[Federal Register Volume 84, Number 196 (Wednesday, October 9, 2019)]
[Notices]
[Pages 54219-54227]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-22023]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-87205; File No. SR-FINRA-2019-024]


Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change To Amend FINRA Rule 7620B To Modify the Trade 
Reporting Fees Applicable to Participants That Use the FINRA/NYSE Trade 
Reporting Facility

October 3, 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 September 26, 2019, Financial Industry Regulatory Authority, Inc. 
(``FINRA'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by FINRA. FINRA has 
designated the proposed rule change as ``establishing or changing a 
due, fee or other charge'' under Section 19(b)(3)(A)(ii) of the Act \3\ 
and Rule 19b-4(f)(2) thereunder,\4\ 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\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \4\ 17 CFR 240.19b-4(f)(2).
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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 FINRA Rule 7620B (Trade Reporting 
Facility Reporting Fees) to modify the trade reporting fees applicable 
to participants that use the FINRA/NYSE Trade Reporting Facility 
(``FINRA/NYSE TRF'').
    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
    The FINRA/NYSE TRF, which is operated by NYSE Market (DE), Inc. 
(``NYSE Market (DE)''), is one of four FINRA facilities \5\ that FINRA 
members can use to report over-the-counter (``OTC'') trades in NMS 
stocks. While members are required to report all OTC trades in NMS 
stocks to FINRA, they may choose which FINRA Facility (or Facilities) 
to use to satisfy their trade reporting obligations.\6\
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    \5\ The four FINRA facilities are the FINRA/NYSE TRF, two FINRA/
Nasdaq Trade Reporting Facilities (together, the ``FINRA/Nasdaq 
TRF''), and the Alternative Display Facility (``ADF'' and together, 
the ``FINRA Facilities'').
    \6\ Members can use the FINRA/NYSE TRF as a backup system and 
reserve bandwidth if there is a failure at another FINRA Facility 
that supports the reporting of OTC trades in NMS stocks. As set 
forth in Trade Reporting Notice 1/20/16 (OTC Equity Trading and 
Reporting in the Event of Systems Issues), a firm that routinely 
reports its OTC trades in NMS stocks to only one FINRA Facility must 
establish and maintain connectivity and report to a second FINRA 
Facility, if the firm intends to continue to support OTC trading as 
an executing broker while its primary facility is experiencing a 
widespread systems issue.
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    As discussed below, NYSE Market (DE) proposes to modify the trade 
reporting fees applicable to FINRA members that use the FINRA/NYSE TRF 
(``FINRA/NYSE TRF Participants'' or ``Participants''). Currently, the 
monthly fee for use of the FINRA/NYSE TRF is calculated using a tiered 
fee structure based on the reporting member's OTC trading activity. 
NYSE Market (DE) proposes to:
     Change the tier basis to use just the trading activity 
reported to the FINRA/NYSE TRF, rather than using all trading activity 
published on FINRA's public website, as it does now; and
     increase the number of fee tiers to address differences in 
participant usage.
    If there were no change in reporting to the FINRA/NYSE TRF, such 
that Participants' reporting volume stayed the same as it was in the 
first quarter of 2019, under the proposed fee schedule the total 
monthly subscriber fees paid to the FINRA/NYSE TRF would decrease.
    FINRA is proposing to amend FINRA Rule 7620B (FINRA/NYSE Trade 
Reporting Facility Reporting Fees) accordingly. There is no new product 
or service accompanying the proposed fee change.
Background
The FINRA/NYSE TRF
    Under the governing limited liability company agreement,\7\ the 
FINRA/NYSE TRF has two members: FINRA and NYSE Market (DE). FINRA, the 
``SRO Member,'' has sole regulatory responsibility for the FINRA/NYSE 
TRF. NYSE Market (DE), the ``Business Member,'' is primarily 
responsible for the management of the FINRA/NYSE TRF's business affairs 
to the extent those affairs are not inconsistent with the regulatory 
and oversight functions of FINRA.
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    \7\ See the Second Amended and Restated Limited Liability 
Company Agreement of FINRA/NYSE Trade Reporting Facility LLC. The 
limited liability company agreement, which was submitted as part of 
the rule filing to establish the FINRA/NYSE TRF and was subsequently 
amended and restated, can be found in the FINRA Manual.
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    The Business Member establishes pricing for use of the FINRA/NYSE 
TRF, which pricing is implemented pursuant to FINRA rules that FINRA 
must file with the Commission and that must be consistent with the Act. 
The relevant FINRA rules are administered by NYSE Market (DE), in its 
capacity as the Business Member and operator of the

[[Page 54220]]

FINRA/NYSE TRF on behalf of FINRA,\8\ and the Business Member collects 
all fees on behalf of the FINRA/NYSE TRF. In addition, the Business 
Member is obligated to pay the cost of regulation and is entitled to 
the profits and losses, if any, derived from the operation of the 
FINRA/NYSE TRF.
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    \8\ FINRA's oversight of this function performed by the Business 
Member is conducted through a recurring assessment and review of the 
FINRA/NYSE TRF operations by an outside independent audit firm.
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    FINRA/NYSE TRF Participants are charged fees pursuant to Rule 7620B 
and may qualify for transaction credits under Rule 7610B (Securities 
Transaction Credit). In addition, pursuant to Rule 7630B (Aggregation 
of Activity of Affiliated Members), affiliated members can aggregate 
their activity for purposes of fees and credits that are dependent upon 
the volume of their activity.\9\
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    \9\ No change is proposed to be made to Rules 7610B or 7630B, 
and so there will be no change to the requirements for, or process 
of, securities transaction credits and the aggregation of affiliated 
member activity.
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    The FINRA/NYSE TRF is smaller than the FINRA/Nasdaq TRF in terms of 
reported volume: FINRA members currently use the FINRA/NYSE TRF to 
report approximately 20% of shares in NMS stocks traded OTC. For 
example, from July 2018 through June 2019, the breakout of trade report 
activity among the FINRA Facilities was as follows:

------------------------------------------------------------------------
                                      Number of reported   Percentage of
              Facility                      shares           TRF total
------------------------------------------------------------------------
FINRA/NYSE TRF......................     130,536,250,022            19.5
FINRA/NASDAQ TRF....................     540,520,980,728            80.5
------------------------------------------------------------------------

