81 FR 95247 - Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to Reporting Transactions in U.S. Treasury Securities to the Trade Reporting and Compliance Engine
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 81, Issue 248 (December 27, 2016)
Federal Register Volume 81, Issue 248 (December 27, 2016)
| Page Range | 95247-95250 | |
| FR Document | 2016-31112 |
[Federal Register Volume 81, Number 248 (Tuesday, December 27, 2016)] [Notices] [Pages 95247-95250] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-31112] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-79620; File No. SR-FINRA-2016-046] Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to Reporting Transactions in U.S. Treasury Securities to the Trade Reporting and Compliance Engine December 20, 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 December 14, 2016, Financial Industry Regulatory Authority, Inc. (``FINRA'') filed with the Securities and Exchange Commission (``Commission'') the proposed rule change as described in Items I and II below, which Items have been prepared by FINRA. 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. --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change FINRA is proposing to amend FINRA Rule 6710 to clarify the definitions of ``Auction Transaction'' and ``When-Issued Transaction'' for the purposes of reporting transactions in U.S. Treasury Securities to the Trade Reporting and Compliance Engine (``TRACE''). Below is the text of the proposed rule change. Proposed new language is in italics; proposed deletions are in brackets. * * * * * 6000. QUOTATION AND TRANSACTION REPORTING FACILITIES * * * * * 6700. TRADE REPORTING AND COMPLIANCE ENGINE (TRACE) 6710. Definitions The terms used in this Rule 6700 Series shall have the same meaning as those defined in the FINRA By-Laws and rules unless otherwise specified. For the purposes of this Rule 6700 Series, the following terms have the following meaning: (a) through (ee) No Change. (ff) ``Collateralized Debt Obligation'' (``CDO'') means a type of Securitized Product backed by fixed-income assets [[Page 95248]] (such as bonds, receivables on loans, or other debt) or derivatives of these fixed-income assets, structured in multiple classes or tranches with each class or tranche entitled to receive distributions of principal and/or interest in accordance with the requirements adopted for the specific class or tranche. A CDO includes, but is not limited to, a collateralized loan obligation (``CLO'') and a collateralized bond obligation (``CBO''). ([ff]gg) ``Auction'' means the bidding process by which the U.S. Department of the Treasury sells marketable securities to the public pursuant to Part 356 of Title 31 of the Code of Federal Regulations. ([gg]hh) ``Auction Transaction'' means [the purchase of] a transaction in which a member is awarded a U.S. Treasury Security in an Auction. ([hh]ii) ``When-Issued Transaction'' means a transaction in a U.S. Treasury Security that is executed before the [Auction for] issuance of the security.Supplementary Material: ------ .01 No Change. * * * * * 6730. Transaction Reporting (a) through (b) No Change. (c) Transaction Information To Be Reported Each TRACE trade report shall contain the following information: (1) through (2) No Change. (3) Price of the transaction (or the elements necessary to calculate price, which are contract amount and accrued interest) or, for When-Issued Transactions in U.S. Treasury Securities executed before the Auction for the security, the yield as required by paragraph (d)(1) of this Rule[below]; (4) through (14) No Change. (d) Procedures for Reporting Price, Capacity, Volume (1) Price (A) Except as noted in subparagraph (B) [for When-Issued Transactions in U.S. Treasury Securities], for principal transactions, report the price, which must include the mark-up or mark-down. (However, if a price field is not available, report the contract amount and, if applicable, the accrued interest.) For agency transactions, report the price, which must exclude the commission. (However, if a price field is not available, report the contract amount and, if applicable, the accrued interest.) Report the total dollar amount of the commission if one is assessed on the transaction. Notwithstanding the foregoing, a member is not required to include a commission, mark- up or mark-down where one is not assessed on a trade-by-trade basis at the time of the transaction or where the amount is not known at the time the trade report is due. A member must use the ``No Remuneration'' indicator described in paragraph (d)(4)(F) where a trade report does not reflect either a commission, mark-up or mark-down, except for an inter-dealer transaction, a ``List or Fixed Offering Price Transaction,'' as defined in Rule 6710(q), or a ``Takedown Transaction,'' as defined in Rule 6710(r). (B) For When-Issued Transactions in U.S. Treasury Securities executed before the Auction for the security and conducted on a principal basis, report the yield, which must include the mark-up or mark-down, of the security in lieu of price. For When-Issued Transactions in U.S. Treasury Securities executed before the Auction for the security and conducted on an agency basis, report the yield, which must exclude the commission, of the security in lieu of price. Report the total dollar amount of the commission. (2) through (4) No Change. (e) through (f) No Change. Supplementary Material: ------ .01 through .05 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 the Statutory Basis for, the Proposed Rule Change 1. Purpose On October 18, 2016, the Commission approved a proposed rule change to require FINRA members to report certain transactions in U.S. Treasury Securities to TRACE.