80876 Federal Register / Vol. 75, No. 246 / Thursday, December 23, 2010 / Notices 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 63336 

(November 18, 2010), 75 FR 71781. 

4 In Amendment No. 1, the Exchange corrected an 

error in the purpose section of the original filing 

purpose section changing the current duration of 

the Step-Up Display Period from 25 milliseconds to 

10 milliseconds. 

5Amendment No. 2 replaces in its entirety the 

original filing and Amendment No. 1. In 

Amendment No. 2, the Exchange proposes to: (a) 

Change the Step-Up Display Period (as defined 

below) from 25 milliseconds to 10 milliseconds, 

and (b) eliminate the discretion in the rule to vary 

the Step-Up Display Period without a rule filing. 

6Exchange Rule 11.9(b)(1) provides that (prior to 

display of an order to a User), an incoming order 

shall first attempt to be matched for execution 

against orders in the EDGX Book. 

7Exchange Rule 1.5(cc) defines a User as any ‘‘any 

Member or Sponsored Participant who is 

authorized to obtain access to the System pursuant 

to Rule 11.3.’’ 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63574; File No. SR–EDGX– 

2010–17] 

Self-Regulatory Organizations; EDGX 

Exchange, Inc.; Notice of Filing of 

Amendment No. 2 to Proposed Rule 

Change To Amend EDGX Rules 11.9 

and 11.5 

December 17, 2010. 

On November 8, 2010, EDGX 

Exchange, Inc. (the ‘‘Exchange’’ or 

‘‘EDGX’’) filed with the Securities and 

Exchange Commission (‘‘Commission’’), 

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

Securities Exchange Act of 1934 

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

proposed rule change regarding Step-Up 

Orders. The proposed rule change was 

published for comment in the Federal 

Register on November 24, 2010.3 On 

November 23, 2010, the Exchange 

submitted Amendment No. 1 to the 

proposed rule change.4 On December 

14, 2010, the Exchange submitted 

Amendment No. 2 to the proposed rule 

change, as described in Items I and II 

below, which items have been prepared 

by the Exchange.5 The Commission is 

publishing this notice of Amendment 

No. 2 to solicit comments on the 

proposed rule change, as amended, from 

interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend 

EDGX Rule 11.9(b)(1)(C) regarding the 

description of the Step-up order type. 

The Exchange also proposes to modify 

Rule 11.5(c)(7) to allow Mid-Point 

Match orders entered in response to 

Step-up orders to be processed pursuant 

to Rule 11.9(b)(1)(C). The text of the 

proposed rule change is available on the 

Exchange’s Internet Web site at http://

www.directedge.com, at the principal 

office of the Exchange, 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, the 

Exchange 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. The 

self-regulatory organization 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 

This Amendment No. 2 replaces in its 

entirety the original filing, SR–EDGX– 

2010–17 (November 8, 2010) and partial 

Amendment No. 1 (November 23, 2010). 

Exchange Rule 11.5(c)(11) defines a 

Step-up order as a ‘‘market or limit order 

with the instruction that the System 

display the order to Users at or within 

the NBBO price pursuant to Rule 

11.9(b)(1)(C).’’ Exchange Rule 

11.9(b)(1)(C), in turn, states that orders 

shall be displayed to Users 6 (hereinafter 

referred to as ‘‘Members’’),7 in a manner 

that is separately identifiable from other 

Exchange orders, at or within the NBBO 

price for a period of time not to exceed 

five hundred milliseconds, as 

determined by the Exchange (the ‘‘Stepup Display Period).’’ 

In this amendment, the Exchange 

proposes to change the Step-up Display 

Period, which is currently set at 25 

milliseconds, to 10 milliseconds. The 

Exchange also proposes to eliminate the 

prior discretion in the rule to vary the 

Step-up Display Period without a rule 

filing. 

The Exchange proposes to amend 

Rule 11.9(b)(1)(C) to add language to the 

rule text which will provide that at the 

conclusion of the Step-up Display 

Period, the Step-up order shall execute 

against responsive User orders priced at 

or within the NBBO, prevailing at the 

end of the Step-up Display Period on a 

price/time priority basis consistent with 

Rule 11.8(a)(1) and (2). Rules 11.8(a)(1) 

and (2), in turn, provide that orders of 

Users shall be ranked and maintained in 

the EDGX Book based on the following 

priority: (i) The highest-priced order to 

buy (or lowest-priced order to sell) shall 

have priority over all other orders to buy 

(or orders to sell); (ii) where orders to 

buy (or sell) are made at the same price, 

the order clearly established as the first 

entered into the System at such 

particular price shall have precedence at 

that price, up to the number of shares 

of stock specified in the order. 

