81 FR 11337 - Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend FINRA Rule 7620A (FINRA/Nasdaq Trade Reporting Facility Reporting Fees)
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 81, Issue 42 (March 3, 2016)
Federal Register Volume 81, Issue 42 (March 3, 2016)
| Page Range | 11337-11340 | |
| FR Document | 2016-04635 |
[Federal Register Volume 81, Number 42 (Thursday, March 3, 2016)] [Notices] [Pages 11337-11340] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-04635] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-77243; File No. SR-FINRA-2016-009] Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend FINRA Rule 7620A (FINRA/Nasdaq Trade Reporting Facility Reporting Fees) February 26, 2016. 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 February 23, 2016, 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, II, and III below, which Items have been prepared by FINRA. FINRA has designated the proposed rule change as ``establishing or changing a due, fee or other charge'' under Section 19(b)(3)(A)(ii) of the Act \3\ and Rule 19b-4(f)(2) thereunder,\4\ 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\ 15 U.S.C. 78s(b)(3)(A)(ii). \4\ 17 CFR 240.19b-4(f)(2). --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of the Substance of the Proposed Rule Change FINRA is proposing to adjust one of the thresholds required to qualify for the Media/Contra fee cap under FINRA Rule 7620A (FINRA/ Nasdaq Trade Reporting Facility Reporting Fees). Below is the text of the proposed rule change. Proposed new language is in italics; proposed deletions are in brackets. * * * * * 7000. CLEARING, TRANSACTION AND ORDER DATA REQUIREMENTS, AND FACILITY CHARGES * * * * * 7600. DATA PRODUCTS AND CHARGES FOR TRADE REPORTING FACILITY SERVICES 7600A. DATA PRODUCTS AND CHARGES FOR FINRA/NASDAQ TRADE REPORTING FACILITY SERVICES * * * * * 7620A. FINRA/Nasdaq Trade Reporting Facility Reporting Fees The following charges shall be paid by participants for use of the FINRA/Nasdaq Trade Reporting Facility. In the case of trades where the same market participant is on both sides of a trade report, applicable fees assessed on a ``per side'' basis will be assessed once, rather than twice, and the market participant will be assessed applicable Non- Comparison/Accept (Non-Match/Compare) Charges as the Executing Party side only. ------------------------------------------------------------------------ ------------------------------------------------------------------------ Non-Comparison/Accept (Non-Match/Compare) Charges ------------------------------------------------------------------------ Tape: Daily Average Number of Media/ Executing Party Trades During the Month Needed to Qualify for Cap: A.................................. 2500. B.................................. 2500. C.................................. 2500. ------------------------------------------------------------------------ Media/Executing Party ------------------------------------------------------------------------ Monthly Charge: Maximum Monthly Charge if Capped: ($0.018) x (Number of Media/ ($0.018) x (Required Daily Executing Party Reports During the Average Number of Media/EP Month). Trades for Tape A, B or C) x (Number of Trading Days During the Month). ------------------------------------------------------------------------ Non-Media/Executing Party ------------------------------------------------------------------------ Monthly Charge: Maximum Monthly Charge if Capped: ($0.018) x (Number of Non-Media/ ($0.018) x 2500 for Tape A, Executing Party Reports During the B or C x (Number of Trading Month). Days During the Month). ------------------------------------------------------------------------ Media/Contra ------------------------------------------------------------------------ Monthly Charge: Maximum Monthly Charge if Capped: ($0.013) x (Number of Media/Contra ($0.013) x 2500 for Tape A, Reports During the Month). B or C x (Number of Trading Days During the Month). ------------------------------------------------------------------------ [[Page 11338]] Media/Contra Cap ------------------------------------------------------------------------ Participants making markets in alternative trading systems registered pursuant to Regulation ATS will qualify for a fee cap applied to all trades under Rule 7620A if they meet the following criteria on a monthly basis:Participant's percentage of contra media trades must represent at least [5]35% of their total [TRF] FINRA/Nasdaq Trade Reporting Facility volume.. Participant must be contra to a minimum of 1,000,000 trades in Tape A, 500,000 trades in Tape C and 250,000 trades in Tape B.. Participant must complete an attestation form stating that they maintain a two-sided quote in each symbol traded on an alternative trading system registered pursuant to Regulation ATS and display a quotation size of at least one normal unit of trading (specific for each security) thereon. Participants will be audited by Nasdaq, Inc. periodically.. ------------------------------------------------------------------------ Maximum Monthly Charge if Capped....... $5,000 per Tape (A, B or C). ------------------------------------------------------------------------ Non-Media/Contra ------------------------------------------------------------------------ Monthly Charge: Maximum Monthly Charge if Capped: ($0.013) x (Number of Non-Media/ ($0.013) x 2500 for Tape A, B Contra Reports During the Month). or C x (Number of Trading Days During the Month). Standard Fees: Clearing report to transfer a $0.03/side. transaction fee charged by one member to another member pursuant to Rule 7230A(h). Comparison/Accept.................. $0.0144/side per 100 shares (minimum 400 shares; maximum 7,500 shares). Late Report--T+N................... $0.288/trade (charged to the Executing