\3\ The reporting requirements will be implemented beginning July 10, 2017.\4\ As part of the proposed rule change, FINRA adopted three new defined terms to address members' reporting requirements involving transactions in U.S. Treasury Securities that occur on a ``when-issued'' basis or that occur as part of an auction of U.S. Treasury Securities: ``Auction,'' ``Auction Transaction,'' and ``When-Issued Transaction.'' FINRA is amending the definitions of ``Auction Transaction'' and ``When-Issued Transaction'' to clarify the application of those terms, and is amending Rule 6730 to clarify the reporting requirements in light of the changes to the definition of ``When-Issued Transaction.'' \5\ --------------------------------------------------------------------------- \3\ See Securities Exchange Act Release No. 79116 (October 18, 2016), 81 FR 73167 (October 24, 2016) (Notice of Filing of Amendment No. 1 and Order Granting Accelerated Approval of File No. SR-FINRA- 2016-027). \4\ See Regulatory Notice 16-39 (October 2016). \5\ On September 23, 2016, the Commission approved SR-FINRA- 2016-023, which added a definition of ``Collateralized Debt Obligation'' to Rule 6710 as paragraph (ff). See Securities Exchange Act Release No. 78925 (September 23, 2016), 81 FR 67023 (September 29, 2016) (Order Approving File No. SR-FINRA-2016-023). The proposed rule change also amends the paragraph designations for the definitions of ``Auction,'' ``Auction Transaction,'' and ``When- Issued Transaction'' as (gg), (hh), and (ii), respectively. --------------------------------------------------------------------------- First, FINRA is amending the terminology in the definition of ``Auction Transaction'' to conform to the regulations applicable to auctions of U.S. Treasury Securities. As adopted, the term ``Auction Transaction'' is defined as ``the purchase of a U.S. Treasury Security in an Auction.'' \6\ Pursuant to the amendments to Rule 6730(e), Auction Transactions are exempt from the TRACE reporting requirements. --------------------------------------------------------------------------- \6\ The term ``Auction'' means ``the bidding process by which the U.S. Department of the Treasury sells marketable securities to the public pursuant to Part 356 of Title 31 of the Code of Federal Regulations.'' --------------------------------------------------------------------------- When conducting auctions, the Department of the Treasury accepts bids and determines awards pursuant to the process set forth in the applicable regulations.\7\ Securities awarded during the auction process must then be paid for by the issue date established in the announcement for the auction.\8\ To incorporate the concept of ``awards'' and maintain consistency with the applicable Treasury regulations, FINRA is amending the definition of ``Auction Transaction'' to mean ``the [sic] \9\ transaction in which a member is awarded a U.S. Treasury Security in an Auction.'' Consequently, the acquisition of U.S. Treasury Securities on the issue [[Page 95249]] date as a result of a successful bid in an Auction will not be reportable to TRACE by a FINRA member. Any secondary market transactions in the security following the initial acquisition on the issue date will be reportable. --------------------------------------------------------------------------- \7\ See 31 CFR 356.20 (How does the Treasury determine auction awards?). \8\ See 31 CFR 356.25 (How does the settlement process work?). \9\ The proposed rule text states: `` `Auction Transaction' means a transaction in which a member is awarded a U.S. Treasury Security in an Auction.'' --------------------------------------------------------------------------- Second, FINRA is amending the definition of ``When-Issued Transaction'' to conform to more common usage of the term. As adopted, the term ``When-Issued Transaction'' was defined as ``a transaction in a U.S. Treasury Security that is executed before the Auction for the security.'' Although ``when-issued'' trading typically refers to any trading conducted between the announcement of an auction for a U.S. Treasury Security and the issue date, which can often be several days after the auction for the security, FINRA defined the term to extend only until the auction for the security to reflect the change in how transactions are priced before and after the auction (i.e., transactions are generally