[Federal Register Volume 85, Number 69 (Thursday, April 9, 2020)]
[Notices]
[Pages 20013-20014]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-07436]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-88556; File No. SR-FINRA-2020-010]
Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Extend the Compliance Date for SR-FINRA-2019-
014
April 3, 2020.
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 April 1, 2020, 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 provide members with additional time to
comply with the amendments adopted by SR-FINRA-2019-014 related to
transactions in U.S. Treasury Securities executed to hedge certain
primary market transactions.
The text of the proposed rule change is available on FINRA's
website 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
On June 21, 2019, the SEC approved SR-FINRA-2019-014, which amended
FINRA Rule 6730 (Transaction Reporting) to: (a) provide members until
the close of TRACE System Hours on the next business day (i.e., until
6:29:59 p.m. ET on T+1) to report transactions in U.S. Treasury
Securities \4\ executed to hedge a P1 \5\ transaction, and (b) require
members to append a new trade modifier when reporting TRACE
transactions in U.S. Treasury Securities that are executed to hedge a
P1 transaction.\6\ On September 19, 2019, FINRA published Regulatory
Notice 19-30 announcing SEC approval of the proposed rule change and
establishing an effective date of June 1, 2020.\7\
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\4\ Rule 6710(p) defines a ``U.S. Treasury Security'' as ``a
security, other than a savings bond, issued by the U.S. Department
of the Treasury to fund the operations of the federal government or
to retire such outstanding securities.'' The term ``U.S. Treasury
Security'' also includes separate principal and interest components
of a U.S. Treasury Security that has been separated pursuant to the
Separate Trading of Registered Interest and Principal of Securities
(``STRIPS'') program operated by the U.S. Department of Treasury.
\5\ ``List or Fixed Offering Price Transactions'' and ``Takedown
Transactions,'' which are identified with the ``P1'' modifier,
generally are primary market sale transactions on the first day of
trading of a security: (i) By a sole underwriter, syndicate manager,
syndicate member or selling group member at the published or stated
list or fixed offering price (or, for Takedown Transactions, at a
discount from the published or stated list or fixed offering price)
or (ii) in the case of primary market sale transactions effected
pursuant to Securities Act Rule 144A, by an initial purchaser,
syndicate manager, syndicate member or selling group member at the
published or stated fixed offering price (or, for Takedown
Transactions, at a discount from the published or stated fixed
offering price). See Rule 6710(q) and (r).
\6\ See Securities Exchange Act Release No. 86178 (June 21,
2019), 84 FR 30783 (June 27, 2019) (Order Approving File No. SR-
FINRA-2019-014).
\7\ See Regulatory Notice 19-30 (SEC Approves Amendments
Relating to Transactions in U.S. Treasury Securities Executed to
Hedge a Primary Market Transaction) (September 19, 2019).
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In light of significant impacts that the spread of coronavirus
disease (COVID-19) may have on member firms, FINRA is extending the
effective date of the amendments adopted by SR-FINRA-2019-014 related
to U.S. Treasury
[[Page 20014]]
Security hedge transactions to allow members additional time to prepare
for implementation of the new requirements. FINRA believes that, given
the need for members to reallocate resources in response to COVID-19,
members would benefit from additional time to, among other things,
implement and test technology changes, update policies and procedures,
and perform staff training related to implementation of the U.S.
Treasury Security hedge amendments. FINRA notes that the implementation
delay will not impact transparency because transactions in U.S.
Treasury Securities currently are not disseminated.
FINRA has filed the proposed rule change for immediate
effectiveness. The new operative date of the amendments adopted by SR-
FINRA-2019-014 will be August 3, 2020.
2. Statutory Basis
FINRA believes that the proposed rule change is consistent with the
provisions of Section 15A(b)(6) of the Act,\8\ 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,\9\ which requires
that FINRA rules not impose any burden on competition that is not
necessary or appropriate.
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\8\ 15 U.S.C. 78o-3(b)(6).
\9\ 15 U.S.C. 78o-3(b)(9).
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FINRA believes that providing members with additional time to
comply with the changes adopted by SR-FINRA-2019-014 will ease
compliance burdens for members as they reallocate resources in response
to COVID-19. FINRA notes that the implementation delay will not impact
transparency because transactions in U.S. Treasury Securities currently
are not disseminated.
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. The proposed rule change would
provide all affected members additional time to prepare for the
implementation of the new U.S. Treasury Security hedging requirements,
which should ease members' implementation burdens given the need to
reallocate resources in response to COVID-19.
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 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 after the date of the filing, or such shorter time as the
Commission may designate, if consistent with the protection of
investors and the public interest, the proposed rule change has become
effective pursuant to Section 19(b)(3)(A) of the Act \10\ and Rule 19b-
4(f)(6)(iii) thereunder.\11\
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\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change, along
with a brief description and text of the proposed rule change, at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Commission has waived the pre-filing requirement.
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At any time within 60 days of the filing of such 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 under
Section 19(b)(2)(B) of the Act \12\ to determine whether the proposed
rule change should be approved or disapproved.
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\12\ 15 U.S.C. 78s(b)(2)(B).
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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-2020-010 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-2020-010. 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 website (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 website 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-2020-010 and should be submitted
on or before April 30, 2020.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
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\13\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-07436 Filed 4-8-20; 8:45 am]
BILLING CODE 8011-01-P