[Federal Register Volume 88, Number 107 (Monday, June 5, 2023)]
[Notices]
[Pages 36621-36624]
[FR Doc No: 2023-11823]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-97618; File No. SR-Phlx-2023-19]

Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend Options 7
To Establish Pricing for Index Options on the Nasdaq-100 ESG Index

May 30, 2023.
    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 May 16, 2023, Nasdaq PHLX LLC (``Phlx'' or ``Exchange'') filed with
the Securities and Exchange Commission (``Commission'') the proposed
rule change as described in Items I, II, and III, below, which Items
have been prepared by the Exchange. 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

    The Exchange proposes to amend the Exchange's Pricing Schedule at
Options 7 to adopt pricing for index options on the Nasdaq-100 ESG
Index, as described further below.
    The text of the proposed rule change is available on the Exchange's
website at https://listingcenter.nasdaq.com/rulebook/phlx/rules, at the
principal office of the Exchange, 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, the Exchange 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. The Exchange 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
    The Exchange recently received approval to list index options on
the Nasdaq-100 ESG Index (``NDXESG options'').\3\ The Nasdaq-100 ESG
Index is a broad based, modified ESG Risk Rating Score-adjusted market-
capitalization-weighted index that is designed to measure the
performance of the companies in the Nasdaq-100 Index (``NDX'') that
meet specific environmental, social and governance (``ESG'')
criteria.\4\ The Nasdaq-100 ESG Index at all times consists of a
selection of securities in NDX.\5\ These options would trade under the
symbol ``EXGN.''
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    \3\ See Securities Exchange Act Release No. 97506 (May 15, 2023)
(Sr-Phlx-2023-09) (Order Granting Approval of Proposed Rule Change
to Permit the Listing and Trading of Options on the Nasdaq-100 ESG
Index) (not yet published).
    \4\ Companies are evaluated and weighted on the basis of their
business activities, controversies and ESG Risk Ratings.
    \5\ See https://indexes.nasdaqomx.com/docs/methodology_NDXESG.pdf.
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Options 7, Section 5
    The Exchange now proposes to amend its Pricing Schedule at Options
7, Section 5 to adopt pricing for NDXESG options. Specifically, the
Exchange proposes to establish transaction fees for NDXESG that are
identical to the transaction fees for NDX and NDXP. The Exchange
proposes to amend Section 5.A of Options 7 to assess the following fees
Options Transaction Charges: $0.00 for Customer \6\ orders, $0.75 per
contract for Professional,\7\ Lead Market Maker,\8\ Market Maker,\9\
Broker-Dealer \10\ and Firm \11\ orders. Similar to NDX and NDXP, a
surcharge of $0.25 per contract will be assessed to Non-Customers who
transact EXGN.
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    \6\ The term ``Customer'' applies to any transaction that is
identified by a member or member organization for clearing in the
Customer range at The Options Clearing Corporation (``OCC'') which
is not for the account of a broker or dealer or for the account of a
``Professional'' (as that term is defined in Options 1, Section
1(b)(45)).
    \7\ The term ``Professional'' applies to transactions for the
accounts of Professionals, as defined in Options 1, Section 1(b)(45)
means any person or entity that (i) is not a broker or dealer in
securities, and (ii) places more than 390 orders in listed options
per day on average during a calendar month for its own beneficial
account(s). See Options 7, Section 1(c).
    \8\ The term ``Lead Market Maker'' applies to transactions for
the account of a Lead Market Maker (as defined in Options 2, Section
12(a)). A Lead Market Maker is an Exchange member who is registered
as an options Lead Market Maker pursuant to Options 2, Section
12(a). An options Lead Market Maker includes a Remote Lead Market
Maker which is defined as an options Lead Market Maker in one or
more classes that does not have a physical presence on an Exchange
floor and is approved by the Exchange pursuant to Options 2, Section
11. See Options 7, Section 1(c). The term ``Floor Lead Market
Maker'' is a member who is registered as an options Lead Market
Maker pursuant to Options 2, Section 12(a) and has a physical
presence on the Exchange's trading floor. See Options 8, Section
2(a)(3).
    \9\ The term ``Market Maker'' is defined in Options 1, Section
1(b)(28) as a member of the Exchange who is registered as an options
Market Maker pursuant to Options 2, Section 12(a). A Market Maker
includes SQTs and RSQTs as well as Floor Market Makers. See Options
7, Section 1(c). The term ``Floor Market Maker'' is a Market Maker
who is neither an SQT or an RSQT. A Floor Market Maker may provide a
quote in open outcry. See Options 8, Section 2(a)(4).
    \10\ The term ``Broker-Dealer'' applies to any transaction which
