0001 1 U.S. SECURITIES AND EXCHANGE COMMISSION 2 3 4 5 6 MEETING OF THE FIXED INCOME 7 MARKET STRUCTURE ADVISORY COMMITTEE 8 9 10 11 12 13 Tuesday, June 11, 2019 14 1:07 p.m. 15 16 17 18 19 20 21 22 23 U.S. Securities and Exchange Commission 24 100 F Street, N.E. 25 Washington, D.C. 0002 1 COMMITTEE MEMBERS: 2 Michael Heaney, Committee Chairman 3 Dan Allen, Anchorage Capital Group 4 Matthew Andresen, Headlands Technologies LLC 5 John Bagley, Municipal Securities Rulemaking Board 6 Horace Carter, Raymond James 7 Gilbert Garcia, Garcia Hamilton & Associates 8 Tom Gira, FINRA 9 Larry Harris, USC Marshall School of Business 10 Amar Kuchinad, Trumid Financial 11 Scott Krohn, Verizon 12 Ananth Madhavan, BlackRock 13 Lynn Martin, ICE Data Services 14 Amy McGarrity, Colorado Public Employees' Retirement 15 Association 16 Richard McVey, MarketAxess 17 Larry Tabb, TABB Group 18 Sonali Theisen, Bank of America Merrill Lynch 19 Kumar Venkataraman, SMU Cox School of Business 20 Elisse Walter, Former Chairman, U.S. Securities and 21 Exchange Commission 22 Brad Winges, Hilltop Securities 23 24 25 0003 1 PARTICIPANTS: 2 Jay Clayton, Commission Chairman 3 Hester Peirce, Commissioner 4 Elad Roisman, Commissioner 5 Brett Redfearn 6 John Roeser 7 Lizzie Baird 8 Rebecca Olsen 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 0004 1 C O N T E N T S 2 PAGE 3 I. Welcome Remarks 5 4 5 II. Item 1 - Draft Recommendation on Pennying 6 in the Corporate Bond and Municipal Securities 7 Markets 13 8 9 III. Item 2 - Draft Comment Letter on FINRA New Issue 10 Reference Database Proposal 18 11 12 IV. Adjournment 28 13 14 15 16 17 18 19 20 21 22 Motions: 16, 26, 29 23 24 25 0005 1 P R O C E E D I N G S 2 MR. HEANEY: Good afternoon everybody. It's 3 Michael Heaney, FIMSAC Chairman, and I'd like to welcome 4 everyone to today's telephonic meeting of the SEC Fixed 5 Income Market Structure Advisory Committee. 6 This afternoon we'll be continuing the 7 discussion the Committee started at our April 15th 8 meeting regarding a recommendation that addresses the 9 practice of pennying in the corporate bond municipal 10 securities market. 11 We'll also consider a draft comment letter on 12 the recent FINRA proposal to establish a new issue 13 reference database consistent with Committee's 14 unanimously approved recommendation. 15 Before we dive into the discussion of the 16 recommendations, there are few housekeeping items I think 17 it's important to go over. 18 First, I'd like to ask everyone that your 19 phones be on mute unless you're speaking. 20 Second, if you do speak, please state your name 21 so that we and the transcriber is tracking who is 22 speaking, as in the case with our meetings in person, 23 members of the public are able to follow our 24 deliberations live, and the transcript of this call will 25 be made available on the FIMSAC website. 0006 1 This is probably the tricky part that we're 2 doing this by phone, but again, if you have a question or 3 would like to make a comment, please state your name and 4 then pause so we can kind of get to each one individual. 5 I'm going to call roll so that we can identify 6 the members on the phone and confirm a quorum is present. 7 When you hear your name please answer that you're 8 present. 9 Dan Allen? 10 MR. ALLEN: Present. 11 MR. HEANEY: Matt Andresen? 12 MR. ANDRESEN: Present. 13 MR. HEANEY: John Bagley? 14 MR. BAGLEY: Here. 15 MR. HEANEY: Carole Brown? Horace Carter? 16 MR. CARTER: Present. 17 MR. HEANEY: Gilbert Garcia? 18 MR. GARCIA: Present. 19 MR. HEANEY: Tom Gira? 20 MR. GIRA: Present. 21 MR. HEANEY: Larry Harris? 22 MR. HARRIS: Present. 23 MR. HEANEY: Scott Krohn? 24 MR. KROHN: Present. 25 MR. HEANEY: Amar Kuchinad? 0007 1 MR. KUCHINAD: Present. 2 MR. HEANEY: Ananth Madhavan? 3 MR. MADHAVAN: Present. 4 MR. HEANEY: Lynn Martin? 5 MS. MARTIN: Present. 6 MR. HEANEY: Amy McGarrity? 7 MS. MCGARRITY: Present. 8 MR. HEANEY: Rick McVey. 9 MR. MCVEY: Present. 