81 FR 4076 - Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to Alternative Trading System Volume and Trading Information
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 81, Issue 15 (January 25, 2016)
Federal Register Volume 81, Issue 15 (January 25, 2016)
| Page Range | 4076-4080 | |
| FR Document | 2016-01308 |
[Federal Register Volume 81, Number 15 (Monday, January 25, 2016)] [Notices] [Pages 4076-4080] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-01308] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-76931; File No. SR-FINRA-2016-002] Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to Alternative Trading System Volume and Trading Information January 19, 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 January 8, 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 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. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. \3\ 17 CFR 240.19b-4(f)(6). --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of the Substance of the Proposed Rule Change FINRA is proposing to (i) delete from the FINRA rulebook Rule 4552, which requires each alternative trading system (``ATS'') that has filed a Form ATS with the SEC to report to FINRA weekly volume information and number of trades regarding equity securities transactions within the ATS; (ii) amend Rules 6110 and 6610 to add provisions regarding FINRA's publication of ATS volume and trade count information for equity securities, including information similar to what is currently reported by ATSs pursuant to Rule 4552 as well as information regarding ATS block transactions; and (iii) amend Rules 6183 and 6625 to require ATSs seeking an exemption from FINRA trade reporting rules to provide FINRA with a link to a publicly-available Web site that displays their weekly equity volume information in a format substantially similar to that used by FINRA. 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 (i) Background On January 17, 2014, the SEC approved a proposed rule change to (i) adopt Rule 4552 (Alternative Trading [[Page 4077]] Systems--Trading Information for Securities Executed Within the Alternative Trading System) to require ATSs \4\ to report to FINRA weekly volume information and number of trades regarding securities transactions within the ATS (``ATS Data'') and to publish the ATS Data on a delayed basis on FINRA's Web site; \5\ and (ii) amend Rules 6160, 6170, 6480, and 6720 (``MPID Rules'') to require each ATS to acquire and use a single, unique market participant identifier (``MPID'') when reporting information to FINRA (``MPID Requirement'').\6\ The implementation date for the reporting requirements under Rule 4552 was May 12, 2014, and FINRA began publishing the ATS Data for equity securities on its Web site on June 2, 2014.\7\ The MPID Requirement was implemented on February 2, 2015.\8\ As the SEC noted in its order approving Rule 4552 and the MPID Requirement, FINRA's response to comments received on that proposal included a commitment by FINRA to evaluate the continued need for self-reporting under Rule 4552 after the MPID Requirement was in place and to ``eliminate the self-reporting requirement for ATSs subject to FINRA trade reporting requirements if the MPID [R]equirement is implemented and operating as anticipated.'' \9\ FINRA has conducted this evaluation, and the proposed rule change eliminates the self-reporting requirement in Rule 4552 for ATSs in light of the successful implementation of the MPID Requirement.\10\ --------------------------------------------------------------------------- \4\ Regulation ATS defines an ``alternative trading system'' as ``any organization, association, person, group of persons, or system: (1) That constitutes, maintains, or provides a market place or facilities for bringing together purchasers and sellers of securities or for otherwise performing with respect to securities the functions commonly performed by a stock exchange within the meaning of [Exchange Act Rule 3b-16]; and (2) That does not: (i) Set rules governing the conduct of subscribers other than the conduct of such subscribers' trading on such organization, association, person, group of persons, or system; or (ii) Discipline subscribers other than by exclusion from trading.'' 17 CFR 242.300(a). Rule 4552 applies to any alternative trading system, as that term is defined in Regulation ATS, that has filed a Form ATS with the Commission. See Rule 4552(a). \5\ FINRA subsequently filed a proposed rule change to limit the reporting requirements in Rule 4552 to equity securities and exclude TRACE-Reportable Securities. See Securities Exchange Act Release No. 71911 (April 9, 2014), 79 FR 21316 (April 15, 2014) (Notice of Filing and Immediate Effectiveness of File No. SR-FINRA-2014-017). \6\ See Securities Exchange Act Release No. 71341 (January 17, 2014), 79 FR 4213 (January 24, 2014) (Order Approving File No. SR- FINRA-2013-042) (``ATS Approval Order''). The MPID Requirement was subsequently amended to permit the use of two MPIDs by a single ATS provided each MPID is used only to report to either the Trade Reporting and Compliance Engine (``TRACE'') or one or more of FINRA's equity reporting facilities. See Securities Exchange Act Release No. 71911 (April 9, 2014), 79 FR 21316 (April 15, 2014) (Notice of Filing and Immediate Effectiveness of File No. SR-FINRA- 2014-017). \7\ See Regulatory Notice 14-07 (February 2014). \8\ See Securities Exchange Act Release No. 73340 (October 10, 2014), 79 FR 62500 (October 17, 2014) (Notice of Filing and Immediate Effectiveness of File No. SR-FINRA-2014-042). \9\ ATS Approval Order, supra note 6, 79 FR at 4215-16. \10\ FINRA and the SEC also noted that certain ATSs exempt from FINRA's trade reporting rules (``Exempt ATSs'') may need to continue reporting because Exempt ATSs would not be using a separate MPID to report their volume due to the exemption. See ATS Approval Order, supra note 6, 79 FR at 4216 n.34. As discussed in more detail below, rather than require Exempt ATSs to continue to self-report volume information pursuant to Rule 4552, FINRA has determined to require any ATS that wishes to avail itself of the trade reporting exemption to provide FINRA with a link to this information on a publicly- available Web site. FINRA will include a link to this information on its ATS Web site so that it is readily accessible to investors and the public. --------------------------------------------------------------------------- Rule 4552 requires individual ATSs to submit weekly reports to FINRA regarding equity security volume information within the ATS, including share volume and number of trades for both NMS stocks and OTC Equity Securities.\11\ This information must be reported to FINRA on a security-by-security basis within seven business days after the end of each calendar week.\12\ The first reports pursuant to Rule 4552 were due to FINRA by May 28, 2014, covering the week of May 12 through 16, 2014.\13\ After FINRA began receiving the self-reported data from ATSs, FINRA began publishing on its Web site, on a delayed basis, the reported information for each equity security for each ATS with appropriate disclosures that the published volume numbers are based on ATS-submitted reports and not on reports produced or validated by FINRA.\14\ FINRA currently makes this data available on its Web site through weekly reports listing aggregate volume and number of trades by security for each ATS within the designated time period.\15\ Aggregate reported information regarding NMS stocks in Tier 1 of the NMS Plan to Address Extraordinary Market Volatility \16\ is published on a two-week delayed basis.\17\ FINRA publishes the information on all other NMS stocks and OTC Equity Securities subject to FINRA trade reporting requirements on a four-week delayed basis.