82 FR 23953 - Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Extend the Tier Size Pilot of Rule 6433 (Minimum Quotation Size Requirements for OTC Equity Securities)

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 99 (May 24, 2017)

Page Range		23953-23955
FR Document		2017-10596
Federal Register, Volume 82 Issue 99 (Wednesday, May 24, 2017)
[Federal Register Volume 82, Number 99 (Wednesday, May 24, 2017)]
[Notices]
[Pages 23953-23955]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-10596]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80727; File No. SR-FINRA-2017-014]


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

May 18, 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 May 16, 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 and 
II below, which Items have been prepared by FINRA. FINRA has designated 
the proposed rule change as constituting a ``non-controversial'' rule 
change under paragraph (f)(6) of Rule 19b-4 under the Act,\3\ which 
renders the proposal effective upon receipt of this filing by the 
Commission. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    FINRA is proposing to amend FINRA Rule 6433 (Minimum Quotation Size 
Requirements for OTC Equity Securities) to extend the Tier Size Pilot, 
which currently is scheduled to expire on June 9, 2017, until December 
8, 2017.
    The text of the proposed rule change is available on FINRA's Web 
site at http://www.finra.org, at the principal

[[Page 23954]]

office of FINRA and at the Commission's Public Reference Room.

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

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

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

1. Purpose
    FINRA proposes to amend FINRA Rule 6433 (Minimum Quotation Size 
Requirements for OTC Equity Securities) (the ``Rule'') to extend, until 
December 8, 2017, the amendments set forth in File No. SR-FINRA-2011-
058 (``Tier Size Pilot'' or ``Pilot''), which currently are scheduled 
to expire on June 9, 2017.\4\
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    \4\ See Securities Exchange Act Release No. 79401 (November 25, 
2016), 81 FR 86762 (December 1, 2016) (Notice of Filing and 
Immediate Effectiveness of File No. SR-FINRA-2016-044).
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    The Tier Size Pilot was filed with the SEC on October 6, 2011,\5\ 
to amend the minimum quotation sizes (or ``tier sizes'') for OTC Equity 
Securities.\6\ The goals of the Pilot were to simplify the tier 
structure, facilitate the display of customer limit orders, and expand 
the scope of the Rule to apply to additional quoting participants. 
During the course of the Pilot, FINRA collected and provided to the SEC 
specified data with which to assess the impact of the Pilot tiers on 
market quality and limit order display.\7\ On September 13, 2013, FINRA 
provided to the Commission an assessment on the operation of the Tier 
Size Pilot utilizing data covering the period from November 12, 2012 
through June 30, 2013.\8\ As noted in the 2013 Assessment, FINRA 
believed that the analysis of the data generally showed that the Tier 
Size Pilot had a neutral to positive impact on OTC market quality for 
the majority of OTC Equity Securities and tiers; and that there was an 
overall increase of 13% in the number of customer limit orders that met 
the minimum quotation sizes to be eligible for display under the Pilot 
tiers. In the 2013 Assessment, FINRA recommended adopting the tiers as 
permanent, but extended the Pilot period to allow more time to gather 
and analyze data after the November 12, 2012 through June 30, 2013 
assessment period.\9\ The purpose of this filing is to further extend 
the operation of the Tier Size Pilot until December 8, 2017, to provide 
additional time to finalize a permanent proposal with regard to the 
Tier Size Pilot.\10\
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    \5\ See Securities Exchange Act Release No. 65568 (October 14, 
2011), 76 FR 65307 (October 20, 2011) (Notice of Filing of File No. 
SR-FINRA-2011-058).
    \6\ ``OTC Equity Security'' means any equity security that is 
not an ``NMS stock'' as that term is defined in Rule 600(b)(47) of 
SEC Regulation NMS; provided, however, that the term OTC Equity 
Security shall not include any Restricted Equity Security. See FINRA 
Rule 6420.
    \7\ FINRA ceased collecting Pilot data for submission to the 
Commission on February 13, 2015.
    \8\ The assessment is part of the SEC's comment file for SR-
FINRA-2011-058 and also is available on FINRA's Web site at: http://www.finra.org/Industry/Regulation/RuleFilings/2011/P124615 (``Pilot 
Assessment'').
    \9\ See Securities Exchange Act Release No. 70839 (November 8, 
2013), 78 FR 68893 (November 15, 2013) (Notice of Filing and 
Immediate Effectiveness of File No. SR-FINRA-2013-049).
    \10\ FINRA reviewed the post-June 30, 2013 data, and stated that 
the impact described in the 2013 Assessment continued to hold (and 
improved in certain areas). See June 2016 Extension [sic].
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    FINRA has filed the proposed rule change for immediate 
effectiveness. The operative date of the proposed rule change will be 
June 9, 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 also believes that the proposed rule change is 
consistent with the provisions of Section 15A(b)(11) of the Act.\12\ 
Section 15A(b)(11) requires that FINRA rules include provisions 
governing the form and content of quotations relating to securities 
sold otherwise than on a national securities exchange which may be 
distributed or published by any member or person associated with a 
member, and the persons to whom such quotations may be supplied.
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    \11\ 15 U.S.C. 78o-3(b)(6).
    \12\ 15 U.S.C. 78o-3(b)(11).
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    FINRA believes that the extension of the Tier Size Pilot until 
December 8, 2017, is consistent with the Act in that it would provide 
the Commission and FINRA with additional time to finalize a proposal 
with regard to the Tier Size Pilot.

