[Federal Register: January 30, 2008 (Volume 73, Number 20)]
[Rules and Regulations]
[Page 5434-5435]
[DOCID:fr30ja08-8]

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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 71

[Docket No. FAA-2007-0161; Airspace Docket No. 07-ASO-25]

Establishment of Class E Airspace; New Albany, MS

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Direct final rule, request for comments.

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SUMMARY: This action establishes Class E Airspace at new Albany, MS.
Airspace is needed to support new Area Navigation (RNAV) Global
Positioning System (GPS) Standard Instrument Approach Procedures
(SIAPs) that have been developed for New Albany-Union County Airport.
This action enhances the safety and management of Instrument Flight
Rule (IFR) operations in the area by providing the required controlled
airspace to protect for these approaches around new Albany, MS.

DATES: Effective 0901 UTC, April 10, 2008. The Director of the Federal
Register approves this incorporation by reference action under title 1,
Code of Federal Regulations, part 51, subject to the annual revision of
FAA Order 7400.9 and publication of conforming amendments. Comments for
inclusion in the Rules Docket must be received on or before March 17,
2008.

ADDRESSES: Send comments on this rule to: Docket Management Facility,
U.S. Department of Transportation, 1200 New Jersey, SE., West Building,
Ground Floor, Room W12-140, Washington, DC 20590-0001; Telephone: 1-
800-647-5527; Fax:<PHONE_NUMBER>. You must identify the Docket Number
FAA-2007-0161; Airspace Docket No. 07-ASO-25, at the beginning of your
comments. You may also submit and review received comments through the
Internet at http://www.regulations.gov.

    You may review the public docket containing the rule, any comments
received, and any final disposition in person in the Dockets Office
(see ADDRESSES section for address and phone number) between 9 a.m. and
5 p.m., Monday through Friday, except Federal Holidays. An informal
docket may also be examined during normal business hours at the office
of the Eastern Service Center, Federal Aviation Administration, Room
210, 1701 Columbia Avenue, College Park, Georgia 30337.

FOR FURTHER INFORMATION CONTACT: Daryl Daniels, System Support Group,
Eastern Service Center, Federal Aviation Administration, P.O. Box
20636, Atlanta, Georgia 30320; telephone<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION:

The Direct Final Rule Procedure

    The FAA anticipates that this regulation will not result in adverse
or negative comments, and, therefore, issues it as a direct final rule.
The FAA has determined that this rule only involves an established body
of technical regulations for which frequent and routine amendments are
necessary to keep them operationally current. Unless a written adverse
or negative comment or a written notice of intent to submit an adverse
or negative comment is received within the comment period, the
regulation will become effective on the date specified above. After the
close of the comment period, the FAA will publish a document in the
Federal Register indicating that no adverse or negative comments were
received and confirming the effective date. If the FAA receives, within
the comment period, an adverse or negative comment, or written notice
of intent to submit such a comment, a document withdrawing the direct
final rule will be published in the Federal Register, and a notice of
proposed rulemaking may be published with a new comment period.

Comments Invited

    Although this action is in the form of a direct final rule, and was
not preceded by a notice of proposed rulemaking, interested persons are
invited to comment on this rule by submitting such written data, views,
or arguments as they may desire. The direct final rule is used in this
case to facilitate the timing of the charting schedule and enhance the
operation at the airport, while still allowing and requesting public
comment on this rulemaking action. An electronic copy of this document
may be downloaded from and comments submitted through http://www.regulations.gov.
 Communications should identify both docket numbers

and be submitted in triplicate to the address specified under the
caption ADDRESSES above or through the Web site. All communications
received on or before the closing date for comments will be considered,
and this rule may be amended or withdrawn in light of the comments
received. Recently published rulemaking documents can also be accessed
through the FAA's Web page at http://www.faa.gov or the Federal Register's Web page at http://www.gpoaccess.gov/fr/index.html.

    Comments are specifically invited on the overall regulatory,
economic, environmental, and energy aspects of the rule that might
suggest a need to modify the rule. Factual information that supports
the commenter's ideas and suggestions is extremely helpful in
evaluating the effectiveness of this action and determining whether
additional rulemaking action would be needed. All comments submitted
will be available, both before and after the closing date for comments,
in the Rules Docket for examination by interested persons. Those
wishing the FAA to acknowledge receipt of their comments submitted in
response to this rule must submit a self-addressed, stamped postcard on
which the following statement is made: ``Comments to Docket No. FAA-
2007-0161; Airspace Docket No. 07-ASO-25.'' The postcard will be date
stamped and returned to the commenter.

The Rule

    This amendment to Title 14, Code of Federal Regulations (14 CFR)
part 71 establishes Class E airspace at New Albany, MS, providing the
controlled airspace required to support new SIAPs that were developed
for the New Albany-Union County Airport. No Class E5 airspace exists in
the airport area, so controlled airspace must be developed. Controlled
airspace extending upward from 700 feet Above Ground Level (AGL) is
required to encompass all SIAPs to the extent practical, therefore, the
FAA is amending Title 14, Code of Federal Regulations (14 CFR) part 71
to establish Class E5 airspace at New Albany, MS. Designations for
Class E airspace areas extending upward from 700 feet or more above the
surface of the Earth are published in FAA Order 7400.9R, signed August
15, 2007 effective September 15, 2007, which is incorporated by
reference in 14 CFR part 71.1. The Class E designations listed in this
document will be published subsequently in the Order.