\18\ --------------------------------------------------------------------------- \11\ See Rule 4552(a) and (d)(4). \12\ See Rule 4552(a). \13\ See Regulatory Notice 14-07 (February 2014). \14\ See Rule 4552(b). \15\ The volume information is available at www.finra.org/ats. \16\ Tier 1 NMS stocks include those NMS stocks in the S&P 500 Index or the Russell 1000 Index and certain exchange-traded products. See NMS Plan to Address Extraordinary Market Volatility. FINRA makes changes to the Tier 1 NMS stocks in accordance with the Indices. Changes to the S&P 500 are made on an as needed basis and are not subject to an annual or semi-annual reconstitution. S&P typically does not add new issues until they have been seasoned for six to twelve months. Russell 1000 rebalancing typically takes places in June. \17\ See Rule 4552(b)(1). Thus, for example, a typical reporting scenario (i.e., no federal holidays) requires ATSs to report the information for a given week by the second Tuesday following the week. FINRA publishes the information regarding Tier 1 NMS stocks no earlier than the following Monday. Information on all other equity securities subject to FINRA trade reporting requirements is published two weeks following the publication of information for the Tier 1 NMS stocks. \18\ See Rule 4552(b)(2). --------------------------------------------------------------------------- Rule 4552 also specifies how an ATS should calculate its volume to ensure consistency and to avoid potential over-counting and requires that, ``[w]hen calculating and reporting the volume of securities traded and the number of trades, an alternative trading system shall include only those trades executed within the alternative trading system. If two orders are crossed by the alternative trading system, the volume shall include only the number of shares crossed as a single trade (e.g., crossing a buy order of 1,000 shares with a sell order of 1,000 shares would be calculated as a single trade of 1,000 shares of volume).'' \19\ Thus, for example, an ATS only reports trades executed within the ATS (not orders routed out of the ATS) and only reports the volume of each executed trade once (not separate or double counting for the buy and sell side of the trade). Supplementary Material .01 to Rule 4552 provides further guidance on how to calculate volume for reporting purposes and notes that ``[i]f an ATS routes an order to another member firm or other execution venue for handling or execution where that initial order matches against interest resident at the other venue, then the ATS would not not [sic] . . . include such volume for reporting purposes.'' --------------------------------------------------------------------------- \19\ See Rule 4552(c). --------------------------------------------------------------------------- In addition to the reporting requirements under Rule 4552, the MPID Rules generally require that a member operating an ATS obtain for each such ATS a single, unique MPID that is designated for exclusive use for reporting each ATS's transactions.\20\ Members that operate multiple ATSs or engage in other lines of business requiring the use of MPIDs are required [[Page 4078]] to obtain and use multiple MPIDs, and if a firm operates multiple ATSs, each ATS must have its own MPID. Firms are required to notify FINRA before changing the usage of the MPID in any way (e.g., repurposing an MPID from reflecting ATS activity to other trading activity at the firm). After an ATS is provided its MPID, any reporting by the ATS-- either reporting trades to a FINRA TRF, the Alternative Display Facility, the OTC Reporting Facility, TRACE, or reporting orders to the Order Audit Trail System (``OATS'')--must include the MPID assigned to the particular ATS, and the member must use the separate MPID to report all transactions executed within the ATS to the appropriate reporting facility. Finally, the MPID Rules prohibit a member from using an MPID assigned to an ATS to report any transaction that is not executed within the ATS and require members to have policies and procedures in place to ensure that trades reported with a separate MPID obtained under the rules are restricted to trades executed within the ATS. --------------------------------------------------------------------------- \20\ See Rule 6160 (Multiple MPIDs for Trade Reporting Facility Participants); Rule 6170 (Primary and Additional MPIDs for Alternative Display Facility Participants); Rule 6480 (Multiple MPIDs for Quoting and Trading in OTC Equity Securities). As noted above, an ATS is permitted to use two separate MPIDs if one MPID is used exclusively for reporting transactions to TRACE and the other MPID is used exclusively for reporting transactions to the equity trade reporting facilities. See Rule 6160(d); Rule 6170(e); Rule 6480(d). --------------------------------------------------------------------------- (ii) MPID Requirement Implementation and Evaluation Under FINRA's trade reporting rules, orders that are crossed by an ATS are reported to the appropriate FINRA trade reporting facility by the ATS.\21\ The MPID Requirement--which requires ATSs to use a single, unique MPID when reporting trades within the ATS to an equity trade reporting facility--became effective on February 2, 2015. Since that time, FINRA has been able to calculate the trading volume for ATSs, other than Exempt ATSs, through the trade reports submitted using the ATS's MPID. FINRA has been comparing the information reported by ATSs pursuant to Rule 4552 to information generated by FINRA from trade reports since the MPID Requirement was implemented. --------------------------------------------------------------------------- \21\ See Securities Exchange Act Release No. 58903 (November 5, 2008), 73 FR 67905, at 67906 (November 17, 2008) (Order Approving File No. SR-FINRA-2008-011) (``Under the proposed rule change, an [ATS] . . . would be the executing party and would have the reporting obligation where the transaction is executed on the ATS.''); see also Regulatory Notice 09-08 (January 2009). --------------------------------------------------------------------------- For most weeks since the implementation of the MPID Requirement, over 75% of ATSs have exact matches between self-reported data and trade reporting data, and there has been a 99.99% overall match rate between self-reported ATS volume and trade reporting volume for ATSs that submit trade reports on the same basis that they calculate volume information pursuant to Rule 4552.\22\ Where differences between the self-reported data and the trade reporting data have been detected by FINRA staff, these differences have almost always been errors in the self-reporting of data by ATSs rather than errors in calculating volume based on trade reporting data. For example, FINRA has found errors such as ATSs including cancelled or reversed trades in the calculations or double-counting certain volume. --------------------------------------------------------------------------- \22\ The 99.99% match rate excludes three ATSs that trade equity securities and, under current guidance or exemptions, will not match: One is an Exempt ATS; one ATS reports trades to a FINRA facility but excludes trades that are matched on an Exempt ATS pursuant to the guidance on volume calculation in Supplementary Material .01 to Rule 4552; and one ATS matches orders but routes some of those matched orders for execution to a third party broker- dealer that executes and reports the trade to FINRA. In each of these three unique circumstances, the trade reports will not match the data reported pursuant to Rule 4552. --------------------------------------------------------------------------- Based on this comparison over the past several months, FINRA believes that, going forward, disseminating ATS volume information based on trade reporting data, rather than self-reported data, will provide a more accurate calculation of ATS volume. Consequently, the proposed rule change replaces the ATS reporting obligations in Rule 4552 with a dissemination provision in Rule 6110 (for NMS stocks) and Rule 6610 (for OTC Equity Securities). The information disseminated by FINRA under the Rules will be substantially the same as that currently disseminated under Rule 4552; however, with the exception of Exempt ATSs, the obligation to calculate the information will shift from the ATSs to FINRA. As discussed below and noted above, however, some of the data calculations will change for ATSs that match orders using an Exempt ATS and ATSs that otherwise have unique trade reporting situations that result in trade reporting data not aligning with the ATS's current calculation methodology under Rule 4552. (iii) Exempt ATSs By shifting ATS volume calculations from self-reported ATS data to trade reporting data, FINRA will not have transaction information for Exempt ATSs because they do not report trades to FINRA under existing exemptive rules.