42340 Federal Register / Vol. 83, No. 162 / Tuesday, August 21, 2018 / Notices 

69 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Exchange Act Release No. 63316 (Nov. 15, 

2010), 75 FR 71166 (Nov. 22, 2010) (File No. SR– 

FINRA–2010–056). 

4See Id. 

5 17 CFR 200.30 3(a)(12). 

6See Exchange Act Release No. 63933 (Feb. 18, 

2011), 76 FR 10629 (Feb. 25, 2011). 

7 17 CFR 201.430. 

8 17 CFR 201.431(e). 

9 17 CFR 201.431. 

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

2 17 CFR 240.19b–4. 

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 email to rule-comments@

sec.gov. Please include File Number SR– 

CboeBZX–2018–058 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–CboeBZX–2018–058. This 

file number should be included on the 

subject line if email 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 website (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 website 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 

10:00 a.m. and 3:00 p.m. Copies of the 

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number SR–CboeBZX–2018–058, and 

should be submitted on or before 

September 11, 2018. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.69

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–17957 Filed 8–20–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Securities Exchange Act of 1934; Release 

No. 34–83856/August 15, 2018] 

Order Granting Petition for Review and 

Scheduling Filing of Statements 

In the Matter of Financial Industry 

Regulatory Authority, Inc. 

For an Order Granting the Approval of 

Proposed Rule Change to Adopt FINRA 

Rule 1113 (Restriction Pertaining to New 

Member Applications) and to Amend the 

FINRA Rule 9520 Series (Eligibility 

Proceedings) (File No. SR–FINRA–2010– 

056) 

This matter comes before the 

Securities and Exchange Commission 

(‘‘Commission’’) on petition to review 

the approval, pursuant to delegated 

authority, of the Financial Industry 

Regulatory Authority, Inc. (‘‘FINRA’’) 

proposed rule change to adopt FINRA 

Rule 1113 (Restriction Pertaining to 

New Member Applications) and to 

amend the FINRA Rule 9520 Series 

(Eligibility Proceedings). 

On November 15, 2010, the 

Commission issued a notice of filing of 

the proposed rule change filed with the 

Commission pursuant to Section 

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

of 1934 (‘‘Exchange Act’’) 1 and Rule 

19b–4 2 thereunder.3 The proposed rule 

change was published for comment in 

the Federal Register on November 22, 

2010.4 On February 18, 2011, after 

consideration of the record for the 

proposed rule change, the Division of 

Trading and Markets (‘‘Division’’), 

pursuant to delegated authority,5

approved the proposed rule change 

(‘‘Approval Order’’).6

On March 4, 2011, pursuant to 

Commission Rule of Practice 430,7

Manuel P. Asensio (‘‘Asensio’’) filed a 

petition for review of the Approval 

Order. Pursuant to Commission Rule of 

Practice 431(e), the Approval Order was 

stayed by the filing with the 

Commission of a notice of intention to 

petition for review.8 Pursuant to Rule 

431 of the Rules of Practice,9 the 

petition for review of the Approval 

Order is granted. Further, the 

Commission hereby establishes that any 

party to the action or other person may 

file a written statement in support of or 

in opposition to the Approval Order on 

or before September 5. 

For the reasons stated above, it is 

hereby: 

Ordered that Asensio’s petition for 

review of the Division’s action to 

approve the proposed rule change by 

delegated authority be Granted; and 

It is further Ordered that any party or 

other person may file a statement in 

support of or in opposition to the action 

made pursuant to delegated authority on 

or before September 5. 

It is further Ordered that the Approval 

Order shall remain stayed pending 

further order by the Commission. 

By the Commission. 

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–17958 Filed 8–20–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–83850; File No. SR–FICC– 

2018–008] 

Self-Regulatory Organizations; Fixed 

Income Clearing Corporation; Notice of 

Filing of Proposed Rule Change To 

Apply Government Securities Division 

Corporation Default Rule to Sponsored 

Members and Make Other Changes 

August 15, 2018. 

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 August 6, 

2018, Fixed Income Clearing 

Corporation (‘‘FICC’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I, II and III 

below, which Items have been prepared 

by the clearing agency. The Commission 

is publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 


sradovich on DSK3GMQ082PROD with NOTICES
Federal Register / Vol. 83, No. 162 / Tuesday, August 21, 2018 / Notices 42341 

3Capitalized terms not defined herein are defined 

in the GSD Rules, available at http://

www.dtcc.com/∼/media/Files/Downloads/legal/ 

rules/ficc_gov_rules.pdf. 