10 MR. HEANEY: Suzanne Shank? Larry Tabb? 11 MR. TABB: Present. 12 MR. HEANEY: Sonali Theisen? 13 MS. THEISEN: Present. 14 MR. HEANEY: Kumar -- I'm going to leave it as 15 just Kumar. 16 MR. VENKATARAMAN: Present. 17 MR. HEANEY: Thank you, Kumar. Elisse Walter? 18 MS. WALTER: Present. 19 MR. HEANEY: Rachel Wilson? Brad Winges? 20 MR. WINGES: Present. 21 MR. HEANEY: And Mihir Worah? Let me just go 22 back and recheck those that we did not hear from. Carole 23 Brown? Suzanne Shank? Rachel Wilson? And Mihir? 24 Okay, well, thank you all. We still do, 25 indeed, have a quorum, so let's turn forward into the 0008 1 meeting, and at this point as we head into the agenda, 2 I'd first like to welcome Chairman Clayton to the call, 3 and ask Chairman Clayton to make his opening remarks. 4 MR. CLAYTON: Thank you, Michael. I'll try to 5 be efficient. I, again, want to thank all the FIMSAC 6 members. I know you're very busy; you're taking time out 7 of your schedules to contribute to our work here. It's 8 greatly appreciated, and I greatly appreciate the way 9 you've been considering the issues on today's agenda, the 10 thoughtful -- the way you've gone about it is really a 11 testament to this group as a whole. 12 And, in particular, I want to thank the 13 Technology and Electronic Trading subcommittee for the 14 work you've put in on both the recommendations. I will 15 leave it to Michael and others to introduce them. I look 16 forward to the discussion, and with that, I'll turn it 17 back to you, Michael. 18 MR. HEANEY: Thank you, Chairman Clayton. Next 19 we'll hear from Commissioner Peirce. 20 MS. PEIRCE: Thanks, Michael. I just want to 21 thank all of you for participating again. We find your 22 work very useful, and you're missing a beautiful day in 23 Washington, D.C. so this probably isn't the right day to 24 have a telephonic meeting, but I look forward to hearing 25 the discussion. Thanks. 0009 1 MR. HEANEY: Thank you, Commissioner Peirce. 2 We'll now from Commissioner Roisman. 3 MR. ROISMAN: Just echoing the comments of the 4 Chairman and Commissioner Peirce. Again, thank you so 5 much for taking the time to provide your expertise and 6 thoughts on this. I look forward to today's discussion. 7 MR. HEANEY: Thank you, Commissioner Roisman. 8 I believe Commissioner Jackson will be joining us later 9 on the call, and we look forward to hearing from him when 10 he does join. Next, I'd like to turn it over to Brett 11 Redfearn, Director of the Division of Trading and Markets 12 and the Committee's designated federal officer. 13 Brett? 14 MR. REDFEARN: Thank you, Michael, and thank 15 you all the FIMSAC members, again, for participating in 16 this afternoon's call. I'll try to brief in my remarks 17 so we can quickly turn to today's agenda. 18 Before I get started, I just wanted to note 19 that I'm joined in the room here in Washington from the 20 staff from the Division of Trading and Markets and the 21 Division of Economic and Risk Analysis, as well as the 22 Office of Municipal Securities. I need to remind you all 23 that the views that are expressed today are those of the 24 speaker and do not necessarily reflect those of the 25 Commission, any commissioners, or other members of the 0010 1 staff from the SEC staff here. 2 I'd also like to take this opportunity to just 3 thank you all very much for your continued diligence and 4 engagement on all these important issues in the bond 5 market. As you're aware, today you're going to be 6 considering two preliminary recommendations from the 7 Technology and Electronic Trading subcommittee. Both 8 concern matters that have been the subject of previous 9 committee deliberations. 10 At this point you're all getting a sense for 11 what the day-to-day work is like here at the Commission. 