Competitive Environment
    According to the Business Member, the FINRA/NYSE TRF operates in a 
competitive environment. The FINRA Facilities have different pricing 
\10\ and compete for FINRA members' trade report activity. In turn, 
FINRA members can choose which FINRA Facility they use to report OTC 
trades in NMS stocks. The Commission has repeatedly expressed its 
preference for competition over regulatory intervention in determining 
prices, products, and services in the securities markets. Specifically, 
in Regulation NMS, the Commission highlighted the importance of market 
forces in determining prices and SRO revenues and recognized that 
current regulation of the market system ``has been remarkably 
successful in promoting market competition in its broader forms that 
are most important to investors and listed companies.'' \11\
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    \10\ Because the FINRA/NYSE TRF and FINRA/Nasdaq TRF are 
operated by different business members competing for market share, 
FINRA does not take a position on whether the pricing for one TRF is 
more favorable or competitive than the pricing for the other TRF.
    \11\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496, 37499 (June 29, 2005) (S7-10-04).
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    FINRA members currently use the FINRA/NYSE TRF to report 
approximately 20% of shares in NMS stocks traded OTC, compared to 
approximately 80% for the FINRA/Nasdaq TRF. The Business Member 
believes that pricing is the key factor for FINRA members when choosing 
which FINRA Facility to use. FINRA members can report their OTC trades 
in NMS stocks to a given FINRA Facility's competitors if they deem 
pricing levels at the other FINRA Facilities to be more favorable, so 
long as they are participants of such other facilities. At the same 
time, the Business Member believes that the current fee structure under 
Rule 7620B discourages some FINRA members from becoming FINRA/NYSE TRF 
Participants, because the current fee is not tied to how much trading 
is reported specifically to the FINRA/NYSE TRF.
    To address this issue, the Business Member has designed a fee 
structure under which FINRA/NYSE TRF Participants' monthly reporting 
fees would not be calculated using a Participant's total OTC trading 
activity. As discussed below, the proposed change would base the 
monthly fee on the Participant's share of total market volume reported 
to the FINRA/NYSE TRF. Accordingly, the Business Member believes that 
the proposed fee change will more closely correspond to actual usage 
and encourage more FINRA members to become FINRA/NYSE TRF Participants 
and use the FINRA/NYSE TRF. Such a change would make the FINRA/NYSE TRF 
more competitive with the FINRA/Nasdaq TRF and give members more 
attractive options for trade reporting, potentially encouraging FINRA 
members to use the FINRA/NYSE TRF to report more than the approximately 
20% of their shares in NMS stocks traded OTC that they currently use it 
for.
Proposed Amendments to Rule 7620B
    Under Rule 7620B, FINRA/NYSE TRF Participants are charged a flat 
fee for access to the complete range of functionality offered by the 
FINRA/NYSE TRF rather than a separate fee for each activity (e.g., a 
per trade or per side fee for reporting a trade, a separate per trade 
fee for canceling a trade, etc.) or a separate fee for 
connectivity.\12\ Rather than charging the same fee to all FINRA/NYSE 
TRF Participants irrespective of trading activity, the fees set forth 
in Rule 7620B are tiered, to tie the amount of the monthly fees to a 
Participant's trading activity.
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    \12\ See, e.g., Rules 7510(a) and 7520 (trade reporting fees and 
connectivity charges for the ADF) and Rule 7620A (trade reporting 
fees for the FINRA/Nasdaq TRF).
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The Current Monthly Fee
    As noted above, the monthly fee for use of the FINRA/NYSE TRF is 
calculated using a tiered fee structure based on a Participant's total 
OTC trading activity, whether or not it is reported to the FINRA/NYSE 
TRF. Specifically, pursuant to current Rule 7620B,\13\ each Participant 
is charged a fee based on its ``ATS & Non-ATS OTC Market Share,'' which 
is defined as the percentage calculated by dividing:
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    \13\ See Securities Exchange Release No. 79050 (October 5, 
2016), 81 FR 70462 (October 12, 2016) (SR-FINRA-2016-037).
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    a. The total number of ATS and non-ATS shares \14\ reported by the 
Participant to FINRA and published on FINRA's public website (``OTC 
Transparency Data website'') \15\ pursuant to Rule 6110 (Trading 
Otherwise than on an Exchange) \16\ during a given calendar quarter, by
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    \14\ ``ATS shares'' are shares of NMS stocks executed within a 
member's alternative trading system (``ATS'') and ``non-ATS shares'' 
are shares of NMS stocks executed OTC by a member outside of an ATS.
    \15\ See otctransparency.finra.org/otctransparency/AtsIssueData.
    \16\ Pursuant to Rule 6110, FINRA publishes on its OTC 
Transparency Data website the number of shares and trades by 
security executed OTC (``Trading Information'') by each ATS and 
member firm with a trade reporting obligation under FINRA rules. 
Trading Information published on FINRA's website is derived directly 
from OTC trades reported by the member firm to the FINRA Facilities.
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    b. the total number of all shares reported to the Consolidated Tape 
Association (``CTA'') or the Nasdaq

[[Page 54221]]

Securities Information Processor (``UTP SIP''), as applicable, during 
that period.
    The ATS & Non-ATS OTC Market Share is calculated in aggregate 
across all tapes.\17\ Such calculation is based on the data available 
for the prior full calendar quarter and determines the monthly fees in 
subsequent periods. By using the total number of ATS and non-ATS shares 
reported, the ATS & Non-ATS OTC Market Share does not limit its 
calculation to reports submitted to the FINRA/NYSE TRF.
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    \17\ There are three tapes: ``Tape A'' includes securities 
listed on the New York Stock Exchange, ``Tape B'' includes 
securities listed on NYSE American and regional exchanges, and 
``Tape C'' includes securities listed on Nasdaq.
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    The following chart sets forth the current fee tiers:

