12782 Federal Register / Vol. 76, No. 45 / Tuesday, March 8, 2011 / Notices 

5 15 U.S.C. 78o–4(b). 

6 15 U.S.C. 78s(b)(3)(A)(iii). 

7 In addition, Rule 19b–4(f)(6)(iii) requires a selfregulatory organization to give the Commission 

written notice of its intent to file the proposed rule 

change at least five business days prior to the date 

of filing of the proposed rule change, or such 

shorter time as designated by the Commission. 

8See Section 19(b)(3)(C) of the Act, 15 U.S.C. 

78s(b)(3)(C). 

9 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 15 U.S.C. 78s(b)(3)(A)(i). 

3 17 CFR 240.19b–4(f)(1). 

shall consist of five members who will 

serve three-year terms. 

2. Statutory Basis 

The MSRB believes that the proposed 

rule change is consistent with Section 

15B(b) of the Securities Exchange Act of 

1934 (the ‘‘Act’’),5 as amended by the 

Dodd-Frank Act, in that it conforms the 

Articles of Incorporation of the Board to 

the requirements of the Dodd-Frank Act 

and MSRB transitional Rule A–3(i). 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The MSRB does not believe that the 

proposed rule change will impose any 

burden on competition not necessary or 

appropriate in furtherance of the 

purposes of the Act, since the proposed 

rule change simply amends the Articles 

of Incorporation of the Board to comply 

with the requirements of the DoddFrank Act and MSRB transitional Rule 

A–3(i), and solely concerns the 

administration of the organization. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

Written comments were neither 

solicited nor received on the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The MSRB represented that the 

proposed rule change qualifies for 

immediate effectiveness pursuant to 

Section 19(b)(3)(A)(iii) of the Act 6

because it: (i) Does not significantly 

affect the protection of investors or the 

public interest; (ii) does not impose any 

significant burden on competition; and 

(iii) does not become operative for 30 

days after filing or such shorter time as 

the Commission may designate 

consistent with the protection of 

investors and the public interest.7 The 

MSRB provided the required written 

notice of its intention to file the 

proposed rule change to the 

Commission on February 10, 2011, and 

the proposed rule change will become 

operative on April 1, 2011, which is 

more than 30 days after the filing of the 

proposed rule change. 

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is necessary or appropriate in the 

public interest, for the protection of 

investors, or otherwise in furtherance of 

the purposes of the Act.8

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an e-mail to rulecomments@sec.gov. Please include File 

Number SR–MSRB–2011–01 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Elizabeth M. Murphy, Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–1090. 

All submissions should refer to File 

Number SR–MSRB–2011–01. This file 

number should be included on the 

subject line if e-mail is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

Web site (http://www.sec.gov/rules/ 

sro.shtml). Copies of the submission, all 

subsequent amendments, all written 

statements with respect to the proposed 

rule change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for Web site viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street, NE., 

Washington, DC 20549, on official 

business days between the hours of 10 

a.m. and 3 p.m. Copies of such filing 

also will be available for inspection and 

copying at the MSRB’s offices. 

All comments received will be posted 

without change; the Commission does 

not edit personal identifying 

information from submissions. You 

should submit only information that 

you wish to make available publicly. All 

submissions should refer to File 

Number SR–MSRB–2011–01 and should 

be submitted on or before March 29, 

2011. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.9

Cathy H. Ahn, 

Deputy Secretary. 

[FR Doc. 2011–5140 Filed 3–7–11; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–64004; File No. SR–FICC– 

2011–02] 

Self-Regulatory Organizations; The 

Fixed Income Clearing Corporation; 

Notice of Filing and Immediate 

Effectiveness of Proposed Rule 

Change To Make a Technical, 

Clarifying Change to the Corporation 

Default Rule of the Government 

Securities Division 

March 2, 2011. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’),1 notice is hereby given that on 

