[Federal Register Volume 84, Number 59 (Wednesday, March 27, 2019)]
[Notices]
[Pages 11586-11589]
[FR Doc No: 2019-05811]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-85390; File No. SR-NYSE-2019-13]

Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend Its Price List To Permit Affiliated Member Organizations That Are
Supplemental Liquidity Providers on the Exchange To Obtain the Most
Favorable Rate in Securities Traded Pursuant to Unlisted Trading
Privileges

March 21, 2019.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act''),\2\ and Rule 19b-4 thereunder,\3\ notice is hereby given
that on March 19, 2019, New York Stock Exchange LLC (``NYSE'' or the
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II,
and III, below, which Items have been prepared by the self-regulatory
organization. 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\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange proposes to amend its Price List to (1) permit
affiliated member organizations that are Supplemental Liquidity
Providers (``SLPs'') on the Exchange to obtain the most favorable rate
in securities traded pursuant to Unlisted Trading Privileges (``UTP'')
(Tapes B and C) when (a) at least one affiliate satisfies the quoting
requirements for SLPs in assigned securities, and (b) the combined
SLPs' aggregate volumes satisfy the adding liquidity volume
requirements for SLP tiered rates; (2) modify the quoting requirements
for SLP tiered rates for displayed and non-displayed orders in UTP
securities; and (3) clarify that the combined SLP quoting requirement
for SLP Tier 2, Tier 1 and the Tape A Tier in UTP securities includes
shares and assigned securities of both an SLP-Prop and an SLMM of the
same or an affiliated member organization. The Exchange proposes to
implement these changes to its Price List effective March 19, 2019.\4\
The proposed rule change is available on the Exchange's website at
www.nyse.com, at the principal office of the Exchange, and at the
Commission's Public Reference Room.
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    \4\ The Exchange originally filed to amend the Price List on
February 28, 2019 (SR-NYSE-2019-10). On March 11, 2019, SR-NYSE-
2019-10 was withdrawn and replaced by SR-NYSE-2019-12. SR-NYSE-2019-
12 was subsequently withdrawn and replaced by this filing.
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II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

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

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

1. Purpose
    The Exchange proposes to amend its Price List to (1) permit
affiliated member organizations that are SLPs on the Exchange to obtain
the most favorable rate in UTP securities when (a) at least one
affiliate satisfies the

quoting requirements for SLPs in assigned securities, and (b) the
combined SLPs' aggregate volumes satisfy the adding liquidity volume
requirements for SLP tiered rates; (2) modify the quoting requirements
for SLP tiered rates for displayed and non-displayed orders in UTP
securities; and (3) clarify that the combined SLP quoting requirement
for SLP Tier 2, Tier 1 and the Tape A Tier in UTP securities includes
shares and assigned securities of both an SLP-Prop and an SLMM of the
same or an affiliated member organization.
    The Exchange proposes to implement these changes to its Price List
effective March 19, 2019
Proposed Rule Change
Background
    SLPs in UTP securities are eligible for certain credits and fees
for displayed and non-displayed orders that add liquidity to the
Exchange in UTP Securities priced at or above $1.00. The amount of the
credit is currently determined by the ``tier'' for which the SLP
qualifies, which is based on the SLP's level of quoting and ADV of
liquidity added by the SLP in assigned UTP securities.
    Currently, for displayed orders in UTP Securities that add
liquidity to the Exchange, the Exchange offers a non-tiered credit of
$0.0026 per share per tape in an assigned UTP Security where the SLP
meets the 10% average or more quoting requirement in an assigned
security pursuant to Rule 107B.\5\ For non-displayed orders in UTP
Securities that add liquidity to the Exchange, the Exchange offers a
non-tiered credit of $0.0008 per share per tape in an assigned UTP
Security if the SLP meets the 10% average or more quoting requirement
in an assigned security pursuant to Rule 107B.
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    \5\ Under Rule 107B, an SLP can be either a proprietary trading
unit of a member organization (``SLP-Prop'') or a registered market
maker at the Exchange (``SLMM'').
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    Current Tier 2 provides a $0.0029 per share credit per tape in an
assigned UTP Security for SLPs adding displayed liquidity to the
Exchange if the SLP (1) adds liquidity for all assigned UTP Securities
in the aggregate of an CADV of at least 0.03% per tape, and quotes on
an average daily basis, calculated monthly, in excess of the 10%
average quoting requirement in 200 or more assigned UTP Securities in
Tapes B and C combined pursuant to Rule 107B, and (2) meets the 10%
average or more quoting requirement in an assigned UTP Security
pursuant to Rule 107B. Tier 2 also provides a $0.0011 per share credit
per tape in assigned UTP securities for SLPs adding non-displayed
liquidity to the Exchange if the SLP meets the 10% average or more
quoting requirement in an assigned UTP Security pursuant to Rule 107B.
    Current Tier 1 provides a $0.0032 per share credit per tape in an
assigned UTP Security for SLPs adding displayed liquidity to the
Exchange if the SLP (1) adds liquidity for all assigned UTP Securities
in the aggregate of an CADV of at least 0.10% for Tape B and 0.075% for
Tape C, and (2) quotes on an average daily basis, calculated monthly,
in excess of the 10% average quoting requirement in 400 or more
assigned UTP Securities in Tapes B and C combined pursuant to Rule
107B, and (3) meets the 10% average or more quoting requirement in an
assigned UTP Security pursuant to Rule 107B. Tier 1 also provides a
$0.0014 per share credit per tape for SLPs adding non-displayed
liquidity to the Exchange, and a $0.0025 per share credit for MPL
Orders adding liquidity, in an assigned UTP Security if the SLP meets
the 10% average or more quoting requirement in an assigned UTP Security
pursuant to Rule 107B.
    Finally, the current Tape A Tier provides a $0.00005 per share in
assigned UTP securities in addition to the Tape A SLP credit in Tape A
assigned securities for SLPs adding displayed liquidity to the Exchange
if the SLP (1) qualifies for the SLP Tier 1 provide rate in both Tape B
and C or quotes on an average daily basis, calculated monthly, in
excess of the 10% average quoting requirement in 300 or more assigned
securities separately in Tapes B and Tape C pursuant to Rule 107B, and
(2) where the SLP meets the 10% average quoting requirement pursuant to
Rule 107B.
Most Favorable Rate for Affiliated SLPs
    The Exchange proposes to amend the Price List to permit affiliated
member organizations that are SLPs to obtain the most favorable rate in
UTP securities when (1) at least one affiliate satisfies the quoting
requirements for SLPs in assigned securities, and (2) the combined
SLPs' aggregate volumes satisfy the adding liquidity volume
requirements for SLP tiered rates (i.e., SLP Provide Tier 2 and SLP
Provide Tier 1).
    To effect this change, the Exchange proposes to add a footnote
stating that affiliated member organizations that are SLPs would be
eligible for the most favorable rate for any such security traded in an
applicable month provided that one or both affiliated member
organizations request and are approved for aggregation of eligible
activity pursuant to the requirements set forth in the Price List when
(1) at least one affiliate satisfies the quoting requirements for SLPs
in assigned securities, and (2) the combined SLPs' aggregate volumes
satisfy the adding liquidity volume requirements for SLP tiered rates
(i.e., SLP Provide Tier 2 and SLP Provide Tier 1).
    In order to qualify as affiliates for purposes of obtaining the
more favorable rate and aggregating the adding liquidity of an ADV
volumes for UTP securities, one or both member organizations that are
SLPs would be required to follow the procedures set forth in the Price
List for requesting that the Exchange aggregate its eligible activity
with the eligible activity of its affiliates.\6\
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    \6\ For purposes of applying any provision of the Exchange's
Price List where the charge assessed, or credit provided, by the
Exchange depends on the volume of a member organization's activity,
a member organization may request that the Exchange aggregate its
eligible activity with activity of such member organization's
affiliates. A member organization requesting aggregation of eligible
affiliate activity is required to (1) certify to the Exchange the
affiliate status of member organizations whose activity it seeks to
aggregate prior to receiving approval for aggregation, and (2)
inform the Exchange immediately of any event that causes an entity
to cease being an affiliate.
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    For example, assume a member organization with a SLP (SLP1) is
affiliated with another member organization that also has a SLP (SLP2).
Both SLP1 and SLP2 meet the quoting requirement in 500 securities each.
If the adding liquidity for all for assigned Tape B SLP securities is
0.08% of Tape B CADV for SLP1 in the billing month and 0.06% of Tape B
CADV for SLP2 in the billing month, the combined adding liquidity for
SLP1 and SLP2 would be 0.14% of Tape B CADV, and both SLP1 and SLP2
would meet the 0.10% Tape B CADV adding requirement for Tape B Tier 1.
    If in that same billing month, SLP1 has 8.0% quoting in SLP symbol
XYZ and SLP2 has 12.0% quoting in that same symbol XYZ, both SLP1 and
SLP2 would qualify for the SLP Tier 1 credit of $0.0032 in symbol XYZ
because of SLP2's 12.0% quoting and the combined adding liquidity of
SLP1 and SLP 2 of 0.14% of Tape B CADV. If SLP2 did not quote in symbol
XYZ at least 10%, then SLP1 would not qualify for the SLP Tier 2 credit
because the 8.0% quoting was below the 10% requirement, and SLP1 and
SLP2 would instead receive the applicable non-tier, Non-SLP Tier 1
adding credit, or non-SLP Tier 2 adding credit.

