Alan Reed, OpenYield Trading LLC
Request for TRACE Reporting Exemption Under FINRA Rule 6732
February 8, 2024
General Counsel & Chief Compliance Officer
OpenYield Trading LLC
205 East 42nd St., Suite 1932
New York, NY 10017
Re: OpenYield Trading (CRD No. 326199) Request for TRACE Reporting Exemption Under FINRA Rule 6732
Dear Mr. Reed,
The staff of the Market Regulation Department (the “staff”) of the Financial Industry Regulatory Authority, Inc. (“FINRA”) has received and reviewed your letter dated January 12, 2024, in which OpenYield Trading LLC (“OpenYield”) requests exemptive relief for its alternative trading system (“ATS”) (“OpenYield ATS”) from the FINRA trade reporting obligations pursuant to FINRA Rule 6732.
Based on the information provided in your application, and conditioned upon OpenYield providing the items listed below, the staff has determined that OpenYield ATS meets the specified criteria and hereby grants, pursuant to FINRA Rule 9610, OpenYield an exemption for certain transactions on the OpenYield ATS from the trade reporting obligation under FINRA Rule 6730, subject to the monthly transaction reporting obligation and remission of the transaction reporting fees based on the fee schedule set forth in Rule 7730(b)(1) for each exempted sell transaction occurring on OpenYield ATS.
- Within 60 days of this letter, OpenYield must provide to FINRA a written attestation that it has entered into written agreements as required by FINRA Rule 6732(a)(5) with all of its FINRA member subscribers that will be parties to an exempt transaction. Within 60 days of this letter, OpenYield must provide to FINRA a sample of at least two such executed agreements.1
- By April 12, 2024, OpenYield shall provide to FINRA data relating to each transaction exempted pursuant to FINRA Rule 6732 occurring on OpenYield ATS for the months of February and March 2023. Thereafter, OpenYield must provide such monthly trade information to FINRA and such information must be received by FINRA no later than the 10th business day following the completion of each calendar month.2
This exemption will be fully and finally effective upon the date that FINRA receives the written attestation and the sample executed written agreements as required by FINRA Rule 6732(a)(5), described in Item 1 above. If OpenYield fails to provide such written attestation and sample executed written agreements within this timeframe, the exemption granted herein will be revoked unless otherwise expressly agreed to by FINRA.
This letter responds only to the issue you have raised based on the facts as you have described them, and does not address any other rule or interpretation of FINRA, or all the possible regulatory and legal issues involved. Any changes in the facts or representations as you have described them in your letter will require further consideration and may cause us to reach a different conclusion.3 You should contact FINRA immediately if there is a change in any of the facts or representations contained in your letter. In addition, this exemption is subject to modification or revocation if at any time FINRA determines that such action is necessary or appropriate for the protection of investors.
Should you have any questions about this letter, please contact Joseph Schwetz in Market Regulation at (240) 386-6170.
Vice President, Surveillance and Market Intelligence
Market Regulation Department
1 OpenYield is reminded that it must retain the written agreements pursuant to its books and records obligations under FINRA rules, the Exchange Act, and applicable Exchange Act rules, and must be able to produce them to FINRA upon request.
2 See Regulatory Notice 16-15 (April 2016).
3 For example, FINRA understands that currently all OpenYield ATS subscribers are FINRA members and OpenYield ATS does not qualify as a “covered ATS” under Rule 6730.06. If OpenYield ATS accepts non-FINRA member subscribers at a later date, OpenYield would be required to separately apply to FINRA if it seeks an exemption under Rule 6732 with respect to transactions between member- and non-member subscribers.