Federal Register / Vol. 77, No. 65 / Wednesday, April 4, 2012 / Notices 20445 

13Among other restrictions, Applicant states that 

it will limit transfers to transfers among members 

or affiliates of members. 

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

2 17 CFR 240.19b–4. 

3The Commission has modified the text of the 

summaries prepared by FICC. 

basis for the financial statements that 

would be filed pursuant to section 30 of 

the Act. Under the requested relief, 

Applicant will provide to its members: 

(i) Annual audited financial statements 

prepared in accordance with generally 

accepted accounting principles and rule 

1–02(d) of Regulation S–X; and (ii) 

unaudited quarterly financial statements 

prepared in accordance with generally 

accepted accounting principles. 

5. Applicant contends that the 

following factors, among others, are 

appropriate grounds for the requested 

relief, particularly in view of the 

provisions of the Act that will apply to 

Applicant: (i) Sunwest Investors who 

were eligible to receive interests in 

Applicant, their counsel, investment 

bankers and other advisors, as well as 

the District Court and its appointed 

mediators, were active participants in 

designing and determining Applicant’s 

structure; (ii) Applicant will continue to 

be subject to the jurisdiction of the 

District Court; (iii) transferability of 

Applicant’s securities is severely 

restricted; 13 (iv) Applicant has a limited 

life and will liquidate upon the 

liquidation of Blackstone LLC; and (v) 

Applicant will not be engaged in the 

business of investing, reinvesting or 

trading in securities, and the only 

securities that Applicant may hold are 

its interests in Blackstone LLC and 

Temporary Investments pending 

distributions to Applicant’s members or 

disbursements in payment of 

Applicant’s obligations. 

6. Accordingly, Applicant believes 

that the issuance of the order pursuant 

to sections 6(c) and 6(e) is appropriate 

in the public interest, and consistent 

with the protection of investors and the 

purposes fairly intended by the policy 

and provisions of the Act. 

Applicant’s Conditions 

Applicant agrees that any order of the 

Commission granting the requested 

relief will be subject to the following 

conditions: 

1. Applicant will not own or hold 

securities other than: (a) Interests in 

Blackstone LLC and (b) Temporary 

Investments. 

2. Applicant will not offer additional 

securities to its members, except in 

connection with capital requests from 

Blackstone LLC or to pay its expenses. 

3. If Applicant sells additional 

securities, such securities would be sold 

at a price equal to or greater than the net 

asset value of the securities at the time 

of the offering. 

4. Applicant’s governing documents 

will not be amended to permit 

Applicant’s securities to be freely 

tradable. 

5. Applicant will provide to its 

members: (a) Quarterly unaudited 

financial statements prepared in 

accordance with generally accepted 

accounting principles and (b) annual 

audited financial statements prepared in 

accordance with generally accepted 

accounting principles and rule 1–02(d) 

of Regulation S–X. 

6. Applicant will be exempt until the 

earlier of August 5, 2015 or such time 

as Applicant no longer meets the 

definition of an investment company 

under the Act. 

7. Applicant will not hold itself out as 

an investment company. 

For the Commission, by the Division of 

Investment Management, under delegated 

authority. 

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2012–8061 Filed 4–3–12; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[File No. 500–1] 

eMax Worldwide, Inc.; Order of 

Suspension of Trading 

April 2, 2012. 

It appears to the Securities and 

Exchange Commission that the public 

interest and the protection of investors 

require a suspension of trading in the 

securities of eMax Worldwide, Inc. (CIK: 

0000830519) because there is a lack of 

current and accurate information 

concerning its securities. eMax 

Worldwide, Inc. has failed to make 

periodic filings with the Commission 

and has more than 300 shareholders of 

record. eMax Worldwide, Inc. is quoted 

on OTC Markets Group Inc. under the 

ticker EMXC. 

The Commission is of the opinion that 

the public interest and the protection of 

investors require a suspension of trading 

in the securities of eMax Worldwide, 

Inc. Therefore, it is ordered, pursuant to 

Section 12(k) of the Securities Exchange 

Act of 1934, that trading in the 

securities of eMax Worldwide, Inc. is 

suspended for the period from 9:30 a.m. 

EDT on April 2, 2012, through 11:59 

p.m. EDT on April 16, 2012. 

By the Commission. 

Jill M. Peterson, 

Assistant Secretary. 

[FR Doc. 2012–8165 Filed 4–2–12; 11:15 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–66679; File No. SR–FICC– 

2012–03] 

Self-Regulatory Organizations; Fixed 

Income Clearing Corporation; Notice of 

Filing of Proposed Rule Change to 

Expand the One-Pot Cross-Margining 

Program With New York Portfolio 

Clearing, LLC to Certain ‘‘Market 

Professionals’’ 

March 29, 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 March 20, 

2012, the Fixed Income Clearing 

Corporation (‘‘FICC’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed change as 

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’’). 

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 

FICC is proposing to expand its 

existing one-pot cross-margining 

program with New York Portfolio 


emcdonald on DSK29S0YB1PROD with NOTICES
20446 Federal Register / Vol. 77, No. 65 / Wednesday, April 4, 2012 / Notices 

4See Securities Exchange Act Release No. 34– 

63986 (February 28, 2011), 76 FR 12144 (March 4, 

2011). 

5The NYPC–FICC ‘‘market professional’’ crossmargining program aims to closely replicate the 

Options Clearing Corporation (‘‘OCC’’)-Chicago 

Mercantile Exchange (‘‘CME’’) cross-margining 

program, which was first approved in 1989 

(Securities Exchange Act Release No. 34–27296 

(September 26, 1989), 54 FR 41195 (October 5, 

1989)) and was expanded in 1991 to include market 

professionals (Securities Exchange Act Release No. 

