Federal Register / Vol. 76, No. 153 / Tuesday, August 9, 2011 / Notices 48937 

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

16 15 U.S.C. 78f(b)(5). 

17 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

Non-Substantive Amendments to Rule 

Text 

The early 2011 expansion of the 

Program prohibited the listing of $2.50 

strike price intervals for classes that 

participate in the Program. This 

prohibition applies to non-LEAP and 

LEAPS. The Exchange proposes to 

maintain this prohibition and codify it 

in Rule 5.5.01(a)(1) (Program 

Description). 

For ease of reference, the Exchange is 

proposing to add the headings ‘‘Program 

Description,’’ ‘‘Initial and Additional 

Series’’ and ‘‘LEAPS’’ to Rule 5.5.01. 

The Exchange is proposing to more 

accurately reflect the nature of the 

Program and is proposing to make 

stylistic changes throughout Rule 5.5.01 

by adding the phrase ‘‘price interval.’’ 

Lastly, the Exchange is making 

technical changes to Rule 5.5.01, e.g., 

replacing the word ‘‘security’’ with the 

word ‘‘stock.’’ 

The Exchange represents that it has 

the necessary systems capacity to 

support the increase in new options 

series that will result from the proposed 

streamlining changes to the Program. 

2. Statutory Basis 

The Exchange believes the proposed 

rule change is consistent with Section 

6(b) 15 of the Act, in general, and 

furthers the objectives of Section 

6(b)(5) 16 in particular in that it is 

designed to prevent fraudulent and 

manipulative acts and practices, to 

promote just and equitable principles of 

trade, to foster cooperation and 

coordination with persons engaged in 

facilitating transactions in securities, 

and to remove impediments to and 

perfect the mechanisms of a free and 

open market in a manner consistent 

with the protection of investors and the 

public interest. In particular, the 

proposed rule change seeks to reduce 

investor confusion and to simplify the 

provisions of the $1 Strike Price Interval 

Program. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

CBOE 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. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were solicited 

or received with respect to the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Within 45 days of the date of 

publication of this notice in the Federal 

Register 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, or 

(B) Institute proceedings to determine 

whether the proposed rule change 

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–CBOE–2011–040 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–CBOE–2011–040. 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 CBOE. 

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 publicly available. All 

submissions should refer to File 

Number SR–CBOE–2011–040 and 

should be submitted on or before 

August 30, 2011. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.17

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. 2011–20172 Filed 8–8–11; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–65025; File No. SR–FINRA– 

2011–027] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Order Approving a 

Proposed Rule Change To Amend 

FINRA Trade Reporting Rules Relating 

to OTC Transactions in Equity 

Securities That Are Part of a 

Distribution and Transfers of Equity 

Securities To Create or Redeem 

Instruments Such as ADRs and ETFs 

August 3, 2011. 

I. Introduction 

On June 9, 2011, the Financial 

Industry Regulatory Authority, Inc. 

(‘‘FINRA’’) 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 to amend FINRA 

Rules 6282, 6380A, 6380B and 6622 

relating to trade reporting of over-thecounter (‘‘OTC’’) transactions in equity 

securities. The proposed rule change 

was published for comment in the 


sroberts on DSK5SPTVN1PROD with NOTICES
48938 Federal Register / Vol. 76, No. 153 / Tuesday, August 9, 2011 / Notices 

3See Securities Exchange Act Release No. 64706 

(June 20, 2011), 76 FR 37382 (‘‘Notice’’). 

4See, e.g., Rules 6282(i), 6380A(e), 6380B(e) and 

6622(e). 

5See Rules 6282(i)(1)(A), 6380A(e)(1)(A), 

6380B(e)(1)(A) and 6622(e)(1)(A). 

6FINRA explained that this exception was 

adopted to align the FINRA trade reporting 

requirements with the Consolidated Tape 

Association and the Nasdaq Unlisted Trading 

Privileges plans, which expressly identify 

transactions that are not required to be reported to 

the tape. See, e.g., Notice to Members 75–42 (June 

1975). 

7 17 CFR 242.100–105. 

8 17 CFR 242.100. 

