July 6, 2015.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”) 
and Rule 19b-4 thereunder,
notice is hereby given that on June 29, 2015, 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. 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
and Rule 19b-4(f)(2) thereunder,
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.
I. Self-Regulatory Organization's Statement of the Terms of the Substance of the Proposed Rule Change
FINRA is proposing to remove Rule 4553 (Fees for ATS Data) from the FINRA rulebook.
Below is the text of the proposed rule change. Proposed new language is in italics; proposed deletions are in brackets.
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4000. FINANCIAL AND OPERATIONAL RULES
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4500. BOOKS, RECORDS AND REPORTS
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4550. ATS Reporting
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[4553. Fees for ATS Data]
[Fees are charged for ATS Data as set forth in this Rule. Professionals and Vendors must pay the subscription fee to receive ATS Data in accordance with this Rule and execute appropriate agreements with FINRA.]
[(1) Professionals may subscribe for the most currently published ATS Data and up to five years of historical ATS Data in a downloadable, pipe delimited format for a twelve-month subscription fee of $12,000. Such fee is not refundable or transferable.]
[(2) Payment of the Professional subscription fee described in this paragraph (b) provides the Professional with use of such ATS Data to generate Derived Data.]
[(3) Professionals may distribute ATS Data or Derived Data to their employees, affiliates, or employees of affiliates but are prohibited from providing ATS Data or Derived Data to any third party.]
[(1) Vendors may subscribe for access to the most currently published ATS Data and up to five years of historical ATS Data in a downloadable, pipe delimited format for a twelve-month subscription fee of $18,000. Such fee is not refundable or transferable.]
[(2) Payment of the Vendor subscription fee described in this paragraph (c) provides the Vendor with use of such ATS Data to generate Derived Data.]
[(3) Vendors are prohibited from providing ATS Data to any third party unless a Professional subscription has been purchased Start Printed Page 39812for each such third party in accordance with paragraph (b) above.]
[(1) There shall be no charge paid by a Non-Professional for access to the most recently published four weeks of ATS Data; however, such ATS Data will not be available in a downloadable format.]
[For purposes of this rule, the following terms have the meaning set forth:]
[(1) “ATS Data” means Trading Information published by FINRA on its Web site.]
[(2) “Derived Data” means data that is derived from ATS Data and that is not able to be (A) reverse engineered by a reasonably skilled user into ATS Data or (B) used as a surrogate for ATS Data.]
[(3) “Non-Professional” means a natural person who uses the ATS Data solely for his or her personal, non-commercial use. A “Non-Professional” is not:]
[(A) registered nor qualified in any capacity with the SEC, the Commodity Futures Trading Commission, any state securities agency, any securities exchange or association, or any commodities or futures contract market or association, nor an employee of the above and, with respect to any person identified in this subparagraph (A), uses ATS Data for other than personal, non-commercial use;]
[(B) engaged as an “investment adviser” as that term is defined in Section 202(a)(11) of the Investment Advisers Act (whether or not registered or qualified under that Act), nor an employee of the above and, with respect to any person identified in this subparagraph (B), uses ATS Data for other than personal, non-commercial use;]
[(C) employed by a bank, insurance company or other organization exempt from registration under federal or state securities laws to perform functions that would require registration or qualification if such functions were performed for an organization not so exempt, nor any other employee of a bank, insurance company or such other organization referenced above and, with respect to any person identified in this subparagraph (C), uses ATS Data for other than personal, non-commercial use; nor]
[(D) engaged in, nor has the intention to engage in, any commercial redistribution of all or any portion of the ATS Data or Derived Data.]
[(4) “Professional” means any non-natural person or any natural person that does not meet the definition of “Non-Professional” in subparagraph (3).]
[(5) “Trading Information” has the same meaning as set forth in Rule 4552.]
[(6) “Vendor” means a Professional who distributes ATS Data or Derived Data to any third party.]
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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
On January 17, 2014, the SEC approved a proposed rule change to (i) adopt Rule 4552 (Alternative Trading Systems—Trading Information for Securities Executed Within the Alternative Trading System) to require alternative trading systems (“ATSs”) 
to report to FINRA weekly volume information and number of trades regarding securities transactions within the ATS (“ATS Data”) and to publish the ATS Data on a delayed basis on FINRA's Web site; 
and (ii) amend FINRA Rules 6160, 6170, 6480, and 6720 to require each ATS to acquire and use a single, unique market participant identifier (“MPID”) when reporting information to FINRA (“MPID Requirement”).