34–29991 (November 26, 1991), 56 FR 61458 

(December 3, 1991)). Since that time, the 

Commission has approved several similar ‘‘market 

professional’’ cross-margining programs, including 

most recently in 2008. They include: OCCIntermarket Clearing Corporation (‘‘ICC’’) Securities 

Exchange Act Release No. 34–30041 (December 5, 

1991), 56 FR 68424 (December 12, 1991); OCC–ICC– 

CME Securities Exchange Act Release No. 34–32534 

(June 28, 1993), 58 FR 36234 (July 6, 1993); OCCBoard of Trade Clearing Corporation Securities 

Exchange Act Release No. 34–32681 (July 27, 1993), 

58 FR 41302 (August 3, 1993) ; OCC-Kansas City 

Board of Trade Clearing Corporation (‘‘KCBOT’’) 

Securities Exchange Act Release No. 34–32708 

(August 2, 1993), 58 FR 42586 (August 10, 1993); 

OCC–ICC–Commodity Clearing Corporation 

(‘‘CCC’’) Securities Exchange Act Release No. 34– 

33272 (December 2, 1993), 58 FR 64997 (December 

10, 1993); OCC–ICC, OCC–ICC–CME, OCC–KCBOT 

Securities Exchange Act Release No. 34–36819 

(February 7, 1996), 61 FR 5594 (February 13, 1996); 

OCC–CME–Securities Exchange Act Release No. 

34–38584 (May 8, 1997), 62 FR 26602 (May 14, 

1997); and OCC–ICE Clear U.S. Securities Exchange 

Act Release No. 34–57118 (January 9, 2008), 73 FR 

2970 (January 16, 2008). 

6The GSD does not have segregated accounts for 

Netting Members’ customers. In contrast, NYPC 

currently maintains both proprietary and segregated 

customer accounts for its Clearing Members in 

compliance with applicable Commodity Futures 

Exchange Commission (‘‘CFTC’’) regulations. Only 

NYPC Clearing Members’ proprietary accounts at 

NYPC are eligible for participation in the 

Proprietary Cross-Margining Program. The present 

proposal would introduce a third type of account 

at NYPC that NYPC Clearing Members may 

maintain, i.e., the Market Professional account. The 

present proposal also introduces a second type of 

account at GSD, i.e., the Market Professional 

account. 

7Consistent with previously approved market 

professional cross-margining programs, FICC’s rules 

define the term ‘‘Non-Customer’’ to mean GSD 

Netting Members and other persons whose accounts 

with GSD Netting Members would not be the 

accounts of ‘‘customers’’ within the meaning of SEC 

Rules 8c–1 and 15c2–1. 

8The FICC–NYPC Cross-Margining Agreement 

was approved by the Commission as part of FICC’s 

Rule Filing No. SR–FICC–2010–09. See note 4, 

supra. 

9As defined in the FICC–NYPC Cross-Margining 

Agreement, the term ‘‘Eligible Products’’ includes 

U.S. Government securities, securities of U.S. 

federal agencies and U.S. Government-sponsored 

enterprises, financing products and certain 

mortgage-backed securities cleared by FICC, and 

futures contracts and options on futures contracts, 

including U.S. dollar-denominated interest rate and 

fixed income futures contracts and options on 

futures contracts, cleared by NYPC. Formal 

inclusion of options on futures in the program will 

be the subject of a separate rule filing with the 

Commission. 

10As described above, GSD Netting Members who 

wish to participate in the Market Professional 

Cross-Margining Program will need to open an 

additional account for their Market Professionals. 

Likewise, NYPC Clearing Members wishing to 

participate in the program will need to open an 

additional account for their Market Professionals, 

which will be required to be separate and distinct 

from both their proprietary and segregated customer 

accounts. 

11 7 U.S.C. 1–27f as amended. 

12 11 U.S.C. 101–1532 as amended. 

13 15 U.S.C. 78aaa–78lll as amended. 

Clearing, LLC (‘‘NYPC’’) 4 (‘‘Proprietary 

Cross-Margining Program’’) to include 

eligible positions held by GSD Netting 

Members and NYPC Clearing Members 

for certain ‘‘market professionals.’’ 5

Overview 

In its present form, the Proprietary 

Cross-Margining Program is limited to 

cross-margining of proprietary accounts. 

Specifically, from NYPC’s perspective, 

only a member’s proprietary or ‘‘house’’ 

account is eligible for cross-margining; 

from GSD’s perspective, all accounts 

maintained by GSD for its Netting 

Members are deemed proprietary.6 The 

proposed rule filing expands the 

Proprietary Cross-Margining Program to 

non-proprietary accounts carried by 

participating GSD Netting Members on 

behalf of ‘‘Market Professionals’’ 

(‘‘Market Professional Cross-Margining 

Program’’). The proposed rule change 

defines ‘‘Market Professional’’ as an 

entity, other than a ‘‘non-customer,’’ 7

that is a member of a designated 

contract market and that actively trades 

for its own account products that are 

eligible under the cross-margining 

agreement between FICC and NYPC 

(‘‘FICC–NYPC Cross-Margining 

Agreement’’) 8 for cross-margining 

(‘‘Eligible Products’’).9 Positions and 

collateral held for Market Professionals 

will be maintained in accounts that are 

distinct from both proprietary crossmargining accounts and non-crossmargining accounts.10

As with the current Proprietary CrossMargining Program, the proposed 

Market Professional Cross-Margining 

Program would be available to GSD 

Netting Members that carry accounts of 

Market Professionals and that are also 

clearing members of NYPC (individually 

a ‘‘Joint Member’’) or that have an 

affiliate that is a clearing member of 

NYPC (individually an ‘‘Affiliated 

Member’’). Members do not have to be 

participating in the Proprietary CrossMargining Program in order to 

participate in the proposed Market 

Professional Cross-Margining Program 

(or vice versa). 

The proposed rule change necessitates 

revisions to the FICC–NYPC CrossMargining Agreement, which are 

described in detail below. Additional 

participant agreements have been added 

as appendices to the FICC–NYPC CrossMargining Agreement for this purpose. 

Segregation and Liquidation 

Considerations 

The proposed Market Professional 

Cross-Margining Program addresses 

concerns regarding segregation and 

liquidation procedures under the 

Commodity Exchange Act (‘‘CEA’’),11

Title 11 of the United States Code 

(‘‘Bankruptcy Code’’) 12 and the 

Securities Investor Protection Act 

(‘‘SIPA’’).13 The CEA requires that the 

property of customers must be 

segregated from the proprietary property 

of a futures commission merchant. 

Because Market Professionals are 

considered ‘‘customers’’ under CFTC 

regulations, the cross-margined 

positions of the Market Professionals 

and all property related thereto must be 

segregated from the cross-margined 

positions and property of the GSD 

Netting Member that carries their 

accounts. 