------------------------------------------------------------------------
                                                              Monthly
             ATS & non-ATS OTC market share               subscriber fee
------------------------------------------------------------------------
Greater than or equal to 2.0%...........................         $30,000
Greater than or equal to 0.5% but less than 2.0%........          15,000
Greater than or equal to 0.1% but less than 0.5%........           5,000
Less than 0.1%..........................................           2,000
------------------------------------------------------------------------

The Proposed Monthly Fee
    The Business Member has determined to adjust the fees for use of 
the FINRA/NYSE TRF to base the monthly fee on the Participant's share 
of total market volume reported to the FINRA/NYSE TRF. More 
specifically, rather than using the ATS & Non-ATS OTC Market Share, the 
proposed fees will be based on the Participant's ``FINRA/NYSE TRF 
Market Share,'' defined as the percentage calculated by dividing:
    a. The total number of shares reported to the FINRA/NYSE TRF for 
public dissemination (or ``tape'') purposes during a given calendar 
month that are attributable to a FINRA/NYSE TRF Participant, by
    b. the total number of all shares reported to the CTA or UTP SIP, 
as applicable, during that period.
    The FINRA/NYSE TRF Market Share would be calculated in aggregate 
across all tapes and would be based on the number of shares 
attributable to a FINRA/NYSE TRF Participant, irrespective of whether 
the trade is reported by the Participant or on behalf of the 
Participant by another FINRA/NYSE TRF Participant. Such calculation 
would be based on the data available for the prior full calendar 
month.\18\
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    \18\ For example, the bill issued in June would be for the month 
of May, and would be based on shares reported during May. The 
Business Member believes that having the calculation based on 
monthly data would allow the fees to reflect any changes in a 
Participant's use of the FINRA/NYSE TRF more quickly than if fees 
were calculated using quarterly data.
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    The text of Rule 7620B would be revised to be consistent with the 
changes. As noted, the fee would be calculated based on the shares 
reported to the FINRA/NYSE TRF and would no longer be based on the 
shares published on FINRA's OTC Transparency Data website. Accordingly, 
amended Rule 7620B would remove the reference to ``ATS and non-ATS'' 
shares because that classification is used on FINRA's OTC Transparency 
Data website, but not by the FINRA/NYSE TRF.
    Amended Rule 7620B would state that a transaction is attributed to 
a FINRA/NYSE TRF Participant if the Participant is identified as the 
executing party, i.e., has the trade reporting obligation under Rule 
6380B(b), in a trade report submitted to the FINRA/NYSE TRF for tape 
purposes. Finally, amended Rule 7620B would state that FINRA/NYSE TRF 
Market Share would be calculated in aggregate across all Tapes and only 
include shares reported to the Tapes.
    In addition to basing the fee on the Participant's FINRA/NYSE TRF 
Market Share, the proposed changes to Rule 7620B would expand the tier 
structure from four monthly participant fees to nine. Under the 
proposed rule change, for those Participants with a FINRA/NYSE TRF 
Market Share of less than 0.10%, the determination of the applicable 
tier would be tied to the number of tape reports submitted to the 
FINRA/NYSE TRF.
    The following chart sets forth the nine proposed fee tiers: \19\
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    \19\ Because the first sentence states that ``each participant'' 
will be charged the fee, to make the rule consistent in its 
terminology ``Subscriber'' would be replaced with ``Participant'' in 
the heading of the third column in the table.

------------------------------------------------------------------------
                                                              Monthly
  FINRA/NYSE TRF market share     Count of tape reports     participant
                                    to FINRA/NYSE TRF           fee
------------------------------------------------------------------------
Greater than or equal to 1.25%.  n/a....................         $30,000
Greater than or equal to 0.75%   n/a....................          20,000
 but less than 1.25%.
Greater than or equal to 0.50%   n/a....................          17,500
 but less than 0.75%.
Greater than or equal to 0.25%   n/a....................          15,000
 but less than 0.50%.
Greater than or equal to 0.10%   n/a....................          10,000
 but less than 0.25%.
Less than 0.10%................  25,000 or more trade              2,000
                                  reports.
Less than 0.10%................  100 or more trade                   750
                                  reports but fewer than
                                  25,000 trade reports.
Less than 0.10%................  1 or more trade reports             250
                                  but fewer than 100
                                  trade reports.
Less than 0.10%................  No trade reports.......           2,000
------------------------------------------------------------------------

    As now, the monthly fee will be charged at the end of the calendar 
month and will apply to any Participant that has submitted a 
participant application agreement to the FINRA/NYSE TRF pursuant to 
Rule 7220B (Trade Reporting Participation Requirements). If a new 
FINRA/NYSE TRF Participant submits the participant application 
agreement and reports no shares traded in a given month, the 
Participant will not be charged the monthly fee for the first two 
calendar months in order to provide time to connect to the FINRA/NYSE 
TRF.\20\
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    \20\ As is the case today, after the first two calendar months, 
the Participant will be charged regardless of connectivity.
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    The monthly fees paid by FINRA/NYSE TRF Participants will continue 
to include unlimited use of the Client Management Tool, as well as full 
access to the FINRA/NYSE TRF and supporting functionality, e.g., trade 
submission, reversal and cancellation.\21\
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    \21\ See 81 FR 70462, supra note 13, at 70465.
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Application of Proposed Fee Schedule
    The proposed fee schedule will be applied in the same manner to all 
FINRA members that are, or elect to become, FINRA/NYSE TRF 
Participants. It will not apply differently to different types or sizes 
of Participants. Rather, because it will utilize the FINRA/NYSE TRF 
Market Share, the proposed fees will be based on a Participant's 
activity on the FINRA/NYSE TRF, not, as now, on its total OTC trading 
activity, whether or not it is reported to the

[[Page 54222]]