Party). Query.............................. $0.50/query. Corrective Transaction Charge...... $0.25/Cancel, Error, Inhibit, Kill, or `No' portion of No/ Was transaction, paid by reporting side; $0.25/Break, Decline transaction, paid by each party. ------------------------------------------------------------------------ Supplementary Material:--------------------- .01 through .02 No Change. * * * * * 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 Background The FINRA/Nasdaq Trade Reporting Facility (``TRF'') is a facility of FINRA that is operated by Nasdaq, Inc. (``NASDAQ'') \5\ and utilizes Automated Confirmation Transaction (``ACT'') Service technology. In connection with the establishment of the FINRA/Nasdaq TRF, FINRA and NASDAQ entered into a limited liability company agreement (the ``LLC Agreement''). Under the LLC Agreement, FINRA, the ``SRO Member,'' has sole regulatory responsibility for the FINRA/Nasdaq TRF. NASDAQ, the ``Business Member,'' is primarily responsible for the management of the FINRA/Nasdaq TRF's business affairs, including establishing pricing for use of the FINRA/Nasdaq TRF, to the extent those affairs are not inconsistent with the regulatory and oversight functions of FINRA. Additionally, the Business Member is obligated to pay the cost of regulation and is entitled to the profits and losses, if any, derived from the operation of the FINRA/Nasdaq TRF. --------------------------------------------------------------------------- \5\ As approved by its board of directors and the Commission, effective September 8, 2015, NASDAQ changed its legal name from The NASDAQ OMX Group, Inc. to Nasdaq, Inc. See Nasdaq, Inc. Form 8-K Current Report (filed September 8, 2015) (available at www.sec.gov/Archives/edgar/data/1120193/000119312515314459/d48431d8k.htm). FINRA and NASDAQ are in the process of amending the LLC Agreement to reflect the name change, and FINRA will file a separate proposed rule change to update the FINRA manual accordingly. --------------------------------------------------------------------------- Pursuant to the FINRA Rule 7600A Series, FINRA members that are FINRA/Nasdaq TRF participants are charged fees and may qualify for fee caps (Rule 7620A) and also may qualify for revenue sharing payments for trade reporting to the FINRA/Nasdaq TRF (Rule 7610A). These rules are administered by NASDAQ, in its capacity as the Business Member and operator of the FINRA/Nasdaq TRF on behalf of FINRA,\6\ and NASDAQ collects all fees on behalf of the FINRA/Nasdaq TRF. --------------------------------------------------------------------------- \6\ FINRA's oversight of this function performed by the Business Member is conducted through a recurring assessment and review of TRF operations by an outside independent audit firm. --------------------------------------------------------------------------- Pursuant to Rule 7620A, FINRA members are charged fees for ``Non- Comparison/Accept (Non-Match/Compare)'' trades. Such trades are defined as transactions that are not subject to the ACT Comparison process, and they may be submitted as media or non-media,\7\ clearing or non- clearing, AGU (automated give-up), QSR (Qualified Service Representative), one-sided or internalized crosses.\8\ Under the fee schedule there are four categories of fees, each of which is applicable to transactions of the three Tapes: \9\ (1) Media/Executing Party; (2) Non-Media/Executing Party; (3) Media/Contra; (4) Non-Media/Contra.\10\ --------------------------------------------------------------------------- \7\ Media eligible trade reports are those that are submitted to the FINRA/Nasdaq TRF for public dissemination by the Securities Information Processors. By contrast, non-media trade reports are not submitted to the FINRA/Nasdaq TRF for public dissemination, but are submitted for regulatory and/or clearance and settlement purposes. \8\ See FINRA Rule 7620A.01. \9\ Market data is transmitted to three tapes based on the listing venue of the security: New York Stock Exchange securities (``Tape A''), American Stock Exchange and regional exchange securities (``Tape B''), and Nasdaq Stock Market securities (``Tape C''). Tape A and Tape B are generally referred to as the Consolidated Tape. \10\ Pursuant to the rule's Supplementary Material, the ``Executing Party (EP)'' is defined as the member with the trade reporting obligation under FINRA rules, and the ``Contra (CP)'' is defined as the member on the contra side of a trade report. These positions formerly were identified in FINRA rules as the ``Market Maker'' or ``MM'' side and the ``Order Entry'' or ``OE'' side, respectively. See FINRA Rule 7620A.01. --------------------------------------------------------------------------- FINRA recently filed a proposed rule change \11\ that would allow FINRA [[Page 11339]] members that are a Contra Party to qualify for a monthly fee cap of $5,000 per Tape applied to trades in each fee category. Eligibility for the Media/Contra fee cap is based on a FINRA member's trade reporting of Media/Contra trades to the TRF and its participation on an alternative trading system registered pursuant to Regulation ATS \12\ (an ``ATS'') as a market maker. Specifically, the FINRA member must make markets on an ATS by maintaining a two-sided quote. The member also must complete and provide a form to NASDAQ, in which the member attests that (1) it maintains two-sided quotes for each security that the member maintains interest in within each ATS and displays a quotation size of at least one normal unit of trading (specific for each security), and (2) it will continue to meet the ATS-based requirements to be eligible for the fee cap. In addition, to qualify a FINRA member must have its Media/Contra trades equal, or exceed, 55% of its total FINRA/Nasdaq TRF volume. Lastly, the FINRA member must