82 FR 56300 - 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 227 (November 28, 2017)

Page Range		56300-56301
FR Document		2017-25694
Federal Register, Volume 82 Issue 227 (Tuesday, November 28, 2017)
[Federal Register Volume 82, Number 227 (Tuesday, November 28, 2017)]
[Notices]
[Pages 56300-56301]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-25694]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82153; File No. SR-FINRA-2017-035]


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)

November 22, 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 November 20, 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 December 8, 2017, until June 
7, 2018.
    The text of the proposed rule change is available on FINRA's Web 
site at http://www.finra.org, at the principal office of FINRA and at 
the Commission's Public Reference Room.

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

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

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

1. Purpose
    FINRA proposes to amend FINRA Rule 6433 (Minimum Quotation Size 
Requirements for OTC Equity Securities) (the ``Rule'') to extend, until 
June 7, 2018, the amendments set forth in File No. SR-FINRA-2011-058 
(``Tier Size Pilot'' or ``Pilot''), which currently are scheduled to 
expire on December 8, 2017.\4\
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    \4\ See Securities Exchange Act Release No. 80727 (May 18, 
2017), 82 FR 23953 (May 24, 2017) (Notice of Filing and Immediate 
Effectiveness of File No. SR-FINRA-2017-014).
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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 June 7, 2018, 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.
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    FINRA has filed the proposed rule change for immediate 
effectiveness. The operative date of the proposed rule change will be 
December 8, 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 June 
7, 2018, 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.

[[Page 56301]]

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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    The Commission is waiving the 30-day operative delay so that the 
proposal may become operative immediately upon filing. The Commission 
believes that waiver of the operative delay is consistent with the 
protection of investors and the public interest because such waiver 
will allow the pilot program to continue without interruption. 
Therefore, the Commission designates the proposal operative upon 
filing.\17\
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    \17\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule should be approved or disapproved.

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-FINRA-2017-035 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-2017-035. 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. Persons submitting 
comments are cautioned that we do not redact or edit personal 
identifying information from comment submissions. You should submit 
only information that you wish to make available publicly. All 
submissions should refer to File Number SR-FINRA-2017-035 and should be 
submitted on or before December 19, 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. 2017-25694 Filed 11-27-17; 8:45 am]
BILLING CODE 8011-01-P
Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Notices 56301