FINRA/NYSE TRF.\22\ At the same time, by expanding the tier structure 
from four monthly participant tiers to nine, the proposed rule change 
would create a more nuanced fee structure, under which Participants' 
monthly fees would more closely correspond to the extent to which they 
use the FINRA/NYSE TRF in a given month.
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    \22\ For example, using the total number of all shares reported 
to the CTA and UTP SIP in March 2019, if Firm A, a very large firm 
with a significant amount of trade reporting volume, had 364 million 
shares per day to report to any TRF and chose to report it all to 
the FINRA/NYSE TRF for the entire month, its FINRA/NYSE TRF Market 
Share would be 4.9% and its fee would be $30,000. If instead Firm A 
chose to report 64 million shares to the FINRA/NYSE TRF and 300 
million shares to another FINRA Facility, the FINRA/NYSE TRF Market 
Share would be 0.88%, and Firm A's fee would be $20,000. The other 
FINRA Facility would charge the firm based on its fee schedule.
    By contrast, if Firm B, a more moderate sized firm, had 21 
million shares to report per day and reported all of it to the 
FINRA/NYSE TRF, its FINRA/NYSE TRF Market Share would be 0.29%, and 
Firm B would have a fee of $15,000. If it chose to report 5 million 
shares to the FINRA/NYSE TRF, its FINRA/NYSE TRF Market Share would 
be 0.07%, and it would incur a fee based on its count of tape 
reports. Specifically, if it reported 30,000 trades, the FINRA/NYSE 
TRF fee would be $2,000; if it were 500 trades, the FINRA/NYSE TRF 
fee would be $750; if it were one trade, the FINRA/NYSE TRF fee 
would be $250; and if it reported no trades, the FINRA/NYSE TRF fee 
would be $2,000. In each case, the FINRA Facility it reported the 
other shares to would charge Firm B based on its fee schedule.
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FINRA/NYSE TRF Market Share
    Measured at any given point, a Participant's FINRA/NYSE TRF Market 
Share would always be lower than or equal to its ATS & Non-ATS OTC 
Market Share. Although one is calculated monthly and the other 
quarterly, given that the denominator for both is the total number of 
shares reported to the CTA or UTP SIP during the relevant period, a 
ratio that has the shares reported only to the FINRA/NYSE TRF as the 
numerator will be smaller than, or at most equal to, a ratio that has 
all shares reported to all FINRA Facilities as the numerator. Based on 
the Business Member's comparison of the information on the OTC 
Transparency Data website with its own activity records, the Business 
Member understands that few, if any, Participants do all of their 
reporting on the FINRA/NYSE TRF. Accordingly, the Business Member 
expects that most Participants' FINRA/NYSE TRF Market Share would be 
lower than, not equal to, their ATS & Non-ATS OTC Market Share.
Proposed Tiers
    To facilitate comparison of the current and proposed tiers, the 
following table sets forth the proposed and current tiers, applicable 
monthly fee, and the number of Participants that were subject to each 
of the current tiers as of March 31, 2019.

----------------------------------------------------------------------------------------------------------------
                                                                                                     Number of
                                                                                    Monthly fee    participants
  ATS & non-ATS OTC market share (current        FINRA/NYSE TRF market share       (current and       in each
                   tiers)                              (proposed tiers)              proposed)     current tier
                                                                                                        \1\
----------------------------------------------------------------------------------------------------------------
Greater than or equal to 2.00%.............  Greater than or equal to 1.25%.....         $30,000               4
                                             Greater than or equal to 0.75% but           20,000  ..............
                                              less than 1.25%.
                                             Greater than or equal to 0.50% but           17,500  ..............
                                              less than 0.75%.
Greater than or equal to 0.50% but less      Greater than or equal to 0.25% but           15,000               4
 than 2.00%.                                  less than 0.50%.
                                             Greater than or equal to 0.10% but           10,000  ..............
                                              less than 0.25%.
Greater than or equal to 0.10% but less      ...................................           5,000               3
 than 0.50%.
Less than 0.10%............................  Less than 0.10% and 25,000 or more            2,000              18
                                              trade reports to the FINRA/NYSE
                                              TRF.
                                             Less than 0.10% and 100 or more                 750  ..............
                                              trade reports but fewer than
                                              25,000 trade reports to the FINRA/
                                              NYSE TRF.
                                             Less than 0.10% and 1 or more trade             250  ..............
                                              reports but fewer than 100 trade
                                              reports to the FINRA/NYSE TRF.
                                             Less than 0.10% and no trade                  2,000  ..............
                                              reports to the FINRA/NYSE TRF.
                                                                                 -------------------------------
    Total..................................  ...................................  ..............              29
----------------------------------------------------------------------------------------------------------------
\1\ As of March 31, 2019.

    The Business Member selected the proposed tiers and fees based on 
its evaluation of what thresholds and fees would create a more nuanced 
structure, under which Participants' monthly fees would more closely 
correspond to the extent to which they use the FINRA/NYSE TRF in a 
given month, without excessive charges. In making its evaluation, the 
Business Member utilized its comparison of the information on the OTC 
Transparency Data website with its own activity records.
    The proposed fee schedule uses different threshold percentages for 
its tiers than the current fee schedule, as shown in the table above. 
Specifically, the highest fee would still be $30,000, but the threshold 
percentage of the FINRA/NYSE TRF Market Share would be 1.25%, as 
opposed to the current tier, which sets the threshold ATS & Non-ATS OTC 
Market Share at 2.0%.
    The current fee schedule has two tiers between the lowest and 
highest tiers, i.e., for Participants with an ATS & Non-ATS OTC Market 
Share that is at least 0.10% and less than 2.0%. By contrast, under the 
proposed rule change, there would be four tiers for Participants with a 
FINRA/NYSE TRF Market Share that is at least 0.10% and less than 1.25%.
    Currently, all Participants with an ATS & Non-ATS OTC Market Share 
of less than 0.10% incur a flat monthly fee of $2,000. No fee is below 
$2,000. Under the proposed rule change, a Participant with a FINRA/NYSE 
TRF Market Share of less than 0.10% would pay a fee based on its number 
of trade reports to the FINRA/NYSE TRF. As indicated in the table 
above, a Participant with a FINRA/NYSE TRF Market Share of less than 
0.1% would be subject to a $250 or $750 monthly fee if it had one or 
more but fewer than 25,000 trade reports. It would incur the $2,000 
monthly fee if it (a) had less than 0.10% market share and 25,000 or 
more trade reports, or (b) had no trade reports.
    Currently, approximately 60% of FINRA/NYSE TRF Participants are 
subject to the flat monthly fee of $2,000

