Federal Register / Vol. 77, No. 59 / Tuesday, March 27, 2012 / Notices 18283 

5 15 U.S.C. 78s(b)(3)(A). 

6 17 CFR 240.19b–4(f). 7 17 CFR 200.30–3(a)(12). 

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

2 15 U.S.C. 78s(b)(3)(A)(iii). 

3 17 CFR 240.19b–4(f)(4)(i). 

4 17 CFR 240.15c3–3(b)(1). 

Exchange rules may provide for the 

equitable allocation of reasonable dues, 

fees, and other charges among its 

Trading Permit Holders and other 

persons using its facilities. The 

proposed change is reasonable because 

the fees for fingerprint processing will 

now be lower than it previously was. 

The proposed change is equitable and 

not unfairly discriminatory because the 

new, lower fingerprint processing fees 

will apply to all eligible parties. Further, 

this fee is not being assessed or set by 

the Exchange, but by FINRA. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

CBOE 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 

The Exchange neither solicited nor 

received comments on 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) 5 of the Act and paragraph (f) 

of Rule 19b–4 6 thereunder. 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. 

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–CBOE–2012–028 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–CBOE–2012–028. 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 

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 No. SR–CBOE– 

2012–028 and should be submitted on 

or before April 17, 2012. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.7

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2012–7278 Filed 3–26–12; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–66635; File No. SR–NSCC– 

2012–04] 

Self-Regulatory Organizations; The 

National Securities Clearing 

Corporation; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Amend Rule 53 of Its 

Rules and Procedures Relating to the 

Alternative Investment Product 

Services To Standardize and Automate 

the Method by Which Registered AIP 

Broker-Dealer Members Meet Their 

Good Control Location Obligations for 

Uncertificated Securities 

March 21, 2012. 

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

Securities Exchange Act of 1934 

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

March 7, 2012, the National Securities 

Clearing Corporation (‘‘NSCC’’) filed 

with the Securities and Exchange 

Commission (‘‘Commission’’) the 

proposed rule change described in Items 

I and II below, which Items have been 

prepared primarily by NSCC. NSCC 

filed the proposal pursuant to Section 

19(b)(3)(A)(iii) 2 of the Act, and Rule 

19b–4(f)(4)(i) 3 thereunder so that the 

proposal was effective upon filing with 

the Commission. The Commission is 

publishing this notice to solicit 

comments on the rule change from 

interested parties. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

NSCC proposes to amend Rule 53 of 

its Rules and Procedures with respect to 

its Alternative Investment Product 

Services (‘‘AIP’’). The proposed rule 

change is intended to standardize and 

automate the method by which 

registered AIP broker-dealer members 

meet their possession or control 

obligations for uncertificated securities 

under Commission Rule 15c3–3(b)(1) 4

when they designate another AIP 

Member as a ‘‘good control location.’’ 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, 

NSCC 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 

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18284 Federal Register / Vol. 77, No. 59 / Tuesday, March 27, 2012 / Notices 

5The Commission has modified the text of the 

summaries prepared by NSCC. 

6 17 CFR 240.15c3–3(b)(1). 

7 17 CFR 240.15c3–3(b)(1). 

8 17 CFR 240.15c3–3(b)(1). 

9 17 CFR 240.15c3–3(c)(1). 

10 17 CFR 240.15c3–3(c)(5). 

11 17 CFR 240.15c3–3(c)(4). 

12 17 CFR 240.15c3–3(c)(7). 

13See, e.g.,Wayne Hummer & Co., SEC No-Action 

Letter, 1986 WL 65387 (SEC) (publicly avail. Apr. 

8, 1986); Letter from Marc J. Hertzberg, Division of 

Market Regulation, to Brandon Becker, Wilmer, 

Cutler & Pickering (July 30, 1997); Letter from Mark 

M. Attar, Division of Market Regulation, SEC, to 

Brandon Becker, Wilmer, Cutler & Pickering (Sept. 

17, 1999); Letter from Bonnie L. Gauch, Division of 

Market Regulation, SEC, to Michael K. Rafter, 

Holland & Knight, LLP (Jan. 5, 2000); Letter from 

Joseph I. Levinson, Special Counsel, Division of 

Trading and Markets, SEC, to Mark D. Fitterman, 

Morgan, Lewis & Bockius LLP (June 9, 2009); 

FOLIO[fn] Investments, Inc., SEC No-Action Letter, 

2009 WL 58414 (Jan 6, 2009). 

14Broker-dealers generally receive the No Lien 

Assurances by obtaining a hard-copy letter from the 

issuer or its transfer agent or other record keeper of 

the securities. 

