Federal Register / Vol. 77, No. 67 / Friday, April 6, 2012 / Notices 20861 

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

6 17 CFR 240.19b–4(f)(6). In addition, Rule 19b4(f)(6)(iii) requires the Exchange to give the 

Commission written notice of the Exchange’s intent 

to file the proposed rule change, along with a brief 

description and text of the proposed rule change, 

at least five business days prior to the date of filing 

of the proposed rule change, or such shorter time 

as designated by the Commission. The Exchange 

has satisfied this requirement. 

7See SR–BATS–2012–014, Item 7. 

8For purposes only of waiving the 30-day 

operative delay, the Commission has considered the 

proposed rule’s impact on efficiency, competition, 

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

9 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

structural changes to the Corporation’s 

certificate of incorporation. These 

changes, however, do not impact the 

governance of the Exchange nor do they 

modify the relative ownership of the 

shareholders of the Corporation. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change imposes any 

burden on competition. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants or Others 

The Exchange has neither solicited 

nor received written comments on the 

proposed rule change. 

III. Date of Effectiveness of the 

Proposed Rule Changes and Timing for 

Commission Action 

Because the foregoing proposed rule 

change does not significantly affect the 

protection of investors or the public 

interest, does not impose any significant 

burden on competition, and, by its 

terms, does not become operative for 30 

days from the date on which it was 

filed, or such shorter time as the 

Commission may designate, it has 

become effective pursuant to Section 

19(b)(3)(A) of the Act 5 and Rule 19b– 

4(f)(6) thereunder.6

The Exchange has requested that the 

Commission waive the 30-day operative 

delay. The Exchange has argued that the 

proposed rule change is consistent with 

the protection of investors and the 

public interest because it would permit 

the Corporation to immediately amend 

its certificate of incorporation to 

facilitate the Corporation’s IPO, and 

because the proposed amendments 

would not impact the ownership or 

governance of the Exchange.7 The 

Exchange has stated that the 

Corporation’s IPO may occur in the near 

future, and that the changes described 

in this proposal are a critical component 

of such IPO. The Exchange has 

represented that a waiver of the 

operative waiting period will allow the 

Corporation to promptly move forward 

with the IPO without delay. The 

Commission notes that the Exchange 

has also represented that the proposed 

amendments to the Corporation’s 

certificate of incorporation would not 

impact the Corporation’s existing 

governance structure or ownership and 

voting limitations or the Exchange’s 

self-regulatory functions. Therefore, the 

Commission believes that a waiver of 

the 30-day operative delay is consistent 

with the protection of investors and the 

public interest. For this reason, the 

Commission hereby waives the 30-day 

operative delay requirement and 

designates the proposed rule change as 

operative upon filing.8

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–BYX–2012–007 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–BYX–2012–007. This file 

number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

Internet Web site (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for Web site viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE., 

Washington, DC 20549, on official 

business days between the hours of 10 

a.m. and 3 p.m. Copies of such filing 

also will be available for inspection and 

copying at the principal office of 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 

publicly available. All submissions 

should refer to File Number SR–BYX– 

2012–007 and should be submitted on 

or before April 27, 2012. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.9

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. 2012–8360 Filed 4–5–12; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–66715; File No. SR–OCC– 

2012–04] 

Self-Regulatory Organizations; The 

Options Clearing Corporation; Notice 

of Filing of Proposed Rule Change 

Relating to Stock Loan Buy-In and SellOut Rules 

April 2, 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 22, 

2012, The Options Clearing Corporation 

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

Exchange Commission (‘‘Commission’’) 

the proposed rule change as described 

in Items I, II, and III below, which Items 

have been prepared primarily by OCC. 

The Commission is publishing this 

notice to solicit comments on the 

proposed rule change from interested 

persons. 

I. Self-Regulatory Organization’s 

Statement of Terms of Substance of the 

Proposed Rule Change 

The proposed rule change would 

make procedural changes to certain 

stock loan buy-in and sell-out rules. 

mstockstill on DSK4VPTVN1PROD with NOTICES

20862 Federal Register / Vol. 77, No. 67 / Friday, April 6, 2012 / Notices 

3The Market Loan Program, governed by Article 

XXIA of OCC’s By-Laws and Chapter XXIIA of 

OCC’s Rules, provides a framework that 

accommodates securities lending transactions 

executed through electronic trading systems (‘‘Loan 

Markets’’). 

4The Stock Loan/Hedge Program, governed by 

Article XXI of OCC’s By-Laws and Chapter XXII of 

OCC’s Rules, allows approved clearing members to 

register their privately negotiated securities lending 

transactions with OCC. 

5Attached to the proposed rule change as Exhibit 

5A is a marked copy showing the changes between 

the original and amended and restated AQS 

Agreement. These supporting changes to the AQS 

Agreement principally are technical in nature. 