[[Page 54223]]

for having an ATS & Non-ATS OTC Market Share of less than 0.10%.\23\ 
All else being equal, the Business Member believes that the number of 
Participants with a FINRA/NYSE TRF Market Share of less than 0.10% is 
unlikely to be the same, as the fee will now more closely correspond to 
their usage of the FINRA/NYSE TRF. However, if we assume that 
Participants do not change their reporting behavior, the Business 
Member believes that most Participants would likely fall into the four 
bottom tiers.
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    \23\ For the 15 months ended March 2019, the number of FINRA/
NYSE TRF Participants subject to the flat $2,000 fee was between 17 
and 19, and the total number of Participants reporting to the FINRA/
NYSE TRF was 29 or 30.
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    The Business Member believes that using the number of trade reports 
submitted to the FINRA/NYSE TRF to help set the dividing line between 
the four bottom tiers provides a basis for distinguishing among such 
Participants, allowing the proposed fee to be more commensurate with 
the Participants' actual usage. At the same time, the Business Member 
believes that it is reasonable and equitable to charge a Participant 
the same $2,000 fee if it reports 25,000 or more reports or none at 
all, because it would create a reasonable incentive for reporting to 
the FINRA/NYSE TRF. Indeed, a Participant that submits just one report, 
rather than none, will reduce its fee from $2,000 to $250, an 87.5% 
reduction. A Participant that does not submit any reports would be 
charged $2,000 under the current fee structure.
Anticipated Application of the New Structure
    It is not possible to fully predict the number of FINRA members 
that are likely to become FINRA/NYSE TRF Participants, how many 
Participants would be subject to each of the proposed tiers, or whether 
there will be an appreciable increase--or decrease--in reporting to the 
FINRA/NYSE TRF.\24\ As noted above, the Business Member anticipates 
that the proposed pricing will incentivize Participants to increase 
their reporting to the FINRA/NYSE TRF.
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    \24\ The Business Member does not propose to change the revenue 
sharing structure. The Business Member notes, however, that the 
proposed pricing may increase revenue sharing by encouraging 
Participants that have a FINRA/NYSE TRF Market Share of less than 
0.10% to make trade reports to the FINRA/NYSE TRF in order to reduce 
their fees from $2,000 to $250 or $750. The Business Member believes 
that the increase in reporting would increase such Participants' 
revenue share as well as decrease the fee.
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    If there were no change in reporting to the FINRA/NYSE TRF, such 
that Participants' reporting volume stayed the same as it was in the 
first quarter of 2019, under the proposed fee schedule, the total 
monthly subscriber fees paid to the FINRA/NYSE TRF would decrease. More 
specifically, of the four Participants with a monthly subscriber fee of 
$30,000 as of March 31, three would remain at that rate and one would 
see its fee fall to $10,000. Of the four Participants with a monthly 
subscriber fee of $15,000, one would remain at that rate, and the 
others would pay fees ranging from $2,000 to $17,500. None of the three 
Participants with monthly subscriber fees of $5,000 would stay at that 
rate: one would see a fee increase, to $10,000, and the other two would 
be subject to fees of $750 and $2,000. Finally, of the 18 Participants 
with a monthly subscriber fee of $2,000, four would remain at $2,000 
and 14 would see a fee reduction to $750.
    The following table suggests how the new tiers would apply if more 
FINRA members were Participants. Using FINRA data for activity reported 
to the FINRA Facilities in the first quarter of 2019 from FINRA's OTC 
Transparency Data website, the table indicates the number of firms that 
would be subject to each tier if all FINRA members (excluding de 
minimis firms) were reporting to the FINRA/NYSE TRF subject to the 
current or proposed fee.\25\ For the current fee, no assumptions are 
required, as it is calculated based on the ATS & Non-ATS OTC Market 
Share. For the proposed fee, the table shows the number of firms that 
would be in each tier were they to report 25%, 50% or 100% of their 
activity to the FINRA/NYSE TRF.
---------------------------------------------------------------------------

    \25\ The table excludes FINRA members whose activity is ``de 
minimis,'' which account for 1.5% of all shares reported. Such 
firms' activity cannot be allocated, as information for firms with 
``de minimis'' volume outside of an ATS is aggregated and published 
on a non-attributed basis. See ``OTC (ATS & Non-ATS) Transparency'' 
at www.finra.org/industry/otc-%28ats-%26-non-ats%29-transparency.

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               Number of        Number of firms per tier based on percentage of  reported volume \1\
                                    FINRA/NYSE TRF market   firms per tier -----------------------------------------------------------------------------
 ATS & non-ATS OTC market share             share            under current
                                                                  fee                  25%                       50%                      100%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Greater than or equal to 2.00%..  Greater than or equal to               7  1.......................  6.......................  7.
                                   1.25%.
                                  Greater than or equal to  ..............  2.......................  ........................  4.
                                   0.75% but less than
                                   1.25%.
                                  Greater than or equal to  ..............  3.......................  2.......................  3.
                                   0.50% but less than
                                   0.75%.
Greater than or equal to 0.50%    Greater than or equal to               8  2.......................  6.......................  7.
 but less than 2.00%.              0.25% but less than
                                   0.50%.
                                  Greater than or equal to  ..............  6.......................  8.......................  7.
                                   0.10% but less than
                                   0.25%.
Greater than or equal to 0.10%    ........................              14
 but less than 0.50%.
Less than 0.10%.................  Less than 0.10% and                   33  35......................  22......................  17.
                                   25,000 or more trade
                                   reports to the FINRA/
                                   NYSE TRF.
                                  Less than 0.10% and 100   ..............  7.......................  14......................  15.
                                   or more trade reports
                                   but fewer than 25,000
                                   trade reports to the
                                   FINRA/NYSE TRF.
                                  Less than 0.10% and 1 or  ..............  6.......................  4.......................  2.
                                   more trade reports but
                                   fewer than 100 trade
                                   reports to the FINRA/
                                   NYSE TRF.

[[Page 54224]]

 
                                  Less than 0.10% and no    ..............  Not available...........  Not available...........  Not available.
                                   trade reports to the
                                   FINRA/NYSE TRF.
                                                           ---------------------------------------------------------------------------------------------
    Total Firms.................  ........................              62  62......................  62......................  62.
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Number of firms that would be in each tier had the firm reported 25%, 50% or 100% of its activity to the FINRA/NYSE TRF. Total activity based on
  data posted on the OTC Transparency Data website for the first quarter of 2019.