conducted on a yield basis before the auction and on a price basis after the auction). To conform the definition in the TRACE rules to more common usage, FINRA is amending the definition of ``When-Issued Transaction'' to mean ``a transaction in a U.S. Treasury Security that is executed before the issuance of the security.'' Under the amendment, therefore, the timing of When-Issued Transactions will still commence with the announcement of the Auction, but any transaction in the security subject to the Auction will be considered a ``When-Issued Transaction'' until the date the security is issued rather than the date the security is auctioned. Members will still be required to report yield, rather than price, for When-Issued Transactions up until the Auction for the security and price following the Auction; however, all When-Issued Transactions, both before and after the Auction up until the issue date, must be reported with the appropriate indicator. Because of the change in definition, FINRA also is amending Rule 6730 to clarify that, although the definition of the term ``When-Issued Transaction'' is being amended, there are no changes as to how members report price or yield on these transactions.\10\ --------------------------------------------------------------------------- \10\ Similarly, the guidance FINRA has provided on the use of the When-Issued Transaction indicator and reopening transactions does not change as a result of these amendments. See Regulatory Notice 16-39 (October 2016). --------------------------------------------------------------------------- FINRA has filed the proposed rule change for immediate effectiveness. The implementation date will be July 10, 2017. 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 believes that the amendments will conform the terms in FINRA rules to their more common usage and use of these terms in applicable Treasury regulations. FINRA believes the amended definitions may reduce confusion regarding usage of the terms in the FINRA TRACE rules. --------------------------------------------------------------------------- \11\ 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. Because the amendments are limited to conforming the terms in FINRA rules to their more common usage and to the use of the terms in applicable Treasury regulations, FINRA believes that amending the definitions may reduce confusion regarding usage of the terms and will not result in any burden on competition. 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 \12\ and Rule 19b- 4(f)(6) thereunder.\13\ --------------------------------------------------------------------------- \12\ 15 U.S.C. 78s(b)(3)(A). \13\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) requires a self-regulatory organization to give the Commission written notice of its intent to file the proposed rule change, along with a brief description and text of the proposed rule change, at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. FINRA has satisfied this requirement. --------------------------------------------------------------------------- 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-2016-046 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-2016-046. 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 [[Page 95250]] available publicly. All submissions should refer to File Number SR- FINRA-2016-046, and should be submitted on or before January 17, 2017. --------------------------------------------------------------------------- \14\ 17 CFR 200.30-3(a)(12). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\14\ Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2016-31112 Filed 12-23-16; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 81, No. 248 / Tuesday, December 27, 2016 / Notices 95247
protection of investors and the public including whether the proposed rule SECURITIES AND EXCHANGE
interest. In this filing, the Exchange has change is consistent with the Act. COMMISSION
asked that the Commission waive the Comments may be submitted by any of
requirement that the proposed rule the following methods: [Release No. 34–79620; File No. SR–FINRA–
change not become operative for 30 days 2016–046]
Electronic Comments
after the date of the filing. Self-Regulatory Organizations;
The Exchange notes the proposed rule • Use the Commission’s Internet Financial Industry Regulatory
is intended to clarify the differences in comment form (http://www.sec.gov/ Authority, Inc.; Notice of Filing and
the handling of certain orders entered rules/sro.shtml); or
into the system by different protocols. Immediate Effectiveness of a Proposed
The Exchange notes that orders will be • Send an email to rule-comments@ Rule Change Relating to Reporting
treated as consistently as possible across sec.gov. Please include File Number SR– Transactions in U.S. Treasury
the Test Groups and the Control Group NASDAQ–2016–171 on the subject line. Securities to the Trade Reporting and
while complying with each grouping’s Compliance Engine
Paper Comments
varied quoting and trading December 20, 2016.