4See 17 CFR 230.144A. 

5 15 U.S.C. 77a et seq. 

6Events that shall constitute a Corporation 

Default are described in Section (b) of GSD Rule 

22B. Supra note 3. 

7 GSD Rule 1 (Definitions) defines ‘‘Member’’ as 

a Comparison-Only Member or a Netting Member. 

Supra note 3. For purposes of this filing, the term 

‘‘Member’’ shall exclude Comparison-Only 

Members because Comparison-Only Members are 

not relevant in the context of Corporation Default 

provisions as such Members only participate in the 

Comparison System. 

8See Section (b)(ii)(A) of GSD Rule 22B. Supra 

note 3. 

9See Section (b)(ii)(B) of GSD Rule 22B. Supra 

note 3. 

10See Section (b)(ii)(C) of GSD Rule 22B. Supra 

note 3. 

11 12 U.S.C. 5381 et seq. 

12See Section (b)(ii)(D) of GSD Rule 22B. Supra 

note 3. 

I. Clearing Agency’s Statement of the 

Terms of Substance of the Proposed 

Rule Change 

The proposed rule change consists of 

modifications to FICC’s Government 

Securities Division (‘‘GSD’’) Rulebook 

(‘‘GSD Rules’’) 3 in order to apply GSD 

Rule 22B (Corporation Default) to 

Sponsored Members as well as make 

certain other changes, as described in 

greater detail below. 

II. Clearing Agency’s Statement of the 

Purpose of, and Statutory Basis for, the 

Proposed Rule Change 

In its filing with the Commission, the 

clearing agency 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 

clearing agency has prepared 

summaries, set forth in sections A, B, 

and C below, of the most significant 

aspects of such statements. 

(A) Clearing Agency’s Statement of the 

Purpose of, and Statutory Basis for, the 

Proposed Rule Change 

1. Purpose 

The purpose of this proposed rule 

change is to amend GSD Rule 3A 

(Sponsoring Members and Sponsored 

Members) in order to apply GSD Rule 

22B (Corporation Default) to Sponsored 

Members. In addition, the proposed rule 

change would make certain other 

changes, as described in greater detail 

below. 

(i) Background 

Under GSD Rule 3A (Sponsoring 

Members and Sponsored Members), 

Bank Netting Members that are wellcapitalized (as defined by the Federal 

Deposit Insurance Corporation’s 

applicable regulations) and have at least 

$5 billion in equity capital (Sponsoring 

Members) are permitted to sponsor 

qualified institutional buyers as defined 

by Rule 144A 4 under the Securities Act 

of 1933, as amended (‘‘Securities Act’’),5

and certain legal entities that, although 

not organized as entities specifically 

listed in paragraph (a)(1)(i) of Rule 144A 

under the Securities Act, satisfy the 

financial requirements necessary to be 

qualified institutional buyers as 

specified in that paragraph (Sponsored 

Members) into GSD membership. 

In connection with the onboarding of 

new Sponsoring Members and their 

respective Sponsored Members into 

GSD membership, FICC has received 

certain questions regarding the 

applicability of GSD Rule 22B 

(Corporation Default) to Sponsoring 

Members and their respective 

Sponsored Members. GSD Rule 22B 

provides that close out netting will be 

applied to obligations between GSD and 

its Members in the event that a 

Corporation Default occurs.6 GSD Rule 

22B currently does not apply to 

Sponsored Members but does apply to 

Sponsoring Members in their capacity 

as Netting Members. Not applying GSD 

Rule 22B to Sponsored Members creates 

an inconsistency with respect to the 

legal framework and process applicable 

to the Sponsored Members versus other 

GSD Members7 in the event that a 

Corporation Default occurs. 

(ii) Proposed Changes to the GSD Rules 

GSD Rule 3A (Sponsoring Members and 

Sponsored Members) 

FICC is proposing to add an 

introductory paragraph to Section 17 of 

GSD Rule 3A (Sponsoring Members and 

Sponsored Members) which makes it 

clear that for purposes of the Rules, 

Schedules, Interpretations and 

Statements of Policy referenced in 

Section 17 of GSD Rule 3A, Sponsoring 

Members and/or Sponsored Members, 

in their respective capacities as such, 

would be ‘‘Members.’’ Adding this 

clarifying paragraph would be helpful to 

Sponsoring Members and Sponsored 

Members because it would enable them 

to know which Rules, Schedules, 

Interpretations and Statements of Policy 

would govern their rights, liabilities and 

obligations in their respective capacities 

as Sponsoring Members and/or 

Sponsored Members. 

