12048 Federal Register / Vol. 80, No. 43 / Thursday, March 5, 2015 / Notices 

1Notice of United States Postal Service of Filing 

a Functionally Equivalent Global Expedited 

Package Services 3 Negotiated Service Agreement 

and Application for Non-Public Treatment of 

Materials Filed Under Seal, February 26, 2015 

(Notice). 

1The descriptions set forth in this notice 

regarding the structure and operations of BSTP have 

been largely derived from information contained in 

BSTP’s amended Form CA–1 application and 

publicly available sources. The application and 

non-confidential exhibits thereto are available on 

the Commission’s Web site. 

non-GS employee categories in 2015. By 

law, EX officials, SES members, 

employees in SL/ST positions, and 

employees in certain other equivalent 

pay systems are not authorized to 

receive locality payments. (Note: An 

exception applies to certain 

grandfathered SES, SL, and ST 

employees stationed in a nonforeign 

area on January 2, 2010.) The locality 

pay percentages continued for non-GS 

employees have not been increased in 

2015. The memo is available at: http:// 

www.opm.gov/policy-data-oversight/

pay-leave/salaries-wages/2014/

continuation-of-locality-payments-fornon-general-schedule-employeesnovember-24-2014.pdf. 

On December 19, 2014, OPM issued a 

memorandum (CPM 2014–17) on the 

January 2015 pay adjustments. (See 

http://www.chcoc.gov/transmittals/

TransmittalDetails.aspx?TransmittalID=

6604.) The memorandum transmitted 

Executive Order 13686 and provided the 

2015 salary tables, locality pay areas 

and percentages, and information on 

general pay administration matters and 

other related information. The ‘‘2015 

Salary Tables’’ posted on OPM’s Web 

site at http://www.opm.gov/policy-dataoversight/pay-leave/salaries-wages/ are 

the official rates of pay for affected 

employees and are hereby incorporated 

as part of this notice. 

U.S. Office of Personnel Management. 

Katherine Archuleta, 

Director. 

[FR Doc. 2015–05115 Filed 3–4–15; 8:45 am] 

BILLING CODE 6325–39–P 

POSTAL REGULATORY COMMISSION 

[Docket Nos. CP2015–44; Order No. 2374] 

New Postal Product 

AGENCY: Postal Regulatory Commission. 

ACTION: Notice. 

SUMMARY: The Commission is noticing a 

recent Postal Service filing concerning 

an additional Global Expedited Package 

Services 3 (GEPS 3) negotiated service 

agreement. This notice informs the 

public of the filing, invites public 

comment, and takes other 

administrative steps. 

DATES: Comments are due: March 9, 

2015. 

ADDRESSES: Submit comments 

electronically via the Commission’s 

Filing Online system at http://

www.prc.gov. Those who cannot submit 

comments electronically should contact 

the person identified in the FOR FURTHER

INFORMATION CONTACT section by 

telephone for advice on filing 

alternatives. 

FOR FURTHER INFORMATION CONTACT: 

David A. Trissell, General Counsel, at 

202–789–6820. 

SUPPLEMENTARY INFORMATION: 

Table of Contents 

I. Introduction 

II. Notice of Commission Action 

III. Ordering Paragraphs 

I. Introduction 

On February 26, 2015, the Postal 

Service filed notice that it has entered 

into an additional Global Expedited 

Package Services 3 (GEPS 3) negotiated 

service agreement (Agreement).1

To support its Notice, the Postal 

Service filed a copy of the Agreement, 

a copy of the Governors’ Decision 

authorizing the product, a certification 

of compliance with 39 U.S.C. 3633(a), 

and an application for non-public 

treatment of certain materials. It also 

filed supporting financial workpapers. 

II. Notice of Commission Action 

The Commission establishes Docket 

No. CP2015–44 for consideration of 

matters raised by the Notice. 

The Commission invites comments on 

whether the Postal Service’s filing is 

consistent with 39 U.S.C. 3632, 3633, or 

3642, 39 CFR part 3015, and 39 CFR 

part 3020, subpart B. Comments are due 

no later than March 9, 2015. The public 

portions of the filing can be accessed via 

the Commission’s Web site (http://

www.prc.gov). 

The Commission appoints Curtis E. 

Kidd to serve as Public Representative 

in this docket. 

III. Ordering Paragraphs 

It is ordered: 

1. The Commission establishes Docket 

No. CP2015–44 for consideration of the 

matters raised by the Postal Service’s 

Notice. 

2. Pursuant to 39 U.S.C. 505, Curtis E. 

Kidd is appointed to serve as an officer 

of the Commission to represent the 

interests of the general public in this 

proceeding (Public Representative). 

3. Comments are due no later than 

March 9, 2015. 

4. The Secretary shall arrange for 

publication of this order in the Federal 

Register. 

By the Commission. 

Shoshana M. Grove, 

Secretary. 

[FR Doc. 2015–05064 Filed 3–4–15; 8:45 am] 

BILLING CODE 7710–FW–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–74394; File No. 600–33] 

Self-Regulatory Organizations; 

Bloomberg STP LLC; Notice of Filing 

of Application for Exemption From 

Registration as a Clearing Agency 

February 27, 2015. 