is not subject to any of the other transaction fees applicable
within a particular category. See Options 7, Section 1(c).
    \11\ The term ``Firm'' applies to any transaction that is
identified by a member or member organization for clearing in the
Firm range at The Options Clearing Corporation. See Options 7,
Section 1(c).
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Other Changes to Options 7
    By way of background, the proprietary products listed within
Options 7, Section 5.A, NDX, NDXP, XND, and VOLQ, are commonly excluded
from a variety of pricing programs. The Exchange notes that the reason
for such exclusion is because the Exchange has expended considerable
resources developing and maintaining its proprietary products. NDXESG
would be excluded from the same pricing once it is added to the list of
proprietary products within Options 7, Section 5.A as NDXESG is also a
proprietary product. Each exclusion is discussed below.
    Today, the Customer Rebates in Options 7, Section 2 of the Pricing
Schedule are not paid on broad-based index options symbols listed
within Options 7, Section 5.A. However, broad-based index options
symbols listed within Options 7, Section 5.A. will count toward the
volume requirement to qualify for a Customer Rebate Tier. The Exchange
proposes to apply the Customer Rebate program in the same manner for
NDXESG.
    Today, Options 7, Section 4 pricing for electronic orders (both
simple and complex orders) excludes broad-based index options symbols
listed within Options 7, Section 5.A. Also, broad-based index options
symbols listed within Options 7, Section 5.A are excluded from a
variety of fee programs in Options 7, Section 4 including, the
``Monthly Market Maker Cap,'' \12\ ``Monthly Firm Fee Cap,'' \13\
facilitation orders pursuant to Options 8, Section 30,\14\ BD-Customer
Facilitation,\15\ ``Strategy Caps,'' and Marketing Fees.
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    \12\ Lead Market Makers and Market Makers are subject to a
``Monthly Market Maker Cap'' of $500,000 for: (i) electronic Option
Transaction Charges, excluding surcharges and excluding options
overlying broad-based index options symbols listed within Options 7,
Section 5.A; and (ii) QCC Transaction Fees (as defined in Exchange
Options 3, Section 12 and Floor QCC Orders, as defined in Options 8,
Section 30(e)). See Options 7, Section 4.
    \13\ Firms are subject to a $200,000 ``Monthly Firm Fee Cap''.
Firm Floor Option Transaction Charges and QCC Transaction Fees, in
the aggregate, for one billing month that exceed the Monthly Firm
Fee Cap per member or member organization, when such members or
member organizations are trading in their own proprietary account,
are subject to a reduced transaction fee of $0.02 per capped
contract unless there is no fee or the fee is waived. See Options 7,
Section 4.
    \14\ The Firm Floor Options Transaction Charges are waived for
members executing facilitation orders pursuant to Options 8, Section
30 when such members are trading in their own proprietary account
(including Cabinet Options Transaction Charges). The Firm Floor
Options Transaction Charges are waived for the buy side of a
transaction if the same member or its affiliates under Common
Ownership represents both sides of a Firm transaction when such
members are trading in their own proprietary account. See Options 7,
Section 4.
    \15\ Broker-Dealer Floor Options Transaction Charges (including
Cabinet Options Transaction Charges) are waived for members
executing facilitation orders pursuant to Options 8, Section 30 when
such members would otherwise incur this charge for trading in their
own proprietary account contra to a Customer (``BD-Customer
Facilitation''), if the member's BD-Customer Facilitation average
daily volume (including both FLEX and non-FLEX transactions) exceeds
10,000 contracts per day in a given month. See Options 7, Section 4.
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    Broad-based index options symbols listed within Options 7, Section
5.A. are not subject to Options 7, Section 6.A. PIXL \16\ Pricing.
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    \16\ A member may electronically submit for execution an order
it represents as agent on behalf of a Public Customer, broker-
dealer, or any other entity (``PIXL Order'') against principal
interest or against any other order it represents as agent (an
``Initiating Order'') provided it submits the PIXL Order for
electronic execution into the PIXL Auction (``Auction'') pursuant to
Options 3, Section 13.
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    Today, broad-based index options symbols listed within Options 7,
Section 5.A are not assessed the FLEX transaction fees set forth in
Options 7, Section 6.B, because broad-based index options symbols
listed within Options 7, Section 5.A are not considered Eligible
Contracts.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\17\ in general, and furthers the objectives of
Sections 6(b)(4) and 6(b)(5) of the Act,\18\ in particular, in that it
provides for the equitable allocation of

