Federal Register / Vol. 80, No. 20 / Friday, January 30, 2015 / Notices 5179 

27 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3Securities Exchange Act Release No. 34–73805 

(December 10, 2014), 79 FR 74790 (December 16, 

2014) (SR–FICC–2014–11). 

4 In the case of GSD locked-in trades, comparison 

occurs upon receipt of the trade data submitted to 

FICC from the locked-in trade source. GSD Rule 6C. 

5See GSD Rule 11B and MBSD Rule 5. 

6The MBSD Rules define a ‘‘SBO-Destined 

Trade’’ as a to-be-announced (‘‘TBA’’) transaction in 

the clearing system intended for TBA Netting in 

accordance with the provisions of the Rules. MBSD 

Rule 1. In a TBA transaction, members agree on a 

sale price, quantity, and the characteristics of the 

securities being sold, but they do not specify which 

particular securities will be delivered on the 

settlement date. 

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 rule-comments@

sec.gov. Please include File Number SR– 

OCC–2015–02 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE., 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–OCC–2015–02. 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 

10:00 a.m. and 3:00 p.m. Copies of the 

filing also will be available for 

inspection and copying at the principal 

office of OCC and on OCC’s Web site at 

http://www.theocc.com/components/

docs/legal/rules_and_bylaws/sr_occ_15_

02.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–2015–02 and should 

be submitted on or before February 20, 

2015. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.27

Jill M. Peterson, 

Assistant Secretary. 

[FR Doc. 2015–01755 Filed 1–29–15; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–74132; File No. SR–FICC– 

2014–11] 

Self-Regulatory Organizations; Fixed 

Income Clearing Corporation; Order 

Approving Proposed Rule Change To 

Amend the Government Securities 

Division Rulebook and the Mortgage 

Backed Securities Clearing Rules In 

Order To Move the Time of Novation 

With Respect to Certain Trades, 

Include Rules To Reflect Existing 

Processes, and Clarify Certain Rules 

To Reflect Current Practices 

January 26, 2015. 

I. Introduction 

On December 2, 2014, the Fixed 

Income Clearing Corporation (‘‘FICC’’) 

filed with the Securities and Exchange 

Commission (‘‘Commission’’) proposed 

rule change SR–FICC–2014–11 pursuant 

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

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

19b–4 thereunder.2 The proposed 

change was published for comment in 

the Federal Register on December 16, 

2014.3 The Commission received no 

comment letters in response to the 

proposed rule change. For the reasons 

discussed below, the Commission is 

approving the proposed rule change. 

II. Description 

The rule change, as proposed, moves 

the time of novation applicable to 

certain transactions submitted to FICC’s 

Government Securities Division 

(‘‘GSD’’) and FICC’s Mortgage Backed 

Securities Division (‘‘MBSD’’) to earlier 

in the clearing process in order to 

provide members with additional legal 

certainty, for purposes of members’ 

regulatory capital requirements, that 

FICC will be the legal counterparty with 

respect to their guaranteed trades. 

Currently, FICC guarantees the 

settlement of a trade upon comparison, 

which generally occurs when FICC 

issues initial ‘‘output’’ to GSD netting 

members or MBSD clearing members, as 

applicable, indicating that their trades 

have compared,4 provided that the trade 

meets the requirements of the GSD 

Rulebook (‘‘GSD Rules’’) or the MBSD 

Rulebook (‘‘MBSD Rules’’), as 

applicable.5

Novation, which refers to the 

termination of delivery, receive and 

related payment obligations between the 

original parties to the contract and the 

replacement of such obligations with 

identical obligations between each party 

and FICC, currently does not occur until 

later in the clearing and settlement 

process than comparison. Under the 

GSD Rules, novation currently occurs 

when subsequent ‘‘netting output’’ is 

issued to netting members (usually the 

day before settlement). Under the MBSD 

Rules, novation currently occurs when 

subsequent ‘‘pool netting output’’ is 

issued to clearing members (usually the 

day before settlement). 

FICC stated in its proposed rule 

change that it was proposing the rule 

change because it understood that, as its 

members (or their advisors) analyze 

their netting rights with respect to 

transactions cleared through FICC for 

purposes of regulatory capital 

requirements, it is beneficial for 

members that FICC become the legal 

counterparty at the point its guarantee 

attaches. 