I. Introduction 

On March 15, 2013, Bloomberg STP 

LLC (‘‘BSTP’’) filed with the Securities 

and Exchange Commission 

(‘‘Commission’’) an application on Form 

CA–1 for exemption from registration as 

a clearing agency pursuant to section 

17A of the Securities Exchange Act of 

1934 (‘‘Exchange Act’’) and Rule 

17Ab2–1 thereunder. BSTP amended its 

application on May 7, 9, and 10, July 11, 

August 8, September 18, and November 

21, 2013, December 19, 2014, and 

January 22, 2015. BSTP is requesting an 

exemption from clearing agency 

registration in connection with its 

proposal to offer an electronic trade 

confirmation (‘‘ETC’’) service and a 

matching service. The Commission is 

publishing this notice in order to solicit 

comments from interested persons on 

the exemption request.1 The 

Commission will consider any 

comments it receives in making its 

determination whether to grant BSTP’s 

request for an exemption from clearing 

agency registration. 

II. Background 

A. BSTP Organization 

BSTP is a limited liability company 

organized under the laws of the State of 

Delaware, and is wholly-owned by 

Bloomberg L.P. (‘‘BLP’’). BLP is a global 

business and financial information and 

news company that is headquartered in 

New York, with offices around the 

world. BLP’s principal product is the 

Bloomberg Professional service, which 

provides financial market information, 

data, news and analytics to banks, 

broker-dealers, institutional investors, 

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Federal Register / Vol. 80, No. 43 / Thursday, March 5, 2015 / Notices 12049 

2See Exhibit C for a graphic description of the 

BSTP’s organizational structure. 

3See Exhibit S at 8–12. 

4See Exhibit S at 11–12. 

5The term ‘‘matching service’’ as used here 

means an electronic service to centrally match trade 

information between a broker-dealer and its 

institutional customer. 

6See Confirmation and Affirmation of Securities 

Trades; Matching, Exchange Act Release No. 34– 

39829 (Apr. 6, 1998), 63 FR 17943 (Apr. 13, 1998). 

7 In addition, on July 1, 2011, the Commission 

published a conditional temporary exemption from 

clearing agency registration for entities that perform 

for security-based swap transactions certain posttrade processing services, including matching 

services. See Exchange Act Release No. 34–64796 

(Jul. 1, 2011), 76 FR 39963 (Jul. 7, 2011) (providing 

an exemption from registration under Section 

17A(b) of the Exchange Act, and stating that ‘‘[t]he 

Commission is using its authority under section 36 

of the Exchange Act to provide a conditional 

temporary exemption, until the compliance date for 

the final rules relating to registration of clearing 

agencies that clear security-based swaps pursuant to 

sections 17A(i) and (j) of the Exchange Act, from 

the registration requirement in section 17A(b)(1) of 

the Exchange Act to any clearing agency that may 

be required to register with the Commission solely 

as a result of providing Collateral Management 

Services, Trade Matching Services, Tear Up and 

Compression Services, and/or substantially similar 

services for security-based swaps’’). The order 

facilitated the Commission’s identification of 

entities that operate in that area and that 

accordingly may fall within the clearing agency 

definition. 

8See 15 U.S.C. 78q–1 and 17 CFR 240.17Ab2–1. 

9See Global Joint Venture Matching Services— 

U.S., LLC; Order Granting Exemption From 

Registration as a Clearing Agency, Exchange Act 

Release No. 34–44188 (Apr. 17, 2001), 66 FR 20494 

(Apr. 23, 2001) (‘‘Omgeo Exemptive Order’’). On 

July 24, 2013, DTCC announced that it had entered 

into an agreement with Thomson Financial to 

acquire full ownership of Omgeo. 

10BSTP provides an additional matching 

workflow in which custodians send matched 

confirmations to the matching service and the 

matching service submits such matched 

confirmations as affirmed confirmations to The 

Depository Trust Company (‘‘DTC’’). 

11According to its application, BSTP notes that 

it will follow DTC’s format for delivering matched 

confirmations to DTC. Further, BSTP will obtain a 

control number from DTC for each trade record, 

cross-reference such control number to the 

confirmation and subsequent affirmation of the 

trade, and include such control number when 

delivering the affirmation of the trade to the 

depository at DTC. See Exhibit S at 12. 

12BSTP notes that its proposed confirmation 

matching process eliminates multiple steps in the 

manual workflow, such as DTC’s producing a 

confirmation for the institution to review and the 

institution’s reviewing and affirming the 

confirmation. 

