[Federal Register Volume 87, Number 126 (Friday, July 1, 2022)]
[Notices]
[Pages 39573-39575]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-14066]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-95165; File No. SR-FINRA-2022-017]


Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing of a Proposed Rule Change To Amend 
FINRA Rule 6750 Regarding the Publication of Aggregated Transaction 
Information on U.S. Treasury Securities

June 27, 2022.
    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 June 23, 2022, the 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    FINRA is proposing to amend FINRA Rule 6750 to provide that FINRA 
may publish or distribute aggregated transaction information and 
statistics on U.S. Treasury Securities on a more frequent basis.
    The text of the proposed rule change is available on FINRA's 
website at http://www.finra.org, at the principal office of FINRA and 
at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, FINRA included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. FINRA has prepared summaries, set forth in sections A, 
B, and C below, of the most significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    On July 10, 2017,\3\ FINRA members began reporting information on 
transactions in U.S. Treasury Securities \4\ to the Trade Reporting And 
Compliance Engine (TRACE).\5\ Information reported to TRACE regarding 
individual transactions in U.S. Treasury Securities is used for 
regulatory and other official sector purposes and is not published or 
disseminated.\6\ On December 20, 2019, the SEC approved amendments to 
Rule 6750 (Dissemination of Transaction Information) to allow FINRA to 
publish weekly aggregated transaction information and statistics on 
U.S. Treasury Securities at no charge (unless FINRA submits a rule 
filing imposing a fee for such data).\7\ Pursuant to amended Rule 
6750.01(b), on March 10, 2020 FINRA began posting on its website 
weekly, aggregate data on the trading volume of U.S. Treasury 
Securities reported to TRACE.\8\
---------------------------------------------------------------------------

    \3\ See Regulatory Notice 16-39 (October 2016) (SEC Approves 
Rule Change to Require Reporting of Transactions in U.S. Treasury 
Securities to the Trade Reporting and Compliance Engine (TRACE)); 
see also Securities Exchange Act Release No. 79116 (October 18, 
2016), 81 FR 73167 (October 24, 2016) (Order Granting Accelerated 
Approval of File No. SR-FINRA-2016-027).
    \4\ Under Rule 6710(p), a ``U.S. Treasury Security'' means a 
security, other than a savings bond, issued by the U.S. Department 
of the Treasury (the ``Treasury Department'') to fund the operations 
of the federal government or to retire such outstanding securities. 
The term ``U.S. Treasury Security'' also includes separate principal 
and interest components of a U.S. Treasury Security that has been 
separated pursuant to the Separate Trading of Registered Interest 
and Principal of Securities (STRIPS) program operated by the 
Treasury Department.
    \5\ FINRA's TRACE rules apply only to FINRA members. However, 
FINRA notes that certain banks that are not FINRA members will begin 
reporting information on transactions in specified fixed income 
securities to TRACE starting on September 1, 2022 pursuant to 
requirements adopted by the Board of Governors of the Federal 
Reserve System. See Agency Information Collection Activities: 
Announcement of Board Approval Under Delegated Authority and 
Submission to OMB, 86 FR 59716 (October 28, 2021) (Federal Reserve 
approval to implement the Treasury Securities and Agency Debt and 
Mortgage-Backed Securities Reporting Requirements (FR 2956; OMB No. 
7100-NEW)).
    \6\ Rule 6750(c)(5) provides that FINRA will not disseminate 
information on U.S. Treasury Securities.
    \7\ See Securities Exchange Act Release No. 87837 (December 20, 
2019), 84 FR 71986 (December 30, 2019) (Order Approving File No. SR-
FINRA-2019-028).
    \8\ See FINRA Press Release, FINRA Launches New Data on Treasury 
Securities Trading Volume, available at https://www.finra.org/media-center/newsreleases/2020/finra-launches-new-data-treasury-securities-trading-volume.
---------------------------------------------------------------------------

    FINRA has received favorable feedback on the weekly aggregated 
trading volume data for U.S. Treasury Securities that is currently made 
available on its website and, in consultation with the Treasury 
Department, now believes it would be appropriate to increase the 
cadence of this aggregated data. Accordingly, FINRA is proposing to 
amend paragraph (b) of Supplementary Material .01 to Rule 6750 to 
delete the word ``weekly'' so as to permit more frequent publication of 
aggregated U.S. Treasury Security transaction information and 
statistics, such as on a daily basis.\9\
---------------------------------------------------------------------------

    \9\ As it has done previously, FINRA may also continue to modify 
and enhance the format and content of the aggregate U.S. Treasury 
Security data (e.g., by adding aggregate trade count and pricing 
information). For example, in 2021, FINRA enhanced the format of the 
weekly aggregate data to include a new maturity category for nominal 
coupons: ``Greater than 10 years and less than or equal to 20 
years.'' This category was intended to highlight the on-the-run 20-
year bond and provide volume information for off-the-run Treasury 
bonds whose remaining maturity fall within the maturity band. See 
Technical Notice (April 29, 2021) (Enhancements to Weekly Aggregated 
Reports and Statistics for U.S. Treasury Securities).
---------------------------------------------------------------------------

