15822 Federal Register / Vol. 77, No. 52 / Friday, March 16, 2012 / Notices 

18 15 U.S.C. 78s(b)(3)(A)(ii). 

19 17 CFR 240.19b–4(f)(2). 

20 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

are equitable because they are open to 

all similarly situated ETP Holders on an 

equal basis and provide credits that are 

reasonably related to the value to an 

exchange’s market quality associated 

with higher volumes. For example, the 

proposed increase to $0.0030 for orders 

in Tape B Securities routed outside the 

Book to any away market centers will 

align such fee to Tape A and Tape C 

routing fees to any away market center 

other than NYSE. The Exchange further 

believes that the proposed Tape A, Tape 

B, and Tape C Step Up Tiers are 

reasonable, equitable and not unfairly 

discriminatory because the Exchange 

has previously implemented two step 

up tiers: Step Up Tier 1 and Step Up 

Tier 2. With respect to shares priced 

under $1.00, the Exchange notes that the 

proposal to increase the charge to 0.2% 

of the total dollar value of the execution 

for these securities for ETP Holders 

accessing liquidity is consistent with 

the limitations of Rule 610(c) of 

Regulation NMS under the Act. 

As stated above, the Exchange 

believes that the new Step Up Tiers, the 

new Investor Tier 2, and the revised 

Investor Tier 3 may incentivize ETP 

Holders to increase the orders sent 

directly to the Exchange and therefore 

provide liquidity that supports the 

quality of price discovery and promotes 

market transparency. For example, the 

increased fee with respect to MPL 

orders that take liquidity in Tape A, 

Tape B, and Tape C Securities will 

provide an added incentive to ETP 

Holders and Market Makers to provide 

displayed liquidity on the Exchange for 

such orders. 

In addition to the new Tiers, the 

Exchange believes that the amendments 

to the Tracking Order Tiers would 

benefit ETP Holders whose increased 

order flow provides meaningful added 

levels of liquidity, but may not be 

eligible for the current Tracking Order 

Tier thresholds, thereby contributing to 

the depth and market quality of the 

Book. 

The Exchange believes that by 

recalibrating the fees for routing and 

taking liquidity and credits for 

providing liquidity it will attract 

additional order flow and liquidity to 

the Exchange, thereby contributing to 

price discovery on the Exchange and 

benefiting investors generally. 

The Exchange also believes that the 

technical amendments proposed herein 

would better assist member 

organizations and others that view the 

Fee Schedule in determining the fees 

and credits that are applicable on the 

Exchange. 

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 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 

The foregoing rule change has become 

effective pursuant to Section 

19(b)(3)(A)(ii) of the Act 18 and 

subparagraph (f)(2) of Rule 19b–4 

thereunder.19 At any time within 60 

days of the filing of the 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 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 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–NYSEARCA–2012–17 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–NYSEARCA–2012–17. 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– 

NYSEARCA–2012–17 and should be 

submitted on or before April 6, 2012. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.20

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2012–6383 Filed 3–15–12; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–66574; File No. SR–FICC– 

2012–02] 

Self-Regulatory Organizations; Fixed 

Income Clearing Corporation; Notice of 

Filing of Proposed Rule Change To 

Remove Functionality in the 

Government Securities Division’s 

Rules That Is No Longer Utilized by 

Participants 

March 12, 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 

29, 2012, the Fixed Income Clearing 

Corporation (‘‘FICC’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed change as 

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Federal Register / Vol. 77, No. 52 / Friday, March 16, 2012 / Notices 15823 

3The Commission has modified the text of the 

summaries prepared by FICC. 

described in Items I and II below, which 

Items have been prepared primarily by 

FICC. The Commission is publishing 

this notice to solicit comments on the 

proposed change from interested 

persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The proposed rule change consists of 

modifications to certain rules of the 

Government Securities Division 

(‘‘GSD’’) of the Fixed Income Clearing 

Corporation (‘‘FICC’’) that refer to 

functions or classifications that are 

either technologically obsolete or no 

longer used by participants. 

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 

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.3

(A) Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

The purpose of this filing is to revise 

the GSD rules to eliminate references to 

functions or classifications that are 

either technologically obsolete or no 

longer utilized by GSD’s participants. 

Reflected below are descriptions of the 

proposed changes to the rules. 