B. Self-Regulatory Organization’s investors, or otherwise in furtherance of For the Commission, by the Division of
Statement on Burden on Competition the purposes of the Act. If the Trading and Markets, pursuant to delegated
Commission takes such action, the authority.18
FINRA does not believe that the Eduardo A. Aleman,
proposed rule change will result in any Commission shall institute proceedings
to determine whether the proposed rule Assistant Secretary.
burden on competition that is not
necessary or appropriate in furtherance should be approved or disapproved. [FR Doc. 2017–25694 Filed 11–27–17; 8:45 am]
of the purposes of the Act. BILLING CODE 8011–01–P
IV. Solicitation of Comments
C. Self-Regulatory Organization’s Interested persons are invited to
Statement on Comments on the submit written data, views and SECURITIES AND EXCHANGE
Proposed Rule Change Received From arguments concerning the foregoing, COMMISSION
Members, Participants, or Others including whether the proposed rule
change is consistent with the Act. Submission for OMB Review;
Written comments were neither
Comments may be submitted by any of Comment Request
solicited nor received.
the following methods: Upon Written Request, Copies Available
III. Date of Effectiveness of the
Proposed Rule Change and Timing for Electronic Comments From: Securities and Exchange
Commission Action • Use the Commission’s Internet Commission, Office of FOIA Services,
comment form (http://www.sec.gov/ 100 F Street NE., Washington, DC
Because the foregoing proposed rule 20549–2736
change does not: (i) Significantly affect rules/sro.shtml); or
the protection of investors or the public • Send an email to rule-comments@ Extension:
sec.gov. Please include File Number SR– Rule 489 and Form F–N, SEC File No. 270–
interest; (ii) impose any significant 361, OMB Control No. 3235–0411
burden on competition; and (iii) become FINRA–2017–035 on the subject line.
operative for 30 days from the date on Paper Comments Notice is hereby given that, pursuant
which it was filed, or such shorter time to the Paperwork Reduction Act of 1995
• Send paper comments in triplicate (44 U.S.C. 3501 et seq.) (‘‘Paperwork
as the Commission may designate, it has to Secretary, Securities and Exchange
become effective pursuant to Section Reduction Act’’), the Securities and
Commission, 100 F Street NE., Exchange Commission (the
19(b)(3)(A) of the Act 13 and Rule 19b– Washington, DC 20549–1090.
4(f)(6) thereunder.14 ‘‘Commission’’) has submitted to the
A proposed rule change filed under All submissions should refer to File Office of Management and Budget
Rule 19b–4(f)(6) 15 normally does not Number SR–FINRA–2017–035. This file (‘‘OMB’’) a request for extension of the
become operative prior to 30 days after number should be included on the previously approved collection of
the date of filing. However, pursuant to subject line if email is used. To help the information discussed below.
Rule 19b–4(f)(6)(iii),16 the Commission Commission process and review your Rule 489 (17 CFR 230.489) under the
may designate a shorter time if such comments more efficiently, please use Securities Act of 1933 (15 U.S.C. 77a et
action is consistent with the protection only one method. The Commission will seq.) requires foreign banks and foreign
of investors and the public interest. post all comments on the Commission’s insurance companies and holding
The Commission is waiving the 30- Internet Web site (http://www.sec.gov/ companies and finance subsidiaries of
day operative delay so that the proposal rules/sro.shtml). Copies of the foreign banks and foreign insurance
may become operative immediately submission, all subsequent companies that are exempted from the
upon filing. The Commission believes amendments, all written statements definition of ‘‘investment company’’ by
that waiver of the operative delay is with respect to the proposed rule virtue of rules 3a–1 (17 CFR 270.3a–1),
consistent with the protection of change that are filed with the 3a–5 (17 CFR 270.3a–5), and 3a–6 (17
investors and the public interest Commission, and all written CFR 270.3a–6) under the Investment
because such waiver will allow the pilot communications relating to the Company Act of 1940 (15 U.S.C. 80a–1
program to continue without proposed rule change between the et seq.) to file Form F–N (17 CFR
interruption. Therefore, the Commission Commission and any person, other than 239.43) to appoint an agent for service
designates the proposal operative upon those that may be withheld from the of process when making a public
filing.17 public in accordance with the offering of securities in the United
At any time within 60 days of the provisions of 5 U.S.C. 552, will be States. The information is collected so
filing of the proposed rule change, the available for Web site viewing and that the Commission and private
Commission summarily may printing in the Commission’s Public plaintiffs may serve process on foreign
temporarily suspend such rule change if Reference Room, 100 F Street NE., entities in actions and administrative
it appears to the Commission that such Washington, DC 20549, on official proceedings arising out of or based on
action is necessary or appropriate in the business days between the hours of the offer or sales of securities in the
public interest, for the protection of 10:00 a.m. and 3:00 p.m. Copies of such United States by such foreign entities.
filing also will be available for The Commission received an average
13 15 U.S.C. 78s(b)(3)(A). inspection and copying at the principal of 30 Form F–N filings from 22 unique
14 17 CFR 240.19b–4(f)(6). As required under Rule office of FINRA. All comments received filers each year for the last three years
19b–4(f)(6)(iii), the Exchange provided the will be posted without change. Persons (2014–2016). The Commission has
Commission with written notice of its intent to file submitting comments are cautioned that
the proposed rule change, along with a brief
previously estimated that the total
description and the text of the proposed rule we do not redact or edit personal annual burden associated with
ethrower on DSK3G9T082PROD with NOTICES

change, at least five business days prior to the date identifying information from comment information collection and Form F–N
of filing of the proposed rule change. submissions. You should submit only preparation and submission is one hour
15 17 CFR 240.19b–4(f)(6).
information that you wish to make per filing. Based on the Commission’s
16 17 CFR 240.19b–4(f)(6)(iii).
17 For purposes only of waiving the 30-day
available publicly. All submissions experience with disclosure documents
operative delay, the Commission has considered the
should refer to File Number SR–FINRA– generally, the Commission continues to
proposed rule’s impact on efficiency, competition, 2017–035 and should be submitted on
and capital formation. See 15 U.S.C. 78c(f). or before December 19, 2017. 18 17 CFR 200.30–3(a)(12).

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Document Created: 2017-11-28 01:50:47
Document Modified: 2017-11-28 01:50:47
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 56300