reasonable dues, fees and other charges among members and issuers and
other persons using any facility, and is not designed to permit unfair
discrimination between customers, issuers, brokers, or dealers.
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    \17\ 15 U.S.C. 78f(b).
    \18\ 15 U.S.C. 78f(b)(4) and (5).
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Options 7, Section 5
    The Exchange believes it is reasonable to assess the proposed
Options Transaction Charge and Non-Customer surcharge as discussed
above for EXGN because the proposed pricing reflects the exclusive and
proprietary nature of this product. Similar to NDX and NDXP the
Exchange continues to expend resources to build and list proprietary
products. Further, the Exchange notes that with its products, market
participants are offered an opportunity to transact in NDX, NDXP, XND,
or EXGN or separately execute options overlying PowerShares QQQ Trust
(``QQQ'').\19\ Offering such proprietary products provides market
participants with a variety of choices in selecting the product they
desire to utilize in order to transact in the Nasdaq-100 Index. These
transaction fees enable Phlx to innovate and offer new proprietary
products, which in turn incentivizes growth and competition for the
innovation of additional products in the options industry. Further, the
Exchange believes that the proposed rates for EXGN are reasonable
because the proposed fees are identical to fees assessed for NDX and
NDXP.
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    \19\ QQQ is an exchange-traded fund based on the same Nasdaq-100
Index as NDX, NDXP, and XND.
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    The Exchange believes that the proposed rates for EXGN are
equitable and not unfairly discriminatory because the Exchange will
assess this fee uniformly to all Non-Customers. The Exchange similarly
believes that the proposed $0.25 per contract surcharge is equitable
and not unfairly discriminatory because it will apply uniformly to all
Non-Customers. The Exchange believes it is equitable and not unfairly
discriminatory to assess no transaction fees to Customers for EXGN
because Customer orders bring valuable liquidity to the market, which
liquidity benefits other market participants. Customer liquidity
benefits all market participants by providing more trading
opportunities, which attracts Lead Market Makers and Market Makers. An
increase in the activity of these market participants in turn
facilitates tighter spreads, which may cause an additional
corresponding increase in order flow from other market participants.
Other Fee Programs
    Excluding EXGN from the same pricing programs as all other
proprietary products within Options 7, Section 5.A is reasonable
because the Exchange seeks to treat EXGN in the same manner as other
proprietary products. More specifically, NDX, NDXP, and XND, and now
EXGN, represent similar options on the same underlying Nasdaq-100
Index.
    It is reasonable to not pay Customer Rebates on EXGN in any rebate
category because this index option will be exclusively listed on Phlx
only. The original intent of the Customer Rebate Program was to pay
rebates on electronically-delivered multiply-listed options. By
definition, EXGN will not be a multiply-listed option, and the Exchange
does not desire to pay rebates on EXGN because of the exclusivity of
this option. While the Exchange will not pay any Customer Rebates on
EXGN transactions, the Exchange also believes it is reasonable to count
EXGN in the total volume to qualify a market participant for these
rebates as market participants would be incentivized to transact in
EXGN to qualify for the Customer Rebate Tiers. The Exchange believes
that its proposal to not pay Customer Rebates on EXGN, but to count