Quoting Requirement for SLP Tiered Credits
    As noted above, the quoting requirement for SLP tiered credits
(Tier 2, Tier 1 and Tape A Tier) is on an average daily basis,
calculated monthly. In each case, the Exchange proposes to clarify that
the quoting requirement would not be on an average daily basis,
calculated monthly. To effectuate this change, the Exchange proposes to
delete the phrase ``, on an average daily basis,'' after ``quotes'' in
Tier 2, Tier 1 and the Tape A Tier.
    For example, if a SLP quotes 6.0% quoting in SLP symbol XYZ, a Tape
B or Tape C security, on day 1 of the billing month, 12.0% on day 2,
and 18.0% on day 3, that SLP would have an average quoting of 12.0% for
the month after day 3 in symbol XYZ. Further assume that the SLP
averaged the same quoting in at least 399 other Tape B and Tape C
securities for that month. As a result, the SLP would have met the 400
symbol quoting requirement for SLP Tier 1 in Tape B and Tape C
combined.
Combined Quoting Requirement for SLP Tier 2, Tier 1 and the Tape A Tier
in UTP Securities
    As noted above, current Tier 2, Tier 1 and the Tape A Tier require
SLPs adding displayed liquidity to the Exchange to quote on an average
daily basis, calculated monthly, in excess of the 10% average quoting
requirement for a specified number of assigned UTP Securities in Tapes
B and C combined pursuant to Rule 107B.
    The Exchange proposes to add a footnote after the word ``combined''
in Tier 2 and Tier 1 that would clarify that the combined SLP quoting
requirement for those two tiers includes shares and assigned securities
of both an SLP-Prop and an SLMM of the same or an affiliated member
organization. The footnote would also clarify that individual
securities quoted by both an SLP-Prop and an SLMM are only counted
once. In the above example, for instance, further assume an SLP meets
the 10% quoting requirement in 350 securities in Tape B and Tape C and
an affiliated SLP meets the requirement in 100 securities in Tape B and
Tape C, 25 of which are the same as the first SLP. The total combined
unique securities across the affiliated SLPs would be 425, or 350 plus
75, meeting the securities quoting for SLP Tier 1 in Tape B and Tape C
combined for both affiliated SLPs.
    Finally, the Exchange proposes to add the word ``combined''
following ``Tapes B and C'' and before ``pursuant to Rule 107B'' in the
Tape A Tier which was inadvertently omitted and add the same footnote
to the Tape A Tier.
    The Exchange believes that these changes will add greater
specificity and clarity to the Exchange's Price List.
    The proposed changes are not otherwise intended to address any
other issues, and the Exchange is not aware of any problems that member
organizations would have in complying with the proposed change.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\7\ in general, and furthers the
objectives of Sections 6(b)(4) and 6(b)(5) of the Act,\8\ in
particular, because it provides for the equitable allocation of
reasonable dues, fees, and other charges among its members, issuers and
other persons using its facilities and does not unfairly discriminate
between customers, issuers, brokers or dealers.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(4) & (5).
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Most Favorable Rate for Affiliated SLPs
    The Exchange believes that the proposed rule change is reasonable
because the SLP Provide Tier rates for UTP securities, established in
previous rule filings, would remain the same.\9\ The Exchange further
believes that the proposed rule change is equitable because it
establishes a manner for the Exchange to treat affiliated member
organizations that are approved as SLPs for purposes of assessing
charges or credits that are based on volume. The provision is also
equitable because all member organizations seeking to aggregate their
activity are subject to the same parameters, in accordance with
established procedures set forth on the Price List regarding
aggregation across affiliated member organizations. The Exchange
further believes that the proposal is not unfairly discriminatory
because it would serve to reduce disparity of treatment between member
organizations with regard to the pricing of different services and
reduce any potential for confusion on how SLP activity can be
aggregated. The Exchange believes that the proposed rule change avoids
disparate treatment of member organizations that have divided their
various business activities between separate corporate entities as
compared to member organizations that operate those business activities
within a single corporate entity. The Exchange further believes that
the proposed rule change is designed to remove impediments to and
perfect the mechanism of a free and open market because it aligns how
affiliated member organizations that are approved as SLPs may aggregate
volume in the same manner that affiliated member organizations
currently aggregate non-SLP trading volume.
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    \9\ See, e.g., Securities Exchange Act Release No. 84583
(November 14, 2018), 83 FR 58637 (November 20, 2018) (SR-NYSE-2018-
53), for the most recent pricing changes applicable to SLPs in UTP
securities.
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Quoting Requirement for SLP Tiered Credits
    The Exchange believes that removing language that specifies that
the quoting requirement for SLP tiered credits (Tier 2, Tier 1 and Tape
A Tier) are on an average daily basis calculated monthly would provide
for a simpler approach to calculating the quoting requirement and
provide greater clarity to the Price List, thereby removing impediments
to and perfecting the mechanism of a free and open market and a
national market system, and, in general, protecting investors and the
public interest.
Combined Quoting Requirement for SLP Tier 2, Tier 1 and the Tape A Tier
in UTP Securities
    The Exchange believes that adding the inadvertently omitted word
``combined'' to SLP Tier A and a footnote to SLP Tier 2, Tier 1 and the
Tape A Tier clarifying that the combined SLP quoting requirement for
those tiers in UTP securities includes shares and assigned securities
of both an SLP-Prop and an SLMM of the same or an affiliated member
organization and that individual securities quoted by both an SLP-Prop
and an SLMM are only counted once would provide greater clarity to the
Price List, thereby removing impediments to and perfecting the
mechanism of a free and open market and a national market system, and,
in general, protecting investors and the public interest. Adding the
proposed clarity to the Price List also reduces potential confusion and
adds transparency to the Exchange's rules, thereby ensuring that
members, regulators, and the public can more easily navigate and
understand the Exchange's rulebook.
    Finally, the Exchange believes that it is subject to significant
competitive forces, as described below in the Exchange's statement
regarding the burden on competition.
    For the foregoing reasons, the Exchange believes that the proposal
is consistent with the Act.

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

    In accordance with Section 6(b)(8) of the Act,\10\ the Exchange
believes that the proposed rule change would not impose any burden on
competition that is not necessary or appropriate in furtherance of the
purposes of the Act. Instead, the Exchange believes that the proposed
change is designed to encourage the submission of additional liquidity
to a public exchange, thereby promoting price discovery and
transparency and enhancing order execution opportunities for member
organizations. The Exchange believes that this could promote
competition between the Exchange and other execution venues, including
those that currently offer comparable transaction pricing, by
encouraging additional orders to be sent to the Exchange for execution.
Further, the Exchange does not believe that the proposal to permit
affiliated member organizations that are SLPs on the Exchange to obtain
the most favorable rate in UTP securities would impose an undue burden
on intra-market competition because all member organizations may
qualify as an SLP. The Exchange notes that the Price List permits
aggregation of activity for eligible affiliates of any member
organization. Further, the Exchange believes that permitting member
organizations that divided their various business activities between
separate corporate entities to qualify for aggregation and receive the
same treatment as a member organization that operates its business
activities within a single corporate entity would encourage competition
and the submission of additional liquidity to a public exchange. The
Exchange also believes that the proposed rule change is designed to
provide the public and investors with a Price List that is clear and
consistent, thereby reducing burdens on the marketplace and
facilitating investor protection.
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    \10\ 15 U.S.C. 78f(b)(8).
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    Finally, the Exchange notes that it operates in a highly
competitive market in which market participants can readily favor
competing venues if they deem fee levels at a particular venue to be
excessive or rebate opportunities available at other venues to be more
favorable. In such an environment, the Exchange must continually adjust
its fees and rebates to remain competitive with other exchanges and
with alternative trading systems that have been exempted from
compliance with the statutory standards applicable to exchanges.
Because competitors are free to modify their own fees and credits in
response, and because market participants may readily adjust their
order routing practices, the Exchange believes that the degree to which
fee changes in this market may impose any burden on competition is
extremely limited. As a result of all of these considerations, the
Exchange does not believe that the proposed changes will impair the
ability of member organizations or competing order execution venues to
maintain their competitive standing in the financial markets.

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

    No written comments were solicited or received with respect to the
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action

    The foregoing rule change is effective upon filing pursuant to
Section 19(b)(3)(A)(ii) of the Act,\11\ and subparagraph (f)(2) of Rule
19b-4 \12\ thereunder, because it establishes a due, fee, or other
charge imposed by the Exchange.
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    \11\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \12\ 17 CFR 240.19b-4(f)(2).
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    At any time within 60 days of the filing of such proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings under
Section 19(b)(2)(B) \13\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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    \13\ 15 U.S.C. 78s(b)(2)(B).
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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-NYSE-2019-13 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-NYSE-2019-13. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (http://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549, on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-NYSE-2019-13 and should be submitted on
or before April 17, 2019.
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    \14\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-05811 Filed 3-26-19; 8:45 am]
 BILLING CODE 8011-01-P


[Federal Register Volume 83, Number 248 (Friday, December 28, 2018)]
[Notices]
[Pages 67408-67416]
[FR Doc No: 2018-28198]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-84901; File No. SR-FINRA-2018-042]

Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Amend FINRA Rules 7610A and 7620A To Modify
Certain Fees and Credits Applicable to FINRA/Nasdaq TRF Retail
Participants

December 20, 2018.

