[Federal Register Volume 88, Number 46 (Thursday, March 9, 2023)]
[Notices]
[Pages 14653-14657]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-04786]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-97039; File No. SR-FINRA-2022-031]


Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Order Instituting Proceedings To Determine Whether To 
Approve or Disapprove Proposed Rule Change To Adopt FINRA Rules 6151 
(Disclosure of Order Routing Information for NMS Securities) and 6470 
(Disclosure of Order Routing Information for OTC Equity Securities)

March 3, 2023.
    On November 16, 2022, the Financial Industry Regulatory Authority, 
Inc. (``FINRA'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Exchange Act'') \1\ and Rule 19b-4 
thereunder,\2\ a proposed rule change to require members to (i) publish 
order routing reports for orders in OTC Equity Securities, and (ii) 
submit their order routing reports for both OTC Equity Securities and 
NMS Securities to FINRA for publication on the FINRA website. The 
proposed rule change was published for comment in the Federal Register 
on December 6, 2022.\3\ On January 18, 2023, the Commission extended 
the time period within which to approve, disapprove the proposed rule 
change, or institute proceedings to determine whether to approve or

[[Page 14654]]

disapprove the proposed rule change to March 6, 2023.\4\ The Commission 
received four comment letters on the proposed rule change, one of which 
was received after the Extension.\5\ Under Section 19(b)(3)(C) of the 
Exchange Act,\6\ the Commission is hereby instituting proceedings to 
determine whether to approve or disapprove File Number SR-FINRA-2022-
031.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 96415 (November 30, 
2022), 87 FR 74672 (``Notice'').
    \4\ See Securities Exchange Act Release No. 96699, 88 FR 4260 
(January 24, 2023) (``Extension'').
    \5\ All comments received by the Commission on the proposed rule 
change are available at: https://www.sec.gov/comments/sr-finra-2022-031/srfinra2022031.htm.
    \6\ 15 U.S.C. 78s(b)(3)(C).
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I. Summary of the Proposed Rule Change and Comments Received

