14848 Federal Register / Vol. 77, No. 49 / Tuesday, March 13, 2012 / Notices 

5NYSE charges $10,000 per month for 10Gb LCN 

(Liquidity Center Network) Connection. See https:// 

usequities.nyx.com/sites/usequities.nyx.com/files/ 

nyse_arca_marketplace_fees_1.3.2012.pdf, page 13. 6 15 U.S.C. 78s(b)(3)(A)(ii). 

7 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

connection will provide Members the 

ability to increase data transmission and 

reduce latency, thereby enhancing their 

operations. The Exchange believes the 

proposed fees for this new connection to 

the Exchange are reasonable because the 

fees charged will allow the Exchange to 

cover the hardware, installation, testing 

and connection costs to maintain and 

manage the enhanced connection. The 

proposed fees will allow the Exchange 

to recoup costs associated with 

providing the low latency 10 GB 

connection and provide the Exchange a 

profit while providing Members the 

possibility of reducing the number of 

their connections to the Exchange. The 

Exchange believes the proposed fees are 

reasonable in that they are lower than 

the fees charged by other trading venues 

for similar connectivity services.5

The Exchange also believes the 

proposed 10 GB fee for connectivity to 

the Exchange is equitably allocated in 

that all Exchange Members that 

voluntarily select this service option 

will be charged the same amount to 

maintain and manage the enhanced 

connection. All Exchange Members 

have the option to select this voluntary 

network connection. 

The Exchange also believes the 

proposed 10 GB fee for connectivity to 

the Exchange is not unfairly 

discriminatory in that all Exchange 

Members will have the option of 

selecting the 10 GB connection to the 

Exchange, and there is no differentiation 

among Members with regard to the fees 

charged for this option. 

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 

Exchange 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 

The foregoing rule change has become 

effective pursuant to Section 

19(b)(3)(A)(ii) of the Exchange Act.6 At 

any time within 60 days of the filing of 

such proposed rule change, the 

Commission summarily may 

temporarily suspend 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 Exchange Act. If the 

Commission takes such action, the 

Commission shall institute proceedings 

to determine whether the proposed rule 

should be approved or 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 Exchange 

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 rulecomments@sec.gov. Please include File 

Number SR–ISE–2012–09 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–ISE–2012–09. 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 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 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; 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–ISE– 

2012–09 and should be submitted on or 

before April 3, 2012. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.7

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2012–5984 Filed 3–12–12; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–66528; File No. SR–FINRA– 

2012–014] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Notice of Filing and 

Order Granting Accelerated Approval 

of Proposed Rule Change To Extend 

the Implementation of FINRA Rule 4240 

(Margin Requirements for Credit 

Default Swaps) 

March 7, 2012. 

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 February 

23, 2012, Financial Industry Regulatory 

Authority, Inc. (‘‘FINRA’’) filed with the 

Securities and Exchange Commission 

(‘‘SEC’’ or ‘‘Commission’’) the proposed 

rule change as described in Items I and 

II, below, which Items have been 

substantially prepared by FINRA. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. For the 

reasons discussed below, the 

Commission is granting accelerated 

approval of the proposed rule change. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

FINRA is proposing to extend to July 

17, 2012 the implementation of FINRA 

Rule 4240, retroactively from January 

17, 2012. FINRA Rule 4240 implements 

an interim pilot program with respect to 

margin requirements for certain 

transactions in credit default swaps. 

The text of the proposed rule change 

is available on FINRA’s Web site at 

mstockstill on DSK4VPTVN1PROD with NOTICES

Federal Register / Vol. 77, No. 49 / Tuesday, March 13, 2012 / Notices 14849 

3See Securities Exchange Act Release No. 59955 

(May 22, 2009), 74 FR 25586 (May 28, 2009) (Notice 

of Filing and Order Granting Accelerated Approval 

of Proposed Rule Change, as Modified by 

Amendment No. 1 [File No. SR–FINRA–2009–012]) 

(‘‘Approval Order’’). 

4See Securities Exchange Act Release No. 64892 

(July 14, 2011), 76 FR 43360 (July 20, 2011) (Notice 

of Filing and Order Granting Accelerated Approval 

of Proposed Rule Change [File No. SR–FINRA– 

2011–034]). 

5See supra note 3, at 25588–89. 

6 In early 2009, the Commission enacted interim 

final temporary rules providing enumerated 

exemptions under the federal securities laws for 

certain CDS to facilitate the operation of one or 

more central clearing counterparties in such CDS. 