12 Every day we solicit public engagement as we pursue 13 policy initiatives that we believe advance the agencies 14 mission. As we tackle challenging issues impacting 15 investors in our markets, we're often tasked with 16 balancing competing points of view and considering the 17 feedback of parties with diverse interests, and while 18 this is not easy the feedback is -- this feedback is the 19 foundation of the regulatory process aimed to result in 20 better and more informed policy decision making. 21 The first preliminary recommendation to be 22 considered today is a revised version of the 23 recommendation on the use of "pennying" that you 24 discussed at the April 15th public meeting. And in light 25 of that discussion you chose to revise a recommendation 0011 1 and represent it at a future meeting. 2 The other preliminary recommendation is a 3 comment letter on FINRA's proposed rule change to create 4 a new issue reference database for corporate bonds. That 5 proposed rule change cited in your October 6 recommendation, which called for FINRA to create such a 7 database. As a proposed rule change is currently pending 8 with us, I'm just going to note that I appreciate all of 9 your engagement and perspectives on this matter. 10 Lastly, I want to reiterate that interested 11 parties on the phone or, you know, watching this later, 12 or paying attention to this later may also submit comments of the 13 work of the Committee via the FIMSAC webpage on the SEC's 14 website. All preliminary recommendations brought to the 15 Committee for consideration and all of the 16 recommendations approved by the Committee are available 17 on the FIMSAC webpage. So I encourage members of the 18 public to review these materials and participate in the 19 policymaking process by offering their input. 20 Again, thanks a lot to everybody for continuing 21 to devote so much time to this committee, and with that, 22 I look forward to today's discussion and I will turn it 23 back to you, Michael. 24 MR. HEANEY: Thank you, Brett. Before I turn 25 it over to Rick McVey, who chairs the Technology and 0012 1 Electronic Trading subcommittee to prevent the revised 2 pennying recommendation, I thought it would be helpful to 3 provide some background. 4 The Technology and Electronic Trading 5 subcommittee, over a period of several months, developed 6 a recommendation that was designed to address the 7 practice of pennying in the corporate bond and municipal 8 securities markets. The subcommittee solicited the 9 feedback of other market participants during this 10 deliberation as reflected in the summary of minutes of 11 the subcommittee meetings, which are posted on the FIMSAC 12 webpage. 13 At our April 15th meeting, we heard from a 14 panel of experts that included members of the 15 subcommittee as well as other market participants. In 16 light of the feedback received from members during the 17 April 15th meeting concerning the concepts of last-look 18 and pennying, the subcommittee determined to revise their 19 recommendation to clarify its intended scope. 20 I want to thank Rick and the members of the 21 subcommittee for their continued efforts in advancing the 22 recommendations for the much hard work and dedication to 23 get this to where we are today. Over the course of this 24 process, the subcommittee's deliberations have been 25 thoughtful and constructive. The engagement on this 0013 1 topic has been commendable, and I think all of you for 2 bringing your knowledge and expertise to bear on this 3 subject. 4 With that, I'll ask Rick to walk us through the 5 revised recommendation that we are considering, including 6 reminding us where we started, and explaining how the 7 subcommittee chose to revise the recommendation and come 8 back to what it was, a unanimous vote for it on the 9 subcommittee level. 10 Rick, I'll turn it over to you. 11 MR. MCVEY: Thank you, Michael. And my thanks 12 as well to the Technology and E-Trading subcommittee for 13 all the work that you have put into this recommendation 14 as well as the one we'll get to later this afternoon. 