22372 Federal Register / Vol. 77, No. 72 / Friday, April 13, 2012 / Notices 

14 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

are advised that they have the option of 

having investors attest to SMMP status as a 

means of streamlining the dealers’ process for 

determining that the customer is an SMMP. 

However, a dealer would not be able to rely 

upon a customer’s SMMP attestation if the 

dealer knows or has reason to know that an 

investor lacks sophistication concerning a 

municipal securities transaction, as 

discussed in detail below. 

Because the list of factors may 

actually serve as a constraint on the 

dealer’s reasonable basis determination, 

when FINRA Rule 2111 eliminated a 

very similar list of factors, the MSRB 

decided to eliminate the list from the 

restated SMMP notice as well. This 

provides more flexibility to a dealer as 

to how it will satisfy the reasonable 

basis requirement of the general rule. 

The MSRB wishes to clarify that dealers 

might find those factors useful but 

would not be required to consider them. 

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 (i) 

as the Commission may designate up to 

90 days of such date 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 

such 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 Exchange 

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–MSRB–2012–05 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–MSRB–2012–05. 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 MSRB’s offices. 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–MSRB–2012–05 and should 

be submitted on or before May 4, 2012. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.14

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2012–8878 Filed 4–12–12; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–66773; File No. SR–CME– 

2012–09] 

Self-Regulatory Organizations; 

Chicago Mercantile Exchange Inc.; 

Notice of Filing and Order Granting 

Accelerated Approval of Proposed 

Rule Change To Comply With 

Revisions to CFTC Regulations 

Governing Derivatives Clearing 

Organizations 

April 9, 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 29, 

2012, the Chicago Mercantile Exchange 

Inc. (‘‘CME’’) 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 CME. The Commission is 

publishing this Notice and Order to 

solicit comments on the proposed rule 

change from interested persons and to 

approve the proposed rule change on an 

accelerated basis. 

I. Self-Regulatory Organization’s 

Statement of Terms of Substance of the 

Proposed Rule Change 

CME proposes to amend certain of its 

rules to comply with pending revisions 

to Commodity Futures Trading 

Commission (‘‘CFTC’’) Regulations 

governing derivatives clearing 

organizations (‘‘DCOs’’). The text of the 

proposed rule change is available at the 

CME’s Web site at http:// 

www.cmegroup.com/market-regulation/ 

rule-filings.html. 

II. Self-Regulatory Organization’s 

Statement of Purpose of, and Statutory 

Basis for, the Proposed Rule Change 

In its filing with the Commission, 

CME included statements concerning 

the purpose 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 III below. CME 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 Purpose of, and Statutory 

Basis for, the Proposed Rule Change 

CME is registered as a DCO with the 

CFTC and operates a substantial 

business clearing futures and swaps 

contracts subject to the jurisdiction of 

the CFTC. CME proposes to amend 

certain of its rules to comply with 

pending changes to CFTC Regulations 

that require DCOs to make 

corresponding rule changes. The 

changes that are the subject of this filing 

will become effective on May 7, 2012. 

1. Amendments To Comply With CFTC 

Regulations 39.12(a)(5)(B) 

The CFTC adopted a number of new 

regulations designed to implement the 

core principles for DCOs in the 

Commodity Exchange Act (‘‘CEA’’), as 

amended by the Dodd-Frank Act. 

Certain of these new DCO regulations 

become effective on May 7, 2012, 

including CFTC Regulation 

39.12(a)(5)(B), which provides that: ‘‘(B) 

A derivatives clearing organization shall 

require clearing members that are not 


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Federal Register / Vol. 77, No. 72 / Friday, April 13, 2012 / Notices 22373 

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

4 15 U.S.C. 78q–1. In approving this proposed 

rule change, the Commission has considered the 

proposed rule’s impact on efficiency, competition, 

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

5 15 U.S.C. 78q–1(b)(3)(F). 

futures commission merchants to make 

the periodic financial reports provided 

pursuant to paragraph (a)(5)(i) of this 

section available to the Commission 

[CFTC] upon the Commission’s [CFTC’s] 

request or, in lieu of imposing this 

requirement, a derivatives clearing 

organization may provide such financial 

reports directly to the Commission 

[CFTC] upon the Commission’s [CFTC’s] 

request.’’ 