See Securities Act Release No. 8999 (January 14, 

2009), 74 FR 3967 (January 22, 2009) (Temporary 

Exemptions for Eligible Credit Default Swaps To 

Facilitate Operation of Central Counterparties To 

Clear and Settle Credit Default Swaps); Securities 

Act Release No. 9063 (September 14, 2009), 74 FR 

47719 (September 17, 2009) (Extension of 

Temporary Exemptions for Eligible Credit Default 

Swaps to Facilitate Operation of Central 

Counterparties to Clear and Settle Credit Default 

Swaps); Securities Act Release No. 9158 (November 

19, 2010), 75 FR 72660 (November 26, 2010) 

(Extension of Temporary Exemptions for Eligible 

Credit Default Swaps to Facilitate Operation of 

Central Counterparties to Clear and Settle Credit 

Default Swaps). See also Securities Exchange Act 

Release No. 59578 (March 13, 2009), 74 FR 11781 

(March 19, 2009) (Order Granting Temporary 

Exemptions in Connection with Request of Chicago 

Mercantile Exchange Inc. and Citadel Investment 

Group, L.L.C. Related to Central Clearing of Credit 

Default Swaps, and Request for Comments); 

Securities Exchange Act Release No. 59165 

(December 24, 2008), 74 FR 133 (January 2, 2009) 

(Order Pursuant to Section 36 of the Securities 

Exchange Act of 1934 Granting Temporary 

Exemptions from Sections 5 and 6 of the Exchange 

Act for Broker-Dealers and Exchanges Effecting 

Transactions in Credit Default Swaps). 

7Pub. L. 111–203, 124 Stat. 1376 (2010). 

8The terms ‘‘swap’’ and ‘‘security-based swap’’ 

are defined in Sections 721 and 761 of the DoddFrank Act. The Commission and the CFTC jointly 

have proposed to further define these terms. See 

Securities Exchange Act Release No. 64372 (Apr. 

29, 2011), 76 FR 29818 (May 23, 2011) (Further 

Definition of ‘‘Swap,’’ ‘‘Security-Based Swap,’’ and 

‘‘Security-Based Swap Agreement’’; Mixed Swaps; 

Security-Based Swap Agreement Recordkeeping); 

Securities Exchange Act Release No. 63452 (Dec. 7, 

2010), 75 FR 80174 (Dec. 21, 2010) (Further 

Definition of ‘‘Swap Dealer,’’ ‘‘Security-Based Swap 

Dealer,’’ ‘‘Major Swap Participant,’’ ‘‘Major 

Security-Based Swap Participant’’ and ‘‘Eligible 

Contract Participant’’). 

9See SR–FINRA–2012–015. 

10 15 U.S.C. 78s(b)(2). 11 15 U.S.C. 78o–3(b)(6). 

http://www.finra.org, at the principal 

office of FINRA 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, 

FINRA 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 III below. FINRA 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 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

On May 22, 2009, the Commission 

approved FINRA Rule 4240,3 which 

implements an interim pilot program 

(‘‘Interim Pilot Program’’) with respect 

to margin requirements for certain 

transactions in credit default swaps 

(‘‘CDS’’). On July 11, 2011, FINRA 

extended the implementation of Rule 

4240 to January 17, 2012.4

As explained in the Approval Order,5

FINRA Rule 4240, coterminous with 

certain Commission actions,6 is 

intended to address concerns arising 

from counterparty credit risk posed by 

CDS, including, among other things, 

risks to the financial system arising from 

credit risk resulting from bilateral CDS 

transactions and from a concentration of 

credit risk to a central counterparty that 

clears and settles CDS. On July 21, 2010, 

President Obama signed into law the 

Dodd-Frank Wall Street Reform and 

Consumer Protection Act (‘‘Dodd-Frank 

Act’’),7 Title VII of which established a 

comprehensive new regulatory 

framework for swaps and security-based 

swaps,8 including certain CDS. The new 

legislation was intended among other 

things to enhance the authority of 

regulators to implement new rules 

designed to reduce risk, increase 

transparency, and promote market 

integrity with respect to such products. 

FINRA believes it is appropriate to 

extend the Interim Pilot Program for a 

limited period, to July 17, 2012, in light 

of the continuing development of the 

CDS business within the framework of 

the Dodd-Frank Act. In addition, in a 

separate filing, FINRA is proposing 

revisions to FINRA Rule 4240 to limit 

the application of the rule at this time 

to certain transactions in credit default 

swaps that are security-based swaps and 

to make other revisions to update the 

rule.9

FINRA has requested the Commission 

to find good cause pursuant to Section 

19(b)(2) of the Act 10 for approving the 

proposed rule change prior to the 30th 

day after its publication in the Federal 

Register, such that FINRA can prevent 

FINRA Rule 4240 from lapsing and 

implement the proposed rule change 

retroactively from January 17, 2012. 

Without the proposed rule change, 

FINRA Rule 4240 would have expired 

on January 17, 2012. 