13See Exhibit J at 9. 

governmental bodies and other business 

and financial professionals worldwide.2

BSTP proposes to provide ETC and 

matching services for fixed-income and 

equity trades as described in its Form 

CA–1 application. An overview of 

BSTP’s proposed matching service is 

presented in Part III below. BSTP will 

enter into a Software License Agreement 

and a License and Services Agreement 

with its parent, BLP. Under the terms 

and conditions of such agreements, BLP 

will provide BSTP with software, 

hardware, administrative, operational 

and other support services. BSTP has 

established a Board of Directors to 

oversee its operations, and intends to 

establish an Advisory Board consisting 

of industry members and users of the 

matching service, including 

representatives from sell-side firms, 

buy-side institutions and custodians.3

The mission of the Advisory Board of 

BSTP is to provide advice and 

recommendations to the Board of 

Directors of BSTP that will assist BSTP 

in fulfilling the policy goals of the 

Exchange Act in a manner that meets all 

applicable legal requirements and serves 

the interests of users of the confirmation 

matching service and the public at 

large.4

B. Matching as a Clearing Agency 

Function 

On April 6, 1998, the Commission 

issued an interpretive release regarding 

matching services 5 (the ‘‘Matching 

Release’’).6 In the Matching Release, the 

Commission concluded that matching 

constitutes a clearing agency function, 

specifically the ‘‘comparison of data 

respecting the terms of settlement of 

securities transactions,’’ within the 

meaning of section 3(a)(23)(A) of the 

Exchange Act.7 Therefore, any person 

providing independent matching 

services must either register with the 

Commission as a clearing agency or 

obtain an exemption from registration 

pursuant to section 17A of the Exchange 

Act and Rule 17Ab2–1 thereunder.8 In 

2001, the Commission granted an 

exemption from registration as a 

clearing agency to Omgeo, a subsidiary 

of The Depository Trust and Clearing 

Corporation (‘‘DTCC’’) and Thomson 

Financial, to conduct ETC and matching 

services.9 BSTP has applied for a similar 

exemption from registration as a 

clearing agency to provide ETC and 

matching services. 

III. BSTP’s Proposed Matching Service 

BSTP’s proposed matching service for 

fixed-income and equity trades will 

compare post-trade information from a 

broker-dealer and the broker-dealer’s 

institutional customer and reconcile 

such information to generate an 

affirmed confirmation. It will operate as 

follows 10: 

1. A customer routes an order to its 

firm. 

2. The firm executes the order and 

then sends a notice of execution 

(‘‘NOE’’) to the customer. 

3. For voice executed trades, the 

customer affirms to the firm the trade 

details contained in the NOE. For trades 

executed electronically, the electronic 

trading platform records the trade in the 

blotters of the customer and the firm. 

4. The customer sends to the 

matching service, the firm, and the 

customer’s custodian allocation 

information for the trade. 

5. The firm then submits to the 

matching service trade data 

corresponding to each allocation, 

including settlement instructions and, 

as applicable, commissions, taxes, and 

fees. 

6. The matching service next 

compares the customer’s allocation 

information (containing multiple fields 

of data) 11 with the firm’s trade data to 

determine whether the information 

contained in each field matches. If all 

required fields match, the matching 

service generates a matched 

confirmation and sends it to the firm, 

the customer, and other entities 

designated by the customer (e.g., the 

customer’s custodian). The matching 

service will typically perform this step 

in less than one second. 

7. After the matching service creates 

the matched confirmation, the matching 

service submits it to DTC as an 

‘‘affirmed confirmation.’’ 12 From there, 

the trade goes into DTC’s settlement 

process. 

According to BSTP, a customer will 

be eligible to use the matching service 

once its broker-dealer and, as 

applicable, its fund service provider 

have enabled the customer to use the 

matching service. A customer may also 

subscribe to the matching service 

directly. BSTP will make available to 

matching service users an interactive 

reporting tool that will display matching 

statistics, and users will be able to 

access specific details regarding 

matched and unmatched allocations 

filtered by counterparty, investment 

type, and status. 

Other than the matching service, 

BSTP states it will not perform any 

other functions of a clearing agency 

requiring registration under section 17A 

of the Exchange Act, such as net 

settlement, maintaining a balance of 

open positions between buyers and 

sellers, marking securities to the market, 

or handling funds or securities.13

IV. BSTP’s Request for an Exemption 

A. Introduction 

BSTP believes its proposed matching 

service would improve reliability and 

stability in the post-trade processing of 

securities transactions. According to 

BSTP, the matching service will offer 

tangible benefits to the securities 

industry by: (i) Adding choice and 

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12050 Federal Register / Vol. 80, No. 43 / Thursday, March 5, 2015 / Notices 

14See Exhibit J at 10. 

15As BSTP’s application notes, a Bloomberg 

Professional service subscription includes a posttrade trade affirmation function known as ‘‘VCON,’’ 

which is used by a substantial number of buy-side 

and sell-side firms. VCON allows an institution and 

its broker-dealer that agree to a trade over the 

telephone, by email, or otherwise to reconcile the 

economics of the trade in a thorough manner. In 

response to requests from multiple buy-side and 

sell-side customers, Bloomberg decided to enhance 

its existing VCON function by adding a 

confirmation matching service for DTC-eligible 

securities. See Exhibit S at 7–8. 