    FINRA has filed the proposed rule change for immediate 
effectiveness. The operative date will be October 1, 2019.
2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the 
provisions of Section 15A(b)(5) of the Act,\26\ which requires, among 
other things, that FINRA rules provide for the equitable allocation of 
reasonable dues, fees and other charges among members and issuers and 
other persons using any facility or system that FINRA operates or 
controls. All similarly situated members are subject to the same fee 
structure and access to the FINRA/NYSE TRF is offered on fair and 
nondiscriminatory terms.
---------------------------------------------------------------------------

    \26\ 15 U.S.C. 78o-3(b)(5).
---------------------------------------------------------------------------

The Proposed Rule Change Is an Equitable Allocation of Reasonable Fees
    FINRA believes that the proposed rule change is an equitable 
allocation of reasonable fees for the following reasons.
    The proposed fee would be based on the Participant's FINRA/NYSE TRF 
Market Share, rather than its ATS & Non-ATS OTC Market Share. As a 
result, the proposed fee will be based on a Participant's activity on 
the FINRA/NYSE TRF, not, as now, on its total OTC trading activity, 
whether or not it is reported to the FINRA/NYSE TRF. At the same time, 
the proposed changes to Rule 7620B would expand the tier structure from 
four monthly participant fees to nine. As a result, Participants' 
monthly fees would more closely correspond to the extent to which they 
use the FINRA/NYSE TRF in a given month. In addition, the Business 
Member believes that having the calculation based on monthly data will 
allow the fees to reflect any changes in a Participant's use of the 
FINRA/NYSE TRF more quickly than if fees were calculated on a quarterly 
basis.
    The proposed fee schedule uses different threshold percentages for 
its tiers than the current schedule, because the percentages are of a 
different ratio. Measured at any given point, a Participant's FINRA/
NYSE TRF Market Share would always be lower than or equal to its ATS & 
Non-ATS OTC Market Share. Although one is calculated monthly and the 
other quarterly, given that the denominator for both is the total 
number of shares reported to the CTA or UTP SIP during the relevant 
period, a ratio that has the shares reported only to the FINRA/NYSE TRF 
as the numerator will be smaller than, or at most, equal to, a ratio 
that has all shares reported to all FINRA Facilities as the numerator. 
Based on the Business Member's comparison of the information on the OTC 
Transparency Data website with its own activity records, it believes 
that few, if any, Participants do all of their reporting on the FINRA/
NYSE TRF. Accordingly, the Business Member expects that most 
Participants' FINRA/NYSE TRF Market Share would be lower than, not 
equal to, their ATS & Non-ATS OTC Market Share.
    The Business Member selected the proposed tiers and fees based on 
its evaluation of what thresholds and fees would create a more nuanced 
structure, under which Participants' monthly fees would more closely 
correspond to the extent to which they use the FINRA/NYSE TRF in a 
given month, without excessive charges. In making its evaluation, the 
Business Member utilized its comparison of the information on the OTC 
Transparency Data website with its own activity records.
    Currently, approximately 60% of FINRA/NYSE TRF Participants are 
subject to the flat monthly fee of $2,000 for having an ATS & Non-ATS 
OTC Market Share of less than 0.10%.\27\ All else being equal, the 
Business Member believes that the number of Participants with a FINRA/
NYSE TRF Market Share of less than 0.10% is unlikely to be the same, as 
the fee will now more closely correspond to their usage of the FINRA/
NYSE TRF. However, if we assume that Participants do not change their 
reporting behavior, the Business Member believes that most Participants 
would likely fall into the four bottom tiers.
---------------------------------------------------------------------------

    \27\ For the 15 months ended March 2019, the number of FINRA/
NYSE TRF Participants subject to the flat $2,000 fee was between 17 
and 19, and the total number of Participants reporting to the FINRA/
NYSE TRF was 29 or 30.
---------------------------------------------------------------------------

    The Business Member believes that using the number of trade reports 
submitted to the FINRA/NYSE TRF to help set the dividing line between 
the four bottom tiers would be equitable because it would provide a 
basis for distinguishing among such Participants, allowing the proposed 
fee to be more commensurate with the Participants' actual usage. At the 
same time, the Business Member believes that it is reasonable and 
equitable to charge a Participant with a FINRA/NYSE TRF Market Share of 
less than 0.10% the same $2,000 fee if it reports 25,000 or more 
reports or none at all, because it would create a reasonable incentive 
for reporting to the FINRA/NYSE TRF. Indeed, a Participant that submits 
just one report, rather than none, will reduce its fee from $2,000 to 
$250, an 87.5% reduction. It would be charged $2,000 under the current 
fee structure.
    As is true currently, the proposed fees are designed such that more 
active Participants have a higher fee, while less active Participants 
pay less. At the same time, by adding additional tiers to the current 
structure, the proposed rule change should lead to fees that are more 
reflective of Participants' activity on the FINRA/NYSE TRF.
The Proposed Rule Change Is Not Unfairly Discriminatory
    FINRA believes that the proposed rule change is not unfairly 
discriminatory for the following reasons.
    The proposed fee schedule will be assessed in the same manner on 
all FINRA members that are, or elect to become, FINRA/NYSE TRF 
Participants. It will not be assessed differently to different types or 
sizes of Participants. Access to the FINRA/NYSE TRF is offered on fair 
and non-discriminatory terms.
    FINRA members can choose among four FINRA Facilities when reporting 
OTC trades in NMS stocks: the FINRA/

[[Page 54225]]

NYSE TRF, the two FINRA/Nasdaq TRFs, or ADF. The FINRA Facilities have 
different pricing and compete for FINRA members' trade report activity. 
FINRA members will continue to have the option of using another FINRA 
Facility for purposes of reporting OTC trades in NMS stocks if they 
determine that the fees and credits of another facility are more 
favorable. The pricing structures of the other FINRA Facilities are 
publicly available, allowing FINRA members to make rational decisions 
based on the information. The Commission has repeatedly expressed its 
preference for competition over regulatory intervention in determining 
prices, products, and services in the securities markets. Specifically, 
in Regulation NMS, the Commission highlighted the importance of market 
forces in determining prices and SRO revenues and recognized that 
current regulation of the market system ``has been remarkably 
successful in promoting market competition in its broader forms that 
are most important to investors and listed companies.'' \28\
---------------------------------------------------------------------------