2. Statutory Basis 

FINRA believes that the proposed rule 

change is consistent with the provisions 

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

requires, among other things, that 

FINRA rules must 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. FINRA believes that the 

proposed rule change will further the 

purposes of the Act because, consistent 

with the goals set forth by the 

Commission when it adopted the 

interim final temporary rules with 

respect to the operation of central 

counterparties to clear and settle CDS, 

and pending the final implementation of 

new CFTC and SEC rules pursuant to 

Title VII of the Dodd-Frank Act, the 

margin requirements set forth by the 

proposed rule change will help to 

stabilize the financial markets. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

FINRA does not believe that the 

proposed rule change will result in 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 

Written comments were neither 

solicited nor received. 

III. 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 rulecomments@sec.gov. Please include File 

Number SR–FINRA–2012–014 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. 

mstockstill on DSK4VPTVN1PROD with NOTICES

14850 Federal Register / Vol. 77, No. 49 / Tuesday, March 13, 2012 / Notices 

12 15 U.S.C. 78s(b)(2). 13 In approving this rule change, the Commission 

notes that it has considered the proposed rule’s 

impact on efficiency, competition, and capital 

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

14 15 U.S.C. 78o–3(b)(6). 

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

16 15 U.S.C. 78s(b)(2). 

17 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 59955 

(May 22, 2009), 74 FR 25586 (May 28, 2009) (Notice 

of Filing and Order Granting Accelerated Approval 

of Proposed Rule Change, as Modified by 

Amendment No. 1 [File No. SR–FINRA–2009–012]) 

(‘‘Approval Order’’). 

All submissions should refer to File 

Number SR–FINRA–2012–014. 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 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 

FINRA. 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–FINRA–2012–014 and 

should be submitted on or before April 

3, 2012. 

IV. Commission’s Findings and Order 

Granting Accelerated Approval of a 

Proposed Rule Change 

FINRA has requested that the 

Commission find good cause pursuant 

to Section 19(b)(2) of the Act for 

approving the proposed rule change 

prior to the 30th day after publication in 

the Federal Register.12 After careful 

consideration, 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 national 

securities association.13

In particular, the Commission finds 

that the proposed rule change is 

consistent with Section 15A(b)(6) of the 

Act, 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.14 The accelerated 

approval will, consistent with the goals 

set forth by the Commission when it 

adopted the interim final temporary 

rules with respect to the operation of 

central counterparties to clear and settle 

CDS, and pending the final 

implementation of new CFTC and SEC 

rules pursuant to Title VII of the DoddFrank Act, help to stabilize the financial 

markets by setting forth margin 

requirements for certain transactions in 

CDS. 

The Commission also finds good 

cause, pursuant to Section 19(b)(2) of 

the Act,15 for approving the proposed 

rule change prior to the 30th day after 

the date of publication of notice in the 

Federal Register. This accelerated 

approval will allow the existing pilot 

program to be effective retroactively to 

January 17, 2012, and extended through 

July 17, 2012, to permit the pilot 

program to continue without 

interruption and extend the benefits of 

a pilot program that the Commission has 

previously approved and extended. 

V. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,16 that the 

proposed rule change (SR–FINRA– 

2012–014), be, and it hereby is, 

approved on an accelerated basis to July 

17, 2012. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.17

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2012–5986 Filed 3–12–12; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–66527; File No. SR–FINRA– 

2012–015] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Notice of Filing and 

Order Granting Accelerated Approval 

of Proposed Rule Change To Amend 

FINRA Rule 4240 (Margin 

Requirements for Credit Default 

Swaps) 

March 7, 2012. 

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 February 

23, 2012, Financial Industry Regulatory 

Authority, Inc. (‘‘FINRA’’) filed with the 

Securities and Exchange Commission 

(‘‘SEC’’ or ‘‘Commission’’) the proposed 

rule change as described in Items I and 

II, below, which Items have been 

substantially prepared by FINRA. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. For the 

reasons discussed below, the 

Commission is granting accelerated 

approval of the proposed rule change. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

FINRA is proposing to amend FINRA 

Rule 4240 (Margin Requirements for 

Credit Default Swaps) to limit the 

application of the rule at this time to 

certain transactions in credit default 

swaps that are security-based swaps and 

to make other revisions to update the 

rule. FINRA Rule 4240 implements an 

interim pilot program with respect to 

margin requirements for certain 

transactions in credit default swaps. 

The text of the proposed rule change 

is available on FINRA’s Web site at 

http://www.finra.org, at the principal 

office of FINRA 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, 

FINRA 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. FINRA 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 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

On May 22, 2009, the Commission 

approved FINRA Rule 4240,3 which 

implements an interim pilot program 

(‘‘Interim Pilot Program’’) with respect 

to margin requirements for certain 

transactions in credit default swaps 

(‘‘CDS’’). FINRA has filed a proposed 

mstockstill on DSK4VPTVN1PROD with NOTICES