9Rule 5190 imposes certain notice requirements 

on members participating in distributions of listed 

and unlisted securities and is designed to ensure 

that FINRA receives pertinent distribution-related 

information from its members in a timely fashion 

in connection with its Regulation M compliance 

program. 

Federal Register on June 27, 2011.3 The 

Commission received no comments on 

the proposal. This order approves the 

proposed rule change. 

II. Description of the Proposal and 

Discussion 

A. Background 

FINRA proposed to amend FINRA 

Rules 6282, 6380A, 6380B and 6622 

(‘‘trade reporting rules’’) relating to 

trade reporting of OTC transactions in 

equity securities. Under FINRA trade 

reporting rules, members are required to 

report OTC transactions in equity 

securities to FINRA unless they fall 

within an express exception. As a 

general matter, when members report 

OTC trades, FINRA facilitates the public 

dissemination of the trade information 

and/or assesses regulatory transaction 

fees under Section 3 of Schedule A to 

the FINRA By-Laws (‘‘Section 3’’) and 

the Trading Activity Fee (‘‘TAF’’). 

Certain transactions and transfers of 

securities are not required to be reported 

to FINRA (e.g., trades executed and 

reported through an exchange, transfers 

made pursuant to an asset purchase 

agreement that has been approved by a 

bankruptcy court), while other 

transactions must be reported to FINRA 

only for the purpose of assessing the 

regulatory transaction fee (e.g., away 

from the market sales and transfers in 

connection with certain corporate 

control transactions).4 Members must 

have policies and procedures and 

internal controls in place to enable them 

to determine whether a transaction 

qualifies for an exception under the 

rules. 

B. Amended Rules 

FINRA proposed to amend its trade 

reporting rules to: (1) Clarify the 

existing exception for transactions that 

are part of a distribution of securities 

and impose certain notice requirements 

on members relying on the exception for 

transactions that are part of an 

‘‘unregistered secondary distribution’’; 

and (2) expressly exclude from the trade 

reporting requirements, transfers of 

equity securities for the purpose of 

creating or redeeming instruments such 

as American Depositary Receipts 

(‘‘ADRs’’) and exchange-traded funds 

(‘‘ETFs’’). 

1. Transactions That Are Part of 

Securities Distribution 

FINRA rules contain an exception 

from the trade reporting requirements 

for transactions that are effected in 

connection with a distribution of 

securities, specifically: 

Transactions that are part of a primary 

distribution by an issuer or of a registered 

secondary distribution (other than ‘‘shelf 

distributions’’) or of an unregistered 

secondary distribution.5

Thus, transactions that are part of a 

distribution (other than a secondary 

shelf distribution) are not reported to 

FINRA or publicly disseminated, and 

they are not assessed regulatory 

transaction fees under Section 3 or the 

TAF.6

FINRA proposed to amend its trade 

reporting rules to incorporate by 

reference the definition of 

‘‘distribution’’ set forth in SEC 

Regulation M for purposes of this 

exception.7 A ‘‘distribution’’ is defined 

under Rule 100 of Regulation M as ‘‘an 

offering of securities, whether or not 

subject to registration under the 

Securities Act, that is distinguished 

from ordinary trading transactions by 

the magnitude of the offering and the 

presence of special selling efforts and 

selling methods.’’ 8

In addition, FINRA proposed to adopt 

Supplementary Material in its trade 

reporting rules that applies specifically 

to the trade reporting exception for 

transactions that are part of an 

‘‘unregistered secondary distribution’’ 

which would require members to 

provide notice to FINRA that they are 

relying on this exception. Members also 

would be required to provide FINRA the 

security name and symbol, execution 

date, execution time, number of shares, 

trade price and parties to the trade, for 

each transaction that is part of the 

unregistered secondary distribution and 

not trade reported. Under the proposed 

rule, members must provide the notice 

and information no later than three 

business days following trade date. If 

the trade executions occur over multiple 

days, then the member would be 

required to provide initial notice and 

information available at that time to 

FINRA no later than three business days 

following the first trade date and final 

notice and information no later than 

three business days following the last 

trade date. 

