80 FR 30310 - Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Designation of a Longer Period for Commission Action on Proceedings To Determine Whether To Approve or Disapprove a Proposed Rule Change to Adopt FINRA Rule 2242 (Debt Research Analysts and Debt Research Reports)

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 101 (May 27, 2015)

Page Range		30310-30311
FR Document		2015-12690

Federal Register, Volume 80 Issue 101 (Wednesday, May 27, 2015)

[Federal Register Volume 80, Number 101 (Wednesday, May 27, 2015)]
[Notices]
[Pages 30310-30311]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-12690]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75013; File No. SR-FINRA-2014-048]


Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Designation of a Longer Period for 
Commission Action on Proceedings To Determine Whether To Approve or 
Disapprove a Proposed Rule Change to Adopt FINRA Rule 2242 (Debt 
Research Analysts and Debt Research Reports)

May 20, 2015.

I. Introduction

    On November 14, 2014, Financial Industry Regulatory Authority, Inc. 
(``FINRA'') filed with the Securities and Exchange Commission (``SEC'' 
or ``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'' or ``Exchange Act'') \1\ and Rule 19b-4 
thereunder,\2\ a proposed rule to adopt new FINRA Rule 2242 (Debt 
Research Analysts and Debt Research Reports) to address conflicts of 
interest relating to the publication and distribution of debt research 
reports. The proposal was published for comment in the Federal Register 
on November 24, 2014.\3\ The Commission received five comments on the 
proposal.\4\ On February 19, 2015, FINRA filed Amendment No. 1 
responding to the comments received to the proposal as well as to 
propose amendments in response to these comments. The proposal, as 
amended by Amendment No. 1, was published for comment in the Federal 
Register on March 18,

[[Page 30311]]

2015.\5\ On February 20, 2015, the Commission issued an order 
instituting proceedings pursuant to Section 19(b)(2)(B) of the Act \6\ 
to determine whether to approve or disapprove the proposal. The order 
was published for comment in the Federal Register on February 26, 
2015.\7\ The Commission received a further four comments regarding the 
proceedings or in response to Amendment No. 1,\8\ to which FINRA 
responded via letter on May 5, 2015.\9\
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Exchange Act Release No. 73623 (Nov. 18, 2014); 79 FR 69905 
(Nov. 24, 2014). On January 6, 2015, FINRA consented to extending 
the time period for the Commission to either approve or disapprove 
the proposed rule change, or to institute proceedings to determine 
whether to approve or disapprove the proposed rule change, to 
February 20, 2015.
    \4\ Letter from Hugh D. Berkson, Executive Vice President and 
President-Elect, Public Investors Arbitration Bar Association, to 
Brent J. Fields, Secretary, SEC, dated Dec. 15, 2014; Letter from 
Kevin Zambrowicz, Associate General Counsel and Managing Director, 
and Sean Davy, Managing Director, Securities Industry and Financial 
Markets Association, to Brent J. Fields, Secretary, SEC, dated Dec. 
15, 2014; Letter from Yoon-Young Lee, Wilmer Cutler Pickering Hale 
and Dorr LLP, to Brent J. Fields, Secretary, SEC, dated Dec. 16, 
2014; Letter from William Beatty, President, North American 
Securities Administrators Association, Inc., Brent J. Fields, 
Secretary, SEC, dated Dec. 19, 2014; and Letter from Kurt N. 
Schacht, Managing Director, Standards and Financial Market 
Integrity, and Linda L. Rittenhouse, Director, Capital Markets 
Policy, CFA Institute, to Brent J. Fields, Secretary, SEC, dated 
Feb. 9, 2015.
    \5\ Exchange Act Release No. 74490 (Mar. 12, 2015); 80 FR 14198 
(Mar. 18, 2015).
    \6\ 15 U.S.C. 78s(b)(2)(B).
    \7\ Exchange Act Release No. 74340 (Feb. 20, 2015); 80 FR 10538 
(Feb. 26, 2015). Specifically, the Commission instituted proceedings 
to allow for additional analysis of the proposed rule change's 
consistency with Section 15A(b)(9) of the Act, which requires that 
FINRA's rules be designed to, among other things, promote just and 
equitable principles of trade, remove impediments to and perfect the 
mechanism of a free and open market and a national market system, 
and, in general, to protect investors and the public interest. See 
id.
    \8\ Letter from Stephanie R. Nicholas, WilmerHale, dated Apr. 6, 
2015, Letter from Kurt N. Schacht, Managing Director, Standards and 
Financial Market Integrity, and Linda L. Rittenhouse, Director, 
Capital Markets Policy, CFA Institute, to Brent J. Fields, 
Secretary, SEC, dated April 7, 2015, an anonymous comment dated Apr. 
8, 2015, and Letter from William Beatty, President and Washington 
(State) Securities Administrator, North American Securities 
Administrators Association, Inc., dated Apr. 17, 2015.
    \9\ Letter from Philip Shaikun, Vice President and Associate 
General Counsel, FINRA, dated May 5, 2015.
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    Section 19(b)(2) of the Act \10\ provides that, after initiating 
approval or disapproval proceedings, the Commission shall issue an 
order approving or disapproving the proposed rule change not later than 
180 days after the date of publication of notice of filing of the 
proposed rule change. The Commission may extend the period for issuing 
an order approving or disapproving the proposed rule change, however, 
by not more than 60 days if the Commission determines that a longer 
period is appropriate and publishes the reasons for such determination. 
The proposal was published for comment in the Federal Register on 
November 24, 2014.\11\ The 180th day after publication of the notice of 
the filing of the proposed rule change in the Federal Register is May 
23, 2015 and the 240th day after publication of the notice of the 
filing of the proposed rule change in the Federal Register is July 22, 
2015.
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    \10\ 15 U.S.C. 78s(b)(2).
    \11\ See supra note 3 and accompanying text.
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    The Commission finds it appropriate to designate a longer period 
within which to issue an order approving or disapproving the proposed 
rule change so that it has sufficient time to consider the proposed 
rule change, including the matters raised in the comment letters to the 
proposed rule change.
    Accordingly, the Commission, pursuant to Section 19(b)(2) of the 
Act,\12\ designates July 22, 2015 as the date by which the Commission 
shall either approve or disapprove the proposed rule change (File No. 
SR-FINRA-2014-048).
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    \12\ 15 U.S.C. 78s(b)(2).