be contra to a minimum of 1 million trades in Tape A, 500,000 trades in Tape C, and 250,000 trades in Tape B to qualify for the fee cap in the securities of the Tapes, respectively. NASDAQ, as the Business Member, set the required level of trades reported for each of the Tapes based on the differing levels of overall trades reported to the FINRA/Nasdaq TRF as Contra Party. --------------------------------------------------------------------------- \11\ See Securities Exchange Act Release No. 76556 (December 4, 2015), 80 FR 76724 (December 10, 2015) (Notice of Filing and Immediate Effectiveness of File No. SR-FINRA-2015-053). \12\ 17 CFR 242.300-303. --------------------------------------------------------------------------- Proposed Adjustment In proposing the Media/Contra fee cap, NASDAQ, as the Business Member, advised FINRA that following implementation, it would monitor the fees paid by Contra Parties and would consider whether any adjustments to the fee cap or qualifying thresholds would be appropriate. Since adopting the Media/Contra fee cap, no FINRA member has achieved the level of Media/Contra trades to equal, or exceed, 55% of its total FINRA/Nasdaq TRF volume. NASDAQ, as the Business Member, designed the Media/Contra fee cap to make pricing more competitive to attract and retain participants on the FINRA/Nasdaq TRF, and because no FINRA member currently qualifies for the Media/Contra fee cap, NASDAQ has determined to reduce the level of Media/Contra trades required to qualify for the fee cap. Specifically, NASDAQ has determined to reduce the level from 55% of the member's total FINRA/Nasdaq TRF volume to 35%. NASDAQ believes that reducing the level of Media/Contra trades required to qualify will make the fee cap more attainable for FINRA members. Accordingly, FINRA, as the SRO Member, is proposing to amend Rule 7620A to reflect the proposed reduction in the level of Media/Contra trades required to qualify for the Media/Contra fee cap. FINRA also is proposing a technical amendment to clarify that the reference to a member's ``total TRF volume'' means its total FINRA/Nasdaq TRF volume. FINRA has filed the proposed rule change for immediate effectiveness. The effective date will be the date of filing, February 23, 2016. 2. Statutory Basis FINRA believes that the proposed rule change is consistent with the provisions of Section 15A(b)(5) of the Act,\13\ which requires, among other things, that FINRA rules provide for the equitable allocation of reasonable dues, fees and other charges among members and issuers and other persons using any facility or system that FINRA operates or controls. NASDAQ, as the Business Member, proposed the $5,000 per tape Media/Contra fee cap for FINRA members that could not qualify for a fee cap under the then-current rules. However, as noted, NASDAQ has determined that the level of Media/Contra trades required to qualify for [sic] fee cap is set too high, resulting in no FINRA member qualifying for the fee cap since its adoption. By reducing this level from 55% to 35% of total FINRA/Nasdaq TRF trades, NASDAQ has advised FINRA that it believes that more FINRA members will be able to qualify for the Media/Contra fee cap and thus the proposed reduction is reasonable. The proposed reduction in the level of Media/Contra trades required to qualify for the Media/Contra fee cap is equitably allocated because it will apply to all FINRA members that use the FINRA/Nasdaq TRF. Any FINRA member that meets the reduced level of Media/Contra trades together with the other requirements under the Rule will qualify for the capped fee. --------------------------------------------------------------------------- \13\ 15 U.S.C. 78o-3(b)(5). --------------------------------------------------------------------------- As discussed in SR-FINRA-2015-053, NASDAQ, as the Business Member, advised FINRA that the Media/Contra fee cap is not unfairly discriminatory because the fee cap would most benefit those Contra Parties that have significant volume on the FINRA/Nasdaq TRF and thus may pay larger trade reporting fees than firms with comparable ``Executing Party'' volume that qualify for a fee cap. NASDAQ anticipates that the proposed rule change will make the fee cap more attainable for these Contra Parties. In addition, FINRA members that are not subject to capped fees can choose to report trades to a competing TRF (or, in this instance, a market maker may elect to route its orders to an ATS that reports to a competing TRF). 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. The proposed rule change would not impose new fees or fee rate increases on any member firm, and will reduce the fees paid by some members to the extent they qualify under the new, lower criteria. NASDAQ, as the Business Member, has advised FINRA that the estimated fee savings to member firms that qualify for the Media/Contra fee would be in the range of $0-$20,000 per month per firm based on overall market and participant activity and number of trading days in the month. NASDAQ has further advised FINRA that, based on current trading practices, NASDAQ estimates that approximately three to eight member firms may be able to take advantage of the fee reductions associated with the Media/Contra fee cap with the proposed reduction in the level of trades required to qualify. As discussed in SR-FINRA-2015-053, FINRA members have trade reporting alternatives other than the FINRA/Nasdaq TRF, so to the extent the proposed rule change is viewed as burdensome among market participants, those participants may choose not to avail themselves of the fee cap and maintain the status quo with respect to fees or adjust their trading practices. This would permit members to mitigate any direct or indirect costs imposed by this proposal. Moreover, by making the fee cap more attainable, the proposed rule change may promote competition among FINRA members by reducing the fee burden on certain FINRA members who are unable to qualify for the existing fee cap, and FINRA members can choose their trading partners, which determination may in part be based on the fees of the particular TRF applicable to Contra Parties. Lastly, FINRA does not believe that the proposed rule change burdens competition among reporting facilities because each is free to adjust their [sic] respective fees to remain competitive with the FINRA/Nasdaq TRF, to the extent the proposed rule change makes the FINRA/Nasdaq [[Page 11340]] TRF a more attractive facility on which to report trades. 