23770 Federal Register / Vol. 77, No. 77 / Friday, April 20, 2012 / Notices 

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

5 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). 

6 15 U.S.C. 78q–1(b)(3)(F). 

7 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 No. 65568 

(October 14, 2011), 76 FR 65307 (October 20, 2011) 

(Notice of Filing of File No. SR–FINRA–2011–058) 

(‘‘Original Proposal’’). 

4Letters to Elizabeth M. Murphy, Secretary, 

Commission, from Suzanne H. Shatto, Seattle, 

Washington, dated October 20, 2011; Naphtali M. 

Hamlet, Seattle, Washington, dated October 21, 

2011; Daniel Zinn, General Counsel, OTC Markets 

Group, Inc., dated November 10, 2011; Michael T. 

Corrao, Managing Director, Knight Capital Group, 

Inc., dated November 16, 2011 (‘‘Knight #1’’); R. 

Cromwell Coulson, President and CEO, OTC 

Markets, dated November 18, 2011; Daniel Zinn, 

General Counsel, OTC Markets Group, Inc., dated 

December 29, 2011; Michael T. Corrao, Managing 

Director, Knight Capital Group, Inc., dated January 

13, 2012 (‘‘Knight #2’’). 

Comment letters are available at www.sec.gov. 

5On December 23, 2011, FINRA responded to 

comment letters received by the SEC as of that date. 

See letter to Elizabeth M. Murphy, Secretary, 

Commission, from Stephanie M. Dumont, Senior 

Vice President and Director of Capital Markets 

Policy, FINRA (‘‘FINRA Response Letter’’). 

6 15 U.S.C. 78s(b)(2)(B). 

7See Securities Exchange Act Release No. 66168 

(January 17, 2012), 77 FR 3515 (January 24, 2012) 

(Order Instituting Proceedings to Determine 

Whether to Disapprove File No. SR–FINRA–2011– 

058) (‘‘Proceedings Order’’). 

8See letter to Elizabeth M. Murphy, Secretary, 

Commission, from Daniel Zinn, General Counsel, 

OTC Markets Group Inc., dated February 14, 2012. 

9See Securities Exchange Act Release No. 62359 

(June 22, 2010), 75 FR 37488 (June 29, 2010) (File 

No. SR–FINRA–2009–054; ‘‘Order Approving NMSPrincipled Rules for OTC Equity Securities’’). 

FINRA Rule 6434 became effective on February 11, 

should refer to File Number SR–CME– 

2012–11 and should be submitted on or 

before May 11, 2012. 

IV. Commission’s Findings and Order 

Granting Accelerated Approval of 

Proposed Rule Change 

Section 19(b) of the Act 4 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 with the requirements 

of Section 17A of the Act,5 and the rules 

and regulations thereunder applicable to 

CME. 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 possession or control 

of the clearing agency or for which it is 

responsible and to protect investors and 

the public interest because it should 

allow CME to enhance its margin 

evaluation and collection related to 

clearing FX products.6

In its filing CME requested that the 

Commission approve this proposed rule 

change prior to the thirtieth day after 

the date of publication of the notice of 

the filing. CME has articulated three 

reasons for so granting approval. One, 

the products covered by this filing and 

CME’s operations as a derivatives 

clearing organization for such products 

are regulated by the CFTC under the 

CEA. Two, the proposed rule change 

relates solely to FX products and 

therefore relate solely to CME’s swaps 

clearing activities and do not 

significantly relate to CME’s functions 

as a clearing agency for security-based 

swaps. Three, not approving this request 

on an accelerated basis will have a 

significant impact on the swap clearing 

business of CME as a designated 

clearing organization. 

The Commission finds good cause for 

granting approval of the proposed rule 

change prior to the thirtieth day after 

publication of the notice of its filing 

because: (i) The proposed rule change 

does not significantly affect any 

securities clearing operations of the 

clearing agency (whether in existence or 

contemplated by its rules) or any related 

rights or obligations of the clearing 

agency or persons using such service; 

(ii) the clearing agency has indicated 

that not providing accelerated approval 

would have a significant impact on its 

FX clearing business as a designated 

clearing organization; and (iii) the 

activity relating to the non-security 

clearing operations of the clearing 

agency for which the clearing agency is 

seeking approval is subject to regulation 

by another federal regulator. 