requirements. Additionally, the • Send paper comments in triplicate Pursuant to Section 19(b)(1) of the
Exchange proposed to remove to Brent J. Fields, Secretary, Securities Securities Exchange Act of 1934
Commentary .14 because it is no longer and Exchange Commission, 100 F Street (‘‘Act’’) 1 and Rule 19b–4 thereunder,2
necessary. NE., Washington, DC 20549–1090. notice is hereby given that on December
The Commission believes that 14, 2016, Financial Industry Regulatory
waiving the 30-day operative delay is All submissions should refer to File
Number SR–NASDAQ–2016–171. This Authority, Inc. (‘‘FINRA’’) filed with the
consistent with the protection of Securities and Exchange Commission
investors and the public interest file number should be included on the
subject line if email is used. To help the (‘‘Commission’’) the proposed rule
because the proposal clarifies the
Commission process and review your change as described in Items I and II
Exchange’s rules and provides
comments more efficiently, please use below, which Items have been prepared
transparency to members with regards
only one method. The Commission will by FINRA. The Commission is
to the handling of certain orders entered
post all comments on the Commission’s publishing this notice to solicit
via OUCH and FLITE as well as RASH,
Internet Web site (http://www.sec.gov/ comments on the proposed rule change
QIX, or FIX protocols for locked or
rules/sro.shtml). from interested persons.
crossed orders in Test Group Three Pilot
Securities. The Commission notes that Copies of the submission, all I. Self-Regulatory Organization’s
the Exchange proposed to remove the subsequent amendments, all written Statement of the Terms of Substance of
functionality described in Commentary statements with respect to the proposed the Proposed Rule Change
.14 and make the necessary rule change that are filed with the FINRA is proposing to amend FINRA
corresponding systems changes in Commission, and all written Rule 6710 to clarify the definitions of
Partial Amendment No. 2 to Nasdaq– communications relating to the ‘‘Auction Transaction’’ and ‘‘When-
2016–126, which the Commission proposed rule change between the Issued Transaction’’ for the purposes of
approved.26 The Exchange notes that it Commission and any person, other than reporting transactions in U.S. Treasury
was able to implement the systems those that may be withheld from the Securities to the Trade Reporting and
changes and that they became fully public in accordance with the Compliance Engine (‘‘TRACE’’).
operational on the December 14, 2016. provisions of 5 U.S.C. 552, will be Below is the text of the proposed rule
Therefore, the Commission hereby available for Web site viewing and
waives the 30-day operative delay and change. Proposed new language is in
printing in the Commission’s Public italics; proposed deletions are in
designates the proposed rule change to Reference Room, 100 F Street NE.,
be operative on December 14, 2016.27 brackets.
Washington, DC 20549, on official
At any time within 60 days of the business days between the hours of * * * * *
filing of the proposed rule change, the 10:00 a.m. and 3:00 p.m. Copies of the 6000. QUOTATION AND
Commission summarily may filing also will be available for TRANSACTION REPORTING
temporarily suspend such rule change if inspection and copying at the principal FACILITIES
it appears to the Commission that such office of the Exchange. All comments
action is: (i) Necessary or appropriate in * * * * *
received will be posted without change;
the public interest; (ii) for the protection the Commission does not edit personal 6700. TRADE REPORTING AND
of investors; or (iii) otherwise in identifying information from COMPLIANCE ENGINE (TRACE)
furtherance of the purposes of the Act. submissions. You should submit only
If the Commission takes such action, the 6710. Definitions
information that you wish to make
Commission shall institute proceedings available publicly. All submissions The terms used in this Rule 6700
to determine whether the proposed rule should refer to File Number SR– Series shall have the same meaning as
should be approved or disapproved. NASDAQ–2016–171 and should be those defined in the FINRA By-Laws
IV. Solicitation of Comments submitted on or before January 17, 2017. and rules unless otherwise specified.
For the purposes of this Rule 6700
Interested persons are invited to For the Commission, by the Division of
asabaliauskas on DSK3SPTVN1PROD with NOTICES
Trading and Markets, pursuant to delegated
Series, the following terms have the
submit written data, views, and following meaning:
authority.28
arguments concerning the foregoing, (a) through (ee) No Change.
