporting Facility LLC (the ``NASD/BSE TRF LLC 
Agreement''), in light of the recent closing of the NASD/BSE Trade 
Reporting Facility (the ``NASD/BSE TRF'').\6\
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    \6\ Effective July 30, 2007, FINRA was formed through the 
consolidation of NASD and the member regulatory functions of NYSE 
Regulation, Inc. Accordingly, from that date until the date it 
closed on September 21, 2007, the NASD/BSE TRF was doing business as 
the FINRA/BSE TRF.
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    The text of the proposed rule change is available at http://www.finra.org
, at the principal offices 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 NASD/BSE TRF was approved by the Commission \7\ and commenced 
operation in February 2007 to provide members with a mechanism for 
reporting locked-in trades in NMS stocks, as defined in Rule 600(b)(47) 
of Regulation NMS under the Act,\8\ effected otherwise than on an 
exchange. The Boston Stock Exchange, Inc. (``BSE''), the ``Business 
Member'' under the NASD/BSE TRF LLC Agreement,

[[Page 58921]]

determined to close the NASD/BSE TRF for business reasons. Accordingly, 
as of the close of business on September 21, 2007, the NASD/BSE TRF 
ceased accepting trade reports.\9\
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    \7\ See Securities Exchange Act Release No. 54931 (December 13, 
2006), 71 FR 76409 (December 20, 2006) (order approving File No. SR-
NASD-2006-115).
    \8\ 17 CFR 242.600(b)(47).
    \9\ Although the NASD/BSE TRF is no longer operating, pursuant 
to the termination provisions in the NASD/BSE TRF LLC Agreement, the 
NASD/BSE Trade Reporting Facility LLC will continue its corporate 
existence until October 30, 2007.
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    FINRA members were given prior notice of the closing and were 
further notified that any members using the NASD/BSE TRF to report 
trades were required to find an alternative mechanism to satisfy their 
trade reporting obligations. Prior to September 21, 2007, FINRA and BSE 
staff worked to ensure that FINRA members that had been reporting 
trades to the NASD/BSE TRF were transitioned to another FINRA facility. 
FINRA represents that, notwithstanding the closing of the NASD/BSE TRF, 
FINRA is able to fulfill all of its regulatory obligations with respect 
to over-the-counter trade reporting through its other facilities, i.e., 
the Alternative Display Facility, the NASD/Nasdaq Trade Reporting 
Facility, the NASD/NSX Trade Reporting Facility, and the NASD/NYSE 
Trade Reporting Facility.
    Accordingly, FINRA proposes to delete the NASD Rule 4000D and 6000D 
Series relating to trade reporting to the NASD/BSE TRF and the NASD 
Rule 7000D Series relating to fees and credits for use of the NASD/BSE 
TRF. In addition, FINRA proposes to delete the NASD/BSE TRF LLC 
Agreement, a copy of which is included in the Manual. The proposed rule 
change will ensure that FINRA's rules accurately reflect only the FINRA 
facilities that are available to members for trade reporting.\10\
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    \10\ On September 12, 2007, FINRA filed a proposed rule change, 
SR-FINRA-2007-012, proposing certain changes to its trade reporting 
rules, including NASD Rule 6130D. See SR-FINRA-2007-012, available 
at http://www.finra.org/RulesRegulation/RuleFilings/2007RuleFilings/P036903.
 FINRA will file an amendment to SR-FINRA-2007-012 to delete 

the references to the NASD/BSE TRF and the proposed changes to NASD 
Rule 6130D contained in that filing.
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    FINRA has filed the proposed rule change for immediate 
effectiveness and requested a waiver of the 30-day operative delay. 
FINRA proposes that the proposed rule change be operative on the date 
of filing.
2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with 
Section 15A(b)(6) of the Act,\11\ which requires, among other things, 
that FINRA rules 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 by deleting rules that apply to a FINRA facility that is 
no longer in operation, the proposed rule change will prevent potential 
member confusion and trade reporting errors and violations.
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    \11\ 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.

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

    FINRA has filed the proposed rule change pursuant to Section 
19(b)(3)(A) of the Act \12\ and subparagraph (f)(6) of Rule 19b-4 
thereunder.\13\ Because FINRA has designated the foregoing proposed 
rule change as one that: (1) Does not significantly affect the 
protection of investors or the public interest; (2) does not impose any 
significant burden on competition; and (3) does not become operative 
for 30 days from the date of filing, or such shorter time as the 
Commission may designate if consistent with the protection of investors 
and the public interest, the proposed rule change has become effective 
pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-4(f)(6) 
thereunder. As required under Rule 19b-4(f)(6)(iii), FINRA provided the 
Commission with written notice of its intention to file the proposed 
rule change at least five business days prior to filing the proposal 
with the Commission or such shorter period as designated by the 
Commission.
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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) normally does 
not become operative prior to 30 days after the date of filing. 
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. FINRA has asked the Commission to 
waive the 30-day operative delay to expedite the deletion of rules that 
applied to the NASD/BSE TRF, a FINRA facility that is no longer in 
operation, thereby preventing potential member confusion and trade 
reporting errors and violations.
    The Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest 
because the proposal will delete rules that applied to the NASD/BSE 
TRF, a FINRA facility that ceased operations on September 21, 2007.\14\ 
Accordingly, the Commission believes that the proposal will ensure that 
FINRA's rules accurately reflect the FINRA trade reporting facilities 
that are in operation currently and available to accept trade reports. 
For these reasons, the Commission designates the proposal to be 
operative on filing with the Commission.
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    \14\ 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. 15 U.S.C. 78c(f).
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    At any time within 60 days of the filing of such 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.

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-2007-016 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, Station Place, 100 F 
Street, NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-FINRA-2007-016. 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/

[[Page 58922]]

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 the 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-2007-016 and should be 
submitted on or before November 7, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-20406 Filed 10-16-07; 8:45 am]

BILLING CODE 8011-01-P