\23\ Because FINRA believes this information will remain important to investors and to the public, Exempt ATSs that wish to continue to have an exemption from the trade reporting requirements must continue to calculate their volume in the same manner they currently do under Rule 4552; however, rather than report the information to FINRA, the proposed rule change moves the requirement, including all of the calculation requirements and guidance, into Rules 6183 and 6625 and requires Exempt ATSs to provide FINRA with a link to the information. The information at that link must be publicly available at no charge and must appear in a substantially similar format as the ATS volume information that FINRA makes available. Supplementary Material .01 to the rules makes clear that, in order for data posted at the link to be in a ``substantially similar format'' under the rule, the data must include the same data elements for the same timeframes, be accessible in the same manner as FINRA makes data available (e.g., downloadable), and include data for the same time periods (including current and historical data). FINRA will use the link provided by the Exempt ATS and make the link available on its public Web site so that investors and other members of the public can freely and readily access Exempt ATS volume information. --------------------------------------------------------------------------- \23\ See Rules 6183 and 6625. --------------------------------------------------------------------------- Because the amendments to Rules 6183 and 6625 incorporate the calculation provisions from Rule 4552, the calculation of Exempt ATS volume information will not change as a result of the proposed rule change; however, the information will be published by the Exempt ATS with a link from FINRA's Web site rather than be reported to FINRA and displayed directly on FINRA's Web site. By shifting the basis of ATS Data from self-reported data to trade reporting data, the calculations, and thus the displayed data, will change primarily for those ATSs that currently exclude transactions involving Exempt ATSs from their reports under Rule 4552. These ATSs report trades to FINRA using their ATS MPID (including those trades that are matched through an Exempt ATS); consequently, those trades involving Exempt ATSs that are currently excluded pursuant to Supplementary Material .01 to Rule 4552 will be included in the volume calculations once the calculations are based on trade reporting data.\24\ --------------------------------------------------------------------------- \24\ This category of trades will also be included in the Exempt ATS's volume calculations. FINRA will note this potential double- counting on its Web site to ensure users of the ATS data are aware of this double-counting. --------------------------------------------------------------------------- (iv) ATS Block Data With the implementation of the MPID Requirement, FINRA now has access to trade-by-trade reporting data from ATSs. The MPID Requirement also allows FINRA to aggregate and categorize ATS trading data in additional ways, and FINRA has been considering additional data that may be useful to investors and the public, particularly with respect to larger-sized, or ``block,'' trades. [[Page 4079]] Following discussions with numerous ATSs, broker-dealers, and FINRA committees, the proposed rule change also provides that FINRA will publish on its public Web site monthly aggregate ATS block trading statistics, with the specific elements to be determined from time to time by FINRA in its discretion as stated in a Regulatory Notice or other equivalent publication, for each ATS.\25\ FINRA believes that these statistics would prove beneficial to firms and the general public and provide interested parties with more detailed information on ATS trading activities, thus enhancing transparency in the over-the-counter market, and the proposed rule change would provide FINRA with a limited ability to change or refine the data fields for ATS block trades to respond to user needs or improve the usefulness of the data. --------------------------------------------------------------------------- \25\ FINRA notes that announcement of the specific elements in a Regulatory Notice or other equivalent publication is similar to the manner in which FINRA announces the data elements and fields included in Historic TRACE Data. See Rules 7730(d) and (f)(4); see also Regulatory Notice 10-14 (March 2010). --------------------------------------------------------------------------- Although FINRA will announce in a Regulatory Notice the specific elements that will be published, the rule provides that the statistics regarding ATS block trades will be aggregated across all NMS stocks (i.e., there will be no security-by-security block data),\26\ will be for a minimum time period of one month of trading,\27\ and will be published no earlier than one month following the end of the month for which trading was aggregated. Rather than strictly define a block transaction, FINRA concluded it would be most beneficial to provide firms and the public with information on block transactions using share-based thresholds, dollar-based thresholds, and thresholds that include both shares and dollar amount. Initially, FINRA anticipates that the ATS block data elements listed below will be published under Rule 6110; however, FINRA will formally announce the elements in a Regulatory Notice.\28\ FINRA currently anticipates that the thresholds for block trades will be the following: --------------------------------------------------------------------------- \26\ The proposed rule change does not include OTC Equity Securities in the initial dissemination phase for block trades, due largely to the wide variance of trading activity in these securities and the difficulty associated with determining thresholds that are appropriate across this class of securities. However, FINRA intends to reassess whether, in the future, the publication of block data should be expanded to include trades in OTC Equity Securities or some subset thereof. \27\ All monthly information will be calculated using calendar months. Because the reports will be based on aggregated monthly data rather than weekly data and includes all NMS stocks, Tier 1 and Tier 2 NMS stocks will not be treated differently for purposes of block trading statistics. \28\ FINRA anticipates that any changes to the elements or the addition of any new elements will be published well in advance of implementation to provide an opportunity for comment by any interested parties. As noted above, for trades executed on an ATS, the ATS is required to report the trade using its MPID. Consequently, the publication by FINRA of ATS block data will not impose any additional obligations on ATSs. [cir] 10,000 or more shares [cir] $200,000 or more in dollar value [cir] 10,000 or more shares and $200,000 or more in dollar value [cir] 2,000 to 9,999 shares [cir] $100,000 to $199,999 in dollar value [cir] 2,000 to 9,999 shares and $100,000 to $199,999 in dollar value For each of these thresholds, FINRA intends to publish trade count and volume information for each ATS aggregated across all NMS stocks. As a convenience for users, FINRA also anticipates calculating and displaying the average trade size and each ATS's rank as well as block market share (i.e., the proportion of each ATS's block trading volume in relation to total block trading by all ATSs) and block business share (i.e., the proportion of a particular ATS's overall trading volume that was done as block trades) and rankings of those metrics.