81 FR 35432 - Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Extend the Tier Size Pilot of FINRA Rule 6433 (Minimum Quotation Size Requirements for OTC Equity Securities)

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 106 (June 2, 2016)

Page Range		35432-35433
FR Document		2016-12871
Federal Register, Volume 81 Issue 106 (Thursday, June 2, 2016)
[Federal Register Volume 81, Number 106 (Thursday, June 2, 2016)]
[Notices]
[Pages 35432-35433]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-12871]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-77923; File No. SR-FINRA-2016-016]


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

May 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 May 19, 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 and 
II, below, which Items have been prepared by FINRA. FINRA has 
designated the proposed rule change as constituting a ``non-
controversial'' rule change under paragraph (f)(6) of Rule 19b-4 under 
the Act,\3\ which renders the proposal effective upon receipt of this 
filing by the Commission. The Commission is publishing this notice to 
solicit comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    FINRA is proposing to amend FINRA Rule 6433 (Minimum Quotation Size 
Requirements for OTC Equity Securities) to extend the Tier Size Pilot, 
which currently is scheduled to expire on June 10, 2016, until December 
9, 2016.
    The text of the proposed rule change is available on FINRA's Web 
site at http://www.finra.org, at the principal office of FINRA and at 
the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, FINRA included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. FINRA has prepared summaries, set forth in sections A, 
B, and C below, of the most significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    FINRA proposes to amend FINRA Rule 6433 (Minimum Quotation Size 
Requirements for OTC Equity Securities) (the ``Rule'') to extend, until 
December 9, 2016, the amendments set forth in File No. SR-FINRA-2011-
058 (``Tier Size Pilot'' or ``Pilot''), which currently are scheduled 
to expire on June 10, 2016.\4\
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    \4\ See Securities Exchange Act Release No. 76519 (November 24, 
2015), 80 FR 75155 (December 1, 2015) (Notice of Filing and 
Immediate Effectiveness of File No. SR-FINRA-2015-051); see also 
Securities Exchange Act Release No. 67208 (June 15, 2012), 77 FR 
37458 (June 21, 2012) (Order Approving File No. SR-FINRA-2011-058, 
as amended).
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    The Tier Size Pilot was filed with the SEC on October 6, 2011,\5\ 
to amend the minimum quotation sizes (or ``tier sizes'') for OTC Equity 
Securities.\6\ The goals of the Pilot were to simplify the tier 
structure, facilitate the display of customer limit orders, and expand 
the scope of the Rule to apply to additional quoting participants. 
During the course of the pilot, FINRA collected and provided to the SEC 
specified data with which to assess the impact of the Pilot tiers on 
market quality and limit order display.\7\ On September 13, 2013, FINRA 
provided to the Commission an assessment on the operation of the Tier 
Size Pilot utilizing data covering the period from November 12, 2012 
through June 30, 2013.\8\ As noted in the 2013 Assessment, FINRA 
believed that the analysis of the data generally showed that the Tier 
Size Pilot had a neutral to positive impact on OTC market quality for 
the majority of OTC Equity Securities and tiers; and that there was an 
overall increase of 13% in the number of customer limit orders that met 
the minimum quotation sizes to be eligible for display under the Pilot 
tiers. In the 2013 Assessment, FINRA recommended adopting the tiers as 
permanent, but extended the pilot period to allow more time to gather 
and analyze data after the November 12, 2012 through June 30, 2013 
assessment period.\9\ FINRA reviewed the post-June 30, 2013 data, and 
believes that the impact described in the 2013 Assessment has continued 
to hold (and has improved in certain areas).
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    \5\ See Securities Exchange Act Release No. 65568 (October 14, 
2011), 76 FR 65307 (October 20, 2011) (Notice of Filing of File No. 
SR-FINRA-2011-058).
    \6\ ``OTC Equity Security'' means any equity security that is 
not an ``NMS stock'' as that term is defined in Rule 600(b)(47) of 
SEC Regulation NMS; provided, however, that the term OTC Equity 
Security shall not include any Restricted Equity Security. See FINRA 
Rule 6420.
    \7\ FINRA ceased collecting Pilot data for submission to the 
Commission on February 13, 2015.
    \8\ The assessment is part of the SEC's comment file for SR-
FINRA-2011-058 and also is available on FINRA's Web site at: http://www.finra.org/Industry/Regulation/RuleFilings/2011/P124615 (``Pilot 
Assessment'').
    \9\ See Securities Exchange Act Release No. 70839 (November 8, 
2013), 78 FR 68893 (November 15, 2013) (Notice of Filing and 
Immediate Effectiveness of File No. SR-FINRA-2013-049).
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    FINRA further extended the Pilot period until June 10, 2016.\10\ 
The purpose of this filing is to extend the operation of the Tier Size 
Pilot until December 9, 2016, to provide FINRA with additional time to 
finalize its