15Letter from Michael A. Macchiaroli, Division of 

Trading and Markets, SEC, to Peter J. Morgan III, 

Charles Schwab & Co., Inc. (February 3, 2012). 

16Securities Exchange Act Release No. 34–57813 

(May12, 2008), 73 FR 28539 (May 16, 2008). 17But see fn. 14, infra. 

may be examined at the places specified 

in Item IV below. NSCC has prepared 

summaries, set forth in sections (A), (B), 

and (C) below, of the most significant 

aspects of these statements.5

(A) Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

NSCC proposes to amend Rule 53 of 

its Rules and Procedures. The purpose 

of the proposed rule change is to 

standardize and automate the method 

by which registered AIP broker-dealer 

members (collectively ‘‘AIP 

Distributors’’) meet their possession or 

control obligations for uncertificated 

securities under Rule 15c3–3(b)(1) 6 of 

the Act when they designate another 

AIP Member, which acts on behalf of or 

under authority of the sponsor, general 

partner, or any other party responsible 

for the creation or manufacturing of a 

participating AIP investment product 

(collectively ‘‘AIP Manufacturers’’) as a 

‘‘good control location,’’ as more 

specifically provided below. 

‘‘Good Control Location’’ Background 

Commission registered broker-dealers 

that hold securities for the accounts of 

their customers are required to maintain 

physical possession or control of all 

customer fully-paid and excess margin 

securities under Rule 15c3–3(b)(1) 7 of 

the Act. The possession or control 

requirement means that registered 

broker-dealers must have securities in 

their physical possession or in their 

name for the benefit of their customers 

at one of the several ‘‘control locations’’ 

identified by Rule 15c3–3(c) 8 of the Act. 

Because uncertificated securities cannot 

be physically held in a broker-dealer’s 

possession, the broker-dealer must 

establish that the uncertificated 

securities are lodged in what are 

generally referred to as ‘‘good control 

locations.’’ Under the Commission’s 

rule, good control locations include 

registered securities clearing agencies,9

U.S. banks,10 certain designated foreign 

financial institutions,11 and ‘‘such other 

locations as the Commission shall upon 

application from a broker or dealer find 

and designate to be adequate for the 

protection of customer securities.’’ 12

The Commission staff has issued 

letters that allowed broker-dealers to use 

certain entities, which were obligated to 

create and maintain the ownership 

records with respect to such 

uncertificated securities as good control 

locations for uncertificated securities 

subject to certain conditions.13 The 

conditions outlined in these letters have 

generally included the broker-dealers’ 

receipt of certain assurances and 

representations from the securities’ 

record keeper, which assurances and 

representations have come to be known 

as the ‘‘No Lien Assurances.’’ 14

In a No-Action Letter dated February 

3, 2012 (‘‘2012 No-Action Letter’’), the 

Commission’s Division of Trading and 

Markets (‘‘Division’’) addressed the use 

of AIP as a means for establishing good 

control locations. 15 In it, the Division 

stated that it would not recommend 

enforcement action against Charles 

Schwab & Co., Inc. (‘‘Schwab’’) if 

Schwab used AIP to establish good 

control locations for uncertificated 

securities of alternative investment 

products participating in AIP. 

AIP Background 

NSCC’s AIP Service is a 

communications and payments 

processing platform for eligible 

alternative investment products, 

including interests in commodity pools, 

REIT securities, managed futures and 

managed currency products, and 

securities issued by hedge funds, private 

equity funds and funds of funds 

(collectively ‘‘Eligible AIP Products’’). 

AIP provides for the processing of 

transactions in these products and for 

the settlement of related payments on a 

pre-funded basis without netting and 

without a guarantee of payment in the 

event of a contra-side default.16

Transactions processed through AIP 

include subscriptions and redemptions, 

distributions, position reporting, and 

account maintenance. 

Since its implementation, AIP has 

standardized the way the alternative 

investment industry communicates 

information between broker-dealers, 

fund managers, administrators, 

custodians, and issuers of alternative 

investment products. In the last several 

months, the alternative investment 

industry has asked NSCC to further 

standardize and automate 

communications among these parties by 

creating a uniform mechanism by which 

AIP Distributors may satisfy their Rule 

15c3–3(c) possession or control 

obligations when using AIP 

Manufacturers as good control locations. 