1. ‘‘Non-Conversion Participants’’/ 

‘‘Conversion Participants’’ 

When first implemented, the DVP 

System required all participants that 

submitted when issued trades to 

resubmit those trades with final money 

calculations on the night of Auction 

Date, after the Treasury Auction results 

were announced. Subsequent to the 

initial implementation, enhancements 

were incorporated such that the DVP 

System recalculated trades (repriced) 

based on auction results. FICC also 

incorporated an option whereby 

participants could decide if they wanted 

to resubmit their trades (participants 

who elected this option were known as 

‘‘Non-Conversion Participants’’) or take 

FICC’s repricing notification 

(participants who elected this option 

were known as ‘‘Conversion 

Participants’’). With the implementation 

of Interactive Messaging in 2000, the 

few remaining Non-Conversion 

Participants agreed to take FICC’s 

calculations, rather than resubmit their 

trades to FICC. As such, FICC proposes 

to remove references in the rules to 

Non-Conversion Participants. Given that 

all participants who submit whenissued transactions for matching/netting 

are subject to accepting FICC’s 

calculations for their trades based on 

Treasury Auction Results, the proposed 

rule changes replace references to 

‘‘Conversion Participants’’ with 

‘‘Participants.’’ 

2. Auction Priority Delivery Requests 

and Customer Delivery Requests (CDRs) 

Auction Priority Delivery Requests, 

also known as Customer Delivery 

Requests (CDRs), were originally built 

for FICC’s batch file transfer, which was 

the initial proprietary method that 

participants used to submit trade 

activity to FICC. This functionality 

allowed the dealer to instruct FICC to 

withhold certain auction trades from the 

net to ensure that a priority client 

received their auction allotment so the 

trade could not be netted out during 

FICC’s end of day netting process. 

However, when Interactive Messaging 

was implemented in 2000, this 

instruction type was not supported as it 

was no longer used. As a result, FICC 

proposes to remove references in the 

rules to Auction Priority Delivery 

Requests and Customer Delivery 

Requests (CDRs). 

3. Repo Substitution Criteria 

GSD initially provided optional fields 

for Repo Substitution Criteria for trade 

submissions. However, over the years, 

participants generally have not used 

these fields. Because the fields were 

provided as an informational courtesy 

that has not been used by participants, 

the new system will not contain them. 

From a rules perspective this entails the 

deletion of references to those fields in 

related schedule. 

In addition to the above-referenced 

changes which relate to the DVP 

System, FICC proposes to make the 

following additional technical 

corrections to the GSD rules: 

—Terminal interfaces and video display 

terminals are currently referenced in 

the rules. The terminals became 

obsolete when FICC replaced them 

with a web browser interface. Because 

the terminals are no longer in 

existence, FICC proposes to remove 

references to these methods from the 

GSD rules. 

—Currently, the ‘‘Schedule of Required 

and Other Data Submission Items 

from GCF Repo Transactions’’ refers 

to ‘‘Reverse dealer Exec. Id’’ and a 

‘‘Repo dealer Exec Id.’’ When FICC 

began using the GSD RTTM web 

format, these fields were eliminated 

because they did not have any 

significance for GCF repo trades. As a 

result, FICC proposes to remove these 

references from the rules. 

FICC believes the proposed change is 

consistent with Section 17A of the Act 

and the rules and regulations 

thereunder because it facilitates the 

prompt and accurate clearance and 

settlement of securities by ensuring that 

FICC’s rules are accurate. 

(B) Self-Regulatory Organization’s 

Statement on Burden on Competition 

FICC does not believe that the 

proposed rule change would 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 

proposed 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 

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 

the proposed rule change; or 

(B) institute proceedings to determine 

whether the proposed rule change 

should be disapproved. 

Electronic Comments 

• Use the Commissions Internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rulecomments@sec.gov. Please include File 

Number SR–FICC–2012–02 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. 

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15824 Federal Register / Vol. 77, No. 52 / Friday, March 16, 2012 / Notices 

4 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. 65896 (Dec. 6, 

2011) (‘‘Notice’’). 

4See letter from Kevin M. Carroll, Managing 

Director and Associate General Counsel, SIFMA, 

dated January 3, 2012 (‘‘SIFMA Letter’’). 

5See letter from Margo A. Hassan, Assistant Chief 

Counsel, FINRA, to Elizabeth M. Murphy, 

Secretary, Commission, dated March 5, 2012 

(‘‘Response Letter’’). 

6See Dodd-Frank Wall Street Reform and 

Consumer Protection Act, Public Law 111–203 

(2010). 

7Sarbanes-Oxley Act of 2002, Public Law 107– 

204 (2002). 

8See Dodd-Frank Act Section 922(c)(2). 

9See Arbitrability of Sarbanes-Oxley 

Whistleblower Claims by Laurence S. Moy, Pearl 

Zuchlewski, Linda A. Neilan and Katherine 

Blostein, The Neutral Corner (Volume 1—2008). 