In order to comply with CFTC 

Regulation 39.12(a)(5)(B), CME proposes 

to amend CME Rule 970.B by adding 

new language that makes clear that nonFCM clearing members are required to 

make available to the CFTC upon 

request copies of financial reports 

required to be submitted to the CME 

audit department. 

2. Amendments To Comply With CFTC 

Regulations 39.13(h)(5)(B)–(C) 

New CFTC Regulations effective on 

May 7, 2012, also include CFTC 

Regulation 39.13(h)(5), which requires 

each DCO to adopt rules that: ‘‘(B) 

Ensure that it has the authority to 

request and obtain information and 

documents from its clearing members 

regarding their risk management 

policies, procedures, and practices, 

including, but not limited to, 

information and documents relating to 

the liquidity of their financial resources 

and their settlement procedures; and (C) 

Require its clearing members to make 

information and documents regarding 

their risk management policies, 

procedures, and practices available to 

the Commission [CFTC] upon the 

Commission’s [CFTC’s] request.’’ 

In order to comply with Regulation 

39.13(h)(5), CME proposes to amend 

CME Rule 982 and CME Rule 8F010 to 

make clear that clearing members will 

be required upon request to make 

appropriate information available 

regarding risk management policies, 

procedures, and practices. 

3. Amendments To Comply With CFTC 

Regulation 39.12(a)(2)(iii) 

New CFTC Regulations effective May 

7, 2012, also include CFTC Regulation 

39.12(a)(2)(iii) which provides that a 

DCO ‘‘shall not set minimum capital 

requirements of more than $50 million 

for any person that seeks to become a 

clearing member in order to clear 

swaps.’’ In order to comply with this 

Regulation, CME proposes to amend 

CME Rule 8F04 to conform it to the new 

standard described above. Note that 

CME plans to make additional changes 

in the near future to the relevant 

chapters in its rulebook governing 

interest rate swap and credit default 

swap clearing member obligations and 

qualifications. 

CME also made two separate filings, 

CME Submissions 12–067 and 12–097, 

with its primary regulator, the CFTC, 

with respect to the proposed rule 

changes. 

CME believes the proposed changes 

are consistent with the requirements of 

the Act. CME, a DCO, is required to 

implement the proposed changes to 

comply with recent changes to CFTC 

regulations. CME notes that the policies 

of the CEA with respect to clearing are 

comparable to a number of the policies 

underlying the Exchange Act, such as 

promoting market transparency for 

derivatives markets, promoting the 

prompt and accurate clearance of 

transactions, and protecting investors 

and the public interest. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

CME 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 

CME has not solicited and does not 

intend to solicit comments regarding 

this proposed rule change. CME has not 

received any unsolicited written 

comments from interested parties. 

III. 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–CME–2012– 

09 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–CME–2012–09. 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 CME. 

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–CME–2012–09 and should 

be submitted on or before May 4, 2012. 

