Document ID: SEC-2014-1732-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Financial Industry Regulatory Authority, Inc.
Posted Date: 2014-10-15T04:00Z

[Federal Register Volume 79, Number 199 (Wednesday, October 15, 2014)]
[Notices]
[Pages 61913-61915]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-24454]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-73316; File No. SR-FINRA-2014-040]

Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change To Revise the Operative Date for Deletion of Rule 
7740 Pursuant to SR-FINRA-2014-032

October 7, 2014.
    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 September 25, 2014, 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    FINRA is proposing to revise the operative date for the deletion of 
Rule 7740 (Historical Research and Administrative Reports) pursuant to 
SR-FINRA-2014-032. The proposed rule change would not make any changes 
to the text of FINRA rules.

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

[[Page 61914]]

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, Proposed Rule Change

1. Purpose
    On July 2, 2014, FINRA filed for immediate effectiveness proposed 
rule change SR-FINRA-2014-032 to amend Rule 7710 relating to fees for 
the OTC Reporting Facility (``ORF'') and delete Rule 7740.\4\ Rule 7740 
sets forth the fees to be paid by the purchaser of historical research 
reports regarding OTC Bulletin Board (``OTCBB'') securities through the 
OTCBB Web site.
---------------------------------------------------------------------------

    \4\ See Securities Exchange Act Release No. 72595 (July 11, 
2014), 79 FR 41711 (July 17, 2014) (Notice of Filing and Immediate 
Effectiveness; SR-FINRA-2014-032).
---------------------------------------------------------------------------

    By its terms, SR-FINRA-2014-032 will be operative upon migration of 
the ORF to FINRA's Multi-Product Platform (``MPP''). At the time of the 
filing of SR-FINRA-2014-032, the ORF was scheduled to migrate to the 
MPP on September 15, 2014. In response to requests by the industry, 
FINRA recently delayed the migration of the ORF from September 15, 2014 
to November 17, 2014.\5\ As such, the amendments to Rule 7710 relating 
to fees for the ORF will be operative on the revised migration date of 
November 17, 2014.
---------------------------------------------------------------------------

    \5\ See ``Revised Migration Date for New OTC Reporting Facility 
Technology Platform,'' available at www.finra.org/Industry/Compliance/MarketTransparency/ORF/Notices/P580334.
---------------------------------------------------------------------------

    However, with respect to deletion of Rule 7740, FINRA is proposing 
that the operative date be September 30, 2014. On that date, FINRA's 
vendor that generates and bills for the historical research reports 
under Rule 7740 will migrate to a new technology platform and will no 
longer provide these services to FINRA. Because FINRA contemplated 
migration of the ORF to the MPP, and the elimination of these reports, 
as of September 15, 2014, FINRA did not make arrangements to connect to 
the vendor's new technology platform. As such, the historical research 
reports will not be produced as of September 30, 2014. (The last date 
to order a report would be September 29, 2014.) As noted in SR-FINRA-
2014-032, the quotation activity through the OTCBB has decreased in 
recent years and as such, the value of these reports has declined 
significantly. In fact, some reports in recent months have been 
generated with substantially all zeroes. Accordingly, the number of 
requests for reports continues to decrease. For example, there were 274 
requests for reports pursuant to Rule 7740 in 2012, 103 in 2013 and 57 
through August 2014.
    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,\6\ 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 ensures that FINRA rules accurately reflect the 
functionality of its systems and will avoid the potential confusion of 
having a fee rule in FINRA's manual for reports that FINRA no longer 
provides.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78o-3(b)(6).
---------------------------------------------------------------------------

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. As noted in SR-FINRA-2014-032, 
with the deletion of Rule 7740, FINRA is eliminating fees for 
historical research reports that are of little value today and not 
relied on by market participants as a source of market data.

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 \7\ and Rule 19b-
4(f)(6) thereunder.\8\
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78s(b)(3)(A).
    \8\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

    A proposed rule change filed under Rule 19b-4(f)(6) \9\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\10\ the Commission 
may 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 so that the proposal may 
become operative upon filing. The Commission believes that waiving the 
30-day operative delay is consistent with the protection of investors 
and the public interest. FINRA is proposing to change the deletion date 
of Rule 7740 due to the reports' unavailability as a result of a third-
party vendor's platform change. The Commission believes it is in the 
interest of investors to implement this change immediately. The reports 
referenced in Rule 7740 will be unavailable before the 30-day operative 
delay is complete and, by making the filing operative immediately, this 
will provide the most notice of this change to the firms. Therefore, 
the Commission hereby waives the 30-day operative delay and designates 
the proposal operative upon filing.\11\
---------------------------------------------------------------------------

    \9\ 17 CFR 240.19b-4(f)(6).
    \10\ 17 CFR 240.19b-4(f)(6)(iii).
    \11\ 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).
---------------------------------------------------------------------------

    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:

[[Page 61915]]

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-2014-040 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.

All submissions should refer to File Number SR-FINRA-2014-040. 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-2013-040 and should be 
submitted on or before November 5, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
---------------------------------------------------------------------------

    \12\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-24454 Filed 10-14-14; 8:45 am]
BILLING CODE 8011-01-P