V. Conclusion 

It is therefore ordered, pursuant to 

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

proposed rule change (SR–CME–2012– 

11) is approved on an accelerated basis. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.7

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2012–9527 Filed 4–19–12; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–66819; File No. SR–FINRA– 

2011–058] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Notice of Filing of 

Amendment No. 1 to Proposed Rule 

Change To Amend FINRA Rule 6433 

(Minimum Quotation Size 

Requirements for OTC Equity 

Securities) 

April 17, 2012. 

I. Introduction 

On October 6, 2011, 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 (‘‘Act’’) 1 and Rule 19b–4 

thereunder,2 a proposed rule change to 

amend FINRA Rule 6433 (Minimum 

Quotation Size Requirements for OTC 

Equity Securities). The proposed rule 

change was published for comment in 

the Federal Register on October 20, 

2011.3 The Commission received seven 

comment letters on the proposed rule 

change—two from individual investors, 

three from an inter-dealer quotation 

system and two from a member firm.4

FINRA responded to comments on 

December 23, 2011.5 The Commission 

published an order instituting 

proceedings pursuant to Section 

19(b)(2)(B) of the Act,6 to determine 

whether to approve or disapprove the 

proposed rule change, in the Federal 

Register on January 24, 2012.7 The 

comment period closed on February 14, 

2012, and FINRA’s rebuttal period 

closed on February 28, 2012. The 

Commission received one comment 

letter in response to the Proceedings 

Order.8 On April 17, 2012, FINRA filed 

Amendment No. 1 to the proposed rule 

change. The text of Amendment No. 1 

is available on FINRA’s Web site at 

http://www.finra.org, at the principal 

office of FINRA and at the 

Commission’s Public Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

As stated in the Original Proposal, 

FINRA is amending FINRA Rule 6433 

(Minimum Quotation Size Requirements 

for OTC Equity Securities) (the ‘‘Rule’’) 

to, among other things, (1) Simplify the 

tier structure, (2) parallel the approach 

taken by the national securities 

exchanges for securities priced at or 

above $1.00, (3) expand the scope of the 

Rule to apply to all quotations or orders 

displayed on an inter-dealer quotation 

system, (4) incorporate the requirements 

of FINRA Rule 6434 (Minimum Pricing 

Increments for OTC Equity Securities) 9


tkelley on DSK3SPTVN1PROD with NOTICES
Federal Register / Vol. 77, No. 77 / Friday, April 20, 2012 / Notices 23771 

2011 and FINRA Rule 6460 became effective on 

May 9, 2011. See Regulatory Notice 10–42 

(September 2010). 10See Order Approving NMS-Principled Rules for 

OTC Equity Securities. 11See, e.g., Knight #1 and Knight #2. 12See, e.g., Knight #1 and Knight #2. 13As previously stated by the SEC, customer limit 

order display is beneficial to the markets: 

The financial markets as a whole should benefit 

from [limit order display] because the price 

discovery process will be enhanced, market 

transparency will be improved and price 

competition will be promoted. By their very nature, 

these benefits are broad-based and pervasive. 

Securities Exchange Act Release No. 36310 

(September 29, 1995), 60 FR 52792 (October 10, 

1995). 

14FINRA analyzed a random sample of over 100 

million customer limit orders in OTC Equity 

Securities that were reported to FINRA during a sixmonth period. 

15See Securities Exchange Act Release No. 

37619A, 61 FR 48290 (September 12, 1996) (‘‘SEC 

Display Rule Adopting Release’’). 

