80 FR 31084 - Self-Regulatory Organizations; Municipal Securities Rulemaking Board; Order Granting Approval of a Proposed Rule Change Consisting of Proposed Amendments to the MSRB Rule G-14 RTRS Procedures, and the Real-Time Transaction Reporting System and Subscription Service
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 80, Issue 104 (June 1, 2015)
Federal Register Volume 80, Issue 104 (June 1, 2015)
| Page Range | 31084-31087 | |
| FR Document | 2015-13082 |
[Federal Register Volume 80, Number 104 (Monday, June 1, 2015)] [Notices] [Pages 31084-31087] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2015-13082] [[Page 31084]] ======================================================================= ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-75039; File No. SR-MSRB-2015-02] Self-Regulatory Organizations; Municipal Securities Rulemaking Board; Order Granting Approval of a Proposed Rule Change Consisting of Proposed Amendments to the MSRB Rule G-14 RTRS Procedures, and the Real-Time Transaction Reporting System and Subscription Service May 22, 2015. I. Introduction On March 19, 2015, the Municipal Securities Rulemaking Board (the ``MSRB'' or ``Board'') filed with the Securities and Exchange Commission (the ``SEC'' or ``Commission''), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule change consisting of proposed amendments to the MSRB Rule G-14 RTRS procedures, and the Real-Time Transaction Reporting System and subscription service (the ``proposed rule change''). The proposed rule change was published for comment in the Federal Register on March 27, 2015.\3\ --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. \3\ Securities Exchange Act Release No. 74564 (March 23, 2015), 80 FR 16466 (March 27, 2015) (the ``Proposing Release''). --------------------------------------------------------------------------- The Commission received three comment letters on the proposed rule change.\4\ On May 20, 2015, the MSRB submitted a response to these comments.\5\ This order approves the proposed rule change. --------------------------------------------------------------------------- \4\ See Letters from Leslie M. Norwood, Managing Director and Associate General Counsel, Securities Industry and Financial Markets Association (``SIFMA''), dated April 17, 2015 (``SIFMA Letter''); Michael Nicholas, Chief Executive Officer, Bond Dealers of America (``BDA''), dated April 17, 2015 (``BDA Letter''); and David T. Bellaire, Esq., Executive Vice President & General Counsel, Financial Services Institute (``FSI''), dated April 17, 2015 (``FSI Letter''). \5\ See Letter from Justin R. Pica, Director of Product Management--Market Transparency, MSRB, dated May 20, 2015 (``MSRB Response Letter''). --------------------------------------------------------------------------- II. Description of the Proposed Rule Change Rule G-14 on reports of sales or purchases requires brokers, dealers and municipal securities dealers (collectively ``dealers'') to report all executed transactions in municipal securities to the MSRB's Real-Time Transaction Reporting System (``RTRS'') within 15 minutes of the time of trade, with limited exceptions.\6\ The MSRB makes certain transaction data reported to RTRS available to the general public through the Electronic Municipal Market Access (``EMMA'') Web site at no cost, and disseminates such data through paid subscription services to market data vendors, institutional market participants and others that subscribe to the data feed.\7\ The MSRB believes that RTRS serves the dual objectives of price transparency and market surveillance.\8\ According to the MSRB, the proposed rule change would enhance the post- trade price transparency information provided through RTRS.\9\ A full description of the proposed rule change is contained in the Proposing Release. --------------------------------------------------------------------------- \6\ See supra note 3. \7\ Id. \8\ Id. \9\ Id. --------------------------------------------------------------------------- 1. Expanding the Application of Existing List Offering Price and Takedown Transaction Indicator The MSRB stated that the proposed rule change would expand the application of the List Offering Price and Takedown Transaction indicators to sale transactions by distribution participant dealers to customers at the list offering price and sale transactions by a sole underwriter or syndicate manager to distribution participant dealers.\10\ The MSRB stated that since the introduction of the List Offering Price indicator in 2005 and Takedown Transaction indicator in 2007, certain market practices in this area have evolved and the proposed rule change would expand the application of the indicators to require reporting of such market practices to RTRS.\11\ --------------------------------------------------------------------------- \10\ Id. \11\ Id. --------------------------------------------------------------------------- 2. Eliminating the Requirement for Dealers To Report Yield on Customer Trade Reports The MSRB stated that the proposed rule change would eliminate the requirement for dealers to include yield on customer trade reports.