Time of Novation—Rule Changes 

Under the revised GSD Rules and 

MBSD Rules, as approved, novation will 

occur at comparison for netting eligible 

transactions (for GSD) and SBODestined Trades 6 (for MBSD). This 

means that, at the point of trade 

comparison, FICC will both guarantee 

the settlement of the transactions (as it 

does today) and novate such 

transactions, becoming the legal 

counterparty to each submitting member 

with respect to such transactions. 

Under the revised GSD Rules, as 

approved pursuant to this rule change, 

all netting eligible transactions that 

compare in accordance with the GSD 

Rules will novate at the point of 

comparison. 

As amended by this proposal, 

pursuant to the MBSD Rules, only SBODestined Trades, all of which are 


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5180 Federal Register / Vol. 80, No. 20 / Friday, January 30, 2015 / Notices 

7MBSD conducts two separate netting processes 

to consolidate settlement obligations and reduce the 

number of securities and the amount of cash that 

must be exchanged to settle transactions. TBA 

Netting is the process used to net SBO-Destined 

Trades that have compared in accordance with the 

MBSD Rules. TBA Netting is conducted before 

particular securities (‘‘pools’’) are identified to the 

SBO-Destined Trades. Pool Netting, which occurs 

after MBSD clearing members allocate pools to 

transactions, is the process used to aggregate and 

match offsetting pool delivery obligations submitted 

by MBSD clearing members to satisfy their 

settlement obligations. MBSD Rules 6 and 7. An 

MBSD clearing member may submit a transaction 

to Pool Netting even if such transaction was not 

submitted for TBA Netting. The rule change 

includes the addition of a new Section 7 to MBSD 

Rule 8 stating that each clearing member must 

submit to FICC for inclusion in Pool Netting each 

SBOO and SBON Trade to which such clearing 

member is a party. The terms ‘‘SBOO Trade’’ and 

‘‘SBON Trade’’ are defined in MBSD Rule 1, as 

amended by this rule change. Section 7 of MBSD 

Rule 8 has been added to reflect MBSD’s existing 

requirements and practices. 

8The MBSD Rules define ‘‘Trade-for-Trade 

Transaction’’ as a TBA transaction submitted to 

FICC not intended for TBA Netting in accordance 

with the provisions of the Rules. MBSD Rule 1. 9The MBSD Rules define ‘‘Specified Pool 

Trades’’ as a trade in which all required pool data, 

including the pool number to be delivered on the 

contractual settlement date, are agreed upon by the 

clearing member at the time of execution. MBSD 

Rule 1. 10Trade-for-Trade Transactions that are not 

submitted to the Pool Netting process must be 

settled outside of FICC between the submitting 

counterparties. 11As noted in SR–FICC–2008–01, a clearing 

member that has a trade that was matched with a 

stipulation (‘‘Stip Trade’’) would not submit such 

trade for Pool Netting. Pool Netting creates delivery 

obligations based off the net position of clearing 

members without regard to the original 

counterparty relationship. With a Stip Trade, the 

buyer and seller will want to ensure the receipt or 

delivery, as applicable, is maintained between 

themselves to ensure that the other party adheres 

to the stipulated terms. Securities Exchange Act 

Release No. 34–66550 (March 9, 2012), 77 FR 15155 

(March 14, 2014) (SR–FICC–2008–01). Therefore, as 

with the current process, FICC does not expect to 

novate Stip Trades. 

12MBSD Rule 10. 

13The terms ‘‘SBOO Trade’’ and ‘‘SBON Trade’’ 

are defined in MBSD Rule 1, as amended by this 

proposal. 

14The term ‘‘Sponsored Member’’ means any 

Person that has been approved by FICC to be 

sponsored into membership by a Sponsoring 

Member pursuant to Rule 3A. GSD Rule 1. 