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 The foregoing rule change has become effective pursuant to Section 19(b)(3)(A) of the Act \14\ and paragraph (f)(2) of Rule 19b-4 thereunder.\15\ 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. --------------------------------------------------------------------------- \14\ 15 U.S.C. 78s(b)(3)(A). \15\ 17 CFR 240.19b-4(f)(2). --------------------------------------------------------------------------- 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 [email protected]. Please include File Number SR-FINRA-2016-009 on the subject line. Paper Comments Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-FINRA-2016-009. 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-2016-009, and should be submitted on or before March 24, 2016. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\16\ --------------------------------------------------------------------------- \16\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Robert W. Errett, Deputy Secretary. [FR Doc. 2016-04635 Filed 3-2-16; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 81, No. 42 / Thursday, March 3, 2016 / Notices 11337
Commission and any person, other than SECURITIES AND EXCHANGE Media/Contra fee cap under FINRA Rule
those that may be withheld from the COMMISSION 7620A (FINRA/Nasdaq Trade Reporting
public in accordance with the [Release No. 34–77243; File No. SR–FINRA–
Facility Reporting Fees).
provisions of 5 U.S.C. 552, will be 2016–009] Below is the text of the proposed rule
available for Web site viewing and change. Proposed new language is in
printing in the Commission’s Public Self-Regulatory Organizations; italics; proposed deletions are in
Reference Room, 100 F Street NE., Financial Industry Regulatory brackets.
Washington, DC 20549, on official Authority, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed * * * * *
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of such Rule Change To Amend FINRA Rule 7000. CLEARING, TRANSACTION AND
filing will also be available for 7620A (FINRA/Nasdaq Trade Reporting ORDER DATA REQUIREMENTS, AND
inspection and copying at the principal Facility Reporting Fees) FACILITY CHARGES
office of the Exchange. All comments February 26, 2016. * * * * *
received will be posted without change; Pursuant to Section 19(b)(1) of the
the Commission does not edit personal Securities Exchange Act of 1934 7600. DATA PRODUCTS AND
identifying information from (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 CHARGES FOR TRADE REPORTING
submissions. You should submit only notice is hereby given that on February FACILITY SERVICES
information that you wish to make 23, 2016, Financial Industry Regulatory 7600A. DATA PRODUCTS AND
available publicly. All submissions Authority, Inc. (‘‘FINRA’’) filed with the CHARGES FOR FINRA/NASDAQ
should refer to File Number SR–EDGX– Securities and Exchange Commission
TRADE REPORTING FACILITY
2016–12 and should be submitted on or (‘‘SEC’’ or ‘‘Commission’’) the proposed
rule change as described in Items I, II, SERVICES
before March 24, 2016.
and III below, which Items have been * * * * *
For the Commission, by the Division of
prepared by FINRA. FINRA has
Trading and Markets, pursuant to delegated
designated the proposed rule change as 7620A. FINRA/Nasdaq Trade Reporting
authority.14 Facility Reporting Fees
‘‘establishing or changing a due, fee or
Robert W. Errett, other charge’’ under Section The following charges shall be paid
Deputy Secretary. 19(b)(3)(A)(ii) of the Act 3 and Rule 19b–
by participants for use of the FINRA/
[FR Doc. 2016–04634 Filed 3–2–16; 8:45 am] 4(f)(2) thereunder,4 which renders the
Nasdaq Trade Reporting Facility. In the
BILLING CODE 8011–01–P proposal effective upon receipt of this
filing by the Commission. The case of trades where the same market
Commission is publishing this notice to participant is on both sides of a trade
solicit comments on the proposed rule report, applicable fees assessed on a
change from interested persons. ‘‘per side’’ basis will be assessed once,
rather than twice, and the market
I. Self-Regulatory Organization’s participant will be assessed applicable
Statement of the Terms of the Substance Non-Comparison/Accept (Non-Match/
of the Proposed Rule Change Compare) Charges as the Executing
FINRA is proposing to adjust one of Party side only.
the thresholds required to qualify for the
Non-Comparison/Accept (Non-Match/Compare) Charges
Tape: Daily Average Number of Media/Executing Party Trades During the
Month Needed to Qualify for Cap:
A ........................................................................................................ 2500.
B ........................................................................................................ 2500.
C ........................................................................................................ 2500.
Media/Executing Party
Monthly Charge: Maximum Monthly Charge if Capped:
($0.018) × (Number of Media/Executing Party Reports During the ($0.018) × (Required Daily Average Number of Media/EP Trades
Month). for Tape A, B or C) × (Number of Trading Days During the
Month).