\12\ The MSRB represented that it would calculate and disseminate yield on customer trade reports, consistent with the manner in which it calculates and includes in disseminated RTRS information yield on inter-dealer trades.\13\ The MSRB believes that this would remove one aspect of a dealer's burden in reporting customer transactions to the MSRB in compliance with MSRB Rule G-14 and ensure that the calculation and dissemination of yields for both inter-dealer and customer transactions are consistent.\14\ --------------------------------------------------------------------------- \12\ Id. \13\ Id. \14\ Id. --------------------------------------------------------------------------- 3. Establishing a New Indicator for Customer Trades Involving Non- Transaction-Based Compensation Arrangements The MSRB stated that the proposed rule change would require dealers to include a new indicator on their trade reports that would be disseminated publicly to distinguish customer transactions that do not include a dealer compensation component and those that include a mark- up, mark-down, or a commission.\15\ The MSRB believes the proposed rule change would improve the usefulness of the transaction information disseminated publicly.\16\ --------------------------------------------------------------------------- \15\ Id. \16\ Id. --------------------------------------------------------------------------- 4. Establishing a New Indicator for ATS Transactions The MSRB stated that the proposed rule change would establish an additional new indicator to better ascertain the extent to which alternative trading systems (``ATSs'') are used in the municipal market and to indicate to market participants on disseminated transaction information that an ATS was used.\17\ The MSRB believes that identifying in disseminated transaction information that an ATS was employed should facilitate higher quality research and analysis of market structure by providing information about the extent to which ATSs are used and should complement the existing indicator disseminated for transactions involving a broker's broker.\18\ --------------------------------------------------------------------------- \17\ Id. \18\ Id. --------------------------------------------------------------------------- 5. Effective Date of the Proposed Rule Change/Testing Period The MSRB proposed that an effective date for the proposed rule change would be announced by the MSRB in a notice published on the MSRB's Web site.\19\ The MSRB stated that the date would be no later than May 23, 2016, and announced no later than sixty (60) days prior to the effective date.\20\ The MSRB believed that such effective date would provide time for the MSRB to undertake the programming changes to implement the proposed rule change, as well as provide an adequate testing period for dealers and subscribers that interface with RTRS.\21\ Also, the MSRB plans to provide a six month testing period in advance of the effective date.\22\ --------------------------------------------------------------------------- \19\ Id. \20\ Id. \21\ Id. \22\ Id. --------------------------------------------------------------------------- [[Page 31085]] III. Summary of Comments Received and the MSRB's Response As noted previously, the Commission received three comment letters on the proposed rule change.\23\ FSI generally supports the proposed rule change.\24\ BDA generally supports the proposed rule change but suggested an extension of the testing period.\25\ SIFMA expresses concerns and provides suggestions about certain aspects of the proposed rule change.\26\ A full description of the comments and response by the MSRB are contained in the comments letters and MSRB Response Letter, respectively.\27\ --------------------------------------------------------------------------- \23\ See supra notes 4 and 5. \24\ See FSI Letter. \25\ See BDA Letter. \26\ See SIFMA Letter. \27\ See supra notes 4 and 5. --------------------------------------------------------------------------- 1. Expanding the Application of Existing List Offering Price and Takedown Transaction Indicator SIFMA generally supports this aspect of the proposed rule change.\28\ However, SIFMA requests that if dealers are currently using the List Offering Price and Takedown Transaction indicator for group net or net designated orders, or for distribution agreement trades, that they be permitted to continue to do so until the proposed rule change is effective, without risk of an enforcement action.\29\ The MSRB responded by stating that it does not believe it would be fair to those dealers that have not programmed systems to use the existing List Offering Price and Takedown Transaction indicator in the expanded manner contemplated in the proposed rule change to advance the timing of the effective date of this component of the proposed rule change.\30\ Also, the MSRB does not believe such a request is relevant to a determination of whether to approve the proposed rule change.