15 I think we had a very constructive panel 16 discussion on the growing practice of pennying on the 17 retail ATS venues in Washington in April, and there was 18 also some important feedback that the subcommittee 19 received on the recommendation primarily around 20 clarifying the difference between pennying that is the 21 growing systematic use of the price discovery process on 22 retail ATS systems to slightly improve the price of an 23 auction in order for the dealer initiating the auction to 24 maintain to trade internally. 25 And the changes that we have made are designed 0014 1 to further clarify the practice of pennying, which we 2 believe has negative implications for long-term 3 competition and pricing in the retail ATS markets versus 4 the legitimate use and practice of last-look by dealers 5 that are trying to be sure to be responsible to their 6 obligations for best execution on behalf of their client. 7 So what you all have now as members of the full 8 FIMSAC committee are the changes we recommend around the 9 terminology change to focus the recommendation on the 10 systematic use of pennying as opposed to last-look; and 11 that we have made every attempt to clarify that last-look 12 is a valid practice for best execution even if used 13 infrequently; and then finally to clarify the definition 14 of pennying. 15 And I think these have been important 16 improvements to make the recommendation even more clear 17 on the practice that we find to be harmful to fair and 18 competitive auctions conducted in the retail ATS venues. 19 And with that, Michael, I'll turn it back over 20 to you. I'm happy and I'm sure any members of the 21 Technology and E-Trading committee would be happy to 22 entertain any questions people might have, but the 23 revised recommendation was specific to that point on 24 pennying versus last-look. 25 MR. HEANEY: Thank you, Rick, appreciate it. 0015 1 Let me first open it up to any other 2 subcommittee members, if I could. Please remember to 3 identify yourself, and ask if there is anything else that 4 they would like to add before opening up to the broader 5 FIMSAC. 6 Okay, I'll now open it up to questions or 7 comments from FIMSAC committee members. Again, please 8 identify yourself prior to speaking and we will do our 9 best to manage this conversation. But again, if could 10 state your name, just pause so that we can keep this 11 somewhat orderly. 12 Questions or comments? 13 MR. GIRA: This is Tom Gira. Just a comment. 14 First off, I think it makes a lot of sense to address 15 this issue, and the recommendation was noted that FINRA 16 would be recommended to publish something from comment. 17 And that connection with that, we were planning to do 18 sort of a study to try to assess pennying and corporate 19 bonds. I think there's been a lot of work done on the 20 muni side, but we think that could help inform some of 21 the comments that could possibly come in. 22 MR. HEANEY: Thank you, Tom. Others? 23 MR. REDFEARN: Tom, hi, this is Brett Redfearn 24 speaking. Just a quick question. What is your timing on 25 that study? 0016 1 MR. GIRA: We have started yet, but we're 2 planning to sort of canvass and get some information from 3 some of the trading venues and doing analysis. 4 MR. REDFEARN: And the scope is essentially to 5 assess the, you know, the degree to which some of the 6 concerns that have been expressed in this recommendation 7 are sort of playing out across the marketplace? 8 MR. GIRA: Correct, yeah. I mean we've done, 9 in concertion with the MSRB we have looked at the 10 munis piece. We have not looked at corporates before. So this 11 would just be to sort of compare and see if we see some more 12 conduct. Anecdotally, I think that's what we're getting at. 13 MR. WINGES: Okay. Thanks Tom. 14 MR. HEANEY: Any other questions or comments? 15 Okay, at this point I'll entertain a motion to 16 vote on the recommendation. Anyone would like to move 17 that? 18 19 A PARTICIPANT: So moved. 