\29\ --------------------------------------------------------------------------- \29\ Both the block business share and the rankings would be determined using the data FINRA is proposing to make publicly available; thus, these metrics would be calculated and provided by FINRA merely as a service to users to enable them to determine this information more readily. Monthly total ATS share volume and trades are calculated in order to derive the block business share, so those values and their market share and ranking would also be published as a service to users. --------------------------------------------------------------------------- FINRA believes that ATS block trading data will be helpful for firms to inform their routing decisions and that FINRA's data, because it would be based on the trade reports submitted by the ATSs, would be more accurate and complete than existing sources of this information. In addition, FINRA believes that monthly aggregated data across all NMS stocks published on a one-month delayed basis will avoid any potential information leakage concerns. FINRA has filed the proposed rule change for immediate effectiveness. The implementation date for the deletion of Rule 4552, the amendments to Rules 6183 and 6625, and the publication of ATS volume and trade count information (except for ATS block data) pursuant to the amendments to Rules 6110 and 6610 will be February 9, 2016. Consequently, ATSs will be required to calculate their volume information pursuant to Rule 4552 through January 31, 2016, and will have until February 9, 2016, to report this data to FINRA.\30\ FINRA will begin calculating ATS volume data based on trade reports beginning February 1, 2016. FINRA will announce the implementation date for these amendments no later than seven days following the filing of the proposed rule change for immediate effectiveness. FINRA will announce the implementation date for the publication of ATS block data in a Regulatory Notice to be published no later than 90 days following publication of the Commission's notice of the filing of the proposed rule change for immediate effectiveness in the Federal Register. The implementation date for the publication of ATS block data will be no later than 180 days after publication of the Regulatory Notice. --------------------------------------------------------------------------- \30\ As discussed above, ATSs exempt from FINRA trade reporting requirements will continue to calculate their volume using the same calculation methodology after Rule 4552 is removed from the FINRA rulebook pursuant to amended Rules 6183 and 6625. As with all ATSs, however, the reporting requirements of Rule 4552 will no longer apply beginning with the trading week of February 1, 2016. Instead, ATSs continuing to rely on the exemption will begin providing FINRA with a link to their data on the same timeframe as FINRA posts the data for other ATSs. --------------------------------------------------------------------------- 2. Statutory Basis FINRA believes that the proposed rule change is consistent with the provisions of Section 15A(b)(6) of the Act,\31\ 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 believes that the weekly ATS volume statistics have significantly enhanced transparency and understanding into trading activity on ATSs in the over-the-counter market. FINRA believes that, with the successful implementation of the MPID Requirement, transitioning the source of this information from self-reported data to trade reporting data enhances the reliability of the data while also reducing the reporting and compliance burden on firms and ATSs. FINRA believes that the proposal to publish ATS block trading data will provide additional transparency into ATS activity and enhance market participants' and investors' understanding of the over-the-counter market. --------------------------------------------------------------------------- \31\ 15 U.S.C. 78o-3(b)(6). --------------------------------------------------------------------------- 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. FINRA notes that the publication of ATS block trading information as [[Page 4080]] described above would not impose any additional reporting requirements on ATSs because the data will be derived solely from trade reports submitted to the FINRA equity trade reporting facilities. FINRA believes that the proposal will have minimal to no impact on firms from a systems development perspective while significantly benefiting the marketplace as a whole. Thus, the proposal will provide additional transparency into ATS trading activity by enabling market participants and investors to have a better understanding of ATS block trading volume at no required cost to firms or ATSs. The proposed rule change would expand the benefits of FINRA's ATS transparency program by providing additional transparency on monthly aggregate block trading on ATSs. The additional information may help market participants and investors to enhance their understanding of trading activity on ATSs and inform routing decisions based on this information. As discussed above, the proposal to publish ATS block trading volume would not impose any additional reporting requirements on firms, and as a result would have no direct impact on firms. Some firms may choose to incur costs to verify the information FINRA publishes, but these cost are voluntary and are also likely to be minimal. 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. As noted above, however, FINRA received written comments on the proposed rule change to adopt Rule 4552 and the MPID Requirement, many of which requested that FINRA eliminate Rule 4552 once the MPID Requirement was implemented and functioning as intended.\32\ The current proposed rule change addresses this concern expressed by earlier commenters by eliminating the reporting requirements in Rule 4552. --------------------------------------------------------------------------- \32\ See ATS Approval Order, supra note 6, 79 FR at 4215. --------------------------------------------------------------------------- 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 \33\ and Rule 19b- 4(f)(6) thereunder.\34\ --------------------------------------------------------------------------- \33\ 15 U.S.C. 78s(b)(3)(A). \34\ 17 CFR 240.19b-4(f)(6). --------------------------------------------------------------------------- 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 CommentsUse the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or Send an email to rule-comments@sec.gov. Please include File Number SR-FINRA-2016-002 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-2016-002. 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-2016-002, and should be submitted on or before February 16, 2016. --------------------------------------------------------------------------- \35\ 17 CFR 200.30-3(a)(12). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\35\ Robert W. Errett, Deputy Secretary. [FR Doc. 2016-01308 Filed 1-22-16; 8:45 am] BILLING CODE 8011-01-P
![4076 Federal Register / Vol. 81, No. 15 / Monday, January 25, 2016 / Notices
III. Date of Effectiveness of the rules/sro.shtml). Copies of the constituting a ‘‘non-controversial’’ rule
Proposed Rule Change and Timing for submission, all subsequent change under paragraph (f)(6) of Rule
Commission Action amendments, all written statements 19b–4 under the Act,3 which renders
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change does not: (i) Significantly affect change that are filed with the this filing by the Commission. The
the protection of investors or the public Commission, and all written Commission is publishing this notice to
interest; (ii) impose any significant communications relating to the solicit comments on the proposed rule
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provisions of 5 U.S.C. 552, will be of the Proposed Rule Change
become effective pursuant to section
available for Web site viewing and FINRA is proposing to (i) delete from
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Reference Room, 100 F Street NE., requires each alternative trading system
thereunder.9
At any time within 60 days of the Washington, DC 20549 on official (‘‘ATS’’) that has filed a Form ATS with
filing of the proposed rule change, the business days between the hours of the SEC to report to FINRA weekly
Commission summarily may 10:00 a.m. and 3:00 p.m. Copies of such volume information and number of
temporarily suspend such rule change if filing also will be available for trades regarding equity securities
it appears to the Commission that such inspection and copying at the principal transactions within the ATS; (ii) amend
action is: (i) Necessary or appropriate in office of the Exchange. All comments Rules 6110 and 6610 to add provisions
received will be posted without change; regarding FINRA’s publication of ATS
the public interest; (ii) for the protection
the Commission does not edit personal volume and trade count information for
of investors; or (iii) otherwise in
identifying information from equity securities, including information
furtherance of the purposes of the Act.