IV. Commission’s Findings and Order 

Granting Accelerated Approval of 

Proposed Rule Change 

Section 19(b) of the Act 3 directs the 

Commission to approve a proposed rule 

change of a self-regulatory organization 

if it finds that such proposed rule 

change is consistent with the 

requirements of the Act and the rules 

and regulations thereunder applicable to 

such organization. The Commission 

finds that the proposed rule change is 

consistent with the requirements of the 

Act, in particular the requirements of 

Section 17A of the Act, and the rules 

and regulations thereunder applicable to 

CME.4 Specifically, the Commission 

finds that the proposed rule change is 

consistent with Section 17A(b)(3)(F) of 

the Act which requires, among other 

things, that the rules of a clearing 

agency be designed to assure the 

safeguarding of securities and funds 

which are in the custody and control of 

the clearing agency because the 

proposed rule change should allow CME 

to better monitor the financial status 

and risk management procedures of its 

clearing members.5

In its filing, CME requested that the 

Commission approve this proposed rule 

change on an accelerated basis for good 

cause shown. CME cites as the reason 

for this request CME’s operation as a 


pmangrum on DSK3VPTVN1PROD with NOTICES
22374 Federal Register / Vol. 77, No. 72 / Friday, April 13, 2012 / Notices 

6 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Exchange Act Release No. 66109 (Jan. 5, 

2012), 77 FR 1773 (Jan. 11, 2012) (Notice of Filing 

of Proposed Rule Change to Amend the Code of 

Arbitration Procedure for Industry Disputes to 

Preclude Collective Action Claims from Being 

Arbitrated) (‘‘Notice’’). The comment period closed 

on February 1, 2012. 

4See Letter from Kevin M. Carroll, Managing 

Director and Associate General Counsel, Securities 

Industry and Financial Markets Association, dated 

February 1, 2012 (‘‘SIFMA Letter’’); and letter from 

Jill I. Gross, Director, Edward Pekarek, Assistant 

Director, and Genavieve Shingle, Student Intern, 

Investor Rights Clinic at Pace Law School, dated 

February 1, 2012 (‘‘PIRC Letter’’). Comment letters 

are available at http://www.sec.gov. 

5See Letter from Mignon McLemore, Assistant 

Chief Counsel, FINRA, FINRA Dispute Resolution, 

to Elizabeth M. Murphy, Secretary, SEC, dated 

March 28, 2012 (‘‘Response to Comments No. 1 and 

Partial Amendment No. 1’’). The text of Response 

to Comments No. 1 and Partial Amendment No. 1 

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

www.finra.org, at the principal office of FINRA, and 

on the Commission’s Web site at http:// 

www.sec.gov. 

6See Notice (citing FINRA Interpretive Letter to 

Cliff Palefsky, Esq., dated September 21, 1999). 

7 Id. (citing Hugo Gomez et al. v. Brill Securities, 

Inc. et al., No. 10 Civ. 3503, 2010 U.S. Dist. LEXIS 

118162 (S.D.N.Y. Nov. 2, 2010)). 

DCO, which is subject to regulation by 

the CFTC under the CEA. This rule 

change is being made according to 

regulations promulgated by the CFTC, 

which were previously subject to notice 

and comment. Not approving this 

request on an accelerated basis would 

have a significant impact on CME’s 

operations as a DCO. 

The Commission finds good cause for 

approving the proposed rule change 

prior to the 30th day after the date of 

publication of notice in the Federal 

Register because the proposed rule 

change allows CME to implement the 

regulations of another federal regulatory 

agency, the CFTC, in accordance with 

those regulations’ effective date. 

V. Conclusion 

It is therefore ordered, pursuant to 

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

proposed rule change (SR–CME–2012– 

09) is approved on an accelerated basis. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.6

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2012–8879 Filed 4–12–12; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–66774; File No. SR–FINRA– 

2011–075] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Notice of Filing of 

Amendment No. 1 and Order Granting 

Accelerated Approval of a Proposed 

Rule Change, as Modified by 

Amendment No. 1, Amending Rule 

13024 of the Code of Arbitration 

Procedure for Industry Disputes To 

Preclude Collective Action Claims 

From Being Arbitrated 

April 9, 2012. 

I. Introduction 

On December 22, 2011, the Financial 

Industry Regulatory Authority, Inc. 

