82 FR 13901 - Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing of a Proposed Rule Change To Amend Rule 6191 To Implement an Anonymous, Grouped Masking Methodology for Over-the-Counter Activity in Connection With Web Site Data Publication of Appendix B Data Pursuant to the Regulation NMS Plan To Implement a Tick Size Pilot Program
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 82, Issue 49 (March 15, 2017)
Federal Register Volume 82, Issue 49 (March 15, 2017)
| Page Range | 13901-13905 | |
| FR Document | 2017-05082 |
[Federal Register Volume 82, Number 49 (Wednesday, March 15, 2017)] [Notices] [Pages 13901-13905] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2017-05082] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-80193; File No. SR-FINRA-2017-006] Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing of a Proposed Rule Change To Amend Rule 6191 To Implement an Anonymous, Grouped Masking Methodology for Over-the-Counter Activity in Connection With Web Site Data Publication of Appendix B Data Pursuant to the Regulation NMS Plan To Implement a Tick Size Pilot Program March 9, 2017. 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 March 3, 2017, 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. 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 Rule 6191 to implement an anonymous, grouped masking methodology for over-the-counter (``OTC'') activity in connection with Web site data publication of Appendix B data pursuant to the Regulation NMS Plan to Implement a Tick Size Pilot Program (``Plan''). 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. [[Page 13902]] 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 Rule 6191(b) (Compliance with Data Collection Requirements) \3\ implements the data collection and Web site publication requirements of the Plan.\4\ Rule 6191(b)(2)(B) provides, among other things, that FINRA will publish data pursuant to Appendix B.I. and B.II. of the Plan on its Web site within 120 calendar days following month end at no charge,\5\ and that such publication will not identify the Trading Center that generated the data. Rule 6191(b)(3)(C) provides, among other things, that FINRA will publish data pursuant to Appendix B.IV. to the Plan on its Web site within 120 calendar days following month end at no charge, and that such publication will not identify the OTC Trading Center that generated the data. --------------------------------------------------------------------------- \3\ See, e.g., Securities Exchange Act Release No. 76484 (November 19, 2015), 80 FR 73858 (November 25, 2015) (Notice of Filing of File No. SR-FINRA-2015-048); see also Securities Exchange Act Release No. 77164 (February 17, 2016), 81 FR 9043 (February 23, 2016) (Notice of Filing of Partial Amendment No. 1 and Order Granting Accelerated Approval of File No. SR-FINRA-2015-048) (``Accelerated Approval Order''). \4\ The Participants filed the Plan to comply with an order issued by the Commission on June 24, 2014. See Letter from Brendon J. Weiss, Vice President, Intercontinental Exchange, Inc., to Secretary, Commission, dated August 25, 2014 (``SRO Tick Size Plan Proposal''). See Securities Exchange Act Release No. 72460 (June 24, 2014), 79 FR 36840 (June 30, 2014). See also Securities Exchange Act Release No. 74892 (May 6, 2015), 80 FR 27513 (May 13, 2015) (``Approval Order''). \5\ On November 30, 2016, the SEC granted exemptive relief to the Participants, and FINRA filed proposed rule changes, to, among other things, delay the publication of Web site data pursuant to Appendices B and C to the Plan until February 28, 2017, and to delay the ongoing Web site publication by ninety days such that it would be published within 120 calendar days following the end of the month. See, e.g., Letter from David S. Shillman, Associate Director, Division of Trading and Markets, Commission, to Marcia E. Asquith, Senior Vice President and Corporate Secretary, FINRA dated November 30, 2016; see also Securities Exchange Act Release No. 79424 (November 29, 2016), 81 FR 87603 (December 5, 2016) (Notice of Filing and Immediate Effectiveness of File No. SR-FINRA-2016-042). FINRA recently filed a proposed rule change to revert to the 30-day delay with regard to Appendix C data Web site publication. See File No. SR-FINRA-2017-005 (Proposed Rule Change to Amend FINRA Rule 6191 to Modify the Date of Appendix B Web site Data Publication Pursuant to the Regulation NMS Plan to Implement a Tick Size Pilot Program). --------------------------------------------------------------------------- In consultation with SEC staff, FINRA is proposing new supplementary material to Rule 6191 to implement the aggregation methodology described further below. Specifically, FINRA is proposing to provide for an anonymous, grouped masking methodology for Appendix B.I., B.II. and B.IV. data in furtherance of the Plan's requirement that the data made publicly available will not identify the Trading Center that generated the data.