16See Exhibit S at 13–19. On November 19, 2014, 

the Commission adopted Regulation Systems 

Compliance and Integrity (‘‘Reg SCI’’), which would 

require ‘‘SCI entities’’ to comply with requirements 

for policies and procedures with respect to their 

automated systems that support the performance of 

their regulated activities. See Exchange Act Release 

No. 34–73639 (Nov. 19, 2014), 79 FR 72251, 72271 

(Dec. 5, 2014). Rule 1000(a) of Reg SCI would define 

an ‘‘SCI entity’’ to include, among other things, a 

registered clearing agency and an exempt clearing 

agency subject to the Commission’s Automation 

Review Policies (‘‘ARP’’). In particular, the term 

‘‘exempt clearing agency subject to ARP’’ includes 

‘‘an entity that has received from the Commission 

an exemption from registration as a clearing agency 

under section 17A of the Exchange Act, and whose 

exemption contains conditions that relate to the 

Commission’s [ARP] Policies, or any Commission 

regulation that supersedes or replaces such 

policies.’’ The Commission notes that the below 

conditions would meet the definition described in 

Rule 1000(a) of Reg SCI, requiring an exempt 

clearing agency subject to ARP to meet the 

applicable requirements set forth in Reg SCI. 

17See 15 U.S.C. 78q–1(a)(1)(D). 

18See Exchange Act Release Nos. 34–27445 (Nov. 

16, 1989), 54 FR 48703 (Nov. 24, 1989) (‘‘ARP I’’), 

and 34–29185 (May 9, 1991), 56 FR 22490 (May 15, 

1991) (‘‘ARP II’’); see also Memorandum from the 

Securities and Exchange Commission Division of 

Market Regulation to SROs and NASDAQ (June 1, 

2001) (‘‘Guidance for Systems Outages and System 

Change Notifications’’), available at http://

www.sec.gov/divisions/marketreg/sro-guidance-forsystems-outage-06-01-2001.pdf. 

19 DTC submits monthly affirmation/confirmation 

reports to the appropriate self-regulatory 

organizations. The Commission anticipates a 

similar schedule for BSTP. 

redundancy and eliminating a single 

point of dependency, thereby increasing 

the reliability and stability of matching 

service support available to market 

participants; (ii) decreasing overall costs 

to market participants; and (iii) by 

introducing competition, increasing the 

potential for development of new and 

enhanced functionality.14

BSTP believes that the proposed 

matching service will increase the speed 

and accuracy of confirmation matching, 

as the proposed matching service will 

be ‘‘seamlessly integrated with other 

tools used by the financial industry, 

including the Bloomberg Professional 

service, BLP’s and third-party order 

management systems, electronic trading 

functionality and other post-trade 

functionality.’’ 15 BSTP states that these 

synergies will help to improve the 

speed, accuracy and reliability of the 

post-trade environment by reducing the 

number of required connections and 

therefore the potential for error in the 

matching process. As a result, the speed 

of confirmation matching is improved 

and the accuracy of allocations 

processing is enhanced, resulting in 

prompt and accurate clearance and 

settlement of trades. 

BSTP believes that the market will 

benefit from the availability of functions 

to be provided by BSTP along with the 

existing functions provided by BLP that 

together will allow professional 

investors to analyze potential trades, 

route an order to a broker, receive an 

execution notice from the broker, enter 

trade details and allocations, receive a 

matched confirmation, and send an 

affirmed confirmation to the depository 

at DTC using the same provider. By 

making available a confirmation 

matching service accessible via the 

Bloomberg Professional service, which 

is commonly also used for electronic 

trading and post-trade processing, BSTP 

states that its proposed matching service 

will afford the securities industry the 

opportunity to use complementary 

services from start to finish. 

BSTP states that it will devote 

resources to helping users and potential 

users of the matching service further the 

goal of straight-through-processing, 

compressed settlement cycles and, 

ultimately, a reduction of risk 

throughout the financial markets. In 

sum, BSTP believes that its matching 

service will increase overall matching 

capacity in the market, eliminate a 

single point of dependency, and 

introduce price competition to the 

market, which will reduce costs to 

market participants. 

B. Conditions to Exemption From 

Registration 

BSTP represents in its Form CA–1 

that it would comply with the list of 

conditions found below regarding its 

operations and interoperability with 

other matching providers.16 The 

Commission preliminarily believes that 

the conditions are important tools to 

facilitate effective systems 

interoperability. By establishing a 

framework that allows the customers of 

multiple service providers to conduct 

transactions without having to join each 

matching provider, the Commission 

preliminarily believes that the 

interoperability conditions help 

facilitate the linking of clearance and 

settlement facilities.17

C.1. Operational Conditions 

(1) Before beginning the commercial 

operation of its matching service, BSTP 

shall provide the Commission with an 

audit report that addresses all the areas 

discussed in the Commission’s 

Automation Review Policies (‘‘ARP’’).18

(2) BSTP shall provide the 

Commission with annual reports and 

any associated field work prepared by 

competent, independent audit 

personnel that are generated in 

accordance with the annual risk 

assessment of the areas set forth in the 

ARP. BSTP shall provide the 

Commission (beginning in its first year 

of operation) with annual audited 

financial statements prepared by 

competent independent audit 

personnel. 

(3) BSTP shall report all significant 

systems outages to the Commission. If it 

appears that the outage may extend for 

thirty minutes or longer, BSTP shall 

report the systems outage immediately. 

If it appears that the outage will be 

resolved in less than thirty minutes, 

BSTP shall report the systems outage 

within a reasonable time after the outage 

has been resolved. 

(4) BSTP shall provide the 

Commission with 20 business days 

advance notice of any material changes 

that BSTP makes to the matching 

service. These changes will not require 

the Commission’s approval before they 

are implemented. 

