Federal Register / Vol. 72, No. 44 / Wednesday, March 7, 2007 / Notices 10277 

3See BOX Rule Chapter I, Section 1(a)(40) for 

definition of ‘‘Options Participants.’’

4 15 U.S.C. 78f(b). 

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

6 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). 

4Rule 5, Section 6 of the GSD rules states in 

pertinent part, ‘‘Each Comparison generated by the 

Corporation * * * shall evidence a valid, binding, 

and enforceable contract in respect of such 

Compared Trade.’’

designated time limit of Chapter VI, 

Section 6(b)(ii)–(iii); and in Section 2(i) 

for Inter-Market Linkage trade-through 

violations of Chapter XII, Section 3(a). 

The sanctions imposed would include 

the application of a fine for each 

violation and an increased fine amount 

for repeat violations. In the instance of 

a trade-through violation, the rule 

proposal would also allow BOX 

Regulation to require the Options 

Participant 3 to disgorge any gains from 

transactions in violation of the tradethrough rules. 

The Exchange believes that the 

proposed rule changes would strengthen 

its ability to carry out its oversight 

responsibilities as a self-regulatory 

organization and reinforce its 

surveillance and enforcement functions. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

Section 6(b) of the Act,4 in general, and 

furthers the objectives of Section 6(b)(5) 

of the Act,5 in particular, in that it 

would promote just and equitable 

principles of trade, facilitate 

transactions in securities, remove 

impediments to and perfect the 

mechanisms of a free and open market 

and a national market system, and 

protect investors and the public interest. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change would 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 

The Exchange has neither solicited 

nor received comments on the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Within 35 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 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 e-mail to 

rule-comments@sec.gov. Please include 

File Number SR–BSE–2006–11 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Nancy M. Morris, Secretary, 

Securities and Exchange Commission, 

10 F Street, NE., Washington, DC 

20549–1090. 

All submissions should refer to File 

Number SR–BSE–2006–11. 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 inspection and copying in 

the Commission’s Public Reference 

Room. Copies of such filing also will be 

available for inspection and copying at 

the principal office of the BSE. 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–BSE–2006–11 and should 

be submitted on or before March 28, 

2007. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.6

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–4041 Filed 3–6–07; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55370; File No. SR–FICC–

2007–01] 

Self-Regulatory Organizations; Fixed 

Income Clearing Corporation; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule To Interpret Rule 5 

Section 6 of the Government Securities 

Division Rules 

February 28, 2007. 

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

Securities Exchange Act of 1934 

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

January 22, 2007, the Fixed Income 

Clearing Corporation (‘‘FICC’’) filed 

with the Securities and Exchange 

Commission (‘‘Commission’’) the 

proposed rule change described in Items 

I, II, and III 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 purpose of the rule change is to 

interpret Rule 5, Section 6 of the 

Government Securities Division 

(‘‘GSD’’) rules.4

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 

comments it received on the proposed 

rule change. The text of these statements 

may be examined at the places specified 


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10278 Federal Register / Vol. 72, No. 44 / Wednesday, March 7, 2007 / Notices 

5The Commission has modified the text of the 

summaries prepared by FICC. 

6Members that submit trades for comparison-only 

processing are not subject to clearing fund, fundsonly settlement, and securities settlement 

obligations under FICC’s rules with respect to such 

comparison-only trades. 

7 15 U.S.C. 78q–1. 

8 15 U.S.C. 78s(b)(3)(A)(i). 

9 17 CFR 240.19b–4(f)(1). 10 17 CFR 200.30–3(a)(12). 

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.5

(A) Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

Rule 5, Section 6 of the GSD rules 

states in pertinent part that each 

comparison generated by GSD evidences 

a valid, binding, and enforceable 

contract with respect to such compared 

trade. This provision confirms the terms 

and conditions of the trade and the 

parties’ agreement thereto and 

authorizes FICC to take further action 

with respect to the compared trade if 

required. 

GSD members are always subject to 

all of the rights and obligations that 

arise under GSD’s rules with respect to 

trades they submit to GSD. For example, 

if a trade is submitted for comparisononly processing, the submitting 

members, whether or not they executed 

the trade, are subject to the obligation to 

pay applicable fees and to other 

obligations that arise under the rules.6 If 

a trade is submitted for netting, the 

submitting members, whether or not 

they executed the trade, are subject to 

the obligation to pay applicable fees, to 

post clearing fund collateral, and to 

satisfy funds-only, securities settlement, 

and other obligations that arise under 

the rules. The submitting members, and 

not the entity for which they are 

submitting trades, also have all the 

rights against FICC for novated 

settlement obligations. However, GSD’s 

rules do not alter rights and obligations 

between a member and its customer 

outside of the clearing process. 

For example, a hedge fund that is not 

a member of GSD executes a trade with 

a dealer (‘‘Dealer A’’) that is a GSD 

netting member. The hedge fund then 

notifies its prime broker (‘‘Prime 

Broker’’) that is also a GSD netting 

member about the trade that the Prime 

Broker is to settle on the hedge fund’s 

behalf. Both Dealer A and the Prime 

Broker submit the trade to GSD. While 

Dealer A and Prime Broker are subject 

to all of the rights and obligations that 

arise under GSD’s rules with respect to 

that trade, GSD’s rules do not eliminate 

any rights and obligations that arise 

between Prime Broker and the hedge 

fund or Dealer A and the hedge fund 

outside of the clearing process. 

The proposed rule change is 

consistent with Section 17A of the Act,7

as amended, because it constitutes an 

interpretation with respect to the 

meaning of an existing rule. 

(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 

propos ed rule change have not yet 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 8 and Rule 19b–4(f)(1) 9 thereunder 

because the rule constitutes an 

interpretation with respect to the 

meaning of an existing rule. At any time 

within sixty days of the filing of the 

proposed rule change, the Commission 

may summarily abrogate 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–2007–01 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Nancy M. Morris, Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–1090. 

All submissions should refer to File 

Number SR–FICC–2007–01. 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 

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 inspection and copying in 

the Commission’s Public Reference 

Section, 100 F Street, NE., Washington, 

DC 20549. 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.ficc.com/commondocs/rule.filings/ 

rule.filing.07-01.pdf. 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–FICC–

2007–01 and should be submitted on or 

before March 28, 2007. 

For the Commission by the Division of 

Market Regulation, pursuant to delegated 

authority.10

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–3932 Filed 3–6–07; 8:45 am] 

BILLING CODE 8010–01–P 


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