\31\ --------------------------------------------------------------------------- \28\ See SIFMA Letter. \29\ Id. \30\ See MSRB Response Letter. \31\ Id. --------------------------------------------------------------------------- 2. Eliminating the Requirement for Dealers To Report Yield on Customer Trade Reports SIFMA generally supports this aspect of the proposed rule change.\32\ However, SIFMA notes that reporting yield on trade reports alerts dealers to trades where the dealer calculated yield is outside the acceptable tolerance from the MSRB calculated yield.\33\ SIFMA notes that such alert mechanism would be eliminated if the proposed rule change is approved.\34\ The MSRB responded by noting that while such alert mechanism does provide benefit in identifying security master and day count discrepancies, the MSRB does not believe that this benefit outweighs the burden on dealers associated with researching and reconciling all questionable errors.\35\ Also, the MSRB notes that dealers would continue to be able to compare dealer calculated yields with MSRB calculated yields by viewing MSRB calculated yields on the EMMA Web site.\36\ --------------------------------------------------------------------------- \32\ See SIFMA Letter. \33\ Id. \34\ Id. \35\ See MSRB Response Letter. \36\ Id. --------------------------------------------------------------------------- In addition, SIFMA continues to have concerns that the proposed rule change may lead to investor confusion because not all transactions are consummated based on yield to worst.\37\ SIFMA believes that there are many reasons and scenarios why the dealer calculated yield and the MSRB's calculations of yield might not match, such as trading based on yield-to-average life for continuously callable securities, and differences in day counts relating to questionable holidays or market closes.\38\ The MSRB responded by stating that the MSRB yield calculations under the proposed rule change would be done in a manner consistent with the requirements of MSRB Rule G-15(a) on customer confirmations.\39\ Accordingly, the MSRB believes irrespective of the basis on which the transaction was executed, the yield calculation performed by RTRS under the proposed rule change would match the calculation as required to be performed by dealers when generating customer confirmations.\40\ Also, the MSRB states that with regard to the potential for differing MSRB and dealer call information resulting in differing MSRB and dealer calculated yields, the MSRB plans to display the call price and date to which yield was calculated, which should provide sufficient transparency to the inputs used in MSRB yield calculations to explain any calculation differences that arise.\41\ --------------------------------------------------------------------------- \37\ See SIFMA Letter. \38\ Id. \39\ See MSRB Response Letter. \40\ Id. \41\ Id. --------------------------------------------------------------------------- 3. Establishing a New Indicator for Customer Trades Involving Non- Transaction-Based Compensation Arrangements SIFMA acknowledges that the establishment of a new indicator to indicate trades with non-transaction-based compensation would be helpful for transparency purposes.\42\ However, SIFMA suggest that a more cost efficient alternative would be for the MSRB to disseminate information it already collects: Whether a trade is done as agent or as principal, and whether the MSRB has added commission in to ``normalize'' agency trades.\43\ The MSRB responded by stating it believes that to ensure that this new indicator applies to all transactions involving non-transaction-based compensation, it is critical that the indicator apply to principal trades that do not include a mark-up or mark-down.\44\ The MSRB also believes that it is important for dealers to affirmatively indicate on agency transactions that no commission was charged using the new indicator.\45\ The MSRB believes this would provide for an additional data quality measure as well as enable dealers to program systems to include the indicator for all transactions involving non-transaction-based compensation as opposed to only a subset of such transactions.\46\ --------------------------------------------------------------------------- \42\ See SIFMA Letter. \43\ Id. \44\ See MSRB Response Letter. \45\ Id. \46\ Id. --------------------------------------------------------------------------- In addition, SIFMA suggests modifying the proposed definition of ``non-transaction-based compensation arrangement transaction.'' \47\ Specifically, SIFMA requests that the definition be limited to transactions involving non-transaction-based compensation ``in a customer account that is subject to an arrangement that does not provide for dealer compensation to be paid on a transaction-based basis.'' \48\ The MSRB responded by stating that it is not proposing to limit the application of the indicator in this manner because this indicator is intended to distinguish in price transparency data all customer transactions that do not include a dealer compensation component from those that include a mark-up, mark-down or commission and is not intended to distinguish such transactions based on the type of compensation arrangement associated with a customer account.