NSCC believes it can offer a number of 

control improvements to the current 

manual, decentralized, and paper-based 

mechanisms that are used today for 

establishing good control locations for 

uncertificated securities of alternative 

investments. 

AIP Membership Requirements 

Under NSCC Rule 53, the following 

types of entities are eligible to become 

AIP users (‘‘AIP Members’’): 

1. A broker-dealer registered under 

the Act or a non-U.S. broker-dealer 

subject to oversight and regulation by 

the appropriate financial services 

regulator in its home jurisdiction;17

2. A bank or trust company that is a 

member of the U.S. federal reserve 

system or that is supervised and 

examined by U.S. federal or state 

banking authorities or a non-U.S. bank 

subject to oversight and regulation by 

the appropriate financial services 

regulator in its home jurisdiction; 

3. An investment company registered 

under the Investment Company Act of 

1940 (‘‘Advisers Act’’), or an issuer 

(structured as a fund or other pooled 

investment vehicle) that is not required 

to register thereunder; 

4. An investment adviser as defined 

in the Advisers Act regardless of 

whether it is registered under the 

Advisers Act or is exempt from 

registration; 

5. A commodity pool operator or 

commodity trading advisor as defined in 

the Commodity Exchange Act (‘‘CEA’’) 

regardless of whether the commodity 

pool operator or commodity trading 

advisor is registered pursuant to the 

CEA or is exempt from registration 

thereunder; 

6. An insurance company subject to 

supervision or regulation under U.S. 

state insurance law or a non-U.S. 

insurance company subject to oversight 

and regulation by the appropriate 

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Federal Register / Vol. 77, No. 59 / Tuesday, March 27, 2012 / Notices 18285 

18An AIP Member may use another NSCC service 

but only if the AIP Member also executes a separate 

NSCC Membership Agreement. 

19As set forth above, broker-dealers are eligible to 

be AIP Members. However, a broker-dealer’s 

authority to serve as a good control location is 

derived from Rule 15c3–3(c)(2) of the Act and 

applicable Commission and SRO guidance. Nothing 

in this proposed rule change is intended to 

contradict existing regulations pertaining to control 

locations under Rule 15c3–3 of the Act. 

insurance regulator in its home 

jurisdiction; and 

7. An entity engaged under contract to 

provide administrative services to one 

or more alternative investment products 

that can be processed through AIP. 

Before acceptance as an AIP Member, 

each applicant must submit an executed 

AIP Membership Agreement to NSCC, 

agreeing that, among other things, it 

will: 

1. Only use the AIP Service; 18

2. Abide by the rules of NSCC and be 

bound by all of the provisions thereof 

and that NSCC will have all of the rights 

and remedies contemplated by the rules 

of NSCC; 

3. Be bound by the rules of NSCC as 

to all matters and transactions occurring 

while the applicant is an AIP Member, 

notwithstanding that the applicant may 

subsequently cease to be an AIP 

Member; 

4. Not submit, clear, or settle through 

NSCC any contract or transaction unless 

the rules of NSCC are part of the terms 

and conditions of such contract or 

transaction; 

5. Pay to NSCC such charges as shall 

be established by NSCC by rule; 

6. Not submit or confirm any 

transaction, charge, request, instruction, 

or transmission through NSCC’s services 

or otherwise utilize NSCC’s services in 

contravention of any law, rule, 

regulation, or statute applicable to the 

AIP Member; 

7. Not submit any request, instruction, 

transaction, or other transmission 

through NSCC’s services for which it is 

not directly or indirectly and whether 

acting on its own behalf or on behalf of 

any other entity, duly authorized; 

8. Pay such fines as may be imposed 

in accordance with NSCC’s rules for the 

failure of the AIP Member while an AIP 

Member to comply therewith; and 

9. Be bound by any amendment to the 

rules of NSCC with respect to any use 

of NSCC’s services subsequent to the 

time such amendment takes effect, as 

fully as though such amendment were 

now a part of the rules of NSCC; 

provided, however, that no such 

amendment shall affect an AIP 

Member’s right to cease to be an AIP 

Member of NSCC unless before such 

amendment becomes effective, the AIP 

Member has opportunity to give written 

notice to NSCC of the AIP Member’s 

election to discontinue being an AIP 

Member. 

The Proposed Rule Changes 

Currently, AIP provides for two 

alternative customer account 

designations either ‘‘broker-controlled’’ 

or ‘‘customer-controlled.’’ The initial 

account designation for an AIP account 

is generally made by the AIP Distributor 

acting on behalf of its investor customer. 

