75718 Federal Register / Vol. 75, No. 233 / Monday, December 6, 2010 / Notices 

10 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b-4. 

3 17 CFR 240.19b 4(f)(6). 

4See Securities Exchange Act Release No. 59955 

(May 22, 2009), 74 FR 25586 (May 28, 2009) (Notice 

of Approval of Proposed Rule Change; File No. SR– 

FINRA–2009–012) (‘‘Approval Order’’). 

5See Securities Exchange Act Release No. 60722 

(September 25, 2009), 74 FR 50856 (October 1, 

2010) (Notice of Filing and Immediate Effectiveness 

of Proposed Rule Change; File No. SR–FINRA– 

2009–063). 

6See 74 FR 25588 through 25589. In early 2009 

the Commission enacted interim final temporary 

rules (the ‘‘interim final temporary rules’’) providing 

enumerated exemptions under the Federal 

securities laws for certain CDS to facilitate the 

operation of one or more central clearing 

counterparties in such CDS. See Securities Act 

Release No. 8999 (January 14, 2009), 74 FR 3967 

(January 22, 2009) (Temporary Exemptions for 

Eligible Credit Default Swaps To Facilitate 

Operation of Central Counterparties To Clear and 

Settle Credit Default Swaps); Securities Act Release 

No. 9063 (September 14, 2009) (Extension of 

Temporary Exemptions for Eligible Credit Default 

Swaps To Facilitate Operation of Central 

Counterparties To Clear and Settle Credit Default 

Swaps). See also Securities Exchange Act Release 

No. 59578 (March 13, 2009), 74 FR 11781 (March 

19, 2009) (Order Granting Temporary Exemptions 

in Connection with Request of Chicago Mercantile 

Exchange Inc. and Citadel Investment Group, L.L.C. 

Related to Central Clearing of Credit Default 

Swaps); Securities Exchange Act Release No. 59165 

(December 24, 2008), 74 FR 133 (January 2, 2009) 

(Order Granting Temporary Exemptions for BrokerDealers and Exchanges Effecting Transactions in 

Credit Default Swaps). 

7See Securities Act Release No. 9158 (November 

19, 2010), 75 FR 72260 (November 26, 2009) 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.10

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–30432 Filed 12–3–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63391; File No. SR–FINRA– 

2010–063] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Extend to July 16, 

2011, the Pilot Period for FINRA Rule 

4240 (Margin Requirements for Credit 

Default Swaps) 

November 30, 2010. 

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 November 

22, 2010, Financial Industry Regulatory 

Authority, Inc. (‘‘FINRA’’) filed with the 

Securities and Exchange Commission 

(‘‘SEC’’ or ‘‘Commission’’) the proposed 

rule change as described in Items I and 

II below, which Items have been 

substantially prepared by FINRA. 

FINRA has designated the proposed rule 

change as constituting a ‘‘noncontroversial’’ rule change under 

paragraph (f)(6) of Rule 19b-4 under the 

Act,3 which renders the proposal 

effective upon receipt of this filing by 

the Commission. 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 

FINRA is proposing to extend to July 

16, 2011, FINRA Rule 4240 (Margin 

Requirements for Credit Default Swaps) 

on an interim pilot program basis. 

FINRA Rule 4240, as approved by the 

SEC on May 22, 2009, will expire on 

November 30, 2010. The rule 

implements an interim pilot program 

with respect to margin requirements for 

transactions in credit default swaps 

executed by a member (regardless of the 

type of account in which the transaction 

is booked), including those in which the 

offsetting matching hedging transactions 

are effected by the member in credit 

default swap contracts that are cleared 

through the central counterparty 

clearing services of the Chicago 

Mercantile Exchange. 

The text of the proposed rule change 

is below. Proposed new language is 

underlined; proposed deletions are in 

brackets: 

* * * * * 

4000. FINANCIAL AND OPERATIONAL 

RULES 

* * * * * 

4200. MARGIN 

* * * * * 

4240. Margin Requirements for Credit 

Default Swaps 

(a) Effective Period of Interim Pilot 

Program. 

This Rule establishes an interim pilot 

program (‘‘Interim Pilot Program’’) with 

respect to margin requirements for any 

transactions in credit default swaps executed 

by a member (regardless of the type of 

account in which the transaction is booked), 

including those in which the offsetting 

matching hedging transactions (‘‘matching 

transactions’’) are effected by the member in 

contracts that are cleared through the central 

counterparty clearing services of the Chicago 

Mercantile Exchange (‘‘CME’’). The Interim 

Pilot Program shall automatically expire on 

[November 30, 2010] July 16, 2011. For 

purposes of this Rule, the term ‘‘credit default 

swap’’ (‘‘CDS’’) shall mean any ‘‘eligible credit 

default swap’’ as defined in Securities Act 

Rule 239T(d), as well as any other CDS that 

would otherwise meet such definition but for 

being subject to individual negotiation, and 

the term ‘‘transaction’’ shall include any 

ongoing CDS position. 

(b) through (e) No Change. 

* * * Supplementary Material: 

.01 No Change. 