submissions. You should submit only similar to what is currently reported by
If the Commission takes such action, the
information that you wish to make ATSs pursuant to Rule 4552 as well as
Commission shall institute proceedings
available publicly. All submissions information regarding ATS block
to determine whether the proposed rule
should refer to File Number SR–Phlx– transactions; and (iii) amend Rules 6183
should be approved or disapproved.
2016–03, and should be submitted on or and 6625 to require ATSs seeking an
IV. Solicitation of Comments before February 16, 2016. exemption from FINRA trade reporting
Interested persons are invited to For the Commission, by the Division of rules to provide FINRA with a link to
submit written data, views, and Trading and Markets, pursuant to delegated a publicly-available Web site that
arguments concerning the foregoing, authority.10 displays their weekly equity volume
including whether the proposed rule Robert W. Errett, information in a format substantially
change is consistent with the Act. Deputy Secretary. similar to that used by FINRA.
Comments may be submitted by any of [FR Doc. 2016–01307 Filed 1–22–16; 8:45 am] The text of the proposed rule change
the following methods: BILLING CODE 8011–01–P
is available on FINRA’s Web site at
http://www.finra.org, at the principal
Electronic Comments office of FINRA and at the
• Use the Commission’s Internet SECURITIES AND EXCHANGE Commission’s Public Reference Room.
comment form (http://www.sec.gov/ COMMISSION II. Self-Regulatory Organization’s
rules/sro.shtml); or Statement of the Purpose of, and
[Release No. 34–76931; File No. SR–FINRA–
• Send an email to rule-comments@ 2016–002] Statutory Basis for, the Proposed Rule
sec.gov. Please include File Number SR– Change
Phlx–2016–03 on the subject line. Self-Regulatory Organizations;
Financial Industry Regulatory In its filing with the Commission,
Paper Comments FINRA included statements concerning
Authority, Inc.; Notice of Filing and
• Send paper comments in triplicate Immediate Effectiveness of a Proposed the purpose of and basis for the
to Secretary, Securities and Exchange Rule Change Relating to Alternative proposed rule change and discussed any
Commission, 100 F Street NE., Trading System Volume and Trading comments it received on the proposed
Washington, DC 20549–1090. Information rule change. The text of these statements
All submissions should refer to File may be examined at the places specified
Number SR–Phlx–2016–03. This file January 19, 2016. in Item IV below. FINRA has prepared
number should be included on the Pursuant to Section 19(b)(1) of the summaries, set forth in sections A, B,
subject line if email is used. To help the Securities Exchange Act of 1934 and C below, of the most significant
Commission process and review your (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 aspects of such statements.
comments more efficiently, please use notice is hereby given that on January 8,
A. Self-Regulatory Organization’s
only one method. The Commission will 2016, Financial Industry Regulatory
Statement of the Purpose of, and
post all comments on the Commission’s Authority, Inc. (‘‘FINRA’’) filed with the
Securities and Exchange Commission Statutory Basis for, the Proposed Rule
Internet Web site (http://www.sec.gov/ Change
asabaliauskas on DSK5VPTVN1PROD with NOTICES
(‘‘SEC’’ or ‘‘Commission’’) the proposed
8 15 U.S.C. 78s(b)(3)(A)(iii). rule change as described in Items I, II, 1. Purpose
9 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– and III below, which Items have been
(i) Background
4(f)(6) requires a self-regulatory organization to give prepared by FINRA. FINRA has
the Commission written notice of its intent to file designated the proposed rule change as On January 17, 2014, the SEC
the proposed rule change at least five business days approved a proposed rule change to (i)
prior to the date of filing of the proposed rule
change, or such shorter time as designated by the
10 17 CFR 200.30–3(a)(12). adopt Rule 4552 (Alternative Trading
1 15 U.S.C. 78s(b)(1).
Commission. The Exchange has satisfied this
requirement. 2 17 CFR 240.19b–4. 3 17 CFR 240.19b–4(f)(6).
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![Federal Register / Vol. 81, No. 15 / Monday, January 25, 2016 / Notices 4077
Systems—Trading Information for anticipated.’’ 9 FINRA has conducted delayed basis.17 FINRA publishes the
Securities Executed Within the this evaluation, and the proposed rule information on all other NMS stocks
Alternative Trading System) to require change eliminates the self-reporting and OTC Equity Securities subject to
ATSs 4 to report to FINRA weekly requirement in Rule 4552 for ATSs in FINRA trade reporting requirements on
volume information and number of light of the successful implementation a four-week delayed basis.18
trades regarding securities transactions of the MPID Requirement.10 Rule 4552 also specifies how an ATS
within the ATS (‘‘ATS Data’’) and to Rule 4552 requires individual ATSs to should calculate its volume to ensure
publish the ATS Data on a delayed basis submit weekly reports to FINRA consistency and to avoid potential over-
on FINRA’s Web site; 5 and (ii) amend regarding equity security volume counting and requires that, ‘‘[w]hen
Rules 6160, 6170, 6480, and 6720 information within the ATS, including calculating and reporting the volume of
(‘‘MPID Rules’’) to require each ATS to share volume and number of trades for securities traded and the number of
acquire and use a single, unique market both NMS stocks and OTC Equity trades, an alternative trading system
participant identifier (‘‘MPID’’) when Securities.11 This information must be shall include only those trades executed
reporting information to FINRA (‘‘MPID reported to FINRA on a security-by- within the alternative trading system. If
Requirement’’).6 The implementation security basis within seven business two orders are crossed by the alternative
date for the reporting requirements days after the end of each calendar trading system, the volume shall
under Rule 4552 was May 12, 2014, and week.12 The first reports pursuant to include only the number of shares
FINRA began publishing the ATS Data Rule 4552 were due to FINRA by May crossed as a single trade (e.g., crossing
for equity securities on its Web site on 28, 2014, covering the week of May 12 a buy order of 1,000 shares with a sell
June 2, 2014.7 The MPID Requirement through 16, 2014.13 After FINRA began order of 1,000 shares would be
was implemented on February 2, 2015.8 receiving the self-reported data from calculated as a single trade of 1,000
As the SEC noted in its order approving ATSs, FINRA began publishing on its shares of volume).’’ 19 Thus, for
Rule 4552 and the MPID Requirement, Web site, on a delayed basis, the example, an ATS only reports trades
FINRA’s response to comments received reported information for each equity executed within the ATS (not orders
on that proposal included a security for each ATS with appropriate routed out of the ATS) and only reports
commitment by FINRA to evaluate the disclosures that the published volume the volume of each executed trade once
continued need for self-reporting under numbers are based on ATS-submitted (not separate or double counting for the
Rule 4552 after the MPID Requirement reports and not on reports produced or buy and sell side of the trade).