Under the proposed rule filing, each 

GSD Netting Member electing to 

participate in the Market Professional 

Cross-Margining Program must execute 

a Cross-Margining Participant 

Agreement for Market Professional 

Accounts (see Appendix C and 

Appendix D of the proposed Amended 

and Restated FICC–NYPC CrossMargining Agreement) and must 

establish a separate cross-margining 

account for the benefit of Market 

Professionals for whom it carries crossmargined positions (‘‘Market 

Professional Cross-Margining 

Account’’). GSD Netting Members and 

NYPC Clearing Members who establish 

Market Professional Cross-Margining 

Accounts must also obtain the consent 

of each Market Professional whose 

cross-margined positions are carried in 

such account to the commingling of the 

Market Professional’s assets with those 

of other electing Market Professionals of 

the same GSD Netting Member and 

NYPC Clearing Member (or permitted 

margin affiliate at NYPC); provided, 

however, that consistent with the 

requirements of CFTC Regulation 

39.13(g)(8)(i) (gross margin for customer 

accounts), the positions of a Market 

Professional cleared by FICC will only 

be cross-margined with the derivatives 

positions of the same Market 

Professional cleared by NYPC. 

Moreover, because Section 4d(a)(2) of 

the CEA prohibits commingling futures 

and securities in the absence of a CFTC 

rule, regulation or order to the contrary, 

it will be necessary for NYPC to obtain 

from the CFTC an order stating that 


emcdonald on DSK29S0YB1PROD with NOTICES
Federal Register / Vol. 77, No. 65 / Wednesday, April 4, 2012 / Notices 20447 

14 11 U.S.C. 761–767. 

15 17 CFR part 190. 

16Some Market Professionals could be deemed to 

be ‘‘customers’’ under SIPA and Exchange Act Rule 

15c3–3. Consistent with previously approved crossmargining programs, however, Market Professionals 

will be required to agree to subordinate their 

claims, in the event of the bankruptcy of a GSD 

Netting Member or an NYPC member, to the claims 

of other customers. See Securities Exchange Act 

Release No. 34–29991 (November 26, 1991), 56 FR 

61458 (December 3, 1991) n.23. 

17Under SIPA, SIPC satisfies the claims of 

‘‘customers’’ against insolvent broker-dealers up to 

predetermined limits. 15 U.S.C. 78fff–3. Under 

SIPA, however, the term ‘‘customer’’ does not 

include any person to the extent that such person 

has a claim for cash or securities which, by 

agreement, is subordinated to the claims of any or 

all creditors of the debtor. 15 U.S.C. 78lll(2)(C)(ii). 

Because a Market Professional will be required to 

subordinate its cross-margin related claims against 

a GSD Netting Member to those of the GSD Netting 

Member’s non-cross-margining customers, it will 

not fall within the protections afforded by SIPA. 

See Securities Exchange Act Release No. 34–29991 

(November 26, 1991), 56 FR 61458 (December 3, 

1991) n.24. 

18 11 U.S.C. 555, 556, 560, and 561. 19 11 U.S.C. 362(b)(6), 362(b)(17), 362(b)(27), and 

561. 20 In the situation where an Affiliated Member 

becomes insolvent, assets in the Market 

Professional Cross-Margin Accounts of FICC and 

NYPC will be set-off by FICC and NYPC against 

related liabilities in such accounts. 21 11 U.S.C. § 742. 22 15 U.S.C. 78fff–1(b) states in part: ‘‘To the 

extent consistent with the provisions of this chapter 

or as otherwise ordered by the court, a trustee shall 

be subject to the same duties as a trustee in a case 

under chapter 7 of Title 11, including, if the debtor 

is a commodity broker, as defined under section 

101 of such title, the duties specified in subchapter 

IV of such chapter 7’’. 

Eligible Products that are cleared by 

FICC and property received by a 

participating GSD Netting Member to 

margin, guarantee, or secure trades or 

positions in or accruing as a result of 

such Eligible Products may be 

commingled in a Market Professional 

Cross-Margining Account with Eligible 

Products cleared by NYPC and with 

property received by a participating 

NYPC Clearing Member to margin, 

guarantee, or secure trades or positions 

in or accruing as a result of such Eligible 

Products that would otherwise be 

required by the CFTC to be segregated 

under the CEA. 

FICC has established procedures to 

facilitate the segregation of the funds 

and securities deposited or received by 

GSD Netting Members regarding their 

Market Professional cross-margining 

activity. For example, each GSD Netting 

Member must establish separate bank 

accounts for the purpose of making 

daily funds-only settlement of its 

proprietary cross-margining activity and 

for the purpose of making daily fundsonly settlement of its Market 

Professional cross-margining activity. In 

addition, FICC and NYPC will establish 

and use separate bank accounts for 

paying and collecting cash margin and 

funds-only settlement amounts resulting 

from members’ proprietary crossmargining activities and for paying and 

collecting such amounts resulting from 

members’ market professional crossmargining activity. FICC will not permit 

the netting of obligations arising out of 

a GSD Netting Member’s proprietary 

cross-margining activity with those 

arising out of its Market Professional 

cross-margining activity. 

FICC has also taken steps to assure the 

segregation of securities that are 

deposited with FICC or its agents to 

satisfy Clearing Fund requirements in 

Market Professional Cross-Margining 

Accounts and proprietary crossmargining accounts. For example, FICC 

and NYPC will establish and use 

separate custody accounts to hold 

securities deposited as margin by 

members for proprietary crossmargining activity and to hold securities 

deposited as margin by members for 

Market Professional cross-margining 

activity. 