10The Dodd-Frank Act also invalidated 

predispute arbitration agreements in other 

whistleblower statutes, including, for example, 7 

All submissions should refer to File 

Number SR–FICC–2012–02. 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 Section, 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 FICC 

and on FICC’s Web site at http://www.

dtcc.com/downloads/legal/rule_filings/

2012/ficc/SR_FICC_2012_02.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–2012–02 and should 

be submitted on or before April 6, 2012. 

For the Commission by the Division of 

Trading and Markets, pursuant to delegated 

authority.4

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2012–6384 Filed 3–15–12; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–66575; File No. SR–FINRA– 

2011–067] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Order Approving a 

Proposed Rule Change Amending 

FINRA Rules 13201 (Statutory 

Employment Discrimination Claims) 

and 2263 (Arbitration Disclosure to 

Associated Persons Signing or 

Acknowledging Form U4) Relating to 

Whistleblower Disputes in Arbitration 

March 12, 2012. 

I. Introduction 

On November 21, 2011, the Financial 

Industry Regulatory Authority, Inc. 

(‘‘FINRA’’) filed with the Securities and 

Exchange Commission (‘‘SEC’’ or 

‘‘Commission’’), pursuant to Section 

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

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

Rule 19b–4 thereunder,2 a proposed rule 

change to amend FINRA Rule 13201 of 

the Code of Arbitration Procedure for 

Industry Disputes (‘‘Industry Code’’) to 

align the rule with statutes that 

invalidate predispute arbitration 

agreements for whistleblower disputes. 

Specifically, the proposed rule change 

would amend Rule 13201 to add a new 

provision to provide that a dispute 

arising under a whistleblower statute 

that prohibits the use of predispute 

arbitration agreements is not required to 

be arbitrated under the Industry Code. 

The proposed rule change would also 

make a conforming amendment to 

FINRA Rule 2263. The proposed rule 

change was published for comment in 

the Federal Register on December 12, 

2011.3 The Commission received one 

comment letter, from the Securities 

Industry and Financial Markets 

Association (‘‘SIFMA’’), on the 

proposed rule change,4 and a response 

to SIFMA’s comments from FINRA.5

The text of the proposed rule change 

and FINRA’s Response Letter are 

available on FINRA’s Web site at http:// 

www.finra.org, at the principal office of 

FINRA, on the Commission’s Web site at 

http://www.sec.gov, and at the 

Commission’s Public Reference Room. 

This order approves the proposed rule 

change. 

II. Purpose 

The proposed rule change would 

amend FINRA Rule 13201 (Statutory 

Employment Discrimination Claims) of 

the Industry Code, and FINRA Rule 

2263 (Arbitration Disclosure to 

Associated Persons Signing or 

Acknowledging Form U4), to align the 

rules with statutes that invalidate 

predispute arbitration agreements for 

whistleblower disputes. 

The Dodd-Frank Wall Street Reform 

and Consumer Protection Act (‘‘DoddFrank Act’’) 6 amended the SarbanesOxley Act of 2002 (‘‘SOX’’) 7 by adding 

a new paragraph (e) to 18 U.S.C. 1514A 

(Nonenforceability of Certain Provisions 

Waiving Rights and Remedies or 

Requiring Arbitration of Disputes) 8 to 

provide that: 

(1) Waiver of Rights and Remedies— 

The rights and remedies provided for in 

this section may not be waived by any 

agreement, policy form, or condition of 

employment, including by a predispute 

arbitration agreement. 

(2) Predispute Arbitration 

Agreements—No predispute arbitration 

agreement shall be valid or enforceable, 

if the agreement requires arbitration of 

a dispute arising under this section. 

Prior to the Dodd-Frank Act, it was 

FINRA staff’s articulated position that 

parties were required to arbitrate SOX 

whistleblower claims under the 

Industry Code.9

In light of the changes set forth in the 

Dodd-Frank Act that invalidate 

predispute arbitration agreements in the 

case of SOX whistleblower disputes, the 

proposed rule change would amend 

FINRA Rule 13201 of the Industry Code 

to make clear that parties are not 

required to arbitrate SOX whistleblower 

disputes, superseding any existing 

guidance to the contrary. While FINRA’s 

main impetus for the proposed rule 

change was the need to update its staff’s 

stated position on SOX whistleblower 

claims, FINRA proposed to make the 

rule text broad enough to cover any 

statutes that prohibit predispute 

arbitration agreements for whistleblower 

disputes.10

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