In order to ensure that all GSD 

Members are subject to a common, 

transparent legal framework in a 

Corporation Default situation, FICC is 

proposing to modify GSD Rule 3A so 

that GSD Rule 22B (Corporation Default) 

would apply to Sponsored Members in 

the same manner as it applies to all 

other GSD Members. Specifically, FICC 

proposes to add a new subsection (a) to 

Section 17 of GSD Rule 3A which 

would provide that GSD Rule 22B 

would apply to Sponsored Members. 

This proposed change would necessitate 

a technical change to renumber all 

subsequent subsections in Section 17 of 

GSD Rule 3A. 

GSD Rule 22B defines the term 

‘‘Corporation Default’’ and sets forth the 

close out netting process in the event of 

a Corporation Default. Section (b)(ii) of 

GSD Rule 22B provides that the 

following events shall constitute a 

Corporation Default: (A) the dissolution 

of FICC (other than pursuant to a 

consolidation, amalgamation, or 

merger),8 (B) the institution by FICC of 

a proceeding seeking a judgment of 

insolvency or bankruptcy or any other 

relief under any bankruptcy or 

insolvency law or other similar law 

affecting creditors’ rights, or the 

presentation of a petition for FICC’s 

winding-up or liquidation, or the 

making of a general assignment for the 

benefit of creditors,9 (C) the institution 

of a proceeding against FICC seeking a 

judgment of insolvency or bankruptcy 

or any other relief under any bankruptcy 

or insolvency law or other similar law 

affecting creditors’ rights, or the 

presentation of a petition for FICC’s 

winding-up or liquidation and, in each 

case, such proceeding or petition 

resulting in a judgement of insolvency 

or bankruptcy or the entry of an order 

for relief or the making of an order for 

FICC’s winding-up or liquidation,10 or 

(D) FICC seeking or becoming subject to 

the appointment of a receiver, trustee, or 

other similar official pursuant to the 

federal securities laws or Title II of the 

Dodd-Frank Wall Street Reform and 

Consumer Protection Act 11 for FICC or 

for all or substantially all of FICC’s 

assets.12

In addition, subject to the limitations 

set forth therein, Section (b)(i) of GSD 

Rule 22B provides that a Corporation 

Default is deemed to have occurred on 

the eighth (8th) day after FICC receives 

notice from a GSD Member of FICC’s 

failure to make, when due, an 

undisputed payment or delivery to such 

Member that is required to be made by 

FICC under the GSD Rules; provided 

that, such failure remains unremedied 


sradovich on DSK3GMQ082PROD with NOTICES
42342 Federal Register / Vol. 83, No. 162 / Tuesday, August 21, 2018 / Notices 

13See Section (b)(i) of GSD Rule 22B. Supra note 

3. 

14See Section (a) of GSD Rule 22B. Supra note 

3. 

15See Section (a) of GSD Rule 22B. Supra note 

3. 

16 Id. 

17 15 U.S.C. 78q–1(b)(3)(F). 

18 17 CFR 240.17Ad–22(e)(23)(i). 

19 15 U.S.C. 78q–1(b)(3)(F). 

throughout the seven (7) day period 

following FICC’s receipt of the notice.13

FICC’s provision of clearance and 

settlement services, including the timely 

settlement of Transactions in the 

ordinary course of business, are a part 

of FICC’s fundamental directive as a 

registered clearing agency under the 

Act. The seven (7) day period provided 

by Section (b)(i) of GSD Rule 22B is 

intended to address the circumstance 

where FICC experiences an operational 

issue that prevents it from completing 

such clearance and settlement services. 

In this circumstance, if FICC is not able 

to rectify the failure and satisfy its 

obligations in seven (7) days, GSD Rule 

22B requires that all Transactions which 

have been subject to Novation pursuant 

to the GSD Rules but have not yet 

settled and any rights and obligations of 

the parties thereto to be immediately 

terminated.14 The seven (7) day period 

is designed to avoid a systemic 

disruption in such circumstance. 

