[Federal Register Volume 87, Number 85 (Tuesday, May 3, 2022)]
[Notices]
[Pages 26256-26259]
[FR Doc No: 2022-09390]

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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

[Docket No. NHTSA-2022-0035]

Agency Information Collection Activities; Notice and Request for
Comment; Consolidated Labeling Requirements for 49 CFR Part 541 and
Procedures for Selecting Lines To Be Covered by the Theft Prevention
Standard for 49 CFR Part 542

AGENCY: National Highway Traffic Safety Administration (NHTSA),
Department of Transportation (DOT).

ACTION: Notice and request for comments on a reinstatement of a
previously approved information collection.

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SUMMARY: In compliance with the Paperwork Reduction Act of 1995 (PRA),
this notice announces that the Information Collection Request (ICR)
summarized below has been forwarded to the Office of Management and
Budget (OMB) for review and approval. The ICR describes the nature of
the information collections and their expected burden for consolidated
labeling requirements and procedures for selecting lines to be covered
by the Theft Prevention Standard. A Federal Register Notice with a 60-
day comment period for approval of a reinstatement of this previously
approved information collection was published on January 12, 2022. The
agency received no comments.

DATES: Comments must be submitted on or before June 2, 2022.

ADDRESSES: Written comments and recommendations for the proposed
information collection, including suggestions for reducing burden,
should be submitted to the Office of Management and Budget at
www.reginfo.gov/public/do/PRAMain. To find this particular information
collection, select ``Currently under Review--Open for Public Comment''
or use the search function.

FOR FURTHER INFORMATION CONTACT: Ms. Carlita Ballard at the National
Highway Traffic Safety Administration, Office of International Policy,
Fuel Economy and Consumer Programs (NRM-310), 1200 New Jersey Avenue
SE, West Building, Room W43-439, Washington, DC 20590. Ms. Ballard's
telephone number is<PHONE_NUMBER>. Please identify the relevant
collection of information by referring to its OMB Control Number.

SUPPLEMENTARY INFORMATION: Under the PRA (44 U.S.C. 3501 et seq.), a
Federal agency must receive approval from the Office of Management and
Budget (OMB) before it collects certain information from the public and
a person is not required to respond to a collection of information by a
Federal agency unless the collection displays a valid OMB control
number. In compliance with these requirements, this notice announces
that the following information collection request will be submitted to
OMB.
    A Federal Register notice with a 60-day comment period soliciting
public comments on the following information collection was published
on January 12, 2022 (87 FR 1833). The agency received no comments.
    Title: Consolidated Labeling Requirements for 49 CFR part 541 and
Procedures for Selecting Lines to be Covered by the Theft Prevention
Standard for 49 CFR part 542.
    OMB Control Number: 2127-0539.
    Type of Request: Reinstatement of a previously approved information
collection.
    Type of Review Requested: Regular.
    Length of Approval Requested: Three years.
    Summary of the Collection of Information: 49 U.S.C. Chapter 331
requires the Secretary of Transportation, and NHTSA by delegation, to
promulgate a theft prevention standard to provide for the
identification of certain motor vehicles and their major replacement
parts (parts-marking) to impede motor vehicle theft. NHTSA's theft
prevention standard at 49 CFR part 541 specifies performance
requirements for identifying numbers or symbols (generally the vehicle
identification number (VIN)) to be placed on major parts of all
passenger vehicles subject to the theft prevention standard. In 1984,
Congress enacted the Motor Vehicle Theft Law Enforcement Act (The Theft
Act) directing NHTSA to issue a theft prevention standard requiring
vehicle manufacturers to mark the major parts of high-theft lines of
passenger motor vehicles. (Pub. L. 98-547.) In 1992, Congress enacted
the Anti Car Theft Act (Pub. L. 102-519, codified at 49 U.S.C. chapter
331), which expanded the parts-marking requirement to include
multipurpose passenger vehicles and certain light duty trucks. In a
final rule published on April 6, 2004 (69 FR 17960), the Federal Motor
Vehicle Theft Prevention Standard was extended to include all passenger
cars and, multipurpose passenger vehicles with a gross vehicle weight
rating (GVWR) of 6,000 pounds or less, all light-duty trucks (LDTs)
determined to be high-theft (with a gross vehicle weight rating of
6,000 pounds or less) and all low-theft LDTs with major parts that are
interchangeable with a majority of the covered major parts of those
passenger motor vehicle lines subject to the theft prevention standard.
The five information collections are: (1) The requirement to mark major
parts of covered motor vehicles; (2) the requirement to submit to NHTSA
target areas showing where the parts will be marked; (3) the
requirement that manufacturers maintain the designated target areas for
the duration of the production of the vehicle line; (4) the requirement
for manufacturers of new LDT lines to submit information to NHTSA to
allow the agency to determine whether the LDT line will be required to
comply with the parts-marking requirements because it is likely to be a
high theft line; and (5) the requirement for manufacturers of new LDT
lines to submit information to NHTSA to allow the agency to determine
the LDT will be required to comply with the parts-marking requirements
because it contains major parts that are interchangeable with the
majority of the covered major parts of passenger motor vehicles covered
by the standard. Each of the information collections are describe in
more detail below.
    49 CFR Part 541--Federal Motor Vehicle Theft Prevention Standard:
The Theft Act requires specified parts of high-theft vehicles to be
marked with vehicle identification numbers (parts-marking). Part 541
specifies performance requirements for identifying numbers or symbols
to be placed on major parts of certain passenger motor vehicles to
reduce the incidence of motor vehicle thefts through tracing and
recovery of parts from stolen vehicles. All passenger cars and
multipurpose passenger vehicles with a gross vehicle weight rating of
6,000 pounds or less, and light duty trucks with major parts that are
interchangeable with the majority of the covered major parts of
passenger motor vehicles covered by the standard are required to be
parts-marked. Each major component part must be either labeled or
affixed with the VIN and its replacement component part must be marked
with the ``DOT'' symbol, the letter ``R'' and the manufacturers' logo.
For each vehicle line, manufacturers must inform NHTSA of the location
of the VIN marking on each part (target area) and the location of the
VIN marking for the replacement part. This information is publicly
available to aid law enforcement personnel in tracing stolen vehicles
and their parts. In addition, the manufacturer must maintain the target
area designated for

