83 FR 20129 - Joint Industry Plan; Order of Summary Abrogation of the Forty-Second Amendment to the Joint Self-Regulatory Organization Plan Governing the Collection, Consolidation and Dissemination of Quotation and Transaction Information for Nasdaq-Listed Securities Traded on Exchanges on an Unlisted Trading Privileges Basis
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 83, Issue 88 (May 7, 2018)
Federal Register Volume 83, Issue 88 (May 7, 2018)
| Page Range | 20129-20131 | |
| FR Document | 2018-09580 |
[Federal Register Volume 83, Number 88 (Monday, May 7, 2018)] [Notices] [Pages 20129-20131] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2018-09580] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-83149; File No. S7-24-89] Joint Industry Plan; Order of Summary Abrogation of the Forty- Second Amendment to the Joint Self-Regulatory Organization Plan Governing the Collection, Consolidation and Dissemination of Quotation and Transaction Information for Nasdaq-Listed Securities Traded on Exchanges on an Unlisted Trading Privileges Basis May 1, 2018. I. Introduction Notice is hereby given that the Securities and Exchange Commission (``Commission''), pursuant to Section 11A of the Securities Exchange Act of 1934 (``Act''),\1\ and Rule 608 thereunder,\2\ is summarily abrogating the Forty-Second Amendment to the Joint Self-Regulatory Organization Plan Governing the Collection, Consolidation and Dissemination of Quotation and Transaction Information for Nasdaq- Listed Securities Traded on Exchanges on an Unlisted Trading Privileges Basis (``Nasdaq/UTP Plan'' or ``Plan'').\3\ --------------------------------------------------------------------------- \1\ 15 U.S.C. 78k-1. \2\ 17 CFR 242.608. \3\ The Plan governs the collection, processing, and dissemination on a consolidated basis of quotation information and transaction reports in Eligible Securities for each of its Participants. This consolidated information informs investors of the current quotation and recent trade prices of Nasdaq securities. It enables investors to ascertain from one data source the current prices in all the markets trading Nasdaq securities. The Plan serves as the required transaction reporting plan for its Participants, which is a prerequisite for their trading Eligible Securities. See Securities Exchange Act Release No. 55647 (April 19, 2007), 72 FR 20891 (April 26, 2007). --------------------------------------------------------------------------- On March 5, 2018 \4\ the participants of the Plans (``Participants'') \5\ filed with the Commission a proposal to amend the Nasdaq/UTP Plan (``Amendment''), pursuant to Section 11A of the Act,\6\ and Rule 608 thereunder.\7\ The Amendment, which was effective upon filing pursuant to Rule 608(b)(3)(i) of Regulation NMS,\8\ modified the Plan's fee schedule to adopt changes to the Nonprofessional Subscriber Enterprise Cap and Per Query Fees. --------------------------------------------------------------------------- \4\ See Securities Exchange Act Release No. 82938 (March 23, 2018), 83 FR 13542 (March 29, 2018) (``Notice of Filing''). \5\ The Participants are: Cboe BYX Exchange; Inc.; Cboe BZX Exchange, Inc.; Cboe EDGA Exchange, Inc.; Cboe EDGX Exchange, Inc.; Chicago Board Options Exchange, Incorporated; Chicago Stock Exchange, Inc.; Financial Industry Regulatory Authority, Inc.; Investors Exchange LLC; Nasdaq BX, Inc.; Nasdaq ISE, LLC; Nasdaq PHLX LLC; The Nasdaq Stock Market LLC; New York Stock Exchange LLC; NYSE Arca, Inc.; NYSE American LLC; NYSE National, Inc. \6\ 15 U.S.C. 78k-1. \7\ 17 CFR 242.608. \8\ 17 CFR 242.608(b)(3)(i). --------------------------------------------------------------------------- II. Description of the Amendment A. Amendments to Enterprise Cap The Amendment modified the Plan's fee schedule to increase the Nonprofessional Subscriber Enterprise Cap (``Enterprise Cap'') from $686,400 to $1,260,000. The Participants stated that as a result of industry consolidation, the non-professional subscriber base for entities subject to the Enterprise Cap may suddenly increase, and whereas before two entities may have benefited slightly from the Enterprise Cap, a combined entity could achieve a substantial decrease in fees by using the Enterprise Cap. Consequently, the Participants stated, the increase of the Enterprise Cap was designed to maintain the status quo and should not have, in conjunction with the Per-Query Fee change described below, resulted in an increase of revenue to the Plan or fees for any particular entity.