EXGN volume toward the volume requirement to qualify for a rebate tier
is equitable and not unfairly discriminatory because the Exchange would
apply the rebate program as described uniformly for all market
participants. Any market participant is eligible to earn a Customer
Rebate.
    The Exchange believes that the proposed updates in Options 7,
Section 4 in connection with the application of certain fee programs to
EXGN are reasonable, equitable, and not unfairly discriminatory.
Particularly, the Exchange believes that it is reasonable to exclude
EXGN from the Non-Penny complex surcharge in note 7 of Options 7,
Section 4, the Monthly Market Maker Cap, the Monthly Firm Fee Cap, the
Floor Options Transaction Charge waivers, the Strategy Caps, and the
Marketing Fees in the same manner in which NDX and NDXP are currently
excluded from the same programs today. The Exchange believes it is
appropriate to update these fee programs in a manner that similarly
situates EXGN with NDX and NDXP as these are all proprietary products
that are based on the Nasdaq-100 Index. In addition, similar to NDX and
NDXP, the Exchange seeks to exclude EXGN from programs that cap or
waive transaction fees for market participants. As it relates to the
Marketing Fee, the Exchange believes it is reasonable to exclude EXGN
from this fee, similar to NDX and NDXP today, because the purpose of
the Marketing Fee is to generate more Customer order flow to the
Exchange. Because EXGN will be an exclusively listed product on Phlx,
the Exchange does not believe that applying a Marketing Fee is
necessary for this product. The Exchange's proposal to exclude EXGN
from the various fee programs in Options 7, Section 4 as discussed
above is equitable and not unfairly discriminatory because the programs
will uniformly exclude all market participant orders in EXGN. The
Exchange notes that its proposal does not alter any of the existing fee
programs, but instead merely proposes to exclude EXGN in those programs
in the same way that NDX and NDXP are currently excluded.
    The Exchange's proposal to exclude EXGN from PIXL pricing in
Options 7, Section 6.A is reasonable because the Exchange intends to
assess the same fees across the board for EXGN transactions. This will
align the pricing structure for EXGN with NDX and NDXP. The proposed
changes are equitable and not unfairly discriminatory because the
Exchange will uniformly exclude EXGN from PIXL pricing for all market
participants, and instead uniformly charge them the Options 7, Section
5.A pricing.
    The Exchange believes that its proposal to assess FLEX EXGN options
the Options Transaction Charges and Non-Customer options surcharge in
Options 7, Section 5.A is reasonable because the Exchange intends to
assess the same fees across the board for EXGN transactions.
Specifically, the Exchange will apply the proposed EXGN options
surcharge of $0.25 per contract to Non-Customers in FLEX EXGN options.
Further, the Exchange will apply the proposed EXGN Options Transaction
Charges of $0.75 per contract (Non-Customer) and $0.00 per contract
(Customer) to FLEX EXGN options. FLEX NDX and NDXP options are likewise
assessed the same Options Transaction Charge and Non-Customer options
surcharge that NDX and NDXP options are assessed today. The Exchange's
proposal is equitable and not unfairly discriminatory because the
Exchange will uniformly apply these fees to FLEX EXGN options to all
similarly situated market participants.
    The Exchange believes it is reasonable to exclude EXGN from
Eligible Contracts for purposes of qualifying for a MARS Payment in the
same manner in which NDX and NDXP are currently excluded today. The
Exchange believes it is appropriate to update its MARS program in a
manner that similarly