included in the TBA Netting process 

and must be submitted to the Pool 

Netting process,7 will novate at the 

point of comparison. Other types of 

transactions, including Trade-for-Trade 

Transactions 8 and Specified Pool 

Trades,9 will continue to be guaranteed 

at comparison, as they are today, but 

FICC will not novate such transactions 

at comparison. Instead, such 

transactions will be treated as they are 

today: (1) To the extent Trade-for-Trade 

Transactions are included in the Pool 

Netting process,10 FICC will novate such 

Transactions once the Pool Netting 11

process is completed and (2) Specified 

Pool Trades, which are not included in 

the TBA Netting process nor the Pool 

Netting process, are not novated today 

(they settle outside of FICC between the 

submitting counterparties) and will 

continue to not be novated under the 

proposal.12

In order to effectuate this change in 

the time of novation as described above, 

the rule change adds language to the 

GSD Rules (new Section 8 of Rule 5) 

and the MBSD Rules (new Section 13 of 

Rule 5) that states that FICC will 

guarantee and novate applicable 

transactions upon comparison, subject 

to the parameters set forth in the rule 

change, as proposed. Conforming 

changes also will be made to GSD Rule 

3A, GSD Rule 6B, GSD Rule 6C, GSD 

Rule 11, GSD Rule 14, GSD Rule 20, 

GSD Rule 21A, Rule 22B, MBSD Rule 6, 

MBSD Rule 8, MBSD Rule 10, MBSD 

Rule 11 and MBSD Rule 17A. In 

addition, the definition of ‘‘novation’’ in 

both GSD Rule 1 and MBSD Rule 1 is 

clarified to reflect that delivery, receive 

and related payment obligations 

between members will be terminated 

and replaced with identical obligations 

to and from FICC at the point in time 

that the trade is compared in accordance 

with the applicable Rules. 

The rule change, as approved, makes 

clear that under the MBSD Rules certain 

settlement obligations continue to be 

settled between the settlement 

counterparties and not vis-a`-vis FICC; 

these are the obligations that are not 

included in the Pool Netting process 

pursuant to MBSD Rule 8 (Pool Netting). 

The rule change does not change this 

existing process. However, because the 

rule change moves the time of novation 

up to the time of comparison for certain 

MBSD transactions, the rule change (in 

MBSD Rule 5, Section 2) makes clear 

that the settlement counterparties 

continue to settle with each other but do 

so on behalf of FICC for those 

transactions that are novated to FICC. 

According to FICC, the proposal to 

move the time of novation as noted 

above does not change FICC’s risk 

exposures. Because FICC currently 

guarantees eligible trades upon 

comparison, FICC already assumes 

responsibility for settling such trades at 

the point of comparison. According to 

FICC, adding legal novation at the point 

of comparison does not increase FICC’s 

obligations and therefore, does not 

require any changes to FICC’s risk 

management processes. In addition, 

FICC notes that the rule change does not 

change FICC’s operational processes. 

Formalization of Existing Processes 

In addition, the rule changes 

formalize the following existing 

processes: 

• Section 7 of MBSD Rule 8 is added 

to state that all SBOO Trades and SBON 

Trades 13 must be submitted to Pool 

Netting. 

• MBSD Rules 15 and 16 are revised 

to clarify that, upon the insolvency of a 

member’s original counterparty to a 

compared trade, such member cannot 

unilaterally modify its obligations with 

respect to transactions originally 

entered with such counterparty. In the 

MBSD Rules, because certain trades are 

not novated and will continue to not be 

novated under this proposal, the rule 

change makes clear that upon a cease to 

act with respect to a member by FICC, 

the solvent member to a compared trade 

with the defaulting member may not 

unilaterally act with respect to such 

trade. 

These changes are not intended to 

change FICC’s current operations or 

processes. 

Clarification To Reflect Current 

Processes 

In addition, the rule change clarifies 

certain GSD and MBSD Rules to reflect 

actual practices and requirements as 

follows: 

• MBSD Rule 17 is revised to clarify 

that when FICC ceases to act for a 

member, FICC may dispose of such 

member’s Trade-for-Trade Transactions 

based upon their generic terms. These 

changes are not intended to change 

FICC’s current operations or processes. 

Specific Changes 

With respect to the GSD Rules, the 

proposed changes are as follows: 

• The term ‘‘Interactive Submission 

Method’’ is revised to correct a 

typographical error. 

• For clean-up and clarification 

purposes, the term ‘‘Novation’’ is 

revised to reflect that delivery, receive 

and related payment obligations 

between GSD netting members will be 

terminated and replaced with identical 

obligations to and from FICC at the 

point in time that the trade is compared 

in accordance to the GSD Rules. 