In connection with the proposed rule 

change to apply GSD Rule 22B to 

Sponsored Members, FICC is also 

proposing to add language to clarify that 

the commencement of the seven (7) day 

period preceding a potential 

Corporation Default, as provided by 

Section (b)(i) of GSD Rule 22B, would 

not modify FICC’s obligations to satisfy 

any undisputed payment or delivery 

obligation to a Sponsored Member 

under the GSD Rules, including any 

undisputed interest payment obligation 

owing to the Sponsored Member on an 

open Sponsored Member Trade, and 

that such obligation would continue to 

accrue in favor of the Sponsored 

Member for the duration of the seven (7) 

day period. Specifically, FICC is 

proposing to include in the proposed 

new subsection (a) to Section 17 of GSD 

Rule 3A language that makes it clear 

that FICC would be responsible for 

satisfying any undisputed payment or 

delivery obligation required to be made 

by FICC to a Sponsored Member under 

the GSD Rules, including, but not 

limited to, any undisputed interest 

payment obligation that accrues in favor 

of a Sponsored Member on a Sponsored 

Member Trade that has been subject to 

Novation pursuant to the GSD Rules but 

has not yet settled and for which FICC 

has received notice from such 

Sponsored Member of FICC’s failure to 

make, when due, such undisputed 

interest payment to such Sponsored 

Member within the meaning of Section 

(b)(i) of GSD Rule 22B. 

GSD Rule 22B (Corporation Default) 

FICC is proposing to amend the 

wording of the third sentence of Section 

(a) of GSD Rule 22B to provide greater 

clarity regarding the close out netting 

process upon a Corporation Default. 

Specifically, FICC is proposing to delete 

a reference to Section 2(a) of GSD Rule 

22A in that sentence and modify the 

reference to Section 2(b) of GSD Rule 

22A to specifically refer to Section 

2(b)(i) of GSD Rule 22A. 

FICC is proposing to delete the 

reference to Section 2(a) of GSD Rule 

22A in the third sentence of Section (a) 

of GSD Rule 22B because this reference 

is unnecessary and potentially 

confusing to GSD Members. The 

reference to Section 2(a) of GSD Rule 

22A is meant to set forth Transactions 

that would not be subject to the close 

out netting process in the event of a 

Corporation Default by referring (by way 

of analogy) to Transactions that FICC 

would not close out in the event FICC 

ceases to act for a GSD Member. 

However, Section (a) of GSD Rule 22B 

already contains a statement that makes 

it clear which Transactions are subject 

to the close out netting process in the 

event of a Corporation Default: ‘‘all 

Transactions which have been subject to 

Novation pursuant to these [GSD] Rules 

. . . .’’ 15 Therefore, the reference to 

Section 2(a) of GSD Rule 22A is not 

necessary and potentially confusing to 

GSD Members, and FICC proposes to 

delete it from the third sentence of 

Section (a) of GSD Rule 22B. 

In addition, FICC is proposing to 

modify the reference to Section 2(b) of 

GSD Rule 22A in the third sentence of 

Section (a) of GSD Rule 22B to 

specifically refer to Section 2(b)(i) of 

GSD Rule 22A. Section (a) of GSD Rule 

22B provides, in relevant part, that ‘‘the 

Board shall determine a single net 

amount owed by or to each Member 

. . . by applying the close out . . . 

procedures of Section 2(a) and (b) of 

[GSD] Rule 22A . . . .’’ 16 The reference 

to the entirety of Section 2(b) of GSD 

Rule 22A could cause confusion for 

GSD Members. This is because only 

subsection (i) of Section 2(b) of GSD 

Rule 22A, which speaks specifically to 

final net settlement positions, is 

relevant in the context of GSD Rule 22B. 

The rest of Section 2(b) of GSD Rule 

22A is not relevant. Therefore, FICC is 

proposing to amend the reference to 

point specifically to Section 2(b)(i) of 

GSD Rule 22A. 

FICC is also proposing to delete the ‘‘, 

to the extent applicable,’’ and ‘‘and 

application’’ language from the third 

sentence of Section (a) of GSD Rule 22B. 