February 17, 2011, The Fixed Income 

Clearing Corporation (‘‘FICC’’) filed with 

the Securities and Exchange 

Commission (‘‘Commission’’) the 

proposed rule change described in Items 

I and II below, which Items have been 

prepared primarily by FICC. FICC filed 

the proposal pursuant to Section 

19(b)(3)(A)(i) of the Act 2 and Rule 19b– 

4(f)(1) 3 thereunder so that the proposal 

was effective upon filing with the 

Commission. The Commission is 

publishing this notice to solicit 

comments on the rule change from 

interested parties. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The proposed rule change will make 

a technical, clarifying change to the 

Corporation Default Rule of the 

Government Securities Division 

(‘‘GSD’’). 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, 

FICC included statements concerning 

the purpose of and basis for the 

proposed rule change and discussed any 


srobinson on DSKHWCL6B1PROD with NOTICES
Federal Register / Vol. 76, No. 45 / Tuesday, March 8, 2011 / Notices 12783 

4The Commission has modified the text of the 

summaries prepared by FICC. 

5SEC Release No. 34–63038, File No. SR–FICC– 

2010–04 (October 5, 2010). 

6 15 U.S.C. 78q–1. 

7 15 U.S.C. 78s(b)(3)(A)(i). 

8 17 CFR 240.19b–4(f)(1). 

comments it received on the proposed 

rule change. The text of these statements 

may be examined at the places specified 

in Item IV below. FICC has prepared 

summaries, set forth in sections (A), (B), 

and (C) below, of the most significant 

aspects of these statements.4

(A) Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

The purpose of this rule change is to 

make a technical, clarifying change to 

GSD Rule 22B, entitled ‘‘Corporation 

Default’’ (‘‘Corporation Default Rule’’). 

FICC adopted the Corporation Default 

Rule to make explicit the close-out 

netting that would be applied to 

obligations between FICC and its 

members in the event that FICC 

becomes insolvent or defaults in its 

obligations to its members.5 By way of 

background, FICC had been approached 

by some of its dealer members that had 

requested that FICC add a provision to 

the rules of the GSD to make explicit the 

close-out netting of obligations between 

FICC and its members in the unlikely 

event that FICC becomes insolvent or 

defaults on its obligations to its 

members. The members stated that the 

adoption of the Corporation Default 

Rule would provide clarity in their 

application of balance sheet netting to 

their positions with FICC under U.S. 

GAAP in accordance with the criteria 

specified in the Financial Accounting 

Standards Board’s Interpretation No. 39, 

‘‘Offsetting of Amounts Related to 

Certain Contracts’’ (FIN 39). The 

members further stated that the 

Corporation Default Rule would allow 

them to comply with Basel Accord 

Standards relating to netting. 

Specifically, firms are able to calculate 

their capital requirements on the basis 

of their net credit exposure where they 

have legally enforceable netting 

arrangements with their counterparties, 

which includes a close-out netting 

provision in the event of the default of 

the counterparty (in this case, the 

division of FICC acting as a CCP). 

The proposed technical change adds a 

sentence to the Corporation Default Rule 

that reads as follows: ‘‘For purposes of 

this Rule 22B and notwithstanding any 

other provision to the contrary, 

Novation is deemed to occur and 

Deliver Obligations and Receive 

Obligations established with respect to 

all Transactions at the time at which the 

data submitted in respect of such 

Transactions is compared and 

constitutes a Compared Trade.’’ For 

purposes of clarity, this sentence brings 

into Rule 22B, existing language of other 

provisions of the GSD’s Rules. For 

example, GSD Rule 11B (‘‘Guaranty of 

Settlement’’) provides that FICC shall 

guarantee the settlement of a trade at the 

time at which the comparison of such 

trade occurs pursuant to the FICC’s 

comparison rules and that FICC’s 

guaranty means FICC’s obligation to 

novate the deliver, receive, and payment 

obligations that were created by the 

trade. The addition of the proposed 

sentence in the Corporation Default 

Rule clarifies that trades that have been 

compared and therefore guaranteed by 

the GSD shall be deemed novated at the 

time of comparison for purposes of Rule 

22B and therefore included in the closeout netting calculation that would be 

performed in the event of an FICC 

default pursuant to Rule 22B. 

