[Federal Register Volume 84, Number 133 (Thursday, July 11, 2019)]
[Notices]
[Pages 33098-33102]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-14724]



[[Page 33098]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-86315; File No. SR-FINRA-2019-019]


Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing of a Proposed Rule Change To Expand 
OTC Equity Trading Volume Data Published on FINRA's Website

July 5, 2019.
    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 July 1, 2019, 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, 
II, and III below, which Items have been prepared by FINRA. 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.
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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 Rules 6110 and 6610 to expand the 
summary firm data relating to over-the-counter (``OTC'') equity trading 
that FINRA publishes on its website.
    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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    Pursuant to Rules 6110(b) and 6610(b), FINRA currently publishes 
certain volume information for OTC transactions \3\ in NMS stocks \4\ 
and OTC Equity Securities,\5\ respectively, that are executed outside 
of an alternative trading system (``ATS'').\6\ All published data is 
derived directly from OTC trades reported to a FINRA equity trade 
reporting facility (i.e., the Alternative Display Facility, a Trade 
Reporting Facility or the OTC Reporting Facility). FINRA does not 
charge a fee for this data.\7\
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    \3\ Rules 6110 and 6610 apply only to OTC transactions in NMS 
stocks and OTC Equity Securities, respectively, i.e., transactions 
effected otherwise than on or through a national securities 
exchange.
    \4\ ``NMS stock'' is defined in Rule 600(b)(47) of the SEC's 
Regulation NMS. See Rule 6110(a). Generally, NMS stocks include any 
security, other than an option, for which transaction reports are 
collected, processed, and made available pursuant to an effective 
transaction reporting plan. See 17 CFR 242.600(b)(47).
    \5\ ``OTC Equity Security'' means any equity security that is 
not an NMS stock, other than a Restricted Equity Security. See Rule 
6420(f). A ``Restricted Equity Security'' means any equity security 
that meets the definition of ``restricted security'' as contained in 
Securities Act Rule 144(a)(3). See Rule 6420(k); 17 CFR 
230.144(a)(3).
    \6\ Rules 6110(b) and 6610(b) govern the publication of 
information for OTC transactions executed outside of an ATS (``non-
ATS'' volume data or information). Rules 6110(c) and 6610(c) 
separately govern the publication of trading information for OTC 
transactions executed on ATSs.
    \7\ OTC transaction volume data published pursuant to Rules 6110 
and 6610 is available on FINRA's OTC Transparency Data web page, 
available at https://otctransparency.finra.org/otctransparency/.
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    Specifically, FINRA publishes weekly non-ATS OTC volume information 
(number of trades and shares) by firm and by security on a two-week or 
four-week delayed basis. Weekly security-specific information for 
transactions in NMS stocks in Tier 1 of the NMS Plan to Address 
Extraordinary Market Volatility (``Tier 1 NMS stocks'') is published on 
a two-week delayed basis, while information on the remaining NMS stocks 
(``Tier 2 NMS stocks'') and OTC Equity Securities is published on a 
four-week delayed basis. FINRA also publishes aggregate weekly non-ATS 
volume totals by firm and category of security (Tier 1 NMS stocks, Tier 
2 NMS stocks and OTC Equity Securities) on the same timeframes, as well 
as aggregate non-ATS volume totals by firm for all NMS stocks and OTC 
Equity Securities, respectively, for each calendar month on a one-month 
delayed basis.\8\ All data is published by firm on an attributed 
basis,\9\ except that for firms executing fewer than, on average, 200 
non-ATS transactions per day during the reporting period,\10\ FINRA 
combines and publishes the volume for these firms on an aggregate non-
attributed basis identified in the published data as ``De Minimis 
Firms.'' \11\
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    \8\ Monthly aggregated data is categorized by NMS stocks and OTC 
Equity Securities, i.e., there is no differentiation between Tier 1 
NMS stocks and Tier 2 NMS stocks.
    \9\ Non-ATS data is published at the firm level, aggregating 
each market participant identifier (``MPID'') used by a particular 
firm (but excluding any MPIDs used by a firm to report trades 
executed on its ATS).
    \10\ For a firm with multiple non-ATS MPIDs, the total volume 
across all its MPIDs is combined for purposes of determining whether 
the de minimis threshold has been met.
    \11\ There is no parallel de minimis exception for ATS 
transactions under Rules 6110(c) and 6610(c). Therefore, all ATS 
volume data is currently published on an attributed basis.
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    As part of FINRA's ongoing efforts to improve market transparency, 
FINRA is proposing to expand the summary firm data relating to non-ATS 
OTC equity trading that FINRA publishes on its website. The proposed 
rule change has two primary components. First, FINRA is proposing to 
publish new monthly aggregate block-size trading data for non-ATS OTC 
trades in NMS stocks, on the same terms as FINRA currently publishes 
aggregate block-size trading data for trades in NMS stocks occurring on 
ATSs. Second, FINRA is proposing to eliminate the current de minimis 
exception for publication of aggregate non-ATS trading volume across 
all NMS stocks and OTC Equity Securities and publish each firm's 
aggregate non-ATS volume on an attributed basis. These two components 
of the proposed rule change are each addressed below.
Non-ATS Block-Size Trading Data
    FINRA currently publishes monthly information on block-size trades 
in all NMS stocks occurring on ATSs pursuant to Rule 6110(c)(2). Data 
regarding ATS block-size trades is aggregated across all NMS stocks 
(i.e., there is no security-by-security block data), is for a time 
period of one month of trading, and is published no earlier than one 
month following the end of the month for which trading was aggregated.
    As announced in Regulatory Notice 16-14,\12\ FINRA currently 
publishes information on block-size ATS trades in NMS stocks using 
share-based thresholds, dollar-based thresholds and thresholds that 
include both shares and dollar amount as follows:
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    \12\ See Regulatory Notice 16-14 (April 2016).
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     10,000 or more shares;
     $200,000 or more in dollar value;
     10,000 or more shares and $200,000 or more in dollar 
value;
     2,000 to 9,999 shares;
     $100,000 to $199,999 in dollar value; and