Non-Media/Executing Party
Monthly Charge: Maximum Monthly Charge if Capped:
($0.018) × (Number of Non-Media/Executing Party Reports During ($0.018) × 2500 for Tape A, B or C × (Number of Trading Days
the Month). During the Month).
Media/Contra
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Monthly Charge: Maximum Monthly Charge if Capped:
($0.013) × (Number of Media/Contra Reports During the Month) .... ($0.013) × 2500 for Tape A, B or C × (Number of Trading Days
During the Month).
14 17 CFR 200.30–3(a)(12). 2 17 CFR 240.19b–4. 4 17 CFR 240.19b–4(f)(2).
1 15 U.S.C. 78s(b)(1). 3 15 U.S.C. 78s(b)(3)(A)(ii).
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![11338 Federal Register / Vol. 81, No. 42 / Thursday, March 3, 2016 / Notices
Media/Contra Cap
Participants making markets in alternative trading systems registered pursuant to Regulation ATS will qualify for a fee cap applied to all trades
under Rule 7620A if they meet the following criteria on a monthly basis:
• Participant’s percentage of contra media trades must represent at least [5]35% of their total [TRF] FINRA/Nasdaq Trade Reporting Facil-
ity volume.
• Participant must be contra to a minimum of 1,000,000 trades in Tape A, 500,000 trades in Tape C and 250,000 trades in Tape B.
• Participant must complete an attestation form stating that they maintain a two-sided quote in each symbol traded on an alternative trad-
ing system registered pursuant to Regulation ATS and display a quotation size of at least one normal unit of trading (specific for each se-
curity) thereon. Participants will be audited by Nasdaq, Inc. periodically.
Maximum Monthly Charge if Capped ....................................................... $5,000 per Tape (A, B or C).
Non-Media/Contra
Monthly Charge: Maximum Monthly Charge if Capped:
($0.013) × (Number of Non-Media/Contra Reports During the ($0.013) × 2500 for Tape A, B or C x (Number of Trading Days During
Month). the Month).
Standard Fees:
Clearing report to transfer a transaction fee charged by one mem- $0.03/side.
ber to another member pursuant to Rule 7230A(h).
Comparison/Accept ........................................................................... $0.0144/side per 100 shares (minimum 400 shares; maximum 7,500
shares).
Late Report—T+N ............................................................................. $0.288/trade (charged to the Executing Party).
Query ................................................................................................. $0.50/query.
Corrective Transaction Charge ......................................................... $0.25/Cancel, Error, Inhibit, Kill, or ‘No’ portion of No/Was transaction,
paid by reporting side; $0.25/Break, Decline transaction, paid by
each party.
• • • Supplementary Material: lll Confirmation Transaction (‘‘ACT’’) Pursuant to Rule 7620A, FINRA
.01 through .02 No Change. Service technology. In connection with members are charged fees for ‘‘Non-
the establishment of the FINRA/Nasdaq Comparison/Accept (Non-Match/
* * * * * TRF, FINRA and NASDAQ entered into Compare)’’ trades. Such trades are
II. Self-Regulatory Organization’s a limited liability company agreement defined as transactions that are not
Statement of the Purpose of, and (the ‘‘LLC Agreement’’). Under the LLC subject to the ACT Comparison process,
Statutory Basis for, the Proposed Rule Agreement, FINRA, the ‘‘SRO Member,’’ and they may be submitted as media or
Change has sole regulatory responsibility for the non-media,7 clearing or non-clearing,
FINRA/Nasdaq TRF. NASDAQ, the AGU (automated give-up), QSR
In its filing with the Commission, ‘‘Business Member,’’ is primarily (Qualified Service Representative), one-
FINRA included statements concerning sided or internalized crosses.8 Under
responsible for the management of the
the purpose of and basis for the the fee schedule there are four
FINRA/Nasdaq TRF’s business affairs,
proposed rule change and discussed any categories of fees, each of which is
including establishing pricing for use of
comments it received on the proposed applicable to transactions of the three
the FINRA/Nasdaq TRF, to the extent
rule change. The text of these statements Tapes: 9 (1) Media/Executing Party; (2)
those affairs are not inconsistent with
may be examined at the places specified Non-Media/Executing Party; (3) Media/
the regulatory and oversight functions of
in Item IV below. FINRA has prepared Contra; (4) Non-Media/Contra.10
FINRA. Additionally, the Business
summaries, set forth in sections A, B, FINRA recently filed a proposed rule
Member is obligated to pay the cost of
and C below, of the most significant change 11 that would allow FINRA
regulation and is entitled to the profits
aspects of such statements.
