Federal Register / Vol. 77, No. 65 / Wednesday, April 4, 2012 / Notices 20471 

195 15 U.S.C. 78s(b)(2). 

196See Regulatory Notice 09–55. 

197 15 U.S.C. 78s(b)(2). 

198 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3 In an AIM auction, described here generally, a 

Participant submits into the mechanism an order 

that it represents as agent (‘‘Agency Order’’) along 

with a contra-side order at a specified price (which 

must comply with parameters set forth in Rule 6.51) 

and for the same size that either represents 

principal interest of the Participant or is a solicited 

order. Certain Participants, as set forth in Rule 6.51, 

then can compete with the contra-side order by 

submitting bids (offers) to execute against the 

Agency Order. After better-priced orders are filled 

and public customers competing at the best price 

receive their allocations, the Participant is granted 

priority ahead of other participants to execute 

against 40% (in some circumstances 50%) of the 

original size of the Agency Order. Under the 

proposed rule change, the initiating Participant will 

be able to elect to have last priority. 

4See Securities Exchange Act Release No. 66384 

(February 13, 2012), 77 FR 9717. 

5 In approving this proposed rule change, the 

Commission has considered the proposed rule’s 

impact on efficiency, competition, and capital 

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

6 15 U.S.C. 78f(b)(5). 

considered carefully and responded 

adequately to comments and concerns 

raised about previous versions of the 

proposed rule. As evidence of FINRA’s 

commitment to drafting a narrowly 

tailored rule while maintaining 

comprehensive investor protection 

standards, the Commission points to the 

discussion above which highlights the 

many revisions FINRA made to the 

proposal to address comments and 

concerns raised through four separate 

opportunities for comment. 

VI. Accelerated Approval 

The Commission finds goods cause, 

pursuant to Section 19(b)(2) of the 

Exchange Act,195 for approving the 

proposed rule change, as modified by 

Amendments Nos. 1, 2, and 3 thereto, 

prior to the 30th day after publication of 

notice of the filing of Amendment No. 

3 in the Federal Register. The proposed 

rule change was informed by FINRA’s 

consideration of, and the incorporation 

of many suggestions made in comments 

on a 2009 proposal to members to 

harmonize and modernize the 

communications with the public 

rules,196 the Original Proposal, the 

Notice and Proceedings Order, and 

Amendment No. 2. Amendment No. 3 

reflects FINRA’s efforts to further 

address commenter concerns and 

minimize burdens resulting from the 

proposed rule’s requirements. 

Accordingly, the Commission finds 

that good cause exists to approve the 

proposal, as modified by Amendment 

Nos. 1, 2 and 3 on an accelerated basis. 

VII. Solicitation of Comments 

Interested persons are invited to 

submit written data, views and 

arguments concerning the foregoing, 

including whether Amendment No. 3 to 

the proposed rule change is consistent 

with the Act. Comments may be 

submitted by any of the following 

methods: 

Electronic Comments 

• Use the Commission’s Internet 

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

rules/sro.shtml); or 

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

Number SR–FINRA–2011–035 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–FINRA–2011–035. This file 

number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

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

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

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

available for Web site viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE., 

Washington, DC 20549, on official 

business days between the hours of 10 

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

also will be available for inspection and 

copying at the principal office of 

FINRA. All comments received will be 

posted without change; the Commission 

does not edit personal identifying 

information from submissions. You 

should submit only information that 

you wish to make available publicly. All 

submissions should refer to File 

Number SR–FINRA–2011–035 and 

should be submitted on or before April 

25, 2012. 

VIII. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,197 that the 

proposed rule change (SR–FINRA– 

2011–035), as modified by Amendments 

Nos. 1, 2 and 3, be, and hereby is, 

approved on an accelerated basis. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.198

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2012–8043 Filed 4–3–12; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–66677; File No. SR–C2– 

2012–006] 

Self-Regulatory Organizations; C2 

Options Exchange, Incorporated; 

Order Approving Proposed Rule 

Change Relating to Its Automated 

Improvement Mechanism 

March 29, 2012. 

On January 31, 2012, the C2 Options 

Exchange, Incorporated (‘‘Exchange’’) 

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 a proposed rule 

change to amend C2 Rule 6.51, which 

relates to the Exchange’s Automated 

Improvement Mechanism (‘‘AIM’’). The 

proposal would permit a participant 

(‘‘Participant’’), when submitting an 

agency order to AIM to initiate an 

auction against a single price 

submission, to elect to have last priority 

in the AIM auction’s order allocation.3

The proposed rule change was 

published for comment in the Federal 

Register on February 17, 2012.4 The 

Commission received no comments on 

the proposal. 

After careful review, the Commission 

finds that the proposed rule change is 

consistent with the requirements of the 

Act and the rules and regulations 

thereunder applicable to a national 

securities exchange 5 and, in particular, 

the requirements of Section 6(b)(5) of 

the Act,6 in that it is designed to provide 

additional flexibility for Participants to 

obtain executions on behalf of their 

customers through AIM because the 

initiating Participants may elect to have 


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20472 Federal Register / Vol. 77, No. 65 / Wednesday, April 4, 2012 / Notices 

7The Commission notes that Chapter V, Section 

18(f)(v) of the Rules of the Boston Exchange Group, 

LLC, ‘‘The Price Improvement Period’’ (‘‘PIP’’), 

includes a similar provision that permits an options 

participant initiating a PIP auction to designate a 

lower amount than the 40% to which it is otherwise 

entitled upon the conclusion of the PIP auction. 