The implementation date for the reporting requirements under Rule 4552 was May 12, 2014, and FINRA began publishing the ATS Data for equity securities on its Web site on June 2, 2014.
On May 29, 2014, the SEC approved Rule 4553, which established a fee schedule for access to the ATS Data.
The proposed rule change deletes Rule 4553.
Under Rule 4552, individual ATSs are required to submit weekly reports to FINRA regarding equity security volume information within the ATS, including share volume and number of trades for both NMS stocks and OTC equity securities.
The first reports pursuant to Rule 4552 were due to FINRA by May 28, 2014, covering the week of May 12-16, 2014.
After FINRA began receiving the self-reported data from ATSs, FINRA began publishing on its Web site, on a delayed basis, the reported information for each equity security for each ATS with appropriate disclosures that the published volume numbers are based on ATS-submitted reports and not on reports produced or validated by FINRA.
FINRA currently makes available on its Web site the ATS Data through weekly reports listing aggregate volume and number of trades by security for each ATS within the designated time period.
Rule 4553 establishes three categories of users of the ATS Data, each of which is entitled to different levels and use of data and is subject to a different fee structure: (i) Non-Professionals; (ii) Professionals; and (iii) Vendors.
Under Rule 4553, the most recently published four weeks of ATS Data is accessible to Non-Professionals 
at no Start Printed Page 39813cost on FINRA's Web site, and FINRA provides a basic web display listing all reporting ATSs and aggregate volume and number of trades for each symbol in which a trade was reported by the ATS during the designated time period.
Under Rule 4553, Professionals are required to pay an annual, enterprise-wide subscription fee of $12,000 that is non-transferable and renewable annually to access the ATS Data.
A Professional who has paid the subscription fee has access to the same ATS Data available to Non-Professionals. However, a Professional subscription allows a user access to the 27 most current weeks of published reports (Non-Professionals are limited to four weeks) as well as access to historical ATS Data in a downloadable format.
The Professional subscription allows an unlimited number of users within the firm to access the ATS Data.
Thus, regardless of the size of the entity in question, the subscription fee for the entity is $12,000 for a twelve-month subscription. Professionals are not permitted to redistribute ATS Data or Derived Data outside of the enterprise (e.g., to their customers); however, Professionals are permitted to distribute ATS Data and Derived Data within the enterprise (including the firm, any affiliates of the firm, and employees thereof). Professionals are required to agree to the terms of FINRA's ATS Data Subscriber Agreement, which establishes the terms and conditions of access to the ATS Data.
Rule 4553 also includes a Vendor subscription fee of $18,000 per year.
A Vendor subscription permits a Vendor to redistribute the ATS Data or Derived Data within and outside the enterprise; however, a Vendor may provide this data to a third party only if a yearly, non-transferable, enterprise-wide Professional subscription has been purchased for each such third party. Vendors must track specific users and their entitlements (and annual commitment term) and are subject to regular audits to ensure accurate and timely compliance with re-dissemination reporting and payment. Vendors are responsible for reporting entity usage as a result of their redistribution of the data.
FINRA established the fee rates for access to ATS Data by Professionals and Vendors to recover the costs associated with collecting, formatting, and disseminating the data.
FINRA noted, when proposing the fee, that it did not have an exact estimate as to how many subscribers will ultimately pay to access ATS Data and stated that FINRA intended to reassess the fairness and reasonableness of the fee once it had experience with the actual usage and ultimate fees paid to access ATS Data.
After approximately one year of receiving and disseminating the ATS Data on FINRA's Web site, FINRA has reviewed the usage of the ATS Data and the costs incurred and is proposing to eliminate the fee for all potential users and disseminate the ATS Data on its Web site at no charge. FINRA has found that there are significantly fewer firms and data vendors accessing the ATS Data than anticipated, which limits the opportunities for broader dissemination and analysis of the data FINRA makes available. By making the ATS Data available at no cost, FINRA believes more data vendors and firms will access the ATS Data and provide useful statistics and analysis to the industry and to individual investors and the public. FINRA currently anticipates making publicly available on its Web site 27 weeks of online reports and up to five years of historical reports available in a downloadable format.