\49\ --------------------------------------------------------------------------- \47\ See SIFMA Letter. \48\ Id. \49\ See MSRB Response Letter. --------------------------------------------------------------------------- 4. Establishing a New Indicator for ATS Transactions SIFMA suggests an alternative where the MSRB is responsible for flagging ATS trades when an ATS firm takes a principal position between a buyer and a seller, similar to how it currently flags trades between dealers and municipal securities broker's brokers.\50\ SIFMA believes this would eliminate the unnecessary and burdensome requirements of the proposed rule [[Page 31086]] change.\51\ The MSRB responded by stating that it believes a consistent approach should be taken for all transactions executed using the services of an ATS by requiring dealers to include the ATS indicator on trade reports, regardless of whether the ATS takes a principal position.\52\ Also, the MSRB believes that this approach would reduce the potential for dealer confusion surrounding the requirement to include the ATS indicator and would help ensure that a dealer currently using the services of an ATS that takes a principal position is prepared to include an ATS indicator on trade reports if that ATS determines in the future to change its business practice and not take a principal position between the buyer and seller.\53\ --------------------------------------------------------------------------- \50\ See SIFMA Letter. \51\ Id. \52\ See MSRB Response Letter. \53\ Id. --------------------------------------------------------------------------- 5. Economic Considerations SIFMA expresses concern about the costs and burdens associated with the proposed rule change.\54\ SIFMA believes that evaluating the costs and burdens of new regulation and weighing those costs against any benefits derived from such new regulation, is critical to ensure efficient regulation.\55\ SIFMA states that the proposed rule change will drive up transaction costs and certain aspects of the proposed rule change do not measure up to the costs and burdens that will be imposed upon dealers.\56\ The MSRB responded by noting that in each of the three solicitations for public comment the MSRB requested input on the operational costs and burdens of each proposed change as well as the benefits that could be achieved.\57\ According to the MSRB, the responses from commenters, to the extent they addressed those issues, well informed the MSRB's determination to seek those changes that would balance the improvements to post-trade price transparency with the regulatory burdens that would be imposed on dealers.\58\ Also, the comments received through the public comment process enabled the MSRB to refine a broad set of potential changes that could be made to the limited set of changes in the proposed rule change.\59\ The MSRB believes that the proposed rule change best balances the improvements to post-trade price transparency that would be gained with the regulatory burdens that would be imposed on dealers.\60\ --------------------------------------------------------------------------- \54\ See SIFMA Letter. \55\ Id. \56\ Id. \57\ See MSRB Response Letter. \58\ Id. \59\ Id. \60\ Id. --------------------------------------------------------------------------- 6. Effective Date of the Proposed Rule Change/Testing Period SIFMA requests that the MSRB publish technical specifications related to the proposed rule change at least nine months prior to the effective date of the proposed rule change.\61\ BDA notes that smaller dealers with fewer IT resources may need more than six months to make changes necessary to comply with the proposal.\62\ Specifically, BDA requests a testing period of at least nine months prior to implementation.\63\ The MSRB anticipates publishing updated technical specifications in early September 2015.\64\ In response to comments from SIFMA and BDA, the MSRB now intends to set a specific effective date of May 23, 2016, which is the latest effective date contemplated by the proposed rule change. The MSRB believes this effective date would likely provide dealers and subscribers with nearly nine months to make necessary system changes after publication by the MSRB of technical specifications.\65\ --------------------------------------------------------------------------- \61\ See SIFMA Letter. \62\ See BDA Letter. \63\ Id. \64\ See MSRB Response Letter. \65\ Id. --------------------------------------------------------------------------- IV. Discussion and Commission Findings The Commission has carefully considered the proposed rule change, the comments received, and the MSRB's response to such comments. The Commission finds that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to the MSRB. In particular, the Commission finds that the proposed rule change is consistent with Section 15B(b)(2)(C) of the Act,\66\ which requires, among other things, that the rules of the MSRB be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in municipal securities and municipal financial products, to remove impediments