20 MR. HEANEY: Thank you. When I call your name, 21 please answer 'yes', 'no', or 'abstain'. I will go back 22 to those that were not present earlier on the rollcall 23 just in case they've joined late. Dan Allen? 24 MR. ALLEN: Yes. 25 MR. HEANEY: Matt Andresen? 0017 1 MR. ANDRESEN: Yes. 2 MR. HEANEY: Carole Brown? Horace? 3 MR. CARTER: Yes. 4 MR. HEANEY: Gilbert? 5 MR. GARCIA: Yes. 6 MR. HEANEY: Larry Harris? 7 MR. HARRIS: Yes. 8 MR. HEANEY: Scott Krohn? 9 MR. KROHN: Yes. 10 MR. HEANEY: Amar? 11 MR. KUCHINAD: Yes. 12 MR. HEANEY: Ananth? Ananth, are you still on? 13 MR. MADHAVAN: Yes, I am and I vote yes. 14 MR. HEANEY: Thank you. Lynn Martin? 15 MS. MARTIN: Yes. 16 MR. HEANEY: Amy? 17 MS. MCGARRITY: Yes. 18 MR. HEANEY: Rick McVey? 19 MR. MCVEY: Yes. 20 MR. HEANEY: Suzanne Shank? Larry Tabb? 21 MR. TABB: I vote yes. 22 MR. HEANEY: Sonali? 23 MS. THEISEN: Yes. 24 MR. HEANEY: Kumar? 25 MR. VENKATARAMAN: Yes. 0018 1 MR. HEANEY: Elisse? 2 MS. WALTER: Yes. 3 MR. HEANEY: Rachel Wilson? Brad? 4 MR. WINGES: Yes. 5 MR. HEANEY: Mihir? I'm not sure if he has 6 joined. 7 Okay, and I will vote as Michael Heaney as a 8 yes. Okay, thank you, the recommendation has been 9 approved by the committee. Again, thank you Rick and the 10 members of the subcommittee for your work on seeing this 11 recommendation through. 12 MR. HEANEY: Next item on the agenda is the 13 consideration of a draft comment letter to the Commission 14 from the Technology and Electronic Trading subcommittee 15 As the members know, FINRA recently proposed to 16 establish a new issue reference database consistent with 17 this committee's unanimously approved recommendation. 18 Several comment letters have been submitted both 19 supporting and opposing FINRA's proposal. 20 Given this proposal is in response to a FIMSAC 21 recommendation, the subcommittee has drafted a comment 22 letter to the commission for FIMSAC consideration that it 23 believes will further contribute to the public dialogue 24 concerning the new issue reference database. 25 The FINRA proposal with the SEC is the logical 0019 1 next step in advancing FIMSAC's recommendation concerning 2 reference data, and the process currently underway is 3 critical to the development and refinement of FIMSAC 4 recommendation. FIMSAC's role is to effectively review 5 our fixed-income markets in an effort to identify 6 potential improvements to its functioning. The FIMSAC 7 makes recommendations based on this review understanding 8 that many of the details regarding implementation of its 9 recommendations must be determined through the robust regulatory 10 process. 11 The FINRA proposal and the SEC's process of 12 reviewing that proposal is a great example of this 13 process at work. And today, the FIMSAC has an 14 opportunity to continue engaging honest recommendations 15 with the consideration of a comment letter addressing 16 many of the issues raised by the proposal and commenters. 17 I again want to thank to the Technology and 18 Electronic Trading subcommittee for their efforts, and 19 will turn it back over to Rick McVey to discuss the draft 20 comment letter. Rick? 21 MR. MCVEY: Thank you, Michael. This proposal 22 does come back on the back of the comment letter on the 23 corporate bond reference database proposal. And I think 24 there were a number of reasons that this subcommittee 25 felt that it was important for the committee to consider 0020 1 responding and clarifying our position that led to the 2 unanimous recommendation that we made recently on 3 recommending a corporate bond reference database for new 4 issues be established by FINRA. 5 So after reviewing the comment letters, 6 positive and negative, the committee did convene several 7 times to reconsider the fields of data that were 8 subsequently proposed by FINRA, and we have validated 9 those fields and made some additional suggestions in the 10 new letter that we are putting in front of you today. 