Eduardo A. Aleman,
(ff) ‘‘Collateralized Debt Obligation’’
26 See supra note 5. Assistant Secretary.
27 For
(‘‘CDO’’) means a type of Securitized
purposes only of waiving the operative [FR Doc. 2016–31108 Filed 12–23–16; 8:45 am]
delay for this proposal, the Commission has
Product backed by fixed-income assets
BILLING CODE 8011–01–P
considered the proposed rule’s impact on
1 15 U.S.C. 78s(b)(1).
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f). 28 17 CFR 200.30–3(a)(12). 2 17 CFR 240.19b–4.
VerDate Sep<11>2014 20:45 Dec 23, 2016 Jkt 241001 PO 00000 Frm 00150 Fmt 4703 Sfmt 4703 E:\FR\FM\27DEN1.SGM 27DEN1](https://thefederalregister.org/doc/81_FR_95495/page/1.svg)
![95248 Federal Register / Vol. 81, No. 248 / Tuesday, December 27, 2016 / Notices
(such as bonds, receivables on loans, or foregoing, a member is not required to requirements will be implemented
other debt) or derivatives of these fixed- include a commission, mark-up or beginning July 10, 2017.4 As part of the
income assets, structured in multiple mark-down where one is not assessed proposed rule change, FINRA adopted
classes or tranches with each class or on a trade-by-trade basis at the time of three new defined terms to address
tranche entitled to receive distributions the transaction or where the amount is members’ reporting requirements
of principal and/or interest in not known at the time the trade report involving transactions in U.S. Treasury
accordance with the requirements is due. A member must use the ‘‘No Securities that occur on a ‘‘when-
adopted for the specific class or tranche. Remuneration’’ indicator described in issued’’ basis or that occur as part of an
A CDO includes, but is not limited to, paragraph (d)(4)(F) where a trade report auction of U.S. Treasury Securities:
a collateralized loan obligation (‘‘CLO’’) does not reflect either a commission, ‘‘Auction,’’ ‘‘Auction Transaction,’’ and
and a collateralized bond obligation mark-up or mark-down, except for an ‘‘When-Issued Transaction.’’ FINRA is
(‘‘CBO’’). inter-dealer transaction, a ‘‘List or Fixed amending the definitions of ‘‘Auction
([ff]gg) ‘‘Auction’’ means the bidding Offering Price Transaction,’’ as defined Transaction’’ and ‘‘When-Issued
process by which the U.S. Department in Rule 6710(q), or a ‘‘Takedown Transaction’’ to clarify the application
of the Treasury sells marketable Transaction,’’ as defined in Rule of those terms, and is amending Rule
securities to the public pursuant to Part 6710(r). 6730 to clarify the reporting
356 of Title 31 of the Code of Federal (B) For When-Issued Transactions in requirements in light of the changes to
Regulations. U.S. Treasury Securities executed before the definition of ‘‘When-Issued
([gg]hh) ‘‘Auction Transaction’’ means the Auction for the security and Transaction.’’ 5
[the purchase of] a transaction in which conducted on a principal basis, report First, FINRA is amending the
a member is awarded a U.S. Treasury the yield, which must include the mark- terminology in the definition of
Security in an Auction. up or mark-down, of the security in lieu ‘‘Auction Transaction’’ to conform to
([hh]ii) ‘‘When-Issued Transaction’’ of price. For When-Issued Transactions the regulations applicable to auctions of
means a transaction in a U.S. Treasury in U.S. Treasury Securities executed U.S. Treasury Securities. As adopted,
Security that is executed before the before the Auction for the security and the term ‘‘Auction Transaction’’ is
[Auction for] issuance of the security. conducted on an agency basis, report defined as ‘‘the purchase of a U.S.
the yield, which must exclude the Treasury Security in an Auction.’’ 6
• • • Supplementary Material: ——— commission, of the security in lieu of Pursuant to the amendments to Rule
.01 No Change. price. Report the total dollar amount of 6730(e), Auction Transactions are
the commission. exempt from the TRACE reporting
* * * * *
(2) through (4) No Change. requirements.