a part on a vehicle line for the duration of the production of the
vehicle line, unless a restyling of the part makes it no longer
practicable to mark within the original target area.
    49 CFR Part 542--Procedures for Selecting Light Duty Truck Lines to
be Covered by the Theft Prevention Standard: Manufacturers of light
duty trucks must identify new model introductions that are likely to be
high-theft vehicle lines as defined in 49 U.S.C. 33104. The specific
vehicle lines are to be selected by agreement between the manufacturer
and the agency. NHTSA's procedures for selecting high-theft vehicle
lines are contained in 49 CFR part 542. Manufacturers use the criteria
in Appendix C of part 541 to evaluate new lines and determine whether
the new line is likely to be high theft. Next, the manufacturers submit
their evaluations and conclusions, together with the underlying factual
information, to NHTSA at least 15 months before introduction of the
vehicle line into U.S. commerce.

Description of the Need for the Information and Proposed Use of the
Information

    49 CFR Part 541: The identification of major parts of high theft
motor vehicle lines is designed to decrease automobile theft by making
it more difficult for criminals to ``chop'' vehicles into component
parts and then fence such parts. The information would aid law
enforcement officials at all levels of Government in the investigation
of ``chop shops'' by creating evidence for prosecution of the operators
for possession of stolen motor vehicle parts. Officials have great
difficulty in establishing that particular parts in the possession of a
``chop shop'' are in fact stolen when the parts are not marked.
Operators of both ``chop shops'' and auto body repair shops would avoid
possession of parts bearing identification that links the parts to a
stolen vehicle. Also, stolen parts, when recovered, could not easily be
traced back to the proper owner and returned to the owner or insurer if
the parts were not marked. Congress intended for major parts
identification to decrease the market for stolen parts and, therefore,
decrease the incentive for motor vehicle theft.
    49 CFR Part 542: Manufacturers of light duty trucks must identify
new model introductions that are likely to be high-theft vehicle lines
as defined in 49 U.S.C. 33104. Because the specific vehicle lines are
to be selected by agreement between the manufacturer and NHTSA, the
agency could not perform its statutory requirement without the
information provided by the manufacturers.