FICC is proposing to delete the ‘‘, to the 

extent applicable,’’ language because 

Section 2(b)(i) of GSD Rule 22A would 

always be applicable for purposes of the 

Board determining a single net amount 

owed by or to each Member under GSD 

Rule 22B after a Corporation Default has 

occurred. Likewise, FICC is proposing to 

streamline the wording of the third 

sentence of Section (a) of GSD Rule 22B 

by deleting the ‘‘and application’’ 

language because it is extraneous 

wording that is unnecessary and not 

relevant in the context of Section 2(b)(i) 

of GSD Rule 22A. 

Lastly, FICC is proposing a change to 

the third sentence of Section (a) of GSD 

Rule 22B to make it clear that, although 

GSD Rule 22B would apply to 

Sponsored Members pursuant to this 

proposal, the loss allocation provisions 

of GSD Rule 4 (Clearing Fund and Loss 

Allocation) referenced in GSD Rule 22B 

would not apply to Sponsored 

Members. Specifically, FICC is 

proposing a clarifying change in that 

sentence to add ‘‘, to the extent such 

provisions are otherwise applicable to 

such Member’’ following the reference 

in that sentence to the loss allocation 

provisions in GSD Rule 4. This 

proposed change is consistent with 

Section 12(a) of GSD Rule 3A, which 

provides that Sponsored Members are 

not obligated for allocations, pursuant to 

GSD Rule 4, of loss or liability incurred 

by FICC. 

2. Statutory Basis 

FICC believes this proposal is 

consistent with the requirements of the 

Act, and the rules and regulations 

thereunder applicable to a registered 

clearing agency. Specifically, FICC 

believes this proposal is consistent with 

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

Rule 17Ad–22(e)(23)(i),18 as 

promulgated under the Act, for the 

reasons described below. 

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

requires, in part, that the GSD Rules be 

designed to ‘‘promote the prompt and 

accurate clearance and settlement of 

securities transactions.’’ 19 FICC believes 

that the proposed rule change to apply 

GSD Rule 22B to Sponsored Members in 

the same manner as it applies to all 

other GSD Members would help to 

ensure that all GSD Members are subject 

to a common, transparent legal 

framework in a Corporation Default 

situation. Having a common, 

transparent legal framework in a 


sradovich on DSK3GMQ082PROD with NOTICES
Federal Register / Vol. 83, No. 162 / Tuesday, August 21, 2018 / Notices 42343 

20 17 CFR 240.17Ad–22(e)(23)(i). 

21 15 U.S.C. 78q–1(b)(3)(I). 

22 Id. 

23 15 U.S.C. 78q–1(b)(3)(F). 

24 15 U.S.C. 78q–1(b)(3)(I). 

25 Id. 

26 Id. 

27 Id. 

Corporation Default situation would 

facilitate an orderly close out netting of 

obligations between FICC and the GSD 

Members in the event that a Corporation 

Default occurs. An orderly close out 

netting of obligations between FICC and 

the GSD Members would provide clarity 

and certainty to market participants in 

a time of distress regarding their rights 

and obligations and the rights and 

obligations of FICC. Clarity and 

certainty of the rights and obligations of 

market participants as well as rights and 

obligations of FICC would in turn 

promote the prompt and accurate 

clearance and settlement of securities 

transactions. Therefore, FICC believes 

that the proposed rule change to apply 

GSD Rule 22B to Sponsored Members in 

the same manner as it applies to all 

other GSD Members is consistent with 

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

Rule 17Ad–22(e)(23)(i) under the Act 

requires FICC to establish, implement, 

maintain and enforce written policies 

and procedures reasonably designed to 

publicly disclose all relevant rules and 

material procedures.20 FICC believes 

that the proposed rule changes to (i) 

amend the third sentence of Section (a) 

of GSD Rule 22B by (A) deleting the 

unnecessary and potentially confusing 

reference to Section 2(a) of GSD Rule 

22A and (B) modifying the reference to 

Section 2(b) of GSD Rule 22A to 

specifically refer to Section 2(b)(i) of 

GSD Rule 22A, and (ii) make clarifying 

and/or technical changes in GSD Rule 

3A and GSD Rule 22B, would ensure 

that the GSD Rules remain clear and 

accurate to GSD Members. Having clear 

and accurate GSD Rules would facilitate 

GSD Members’ understanding of those 

rules and provide GSD Members with 

increased predictability and certainty 

regarding their obligations. As such, 

FICC believes that these proposed rule 

changes are consistent with Rule 17Ad– 

22(e)(23)(i) under the Act. 