FICC’s proposal also addresses the 

potential for conflict between SIPA, 

Subchapter IV of chapter 7 of the 

Bankruptcy Code,14 and corresponding 

CFTC bankruptcy regulations,15 in the 

event of the liquidation and distribution 

of the property and funds of a GSD 

Netting Member that is a registered 

broker-dealer.16 To establish uniform 

results in the event of the bankruptcy or 

liquidation of a broker-dealer GSD 

Netting Member under SIPA, FICC will 

require each Netting Member that 

chooses to participate in the Market 

Professional Cross-Margining Program 

to require that the GSD Netting 

Member’s participating Market 

Professionals agree that in the event of 

the bankruptcy or liquidation of the 

GSD Netting Member carrying its crossmargined positions, the Market 

Professional will subordinate its crossmargining related claims to the claims 

of the firm’s non-cross-margining 

customers.17 Similarly, each 

participating Market Professional must 

acknowledge that all of the assets 

carried in a GSD Netting Member’s 

Market Professional Cross-Margining 

Account on the Market Professional’s 

behalf will not be deemed ‘‘customer 

property’’ for purposes of SIPA or give 

rise to any claim thereunder. This 

means that in the event of a GSD Netting 

Member bankruptcy, all claims to assets 

in cross-margining accounts will be 

determined under Subchapter IV of 

chapter 7 of the Bankruptcy Code and 

applicable CFTC regulations. FICC 

believes these measures reduce the 

possibility that assets in a GSD Netting 

Member’s Market Professional CrossMargining Account will be subject to 

two conflicting schemes of distribution. 

In the event of a default of a member 

that chooses to participate in the Market 

Professional Cross-Margining Program, 

FICC and NYPC will follow the 

remedies outlined in the FICC–NYPC 

Cross-Margining Agreement to liquidate 

or transfer the proprietary and Market 

Professional Cross-Margining Accounts. 

Any deficit in the Market Professional 

Cross-Margining Account would, absent 

a deficit in any NYPC segregated 

customer account of the defaulting 

member, be offset against any credit in 

any proprietary cross-margining account 

of the defaulting member. Non-crossmargining accounts at NYPC would be 

liquidated or transferred pursuant to 

NYPC procedures as they exist today. 

FICC and NYPC will not offset a credit 

in a Market Professional CrossMargining Account with a deficit in a 

proprietary cross-margin account or 

with any other account FICC or NYPC 

maintains for the defaulting member. 

Thus, any surplus in the Market 

Professional Cross-Margining Account 

will be returned to the member or its 

representative. 

In the event of a member bankruptcy, 

the Bankruptcy Code exempts FICC and 

NYPC from the automatic stay and 

permits FICC and NYPC to liquidate any 

assets held for the insolvent member 18

and offset those assets against the 

member’s liabilities.19 Assets of the 

member held in the Market Professional 

Cross-Margining Account will only be 

set-off against related Market 

Professional cross-margining liabilities. 

Any assets remaining after such a set-off 

will be transferred to the bankruptcy 

trustee for administration and 

distribution.20

If a member becomes insolvent, the 

Securities Investor Protection 

Corporation (‘‘SIPC’’) may and probably 

will file for a protective decree under 

SIPA.21 SIPC will then appoint a trustee 

charged with liquidating the bankrupt 

estate, consistent with SIPA. Under 

SIPA, the trustee must, to the extent not 

inconsistent with SIPA, administer the 

assets of the member held as a 

commodity broker in accordance with 

the Bankruptcy Code’s commodity 

broker liquidation requirements and 

applicable CFTC regulations.22 Even if 

SIPC does not exercise its power to seek 

appointment of a trustee and SIPA does 

not apply to the liquidation, a Market 

Professional’s claims to assets in the 

Market Professional Cross-Margining 

Account will be determined in 

accordance with the Bankruptcy Code’s 

commodity broker liquidation scheme 


emcdonald on DSK29S0YB1PROD with NOTICES
20448 Federal Register / Vol. 77, No. 65 / Wednesday, April 4, 2012 / Notices 

23As defined in 11 U.S.C. 761(10) and 17 CFR 

190.01(n). 

24As defined in 11 U.S.C. 761(9). 

25 11 U.S.C. 766(h); see 17 CFR 190.08. 

26See generally 11 U.S.C.§ 766 and 17 CFR 

190.08. 

27See 17 CFR part 190, Appendix B (Framework 

1). 

contained in Subchapter IV of chapter 7 

and applicable CFTC regulations. 

Generally, applicable sections of the 

Bankruptcy Code and CFTC regulations 

provide for the trustee to distribute 

‘‘customer property’’ 23 pro rata among 

‘‘customers’’ 24 according to account 

class and generally give priority to 

customer claims over all others, except 

those dealing with the administration of 

the bankrupt estate.25 Also, assuming 

the trustee does not transfer customer 

accounts to another firm and determines 

to liquidate customer accounts, the 

trustee will distribute customer property 

to the claimants.26 If there is a shortfall 

in the Market Professional CrossMargining Account and there is no 

shortfall or a lesser shortfall in the noncross-margining customer account, 

Market Professionals will have a claim 

against the Market Professional CrossMargining Account and will be able to 

claim against the non-cross-margining 

customer account only after all noncross-margining customer claims have 

been satisfied. If the shortfall in the noncross-margining customer account is 

equal to or greater than the shortfall in 

the Market Professional Cross-Margining 

Account, the two accounts will be 

combined and Market Professionals and 

non-cross-margining customers will 

share on a pro rata basis.27

Proposed Changes to the FICC–NYPC 

Cross-Margining Agreement 

In addition to certain technical 

corrections and conforming changes, the 

FICC–NYPC Cross-Margining 

Agreement would be substantively 

amended as described below in order to 

incorporate the proposed Market 

Professional Cross-Margining Program. 

Capitalized terms used in this section 

have the meanings given to them in the 

FICC–NYPC Cross-Margining 

Agreement. 

Recitals 

The Recitals to the FICC–NYPC CrossMargining Agreement would be 

amended to describe the proposed 

expansion of the existing FICC–NYPC 

Cross-Margining Agreement to provide 

for the cross-margining of the accounts 

of Market Professionals, and also to 

reflect the fact that the current FICC– 

NYPC Cross-Margining Agreement was 

executed on March 4, 2011, after receipt 

of the necessary regulatory approvals by 

FICC and NYPC. 

Section 1. Definitions 

Section 1(f) (Available Assets) and 

Section 1(tt) (Margin) 

The ‘‘Available Assets’’ definition 

would be amended to include as assets 

available in the event of a default any 

margin posted to the Defaulting 

Member’s Proprietary Cross-Margining 

Account, as well as any margin posted 

to the Defaulting Member’s Market 

Professional Cross-Margining Account. 