    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on December

17, 2018, Financial Industry Regulatory Authority, Inc. (``FINRA'')
filed with the Securities and Exchange Commission (``SEC'' or
``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by FINRA. FINRA has
designated the proposed rule change as ``establishing or changing a
due, fee or other charge'' under Section 19(b)(3)(A)(ii) of the Act \3\
and Rule 19b-4(f)(2) thereunder,\4\ 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\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \4\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    FINRA is proposing to amend FINRA Rules 7610A and 7620A to modify
certain fees and credits applicable to Retail Participants that use the
FINRA/Nasdaq Trade Reporting Facility Carteret (the ``FINRA/Nasdaq TRF
Carteret'') and/or the FINRA/Nasdaq Trade Reporting Facility Chicago
(the ``FINRA/Nasdaq TRF Chicago''). Under FINRA rules and as used
herein, the term ``FINRA/Nasdaq TRF'' means the FINRA/Nasdaq TRF
Carteret, the FINRA/Nasdaq TRF Chicago, or both, as applicable,
depending on the facility or facilities to which the participant elects
to report.
    The text of the proposed rule change is available on FINRA's
website 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
    The FINRA/Nasdaq TRF is a facility of FINRA that is operated by
Nasdaq, Inc. (``Nasdaq''). In connection with the establishment of the
FINRA/Nasdaq TRF, FINRA and Nasdaq entered into a limited liability
company agreement (the ``LLC Agreement''). Under the LLC Agreement,
FINRA, the ``SRO Member,'' has sole regulatory responsibility for the
FINRA/Nasdaq TRF. Nasdaq, the ``Business Member,'' is primarily
responsible for the management of the FINRA/Nasdaq TRF's business
affairs, including establishing pricing for use of the FINRA/Nasdaq
TRF, to the extent those affairs are not inconsistent with the
regulatory and oversight functions of FINRA. Additionally, the Business
Member is obligated to pay the cost of regulation and is entitled to
the profits and losses, if any, derived from the operation of the
FINRA/Nasdaq TRF.
    Pursuant to the FINRA Rule 7600A Series, FINRA/Nasdaq TRF
participants are charged fees, may qualify for fee caps (Rule 7620A),
and also may qualify for revenue sharing payments for trade reporting
to the FINRA/Nasdaq TRF (Rule 7610A). These rules are administered by
Nasdaq, in its capacity as the Business Member and operator of the
FINRA/Nasdaq TRF on behalf of FINRA,\5\ and Nasdaq collects all fees on
behalf of the FINRA/Nasdaq TRF.
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    \5\ FINRA's oversight of this function performed by the Business
Member is conducted through a recurring assessment and review of TRF
operations by an outside independent audit firm.
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    Pursuant to Supplementary Material .01 to FINRA Rule 7620A, a
``Retail Participant'' \6\ is a participant ``for which substantially
all of its trade reporting activity on the FINRA/Nasdaq Trade Reporting
Facility comprises Retail Orders.'' \7\ Under FINRA Rule 7620A, Retail
Participants presently are subject to four categories of transaction-
based fees, each of which is applicable to transactions on the three
Tapes: \8\ (1) Media/Executing Party; (2) Non-Media/Executing Party;
(3) Media/Contra Party; and (4) Non-Media/Contra Party.\9\ Rule 7620A
provides that for any of these categories of fees, a Retail Participant
may qualify for a cap on the fees it would otherwise pay to report
trades to a particular Tape during a given month, provided that during
the month, the Retail Participant achieves a daily average number of
Media/Executing Party trades of at least 2,500 in that same Tape.\10\
The uncapped fee rates and cap amounts that apply to Retail
Participants are different from those that apply to non-Retail
Participants under the Rule.\11\
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    \6\ To qualify as a ``Retail Participant'' and for special
pricing under the Retail Participant fee schedule, a participant
must complete and submit to Nasdaq, as the Business Member, an
application. The application form requires the participant to attest
to its qualifications as a Retail Participant on the FINRA/Nasdaq
TRF in which it is a participant and for which it seeks Retail
Participant pricing. The participant must also attest to its
reasonable expectation that it will maintain its qualifications for
a one year period following the date of attestation. Once a
participant has been designated as a Retail Participant, it must
complete and submit a written attestation to Nasdaq on an annual
basis to retain its status as such. A Retail Participant must inform
Nasdaq promptly if at any time it ceases to qualify or it reasonably
expects that it will cease to qualify as a Retail Participant.
    \7\ Pursuant to FINRA Rule 7260A.01, a ``Retail Order'' means
``an order that originates from a natural person, provided that,
prior to submission, no change is made to the terms of the order
with respect to price or side of market and the order does not
originate from a trading algorithm or any other computerized
methodology.''
    \8\ Market data is transmitted to three tapes based on the
listing venue of the security: New York Stock Exchange securities
(``Tape A''), NYSE American and regional exchange securities (``Tape
B''), and Nasdaq Stock Market securities (``Tape C'').
    \9\ Media eligible trade reports are those that are submitted to
the FINRA/Nasdaq TRF for public dissemination by the Securities
Information Processors (``SIPs''). By contrast, non-media trade
reports are not submitted to the FINRA/Nasdaq TRF for public
dissemination, but are submitted for regulatory and/or clearance and
settlement purposes.
    Pursuant to the Rule's Supplementary Material, the ``Executing
Party (EP)'' is defined as the member with the trade reporting
obligation under FINRA rules, and the ``Contra (CP)'' is defined as
the member on the contra side of a trade report.
    \10\ Additionally, the Rule provides for a monthly Participation
Fee, from which Retail Participants are exempt. It also provides for
two special fee cap programs--known as the ``ATS Market Maker Media/
Contra Party Cap'' and the ``ATS Market Maker Combined Media
Activity Cap''--for participants that make markets in an alternative
trading system (``ATS'').
    \11\ Retail Participants generally do not achieve Executing
Party activity sufficient to qualify for cap programs due to the
nature and scale of their retail businesses. Retail orders that
originate from natural persons or from nonprofessional investors are
not produced in the same volumes or notional amounts as are orders
that originate from professional executing broker firms. To date,
only one Retail Participant has achieved enough Executing Party
activity to qualify for a cap.
---------------------------------------------------------------------------

    Under Rule 7610A, FINRA members that report over-the-counter
(``OTC'') transactions in NMS stocks to a FINRA/Nasdaq TRF for public
dissemination or ``media'' purposes may receive quarterly transaction
credits that equal a percentage of FINRA/Nasdaq TRF revenues that are
attributable to the members' transactions.\12\ The percentage of
attributable revenue that a FINRA member may receive in the form of a
transaction credit varies depending upon the extent of the member's
market share on the FINRA/Nasdaq TRF.\13\ The

schedule of transaction credits is as follows. (Presently, it does not
distinguish among categories of FINRA/Nasdaq TRF participants.)
---------------------------------------------------------------------------

    \12\ Under the Rule, a transaction is attributable to a FINRA
member if a trade report submitted to the FINRA/Nasdaq TRF that the
FINRA/Nasdaq TRF then submits to either of the SIPs identifies the
FINRA member as the Executing Party on the transaction.
    \13\ For purposes of this Rule, the term ``market share'' means
a percentage calculated by dividing the total number of shares
represented by trades reported by a FINRA member to the FINRA/Nasdaq
TRF for media purposes during a given calendar quarter by the total
number of shares represented by all trades reported to the
Consolidated Tape Association or the Nasdaq Securities Information
Processor, as applicable, during that quarter. Market Share is
calculated separately for each tape. See Rule 7620A. The Rule notes,
moreover, that if a FINRA member reports trades to both FINRA/Nasdaq
TRFs during a given calendar quarter, then ``market share'' shall be
calculated by dividing the total number of shares represented by
trades reported by the member to both of the FINRA/Nasdaq TRFs
during that calendar quarter by the total number of shares
represented by all trades reported to the Consolidated Tape
Association or the Nasdaq SIP, as applicable, during that quarter.

------------------------------------------------------------------------
                                                        Percent of
            Percentage market share               attributable  revenue
                                                          shared
------------------------------------------------------------------------
Tape A:
    Greater than or equal to 2%................                       98
    Less than 2% but greater than or equal to                         95
     1%........................................
    Less than 1% but greater than or equal to                         75
     0.50%.....................................
    Less than 0.50% but greater than or equal                         20
     to 0.10%..................................
    Less than 0.10%............................                        0
Tape B:
    Greater than or equal to 2%................                       98
    Less than 2% but greater than or equal to                         90
     1%........................................
    Less than 1% but greater than or equal to                         70
     0.35%.....................................
    Less than 0.35% but greater than or equal                         10
     to 0.10%..................................
    Less than 0.10%............................                        0
Tape C:
    Greater than or equal to 2%................                       98
    Less than 2% but greater than or equal to                         95
     1%........................................
    Less than 1% but greater than or equal to                         75
     0.50%.....................................
    Less than 0.50% but greater than or equal                         20
     to 0.10%..................................
    Less than 0.10%............................                        0
------------------------------------------------------------------------

    The Rule 7600A Series expressly provides that the schedules of
credits and fees apply to reporting activity that occurs on either or
both of the FINRA/Nasdaq TRFs and a participant's eligibility for any
volume-based credits or fee caps will be determined based upon its
aggregate reporting volume between the two FINRA/Nasdaq TRFs. Nasdaq,
as the Business Member, has determined to make several amendments to
the current schedules of fees, caps, and credits. There is substantial
competition in the market for OTC trade reporting between the FINRA/
Nasdaq TRF and the FINRA/NYSE TRF, as evidenced by a recent shift in
market share between these facilities.\14\ The proposed rule change
responds to these competitive forces by reducing the fees that most
Retail Participants pay to the FINRA/Nasdaq TRF. It also establishes a
new transaction credit program that will be more accessible to Retail
Participants than is the existing credit program. The proposed rule
change also clarifies the fee schedule and corrects a typographical
error in the existing fee schedule. Each of these proposed changes is
described in detail below.
---------------------------------------------------------------------------

