6731. Exemption from Trade Reporting Obligation for Certain Alternative Trading Systems
(a) Pursuant to the Rule 9600 Series, the staff for good cause shown after taking into consideration all relevant factors, may exempt, upon application and subject to specified terms and conditions, a member alternative trading system ("ATS") from the trade reporting obligation under Rule 6730, if such exemption is consistent with the protection of investors and the public interest. The staff will grant an exemption only if all of the following criteria are satisfied:
(1) Trades are between ATS subscribers that are both FINRA members.
(2) The ATS demonstrates that:
(A) The member subscribers are fully disclosed to one another at all times on the ATS;
(B) The system does not permit automatic execution, and a member subscriber must take affirmative steps beyond the submission of an order to agree to a trade with another member subscriber;
(C) The trade does not pass through any ATS account, and the ATS does not in any way hold itself out to be a party to the trade; and
(D) The ATS does not exchange TRACE-Eligible Securities or funds on behalf of the member subscribers, take either side of the trade for clearing or settlement purposes, including, but not limited to, at DTC or otherwise, or in any other way insert itself into the trade.
(3) The ATS and the member subscribers acknowledge and agree in writing that the ATS shall not be deemed a party to the trade for purposes of trade reporting and that trades shall be reported by each member subscriber that satisfies the definition of "Party to a Transaction" under Rule 6710.
(4) The ATS agrees to provide to FINRA on a monthly basis, or such other basis as prescribed by FINRA, data relating to the volume of trades by security executed by the ATS's member subscribers using the ATS's system, and the ATS acknowledges that failure to report such data to FINRA, in addition to constituting a violation of FINRA rules, will result in revocation of any exemption granted pursuant to this Rule.
(b) Where FINRA has granted an exemption under this Rule, trades shall be reported to FINRA in accordance with Rule 6730 by each member subscriber that satisfies the definition of "Party to a Transaction" under Rule 6710(e).
|Adopted by SR-FINRA-2012-016 eff. Feb. 28, 2012.|