Agency Findings

    The regulations adopted herein will not have substantial direct
effects on the States, on the relationship between the national
government and the States, or on the distribution of power and
responsibilities among various levels of government. Therefore, it is
determined that this final rule does not have federalism implications
under Executive Order 13132.
    The FAA has determined that this regulation only involves an
established body of technical regulations for which frequent and
routine amendments are necessary to keep them operationally current, is
non-controversial and unlikely to result in adverse or negative

comments. It, therefore, (1) is not a ``significant regulatory action''
under Executive Order 12866; (2) is not a ``significant rule'' under
DOT Regulatory Policies and Procedures (44 FR 11034; February 26,
1979); and (3) does not warrant preparation of a Regulatory Evaluation
as the anticipated impact is so minimal. Since this is a routine matter
that will only affect air traffic procedures and air navigation, it is
certified that this rule, when promulgated, will not have a significant
economic impact on a substantial number of small entities under the
criteria of the Regulatory Flexibility Act.
    The FAA's authority to issue rules regarding aviation safety is
found in Title 49 of the United States Code. Subtitle I, Section 106
describes the authority of the FAA Administrator. Subtitle VII,
Aviation Programs, describes in more detail the scope of the agency's
authority.
    This rulemaking is promulgated under the authority described in
Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the
FAA is charged with prescribing regulations to assign the use of
airspace necessary to ensure the safety of aircraft and the efficient
use of airspace. This regulation is within the scope of that authority
as it establishes controlled airspace around the New Albany-Union
County Airport.

Lists of Subjects in 14 CFR part 71

    Airspace, Incorporation by reference, Navigation (Air).

Adoption of the Amendment

0
In consideration of the foregoing, the Federal Aviation Administration
amends 14 CFR part 71 as follows:

PART 71--DESIGNATION OF CLASS A, B, C, D AND E AIRSPACE AREAS; AIR
TRAFFIC SERVICE ROUTES; AND REPORTING POINTS

0
1. The authority citation for part 71 continues to read as follows:

    Authority: 49 U.S.C. 106(g); 40103, 40113, 40120; E.O. 10854, 24
FR 9565, 3 CFR, 1959-1963 Comp., p. 389.

Sec.  71.1  [Amended]

0
2. The incorporation by reference in 14 CFR 71.1 of Federal Aviation
Administration Order 7400.9R, Airspace Designations and Reporting
Points, signed August 15, 2007, effective September 15, 2007, is
amended as follows:

Paragraph 6005 Class E Airspace Areas Extending Upward from 700
feet or More Above the Surface of the Earth.

* * * * *

ASO MS E5 New Albany, MS [NEW]

New Albany-Union County Airport, MS
    (lat. 34[deg]32'55'' N., long. 89[deg]01'27'' W.)

    That airspace extending upward from 700 feet above the surface
within a 7.1-mile radius of New Albany-Union County Airport and
within 4 miles each side of the 176[deg] bearing from the airport
extending from the 7.1-mile radius to 10.3 miles southeast of the
airport.

    Issued in College Park, Georgia, on December 14, 2007.
Mark D. Ward,
Manager, System Support Group, Eastern Service Center.
[FR Doc. 08-322 Filed 1-29-08; 8:45 am]

BILLING CODE 4910-13-M


[Federal Register Volume 79, Number 40 (Friday, February 28, 2014)]
[Notices]
[Pages 11481-11486]
[FR Doc No: 2014-04390]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-71607; File No. SR-FINRA-2013-046]

Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing of Amendment No. 1 and Order Granting
Accelerated Approval of Proposed Rule Change, as Modified by Amendment
No. 1, Relating to TRACE Reporting and Dissemination of Transactions in
Asset-Backed Securities

February 24, 2014.

I. Introduction

    On November 13, 2013, 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 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a
proposed rule change relating to TRACE reporting and dissemination of
transactions in Asset-Backed Securities.\3\ The proposed rule change
was published for comment in the Federal Register on November 26,
2013.\4\ The Commission received one comment on the proposal.\5\ On
January 10, 2014, the Commission extended to February 24, 2014, the
time period in which to approve the proposed rule change, disapprove
the proposed rule change, or institute proceedings to determine whether
the proposed rule change should be disapproved.\6\ On February 14,
2014, FINRA responded to the comment \7\ and filed Amendment No. 1 to
the proposed rule change.\8\ On February 21, 2014, FINRA submitted a
supplemental response to the comment.\9\ The Commission is publishing
this notice to solicit comments on Amendment No. 1 from interested
persons, and is approving the proposed rule change, as modified by
Amendment No. 1, on an accelerated basis.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ The term ``Asset-Backed Security'' was previously defined in
FINRA Rule 6710(m). As a result of this proposed rule change, the
definition has been revised and relocated to FINRA Rule 6710(cc).
    \4\ See Securities Exchange Act Release No. 70906 (November 20,
2013), 78 FR 70602 (``Notice'').
    \5\ See letter to Elizabeth M. Murphy, Secretary, Commission,
from Chris Killian, Managing Director, Securitization, SIFMA, dated
December 17, 2013 (``SIFMA Letter'').
    \6\ See Securities Exchange Act Release No. 71287 (January 10,
2014), 79 FR 2924 (January 16, 2014).
    \7\ See letter to Elizabeth M. Murphy, Secretary, Commission,
from Kathryn M. Moore, Associate General Counsel, FINRA, dated
February 14, 2014 (``FINRA Letter I'').
    \8\ In Amendment No. 1, FINRA revised the types of products that
would be included in the definition of ``Asset-Backed Security'' and
that, under the proposal, would be disseminated through TRACE and
subject to reduced reporting times. FINRA initially proposed to
include in the definition of ``Asset-Backed Securities,'' among
other things, collateralized debt obligations, collateralized loan
obligations, collateralized bond obligations, and non-agency backed
commercial mortgage-backed securities. Amendment No. 1 removes these
securities from the defined ``Asset-Backed Securities'' that would
be subject to reduced reporting times and disseminated under the
proposal. Amendment No. 1 also makes other minor, technical
revisions to the proposal.
    \9\ See email to Michael Gaw, Assistant Director, Division of
Trading and Markets, Commission, from Kathryn M. Moore, Associate
General Counsel, FINRA, dated February 21, 2014 (``FINRA Letter
II'').
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II. Description of the Amended Proposal