situates EXGN with its other proprietary products, NDX and NDXP, which
are all based on the Nasdaq-100 Index. The Exchange believes that its
proposal is equitable and not unfairly discriminatory because the
Exchange will uniformly exclude EXGN from MARS for all market
participants.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act. In terms of inter-market
competition, the Exchange notes that it operates in a highly
competitive market in which market participants can readily favor
competing venues if they deem fee levels at a particular venue to be
excessive, or rebate opportunities available at other venues to be more
favorable. The Exchange notes that with its products, market
participants are offered an opportunity to transact in NDX, NDXP, XND,
or EXGN, or separately execute options overlying QQQ. Offering these
products provides market participants with a variety of choices in
selecting the product they desire to utilize to transact in the Nasdaq-
100 Index.
    Further, the Exchange does not believe that the proposed rule
change will impose any burden on intra-market competition that is not
necessary or appropriate in furtherance of the purposes of the Act
because the proposed EXGN pricing will apply uniformly to all similarly
situated market participants. Specifically, all Non-Customers will be
assessed a uniform Options Transaction Charge and options surcharge
while Customers receive free executions. As discussed above, Customer
liquidity benefits all market participants by providing more trading
opportunities, which attracts other market participants, thus
facilitating tighter spreads and increased order flow.

C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others

    No written comments were either solicited or received.

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)(ii) of the Act.\20\
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    \20\ 15 U.S.C. 78s(b)(3)(A)(ii).
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    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: (i)
necessary or appropriate in the public interest; (ii) for the
protection of investors; or (iii) 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:

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-Phlx-2023-19 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-Phlx-2023-19. 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 the filing also will be available for inspection
and copying at the principal office of the Exchange. Do not include
personal identifiable information in submissions; you should submit
only information that you wish to make available publicly. We may
redact in part or withhold entirely from publication submitted material
that is obscene or subject to copyright protection. All submissions
should refer to File Number SR-Phlx-2023-19 and should be submitted on
or before June 26, 2023.
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    \21\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\21\
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-11823 Filed 6-2-23; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register: January 22, 2008 (Volume 73, Number 14)]
[Notices]
[Page 3783-3785]
[DOCID:fr22ja08-106]

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SECURITIES AND EXCHANGE COMMISSION

Release No. 34-57143; File No. SR-FINRA-2007-034]

Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change Relating to Dissemination of Trade Reports for OTC
Equity Securities Transactions of Fewer Than 100 Shares

 January 14, 2008.
    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 December 19, 2007, Financial Industry Regulatory Authority, Inc.
(``FINRA'') (f/k/a National Association of Securities Dealers, Inc.
(``NASD'')) filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II below, which Items have been substantially prepared by FINRA. FINRA
filed the proposal as a ``non-controversial'' proposed rule change
pursuant to Section 19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-
4(f)(6) thereunder,\4\ which renders it effective upon filing with the
Commission. 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.
    \3\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    FINRA's proposed rule change relates to the dissemination of last
sale information for transactions of fewer than 100 shares in OTC
Equity Securities.\5\ Specifically, FINRA is proposing that for OTC
Equity Securities that traded at or above $175.00 per share during the
fourth calendar quarter of 2007, FINRA will change the ``unit of
trade'' from 100 shares to one share (such that transactions in these
securities will no longer be considered ``odd-lot transactions'' for
dissemination purposes) and will disseminate last sale information for
all reported transactions of one or more shares in these securities.
The proposed rule change amends FINRA's trade report dissemination
policy and does not require amendments to any rules.
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    \5\ NASD Rule 6610(d) defines OTC Equity Security as ``any non-
exchange-listed security and certain exchange-listed securities that
do not otherwise qualify for real-time trade reporting.''
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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 those 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 parts of such statements.

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

1. Purpose
    Only reports of transactions that meet the ``unit of trade'' test
pursuant to FINRA's dissemination protocols are publicly disseminated.
As a general matter, OTC Equity Securities have a unit of trade of 100
shares. While

transactions of fewer than 100 shares (commonly referred to as ``odd-
lot transactions'') in such securities are reported to FINRA,\6\ they
are not publicly disseminated. FINRA believes that, consistent with the
dissemination protocols for NMS stocks, disseminating last sale
information for odd-lot transactions would provide minimal market
value, particularly with respect to low-priced OTC Equity Securities.
However, with respect to high-priced OTC Equity Securities, many (if
not all) transactions may be for fewer than the standard unit of trade
of 100 shares. Thus, information regarding trades at these levels is
more valuable to the market and investors. In fact, trading data for
such securities could effectively be unavailable to market participants
if only trades of 100 or more shares were disseminated.
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    \6\ See NASD Rule 6620.
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    Accordingly, FINRA disseminates last sale information for
transactions of fewer than 100 shares in a limited number of high-
priced OTC Equity Securities today. For these OTC Equity Securities,
the unit of trade has been designated as one share, such that any
transaction of one or more shares will meet the unit of trade test for
that security and be disseminated. For example, if OTC Equity Security
ABCD has a unit of trade of one share, a transaction of 25 shares of
ABCD would meet the unit of trade test for that security and last sale
information for the transaction would be disseminated. Under past
practice, the unit of trade of OTC Equity Securities was changed on a
case-by-case basis upon request from a market participant (e.g., a
market maker or issuer) to facilitate the dissemination of trades of
fewer than 100 shares. Typically, such changes were made in connection
with securities trading above $200.00 per share.
    FINRA is proposing to adopt a more uniform policy regarding the
dissemination of OTC Equity Securities and will publish a Notice
informing members, investors and other interested parties of the new
policy.\7\ Specifically, for all OTC Equity Securities that traded at
or above $175.00 per share during the fourth calendar quarter of 2007,
FINRA will designate the unit of trade as one (such that transactions
in these securities will no longer be considered odd-lot transactions
for dissemination purposes) and will disseminate last sale information
for all transactions of one or more shares in such securities. FINRA
will publish a list of the OTC Equity Securities that meet the stated
dissemination criteria in the proposed Notice and will also make this
list available on the OTC Bulletin Board Web site (http://www.otcbb.com
).\8\ FINRA staff anticipates that the unit of trade for