11 We also want to clarify and remind all readers 12 of the process that the subcommittee and the full 13 committee went through and the importance of this 14 recommendation that did lead to the unanimous approval by 15 FIMSAC. 16 And in that, in the letter as you have seen, we 17 clarify the inclusive process that led to the proposal 18 with investors, dealers, underwriters, and all major 19 reference data providers participating in the 20 deliberations leading up to the recommendation. 21 We also clarify that referenced data is 22 absolutely needed to trade and value all fixed-income 23 securities including corporate bonds. We remind the 24 reader that the municipal bond market has had a solution 25 now for nearly 10 years in NIIDS, operated by DTCC, which 0021 1 has provided many of the same benefits to the fixed- 2 income market that we are including in the proposal today 3 for corporate bonds. 4 We also ran into significant issues in the 5 current market practices where it is left to the 6 underwriter to distribute to the data providers all new 7 issue information which leads to important timing 8 differences on when the various reference data providers 9 in U.S. fixed-income receive new issue data. 10 And as a result of that, depending on which 11 data provider, market participant and E-trading venues 12 are using, some market participants are not able to value 13 and trade new issues on some of the most active trading 14 periods shortly after newly issued bonds are free to 15 trade. 16 We made it very clear in our letter that our 17 recommendation did not attempt to displace the reference 18 data providers in any way, and want to make it clear that 19 almost all reference data providers voiced their 20 significant support for the proposal that we made. It is 21 important to remember that a full database in fixed- 22 income has hundreds of thousands of issues that also have 23 more fields of data and require constant updates on 24 changes including call features, mergers, ratings changes 25 and corporate actions. 0022 1 We also reinforce that we have reconsidered and 2 confirmed that we believe that FINRA is the right 3 provider of this service. We view this as a natural 4 extension of the TRACE data service that FINRA has 5 provided since 2002. And we believe that their ability 6 to provide this service would be both cost effective and 7 expedient given their role already in TRACE reporting. 8 The process we understood, as well, from 9 underwriters that participated in our deliberations, 10 would be easy to implement given the electronic means by 11 which they're providing new issue data to some reference 12 data providers today. 13 And importantly, we think it's critical that 14 competition exists in the reference data field to 15 overcome some of the issues that the committee uncovered 16 around impartial access for reference data with some of 17 the reference data providers. 18 So Michael, I will stop there and I know the 19 committee would be happy to take any questions that the 20 full FIMSAC committee may have, but we felt based on 21 market feedback and input subsequent to the comment 22 period that it was important for the committee to 23 consider submitting a follow-on letter reinforcing the 24 recommendation, the reasons for it, and the data fields 25 that have been provided by FINRA. 0023 1 MR. HEANEY: Thank you very much, Rick. I'll 2 now open it up to questions or comments from FIMSAC 3 members. Please remember to identify yourself prior to 4 speaking. 5 MS. MARTIN: Hi, this is Lynn Martin from ICE 6 Data Services. You know, as Rick said earlier, we are a 7 reference data provider and we're strongly supportive of 8 this proposal. 