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

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

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

    Written comments were neither solicited nor received.

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

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

[[Page 23955]]

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-2017-014 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-2017-014. 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-2017-014 and should be 
submitted on or before June 14, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-10596 Filed 5-23-17; 8:45 am]
 BILLING CODE 8011-01-P
Federal Register / Vol. 82, No. 99 / Wednesday, May 24, 2017 / Notices 23955

investors, or otherwise in furtherance of For the Commission, by the Division of prescribed by Rule 15c3–3 must obtain
the purposes of the Act. If the Trading and Markets, pursuant to delegated and retain a written notification from
Commission takes such action, the authority.18 each bank in which it has a Special
Commission shall institute proceedings Eduardo A. Aleman, Reserve Bank Account to evidence the
to determine whether the proposed rule Assistant Secretary. bank’s acknowledgement that assets
should be approved or disapproved. [FR Doc. 2017–10596 Filed 5–23–17; 8:45 am] deposited in the Account are being held
BILLING CODE 8011–01–P by the bank for the exclusive benefit of
IV. Solicitation of Comments
the broker-dealer’s customers. In
Interested persons are invited to addition, a broker-dealer must
submit written data, views and SECURITIES AND EXCHANGE immediately notify the Commission and
arguments concerning the foregoing, COMMISSION its designated examining authority if it
including whether the proposed rule fails to make a required deposit to its
[SEC File No. 270–087, OMB Control No.
change is consistent with the Act. 3235–0078] Special Reserve Bank Account. Finally,
Comments may be submitted by any of a broker-dealer that effects transactions
the following methods: Submission for OMB Review; in SFPs for customers will also have
Electronic Comments Comment Request paperwork burdens to make a record of
each change in account type.
• Use the Commission’s Internet Upon Written Request, Copies Available The Commission staff estimates a total
comment form (http://www.sec.gov/ From: Securities and Exchange annual time burden of 555,604 hours
rules/sro.shtml); or Commission, Office of FOIA Services, and an aggregate cost of $1,848,465 to
• Send an email to rule-comments@ 100 F St. NE., Washington, DC 20549– comply with the rule. These amounts
sec.gov. Please include File Number SR– 0213 were adjusted after publication of the
FINRA–2017–014 on the subject line. Extension: 60-day notice to reflect the addition of
Rule 15c3–3 a previously-omitted information
Paper Comments
Notice is hereby given that pursuant collection and higher postage costs.
• Send paper comments in triplicate An agency may not conduct or
to the Paperwork Reduction Act of 1995
to Brent J. Fields, Secretary, Securities sponsor, and a person is not required to
(44 U.S.C. 3501 et seq.) the Securities
and Exchange Commission, 100 F Street respond to, a collection of information
and Exchange Commission
NE., Washington, DC 20549–1090. under the PRA unless it displays a
(‘‘Commission’’) has submitted to the
All submissions should refer to File Office of Management and Budget currently valid OMB control number.
Number SR–FINRA–2017–014. This file (‘‘OMB’’) a request for approval of The public may view background
number should be included on the extension of the previously approved documentation for this information
