
[Federal Register: October 19, 2009 (Volume 74, Number 200)]
[Notices]               
[Page 53524-53526]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr19oc09-96]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60807; File No. SR-FINRA-2009-064]

 
Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing and Order Granting Accelerated 
Approval of Proposed Rule Change Relating to the Publication of Certain 
Daily and Monthly Short Sale Data on the FINRA Web Site

October 9, 2009.
    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 September 24, 2009, 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 substantially prepared by FINRA. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons and simultaneously 
approving the proposed rule change on an accelerated basis.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    FINRA is proposing a rule change relating to the publication of 
certain daily and monthly short sale data on the FINRA Web site. FINRA 
is not proposing any textual changes to the By-Laws, Schedules to the 
By-Laws, or Rules of FINRA.
    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
    In coordination with SEC staff, FINRA is publishing on its Web 
site: (1) aggregate daily short sale volume data by security for NMS 
stocks \3\ and OTC Equity Securities,\4\ and (2) monthly short sale 
transaction data by security for NMS stocks.\5\ Due to the more

[[Page 53525]]

manual, member-driven reporting structure inherent in the over-the-
counter market, FINRA notes that data imperfections may be more likely 
than with similar reporting by the exchanges. FINRA is filing this 
proposed rule change to describe the content and parameters of the 
short sale data files that will be made publicly available on the FINRA 
Web site.
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    \3\ Rule 600 of SEC Regulation NMS defines ``NMS stock'' as any 
``NMS security'' other than an option, and further defines ``NMS 
security'' as any security or class of securities for which 
transaction reports are collected, processed, and made available 
pursuant to an effective transaction reporting plan, or an effective 
national market system plan for reporting transactions in listed 
options.
    \4\ FINRA Rule 6420 defines ``OTC Equity Security'' as any non-
exchange-listed security and certain exchange-listed securities that 
do not otherwise qualify for real-time trade reporting.
    \5\ By letter dated July 2, 2009, and as discussed in subsequent 
conversations, SEC staff requested that FINRA publish on its Web 
site certain daily short sale volume files and monthly short sale 
transaction files. SEC staff stated that it believes that the 
publication of this data, and the resulting increased market 
transparency, may help bolster investor confidence and thereby help 
promote capital formation.
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    Daily Short Sale Volume File
    For each trading date, FINRA will post on its Web site the daily 
short sale volume file within a reasonable amount of time after the end 
of regular trading hours on that trading day.\6\ As a general rule, 
aggregate short sale volume for equity securities executed and reported 
to any of the FINRA Facilities during regular trading hours will be 
included in the file.\7\ The daily short sale volume file will provide 
information on the aggregate volume of short sales reported to a 
consolidated tape out of the total volume of executed trades during 
regular trading hours on each trading day.\8\
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    \6\ See 17 CFR 242.600(b)(64) (defining ``regular trading 
hours'').
    \7\ Transactions may be reported through the Alternative Display 
Facility (``ADF''), a Trade Reporting Facility (``TRF''), or through 
the OTC Reporting Facility (``ORF''). The ADF, TRFs and ORF are 
collectively referred to herein as the ``FINRA Facilities.'' Trades 
in certain classes of securities, such as Rule 144A securities, are 
reported to the ORF, but not disseminated. Non-disseminated 
securities will not be included in either the daily short sale 
volume file or the monthly short sale transaction file.
    \8\ Certain OTC transactions (e.g., riskless principal and 
agency transactions where one member is acting on behalf of another 
member) are reported to FINRA in related tape and non-tape reports. 
Tape reports are submitted to FINRA for public dissemination by the 
appropriate exclusive Securities Information Processor (``SIP''), 
while non-tape reports are submitted to FINRA, but are not submitted 
to the SIP for public dissemination. FINRA will not be including 
non-tape reports in either the daily short sale volume file or the 
monthly short sale transaction file. Accordingly, in those instances 
where the short sale indicator is only included in the related non-
tape report, the short sale data published in the daily and monthly 
files may be under-inclusive. Similarly, the published figures will 
not include odd lots since these transactions are not disseminated 
to the consolidated tape.
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    FINRA expects to begin publishing the daily short sale volume file 
on a going forward basis in October 2009, but no later than the end of 
fourth quarter 2009.\9\ Specifically, the Short Sale Volume File will 
include the following fields: \10\
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    \9\ While initial publication of the daily short sale volume 
file will not commence until fourth quarter 2009, once published, 
the data will include daily files from August 3rd, 2009. FINRA will 
retain one year of historical short sale data from the date of 
initial publication onward on a rolling basis.
    \10\ The filename will contain the trading date and the 
reporting SRO (EEEEshvolYYYYMMDD.txt where EEEE represents the 
reporting SRO and YYYYMMDD represents the date).