and losses, if any, derived from the 7 Media eligible trade reports are those that are
A. Self-Regulatory Organization’s operation of the FINRA/Nasdaq TRF. submitted to the FINRA/Nasdaq TRF for public
Statement of the Purpose of, and Pursuant to the FINRA Rule 7600A dissemination by the Securities Information
Statutory Basis for, the Proposed Rule Processors. By contrast, non-media trade reports are
Series, FINRA members that are FINRA/ not submitted to the FINRA/Nasdaq TRF for public
Change Nasdaq TRF participants are charged dissemination, but are submitted for regulatory and/
1. Purpose fees and may qualify for fee caps (Rule or clearance and settlement purposes.
8 See FINRA Rule 7620A.01.
7620A) and also may qualify for revenue
Background 9 Market data is transmitted to three tapes based
sharing payments for trade reporting to on the listing venue of the security: New York Stock
The FINRA/Nasdaq Trade Reporting the FINRA/Nasdaq TRF (Rule 7610A). Exchange securities (‘‘Tape A’’), American Stock
Facility (‘‘TRF’’) is a facility of FINRA These rules are administered by Exchange and regional exchange securities (‘‘Tape
NASDAQ, in its capacity as the B’’), and Nasdaq Stock Market securities (‘‘Tape
that is operated by Nasdaq, Inc. C’’). Tape A and Tape B are generally referred to
(‘‘NASDAQ’’) 5 and utilizes Automated Business Member and operator of the as the Consolidated Tape.
FINRA/Nasdaq TRF on behalf of 10 Pursuant to the rule’s Supplementary Material,
5 As approved by its board of directors and the
FINRA,6 and NASDAQ collects all fees the ‘‘Executing Party (EP)’’ is defined as the member
mstockstill on DSK4VPTVN1PROD with NOTICES
Commission, effective September 8, 2015, NASDAQ on behalf of the FINRA/Nasdaq TRF. with the trade reporting obligation under FINRA
changed its legal name from The NASDAQ OMX rules, and the ‘‘Contra (CP)’’ is defined as the
Group, Inc. to Nasdaq, Inc. See Nasdaq, Inc. Form member on the contra side of a trade report. These
8–K Current Report (filed September 8, 2015) rule change to update the FINRA manual positions formerly were identified in FINRA rules
(available at www.sec.gov/Archives/edgar/data/ accordingly. as the ‘‘Market Maker’’ or ‘‘MM’’ side and the
1120193/000119312515314459/d48431d8k.htm). 6 FINRA’s oversight of this function performed by ‘‘Order Entry’’ or ‘‘OE’’ side, respectively. See
FINRA and NASDAQ are in the process of the Business Member is conducted through a FINRA Rule 7620A.01.
amending the LLC Agreement to reflect the name recurring assessment and review of TRF operations 11 See Securities Exchange Act Release No. 76556
change, and FINRA will file a separate proposed by an outside independent audit firm. (December 4, 2015), 80 FR 76724 (December 10,
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![Federal Register / Vol. 81, No. 42 / Thursday, March 3, 2016 / Notices 11339
members that are a Contra Party to believes that reducing the level of anticipates that the proposed rule
qualify for a monthly fee cap of $5,000 Media/Contra trades required to qualify change will make the fee cap more
per Tape applied to trades in each fee will make the fee cap more attainable attainable for these Contra Parties. In
category. Eligibility for the Media/ for FINRA members. addition, FINRA members that are not
Contra fee cap is based on a FINRA Accordingly, FINRA, as the SRO subject to capped fees can choose to
member’s trade reporting of Media/ Member, is proposing to amend Rule report trades to a competing TRF (or, in
Contra trades to the TRF and its 7620A to reflect the proposed reduction this instance, a market maker may elect
participation on an alternative trading in the level of Media/Contra trades to route its orders to an ATS that reports
system registered pursuant to required to qualify for the Media/Contra to a competing TRF).
Regulation ATS 12 (an ‘‘ATS’’) as a fee cap. FINRA also is proposing a
market maker. Specifically, the FINRA technical amendment to clarify that the B. Self-Regulatory Organization’s
member must make markets on an ATS reference to a member’s ‘‘total TRF Statement on Burden on Competition
by maintaining a two-sided quote. The volume’’ means its total FINRA/Nasdaq FINRA does not believe that the
member also must complete and TRF volume. proposed rule change will result in any
provide a form to NASDAQ, in which FINRA has filed the proposed rule burden on competition that is not
the member attests that (1) it maintains change for immediate effectiveness. The necessary or appropriate in furtherance
two-sided quotes for each security that effective date will be the date of filing, of the purposes of the Act. The
the member maintains interest in within February 23, 2016. proposed rule change would not impose
each ATS and displays a quotation size 2. Statutory Basis new fees or fee rate increases on any
of at least one normal unit of trading member firm, and will reduce the fees
(specific for each security), and (2) it FINRA believes that the proposed rule
change is consistent with the provisions paid by some members to the extent
will continue to meet the ATS-based they qualify under the new, lower
requirements to be eligible for the fee of Section 15A(b)(5) of the Act,13 which
requires, among other things, that criteria. NASDAQ, as the Business
cap. In addition, to qualify a FINRA Member, has advised FINRA that the
member must have its Media/Contra FINRA rules provide for the equitable
allocation of reasonable dues, fees and estimated fee savings to member firms
trades equal, or exceed, 55% of its total that qualify for the Media/Contra fee
FINRA/Nasdaq TRF volume. Lastly, the other charges among members and
issuers and other persons using any would be in the range of $0–$20,000 per
FINRA member must be contra to a month per firm based on overall market
minimum of 1 million trades in Tape A, facility or system that FINRA operates
or controls. NASDAQ, as the Business and participant activity and number of
500,000 trades in Tape C, and 250,000 trading days in the month. NASDAQ
trades in Tape B to qualify for the fee Member, proposed the $5,000 per tape
Media/Contra fee cap for FINRA has further advised FINRA that, based
cap in the securities of the Tapes, on current trading practices, NASDAQ
respectively. NASDAQ, as the Business members that could not qualify for a fee
cap under the then-current rules. estimates that approximately three to
Member, set the required level of trades eight member firms may be able to take
reported for each of the Tapes based on However, as noted, NASDAQ has
determined that the level of Media/ advantage of the fee reductions
the differing levels of overall trades associated with the Media/Contra fee
reported to the FINRA/Nasdaq TRF as Contra trades required to qualify for
[sic] fee cap is set too high, resulting in cap with the proposed reduction in the
Contra Party. level of trades required to qualify.