subject line if email is used. To help the collection of information provided for in collection at the following Web site,
Commission process and review your Rule 15c3–3 (17 CFR 240.15c3–3), www.reginfo.gov. Comments should be
comments more efficiently, please use under the Securities Exchange Act of directed to: (i) Desk Officer for the
only one method. The Commission will 1934 (15 U.S.C. 78a et seq.) (‘‘Exchange Securities and Exchange Commission,
post all comments on the Commission’s Act’’). Office of Information and Regulatory
Internet Web site (http://www.sec.gov/ Rule 15c3–3 requires that a broker- Affairs, Office of Management and
rules/sro.shtml). Copies of the dealer that holds customer securities Budget, Room 10102, New Executive
submission, all subsequent obtain and maintain possession and Office Building, Washington, DC 20503,
amendments, all written statements control of fully-paid and excess margin or by sending an email to: Shagufta_
with respect to the proposed rule securities they hold for customers. In Ahmed@omb.eop.gov; and (ii) Pamela
change that are filed with the addition, the Rule requires that a broker- Dyson, Director/Chief Information
Commission, and all written dealer that holds customer funds make Officer, Securities and Exchange
communications relating to the either a weekly or monthly computation Commission, c/o Remi Pavlik-Simon,
proposed rule change between the to determine whether certain customer 100 F Street NE., Washington, DC
Commission and any person, other than funds need to be segregated in a special 20549, or send an email to: PRA_
those that may be withheld from the reserve bank account for the exclusive Mailbox@sec.gov. Comments must be
public in accordance with the benefit of the firm’s customers. It also submitted to OMB within 30 days of
provisions of 5 U.S.C. 552, will be requires that a broker-dealer maintain a this notice.
available for Web site viewing and written notification from each bank Dated: May 19, 2017.
printing in the Commission’s Public where a Special Reserve Bank Account Eduardo A. Aleman,
Reference Room, 100 F Street NE., is held acknowledging that all assets in Assistant Secretary.
Washington, DC 20549, on official the account are for the exclusive benefit [FR Doc. 2017–10617 Filed 5–23–17; 8:45 am]
business days between the hours of of the broker-dealer’s customers, and to BILLING CODE 8011–01–P
10:00 a.m. and 3:00 p.m. Copies of such provide written notification to the
filing also will be available for Commission (and its designated
inspection and copying at the principal examining authority) under certain, SECURITIES AND EXCHANGE
office of FINRA. All comments received specified circumstances. Finally, broker- COMMISSION
will be posted without change; the dealers that sell securities futures
asabaliauskas on DSK3SPTVN1PROD with NOTICES

Commission does not edit personal products (‘‘SFP’’) to customers must Sunshine Act Meeting; Date and Time
identifying information from provide certain notifications to Change
submissions. You should submit only customers and make a record of any
information that you wish to make changes of account type. FEDERAL REGISTER CITATION OF PREVIOUS
available publicly. All submissions A broker-dealer required to maintain ANNOUNCEMENT: To be published.
should refer to File Number SR–FINRA– the Special Reserve Bank Account PREVIOUSLY ANNOUNCED TIME AND DATE OF
2017–014 and should be submitted on THE MEETING: Thursday, May 25, 2017
or before June 14, 2017. 18 17 CFR 200.30–3(a)(12). 2:00 p.m.

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Document Created: 2017-05-24 01:03:17
Document Modified: 2017-05-24 01:03:17
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 23953