60 Day Notice

Federal Register / Vol. 88, No. 146 / Tuesday, August 1, 2023 / Notices
b. FINRA’s Responses to Comments
As discussed in section III.A.2.b.
above, in response to the comments to
the Notice, FINRA stated that it has
engaged with industry participants
extensively on their concerns, and has
addressed them on multiple occasions
since the process of soliciting comment
on requirements for Covered Agency
Transactions began in January 2014
with the publication of Regulatory
Notice 14–02 and in 2015 with FINRA’s
original rulemaking for Covered Agency
Transactions.339 FINRA also stated that
the original rulemaking is necessary
because of the risks posed by unsecured
credit exposures in the Covered Agency
Transactions market.340
FINRA also stated that it has
addressed, on multiple occasions, the
need to include Specified Pool
Transactions and CMOs within the
scope of the requirements,341 and made
key revisions in finalizing the original
rulemaking expressly to mitigate any
potential impact on smaller firms and
on activity in the Covered Agency
Transaction market, including
increasing the small cash counterparty
exception from $2.5 million to $10
million, subject to specified conditions,
and modifying the two percent
maintenance margin requirement, as
adopted pursuant to the original
rulemaking, to create an exception for
cash investors that otherwise would
have been subject to the requirement.342
FINRA also stated that it exempted
mortgage bankers from the maintenance
margin requirements in the original
rulemaking; exempted multifamily
housing securities and project loan
program securities from the new margin
requirements; 343 and established a
$250,000 de minimis transfer amount,
for a single counterparty, subject to
specified conditions, up to which
members need not collect margin or take
a charge to their net capital.344 Finally,
FINRA responded that it does not
propose to make the suggested
modification to exclude the U.S. Federal
Home Loan Banks from the scope of the
rule because it would undermine the
rule’s purpose of reducing risk.345
339 See

Amendment No. 1 (2021) at 4.
Amendment No. 1 (2021) at 4–5; 2015
Notice, 80 FR at 63615–16.
341 See Amendment No. 1 (2021) at 5; 2016
Approval Order, 81 FR at 40371.
342 See Amendment No. 1 (2021) at 5; 2015
Notice, 80 FR at 63608.
343 See Amendment No. 1 (2021) at 6; Partial
Amendment No. 1 to SR–FINRA–2015–036,
available at https://www.finra.org/rules-guidance/
rule-filings/sr-finra-2015-036.
344 See Amendment No. 1 (2021) at 17; 2016
Approval Order, 81 FR at 40368.
345 See Amendment No. 1 (2021) at 17.

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340 See

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c. Commission Discussion and Findings
The Commission agrees with FINRA
that some comments have been
previously addressed in the original
rulemaking, including whether to: (1)
exclude additional products or
counterparties from the scope of the
rule, such as Specified Pools and CMOs;
or (2) adjust the requirement to collect
margin based on SIFMA’s good day
settlements.346 Nevertheless, while the
Commission agrees that these comments
have been addressed previously, to the
extent that they relate to the proposed
rule changes set forth in the 2021
Amendments, and not solely to the 2016
Amendments, by suggesting alternative
approaches to the 2021 Amendments
that should be considered, the
Commission disagrees with
commenters’ recommendations.
Specifically, the Commission believes
that excluding additional products or
counterparties would undermine the
purpose of the rule to address the risk
of unsecured credit from Covered
Agency Transaction for broker-dealers
and encourage the collection of margin.
In addition, excluding additional
products from the scope of the rule
would result in a mismatch between
FINRA margin requirements and TMPG
best practices of exchanging variation
margin for Covered Agency
Transactions which may potentially
distort trading in the Covered Agency
Transaction market by incentivizing
counterparties to trade in non-margined
products.
Moreover, the option to take a capital
charge in lieu of collecting margin for
the excess net mark to market loss will
provide broker-dealers with the
flexibility to choose not to collect
margin from specific counterparties or
for specific transactions, while
continuing to protect broker-dealers
from the risk of unsecured credit
exposures arising from Covered Agency
Transactions. In addition, adjusting the
time to collect margin or take capital
charges related to SIFMA good
settlement dates or other longer time
periods also would undermine the
effectiveness of the rule because these
suggested changes would have the effect
of generally requiring no margin or
minimal capital charges (that is, they
would have the effect of essentially
reverting back to current and
346 See, e.g., 2016 Approval Order, 81 FR at
40375–76 (‘‘[E]xcluding additional products from
the rule or modifying the settlement dates in the
definition of Covered Agency Transactions
potentially may ‘‘undermine the effectiveness of the
proposal’’ if counterparties are permitted to
maintain unsecured credit exposures on these
positions.’’).