9 I think that perhaps the intent of the service 10 was potentially misunderstood by some of the participants 11 who indicated negative comment letters. But much in the 12 way that we use the NIIDS system, which works quite well, 13 we think a centralized new issue database would benefit 14 the market from a transparency perspective, from a 15 liquidity perspective allowing those issues to trade as 16 soon as possible after a secondary market is enabled. So 17 we are strongly supportive of this. 18 MR. HEANEY: Thank you, Lynn. Others? 19 MR. HARRIS: This is Larry Harris. A couple of 20 very quick notes. First of all, to remind everybody that 21 the data we're talking about are already publicly 22 available in the registration statements. I also like to 23 note that in their importance to investors who need to 24 value bonds and other securities, these data are no 25 different from the financial data that the SEC already 0024 1 collects and disseminates through EDGAR. Those data are 2 marked up with xml to make them machine readable. 3 Essentially our proposal is to do almost the same. 4 I would suggest, though, that, and this is not 5 in the proposal, that the SEC consider making those 6 registration statements requiring that they also be 7 machine readable. Making these data machine readable, 8 whether through FINRA or through the SEC, will promote 9 competition in the reference data business by lowering 10 the cost of entry because it substantially decreases the 11 cost of having people read these registration statements 12 to pull out these fields. 13 It also ultimately should decrease the cost to 14 investors because if the reference data providers have 15 lower costs, they openly should pass them on through 16 their increased competition. 17 MS. THEISEN: Hi, it's Sonali Theisen from Bank 18 of America. I would like to make a couple of comments. 19 We are very supportive of the concept of there being a 20 new issue reference database. I think it's an important 21 development for the market as my fellow FIMSAC members 22 have mentioned. 23 There's two points that we'd like to raise on 24 this for consideration. The first is that for the 25 majority of the fields the responsibility will fall to 0025 1 the underwriter to report these additional fields. That 2 process today to report them to FINRA, as I understand 3 it, internally is a largely manual one of forms. 4 We would like to encourage that the format for, 5 particularly given the number of fields is increasing 6 significantly, that the format for the fields be as 7 standardized as possible in any enhancements that are 8 made so that there's -- it minimizes the opportunity for 9 error. The one field that is included in this revised 10 proposal, which we have noted which we don't -- we do not 11 believe the underwriters have the ability to pass on 12 directly today from a commercial perspective, are the 13 ratings. 14 We are, again, very much in favor of the 15 marketplace having this information, but we want to flag 16 the fact that we believe the ratings will need to be 17 given directly to FINRA by the rating agencies or by the 18 issuer, and that that's not something that we believe, as 19 the underwriter, we have the ability, under commercial, 20 terms to necessarily to pass on. 21 MR. TABB: This is Larry Tabb. I was a little 22 bit more mixed, but at the end I voted for this. I think 23 that we, you know, quality problems with this data and I 24 worried about centralizing all of this within one entity 25 and basically propagating what might not be clean data 0026 1 out to the marketplace. 2 On the other hand, I think that a centralized 3 database of this information is valuable to the market 4 and I think in the overall end of the day this hopefully 5 will not turn into a monopoly and commercial players will 6 play here and the true competition and greater 7 transparency will get clean and better data out to the 8 markets faster, and I think it will be a benefit for the 9 industry. 