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

Exchange Commission (‘‘SEC’’ or 

‘‘Commission’’), pursuant to Section 

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

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

19b–4 thereunder,2 a proposal to amend 

Rule 13204 of the Code of Arbitration 

Procedure for Industry Disputes 

(‘‘Industry Code’’) to preclude collective 

action claims by employees of FINRA 

members under the Fair Labor 

Standards Act (FLSA), the Age 

Discrimination in Employment Act 

(ADEA), or the Equal Pay Act of 1963 

(EPA) from being arbitrated under the 

Industry Code. Specifically, the 

proposal would, among other things, (1) 

State that collective action claims under 

the FLSA, the ADEA, or the EPA may 

not be arbitrated under the Code; (2) 

provide that any claim involving 

similarly situated plaintiffs against the 

same defendants, such as a courtcertified collective action or a putative 

collective action, would not be 

arbitrated in FINRA’s arbitration forum; 

(3) give arbitrators the authority to 

decide disputes about whether a claim 

is part of a collective action; and (4) 

prohibit a member firm or associated 

person from enforcing any arbitration 

agreement against a member of a 

certified or putative collective action 

with respect to any claim that is the 

subject of the certified or putative 

collective action until either the 

collective certification is denied or the 

group is decertified. 

The proposed rule change was 

published for comment in the Federal 

Register on January 11, 2012.3 The 

Commission received two comments on 

the proposed rule change.4 On March 

29, 2012, FINRA filed a response to 

comments and a partial amendment to 

the proposed rule change (‘‘Amendment 

No. 1’’).5 The Commission is publishing 

this notice and order to solicit comment 

on Amendment No. 1 and to approve 

the proposed rule change, as modified 

by Amendment No. 1, on an accelerated 

basis. 

II. Description of Proposed Rule Change 

As stated in the Notice, Rule 13204 of 

the Industry Code generally provides 

that any claim that is based upon the 

same facts and law, and involves the 

same defendants as in a court-certified 

class action or a putative class action, 

shall not be arbitrated. The Notice also 

stated that in 1999 FINRA issued an 

Interpretive Letter stating that its class 

action rules should include collective 

action claims brought under the FLSA 

and, therefore, considered these claims 

ineligible for arbitration in its forum.6

However, as described in the Notice, the 

United States District Court for the 

Southern District of New York found 

that an FLSA collective action is not a 

class action for purposes of Rule 13204 

of the Industry Code and compelled 

arbitration of such claims in FINRA’s 

dispute resolution forum.7

In response to the court’s finding, 

FINRA is proposing to amend Rule 

13204 to preclude collective action 

claims from being arbitrated in FINRA’s 

forum under the Industry Code. The 

proposed amendments to Rule 13204, 

would separate Rule 13204 into two 

sections: subparagraph (a) for class 

actions, and subparagraph (b) for 

collective actions. Subparagraph (a) 

would be titled, ‘‘Class Actions,’’ and renumbered. Subparagraph (b) would be 

titled, ‘‘Collective Actions,’’ and would 

contain four subparagraphs. 

Proposed subparagraph (b)(1) would 

state that collective action claims under 

the FLSA, the ADEA, or the EPA may 

not be arbitrated under the Industry 

Code. 

Under proposed subparagraph (b)(2), 

any claim that involves plaintiffs who 

are similarly-situated against the same 

defendants as in a court-certified 

collective action or a putative collective 

action, or that is ordered by a court for 

collective action at a forum not 

sponsored by a self-regulatory 

organization, would not be arbitrated 

under the Industry Code, if the party 

bringing the claim has opted in to the 

collective action. 

Under proposed subparagraph (b)(3), 

as originally proposed, the Director 

would have referred to a panel any 

dispute as to whether a claim is part of 

a collective action, unless a party asked 

the court hearing the collective action to 

resolve the dispute within 10 days of 

receiving notice that the Director has 

decided to refer the dispute to a panel. 

Amendment No. 1, however, would 

permit a party to ask any forum (not just 

a court) hearing the collective action to 

resolve the dispute within the specified 

time. 


pmangrum on DSK3VPTVN1PROD with NOTICES