60-Day Notice

    A Federal Register notice with a 60-day comment period soliciting
public comments on the following information collection was published
on January 12, 2022 (87 FR 1833). NHTSA received no comments.
    Affected Public: Motor vehicle manufacturers.
    Estimated Number of Respondents: 21.
    There are approximately 21 manufacturers that are required to
comply with the parts marking requirements of part 541 each year and
submit information on target areas to NHTSA. For the information
collections contained in part 542, NHTSA estimates that there are
currently 7 manufacturers of LDTs that could be subject to the parts-
marking requirements. However, these manufacturers are not required to
submit information every year. Instead, these manufacturers would only
need to submit information under part 542 before they introduce a new
LDT line. Because NHTSA estimates that it will only receive one
submission under section 542.1 and one submission under section 542.2
in each of the next three years, NHTSA estimates there will only be one
respondent to these information collections annually.
    Frequency: On Occasion.
    Manufacturers comply with the parts-marking requirements when they
manufacture new vehicles. Manufacturers submit new target area
information when they introduce new vehicle lines or make changes to
existing vehicle lines that require changes to where parts are marked.
Manufacturers only submit information under part 542 when they
introduce new LDT lines.
    Number of Responses: 1.
    For the five information collections in part 541 and part 542,
NHTSA estimates the annual number of responses as follows: (1) 4.5
million for the parts-marking requirement; (2) 23 for submissions of
target area information; (3) 23 for maintaining of target area
information; (4) 1 for reporting on whether a LDT line is likely to be
high-theft; and (5) 1 for reporting on whether a LDT line shares
interchangeable parts with a high theft line subject to the parts-
marking requirements.
    Estimated Total Annual Burden Hours: 150,550.
    49 CFR Part 541: The agency estimates that, based on the most
currently available data, there has been a decrease in the production
of vehicles requiring parts-marking from 8 million vehicles to
approximately 4.5 million for all manufacturers. To calculate the
burden associated with the parts marking requirement, NHTSA assumes
that manufacturers will use the least burdensome method for complying
with the requirement, based on historical practice and the agency's
current understanding of how manufacturers fit labeling into the
vehicle assembly line. For the antitheft requirement, the cost of
labeling the major parts (i.e., a paper label with the VIN is placed on
each major part) is less than the cost of stamping the VIN on each
major part with a stamping machine.
    To meet the Theft Prevention Standard, the agency estimates that
the time to number and affix the average of 14 labels to each vehicle
is approximately 2 minutes. If 4.5 million vehicles are covered, the
hourly burden for labeling 4.5 million motor vehicles would be 150,000
hours (4.5 million cars x 2 minutes per car / 60 minutes in an hour).
    The agency estimates that the time to stamp both the engine and
transmission will take approximately 1 minute. If 4.5 million vehicles
are covered, the total burden for stamping is estimated to total 75,000
hours (4.5 million cars x 1 minute per car / 60 minutes in an hour).
Please note that in this analysis each vehicle would either have its
major parts labeled or stamped, but not both. As discussed above, since
affixing paper labels is estimated to be cost less for manufacturers,
NHTSA has estimated the burden of the parts marking requirements using
the estimates for affixing paper labels. Therefore, NHTSA estimates the
total burden for parts-marking to be 150,000 hours annually.
    Each manufacturer of vehicles that are required to be parts-marked
must submit reports of the target area locations for the labels or
stamping. The target area designated for a part on a vehicle line shall
be maintained for the duration of the production of the vehicle line,
unless a restyling of the part makes it no longer practicable to mark
within the original target area. If there is such a restyling, the
vehicle manufacturer shall inform NHTSA of that fact and provide a new
target area submission. NHTSA estimates that there is no additional
hour burden to maintain the target area designation because maintaining
the designation is built into the production process of a new vehicle
line and the record of the target designation is kept electronically in
the normal course of business.
    NHTSA estimates that approximately 70 target area responses will be
submitted to the agency in the next three years, or approximately 23

