80 FR 28327 - Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Extend the Tier Size Pilot of FINRA Rule 6433 (Minimum Quotation Size Requirements for OTC Equity Securities)

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 95 (May 18, 2015)

Page Range		28327-28328
FR Document		2015-11869

Federal Register, Volume 80 Issue 95 (Monday, May 18, 2015)

[Federal Register Volume 80, Number 95 (Monday, May 18, 2015)]
[Notices]
[Pages 28327-28328]
From the Federal Register Online [www.thefederalregister.org]
[FR Doc No: 2015-11869]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74927; File No. SR-FINRA-2015-010]

Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Extend the Tier Size Pilot of FINRA Rule 6433
(Minimum Quotation Size Requirements for OTC Equity Securities)

May 12, 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 30, 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 amend FINRA Rule 6433 (Minimum Quotation Size
Requirements for OTC Equity Securities) to extend the Tier Size Pilot,
which currently is scheduled to expire on May 15, 2015, for an
additional three months, until August 14, 2015.
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
FINRA proposes to amend FINRA Rule 6433 (Minimum Quotation Size
Requirements for OTC Equity Securities) (the ``Rule'') to extend, until
August 14, 2015, the amendments set forth in File No. SR-FINRA-2011-058
(``Tier Size Pilot'' or ``Pilot''), which currently are scheduled to
expire on May 15, 2015.\4\
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\4\ See Securities Exchange Act Release No. 73299 (October 3,
2014), 79 FR 61120 (October 9, 2014) (Notice of Filing and Immediate
Effectiveness of File No. SR-FINRA-2014-041); see also Securities
Exchange Act Release No. 67208 (June 15, 2012), 77 FR 37458 (June
21, 2012) (Order Approving File No. SR-FINRA-2011-058, as amended).
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The Tier Size Pilot was filed with the SEC on October 6, 2011,\5\
to amend the minimum quotation sizes (or ``tier sizes'') for OTC Equity
Securities.\6\ The goals of the Pilot were to simplify the tier
structure, facilitate the display of customer limit orders, and expand
the scope of the Rule to apply to additional quoting participants.
During the course of the pilot, FINRA collected and provided to the SEC
specified data with which to assess the impact of the Pilot tiers on
market quality and limit order display.\7\ On September 13, 2013, FINRA
provided to the Commission an assessment on the operation of the Tier
Size Pilot utilizing data covering the period from November 12, 2012
through June 30, 2013.\8\ As noted in the 2013 Assessment, FINRA
believed that the analysis of the data generally showed that the Tier
Size Pilot had a neutral to positive impact on OTC market quality for
the majority of OTC Equity Securities and tiers; and that there was an
overall increase of 13% in the number of customer limit orders that met
the minimum quotation sizes to be eligible for display under the Pilot
tiers. In the 2013 Assessment, FINRA recommended adopting the tiers as
permanent, but extended the pilot period to allow more time to gather
and analyze data after the November 12, 2012 through June 30, 2013
assessment period.\9\ On January 29, 2015, FINRA further extended the
Pilot period to permit FINRA and the Commission to consider the
implications of the data collected since June 30, 2013.\10\ FINRA has
reviewed this post-June 30, 2013 data, and believes that the impact
described in the 2013 Assessment has continued to hold (and has
improved in certain areas).
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\5\ See Securities Exchange Act Release No. 65568 (October 14,
2011), 76 FR 65307 (October 20, 2011) (Notice of Filing of File No.
SR-FINRA-2011-058).
\6\ ``OTC Equity Security'' means any equity security that is
not an ``NMS stock'' as that term is defined in Rule 600(b)(47) of
SEC Regulation NMS; provided, however, that the term OTC Equity
Security shall not include any Restricted Equity Security. See FINRA
Rule 6420.
\7\ FINRA ceased collecting Pilot data for submission to the
Commission on February 13, 2015.
\8\ The assessment is part of the SEC's comment file for SR-
FINRA-2011-058 and also is available on FINRA's Web site at: http://www.finra.org/Industry/Regulation/RuleFilings/2011/P124615 (``Pilot
Assessment'').
\9\ See Securities Exchange Act Release No. 70839 (November 8,
2013), 78 FR 68893 (November 15, 2013) (Notice of Filing and
Immediate Effectiveness of File No. SR-FINRA-2013-049).
\10\ See Securities Exchange Act Release No. 74251 (February 11,
2015), 80 FR 8741 (February 18, 2015) (Notice of Filing and
Immediate Effectiveness of File No. SR-FINRA-2015-002).
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The purpose of this filing is to extend the operation of the Tier
Size Pilot for an additional three month period, until August 14, 2015,
to provide FINRA with additional time to finalize its recommendation
with regard to the Tier Size Pilot.
FINRA has filed the proposed rule change for immediate
effectiveness. The operative date of the proposed rule change will be
May 15, 2015.
2. Statutory Basis
FINRA believes that the proposed rule change is consistent with the
provisions of Section 15A(b)(6) of the Act,\11\ which