6730. Transaction Reporting (e) through (f) No Change. When conducting auctions, the
Department of the Treasury accepts bids
(a) through (b) No Change. • • • Supplementary Material: ——— and determines awards pursuant to the
(c) Transaction Information To Be .01 through .05 No Change. process set forth in the applicable
Reported * * * * * regulations.7 Securities awarded during
Each TRACE trade report shall the auction process must then be paid
II. Self-Regulatory Organization’s for by the issue date established in the
contain the following information:
Statement of the Purpose of, and announcement for the auction.8 To
(1) through (2) No Change.
Statutory Basis for, the Proposed Rule incorporate the concept of ‘‘awards’’
(3) Price of the transaction (or the
Change and maintain consistency with the
elements necessary to calculate price,
which are contract amount and accrued In its filing with the Commission, applicable Treasury regulations, FINRA
FINRA included statements concerning is amending the definition of ‘‘Auction
interest) or, for When-Issued
the purpose of and basis for the Transaction’’ to mean ‘‘the [sic] 9
Transactions in U.S. Treasury Securities
proposed rule change and discussed any transaction in which a member is
executed before the Auction for the
comments it received on the proposed awarded a U.S. Treasury Security in an
security, the yield as required by
rule change. The text of these statements Auction.’’ Consequently, the acquisition
paragraph (d)(1) of this Rule[below];
may be examined at the places specified of U.S. Treasury Securities on the issue
(4) through (14) No Change.
in Item IV below. FINRA has prepared
(d) Procedures for Reporting Price, summaries, set forth in sections A, B,
4 See Regulatory Notice 16–39 (October 2016).
5 On September 23, 2016, the Commission
Capacity, Volume and C below, of the most significant approved SR–FINRA–2016–023, which added a
(1) Price aspects of such statements. definition of ‘‘Collateralized Debt Obligation’’ to
Rule 6710 as paragraph (ff). See Securities Exchange
(A) Except as noted in subparagraph A. Self-Regulatory Organization’s Act Release No. 78925 (September 23, 2016), 81 FR
(B) [for When-Issued Transactions in Statement of the Purpose of, and the 67023 (September 29, 2016) (Order Approving File
U.S. Treasury Securities], for principal Statutory Basis for, the Proposed Rule No. SR–FINRA–2016–023). The proposed rule
change also amends the paragraph designations for
transactions, report the price, which Change the definitions of ‘‘Auction,’’ ‘‘Auction
must include the mark-up or mark- Transaction,’’ and ‘‘When-Issued Transaction’’ as
1. Purpose
down. (However, if a price field is not (gg), (hh), and (ii), respectively.
available, report the contract amount On October 18, 2016, the Commission 6 The term ‘‘Auction’’ means ‘‘the bidding process
and, if applicable, the accrued interest.) approved a proposed rule change to by which the U.S. Department of the Treasury sells
asabaliauskas on DSK3SPTVN1PROD with NOTICES
marketable securities to the public pursuant to Part
For agency transactions, report the require FINRA members to report 356 of Title 31 of the Code of Federal Regulations.’’
price, which must exclude the certain transactions in U.S. Treasury 7 See 31 CFR 356.20 (How does the Treasury
commission. (However, if a price field is Securities to TRACE.3 The reporting determine auction awards?).
not available, report the contract 8 See 31 CFR 356.25 (How does the settlement
amount and, if applicable, the accrued 3 See Securities Exchange Act Release No. 79116 process work?).