However, the AIP Manufacturer may 

change the account designation at any 

time. For example, if an investor were 

to directly notify the AIP Manufacturer 

that its account should no longer be 

designated as broker-controlled, the AIP 

Manufacturer could change the 

indication on the AIP system. The 

proposed rule changes to NSCC Rule 53 

will apply solely with respect to 

‘‘broker-controlled’’ AIP account 

designations. 

NSCC proposes to amend Rule 53 to 

specify that when an AIP Distributor 

submits an AIP order for its customer 

account and requests a brokercontrolled designation as part of the 

order, the AIP Manufacturer accepting 

the order (and accordingly making and 

approving the broker-controlled 

designation as part of the order) 19 will 

be making continual and ongoing 

representations and assurances to the 

controlling AIP Distributor that: 

1. The Eligible AIP Product securities 

held (or to be held) in the account are 

not subject to any right, charge, security 

interest, lien, or claim of any kind in 

favor of the AIP Manufacturer or any 

person claiming through such AIP 

Manufacturer; 

2. To the knowledge of the AIP 

Manufacturer, there are no substantial 

problems of an operational nature 

which the AIP Manufacturer is 

experiencing or which may endanger 

the interest of investors in the Eligible 

AIP Product; 

3. The Eligible AIP Product securities 

held (or to be held) in the account are 

registered with the Commission 

pursuant to the Securities Act of 1933, 

as amended, are exempt from such 

registration, or are not required to be so 

registered; 

4. The Eligible AIP Product securities 

in the account (or to be held in the 

account) are registered on the books and 

records of the AIP Manufacturer or its 

designee in the name of the controlling 

AIP Distributor on behalf of its 

customer; 

5. In the case of Eligible AIP Product 

securities issued outside of the United 

States, the AIP Manufacturer does not 

require the controlling AIP Distributor 

or any of its customers to pay any fees 

other than for safe custody or 

administration as a condition for the 

transfer of the securities; and 

6. The AIP Manufacturer understands 

and acknowledges that the controlling 

AIP Distributor may be relying on the 

above representations in order to 

establish custody in accordance with 

Rule 15c3–3 of the Act and that failure 

to comply with the above 

representations may require that the 

controlling AIP Distributor remove the 

Eligible AIP Product securities from the 

applicable customer’s brokerage 

account. 

The AIP Manufacturer representations 

and assurances in 1–6 above are 

collectively referred to as the ‘‘AIP 

Manufacturer Representations and 

Assurances.’’ 

The AIP Manufacturer 

Representations and Assurances will be 

obtained from each relevant AIP 

Manufacturer through an ‘‘accept’’ or 

‘‘decline’’ option within the record 

layouts that reside in AIP. The relevant 

AIP Distributors will be able to 

determine through AIP whether the AIP 

Manufacturer Representations and 

Assurances have been provided by 

reference to an indicator on a security 

profile that is included on a data file 

provided to the AIP Distributor. NSCC 

also proposes to amend the AIP 

Membership Agreement with regard to 

AIP Manufacturers to provide that each 

time the AIP Manufacturer accepts an 

AIP order and designates the securities 

with respect to that order as ‘‘brokercontrolled,’’ such AIP Manufacturer will 

be making the AIP Manufacturers 

Representations and Assurances on a 

continual and ongoing basis to the 

applicable AIP Distributor, so long as 

the ‘‘broker-controlled’’ designation 

remains in place. 

Additionally, Rule 53, as amended, 

will provide that each AIP Distributor 

that is a registered broker-dealer and 

that is relying on a specified AIP 

Manufacturer’s Representations and 

Assurances with respect to a customer 

account shall for so long as the 

applicable ‘‘broker-controlled’’ 

designation remains in place be 

continually stating that such AIP 

Distributor: 

1. Carries those Eligible AIP Product 

securities ‘‘long’’ in each respective 

customer account; 

2. Reflects all share positions of the 

applicable Eligible AIP Product 

separately in its securities records or 

ledgers maintained pursuant to Rule 

17a–3 of the Act; 

3. Maintains in a separate file a 

current list of all AIP Manufacturers of 

which Eligible AIP Product securities 

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18286 Federal Register / Vol. 77, No. 59 / Tuesday, March 27, 2012 / Notices 

20See the 2012 No-Action Letter, Condition #7. 