The Commission also recently approved a similar 

provision under Rule 6.74A of the Chicago Board 

of Options Exchange, Incorporated, with respect to 

its AIM auction. See Securities Exchange Act 

Release No. 66375 (February 10, 2012), 77 FR 9274 

(February 16, 2012) (SR–CBOE–2011–117). 

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

9 17 CFR 200.30–3(a)(12). 

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 OCC. 

4Securities Exchange Act Release No. 34–65648 

(October 27, 2011), 76 FR 68236 (November 3, 

2011). 

last priority. The Commission believes 

that, as a result of this flexibility, there 

may be increased usage of AIM auctions 

and the mechanism may attract new 

participants, thereby helping to further 

competition and to enhance the 

possibility of price improvement on 

behalf of customers.7

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,8 that the 

proposed rule change (SR–C2–2012– 

006) be, and it hereby is, approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.9

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2012–8036 Filed 4–3–12; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–66676; File No. SR–OCC– 

2012–03] 

Self-Regulatory Organizations; The 

Options Clearing Corporation; Notice 

of Filing of Proposed Rule Change to 

More Closely Align OCC’s By-Laws 

and Rules with Regulatory 

Requirements Related to ‘‘Statutory 

Disqualifications’’ 

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 15, 

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 the Terms of Substance of 

the Proposed Rule Change 

The proposed rule change would 

more closely align OCC’s By-Laws and 

Rules with applicable regulatory 

requirements related to ‘‘statutory 

disqualifications’’ under the Act in 

order to reduce the overall 

administrative burden on OCC 

associated with addressing the statutory 

disqualification of OCC clearing 

members (‘‘Clearing Members’’) and 

applicants for clearing membership 

(‘‘Applicants’’) while giving guidance to 

Clearing Members and Applicants as to 

OCC’s policies with respect to statutory 

disqualifications. 

II. Self-Regulatory Organization’s 

Statement of the 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.3

(A) Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

The purpose of this proposed rule 

change is to more closely align OCC’s 

By-Laws and Rules with applicable 

regulatory requirements related to 

‘‘statutory disqualifications’’ under the 

Act in order to reduce the overall 

administrative burden on OCC 

associated with addressing the statutory 

disqualification of Clearing Members 

and Applicants while giving guidance to 

Clearing Members and Applicants as to 

OCC’s policies with respect to statutory 

disqualifications. OCC is also proposing 

to amend its ‘‘Fitness Standards for 

Directors, Clearing Members and 

Others’’ (‘‘Fitness Standards’’) to bring 

such standards into conformity with the 

proposed amendments to OCC’s ByLaws. The Fitness Standards were 

submitted to the Commission in SR– 

OCC–2011–12 and approved by the 

Commission on October 27, 2011.4

Background 

Persons who have engaged in certain 

types of misconduct are subject to 

‘‘statutory disqualification,’’ as defined 

by Section 3(a)(39) of the Act, and must 

undergo a review by the Commission 

under Rule 19h–1 of the Act in order to 

enter or continue in membership in a 

self-regulatory organization (‘‘SRO’’). 

Section 17A(b)(4)(A) of the Act provides 

that a registered clearing agency may, 

and in cases in which the Commission 

so orders must, deny participation to 

any person subject to a statutory 

disqualification. This provision further 

requires a registered clearing agency to 

provide the Commission with 30 days’ 

notice before admitting a statutorily 

disqualified person to clearing 

membership. Rule 19h–1 of the Act 

implements these statutory provisions 

by requiring notice to the Commission 

if a registered clearing agency proposes 

either to admit to membership or to 

continue as a member a person subject 

to a statutory disqualification. Notably, 

unlike in the case of a national 

securities exchange or registered 

securities association, the rule does not 

require a registered clearing agency to 

file such a notice with respect to 

statutory disqualifications of associated 

persons of a Member or Applicant. A 

registered clearing agency is required to 

file such a notice only when the 

Member or Applicant itself is subject to 

the disqualification. 

Article V of OCC’s By-Laws 

establishes the qualifications required of 

Clearing Members and sets forth the 

procedures for admitting persons to 

clearing membership, including those 

that are or become subject to a statutory 

disqualification. Currently, 

Interpretation and Policy .03 of Article 

V, Section 1 of OCC’s By-Laws provides 

that the Membership/Risk Committee 

(‘‘Committee’’) will not recommend the 

approval of an application for 

membership if the Applicant or an 

associated person is subject to a 

statutory disqualification unless the 

Committee makes a finding that ‘‘special 

circumstances’’ exist warranting a 

waiver of the statutory disqualification. 

The requirements of this By-Law are 

more stringent than those applied to 

registered clearing agencies by the Act 

or Commission rules because they 

require the Committee to (i) make 

specific findings of ‘‘special 

circumstances’’ before recommending 

membership approval and (ii) address 

statutory disqualifications of associated 

persons. The By-Laws therefore impose 

additional administrative burdens on 

OCC that are not required under any 


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