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inconsistent margin practices among
FINRA broker-dealers).
Finally, proposals to expand clearing
for Covered Agency Transactions
through MBSD is outside the scope of
this proposed rule change.
IV. Conclusion
For the foregoing reasons, the
Commission finds that the proposed
rule change, as modified by Amendment
No. 1 (2021), is consistent with the Act
and the rules and regulations
thereunder applicable to a national
securities association.
It is Therefore Ordered, pursuant to
Rule 431 of the Commission’s Rules of
Practice, that the earlier action taken by
delegated authority, Exchange Act
Release No. 94013 (Jan. 20, 2022), 87 FR
4076 (Jan. 26, 2022), is set aside and,
pursuant to Section 19(b)(2) of the
Act,347 the proposed rule change (SR–
FINRA–2021–010), as modified by
Amendment No. 1 (2021), hereby is
approved.
By the Commission.
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2023–16267 Filed 7–31–23; 8:45 am]
BILLING CODE 8011–01–P

SECURITIES AND EXCHANGE
COMMISSION
[SEC File No. 270–155, OMB Control No.
3235–0123]

Proposed Collection; Comment
Request; Extension: Rule 17a–5
Upon Written Request, Copies Available
From: Securities and Exchange
Commission, Office of FOIA Services,
100 F Street NE, Washington, DC
20549–2736
Notice is hereby given that pursuant
to the Paperwork Reduction Act of 1995
(‘‘PRA’’) (44 U.S.C. 3501 et seq.), the
Securities and Exchange Commission
(‘‘Commission’’) is soliciting comments
on the existing collection of information
provided for in Rule 17a–5 (17 CFR
240.17a–5), under the Securities
Exchange Act of 1934 (15 U.S.C. 78a et
seq.). The Commission plans to submit
this existing collection of information to
the Office of Management and Budget
(‘‘OMB’’) for extension and approval.
Rule 17a–5 is the basic financial
reporting rule for brokers and dealers.1
Rule 17a–5 applies to broker-dealers,
including some broker-dealers that are
347 15

U.S.C. 78s(b)(2).
17a–5(c) requires a broker or dealer to
furnish certain of its financial information to
customers and is subject to a separate PRA filing
(OMB Control Number 3235–0199).
1 Rule

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Federal Register / Vol. 88, No. 146 / Tuesday, August 1, 2023 / Notices

OTC derivatives dealers; broker-dealers,
other than OTC derivatives dealers, that
are also registered security-based swap
dealers; and broker-dealers, including
OTC derivatives dealers, that are also
registered as major security-based swap
participants. The rule requires the filing
of Form X–17A–5, the Financial and
Operational Combined Uniform Single
Report (‘‘FOCUS Report’’), which was
the result of years of study and
comments by representatives of the
securities industry through advisory
committees and through the normal rule
proposal methods. The FOCUS Report
was designed to eliminate the
overlapping regulatory reports required
by various self-regulatory organizations
and the Commission and to reduce
reporting burdens as much as possible.
The rule also requires the filing of
annual reports, which include a
financial report and a compliance or
exemption report as well as reports of
an independent public accountant
covering the financial report and the
compliance or exemption report. In
addition, the rule requires a brokerdealer that computes certain capital
charges in accordance with Appendix E
to Exchange Act Rule 15c3–1 (17 CFR
240.15c3–1e) to file additional monthly
or quarterly reports and a supplemental
report on management controls
concurrently with its annual reports.
The Commission estimates that the
total hour burden under Rule 17a–5 is
approximately 397,467 hours per year,
and the total cost burden is
approximately $31,295,048 per year.
Written comments are invited on: (a)
whether the proposed collection of
information is necessary for the proper
performance of the functions of the
Commission, including whether the
information shall have practical utility;
(b) the accuracy of the Commission’s
estimates of the burden of the proposed
collection of information; (c) ways to
enhance the quality, utility, and clarity
of the information collected; and (d)
ways to minimize the burden of the
collection of information on
respondents, including through the use
of automated collection techniques or
other forms of information technology.
Consideration will be given to
comments and suggestions submitted by
October 2, 2023.
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
unless it displays a currently valid OMB
control number.
Please direct your written comments
to: David Bottom, Director/Chief
Information Officer, Securities and
Exchange Commission, c/o John
Pezzullo, 100 F Street NE, Washington,