16See also SEC Display Rule Adopting Release. 

and, importantly, (5) facilitate the 

display of customer limit orders under 

FINRA Rule 6460 (Display of Customer 

Limit Orders) (the ‘‘limit order display 

rule’’).10

In this Amendment No. 1, FINRA is 

modifying the Original Proposal in 

response to comment letters as well as 

further discussions with members, 

particularly with regard to the lower 

minimum dollar amount of displayed 

liquidity required under the proposed 

tiers.11 For example, commenters 

expressed concern that the Original 

Proposal would remove meaningful 

minimum dollar value level 

requirements for displayed liquidity by 

market makers and suggested that any 

changes be implemented as a pilot.12

FINRA believes that these proposed 

modifications, which increase several 

minimum tier sizes as compared to the 

Original Proposal, would address 

commenters’ concerns by increasing the 

minimum dollar commitment to the 

market overall, while nonetheless 

facilitating investor protection by 

providing for increased display of 

customer limit orders than is currently 

provided under the limit order display 

rule. As noted in the FINRA Response 

Letter, through the extension of limit 

order display for OTC equity securities, 

investors may now benefit from 

enhanced transparency of limit orders, 

improved prices and increased 

execution opportunities.13

The minimum quotation sizes and 

liquidity ranges of the Original Proposal 

and the revised proposals are as follows: 

ORIGINAL PROPOSAL

Tier size range Min. shares Minimum liquidity range 

$0.0001 ........................................................... $0.0199 10,000 $1.00 .............................................................. $199.00 

$0.02 ............................................................... 0.2599 1,000 $20.00 ............................................................ 259.90 

$0.26 ............................................................... 0.5099 500 $130.00 .......................................................... 254.95 

$0.51 ............................................................... 0.9999 200 $102.00 .......................................................... 199.98 

$1.00 ............................................................... 174.99 100 $100.00 .......................................................... 17,499.00 

$175.00 ........................................................... ........................ 1 $175.00.

REVISED PROPOSAL

Tier size range Min. shares Minimum liquidity range 

$0.0001 ........................................................... $0.0999 10,000 $1.00 .............................................................. $999.00 

$0.10 ............................................................... 0.1999 5,000 $500.00 .......................................................... 999.50 

$0.20 ............................................................... 0.5099 2,500 $500.00 .......................................................... 1,274.75 

$0.51 ............................................................... 0.9999 1,000 $510.00 .......................................................... 999.90 

$1.00 ............................................................... 174.99 100 $100.00 .......................................................... 17,499.00 

$175.00 ........................................................... ........................ 1 $175.00 .......................................................... ........................

These revisions increase the 

minimum quotation sizes for price 

points between $0.02 and $1.00 (as 

compared to the Original Proposal). 

Specifically, the minimum quotation 

size required for securities priced 

between $0.02 and $0.0999 would be 

increased from 1,000 shares to 10,000 

shares; between $0.10 and $0.1999 

would be increased from 1,000 shares to 

5,000 shares; between $0.26 and 

$0.5099 would be increased from 500 

shares to 2,500 shares; and between 

$0.51 and $0.9999 from 200 shares to 

1,000 shares. Therefore, under the 

revised tiers, for securities priced from 

$0.10 up to $1.00, the required 

minimum dollar value of displayed 

liquidity would range from $500.00 to 

$1,274.75—dollar amounts FINRA 

believes represent both appropriate 

minimum dollar value of displayed 

liquidity for members and reasonable 

dollar values for customer orders to be 

eligible for display on an inter-dealer 

quotation system. 

Thus, FINRA believes that these 

revised tier sizes and corresponding 

liquidity minimum amounts are in the 

best interest of the market for OTC 

Equity Securities and investors in that 

they facilitate the display of additional 

liquidity by market makers and of 

approximately 95% of all customer limit 

orders reviewed.14 In addition, FINRA 

expects that—as the SEC has found in 

the context of its display rule—the 

improved display of customer limit 

orders resulting from the revised 

minimum quotation sizes will enhance 

the quality of published quotations for 

OTC Equity Securities and enhance 

competition and pricing efficiency in 

the market for OTC Equity Securities, 

which also should have a positive 

impact on capital formation.15

Further, FINRA believes that the 

resulting increased display of customer 

limit orders will improve the public 

availability of quotation information, 

increase quote competition, market 

efficiency, best execution and 

disintermediation.16


tkelley on DSK3SPTVN1PROD with NOTICES
23772 Federal Register / Vol. 77, No. 77 / Friday, April 20, 2012 / Notices 

17A round lot of 100 shares applies to most 

NASDAQ and NYSE listed securities. The 

Commission notes that those OTC Equity Securities 

priced at or above $175 are proposed to have a 

minimum quotation size that would equal the 

round lot size applicable to those securities, which 

is one share. 