[[Page 33099]]

     2,000 to 9,999 shares and $100,000 to $199,999 in dollar 
value.
    For each of these categories, FINRA publishes monthly trade count 
and volume information for each ATS, on an attributed basis, aggregated 
across all NMS stocks with no differentiation between Tier 1 NMS stocks 
and Tier 2 NMS stocks. FINRA also calculates and displays the average 
trade size and each ATS's rank as well as ``ATS Block Market Share'' 
(i.e., the proportion of each ATS's block-size trading volume in 
relation to total block-size trading by all ATSs) and ``ATS Block 
Business Share'' (i.e., the proportion of a particular ATS's overall 
trading volume that was done as block-size trades) and rankings of 
those metrics for each of the above categories.\13\
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    \13\ ATS block-size data can be viewed on FINRA's OTC 
Transparency Data web page, available at https://otctransparency.finra.org/otctransparency/AtsBlocks. The data may 
also be directly downloaded through the OTC Transparency Data web 
page, available at https://otctransparency.finra.org/otctransparency/AtsBlocksDownload.
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    FINRA is proposing to expand the block-size trading data that it 
publishes on its website to also include monthly aggregate non-ATS 
block-size trading data for all NMS stocks. The new non-ATS block-size 
data would be published on the same terms as current ATS block-size 
data and FINRA would not charge a fee for the new data. Specifically, 
proposed paragraph (b)(3) of Rule 6110 provides that non-ATS block-size 
data would be aggregated across all NMS stocks (i.e., there would be no 
security-by-security block data), would be for a time period of one 
month of trading, and would be published no earlier than one month 
following the end of the month for which trading was aggregated. All 
published data would be derived directly from OTC trades reported to 
the Alternative Display Facility or a Trade Reporting Facility.
    Pursuant to proposed Rule 6110(b)(3), FINRA will publish the new 
non-ATS block-size data with elements to be determined from time to 
time by FINRA in its discretion as stated in a Regulatory Notice or 
other equivalent publication. As with current ATS block-size data, 
rather than defining what constitutes a ``block-size'' trade, non-ATS 
block-size data would be published using the same share-based, dollar-
based and combination share- and dollar-based thresholds used for ATS 
block-size data, as described above. For each category, FINRA would 
publish monthly trade count and volume information for each firm, on an 
attributed basis,\14\ aggregated across all NMS stocks with no 
differentiation between Tier 1 NMS stocks and Tier 2 NMS stocks.\15\ 
FINRA would also calculate and display the average trade size and each 
firm's rank as well as ``Firm Block Market Share'' (i.e., the 
proportion of each firm's block-size trading volume in relation to 
total block-size trading by all firms) and ``Firm Block Business 
Share'' (i.e., the proportion of a particular firm's overall trading 
volume that was done as block-size trades) and rankings of those 
metrics for each of the above categories.\16\
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    \14\ Each firm that engages in block-size non-ATS trading of NMS 
stocks would be separately identified, i.e., FINRA is not proposing 
any de minimis exception for non-ATS block-size data.
    \15\ FINRA is not proposing at this time to publish non-ATS 
block-size data for trading in OTC Equity Securities, due largely to 
the wide variance of trading activity in these securities and the 
difficulty associated with determining appropriate block thresholds. 
FINRA notes that the currently published ATS block-size data is also 
limited to NMS stocks and does not cover trading in OTC Equity 
Securities. FINRA will continue to assess whether block-size trading 
data should be expanded to include trades in OTC Equity Securities 
or a subset thereof.
    \16\ FINRA will announce any changes to these elements in 
advance in a Regulatory Notice or similar publication.