As FINRA noted when it proposed collecting and disseminating the ATS Data, Rule 4552 was intended in part to increase transparency in the over-the-counter market. Although Rule 4552 has no doubt achieved this goal, particularly by providing individual investors with access to the ATS Data at no cost, FINRA believes that transparency may be even further enhanced by eliminating the fee for Professionals and Vendors so that individual investors and the public can benefit from more detailed and widely-available analysis of the ATS Data. Consequently, FINRA is proposing to eliminate the fee for Professionals and Vendors and make the ATS Data publicly available at no cost.
FINRA has filed the proposed rule change for immediate effectiveness. The implementation date will be July 13, 2015. FINRA staff is currently working on changes to FINRA's Web site to enable all users to access the ATS Data and to remove functionality that currently limits access to the ATS Data to either Non-Professionals or those with paid subscriptions. FINRA anticipates that these changes will be made so that the ATS Data will be publicly available beginning July 13, 2015. Until that time, the ATS Data will continue to be available only to paid subscribers or, in more limited formats, to Non-Professionals consistent with Rule 4553.
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2. Statutory Basis
FINRA believes that the proposed rule change is consistent with the provisions of Section 15A(b)(6) of the Act,
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)(5) of the Act,
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.
FINRA believes that, by eliminating the fees imposed by Rule 4553 and making the ATS Data available to the public at no cost, more data vendors and firms will use the ATS Data to provide useful statistics and analysis to the industry, individual investors, and the public. This, in turn, will further improve transparency in the over-the-counter market by making the ATS Data, and analysis of the data, more widely available not only for Professionals and Vendors, but also for individual investors who can benefit from more detailed analysis of the ATS Data.
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. FINRA believes that eliminating the fee may, in fact, remove potential burdens by widening access to the ATS Data, particularly for smaller firms that may not have been able to pay the existing Professional or Vendor fees.
Economic Impact Analysis
As described above, FINRA is proposing to remove Rule 4553 to eliminate the fee for all potential users of ATS Data and disseminate the ATS Data on its Web site at no charge. Currently, FINRA makes this data available on its Web site and charges according to the three tiers described above. In the presence of this proposed rule change, the ATS Data will continue to be made available, and FINRA will seek no fees for its usage. FINRA anticipates that the demand for the ATS Data will increase in the absence of professional and vendor fees.
FINRA believes that eliminating the fee for Professionals and Vendors to access ATS Data will extend the impact of transparency in the over-the-counter market and will not result in any burden on FINRA members or the public. Yet, investors may benefit from an externality if the wider availability of the ATS Data leads to an increased production of relevant analysis by professionals.
Also, FINRA believes—based on member firms' and vendors' feedback—that there is a wide range of market participants that will start using the ATS Data and benefit from it when it is made available free of charge.
FINRA would incur no additional costs as a result of the proposed rule change, as FINRA already aggregates and publishes the ATS Data on a weekly basis; however, FINRA will forego the revenue that partially covers the cost of maintaining the ATS Data, although both the cost and revenue have been non-material since the data dissemination started in June 2014. FINRA's experience in the past year suggests that the marginal costs to provide this information to the public is de minimis, with no material impact to its budget or members.
C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others
Although written comments were not solicited regarding the elimination of Rule 4553, FINRA has received one comment letter since the adoption of Rule 4553 that addresses the current fee structure for access to ATS Data.
The Securities Industry and Financial Markets Association (“SIFMA”) submitted a written comment letter in response to Regulatory Notice 14-48 
that, among other things, noted that SIFMA “continues to oppose FINRA charging a fee to access the [ATS] data and the fact that only a limited scope of information is available for free on the FINRA Web site.” 
A copy of Regulatory Notice 14-48 is attached as Exhibit 2a.
A copy of SIFMA's comment letter received in response to the Regulatory Notice is attached as Exhibit 2b.
FINRA believes the elimination of Rule 4553 would address the concern raised by SIFMA in its comment letter.
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 
and paragraph (f)(2) of Rule 19b-4 thereunder.
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.
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:
- Send paper comments in triplicate to Secretary, Securities and Exchange Start Printed Page 39815Commission, 100 F Street NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-FINRA-2015-023. 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 Web site (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 Web site 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 offices of FINRA. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-FINRA-2015-023, and should be submitted on or before July 31, 2015.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.34
Brent J. Fields,
[FR Doc. 2015-16860 Filed 7-9-15; 8:45 am]
BILLING CODE 8011-01-P