to and perfect the mechanism of a free and open market in municipal securities and municipal financial products, and, in general, to protect investors, municipal entities, obligated persons, and the public interest. The Commission believes that the proposed rule change is consistent with Section 15B(b)(2)(C) of the Act because the proposed rule change is reasonably designed to remove impediments to and perfect the mechanism of a free and open market in municipal securities by increasing the quality and usefulness of the post-trade price transparency information provided through RTRS. As noted by the MSRB, the (i) expansion of the application of the existing List Offering Price and Takedown Transaction indicator to cases involving distribution participant dealers and takedown transactions that are not at a discount from the list offering price, (ii) establishment of a new indicator for customer trades involving non-transaction-based compensation arrangements, and (iii) establishment of a new indicator for ATS transactions would enable users of the post-trade price transparency information provided through RTRS to better understand the pricing of certain transactions as well as how such transactions were executed.\67\ As further noted by the MSRB, identifying in disseminated transaction information that an ATS was employed should facilitate higher quality research and analysis of market structure by providing information about the extent to which ATSs are used and should complement the existing indicator disseminated for transactions involving a broker's broker.\68\ Accordingly, the Commission believes that the proposed rule change would contribute to the MSRB's continuing efforts to improve market transparency and to protect investors, municipal entities, obligated persons and the public interest. --------------------------------------------------------------------------- \66\ 15 U.S.C. 78o-4(b)(2)(C). \67\ See supra note 4. \68\ Id. --------------------------------------------------------------------------- In approving the proposed rule change, the Commission has considered the proposed rule change's impact on efficiency, competition, and capital formation.\69\ The Commission recognizes that the proposed rule change would impose a burden on dealers and subscribers that interface with RTRS to comply with the reporting and dissemination of the new indicators that would be required by the proposed rule change. However, the Commission believes that the potential burden created by the proposed rule change is likely outweighed by the benefits, such as increasing the quality and usefulness of post-trade price transparency information. Also, the Commission believes that the proposed rule change includes accommodations that help promote efficiency. Specifically, the [[Page 31087]] proposed rule change would eliminate the requirement for dealers to include yield on customer trade reports. The Commission believes that this would remove one aspect of a dealer's burden in reporting customer transactions to the MSRB in compliance with MSRB Rule G-14. Furthermore, the MSRB has revised its implementation schedule in response to comments from BDA and SIFMA, which would likely provide dealers and subscribers with nearly nine months to make necessary system changes after publication by the MSRB of the technical specifications. This accommodation would likely provide dealers and subscribers with sufficient time to make any required changes in due course without causing adverse disruptions. The Commission does not believe that the proposed rule change would impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act because the requirements of the proposed rule change would apply equally to all dealers who report trade information to RTRS. --------------------------------------------------------------------------- \69\ 15 U.S.C. 78c(f). --------------------------------------------------------------------------- As noted above, the Commission received three comment letters on the filing. The Commission believes that the MSRB considered carefully and responded adequately to comments and concerns regarding the proposed rule change. Although one commenter suggested changes and opposed certain aspects of the proposed rule change, the Commission notes that no commenters argued that the proposed rule change was inconsistent with the applicable provisions of the Act. For the reasons noted above, including those discussed in the MSRB Response Letter, the Commission believes that the proposed rule change is consistent with the Act. V. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,\70\ that the proposed rule change (SR-MSRB-2015-02) be, and hereby is, approved. --------------------------------------------------------------------------- \70\ 15 U.S.C. 78s(b)(2). For the Commission, pursuant to delegated authority.\71\ --------------------------------------------------------------------------- \71\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Robert W. Errett, Deputy Secretary. [FR Doc. 2015-13082 Filed 5-29-15; 8:45 am] BILLING CODE 8011-01-P