(5) BSTP shall respond and require its 

service providers (including BLP) to 

respond to requests from the 

Commission for additional information 

relating to the matching service and ETC 

service, and provide access to the 

Commission to conduct on-site 

inspections of all facilities (including 

automated systems and systems 

environment), records, and personnel 

related to the matching service and the 

ETC service. The requests for 

information shall be made and the 

inspections shall be conducted solely 

for the purpose of reviewing the 

matching service’s and the ETC service’s 

operations and compliance with the 

federal securities laws and the terms 

and conditions in any exemptive order 

issued by the Commission with respect 

to BSTP’s matching service and the ETC 

service. 

(6) BSTP shall supply the 

Commission or its designee with 

periodic reports regarding the 

affirmation rates for institutional 

transactions effected by institutional 

investors that utilize its matching 

service and ETC service.19

(7) BSTP shall preserve a copy or 

record of all trade details, allocation 

instructions, central trade matching 

results, reports and notices sent to 

customers, service agreements, reports 

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Federal Register / Vol. 80, No. 43 / Thursday, March 5, 2015 / Notices 12051 

20 15 U.S.C. 78q–1(a)(2)(A)(ii). 

21The failure of neutral industry participants to 

be available or to submit their input within the 120 

day or 90 day time periods set forth in this 

paragraph shall not constitute an adequate business 

or technological justification for failing to adhere to 

the requirements set forth in this paragraph. 

regarding affirmation rates that are sent 

to the Commission or its designee, and 

any complaint received from a 

customer, all of which pertain to the 

operation of its matching service and 

ETC service. BSTP shall retain these 

records for a period of not less than five 

years, the first two years in an easily 

accessible place. 

(8) BSTP shall not perform any 

clearing agency function (such as net 

settlement, maintaining a balance of 

open positions between buyers and 

sellers, or marking securities to the 

market) other than as permitted in an 

exemption issued by the Commission. 

(9) Before beginning the commercial 

operation of its matching service, BSTP 

shall provide the Commission with 

copies of the service agreement between 

BLP and BSTP and shall notify the 

Commission of any material changes to 

the service agreement. 

C.2. Interoperability Conditions 

(1) BSTP shall develop, in a timely 

and efficient manner, fair and 

reasonable linkages between BSTP’s 

matching service and other matching 

services that are registered with the 

Commission or that receive or have 

received from the Commission an 

exemption from clearing agency 

registration that, at a minimum, allow 

parties to trades that are processed 

through one or more matching services 

to communicate through one or more 

appropriate effective interfaces with 

other matching services. 

(2) BSTP shall devise and develop 

interfaces with other matching services 

that enable end-user clients or any 

service that represents end-user clients 

to BSTP (‘‘end-user representative’’) to 

gain a single point of access to BSTP 

and other matching services. Such 

interfaces must link with each other 

matching service so that an end-user 

client of one matching service can 

communicate with all end-user clients 

of all matching services, regardless of 

which matching service completes trade 

matching prior to settlement. 

(3) If any intellectual property 

proprietary to BSTP is necessary to 

develop, build, and operate links or 

interfaces to BSTP’s matching service, 

as described in these conditions, BSTP 

shall license such intellectual property 

to other matching services seeking 

linkage to BSTP on fair and reasonable 

terms for use in such links or interfaces. 

(4) BSTP shall not engage in any 

activity inconsistent with the purposes 

of section 17A(a)(2) of the Exchange 

Act,20 which section seeks the 

establishment of linked or coordinated 

facilities for clearance and settlement of 

transactions. In particular, BSTP will 

not engage in activities that would 

prevent any other matching service from 

operating a matching service that it has 

developed independently from BSTP’s 

matching service. 

(5) BSTP shall support industry 

standards in each of the following 

categories: communication protocols 

(e.g., TCP/IP, SNA); message and file 

transfer protocols and software (e.g., 

FIX, WebSphere MQ, SWIFT); message 

format standards (e.g., FIX); and 

message languages and metadata (e.g., 

XML). However, BSTP need not support 

all existing industry standards or those 

listed above by means of example. 

Within three months of regulatory 

approval, BSTP shall make publicly 

known those standards supported by 

BSTP’s matching service. To the extent 

that BSTP decides to support other 

industry standards, including new and 

modified standards, BSTP shall make 

these standards publicly known upon 

making such decision or within three 

months of updating its system to 

support such new standards, whichever 

is sooner. Any translation to/from these 

published standards necessary to 

communicate with BSTP’s system shall 

be performed by BSTP without any 

significant delay or service degradation 

of the linked parties’ services. 

(6) BSTP shall make all reasonable 

efforts to link with each other matching 

service in a timely and efficient manner, 

as specified below. Upon written 

request, BSTP shall negotiate with each 

other matching service to develop and 

build an interface that allows the two to 

link matching services (‘‘interface’’). 

BSTP shall involve neutral industry 

participants in all negotiations to build 

or develop interfaces and, to the extent 

feasible, incorporate input from such 

participants in determining the 

specifications and architecture of such 

interfaces. Absent adequate business or 

technological justification,21 BSTP and 

the requesting other matching service 

shall conclude negotiations and reach a 

binding agreement to develop and build 

an interface within 120 calendar days of 

BSTP’s receipt of the written request. 