was in place and to ‘‘eliminate the self- validated by FINRA.14 FINRA currently Supplementary Material .01 to Rule
reporting requirement for ATSs subject makes this data available on its Web site 4552 provides further guidance on how
to FINRA trade reporting requirements through weekly reports listing aggregate to calculate volume for reporting
if the MPID [R]equirement is volume and number of trades by purposes and notes that ‘‘[i]f an ATS
implemented and operating as security for each ATS within the routes an order to another member firm
designated time period.15 Aggregate or other execution venue for handling or
4 Regulation ATS defines an ‘‘alternative trading reported information regarding NMS execution where that initial order
system’’ as ‘‘any organization, association, person, stocks in Tier 1 of the NMS Plan to matches against interest resident at the
group of persons, or system: (1) That constitutes,
maintains, or provides a market place or facilities
Address Extraordinary Market other venue, then the ATS would not
for bringing together purchasers and sellers of Volatility 16 is published on a two-week not [sic] . . . include such volume for
securities or for otherwise performing with respect reporting purposes.’’
to securities the functions commonly performed by 9 ATS Approval Order, supra note 6, 79 FR at In addition to the reporting
a stock exchange within the meaning of [Exchange 4215–16. requirements under Rule 4552, the
Act Rule 3b–16]; and (2) That does not: (i) Set rules 10 FINRA and the SEC also noted that certain
governing the conduct of subscribers other than the MPID Rules generally require that a
ATSs exempt from FINRA’s trade reporting rules
conduct of such subscribers’ trading on such (‘‘Exempt ATSs’’) may need to continue reporting
member operating an ATS obtain for
organization, association, person, group of persons, because Exempt ATSs would not be using a each such ATS a single, unique MPID
or system; or (ii) Discipline subscribers other than separate MPID to report their volume due to the that is designated for exclusive use for
by exclusion from trading.’’ 17 CFR 242.300(a). Rule exemption. See ATS Approval Order, supra note 6,
4552 applies to any alternative trading system, as reporting each ATS’s transactions.20
79 FR at 4216 n.34. As discussed in more detail
that term is defined in Regulation ATS, that has below, rather than require Exempt ATSs to continue
Members that operate multiple ATSs or
filed a Form ATS with the Commission. See Rule to self-report volume information pursuant to Rule engage in other lines of business
4552(a). 4552, FINRA has determined to require any ATS requiring the use of MPIDs are required
5 FINRA subsequently filed a proposed rule
that wishes to avail itself of the trade reporting
change to limit the reporting requirements in Rule exemption to provide FINRA with a link to this 17 See Rule 4552(b)(1). Thus, for example, a
4552 to equity securities and exclude TRACE- information on a publicly-available Web site.
Reportable Securities. See Securities Exchange Act typical reporting scenario (i.e., no federal holidays)
FINRA will include a link to this information on its requires ATSs to report the information for a given
Release No. 71911 (April 9, 2014), 79 FR 21316 ATS Web site so that it is readily accessible to
(April 15, 2014) (Notice of Filing and Immediate week by the second Tuesday following the week.
investors and the public. FINRA publishes the information regarding Tier 1
Effectiveness of File No. SR–FINRA–2014–017). 11 See Rule 4552(a) and (d)(4).
6 See Securities Exchange Act Release No. 71341 NMS stocks no earlier than the following Monday.
12 See Rule 4552(a).
(January 17, 2014), 79 FR 4213 (January 24, 2014) Information on all other equity securities subject to
13 See Regulatory Notice 14–07 (February 2014). FINRA trade reporting requirements is published
(Order Approving File No. SR–FINRA–2013–042)
(‘‘ATS Approval Order’’). The MPID Requirement 14 See Rule 4552(b). two weeks following the publication of information
was subsequently amended to permit the use of two 15 The volume information is available at for the Tier 1 NMS stocks.
18 See Rule 4552(b)(2).
MPIDs by a single ATS provided each MPID is used www.finra.org/ats.
only to report to either the Trade Reporting and 16 Tier 1 NMS stocks include those NMS stocks 19 See Rule 4552(c).
Compliance Engine (‘‘TRACE’’) or one or more of
asabaliauskas on DSK5VPTVN1PROD with NOTICES
in the S&P 500 Index or the Russell 1000 Index and 20 See Rule 6160 (Multiple MPIDs for Trade
FINRA’s equity reporting facilities. See Securities certain exchange-traded products. See NMS Plan to Reporting Facility Participants); Rule 6170 (Primary
Exchange Act Release No. 71911 (April 9, 2014), 79 Address Extraordinary Market Volatility. FINRA and Additional MPIDs for Alternative Display
FR 21316 (April 15, 2014) (Notice of Filing and makes changes to the Tier 1 NMS stocks in Facility Participants); Rule 6480 (Multiple MPIDs
Immediate Effectiveness of File No. SR–FINRA– accordance with the Indices. Changes to the S&P for Quoting and Trading in OTC Equity Securities).