\9\ --------------------------------------------------------------------------- \9\ The Participants noted that very few entities take advantage of the Enterprise Cap. --------------------------------------------------------------------------- In addition, the Amendment modified the Plan to remove a provision relating to annual increases of the Enterprise Cap after a two-thirds vote of the Participants. In 2014 \10\ the Participants amended the mechanism by which the Enterprise Cap would increase, from an automatic increase based on volume, to a requirement for an affirmative vote of the Participants. The Participants have not used this mechanism to increase the Enterprise Cap. The Participants believe that any future changes to the Enterprise Cap should be filed with the Commission and subject to public comment. Consequently, the Participants proposed to delete this provision. --------------------------------------------------------------------------- \10\ See Securities Exchange Act Release No. 73279 (October 1, 2014), 79 FR 60522 (October 7, 2014) (describing the history of the Per-Query Fees). --------------------------------------------------------------------------- B. Amendments to the Per-Query Fee The Participants stated that because of the increase in the Enterprise Cap, there could have been broker-dealers that used the Enterprise Cap that, without a corresponding offset, could have faced an increase in fees. To offset the potential fee increase, the Amendment modified the text of the Plan's fee schedule to reduce the Plan's Per-Query Fee for broker-dealers with 500,000 or more non- professional subscribers from $.0075 to $.0025. The Participants stated that by implementing a tiered structure for Per-Query Fees, the proposal was designed to provide an offset to those firms most likely affected by the Enterprise Cap increase (i.e., those with a large non-professional subscriber base). Additionally, the Participants stated that the proposal would align the tiered structures for Network C with those of Networks A and B. Pursuant to Rule 608(b)(3)(i) under Regulation NMS,\11\ the Participants designated the Amendment as establishing or changing a fee or other charge collected on their behalf in connection with access to, or use of, the facilities contemplated by the Plan. As a result, the Amendment was effective upon filing with the Commission. The Amendment was published for comment in the Federal Register on March 29, 2018.\12\ --------------------------------------------------------------------------- \11\ 17 CFR 242.608(b)(3)(i). \12\ See Notice of Filing, supra note 4. --------------------------------------------------------------------------- III. Summary of Comments The Commission received two comment letters in response to the Notice of Filing \13\ and a response thereto from the Participants.\14\ In its comment letter, SIFMA stated that the information provided by the Participants in the Amendment with respect to, among other things, cost, revenue, and customer data, is insufficient to permit the Commission to determine whether the Amendment is consistent with the Act.\15\ SIFMA stated that only the Participants, and not SIFMA or other market participants, possess the information necessary to [[Page 20130]] evaluate the Amendment.\16\ SIFMA also stated that, costs, and not revenue neutrality as the Participants suggest, is the relevant factor in assessing whether the Amendment is consistent with the Act.\17\ --------------------------------------------------------------------------- \13\ See letters from Melissa MacGregor, Managing Director, Securities Industry and Financial Markets Association (``SIFMA''), dated April 19, 2018 (``SIFMA Letter''), and Tyler Gellasch, Executive Director, Healthy Markets Association (``Healthy Markets''), dated April 30, 2018 (``Healthy Markets Letter''), to Brent J. Fields, Secretary, Commission. \14\ See Letter from Emily Kasparov to Brent J. Fields, Secretary, Commission, dated April 27, 2018 (``Participants' Response''). The Participants responded to the comments received on this Amendment, as well as on SR-CTA/CQ-2018-01, which amended the CTA/CQ plan in a parallel fashion. \15\ See SIFMA Letter, supra note 13 at 1-3. SIFMA also stated that absent data demonstrating a reasonable relationship between core data revenues and the costs of collecting and disseminating data, it is doubtful that maintaining the status quo with respect to market data fees is consistent with the Act. According to SIFMA, the governance structure for NMS plans is broken and market data fees are not restrained by competitive forces, thus maintaining the status quo with respect to market data fees could impose a burden on competition. See id. at 3. \16\ See id. at 1-3. \17\ See id. at 2. --------------------------------------------------------------------------- Healthy