January 23, 2024 - FIF Front Office Committee Agenda

Meeting Details

When: January 23, 2024 @ 11am ET

Meeting Agenda

FINRA Updates:
- TRACE
  - January 11, 2024: SR-FINRA-2024-004 - Proposed Rule Change to Amend FINRA Rule 6730 (Transaction Reporting) to Reduce the 15-Minute TRACE Reporting Timeframe to One Minute
  - December 20, 2023: Updated TRACE SPDS Specification
- Additional FINRA Updates
  - January 16, 2024: 34-99351 - Notice of Filing of a Proposed Rule Change to Amend FINRA Rule 3240 (Borrowing From or Lending to Customers)
  - December 22, 2023: Regulatory Notice 23-21 - FINRA Reminds Member Firms of Net Capital, Recordkeeping and Financial Reporting Requirements in Connection with Revenue Recognition Practices
CAT Updates:
- January 17, 2024: 34-99372 - Notice of Filing of a Proposed Rule Change to Adopt FINRA Rule 6897(b) (CAT Cost Recovery Fees) to Implement a Historical Consolidated Audit Trail Recovery Assessment; Suspension of and Order Instituting Proceedings to Determine Whether to Approve or Disapprove
- January 17, 2024: 34-99363 - Notice of Filing of a Proposed Rule Change to Adopt FINRA Rule 6897(a) and Supplementary Material to Establish Fees for Industry Members Related to Certain Historical Costs of the National Market System Plan Governing the Consolidated Audit Trail Comments Due: 21 days after date of publication in the Federal Register
- January 12, 2024: CAT Billing Scenarios
- January 10, 2024: CAT Billing Known Issues List
- January 2, 2024: 2024 Annual Clock Synchronization Certification
- January 2, 2024: SR-FINRA-2024-003 - Proposed Rule Change to Adopt FINRA Rule 6897(b) (CAT Cost Recovery Fees) to Implement a Historical Consolidated Audit Trail Recovery Assessment
- January 2, 2024: SR-FINRA-2024-002 - Proposed Rule Change to Adopt FINRA Rule 6897(a) and Supplementary Material to Establish Fees for Industry Members Related to Historical Costs of the National Market System Plan Governing the Consolidated Audit Trail
- December 18, 2023: Independent Audit of Costs Incurred Prior to Effective Date of the Plan
SEC
- January 19, 2024: SEC published for comment the amended market data governance plan submitted by the SROs on October 23, 2023. The amendment includes a process for selecting a new plan administrator. Comments are due 30 days after publication in the Federal Register
- January 16, 2024: 34-99345 - Notice of Filing of Proposed Amendment to Modify Section 5.2(c)(iii) of the OPRA Plan Relating to Dissemination of Exchange Proprietary Data Information
- January 9, 2024: 34-99304 - Notice of Designation of a Longer Period for Commission Action on Proceedings to Determine Whether to Approve or Disapprove a Proposed Rule Change to Provide Relief Relating to Specified Option Transactions under FINRA Rule 4210 (Margin Requirements)
- January 3, 2024: Mark Uyeda Sworn in for Second Term as SEC Commissioner
- December 18, 2023: Adoption of Updated EDGAR Filer Manual
Exchange Updates:
- MIAX
  - January 4, 2024: MIAX Sapphire Options Exchange - Update: Notification of Important Dates and Access to Resources
  - December 29, 2023: 34-99251 - Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Amend Exchange Rule 404, Series of Option Contracts Open for Trading
  - December 22, 2023: 34-99232 - Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Amend Exchange Rule 517, Quote Types Defined
- NYSE
  - January 10, 2024: 34-99306 - Order Granting Accelerated Approval of Proposed Rule Changes, as Modified by Amendments Thereto, to List and Trade Bitcoin-Based Commodity-Based Trust Shares and Trust Units
- NASDAQ
  - January 8, 2024: 34-99297 - Notice of Filing and Immediate Effectiveness of Proposed Rule Change to Add the User Specific Routing Option
- MEMX
  - December 28, 2023: 34-99252 - Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Amend the Exchange’s Rules to Accommodate the Listing of Options Series that Would Expire at the Close of Business on the Last Business Day of a Calendar Month
  - December 20, 2023: 34-99211 - Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Amend the Exchange’s Short Term Option Series Program
FIF Member Question:
- If you would like to submit anonymized questions for the group to discuss, email us at fifinfo@fif.com and we will include it on the next agenda.