• Rule 3A, Sections 2(i), 7(a), 7(d), 

14(c), and 16(a) are revised to reflect 

that trades submitted by Sponsored 

Members 14 will novate to FICC at the 

time that such trades receive FICC’s 

guaranty of settlement. 

• Rule 5 is revised to include a new 

Section 8 entitled ‘‘Novation and 

Guaranty of Compared Trades,’’ which 

provides for the following: (1) 

Compared trades that meet the 


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15Pursuant to the GSD Rules, the term ‘‘GCF Repo 

Transaction’’ means a Repo Transaction involving 

generic CUSIP numbers the data on which are 

submitted to FICC on a locked-in-trade basis 

pursuant to the provisions of Rule 6C, for netting 

and settlement by FICC pursuant to the provisions 

of Rule 20. GSD Rule 1. 

requirements of the GSD Rules and were 

entered into in good faith will novate to 

FICC and FICC will guarantee the 

settlement for each such compared 

trade; (2) if a compared trade becomes 

uncompared or cancelled, FICC’s 

guaranty and novation of such trade will 

be reversed and cancelled; (3) if a 

compared trade is modified after 

novation and such modification does 

not cause the trade to become 

uncompared, then the modification will 

cause a corresponding modification to 

the deliver, receive and related payment 

obligations between the GSD netting 

members and FICC; (4) at the time that 

a compared trade becomes novated, 

such trade ceases to be bound by any 

bilateral agreement between the parties 

with respect to the deliver, receive and 

related payment obligations, however, if 

the trade becomes uncompared or is 

cancelled, such trade shall be governed 

by the bilateral agreement that governed 

the trade prior to the novation; and (5) 

if a right of substitution was established 

by the parties to a repurchase 

transaction, such right will continue 

and be recognized by FICC after 

novation. 

• Rule 6B, Section 4 deletes the 

provision which states that an 

uncompared trade will cease to be 

guaranteed by FICC because this 

concept is now covered in Rule 5, 

Section 8. 

• Rule 6C, Section 10 deletes the 

provision which states that a locked-in 

trade that becomes uncompared will 

cease to be guaranteed by FICC because 

this concept is now covered in Rule 5, 

Section 8. 

• Rule 6C, Section 11 deletes the 

provision which states that a netting 

eligible auction purchase that becomes 

uncompared will cease to be guaranteed 

by FICC because this concept is now 

covered in Rule 5, Section 8. 

• Rule 6C, Section 12 deletes the 

provision which states that a GCF Repo 

Transaction 15 that becomes 

uncompared will cease to be guaranteed 

by FICC because this concept is now 

covered in Rule 5, Section 8. 

• Rule 11, Section 6 is revised to 

reflect that (1) novation occurs at 

comparison; and (2) at netting, the 

previously novated deliver, receive and 

related payment obligations between the 

netting members and FICC will be 

terminated and replaced by net deliver, 

receive and related payment obligations 

as listed in the report made available by 

FICC to the netting members. 

• Rule 11B is revised to correct 

typographical errors. 

• Rule 14, Section 3 is revised to 

reflect that (1) novation occurs at 

comparison; and (2) at netting, the 

previously novated deliver, receive and 

related payment obligations between the 

netting members and FICC created by 

Forward Trades will be terminated and 

replaced by net deliver, receive and 

related payment obligations as listed in 

the report made available by FICC to the 

netting members. 

• Rule 20, Section 5 is revised to 

reflect that with respect to GCF Repo 

Transactions, novation will occur at 

comparison in accordance with Rule 5, 

Section 8. 

• Rule 21A is revised to incorporate 

the concept of novation. 

• Rule 22B included a sentence 

providing that upon FICC’s default, 

trades that had compared would be 

deemed novated. Because the GSD 

Rules are being revised to reflect that 

novation occurs at comparison, this 

sentence is no longer necessary. As a 

result, it is being deleted in connection 

with this rule change. 

With respect to the MBSD Rules, the 

changes are as follows: 

• For clean-up and clarification 

purposes, the term ‘‘Novation’’ is 

revised to reflect that delivery, receive 

and related payment obligations 

between MBSD clearing members will 

be terminated and replaced with 

identical obligations to and from FICC 

in accordance with the MBSD Rules. 

• The term ‘‘SBO Contra-Side 

Member’’ is revised to correct a 

typographical error. 