This 120-day period may be extended 

upon the written agreement of both 

BSTP and the other matching service 

engaged in negotiations. For each other 

matching service with whom BSTP 

reaches a binding agreement to develop 

and build an interface, BSTP shall begin 

operating such interface within 90 days 

of reaching a binding agreement and 

receiving all the information necessary 

to develop and operate it. This 90-day 

period may be extended upon the 

written agreement of both BSTP and the 

other matching service. For each 

interface and within the same time 

BSTP must negotiate and begin 

operating each interface, BSTP and the 

other matching service shall agree to 

‘‘commercial rules’’ for coordinating the 

provision of matching services through 

their respective interfaces, including 

commercial rules: (A) Allocating 

responsibility for performing matching 

services; and (B) allocating liability for 

service failures. BSTP shall also involve 

neutral industry participants in 

negotiating applicable commercial rules 

and, to the extent feasible, take input 

from such participants into account in 

agreeing to commercial rules. At a 

minimum, each interface shall enable 

BSTP and the other matching service to 

transfer between them all trade and 

account information necessary to fulfill 

their respective matching 

responsibilities as set forth in their 

commercial rules (‘‘trade and account 

information’’). Absent an adequate 

business or technological justification, 

BSTP shall develop and operate each 

interface without imposing conditions 

that negatively impact the other 

matching service’s ability to innovate its 

matching service or develop and offer 

other value-added services relating to its 

matching service or that negatively 

impact the other matching service’s 

ability to compete effectively against 

BSTP. 

(7) In order to facilitate fair and 

reasonable linkages between BSTP and 

other matching services, BSTP shall 

publish or make available to any other 

matching service the specifications for 

any interface and its corresponding 

commercial rules that are in operation 

within 20 days of receiving a request for 

such specifications and commercial 

rules. Such specifications shall contain 

all the information necessary to enable 

any other matching services not already 

linked to BSTP through an interface to 

establish a linkage with BSTP through 

an interface or a substantially similar 

interface. BSTP shall link to any other 

matching service, if the other matching 

service so opts, through an interface 

substantially similar to any interface 

and its corresponding commercial rules 

that BSTP is currently operating. BSTP 

shall begin operating such substantially 

similar interface and commercial rules 

with the other matching service within 

90 days of receiving all the information 

necessary to operate that link. This 90- 

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12052 Federal Register / Vol. 80, No. 43 / Thursday, March 5, 2015 / Notices 

day period may be extended upon the 

written agreement of both BSTP and the 

other matching service that plans to use 

that link. 

(8) BSTP and respective other 

matching services shall bear their own 

costs of building and maintaining an 

interface, unless otherwise negotiated 

by the parties. 

(9) BSTP shall provide to all other 

matching services and end-user 

representatives that maintain linkages 

with BSTP sufficient advance notice of 

any material changes, updates, or 

revisions to its interfaces to allow all 

parties who link to BSTP through 

affected interfaces to modify their 

systems as necessary and avoid system 

downtime, interruption, or system 

degradation. 

(10) BSTP and each other matching 

service shall negotiate fair and 

reasonable charges and terms of 

payment for the use of their interface 

with respect to the sharing of trade and 

account information (‘‘interface 

charges’’). In any fee schedule adopted 

under conditions C.2(10), C.2(11), or 

C.2(12) herein, BSTP’s interface charges 

shall be equal to the interface charges of 

the respective other matching service. 

(11) If BSTP and the other matching 

service cannot reach agreement on fair 

and reasonable interface charges within 

60 days of receipt of the written request, 

BSTP and the other matching service 

shall submit to binding arbitration 

under the rules promulgated by the 

American Arbitration Association. The 

arbitration panel shall have 60 days to 

establish a fee schedule. The arbitration 

panel’s establishment of a fee schedule 

shall be binding on BSTP and the other 

matching service unless and until the 

fee schedule is subsequently modified 

or abrogated by the Commission or 

BSTP and the other matching service 

mutually agree to renegotiate. 

(12)(A) The following parameters 

shall be considered in determining fair 

and reasonable interface charges: (i) The 

variable cost incurred for forwarding 

trade and account information to other 

matching services; (ii) the average cost 

associated with the development of 

links to end-users and end-user 

representatives; and (iii) BSTP’s 

interface charges to other matching 

services. (B) The following factors shall 

not be considered in determining fair 

and reasonable interface charges: (i) The 

respective cost incurred by BSTP or the 

other matching service in creating and 

maintaining interfaces; (ii) the value 

that BSTP or the other matching service 

contributes to the relationship; (iii) the 

opportunity cost associated with the 

loss of profits to BSTP that may result 

from competition from other matching 

services; (iv) the cost of building, 

maintaining, or upgrading BSTP’s 

matching service; or (v) the cost of 

building, maintaining, or upgrading 

value added services to BSTP’s 

matching service. (C) In any event, the 

interface charges shall not be set at a 

level that unreasonably deters entry or 

otherwise diminishes price or non-price 

competition with BSTP by other 

matching services. 