FICC believes that the proposed rule 

change is consistent with the 

requirements of Section 17A of the Act 6

and the rules and regulations 

thereunder applicable to FICC because it 

provides members with further clarity 

with respect to the Corporation Default 

Rule and net credit exposure where 

members have legally enforceable 

netting arrangements with their 

counterparties. 

(B) Self-Regulatory Organization’s 

Statement on Burden on Competition 

FICC does not believe that the 

proposed rule change will have any 

impact or impose any burden on 

competition. 

(C) Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

Written comments relating to the 

proposed rule change have not been 

solicited or received. FICC will notify 

the Commission of any written 

comments received by FICC. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing proposed rule change 

has become effective upon filing 

pursuant to Section 19(b)(3)(A)(i) of the 

Act 7 and Rule 19b–4(f)(1) 8 thereunder 

because the proposed rule change 

constitutes a stated policy, practice, or 

interpretation with respect to the 

meaning, administration, or 

enforcement of an existing rule. At any 

time within 60 days of the filing of the 

proposed rule change, the Commission 

summarily may temporarily suspend 

such rule change if it appears to the 

Commission that such action is 

necessary or appropriate in the public 

interest, for the protection of investors, 

or otherwise in furtherance of the 

purposes of the Act. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an e-mail to rulecomments@sec.gov. Please include File 

Number SR–FICC–2011–02 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Elizabeth M. Murphy, Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–1090. 

All submissions should refer to File 

Number SR–FICC–2011–02. This file 

number should be included on the 

subject line if e-mail is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

Internet Web site (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for Web site viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street, NE., 

Washington, DC 20549, on official 

business days between the hours of 10 

a.m. and 3 p.m. Copies of such filings 

also will be available for inspection and 

copying at the principal office of FICC 

and on FICC’s Web site at http:// 

www.dtcc.com/downloads/legal/ 

rule_filings/2011/ficc/2011–02.pdf. All 

comments received will be posted 

without change; the Commission does 

not edit personal identifying 


srobinson on DSKHWCL6B1PROD with NOTICES
12784 Federal Register / Vol. 76, No. 45 / Tuesday, March 8, 2011 / Notices 

9 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3A member achieving the requisite level through 

one MPID would be eligible to receive the higher 

credit with respect to trading activity through its 

other MPIDs as well. 

information from submissions. You 

should submit only information that 

you wish to make available publicly. All 

submissions should refer to File 

Number SR–FICC–2011–02 and should 

be submitted on or before March 29, 

2011. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.9

Cathy H. Ahn, 

Deputy Secretary. 

[FR Doc. 2011–5138 Filed 3–7–11; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–64003; File No. SR– 

NASDAQ–2011–028] 

Self-Regulatory Organizations; The 

NASDAQ Stock Market LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change To Modify Fees 

for Members Using the NASDAQ 

Market Center 

March 2, 2011. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’) 1 and Rule 19b–4 thereunder,2

notice is hereby given that, on February 

22, 2011, The NASDAQ Stock Market 

LLC (the ‘‘Exchange’’ or ‘‘NASDAQ’’) 

filed with the Securities and Exchange 

Commission (the ‘‘Commission’’) the 

proposed rule change as described in 

Items I, II, and III below, which Items 

have been prepared by NASDAQ. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

NASDAQ proposes to modify pricing 

for NASDAQ members using the 

NASDAQ Market Center. NASDAQ will 

implement the proposed change on 

March 1, 2011. The text of the proposed 

rule change is available at http:// 

nasdaq.cchwallstreet.com/, at 

NASDAQ’s principal office, and at the 

Commission’s Public Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, 

NASDAQ included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. 