    Historically, FINRA has utilized the Trade Reporting and Compliance
Engine (``TRACE'') to collect from its members and publicly disseminate
information on secondary over-the-counter transactions in corporate
debt securities, Agency Debt Securities,\10\ and certain primary market
transactions. For certain other asset types, FINRA utilized TRACE to
collect transaction information, but until recently, did not report
such information publicly. Recently, however, FINRA began to phase-in
dissemination of the transaction information for these previously non-
disseminated asset types. In the first two phases, FINRA implemented
dissemination of Agency Pass-Through Mortgage-Backed Securities and
SBA-Backed ABS.\11\

Next, FINRA sought, and the Commission approved, public dissemination
of transactions in TRACE-Eligible Securities effected as Rule 144A
transactions (provided that such transactions were in securities of the
same type as are subject to dissemination if effected in non-Rule 144A
transactions).\12\ FINRA now has proposed to provide for public
dissemination of a group of newly defined Asset-Backed Securities and
to make certain related changes to its rules, as described below.
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    \10\ The term ``Agency Debt Security'' is defined in FINRA Rule
6710(l).
    \11\ On November 12, 2012, FINRA began disseminating
transactions in Agency Pass-Though Mortgage-Backed Securities traded
TBA. See Securities Exchange Act Release No. 66829 (April 18, 2012),
77 FR 24748 (April 25, 2012) (Order Approving SR-FINRA-2012-020);
FINRA's Regulatory Notice 12-26 (May 2012) and Regulatory Notice 12-
48 (November 2012). On July 22, 2013, FINRA began disseminating
Agency Pass-Through Mortgage-Backed Securities traded in Specified
Pool Transactions and SBA-Backed ABS traded TBA or in Specified Pool
Transactions. See Securities Exchange Act Release No. 68084 (October
23, 2012), 77 FR 65436 (October 26, 2012) (Order Approving SR-FINRA-
2012-042); FINRA's Regulatory Notice 12-56 (December 2012). The
terms ``TBA,'' ``Agency Pass-Through Mortgage-Backed Security,''
``Specified Pool Transaction,'' and ``SBA-Backed ABS'' are defined
in FINRA Rule 6710(u), (v), (x), and (bb), respectively.
    \12\ See Securities Exchange Act Release No. 70345 (September 6,
2013), 78 FR 56251 (September 12, 2013) (Order Approving SR-FINRA-
2013-029); Securities Exchange Act Release No. 70691 (October 16,
2013), 78 FR 62788 (October 22, 2013) (SR-FINRA-2013-043) (together,
``Rule 144A Dissemination Amendments''); FINRA's Regulatory Notice
13-35 (announcing June 30, 2014 as the effective date for SR-FINRA-
2013-029 and SR-FINRA-2013-043). Given the Rule 144A Dissemination
Amendments, the instant proposal would result in the dissemination
of Asset-Backed Security transactions effected pursuant to Rule 144A
(in addition to Asset-Backed Security transactions not effected
pursuant to Rule 144A).
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Dissemination and Definitional Amendments

    FINRA has proposed to revise FINRA Rule 6750 to include Asset-
Backed Securities among the TRACE-Eligible Securities that FINRA will
disseminate publicly.\13\ In connection with this change, FINRA has
proposed to revise certain existing definitions in its rules and add
other, new definitions in order to delineate the specific Asset-Backed
Securities that would be subject to dissemination pursuant to FINRA
Rule 6750. Specifically, FINRA has proposed to re-name as ``Securitized
Products'' the broad group of securities currently defined as ``Asset-
Backed Securities'' in FINRA Rule 6710(m) \14\ and, in a proposed new
definition in FINRA Rule 6710(cc), to re-define the term ``Asset-Backed
Security'' more narrowly to mean:
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    \13\ See proposed Rule 6750 and Amendment No. 1.
    \14\ See proposed FINRA Rule 6710(m). Proposed FINRA Rule
6710(m) also would replace the current rule's reference to Section
3(a)(77)(A) of the Act with a reference to Section 3(a)(79)(A) of
the Act. This is a technical change to coincide with renumbering to
Section 3(a)(77) of the Act implemented by Section 101(b)(1) of the
Jumpstart Our Business Startups act (``JOBS Act''). See Notice, 78
FR at 70604; see also Public Law 112-106, 126 Stat. 306 (2012).

a type of Securitized Product where the Asset-Backed Security is
collateralized by any type of financial asset, such as a consumer or
student loan, a lease, or a secured or unsecured receivable, and
excludes: (i) a Securitized Product that is backed by residential or
commercial mortgage loans, mortgage-backed securities, or other
financial assets derivative of mortgage-backed securities; (ii) an
SBA-Backed ABS as defined in paragraph (bb) traded To Be Announced
(``TBA'') as defined in paragraph (u) or in a Specified Pool
Transaction as defined in paragraph (x); and (iii) collateralized
debt, loan and bond obligations.\15\
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    \15\ Proposed FINRA Rule 6710(cc); see also Amendment No. 1.
FINRA believes that this proposed narrower definition is consistent
with industry usage. See Notice, 78 FR at 70603.