• The term ‘‘SBO Net-Out Position’’ is 

revised to clarify that the term is used 

in connection with offsetting purchase 

and sale SBO-Destined Trades that were 

originally between different clearing 

members (but, once novated at 

comparison, are between such members 

and FICC). 

• The term ‘‘SBO Net-Out Unit’’ is 

being deleted because this term is not 

used in the MBSD Rules. 

• The term ‘‘SBO Netted Position’’ is 

revised to clarify that the term is used 

in connection with offsetting purchase 

and sale SBO-Destined Trades that were 

originally between the same clearing 

members (but, once novated at 

comparison, are between such members 

and FICC). 

• The term ‘‘SBON Trade’’ is revised 

to correct a typographical error. 

• The term ‘‘SBOO Trade’’ is revised 

to correct a typographical error. 

• Rule 5, Section 1 is revised to 

correct a typographical error. 

• Rule 5, Section 2 is revised to 

reflect that (1) transactions that are not 

novated pursuant to this proposal 

(pursuant to new Section 13 of Rule 5 

discussed below) and not netted and 

novated through the Pool Netting 

system will be settled directly between 

the members; and (2) transactions 

novated pursuant to new Section 13 of 

Rule 5 and not thereafter netted through 

the Pool Netting system pursuant to 

Rule 8 will settle between members on 

behalf of FICC. 

• Rule 5, Section 12 is revised to 

correct a typographical error. 

• Rule 5 includes a new Section 13 

entitled ‘‘Novation’’ which states the 

following: (1) FICC will guarantee and 

novate SBO-Destined Trades that meet 

the requirement of the MBSD Rules and 

have been entered into in good faith; (2) 

FICC will not novate SBO-Destined 

Trades that are partially compared; (3) 

to the extent a partially compared SBODestined Trade becomes fully 

compared, FICC will novate such trade; 

(4) if a trade becomes uncompared or 

cancelled, the guaranty and novation of 

such transaction shall be reversed; (5) at 

the time that an SBO-Destined Trade is 

novated to FICC, such trade shall cease 

to be bound by any bilateral agreement 

between the parties to the trade with 

respect to the deliver, receive and 

related payment obligations, however, if 

the trade becomes uncompared or is 

cancelled, such trade shall be governed 

by the bilateral agreement that governs 

such trade prior to the novation. 

• Rule 6, Sections 1(a), (b) and (c) are 

revised to take into account the fact that 

SBO-Destined Trades are novated upon 

comparison and are, therefore, legally 

between MBSD clearing members and 

FICC after comparison. 

• Rule 8, Section 6 is revised to take 

into account the fact that SBO-Destined 

Trades are novated upon comparison 

and are, therefore, legally between 

MBSD clearing members and FICC after 

comparison. 

• Rule 8 includes a new Section 7 

which is entitled ‘‘Obligation to Submit 

SBOO and SBON Trades to Pool 

Netting.’’ This Section reflects MBSD’s 

current requirement and current 

practice that clearing members are 

required to submit all SBOO Trades and 

SBON Trades for inclusion in the Pool 

Netting system. 

• Rule 10, Section 2 is revised to 

clarify that clearing members are 

required to submit a notification of 

settlement for SBO Trades that are 

novated at comparison and processed 

through the TBA Netting system but that 

are not thereafter submitted to the Pool 

Netting system. 


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16 Including ‘‘stip’’ trades and any other TBA 

transactions not intended for TBA Netting. 

17 15 U.S.C. 78s(b)(2)(C). 

18 15 U.S.C. 78q–1(b)(3)(F). 

19 15 U.S.C. 78q–1. 

20 15 U.S.C. 78s(b)(2). 

21 In approving the proposed rule change, the 

Commission considered the proposal’s impact on 

efficiency, competition, and capital formation. See 

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

22 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3The Exchange initially filed the proposed fee 

changes on December 31, 2014 (SR–CBOE–2014– 

097). On January 14, 2015, the Exchange withdrew 

that filing and submitted this filing. 

• Rule 11, Section 1 is revised to take 

into account the fact that SBO Trades 

are novated upon comparison and are, 

therefore, legally between MBSD 

clearing members and FICC after 

comparison. 