    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)(57).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-12690 Filed 5-26-15; 8:45 am]
 BILLING CODE 8011-01-P

30310 Federal Register / Vol. 80, No. 101 / Wednesday, May 27, 2015 / Notices

estimates, our staff estimates that the requirements, and prepare their annual SECURITIES AND EXCHANGE
total annual burden for all funds to federal and state income tax returns. COMMISSION
comply with rule 31a–2 is 692,120 Therefore, we estimate that the total
hours at an estimated cost of annual cost burden for all funds as a [Release No. 34–75013; File No. SR–FINRA–
$49,832,640.7 result of compliance with rule 31a–2 is 2014–048]
The hour burden estimates for approximately $117,632,086 per year.
retaining records under rule 31a–2 are Self-Regulatory Organizations;
based on our experience with registrants The estimate of average burden hours Financial Industry Regulatory
and our experience with similar is made solely for the purposes of the Authority, Inc.; Notice of Designation
requirements under the Act and the Paperwork Reduction Act, and is not of a Longer Period for Commission
rules under the Act. The number of derived from a comprehensive or even Action on Proceedings To Determine
burden hours may vary depending on, a representative survey or study of the Whether To Approve or Disapprove a
among other things, the complexity of costs of Commission rules and forms. Proposed Rule Change to Adopt
the fund, the issues faced by the fund, The collection of information under FINRA Rule 2242 (Debt Research
and the number of series and classes of rule 31a–2 is mandatory for all funds. Analysts and Debt Research Reports)
the fund. The estimated average burden An agency may not conduct or sponsor,
hours are made solely for purposes of May 20, 2015.
and a person is not required to respond
the Paperwork Reduction Act and are to, a collection of information unless it I. Introduction
not derived from quantitative, displays a currently valid control
comprehensive, or even representative On November 14, 2014, Financial
number. Industry Regulatory Authority, Inc.
survey or study of the burdens
associated with our rules and forms. Written comments are invited on: (a) (‘‘FINRA’’) filed with the Securities and
Based on conversations with Whether the proposed collection of Exchange Commission (‘‘SEC’’ or
representatives of the fund industry and information is necessary for the proper ‘‘Commission’’), pursuant to Section
past estimates, our staff estimates that performance of the functions of the 19(b)(1) of the Securities Exchange Act
the average cost of preserving books and Commission, including whether the of 1934 (‘‘Act’’ or ‘‘Exchange Act’’) 1 and
records required by rule 31a–2 is information will have practical utility; Rule 19b–4 thereunder,2 a proposed rule
approximately $74,782 annually per (b) the accuracy of the Commission’s to adopt new FINRA Rule 2242 (Debt
fund.8 As discussed previously, there Research Analysts and Debt Research
estimate of the burden of the collection
are 3146 funds currently operating, for Reports) to address conflicts of interest
of information; (c) ways to enhance the
a total cost of preserving records as relating to the publication and
quality, utility, and clarity of the distribution of debt research reports.
required by rule 31a–2 of approximately information collected; and (d) ways to
$235,264,172 per year.9 Our staff The proposal was published for
minimize the burden of the collection of comment in the Federal Register on
understands, however, based on information on respondents, including
previous conversations with November 24, 2014.3 The Commission
through the use of automated collection received five comments on the
representatives of the fund industry, techniques or other forms of information