(B) Clearing Agency’s Statement on 

Burden on Competition 

FICC believes that the proposed rule 

change to apply GSD Rule 22B to 

Sponsored Members could have an 

impact on competition. This is because 

the proposed change to apply GSD Rule 

22B to Sponsored Members would (i) 

provide for the immediate termination 

upon a Corporation Default of all 

Transactions to which a Sponsored 

Member is a party and which have been 

subject to Novation pursuant to GSD 

Rules but have not yet settled and (ii) 

require a Sponsored Member to provide 

FICC with a 7-day period under the 

circumstances described in Section 

(b)(i) of GSD Rule 22B before such 

termination can occur. FICC believes 

this proposed rule change could both 

promote competition and burden 

competition. The proposed rule change 

to apply GSD Rule 22B to Sponsored 

Members could promote competition by 

ensuring that GSD Members are subject 

to a common, transparent legal 

framework in a Corporation Default. 

Applying the close out netting process 

and the 7-day period requirement to 

Sponsored Members in the same 

manner as they apply to all other GSD 

Members would help ensure that, in the 

unlikely event that FICC becomes 

insolvent or defaults in its obligations to 

GSD Members, all GSD Members follow 

the same procedures in closing out their 

positions and netting them against 

FICC’s obligations to the GSD Members. 

Requiring that all GSD Members follow 

the same procedures in closing out their 

positions in a Corporation Default 

would help promote competition 

because all GSD Members would be 

treated alike during a stressed market 

condition. Conversely, the propose rule 

change to apply GSD Rule 22B to 

Sponsored Members could burden 

competition by subjecting the 

Sponsored Members to the close out 

netting process and the 7-day period 

requirement. However, FICC believes 

any burden on competition that is 

created by this proposed rule change 

would be necessary and appropriate in 

furtherance of the purposes of the Act, 

as permitted by Section 17A(b)(3)(I) of 

the Act.21

FICC believes any burden on 

competition that is created by the 

proposed rule change to apply GSD Rule 

22B to Sponsored Members would be 

necessary in furtherance of the purposes 

of the Act 22 because the GSD Rules are 

required to be designed to ‘‘promote the 

prompt and accurate clearance and 

settlement of securities transactions.’’ 23

As described above, the proposed rule 

change to apply GSD Rule 22B to 

Sponsored Members would help to 

ensure that all GSD Members are subject 

to a common, transparent legal 

framework in a Corporation Default. 

Having a common, transparent legal 

framework in a Corporation Default 

situation would facilitate an orderly 

close out netting of obligations between 

FICC and the GSD Members in the event 

that a Corporation Default occurs. An 

orderly close out netting of obligations 

between FICC and the GSD Members 

would provide clarity and certainty to 

market participants in a time of distress 

regarding their rights and obligations 

and the rights and obligations of FICC. 

Clarity and certainty of the rights and 

obligations of market participants as 

well as the rights and obligations of 

FICC would in turn promote the prompt 

and accurate clearance and settlement of 

securities transactions. Therefore, FICC 

believes any burden that is created by 

the proposed rule change to apply GSD 

Rule 22B to Sponsored Members would 

be necessary in furtherance of the 

purposes of the Act, as permitted by 

Section 17A(b)(3)(I) of the Act.24

FICC also believes any burden on 

competition that is created by the 

proposed rule change to apply GSD Rule 

22B to Sponsored Members would be 

appropriate in furtherance of the 

purposes of the Act.25 As described 

above, the proposed rule change to 

apply GSD Rule 22B to Sponsored 

Members would subject Sponsored 

Members to the close out netting 

process and the 7-day period 

requirement. Subjecting Sponsored 

Members to the close out netting 

process would facilitate an orderly close 

out netting of obligations between FICC 

and all GSD Members (including the 

Sponsored Members) in the event that a 

Corporation Default occurs. Requiring 

Sponsored Members to provide FICC 

with a 7-day period under the 

circumstances described in Section 

(b)(i) of GSD Rule 22B would help to 

avoid a systemic disruption under such 

circumstances. Therefore, FICC believes 

any burden that is created by the 

proposed rule change to apply GSD Rule 

22B to Sponsored Members would be 

appropriate in furtherance of the 

purposes of the Act, as permitted by 

Section 17A(b)(3)(I) of the Act.26

FICC does not believe that the 

proposed rule changes to (i) amend the 

third sentence of Section (a) of GSD 

Rule 22B by (A) deleting the 

unnecessary and potentially confusing 

reference to Section 2(a) of GSD Rule 

22A and (B) modifying the reference to 

Section 2(b) of GSD Rule 22A to 

specifically refer to Section 2(b)(i) of 

GSD Rule 22A, and (ii) make clarifying 

and/or technical changes in GSD Rule 

3A and GSD Rule 22B, would have an 

impact on competition.27 These changes 

would simply provide specificity, 

clarity and additional transparency 

within the GSD Rules and not affect 

GSD Members’ rights and obligations. 