submissions each year. This estimate is based on the number of the
submissions over the three-year period for MYs 2019-2021. Specifically,
18, 29 and 23 target areas were submitted for MYs 2019, 2020 and 2021,
respectively. Due to the decreased production of vehicles requiring
parts-marking, the agency estimates on an average, there will be a
total of 23 target areas submitted by approximately 21 manufacturers.
The average time to prepare and submit the target areas is estimated to
be 20 hours for each submission. The burden hour for submissions will
be 460 hours (23 submissions x 20 hours).
    NHTSA estimates the labor cost associated with this collection of
information by (1) applying the appropriate average hourly labor rate
published by the Bureau of Labor Statistics (BLS), (2) dividing by
0.702 \1\ (70.2%), for private industry workers to obtain the total
cost of compensation, and (3) multiplying by the estimated burden hours
for each respondent type. NHTSA estimates the labor costs associated
with preparing and affixing labels to 14 major parts under Sec.
541.5(a) using the average wage for manufacturers and assemblers in the
motor vehicle manufacturing industry (Standard Occupational
Classification #51-2000), which BLS estimates to be $23.18 \2\ per
hour. Using this estimate, NHTSA estimates the total compensation costs
per hour to be $33.02 per hour ($23.18 per hour / 0.702). The labor
cost per vehicle is estimated to be $1.10 ($33.02 x 2 minutes/60), and
the total labor cost for preparing and affixing labels to the estimated
4.5 million vehicles each year is estimated to be $4,953,000 ($1.10 x
4.5 million vehicles).
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    \1\ See Table 1. Employer Costs for Employee Compensation by
ownership (Mar. 2020), available at https://www.bls.gov/news.release/archives/ecec_06182020.pdf (accessed August 31, 2021).
    \2\ May 2020 National Industry-Specific Occupational Employment
and Wage Estimates, NAICS 336100--Motor Vehicle Manufacturing,
Assemblers and Fabricators, Occupation Code 51-2000, https://www.bls.gov/oes/2020/may/oessrci.htm (accessed August 31, 2021).
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    NHTSA estimates the labor costs associated with developing and
submitting reports of the target area locations for labels or stamping
under Sec.  541.5(e) using the average wage for compliance officers in
the motor vehicle manufacturing industry (Standard Occupational
Classification #13-1041), which BLS estimates to be $42.30 \3\ per
hour. Using this estimate, NHTSA estimates the total compensation costs
per hour to be $60.26 per hour ($42.30 per hour / 0.702). The labor
cost to prepare each report submitted under Sec.  541.5(e) is estimated
to be $1,205.20 ($60.26 x 20 hours per submission), and the total labor
cost for the estimated 23 target area reports that will be submitted
each year is estimated to be $27,720 ($1,205.20 x 23 reports, rounded).
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    \3\ May 2020 National Industry-Specific Occupational Employment
and Wage Estimates, NAICS 336100--Motor Vehicle Manufacturing,
Compliance Officer, Occupation Code 13-1041, https://www.bls.gov/oes/2020/may/naics4_336100.htm#13-0000 (accessed August 31, 2021).
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    NHTSA estimates that Part 541 will impose an annual reporting
burden of 150,460 burden-hours, and the total estimated labor costs
associated with these burden hours endured by the responding
manufacturers are $4,977,720 ($4,950,000 + $27,720).
    49 CFR Part 542: Currently there are seven manufacturers who
produce LDTs that could be subject to the parts-marking requirements.
While NHTSA estimates that all seven are still active in the U.S.
market, only manufacturers that introduce new LDT lines would be
required to report to NHTSA under 49 CFR 542.1 and 49 CFR 542.2. On
average, NHTSA estimates that approximately that one LDT line will be
introduced each year for which the manufacturer will need to submit
information under Sec.  542.1 and one LDT line will be introduced for
which the manufacturer will need to submit information under Sec.
541.2.
    Section 542.1 specifies procedures for motor vehicle manufacturers
and the agency to follow in the determination of new LDT lines that are
likely to have a theft rate above or below the median theft rate of
3.5826. This section also provides the manufacturers with notice of
their rights and responsibilities during the selection and appeals
process. On average, NHTSA estimates that there will be approximately
one manufacturer submittal a year. NHTSA further estimates that the
burden for each Sec.  542.1 submittal is approximately 45 hours.
Therefore, the total annual burden for Sec.  542.1 submittals is
estimated to be 45 hours.
    Section 542.2 specifies procedures for motor vehicle manufacturers
and NHTSA to follow in the determination of new LTD lines that will
likely have a low theft rate and have major parts interchangeable with
a majority of the major parts of a passenger motor vehicle line subject
to the parts-marking requirements. This section also provides the
manufacturers with notice of their rights and responsibilities during
the selection and appeal process. On average, NHTSA estimates that
there will be approximately one manufacturer submittal a year. NHTSA
further estimates that the burden for each Sec.  542.2 submittal is
approximately 45 hours. Therefore, the total annual burden for Sec.
542.2 submittals is estimated to be 45 hours.
    NHTSA estimates the labor cost associated with this collection of
information by (1) applying the appropriate average hourly labor rate
published by the Bureau of Labor Statistics (BLS), (2) dividing by
0.702 \4\ (70.2%), for private industry workers to obtain the total
cost of compensation, and (3) multiplying by the estimated burden hours
for each respondent type.
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    \4\ See Table 1. Employer Costs for Employee Compensation by
ownership (Mar. 2020), available at https://www.bls.gov/news.release/archives/ecec_06182020.pdf (accessed August 31, 2021).
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    Table 1 below provides a summary of the estimated burden hours and
Table 2 provides a summary of the labor costs associated with the
burden hours.

                                               Table 1--Total Estimated Burden Hours for Parts 541 and 542
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                                                                                Estimated
        IC No.                ICR title                  Type of IC             number of    Estimated  number of   Estimated  time per    Total burden
                                                                               respondents        responses               response             hours
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1.....................  541: Parts-Marking on  Third-Party Disclosure........           21  4.5 million..........  2 minutes............         150,000
                         14 major parts (49
                         CFR 541.5(a)).
2.....................  541: Reporting of      Reporting.....................           21  23...................  20 hours.............             460
                         Target Areas to
                         NHTSA.
3.....................  Maintaining a Record   Recordkeeping.................           21  21...................  0 hours..............               0
                         of the Target Areas.
4.....................  542: Submissions for   Reporting.....................            1  1....................  45 hours.............              45
                         Determination of
                         whether LDT Line is
                         High Theft.
5.....................  542: Submission for    Reporting.....................            1  1....................  45 hours.............              45
                         Determination of
                         whether LDT line
                         Shares
                         Interchangeable
                         Parts with High
                         Theft Line.
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    Total.............  .....................  ..............................  ...........  .....................  .....................         150,550
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                                 Table 2--Estimated Labor Costs for Burden Hours
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                                       Labor cost      Time per      Labor cost per   Total burden   Total labor
     ICR No.           ICR title        per hour       response         response          hours          cost
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1................  541: Parts-             $33.02  2 minutes.......           $1.10         150,000   $4,953,000
                    Marking on 14
                    major parts (49
                    CFR 541.5(a)).
2................  541: Reporting of        60.26  20 hours........        1,205.20             460    27,719.60
                    Target Areas to                                                                       27,720
                    NHTSA.
3................  Maintaining a              N/A  0 hours.........             N/A               0            0
                    Record of the
                    Target Areas.
4................  542: Submissions         60.26  45 hours........        2,711.70              45     2,711.70
                    for                                                                                2,712
                    Determination of
                    whether LDT Line
                    is High Theft.
5................  542: Submission          60.26  45 hours........        2,711.70              45     2,711.70
                    for                                                                                2,712
                    Determination of
                    whether LDT line
                    Shares
                    Interchangeable
                    Parts with High
                    Theft Line.
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    Totals.......  .................  ...........  ................  ..............         150,550    4,986,114
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    Estimated Total Annual Cost Burden: $24,003,000.
    49 CFR Part 541: NHTSA assumes that most manufacturers will use the
less expensive method of labeling the major parts on vehicles, and not
stamp the VINs onto major parts, based on historical practice and the
agency's current understanding of how manufacturers fit labeling into
the vehicle assembly line. The cost of this collection of information
will comprise of printing costs for the labels affixed to the vehicle
parts. There are no additional costs to maintain the target area
designation because maintaining the designation is built into the
production process of a new vehicle line and the record of the target
designation is kept electronically in the normal course of business.
NHTSA estimates that the average cost to print each label is $0.381.
There are an average 14 parts per vehicle to label; therefore, the
printing cost per vehicle is $5.33. At present, the agency estimates
that 4.5 million motor vehicles annually must have their major parts
marked. The total annual costs are estimated to be $ 24,003,000 for
label identifiers ($5.33 x 4.5 million vehicles).