(13) BSTP shall not charge its 

customers more for use of its matching 

service when one or more 

counterparties are customers of other 

matching services than BSTP charges its 

customers for use of its matching service 

when all counterparties are customers of 

BSTP. BSTP shall not charge customers 

any additional amount for forwarding to 

or receiving trade and account 

information from other matching 

services called for under applicable 

commercial rules. 

(14) BSTP shall maintain its quality, 

capacity, and service levels in the 

interfaces with other matching services 

(‘‘matching services linkages’’) without 

bias in performance relative to similar 

transactions processed completely 

within BSTP’s service. BSTP shall 

preserve and maintain all raw data and 

records necessary to prepare reports 

tabulating separately the processing and 

response times on a trade-by-trade basis 

for (A) completing its matching service 

when all counterparties are customers of 

BSTP; (B) completing its matching 

service when one or more 

counterparties are customers of other 

matching services; or (C) forwarding 

trade information to other matching 

services called for under applicable 

commercial rules. BSTP shall retain the 

data and records for a period not less 

than six years. Sufficient information 

shall be maintained to demonstrate that 

the requirements of condition C.2(15) 

below are being met. BSTP and its 

service providers shall provide the 

Commission with reports regarding the 

time it takes BSTP to process trades and 

forward information under various 

circumstances within thirty days of the 

Commission’s request for such reports. 

However, BSTP shall not be responsible 

for identifying the specific cause of any 

delay in performing its matching service 

where the fault for such delay is not 

attributable to BSTP. 

(15) BSTP shall process trades or 

facilitate the processing of trades by 

other matching services on a first-intime priority basis. For example, if 

BSTP receives trade and account 

information that BSTP is required to 

forward to other matching services 

under applicable commercial rules 

(‘‘pass-through information’’) prior to 

receiving trade and account information 

from BSTP’s customers necessary to 

provide matching services for a trade in 

which all parties are customers of BSTP 

(‘‘intra-hub information’’), BSTP shall 

forward the pass-through information to 

the designated other matching service 

prior to processing the intra-hub 

information. If, on the other hand, the 

information were to come in the reverse 

order, BSTP shall process the intra-hub 

information before forwarding the passthrough information. 

(16) BSTP shall sell access to its 

databases, systems or methodologies for 

transmitting settlement instructions 

(including settlement instructions from 

investment managers, broker-dealers, 

and custodian banks) and/or 

transmitting trade and account 

information to and receiving 

authorization responses from settlement 

agents on fair and reasonable terms to 

other matching services and end-user 

representatives. Such access shall 

permit other matching services and enduser representatives to draw information 

from those databases, systems, and 

methodologies for transmitting 

settlement instructions and/or 

transmitting trade and account 

information to and receiving 

authorization responses from settlement 

agents for use in their own matching 

services or end-user representatives’ 

services. The links necessary for other 

matching services and end-user 

representatives to access BSTP’s 

databases, systems or methodologies for 

transmitting settlement instructions 

and/or transmitting trade and account 

information to and receiving 

authorization responses from settlement 

agents will comply with conditions 

C.2(3), C.2(5), C.2(9), C.2(14) and C.2(15) 

above. 

(17) For the first five years from the 

date of an exemptive order issued by the 

Commission with respect to BSTP’s 

matching service, BSTP shall provide 

the Commission with reports every six 

months sufficient to document BSTP’s 

adherence to the obligations relating to 

interfaces set forth in conditions C.2(6) 

through C.2(13) and C.2(16) above. 

BSTP shall incorporate into such reports 

information including but not limited 

to: (A) All other matching services 

linked to BSTP; (B) the time, effort, and 

cost required to establish each link 

between BSTP and other matching 

services; (C) any proposed links 

between BSTP and other matching 

services as well as the status of such 

proposed links; (D) any failure or 

inability to establish such proposed 

links or fee schedules for interface 

charges; (E) any written complaint 

received from other matching services 

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Federal Register / Vol. 80, No. 43 / Thursday, March 5, 2015 / Notices 12053 

22See 15 U.S.C. 78q–1(b) and 17 CFR 240.17Ab2– 

1. 23See supra note 9. 24See Exhibit J at 10. 

relating to its established or proposed 

links with BSTP; and (F) if BSTP failed 

to adhere to any of the obligations 

relating to interfaces set forth in 

conditions C.2(6) through C.2(13) and 

C.2(16) above, its explanation for such 

failure. The Commission shall treat 

information submitted in accordance 

with this condition as confidential, nonpublic information, subject to the 

provisions of applicable law. If any 

other matching service seeks to link 

with BSTP more than five years after 

issuance of an exemptive order issued 

by the Commission with respect to 

BSTP’s matching service, BSTP shall 

notify the Commission of the other 

matching service’s request to link with 

BSTP within ten days of receiving such 

request. In addition, BSTP shall provide 

reports to the Commission in 

accordance with this paragraph 

commencing six months after the initial 

request for linkage is made until one 

year after BSTP and the other matching 

service begin operating their interface. 

The Commission reserves the right to 

request reports from BSTP at any time. 

BSTP shall provide the Commission 

with such updated reports within thirty 

days of the Commission’s request. 

(18) BSTP shall also publish or make 

available upon request to any end-user 

representative the necessary 

specifications, protocols, and 

architecture of any interface created by 

BSTP for any end-user representative. 