10 I do have a challenge with FINRA. We've had 11 some problems with market data on the equity side because 12 of issues surrounding that. On the other hand I'm not 13 sure there's a better player unless we want to open this 14 up to competitive bidding, which may be problematic. So 15 at the end of the day, I'm in favor of this. 16 MR. HEANEY: Thank you, Larry. Others? Any 17 other FIMSAC questions or comments? Okay, thank you. 18 At this point I'll entertain a motion to vote 19 on approving submission of the draft comment letter to 20 the commission. 21 22 A PARTICIPANT: I'll make a motion. 23 MR. HEANEY: Thank you. When I call your name, 24 please answer 'yes', 'no', or 'abstain'. Dan Allen? 25 MR. ALLEN: Yes. 0027 1 MR. HEANEY: Matt Andresen? Matt, are you 2 there? Carole Brown? 3 MR. ANDRESEN: Yes. 4 MR. HEANEY: I'm sorry, Matt. Can you just -- 5 again, Matt Andresen? 6 MR. ANDRESEN: Yes. 7 MR. HEANEY: Thank you. Carole Brown? Horace 8 Carter? 9 MR. CARTER: Yes. 10 MR. HEANEY: Gilbert? 11 MR. GARCIA: Yes. 12 MR. HEANEY: Larry Harris? 13 MR. HARRIS: Yes. 14 MR. HEANEY: Scott? 15 MR. KROHN: Yes. 16 MR. HEANEY: Amar? 17 MR. KUCHINAD: Yes. 18 MR. HEANEY: Ananth? I'm sure if he's still 19 with us. He had to -- 20 MR. MADHAVAN: Yes. I'm still -- thanks. 21 MR. HEANEY: Thank you. Lynn Martin? 22 MS. MARTIN: Yes. 23 MR. HEANEY: Amy? 24 MS. MCGARRITY: Yes. 25 MR. HEANEY: Rick? I'm sorry, Amy was a yes. 0028 1 Rick McVey? 2 MR. MCVEY: Yes. 3 MR. HEANEY: Thank you. Suzanne Shank? Larry 4 Tabb? 5 MR. TABB: Yes. 6 MR. HEANEY: Sonali? 7 MS. THEISEN: Yes. 8 MR. HEANEY: Kumar? 9 MR. VENKATARAMAN: Yes. 10 MR. HEANEY: Elisse, am I correct that you will 11 be recusing yourself from the vote? 12 MS. WALTER: Yes, because I'm on the FINRA 13 board. 14 MR. HEANEY: Okay, thank you, Elisse. Rachel 15 Wilson? Brad? 16 MR. WINGES: Yes. 17 MR. HEANEY: Mihir? Not sure if he's joined. 18 Mihir, are you there? 19 And Michael Heaney votes yes. The comment 20 letter has been approved by the committee. 21 Thank you, Rick and again the members of the 22 subcommittee for your continued work on this important 23 initiative and for all the work done for both of these 24 items today. 25 MR. HEANEY: That concludes our agenda for 0029 1 today. 2 Again, I'd like to thank everyone, all the 3 members for continuing to devote so much time to FIMSAC. 4 I appreciate you taking the time to participate today and 5 advance the thoughtful recommendations to the SEC. I 6 look forward to seeing you all in Washington on July 7 29th, and at this point I'll entertain a motion to 8 adjourn. 9 A PARTICIPANT: So moved. 10 MR. HEANEY: All in favor. 11 [Chorus of ayes.] 12 MR. HEANEY: Sounds like a majority. 13 Thank you for your active engagement and 14 participation, again, and for all the hard work that you 15 continue to do for this. The meeting is adjourned. 16 (Whereupon, at 1:40 p.m., the meeting was 17 adjourned.) 18 * * * * * 19 20 21 22 23 24 25 0030 1 PROOFREADER'S CERTIFICATE 2 3 In the Matter of: SEC FIXED INCOME MARKET STRUCTURE 4 ADVISORY COMMITTEE 5 File Number: OS-0611 6 Date: Tuesday, June 11, 2019 7 Location: Washington, D.C. 8 9 This is to certify that I, Christine Boyce 10 (the undersigned), do hereby certify that the foregoing 11 transcript is a complete, true and accurate transcription 12 of all matters contained on the recorded proceedings of 13 the investigative testimony. 14 15 _______________________ _______________________ 16 Proofreader's Name) (Date) 17 18 19 20 21 22 23 24 25 0031 1 REPORTER'S CERTIFICATE 2 3 I, Michelle Yenchochic, reporter, hereby certify that 4 the foregoing transcript is a complete, true and accurate 5 transcript of the matter indicated, held on 6 __6/11/2019___________, at Washington, D.C., in the 7 matter of: 8 SEC FIXED INCOME MARKET STRUCTURE COMMITTEE MEETING. 9 I further certify that this proceeding was recorded by 10 me, and that the foregoing transcript has been prepared 11 under my direction. 12 13 14 Date: 6/11/2019 15 Official Reporter: Michelle Yenchochic 16 17 18 19 20 21 22 23 24 25