    In 2018, the Commission amended SEC Rule 606(a) of Regulation 
NMS,\7\ to enhance required disclosures from broker-dealers about their 
order routing practices for NMS Securities,\8\ including enhanced 
disclosures for non-directed orders in NMS stocks that are submitted on 
a ``held'' basis in order to better allow ``customers--and retail 
investors in particular--that submit orders to their broker-dealers 
[to] be better able to assess the quality of order handling services 
provided by their broker-dealers'' and to allow customers to determine 
``whether their broker-dealers are effectively managing potential 
conflicts of interest.'' \9\
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    \7\ 17 CFR 242.606(a).
    \8\ ``NMS Securities'' include any security or class of 
securities for which transaction reports are collected, processed, 
and made available to an effective transaction reporting plan, or an 
effective national market system plan for reporting transactions in 
listed options. See 17 CFR 242.600(b).
    \9\ See Securities Exchange Act Release No. 84528, 58423 
(November 2, 2018), 83 FR 58338 (November 19, 2018). A broker-dealer 
must attempt to execute a ``held'' order immediately, while a ``not 
held'' order instead provides a broker-dealer with price and time 
discretion. Id. at 58344. See also Notice, supra note 3, at 74672 
n.5.
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    As described in more detail in the Notice, FINRA proposes to adopt 
FINRA Rule 6470 (Disclosure of Order Routing Information for NMS 
Securities), which imposes disclosure requirements for unlisted stocks 
that are generally aligned with the requirements of SEC Rule 606(a) 
disclosures, but with modifications to account for differences between 
the over-the-counter (``OTC'') markets and the market for NMS 
Securities. In addition, to improve the accessibility of these new 
disclosures, as well as SEC Rule 606(a) reports, FINRA proposes to 
adopt FINRA Rule 6151 (Disclosure of Order Routing Information for OTC 
Equity Securities) to require members to submit their order routing 
reports for NMS Securities to FINRA for centralized publication on the 
FINRA website.
    Proposed FINRA Rule 6470, entitled ``Disclosure of Order Routing 
Information for OTC Equity Securities,'' would require the publication 
of order routing disclosures for OTC Equity Securities.\10\ 
Specifically, FINRA Rule 6470(a) would require every member to make 
publicly available for each calendar quarter a report on its routing of 
non-directed orders in OTC Equity Securities that are submitted on a 
held basis during that quarter, broken down by calendar month, and keep 
such report posted on an internet website that is free and readily 
accessible to the public for a period of three years from the initial 
date of posting on the internet website (``OTC Equity Security 
reports'').\11\ These reports would be required to be separated into 
three sections: (i) domestic OTC Equity Securities; (ii) American 
Depository Receipts (``ADRs'') and foreign ordinaries that are OTC 
Equity Securities; and (iii) Canadian-listed securities trading in the 
United States as OTC Equity Securities.\12\ In addition, FINRA Rule 
6470(a) would specify that the new OTC Equity Security reports must be 
made available using the most recent versions of the XML schema and 
associated PDF renderer as published on the FINRA website,\13\ and 
FINRA Rule 6470(d) would require the reports to be made publicly 
available within one month after the end of the quarter addressed in 
the report.\14\
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    \10\ See Notice, supra note 3, at 74672 n.8. FINRA Rule 6420(f) 
defines an ``OTC Equity Security'' as any equity security that is 
not an NMS stock, other than a Restricted Equity Security. FINRA 
Rule 6420(k) defines a ``Restricted Equity Security'' as any equity 
security that meets the definition of ``restricted security'' as 
contained in Securities Act Rule 144(a)(3).
    \11\ Proposed FINRA Rule 6470 would apply to ``every member,'' 
but FINRA notes that the focus of the proposed disclosures is held 
orders from customers in OTC Equity Securities, and some members may 
not engage in any activities involving held orders from customers in 
OTC Equity Securities. See Notice, supra note 3, at 74673 n.9. If a 
member does not accept any orders in OTC Equity Securities from 
customers during a given calendar quarter (whether held or not 
held), such member would not be required to publish a report under 
Rule 6470 for that quarter. Id. Similarly, a member that accepted 
only not held orders in OTC Equity Securities from customers--but no 