The ‘‘Margin’’ definition would be 

similarly amended to include original 

margin, option premiums and other 

margin collateral held by or for the 

account of FICC or NYPC to secure the 

obligations of a Cross-Margining 

Participant’s Proprietary CrossMargining Account and/or its Market 

Professional Cross-Margining Account. 

The ‘‘Available Assets’’ definition 

would be further amended to clarify 

that, consistent with the distributional 

convention established in Appendix B 

to Part 190 of the CFTC’s Regulations, 

the NYPC Guaranty Fund deposits of a 

Defaulting Member would first be 

applied to any deficit in the Customer 

Funds Account of the Defaulting 

Member carried by NYPC, and then, 

after any such deficit has been 

completely satisfied, to any CrossMargin Loss in the Defaulting Member’s 

Market Professional Cross-Margining 

Account carried by NYPC, and then 

finally to any Cross-Margin Loss in the 

Defaulting Member’s Proprietary CrossMargining Account carried by NYPC. 

Section 1(t) (Cross-Margin Gain) and 

Section 1(u) (Cross-Margin Loss) 

For ease of reference and to facilitate 

understanding of the loss allocation 

mechanism in the event of the 

liquidation of the cross-margined 

positions carried for a Defaulting 

Member by FICC and NYPC, the 

definitions of Cross-Margin Gain and 

Cross-Margin Loss would become a new 

subsection (b) of Section 7 of the FICC– 

NYPC Cross-Margining Agreement 

(Suspension and Liquidation of CrossMargining Participant). 

Section 1(y) (Customer Funds Account) 

The term ‘‘Segregated Funds 

Account’’ in the existing FICC–NYPC 

Cross-Margining Agreement would be 

replaced by the term ‘‘Customer Funds 

Account’’ and modified in order to 

clearly distinguish non-cross-margining 

‘‘customer’’ accounts established by 

NYPC from both Market Professional 

Cross-Margining Accounts and 

Proprietary Cross-Margining Accounts. 

Section 1(ww) (Market Professional) 

As described above, consistent with 

previously approved cross-margining 

programs, the term ‘‘Market 

Professional’’ would be defined as an 

entity, other than a ‘‘Non-Customer’’ 

(described below), that is a member of 

a designated contract market and that 

actively trades for its own account 

Eligible Products that are eligible for 

cross-margining under the FICC–NYPC 

Cross-Margining Agreement. 

Section 1(bbb) (Non-Customer) 

As described above, ‘‘Non-Customers’’ 

would be excluded from the definition 

of a Market Professional. With respect to 

a GSD Netting Member, the term ‘‘NonCustomer’’ would be defined as such 

GSD Netting Member or other person 

whose account with such GSD Netting 

Member would not be the account of a 

‘‘customer’’ within the meaning of SEC 

Rules 8c–1 and 15c2–1. 

Section 1(sss) (Securities Custody 

Account) and 1(uuu) (Settlement 

Account) 

For ease of reference, the term ‘‘CrossMargining Securities Account’’ would 

be replaced with the term ‘‘Securities 

Custody Account’’ and would be 

expanded to include a custody account 

to hold Margin in the form of securities 

deposited by a Cross-Margining 

Participant in respect of a Proprietary 

Cross-Margining Account or a Market 

Professional Cross-Margining Account. 

Similarly, the definition of ‘‘Settlement 

Account’’ would be expanded to 

include a bank account established to 

hold cash Margin deposited by a CrossMargining Participant in respect of a 

Proprietary Cross-Margining Account or 

a Market Professional Cross-Margining 

Account. 

Section 2. Participation 

Section 2(a) would be amended and 

Section 2(b) and 2(c) would be added in 

order to accommodate the additional 

documentation required to establish a 

Set of Market Professional CrossMargining Accounts by either a Joint 

Clearing Member or by a Clearing 

Member and its Cross-Margining 

Affiliate. 

Section 5. Forms of Margin; Holding 

Margin 

Section 5(b) would be amended to 

reflect the fact that separate Settlement 

Accounts and Securities Custody 

Accounts would be maintained for 

proprietary and Market Professional 

cross-margining activity. 

Section 5(c) would be amended to 

allow FICC and NYPC to hold cash and 

securities posted with respect to crossVerDate Mar<15>2010 15:28 Apr 03, 2012 Jkt 226001 PO 00000 Frm 00096 Fmt 4703 Sfmt 4703 E:\FR\FM\04APN1.SGM 04APN1

emcdonald on DSK29S0YB1PROD with NOTICES
Federal Register / Vol. 77, No. 65 / Wednesday, April 4, 2012 / Notices 20449 

28Similar to the Clearing Member Agreements for 

Proprietary Accounts, the Clearing Member 

Agreements for Market Professional Accounts 

would require the Clearing Member to pledge, for 

itself and for each Market Professional on whose 

behalf positions are carried in a Set of Market 

Professional Cross-Margining Accounts, the 

positions and Margin in the Set of Market 

Professional Cross-Margining Accounts. Consistent 

therewith and with the Clearing Member 

Continued 

margining activity in either separate 

accounts or, consistent with previously 

approved cross-margining programs, 

joint accounts titled in the names of 

FICC and NYPC. 

Section 7. Suspension and Liquidation 

of Cross-Margining Participant 

Section 7(a) would be amended to 

clarify that the positions and Margin of 

a Defaulting Member may be liquidated 

or transferred to one or more nondefaulting Clearing Members. A new 

Section 7(b) would be added to define 

‘‘Cross-Margin Gain’’ and ‘‘Cross-Margin 

Loss,’’ as described above. New Section 

7(b) would also make clear that in 

calculating its Cross-Margin Gain (or 

Cross-Margin Loss) or Net Gain (or Net 

Loss) FICC and NYPC would be 

required to make separate calculations 

with respect to the Defaulting Member’s 

Proprietary Cross-Margining Account 

and its Market Professional CrossMargining Account. 

Section 7(g) would be amended to 

provide that to the extent that pursuant 

to the loss allocation prescribed in 

Section 7, both FICC and NYPC owe 

payments to each other, i.e., one 

clearing organization owes a payment 

with respect to the Proprietary CrossMargining Account of a Defaulting 

Member and the other owes a payment 

with respect to the Defaulting Member’s 

Market Professional Cross-Margining 

Account, those two payments may be 

netted and setoff against each other. 