(October 18, 2016), 81 FR 73167 (October 24, 2016) 9 The proposed rule text states: ‘‘ ‘Auction
interest.) Report the total dollar amount (Notice of Filing of Amendment No. 1 and Order Transaction’ means a transaction in which a
of the commission if one is assessed on Granting Accelerated Approval of File No. SR– member is awarded a U.S. Treasury Security in an
the transaction. Notwithstanding the FINRA–2016–027). Auction.’’
VerDate Sep<11>2014 20:45 Dec 23, 2016 Jkt 241001 PO 00000 Frm 00151 Fmt 4703 Sfmt 4703 E:\FR\FM\27DEN1.SGM 27DEN1](https://thefederalregister.org/doc/81_FR_95495/page/2.svg)
![95250 Federal Register / Vol. 81, No. 248 / Tuesday, December 27, 2016 / Notices
available publicly. All submissions The text of the proposed rule change connect to the new environment during
should refer to File Number SR–FINRA– is available on the Exchange’s Web site this NOM Refresh Period.4 As of
2016–046, and should be submitted on at http://nasdaq.cchwallstreet.com, at December 1, 2016, only new SQF Ports
or before January 17, 2017. the principal office of the Exchange, and were utilized and the old SQF Ports
For the Commission, by the Division of at the Commission’s Public Reference were eliminated.
Trading and Markets, pursuant to delegated Room. At this time, the Exchange is
authority.14 proposing to eliminate the Fixed SQF
II. Self-Regulatory Organization’s
Eduardo A. Aleman, Port Fee and adopt the following
Statement of the Purpose of, and
Assistant Secretary. incremental cost model for SQF Port
Statutory Basis for, the Proposed Rule
[FR Doc. 2016–31112 Filed 12–23–16; 8:45 am] Fees, per port, per month:
Change
BILLING CODE 8011–01–P
In its filing with the Commission, the Number of SQF ports Monthly fee per
Exchange included statements port
SECURITIES AND EXCHANGE concerning the purpose of and basis for
First 5 ports ....................... $1,500 per port.
COMMISSION the proposed rule change and discussed Next 15 ports (6–20) ......... $1,000 per port.
any comments it received on the All ports over 20 ports (21 $500 per port.
[Release No. 34–79619; File No. SR– proposed rule change. The text of these
NASDAQ–2016–178] and above).
statements may be examined at the
Self-Regulatory Organizations; The places specified in Item IV below. The For example, if a NOM Market Maker
NASDAQ Stock Market LLC; Notice of Exchange has prepared summaries, set desired 21 SQF Ports in December 2016,
Filing and Immediate Effectiveness of forth in sections A, B, and C below, of the NOM Market Maker would be billed
Proposed Rule Change Related to SQF the most significant aspects of such $1,500 for the first 5 ports ($7,500), the
Ports statements. next 15 ports will be billed $1,000
A. Self-Regulatory Organization’s ($15,000) and the final port would be
December 20, 2016. billed $500 for a total SQF Port Fee for
Statement of the Purpose of, and
Pursuant to Section 19(b)(1) of the December of $23,000.
Securities Exchange Act of 1934 Statutory Basis for, the Proposed Rule
Change While NOM Market Makers will be
(‘‘Act’’),1 and Rule 19b–4 thereunder,2 assessed higher fees for each port under
notice is hereby given that on December 1. Purpose 20 ports as compared to the original
16, 2016, The NASDAQ Stock Market $750 SQF Port Fee prior to the
The Exchange proposes to amend the
LLC (‘‘Nasdaq’’ or ‘‘Exchange’’) filed implementation of the Fixed SQF Port
SQF Port Fees in Chapter XV, Section 3
with the Securities and Exchange Fee,5 the Exchange believes that costs
of the NOM Rules. The Exchange
Commission (‘‘SEC’’ or ‘‘Commission’’) will decline overall as a result of the
recently transitioned to state-of-the-art
the proposed rule change as described more efficient connectivity offered by
hardware and software architecture to
in Items I, II, and III, below, which Items the NOM Refresh and the need for fewer
achieve a more efficient and more
have been prepared by the Exchange. ports. The Exchange believes that it
robust infrastructure to support the
The Commission is publishing this continues to offer SQF Ports to NOM
growing needs of our Options
notice to solicit comments on the Market Makers at competitive prices.