Markets \18\ urged the Commission to summarily abrogate the Amendment on grounds that it is not appropriately justified, is discriminatory, and is contrary to the original purpose of the Enterprise Cap. Healthy Markets also stated that the Enterprise Cap should be eliminated as part of the broader process of modernizing the UTP fee schedules. --------------------------------------------------------------------------- \18\ Healthy Markets also commented on other items that are not germane to the instant filing, such as broader recommendations for NMS Plans and Securities Information Processor Fees. --------------------------------------------------------------------------- Specifically, Healthy Markets stated that the Participants failed to support their representations regarding industry consolidation and noted that the Amendment lacks any detailed justification or analysis.\19\ In addition, Healthy Markets stated that the Participants' representation that the Amendment may be revenue neutral does not demonstrate that the Amendment is consistent with the Act whose goal is to protect the public interest by, amongst other things, promoting competition, the reasonable allocation of fees, and non- discrimination.\20\ Healthy Markets also states that the Amendment is discriminatory, and that it adds complexity to an already complex process.\21\ Lastly, Healthy Market stated that the Enterprise Cap should be eliminated as part of the broader process of modernizing the UTP fee schedules to simply allow for the non-discriminatory, consistent access and pricing of public market data.\22\ --------------------------------------------------------------------------- \19\ See Healthy Markets Letter, supra note 13 at 3-4. \20\ See id. \21\ See id. at 5. \22\ See id. --------------------------------------------------------------------------- In response, the Participants stated that the comments received are misguided or incorrect, and require no further response from the Participants.\23\ In addition, the Participants stated that market participants have access to the information necessary to assess the impact of the Amendment on revenue,\24\ asserting that data subscribers can readily apply the new fee schedule to their historical usage to project future usage and thereby determine whether the Participants' representations concerning the effect on revenue hold true.\25\ The Participants also noted that only industry associations commented on the Amendment, and that individual market data subscribers could have commented on the Amendment had the Participants' analysis been incorrect.\26\ --------------------------------------------------------------------------- \23\ See Participants' Response, supra note 14 at 1-2. \24\ See Participants' Response, supra note 14 at 1. \25\ See id. \26\ See id. --------------------------------------------------------------------------- IV. Discussion Pursuant to Section 11A of the Act \27\ and Rule 608(b)(3)(iii) of Regulation NMS thereunder,\28\ at any time within 60 days of the filing of any such amendment, the Commission may summarily abrogate the amendment and require that the amendment be re-filed in accordance with paragraph (a)(1) of Rule 608 \29\ and reviewed in accordance with paragraph (b)(2) of Rule 608,\30\ if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or the maintenance of fair and orderly markets, to remove impediments to, and perfect the mechanisms of, a national market system or otherwise in furtherance of the purposes of the Act. The Commission is concerned that the information and justifications provided by the Participants are not sufficient for the Commission to determine whether the Amendment is consistent with the Act. Accordingly, the Commission believes that the procedures set forth in Rule 608(b)(2) \31\ will provide a more appropriate mechanism for determining whether the Amendment is consistent with the Act. --------------------------------------------------------------------------- \27\ 15 U.S.C. 78k-1. \28\ 17 CFR 242.608. \29\ 17 CFR 242.608(a)(1). \30\ 17 CFR 242.608(b)(2). \31\ Id. --------------------------------------------------------------------------- The Commission believes that the Amendment raises questions as to whether the changes will result in fees that are fair and reasonable, not unreasonably discriminatory,\32\ and that will not impose an undue or inappropriate burden on competition under Section 11A of the Act.