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    In developing its proposal to publish non-ATS block-size data, 
FINRA discussed the initiative with a number of FINRA's industry 
advisory committees, informally consulted a number of firms and 
solicited written comment in Regulatory Notice 18-28 (discussed in 
greater detail below). Firms were generally supportive of publishing 
non-ATS block-size data, which would provide enhanced transparency into 
the OTC market as a complement to the currently published ATS block-
size data. Several firms noted potential information leakage concerns 
involved with publishing new block-size data, but indicated that such 
concerns would be mitigated by publishing data on an aggregated basis, 
rather than security-by-security, and by delaying publication.
    FINRA believes that publication of non-ATS block-size data as 
described above would be beneficial to firms and the general public and 
provide interested parties with more detailed information on non-ATS 
trading activities, thus enhancing transparency in the OTC market for 
NMS stocks.
Elimination of the De Minimis Exception
    As noted above, pursuant to Rules 6110(b)(2)(B) and 6610(b)(2)(B), 
for firms executing fewer than, on average, 200 non-ATS transactions 
per day during the reporting period, FINRA publishes the volume for 
these firms on an aggregate non-attributed basis identified in the 
published data as ``De Minimis Firms.'' FINRA is proposing to eliminate 
this de minimis exception and publish on an attributed basis each 
firm's aggregate non-ATS volume (number of trades and shares) on a 
weekly or monthly basis, as applicable. As a result, each individual 
firm would be identified in the published aggregate data and there 
would no longer be a de minimis exception for published aggregate 
volume information. However, FINRA is not proposing to eliminate the de 
minimis exception for purposes of the security-specific non-ATS volume 
data under Rules 6110(b)(2)(C) and 6610(b)(2)(C). Therefore, if a firm 
averages fewer than 200 non-ATS transactions per day in a given 
security during the reporting period, FINRA would continue to aggregate 
the firm's volume in that security with that of similarly situated 
firms and there would continue to be a De Minimis Firms category for 
published security-by-security volume data.
    When FINRA amended its rules to expand its transparency initiative 
by publishing non-ATS trading volume, it noted its belief at the time 
that publishing volume information for each firm that executed only a 
small number of trades or shares in any given period would not provide 
meaningful information to the marketplace.\17\ FINRA also noted that it 
would consider whether modifications to the de minimis threshold would 
be appropriate based on feedback it may receive from interested 
parties.\18\ Since that time, FINRA has continued to review and assess 
the published data to determine whether changes are warranted that 
would improve market transparency, including whether publishing more 
granular data on trading currently aggregated in the ``De Minimis 
Firms'' category would provide meaningful information to firms and the 
public.
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    \17\ See Securities Exchange Act Release No. 75356 (July 2, 
2015), 80 FR 39463, 39464 (July 9, 2015) (Notice of Filing of File 
No. SR-FINRA-2015-020).
    \18\ See Securities Exchange Act Release No. 75356 (July 2, 
2015), 80 FR 39463, 39467 (July 9, 2015) (Notice of Filing of File 
No. SR-FINRA-2015-020).
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    Based on a review of trading data for the period from January 1, 
2018 through December 30, 2018, FINRA determined that, on average, 
there are only 37 and 33 firms with attributed volume for Tier 1 NMS 
stocks and Tier 2 NMS stocks, respectively, on a weekly basis. For OTC 
Equity Securities during the same time period, there are, on average, 
only 23 firms with attributed volume on a weekly basis. By removing the 
de minimis exception, on average, 148 and 177 firms would have their 
aggregate non-ATS volume in Tier 1 NMS stocks