held orders in OTC Equity Securities from customers--during a given 
calendar quarter would not be required to publish a report for that 
quarter. Id. Further, FINRA states that if a member accepted orders 
in OTC Equity Securities (whether held, not held, or both) only from 
other broker-dealers, but not from customers, during a given 
calendar quarter, such member would not be required to publish a 
report for that quarter. Id.
    \12\ FINRA states that to provide for consistency across member 
reports, FINRA will publish a list of the OTC Equity Security 
symbols that fall under each category, and members would be required 
to publish reports in a manner consistent with such list. See 
Notice, supra note 3, at 74673. FINRA states that it will provide 
information in the Regulatory Notice announcing the effective date 
regarding where members may access the list of OTC Equity Security 
symbols that FINRA will maintain on its website. Id. at 74674 n.11. 
FINRA also notes that these categories differ from the NMS 
Securities required to be reported for SEC Rule 606(a) reports, 
which it believes is not relevant to the OTC market. Id.
    \13\ FINRA states that it will publish the technical 
specifications for the XML schema and associated PDF renderer on its 
website for member use in generating the new reports. See Notice, 
supra note 3, at 74673 n.12. FINRA expects that, subject to the 
differences between the SEC Rule 606(a) reports and the OTC Equity 
Security reports, the XML schema and associated PDF renderer 
published by FINRA would be substantially similar to those published 
by the SEC for the SEC Rule 606(a) reports. Id. FINRA believes this 
requirement would ensure that reports are generated and published in 
standardized machine-readable and human-readable forms, which would 
benefit investors by permitting the public to more easily analyze 
and compare the OTC Equity Security reports across members, as well 
as to more easily perform combined analysis of both SEC Rule 606(a) 
and OTC Equity Security reports. Id. at 74763.
    \14\ FINRA states that it understands that some introducing 
firms route all of their orders in OTC Equity Securities to one or 
more clearing firms for further routing to other venues for 
execution. See Notice, supra note 3 at 74673 n.10. FINRA states that 
the Commission has provided guidance that, where an introducing firm 
routes all of its covered orders to one or more clearing firms for 
further routing and execution and the clearing firm in fact makes 
the routing decision, the introducing firm generally may comply with 
the order routing disclosure requirements by: (i) disclosing its 
relationship with the clearing firm(s) on its website that includes 
any payment for order flow received by the introducing firm, and 
(ii) adopting the clearing firm's disclosures by reference, provided 
that the introducing firm has examined the report and does not have 
reason to believe it materially misrepresents the order routing 
practices. Id. FINRA states that it intends to provide parallel 
guidance with respect to proposed FINRA Rule 6470. Id.
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    Pursuant to FINRA Rule 6470(a), the new OTC Equity Security reports 
would be required to include the information specified in paragraphs 
(a)(1) through (4) of proposed FINRA Rule 6470, specifically:
     the percentage of total orders \15\ for the section that 
were not held orders and held orders, and the percentage of held orders 
for the section that were non-directed orders; \16\
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    \15\ FINRA states that ``total orders'' would include all orders 
from customers for the section, including both directed and non-
directed orders from customers. See Notice, supra note 3, at 74673 
n.14.
    \16\ FINRA states that for purposes of the proposed disclosures, 
a ``non-directed order'' would mean any order from a customer other 
than a directed order. See Notice, supra note 3, at 74673-74 n.15. 
FINRA further states that consistent with the definition of 
``directed order'' under Regulation NMS, a ``directed order'' would 
mean an order from a customer that the customer specifically 
instructed the member to route to a particular venue for execution. 
See id.; 17 CFR 242.600(b). FINRA notes that, similar to the 
definition of ``customer'' under SEC Rule 600(b)(23) of Regulation 
NMS, a ``customer'' is defined under FINRA rules to exclude a broker 
or dealer. See FINRA Rule 0160(b)(4). Orders from other broker-
dealers would therefore be excluded from the proposed disclosures. 
See Notice, supra note 3, at 74673-74 n.15.