the vast majority of OTC Equity Securities will remain 100 shares.
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    \7\ With the exception of NASD Rule 6250, which applies to
dissemination of transaction information for TRACE-eligible
securities, dissemination of trade reports is typically not governed
by FINRA's rules, but rather by its protocols. Thus, FINRA is not
proposing to amend any rules to effectuate the change discussed
herein.
    \8\ FINRA notes that all OTC Equity Securities for which the
unit of trade is currently designated as one will be included in
this list and will remain on this list regardless of whether they
meet the stated dissemination criteria.
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    Additionally, using the above criteria, FINRA will update the list
of OTC Equity Securities at the end of each calendar quarter based on
that quarter's trading activity. While OTC Equity Securities may be
added to the list, they generally will not be removed.\9\ FINRA staff
believes that retaining OTC Equity Securities on the list, rather than
re-evaluating each security's eligibility every calendar quarter, will
achieve greater transparency and consistency with respect to trade data
dissemination.
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    \9\ FINRA may determine that an OTC Equity Security should be
removed from the list if, e.g., there has been a significant
corporate action, such as a stock split, that has changed the
pricing in the security such that a unit of trade of one is no
longer appropriate, or if the OTC Equity Security was erroneously
included on the list as a result of inaccurate prices included in
the trade report(s) that qualified the security for dissemination of
last sale transaction information. Telephone conversation between
Lisa Horrigan, Associate General Counsel, FINRA, and Ronesha Butler,
Special Counsel, Division of Trading and Markets, Commission, on
January 14, 2008.
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    FINRA believes that the proposed rule change will enhance
transparency and the amount of information available to market
participants with respect to transactions in OTC Equity Securities.
    FINRA is filing the proposed rule change for immediate
effectiveness. FINRA will publish a Notice announcing the operative
date of the new dissemination policy, which date will be at least 30
days after the date of filing.
2. Statutory Basis
    The proposed rule change is consistent with the provisions of
Section 15A(b)(6) of the Act,\10\ which requires, among other things,
that FINRA rules 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. FINRA
believes that the proposed rule change will enhance transparency and
the amount of information available to market participants with respect
to transactions in OTC Equity Securities.
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    \10\ 15 U.S.C. 78o-3(b)(6).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The proposed rule change will not result in any burden on
competition that is not necessary or appropriate in furtherance of the
purposes of the Act.

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

    Because the foregoing proposed rule change does not: (1)
Significantly affect the protection of investors or the public
interest; (2) impose any significant burden on competition; and (3)
become operative for thirty days from the date on which it was filed,
or such shorter time as the Commission may designate if consistent with
the protection of investors and the public interest, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \11\ and Rule 19b-
4(f)(6) \12\ thereunder.\13\
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(6).
    \13\ FINRA has given the Commission written notice of its intent
to file the proposed rule change, along with a brief description and
text of the proposed rule change, at least five business days prior
to the date on which it filed the proposed rule change. See 17 CFR
240.19b-4(f)(6)(iii).
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    At any time within 60 days of the filing of such proposed rule
change, the Commission may summarily abrogate 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 the furtherance of the purposes of the Act.

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 e-mail to<EMAIL_ADDRESS>Please include

File Number SR-FINRA-2007-034 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.

All submissions should refer to File Number SR-FINRA-2007-034. This
file number should be included on the subject line if e-mail 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 inspection
and copying 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; 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-2007-034 and should be
submitted on or before February 12, 2008.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E8-992 Filed 1-18-08; 8:45 am]

BILLING CODE 8011-01-P