    \14\ Nasdaq understands, based upon Retail Participant feedback,
that recent market share changes are attributable to disparities in
pricing between the FINRA/Nasdaq TRF and the FINRA/NYSE TRF. Due to
pricing concerns, some Retail Participants have instructed their
executing counterparties to shift their trade reporting activity
from the FINRA/Nasdaq TRF to the FINRA/NYSE TRF. The proposed rule
change seeks to lower Retail Participant pricing on the FINRA/Nasdaq
TRF to render the FINRA/Nasdaq TRF a more attractive trade reporting
venue for this market segment.
---------------------------------------------------------------------------

General Clarification and Reorganization
    First, the proposed rule change clarifies Rule 7620A by adding
roman numerals to each of the headings in the fee schedule and also
letters and numbers to its subheadings. These proposed changes will
render the fee schedule easier to read and understand, particularly
when there is a need to cross-reference the various fee programs
contained therein.
    The proposed rule change also moves the example of the operation of
the fee schedule, which presently appears immediately under the heading
``Non-Comparison/Accept (Non-Match/Compare) Trade Report Fees and Caps
on Trade Report Fees'' (to be numbered ``II''), to the subheading ``Cap
Qualifying Activity (Requisite Daily Average Media/Executing Party
Trade Reporting Activity for a Participant to Qualify for Fee Caps in
Paragraphs 1-4 Above)'' (to be relocated to follow subparagraphs 1
through 4 and numbered ``II.A''). Movement of this example is necessary
because of other proposed changes to the Rule, to be discussed below,
which will render the example applicable only under the fee program set
forth in revised subparagraph II.A. As discussed below, the proposed
rule change adds new examples that are tailored for the new Retail
Participant fee programs that will be set forth in proposed
subparagraphs II.B and II.C.
    Additionally, the proposed rule change adds a clarifying sentence
beneath proposed paragraph II, which states that a participant's
activity that qualifies for more than one special fee program under the
Rule will automatically receive the benefit of the lowest applicable
fee rate or cap. The purpose of this sentence is to clarify how the fee
schedule operates where multiple discounts or caps apply to the same
activity on the FINRA/Nasdaq TRF. An example of the application of this
principle is included in the Rule text, under proposed subparagraph
II.C, and below.
    Lastly, the proposed rule change amends the definition of a
``Retail Order,'' in Supplementary Material .01 to Rule 7620A, to
clarify that it includes orders ``on behalf of accounts that are held
in a corporate legal form, such as an Individual Retirement Account,
Corporation, or a Limited Liability Corporation that has been
established for the benefit of an individual or group of related family
members, provided that the order is submitted by an individual.''
Although the existing definition arguably implies that a Retail Order
already includes such orders,

prospective Retail Participants have requested the proposed
clarification to eliminate any uncertainty in this regard.
Special Pricing Programs for Retail Participants
    The proposed rule change will replace the existing pricing programs
for Retail Participants with two new programs that are intended to
substantially decrease the fees that many Retail Participants pay to
the FINRA/Nasdaq TRF. The first new program is the Retail Participant
Contra Party Fee Discount and Cap Program and the second one is the
Retail Participant Combined Cap Program. These new pricing programs are
described below.\15\
---------------------------------------------------------------------------

    \15\ The proposed rule change would specify that if a
participant in the FINRA/Nasdaq TRF is approved as a Retail
Participant on or before the twenty-second day of a month, such
approval will be deemed effective, for purposes of Rule 7620A, as of
the first day of that month, whereas an approval that occurs after
the twenty-second day of the month will be deemed effective the
first day of the next month. If a participant in the FINRA/Nasdaq
TRF notifies Nasdaq, Inc. that it no longer qualifies as a Retail
Participant during a given month, such notification shall be deemed
effective, for purposes of Rule 7620A, as of the first day of the
next month.
---------------------------------------------------------------------------

Retail Participant Contra Party Fee Discount and Cap Program
    The first proposed pricing program, which is set forth in a new
subparagraph II.B, will focus on a Retail Participant's Contra Party
activity on the FINRA/Nasdaq TRF. Most of the activity in which Retail
Participants engage on the FINRA/Nasdaq TRF is Contra Party activity,
and this new program is intended to reduce substantially the fees that
Retail Participants, and their clients, pay for engaging in such
activity.
    Presently, a Retail Participant that engages in Contra Party
activity on the FINRA/Nasdaq TRF pays the following fees. The monthly
charge for a Retail Participant that engages in Media/Contra Party
(Non-Media/Contra Party) activity is $0.013 multiplied by the number of
Media/Contra Party (Non-Media/Contra Party) trades that the participant
reports to the FINRA/Nasdaq TRF during the month. Retail Participants
qualify for a cap (on a per Tape basis) on Media/Contra Party (Non-
Media/Contra Party) fees during a given month if they report to the
FINRA/Nasdaq TRFs, on average, at least 2,500 Media/Executing Party
trades per day in Tapes A, B, or C. If capped, Media/Contra Party (Non-
Media/Contra Party) fees for a Retail Participant equal $0.013
multiplied by 2,500 multiplied by the number of trading days during
that month.
    The proposed rule change will largely replace this pricing scheme
with a new one that will make it easier for Retail Participants to
qualify for discounts or caps on their Contra Party activity.
Specifically, a Retail Participant will be entitled to receive special
tiered pricing on its Contra Party activity even when it has no
corresponding Media/Executing Party Activity. Under the proposed
program, a Retail Participant will qualify for discounted or capped
fees to the extent that it achieves, during a given month, a qualifying
volume of average daily Contra Party activity (Media, Non-Media, or
both) in a particular Tape. Within each Tape, a qualifying Retail
Participant will receive a volume-based discount on its monthly
uncapped Contra Party activity charges relative to the standard
rate.\16\ For both Media/Contra Party and Non-Media/Contra Party
activity, the standard uncapped rate is the number of Media/Contra
Party (Non-Media/Contra Party) reports during the month multiplied by
$0.013, whereas the discounted rates under the new program will be the
number of Media/Contra Party (Non-Media/Contra Party) reports
multiplied by the following:
---------------------------------------------------------------------------

    \16\ The structure of the proposed tiers differs within each
Tape. The tiers are structured to enable Retail Participants to
qualify for special pricing on Contra Party activity beginning at
lower volumes on Tape B, where the FINRA/Nasdaq TRF has less such
activity, and at higher volumes on Tapes A and C, where the FINRA/
Nasdaq TRF has more such activity.

----------------------------------------------------------------------------------------------------------------
                                                                                Discounted rate
                                                                Daily average number of   (relative to standard
                             Tier                                executions during the     rate) to be used to
                                                                month needed to qualify     calculate monthly
                                                                        for tier           charge, if uncapped
----------------------------------------------------------------------------------------------------------------
Tape A:
    1.........................................................           50,000-100,000                  $0.0120
    2.........................................................          100,001-200,000                   0.0072
    3.........................................................          200,001-300,000                   0.0052
    4.........................................................                 >300,000                   0.0050
Tape B:
    1.........................................................            15,000-30,000                   0.0120
    2.........................................................            30,001-60,000                   0.0072
    3.........................................................           60,001-100,000                   0.0052
    4.........................................................                 >100,000                   0.0050
Tape C:
    1.........................................................           50,000-100,000                   0.0120
    2.........................................................          100,001-200,000                   0.0072
    3.........................................................          200,001-300,000                   0.0052
    4.........................................................                 >300,000                   0.0050
----------------------------------------------------------------------------------------------------------------

    In addition, monthly fees for a Retail Participant's qualifying
Contra Party activity for each Tape will be capped at a maximum monthly
amount if the Retail Participant qualifies for Tier 4 pricing, as
follows:

----------------------------------------------------------------------------------------------------------------
                                                                Daily average number of
                                                                 executions during the   Maximum monthly charge,
                             Tier                               month needed to qualify         if capped
                                                                        for tier
----------------------------------------------------------------------------------------------------------------
Tape A:
    1.........................................................           50,000-100,000                      n/a
    2.........................................................          100,001-200,000                      n/a

    3.........................................................          200,001-300,000                      n/a
    4.........................................................                 >300,000                  $32,000
Tape B:
    1.........................................................            15,000-30,000                      n/a
    2.........................................................            30,001-60,000                      n/a
    3.........................................................           60,001-100,000                      n/a
    4.........................................................                 >100,000                   11,000
Tape C:
    1.........................................................           50,000-100,000                      n/a
    2.........................................................          100,001-200,000                      n/a
    3.........................................................          200,001-300,000                      n/a
    4.........................................................                 >300,000                   32,000
----------------------------------------------------------------------------------------------------------------