Commencing on the six month 

anniversary of {Insert Commission 

approval date of this rule filing}, the 

orders eligible for executing against 

Step-up orders shall be expanded to 

include User orders priced better but 

not outside the NBBO at the end of the 

Step-up Display Period (such orders, 

‘‘Eligible Book Orders’’). 

In effect, Step-up orders permit a 

Member to initiate a price auction of 

such orders by displaying order 

solicitation information to other 

Members simultaneously, provided 

such other Members have elected to 

receive such order information (each 

such Member, an ‘‘Electing Member.’’) 

After the passage of the Step-up Display 

Period, the Step-up orders are executed 

against responses and, commencing on 

the six month anniversary of {Insert 

Commission approval date of this rule 

filing}, Eligible Book Orders, on a price/ 

time priority basis in accordance with 

Rule 11.8(a)(1) and (2). Responses are 

accumulated for the Step-up Display 

Period by the Exchange, rather than 

processed at arrival time. Eligible Book 

Orders will continue to be eligible for 

execution against the EDGX Book 

during the Step-up Display Period. 

For example, assume the NBBO 

(national best bid/offer) is 10.10 × 10.12. 

If Member A enters a Step-up order to 

buy 500 shares of ABC security at the 

prevailing national best offer ($10.12) 

and such Step-up order cannot execute 

against the EDGX Book then Electing 

Members will receive a solicitation to 

sell 500 shares of ABC security at $10.12 

or lower. If Electing Members X, Y, and 

Z transmit an order to sell 500 shares (or 

less) of ABC security at the prevailing 

national best offer or lower (i.e, $10.12 

or lower), within the Step-up Display 

Period, they would all participate in a 

price auction, which would be awarded 

at the end of the Step-up Display Period 

on a price/time priority basis based on 

the prevailing NBBO at the end of such 

time period. Therefore, if EDGX receives 

an order to sell 500 shares at $10.11 

from Electing Member X, then receives 

an order to sell 200 shares at $10.10 

from Electing Member Y and lastly 

receives an order to sell 200 shares at 

$10.11 from Electing Member Z, 

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Federal Register / Vol. 75, No. 246 / Thursday, December 23, 2010 / Notices 80877 

8 15 U.S.C. 78f(b)(5). 

9 15 U.S.C. 78k–1(a)(1). 

10The Commission notes that the notice of the 

proposed rule change was first published in the 

Federal Register on November 24, 2010. 

11The text of the proposed rule change, as 

amended, is available on the Commission’s Web 

site at http://www.sec.gov/rules/sro.shtml. 

Electing Member Y would have priority 

over Electing Members X and Z based 

on price priority, assuming that such 

orders were received within the Step-up 

Display Period. As a result, Electing 

Member Y’s order would execute 

against Member A’s Step-up order for 

200 shares at $10.10. The remaining 300 

shares would be awarded to Electing 

Member X at $10.11, since Electing 

Member X has time priority over 

Electing Member Z. Following the six 

month anniversary of {Insert 

Commission approval date of this rule 

filing}, if non-electing Member W had 

an order to sell 500 shares at $10.11 that 

was entered before Electing Member X’s 

order and it was not otherwise executed 

on the EDGX Book prior to the end of 

the Step-up Display Period, then the 

remaining 300 shares in the above 

example would be executed against 

Member W’s order, since Member W 

would have time priority over both 

Electing Members X and Z. 

The Exchange believes that this 

proposed amendment provides more 

transparency regarding the timing 

associated with the price auction. 

The Exchange also proposes to amend 

Rule 11.5(c)(7) to allow Mid-Point 

Match orders that are entered in 

response to Step-up orders to be eligible 

for execution pursuant to Rule 

11.9(b)(1)(C), as described above. 

In response to the price auction 

described above, the Exchange will not 

accept orders priced in subpennies. The 

respondent User could enter a MidPoint Match order, however, that would 

be eligible for execution at the midpoint 

of the prevailing NBBO at the end of the 

Step-up Display Period. 

The Exchange believes the midpoint 

response described above will provide 

an additional pricing mechanism for the 

respondent User that is willing to offer 

price improvement, but is unwilling to 

cross the spread between the national 

best bid and offer to do so. By providing 

this option, the Exchange believes that 

a greater proportion of Step-up orders 

will receive price improvement. In 

addition, because the midpoint response 

will execute all trades at the midpoint 

of the NBBO, it will never execute a 

trade outside of the NBBO. If the 

national best bid for a security 

underlying a Step-up order equals or 

‘‘locks’’ the national best offer for such 

security, a Mid-Point Match order 

response will execute all trades at the 

locked price. 