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[[Page 14655]]

     the identity of the ten venues to which the largest number 
of total non-directed held orders for the section were routed for 
execution \17\ and of any venue to which five percent or more of non-
directed held orders for the section were routed for execution, and the 
percentage of total non-directed held orders for the section routed to 
the venue; \18\
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    \17\ FINRA states that, consistent with the SEC's approach to 
SEC Rule 606(a), a ``venue'' would be defined broadly to cover any 
market center or any other person or entity to which a member routes 
orders for execution. See Notice, supra note 3, at 74674 n.16. 
Accordingly, for purposes of proposed FINRA Rule 6470, where an 
alternative trading system (``ATS'') offers both automatic order 
execution and order delivery functionality, the ATS should be 
identified as the venue only when the ATS provides order execution. 
Conversely, for purposes of proposed FINRA Rule 6470, in cases where 
the ATS instead provides order delivery, the separate market center 
to which the orders are delivered--e.g., a market maker or other 
ATS--should be identified as the venue where the order was routed 
for execution. Id.
    \18\ Proposed FINRA Rule 6470(b) would provide that a member is 
not required to identify execution venues that received less than 5% 
of non-directed held orders for a section of the member's OTC Equity 
Securities report, provided that the member has identified the top 
execution venues that in the aggregate received at least 90% of the 
member's total non-directed held orders for the section. FINRA 
states that this provision is consistent with exemptive relief that 
the Commission has provided with respect to SEC Rule 606(a) reports. 
See Notice, supra note 3, at 74674 n.17.
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     for each identified venue, the net aggregate amount of any 
payment for order flow received, payment from any profit-sharing 
relationship received, transaction fees paid, and transaction rebates 
received, both as a total dollar amount and per order, for all non-
directed held orders for the section; and
     a discussion of the material aspects of the member's 
relationship with each identified venue, including, without limitation, 
a description of any arrangement for payment for order flow and any 
profit-sharing relationship and a description of any terms of such 
arrangements, written or oral, that may influence a member's order 
routing decision including, among other things: (i) incentives for 
equaling or exceeding an agreed upon order flow volume threshold, such 
as additional payments or a higher rate of payment; disincentives for 
failing to meet an agreed upon minimum order flow threshold, such as 
lower payments or the requirement to pay a fee; (ii) volume-based 
tiered payment schedules; and (iii) agreements regarding the minimum 
amount of order flow that the member would send to a venue.\19\
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    \19\ FINRA states that the types of arrangements referenced 
above are not an exhaustive list of terms of payment for order flow 
arrangements or profit-sharing relationships that may influence a 
broker-dealer's order routing decision that would be required to be 
disclosed. See Notice, supra note 3, at 74674 n.18. For example, if 
a broker-dealer receives a discount on executions in other 
securities or some other advantage in directing order flow in a 
specific security to a venue, or if a broker-dealer receives equity 
rights in a venue in exchange for directing order flow there, then 
all terms of those arrangements would also be required to be 
disclosed. Id. Similarly, if a broker-dealer receives variable 
payments or discounts based on order types and the number of orders 
sent to a venue, such arrangements would be required to be 
disclosed. Id. However, FINRA notes that these are only examples, 
and a member would be required to disclose any other material 
aspects of its relationship with each identified venue regardless of 
whether a particular example is listed in the proposed rule text or 
otherwise discussed in this proposed rule change. Id.
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    To make both the existing SEC Rule 606(a) reports and the new OTC 
Equity Security reports more accessible for regulators, investors and 
others seeking to analyze and compare the data, FINRA is proposing to 
require that members provide the reports to FINRA for central 