[[Page 28328]]

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 also believes that the
proposed rule change is consistent with the provisions of Section
15A(b)(11) of the Act.\12\ Section 15A(b)(11) requires that FINRA rules
include provisions governing the form and content of quotations
relating to securities sold otherwise than on a national securities
exchange which may be distributed or published by any member or person
associated with a member, and the persons to whom such quotations may
be supplied.
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\11\ 15 U.S.C. 78o-3(b)(6).
\12\ 15 U.S.C. 78o-3(b)(11).
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FINRA believes that the extension of the Tier Size Pilot for an
additional three months is consistent with the Act in that it would
provide the Commission and FINRA with additional time to determine
whether the pilot tiers should be made permanent.

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

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 \13\ and Rule 19b-
4(f)(6) thereunder.\14\
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\13\ 15 U.S.C. 78s(b)(3)(A).
\14\ 17 CFR 240.19b-4(f)(6). 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) \15\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\16\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest.
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\15\ 17 CFR 240.19b-4(f)(6).
\16\ 17 CFR 240.19b-4(f)(6)(iii).
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FINRA has asked the Commission to waive the 30-day operative delay
so that the proposal may become operative immediately upon filing. The
Commission believes that waiver of the operative delay is consistent
with the protection of investors and the public interest because such
waiver will allow the pilot program to continue without interruption.
Therefore, the Commission designates the proposal as operative upon
filing.\17\
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\17\ 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 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:

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-2015-010 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-2015-010. 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 St. 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-2015-010, and should
be submitted on or before June 8, 2015.

For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
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\18\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-11869 Filed 5-15-15; 8:45 am]
BILLING CODE 8011-01-P