• Rule 15 is revised to clarify the 

current process with respect to 

transactions submitted to and compared 

by FICC, whereby in the event a 

member’s original counterparty becomes 

insolvent, such member cannot 

unilaterally modify its obligations with 

respect to transactions originally 

entered with such counterparty. 

• Rule 16 is revised to clarify the 

current process with respect to 

transactions submitted to and compared 

by FICC, whereby in the event a 

member’s original counterparty becomes 

insolvent, such member cannot 

unilaterally modify its obligations with 

respect to transactions originally 

entered with such counterparty. 

• Rule 17, Section 2 is revised to 

clarify the current process whereby 

when FICC ceases to act for a clearing 

member, such member’s Trade-forTrade Transactions 16 may be disposed 

of based upon their generic terms such 

as agency, product, coupon rate and 

maturity. The other changes are 

typographical corrections. 

• Rule 17A is revised to clarify that 

in the event of FICC’s default, novation 

is deemed to have occurred with respect 

to all transactions at the time such 

transactions are compared, whether or 

not such transactions are SBO-Destined 

Trades that would otherwise have been 

novated at comparison. The other 

changes to this provision are 

grammatical corrections. 

III. Discussion 

Section 19(b)(2)(C) of the Act 17

directs the Commission to approve a 

proposed rule change of a selfregulatory 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. Section 

17A(b)(3)(F) of the Act 18 requires, 

among other things, that the rules of a 

clearing agency be designed to achieve 

several goals, including promoting the 

prompt and accurate clearance and 

settlement of securities transactions 

and, to the extent applicable, derivative 

agreements, contracts, and transactions. 

The Commission concludes that the 

proposed rule change is consistent with 

the requirements of Section 17A(b)(3)(F) 

of the Act, and the rules and regulations 

thereunder, because by moving novation 

for trades that enter GSD’s Netting 

system and MBSD’s TBA Netting 

system, the rule change, as approved, 

should clarify FICC’s responsibilities to 

its members and remove potential 

uncertainty that previously existed due 

to a mismatch between the time of 

guaranty and the time of novation. As a 

result, such clarity should further 

facilitate the prompt and accurate 

clearance and settlement of securities 

transactions. 

IV. Conclusion 

On the basis of the foregoing, the 

Commission finds that the proposed 

rule change is consistent with the 

requirements of the Act, particularly 

those set forth in Section 17A,19 and the 

rules and regulations thereunder. 

IT IS THEREFORE ORDERED, 

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

Act,20 that the proposed rule change 

(SR–FICC–2014–11) be, and hereby is, 

APPROVED.21

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.22

Brent J. Fields, 

Secretary. 

[FR Doc. 2015–01747 Filed 1–29–15; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–74134; File No. SR–CBOE– 

2015–005] 

Self-Regulatory Organizations; 

Chicago Board Options Exchange, 

Incorporated; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Amend the Fees 

Schedule 

January 26, 2015. 

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

Securities Exchange Act of 1934 (the 

‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on January 

14, 2015, Chicago Board Options 

Exchange, Incorporated (the ‘‘Exchange’’ 

or ‘‘CBOE’’) filed with the Securities 

and Exchange Commission (the 

‘‘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 its 

Fees Schedule. The text of the proposed 

rule change is available on the 

Exchange’s Web site (http://

www.cboe.com/AboutCBOE/

CBOELegalRegulatoryHome.aspx), at 

the Exchange’s Office of the Secretary, 

and at the Commission’s Public 

Reference Room. 

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 

Exchange 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 make a 

number of changes to its Fees 

Schedule.3

COB Taker Surcharge 

The Exchange proposes to implement 

a Complex Order Book (‘‘COB’’) Taker 

Surcharge. Specifically, the Exchange 

proposes to adopt a $0.05 per contract 

per side surcharge for non-customer 

complex order executions that take 

liquidity from the COB in all underlying 

classes except OEX, XEO, SPX 

(including SPXW), SPXpm, SRO, VIX, 

VXST, Volatility Indexes and binary 

options (‘‘Underlying Symbol List A’’) 

and mini-options. Additionally, the 

Exchange proposes to provide that the 

COB Taker Surcharge will not be 

assessed on non-customer complex 

order executions in the Complex Order 

Auction (‘‘COA’’), the Automated Aim 

Mechanism (‘‘AIM’’), orders originating 

from a Floor Broker PAR, or electronic 


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