\6\ The proposed methodology also is intended to mitigate confidentiality concerns previously raised by commenters \7\ regarding the publication of data related to OTC activity. Chicago Stock Exchange, Inc. (``CHX'') is the designated examining authority (``DEA'') for a relatively small number of OTC Trading Centers; thus, FINRA also will incorporate the firms for which CHX is the DEA into the anonymous, grouped masking methodology and publish OTC-wide statistics for Appendix B.I., B.II. and B.IV. data on the FINRA Web site.\8\ --------------------------------------------------------------------------- \6\ See Section VII.(A) of the Plan (Collection of Trading Center Pilot Data). \7\ See infra note 20. \8\ In connection with the instant filing, FINRA and CHX requested exemptive relief from the Plan to permit the publication on the FINRA Web site of data relating to OTC activity pursuant to Appendix B.I., B.II. and B.IV. on an aggregated basis using an anonymous, grouped masking methodology. See Letter from Marcia E. Asquith, Executive Vice President, Board and External Relations, FINRA, to Robert W. Errett, Deputy Secretary, Commission, dated March 2, 2017. --------------------------------------------------------------------------- Grouping Methodology For purposes of the data to be made available on the FINRA Web site pursuant to the Plan, FINRA proposes to aggregate individual OTC Trading Center Appendix B data within groupings of Trading Centers by ATS and non-ATS categories, using an undisclosed methodology for assigning each Trading Center to a group. FINRA believes that an anonymous, grouped masking methodology for purposes of publishing the required data related to OTC activity will support the Plan's requirement that the data to be made publicly available will not identify the Trading Center that generated the data.\9\ In furtherance of this objective, the details of the methodology used to formulate the anonymous groupings will not be disclosed. FINRA believes that the proposed approach strikes an appropriate balance between mitigating confidentiality concerns while supporting the public availability of useful Plan data. --------------------------------------------------------------------------- \9\ See Section VII.(A) of the Plan. --------------------------------------------------------------------------- Trading Center group assignments will not be published and generally will remain unchanged for the duration of the data publication period, with the exception of the entrance of a new Trading Center (new FINRA member). The anonymized identifier used for each group will remain unchanged for the duration of the data publication period and the same groups and group identifiers will be used for all Appendix B data sets. The number of Trading Centers assigned to each group will not specifically be disclosed; however, each group will contain between five and 25 market participant identifiers (MPIDs). In addition, for each day's statistics, the number of MPIDs in each group with activity in any Pilot Security for that day will be disclosed. Disclosing the number of active MPIDs each day is intended to inform evaluators of the data of whether the number of Trading Centers reflected in the statistics each day has changed--for example, because a Trading Center in the group didn't register activity on a given day.\10\ --------------------------------------------------------------------------- \10\ FINRA will disclose the number of MPIDs in each group with activity in any Pilot Security for that day either within each Appendix B data set or in an associated file. --------------------------------------------------------------------------- Appendix B.I. Data Aggregation Methodology FINRA proposes to aggregate the Appendix B.I. data to be made publicly available on the FINRA Web site by aggregating statistics within each group by Pilot Security for each trading day. The methodology used for computing the statistics at the group level will be the same methodology used to compute these statistics at the Trading Center level in the non-public version of the data (and in the public version of the exchange data).\11\ Specifically, FINRA would calculate group-level sums for statistics that are quantity counts \12\ and use all underlying data within a group to calculate statistics requiring averages or weighted averages.\13\ Data will be aggregated separately for each order [[Page 13903]] type and subcategory, and will not be aggregated across order types or subcategories. --------------------------------------------------------------------------- \11\ See Tick Size Appendix B and C Statistics FAQs (available at http://www.finra.org/sites/default/files/Tick-Size-Pilot-Appendix-B-and-C-FAQ.pdf). \12\ See, e.g., Appendix B.I.a(7) (cumulative number of orders). \13\ See, e.g., Appendix B.I.a(28) (the share weighted average realized spread for executions of orders); and Appendix B.I.a(29) (the received share-weighted average percentage for shares not displayable as of order receipt). FINRA will calculate averages for all price variables and percentages. Table 1--Illustrative Sample B.I. Data Aggregation 14 -------------------------------------------------------------------------------------------------------------------------------------------------------- Share Cumulative weighted Number of number of average active MPIDs Cumulative Cumulative shares of realized Date