    In addition, FINRA has proposed to provide further guidance
regarding the scope of this narrower definition of ``Asset-Backed
Security'' in proposed Supplementary Material .01 to FINRA Rule 6710,
which would state that the term ``Asset-Backed Security'' includes, but
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is not limited to:

securities collateralized by the following types of assets and
securities: credit card receivables; automobile loans and leases;
student loans; home equity loans and home equity lines of credit;
aircraft leases; automobile floorplan and wholesale loans;
motorcycle loans and leases; recreational vehicle loans;
manufactured housing loans; commercial loans; tranches of other
Asset-Backed Securities; reinsurance; timeshare obligations; and
loans or other financial instruments generating a stream of payments
and guaranteed as to principal or interest (or both) by the Small
Business Administration (traded other than to be announced (``TBA'')
as defined in paragraph (u) or in a Specified Pool Transaction as
defined in paragraph (x)).\16\
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    \16\ Proposed Supplementary Material .01 to FINRA Rule 6710; see
also Notice, 78 FR at 70603-04 and Amendment No. 1.

    Transactions included in the re-defined group of Asset-Backed
Securities, set forth in proposed Rule 6710(cc) (including Rule 144A
transactions in such securities) and Supplementary Material .01
thereto, will be publicly disseminated through TRACE as a result of the
proposed rule change.\17\ Securities excluded from the new definition
of Asset-Backed Security by subparts (i) through (iii) of proposed Rule
6710(cc) would not be disseminated under the proposal. FINRA has
represented that it will observe trading in the newly-disseminated
Asset-Backed Securities to monitor the impact of price transparency on
the market for these securities.\18\
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    \17\ See Notice, 78 FR at 70603-04.
    \18\ See Notice, 78 FR at 70605.
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    FINRA also has proposed to define ``Collateralized Mortgage
Obligation'' in proposed new FINRA Rule 6710(dd).\19\ As defined,
Collateralized Mortgage Obligations would be excluded from the
definition of ``Asset-Backed Security'' by subpart (i) of proposed Rule
6710(cc), and thus transactions in Collateralized Mortgage Obligations
would not be publicly disseminated by TRACE pursuant to this proposed
rule change.\20\
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    \19\ See proposed Rule 6710(dd) and Amendment No. 1.
    \20\ See Amendment No. 1.
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Reduction of Reporting Period

    In connection with its proposal to publicly disseminate
transactions in certain Asset-Backed Securities,\21\ FINRA has proposed
to amend FINRA Rule 6730 to reduce the period for reporting Asset-
Backed Security transactions to TRACE. The reduction would occur in two
stages. First, FINRA would reduce the reporting period from no later
than the close of the TRACE system on the date of execution to no later
than 45 minutes from the time of execution.\22\ Second, after
approximately 180 days, the reporting period would be further reduced
from no later than 45 minutes from the time of execution to no later
than 15 minutes from the time of execution.\23\
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    \21\ Hereinafter, except where the context requires otherwise,
references to ``Asset-Backed Security'' and ``Securitized Product''
are to the new definitions of those terms.
    \22\ See proposed Rule 6730(a)(3)(B)(i)(b). Exceptions for
transactions that are executed within 45 minutes of the close of the
TRACE system and for transactions executed when it is closed are set
forth in subparts a., c., and d. of proposed Rule 6730(a)(3)(B)(i).
    \23\ See proposed Rule 6730(a)(3)(B)(ii), which incorporates by
reference Rule 6730(a)(1). Rule 6730(a)(1) requires that
transactions in TRACE-Eligible Securities be reported within 15
minutes of the time of execution, and also provides exceptions for
transactions in TRACE-Eligible Securities that are executed shortly
before the TRACE system closes and when it is closed.
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List or Fixed Offering Price and Takedown Transactions

    According to FINRA, many Asset-Backed Securities are underwritten
using a syndicated process that is similar to the offering process for
corporate bonds.\24\ In syndicated offerings, there may be a number of
transactions that occur at the list or fixed offering price (or the
takedown price).\25\ Transactions in TRACE-Eligible Securities (except
for transactions in Securitized Products) that are effected in
accordance with the requirements of a List or Fixed Offering Price
Transaction \26\ or a Takedown

Transaction \27\ may be reported as late as T+1 during TRACE system
hours, as provided in FINRA Rule 6730(a)(2); such transactions are not
disseminated, as provided in FINRA Rule 6750(b)(3); and members are not
charged a reporting fee for such transactions, as provided in FINRA
Rule 7730(b)(1)(C).\28\
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    \24\ See Notice, 78 FR at 70605.
    \25\ See id. The terms ``List or Fixed Offering Price
Transaction'' and ``Takedown Transaction'' are defined in FINRA
Rules 6710(q) and 6710(r), respectively.
    \26\ The term ``List or Fixed Offering Price Transaction'' is
defined in FINRA Rule 6710(q).
    \27\ The term ``Takedown Transaction'' is defined in FINRA Rule
6710(r).
    \28\ See Notice, 78 FR at 70605.
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    In light of the similarity of the offering process for corporate
bonds and many Asset-Backed Securities, FINRA has proposed to amend
FINRA Rules 6710(q) and 6710(r) so that primary market Asset-Backed
Securities transactions that meet all of the requirements of a List or
Fixed Offering Price Transaction or a Takedown Transaction may be
treated in accordance with FINRA Rules 6730(a)(2), 6750(b)(3), and
7730(b)(1)(C).\29\
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    \29\ See proposed FINRA Rules 6710(q) and 6710(r); see also
Notice, 78 FR at 70605. All primary market transactions in other
classes of Securitized Products will continue to be specifically
excluded from the definitions of List or Fixed Offering Price
Transaction and Takedown Transaction, because, in general, such
Securitized Products are structured, offered, and sold quite
differently than corporate bonds (i.e., a large number of
Securitized Products sales are for forward delivery, and most such
securities are not underwritten using a syndicated process
generating a large number of transactions occurring at the same
price). See Notice, 78 FR at 70605 n.28.
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Dissemination Caps