no FINRA member qualifying for the fee
Proposed Adjustment cap since its adoption. By reducing this As discussed in SR–FINRA–2015–
In proposing the Media/Contra fee level from 55% to 35% of total FINRA/ 053, FINRA members have trade
cap, NASDAQ, as the Business Member, Nasdaq TRF trades, NASDAQ has reporting alternatives other than the
advised FINRA that following advised FINRA that it believes that more FINRA/Nasdaq TRF, so to the extent the
implementation, it would monitor the FINRA members will be able to qualify proposed rule change is viewed as
fees paid by Contra Parties and would for the Media/Contra fee cap and thus burdensome among market participants,
consider whether any adjustments to the the proposed reduction is reasonable. those participants may choose not to
fee cap or qualifying thresholds would The proposed reduction in the level of avail themselves of the fee cap and
be appropriate. Since adopting the Media/Contra trades required to qualify maintain the status quo with respect to
Media/Contra fee cap, no FINRA for the Media/Contra fee cap is fees or adjust their trading practices.
member has achieved the level of equitably allocated because it will apply This would permit members to mitigate
Media/Contra trades to equal, or exceed, to all FINRA members that use the any direct or indirect costs imposed by
55% of its total FINRA/Nasdaq TRF FINRA/Nasdaq TRF. Any FINRA this proposal. Moreover, by making the
volume. NASDAQ, as the Business member that meets the reduced level of fee cap more attainable, the proposed
Member, designed the Media/Contra fee Media/Contra trades together with the rule change may promote competition
cap to make pricing more competitive to other requirements under the Rule will among FINRA members by reducing the
attract and retain participants on the qualify for the capped fee. fee burden on certain FINRA members
FINRA/Nasdaq TRF, and because no As discussed in SR–FINRA–2015– who are unable to qualify for the
FINRA member currently qualifies for 053, NASDAQ, as the Business Member, existing fee cap, and FINRA members
the Media/Contra fee cap, NASDAQ has advised FINRA that the Media/Contra can choose their trading partners, which
determined to reduce the level of fee cap is not unfairly discriminatory determination may in part be based on
Media/Contra trades required to qualify because the fee cap would most benefit the fees of the particular TRF applicable
mstockstill on DSK4VPTVN1PROD with NOTICES
for the fee cap. Specifically, NASDAQ those Contra Parties that have to Contra Parties. Lastly, FINRA does
has determined to reduce the level from significant volume on the FINRA/ not believe that the proposed rule
55% of the member’s total FINRA/ Nasdaq TRF and thus may pay larger change burdens competition among
Nasdaq TRF volume to 35%. NASDAQ trade reporting fees than firms with reporting facilities because each is free
comparable ‘‘Executing Party’’ volume to adjust their [sic] respective fees to
2015) (Notice of Filing and Immediate Effectiveness that qualify for a fee cap. NASDAQ remain competitive with the FINRA/
of File No. SR–FINRA–2015–053). Nasdaq TRF, to the extent the proposed
12 17 CFR 242.300–303. 13 15 U.S.C. 78o–3(b)(5). rule change makes the FINRA/Nasdaq
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![11340 Federal Register / Vol. 81, No. 42 / Thursday, March 3, 2016 / Notices
TRF a more attractive facility on which Commission, and all written FOR FURTHER INFORMATION CONTACT: Mr.
to report trades. communications relating to the Leo Sanchez, Office of Government
proposed rule change between the Contracting, U.S. Small Business
C. Self-Regulatory Organization’s
Commission and any person, other than Administration, 409 Third Street SW.,
Statement on Comments on the
those that may be withheld from the Washington, DC 20416; (202) 619–1658;
Proposed Rule Change Received From public in accordance with the wosb@sba.gov.