Trading Ticker in masked Order type number of number of orders spread for center symbol group across orders shares of executed at execution of all pilot orders an away orders on stocks trading trading center center only -------------------------------------------------------------------------------------------------------------------------------------------------------- Unmasked Data -------------------------------------------------------------------------------------------------------------------------------------------------------- 20160926...................... ABCD ZZZZ n/a 18 2 100,000 75,000 -0.01 20160926...................... EFGH ZZZZ n/a 18 2 100,000 100,000 0.01 20160926...................... IJKL ZZZZ n/a 18 4 750,000 35,000 0.011 -------------------------------------------------------------------------------------------------------------------------------------------------------- Masked Data -------------------------------------------------------------------------------------------------------------------------------------------------------- 20160926...................... G1 ZZZZ 5 18 8 950,000 210,000 0.0090 -------------------------------------------------------------------------------------------------------------------------------------------------------- Appendix B.II. Data Aggregation Methodology Appendix B.II. data includes order-level statistics; thus, FINRA proposes that all individual orders be displayed for all Trading Centers within a group, with each order attributed to the group rather than the underlying Trading Center. In addition, Appendix B.II. order information would be displayed in pure chronological order based on time of order receipt to help minimize confidentiality concerns that may occur if other ordering methods were used, such as showing the original chronological order per Trading Center. --------------------------------------------------------------------------- \14\ For purposes of illustration, this table reflects only a sample of the data--specifically, the fields described in Appendix B.I.a.(1), (2), (3), (7), (8), (13) and (28). The published data would reflect all fields described in Appendix B.I. to the Plan and as further specified in FINRA Rule 6191 and related rule filings, the Tick Size Appendix B and C Statistics FAQs (available at http://www.finra.org/sites/default/files/Tick-Size-Pilot-Appendix-B-and-C-FAQ.pdf), and in FINRA's Appendix B and C Requirements and Finra.org File Specifications document (available at http://www.finra.org/sites/default/files/Appendix-B-and-C-Reporting-Specifications.pdf). Table 2--Illustrative Sample B.II. Data Aggregation 15 -------------------------------------------------------------------------------------------------------------------------------------------------------- Number of active MPIDs Trading in masked Order received Order shares Date center Issue group across time Order type quantity B/S code Limit price all pilot stocks -------------------------------------------------------------------------------------------------------------------------------------------------------- Unmasked Data -------------------------------------------------------------------------------------------------------------------------------------------------------- 20160906...................... ABCD ZZZZ n/a 93,605.41 10 500 B (null) 20160906...................... ABCD ZZZZ n/a 94,114.99 11 100 S 52.45 20160906...................... ABCD ZZZZ n/a 101,140.05 11 900 S 52.31 20160906...................... EFGH ZZZZ n/a 93,605.42 10 600 B (null) 20160906...................... EFGH ZZZZ n/a 94,114.99 11 100 S 52.45 20160906...................... EFGH ZZZZ n/a 101,140.07 11 700 S 52.37 -------------------------------------------------------------------------------------------------------------------------------------------------------- Masked Data -------------------------------------------------------------------------------------------------------------------------------------------------------- 20160906...................... G1 ZZZZ 5 93,605.41 10 500 B (null) 20160906...................... G1 ZZZZ 5 93,605.42 10 600 B (null) 20160906...................... G1 ZZZZ 5 94,114.99 11 100 S 52.45 20160906...................... G1 ZZZZ 5 94,114.99 11 100 S 52.45 20160906...................... G1 ZZZZ 5 101,140.05 11 900 S 52.31 20160906...................... G1 ZZZZ 5 101,140.07 11 700 S 52.37 -------------------------------------------------------------------------------------------------------------------------------------------------------- Appendix B.IV. Data Aggregation Methodology FINRA proposes to aggregate Appendix B.IV. data by aggregating statistics within each group by trading day by summing the statistics of all market maker activity represented within the group. The number of market makers would be displayed as the unique number of market makers \16\ across all Trading Centers within the group. --------------------------------------------------------------------------- \15\ For purposes of illustration, this table reflects only a sample of the data--specifically, the fields required by items a. through h. of Appendix B.II. The published data would reflect all