publication on the FINRA website. Proposed FINRA Rule 6151 would 
require every member that is required to publish a report pursuant to 
SEC Rule 606(a) of Regulation NMS to provide the report to FINRA, in a 
manner prescribed by FINRA, within the same time and in the same 
formats that such report is required to be made publicly available 
pursuant to SEC Rule 606(a). In combination with proposed FINRA Rule 
6470(d), which would require members to provide the report required by 
paragraph (a) of FINRA Rule 6470 within one month after the end of the 
quarter addressed in the report in such a manner as may be prescribed 
by FINRA, FINRA would be able to publish both SEC Rule 606(a) and OTC 
Equity Security reports on its public website, free of charge and 
without usage restrictions.\20\
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    \20\ See Notice, supra note 3, at 74674-75. FINRA states that 
the SEC has provided guidance that introducing firms may comply with 
SEC Rule 606(a) by incorporating their clearing firm(s) reports in 
specified circumstances, and FINRA intends to provide similar 
guidance with respect to the OTC Equity Security reports required 
under proposed FINRA Rule 6470. Id. at 74675 n.25. To facilitate 
centralized access to the reports, such introducing firms must 
provide FINRA with a list of their clearing firm(s) and the 
hyperlink to the web page where they disclose their clearing firm 
relationship(s) and adopt the clearing firm(s)'s reports by 
reference. Id. Each introducing firm relying on this guidance would 
be required to provide this information to FINRA upon implementation 
of the proposed rule change and to update FINRA if the information 
previously provided changes. Id. This information will enable FINRA 
to provide investors with relevant information for all firms, 
including introducing firms incorporating clearing firm reports by 
reference, on FINRA's website. Id.
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    FINRA states that it undertook an ``economic impact assessment'' to 
analyze the potential economic impacts of the proposed rule change, 
including potential costs, benefits, and distributional and competitive 
effects, relative to the current baseline.\21\ In this analysis, FINRA 
analyzed the number of firms quoting, executing trades and routing 
orders in OTC Equity Securities over specific time periods, as well as 
the number of symbols traded per firm and average dollar volume of 
trading per symbol and per firm. In addition, FINRA published the 
proposed rule change in Regulatory Notice 21-35 (October 2021) and 
received five comments in response.\22\ FINRA provided these comments, 
as well as a summary of these comments and its responses in its filing 
with the Commission.\23\
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    \21\ See Notice, supra note 3, at 74675-78.
    \22\ Comments received by FINRA are available on FINRA's website 
at https://www.finra.org/rules-guidance/notices/21-35#comments.
    \23\ See Notice, supra note 3, at 74678-80.
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    FINRA argues in support of its proposal that the proposed 
requirement for members to publish order routing disclosures for OTC 
Equity Securities, similar to what is available under SEC rules for NMS 
Securities, would provide valuable information for investors and other 
market participants, academics, regulators and others regarding order 
routing practices in the OTC market, thereby enhancing the protection 
of investors and the public interest.\24\ In particular, FINRA believes 
that these new disclosures will enable investors to better assess the 
quality of their broker-dealers' order handling services for these 
securities, provide more information on the financial incentives that 
may affect their broker-dealers' routing decisions, and allow clearing 
firm(s)'s reports by reference.\25\ FINRA states that this information 
will enable FINRA to provide investors with relevant information for 
all firms which would allow investors to better evaluate whether their 
broker-dealers are effectively managing potential conflicts of 
interest.\26\ FINRA also argues that the proposed requirements for 
members to send their disclosure reports for both NMS Securities and 
OTC Equity Securities to FINRA for centralized publication on the FINRA 
website will make this important information more accessible for 
regulators, investors, academics and others seeking to analyze and 
compare the data, particularly across firms, and would facilitate the