    \28\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496, 37499 (June 29, 2005) (S7-10-04).
---------------------------------------------------------------------------

    FINRA members currently use the FINRA/NYSE TRF to report 
approximately 20% of shares in NMS stocks traded OTC, compared to 
approximately 80% for the FINRA/Nasdaq TRF. The Business Member 
believes that pricing is the key factor for FINRA members when choosing 
which FINRA Facility to use. FINRA members can report their OTC trades 
in NMS stocks to a given FINRA Facility's competitors if they deem 
pricing levels at the other FINRA Facilities to be more favorable, so 
long as they are participants of such other facilities.
    At the same time, the Business Member believes that the current 
structure of Rule 7620B discourages FINRA members from becoming FINRA/
NYSE TRF Participants. Because it is calculated using a Participant's 
total OTC trading activity, the current fee is not tied to how much 
trading is reported to the FINRA/NYSE TRF. In other words, a member may 
not choose to become a FINRA/NYSE TRF Participant because it would then 
be subject to a fee based on all its reporting, not just its usage of 
the FINRA/NYSE TRF. The Business Member believes that the proposed fee 
change will encourage more FINRA members to become FINRA/NYSE TRF 
Participants and use the FINRA/NYSE TRF. Such a change would make the 
FINRA/NYSE TRF more competitive with the FINRA/Nasdaq TRF and give 
members more attractive options for trade reporting, potentially 
encouraging FINRA members to use the FINRA/NYSE TRF to report more than 
the approximately 20% of their shares in NMS stocks traded OTC that 
they currently use it for.
    Because it will utilize the FINRA/NYSE TRF Market Share, the 
proposed fees will be based on a Participant's activity on the FINRA/
NYSE TRF, not, as now, on its total OTC trading activity, whether or 
not it is reported to the FINRA/NYSE TRF. At the same time, by 
expanding the tier structure from four monthly participant tiers to 
nine, the proposed rule change would create a structure under which 
Participants' monthly fees would more closely correspond to the extent 
to which they use the FINRA/NYSE TRF in a given month.
    The Business Member selected the proposed tiers and fees based on 
its evaluation of what thresholds and fees would create a more nuanced 
structure, under which Participants' monthly fees would more closely 
correspond to the extent to which they use the FINRA/NYSE TRF in a 
given month, without excessive charges. In making its evaluation, the 
Business Member utilized its comparison of the information on the OTC 
Transparency Data website with its own activity records.
    The Business Member believes that, for those Participants with a 
FINRA/NYSE TRF Market Share of less than 0.10%, using the number of 
trade reports submitted to the FINRA/NYSE TRF to help set the dividing 
line between tiers provides a basis for distinguishing among such 
Participants, allowing the proposed fee to be more commensurate with 
the Participants' actual usage. At the same time, the Business Member 
believes that it is reasonable and equitable to charge a Participant 
the same $2,000 fee if it reports 25,000 or more reports or none at 
all, because it would create a reasonable incentive for reporting to 
the FINRA/NYSE TRF. Indeed, a Participant that submits just one report, 
rather than none, will reduce its fee from $2,000 to $250, an 87.5% 
reduction. It would be charged $2,000 under the current fee structure.

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. In fact, the Business Member 
believes that, rather than impose a burden on competition, the proposed 
change will benefit competition because it will give all FINRA members 
more attractive options for trade reporting. The Commission has 
repeatedly expressed its preference for competition over regulatory 
intervention in determining prices, products, and services in the 
securities markets. In Regulation NMS, the Commission highlighted the 
importance of market forces in determining prices and SRO revenues and 
recognized that current regulation of the market system ``has been 
remarkably successful in promoting market competition in its broader 
forms that are most important to investors and listed companies.'' \29\
---------------------------------------------------------------------------

    \29\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496, 37499 (June 29, 2005) (S7-10-04).
---------------------------------------------------------------------------

    Intramarket Competition. FINRA members currently use the FINRA/NYSE 
TRF to report approximately 20% of shares in NMS stocks traded OTC, 
compared to approximately 80% for the FINRA/Nasdaq TRF. Based on the 
Business Member's comparison of the information on the OTC Transparency 
Data website with its own activity records, the Business Member 
understands that few, if any, Participants do all of their reporting on 
the FINRA/NYSE TRF.
    The Business Member believes that pricing is the key factor for 
FINRA members when choosing which FINRA Facility to use. FINRA members 
can report their OTC trades in NMS stocks to a given FINRA Facility's 
competitors if they deem pricing levels at the other FINRA Facilities 
to be more favorable, so long as they are participants of such other 
facilities. At the same time, the Business Member believes that the 
current fee structure under Rule 7620B discourages some FINRA members 
from becoming FINRA/NYSE TRF Participants, because the current fee is 
not tied to how much trading is reported specifically to the FINRA/NYSE 
TRF.
    To address this issue, the Business Member has designed a fee 
structure under which FINRA/NYSE TRF Participants' monthly reporting 
fees would no longer be calculated using a Participant's total OTC 
trading activity. Instead, as discussed above, the proposed change 
would base the monthly fee on the Participant's share of total market 
volume reported to the FINRA/NYSE TRF. Accordingly, the Business Member 
believes that the proposed fee change will more closely correspond to 
actual usage and encourage more FINRA members to become FINRA/NYSE TRF 
Participants and use the FINRA/NYSE TRF, thereby