fields described in Appendix B.II. to the Plan and as further specified in FINRA Rule 6191 and related rule filings, the Tick Size Appendix B and C Statistics FAQs (available at http://www.finra.org/sites/default/files/Tick-Size-Pilot-Appendix-B-and-C-FAQ.pdf), and in FINRA's Appendix B and C Requirements and Finra.org File Specifications document (available at http://www.finra.org/sites/default/files/Appendix-B-and-C-Reporting-Specifications.pdf). \16\ As provided in FINRA Rule 6191.11, FINRA will provide a count of the number of Market Makers used in the participation calculations. Thus, if a single unique Market Maker traded on multiple Trading Centers within the same masking group, for the Appendix B.IV. count of unique Market Makers on a given trading day, FINRA will count this activity as attributed to one unique Market Maker. [[Page 13904]] Table 3--Illustrative Sample B.IV. data aggregation 17 -------------------------------------------------------------------------------------------------------------------------------------------------------- Number of active MPIDs in masked Number unique Number unique Shares Shares Date Trading center group across MMs buy side MMs sell side participation participation all pilot (buy) (sell) stocks -------------------------------------------------------------------------------------------------------------------------------------------------------- Unmasked Data -------------------------------------------------------------------------------------------------------------------------------------------------------- 20160906.................................... ABCD n/a 2 1 700,000 225,000 20160906.................................... EFGH n/a 1 1 200 5,000 20160906.................................... IJKL n/a 4 1 35,000 500,000 -------------------------------------------------------------------------------------------------------------------------------------------------------- Masked Data -------------------------------------------------------------------------------------------------------------------------------------------------------- 20160906.................................... G1 5 5 2 735,200 730,000 -------------------------------------------------------------------------------------------------------------------------------------------------------- If the Commission approves the proposed rule change, the effective date of the proposed rule change will be 120 days following Commission approval. --------------------------------------------------------------------------- \17\ For purposes of illustration, this table reflects only a sample of the data--specifically, the fields required by items a. and b. of Appendix B.IV and FINRA Rule 6191.11. The published data would reflect all fields described in Appendix B.IV. to the Plan and as further specified in FINRA Rule 6191 and related rule filings, the Tick Size Appendix B and C Statistics FAQs (available at http://www.finra.org/sites/default/files/Tick-Size-Pilot-Appendix-B-and-C-FAQ.pdf), and in FINRA's Appendix B and C Requirements and Finra.org File Specifications document (available at http://www.finra.org/sites/default/files/Appendix-B-and-C-Reporting-Specifications.pdf). --------------------------------------------------------------------------- 2. Statutory Basis FINRA believes that the proposed rule change is consistent with the provisions of Section 15A(b)(6) of the Act,\18\ 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, and Section 15A(b)(9) of the Act,\19\ which requires that FINRA rules not impose any burden on competition that is not necessary or appropriate. --------------------------------------------------------------------------- \18\ 15 U.S.C. 78o-3(b)(6). \19\ 15 U.S.C. 78o-3(b)(9). --------------------------------------------------------------------------- The Plan is designed to allow the Commission, market participants, and the public to study and assess the impact of increment conventions on the liquidity and trading of the common stock of small- capitalization companies. FINRA consulted extensively with SEC staff in connection with the instant proposal to design a grouped masking methodology that is consistent with the objectives of Section VII(A) of the Plan to make Appendix B data publicly available while not identifying the Trading Center that generated the data. 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 proposed rule change implements the provisions of the Plan. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others The Commission previously received comment letters from FIF and Citadel Securities expressing concern over FINRA's intent to publish Appendix B data on a Trading Center-by-Trading Center basis.\20\ FIF stated that publishing Appendix B.I. and B.II. statistics on FINRA's Web site in a disaggregated format does not satisfy the requirements of the Plan or Rule 6191 that the publicly available data will not identify the trading center that generated the data.\21\ Similarly, Citadel Securities stated that market participants would be able to determine the identity of Trading Centers in violation of the Plan if the Appendix B data were to be published in a disaggregated format.