NASDAQ has prepared summaries, set 

forth in Sections A, B, and C below, of 

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

NASDAQ is amending Rule 7018 to 

make modifications to its pricing 

schedule for execution of orders through 

the NASDAQ Market Center. NASDAQ 

offers a credit to liquidity providers, 

with the size of the credit varying based 

on overall monthly volumes of liquidity 

provision. Currently, the highest credit 

is $0.00295 per share executed for 

displayed liquidity and $0.0015 per 

share executed for non-displayed 

liquidity. The availability of this credit 

level is based on volume of liquidity 

provision during a month, with the 

required volume adjusted each month in 

accordance with a sliding scale that 

takes account of overall market volumes 

during the month. Specifically, a 

member qualifies for the highest credit 

if it has an average daily volume 

through the NASDAQ Market Center in 

all securities during the month of: (i) 

More than 95 million shares of liquidity 

provided, if average total consolidated 

volume reported to all consolidated 

transaction reporting plans by all 

exchanges and trade reporting facilities 

is more than 10 billion shares per day 

during the month; (ii) more than 85 

million shares of liquidity provided, if 

average total consolidated volume is 

between 9,000,000,001 and 10 billion 

shares per day during the month; (iii) 

more than 75 million shares of liquidity 

provided, if average total consolidated 

volume is between 8,000,000,001 and 9 

billion shares per day during the month; 

and (iv) more than 65 million shares of 

liquidity provided, if average total 

consolidated volume is 8 billion or 

fewer shares per day during the month. 

Effective March 1, 2011, NASDAQ 

will modify the conditions for 

qualifying for this rebate tier by 

stipulating that a member must achieve 

the requisite volume levels through a 

single market participant identifier 

(‘‘MPIDs’’).3 An MPID is a four-letter 

code used by a member to categorize its 

trading activity for a specific purpose. 

All members have at least one MPID, 

but a member may request the 

assignment of additional MPIDs. For 

example, a member may conduct market 

making activity through one MPID, 

while using a second MPID for trading 

on behalf of institutional customers. In 

addition, certain members aggregate the 

trading activity of several firms under 

their own membership rubric, for the 

purposes of obtaining more favorable 

pricing, but will generally acquire a 

separate MPID for each firm that they 

aggregate, so as to distinguish the 

trading activity of one firm from 

another. NASDAQ has concluded that 

its most favorable rebate tier should be 

paid to those firms that do the most to 

enhance NASDAQ’s market quality 

through unified management of a high 

volume of quotes/orders. NASDAQ also 

wishes to ensure that its fee schedule 

does not provide excessive 

encouragement to members to aggregate 

the activity of several firms (some of 

whom may not themselves be members 

of the exchange) for the sole purpose of 

earning a higher rebate. Thus, a member 

or a sponsored non-member that is not 

able to achieve the requisite level of 

liquidity provision will not be able to 

meet the threshold by coordinating and 

consolidating with the trading activity 

of other firms using multiple MPIDs. 

NASDAQ notes, however, that the 

impact of the change on firms that 

currently qualify for the most favorable 

rebate rate but that are not able to 

achieve the required volume thresholds 

through a single MPID is mitigated by 

the fact that qualification for other 

rebate tiers may continue to be achieved 

through one or more MPIDs. Notably, 

members that provide a daily average of 

more than 35 million shares of liquidity 

during the month through one or more 

MPIDs are eligible to receive a rebate of 

$0.0029 per share executed for 

displayed liquidity and $0.0015 per 

share executed for non-displayed 

liquidity (versus the top rebate of 

$0.00295 per share executed for 

displayed liquidity and $0.0015 per 

share executed for non-displayed 

liquidity). 

Separately, NASDAQ currently offers 

a rebate of $0.0029 per share executed 

for displayed liquidity and $0.0015 per 

share executed for non-displayed in 

circumstances where a market 

participant achieves certain specified 

levels of activity in both the NASDAQ 

Market Center and the NASDAQ 

Options Market. Currently, the required 

levels of monthly activity are an average 

daily volume of more than 25 million 

shares of liquidity provided through the 

NASDAQ Market Center and an average 

daily volume of more than 200,000 


srobinson on DSKHWCL6B1PROD with NOTICES