The proposed Supplementary 

Material also would require that the 

member retain records sufficient to 

document its basis for relying on this 

trade reporting exception, including but 

not limited to, the basis for determining 

that the transactions are part of an 

unregistered secondary distribution, as 

defined under Rule 100 of Regulation 

M. FINRA explained that members 

would be required to demonstrate that 

they have satisfied the ‘‘magnitude of 

the offering’’ and ‘‘special selling 

efforts’’ criteria under Regulation M, 

and stated that the mere assertion that 

the order was large-sized or a block or 

that execution of the order was 

‘‘worked’’ by a member would usually 

not by itself be sufficient. FINRA also 

explained that members must be able to 

demonstrate that they have complied 

with the applicable notification 

requirements in FINRA Rule 5190.9 The 

Commission notes that the proposed 

rule change imposes a notice 

requirement; it does not impose a trade 

reporting requirement. As is the case 

today, under the proposal, transactions 

that are part of a primary distribution by 

an issuer or of a registered secondary 

distribution (other than ‘‘shelf 

distributions’’), or of an unregistered 

secondary distribution, would not be 

trade reported nor would they be 

disseminated to the public. In addition, 

these transactions would not be 

assessed regulatory transaction fees 

under Section 3 or the TAF. 

The Commission believes that this 

requirement, as well as the modification 

to provide a definition of ‘‘distribution’’ 

for use in connection with the 

exception, should ensure that members 

apply the trade reporting exception 

correctly and should help ensure that 

members report all transactions that are 

required to be reported. The 

Commission specifically notes that large 

block trades must be reported to FINRA 

for tape dissemination purposes and are 

assessed regulatory transaction fees 

under Section 3 and the TAF. The trade 

reporting exception does not apply to 

block trades, unless they otherwise meet 

the definition of distribution under 

Regulation M. 

2. Transfers of Equity Securities To 

Create or Redeem Instruments Such as 

ADRs and ETFs 

FINRA also proposed to amend its 

trade reporting rules to expressly 


sroberts on DSK5SPTVN1PROD with NOTICES
Federal Register / Vol. 76, No. 153 / Tuesday, August 9, 2011 / Notices 48939 

10FINRA explained, however, that purchases and 

sales of the securities that are to be transferred for 

the purpose of creating or redeeming instruments 

such as ADRs and ETFs and subsequent purchases 

and sales of the instruments in the secondary 

market are OTC transactions and must be reported 

to FINRA in accordance with the trade reporting 

rules. FINRA also noted that purchases and sales of 

the underlying securities in order to track the 

performance of an instrument such as an ADR or 

ETF, without actually creating the instrument, are 

trade reportable and that such transactions are 

subject to regulatory transaction fees under Section 

3 and the TAF. 

11 15 U.S.C. 78o–3(b)(6). 

12 In approving this proposal, the Commission has 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

15 U.S.C. 78c(f). 

13 15 U.S.C. 78s(b)(2). 

14 17 CFR 200.30–3(a)(12). 

exclude from the trade reporting 

requirements any transfer of equity 

securities for the sole purpose of 

creating or redeeming an instrument 

that evidences ownership of or 

otherwise tracks the underlying 

securities transferred. FINRA explained 

that such transfers are not considered 

transactions for purposes of the trade 

reporting rules and thus are not 

reportable events.10 FINRA represented 

that the proposed rule change codifies 

current guidance and practice in this 

area. The Commission believes that this 

codification of current practice will help 

reduce confusion with regard to what is 

required to be reported under FINRA’s 

trade reporting requirements and thus 

reduce reporting errors. 

FINRA stated that the proposed rule 

change will be effective 90 days 

following the date of Commission 

approval. 

III. Commission’s Findings 

After carefully considering the 

proposed rule change, the Commission 

finds that it is consistent with the 

requirements of the Act and the rules 

and regulations thereunder applicable to 

a national securities association. In 

particular, the Commission finds that 

the proposal is consistent with Section 

15A(b)(6) of the Act,11 which requires, 

among other things, that FINRA rules 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.12

The Commission believes that the 

proposal is reasonably designed to 

clarify the interpretation and 

application of the current exception 

from the trade reporting requirements 

for transactions that are part of a 

distribution. The Commission believes 

that the proposal will: (1) Enhance 

market transparency by helping to 

ensure that transactions that are not part 

of an ‘‘unregistered secondary 

distribution,’’ such as large block trades, 

are properly reported; and (2) clarify 

members’ obligations with respect to the 

reporting of transfers of equity securities 

to create or redeem instruments such as 

ADRs and ETFs under FINRA trade 

reporting rules. 