[[Page 35433]]

proposal with regard to the Tier Size Pilot.
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    \10\ See Securities Exchange Act Release No. 74251 (February 11, 
2015), 80 FR 8741 (February 18, 2015) (Notice of Filing and 
Immediate Effectiveness of File No. SR-FINRA-2015-002); Securities 
Exchange Act Release No. 74927 (May 12, 2015), 80 FR 28327 (May 18, 
2015) (Notice of Filing and Immediate Effectiveness of File No. SR-
FINRA-2015-010); Securities Exchange Act Release No. 75639 (August 
7, 2015), 80 FR 48615 (August 13, 2015) (Notice of Filing and 
Immediate Effectiveness of File No. SR-FINRA-2015-028); and 
Securities Exchange Act Release No. 76519 (November 24, 2015), 80 FR 
75155 (December 1, 2015) (Notice of Filing and Immediate 
Effectiveness of File No. SR-FINRA-2015-051).
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    FINRA has filed the proposed rule change for immediate 
effectiveness. The operative date of the proposed rule change will be 
June 10, 2016.
2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the 
provisions of Section 15A(b)(6) of the Act,\11\ which requires, among 
other things, that FINRA rules must be designed to prevent fraudulent 
and manipulative acts and practices, to promote just and equitable 
principles of trade, and, in general, to protect investors and the 
public interest. FINRA also believes that the proposed rule change is 
consistent with the provisions of Section 15A(b)(11) of the Act.\12\ 
Section 15A(b)(11) requires that FINRA rules include provisions 
governing the form and content of quotations relating to securities 
sold otherwise than on a national securities exchange which may be 
distributed or published by any member or person associated with a 
member, and the persons to whom such quotations may be supplied.
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    \11\ 15 U.S.C. 78o-3(b)(6).
    \12\ 15 U.S.C. 78o-3(b)(11).
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    FINRA believes that the extension of the Tier Size Pilot until 
December 9, 2016, is consistent with the Act in that it would provide 
the Commission and FINRA with additional time to finalize its proposal 
with regard to the Tier Size Pilot.

B. Self-Regulatory Organization's Statement on Burden on Competition

    FINRA does not believe that the proposed rule change will result in 
any burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    Written comments were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \13\ and Rule 19b-
4(f)(6) thereunder.\14\
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    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 17 CFR 240.19b-4(f)(6). As required under Rule 19b-
4(f)(6)(iii), the Exchange provided the Commission with written 
notice of its intent to file the proposed rule change, along with a 
brief description and the text of the proposed rule change, at least 
five business days prior to the date of filing of the proposed rule 
change.
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    A proposed rule change filed under Rule 19b-4(f)(6) \15\ normally 
does not become operative prior to 30 days after the date of filing. 
However, pursuant to Rule 19b-4(f)(6)(iii),\16\ the Commission may 
designate a shorter time if such action is consistent with the 
protection of investors and the public interest.
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    \15\ 17 CFR 240.19b-4(f)(6).
    \16\ 17 CFR 240.19b-4(f)(6)(iii).
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    FINRA has asked the Commission to waive the 30-day operative delay 
so that the proposal may become operative immediately upon filing. The 
Commission believes that waiver of the operative delay is consistent 
with the protection of investors and the public interest because such 
waiver will allow the pilot program to continue without interruption. 
Therefore, the Commission designates the proposal operative upon 
filing.\17\
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    \17\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule should be approved or disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-FINRA-2016-016 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-FINRA-2016-016. 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-2016-016 and should be 
submitted on or before June 23, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2016-12871 Filed 6-1-16; 8:45 am]
 BILLING CODE 8011-01-P
Federal Register / Vol. 81, No. 106 / Thursday, June 2, 2016 / Notices 35433