These caps will replace the existing cap formulas that apply to Retail
Participants for their Media/Contra Party and Non-Media Contra Party
reporting activity (proposed subparagraphs II.3 and II.4).
Example 1
    An example of the application of the proposed program is as
follows. If in a given month with 20 trading days, a Retail Participant
achieves an average daily execution volume on the FINRA/Nasdaq TRF of
150,000 Media/Contra Party trades in Tape A, 20,000 Media/Contra Party
Trades in Tape B, and 400,000 Media/Contra Party Trades in Tape C, then
the Retail Participant would be entitled to receive the special Media/
Contra Party pricing set forth in proposed subparagraph 3 with respect
to its activity in Tape A (Tier 2), Tape B (Tier 1) and Tape C (Tier
4). As to Tape A, the Retail Participant would pay the uncapped
discounted monthly charges applicable to Tier 2 (($.0072) x (the number
of Media/Contra Party trades in Tape A during the month (150,000)) x
(20 trading days) = $21,600. As to Tape B, the Retail Participant would
pay the uncapped discounted monthly charges applicable to Tier 1, which
would be $4,800 (($.012) x (the number of Media/Contra Party trades in
Tape B during the month (20,000)) x (20 trading days)). As to Tape C,
the Retail Participant would pay the lesser of the uncapped discounted
monthly charges applicable to Tier 4 (($.005) x (the number of Media/
Contra Party trades in Tape C during the month (400,000)) x (20 trading
days) = $40,000) or the Tier 4 cap ($32,000), which would be $32,000.
Assuming that these Media/Contra Party transactions comprised all of
the Retail Participant's activity on the FINRA/Nasdaq TRF, then the
Retail Participant's total fees would be $58,400.
    By comparison, under the existing program, the Retail Participant
would not receive the benefit of any cap on its Contra Party activity
unless it also achieves at least 2,500 average daily Executing Party
reports in each Tape during the month. If the Retail Participant does
not achieve a cap on its Contra Party activity--as has been the case
generally,\17\ then under the existing program, the Retail Participant
would pay the standard rate. At the standard rate, the same Contra
Party activity would cost the Retail Participant $39,000 in Tape A
($0.013 x 150,000 average daily executions x 20 trading days), $5,200
in Tape B ($.013 x 20,000 average daily executions x 20 trading days),
and $104,000 in Tape C ($.013 x 400,000 average daily executions x 20
trading days), or a total of $148,200. Thus, under the existing fee
schedule, the Retail Participant in this example would pay roughly 2.45
times more for its Contra Party activity on the FINRA/Nasdaq TRF than
it would under the proposed rule change.
---------------------------------------------------------------------------

    \17\ To date, only one Retail Participant has achieved the
requisite Executing Party activity to also qualify it for a Contra
Party cap.
---------------------------------------------------------------------------

Retail Participant Combined Cap Program
    The second proposed pricing program, which is set forth in a new
subparagraph II.C, is a Retail Participant Combined Cap Program, which
will apply to Retail Participants that engage in Media/Executing Party
activity in addition to Contra Party activity on the FINRA/Nasdaq TRF.
    Presently, a Retail Participant may qualify for a cap on its Media
(Non-Media)/Executing Party activity separate and apart from the cap on
its Contra Party activity. For Media/Executing Party (Non-Media/
Executing Party) fees, the monthly charge for a Retail Participant is
$0.018 multiplied by the number of Media/Executing Party (Non-Media/
Executing Party) trades that the Retail Participant reports to the
FINRA/Nasdaq TRF during that month. Such fees are capped once the
Retail Participant reports to the FINRA/Nasdaq TRF, on average, at
least 2,500 Media/Executing Party trades per day in Tapes A, B, or C
during that month. If capped for trades in a particular Tape, Media/
Executing Party (Non-Media/Executing Party) fees for a Retail
Participant equal $0.018 multiplied by 2,500 multiplied by the number
of trading days during that month.
    The proposed rule change would eliminate this cap program because
it is ill-suited for Retail Participants. The existing Retail
Participant Executing Party pricing programs were adapted from programs
that were based on Executing Party activity among non-Retail
Participants, i.e., participants whose activity on the FINRA/Nasdaq TRF
consists of Executing Party activity, primarily, and Contra Party
activity, secondarily. However, Retail Participants' typical activity
on the FINRA/Nasdaq TRF is the opposite of non-Retail Participants--it
is almost exclusively limited to Contra Party activity. As such, the
existing programs--which require a Retail Participant to engage in a
threshold level of Media/Executing Party activity to qualify for a cap
on either its Executing Party or its Contra Party activity--are
ineffective. Indeed, only one Retail Participant to date has achieved
enough Media/Executing Party activity to qualify for a cap.
    The proposed rule change would replace the existing Executing Party
programs with a new Combined Activity Cap that is tailored specifically
to the behavior of Retail Participants. That is, for Retail
Participants that engage primarily in Contra Party activity on the
FINRA/Nasdaq TRF, the proposed program would not disqualify them from
any special pricing--as does the existing program--if they fail to
engage in Executing Party activity. For Retail Participants that do
engage in Executing

Party activity, the proposed program would cap their combined Executing
Party and Contra Party activity for the month.
    Specifically, the proposed rule change would establish a new three-
tiered combined fee cap. Tier 1 would cap at $50,000 a Retail
Participant's fees for its total Executing Party and Contra Party
activity during a month. To qualify for the Tier 1 cap, a Retail
Participant would need to achieve between 1,000 and 2,000 average daily
Media/Executing Party trades across all three Tapes during the
immediately preceding three month period.\18\ (This qualifying level of
Media/Executing Party activity is notably less than the existing
threshold requirement of 2,500 average daily Media/Executing Party
trades.) Tier 2 would cap a Retail Participant's total monthly fees at
$25,000. To qualify for the Tier 2 cap, a Retail Participant would need
to achieve between 2,001 and 4,000 average daily Media/Executing Party
trades across all three Tapes during the immediately preceding three
month period. Finally, Tier 3 of the new program would cap a Retail
participant's total monthly fees at $15,000. To qualify for the Tier 3
cap, a Retail Participant would need to achieve more than 4,000 average
daily Media/Executing Party trades across all three Tapes during the
immediately preceding three month period.
---------------------------------------------------------------------------

    \18\ Unlike the existing program, which measures a Retail
Participant's average daily executions during the prior month, the
proposed program will measure activity over the course of the
immediately preceding prior three months. Thus, to qualify for the
proposed program, Retail Participants will be required to sustain
their daily average activity level for a longer period of time than
they do presently. This longer qualification period is intended to
ensure that the program applies to Retail Participants that are
maintaining or increasing Executing party activity, rather than
those that have only episodic activity. This time period also aligns
with the schedules for dividend reinvestment programs, which often
are the basis for Executing Party activity.
---------------------------------------------------------------------------

Example 2
    The following is an example of the application of the Retail
Participant Combined Activity Cap. Assume that a Retail Participant has
the same level of Contra Party activity during a month as described in
Example 1 above. Assume also that, in addition to this Contra Party
activity, the Retail Participant also achieves, during the immediately
preceding three month period, an average of 1,500 Media/Executing Party
trade reports per day in Tape A, 500 Media/Executing Party trade
reports per day in Tape B, and 100 Media/Executing Party trade reports
per day in Tape C. In this scenario, the Retail Participant's aggregate
2,100 average daily Media/Executing Party trades across all three Tapes
would qualify it for the Tier 2 Retail Participant Combined Activity
Cap of $25,000. The capped fee would cover all of the Retail
Participant's Executing Party and Contra Party activity for the month.
Thus, the Retail Participant would pay the $25,000 combined cap in lieu
of paying $58,400 for its Contra Party activity under the proposed
Retail Participant Contra Party Fee Discount and Cap Program (as
described in Example 1). This is because the Retail Participant would
receive the benefit of the lowest applicable fee for its activity on
the FINRA/Nasdaq TRF.
Retail Participant Securities Transaction Credit
    The proposed rule change would amend Rule 7610A to establish a new
category of transaction credits tailored to Retail Participants. Much
like the existing fee program discussed above, the existing transaction
credit program set forth in Rule 7610A was not designed with Retail
Participants in mind because participants are entitled to credits only
to the extent that they engage in substantial amounts of Media/
Executing Party activity. For example, those participants with less
than 0.10% market share on the FINRA/Nasdaq TRF presently receive no
credits for any revenue that is attributable to their Media/Executing
Party activity in any Tape.
    The proposed rule change would make the transaction credit program
available to Retail Participants that achieve even low levels of Media/
Executing Party activity during a given quarter. Under the proposed
rule change, Retail Participants that achieve less than 0.10 percent
market share on the FINRA/Nasdaq TRFs on any of the three Tapes would
be entitled to receive credits equal to 75 percent of the revenue that
is attributable to their Media/Executing Party activity in Tape A and
Tape C and credits equal to 70 percent of attributable revenue in Tape
B. Retail Participants that achieve a market share of between 0.10
percent and less than 0.50 percent in Tape A or Tape C would receive
credits equal to 75 percent of attributable revenue in that Tape
(versus 20 percent of attributable revenue for other participants).
Retail Participants that achieve a market share of between 0.10 percent
and less than 0.35 percent in Tape B would receive credits equal to 70
percent of attributable revenue in that Tape (versus 10 percent of
attributable revenue for other participants). For higher market shares,
Retail Participants in all Tapes would receive the same percentage
shares of attributable revenue as would other participants.\19\
---------------------------------------------------------------------------

