Notice2021-17307
Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing of Amendment No. 1 and Order Instituting Proceedings To Determine Whether To Approve or Disapprove the Proposed Rule Change, as Modified by Amendment No. 1, Relating to Security-Based Swaps
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
August 13, 2021
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 86 Issue 154 (Friday, August 13, 2021)</title>
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[Federal Register Volume 86, Number 154 (Friday, August 13, 2021)]
[Notices]
[Pages 44761-44763]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-17307]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-92617; File No. SR-FINRA-2021-008]
Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing of Amendment No. 1 and Order
Instituting Proceedings To Determine Whether To Approve or Disapprove
the Proposed Rule Change, as Modified by Amendment No. 1, Relating to
Security-Based Swaps
August 9, 2021.
I. Introduction
On April 26, 2021, the Financial Industry Regulatory Authority,
Inc. (``FINRA'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change SR-FINRA-2021-008 (``Proposed
Rule Change'') pursuant to Section 19(b)(1) of the Securities Exchange
Act of 1934 (``Exchange Act''),\1\ and Rule 19b-4 \2\ thereunder, to
amend FINRA Rules 0180, 4120, 4210, 4220, 4240 and 9610 to clarify the
application of FINRA rules to security-based swaps (``SBS'') following
the SEC's completion of its
[[Page 44762]]
rulemaking regarding SBS dealers (``SBSDs'') and major SBS participants
(``MSBSPs'') (collectively, ``SBS Entities'').\3\ The Proposed Rule
Change was published for public comment in the Federal Register on May
12, 2021.\4\ On June 14, 2021, FINRA consented to an extension of the
time period in which the Commission must approve the Proposed Rule
Change, disapprove the Proposed Rule Change, or institute proceedings
to determine whether to approve or disapprove the Proposed Rule Change
to August 10, 2021.\5\ On August 9, 2021, FINRA responded to the
comment letters received in response to the Notice and filed an
amendment to modify the Proposed Rule Change (``Amendment No. 1'').\6\
The Commission is publishing this order pursuant to Section 19(b)(2)(B)
of the Exchange Act \7\ to solicit comments on Amendment No. 1 from
interested persons and to institute proceedings to determine whether to
approve or disapprove the Proposed Rule Change, as modified by
Amendment No. 1.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ Exchange Act Release No. 91789, (May 7, 2021), 86 FR 26084
(May 12, 2021) (File No. SR-FINRA-2021-008) (``Notice'').
\4\ See id.
\5\ See letter from Robert McNamee, Assistant General Counsel,
Office of General Counsel, FINRA, to Daniel Fisher, Division of
Trading and Markets, Commission, dated June 14, 2021.
\6\ See letter from Robert McNamee, Assistant General Counsel,
Office of General Counsel, FINRA to Vanessa Countryman, Secretary,
Commission, dated August 9, 2021.
\7\ 15 U.S.C. 78s(b)(2)(B).
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II. Description of the Proposed Rule Change, as Modified by Amendment
No. 1
FINRA is proposing to amend FINRA Rules 0180, 4120, 4210, 4220,
4240 and 9610 to take into account members' SBS activities once SBS
Entities begin registering with the Commission on October 6, 2021. The
proposed amendments to these rules generally fall into three
categories. First, the Proposed Rule Change, as modified by Amendment
No. 1, would adopt a new FINRA Rule 0180, to replace expiring current
FINRA Rule 0180, that would generally apply FINRA rules to members'
activities and positions with respect to SBS, while providing limited
exceptions for those activities and positions in circumstances where
FINRA believes such exceptions are appropriate. Second, the Proposed
Rule Change, as modified by Amendment No. 1, would amend FINRA's
financial responsibility and operational rules for SBSDs and broker-
dealers to conform to the SEC's amendments to its capital, margin and
segregation requirements,\8\ and to otherwise take into account
members' SBS activities. Third, the Proposed Rule Change, as modified
by Amendment No. 1, would adopt a new margin rule specifically
applicable to SBS, which would replace the expiring interim pilot
program establishing margin requirements for credit default swaps.