Participants (‘‘NOM Refresh’’). In
proposed rule change from interested
connection with this recent NOM 2. Statutory Basis
persons.
Refresh, NOM Market Makers were
I. Self-Regulatory Organization’s required to make certain changes to The Exchange believes that its
Statement of the Terms of Substance of connect to the new NOM System via proposal is consistent with Section 6(b)
the Proposed Rule Change their SQF Ports. As a result of these of the Act,6 in general, and furthers the
changes to NOM, the number of SQF objectives of Sections 6(b)(4) and 6(b)(5)
The Exchange proposes to amend of the Act,7 in particular, in that it
Chapter XV, entitled ‘‘Options Pricing,’’ Ports required by NOM Market Makers
should be reduced, since a single provides for the equitable allocation of
at Section 3, entitled ‘‘NASDAQ reasonable dues, fees and other charges
Options Market—Ports and other connection may be utilized to quote
across all symbols. The Exchange among members and issuers and other
Services.’’ Chapter XV governs pricing persons using its facility, and is not
for Exchange members using the anticipates that NOM Market Makers
will benefit from the efficiency of the designed to permit unfair
NASDAQ Options Market LLC
(‘‘NOM’’), the Exchange’s facility for service that is available to them as a
4 For example if a NOM Market Maker obtained
executing and routing standardized result of the NOM Refresh.
1 new SQF Port to test during the NOM Refresh
equity and index options. The Exchange The Exchange provided NOM Market Period, the NOM Market Maker was not assessed a
proposes to amend Specialized Quote Makers with new SQF ports for new SQF Port Fee for that port, but only pay the
Feed (‘‘SQF’’) Port 3 Fees. connectivity so that NOM Market Fixed SQF Port Fee during the two months. The
Makers could support our migration Exchange notes that it is removing language related
to new NOM Market Makers that request SQF Ports
14 17 CFR 200.30–3(a)(12). from the old to the new SQF Ports after October 3, 2016 would be assessed $750 per
1 15 U.S.C. 78s(b)(1). during our symbol rollout period. port, per month between October 3, 2016 and
2 17 CFR 240.19b–4. During the months of October and November 30, 2016. This language is no longer
November 2016 (‘‘NOM Refresh necessary. The Exchange notes that no NOM Market
asabaliauskas on DSK3SPTVN1PROD with NOTICES
3 SQF ports are ports that receive inbound quotes
at any time within that month. The SQF Port allows Makers were subject to this fee during the NOM
Period’’) the Exchange offered NOM Refresh Period.
a NOM Market Maker to access information such as
execution reports and other relevant data through
Market Makers a Fixed SQF Port Fee, 5 Prior to the implementation of the Fixed SQF
a single feed. For example, this data would show which is the amount that was paid by Port Fee, the Exchange assessed an SQF Port Fee
which symbols are trading on NOM and the current the NOM Market Maker for SQF Ports of $750 per port, per month. See Securities
state of an options symbol (i.e., open for trading, Exchange Act Release No. 79105 (October 17, 2016),
for the month of August 2016. 81 FR 72844 (October 21, 2016) (SR–NASDAQ–
trading, halted or closed). NOM Market Makers rely
on data available through the SQF Port to provide
Currently, NOM Market Makers are not 2016–133).
them the necessary information to perform market assessed an SQF Port Fee for their use 6 15 U.S.C. 78f(b).
making activities. of the new version of the SQF Ports to 7 15 U.S.C. 78f(b)(4) and (5).
VerDate Sep<11>2014 20:45 Dec 23, 2016 Jkt 241001 PO 00000 Frm 00153 Fmt 4703 Sfmt 4703 E:\FR\FM\27DEN1.SGM 27DEN1](https://thefederalregister.org/doc/81_FR_95495/page/4.svg)
Document Created: 2018-02-14 09:13:15
Document Modified: 2018-02-14 09:13:15
| 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 95247 |
2025 Federal Register | Disclaimer | Privacy Policy
USC | CFR | eCFR