Members, Participants, or Others provisions of 5 U.S.C. 552, will be SUPPLEMENTARY INFORMATION:
Written comments were neither available for Web site viewing and
solicited nor received. printing in the Commission’s Public I. Background
Reference Room, 100 F Street NE., Under section 8(m) of the Small
III. Date of Effectiveness of the
Washington, DC 20549 on official Business Act, 15 U.S.C. 637(m), SBA is
Proposed Rule Change and Timing for
business days between the hours of responsible for implementing and
Commission Action
10:00 a.m. and 3:00 p.m. Copies of such administering the WOSB Program,
The foregoing rule change has become filing also will be available for which went into effect on February 4,
effective pursuant to Section 19(b)(3)(A) inspection and copying at the principal 2011. The purpose of the WOSB
of the Act 14 and paragraph (f)(2) of Rule office of FINRA. All comments received Program is to ensure that women-owned
19b–4 thereunder.15 At any time within will be posted without change; the small businesses (WOSBs) have an
60 days of the filing of the proposed rule Commission does not edit personal equal opportunity to participate in
change, the Commission summarily may identifying information from Federal contracting and to help attain
temporarily suspend such rule change if submissions. You should submit only the Federal government’s goal of
it appears to the Commission that such information that you wish to make awarding five percent of its prime
action is necessary or appropriate in the available publicly. All submissions contract dollars to WOSBs. The WOSB
public interest, for the protection of should refer to File Number SR–FINRA– Program authorizes Federal contracting
investors, or otherwise in furtherance of 2016–009, and should be submitted on officers to restrict competition for an
the purposes of the Act. If the or before March 24, 2016. acquisition to WOSBs if there is a
Commission takes such action, the For the Commission, by the Division of reasonable expectation that at least two
Commission shall institute proceedings Trading and Markets, pursuant to delegated WOSBs will submit offers that meet the
to determine whether the proposed rule authority.16 requirements of the acquisition at a fair
should be approved or disapproved. Robert W. Errett, and reasonable price and if the
Deputy Secretary. acquisition is for a good or service
IV. Solicitation of Comments
[FR Doc. 2016–04635 Filed 3–2–16; 8:45 am] assigned a North American Industry
Interested persons are invited to Classification System (NAICS) code in
BILLING CODE 8011–01–P
submit written data, views, and which SBA has determined that WOSBs
arguments concerning the foregoing, are ‘‘substantially underrepresented.’’
including whether the proposed rule The WOSB Program also authorizes
change is consistent with the Act. SMALL BUSINESS ADMINISTRATION
contracting officers to award a sole
Comments may be submitted by any of Women-Owned Small Business source contract assigned such a NAICS
the following methods: Federal Contract Program; code to a WOSB if only one WOSB can
Electronic Comments Identification of Eligible Industries be identified that can perform the
contract at a fair and reasonable price.
• Use the Commission’s Internet AGENCY: Small Business Administration. In addition, Economically
comment form (http://www.sec.gov/ ACTION: Notice. Disadvantaged Women-Owned Small
rules/sro.shtml); or Businesses (EDWOSBs) can likewise
• Send an email to rule-comments@ SUMMARY: In order to carry out the
receive set-asides and sole source
sec.gov. Please include File Number SR– Women-Owned Small Business Federal
awards similar to those described above
FINRA–2016–009 on the subject line. Contract Program (WOSB Program), the
for WOSBs, and in a larger set of
U.S. Small Business Administration
Paper Comments industries where SBA has determined
(SBA) was required by section 825 of
that WOSBs are ‘‘underrepresented’’ but
• Send paper comments in triplicate the National Defense Authorization Act
not substantially so.
to Secretary, Securities and Exchange of 2015 to conduct a new study
In order to identify the industries
Commission, 100 F Street NE., identifying the industries in which
eligible for set-asides under the WOSB
Washington, DC 20549–1090. women-owned small businesses are
Program, the Small Business Act
All submissions should refer to File underrepresented in Federal contracting
required the SBA Administrator to
Number SR–FINRA–2016–009. This file and to report to Congress on the results
conduct a study to identify those
number should be included on the of that study by January 2, 2016. In
industries in which small business
subject line if email is used. To help the accordance with this statutory mandate,
concerns owned and controlled by
Commission process and review your SBA has provided this report to
women are underrepresented in Federal
comments more efficiently, please use Congress and with this notice, notifies
the public of the results of this study contracting. 15 U.S.C. 637(m)(4). SBA
only one method. The Commission will awarded a contract to the Kauffman-
post all comments on the Commission’s and identifies the industries designated
by SBA as eligible for the WOSB RAND Institute for Entrepreneurship
Internet Web site (http://www.sec.gov/ Public Policy (RAND) to complete a
Program.
mstockstill on DSK4VPTVN1PROD with NOTICES
rules/sro.shtml). Copies of the study of the underrepresentation of
submission, all subsequent DATES: This notice is effective March 3, WOSBs in Federal prime contracts by
amendments, all written statements 2016. The designations of industries industry code. RAND published the
with respect to the proposed rule contained in this notice apply to all study in April 2007.1 Prior to the
change that are filed with the solicitations issued on or after the
effective date. 1 The RAND study is available to the public at
14 15 U.S.C. 78s(b)(3)(A). http://www.RAND.org/pubs/technical_reports/
15 17 CFR 240.19b–4(f)(2). 16 17 CFR 200.30–3(a)(12). TR442.
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Document Created: 2016-03-03 03:51:10
Document Modified: 2016-03-03 03:51:10
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
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| FR Citation | 81 FR 11337 |
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