[[Page 14656]]

ability of FINRA and the SEC to review the data for regulatory 
purposes.\27\
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    \24\ See Notice, supra n. 3 at 74675.
    \25\ See id.
    \26\ See id.
    \27\ See id.
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    The Commission received two comment letters that were broadly 
supportive of the proposed rule change and greater transparency on 
routing of orders in generally.\28\ One commenter submitted two letters 
and was supportive of some aspects of the rule proposal,\29\ but 
expressed concerns about and opposed other aspects of the proposal.\30\
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    \28\ See letters to Vanessa Countryman, Secretary, Commission, 
from G.P., dated November 30, 2022 (``GP Letter''); Daniel Lambden, 
dated December 5, 2022 (``Lambden Letter'').
    \29\ FIF is supportive of some aspects of the rule proposal, 
including: FINRA's proposal to maintain the same quarterly reporting 
timeframe for OTC Equity Security reports as applies for SEC Rule 
606(a) reporting; FINRA's chosen OTC equity security reporting 
categories; FINRA's assertion that it will publish and maintain a 
file of which symbols are included in each OTC equity category and 
make this file accessible to all industry members without charge 
(FIF further recommends that the symbol file be made available to 
industry members prior to the first day of each quarter, because 
requiring industry members to process daily updates to a reportable 
symbol list would significantly increase the reporting burden for 
firms); FINRA's approach of not requiring the OTC Equity Security 
reports to be broken out by order type; FINRA's proposal to require 
reporting of payments per executed order rather than per share; 
FINRA's decision to limit the OTC Equity Security reports to non-
directed held orders; and proposed FINRA Rule 6470(b) which would 
provide a limited exception to venue reporting requirements in 
proposed FINRA Rule 6470(a)(2). See FIF Letter at 7-9.
    \30\ See FIF Letter and letter to Vanessa Countryman, Secretary, 
Commission, from Howard Meyerson, Managing Director, Financial 
Information Forum, dated December 20, 2022 (``FIF Letter'') and 
dated February 3, 2023 (``FIF Letter II'').
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    That commenter states that the proposed FINRA rule, like SEC Rule 
606(a), applies when a reporting firm receives and routes a customer 
order to a second firm, and the second firm (``routing firm'') can 
route the order to various execution venues but itself cannot execute 
the order (``routing firm scenario''). The commenter also states that 
this requires the reporting firm to report the net fees paid or 
received between the routing firm and the venue in the SEC Rule 606(a) 
tables or FINRA's OTC Equity Security Routing Public Report as 
applicable, and material aspects disclosures.\31\ The commenter notes 
that the proposed FINRA rule, like SEC Rule 606(a), does not require 
the reporting of the net fees paid or received between the reporting 
broker-dealer and the routing broker in the OTC Equity Security Routing 
Public Report tables.\32\ The commenter argues that this approach 
obscures relevant information from retail customers, because, to 
understand the financial inducements faced by a reporting firm, the 
relevant information is the payments between the reporting firm and the 
routing firm.\33\ The commenter also argues that this results in 
reported data that is not comparable across broker-dealers.\34\ The 
commenter also states that this approach requires firms to report on 
financial arrangements to which they might not be a party, that the 
rules do not impose any obligation on the routing firm to provide this 
data to the reporting firm, and a reporting firm cannot effectively 
validate the data relating to routing firm scenarios.\35\ The commenter 
further states that the rule filing does not explicitly discuss the 
costs for such reporting.\36\ The commenter further suggests that if 
FINRA adopts this reporting, FINRA Rule 6470 should be revised to 
address the routing scenario.\37\ The commenter also states this 
reporting scenario should not apply for routes to foreign routing 
firms.
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    \31\ See FIF Letter at 2.
    \32\ See id.
    \33\ See id.
    \34\ See id. at 3-4.
    \35\ See id. at 5.
    \36\ See id. at 5.
    \37\ See id. at 6.
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    The commenter argues that there are a significant number of OTC 
stocks that have a limited number of available execution venues or only 
have one or two market makers, and that there is a potential risk that 
investors viewing the report for these stocks would see a high 
percentage of order flow being routed to one or two venues without 
appropriate context of the limited choices available to the reporting 
firm, and that some firms with lower trading volume in OTC equities 
could have routing relationships with a limited number of market 
makers.\38\ The commenter suggests that FINRA should identify this as a 
factor for investors to consider when reviewing a broker-dealer's OTC 
Equity Security report.\39\ The commenter also states that FINRA should 
consider whether certain categories of data that firms are required to 
report in the OTC Equity Security reports could be obtained by FINRA 
from the consolidated audit trail (``CAT'').\40\ The commenter further 
states that the rule filing does not provide clear guidance on 
reporting scenarios relating to trading on OTC Link ATS and raises 
several hypothetical situations where it believes OTC Link ATS should 
be reported as the execution venue, as opposed to where the execution 
actually took place.\41\
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    \38\ See id.
    \39\ See id.
    \40\ FIF Letter at 6. The CAT is operated pursuant a national 
market system plan approved by the Commission pursuant to Section 
11A of the Exchange Act and the rules and regulations thereunder. 
See Securities Exchange Act Release No. 79318 (Nov. 15, 2016), 81 FR 
84696 (Nov. 23, 2016).
    \41\ FIF Letter at 6 and FIF Letter II at 2-4.
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    The commenter also raises concerns about implementation of the 
proposal and argues that a longer implementation period is appropriate 
to ensure that industry members will have sufficient time to properly 
implement the planned reporting changes.\42\ The commenter states that 
it supports centralized publication of SEC Rule 606(a) reports and the 
OTC routing reports, but argues that if FINRA will publish these 
reports that firms should no longer be required to separately publish 
these reports on their own websites, and instead firms should be 
required to provide a link from its public website to the applicable 
section of the FINRA website.\43\
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    \42\ FIF also states that the Commission has not provided market 
participants an adequate period of time to comment on the rule 
proposal. FIF Letter at 9-10. FIF requests that any implementation 
timetable should run from the date that FINRA publishes technical 
specifications, schemas, interpretive FAQs and other applicable 
documentation. Id. at 9.
    \43\ FIF Letter at 7. FIF also recommends that FINRA consider 
creating a database with structured firm routing report data that 
industry members and other market participants could access through 
automated queries. Id.
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II. Proceedings To Determine Whether To Approve or Disapprove SR-FINRA-
2022-031 and Grounds for Disapproval Under Consideration