that even in the absence of rule 31a–2 proposal.4 On February 19, 2015, FINRA
technology. Consideration will be given filed Amendment No. 1 responding to
funds would already spend
to comments and suggestions submitted the comments received to the proposal
approximately half of this amount
in writing within 60 days of this as well as to propose amendments in
($117,632,086) to preserve these same
books and records, as they are also publication. response to these comments. The
necessary to prepare financial Please direct your written comments proposal, as amended by Amendment
statements, meet various state reporting to Pamela Dyson, Director/Chief No. 1, was published for comment in
Information Officer, Securities and the Federal Register on March 18,
2013, modified by Commission staff to account for Exchange Commission, C/O Remi
an 1800-hour work-year and multiplied by 2.93 to Pavlik-Simon, 100 F Street NE.,
1 15 U.S.C. 78s(b)(1).
account for bonuses, firm size, employee benefits 2 17 CFR 240.19b–4.
and overhead. Washington, DC 20549; or send an email 3 Exchange Act Release No. 73623 (Nov. 18,
7 This estimate is based on the following to: PRA_Mailbox@sec.gov. 2014); 79 FR 69905 (Nov. 24, 2014). On January 6,
calculations: 3146 funds × 220 hours = 692,120 total 2015, FINRA consented to extending the time
hours; 692,120 hours/2 = 346,060 hours; 346,060 × Dated: May 20, 2015.
period for the Commission to either approve or
$57 rate per hour for a clerk = $19,725,420; 346,060 Robert W. Errett, disapprove the proposed rule change, or to institute
× $87 rate per hour for a computer operator = proceedings to determine whether to approve or
$30,107,220; $19,725,420 + $30,107,220 =
Deputy Secretary.
disapprove the proposed rule change, to February
$49,832,640 total cost. [FR Doc. 2015–12684 Filed 5–26–15; 8:45 am] 20, 2015.
8 This estimate is based on staff’s 2012 estimate 4 Letter from Hugh D. Berkson, Executive Vice
BILLING CODE 8011–01–P
of costs of preserving books and records required President and President-Elect, Public Investors
by rule 31a–2 ($70,000), adjusted for inflation to Arbitration Bar Association, to Brent J. Fields,
January 2015 values using the Personal Secretary, SEC, dated Dec. 15, 2014; Letter from
Consumption Expenditures Chain-Type Price Index Kevin Zambrowicz, Associate General Counsel and
(‘‘PCE Index’’). The values of the PCE Index are Managing Director, and Sean Davy, Managing
available from the Bureau of Economic Analysis, a Director, Securities Industry and Financial Markets
bureau of the Department of Commerce. See Bureau Association, to Brent J. Fields, Secretary, SEC, dated
of Economic Analysis, Table 2.8.6. Real Personal Dec. 15, 2014; Letter from Yoon-Young Lee, Wilmer
Consumption Expenditures by Major Type of Cutler Pickering Hale and Dorr LLP, to Brent J.
mstockstill on DSK4VPTVN1PROD with NOTICES

Product, Monthly, Chained Dollars (Last Revised on Fields, Secretary, SEC, dated Dec. 16, 2014; Letter
March 2, 2015), available at http://www.bea.gov/ from William Beatty, President, North American
iTable/iTable.cfm?ReqID=9&step=1#reqid=9&step= Securities Administrators Association, Inc., Brent J.
3&isuri=1&903=83. Thus, $70,000 (2012 estimate) × Fields, Secretary, SEC, dated Dec. 19, 2014; and
11,163.6 (Jan. 2015 PCE Index value)/10,449.7 (2012 Letter from Kurt N. Schacht, Managing Director,
PCE Index value) = $74,782 (Jan. 2015 inflation Standards and Financial Market Integrity, and
adjusted estimate). Linda L. Rittenhouse, Director, Capital Markets
9 This estimate is based on the following Policy, CFA Institute, to Brent J. Fields, Secretary,
calculation: 3146 funds × $74,782 = $235,264,172. SEC, dated Feb. 9, 2015.

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Document Created: 2015-12-15 15:36:27
Document Modified: 2015-12-15 15:36:27

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 30310