[[Page 33100]]

and Tier 2 NMS stocks, respectively, published. For OTC Equity 
Securities, the number of firms that would have their aggregate non-ATS 
volume published, on average, is 124. Since a large number of small 
trades can add up to significant volume, FINRA believes that the data 
at the firm level may be more meaningful if each firm's volume is 
published, irrespective of size.
    FINRA discussed the proposed elimination of the de minimis 
exception with a number of FINRA's industry advisory committees, 
informally consulted a number of firms and solicited written comment. 
Based on the feedback received, FINRA believes that removing the de 
minimis exception for publication of aggregated non-ATS volume data 
would provide valuable additional transparency into the OTC markets 
that is not currently available.\19\
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    \19\ FINRA notes that some firms and commenters suggested that 
FINRA should also eliminate the de minimis exception for security-
by-security non-ATS volume data. FINRA continues to assess whether 
further enhancements to its published volume data may be warranted 
but is not at this time proposing to eliminate the de minimis 
exception for the security-by-security non-ATS volume data that it 
publishes on its website.
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Technical Changes
    The text of the proposed rule change also includes several other 
minor, non-substantive and conforming changes to the current rule text 
in addition to the two substantive proposed changes discussed above. 
These edits are being proposed to improve the readability and 
consistency of the rules and are not intended to create or modify any 
substantive provisions. First, Rules 6110(b)(1)(A) and (B) and 
6610(b)(1)(A) would be amended to clarify that those provisions apply 
to the publication of aggregate weekly Trading Information. This 
conforms to language in current Rules 6110(c) and 6610(c). Second, 
conforming changes would be made to Rules 6110(b)(2)(B) and 
6610(b)(2)(B) (as re-designated by the proposed rule change) to clarify 
that the remaining de minimis exceptions under those provisions apply 
to Trading Information by security. Third, the final sentence of Rule 
6610(b)(3) would be amended to correct the cross-reference to the 
definition of ``ATS Trading Information.'' Finally, Rule 6610(c)(1) 
would be amended to correct the punctuation at the end of the sentence.
    If the Commission approves the proposed rule change, FINRA proposes 
that the effective date of the proposed rule change will be no earlier 
than October 1, 2019 and no later than March 31, 2020. Currently, FINRA 
anticipates that it will begin publication of data in accordance with 
the proposed rule change in the fourth quarter of 2019 and will 
announce the specific date in a Regulatory Notice.
2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the 
provisions of Section 15A(b)(6) of the Act,\20\ 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 proposed rule change will 
provide enhanced transparency into the OTC market by providing more 
detailed information on block-size OTC transactions in NMS stocks and 
by enabling market participants and investors to better understand each 
individual firm's OTC trading volume and market share in the equity 
market.
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    \20\ 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. FINRA has undertaken an 
economic impact assessment, as set forth below, to analyze the 
regulatory need for the proposed rule change, its potential economic 
impacts, including anticipated costs and benefits, and any alternatives 
FINRA considered in assessing how to best meet its regulatory 
objectives.
Regulatory Need
    FINRA is proposing to publish new monthly aggregate block-size 
trading data for non-ATS OTC trades in NMS stocks, with the intent to 
improve market transparency relating to trading in the OTC market. As 
mentioned above, FINRA makes similar block-size trading data for trades 
in NMS stocks occurring on ATSs available to the public, and has 
received support from the industry on its transparency initiatives in 
the non-ATS OTC equity markets.
    FINRA also proposes to eliminate the de minimis exception for firms 
that have fewer than, on average, 200 non-ATS transactions per day and 
publish, on an attributed basis, each firm's aggregate non-ATS volume 
on a weekly or monthly basis, as applicable. FINRA believes that non-
ATS data at the firm level provides better insight into market activity 
when each firm's volume is published individually, irrespective of 
size.
Economic Baseline
    FINRA currently publishes monthly information on block-size trades 
in NMS stocks on ATSs, by share- and dollar-based thresholds as 
announced in Regulatory Notice 16-14, but does not make such data 
publicly available for trading in NMS stocks outside ATSs in the OTC 
equity market. Therefore, market participants and investors have access 
to trading data on block trades in only one segment of the market. In 
the sample period from January 2018 through December 2018, non-ATS OTC 
block trading volume for the 10,000 share threshold constituted, on 
average, 39.4% of the monthly share volume in the aggregate non-ATS OTC 
volume. For the same sample period, non-ATS OTC block trading volume 
for the $200,000 threshold constituted, on average, 37.7% of the 
monthly share volume in the aggregate non-ATS OTC volume. This 
represents a higher percentage compared to the share of ATS block 
trading in the aggregate ATS volume during the same period. From 
January 2018 through December 2018, ATS block trading volume for the 
10,000-share threshold constituted, on average, 11.9% of the monthly 
share volume in the aggregate ATS OTC volume. For the same sample 
period, ATS OTC block trading volume for the $200,000 threshold 
constituted, on average, 13.5% of the monthly share volume in the 
aggregate ATS OTC volume.
    FINRA also currently publishes weekly non-ATS OTC volume 
information by firm and by security on a two-week (Tier 1 NMS stocks) 
and four-week (Tier 2 NMS stocks and OTC Equity Securities) delayed 
basis, as well as aggregate non-ATS volume by firm for all NMS stocks 
and OTC Equity Securities for each calendar month on a one-month 
delayed basis. FINRA combines and publishes volume data for firms 
executing fewer than, on average, 200 non-ATS transactions per day 
during the reporting period, on an aggregate non-attributed basis under 
``De Minimis Firms.''
Economic Impacts
    The proposal described above would not impose any additional 
requirements on firms because the non-ATS OTC block trade data will be 
derived solely from trade reports already submitted to the FINRA equity 
trade reporting facilities and disseminated trade-by-trade on an 
anonymous basis through the securities information processors. In 
addition, because the data is available free of charge, FINRA does not 
believe