28328 Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Notices

requires, among other things, that the date of the filing. However, pursuant rules/sro.shtml). Copies of the
FINRA rules must be designed to to Rule 19b–4(f)(6)(iii),16 the submission, all subsequent
prevent fraudulent and manipulative Commission may designate a shorter amendments, all written statements
acts and practices, to promote just and time if such action is consistent with the with respect to the proposed rule
equitable principles of trade, and, in protection of investors and the public change that are filed with the
general, to protect investors and the interest. Commission, and all written
public interest. FINRA also believes that FINRA has asked the Commission to communications relating to the
the proposed rule change is consistent waive the 30-day operative delay so that proposed rule change between the
with the provisions of Section the proposal may become operative Commission and any person, other than
15A(b)(11) of the Act.12 Section immediately upon filing. The those that may be withheld from the
15A(b)(11) requires that FINRA rules Commission believes that waiver of the public in accordance with the
include provisions governing the form operative delay is consistent with the provisions of 5 U.S.C. 552, will be
and content of quotations relating to protection of investors and the public available for Web site viewing and
securities sold otherwise than on a interest because such waiver will allow printing in the Commission’s Public
national securities exchange which may the pilot program to continue without Reference Room, 100 F St. NE.,
be distributed or published by any interruption. Therefore, the Commission Washington DC 20549, on official
member or person associated with a designates the proposal as operative business days between the hours of
member, and the persons to whom such upon filing.17 10:00 a.m. and 3:00 p.m. Copies of such
quotations may be supplied. At any time within 60 days of the filing also will be available for
FINRA believes that the extension of filing of the proposed rule change, the inspection and copying at the principal
the Tier Size Pilot for an additional Commission summarily may office of FINRA. All comments received
three months is consistent with the Act temporarily suspend such rule change if will be posted without change; the
in that it would provide the it appears to the Commission that such Commission does not edit personal
Commission and FINRA with additional action is necessary or appropriate in the identifying information from
time to determine whether the pilot tiers public interest, for the protection of submissions. You should submit only
should be made permanent. investors, or otherwise in furtherance of information that you wish to make
the purposes of the Act. If the available publicly. All submissions
B. Self-Regulatory Organization’s Commission takes such action, the
Statement on Burden on Competition should refer to File Number SR–FINRA–
Commission shall institute proceedings 2015–010, and should be submitted on
FINRA does not believe that the to determine whether the proposed rule or before June 8, 2015.
proposed rule change will result in any should be approved or disapproved. For the Commission, by the Division of
burden on competition that is not Trading and Markets, pursuant to delegated
necessary or appropriate in furtherance IV. Solicitation of Comments
authority.18
of the purposes of the Act. Interested persons are invited to
Robert W. Errett,
submit written data, views, and
C. Self-Regulatory Organization’s arguments concerning the foregoing, Deputy Secretary.
Statement on Comments on the including whether the proposed rule [FR Doc. 2015–11869 Filed 5–15–15; 8:45 am]
Proposed Rule Change Received From change is consistent with the Act. BILLING CODE 8011–01–P
Members, Participants, or Others Comments may be submitted by any of
Written comments were neither the following methods:
solicited nor received. SECURITIES AND EXCHANGE
Electronic Comments COMMISSION
III. Date of Effectiveness of the • Use the Commission’s Internet
Proposed Rule Change and Timing for [Release No. 34–74939; File No. SR–BYX–
comment form (http://www.sec.gov/ 2015–24]
Commission Action rules/sro.shtml); or
Because the foregoing proposed rule • Send an email to rule- Self-Regulatory Organizations; BATS
change does not: (i) Significantly affect comments@sec.gov. Please include File Y-Exchange, Inc.; Notice of Filing and
the protection of investors or the public Number SR–FINRA–2015–010 on the Immediate Effectiveness of a Proposed
interest; (ii) impose any significant subject line. Rule Change Related to Fees for Use
burden on competition; and (iii) become of BATS Y-Exchange, Inc.
Paper Comments
operative for 30 days from the date on
which it was filed, or such shorter time • Send paper comments in triplicate May 12, 2015.
to Brent J. Fields, Secretary, Securities Pursuant to Section 19(b)(1) of the
as the Commission may designate, it has
and Exchange Commission, 100 F Street Securities Exchange Act of 1934
become effective pursuant to Section
NE., Washington, DC 20549–1090. (‘‘Act’’),1 and Rule 19b–4 thereunder,2
19(b)(3)(A) of the Act 13 and Rule 19b–
All submissions should refer to File notice is hereby given that on May 1,
4(f)(6) thereunder.14
A proposed rule change filed under Number SR–FINRA–2015–010. This file 2015, BATS Y-Exchange, Inc. (the
Rule 19b–4(f)(6) 15 normally does not number should be included on the ‘‘Exchange’’ or ‘‘BYX’’) filed with the
Securities and Exchange Commission
become operative prior to 30 days after subject line if email is used. To help the
(‘‘SEC’’ or ‘‘Commission’’) the proposed
Commission process and review your
rule change as described in Items I, II,
12 15 U.S.C. 78o–3(b)(11). comments more efficiently, please use
asabaliauskas on DSK5VPTVN1PROD with NOTICES

13 15 U.S.C. 78s(b)(3)(A). and III below, which Items have been
only one method. The Commission will
14 17 CFR 240.19b–4(f)(6). Rule 19b–4(f)(6) prepared by the Exchange. The
post all comments on the Commission’s
requires a self-regulatory organization to give the Exchange has designated the proposed
Commission written notice of its intent to file the Internet Web site (http://www.sec.gov/
rule change as one establishing or
proposed rule change at least five business days
prior to the date of filing of the proposed rule 16 17CFR 240.19b–4(f)(6)(iii).
changing a member due, fee, or other
change, or such shorter time as designated by the 17 Forpurposes only of waiving the 30-day
18 17 CFR 200.30–3(a)(12).
Commission. The Exchange has satisfied this operative delay, the Commission has considered the
requirement. proposed rule’s impact on efficiency, competition, 1 15 U.S.C. 78s(b)(1).
15 17 CFR 240.19b–4(f)(6). and capital formation. See 15 U.S.C. 78c(f). 2 17 CFR 240.19b–4.

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Document Created: 2015-12-16 07:39:37
Document Modified: 2015-12-16 07:39:37

Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Notices
FR Citation		80 FR 28327