Notice2022-14066
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
Primary source
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Published
July 1, 2022
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 87 Issue 126 (Friday, July 1, 2022)</title>
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[Federal Register Volume 87, Number 126 (Friday, July 1, 2022)]
[Notices]
[Pages 39573-39575]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-14066]
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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.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
FINRA is proposing to amend 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 <a href="http://www.finra.org">http://www.finra.org</a>, 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\
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\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 <a href="https://www.finra.org/media-center/newsreleases/2020/finra-launches-new-data-treasury-securities-trading-volume">https://www.finra.org/media-center/newsreleases/2020/finra-launches-new-data-treasury-securities-trading-volume</a>.
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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\
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\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).
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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.
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\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.
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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.
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\11\ 15 U.S.C. 78o-3(b)(6).
\12\ 15 U.S.C. 78o-3(b)(9).
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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.
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\13\ See supra note 3.
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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\
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\14\ See <a href="https://www.newyorkfed.org/markets/primarydealers">https://www.newyorkfed.org/markets/primarydealers</a> for
the definition of ``primary dealers'' and the weekly statistics.
\15\ See supra note 8.
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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
<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#2755524b420a44484a4a424953546754424409404851"><span class="__cf_email__" data-cfemail="3745425b521a54585a5a525943447744525419505841">[email protected]</span></a>. Please include
File Number SR-FINRA-2022-017 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.
[[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 (<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 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\
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\16\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2022-14066 Filed 6-30-22; 8:45 am]
BILLING CODE 8011-01-P
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