Technical changes also have been made to reflect 

the use of DTC’s Dividend Service to effect 

settlement of certain cash dividends. See Exchange 

Act Release No. 34–60881 (October 26, 2009), 74 

F.R. 56253 (October 30, 2009) [SR–OCC–2009–16]. 

II. Self-Regulatory Organization’s 

Statement of Purpose of, and Statutory 

Basis for, the Proposed Rule Change 

In its filing with the Commission, 

OCC 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. OCC has prepared 

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

and (C) below, of the most significant 

aspects of these statements. 

A. Self-Regulatory Organization’s 

Statement of Purpose of, and Statutory 

Basis for, the Proposed Rule Change 

As described below, OCC is proposing 

three procedural changes to certain 

rules relating to the Market Loan 

Program 3 and the Stock Loan/Hedge 

Program.4

First, OCC proposes to amend the 

buy-in and sell-out processes under the 

Market Loan Program. Under existing 

Rules, buy-in and sell-out transactions 

under the Market Loan Program would 

be executed by the relevant Loan Market 

using an independent broker. However, 

Clearing Members participating in the 

Market Loan Program have requested 

that the execution of such buy-in or sellout transactions be left to the discretion 

of Lending Clearing Member or 

Borrowing Clearing Member, as 

applicable. OCC understands that 

Automated Equity Finance Markets, Inc. 

(‘‘AQS’’), the operator of the Loan 

Market supported by the Market Loan 

Program, supports the requested change 

and believes that allowing participants 

in the Market Loan Program to manage 

the buy-in and sell-out processes in the 

manner that they are accustomed to will 

foster the development of its 

marketplace. To accommodate such 

request, OCC proposes to amend Rule 

2209A and Rule 2211A to update the 

buy-in and sell-out processes described 

therein and to redefine the respective 

rights, obligations, and responsibilities 

of OCC, Clearing Members and the 

relevant Loan Market in connection 

therewith. 

More specifically, under existing rules 

where the Borrowing Clearing Member 

fails to return the specified quantity of 

loaned stock (or where the Lending 

Clearing Member fails to pay the 

settlement price with respect to the 

specified quantity of loaned stock), the 

relevant Loan Market will instruct an 

independent broker to execute a buy-in 

(or sell-out) of the loaned stock, and 

OCC will determine in its sole 

discretion, as between OCC and the 

clearing members, whether the costs of 

the transaction are reasonable. Under 

the proposed rules, as is the more 

common practice in connection with 

securities lending, instead of an 

independent broker the Lending 

Clearing Member (or the Borrowing 

Clearing Member) would determine if 

and when to execute a buy-in (or sellout) of the loaned stock. Because the 

Clearing Member would have sole 

discretion with respect to execution of 

the buy-in (or sell-out) transaction, such 

Clearing Member would be required to 

defend the timeliness of the transaction 

and the reasonableness of the costs if 

such matters were challenged. OCC 

would have no responsibility with 

respect to the resolution unless OCC 

had suspended the Clearing Member. In 

connection with the foregoing proposed 

changes, OCC and AQS would amend 

and restate the Agreement for Clearing 

and Settlement Services between the 

parties (‘‘AQS Agreement’’). A copy of 

the amended and restated AQS 

Agreement is attached to the proposed 

rule change.5

Second, OCC proposes to amend the 

Rules governing the Stock Loan/Hedge 

Program to add a sell-out process. 

Currently, Rule 2209, which governs 

regular termination of stock loans under 

the Stock Loan/Hedge Program, does not 

describe a sell-out process. Although a 

sell-out process is described in Rule 

2211, the scope of its application is 

limited by the context of Rule 2211, 

which specifically governs the close-out 

of stock loan positions of suspended 

Clearing Members. Therefore, OCC 

proposes to amend Rule 2209 to add a 

sell-out process that would apply in the 

context of regular termination of stock 

loans and to amend Rule 2211 to update 

the buy-in and sell-out processes 

described therein and to redefine the 

respective rights, obligations, and 

responsibilities of OCC and Clearing 

Members in connection therewith. Rule 

2209 would also be amended to clarify 

when stock loans are terminated, 

including codifying a long standing 

process which has permitted Clearing 

Members to a stock loan to certify to 

OCC that they have terminated the stock 

loan and transferred the settlement price 

between themselves. 

Third, OCC proposes to amend the 

Rules governing the Stock Loan/Hedge 

Program to add a cash settlement 

process. Under the Market Loan 

Program, if the Lending Clearing 

Member is unable to complete a buy-in, 

OCC has the discretion to fix a cash 

settlement value for the quantity of the 

loaned stock not returned to the 

Lending Clearing Member, thereby 

facilitating the termination of the 

relevant stock loan [see Rule 

2209A(b)(3)]. However, currently OCC 

does not have the same option available 

under the Stock Loan/Hedge Program. 