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                   Field name                        Field description
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Date............................................  Trade date (YYYYMMDD).
Symbol..........................................  Trading symbol.
Short Volume....................................  Aggregate reported
                                                   share volume of
                                                   executed short sale
                                                   trades during regular
                                                   trading hours.
Total Volume....................................  Aggregate reported
                                                   share volume of all
                                                   executed trades
                                                   during regular
                                                   trading hours.
Market..........................................  CTA market identifier.
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    FINRA will not incorporate trading information into the daily short 
sale volume file that has not been executed and reported within the 
trading day.\11\ Further, FINRA will not retroactively apply ``as of'' 
and ``reversal'' transactions to update the daily statistics.
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    \11\ While members generally are required to report trades in 
equity securities to FINRA within 90 seconds, a firm could 
improperly delay reporting of short sales until well after the 
close, which would result in the under-reporting of over-the-counter 
short sale volume. Delaying the reporting of trades for such a 
purpose would be considered a violation of the applicable trade 
reporting rules and Rule 2010 (Standards of Commercial Honor and 
Principles of Trade).
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    Monthly Short Sale Transaction File
    For each trading month, FINRA will post on its Web site a monthly 
short sale transaction file by no later than the last day of the 
following calendar month that includes, among other things, trade 
details including the transaction time, price and number of shares for 
every short sale transaction in an NMS stock. The monthly short sale 
transaction file request is similar to, but not the same as, the 
instructions for the Regulation SHO Pilot data.\12\ FINRA began 
publishing the monthly short sale transaction, with the initial file 
for the month of August 2009 posted on September 30, 2009 (the last day 
of the following calendar month).
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    \12\ See Securities Exchange Act Release No. 50104 (July 28, 
2004), 69 FR 48032 (Aug. 6, 2004).
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    FINRA's monthly short sale transaction file includes all short 
sales reported to a TRF or the ADF and reported by FINRA to a tape 
plan.\13\ Unlike the daily short sale volume file, the monthly short 
sale transaction file includes short sale transactions that are 
reported both during regular trading hours as well as after-hours. 
While FINRA is not including reversals in the monthly short sale 
transaction file, the original reversed trade is included. FINRA is 
also including in each monthly transaction file any ``as of'' trades 
that were executed and reported within each given month.
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    \13\ See supra note 8.
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    The Monthly Short Sale Transaction files contain the following 
information: \14\

    \14\ The data files will include a ``link indicator'' field, 
which would provide a market center defined character variable to 
flag records that may have been difficult to match to tape data. 
This indicator was intended to allow for the dissection of trades 
that are bulk-reported to the tape; however, because FINRA does not 
bulk report trades to the tape, this field is not applicable and, 
therefore, will be left blank.
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--Market center: As reported on the tape.\15\
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    \15\ The ADF, NYSE TRF and NASDAQ TRF files are currently 
separately designated. FINRA intends at a later date to consolidate 
the TRF and ADF files in a user-friendly manner.
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--Ticker symbol: CT/CQ, TAQ, or symbols used for trading by the market 
center.
--Report Date: Date that the trade was reported to the tape.
--Reported Trade Time: In military time, Eastern Time.
--Size of the Trade: Number of shares in mixed or round lots as 
reported to the tape.
--Price of the Trade: Exactly as reported to the tape.