\22\ --------------------------------------------------------------------------- \20\ See Letters from William Hebert, Managing Director, Financial Information Forum (``FIF''), to Robert W. Errett, Deputy Secretary, Commission, dated December 21, 2016 (``FIF letter''); and Adam C. Cooper, Senior Managing Director and Chief Legal Officer, Citadel Securities, to Brent J. Fields, Secretary, Commission, dated December 21, 2016 (``Citadel letter''). See also Securities Exchange Act Release No. 79424 (November 29, 2016), 81 FR 87603 (December 5, 2016) (Notice of Filing and Immediate Effectiveness of File No. SR- FINRA-2016-042). \21\ See FIF letter. \22\ See Citadel letter. --------------------------------------------------------------------------- In consultation with SEC staff, FINRA is filing the instant proposed rule change to mitigate the confidentiality concerns raised by commenters by providing for an anonymized, grouped masking methodology for Appendix B data for all OTC activity in furtherance of the objectives of the Plan. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 45 days of the date of publication of this notice in the Federal Register or within such longer period (i) as the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the self-regulatory organization consents, the Commission will: (A) By order approve or disapprove such proposed rule change, or (B) institute proceedings to determine whether the proposed rule change should be 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 [email protected]. Please include File Number SR-FINRA-2017-006 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-2017-006. 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 [[Page 13905]] 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 the 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-2017-006, and should be submitted on or before April 5, 2017. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\23\ --------------------------------------------------------------------------- \23\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017-05082 Filed 3-14-17; 8:45 am] BILLING CODE 8011-01-P
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to the tier schedule are not unfairly IV. Solicitation of Comments For the Commission, by the Division of
discriminatory as all members will be Trading and Markets, pursuant to delegated
able to attain higher rebates by Interested persons are invited to authority.12
executing the required volume of QCC submit written data, views, and Eduardo A. Aleman,
and/or other solicited crossing orders on arguments concerning the foregoing, Assistant Secretary.
the Exchange. including whether the proposed rule
[FR Doc. 2017–05086 Filed 3–14–17; 8:45 am]
change is consistent with the Act.
B. Self-Regulatory Organization’s Comments may be submitted by any of BILLING CODE 8011–01–P
Statement on Burden on Competition the following methods:
In accordance with Section 6(b)(8) of Electronic Comments SECURITIES AND EXCHANGE
the Act,9 the Exchange does not believe COMMISSION
that the proposed rule change will • Use the Commission’s Internet
impose any burden on intermarket or comment form (http://www.sec.gov/ [Release No. 34–80193; File No. SR–FINRA–
intramarket competition that is not rules/sro.shtml); or 2017–006]
necessary or appropriate in furtherance • Send an email to rule-comments@
of the purposes of the Act. The sec.gov. Please include File Number SR– Self-Regulatory Organizations;
proposed rule change merely allows for ISE–2017–17 on the subject line. Financial Industry Regulatory
the aggregation of volume from affiliates Authority, Inc.; Notice of Filing of a
for purposes of the QCC and Solicitation Paper Comments Proposed Rule Change To Amend Rule
rebate, consistent with treatment of 6191 To Implement an Anonymous,
volume for other purposes in the • Send paper comments in triplicate
to Secretary, Securities and Exchange Grouped Masking Methodology for
Schedule of Fees, and with volume Over-the-Counter Activity in
aggregation on other options markets. Commission, 100 F Street NE.,
Washington, DC 20549–1090. Connection With Web Site Data
The Exchange operates in a highly Publication of Appendix B Data
competitive market in which market All submissions should refer to File Pursuant to the Regulation NMS Plan
participants can readily direct their Number SR–ISE–2017–17. This file To Implement a Tick Size Pilot
order flow to competing venues. In such number should be included on the Program
an environment, the Exchange must subject line if email is used. To help the
continually review, and consider Commission process and review your March 9, 2017.
adjusting, its fees and rebates to remain comments more efficiently, please use Pursuant to Section 19(b)(1) of the
competitive with other exchanges. For only one method. The Commission will
the reasons described above, the Securities Exchange Act of 1934
post all comments on the Commission’s (‘‘Act’’) 1 and Rule 19b–4 thereunder,2
Exchange believes that the proposed fee Internet Web site (http://www.sec.gov/
changes reflect this competitive notice is hereby given that on March 3,
rules/sro.shtml). Copies of the 2017, Financial Industry Regulatory
environment.