![31084 Federal Register / Vol. 80, No. 104 / Monday, June 1, 2015 / Notices
SECURITIES AND EXCHANGE makes certain transaction data reported dealer and customer transactions are
COMMISSION to RTRS available to the general public consistent.14
through the Electronic Municipal
[Release No. 34–75039; File No. SR–MSRB– 3. Establishing a New Indicator for
2015–02]
Market Access (‘‘EMMA’’) Web site at Customer Trades Involving Non-
no cost, and disseminates such data Transaction-Based Compensation
Self-Regulatory Organizations; through paid subscription services to Arrangements
Municipal Securities Rulemaking market data vendors, institutional
market participants and others that The MSRB stated that the proposed
Board; Order Granting Approval of a
subscribe to the data feed.7 The MSRB rule change would require dealers to
Proposed Rule Change Consisting of
believes that RTRS serves the dual include a new indicator on their trade
Proposed Amendments to the MSRB
objectives of price transparency and reports that would be disseminated
Rule G–14 RTRS Procedures, and the
market surveillance.8 According to the publicly to distinguish customer
Real-Time Transaction Reporting
MSRB, the proposed rule change would transactions that do not include a dealer
System and Subscription Service
enhance the post-trade price compensation component and those that
May 22, 2015. transparency information provided include a mark-up, mark-down, or a
through RTRS.9 A full description of the commission.15 The MSRB believes the
I. Introduction proposed rule change would improve
proposed rule change is contained in
On March 19, 2015, the Municipal the Proposing Release. the usefulness of the transaction
Securities Rulemaking Board (the information disseminated publicly.16
‘‘MSRB’’ or ‘‘Board’’) filed with the 1. Expanding the Application of 4. Establishing a New Indicator for ATS
Securities and Exchange Commission Existing List Offering Price and Transactions
(the ‘‘SEC’’ or ‘‘Commission’’), pursuant Takedown Transaction Indicator
to Section 19(b)(1) of the Securities The MSRB stated that the proposed
Exchange Act of 1934 (‘‘Act’’) 1 and Rule The MSRB stated that the proposed rule change would establish an
19b–4 thereunder,2 a proposed rule rule change would expand the additional new indicator to better
change consisting of proposed application of the List Offering Price ascertain the extent to which alternative
amendments to the MSRB Rule G–14 and Takedown Transaction indicators to trading systems (‘‘ATSs’’) are used in
RTRS procedures, and the Real-Time sale transactions by distribution the municipal market and to indicate to
Transaction Reporting System and participant dealers to customers at the market participants on disseminated
subscription service (the ‘‘proposed rule list offering price and sale transactions transaction information that an ATS was
change’’). The proposed rule change was by a sole underwriter or syndicate used.17 The MSRB believes that
published for comment in the Federal manager to distribution participant identifying in disseminated transaction
Register on March 27, 2015.3 dealers.10 The MSRB stated that since information that an ATS was employed
The Commission received three the introduction of the List Offering should facilitate higher quality research
comment letters on the proposed rule Price indicator in 2005 and Takedown and analysis of market structure by
change.4 On May 20, 2015, the MSRB Transaction indicator in 2007, certain providing information about the extent
submitted a response to these market practices in this area have to which ATSs are used and should
comments.5 This order approves the evolved and the proposed rule change complement the existing indicator
proposed rule change. would expand the application of the disseminated for transactions involving
indicators to require reporting of such a broker’s broker.18
II. Description of the Proposed Rule market practices to RTRS.11
Change 5. Effective Date of the Proposed Rule
2. Eliminating the Requirement for Change/Testing Period
Rule G–14 on reports of sales or Dealers To Report Yield on Customer The MSRB proposed that an effective
purchases requires brokers, dealers and Trade Reports date for the proposed rule change would
municipal securities dealers
be announced by the MSRB in a notice
(collectively ‘‘dealers’’) to report all The MSRB stated that the proposed published on the MSRB’s Web site.19
executed transactions in municipal rule change would eliminate the The MSRB stated that the date would be
securities to the MSRB’s Real-Time requirement for dealers to include yield no later than May 23, 2016, and
Transaction Reporting System (‘‘RTRS’’) on customer trade reports.12 The MSRB announced no later than sixty (60) days
within 15 minutes of the time of trade, represented that it would calculate and prior to the effective date.20 The MSRB
with limited exceptions.6 The MSRB disseminate yield on customer trade believed that such effective date would
reports, consistent with the manner in provide time for the MSRB to undertake
1 15 U.S.C. 78s(b)(1). which it calculates and includes in the programming changes to implement
2 17 CFR 240.19b–4.