    Currently, there are dissemination caps in place for disseminated
TRACE data, such that the actual size (volume) of a transaction over a
certain par value is not displayed.\30\ FINRA has proposed a $10
million dissemination cap for Asset-Backed Security transactions, which
would prevent the display in disseminated TRACE data of the actual size
(volume) of Asset-Backed Security transactions with an original par or
value over $10 million; rather, such transactions will be displayed as
``10MM+.'' \31\
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    \30\ See Notice, 78 FR at 70605-06 and n.29. There are $5
million and $1 million caps for TRACE-Eligible Securities that are
rated Investment Grade and Non-Investment Grade, respectively; a $25
million cap for Agency Pass-Through Mortgage Backed Securities
traded TBA for good delivery; and a $10 million cap for Agency Pass-
Through Mortgage Backed Securities traded TBA not for good delivery,
Agency Pass-Through Mortgage-Backed Securities traded in Specified
Pool Transactions, and SBS-Backed ABS traded TBA and in Specified
Pool Transactions.
    \31\ See Notice, 78 FR at 70606. In the Notice, FINRA stated
that--based on a sample period of transactions reported from May 16,
2011 through December 2012--approximately 17.6% of trades and
approximately 75.6% of original par or principal value traded in
Asset-Backed Securities transactions (other than Rule 144A
transactions) would have been subject to the $10MM+ dissemination
cap had these transactions been subject to public dissemination. For
Rule 144A transactions in Asset-Backed Securities over that same
time period, approximately 28.5% of trades and approximately 88.1%
of original par or principal value traded would have been
disseminated subject to the $10MM+ dissemination cap. See id. at n.
30. The Commission notes that these figures are based on the
definition of ``Asset-Backed Securities'' in the original proposal,
not the definition in Amendment No. 1.
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Other Dissemination Protocols

    Currently, the standard data elements that are disseminated for
TRACE-Eligible securities include, among other things, a dealer/
customer indicator (indicating the type of contra party) and a buy/sell
indicator.\32\ FINRA has stated that the Asset-Backed Security market
differs from the corporate bond market in that it has a smaller number
of participants that are largely institutional. As a result, market
participants have raised concerns with FINRA regarding protecting the
confidentiality of dealer and customer trading strategies, identities,
and positions in certain types of Asset-Backed Securities. To address
these concerns, FINRA has proposed not to disseminate the dealer/
customer and buy/sell indicators for Asset-Backed Security
transactions.\33\
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    \32\ Additional standard data elements include the CUSIP, the
time and date of the transaction, price, and the size (subject to
dissemination caps). Specified Pool Transactions are disseminated
subject to modified dissemination protocols. See Securities Exchange
Act Release No. 68084 (October 23, 2012), 77 FR 65436 (October 26,
2012) (Order Approving SR-FINRA-2012-042); FINRA Regulatory Notice
12-56 (December 2012).
    \33\ See Notice, 78 FR at 70606.
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Data Availability

    Currently, what is known as Asset-Backed Securities data--organized
as the ABS Data Set for real-time data and as the Historic ABS Data Set
for Historic TRACE Data \34\--includes all Securitized Products
transactions that are disseminated (i.e., TBA transactions and
Specified Pool Transactions). In light of the proposed definitional
amendments discussed above, however, FINRA has proposed to amend Rule
7730 to rename those data sets as the ``SP Data Set'' and ``Historic SP
Data Set.'' FINRA also has proposed to include in these data sets the
transaction data for the newly defined Asset-Backed Securities, which
would be disseminated under this proposal.\35\ Asset-Backed Securities
that are traded in Rule 144A transactions would be included in,
respectively, the Rule 144A Data Set, when available, and the Historic
Rule 144A Data Set, when available.\36\ FINRA does not propose to amend
the fees currently in effect for the SP Data Set and the Historic SP
Data Set. Similarly, when the Rule 144A Data Set and the Historic Rule
144A Data Set become available, disseminated information regarding Rule
144A transactions in Asset-Backed Securities would be included in such
data sets without any change to the applicable fees.\37\
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    \34\ A transaction in a disseminated TRACE-Eligible Security
becomes available as part of Historic TRACE Data no earlier than 18
months after the specific transaction is reported to TRACE. See
Notice, 78 FR at 70606 n.35.
    \35\ See proposed FINRA Rule 7730; see also Notice, 78 FR at
70606 and n. 35.
    \36\ See Notice, 78 FR at 70606.
    \37\ See id.; see also Rule 144A Dissemination Amendments, supra
note 12.
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Other Technical Changes

    FINRA has proposed to eliminate certain provisions that have
expired and all cross-references thereto in FINRA Rule 6730(a) and to
make conforming changes.\38\ FINRA also has proposed to make conforming
and technical changes to the FINRA Rule 6700 Series and FINRA Rule 7730
to incorporate the proposed definitional amendments and new data set
names discussed above.\39\
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    \38\ See proposed FINRA Rules 6730(a)(3)(D) through
6730(a)(3)(G); see also Notice, 78 FR at 70606.
    \39\ See Notice, 78 FR at 70606.
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Effective Date of Proposed Rule Change

    FINRA has stated that it would announce the effective date of the
proposed rule change in a Regulatory Notice to be published no later
than 60 days following Commission approval, and that the effective date
would be no later than 270 days following publication of that
Regulatory Notice.