Where an AIP Distributor learns that the 

designation for an Eligible AIP Product has been 

changed from ‘‘broker-controlled’’ to ‘‘customercontrolled,’’ the AIP Distributor should contact the 

AIP Manufacturer to confirm whether the position 

was intended to be returned to the customer. If the 

Eligible AIP Product is not re-designated as ‘‘brokercontrolled,’’ the AIP Distributor should remove the 

position from the customer’s brokerage account. 

21 15 U.S.C. 78s(b)(3)(A)(iii). 

22 17 CFR 240.19b–4(f)(4)(i). 

are carried on that AIP Distributor’s 

books and records, including the name, 

telephone number, and address of a 

contact person at each AIP 

Manufacturer; and 

4. Is not aware of any substantial 

problems of an operational nature 

which AIP or the applicable AIP 

Manufacturer or issuer (if different) may 

be experiencing and which may 

endanger the interests of the customer. 

The above AIP Distributor statements 

(collectively the ‘‘AIP Distributor 

Statements’’) would be recorded by way 

of an electronic indicator within AIP. 

NSCC proposes to amend the AIP 

Membership Agreement with regard to 

AIP Distributors to set forth that each 

AIP Distributor who shall be relying on 

an AIP Manufacturer’s Representations 

and Assurances understands that such 

AIP Distributor will continually and on 

an ongoing basis be making the AIP 

Distributor Statements so long as the 

applicable ‘‘broker-controlled’’ 

designation remains in place. 

The above AIP Manufacturer 

Representations and Assurances and 

AIP Distributor Statements conform to 

the No-Action Letters developed by the 

Commission staff and described herein, 

including the 2012 No-Action Letter 

addressing the use AIP for establishing 

good control locations. As noted above, 

registered broker-dealers currently 

establish their Commission Rule 15c3– 

3(c)(7) obligations by way of manual 

processes. Automating this process 

through AIP will standardize and 

centralize the process will assist the 

parties in establishing compliance with 

legal requirements and will provide a 

better audit trail for AIP Members and 

their regulators to verify compliance 

after the fact. 

Further, if an AIP Manufacturer or 

AIP Distributor at any time elects to 

change the customer account 

designation from ‘‘broker-controlled’’ to 

‘‘customer-controlled,’’ the above AIP 

Manufacturer Representations and 

Assurances and AIP Distributor 

Statements from that point forward 

would no longer apply to the relevant 

AIP Members, and each relevant AIP 

Distributor and AIP Manufacturer, as 

the case may be, would be put on notice 

that the designation with regard to the 

customer account has changed. As a 

condition set forth in the 2012 NoAction Letter, each AIP Distributor 

relying on the AIP Manufacturer 

Representations and Assurances is 

required to monitor AIP on a regular 

basis for any changes to the ‘‘brokercontrolled’’ account designations for 

which the AIP Distributor maintains 

custody.20

The proposed rule change is 

consistent with the requirements of the 

Act and the rules and regulations issued 

thereunder because it promotes the 

prompt and accurate clearance and 

settlement of transactions in securities 

by automating, standardizing, and 

centralizing the communication of 

information between persons engaged in 

the clearance and settlement of 

securities transactions. In addition, the 

proposed rule change fosters 

cooperation and coordination between 

broker-dealers and issuers of securities 

and removes impediments to the 

prompt and accurate clearance and 

settlement of securities transactions. 

(B) Self-Regulatory Organization’s 

Statement on Burden on Competition 

NSCC does not believe that the 

proposed rule change will have any 

impact or impose any burden on 

competition. 

(C) Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

Written comments relating to the 

proposed rule change have not been 

solicited or received. NSCC will notify 

the Commission of any written 

comments received by NSCC. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing proposed rule change 

has become effective upon filing 

pursuant to Section 19(b)(3)(A)(iii) 21 of 

the Act and Rule 19b–4 (f)(4)(i) 22

thereunder because it effects a change in 

NSCC’s existing AIP services that does 

not adversely affect the safeguarding of 

securities or funds in the custody or 

control of NSCC or for which it is 

responsible and does not significantly 

affect the respective rights or obligations 

of NSCC or the persons using the 

service. The proposed rule change 

affects a service of NSCC which is not 

guaranteed (i.e., to which NSCC is not 

a central counter-party) and which does 

not provide for the movement of 

securities or for the application of 

credits or debits to cash balances of 

members. Accordingly, the proposed 

rule change does not adversely affect the 

safeguarding of securities or funds in 

the custody or control of NSCC or for 

which NSCC is responsible. 