    \19\ The proposed rule change would specify that if a
participant in the FINRA/Nasdaq TRF is approved as a Retail
Participant after the first day of a calendar quarter, such approval
will be deemed effective, for purposes of Rule 7610A, as of the
first day of the next calendar quarter. Likewise, if a participant
in the FINRA/Nasdaq TRF notifies Nasdaq, Inc. that it no longer
qualifies as a Retail Participant after the first day of a calendar
quarter, such notification shall be deemed effective, for purposes
of Rule 7610A, as of the first day of the next calendar quarter.
---------------------------------------------------------------------------

    The proposal to tailor the transaction credit program to Retail
Participants would provide another mechanism--in addition to lower fees
and fee caps--to lower the overall costs to Retail Participants of
participating in the FINRA/Nasdaq TRF, particularly for Retail
Participants with a greater scope and volume of activity.
Clarification to ATS Market Maker Media/Contra Party Cap
    Lastly, the proposed rule change would amend the ATS Market Maker
Media/Contra Party Cap, which currently is set forth in subparagraph 5
and would be renumbered as subparagraph D, to correct a typographical
error and also clarify the provision. This cap program provides for
participants making markets in alternative trading systems registered
pursuant to Regulation ATS to qualify for a fee cap on all their trades
in a month if they meet three criteria. Presently in the Rule, the
second criterion is that the ``Participant must be contra to a minimum
of 1,000,000 trades in Tape A, 500,000 trades in Tape C or 250,000
trades in Tape B.'' Prior to the reorganization of the fee schedule,
effective September 1, 2018, this provision stated that to qualify for
the program, ``Participant must be contra to a minimum of 1,000,000
trades in Tape A, 500,000 trades in Tape C and 250,000 trades in Tape
B.'' (Emphasis added.) \20\ Upon reorganizing the fee schedule, the
``and'' in this provision was inadvertently changed to ``or.'' The
proposed rule change corrects that unintended error.
---------------------------------------------------------------------------

    \20\ See Securities Exchange Act Release No. 83866 (Aug. 16,
2018), 83 FR 42545 (Aug. 22, 2018) (Notice of Filing and Immediate
Effectiveness of File No. SR-FINRA-2018-029).
---------------------------------------------------------------------------

    Additionally, the proposed rule change further amends this
criterion due to concern that it could be misinterpreted (as corrected
above) to mean that qualification for the cap requires a participant to
meet minimum Contra Party trade reporting volumes in all three Tapes.
In fact, the criterion is intended to mean that to qualify for the cap
with respect to trade reports in a

particular Tape, a participant must meet the minimum trade volume
threshold for that Tape. The proposed revised and corrected text is as
---------------------------------------------------------------------------
follows:

    Participant must be contra to a minimum number of trades during
the month in a particular Tape to qualify for a cap on trades in
that Tape. The minimum number of monthly trades for each Tape are as
follows: 1,000,000 trades in Tape A, 500,000 trades in Tape C and
250,000 trades in Tape B.

    FINRA has filed the proposed rule change for immediate
effectiveness. The operative date will be January 1, 2019.
2. Statutory Basis
    FINRA believes that the proposed rule changes [sic] are consistent
with the provisions of Section 15A(b)(5) of the Act,\21\ which
requires, among other things, that FINRA rules provide for the
equitable allocation of reasonable dues, fees and other charges among
members and issuers and other persons using any facility or system that
FINRA operates or controls.
---------------------------------------------------------------------------

    \21\ 15 U.S.C. 78o-3(b)(5).
---------------------------------------------------------------------------

    First, FINRA believes that the proposed elimination of the existing
Retail Participant pricing programs under Rule 7620A and adoption of
new programs that are better aligned with and tailored to the
behavioral profile of Retail Participants is an equitable allocation of
reasonable fees. The existing pricing programs for Retail Participants
were established by carving Retail Participants out from the general
pricing programs applicable to all participants. The existing pricing
programs were not designed with Retail Participants in mind, but
instead are geared toward participants that engage in Executing Party
activity primarily, and Contra Party activity secondarily. The
behavioral profile of Retail Participants is the opposite of non-Retail
Participants, such as ATS market makers and wholesalers. Retail
Participants engage primarily, if not exclusively, in Contra Party
activity on the FINRA/Nasdaq TRF. However, the only aspect of the
Retail Participant programs that distinguishes them from their non-
Retail Participant counterparts is the fact that their pricing is
frozen at pre-September 2018 levels. Because the Retail Participant
programs were designed for non-Retail Participants, the existing Retail
Participant programs have proven to be ineffective in accomplishing
their objectives of lowering fees for Retail Participants and their
retail customers. That is, the existing programs require Retail
Participants to achieve at least 2,500 average daily Media/Executing
Party trades to qualify for caps on either their Executing Party or
their Contra Party activity fees, but Retail Participants generally do
not generate enough Executing Party activity to trigger the caps. To
date, only one Retail Participant has qualified for a cap. Moreover,
the ineffectiveness of the existing Retail Participant programs in
lowering fees has led certain Retail Participants to direct their
executing counterparties to stop reporting their trades to the FINRA/
Nasdaq TRF and to report them instead to the FINRA/NYSE TRF, which does
not charge Contra Parties that are not also reporting parties.
    The two proposed Retail Participant fee programs address the
ineffectiveness of the existing programs by aligning fees, discounts,
and caps with the activities in which Retail Participants engage on the
FINRA/Nasdaq TRF. First and foremost in this regard, the proposed rule
change introduces a tiered system of caps--as well as discounts, when
caps are not economical to the Retail Participant--that become more
favorable as the level of the Retail Participant's Contra Party
activity increases. The proposed rule change also eliminates the
requirement that a Retail Participant must engage in a threshold level
of Media/Executing Party activity to qualify for discounts or caps on
their Contra Party activity.
    Moreover, the proposed rule change introduces a Retail Participant
Combined Activity Cap that would provide Retail Participants with a cap
on their combined monthly activity on the FINRA/Nasdaq TRF to the
extent that they have Media/Executing Party activity. This Combined
Activity Cap in many cases would be more favorable than the Contra
Activity cap for Retail Participants that also have Executing Party
activity.
    For similar reasons, FINRA believes that the proposed rule change
to establish a new securities transaction credit program under Rule
7610A that is tailored to Retail Participants is an equitable
allocation of reasonable fees. The existing securities transaction
program is generally inaccessible to Retail Participants, insofar as
they generally engage in low levels of Media/Executing Party activity.
The proposed rule change would enable Retail Participants with even low
levels of Media/Executing Party activity to receive credits for
engaging in such activity. It also would increase the percentage of
revenue sharing that occurs at these low levels of activity relative to
the percentage that other types of participants receive with the same
market shares. As such, the proposed rule change would provide another
mechanism to lower the overall costs to Retail Participants of
participating in the FINRA/Nasdaq TRF.
    The proposed new programs to benefit Retail Participants
specifically are not unfairly discriminatory. Effective September 1,
2018, a distinct category of Retail Participant pricing for the FINRA/
Nasdaq TRF was established in recognition of the fact that customers of
Retail Participants generally include individual investors who trade
less frequently than do other categories of customers. Accordingly,
Retail Participants often report fewer trades to the FINRA/Nasdaq TRF
than other participants. As such, the fees that Retail Participants
(and their customers) pay should be better tailored to their activity
on the FINRA/Nasdaq TRF.\22\ However, the existing programs have not
achieved their objective of reducing costs for Retail Participants.
---------------------------------------------------------------------------

    \22\ See Securities Exchange Act Release No. 83866 (Aug. 16,
2018), 83 FR 42545 (Aug. 22, 2018) (Notice of Filing and Immediate
Effectiveness of File No. SR-FINRA-2018-029).
---------------------------------------------------------------------------

    Because the existing programs have not succeeded in reducing costs
to Retail Participants relative to the FINRA/NYSE TRF (which also
competes for Contra Party business and does not charge Contra Parties
that are not also reporting parties), several Retail Participants have
requested that their executing counterparties report their trades to
the FINRA/NYSE TRF rather than the FINRA/Nasdaq TRF. The proposed rule
change is designed to further reduce the costs to Retail Participants
on the FINRA/Nasdaq TRF in an effort to stem, if not reverse, this loss
of retail business to the FINRA/NYSE TRF.
    The proposed changes also are not unfairly discriminatory in that
they will be available to all FINRA members that use the FINRA/Nasdaq
TRF and meet the threshold requirements to qualify for the terms of the
programs. The programs themselves are designed to be accessible to
most, if not all, existing Retail Participants, including those with
both low and high levels of activity on the FINRA/Nasdaq TRF.
    Additionally, the proposed rule change would reorganize and clarify
Rule 7620A so that it is easier to comprehend and presented in a more
logical order. The reorganization will also ensure that examples of the
application of the Rule are placed in the paragraphs where they will be
applicable going forward.
    The proposed rule change also would amend the definition of a
``Retail Order'' in Supplementary Material .01 to Rule 7620A to clarify
that this term includes

orders that originate from accounts that exist in corporate form for
the benefit of individuals, provided that individuals submit the
orders. Although it is reasonable to interpret the existing definition
of a Retail Order to include an order that originates from an
individual retirement account or another corporate account that exists
for the benefit of an individual, the proposed rule change will
eliminate any uncertainty in this regard. Moreover, the proposed rule
change will aid prospective Retail Participants in understanding their
obligations as such. The proposed clarifying language derives from the
definition of a ``Designated Retail Order'' in Nasdaq Rule 7018 [sic],
which is reasonable because the concepts are similar. This proposed
change is equitable and not unfairly discriminatory because it merely
makes a non-substantive technical clarification to the meaning of
``Retail Order.''
    Finally, the proposed rule change would correct an unintended
typographical error that occurred when Rule 7620A was reorganized
effective September 1, 2018. FINRA, Nasdaq, and all FINRA/Nasdaq TRF
participants have an interest in FINRA maintaining rules for its trade
reporting facilities that are accurate and free of errors. Likewise,
FINRA believes that clarifying the ATS Market Maker Media/Contra Party
Cap will avoid confusion as to the number of Contra Party trades in a
particular Tape that are required to qualify for the cap for that Tape.