    The Commission hereby institutes proceedings pursuant to Section 
19(b)(2)(B) of the Exchange Act \44\ to determine whether the proposed 
rule change should be approved or disapproved. Institution of 
proceedings is appropriate at this time in view of the legal and policy 
issues raised by the proposal. Institution of proceedings does not 
indicate that the Commission has reached any conclusions with respect 
to any of the issues involved. Rather, the Commission seeks and 
encourages interested persons to provide additional comment on the 
proposed rule change to inform the Commission's analysis of whether to 
approve or disapprove the proposed rule change.
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    \44\ 15 U.S.C. 78s(b)(2)(B).
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    Pursuant to Section 19(b)(2)(B) of the Exchange Act,\45\ the 
Commission is

[[Page 14657]]

providing notice of the grounds for possible disapproval under 
consideration. As described above, FINRA has proposed to require 
members to publish order routing reports for orders in OTC Equity 
Securities, and submit their order routing reports for both OTC Equity 
Securities and NMS Securities to FINRA for publication on the FINRA 
website. The Commission is instituting proceedings to allow for 
additional analysis of, and input from commenters with respect to, the 
consistency of the proposal with the Section 15A(b)(6) of the Exchange 
Act,\46\ 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.
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    \45\ 15 U.S.C. 78s(b)(2)(B). Section 19(b)(2)(B) of the Exchange 
Act also provides that proceedings to determine whether to 
disapprove a proposed rule change must be concluded within 180 days 
of the date of publication of notice of the filing of the proposed 
rule change. See id. The time for conclusion of the proceedings may 
be extended for up to 60 days if the Commission finds good cause for 
such extension and publishes its reasons for so finding, or if the 
self-regulatory organization consents to the longer period. See id.
    \46\ 15 U.S.C. 78o-3(b)(6).
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III. Procedure: Request for Written Comments

    The Commission requests that interested persons provide written 
submissions of their views, data, and arguments with respect to the 
issues identified above, as well as any other concerns they may have 
with the proposal. In particular, the Commission invites the written 
view of interested persons concerning whether the proposal is 
consistent with Section 15A(b)(6) or any other provision of the 
Exchange Act, or the rules and regulations thereunder. Although there 
do not appear to be any issues relevant to approval or disapproval that 
would be facilitated by an oral presentation of views, data, and 
arguments, the Commission will consider, pursuant to Rule 19b-4, any 
request for an opportunity to make an oral presentation.\47\
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    \47\ Section 19(b)(2) of the Exchange Act, as amended by the 
Securities Act Amendments of 1975, Public Law 94-29 (June 4, 1975), 
grants the Commission flexibility to determine what type of 
proceeding--either oral or notice and opportunity for written 
comments--is appropriate for consideration of a particular proposal 
by a self-regulatory organization. See Securities Act Amendments of 
1975, Senate Comm. on Banking, Housing & Urban Affairs, S. Rep. No. 
75, 94th Cong., 1st Sess. 30 (1975).
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    Interested persons are invited to submit written data, views, and 
arguments regarding whether the proposal should be approved or 
disapproved by March 30, 2023. Any person who wishes to file a rebuttal 
to any other person's submission must file that rebuttal by April 13, 
2023.
    The Commission asks that commenters address the sufficiency of 
FINRA's statements in support of the proposal and any other issues 
raised by the proposed rule change under the Exchange Act. In this 
regard, the Commission seeks commenters' views regarding the 
application of the proposed rule in the routing firm scenario.
    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-2022-031 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-2022-031. 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-2022-031 should be submitted on or 
before March 30, 2023. Rebuttal comments should be submitted by April 
13, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\48\
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    \48\ 17 CFR 200.30-3(a)(57).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-04786 Filed 3-8-23; 8:45 am]
BILLING CODE 8011-01-P