The Step-up order process will not 

generate an execution if the national 

best bid (offer) for the security 

underlying a Step-up order is priced 

better than or ‘‘crosses’’ the national best 

offer (bid) for such security. In the event 

of a ‘‘crossed’’ market or an absence of 

responsive User orders at or within the 

NBBO and, commencing on the six 

month anniversary of {Insert 

Commission approval date of this rule 

filing}, Eligible Book Orders at the end 

of the Step-up Display Period, the Stepup process shall terminate and the Stepup order shall be cancelled or routed in 

accordance with the User’s instructions. 

2. Statutory Basis 

The statutory basis for the proposed 

rule change is Section 6(b)(5) of the 

Act,8 which requires the rules of an 

exchange to promote just and equitable 

principles of trade, to remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system and, in 

general, to protect investors and the 

public interest. The proposed rule 

change also is designed to support the 

principles of Section 11A(a)(1) 9 of the 

Act in that it seeks to assure fair 

competition among brokers and dealers 

and among exchange markets. The 

Exchange believes that the proposed 

rule meets these requirements in that it 

seeks to promote the efficient execution 

of investor transactions, and thus 

investor confidence, over the long term 

by providing additional transparency 

relating to the execution of Step-up 

orders. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The proposed rule change does not 

impose 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 

The Exchange has not solicited, and 

does not intend to solicit, comments on 

this proposed rule change. The 

Exchange has not received any 

unsolicited written comments from 

members or other interested parties. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Within 45 days of the date of 

publication of the notice of the 

proposed rule change in the Federal 

Register 10 or within such longer period 

(i) as the Commission may designate up 

to 90 days of such date if it finds such 

longer period to be appropriate and 

publishes its reasons for so finding or 

(ii) as to which the self-regulatory 

organization consents, the Commission 

will: 

(A) By order approve or disapprove 

such proposed rule change, as amended, 

or 

(B) Institute proceedings to determine 

whether the proposed rule change, as 

amended, should be disapproved. 

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–EDGX–2010–17 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–EDGX–2010–17. 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,11 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, on official business 

days between the hours of 10 a.m. and 

3 p.m. Copies of the filing, as amended, 

also will be available for inspection and 

copying at the principal office of the 

Exchange. All comments received will 

be posted without change; the 

mstockstill on DSKH9S0YB1PROD with NOTICES

80878 Federal Register / Vol. 75, No. 246 / Thursday, December 23, 2010 / Notices 

12 17 CFR 200.30–3(a)(12). 

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

2Securities Exchange Act Release No. 63254 

(November 5, 2010), 75 FR 69514 (November 12, 

2010). 

3The amendment was the subject of a DTC 

proposed rule change approved by the Commission. 

Securities Exchange Act No. 34–41529 (June 15, 

1999), 64 FR 33333 (June 22, 1999) [File No. SR– 

DTC–1999–08]. The amendment was also approved 

by the New York State Superintendent of Banks. 

4Securities Exchange Release No. 43197 (August 

23, 2000), 65 FR 52459 (August 29, 2000) [File No. 

SR–DTC–2000–02]. 

5Securities Exchange Act Release No. 54775 

(November 17, 2006), 71 FR 68662 (November 27, 

2006) [SR–DTC–2006–14]. 

6Securities Exchange Act Release No. 59612 

(March 20, 2009), 74 FR 13488 (March 27, 2009) 

[File No. SR–DTC–2009–06]. 

7On October 20, 2010, DTC’s sole stockholder, 

The Depository Trust & Clearing Corporation, 

authorized DTC to amend its Certificate of 

Organization to increase the number of shares of 

authorized preferred stock, as required by Section 

8003 of the Banking Law of the State of New York. 

DTC is also required to seek approval from the New 

York State Banking Department, which concurrent 

with the filing of this proposed rule change, it has 

done. 

8 DTC, as a member institution of the Federal 

Reserve System, is subject to capital guidelines 

issued by the Board of Governors of the Federal 

Reserve System. To be considered ‘‘wellcapitalized’’ under these guidelines, DTC must, 

among other things, maintain a Total Risk-Based 

Capital Ratio of at least 10%, a Leverage Ratio of 

at least 5%, and a Tier 1 Risk-Based Capital Ratio 

of at least 6%. 

The authorization and issuance of this additional 

1,750,000 shares will increase the number of shares 

of Series A Preferred Stock to a total of 3,250,000 

shares with a total par value of $325 million. This 

will enable DTC to continue to be ‘‘well capitalized’’ 

under the capital guidelines issued by the Board of 

Governors of the Federal Reserve System. 

9 15 U.S.C. 78q–1(b)(3)(F). 