Other Issues

    Once the Daily Short Sale Volume File is made publicly available at 
the end of each trading day, FINRA notes that users of such data should 
not expect the daily and monthly data to reconcile because, among other 
things, monthly transaction data will include reporting through the end 
of FINRA transaction reporting hours that terminate as late as 8 p.m., 
while daily volume reports will only include volume reported during 
regular trading hours.
    Information relating to market maker or supplemental liquidity 
provider status is not currently included in the trade report 
submission; thus, FINRA currently is unable to separately identify

[[Page 53526]]

the trades of equity market makers and supplemental liquidity providers 
in the monthly short sale transaction file. Therefore, the ``short 
type'' field will include a value of ``S'' in all cases.
    FINRA will retain on the FINRA Web site one year of historical 
monthly short sale transaction data beginning with the data published 
on September 30, 2009.
    The proposed rule change will become effective upon Commission 
approval.
2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the 
provisions of Section 15A(b)(6) of the Act,\16\ 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 believes that the publication of the requested 
short sale data will result in increased market transparency, providing 
additional market information to investors and other interested 
parties.
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    \16\ 15 U.S.C. 78o-3(b)(6).
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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. Commission's Findings and Order Granting Accelerated Approval of 
Proposed Rule Change

    Pursuant to Section 19(b)(2) of the Act,\17\ the Commission may not 
approve any proposed rule change prior to the 30th day after the date 
of publication of the notice of filing thereof, unless the Commission 
finds good cause for so doing and publishes its reasons for so finding. 
FINRA also has requested that the Commission find good cause for 
approving the proposed rule change prior to the 30th day after 
publication in the Federal Register. For the Commission to approve a 
proposed rule change proposed by a national securities association 
(i.e., FINRA), the proposed rule change must be consistent with the 
requirements of the Act, including Section 15A(b)(6) of the Act,\18\ 
and the rules and regulations thereunder. Section 15A(b)(6) of the Act 
requires, among other things, that the rules of a national securities 
association 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.
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    \17\ 15 U.S.C. 78s(b)(2).
    \18\ 15 U.S.C. 78o-3(b)(6).
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    After careful consideration, the Commission finds that FINRA's 
proposed rule change relating to the publication of certain daily and 
monthly short sale data on the FINRA Web site is consistent with the 
requirements of the Act,\19\ including Section 15A(b)(6) of the 
Act.\20\ In particular, the Commission finds that FINRA's proposed rule 
change is consistent with Section 15A(b)(6) of the Act \21\ in that it 
is designed to protect investors and the public interest. The 
Commission notes that the proposed rule change will facilitate public 
access to short sale data, increase market transparency and thereby 
promote capital formation.
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    \19\ In approving this proposed rule change, the Commission has 
considered its impact on efficiency, competition, and capital 
formation. See 15 U.S.C. 78c(f).
    \20\ 15 U.S.C. 78o-3(b)(6).
    \21\ 15 U.S.C. 78o-3(b)(6).
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    The Commission also finds that accelerated approval is appropriate. 
More specifically, accelerated approval will allow FINRA to facilitate 
public access to information related to short sale volume and 
transaction data, which many self-regulatory organizations are already 
publishing on their respective Web sites.

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 e-mail to rule-comments@sec.gov. Please include 
File Number SR-FINRA-2009-064 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-FINRA-2009-064. This 
file number should be included on the subject line if e-mail 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 inspection 
and copying in the Commission's Public Reference Room, 100 F Street, 
NE., Washington, DC 20549, on official business days between the hours 
of 10 a.m. and 3 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-2009-064 and should be 
submitted on or before November 9, 2009.

V. Conclusion

    For the foregoing reasons, pursuant to Section 19(b)(2) of the 
Act,\22\ the Commission finds good cause to approve the proposed rule 
change on an accelerated basis.
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    \22\ 15 U.S.C. 78s(b)(2).
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    It is hereby ordered, pursuant to Section 19(b)(2) of the Act,\23\ 
that the proposed rule change (SR-FINRA-2009-064) be, and hereby is, 
approved on an accelerated basis. For the Commission, by the Division 
of Trading and Markets, pursuant to delegated authority.\24\
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    \23\ 15 U.S.C. 78s(b)(2).
    \24\ 17 CFR 200.30-3(a)(12).

Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-25002 Filed 10-16-09; 8:45 am]

BILLING CODE 8011-01-P