2014–017). 500 are made on an as needed basis and are not As noted above, an ATS is permitted to use two
7 See Regulatory Notice 14–07 (February 2014).
subject to an annual or semi-annual reconstitution. separate MPIDs if one MPID is used exclusively for
8 See Securities Exchange Act Release No. 73340 S&P typically does not add new issues until they reporting transactions to TRACE and the other
(October 10, 2014), 79 FR 62500 (October 17, 2014) have been seasoned for six to twelve months. MPID is used exclusively for reporting transactions
(Notice of Filing and Immediate Effectiveness of Russell 1000 rebalancing typically takes places in to the equity trade reporting facilities. See Rule
File No. SR–FINRA–2014–042). June. 6160(d); Rule 6170(e); Rule 6480(d).
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![4078 Federal Register / Vol. 81, No. 15 / Monday, January 25, 2016 / Notices
to obtain and use multiple MPIDs, and differences between the self-reported calculation requirements and guidance,
if a firm operates multiple ATSs, each data and the trade reporting data have into Rules 6183 and 6625 and requires
ATS must have its own MPID. Firms are been detected by FINRA staff, these Exempt ATSs to provide FINRA with a
required to notify FINRA before differences have almost always been link to the information. The information
changing the usage of the MPID in any errors in the self-reporting of data by at that link must be publicly available
way (e.g., repurposing an MPID from ATSs rather than errors in calculating at no charge and must appear in a
reflecting ATS activity to other trading volume based on trade reporting data. substantially similar format as the ATS
activity at the firm). After an ATS is For example, FINRA has found errors volume information that FINRA makes
provided its MPID, any reporting by the such as ATSs including cancelled or available. Supplementary Material .01 to
ATS—either reporting trades to a FINRA reversed trades in the calculations or the rules makes clear that, in order for
TRF, the Alternative Display Facility, double-counting certain volume. data posted at the link to be in a
the OTC Reporting Facility, TRACE, or Based on this comparison over the ‘‘substantially similar format’’ under the
reporting orders to the Order Audit Trail past several months, FINRA believes rule, the data must include the same
System (‘‘OATS’’)—must include the that, going forward, disseminating ATS data elements for the same timeframes,
MPID assigned to the particular ATS, volume information based on trade be accessible in the same manner as
and the member must use the separate reporting data, rather than self-reported FINRA makes data available (e.g.,
MPID to report all transactions executed data, will provide a more accurate downloadable), and include data for the
within the ATS to the appropriate calculation of ATS volume. same time periods (including current
reporting facility. Finally, the MPID Consequently, the proposed rule change and historical data). FINRA will use the
Rules prohibit a member from using an replaces the ATS reporting obligations link provided by the Exempt ATS and
MPID assigned to an ATS to report any in Rule 4552 with a dissemination make the link available on its public
transaction that is not executed within provision in Rule 6110 (for NMS stocks) Web site so that investors and other
the ATS and require members to have and Rule 6610 (for OTC Equity members of the public can freely and
policies and procedures in place to Securities). The information readily access Exempt ATS volume
ensure that trades reported with a disseminated by FINRA under the Rules information.
separate MPID obtained under the rules will be substantially the same as that Because the amendments to Rules
are restricted to trades executed within currently disseminated under Rule 6183 and 6625 incorporate the
the ATS. 4552; however, with the exception of calculation provisions from Rule 4552,
Exempt ATSs, the obligation to the calculation of Exempt ATS volume
(ii) MPID Requirement Implementation calculate the information will shift from information will not change as a result
and Evaluation the ATSs to FINRA. As discussed below of the proposed rule change; however,
Under FINRA’s trade reporting rules, and noted above, however, some of the the information will be published by the
orders that are crossed by an ATS are data calculations will change for ATSs Exempt ATS with a link from FINRA’s
reported to the appropriate FINRA trade that match orders using an Exempt ATS Web site rather than be reported to
reporting facility by the ATS.21 The and ATSs that otherwise have unique FINRA and displayed directly on
MPID Requirement—which requires trade reporting situations that result in FINRA’s Web site. By shifting the basis
ATSs to use a single, unique MPID trade reporting data not aligning with of ATS Data from self-reported data to
when reporting trades within the ATS to the ATS’s current calculation trade reporting data, the calculations,
an equity trade reporting facility— methodology under Rule 4552. and thus the displayed data, will change
became effective on February 2, 2015. primarily for those ATSs that currently
Since that time, FINRA has been able to (iii) Exempt ATSs
exclude transactions involving Exempt
calculate the trading volume for ATSs, By shifting ATS volume calculations ATSs from their reports under Rule
other than Exempt ATSs, through the from self-reported ATS data to trade 4552. These ATSs report trades to
trade reports submitted using the ATS’s reporting data, FINRA will not have FINRA using their ATS MPID (including
MPID. FINRA has been comparing the transaction information for Exempt those trades that are matched through
information reported by ATSs pursuant ATSs because they do not report trades an Exempt ATS); consequently, those
to Rule 4552 to information generated to FINRA under existing exemptive trades involving Exempt ATSs that are
by FINRA from trade reports since the rules.23 Because FINRA believes this currently excluded pursuant to
MPID Requirement was implemented. information will remain important to Supplementary Material .01 to Rule
For most weeks since the investors and to the public, Exempt 4552 will be included in the volume
implementation of the MPID ATSs that wish to continue to have an calculations once the calculations are
Requirement, over 75% of ATSs have exemption from the trade reporting based on trade reporting data.24
exact matches between self-reported requirements must continue to calculate
data and trade reporting data, and there their volume in the same manner they (iv) ATS Block Data
has been a 99.99% overall match rate currently do under Rule 4552; however, With the implementation of the MPID
between self-reported ATS volume and rather than report the information to Requirement, FINRA now has access to
trade reporting volume for ATSs that FINRA, the proposed rule change moves trade-by-trade reporting data from ATSs.
submit trade reports on the same basis the requirement, including all of the The MPID Requirement also allows
that they calculate volume information FINRA to aggregate and categorize ATS
pursuant to Rule 4552.22 Where guidance or exemptions, will not match: One is an trading data in additional ways, and
Exempt ATS; one ATS reports trades to a FINRA FINRA has been considering additional
asabaliauskas on DSK5VPTVN1PROD with NOTICES
21 See Securities Exchange Act Release No. 58903 facility but excludes trades that are matched on an data that may be useful to investors and
(November 5, 2008), 73 FR 67905, at 67906 Exempt ATS pursuant to the guidance on volume
calculation in Supplementary Material .01 to Rule
the public, particularly with respect to
(November 17, 2008) (Order Approving File No.
