On October 22, the Committee submitted a second comment letter to the Securities and Exchange Commission (the “SEC”) regarding the amended proposal by the Financial Industry Regulatory Authority, Inc. (“FINRA”) to establish a new issue reference service for corporate bonds (the “Amended Bond Data Service Proposal”).
Under the original proposal, (i) FINRA sought to amend Rule 6760 with respect to new issues of corporate debt securities to require bond underwriters to report additional attributes of the security to FINRA prior to the first transaction in the security; and (ii) FINRA would begin selling this data back to market participants at a FINRA-prescribed fee (up to $6,000 per month if the data is retransmitted or repackaged for dissemination).
Under the Amended Bond Data Service Proposal, FINRA would establish the bond data service now, submit a separate filing to set fees for the new service at a future date, and implement the service after those fees are adopted.
The Committee recommended that the SEC not approve the proposed rule change. The Amended Bond Data Service Proposal removes the service’s fees from the full notice-and-comment rulemaking process at a time when the SEC is curtailing this practice with respect to other market data fees because it undermines transparent review and approval. Further, by addressing fees at a later date, the Amended Bond Data Service deprives the SEC of critical information it needs now to conduct a full cost-benefit analysis of the proposal.
The Committee’s letter can be found here.