[[Page 54226]]

making it more competitive with the FINRA/Nasdaq TRF.
    The Business Member does not believe that the proposed fee would 
place certain market participants at a relative disadvantage compared 
to other market participants, because the proposed fee schedule will be 
applied in the same manner to all FINRA members that are, or elect to 
become, FINRA/NYSE TRF Participants. It will not apply differently to 
different types or sizes of Participants. Rather, the proposed fees 
will be based on a Participant's activity on the FINRA/NYSE TRF, 
because it will utilize the FINRA/NYSE TRF Market Share.\30\ At the 
same time, by expanding the tier structure from four monthly 
participant tiers to nine, the proposed rule change would create a 
structure under which Participants' monthly fees would more closely 
correspond to the extent to which they use the FINRA/NYSE TRF in a 
given month.
---------------------------------------------------------------------------

    \30\ See note 22, supra. As noted in note 6, supra, a firm that 
routinely reports its OTC trades in NMS stocks to only one FINRA 
Facility would have connectivity to a second FINRA Facility for 
backup purposes. The proposed fee change is expected to reduce costs 
for many Participants that utilize the FINRA/NYSE TRF as a backup 
facility only, because it will be calculated using the Participant's 
share of total market volume reported to the FINRA/NYSE TRF, rather 
than its total OTC trading activity. For example, if Firm A, a very 
large firm with a significant amount of trade reporting volume, had 
364 million shares per day to report and chose to report it all to 
another FINRA Facility, but kept its position as a Participant in 
the FINRA/NYSE TRF for backup purposes, its current FINRA/NYSE TRF 
fee would be $30,000 for the month, because it would be based on 
Firm A's total OTC trading activity. Under the proposed fee Firm A 
would pay only $2,000 per month, because the fee would be based on 
its reporting to the FINRA/NYSE TRF.
---------------------------------------------------------------------------

    As of March 31, 2019, there were 29 Participants, of which a 
majority of 18 were in the $2,000 per month tier. Four of the remaining 
Participants were in the $30,000 per month tier, four were in the 
$15,000 per month tier, and three were in the $5,000 per month tier. 
Assuming the number of Participants remained flat, the average fee 
incurred during March 2019 was estimated to be approximately $7,966 per 
Participant across the 29 Participants.
    If there were no change in reporting to the FINRA/NYSE TRF, such 
that Participants' reporting volume stayed the same as it was in the 
first quarter of 2019, under the proposed fee schedule, the total 
monthly subscriber fees paid to the FINRA/NYSE TRF would decrease. More 
specifically, assuming there was no change in reporting to the FINRA/
NYSE TRF, under the proposed fee schedule the average subscriber fee 
that would have been incurred would have been approximately $6,060 
across the 29 Participants, compared to approximately $7,966 per 
Participant under the current fee. Of the four Participants with a 
monthly subscriber fee of $30,000, three would remain at that rate and 
one would see its fee fall to $10,000. Of the four Participants with a 
monthly subscriber fee of $15,000, one would remain at that rate, and 
the others would pay fees ranging from $2,000 to $17,500. None of the 
three Participants with monthly subscriber fees of $5,000 would stay at 
that rate: One would see a fee increase, to $10,000, and the other two 
would be subject to fees of $750 and $2,000. Finally, of the 18 
Participants with a monthly subscriber fee of $2,000, four would remain 
at $2,000 and 14 would see a fee reduction to $750.
    Participants may potentially alter their trading activity in 
response to the proposed rule change. Specifically, those Participants 
that would incur higher fees may refrain from reporting to the FINRA/
NYSE TRF and may choose to report to another FINRA Facility. 
Alternatively, such firms may continue reporting or new firms may start 
reporting to the FINRA/NYSE TRF if they find that the proposed net cost 
of reporting and other functionalities provided represent the best 
value to their business.\31\ The net effect on any individual 
Participant of the proposed change in reporting fees will depend on the 
number of shares the Participant reports to the FINRA/NYSE TRF and the 
total number of all shares reported to the CTA or UTP SIP, as 
applicable, during a period.
---------------------------------------------------------------------------

    \31\ The FINRA/NYSE TRF does not impose a fee on new 
Participants, and so a FINRA member that opts to become a 
Participant would not incur an additional cost from the FINRA/NYSE 
TRF. In some cases, a new Participant may incur incidental costs to 
connect to the FINRA/NYSE TRF, but those are not charged by the 
FINRA/NYSE TRF. An existing Participant that ceases to be a 
Participant is not subject to any change fee by the FINRA/NYSE TRF.
---------------------------------------------------------------------------

    Intermarket Competition. The FINRA/NYSE TRF operates in a 
competitive environment. The proposed fee would not impose a burden on 
competition on other FINRA Facilities that is not necessary or 
appropriate. The FINRA Facilities have different pricing and compete 
for FINRA members' trade report activity. The pricing structures of the 
FINRA/NYSE TRF and other FINRA Facilities are publicly available, 
allowing FINRA members to make rational decisions regarding which FINRA 
Facility they use to report OTC trades in NMS stocks.
    FINRA members can choose among four FINRA Facilities when reporting 
OTC trades in NMS stocks: The FINRA/NYSE TRF, the two FINRA/Nasdaq 
TRFs, or ADF. FINRA members can report their OTC trades in NMS stocks 
to a given FINRA Facility's competitors if they determine that the fees 
and credits of another FINRA Facility are more favorable, so long as 
they are participants of such other facility.
    The Business Member believes that in such an environment the FINRA/
NYSE TRF must adjust its fees to be competitive with other FINRA 
Facilities and to attract Participant reporting. By making the FINRA/
NYSE TRF more competitive with the FINRA/Nasdaq TRF, the Business 
Member believes that the proposed fee change will encourage more FINRA 
members to become FINRA/NYSE TRF Participants and use the FINRA/NYSE 
TRF, thereby increasing competition among the FINRA Facilities and 
giving FINRA members more attractive options for trade reporting.

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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act \32\ and paragraph (f)(2) of Rule 19b-4 
thereunder.\33\ 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.
---------------------------------------------------------------------------

    \32\ 15 U.S.C. 78s(b)(3)(A).
    \33\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

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

[[Page 54227]]

     Send an email to rule-comments@sec.gov. Please include 
File Number SR-FINRA-2019-024 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-2019-024. 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 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. 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-2019-024 and should be submitted on or before October 30, 2019.
---------------------------------------------------------------------------

    \34\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\34\
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-22023 Filed 10-8-19; 8:45 am]
 BILLING CODE 8011-01-P