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.
Regulatory Need
    Nasdaq, as the Business Member and operator of the FINRA/Nasdaq
TRF, collects all fees on behalf of the FINRA/Nasdaq TRF. As discussed
above, Nasdaq has observed an increase in competition in the market for
OTC trade reporting, and in response to competitive forces, determined
to reduce fees for most Retail Participants that report trades to the
FINRA/Nasdaq TRFs and establish a new transaction credit program that
will be more accessible to such participants.
Economic Baseline
    As discussed above, pursuant to FINRA Rule 7620A, Retail
Participants in the FINRA/Nasdaq TRF are currently subject to four
categories of fees, each of which is applicable to transactions on the
three Tapes: (1) Media/Executing Party; (2) Non-Media/Executing Party;
(3) Media/Contra Party; (4) and Non-Media/Contra Party. The rule also
provides fee caps for Retail Participants for a particular Tape during
a given month, provided that during the month, the Retail Participant
achieves a daily average number of Media/Executing Party trades of at
least 2,500 in the same Tape.
    There are currently fifteen participants who are either approved or
being considered for the Retail Participant program, that cumulatively
represent approximately 25% of total reporting activity in the FINRA/
Nasdaq TRF over the past 12 months. However, due to the nature and
scale of retail businesses, to date, only one Retail Participant had
sufficient reporting activity to qualify for a cap.
    Also, pursuant to Rule 7610A, FINRA members that report OTC
transactions in NMS stocks to a FINRA/Nasdaq TRF for public
dissemination or ``media'' purposes may receive quarterly transaction
credits that equal a percentage of FINRA/Nasdaq TRF revenues that are
attributable to the members' transactions. However, the current rule
does not distinguish among categories of FINRA/Nasdaq TRF participants.
Due to Retail Participants' relatively smaller reporting activity
compared to that of non-Retail Participants, Retail Participants have
not received transactions credits in the past.
Economic Impacts
    The proposed rule change replaces the existing retail Participant
Pricing Program with two new programs, ``Retail Participant Contra
Party Fee Discount and Cap Program'' and ``Retail Participant Combined
Cap Program,'' which are designed to reduce the fees that most Retail
Participants pay to the FINRA/Nasdaq TRF.
    As mentioned above, there are fifteen current and prospective
Retail Participants that could potentially benefit from the reduced
fees under the proposed Retail Participant programs. While Example 1
above illustrates the potential reduction in fees for a given volume in
all Tapes, the potential reduction in fees in each Tape ranges from a
few hundred dollars to approximately $50,000. The reduction in fees
could be larger if the Participant qualifies for both the reduced fees
and the combined cap. Currently, only one Retail Participant would have
the sufficient activity to qualify for the Retail Participant Combined
Cap Program based on its historical activity. Going forward, however,
as a result of the proposal, additional Retail Participants may
increase their Executing Party activity on the FINRA/Nasdaq TRF and
potentially become eligible for transaction credits or the Retail
Participant Combined Cap Program.
    FINRA analyzed data provided by Nasdaq that contain monthly fees
incurred by fifteen current and prospective Retail Participants that
reported OTC trades to FINRA/Nasdaq TRF over a one year period from
July 2017 through June 2018. The data included the estimated reduction
in fees that would have occurred under the proposed fee and cap
schedule assuming that the reporting behavior would be the same under
the current and the proposed schedule. The analysis demonstrated that
there would be no reduction in fees for ten of the fifteen current and
prospective Retail Participants, since their level of reporting
activity would not qualify them for the discounts (although such Retail
Participants would, at a minimum, be exempt from the $350 per month
Participant Fee). The remaining five participants would observe average
monthly reduction in fees that range from $390 to $111,856.
    The proposed rule change also opens up the transaction credit
program to Retail Participants that achieve even low levels of
Executing Party activity during a given quarter. In the four quarters
between July 2017 and June 2018, four Retail Participants would have
sufficient market share to qualify for transaction credits. The
quarterly credits would range from $55 to $11,007 across all Tapes,
with a median credit of $4,749.
    The potential net impact of the proposed rule change depends on
whether participants alter their reporting activity across TRFs to be
eligible for the fee caps. To the extent that the proposed reduction in
fees provide [sic] net benefits, they may choose to shift their
reporting from FINRA/NYSE TRF to FINRA/Nasdaq TRF. The net impact would
also depend on whether the proposed fee caps create an optimal
reporting strategy to be eligible for a specific cap to maximize the
overall savings for all trade types reported to the FINRA/Nasdaq TRFs.
    Finally, FINRA notes that the proposed fee and fee cap changes
occur within the context of a competitive environment in which the
various trade reporting facilities vie for market share. The FINRA/NYSE
TRF is free to adjust its fees and fee cap programs in response to the
changes proposed herein to render them more attractive relative

to the FINRA/Nasdaq TRF. If any existing or prospective participant in
FINRA/Nasdaq TRF determines that the new fees or fee cap thresholds are
less attractive or are unfavorable relative to fees and fee cap
programs applicable to the FINRA/NYSE TRF, such participants may choose
to report to the FINRA/NYSE TRF in lieu of the FINRA/Nasdaq TRF, in
which case the FINRA/Nasdaq TRFs would lose market share. However, the
impact of differences in fees and fee cap programs across the TRFs on a
participant's decision to prefer one TRF over the other may be limited
by the set of functionalities each TRF provides.
Alternatives Considered
    No other alternatives were considered for the proposed rule change.

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

    The foregoing rule change has become effective pursuant to Section
19(b)(3)(A) of the Act \23\ and paragraph (f)(2) of Rule 19b-4
thereunder.\24\ At any time within 60 days of the filing of the
proposed rule change, the Commission summarily may temporarily suspend
such rule change if it appears to the Commission that such action is
necessary or appropriate in the public interest, for the protection of
investors, or otherwise in furtherance of the purposes of the Act. If
the Commission takes such action, the Commission shall institute
proceedings to determine whether the proposed rule should be approved
or disapproved.
---------------------------------------------------------------------------

    \23\ 15 U.S.C. 78s(b)(3)(A).
    \24\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

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-2018-042 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-2018-042. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (http://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549 on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of FINRA. All comments received
will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-FINRA-2018-042, and should be submitted
on or before January 18, 2019.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\25\
---------------------------------------------------------------------------

    \25\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Brent J. Fields,
Secretary.
[FR Doc. 2018-28198 Filed 12-27-18; 8:45 am]
 BILLING CODE 8011-01-P


[Federal Register Volume 88, Number 233 (Wednesday, December 6, 2023)]
[Rules and Regulations]
[Pages 84693-84695]
[FR Doc No: 2023-26662]

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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. FAA-2023-1719; Project Identifier 2008-NM-202-AD; Amendment
39-22621; AD 2010-26-05R1]
RIN 2120-AA64

Airworthiness Directives; Dassault Aviation Airplanes

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Final rule; removal.

-----------------------------------------------------------------------

SUMMARY: The FAA is removing Airworthiness Directive (AD) 2010-26-05,
which applied to certain Dassault Aviation Model Falcon 10 airplanes;
Model FAN JET FALCON, FAN JET FALCON SERIES C, D, E, F, and G
airplanes; Model MYSTERE-FALCON 20-C5, 20-D5, 20-E5, and 20-F5
airplanes; and all Model MYSTERE-FALCON 200 airplanes; Model FALCON
2000 and FALCON 2000EX airplanes; Model MYSTERE-FALCON 50 and MYSTERE-
FALCON 900 airplanes; and Model FALCON 900EX airplanes. AD 2010-26-05
required repetitive inspections for overpressure tightness on the
pressurization control regulating valves and, if necessary, replacing
the affected valve with a serviceable unit. The FAA issued AD 2010-26-
05 to address failure of the pressurization control regulating valve
(overpressure capsule), which will affect the aircraft's overpressure
protection. Since the FAA issued AD 2010-26-05, the FAA issued ADs
2021-04-20, 2020-02-13, 2020-03-24, 2020-03-19, 2020-01-13, 2023-05-15,
2023-04-10, 2023-02-13, 2023-04-18, and 2023-04-13 to address the
unsafe condition. Therefore, the FAA has determined that AD 2010-26-05
is no longer necessary. Accordingly, AD 2010-26-05 is removed.

DATES: This AD becomes effective December 6, 2023.

ADDRESSES:
    AD Docket: You may examine the AD docket at regulations.gov under
Docket No. FAA-2023-1719; or in person at Docket Operations between 9
a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD
docket contains this final rule, the mandatory continuing airworthiness
information (MCAI), any comments received, and other information. The
address for Docket Operations is U.S. Department of Transportation,
Docket Operations, M-

30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue
SE, Washington, DC 20590.

FOR FURTHER INFORMATION CONTACT: Tom Rodriguez, Aviation Safety
Engineer, FAA, 1600 Stewart Avenue, Suite 410, Westbury, NY 11590;
telephone:<PHONE_NUMBER>; email: [email protected].