\33\ --------------------------------------------------------------------------- \32\ 17 CFR 242.603(a)(1)-(2), 17 CFR 242.608, and 15 U.S.C. 78k-1(a)(1)(C). \33\ 15 U.S.C. 78k-1 --------------------------------------------------------------------------- The Commission does not believe that the Participants have provided sufficient information regarding, or adequate justification for, the changes described in the Amendment. While the Participants represent that they used certain data to calibrate the fee changes to achieve a revenue neutral outcome \34\ none of that data is provided in the Amendment, nor do the Participants provide any such information in their response.\35\ The Commission is also concerned that the Participants provided little information concerning the basis for, the anticipated revenue effects of, and the effects on market participants from, the Amendment. The Participants have not provided sufficient information for the changes to be closely scrutinized for fairness and reasonableness and the Amendment lacks support for the basis of, as well as the application and likely effect of, the fees to determine that the Amendment is not unreasonably discriminatory. --------------------------------------------------------------------------- \34\ See Notice of Filing, supra note 4 at 13543. \35\ See Participants' Response, supra note 14. --------------------------------------------------------------------------- In addition, the Participants did not provide information to support their assertion that the increase of the Enterprise Cap is designed to maintain the status quo and should not, in conjunction with the Per-Query fee changes, result in an increase of revenue to the Plan or of fees to any particular entity.\36\ The Participants lowered the Per-Query fee for firms with at least 500,000 non-professional accounts. However the filing does not indicate why the Participants chose to limit the lower fee to firms that have 500,000 non- professional subscribers. The Participants state that the Amendment does not impose any burden on competition that is not necessary or appropriate because it is revenue neutral and maintains the status quo. Because the Participants did not provide the Commission with sufficient data to support their assertion that the fee change should not result in an increase of revenue to the Plan or to fees for any particular entity, however, the Commission is unable to evaluate the Participants' assertions that the Amendment does not impose any burden on competition that is not necessary or appropriate. --------------------------------------------------------------------------- \36\ Id. --------------------------------------------------------------------------- V. Conclusion For the reasons stated above, the Commission believes it necessary or appropriate to summarily abrogate the Amendment and terminate its status as immediately effective. The Commission believes that the procedures set forth in Rule 608(b)(2) of Regulation NMS \37\ will provide a more appropriate mechanism for determining whether the Amendment is consistent with the Act. Therefore, the Commission believes that it is necessary or appropriate in the public interest, for the protection of investors, or the maintenance of fair and orderly markets, to remove impediments to, and perfect the mechanisms of, a national market system or otherwise in furtherance of the purposes of the Act, to summarily abrogate the Amendment. --------------------------------------------------------------------------- \37\ 17 CFR 242.608(b)(2). --------------------------------------------------------------------------- [[Page 20131]] It is therefore ordered, pursuant to Section 11A of the Act,\38\ and Rule 608 thereunder,\39\ that the Forty-Second Amendment to the Nasdaq/UTP Plan (File No. S7-24-89) be, and hereby is, summarily abrogated. If the Participants choose to re-file the Amendment, they must do so pursuant to Section 11A of the Act and the Amendment must be re-filed in accordance with paragraph (a)(1) of Rule 608 of Regulation NMS \40\ for review in accordance with paragraph (b)(2) of Rule 608 of Regulation NMS.\41\ --------------------------------------------------------------------------- \38\ 15 U.S.C. 78k-1. \39\ 17 CFR 242.608. \40\ 17 CFR 242.608(a)(1). \41\ 17 CFR 242.608(b)(2). By the Commission. Brent J. Fields, Secretary. [FR Doc. 2018-09580 Filed 5-4-18; 8:45 am] BILLING CODE 8011-01-P
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By the Commission. pursuant to Section 11A of the Act,6 and schedule to reduce the Plan’s Per-Query
Brent J. Fields, Rule 608 thereunder.7 The Amendment, Fee for broker-dealers with 500,000 or
Secretary. which was effective upon filing more non-professional subscribers from
[FR Doc. 2018–09579 Filed 5–4–18; 8:45 am] pursuant to Rule 608(b)(3)(i) of $.0075 to $.0025.