3 Securities Exchange Act Release No. 74564
disseminated RTRS information yield the proposed rule change, as well as
(March 23, 2015), 80 FR 16466 (March 27, 2015)
on inter-dealer trades.13 The MSRB provide an adequate testing period for
(the ‘‘Proposing Release’’). believes that this would remove one dealers and subscribers that interface
4 See Letters from Leslie M. Norwood, Managing aspect of a dealer’s burden in reporting with RTRS.21 Also, the MSRB plans to
Director and Associate General Counsel, Securities customer transactions to the MSRB in provide a six month testing period in
Industry and Financial Markets Association compliance with MSRB Rule G–14 and
(‘‘SIFMA’’), dated April 17, 2015 (‘‘SIFMA Letter’’); advance of the effective date.22
Michael Nicholas, Chief Executive Officer, Bond ensure that the calculation and
Dealers of America (‘‘BDA’’), dated April 17, 2015 dissemination of yields for both inter- 14 Id.
(‘‘BDA Letter’’); and David T. Bellaire, Esq.,
Lhorne on DSK2VPTVN1PROD with NOTICES
15 Id.
Executive Vice President & General Counsel, 7 Id. 16 Id.
Financial Services Institute (‘‘FSI’’), dated April 17, 8 Id. 17 Id.
2015 (‘‘FSI Letter’’).
9 Id. 18 Id.
5 See Letter from Justin R. Pica, Director of
10 Id. 19 Id.
Product Management—Market Transparency,
11 Id. 20 Id.
MSRB, dated May 20, 2015 (‘‘MSRB Response
Letter’’). 12 Id. 21 Id.
6 See supra note 3. 13 Id. 22 Id.
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![Federal Register / Vol. 80, No. 104 / Monday, June 1, 2015 / Notices 31087
proposed rule change would eliminate SECURITIES AND EXCHANGE A. Self-Regulatory Organization’s
the requirement for dealers to include COMMISSION Statement of the Purpose of, and
yield on customer trade reports. The Statutory Basis for, the Proposed Rule
Commission believes that this would [Release No. 34–75041; File No. SR–Phlx– Change
remove one aspect of a dealer’s burden 2015–45] 1. Purpose
in reporting customer transactions to the
Self-Regulatory Organizations; The purpose of the proposed rule
MSRB in compliance with MSRB Rule
NASDAQ OMX PHLX LLC; Notice of change is to amend certain charges and
G–14. Furthermore, the MSRB has
fees for order execution and routing
revised its implementation schedule in Filing and Immediate Effectiveness of
applicable to the use of the order
response to comments from BDA and Proposed Rule Change Relating to the
execution and routing services of the
SIFMA, which would likely provide Exchange’s Pricing Schedule Under
NASDAQ OMX PSX System (‘‘PSX’’) by
dealers and subscribers with nearly nine Section VIII With Respect to Execution
member organizations for all securities
months to make necessary system and Routing of Orders in Securities
traded at $1 or more per share.
changes after publication by the MSRB Priced at $1 or More Per Share Specifically, the charge to a member
of the technical specifications. This May 26, 2015. organization that executes in PSX will
accommodation would likely provide increase to $0.0029 per share executed
dealers and subscribers with sufficient Pursuant to Section 19(b)(1) of the regardless of where the shares are listed.