Additionally, designation of an account 

as ‘‘broker-controlled’’ or ‘‘customercontrolled’’ within AIP is wholly 

voluntary meaning that an AIP 

Manufacturer may choose to decline an 

order request with a broker-controlled 

designation and therefore may not be 

required to make the above stated 

assurances and representations. This is 

effectively what happens in the market 

today outside of AIP when a registered 

broker-dealer attempts to designate an 

account as broker-controlled but the 

applicable alternative investment 

product record keeper refuses to provide 

the requisite representations and 

assurances. A registered broker-dealers’ 

failure to obtain such assurances and 

representations would preclude the 

registered broker-dealer from continuing 

to identify the customer account in such 

alternative investment product as 

‘‘broker-controlled.’’ Under the 

proposed rule change, the rights and 

obligations of the parties would not 

change, but each relevant party would 

know the status of the customer account 

designation in a far less time-consuming 

manner. Further, if a ‘‘customer 

controlled’’ designation is made with 

respect to an AIP order, the above rule 

changes would not apply to either the 

AIP Manufacturer making the 

designation or to the applicable AIP 

Distributor. 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. 

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–NSCC–2012–04 on the 

subject line. 

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Federal Register / Vol. 77, No. 59 / Tuesday, March 27, 2012 / Notices 18287 

23 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3 15 U.S.C. 78f(b). 

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

5 15 U.S.C. 78s(b)(3)(A). 

6 17 CFR 240.19b–4(f). 

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–NSCC–2012–04. 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 filings 

also will be available for inspection and 

copying at the principal office of NSCC 

and on NSCC’s Web site at http://www.

dtcc.com/downloads/legal/rule_filings/

2012/nscc/2012–04.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–NSCC–2012–04 and should 

be submitted on or before April 17, 

2012. 

For the Commission by the Division of 

Trading and Markets, pursuant to delegated 

authority.23

Kevin O’Neill, 

Deputy Secretary. 

[FR Doc. 2012–7276 Filed 3–26–12; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–66639; File No. SR–C2– 

2012–009] 

Self-Regulatory Organizations; C2 

Options Exchange, Incorporated; 

Notice of Filing and Immediate 

Effectiveness of a Proposed Rule 

Change To Amend Its Fees Schedule 

March 21, 2012. 

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 March 19, 

2012, C2 Options Exchange, 

Incorporated (the ‘‘Exchange’’ or ‘‘C2’’) 

filed with the Securities and Exchange 

Commission (the ‘‘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 proposes to amend its 

Fees Schedule. The text of the proposed 

rule change is available on the 

Exchange’s Web site (http:// 

www.c2exchange.com/Legal/), at the 

Exchange’s Office of the Secretary, 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 aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange currently lists on its 

Fees Schedule the fingerprint 

processing fees that are collected and 

retained by the Financial Industry 

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

via its Web CRDSM registration system 

for the registration of associated persons 

of Exchange Trading Permit Holder 

(‘‘TPH’’) and TPH organizations that are 

not also FINRA members. The Exchange 

was recently notified by FINRA that, 

effective March 19, 2012, FINRA is 

decreasing the per card Initial 

Submission and Third Submission fees 

from $30.25 to $27.50. As such, the 

Exchange proposes to amend its Fees 

Schedule to reflect this change. 

2. Statutory Basis 

The Exchange believes the proposed 

rule change is consistent with the Act 

and the rules and regulations 

thereunder applicable to the Exchange 

and, in particular, the requirements of 

Section 6(b) of the Act.3 Specifically, 

the Exchange believes the proposed rule 

change is consistent with Section 6(b)(4) 

of the Act,4 which provides that 

Exchange rules may provide for the 

equitable allocation of reasonable dues, 

fees, and other charges among its 

Trading Permit Holders and other 

persons using its facilities. The 

proposed change is reasonable because 

the fees for fingerprint processing will 

now be lower than it previously was. 

The proposed change is equitable and 

not unfairly discriminatory because the 

new, lower fingerprint processing fees 

will apply to all eligible parties. Further, 

this fee is not being assessed or set by 

the Exchange, but by FINRA. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

C2 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 

The Exchange neither solicited nor 

received comments on 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) 5 of the Act and paragraph (f) 

of Rule 19b–4 6 thereunder. At any time 

within 60 days of the filing of the 

proposed rule change, the Commission 

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