[[Page 33101]]

that there would be any direct costs associated with the proposal--to 
firms, investors or data consumers.
    At the same time, the proposal is anticipated to help market 
participants better understand the overall OTC trading of equities, by 
providing information that could be utilized in assessing where 
liquidity is concentrated and how order routing strategies could be 
improved. Based on a review of trading data in the sample period, there 
would be 236 firms, on average, represented in the monthly non-ATS 
block-size data, compared to 32 ATSs during the same sample period. 
Hence, the proposal would provide additional transparency into OTC 
trading activity by expanding the availability of information about OTC 
block-size trading to non-ATS volume at no required cost to firms.
    FINRA evaluated the impact of removing the de minimis exception for 
publication of aggregated non-ATS OTC volume. During the sample 
period,\21\ there were, on average, 37, 33 and 23 firms in the weekly 
volume reports for Tier 1 NMS, Tier 2 NMS and OTC Equity Securities, 
respectively. By removing the de minimis exception, the number of 
additional firms that would have their aggregate non-ATS volume 
published would be 111, 144, and 101, respectively, for the categories 
of securities described above. Their average weekly share volume 
represented 8.43%, 7.99% and 0.90% of the aggregate non-ATS OTC volume 
in the sample period. Hence, FINRA believes that expanding transparency 
to all segments of the OTC equity market would bridge gaps in 
information published across ATS versus non-ATS segments of the OTC 
equity market and removing the de minimis exception would provide a 
more complete picture of OTC trading activity, thereby reducing any 
competitive distortions that may be associated with such information 
gaps.
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    \21\ The sample period included weekly data from January 1, 2018 
through December 30, 2018.
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    FINRA also considered information leakage concerns, i.e., whether a 
firm's proprietary trading strategy could be discerned from the 
published data. FINRA believes that the proposed data dissemination 
structure mitigates such information leakage concerns, by limiting the 
granularity of the data at the firm level only, with no accompanying 
security level data. In addition, FINRA believes that the delay in 
publication is a well-calibrated effort to reduce information leakage. 
FINRA's previous experience with the publication of ATS OTC trading 
volume provides support that the proposed dissemination is expected to 
benefit market participants by providing access to meaningful 
information on non-ATS trading activity.
    FINRA also notes that there may be differences in non-ATS block-
size trading and ATS block-size trading, e.g., the total number of 
shares traded in non-ATS block-size trades of 10,000 or more shares 
tends to be a significantly higher percentage of the overall non-ATS 
OTC activity as compared to ATS block activity. Nonetheless, such 
differences are not expected to produce any information that could be 
used as a part of a trading strategy due to the reasons explained in 
the above paragraph.
Other Proposals Considered
    FINRA notes that Regulatory Notice 18-28 also solicited comment on 
a proposal to separately identify firms' volume of trading on a single 
dealer platform (``SDP''). FINRA continues to consider comments 
provided in response to Regulatory Notice 18-28 but is not proposing at 
this time to require identification of SDP trading volume.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    The proposed rule change was published for comment in Regulatory 
Notice 18-28 (September 2018). Four comments were received in response 
to the Regulatory Notice.\22\ The comments are summarized below.\23\
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    \22\ See Letter from Christopher Bok, Esq., Financial 
Information Forum to Marcia E. Asquith, Corporate Secretary, FINRA, 
dated November 9, 2018 (``FIF Letter''); letter from Stephen John 
Berger, Managing Director, Government & Regulatory Policy, Citadel 
Securities to Marcia E. Asquith, Corporate Secretary, FINRA, dated 
November 12, 2018 (``Citadel Letter''); letter from Thomas M. 
Merritt, Deputy General Counsel, Virtu Financial, Inc. to Marcia E. 
Asquith, Corporate Secretary, FINRA, dated November 14, 2018 
(``Virtu Letter''); and letter from Bob Hill, Global OTC to Marcia 
E. Asquith, Corporate Secretary, FINRA, dated November 16, 2018 
(``Global OTC Letter'').
    \23\ As noted above, Regulatory Notice 18-28 also solicited 
comment on other possible enhancements to the OTC equity trading 
volume data published on FINRA's website, including a proposal to 