III. Summary of Comments

    The Commission received one comment on the proposal,\40\ and two
responses to the comment from FINRA.\41\ The commenter argues that the
proposal ``has the potential to negatively impact liquidity, as
previous proposals have done in the TBA, specified pool and the high-
yield markets.'' \42\ Therefore, the commenter requests ``that FINRA
not implement this proposal, and instead engage in further discussion
with the industry as to how best to preserve ABS market liquidity, and
re-propose this proposal after such discussions.'' \43\
---------------------------------------------------------------------------

    \40\ See SIFMA Letter.
    \41\ See FINRA Letter I; FINRA Letter II.
    \42\ SIFMA Letter at 1.
    \43\ Id.
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    According to the commenter, FINRA's prior implementation of post-
trade transparency in the high-yield bond market, and more recently in
the markets for mortgage-backed securities traded TBA and in specified
pools,\44\

has contributed to liquidity decreases in those markets; the commenter
believes that the result in the Asset-Backed Security market would be
the same.\45\ The commenter asserts that market makers are less willing
to take on large trades from their buy-side counterparties when the
identity of their position becomes immediately known.\46\ In addition,
the commenter references a recent study that, according to the
commenter, concluded that the implementation of mandatory transparency
through TRACE in the corporate bond market caused a significant
decrease in price dispersion for all bonds and significant decrease in
trading activity for certain categories of bonds.\47\ The commenter
states that the study's results indicate that mandated transparency may
help some investors and dealers through a decline in price dispersion,
while it harms others through a reduction in trading activity.
According to the commenter, in the markets where post-trade
transparency has already been implemented, the benefits of improved
price discovery have been far outweighed by the costs of decreased
liquidity.\48\
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    \44\ See supra notes 7 and 9.
    \45\ See SIFMA Letter at 2.
    \46\ See id.
    \47\ See id. (citing Asquith, Covert, and Pathak, ``The Effects
of Mandatory Transparency in Financial Markets Design: Evidence from
the Corporate Bond Market'' (2013) (the ``Asquith et al. study'')).
    \48\ See id.
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    In response, FINRA notes that TRACE has been subject to extensive
academic interest since its inception, and that studies have shown
multiple benefits of transparency, including a narrowing of the bid-ask
spread, reduction in trade execution costs, and improved valuation
precision in mark-to-market valuations.\49\ FINRA acknowledges the
study referenced by the commenter, and notes that the study examined
trading volume and the dispersion of transaction prices of corporate
bonds over the period July 1, 2002, through December 31, 2006--a period
during which FINRA implemented post-trade transparency in four stages.
According to FINRA, the Asquith et al. study evaluated the change in
dispersion of transaction prices and trading volume for windows of 90,
60, and 30 days before and after the implementation of each stage, and
for the time frame examined concluded that increases in post-trade
transparency were associated with a statistically significant decrease
in price dispersion in all stages, generally benefitting investors.
Further, FINRA asserts that the study found no negative impact on
trading activity for the first three stages of transparency
implementation, and it found a statistically significant decrease in
trading activity only for the last stage of dissemination, which was
composed of non-investment grade and inactively-traded bonds. FINRA
notes, however, that the study captured only the temporary adjustment
in trading activity for the 90 days after implementation of
dissemination, which FINRA states may have been a time period when
market participants were adjusting to the new information available.
---------------------------------------------------------------------------

    \49\ See FINRA Letter I at 3 (citing, e.g., Goldstein,
Hotchkiss, and Sirri, ``Transparency and Liquidity: A Controlled
Experiment on Corporate Bonds'' (March 2006); Bessembinder, Maxwell,
and Venkataraman, ``Optimal Market Transparency: Evidence From the
Initiation of Trade Reporting in Corporate Bonds'' (January 2005);
and Cici, Gibson, and Merrick, ``Missing the Marks: Dispersion in
Corporate Bond Valuation'' (May 2008)).
---------------------------------------------------------------------------

    Furthermore, FINRA states that, during the time period beyond 90
days from the last stage of dissemination, it appears that the trading
activity of such bonds recovered to pre-dissemination levels, while the
reduction in price dispersion was maintained. FINRA asserts this based
on its understanding of the information and analysis provided in the
same study referenced in the SIFMA Letter.\50\ Specifically, FINRA
notes that, for phase 3B bonds, which the authors identified as the
bonds that have experienced a large and significant reduction in
trading activity, Figure 1 on page 35 of the paper shows that the
average weekly daily trading volume, which was in the $200,000 to
$400,000 range when the final stage of transparency was implemented in
February 2005, declined below the $200,000 level over the next several
months after dissemination, but then by December and January 2006,
recovered to the $200,000 to $400,000 range.\51\
---------------------------------------------------------------------------

    \50\ See FINRA Letter II.
    \51\ See id. FINRA states that a similar trend is shown in
Figure 2 on page 36 of the Asquith et al. study.
---------------------------------------------------------------------------

    In addition, FINRA disputes the commenter's assertion that the
implementation of post-trade transparency in the markets for mortgage-
backed securities traded TBA and in specified pools has caused
decreased liquidity in these markets. According to FINRA, while there
has been a decline in trading in these markets, there is no direct
evidence that transparency has contributed to the decline.\52\ FINRA
states that TRACE data and statistics published on SIFMA's Web site
indicate that the issuance of mortgage-related products has declined to
the same extent or greater than trading volumes, affecting both
disseminated and non-disseminated products.\53\ FINRA also believes
that market participants have been focused on macro factors in general,
and in particular the current and future impact of the Federal Reserve
buying program and any tapering thereof.\54\
---------------------------------------------------------------------------

    \52\ See FINRA Letter I at 3-4.
    \53\ See id. at 4.
    \54\ See id.
---------------------------------------------------------------------------