In addition, FINRA will receive 

information regarding transactions that 

are part of an unregistered secondary 

distribution which will enhance 

FINRA’s ability to monitor compliance 

with the securities laws and rules. 

IV. Conclusion 

It Is Therefore Ordered, pursuant to 

Section 19(b)(2) of the Act,13 that the 

proposed rule change (SR–FINRA– 

2011–027), be, and it hereby is, 

approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.14

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. 2011–20171 Filed 8–8–11; 8:45 am] 

BILLING CODE 8011–01–P 

SMALL BUSINESS ADMINISTRATION 

[Disaster Declaration #12704 and #12705] 

Tennessee Disaster Number TN–00058 

AGENCY: U.S. Small Business 

Administration. 

ACTION: Amendment 1. 

SUMMARY: This is an amendment of the 

Presidential declaration of a major 

disaster for Public Assistance Only for 

the State of Tennessee (FEMA–4005– 

DR), dated 07/20/2011. 

Incident: Severe Storms, Straight-line 

Winds, Tornadoes, and Flooding. 

Incident Period: 06/18/2011 through 

06/24/2011. 

Effective Date: 08/01/2011. 

Physical Loan Application Deadline 

Date: 09/19/2011. 

Economic Injury (EIDL) Loan 

Application Deadline Date: 04/20/2012. 

ADDRESSES: Submit completed loan 

applications to: U.S. Small Business 

Administration, Processing and 

Disbursement Center, 14925 Kingsport 

Road, Fort Worth, TX 76155. 

FOR FURTHER INFORMATION CONTACT: A. 

Escobar, Office of Disaster Assistance, 

U.S. Small Business Administration, 

409 3rd Street, SW., Suite 6050, 

Washington, DC 20416. 

SUPPLEMENTARY INFORMATION: The notice 

of the President’s major disaster 

declaration for Private Non-Profit 

organizations in the State of Tennessee, 

dated 07/20/2011, is hereby amended to 

include the following areas as adversely 

affected by the disaster. 

Primary Counties: Anderson. 

All other information in the original 

declaration remains unchanged. 

(Catalog of Federal Domestic Assistance 

Numbers 59002 and 59008) 

James E. Rivera, 

Associate Administrator for Disaster 

Assistance. 

[FR Doc. 2011–20079 Filed 8–8–11; 8:45 am] 

BILLING CODE 8025–01–P 

DEPARTMENT OF STATE 

[Public Notice 7544] 

Announcement of Meeting of the 

International Telecommunication 

Advisory Committee 

SUMMARY: This notice announces a 

meeting of the International 

Telecommunication Advisory 

Subcommittees (ITAC) on August 22, 

2011, 10 a.m.–noon EDT, at the 

Department of State, 2201 C Street, NW., 

Washington, DC 20520, to seek advice 

from the telecommunications industry 

on: (a) The consultation of International 

Telecommunication Union, 

Telecommunication Standardization 

Sector Study Group 15, on whether draft 

Recommendation G.tp-oam (Operations, 

Administration and Maintenance 

mechanism for MPLS–TP in Packet 

Transport Network (PTN)) should be 

approved as a policy-level document; 

and (b) what policy position the United 

States should take at the December 2011 

Study Group 15 meeting on this issue. 

This meeting is open to the public as 

seating capacity allows. The public will 

have an opportunity to provide 

comments at this meeting. People 

desiring further information on this 

meeting or wishing to request 

reasonable accommodation may contact 

the Secretariat at minardje@state.gov. 

Dated: August 3, 2011. 

Marian R. Gordon, 

International Communications & Information 

Policy, U.S. Department of State . 

[FR Doc. 2011–20179 Filed 8–8–11; 8:45 am] 

BILLING CODE 4710–07–P 


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