Federal Register / Vol. 72, No. 88 / Tuesday, May 8, 2007 / Notices 26191 

6 15 U.S.C. 78f(b). 

7 15 U.S.C. 78f(b)(4). 

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

9 17 CFR 240.19b–4(f)(2). 

10 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3Securities Exchange Act Release No. 55047 (Jan. 

5, 2007), 72 FR 1571. 

trade as part of the Penny Pilot. QQQQ 

has now been included in the Penny 

Pilot and therefore the Exchange will no 

longer assess a Marketing Charge on any 

trades in this issue. The Exchange also 

proposes making minor technical 

changes to this section of the Schedule 

with this filing. 

Royalty Fees 

In an effort to reduce costs associated 

with trading on NYSE Arca, the 

Exchange proposes to eliminate certain 

Royalty Fees. The Exchange proposes to 

eliminate the $0.10 per contract Royalty 

Fee for options traded on the following 

ETFs; the Financial Select Sector SPDR 

(XLF), the Technology Select Sector 

SPDR (XLK), and the Healthcare Select 

Sector SPRD (XLV). By eliminating 

these fees, the Exchange hopes to attract 

additional order flow and encourage 

more trading by market participants. 

Vendor Equipment Room Usage Fee 

This fee covers the use of server 

cabinets in the vendor equipment room 

located adjacent to the trading floor. 

This fee will now be called the Vendor 

Equipment Room Cabinet Fee, and the 

footnote associate with the fee will now 

be moved into the body of the Schedule. 

These minor changes simply serve to 

offer clarity as to how this fee is 

assessed, and makes no change to the 

fee itself. 

Technical and Formatting Changes 

The Exchange proposes making minor 

changes to the schedule in order correct 

certain typographical and grammatical 

errors and to make certain formatting 

changes. These changes will have no 

effect on existing fees or the application 

of the existing fees. 

2. Statutory Basis 

The Exchange believes that the 

proposal is consistent with Section 

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

6(b)(4),7 in particular, in that it provides 

for the equitable allocation of dues, fees 

and other charges among its members. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purpose of the Act. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants or Others 

Written comments on the proposed 

rule change were neither solicited nor 

received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing rule change is subject to 

Section 19(b)(3)(A)(ii) of the Act 8 and 

Rule 19b–4(f)(2) thereunder 9 because it 

establishes or changes a due, fee, or 

other charge applicable only to a 

member imposed by the self-regulatory 

organization. Accordingly, the proposal 

is effective upon Commission receipt of 

the filing. At any time within 60 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 e-mail to rulecomments@sec.gov. Please include File 

Number SR–NYSEArca–2007–35 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–NYSEArca–2007–35. 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 filings will also be 

available for inspection and copying at 

the principal office of the Exchange. 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–NYSEArca–2007–35 and should be 

submitted by May 29, 2007. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.10

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–8732 Filed 5–7–07; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55686; File No. SR–OCC–

2006–21] 

Self-Regulatory Organizations; The 

Options Clearing Corporation; Order 

Granting Approval of a Proposed Rule 

Change Relating to Membership 

Requirements 

May 1, 2007. 

I. Introduction 

On November 15, 2006, The Options 

Clearing Corporation (‘‘OCC’’) filed with 

the Securities and Exchange 

Commission pursuant to Section 

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

of 1934 1 and Rule 19b–4 thereunder 2 a 

proposed rule change to modify certain 

OCC By-Laws and Rules relating to 

membership requirements. The 

proposed rule change was published for 

comment in the Federal Register on 

January 12, 2007.3 No comment letters 

were received. This order approves the 

proposal. 


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26192 Federal Register / Vol. 72, No. 88 / Tuesday, May 8, 2007 / Notices 

4CDS is the successor organization to Canadian 

Depository for Securities Ltd. OCC’s By-Law 

definition of CDS is being amended to reflect this 

organizational change. 

5OCC surveyed appointed clearing members that 

effect NSCC settlements for nonaffiliated clearing 

members and CDS to ascertain their views regarding 

the proposed change in the notice period for 

terminating such appointments. There were no 

objections to the proposed change. 

6Conforming changes have been made to the 

related appointment forms, which are attached as 

Exhibits 5A and 5B to the proposed rule filing. 

7 15 U.S.C. 78q–1(b)(3)(F). 

8 15 U.S.C. 78q–1. 

9 In approving the proposed rule change, the 

Commission considered the proposal’s impact on 

efficiency, competition and capital formation. 15 

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

10 17 CFR 200.30–3(a)(12). 

II. Description of the Proposal 

1. Interpretation and Policy .03 

Prior to this rule change, 

Interpretation and Policy .03 to Article 

V, Section 1, of OCC’s By-Laws required 

applicants for membership to employ 

two key operations employees on a fulltime basis. This requirement was 

intended to ensure that an applicant 

maintains sufficient staff to fulfill its 

obligations as a clearing member. 