submission, all subsequent Authority, Inc. (‘‘FINRA’’) filed with the
C. Self-Regulatory Organization’s amendments, all written statements Securities and Exchange Commission
Statement on Comments on the with respect to the proposed rule (‘‘SEC’’ or ‘‘Commission’’) the proposed
Proposed Rule Change Received From change that are filed with the rule change as described in Items I, II,
Members, Participants, or Others Commission, and all written and III below, which Items have been
communications relating to the prepared by FINRA. The Commission is
No written comments were either proposed rule change between the
solicited or received. publishing this notice to solicit
Commission and any person, other than comments on the proposed rule change
III. Date of Effectiveness of the those that may be withheld from the from interested persons.
Proposed Rule Change and Timing for public in accordance with the
Commission Action provisions of 5 U.S.C. 552, will be I. Self-Regulatory Organization’s
available for Web site viewing and Statement of the Terms of Substance of
The foregoing rule change has become printing in the Commission’s Public the Proposed Rule Change
effective pursuant to Section Reference Room, 100 F Street NE.,
19(b)(3)(A)(ii) of the Act,10 and Rule FINRA is proposing to amend Rule
Washington, DC 20549, on official 6191 to implement an anonymous,
19b–4(f)(2) 11 thereunder. At any time business days between the hours of
within 60 days of the filing of the grouped masking methodology for over-
10:00 a.m. and 3:00 p.m. Copies of the the-counter (‘‘OTC’’) activity in
proposed rule change, the Commission
filing also will be available for connection with Web site data
summarily may temporarily suspend
inspection and copying at the principal publication of Appendix B data
such rule change if it appears to the
Commission that such action is: (i) office of the Exchange. All comments pursuant to the Regulation NMS Plan to
Necessary or appropriate in the public received will be posted without change; Implement a Tick Size Pilot Program
interest; (ii) for the protection of the Commission does not edit personal (‘‘Plan’’).
investors; or (iii) otherwise in identifying information from
The text of the proposed rule change
asabaliauskas on DSK3SPTVN1PROD with NOTICES2
furtherance of the purposes of the Act. submissions. You should submit only
information that you wish to make is available on FINRA’s Web site at
If the Commission takes such action, the http://www.finra.org, at the principal
Commission shall institute proceedings available publicly. All submissions
should refer to File Number SR–ISE– office of FINRA and at the
to determine whether the proposed rule
2017–17 and should be submitted on or Commission’s Public Reference Room.
should be approved or disapproved.
before April 5, 2017.
9 15 U.S.C. 78f(b)(8).
10 15 1 15 U.S.C. 78s(b)(1).
U.S.C. 78s(b)(3)(A)(ii).
11 17 CFR 240.19b–4(f)(2). 12 17 CFR 200.30–3(a)(12). 2 17 CFR 240.19b–4.
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![Federal Register / Vol. 82, No. 49 / Wednesday, March 15, 2017 / Notices 13905
Internet Web site (http://www.sec.gov/ standards for Special Purpose concurrent sale of equity securities, be
rules/sro.shtml). Copies of the Acquisition Companies (‘‘SPACs’’) to placed in a trust account.6 Further
submission, all subsequent provide an option to hold a tender offer within three years, or such shorter time
amendments, all written statements in lieu of a shareholder vote on a period as specified by the SPAC, the
with respect to the proposed rule proposed acquisition; and amend initial SPAC must complete one or more
change that are filed with the and continued listing standards to, business combinations having an
Commission, and all written among other things, lower quantitative aggregate fair market value of at least
communications relating to the standards. The proposed rule change 80% of the value of the trust account.7
proposed rule change between the was published for comment in the Until the SPAC has completed a
Commission and any person, other than Federal Register on December 29, business combination, or a series of
those that may be withheld from the 2016.3 The Commission received no business combinations, representing at
public in accordance with the comments on the proposal. On February least 80% of the trust account’s
provisions of 5 U.S.C. 552, will be 10, 2017, the Commission extended the aggregate fair market value, the SPAC
available for Web site viewing and time period for Commission action on must, among other things, submit the
printing in the Commission’s Public the proposal to March 29, 2017.4 This business combination to a shareholder
Reference Room, 100 F Street NE., order approves the proposed rule vote.8 Any public shareholders who
Washington, DC 20549, on official change. vote against the business combination
business days between the hours of have a right to convert their shares of
II. Description of the Proposal
10:00 a.m. and 3:00 p.m. Copies of the common stock into a pro rata share of
filing also will be available for A. Background the aggregate amount then in the trust