As such, FICC believes that these 


sradovich on DSK3GMQ082PROD with NOTICES
42344 Federal Register / Vol. 83, No. 162 / Tuesday, August 21, 2018 / Notices 

28 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See proposed Rule 29.11, Interpretation and 

Policy .01. 

proposed rule changes would not have 

any impact on competition. 

(C) Clearing Agency’s Statement on 

Comments on the Proposed Rule 

Change Received From Members, 

Participants, or Others 

FICC reviewed the proposed rule 

change with its Sponsoring Members in 

order to benefit from their expertise on 

the Sponsored Members. Written 

comments relating to this proposed rule 

change have not been received from the 

Sponsoring Members or any other 

person. 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 

Within 45 days of the date of 

publication of this notice in the Federal 

Register or within such longer period 

up to 90 days (i) as the Commission may 

designate 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 email to rule-comments@

sec.gov. Please include File Number SR– 

FICC–2018–008 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549. 

All submissions should refer to File 

Number SR–FICC–2018–008. This file 

number should be included on the 

subject line if email 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 website (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 website 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 

10:00 a.m. and 3:00 p.m. Copies of the 

filing also will be available for 

inspection and copying at the principal 

office of FICC and on DTCC’s website 

(http://dtcc.com/legal/sec-rulefilings.aspx). All comments received 

will be posted without change. Persons 

submitting comments are cautioned that 

we do not redact or edit personal 

identifying information from comment 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File Number SR–FICC– 

2018–008 and should be submitted on 

or before September 11, 2018. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.28

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–17956 Filed 8–20–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–83853; File No. SR– 

CboeEDGX–2018–035] 

Self-Regulatory Organizations; Cboe 

EDGX Exchange, Inc.; Notice of Filing 

of a Proposed Rule Change To Permit 

the Listing and Trading of Options 

That Overlie the Mini-SPX Index, the 

Russell 2000 Index, and the Dow Jones 

Industrial Average 

August 15, 2018. 

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

Securities Exchange Act of 1934 (the 

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

notice is hereby given that on August 

10, 2018, Cboe EDGX Exchange, Inc. 

(the ‘‘Exchange’’ or ‘‘EDGX’’) filed with 

the Securities and Exchange 

Commission (‘‘Commission’’) the 

proposed rule change as described in 

Items I, II and III below, which Items 

have been prepared by the Exchange. 

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 

The Exchange filed a proposal to 

permit the listing and trading of options 

that overlie the Mini-SPX Index (‘‘XSP 

options’’), the Russell 2000 Index (‘‘RUT 

options’’), and the Dow Jones Industrial 

Average (‘‘DJX options’’). 

The text of the proposed rule change 

is available at the Exchange’s website at 

www.markets.cboe.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 

Exchange has prepared summaries, set 

forth in Sections A, B, and C below, of 

the most significant parts of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The proposed rule change amends the 

Exchange’s index rules to permit the 

listing and trading of XSP options, RUT 

options, and DJX options. XSP options 

are options on the Mini SPX Index, the 

current value of which is 1/10th the 

value of the Standard & Poor’s 500 Stock 

Index reported by the reporting 

authority.3 RUT options are options on 

the Russell 2000 Index. DJX options are 

options based on 1/100th of the value of 

the Dow Jones Industrial Average. The 

index underlying each of XSP, RUT, and 

DJX options satisfies the criteria of a 

broad-based index for the initial listing 

of options on that index, as set forth in 

Rule 29.3(b): 

(1) The index is broad-based index, as 

defined in Rule 29.2(j) (an index 

designed to be representative of a stock 

market as a whole or of a range of 

companies in unrelated industries); 

(2) The options are designated as 

A.M.-settled; 


sradovich on DSK3GMQ082PROD with NOTICES