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                                                                        Number of                       Total printing     Number of          Total
                       Information collection                         parts labeled    Printing cost       cost per       vehicles per      estimated
                                                                       per  vehicle      per label         vehicle      year  (million)   printing cost
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541: Parts-Marking on 14 major parts (49 CFR 541.5(a)).............              14           $0.381            $5.33              4.5      $24,003,000
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    Target area submissions require no additional costs to the
respondents above and beyond the labor costs.
    49 CFR Parts 542: NHTSA estimates that meeting Part 542 involves no
additional costs to the respondents above and beyond the labor costs.
    Public Comments Invited: You are asked to comment on any aspects of
this information collection, including (a) whether the proposed
collection of information is necessary for the proper performance of
the functions of the agency, including whether the information will
have practical utility; (b) the accuracy of the agency's estimate of
the burden of the proposed collection of information, including the
validity of the methodology and assumptions used; (c) ways to enhance
the quality, utility and clarity of the information to be collected;
and (d) ways to minimize the burden of the collection of information on
respondents, including the use of appropriate automated, electronic,
mechanical, or other technological collection techniques or other forms
of information technology, e.g., permitting electronic submission of
responses.
    Authority: The Paperwork Reduction Act of 1995, 44 U.S.C. chapter
35, as amended; 49 CFR 1.49; and DOT Order 1351.29A.

Raymond R. Posten,
Associate Administrator for Rulemaking.
[FR Doc. 2022-09390 Filed 5-2-22; 8:45 am]
BILLING CODE 4910-59-P


[Federal Register Volume 80, Number 193 (Tuesday, October 6, 2015)]
[Notices]
[Pages 60421-60424]
[FR Doc No: 2015-25330]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76061; File No. SR-FINRA-2015-035]

Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change Relating to the Submission of ``Clearing-Only,
Non-Regulatory Reports'' to the FINRA Equity Trade Reporting Facilities

September 30, 2015.
    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 September 22, 2015, Financial Industry Regulatory Authority, Inc.
(``FINRA'') filed with the Securities and Exchange Commission (``SEC''
or ``Commission'') the proposed rule change as described in Items I,
II, and III below, which Items have been prepared by FINRA. FINRA has
designated the proposed rule change as constituting a ``non-
controversial'' rule change under paragraph (f)(6) of Rule 19b-4 under
the Act,\3\ which renders the proposal effective upon receipt of this
filing by the Commission. The Commission is publishing this notice to
solicit comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of the
Substance of the Proposed Rule Change

    FINRA is proposing to amend FINRA rules governing the reporting of
over-the-counter (``OTC'') transactions in equity securities to the
FINRA Facilities \4\ to allow the submission of ``clearing-only, non-
regulatory reports,'' as defined herein, relating to previously
executed and reported transactions and exempt such reports from certain
reporting requirements under FINRA rules.
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    \4\ For purposes of this filing, the FINRA Facilities are the
Alternative Display Facility (``ADF'') and the Trade Reporting
Facilities (``TRF''), to which members report OTC transactions in
NMS stocks, as defined in SEC Rule 600(b) of Regulation NMS; and the
OTC Reporting Facility (``ORF''), to which members report
transactions in ``OTC Equity Securities,'' as defined in Rule 6420
(i.e., non-NMS stocks such as OTC Bulletin Board and OTC Market
securities), as well as transactions in Restricted Equity
Securities, as defined in Rule 6420, effected pursuant to Securities
Act Rule 144A.
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    The text of the proposed rule change is available on FINRA's Web
site at http://www.finra.org, at the principal office of FINRA and at
the Commission's Public Reference Room.