SUPPLEMENTARY INFORMATION:

Background

    The FAA issued a notice of proposed rulemaking (NPRM) to amend 14
CFR part 39 by removing AD 2010-26-05, Amendment 39-16544 (75 FR 79952,
December 21, 2010) (AD 2010-26-05). The NPRM was published in the
Federal Register on August 29, 2023 (88 FR 59471). AD 2010-26-05
applied to certain Dassault Aviation Model Falcon 10 airplanes; Model
FAN JET FALCON, FAN JET FALCON SERIES C, D, E, F, and G airplanes;
Model MYSTERE-FALCON 20-C5, 20-D5, 20-E5, and 20-F5 airplanes; and all
Model FALCON 2000 and FALCON 2000EX airplanes; Model MYSTERE-FALCON 200
airplanes; Model MYSTERE-FALCON 50 and MYSTERE-FALCON 900 airplanes,
and Model FALCON 900EX airplanes. AD 2010-26-05 was prompted by AD
2008-0072, dated April 18, 2008, issued by the European Union Aviation
Safety Agency (EASA), which is the Technical Agent for the Member
States of the European Union (EASA AD 2008-0072) (also referred to as
the MCAI). The NPRM was prompted by a determination that AD 2010-26-05
is no longer necessary, because the actions specified in the MCAI have
been included in the airworthiness limitations section of the existing
maintenance manual. EASA issued AD 2008-0072-CN, dated October 5, 2020,
which cancels EASA AD 2008-0072. Additionally, the FAA has issued the
following ADs to address the unsafe condition by revising the existing
maintenance or inspection program, as applicable, to incorporate new or
more restrictive maintenance requirements and airworthiness
limitations, including the actions specified in AD 2010-26-05.
     AD 2021-04-20, Amendment 39-21442 (86 FR 12802, March 5,
2021), which addresses the unsafe condition for Model Falcon 10
airplanes.
     AD 2020-02-13, Amendment 39-19827 (85 FR 6744, February 6,
2020), which addresses the unsafe condition for Model FAN JET FALCON,
FAN JET FALCON SERIES C, D, E, F, and G airplanes on which the
supplemental structural inspection program (SSIP) has been incorporated
into the airplane's maintenance program.
     AD 2020-03-24, Amendment 39-19848 (85 FR 11289, February
27, 2020), which addresses the unsafe condition for Model MYSTERE-
FALCON 20-C5, 20-D5, 20-E5, and 20-F5 airplanes on which the SSIP
(Dassault Service Bulletin 730) has been embodied into the airplane's
existing maintenance or inspection program.
     AD 2020-03-19, Amendment 39-19843 (85 FR 11280, February
27, 2020), which address the unsafe condition for Model MYSTERE-FALCON
20-C5, 20-D5, 20-E5, and 20-F5 airplanes, except those on which the
SSIP (Dassault Service Bulletin 730) has been embodied into the
airplane's existing maintenance or inspection program.
     AD 2020-01-13, Amendment 39-19819 (85 FR 5313, January 30,
2020), which addresses the unsafe condition for Model MYSTERE-FALCON
200 airplanes.
     AD 2023-05-15, Amendment 39-22384 (88 FR 22374, April 13,
2023), which addresses the unsafe condition for Model MYSTERE-FALCON 50
airplanes.
     AD 2023-04-10, Amendment 39-22357 (88 FR 20743, April 7,
2023), which addresses the unsafe condition for Model MYSTERE-FALCON
900 airplanes.
     AD 2023-02-13, Amendment 39-22320 (88 FR 8740, February
10, 2023), which addresses the unsafe condition for Model FALCON 900EX
airplanes.
     AD 2023-04-18, Amendment 39-22365 (88 FR 15607, March 14,
2023), which addresses the unsafe condition for Model FALCON 2000
airplanes.
     AD 2023-04-13, Amendment 39-22360 (88 FR 20741, April 7,
2023), which addresses the unsafe condition for Model FALCON 2000EX
airplanes.
    The NPRM proposed to remove AD 2010-26-05. The FAA is issuing this
AD to remove AD 2010-26-05.

Discussion of Final Airworthiness Directive

Comments

    The FAA received no comments on the NPRM or on the determination of
the cost to the public.

Justification for Immediate Adoption and Determination of the Effective
Date

    Section 553(b)(3)(B) of the Administrative Procedure Act (APA) (5
U.S.C. 551 et seq.) authorizes agencies to dispense with notice and
comment procedures for rules when the agency, for ``good cause,'' finds
that those procedures are ``impracticable, unnecessary, or contrary to
the public interest.'' Under this section, an agency, upon finding good
cause, may issue a final rule without providing notice and seeking
comment prior to issuance. Further, section 553(d) of the APA
authorizes agencies to make rules effective in less than 30 days, upon
a finding of good cause. Since the FAA issued AD 2010-26-05, the
actions specified in the MCAI have been included in the airworthiness
limitations section of the existing maintenance manual, and the FAA has
issued ADs to require the incorporation of those airworthiness
limitations. Therefore, the FAA is issuing this AD to remove AD 2010-
26-05, and the FAA did not receive any adverse comments or useful
information about this AD from U.S. operators that necessitates waiting
30 days for relief from this requirement. Accordingly, the FAA finds
that good cause exists pursuant to 5 U.S.C. 553(d) for making this
amendment effective in less than 30 days.

Conclusion

    The FAA reviewed the relevant data and determined that air safety
requires adopting this AD as proposed. Except for minor editorial
changes, this AD is adopted as proposed in the NPRM. None of the
changes will increase the economic burden on any operator.
    This AD removes all actions of AD 2010-26-05. Therefore, the
requirements of AD 2010-26-05 are terminated.

Related Costs of Compliance

    This AD adds no costs. This AD removes AD 2010-26-05 from 14 CFR
part 39; therefore, operators are no longer required to show compliance
with that AD.

Authority for This Rulemaking

    Title 49 of the United States Code specifies the FAA's authority to
issue rules on aviation safety. 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.
    The FAA is issuing this rulemaking under the authority described in
Subtitle VII, Part A, Subpart III, Section 44701: General requirements.
Under that section, Congress charges the FAA with promoting safe flight
of civil

aircraft in air commerce by prescribing regulations for practices,
methods, and procedures the Administrator finds necessary for safety in
air commerce. This regulation is within the scope of that authority.

Regulatory Findings

    The FAA determined that this AD will not have federalism
implications under Executive Order 13132. This AD will not have a
substantial direct effect on the States, on the relationship between
the national government and the States, or on the distribution of power
and responsibilities among the various levels of government.
    For the reasons discussed above, I certify that this AD:
    (1) Is not a ``significant regulatory action'' under Executive
Order 12866,
    (2) Will not affect intrastate aviation in Alaska, and
    (3) Will not have a significant economic impact, positive or
negative, on a substantial number of small entities under the criteria
of the Regulatory Flexibility Act.

List of Subjects in 14 CFR Part 39

    Air transportation, Aircraft, Aviation safety, Incorporation by
reference, Safety.

The Amendment

    Accordingly, under the authority delegated to me by the
Administrator, the FAA amends 14 CFR part 39 as follows:

PART 39--AIRWORTHINESS DIRECTIVES

0
1. The authority citation for part 39 continues to read as follows:

    Authority: 49 U.S.C. 106(g), 40113, 44701.

Sec.  39.13  [Amended]

0
2. The FAA amends Sec.  39.13 by:
0
a. Removing Airworthiness Directive (AD) 2010-26-05, Amendment 39-16544
(75 FR 79952, December 21, 2010), and
0
b. Adding the following new AD:

2010-26-05R1 Dassault Aviation: Amendment 39-22621; Docket No. FAA-
2023-1719; Project Identifier AD-2008-NM-202-AD.

(a) Effective Date

    This AD is effective December 6, 2023.

(b) Affected AD

    This AD replaces AD 2010-26-05, Amendment 39-16544 (75 FR 79952,
December 21, 2010) (AD 2010-26-05).

(c) Applicability

    This action applies to the airplanes identified in paragraphs
(c)(1) and (2) of this AD, certificated in any category.
    (1) Dassault Aviation Model Falcon 10 airplanes; Model FAN JET
FALCON, FAN JET FALCON SERIES C, D, E, F, and G airplanes; and Model
MYSTERE-FALCON 20-C5, 20-D5, 20-E5, and 20-F5 airplanes; all serial
numbers, equipped with Liebherr or ABG-Semca pressurization outflow
valves.
    (2) Dassault Aviation Model MYSTERE-FALCON 200 airplanes, Model
MYSTERE-FALCON 50 and MYSTERE-FALCON 900 airplanes, and FALCON 900EX
airplanes; and Model FALCON 2000 and FALCON 2000EX airplanes; all
serial numbers.

(d) Subject

    Air Transport Association (ATA) of America Code 21, Air
conditioning.

(e) Terminating Action

    This AD terminates all requirements of AD 2010-26-05.

(f) Related Information

    For more information about this AD, contact Tom Rodriguez,
Aviation Safety Engineer, FAA, 1600 Stewart Avenue, Suite 410,
Westbury, NY 11590; telephone:<PHONE_NUMBER>; email:
[email protected].

(g) Material Incorporated by Reference

    None.

    Issued on November 29, 2023.
Victor Wicklund,
Deputy Director, Compliance & Airworthiness Division, Aircraft
Certification Service.
[FR Doc. 2023-26662 Filed 12-5-23; 8:45 am]
BILLING CODE 4910-13-P