BILLING CODE 8011–01–P
Regulation NMS,8 modified the Plan’s The Participants stated that by
fee schedule to adopt changes to the implementing a tiered structure for Per-
Nonprofessional Subscriber Enterprise Query Fees, the proposal was designed
SECURITIES AND EXCHANGE Cap and Per Query Fees. to provide an offset to those firms most
COMMISSION II. Description of the Amendment likely affected by the Enterprise Cap
increase (i.e., those with a large non-
[Release No. 34–83149; File No. S7–24–89] A. Amendments to Enterprise Cap professional subscriber base).
The Amendment modified the Plan’s Additionally, the Participants stated
Joint Industry Plan; Order of Summary that the proposal would align the tiered
Abrogation of the Forty-Second fee schedule to increase the
Nonprofessional Subscriber Enterprise structures for Network C with those of
Amendment to the Joint Self- Networks A and B.
Regulatory Organization Plan Cap (‘‘Enterprise Cap’’) from $686,400 to
$1,260,000. The Participants stated that Pursuant to Rule 608(b)(3)(i) under
Governing the Collection, Regulation NMS,11 the Participants
Consolidation and Dissemination of as a result of industry consolidation, the
non-professional subscriber base for designated the Amendment as
Quotation and Transaction Information establishing or changing a fee or other
for Nasdaq-Listed Securities Traded on entities subject to the Enterprise Cap
may suddenly increase, and whereas charge collected on their behalf in
Exchanges on an Unlisted Trading connection with access to, or use of, the
Privileges Basis before two entities may have benefited
slightly from the Enterprise Cap, a facilities contemplated by the Plan. As
May 1, 2018. combined entity could achieve a a result, the Amendment was effective
substantial decrease in fees by using the upon filing with the Commission. The
I. Introduction Amendment was published for
Enterprise Cap. Consequently, the
Notice is hereby given that the Participants stated, the increase of the comment in the Federal Register on
Securities and Exchange Commission Enterprise Cap was designed to March 29, 2018.12
(‘‘Commission’’), pursuant to Section maintain the status quo and should not III. Summary of Comments
11A of the Securities Exchange Act of have, in conjunction with the Per-Query
1934 (‘‘Act’’),1 and Rule 608 Fee change described below, resulted in The Commission received two
thereunder,2 is summarily abrogating an increase of revenue to the Plan or comment letters in response to the
the Forty-Second Amendment to the fees for any particular entity.9 Notice of Filing 13 and a response
Joint Self-Regulatory Organization Plan In addition, the Amendment modified thereto from the Participants.14 In its
Governing the Collection, Consolidation the Plan to remove a provision relating comment letter, SIFMA stated that the
and Dissemination of Quotation and to annual increases of the Enterprise information provided by the
Transaction Information for Nasdaq- Cap after a two-thirds vote of the Participants in the Amendment with
Listed Securities Traded on Exchanges Participants. In 2014 10 the Participants respect to, among other things, cost,
on an Unlisted Trading Privileges Basis amended the mechanism by which the revenue, and customer data, is
(‘‘Nasdaq/UTP Plan’’ or ‘‘Plan’’).3 Enterprise Cap would increase, from an insufficient to permit the Commission to
On March 5, 2018 4 the participants of automatic increase based on volume, to determine whether the Amendment is
the Plans (‘‘Participants’’) 5 filed with a requirement for an affirmative vote of consistent with the Act.15 SIFMA stated
the Commission a proposal to amend the Participants. The Participants have that only the Participants, and not
the Nasdaq/UTP Plan (‘‘Amendment’’), not used this mechanism to increase the SIFMA or other market participants,
Enterprise Cap. The Participants believe possess the information necessary to
1 15 U.S.C. 78k–1. that any future changes to the Enterprise
11 17 CFR 242.608(b)(3)(i).