SR–FINRA–2008–011) (‘‘Under the proposed rule 4552; and one ATS matches orders but routes some larger-sized, or ‘‘block,’’ trades.
change, an [ATS] . . . would be the executing party of those matched orders for execution to a third
and would have the reporting obligation where the party broker-dealer that executes and reports the 24 This category of trades will also be included in
transaction is executed on the ATS.’’); see also trade to FINRA. In each of these three unique the Exempt ATS’s volume calculations. FINRA will
Regulatory Notice 09–08 (January 2009). circumstances, the trade reports will not match the note this potential double-counting on its Web site
22 The 99.99% match rate excludes three ATSs data reported pursuant to Rule 4552. to ensure users of the ATS data are aware of this
that trade equity securities and, under current 23 See Rules 6183 and 6625. double-counting.
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![4080 Federal Register / Vol. 81, No. 15 / Monday, January 25, 2016 / Notices
described above would not impose any as the Commission may designate, it has 10:00 a.m. and 3:00 p.m. Copies of such
additional reporting requirements on become effective pursuant to Section filing also will be available for
ATSs because the data will be derived 19(b)(3)(A) of the Act 33 and Rule 19b– inspection and copying at the principal
solely from trade reports submitted to 4(f)(6) thereunder.34 office of FINRA. All comments received
the FINRA equity trade reporting At any time within 60 days of the will be posted without change; the
facilities. FINRA believes that the filing of the proposed rule change, the Commission does not edit personal
proposal will have minimal to no Commission summarily may identifying information from
impact on firms from a systems temporarily suspend such rule change if submissions. You should submit only
development perspective while it appears to the Commission that such information that you wish to make
significantly benefiting the marketplace action is necessary or appropriate in the available publicly. All submissions
as a whole. Thus, the proposal will public interest, for the protection of should refer to File Number SR–FINRA–
provide additional transparency into investors, or otherwise in furtherance of 2016–002, and should be submitted on
ATS trading activity by enabling market the purposes of the Act. If the or before February 16, 2016.
participants and investors to have a Commission takes such action, the For the Commission, by the Division of
better understanding of ATS block Commission shall institute proceedings Trading and Markets, pursuant to delegated
trading volume at no required cost to to determine whether the proposed rule authority.35
firms or ATSs. should be approved or disapproved. Robert W. Errett,
The proposed rule change would
IV. Solicitation of Comments Deputy Secretary.
expand the benefits of FINRA’s ATS
Interested persons are invited to [FR Doc. 2016–01308 Filed 1–22–16; 8:45 am]
transparency program by providing
additional transparency on monthly submit written data, views, and BILLING CODE 8011–01–P
aggregate block trading on ATSs. The arguments concerning the foregoing,
additional information may help market including whether the proposed rule
participants and investors to enhance change is consistent with the Act. SECURITIES AND EXCHANGE
their understanding of trading activity Comments may be submitted by any of COMMISSION
on ATSs and inform routing decisions the following methods:
based on this information. As discussed [File No. 500–1]
Electronic Comments
above, the proposal to publish ATS
block trading volume would not impose • Use the Commission’s Internet In the Matter of Vadda Energy Corp.;
any additional reporting requirements comment form (http://www.sec.gov/ Order of Suspension of Trading
on firms, and as a result would have no rules/sro.shtml); or
• Send an email to rule-comments@ January 21, 2016.
direct impact on firms. Some firms may
choose to incur costs to verify the sec.gov. Please include File Number SR– It appears to the Securities and
information FINRA publishes, but these FINRA–2016–002 on the subject line. Exchange Commission that there is a
cost are voluntary and are also likely to Paper Comments lack of current and accurate information
be minimal. concerning the securities of Vadda
• Send paper comments in triplicate Energy Corp. (CIK No. 1082492), a
C. Self-Regulatory Organization’s to Secretary, Securities and Exchange Florida corporation with its principal
Statement on Comments on the Commission, 100 F Street NE., place of business listed as Flower
Proposed Rule Change Received From Washington, DC 20549–1090. Mound, Texas with stock quoted on
Members, Participants, or Others All submissions should refer to File OTC Link (previously ‘Pink Sheets’)
Written comments were neither Number SR–FINRA–2016–002. This file operated by OTC Markets Group Inc.
solicited nor received. As noted above, number should be included on the (‘OTC Link’) under the ticker symbol
however, FINRA received written subject line if email is used. To help the VDDA, because it has not filed any
comments on the proposed rule change Commission process and review your periodic reports since it filed its
to adopt Rule 4552 and the MPID comments more efficiently, please use registration statement on September 30,
Requirement, many of which requested only one method. The Commission will 2013. On October 9, 2015, a
that FINRA eliminate Rule 4552 once post all comments on the Commission’s delinquency letter was sent by the
the MPID Requirement was Internet Web site (http://www.sec.gov/ Division of Corporation Finance to
implemented and functioning as rules/sro.shtml). Copies of the Vadda Energy requesting compliance
intended.32 The current proposed rule submission, all subsequent with its periodic filing obligations, and
change addresses this concern amendments, all written statements Vadda Energy received the delinquency
expressed by earlier commenters by with respect to the proposed rule letter on October 15, 2015, but failed to
eliminating the reporting requirements change that are filed with the cure its delinquencies.
in Rule 4552. Commission, and all written The Commission is of the opinion that
communications relating to the the public interest and the protection of
III. Date of Effectiveness of the proposed rule change between the
Proposed Rule Change and Timing for investors require a suspension of trading
Commission and any person, other than in the securities of the above-listed
Commission Action those that may be withheld from the company.
Because the foregoing proposed rule public in accordance with the
Therefore, it is ordered, pursuant to
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change does not: (i) Significantly affect provisions of 5 U.S.C. 552, will be
the protection of investors or the public available for Web site viewing and Section 12(k) of the Securities Exchange
interest; (ii) impose any significant printing in the Commission’s Public Act of 1934, that trading in the
burden on competition; and (iii) become Reference Room, 100 F Street NE., securities of the above-listed company is
operative for 30 days from the date on Washington, DC 20549 on official suspended for the period from 9:30 a.m.
which it was filed, or such shorter time business days between the hours of EST on January 21, 2016, through 11:59
p.m. EST on February 3, 2016.
32 See ATS Approval Order, supra note 6, 79 FR 33 15 U.S.C. 78s(b)(3)(A).
at 4215. 34 17 CFR 240.19b–4(f)(6). 35 17 CFR 200.30–3(a)(12).
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Document Created: 2018-02-02 12:35:19
Document Modified: 2018-02-02 12:35:19
| 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 4076 |
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