separately identify firms' volume of trading on an SDP. FINRA is not 
proposing at this time to require identification of SDP trading 
volume. The discussion above is therefore limited to comments 
relevant to the proposed rule change.
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    Citadel generally supported efforts to increase market transparency 
that benefit end investors, but did not specifically comment on the two 
aspects of the proposed rule change that FINRA is proposing at this 
time.\24\
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    \24\ See Citadel Letter.
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    Virtu and Global OTC specifically supported the proposal to publish 
new non-ATS block-size data for NMS stocks.\25\ Virtu noted its belief 
that any concerns about information leakage with respect to non-ATS 
block-size data are alleviated by the one-month publication delay and 
the fact that disclosure would not be made on a security-by-security 
basis or differentiate between Tier 1 NMS stocks and Tier 2 NMS 
stocks.\26\
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    \25\ See Virtu Letter; Global OTC Letter.
    \26\ See Virtu Letter.
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    Global OTC suggested that the proposal go further by including all 
OTC Equity Securities in published monthly aggregate non-ATS block-size 
trading data, noting its belief that the public interest of including 
all OTC Equity Securities outweighs the difficulty that may arise in 
determining block thresholds that would be appropriate across all OTC 
Equity Securities.\27\ As noted above, FINRA is not proposing at this 
time to publish non-ATS block-size data for trading in OTC Equity 
Securities, but will continue to assess whether block-size trading data 
should be expanded in the future.
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    \27\ See Global OTC Letter.
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    FIF stated that the rationale for publication of non-ATS block-size 
data does not bear a valid relationship to the costs and risks 
associated with the proposal.\28\ However, FIF did not identify any 
specific costs or risks associated with the proposed publication of 
non-ATS block-size data. FINRA notes that the newly published 
information would be derived directly from data already reported to 
FINRA's equity reporting facilities and that firms would have no new 
reporting obligations as a result of the proposed rule change. Based on 
consultations with firms and industry advisory committees, FINRA 
believes that the proposal to publish non-ATS block-size data will 
provide additional transparency into non-ATS activity and enhance 
market participants' and investors' understanding of the OTC market.
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    \28\ See FIF Letter.
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    Global OTC generally supported additional transparency into OTC 
trading activity and expanding the availability of information about 
OTC trading, but did not specifically address the proposed elimination 
of the de minimis exception for publication of aggregate non-ATS volume 
data.\29\ Virtu disagreed with the proposed elimination of the de 
minimis exception because it is concerned that the ``next `logical' 
step'' would be to require the publication of transaction data on a

[[Page 33102]]

security-by-security basis.\30\ While Virtu believes that eliminating 
the de minimis exception for security-by-security volume data could 
expose firms to principal risk,\31\ Virtu did not express any specific 
concerns regarding the proposal to eliminate the de minimis exception 
for aggregate, rather than security-by-security, data. As noted above, 
FINRA is not proposing to eliminate the de minimis exception for 
purposes of security-specific non-ATS volume data.
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    \29\ See Global OTC Letter.
    \30\ See Virtu Letter.
    \31\ See Virtu Letter.
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III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) By order approve or disapprove such proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule 
change should be 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-2019-019 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-2019-019. 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-2019-019, and should be submitted 
on or before August 1, 2019.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\32\
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    \32\ 17 CFR 200.30-3(a)(12).
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J. Lynn Taylor,
Assistant Secretary.
[FR Doc. 2019-14724 Filed 7-10-19; 8:45 am]
 BILLING CODE 8011-01-P