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DC 20549, or send an email to: PRA_
[email protected].
Dated: July 26, 2023.
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–16226 Filed 7–31–23; 8:45 am]
BILLING CODE 8011–01–P

SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–98002; File No. SR–
NYSENAT–2023–12]

Self-Regulatory Organizations; NYSE
National, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend the
Connectivity Fee Schedule
July 26, 2023.

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 July 14,
2023, NYSE National, Inc. (‘‘NYSE
National’’ or the ‘‘Exchange’’) filed with
the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I and II 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.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend the
Connectivity Fee Schedule (the ‘‘Fee
Schedule’’) to add the services available
to third party telecommunications
service providers in the two Mahwah
data center meet me rooms. 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.
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,

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1 15

U.S.C. 78s(b)(1).
U.S.C. 78a.
3 17 CFR 240.19b–4.
2 15

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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 the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend the
Fee Schedule to add the services
available to third party
telecommunications service providers 4
in the two Mahwah, New Jersey data
center (‘‘MDC’’) meet me rooms
(‘‘MMRs’’).5
Meet me rooms are standard within
the data center industry. A meet me
room is a location within a data center
where circuits from outside of the data
center ‘‘meet’’ and connect with the
circuits within the data center, such as
those of colocated customers. As a
general description,
telecommunications service provider’s
circuits from outside a data center are
brought into a meet me room, where
those circuits connect to a
telecommunications service provider’s
equipment in a meet me room cabinet.
From there, a cross connect will
complete the connection to a customer’s
equipment in the data center’s
colocation hall. The data center
customer uses the circuit supplied by
the telecommunications service
provider to connect to locations outside
of the data center, e.g., the customers’
back offices.
Before 2013, the MDC did not have a
MMR, and all connectivity into and out
of the MDC was provided by ICE’s
predecessor, NYSE Euronext. In
response to customer demand for more
connectivity options, the MMRs opened
to Telecoms in January 2013. The
Telecoms have an expertise that the
Exchange and FIDS do not have, and
can provide their customers with a
range of circuit options. More
importantly, the Telecoms provide a
service that the Exchange and FIDS
cannot, because the Exchange and FIDS
4 In this filing, telecommunications service
providers that choose to purchase MMR services at
the MDC are referred to as ‘‘Telecoms.’’ Telecoms
are licensed by the Federal Communications
Commission (‘‘FCC’’) and are not required to be, or
be affiliated with, a member of the Exchange or an
Affiliate SRO.
5 Through its Fixed Income and Data Services
(‘‘FIDS’’) (previously ICE Data Services) business,
Intercontinental Exchange, Inc. (‘‘ICE’’) operates the
MDC. The Exchange is an indirect subsidiary of ICE
and is an affiliate of NYSE American LLC, NYSE
Arca, Inc., NYSE Chicago, Inc., and NYSE National,
Inc. (together, the ‘‘Affiliate SROs’’). Each Affiliate
SRO has submitted substantially the same proposed
rule change. See SR–NYSEAMER–2023–36, SR–
NYSEARCA–2023–47, SR–NYSECHX–2023–14,
and SR–NYSENAT–2023–12.

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