2 17 CFR 242.608. Cap should be filed with the
3 The Plan governs the collection, processing, and 12 See Notice of Filing, supra note 4.
Commission and subject to public
dissemination on a consolidated basis of quotation 13 See letters from Melissa MacGregor, Managing
information and transaction reports in Eligible
comment. Consequently, the Director, Securities Industry and Financial Markets
Securities for each of its Participants. This Participants proposed to delete this Association (‘‘SIFMA’’), dated April 19, 2018
consolidated information informs investors of the provision. (‘‘SIFMA Letter’’), and Tyler Gellasch, Executive
current quotation and recent trade prices of Nasdaq Director, Healthy Markets Association (‘‘Healthy
securities. It enables investors to ascertain from one B. Amendments to the Per-Query Fee Markets’’), dated April 30, 2018 (‘‘Healthy Markets
data source the current prices in all the markets Letter’’), to Brent J. Fields, Secretary, Commission.
trading Nasdaq securities. The Plan serves as the The Participants stated that because of 14 See Letter from Emily Kasparov to Brent J.
required transaction reporting plan for its the increase in the Enterprise Cap, there Fields, Secretary, Commission, dated April 27, 2018
Participants, which is a prerequisite for their could have been broker-dealers that (‘‘Participants’ Response’’). The Participants
trading Eligible Securities. See Securities Exchange used the Enterprise Cap that, without a responded to the comments received on this
Act Release No. 55647 (April 19, 2007), 72 FR Amendment, as well as on SR–CTA/CQ–2018–01,
20891 (April 26, 2007). corresponding offset, could have faced which amended the CTA/CQ plan in a parallel
4 See Securities Exchange Act Release No. 82938 an increase in fees. To offset the fashion.
(March 23, 2018), 83 FR 13542 (March 29, 2018) potential fee increase, the Amendment 15 See SIFMA Letter, supra note 13 at 1–3. SIFMA
(‘‘Notice of Filing’’). modified the text of the Plan’s fee also stated that absent data demonstrating a
5 The Participants are: Cboe BYX Exchange; Inc.; reasonable relationship between core data revenues
daltland on DSKBBV9HB2PROD with NOTICES
Cboe BZX Exchange, Inc.; Cboe EDGA Exchange, 6 15 and the costs of collecting and disseminating data,
U.S.C. 78k–1.
Inc.; Cboe EDGX Exchange, Inc.; Chicago Board 7 17
it is doubtful that maintaining the status quo with
Options Exchange, Incorporated; Chicago Stock CFR 242.608. respect to market data fees is consistent with the
8 17 CFR 242.608(b)(3)(i).
Exchange, Inc.; Financial Industry Regulatory Act. According to SIFMA, the governance structure
9 The Participants noted that very few entities
Authority, Inc.; Investors Exchange LLC; Nasdaq for NMS plans is broken and market data fees are
BX, Inc.; Nasdaq ISE, LLC; Nasdaq PHLX LLC; The take advantage of the Enterprise Cap. not restrained by competitive forces, thus
Nasdaq Stock Market LLC; New York Stock 10 See Securities Exchange Act Release No. 73279 maintaining the status quo with respect to market
Exchange LLC; NYSE Arca, Inc.; NYSE American (October 1, 2014), 79 FR 60522 (October 7, 2014) data fees could impose a burden on competition.
LLC; NYSE National, Inc. (describing the history of the Per-Query Fees). See id. at 3.
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It is therefore ordered, pursuant to office of FINRA and at the The Pilot tiers were designed to: (1)
Section 11A of the Act,38 and Rule 608 Commission’s Public Reference Room. Simplify the structure of the minimum
thereunder,39 that the Forty-Second quotation sizes; (2) facilitate the display
II. Self-Regulatory Organization’s
Amendment to the Nasdaq/UTP Plan of customer limit orders under Rule
Statement of the Purpose of, and
(File No. S7–24–89) be, and hereby is, 6460 (Display of Customer Limit Orders)
Statutory Basis for, the Proposed Rule
summarily abrogated. If the Participants (‘‘limit order display rule’’); and (3)
Change
choose to re-file the Amendment, they expand the scope of the Rule to provide
must do so pursuant to Section 11A of In its filing with the Commission, for uniform treatment of the types and
the Act and the Amendment must be re- FINRA included statements concerning sources of quotations that would be
filed in accordance with paragraph the purpose of and basis for the subject to the Rule.6 FINRA believes the
(a)(1) of Rule 608 of Regulation NMS 40 proposed rule change and discussed any Pilot has resulted in its intended
for review in accordance with paragraph comments it received on the proposed objectives, and particularly notes that
(b)(2) of Rule 608 of Regulation NMS.41 rule change. The text of these statements the Pilot has yielded a significant
By the Commission. may be examined at the places specified positive result with regard to increased
in Item IV below. FINRA has prepared display of customer limit orders. At the
Brent J. Fields,
summaries, set forth in sections A, B, same time, market quality measures
Secretary.