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\8\ See Capital, Margin, and Segregation Requirements for
Security-Based Swap Dealers and Major Security-Based Swap
Participants and Capital and Segregation Requirements for Broker-
Dealers, Exchange Act Release No. 86175, (Jun. 21, 2019), 84 FR
43872 (Aug. 22, 2019) (File No. S7-08-12).
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Amendment No. 1 would make the following changes to the Proposed
Rule Change: (1) Extend the effective date of the proposed amendments
to FINRA Rules 0180, 4120 and 9610 from October 6, 2021 to February 6,
2022; (2) extend the effective date of the proposed amendments to FINRA
Rules 4210, 4220 and 4240 from October 6, 2021 to April 6, 2022; and
(3) conform the proposed definition of Legacy Swap in proposed FINRA
Rule 4240(d)(12) to reflect the new effective date of April 6, 2022.
III. Proceedings To Determine Whether To Approve or Disapprove File No.
SR-FINRA-2021-008 and Grounds for Disapproval Under Consideration
The Commission is instituting proceedings pursuant to Section
19(b)(2)(B) of the Exchange Act to determine whether the Proposed Rule
Change, as modified by Amendment No. 1, should be approved or
disapproved.\9\ Institution of proceedings is appropriate at this time
in view of the legal and policy issues raised by the Proposed Rule
Change, as modified by Amendment No. 1. Institution of proceedings does
not indicate that the Commission has reached any conclusions with
respect to the Proposed Rule Change, as modified by Amendment No. 1.
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\9\ 15 U.S.C. 78s(b)(2)(B).
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Pursuant to Section 19(b)(2)(B) of the Exchange Act,\10\ the
Commission is providing notice of the grounds for disapproval under
consideration. The Commission is instituting proceedings to allow for
additional analysis and input concerning whether the Proposed Rule
Change, as modified by Amendment No. 1, is consistent with the Exchange
Act and the rules thereunder.
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\10\ Id.
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IV. 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 Proposed Rule Change, as modified by Amendment No. 1. In
particular, the Commission invites the written views of interested
persons concerning whether the Proposed Rule Change, as modified by
Amendment No. 1, is consistent with the Exchange Act and the rules
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.\11\
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\11\ Section 19(b)(2) of the Act, as amended by the Securities
Acts Amendments of 1975, Public Law 94-29, 89 Stat. 97 (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 Acts Amendments of
1975, Report of the Senate Committee on Banking, Housing and Urban
Affairs to Accompany S. 249, 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 Proposed Rule Change, as modified by
Amendment No. 1, should be approved or disapproved by August 30, 2021.
Any person who wishes to file a rebuttal to any other person's
submission must file that rebuttal by September 3, 2021.
Comments may be submitted by any of the following methods:
Electronic Comments
<bullet> Use the Commission's internet comment form (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#81f3f4ede4ace2eeecece4eff5f2c1f2e4e2afe6eef7"><span class="__cf_email__" data-cfemail="750700191058161a1818101b0106350610165b121a03">[email protected]</span></a>. Please include
File No. SR-FINRA-2021-008 on the subject line.
Paper Comments
<bullet> 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 No. SR-FINRA-2021-008. 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 (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>).
Copies of the submission, all subsequent amendments, all written
statements with respect to the Proposed Rule Change, as modified by
Amendment No. 1, that are filed with the Commission, and all written
communications relating
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to the Proposed Rule Change, as modified by Amendment No. 1, 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 No. SR-FINRA-2021-008 and
should be submitted on or before August 30, 2021. If comments are
received, any rebuttal comments should be submitted on or before
September 3, 2021.
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\12\ 17 CFR 200.30-3(a)(12); 17 CFR 200.30-3(a)(57).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-17307 Filed 8-12-21; 8:45 am]
BILLING CODE 8011-01-P
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