Proposed Changes to Clearing Member 

Agreements 

The FICC–NYPC Cross-Margining 

Agreement is solely between FICC and 

NYPC. Members of FICC and of NYPC 

that wish to participate in the CrossMargining Program must become party 

to a Clearing Member Cross-Margining 

Agreement which, among other things, 

reflects the Clearing Member’s 

agreement to be bound by the Rules 

applicable to cross-margining and to the 

provisions of the FICC–NYPC CrossMargining Agreement (‘‘Clearing 

Member Agreements’’). Capitalized 

terms used in this section have the 

meanings given to them in the proposed 

Clearing Member Agreements. 

The current FICC–NYPC CrossMargining Agreement includes two 

forms of Clearing Member Agreement— 

one for joint Clearing Members (i.e., 

entities that are members of both FICC 

and NYPC), the other for Clearing 

Members that are Affiliates of each other 

(i.e., a Clearing Member of either FICC 

or NYPC that directly or indirectly 

controls, is controlled by, or under 

common control with a Clearing 

Member of the other Clearing 

Organization). Those agreements, which 

are set forth as Appendix A and 

Appendix B to the FICC–NYPC CrossMargining Agreement, would be 

renamed as Clearing Member CrossMargining Agreement (Joint Clearing 

Member—Proprietary Accounts) and 

Clearing Member Cross-Margining 

Agreement (Affiliated Clearing 

Members—Proprietary Accounts), and 

references in those agreements to a 

‘‘Member’’ would be replaced with 

references to a ‘‘Clearing Member’’ for 

consistency with the terminology used 

in the FICC–NYPC Cross-Margining 

Agreement. 

The Clearing Member Agreements for 

Proprietary Accounts are proposed to be 

further modified to make clear that a Set 

of Proprietary Cross-Margining 

Accounts would be combined and 

treated as a single account for purposes 

of calculating Margin. This change is 

reflective of the current practice of the 

Clearing Organizations pursuant to the 

Cross-Margining Agreement and is 

proposed to be set out solely for 

purposes of clarity. 

The Clearing Member Agreements 

would additionally be modified to 

reflect the practice of the Clearing 

Organizations regarding the use of 

Clearing Data (as that term is defined in 

the Clearing Member Cross-Margining 

Agreements). Specifically, the Clearing 

Member Agreements would be modified 

to provide that Clearing Data may only 

be disclosed (i) to an Affiliated Clearing 

Member, where applicable, (ii) in 

accordance with the provisions of 

Section 10 of the Cross-Margining 

Agreement, and (iii) in aggregated form, 

provided that such aggregated Clearing 

Data does not identify of the Clearing 

Member or Affiliated Clearing Members, 

as applicable, as the source thereof. 

The termination provisions of the 

Clearing Member Agreements for 

Proprietary Accounts would also be 

modified to make clear that the required 

acknowledgment of a Clearing Member’s 

termination of the Agreement will be 

given by the Clearing Organizations 

promptly after the two Business Day 

notice period required by the Clearing 

Member Agreements. The termination 

provisions would additionally be 

modified to make explicit that a 

Clearing Member’s continuing 

obligations under the Clearing Member 

Agreements and the Cross-Margining 

Agreement survive the termination of 

the Clearing Member Agreement only to 

the extent those obligations arose prior 

to such termination. 

Finally, the Clearing Member CrossMargining Agreement (Affiliated 

Clearing Members—Proprietary 

Accounts) is proposed to be amended to 

include a waiver of the Clearing 

Members’ and the Clearing 

Organizations’ right to jury trial in any 

dispute arising in connection with that 

agreement. A comparable provision 

already is included in the Clearing 

Member Cross-Margining Agreement 

(Joint Clearing Member—Proprietary 

Accounts). The remaining revisions to 

the Clearing Member Agreements for 

Proprietary Accounts are nonsubstantive or conforming. 

While it is anticipated that some 

Clearing Members will elect to 

participate in cross-margining for their 

Proprietary Accounts and also act as 

Clearing Member for Market 

Professionals, a Clearing Member could 

elect to act in only one of those 

capacities. The Clearing Member 

Agreements in Appendices A and B to 

the FICC–NYPC Cross-Margining 

Agreement, therefore, would be 

complemented by a Clearing Member 

Cross-Margining Agreement (Joint 

Clearing Member—Market Professional 

Accounts) and Clearing Member CrossMargining Agreement (Affiliated 

Clearing Members—Market Professional 

Accounts), respectively, and a Clearing 

Member that elected to maintain a Set 

of Proprietary Cross-Margining 

Accounts and a Set of Market 

Professional Cross-Margining Accounts 

would be required to enter into Clearing 

Member Cross-Margining Agreements 

for both its Proprietary Accounts and for 

its Market Professional Accounts. 

The proposed Clearing Member 

Agreements for Market Professional 

Accounts (Appendices C and D to the 

FICC–NYPC Cross-Margining 

Agreement) are based upon the Clearing 

Member Agreements for Proprietary 

Accounts, but have been modified as 

appropriate. For example, the Clearing 

Member Agreements for Market 

Professional Accounts would make 

explicit that the Set of Market 

Professional Cross-Margining Accounts 

that would be established by the 

Clearing Organizations for a Clearing 

Member are to be limited to transactions 

and positions established by Market 

Professionals who have signed a Market 

Professional Agreement for CrossMargining in the form set forth as 

Exhibit A to Appendices C and D, 

respectively.28


emcdonald on DSK29S0YB1PROD with NOTICES
20450 Federal Register / Vol. 77, No. 65 / Wednesday, April 4, 2012 / Notices 

Agreements for Proprietary Accounts, the Clearing 

Member Agreements for Market Professional 

Accounts would include representations and 

warranties by the Clearing Member to the effect that 

it has the power to grant the foregoing security 

interest and that it is the sole owner of or otherwise 

has the right to transfer collateral to the Clearing 

Organizations. 

29See Exhibits 5F and 5G to Release No. 34– 

57118 (January 9, 2008) (Options Clearing 

Corporation—ICE Clear US market professional 

cross-margining); see also Securities Exchange Act 

Release No. 34–29991(November 26, 1991), 56 FR 

61458 (December 3, 1991) (Options Clearing 

Corporation—Chicago Mercantile Exchange market 

professional cross-margining). 