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

    In its filing with the Commission, FINRA included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. FINRA has prepared summaries, set forth in sections A,
B, and C below, of the most significant aspects of such statements.

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

1. Purpose
Background
    With limited exceptions, FINRA trade reporting rules require that
members report OTC transactions in equity securities by submitting a
``tape'' report (the transaction is reported for public dissemination
purposes) to FINRA.\5\ In some instances, members may be required (or
may choose) to also submit one or more ``non-tape'' reports (the
transaction is not reported for publication) in connection with the
transaction. For example, members executing OTC transactions as
riskless principal \6\ or agent on behalf of other members are required
to submit non-tape report(s) to identify other FINRA members that are
parties to the trade.\7\ Non-tape reports can be (1) ``non-tape, non-
clearing'' (the transaction is not reported to the tape and is
submitted to FINRA solely for regulatory purposes) or (2) ``clearing-
only'' (the transaction is not reported to the tape and is submitted to
FINRA for clearing (and perhaps also regulatory) purposes). FINRA notes
that members can elect, but are not required, to have the FINRA
Facility submit their trades to the National Securities Clearing
Corporation (``NSCC'') for clearance and settlement, and in such
instance, they would designate the submission for clearing.\8\
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    \5\ FINRA trade reporting rules require that for transactions
between members, the ``executing party'' report the trade to FINRA.
For transactions between a member and a non-member or customer, the
member must report the trade. ``Executing party'' is defined under
FINRA rules as the member that receives an order for handling or
execution or is presented an order against its quote, does not
subsequently re-route the order, and executes the transaction. See
Rules 6282(b), 6380A(b), 6380B(b) and 6622(b).
    \6\ For purposes of OTC trade reporting requirements applicable
to equity securities, a ``riskless principal'' transaction is a
transaction in which a member, after having received an order to buy
(sell) a security, purchases (sells) the security as principal (the
initial leg) and satisfies the original order by selling (buying) as
principal at the same price.
    \7\ See Rules 6282(d)(4), 6380A(d)(4), 6380B(d)(4) and
6622(d)(4).
    \8\ As noted, FINRA rules do not mandate that members submit OTC
transactions for clearing through a FINRA Facility, and for example,
members may elect to clear via direct submission to the NSCC by a
Qualified Special Representative (``QSR'').
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    Effective February 2, 2015, any member operating an alternative
trading system (``ATS'') must obtain for each such ATS a single, unique
market participant identifier (``MPID'') that is designated for
exclusive use for