10 17 CFR 200.30–3(a)(12). 

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–EDGX– 

2010–17 and should be submitted on or 

before January 13, 2011. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.12

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–32286 Filed 12–22–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63567; File No. SR–DTC– 

2010–14] 

Self-Regulatory Organizations; The 

Depository Trust Company; Order 

Granting Approval of a Proposed Rule 

Change To Authorize Additional 

Shares of Preferred Stock and 

Designate Shares as Series A 

Preferred Stock 

December 16, 2010. 

I. Introduction 

On October 22, 2010, The Depository 

Trust Company (‘‘DTC’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) proposed rule change 

SR–DTC–2010–11 pursuant to Section 

19(b)(1) of the Securities Exchange Act 

of 1934 (‘‘Act’’).1 Notice of the proposal 

was published in the Federal Register 

on November 12, 2010.2 The 

Commission received no comment 

letters. For the reasons discussed below, 

the Commission is granting approval of 

the proposed rule change. 

II. Description 

In 1999, DTC’s Certificate of 

Organization was amended (‘‘1999 

Amendment’’) to provide for the 

authorization and issuance of 1,500,000 

shares of preferred stock, par value $100 

per share.3 The 1999 Amendment also 

provided that the preferred stock could 

be issued in one or more classes having 

such designations, relative rights, 

preferences, or limitation as fixed by the 

Board of Directors of DTC at the time of 

issuance of any such preferred stock. 

DTC’s Certificate of Organization has 

been amended three times since the 

1999 Amendment to provide for the 

issuance of variable rate, 

noncumulative, nonvoting shares of 

Series A preferred stock, par value $100 

per shares, which are preferred over 

DTC’s common stock as to dividends 

and in the event of liquidation (‘‘Series 

A Preferred Stock’’). The first such 

amendment (filed in 2000) provided for 

the issuance of 750,000 shares of the 

Series A Preferred Stock.4 The second 

amendment (filed in 2006) provided for 

the issuance of an additional 500,000 

shares of Series A Preferred Stock.5 The 

third amendment (filed in 2009) 

provided for the issuance of an 

additional 250,000 shares of Series A 

Preferred Stock.6

DTC participants are required to 

purchase and own shares of the Series 

A Preferred Stock in proportion to their 

use of DTC services. DTC treats the 

Series A Preferred Stock held by 

participants substantially the same as it 

treats the mandatory cash deposits made 

by participants to the Participants Fund 

for purposes of collateralizing securities 

transactions, limiting net debit 

positions, implementing default 

procedures, and allocating unrecovered 

losses. 

In order to further increase its capital, 

DTC is amending its Certificate of 

Organization 7 to authorize an 

additional 1,750,000 shares of Series A 

Preferred stock with such rights, 

preferences, and limitations as currently 

provided in its Certificate of 

Organization.8

III. Discussion 

Section 17A(b)(3)(F) of the Act 

requires that the rules of a clearing 

agency be designed to, among other 

things, assure the safeguarding of 

securities and funds which are in the 

custody or control of the clearing agency 

or for which it is responsible and to 

protect investors and the public 

interest.9 The Commission believes that 

the rule change is consistent with DTC’s 

obligations under the Exchange Act 

because the rule change will enable DTC 

to be ‘‘well capitalized’’ while not 

adversely affecting its ability to 

adequately safeguard the securities and 

funds in its custody or control or for 

which it is responsible. 

IV. Conclusion 

On the basis of the foregoing, the 

Commission finds that the proposed 

rule change is consistent with the 

requirements of the Act and in 

particular with the requirements of 

Section 17A of the Act and the rules and 

regulations thereunder. 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act, that the 

proposed rule change (File No. SR– 

DTC–2010–14) be and hereby is 

approved. 

For the Commission by the Division of 

Trading and Markets, pursuant to delegated 

authority.10

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–32225 Filed 12–22–10; 8:45 am] 

BILLING CODE 8011–01–P 

SMALL BUSINESS ADMINISTRATION 

[Disaster Declaration #12418 and #12419] 

U.S. Virgin Islands Disaster #VI–00006 

AGENCY: U.S. Small Business 

Administration. 

ACTION: Notice. 

SUMMARY: This is a notice of an 

Administrative declaration of a disaster 

for the U.S. Virgin Islands dated 12/15/ 

2010. 

Incident: Tropical Storm Tomas. 

Incident Period: 11/08/2010 through 

11/12/2010. 

Effective Date: 12/15/2010. 

Physical Loan Application Deadline 

Date: 02/14/2011. 

Economic Injury (EIDL) Loan 

Application Deadline Date: 09/15/2011. 

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