The Market Professional Agreements 

are derived from the form of Market 

Professional’s Agreement for CrossMargining that has previously been 

approved by the Commission.29 The 

FICC–NYPC Market Professional 

Agreements differ from the forms of 

agreement that have previously been 

approved in that they would be 

modified to reference the Eligible 

Products that are available for crossmargining under the FICC–NYPC CrossMargining Agreement. The FICC–NYPC 

Market Professional Agreements 

additionally would be modified to 

reference the definitions of the term 

‘‘Market Professional’’ that would be set 

forth in the Rules of FICC and NYPC, 

and to require a Market Professional to 

represent and warrant that it does, in 

fact, qualify as such. Moreover, the 

FICC–NYPC Market Professional 

Agreements would be amended to 

provide that, consistent with the 

requirements of CFTC Regulation 

39.13(g)(8)(i) (gross margin for customer 

accounts), the positions of a Market 

Professional cleared by FICC will only 

be cross-margined with the derivatives 

positions of the same Market 

Professional cleared by NYPC. The only 

other substantive change from the form 

of agreement previously approved by 

the Commission would be the 

elimination of a provision that would 

have conditioned the effectiveness of 

the Market Professional Agreements on 

the receipt of all necessary approvals by 

the Commission and the CFTC. FICC 

believes that a provision of this nature 

is unnecessary, given that FICC and 

NYPC will not permit Clearing Members 

to enter into Market Professional 

Agreements until all necessary 

regulatory approvals have been 

obtained. 

Proposed FICC Rule Changes 

In addition to the proposed changes to 

the FICC–NYPC Cross-Margining 

Agreement, FICC is proposing the 

following GSD rule changes to effectuate 

the Market Professional Cross-Margining 

Program. Capitalized terms used in this 

section have the meanings given to them 

in the GSD Rules. 

Rule 1 (Definitions) 

New definitions are being added for 

the following terms: ‘‘Market 

Professional,’’ ‘‘Market Professional 

Agreement for Cross-Margining,’’ 

‘‘Market Professional Cross-Margining 

Account,’’ ‘‘Non-Customer,’’ ‘‘NYPC 

Market Professional Account,’’ and 

‘‘NYPC Proprietary Account’’ (which 

retains the current definition of ‘‘NYPC 

Account’’). ‘‘NYPC Account,’’ an 

existing term, is now proposed to be 

amended to encompass the two new 

terms of ‘‘NYPC Market Professional 

Account’’ and ‘‘NYPC Proprietary 

Account.’’ In addition, changes are 

proposed to the following definitions to 

reference the concepts associated with 

the Market Professional Cross-Margining 

Program: ‘‘Account,’’ ‘‘Cross-Margining 

Affiliate,’’ ‘‘Cross-Margining 

Agreement’’ and ‘‘Margin Portfolio.’’ A 

technical change is being proposed to 

the definition of ‘‘Cross-Margining 

Payment.’’ 

Rule 3 (On-Going Membership 

Requirements) 

FICC is proposing to amend Section 

11 of Rule 3, which covers additional 

accounts requested by Members, to 

provide for the opening of market 

professional accounts and to make clear 

that such accounts must meet the 

requirements of the Cross-Margining 

Agreement and the GSD Rules (as with 

all other accounts carried by FICC for its 

Members). 

Rule 4 (Clearing Fund and Loss 

Allocation) 

FICC is proposing to amend Section 

1b and Section 2 of Rule 4 to provide 

that the market professional account 

will have its own Clearing Fund 

calculations separate from the main 

account of the Netting Member, and that 

the rules applicable to the Clearing 

Fund calculations and the requirements 

of the Required Fund Deposit also apply 

Clearing Fund calculations and 

Required Fund Deposits associated with 

the market professional accounts. 

Rule 13 (Funds-Only Settlement) 

FICC is proposing to amend Section 1 

and Section 5a to provide that fundsonly settlement amounts will be 

calculated separately for the member’s 

market professional account and that 

net-net funds only credits/debits will 

also apply to the market professional 

accounts of a Member (or its permitted 

margin affiliate) across FICC and NYPC, 

as is the case currently with the 

proprietary accounts. 

Rule 22A (Procedures for When the 

Corporation Ceases To Act) 

FICC is proposing to amend Section 2 

of Rule 22A to provide that a liquidation 

gain in a Netting Member’s proprietary 

account will be used to offset any 

resulting liquidation loss in such 

Member’s Market Professional CrossMargining Account. 

Rule 29 (Release of Clearing Data) 

FICC is proposing to amend Rule 29 

to make clear that a Member’s Clearing 

Data will be released to a futures 

clearing organization (FCO) with which 

FICC has a Cross-Margining 

Arrangement and that such data will 

include data regarding the Member’s 

market professional customers. 

Rule 43 (Cross-Margining 

Arrangements) 

FICC is proposing to amend Rule 43 

to provide for the requirement for 

Netting Members who wish to 

participate in the Market Professional 

Cross-Margining Program to execute the 

appropriate participation agreements 

which are appended to the FICC–NYPC 

Cross-Margining Agreement as 

discussed above. 

FICC believes the proposed change is 

consistent with Section 17A of the Act 

and the rules and regulations 

thereunder because it will facilitate the 

establishment of linked or coordinated 

facilities for clearance and settlement of 

transactions in securities and contracts 

of sale for future delivery by providing 

for the cross-margining of members’ 

Market Professionals’ positions held at 

FICC and NYPC. 

(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 


emcdonald on DSK29S0YB1PROD with NOTICES
Federal Register / Vol. 77, No. 65 / Wednesday, April 4, 2012 / Notices 20451 

30 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 Nos. 65437 

(September 28, 2011), 76 FR 61466; 65428 

(September 28, 2011), 76 FR 61435; 65429 

(September 28, 2011), 76 FR 61432; 65433 

(September 28, 2011), 76 FR 61453; 65438 

(September 28, 2011), 76 FR 61447; 65426 

(September 28, 2011), 76 FR 61460; 65431 

(September 28, 2011), 76 FR 61425; 65440 

(September 28, 2011), 76 FR 61444; 65430 

(September 28, 2011), 76 FR 61429; 65425 

(September 28, 2011), 76 FR 61438; 65435 

(September 28, 2011), 76 FR 61416 ; 65436 

(September 28, 2011), 76 FR 61450; 65427 

(September 28, 2011), 76 FR 61457; 65432 

(September 28, 2011), 76 FR 61422; 65439 

(September 28, 2011), 76 FR 61463; 65434 

(September 28, 2011), 76 FR 61419 (collectively, the 

‘‘Notices’’). 