reporting the ATS's transactions.\9\ The member must use such separate
MPID to report all transactions executed within the ATS to FINRA.
Members that operate multiple ATSs or engage in other lines of business
requiring the use of MPIDs must obtain and use multiple MPIDs.
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    \9\ See Rules 6160, 6170 and 6480.
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    Following implementation of the ATS MPID requirement, some firms
that operate an ATS and use a FINRA Facility to submit trades to NSCC
submit separate clearing-only reports to FINRA using their main broker-
dealer MPID. In other words, the firm submits a tape report and any
required non-tape, non-clearing (i.e., regulatory) reports using the
ATS MPID, and also submits one or more separate clearing-only reports
using the firm's main broker-dealer MPID. FINRA understands that firms
report in this manner to facilitate externally facing back office
clearing processes, such as client reporting and step-out trade
processing, that are built using the firm's main broker-dealer MPID.
Firms have indicated that it would be a significant burden to change
these established clearing processes and use the ATS MPID for purposes
of clearing-only submissions.
    Currently, these additional clearing reports with the firm's main
broker-dealer MPID duplicate the trade information previously reported
to FINRA. Because they are not identified with the same MPID and are
not linked to the related tape and non-tape, non-clearing reports,
FINRA is unable to distinguish duplicative clearing-only reports from
other reports that are submitted to satisfy a firm's regulatory
reporting obligations. This creates confusion in the audit trail which
in turn can result in the generation of false alerts in FINRA's
automated surveillance programs.
Clearing-Only, Non-Regulatory Reports
    After reviewing the system capabilities and consulting with
industry representatives, FINRA is proposing to adopt new subparagraph
(4) under Rules 7130(g), 7230A(i), 7230B(h) and 7330(h) to create a
uniquely identified category of submissions to FINRA that are
``clearing-only, non-regulatory reports,'' i.e., the transaction is
submitted solely to facilitate clearing and not for dissemination or
regulatory purposes. As described in more detail below, ATSs would be
permitted to use their main broker-dealer MPID on this limited subset
of reports.
    Pursuant to the proposed rule change, a member may submit a
clearing-only, non-regulatory report to a FINRA Facility for a
previously executed trade for which a tape report has been submitted to
the Facility, or for the offsetting portion of a riskless principal or
agency transaction for which a non-tape, non-clearing report already
has been submitted to the Facility satisfying FINRA regulatory
requirements.\10\ In other words, the information contained in a
clearing-only, non-regulatory report must be duplicative of information
reported to the FINRA Facility in other submissions.
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    \10\ See, e.g., current Rules 7130(g)(1), 7230A(i)(1),
7230B(h)(1) and 7330(h)(1), which prohibit members from submitting
to a FINRA Facility any non-tape report associated with a previously
executed trade that was not reported to that FINRA Facility, except
where submitting the offsetting portion of a riskless principal or
agency transaction. See also Regulatory Notice 07-38 (August 2007).
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    Pursuant to the proposed rule change, a clearing-only, non-
regulatory report cannot be used to satisfy any regulatory reporting
requirement under FINRA rules that may apply to the transaction, e.g.,
the identification of other members for agency or riskless principal
transactions.\11\ Thus, members will only be permitted to use such
reports where the member's regulatory reporting obligations have been
satisfied through other reports (tape or non-tape, as applicable)
submitted to the FINRA Facility. Submission of a clearing-only, non-
regulatory report constitutes certification by the member that it has
satisfied all regulatory reporting requirements that may apply to the
transaction through its other submissions.
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    \11\ See Rules 6282(d)(4), 6380A(d)(4), 6380B(d)(4) and
6622(d)(4).
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    Members that opt to submit such reports would be required to use a
unique indicator to denote that the report is submitted solely for
purposes of clearing the transaction and not for purposes of satisfying
any regulatory reporting requirements. If a clearing submission does
not comply with the provisions of the Rule, e.g., if it is being used
to satisfy any regulatory reporting requirements, then the member must
not use the unique indicator. FINRA is proposing a conforming change to
Rules 7130(d), 7230A(d), 7230B(d) and 7330(d), which identify the
information that must be included in trade reports submitted to FINRA,
to require members to append the unique indicator to denote a clearing-
only, non-regulatory report, if applicable.
    Although clearing-only, non-regulatory reports will not be used by
members to satisfy their regulatory reporting obligations, the
information contained in such reports must nonetheless be consistent
with previously submitted information for the same transaction, unless
otherwise expressly provided under FINRA rules. Thus, FINRA is also
proposing to amend Rules 6160, 6170 and 6480 to expressly allow members
that operate an ATS to use an MPID other than their ATS MPID on
clearing-only, non-regulatory reports.\12\ FINRA notes, however, that
this relief relates solely to the MPID requirement, and the member firm
with the trade reporting obligation under FINRA rules (or the
``executing party'') must continue to be identified as such in all
clearing-only, non-regulatory reports.
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    \12\ If a member is using its clearing submission to satisfy any
of its regulatory reporting obligations, then it must use its ATS
MPID (and may not use its main broker-dealer MPID) in the clearing
submission.
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    In addition, FINRA is proposing to amend Rules 7130(d), 7230A(d),
7230B(d) and 7330(d) to provide that members are not required to use
the short sale (or short sale exempt) indicator, if applicable, on
clearing-only, non-regulatory reports. The short sale indictor must be
included on the required tape report and if submitted, non-tape non-
clearing report that identifies the FINRA member that is selling short
(or short exempt). The member is not required to duplicate this
information on the optional clearing-only, non-regulatory report.
    FINRA reiterates that use of the clearing-only, non-regulatory
report is not mandatory, and members will have the option of continuing
to use clearing submissions to satisfy their regulatory reporting
obligations. However, where a member opts to submit a clearing-only,
non-regulatory report that duplicates trade information reported to
FINRA in other tape and non-tape, non-clearing reports, then the member
would be required to comply with the requirements set forth in this
proposed rule change.
    To further illustrate the application of the proposed rule change,
FINRA is providing the following detailed example: Member Firm 1
operates an ATS that uses the MPID ``MATS,'' and Firm 1's main broker-
dealer MPID is ``MOTH.'' Firm 1 executes an agency cross transaction in
its ATS between member Firm 2, as the buyer, and member Firm 3, as the
seller. Under FINRA rules, using its ATS MPID ``MATS,'' Firm 1 must
report the transaction to FINRA for public dissemination (for purposes
of this example, ``MATS'' reports a cross transaction) and must submit
non-tape report(s) to identify Firms 2 and 3 as parties to the trade,
because they are

