
[Federal Register Volume 80, Number 95 (Monday, May 18, 2015)]
[Notices]
[Pages 28327-28328]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-11869]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74927; File No. SR-FINRA-2015-010]


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 FINRA Rule 6433 
(Minimum Quotation Size Requirements for OTC Equity Securities)

May 12, 2015.
    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 30, 2015, 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 the 
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 May 15, 2015, for an 
additional three months, until August 14, 2015.
    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 
August 14, 2015, the amendments set forth in File No. SR-FINRA-2011-058 
(``Tier Size Pilot'' or ``Pilot''), which currently are scheduled to 
expire on May 15, 2015.\4\
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    \4\ See Securities Exchange Act Release No. 73299 (October 3, 
2014), 79 FR 61120 (October 9, 2014) (Notice of Filing and Immediate 
Effectiveness of File No. SR-FINRA-2014-041); see also Securities 
Exchange Act Release No. 67208 (June 15, 2012), 77 FR 37458 (June 
21, 2012) (Order Approving File No. SR-FINRA-2011-058, as amended).
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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\ On January 29, 2015, FINRA further extended the 
Pilot period to permit FINRA and the Commission to consider the 
implications of the data collected since June 30, 2013.\10\ FINRA has 
reviewed this post-June 30, 2013 data, and believes that the impact 
described in the 2013 Assessment has continued to hold (and has 
improved in certain areas).
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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\ See Securities Exchange Act Release No. 74251 (February 11, 
2015), 80 FR 8741 (February 18, 2015) (Notice of Filing and 
Immediate Effectiveness of File No. SR-FINRA-2015-002).
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    The purpose of this filing is to extend the operation of the Tier 
Size Pilot for an additional three month period, until August 14, 2015, 
to provide FINRA with additional time to finalize its recommendation 
with regard to the Tier Size Pilot.
    FINRA has filed the proposed rule change for immediate 
effectiveness. The operative date of the proposed rule change will be 
May 15, 2015.
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

[[Page 28328]]

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 for an 
additional three months is consistent with the Act in that it would 
provide the Commission and FINRA with additional time to determine 
whether the pilot tiers should be made permanent.

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). 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 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 Exchange has 
satisfied this requirement.
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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 the 
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 as 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 rule-comments@sec.gov. Please include 
File Number SR-FINRA-2015-010 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-2015-010. 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 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 St. 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-2015-010, and should 
be submitted on or before June 8, 2015.

    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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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-11869 Filed 5-15-15; 8:45 am]
 BILLING CODE 8011-01-P