4See Letter to Elizabeth M. Murphy, Secretary, 

Commission, from Ann L. Vlcek, Managing Director 

and Associate General Counsel, the Securities 

Industry and Financial Markets Association, dated 

October 27, 2011; Letter to Commission, from James 

J. Angel, Ph.D., CFA, Associate Professor of 

Finance, Georgetown University, McDonough 

School of Business, dated October 25, 2011; Letter 

to Elizabeth M. Murphy, Secretary, Commission, 

from Craig S. Donohue, CME Group, Inc., dated 

October 25, 2011; Letter to Elizabeth M. Murphy, 

Secretary, Commission, from Commissioner Bart 

Chilton, Commodity Futures Trading Commission, 

dated October 25, 2011; Letter to Elizabeth M. 

Murphy, Secretary, Commission, from Richard H. 

Baker, President and CEO, Managed Funds 

Association, dated October 25, 2011; Letter from 

Suzanne H. Shatto, dated October 20, 2011; Letter 

from Mark Roszak, dated October 4, 2011. 

5See Securities Exchange Act Release No. 65770 

(November 17, 2011), 76 FR 72492 (November 23, 

2011). 

6See Securities Exchange Act Release No. 66065 

(December 28, 2011), 77 FR 316 (January 4, 2012) 

(‘‘Order Instituting Proceedings’’). 

7See letters to Elizabeth Murphy, Secretary, 

Commission, from Timothy Quast, Managing 

Director, ModernIR, dated January 20, 2012; Craig 

S. Donohue, Chief Executive Officer, CME Group, 

Inc., dated January 25, 2012, and Ann L. Vlcek, 

Managing Director and Associate General Counsel, 

the Securities Industry and Financial Markets 

Association, dated February 7, 2012. 

8 15 U.S.C. 78s(b)(2). 

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 

rule-comments@sec.gov. Please include 

File Number SR–FICC–2012–03 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–FICC–2012–03. 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_03.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– 

2012–03 and should be submitted on or 

before April 25, 2012. 

For the Commission by the Division of 

Trading and Markets, pursuant to delegated 

authority.30

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2012–8042 Filed 4–3–12; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–66680; File Nos. SR–BATS– 

2011–038; SR–BYX–2011–025; SR–BX– 

2011–068; SR–CBOE–2011–087; SR–C2– 

2011–024; SR–CHX–2011–30; SR–EDGA– 

2011–31; SR–EDGX–2011–30; SR–FINRA– 

2011–054; SR–ISE–2011–61; SR–NASDAQ– 

2011–131; SR–NSX–2011–11; SR–NYSE– 

2011–48; SR–NYSEAmex–2011–73; SR– 

NYSEArca–2011–68; SR–Phlx–2011–129] 

Self-Regulatory Organizations; BATS 

Exchange, Inc.; BATS Y–Exchange, 

Inc.; NASDAQ OMX BX, Inc.; Chicago 

Board Options Exchange, 

Incorporated; C2 Options Exchange, 

Incorporated; Chicago Stock 

Exchange, Inc.; EDGA Exchange, Inc.; 

EDGX Exchange, Inc.; Financial 

Industry Regulatory Authority, Inc.; 

International Securities Exchange LLC; 

The NASDAQ Stock Market LLC; New 

York Stock Exchange LLC; NYSE 

Amex LLC; NYSE Arca, Inc.; National 

Stock Exchange, Inc.; NASDAX OMX 

PHLX LLC; Notice of Designation of 

Longer Period for Commission Action 

on Proceedings To Determine Whether 

To Disapprove Proposed Rule 

Changes Relating to Trading Halts Due 

to Extraordinary Market Volatility 

March 29, 2012. 

On September 27, 2011, each of BATS 

Exchange, Inc. (‘‘BATS’’), BATS Y– 

Exchange, Inc. (‘‘BYX’’), NASDAQ OMX 

BX, Inc. (‘‘BX’’), Chicago Board Options 

Exchange, Incorporated (‘‘CBOE’’), C2 

Options Exchange, Incorporated (‘‘C2’’), 

Chicago Stock Exchange, Inc. (‘‘CHX’’), 

EDGA Exchange, Inc. (‘‘EDGA’’), EDGX 

Exchange, Inc. (‘‘EDGX’’), Financial 

Industry Regulatory Authority, Inc. 

(‘‘FINRA’’), International Securities 

Exchange LLC (‘‘ISE’’), The NASDAQ 

Stock Market LLC (‘‘Nasdaq’’), National 

Stock Exchange, Inc. (‘‘NSX’’), New 

York Stock Exchange LLC (‘‘NYSE’’), 

NYSE Amex LLC (‘‘NYSE Amex’’), 

NYSE Arca, Inc. (‘‘NYSE Arca’’), and 

NASDAQ OMX PHLX LLC (‘‘Phlx’’) 

filed with the Securities and Exchange 

Commission (‘‘Commission’’), pursuant 

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

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

19b–4 thereunder,2 proposed rule 

changes (the ‘‘SRO Proposals’’) to 

amend certain of their respective rules 

relating to trading halts due to 

extraordinary market volatility. The 

SRO Proposals were published for 

comment in the Federal Register on 

October 4, 2011.3 The Commission 

received seven comment letters on the 

SRO Proposals.4

On November 17, 2011, the 

Commission extended the time period 

in which to either approve the SRO 

Proposals, disapprove the SRO 

Proposals, or to institute proceedings to 

determine whether to disapprove the 

SRO Proposals, to December 30, 2011.5

On December 28, 2011, the Commission 

instituted proceedings to determine 

whether to approve or disapprove the 

SRO Proposals.6 The Commission 

thereafter received an additional three 

comment letters on the SRO Proposals.7

Section 19(b)(2) of the Act 8 provides 

that, after initiating disapproval 

proceedings, the Commission shall issue 

an order approving or disapproving the 


emcdonald on DSK29S0YB1PROD with NOTICES