and C below, of the most significant have been neutral (i.e., unchanged) or
[FR Doc. 2018–09580 Filed 5–4–18; 8:45 am]
aspects of such statements. slightly positive (i.e., slightly improved)
BILLING CODE 8011–01–P
A. Self-Regulatory Organization’s overall during the Pilot, as compared to
Statement of the Purpose of, and the pre-Pilot period, as discussed more
SECURITIES AND EXCHANGE Statutory Basis for, the Proposed Rule fully below. Accordingly, FINRA
COMMISSION Change believes it is appropriate and consistent
with the Act to adopt the Pilot tier sizes
[Release No. 34–83129; File No. SR–FINRA– 1. Purpose on a permanent basis.
2018–015]
FINRA proposes to amend Rule 6433 Objectives of the Pilot
Self-Regulatory Organizations; (Minimum Quotation Size Requirements
Financial Industry Regulatory for OTC Equity Securities) (the ‘‘Rule’’) FINRA Rule 6433 sets forth the
Authority, Inc.; Notice of Filing of a to adopt as permanent the minimum minimum quotation sizes applicable to
Proposed Rule Change To Amend quotation sizes applicable to quotations the display of quotations in OTC equity
FINRA Rule 6433 To Adopt the OTC in OTC equity securities 3 that were securities on any inter-dealer quotation
Quotation Tier Pilot as Permanent proposed pursuant to File No. SR– system that permits quotation updates
FINRA–2011–058 and implemented on on a real-time basis. The Rule provides
April 30, 2018. a pilot basis on November 12, 2012 different minimum quotation sizes that
Pursuant to Section 19(b)(1) of the (‘‘Tier Size Pilot’’ or ‘‘Pilot’’).4 The Pilot apply depending upon the price level of
Securities Exchange Act of 1934 was initially approved for a one-year the bid or offer in the security.
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2 term, has been extended ten times, and Prior to the Pilot, which has been in
notice is hereby given that on April 20, currently is scheduled to expire on June effect since November 12, 2012,7 Rule
2018, Financial Industry Regulatory 7, 2018.5
Authority, Inc. (‘‘FINRA’’) filed with the Immediate Effectiveness of a Proposed Rule Change
Securities and Exchange Commission 3 An OTC equity security is an equity security to Extend the Tier Size Pilot to August 14, 2015;
(‘‘SEC’’ or ‘‘Commission’’) the proposed that is not an ‘‘NMS Stock’’ as defined in Rule File No. SR–FINRA–2015–010); Securities
600(b)(47) of SEC Regulation NMS; provided, Exchange Act Release No. 75639 (August 7, 2015),
rule change as described in Items I, II, however, that the term ‘‘OTC equity security’’ shall 80 FR 48615 (August 13, 2015) (Notice of Filing and
and III below, which Items have been not include any Restricted Equity Security. See Immediate Effectiveness of a Proposed Rule Change
prepared by FINRA. The Commission is FINRA Rule 6420(f). to Extend the Tier Size Pilot to December 11, 2015;
publishing this notice to solicit 4 See Securities Exchange Act Release No. 65568 File No. SR–FINRA–2015–028); Securities
(October 14, 2011), 76 FR 65307 (October 20, 2011) Exchange Act Release No. 76519 (November 24,
comments on the proposed rule change 2015), 80 FR 75155 (December 1, 2015) (Notice of
(Notice of Filing of File No. SR–FINRA–2011–058)
from interested persons. (‘‘Original Proposal’’). Filing and Immediate Effectiveness of a Proposed