Therefore, OCC proposes to amend Rule 

2209 and Rule 2211, as appropriate, to 

include a cash settlement process 

identical to the process available under 

the Market Loan Program. 

Finally, in addition to the procedural 

changes described above, OCC proposes 

to amend Rule 2202(b) to clarify that 

with respect to a stock loan that has 

been novated by OCC under the Stock 

Loan/Hedge Program, any terms of the 

original stock loan (other than terms 

that establish congruence) and any 

representations, warranties, and 

covenants made by the parties to the 

original stock loan with respect to such 

loan, to the extent that they do not 

conflict with OCC’s By-Laws and Rules, 

shall remain in effect as between such 

parties. This change clarifies that, for 

example, the agreements of the parties 

to the original stock loan transaction 

with respect to dividend and rebate 

payments (which are not guaranteed by 

OCC in the Stock Loan/Hedge Program) 

are not affected by the provisions of 

OCC’s By-Laws and Rules. 

The proposed changes to OCC’s ByLaws and Rules are consistent with the 

purposes and requirements of Section 

17A of the Act, as amended, because 

they are designed to promote the 

prompt and accurate clearance and 

settlement of stock loans by permitting 

Clearing Members to manage the buy-in 

and sell-out processes in the manner 

that they are accustomed to and by 

providing OCC with the additional 

option of closing out stock loans 

through a cash settlement process, 

thereby fostering cooperation and 

coordination with persons engaged in 

the clearance and settlement of stock 

loans, and removing impediments to 

and perfecting the mechanism of a 

national system for the prompt and 

mstockstill on DSK4VPTVN1PROD with NOTICES

Federal Register / Vol. 77, No. 67 / Friday, April 6, 2012 / Notices 20863 

6 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3 DE Route is a facility of the Exchange. 

Accordingly, under Exchange Rule 2.11(a)(1), the 

Exchange is responsible for filing with the 

Commission rule changes and fees relating to DE 

Route’s outbound router function. In addition, 

EDGA is using the phrase ‘‘the Exchange or DE 

Route’’ in this rule filing to reflect the fact that a 

decision to cancel orders affected by Systems Issue 

may be made by the Exchange or DE Route 

Continued 

accurate clearance and settlement of 

stock loans. The proposed rule change 

is not inconsistent with any rules of 

OCC, including any rules proposed to be 

amended. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

OCC 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 were not and are 

not intended to be solicited with respect 

to the proposed rule change and none 

have been received. 

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. 

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 may be 

submitted by using the Commission’s 

Internet comment form (http:// 

www.sec.gov/rules/sro.shtml), or send 

an email to rule-comments@sec.gov. 

Please include File No. SR–OCC–2012– 

04 on the subject line. 

• Paper comments should be sent 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–OCC–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 

will also be available for inspection and 

copying at the principal office of OCC 

and on OCC’s Web site at http:// 

www.optionsclearing.com/components/ 

docs/legal/rules_and_bylaws/ 

sr_occ_12_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–OCC– 

2012–04 and should be submitted on or 

before April 27, 2012. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.6

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. 2012–8270 Filed 4–5–12; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–66714; File No. SR–EDGA– 

2012–09] 

Self-Regulatory Organizations; EDGA 

Exchange, Inc.; Notice of Filing of 

Proposed Rule Change Relating to 

Amendments to Rule 2.11 That 

Establish the Authority To Cancel 

Orders and Describe the Operation of 

an Error Account 

April 2, 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 22, 

2012, EDGA Exchange, Inc. (‘‘Exchange’’ 

or ‘‘EDGA’’) filed with the Securities 

and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III below, which Items have been 

prepared by the Exchange. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend 

Rule 2.11 to (1) add a new subparagraph 

(a)(6) that addresses the authority of the 

Exchange and its routing broker-dealer, 

Direct Edge ECN LLC d/b/a DE Route 

(‘‘DE Route’’) to cancel orders if and 

when a systems, technical or 

operational issue (herein, each 

individually referred to as a ‘‘Systems 

Issue,’’ and collectively referred to as 

‘‘Systems Issues’’) occurs, and (2) 

amend subparagraph (a)(4) and add new 

subparagraph (a)(7) to describe the 

operation of an error account for DE 

Route. The text of the proposed rule 

change is available on the Exchange’s 

Web site, at the Exchange’s principal 

office and in the Public Reference Room 

of the Commission. 

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 

self-regulatory organization 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 proposes to amend 

Rule 2.11 by adding subparagraph (a)(6) 

to address the authority of the Exchange 

and DE Route to cancel orders when a 

Systems Issue occurs, and by amending 

subparagraph (a)(4) and adding 

subparagraph (a)(7) to describe the 

conditions under which DE Route may 

maintain and use an error account.3

mstockstill on DSK4VPTVN1PROD with NOTICES