18 17 CFR 200.30–3(a)(57). 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4Commodity-Based Trust Shares are securities 

issued by a trust that represent investors’ discrete 

identifiable and undivided interest in and 

ownership of the net assets of the Trust. 

5See Securities Exchange Act Release No. 56224 

(August 8, 2007), 72 FR 45850 (August 15, 2007) 

(SR–NYSEArca–2007–76) (approving listing on the 

Exchange of the streetTRACKS Gold Trust); 

Securities Exchange Act Release No. 56041 (July 11, 

2007), 72 FR 39114 (July 17, 2007) (SR–NYSEArca– 

2007–43) (order approving listing on the Exchange 

of iShares COMEX Gold Trust). 

6See Securities Exchange Act Release Nos. 58956 

(November 14, 2008), 73 FR 71074 (November 24, 

2008) (SR–NYSEArca–2008–124) (approving listing 

on the Exchange of the iShares Silver Trust). 

The revised tiers also would continue 

to yield the other benefits discussed in 

the Original Proposal, including 

simplifying the existing Rule by 

reducing the number of minimum 

quotation tiers from nine tiers to six 

tiers and requiring a round lot of one 

hundred shares for all securities priced 

at or above $1.00.17

FINRA is proposing that the proposed 

rule change be implemented for all OTC 

Equity Securities displayed on an interdealer quotation system on a pilot basis 

for a period of one year from the 

effective date. The effective date of the 

minimum quotation size pilot will be 

120 days from Commission approval. 

FINRA will provide the Commission 

with trading data, as necessary, to 

evaluate the impact of the pilot. 

III. Solicitation of Comments 

Interested persons are invited to 

submit written data, views and 

arguments concerning the foregoing, 

including whether the proposed rule 

change, as amended by Amendment No. 

1, 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–2011–058 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–2011–058. 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–2011–058 and 

should be submitted on or before May 

7, 2012. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.18

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2012–9593 Filed 4–19–12; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–66816; File No. SR– 

NYSEArca–2012–28] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing of Proposed 

Rule Change To List and Trade Shares 

of the JPM XF Physical Copper Trust 

Pursuant to NYSE Arca Equities Rule 

8.201 

April 16, 2012. 

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

Securities Exchange Act of 1934 (the 

‘‘Act’’) 2 and Rule 19b–4 thereunder,3

notice is hereby given that, on April 2, 

2012, NYSE Arca, Inc. (the ‘‘Exchange’’ 

or ‘‘NYSE Arca’’) filed with the 

Securities and Exchange Commission 

(the ‘‘Commission’’) the proposed rule 

change as described in Items I and II 

below, which Items have been prepared 

by the self-regulatory organization. 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 list and 

trade shares of JPM XF Physical Copper 

Trust (the ‘‘Trust’’) pursuant to NYSE 

Arca Equities Rule 8.201. The text of the 

proposed rule change is available at the 

Exchange, the Commission’s Public 

Reference Room, and www.nyse.com. 

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 

self-regulatory organization 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 those statements may be examined at 

the places specified in Item IV below. 

The Exchange has prepared summaries, 

set forth in sections A, B, and C below, 

of the most significant parts 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 list and 

trade JPM XF Physical Copper Shares 

(‘‘Shares’’) of the Trust under NYSE 

Arca Equities Rule 8.201. Under NYSE 

Arca Equities Rule 8.201, the Exchange 

may propose to list and/or trade 

pursuant to unlisted trading privileges 

(‘‘UTP’’) ‘‘Commodity-Based Trust 

Shares.’’ 4 The Commission has 

previously approved listing on the 

Exchange under NYSE Arca Equities 

Rule 8.201 of other issues of 

Commodity-Based Trust Shares. The 

Commission has approved listing on the 

Exchange of the streetTRACKS Gold 

Trust and iShares COMEX Gold Trust.5

The Commission also has approved 

listing of the iShares Silver Trust on the 

Exchange 6 and, previously, listing of 

the iShares Silver Trust on the 


tkelley on DSK3SPTVN1PROD with NOTICES