    FINRA notes that the more frequent aggregated U.S. Treasury 
Security data would continue to not identify individual market 
participants or transactions, and FINRA would continue to not publish 
aggregated transaction information and statistics by individual U.S. 
Treasury Security (except for the category of on-the-run

[[Page 39574]]

U.S. Treasury Securities because there is only one on-the-run security 
at a time for each subtype and maturity).\10\ The aggregate U.S. 
Treasury Security data would also continue to be provided at no charge 
(unless FINRA submits a rule filing to impose a fee for this data). 
FINRA believes that the proposed rule change will benefit investors and 
market participants by providing timelier insight into U.S. Treasury 
market activity, while maintaining the confidentiality of individual 
market participants and transactions.
---------------------------------------------------------------------------

    \10\ See Rule 6750.01(b), which currently provides that 
aggregated transaction information and statistics on U.S. Treasury 
Securities will not be published or distributed by individual 
security (except for aggregated data that includes on-the-run U.S. 
Treasury Securities that may have had only one on-the-run security 
during the aggregated period), and will not identify individual 
market participants or transactions.
---------------------------------------------------------------------------

    If the Commission approves the proposed rule change, the effective 
date of the proposed rule change will be the date of Commission 
approval.
2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the 
provisions of Section 15A(b)(6) of the Act,\11\ which requires, among 
other things, that FINRA rules must be designed to prevent fraudulent 
and manipulative acts and practices, to promote just and equitable 
principles of trade, and, in general, to protect investors and the 
public interest, and Section 15A(b)(9) of the Act,\12\ which requires 
that FINRA rules not impose any burden on competition that is not 
necessary or appropriate.
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78o-3(b)(6).
    \12\ 15 U.S.C. 78o-3(b)(9).
---------------------------------------------------------------------------

    FINRA believes that the proposed rule change will benefit investors 
and market participants by providing additional insights into U.S. 
Treasury Security transaction volume, while maintaining the 
confidentiality of individual market participants and transactions. 
Accordingly, FINRA believes the proposed rule change is in the public 
interest and will help provide greater transparency in U.S. Treasury 
Securities.

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.
Economic Impact Assessment
    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 considered in assessing how to best meet the 
proposal's regulatory objectives.
Regulatory Need
    The purpose of the proposal is described above and is consistent 
with TRACE transparency initiatives.
Economic Baseline
    As mentioned above, in July 2017, FINRA member firms began 
reporting transactions in U.S. Treasury Securities to TRACE.\13\ 
Currently, there is no dissemination of transactions to the public, 
either real-time or on a delayed basis, as member firms report trade 
activity in U.S. Treasury Securities to TRACE for regulatory purposes 
only.
---------------------------------------------------------------------------

    \13\ See supra note 3.
---------------------------------------------------------------------------

    There is currently limited publicly available information on U.S. 
Treasury Security transaction volume. The Federal Reserve Bank of New 
York publishes average daily trading volume and end-of-the-week 
positions of primary dealers in U.S. Treasury Securities on a weekly 
basis.\14\ As noted above, in March 2020, FINRA began publishing weekly 
aggregate volume data in Treasury Securities.\15\
---------------------------------------------------------------------------

    \14\ See https://www.newyorkfed.org/markets/primarydealers for 
the definition of ``primary dealers'' and the weekly statistics.
    \15\ See supra note 8.
---------------------------------------------------------------------------

Economic Impacts
    The proposed dissemination of more frequent aggregate volume data 
in U.S. Treasury Securities would not impose any additional 
requirements on firms. The aggregate volume data published by FINRA 
will continue to be derived from trade reports already required to be 
submitted to TRACE. In addition, because the data would be available 
free of charge, FINRA does not believe that there would be any direct 
costs associated with the proposal for firms, investors or data 
consumers.
    FINRA expects that the proposed rule change would help market 
participants better understand the overall trading of U.S. Treasury 
Securities by providing more timely information that could be utilized 
in assessing where liquidity is concentrated by security characteristic 
and market segment. FINRA believes that publishing more frequent 
aggregated data on U.S. Treasury Securities transactions would further 
benefit market participants and the investor community by enhancing 
overall transparency.
    FINRA also considered information leakage concerns, i.e., whether 
market participants' proprietary trading strategy could be discerned 
from the published data. FINRA believes that the aggregated framework 
mitigates these concerns. As is the case under the current rule, 
aggregated transaction information and statistics on U.S. Treasury 
Securities will not be published or distributed by individual security 
(except for aggregated data that includes on-the-run U.S. Treasury 
Securities that may have had only one on-the-run security during the 
aggregated period) and will not identify individual market participants 
or transactions.
Alternatives Considered
    No other alternatives were considered for the proposed 
dissemination framework.

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

    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 [email protected]. Please include 
File Number SR-FINRA-2022-017 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.


[[Page 39575]]


All submissions should refer to File Number SR-FINRA-2022-017. 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-2022-017 and should be submitted on or before July 22, 2022.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
---------------------------------------------------------------------------

    \16\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2022-14066 Filed 6-30-22; 8:45 am]
BILLING CODE 8011-01-P