inspection and copying at the principal A SPAC is a special purpose company account, if the business combination is
office of FINRA. All comments received that raises capital in an initial public approved and consummated.9 The
will be posted without change; the offering (‘‘IPO’’) to enter into future Manual further states that a business
Commission does not edit personal undetermined business combinations combination cannot be consummated by
identifying information from through mergers, capital stock the SPAC if the public shareholders
submissions. You should submit only exchanges, assets acquisitions, stock owning in excess of a threshold amount
information that you wish to make purchases, reorganizations or similar (to be set no higher than 40%) of the
available publicly. All submissions business combinations with one or more shares of common stock exercise their
should refer to File Number SR–FINRA– operating businesses or assets. In its conversion rights.10
2017–006, and should be submitted on filing, the Exchange stated that in the In addition to these safeguards, a
or before April 5, 2017. IPO, a SPAC typically sells units SPAC must also meet minimum
For the Commission, by the Division of consisting of one share of common stock quantitative initial and continued listing
Trading and Markets, pursuant to delegated and one or more warrants (or fraction of standards to list, and remain listed on
authority.23 a warrant) to purchase common stocks. the Exchange, as well as specified
Eduardo A. Aleman, The units are separable at some point continued listing standards to remain
Assistant Secretary. after the IPO. The Exchange also noted listed after consummation of a business
[FR Doc. 2017–05082 Filed 3–14–17; 8:45 am] that management of the SPAC typically combination.11
BILLING CODE 8011–01–P receives a percentage of the equity at the
outset and may be required to purchase B. Option To Hold a Tender Offer in
additional shares in a private placement Lieu of a Shareholder Vote
SECURITIES AND EXCHANGE at the time of the IPO. Due to their The Exchange proposes to add an
COMMISSION unique structure, SPACs do not have option for the SPAC to conduct a tender
any prior financial history, at the time offer in lieu of a shareholder vote to
[Release No. 34–80199; File No. SR–NYSE–
2016–72]
of their listing, like operating complete a business combination. First,
companies. under the proposal if a shareholder vote
Self-Regulatory Organizations; New NYSE Listed Company Manual is not held on a business combination
York Stock Exchange LLC; Order (‘‘Manual’’) Section 102.06 sets forth the for which the SPAC must file and
Granting Approval of a Proposed Rule listing standards that apply to SPACs.5 furnish a proxy or information
Change Amending Initial and In addition to requiring SPACs to meet statement subject to Regulation 14A or
Continued Listing Standards for certain quantitative standards, Section 14C under the Exchange Act, the SPAC
Special Purpose Acquisition 102.06 of the Manual provides must provide all shareholders with the
Companies additional investor protection opportunity to redeem all their shares
safeguards for shareholders investing in for cash equal to their pro rata share of
March 10, 2017. SPACs. Currently, Section 102.06 of the the aggregate amount then in the deposit
I. Introduction Manual requires at least 90% of the account pursuant to Rule 13e–4 and
proceeds raised in a SPAC IPO, and any Regulation 14E under the Exchange
On December 8, 2016, the New York Act.12 The proposal states that a SPAC
Stock Exchange LLC (‘‘NYSE’’ or 3 See Securities Exchange Act Release No. 79676
‘‘Exchange’’) filed with the Securities (December 22, 2016), 81 FR 96150 (December 29, 6 See NYSE Listed Company Manual Section
and Exchange Commission 2016) (‘‘Notice’’).
102.06.
asabaliauskas on DSK3SPTVN1PROD with NOTICES2
4 See Securities Exchange Act Release No. 80022
(‘‘Commission’’), pursuant to Section 7 Id. The 80% fair market value is the net assets
(February 10, 2017), 82 FR 10947 (February 16,
19(b)(1) of the Securities Exchange Act held in trust net of amounts disbursed to
2017) (‘‘Extension’’).
management for working capital purposes and
of 1934 (‘‘Exchange Act’’) 1 and Rule 5 The Commission notes that throughout this
excluding the amount of any deferred underwriting
19b–4 thereunder,2 a proposed rule order we have used the term ‘‘SPAC’’ or ‘‘SPACs’’, discount held in trust.
change to amend initial listing but these terms have the same meaning as 8 Id.
‘‘Acquisition Company’’ or ‘‘Acquisition 9 Id.
Companies’’ which are the terms used for listing,
23 17 CFR 200.30–3(a)(12). 10 Id.
and continued listing, in Sections 102.06 and
1 15 U.S.C. 78s(b)(1). 11 See notes 16–18, infra and accompanying text.
802.01B of the Manual. See NYSE Listed Company
2 17 CFR 240.19b–4. Manual Sections 102.06 and 802.01B. 12 See Notice, supra note 4.
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Document Created: 2017-03-15 06:04:44
Document Modified: 2017-03-15 06:04:44
| 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 | 82 FR 13901 |
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