5 See Securities Exchange Act Release No. 67208 Rule Change to Extend the Tier Size Pilot to June
I. Self-Regulatory Organization’s 10, 2016; File No. SR–FINRA–2015–051); Securities
(June 15, 2012), 77 FR 37458 (June 21, 2012) (Notice
Statement of the Terms of Substance of of Filing of Amendment No. 2 and Order Granting Exchange Act Release No. 77923 (May 26, 2016), 81
the Proposed Rule Change Accelerated Approval of a Proposed Rule Change, FR 35432 (June 2, 2016) (Notice of Filing and
as Modified by Amendment Nos. 1 and 2, To Immediate Effectiveness of a Proposed Rule Change
FINRA is proposing to amend FINRA Amend FINRA Rule 6433 (Minimum Quotation to Extend the Tier Size Pilot to December 9, 2016;
Rule 6433 (Minimum Quotation Size Size Requirements for OTC Equity Securities)) File No. SR–FINRA–2016–016); Securities
Requirements for OTC Equity (Order Approving File No. SR–FINRA–2011–058, as Exchange Act Release No. 79401 (November 25,
amended); see also Securities Exchange Act Release 2016), 81 FR 86762 (December 1, 2016) (Notice of
Securities) to adopt as permanent the Filing and Immediate Effectiveness of a Proposed
No. 70839 (November 8, 2013), 78 FR 68893
minimum quotation sizes for OTC (November 15, 2013) (Notice of Filing and Rule Change to Extend the Tier Size Pilot to June
equity securities currently operating on Immediate Effectiveness of a Proposed Rule Change 9, 2017; File No. SR–FINRA–2016–044); Securities
a pilot basis, scheduled to expire on to Extend the Tier Size Pilot to November 14, 2014; Exchange Act Release No. 80727 (May 18, 2017), 82
File No. SR–FINRA–2013–049); Securities FR 23953 (May 24, 2017) (Notice of Filing and
June 7, 2018. Immediate Effectiveness of a Proposed Rule Change
Exchange Act Release No. 73299 (October 3, 2014),
The text of the proposed rule change 79 FR 61120 (October 9, 2014) (Notice of Filing and to Extend the Tier Size Pilot to December 8, 2017;
is available on FINRA’s website at Immediate Effectiveness of a Proposed Rule Change File No. SR–FINRA–2017–014); Securities
daltland on DSKBBV9HB2PROD with NOTICES
http://www.finra.org, at the principal to Extend the Tier Size Pilot to February 13, 2015; Exchange Act Release No. 82153 (November 22,
File No. SR–FINRA–2014–041); Securities 2017), 82 FR 56300 (November 28, 2017) (Notice of
38 15 Exchange Act Release No. 74251 (February 11, Filing and Immediate Effectiveness of a Proposed
U.S.C. 78k–1. Rule Change to Extend the Tier Size Pilot to June
39 17 2015), 80 FR 8741 (February 18, 2015) (Notice of
CFR 242.608. 7, 2018; File No. SR–FINRA–2017–035).
40 17 CFR 242.608(a)(1).
Filing and Immediate Effectiveness of a Proposed
6 See Order Approving File No. SR–FINRA–2011–
Rule Change to Extend the Tier Size Pilot to May
41 17 CFR 242.608(b)(2).
15, 2015; File No. SR–FINRA–2015–002); Securities 058, 77 FR at 37458.
1 15 U.S.C. 78s(b)(1). 7 Regulatory Notice 12–51 (November 2012); see
Exchange Act Release No. 74927 (May 12, 2015), 80
2 17 CFR 240.19b–4. FR 28327 (May 18, 2015) (Notice of Filing and also Regulatory Notice 12–37 (August 2012).
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Document Created: 2018-05-05 02:48:01
Document Modified: 2018-05-05 02:48:01
| 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 | 83 FR 20129 |
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