FINRA members (``MATS'' sells to Firm 2 and ``MATS'' buys from Firm 3).
Firm 1 has the option, but is not required, to also report the
transaction to FINRA for submission to clearing. Under the proposed
rule change, Firm 1 could opt to submit two additional reports, i.e.,
two clearing-only, non-regulatory reports, with the unique indicator
specified by FINRA, using an MPID other than its ATS MPID (``MOTH''
sells to Firm 2 and ``MOTH'' buys from Firm 3). In making such
submissions, per the terms of the proposed rule change, Firm 1 is
certifying that it has satisfied all regulatory reporting requirements
through the submission of the tape and non-tape, non-clearing reports.
Alternatively, Firm 1 would have the option of designating the non-tape
reports showing ``MATS'' sells to Firm 2 and ``MATS'' buys from Firm 3
for clearing. In that instance, Firm 1 would not use the special
indicator because the reports are also satisfying Firm 1's reporting
obligation under FINRA rules to identify Firms 2 and 3 as parties to
the trade.
    Finally, FINRA notes that while the proposed rule change has been
prompted by issues involving ATS trade reporting, any FINRA member
(e.g., a member that does not operate an ATS but nonetheless uses
multiple MPIDs) could elect to use clearing-only, non-regulatory
reports in accordance with the proposed rule change.
    FINRA believes that the proposed rule change will ensure the
accuracy and efficiency of FINRA's audit trail and automated
surveillance programs while accommodating firms' business models and
reporting and clearing processes that rely on clearing against their
main broker-dealer MPID. The proposed rule change will ensure a more
accurate audit trail by distinguishing voluntary trade reports that are
submitted only to facilitate clearing from reports that are required
under FINRA's trade reporting rules to satisfy a member's regulatory
reporting obligations. Further, by distinguishing clearing-only, non-
regulatory reports from other trade submissions, the proposed rule
change will improve the efficiency of FINRA's automated surveillance
programs by potentially preventing false alerts that require both FINRA
and member firms to unnecessarily expend resources to address such
alerts.
    FINRA has filed the proposed rule change for immediate
effectiveness and proposes that the operative date will be in February
2016. FINRA will announce the operative date in a Regulatory Notice. To
provide members sufficient time to make the required systems changes,
FINRA expects to publish updated technical specifications for the FINRA
Facilities at least four months prior to the operative date.
2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the
provisions of Section 15A(b)(6) of the Act,\13\ which requires, among
other things, that FINRA rules must be designed to prevent fraudulent
and manipulative acts and practices, to promote just and equitable
principles of trade, and, in general, to protect investors and the
public interest. FINRA believes that the proposed change is consistent
with the Act because it will ensure a more accurate audit trail and
enhance FINRA's ability to surveil on an automated basis for compliance
with FINRA trade reporting rules.
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    \13\ 15 U.S.C. 78o-3(b)(6).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    FINRA does not believe that the proposed rule change will result in
any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act.
Economic Impact Analysis
    As described above, implementation of FINRA's reporting rules for
ATSs creates an obligation for firms to report transactions to FINRA
using an ATS-specific MPID. FINRA understands that requiring the
submission of clearing reports with a firm's ATS-specific MPID would
impose significant costs for firms with clearing processes that use
their main broker-dealer MPID, and such a requirement would provide no
material additional regulatory or market information beyond what is
already provided through tape and non-tape regulatory reporting.
Consequently, the proposed rule change is intended to remove a burden
on firms that would provide no significant regulatory benefit if
maintained.
    While the proposed rule change would require some firms to
implement systems changes to identify clearing-only, non-regulatory
reports with a unique indicator, FINRA does not believe that these
changes would impose significant or differential costs on similarly
situated firms.\14\ Firms will not be required to submit clearing-only,
non-regulatory reports and may continue to combine their regulatory
reporting and clearing in the same report. Thus, firms will be free to
select the method of reporting that best suits their business model.
FINRA notes that firms would not be required to report consistently for
all trades, i.e., a firm could submit clearing-only, non-regulatory
reports for some trades, but not all.\15\ FINRA is proposing to provide
members a sufficient implementation period to accommodate any such
changes.
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    \14\ FINRA notes that today, on average, approximately 350
members regularly report trades to the FINRA Facilities. Many firms,
including smaller firms, route their order flow to another firm,
e.g., their clearing firm, for execution, and as the routing firm,
they do not have the trade reporting obligation. Thus, the proposed
rule change will have no impact on many members.
    \15\ FINRA further notes that firms would not be required to
provide prior notice to FINRA of their intention to use clearing-
only, non-regulatory reports.
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    As noted above, the information in clearing-only, non-regulatory
reports will be duplicative of information provided to FINRA in other
reports. Accordingly, there will be no impact on the regulatory
information that FINRA receives, and FINRA will be able to identify
firms' use of clearing-only, non-regulatory reports in its audit trail.
Therefore, the proposed rule change is not anticipated to create
significant economic or informational impacts on the public, member
firms or FINRA.

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: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A)(iii) of the Act \16\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\17\
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    \16\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \17\ 17 CFR 240.19b-4(f)(6).
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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_ADDRESS>Please include
File Number SR-FINRA-2015-035 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-FINRA-2015-035. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549 on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of such filing also will be available
for inspection and copying at the principal offices of FINRA. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-FINRA-2015-035, and should
be submitted on or before October 27, 2015.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-25330 Filed 10-5-15; 8:45 am]
 BILLING CODE 8011-01-P