    The commenter also states that its members are ``generally in
agreement with the re-definition of ABS that includes securities backed
by consumer or student loans, a lease or a secured or unsecured
receivable but excludes Agency Pass-MBS, Agency CMOs and Agency and
Non-Agency RMBS.'' \55\ The commenter warns, however, that ``the
inclusion of CDOs, CLOs and Non-Agency-Backed CMBS is pressing the
revised definition of ABS beyond what is appropriate.'' \56\ According
to the commenter, unlike the consumer Asset-Backed Securities with
which they are grouped under the original proposal, the credit analysis
for CDOs, CLOs, and Non-Agency CMBS require extensive work and an in-
depth study of the underlying assets in order to formulate an opinion
on the value of the tranche.\57\ The commenter states, therefore, that
``[i]f prices were disseminated to the market on these securities
without appropriate consideration, it would likely be the case that
inexperienced investors could use the trade print in one junior bond as
a proxy for a nominally similar piece of paper.'' \58\ Furthermore, the
commenter cautions that disseminated prices for CMBS and CDO tranches
may be influenced by technical factors and thus ``TRACE prices may not
always reflect the fundamental credit risk of a security.'' \59\
---------------------------------------------------------------------------

    \55\ SIFMA Letter at 3.
    \56\ Id.
    \57\ See id.
    \58\ Id.
    \59\ Id. at 4 (stating, for example, that ``it is not uncommon
in markets for deeply discounted legacy CMBS credit that a party may
seek to purchase a specific tranche as a means of obtaining control
rights in a transaction. As a result, a bond can trade at a
pronounced premium to its fundamental value because the control
right is worth a significant amount for a special servicer who can
extract value with special servicing and liquidation fees which are
not available to a typical investor'').
---------------------------------------------------------------------------

    In its response, FINRA stated that it ``agrees that the credit
analysis for [these securities] differs from those Securitized Products
backed by consumer or student loans, a lease, or a secured or unsecured
receivable.'' \60\ Accordingly, in Amendment No. 1, FINRA revised the
proposal to exclude these securities--as well as collateralized bond
obligations--from the defined group of Asset-Backed Securities that
would be disseminated

under the proposal.\61\ FINRA states that, instead, it will consider
potential additional transparency in these securities in conjunction
with other tranched securities, such as Collateralized Mortgage
Obligations, as appropriate.\62\
---------------------------------------------------------------------------

    \60\ FINRA Letter I at 2.
    \61\ See id.; Amendment No. 1.
    \62\ See FINRA Letter I at 2.
---------------------------------------------------------------------------

    Finally, the commenter suggests an increased reporting period for
TRACE-reportable Regulation S securities, stating that they require a
manual and time-consuming booking process which would be difficult if
not impossible to complete within the proposed timeframes.\63\ In
response, FINRA states that it considers this suggestion to be outside
the scope of its proposal.\64\
---------------------------------------------------------------------------

    \63\ See SIFMA Letter at 4.
    \64\ See FINRA Letter I at 4. FINRA also reiterates that the
proposal is consistent with the Act and should be approved for the
reasons set forth in the proposal. See id.
---------------------------------------------------------------------------

IV. Discussion and Commission Findings

    After careful review, the Commission finds that the proposed rule
change is consistent with the requirements of the Act and the rules and
regulations thereunder applicable to a national securities
association.\65\ In particular, the Commission finds that the proposed
rule change is consistent with Section 15A(b)(6) of the Act,\66\ which
requires, among other things, that FINRA's 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.
---------------------------------------------------------------------------

    \65\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
    \66\ 15 U.S.C. 78o-3(b)(6).
---------------------------------------------------------------------------

    In approving the original TRACE rules, the Commission stated that
price transparency plays a fundamental role in promoting the fairness
and efficiency of U.S. capital markets.\67\ The Commission believes
that real-time dissemination of last-sale information could aid dealers
in deriving better quotations, because they would know the prices at
which other market participants had recently transacted in the same or
similar instruments. This information also could aid all market
participants in evaluating current quotations, because they could
inquire why dealer quotations might differ from the prices of recently
executed transactions. Furthermore, post-trade transparency affords
market participants a means of testing whether dealer quotations before
the last sale were close to the price at which the last sale was
executed. In this manner, post-trade transparency can promote price
competition between dealers and more efficient price discovery, and
ultimately lower transaction costs. For similar reasons, FINRA believes
that dissemination of Asset-Backed Security transaction information may
enhance price discovery, allow investors to better assess the quality
of their executions, assist broker-dealers in complying with best
execution obligations, and enable broker-dealers and other
institutional investors to improve the accuracy of their valuations of
their Asset-Backed Security positions.\68\ The Commission agrees.\69\
---------------------------------------------------------------------------

    \67\ See Securities Exchange Act Release No. 43873 (January 23,
2001), 66 FR 8131, 8136 (January 29, 2001) (approving SR-NASD-99-65)
(``2001 TRACE Order'').
    \68\ See Notice, 78 FR at 70607; see also FINRA Letter I, at 4.
    \69\ See Edwards, A. K., Harris, L. E. & Piwowar, M. S.,
``Corporate Bond Market Transaction Costs and Transparency'' (June
2007); Goldstein, Hotchkiss, and Sirri, ``Transparency and
Liquidity: A Controlled Experiment on Corporate Bonds'' (March
2006); and Bessembinder, Maxwell, and Venkataraman, ``Optimal Market
Transparency: Evidence From the Initiation of Trade Reporting in
Corporate Bonds'' (January 2005).
---------------------------------------------------------------------------