* * * * * 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, 

FINRA 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. FINRA 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 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

On May 22, 2009, the Commission 

approved FINRA Rule 4240,4 which 

implements an interim pilot program 

(the ‘‘Interim Pilot Program’’) with 

respect to margin requirements for 

transactions in credit default swaps 

(‘‘CDS’’) executed by a member 

(regardless of the type of account in 

which the transaction is booked), 

including those in which the offsetting 

matching hedging transactions are 

effected by the member in credit default 

swap contracts that are cleared through 

the central counterparty clearing 

services of the Chicago Mercantile 

Exchange (‘‘CME’’). On September 21, 

2009, FINRA extended the 

implementation of Rule 4240 to 

November 30, 2010.5

As explained in the Approval Order, 

FINRA Rule 4240 is intended to be 

coterminous with certain Commission 

actions intended to address concerns 

arising from systemic risk posed by 

CDS, including, among others, risks to 

the financial system arising from the 

lack of a central clearing counterparty to 

clear and settle CDS.6 Recently, the 

Commission has determined to extend 

the period for which certain of these 

actions are in effect.7 FINRA believes it 


jdjones on DSK8KYBLC1PROD with NOTICES
Federal Register / Vol. 75, No. 233 / Monday, December 6, 2010 / Notices 75719 

(Extension of Temporary Exemptions for Eligible 

Credit Default Swaps To Facilitate Operation of 

Central Counterparties To Clear and Settle Credit 

Default Swaps). 

8See Exhibit 5. 

9 15 U.S.C. 78o–3(b)(6). 

10 15 U.S.C. 78s(b)(3)(A). 

11 17 CFR 240.19b–4(f)(6). 

12 17 CFR 240.19b–4(f)(6)(iii). In addition, Rule 

19b-4(f)(6)(iii) requires a self-regulatory 

organization to submit to the Commission written 

notice of its intent to file the proposed rule change, 

along with a brief description and text of 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. The Commission has waived the fiveday pre-filing period in this case. 

13For the purposes only of waiving the 30-day 

operative delay, the Commission has considered the 

proposed rule’s impact on efficiency, competition, 

and capital formation. 15 U.S.C. 78c(f). 14 17 CFR 200.30–3(a)(12). 

is appropriate to extend the 

implementation of the Interim Pilot 

Program accordingly, to July 16, 2011.8

FINRA has filed the proposed rule 

change for immediate effectiveness and 

has requested that the SEC waive the 

requirement that the proposed rule 

change not become operative for 30 days 

after the date of the filing, such that 

FINRA can implement the proposed 

rule change immediately. The proposed 

rule change will expire on July 16, 2011. 

FINRA is proposing to implement the 

proposed rule change on November 30, 

2010. 

2. Statutory Basis 

FINRA believes that the proposed rule 

change is consistent with the provisions 

of Section 15A(b)(6) of the Act,9 which 

requires, among other things, that 

FINRA rules must be designed to 

prevent fraudulent and manipulative 

acts and practices, to promote just and 

equitable principles of trade, and, in 

general, to protect investors and the 

public interest. FINRA believes that the 

proposed rule change will further the 

purposes of the Act because, consistent 

with the goals set forth by the 

Commission when it adopted the 

interim final temporary rules with 

respect to the operation of central 

counterparties to clear and settle CDS, 

the margin requirements set forth by the 

proposed rule change will help to 

stabilize the financial markets. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

FINRA does not believe that the 

proposed rule change will result in any 

burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. 

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. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Because the foregoing proposed rule 

change does not: (i) Significantly affect 

the protection of investors or the public 

interest; (ii) impose any significant 

burden on competition; and (iii) become 

operative for 30 days from the date on 

which it was filed, or such shorter time 

as the Commission may designate, it has 

become effective pursuant to Section 

19(b)(3)(A) of the Act 10 and Rule 

19b 4(f)(6) thereunder.11

FINRA requests that the Commission 

waive the five-day pre-filing notice 

requirement specified in Rule 19b– 

4(f)(6)(iii) under the Act.12 FINRA 

proposes to make the proposed rule 

change operative on November 30, 2010. 

FINRA has requested that the 

Commission waive the 30-day operative 

delay, so that the proposed rule change 

may become operative upon filing. The 

Commission hereby grants FINRA’s 

request and believes that waiving the 

30-day operative delay is consistent 

with the protection of investors and the 

public interest.13 This will allow the 

existing pilot program to continue 

without interruption and extend the 

benefits of a pilot program that the 

Commission approved and previously 

extended. For these reasons, the 

Commission designates the proposed 

rule change as effective and operative 

on November 30, 2010. 

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–FINRA–2010–063 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

Elizabeth M. Murphy, Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–1090. 

All submissions should refer to File 

Number SR–FINRA–2010–063. 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 filing 

also will be available for inspection and 

copying at the principal office of 

FINRA. 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–FINRA–2010–063 

and should be submitted on or before 

December 27, 2010. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.14

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–30429 Filed 12–3–10; 8:45 am] 

BILLING CODE 8011–01–P 

SMALL BUSINESS ADMINISTRATION 

[Disaster Declaration #12398 and #12399] 

U.S. Virgin Islands Disaster # VI–00007 

AGENCY: U.S. Small Business 

Administration. 

ACTION: Notice. 

SUMMARY: This is a Notice of the 

Presidential declaration of a major 

disaster for public assistance only for 


jdjones on DSK8KYBLC1PROD with NOTICES