However, several recent applicants for 

clearing membership have had difficulty 

meeting this requirement because their 

entire staff was employed by an affiliate 

of the applicant (i.e., a parent or related 

organization) rather than by the 

applicant itself. While these applicants 

entered into employee leasing 

arrangements in order to comply with 

OCC’s policy, OCC decided to 

reevaluate the policy in light of the fact 

that it had proved burdensome to a 

number of applicants. 

OCC understands that it is not 

uncommon for some entities of an 

affiliated corporate group to outsource 

certain or all functions to another entity 

of the corporate group and let the latter 

be the sole employer of the people who 

perform those functions. In situations of 

that nature, OCC concluded that there is 

not the same reason to be concerned 

about whether the applicant will have 

adequate staffing as in cases where the 

applicant relies on an unaffiliated third 

party for staffing. OCC therefore is 

modifying its policy in order to provide 

greater flexibility to recognize this 

alternative employment structure by 

amending Interpretation and Policy .03 

to Article V, Section 1, to permit the 

Membership/Risk Committee 

(‘‘Committee’’) to waive the requirement 

that an applicant employ two key 

operations employees on a full-time 

basis if the daily operations of the 

applicant are conducted by staff 

employed on a full-time basis by an 

entity affiliated with such applicant. 

OCC believes that the Committee’s 

authority to waive such requirement is 

consistent with its existing authority to 

waive the requirement that an applicant 

employ at least one full-time person 

who is registered as a ‘‘Limited 

Principal—Financial and Operations’’ or 

comparable registration requirement, as 

applicable. 

2. Rule 309 

OCC is also amending Rule 309 by 

adding new paragraph (f) to clarify that 

if an operationally capable clearing 

member proposes to become a managed 

clearing member (i.e., outsource certain 

of its obligations as a clearing member 

to another clearing member [‘‘managing 

clearing member’’]), the applicant must 

obtain prior approval from the 

Committee. Prior to this rule change, 

Interpretation and Policy .04 to Rule 309 

primarily contemplated the use of 

facilities management agreements by 

applicants for membership rather than 

by existing clearing members. 

Nonetheless, OCC has always 

interpreted its By-Laws and Rules as 

requiring prior Committee review and 

approval of all facilities management 

agreements, including those proposed to 

be entered into by operationally capable 

clearing members. The amendment to 

Rule 309 makes this interpretation 

explicit. 

3. Rule 901 

OCC is amending Rule 901 to provide 

that a clearing member’s appointment of 

another clearing member or CDS 

Clearing and Depository Services Inc. 

(‘‘CDS’’) 4 for purposes of effecting 

settlements of exercised or matured 

cleared securities may not be terminated 

until after the 30th calendar day 

following notice to OCC of such 

termination.5 Prior to this rule change, 

clearing members were required to 

provide three business days notice of 

terminating such appointments. 

However, OCC concluded that three 

business days was insufficient time for 

OCC to determine whether or not the 

clearing member has made appropriate 

alternative settlement arrangements. 

Accordingly, OCC is changing the notice 

period to be consistent with the notice 

period required to advise OCC of the 

termination of a facilities management 

agreement.6

III. Discussion 

The Commission finds that the 

proposed rule change is consistent with 

the requirements of the Act and the 

rules and regulations thereunder 

applicable to a registered clearing 

agency. In particular, the Commission 

believes the proposal is consistent with 

the requirements of Section 

17A(b)(3)(F),7 which, among other 

things, requires the rules of a clearing 

agency to assure the safeguarding of 

securities and funds that are in the 

custody or control of the clearing agency 

or for which it is responsible. Although 

OCC is giving the Membership/Risk 

Committee the ability to waive the 

requirement that an applicant employ 

two key operations employees on a fulltime basis, the revised requirement that 

allows an applicant to have full-time 

operational staff employed by an 

affiliate of the applicant should provide 

OCC with the practical flexibility to 

permit such arrangements and still have 

reasonable assurance that its members 

are operationally sound. Moreover, 

specifying that a clearing member’s 

appointment of another clearing entity 

to effect settlement on its behalf can not 

be terminated until after the 30th 

calendar day following notice to OCC of 

such termination should provide OCC 

with an appropriate amount of time in 

which to determine that the clearing 

member has made alternative settlement 

arrangements. 

IV. Conclusion 

On the basis of the foregoing, the 

Commission finds that the proposal is 

consistent with the requirements of the 

Act and in particular with the 

requirements of Section 17A of the Act 8

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–

OCC–2006–21) be, and hereby is, 

approved.9

For the Commission by the Division of 

Market Regulation, pursuant to delegated 

authority.10

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–8735 Filed 5–7–07; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55689; File No. SR–Phlx–

2007–36] 

Self-Regulatory Organizations; 

Philadelphia Stock Exchange, Inc.; 

Notice of Filing and Immediate 

Effectiveness of Proposed Rule 

Change Relating to Quoting 

Obligations in Long Term Options 

May 1, 2007. 

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

Securities Exchange Act of 1934 


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