    The Commission has considered the commenter's argument that post-
trade transparency in the Asset-Backed Security market has the
potential to negatively impact liquidity in that market. The commenter
references an academic study that found that the implementation of
mandatory transparency through TRACE in the corporate bond market is
associated with a significant decrease in price dispersion for all
bonds and a significant decrease in trading activity for certain
categories of bonds. FINRA notes in response to the comment that the
study found a statistically significant decrease in trading activity
only in the last of the four stages of transparency implementation in
high-yield corporate bonds, and no impact on trading activity in the
first three stages.\70\ FINRA also notes that, according to the same
study, trading activity in those corporate bonds eventually normalized
to pre-dissemination levels, while the reduction in price dispersion
remained.\71\ The Commission notes that both the commenter and the
Asquith et al. study believe that mandated post-trade transparency
under TRACE has caused a reduction in price dispersion of the affected
bonds. This feature appears consistent with the view that post-trade
transparency reduces information asymmetries and promotes price
competition in the market. Although the Asquith et al. study claims
that post-trade transparency may cause a reduction in the level of
trading of illiquid bonds, the Commission also notes that some question
exists about whether that feature--even if real in the short term--
persists over time or is detrimental. The Commission believes that the
comment does not preclude approval of the proposal at this time,
particularly in light of FINRA's representation that it will ``observe
the trading in Asset-Backed Securities to monitor the impact of price
transparency in the market for Asset-Backed Securities.'' \72\
---------------------------------------------------------------------------

    \70\ See FINRA Letter I.
    \71\ See FINRA Letters I and II.
    \72\ Notice, 78 FR at 70605.
---------------------------------------------------------------------------

    The Commission believes that the proposed reduction in reporting
times for Asset-Backed Security transactions (except those that are
effected as primary market List or Fixed Offering Price Transactions or
Takedown Transactions) is an important corollary to the expansion of
post-trade transparency for such transactions. Reducing the reporting
period for these transactions as set forth in the proposal will result
in important trade information reaching the market more quickly, thus
contributing to enhanced price transparency for Asset-Backed
Securities. The Commission also believes that FINRA's two-stage phased
approach to implementing the reduced reporting period is reasonably
designed to ease the compliance burdens on those affected by the
proposal without significantly compromising FINRA's ability to
disseminate more timely transaction information. Further, the
Commission believes that it is reasonable and appropriate to allow
members that effect primary market Asset-Backed Security transactions
as List or Fixed Ordering Price Transactions or Takedown Transactions
to continue to take advantage of the more flexible treatment of those
transactions provided for in FINRA Rules 6730(a)(2), 6750(b)(3), and
7730(b)(1)(C).
    The Commission believes that the proposed $10 million dissemination
cap for Asset-Backed Security transactions is reasonable and consistent
with the Act. FINRA has represented that it will observe the effects of
the $10 million dissemination cap on the market and may propose
modifications to the cap size in the future if warranted. The
Commission expects FINRA to periodically re-evaluate whether the
dissemination caps, including the caps for Asset-Backed Security
transactions being approved today, continue to be appropriate.
Furthermore, the Commission believes that the additional

proposed dissemination protocols for Asset-Backed Security
transactions, pursuant to which the dealer/customer and buy/sell
indicators would not be disseminated, strike an appropriate balance
between enhancing post-trade transparency and protecting counterparty
confidentiality.
    The Commission further believes that including disseminated Asset-
Backed Security transaction data in the SP Data Set and Historic SP
Data Set (as renamed under the proposal) while maintaining the current
fee levels in effect for those data sets is reasonable and consistent
with the Act. The rules that establish the existing data sets have been
approved by the Commission,\73\ and including the additional Asset-
Backed Securities to be disseminated under the instant proposal in
those data sets does not appear to raise any issues. Finally, the
Commission believes that the proposal's minor, conforming, and
technical revisions to the FINRA Rule 6700 series and FINRA Rule 7730
are consistent with the Act.
---------------------------------------------------------------------------

    \73\ See Securities Exchange Act Release No. 66829 (April 18,
2012), 77 FR 24748 (April 25, 2012) (approving SR-FINRA-2012-020,
which, among other things, established real-time and historic market
data sets for certain Asset-Backed Securities traded ``To Be
Announced''); Securities Exchange Act Release No. 68084 (October 23,
2012), 77 FR 65436 (October 26, 2012) (approving SR-FINRA-2012-042,
which, among other things, established real-time and historic market
data sets for certain other Asset-Backed Securities).
---------------------------------------------------------------------------

    The Commission finds good cause to approve the proposed rule
change, as amended by Amendment No. 1, prior to the thirtieth day after
the date of publication of notice of filing thereof in the Federal
Register. The amendment responds to an issue raised by one commenter on
the proposal by excluding certain tranched securities from the Asset-
Backed Securities to be disseminated. Thus, the scope of proposal, as
amended, is narrower than the initial proposal. In addition, the
initial proposal underwent a full notice-and-comment period and
generated no comment from any other parties. Accelerated approval would
allow FINRA to expand post-trade transparency to transactions in the
Asset-Backed Securities set forth in the amended proposal without
delay. Accordingly, the Commission believes that good cause exists,
consistent with Sections 15A(b)(6) and 19(b) of the Act,\74\ to approve
the proposed rule change, as amended by Amendment No. 1, on an
accelerated basis.
---------------------------------------------------------------------------

    \74\ 15 U.S.C. 78o-3(b)(6); 15 U.S.C. 78s(b).
---------------------------------------------------------------------------

V. Solicitation of Comments on Amendment No. 1

    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_ADDRESS>Please include
File Number SR-FINRA-2013-046 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-FINRA-2013-046. 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 the 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-2013-046 and should be
submitted on or before March 21, 2014.

VI. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\75\ that the proposed rule change (SR-FINRA-2013-046), as modified
by Amendment No. 1, be, and it hereby is, approved on an accelerated
basis.
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    \75\ 15 U.S.C. 78s(b)(2).
    \76\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\76\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-04390 Filed 2-27-14; 8:45 am]
BILLING CODE 8011-01-P