FIF Working Group Updates: Please click here to Join Working Groups

CAT Transaction Reporting
- Recent Developments
  - On November 2 the SEC issued an exemptive order on CAT reporting; the exemptive order provides limited relief for reporting of port settings and does not provide any relief on linkage of representative and principal orders
  - On November 29 the CAT Plan Participants and FINRA CAT published updates to the CAT Technical Specifications focused on CAT reporting for NIA RFQ responses
- FIF areas of focus
  - On November 16 FIF submitted a letter to the SEC requesting that the implementation date for CAT reporting for NIA RFQ responses be delayed until one year from the date that the SEC provides clear guidance on the specific conditions as to when NIA RFQ responses are reportable
  - On January 9 FIF submitted a draft letter to SEC representatives on the need for exemptive relief from the requirement for a routing broker to report to CAT settings applied by a receiving firm
CAT Billing
- Recent Developments
  - On December 26 FINRA CAT made available to industry members CAT bills for November 2022 (for testing and implementation purposes)
  - On January 2 and 3 FINRA and the other SROs submitted rule filings with the SEC relating to the collection of CAT fees from industry members
- FIF Areas of Focus
  - On November 17 FIF members participated in a discussion with SEC representatives to discuss the implementation of CAT billing
  - On November 22 FIF submitted additional comments to the CAT Plan Participants and FINRA CAT relating to reconciliation of CAT billing
  - On December 8 FIF submitted a letter to the CAT Plan Participants and FINRA CAT on the break-out of CAT invoices
  - On December 15 FIF submitted a letter to FINRA on the pass-through of FINRA fees for CAT to industry members
CAT CAIS
- Recent developments
  - Planned changes for 2024 include
    - Historical data reload
    - New Outstanding Rejections feedback file
    - Re-enabling of inconsistency checks
    - New feedback files for Material Inconsistencies
    - New inconsistency codes to distinguish between intra-firm and inter-firm inconsistencies
    - Expansion of the correctionAction of DELETE to cover all data validation errors
  - FINRA CAT published updates to the CAIS Technical Specifications on December 21, 2023 and January 3, 2024
- FIF areas of focus
  - On December 7 FIF submitted a request to FINRA CAT that the Outstanding Rejections file be provided on a daily basis, in addition to the current daily rejections files
  - On December 22 FIF submitted a letter to FINRA CAT identifying concerns with the unavailability of the CAIS system between January 5 and 8, 2024
OTC Routing Reports
- On August 2 the SEC approved a rule filing by FINRA to require broker-dealers to report routing statistics and practices for OTC equities
- On September 7 FIF submitted comments and questions to FINRA relating to the new reporting requirements
- The next step is for FINRA to publish a Regulatory Notice, which will start a one-year implementation period
TRACE and MSRB RTRS
- During July and August, FINRA and the MSRB announced plans to submit rule filings to reduce to one minute the timeframe for reporting corporate, agency and muni bonds; as stated by FINRA and the MSRB, the rule filings will provide exceptions for verbal trades, but the scope of the exceptions are not clear at this time
- The next step is for FINRA to submit a rule filing to the SEC
Securities Lending Transparency
- Ignacio Sandoval of the Morgan Lewis law firm reviewed with the FIF Securities Lending Transparency Working Group the SEC’s recent adoption of a rule to require Reporting of Securities Loans
- During these calls, Working Group members discussed various implementation issues and questions relating to the new rule
Short Positions and Activity Reporting
- The FIF Short Sales / Reg SHO / Short Interest Reporting Working Group reviewed and discussed the SEC’s recent adoption of a rule to require monthly reporting of short positions and short activity
- During the call, FIF members identified a number of implementation challenges and areas where further guidance is required from the SEC
Centralized Clearing of Treasuries
- Penny Christophorou and Ignacio Sandoval of the Morgan Lewis law firm reviewed a rule recently adopted by the SEC to require centralized clearing of certain Treasury and Treasury repo transactions
Section 31 Fee Collection Process
- On November 2 FIF submitted a letter to FINRA requesting that FINRA provide additional data to industry members to facilitate reconciliation of Section 31-related fees
- On December 18 FIF members participated on a call with FINRA representatives to discuss this presentation
- FIF has scheduled a call for this subgroup for January 16 to discuss next steps
Compliance and Surveillance
- FIF hosted a call to review a digest of current SEC and FINRA rulemaking initiatives, including proposed rule and adopted rules that firms are in the process of implementing
- FIF hosted a sub-group call to discuss clock synch for the cloud
- On January 29 Satish Kini and Robert Dura of the Debevoise law firm will review 2023 developments relating to anti-money laundering and sanctions regulations and key issues to focus on for 2024
- At the request of FIF members, FIF has created a subgroup for members to discuss issues relating to T+1 implementation, including the new requirements relating to same-day allocations
- FIF has scheduled a subgroup call for January 18 to discuss the obligations of a non-executing firm when reporting to TRACE the execution timestamp provided by the executing firm
OCC Cyber Rule
- FIF hosted a call to review the SEC’s recent approval of a rule change by The Options Clearing Corporation relating to OCC clearing member cybersecurity obligations
Digital Assets
- FIF hosted a call to discuss disclosure requirements for digital assets, including SEC Rule 15c2-11
- The next working group call will be on January 24th
Financial Risk Regulations
- Ignacio Sandoval of the Morgan Lewis law firm reviewed with FIF members the new margin requirements for covered agency transactions scheduled to take effect on May 22, 2024

Tax Information Reporting Working Group
- The Tax group held a call on November 28, the meeting focused on the new IRS Crypto regulations
Cybersecurity Working Group
- Matt Weinberg of CISA will present on 1/31 on the Current Threats to the Financial Industry. The group will also go over some notable releases from FINRA, the SEC and NSA.
Data & Technology Committee
- Please find last month's Meeting Materials deck here and Capacity Statistics deck here.
- FIF will hold our next call on January 31 at 10am ET where the spotlight presentation will focus on the launch of the MEMX Options Exchange
FIF Industry Solutions Offering
- FIF Retail Execution Quality Statistics
- FIF Regulatory Initiatives Tracking Site - (Requires FIF Website Login)
FIF Monthly Reports
- Market Data Capacity Statistics – (Requires FIF Website Login)

Next Meeting Date: February 27, 2024 @ 11am ET

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