time to make any required changes in Securities Exchange Act of 1934 (the This means an increase from: (i) $0.0026
due course without causing adverse ‘‘Act’’),1 and Rule 19b–4 thereunder,2 to $0.0029 per share executed for shares
notice is hereby given that on May 18, executed in The NASDAQ Stock Market
disruptions. The Commission does not
2015, NASDAQ OMX PHLX LLC LLC (‘‘Nasdaq’’)-listed securities; (ii)
believe that the proposed rule change
(‘‘Phlx’’ or ‘‘Exchange’’) filed with the $0.0025 to $0.0029 per share executed
would impose any burden on
Securities and Exchange Commission for shares executed in New York Stock
competition not necessary or (‘‘SEC’’ or ‘‘Commission’’) the proposed
appropriate in furtherance of the Exchange (‘‘NYSE’’)-listed securities;
rule change as described in Items I, II, and (iii) $0.0026 to $0.0029 per share
purposes of the Act because the and III below, which Items have been executed for shares in securities listed
requirements of the proposed rule prepared by the Exchange. The on exchanges other than Nasdaq or
change would apply equally to all Commission is publishing this notice to NYSE. The Exchange believes that these
dealers who report trade information to solicit comments on the proposed rule increases enable it to balance the need
RTRS. change from interested persons. to fund credits and operational costs.
As noted above, the Commission The Exchange will also increase
I. Self-Regulatory Organization’s
received three comment letters on the certain credits to member organizations
Statement of the Terms of the Substance
filing. The Commission believes that the that provide liquidity through PSX.
of the Proposed Rule Change
MSRB considered carefully and Specifically, the credit to a member
responded adequately to comments and The Exchange proposes to amend the organization that executes in PSX for a
concerns regarding the proposed rule Exchange’s Pricing Schedule under displayed quote/order will increase
change. Although one commenter Section VIII, entitled ‘‘NASDAQ OMX from $0.0025 to $0.0028 per share
suggested changes and opposed certain PSX FEES,’’ with respect to execution executed for quotes/orders entered by a
and routing of orders in securities member organization that provides and
aspects of the proposed rule change, the
priced at $1 or more per share. accesses 0.35% or more of Consolidated
Commission notes that no commenters
Volume during the month—previously
argued that the proposed rule change The text of the proposed rule change this rate required adding 0.12% of
was inconsistent with the applicable is available on the Exchange’s Web site Consolidated Volume. The term
provisions of the Act. at http:// ‘‘accesses’’ is another way of saying
For the reasons noted above, nasdaqomxphlx.cchwallstreet.com/, at taking liquidity. This change also
including those discussed in the MSRB the principal office of the Exchange, and eliminates the requirements that (i) the
Response Letter, the Commission at the Commission’s Public Reference quote/order is entered through a PSX
Room. Market Participant ID (‘‘MPID’’) through
believes that the proposed rule change
is consistent with the Act. II. Self-Regulatory Organization’s which the member organization
Statement of the Purpose of, and displays, on average over the course of
V. Conclusion the month, 100 shares or more at the
Statutory Basis for, the Proposed Rule
It is therefore ordered, pursuant to Change national best bid and/or national best
offer at least 25% of the time during
Section 19(b)(2) of the Act,70 that the In its filing with the Commission, the regular market hours in the security that
proposed rule change (SR–MSRB–2015– Exchange included statements is the subject of the quote/order, or (ii)
02) be, and hereby is, approved. concerning the purpose of and basis for the member organization displays, on
For the Commission, pursuant to delegated the proposed rule change and discussed average over the course of the month,
authority.71 any comments it received on the 100 shares or more at the national best
Robert W. Errett, proposed rule change. The text of these bid and/or national best offer at least
Deputy Secretary. statements may be examined at the 25% of the time during regular market
[FR Doc. 2015–13082 Filed 5–29–15; 8:45 am]
places specified in Item IV below. The hours in 500 or more securities. The
Lhorne on DSK2VPTVN1PROD with NOTICES
Exchange has prepared summaries, set Exchange believes that eliminating these
BILLING CODE 8011–01–P
forth in sections A, B, and C below, of requirements will encourage firms to
the most significant aspects of such participate in PSX by allowing their
statements. participation in the market to define the
credit rate they receive.
70 15 U.S.C. 78s(b)(2). 1 15 U.S.C. 78s(b)(1). The Exchange will also increase the
71 17 CFR 200.30–3(a)(12). 2 17 CFR 240.19b–4. credit to a member organization that
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Document Created: 2015-12-15 15:19:07
Document Modified: 2015-12-15 15:19:07
| 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 31084 |
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