proposal with regard to the Tier Size 19(b)(3)(A) of the Act 13 and Rule 19b– and Exchange Commission, 100 F Street
Pilot. 4(f)(6) thereunder.14 NE., Washington, DC 20549–1090.
FINRA has filed the proposed rule A proposed rule change filed under All submissions should refer to File
change for immediate effectiveness. The Rule 19b–4(f)(6) 15 normally does not Number SR–FINRA–2016–016. This file
operative date of the proposed rule become operative prior to 30 days after number should be included on the
change will be June 10, 2016. the date of filing. However, pursuant to subject line if email is used. To help the
Rule 19b–4(f)(6)(iii),16 the Commission Commission process and review your
2. Statutory Basis may designate a shorter time if such comments more efficiently, please use
FINRA believes that the proposed rule action is consistent with the protection only one method. The Commission will
change is consistent with the provisions of investors and the public interest. post all comments on the Commission’s
of Section 15A(b)(6) of the Act,11 which FINRA has asked the Commission to Internet Web site (http://www.sec.gov/
requires, among other things, that waive the 30-day operative delay so that rules/sro.shtml). Copies of the
FINRA rules must be designed to the proposal may become operative submission, all subsequent
prevent fraudulent and manipulative immediately upon filing. The amendments, all written statements
acts and practices, to promote just and Commission believes that waiver of the with respect to the proposed rule
equitable principles of trade, and, in operative delay is consistent with the change that are filed with the
general, to protect investors and the protection of investors and the public Commission, and all written
public interest. FINRA also believes that interest because such waiver will allow communications relating to the
the proposed rule change is consistent the pilot program to continue without proposed rule change between the
with the provisions of Section interruption. Therefore, the Commission Commission and any person, other than
15A(b)(11) of the Act.12 Section designates the proposal operative upon those that may be withheld from the
15A(b)(11) requires that FINRA rules filing.17 public in accordance with the
include provisions governing the form At any time within 60 days of the provisions of 5 U.S.C. 552, will be
and content of quotations relating to filing of the proposed rule change, the available for Web site viewing and
securities sold otherwise than on a Commission summarily may printing in the Commission’s Public
national securities exchange which may temporarily suspend such rule change if Reference Room, 100 F Street NE.,
be distributed or published by any it appears to the Commission that such Washington, DC 20549, on official
member or person associated with a action is necessary or appropriate in the business days between the hours of
member, and the persons to whom such public interest, for the protection of 10:00 a.m. and 3:00 p.m. Copies of such
quotations may be supplied. investors, or otherwise in furtherance of filing also will be available for
FINRA believes that the extension of the purposes of the Act. If the inspection and copying at the principal
the Tier Size Pilot until December 9, Commission takes such action, the office of FINRA. All comments received
2016, is consistent with the Act in that Commission shall institute proceedings will be posted without change; the
it would provide the Commission and to determine whether the proposed rule Commission does not edit personal
FINRA with additional time to finalize should be approved or disapproved. identifying information from
its proposal with regard to the Tier Size IV. Solicitation of Comments submissions. You should submit only
Pilot. information that you wish to make
Interested persons are invited to available publicly. All submissions
B. Self-Regulatory Organization’s submit written data, views and should refer to File Number SR–FINRA–
Statement on Burden on Competition arguments concerning the foregoing, 2016–016 and should be submitted on
including whether the proposed rule or before June 23, 2016.
FINRA does not believe that the
change is consistent with the Act.
proposed rule change will result in any For the Commission, by the Division of
Comments may be submitted by any of
burden on competition that is not Trading and Markets, pursuant to delegated
the following methods:
necessary or appropriate in furtherance authority.18
of the purposes of the Act. Electronic Comments Brent J. Fields,
C. Self-Regulatory Organization’s • Use the Commission’s Internet Secretary.
Statement on Comments on the comment form (http://www.sec.gov/ [FR Doc. 2016–12871 Filed 6–1–16; 8:45 am]
Proposed Rule Change Received From rules/sro.shtml); or BILLING CODE 8011–01–P
Members, Participants, or Others • Send an email to rule-comments@
sec.gov. Please include File Number SR–
Written comments were neither FINRA–2016–016 on the subject line. SMALL BUSINESS ADMINISTRATION
solicited nor received.
Paper Comments [Disaster Declaration #14728 and #14729]
III. Date of Effectiveness of the
Proposed Rule Change and Timing for • Send paper comments in triplicate
Montana Disaster #MT–00095
Commission Action to Brent J. Fields, Secretary, Securities
AGENCY: U.S. Small Business
Because the foregoing proposed rule 13 15 U.S.C. 78s(b)(3)(A). Administration.
change does not: (i) Significantly affect 14 17 CFR 240.19b–4(f)(6). As required under Rule
ACTION: Notice.
the protection of investors or the public 19b–4(f)(6)(iii), the Exchange provided the
interest; (ii) impose any significant Commission with written notice of its intent to file
asabaliauskas on DSK3SPTVN1PROD with NOTICES

the proposed rule change, along with a brief
SUMMARY: This is a Notice of the
burden on competition; and (iii) become description and the text of the proposed rule Presidential declaration of a major
operative for 30 days from the date on change, at least five business days prior to the date disaster for Public Assistance Only for
which it was filed, or such shorter time of filing of the proposed rule change. the State of Montana (FEMA–4271–DR),
15 17 CFR 240.19b–4(f)(6).
as the Commission may designate, it has dated 05/24/2016.
16 17 CFR 240.19b–4(f)(6)(iii).
become effective pursuant to Section 17 For purposes only of waiving the 30-day
Incident: Severe Winter Storm and
operative delay, the Commission has considered the Straight-line Winds.
11 15 U.S.C. 78o–3(b)(6). proposed rule’s impact on efficiency, competition,
12 15 U.S.C. 78o–3(b)(11). and capital formation. See 15 U.S.C. 78c(f). 18 17 CFR 200.30–3(a)(12).

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Document Created: 2016-06-02 01:23:18
Document Modified: 2016-06-02 01:23:18
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		81 FR 35432