V. Statutory Standards 

A. Statutory Process for Registering or 

Exempting Clearing Agencies 

Section 17A(b)(1) of the Exchange Act 

requires all clearing agencies to register 

with the Commission before performing 

any of the functions of a clearing 

agency.22 However, section 17A(b)(1) 

also states that, upon its own motion or 

upon a clearing agency’s application, 

the Commission may conditionally or 

unconditionally exempt said clearing 

agency from any provisions of section 

17A or the rules or regulations 

thereunder if the Commission finds that 

such exemption is consistent with the 

public interest, the protection of 

investors, and the purposes of section 

17A, including the prompt and accurate 

clearance and settlement of securities 

transactions and the safeguarding of 

securities and funds. 

In the Matching Release, the 

Commission noted that an entity that 

limited its clearing agency functions to 

providing matching services might not 

have to be subject to the full range of 

clearing agency regulation. The 

Matching Release stated that the 

Commission anticipated that an entity 

seeking an exemption from clearing 

agency registration for matching would 

be required to: (1) Provide the 

Commission with information on its 

matching services and notice of material 

changes to its matching services; (2) 

establish an electronic link to a 

registered clearing agency that provides 

for the settlement of its matched trades; 

(3) allow the Commission to inspect its 

facilities and records; and (4) make 

periodic disclosures to the Commission 

regarding its operations. 

In 2001, the Commission approved an 

application by Omgeo, then a joint 

venture between DTCC and Thomson 

Financial, for an exemption from 

registration as a clearing agency to 

provide matching services.23 Omgeo’s 

exemption from clearing agency 

registration was subject to conditions 

that were substantially similar to the 

conditions set forth in Part IV.C above. 

B. BSTP’s Compliance With Statutory 

Standards 

BSTP’s matching service would be the 

only clearing agency function that it 

would perform under an exemptive 

order. BSTP believes that the 

undertakings it has proposed as a 

condition of obtaining an exemption 

from clearing agency registration are 

consistent with the public interest, the 

protection of investors, and the 

purposes of section 17A of the Exchange 

Act. 

BSTP represents in its Form CA–1 

that it will comply with all of the 

conditions described in Part IV.C above. 

Preliminarily, the Commission does not 

believe, however, that BSTP, in the 

absence of performing the functions of 

a clearing agency other than the 

matching service described here, raises 

the same concerns as an entity that 

performs a wider range of clearing 

agency functions. For example, BSTP 

would not be operating as a selfregulatory organization with the powers 

to enforce its rules against its members. 

Accordingly, the Commission 

preliminarily believes it may not be 

necessary to require BSTP to satisfy all 

of the standards for registrants under 

section 17A of the Exchange Act 

because the proposed conditions should 

establish a sufficiently robust regulatory 

framework. Further, the Commission 

preliminarily believes that granting 

BSTP an exemption from registration as 

a clearing agency would be consistent 

with the Commission’s past practice, 

and that additional matching service 

providers should promote innovation 

and reduce costs for investors. 

In evaluating BSTP’s application, the 

Commission intends to consider 

whether BSTP is so organized and has 

the capacity to be able to facilitate 

prompt and accurate matching services. 

Subject to the specific operational, 

interoperability and access conditions to 

which it has agreed, the Commission 

preliminarily believes this to be the 

case. In particular, BSTP has 

represented that the addition of a new 

matching service into a single provider 

market will not adversely affect current 

users of the existing matching service 

offered by Omgeo. BSTP states that the 

proposed matching service will ensure 

that users will have full flexibility to use 

the central matching service of their 

choice at any time, and will have the 

ability to choose whether or not to use 

the matching service or another service 

on a per-trade basis. BSTP represents 

that users will not be locked into using 

BSTP’s matching service over any 

alternative, whether by contract, 

functionality or otherwise.24 BSTP 

believes that market participants seek 

‘‘interoperability’’ through the ability to 

connect to multiple providers and the 

resulting improvements to reliability 

and stability in the post-trade space that 

would flow from this type of service 

offering. 

The Commission requests comment 

on whether the conditions are sufficient 

to promote the purposes of section 17A 

of the Exchange Act and to allow the 

Commission to adequately monitor the 

effects of BSTP’s proposed activities on 

the national system for the clearance 

and settlement of securities 

transactions. In addition, the 

Commission invites commenters to 

address whether granting BSTP an 

exemption from clearing agency 

registration would impose any burden 

on competition that is not necessary or 

appropriate in furtherance of the 

purposes of section 17A of the Exchange 

Act. 

VI. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed 

exemption is consistent with the public 

interest, the protection of investors, and 

the purposes of section 17A of the 

Exchange Act. To the extent possible, 

commenters are requested to provide 

empirical data and other factual support 

for their views. In addition, the 

Commission seeks comment generally 

on the following issues: 

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12054 Federal Register / Vol. 80, No. 43 / Thursday, March 5, 2015 / Notices 

25 17 CFR 200.30–3(a)(16). 

1 15 U.S.C. 78k–1. 

2 17 CFR 242.608. 

3See Letter from Brendon J. Weiss, Vice 

President, NYSE Group Inc., to Secretary, 

Commission, dated August 25, 2014. 

4See Securities Exchange Act Release No. 73511 

(November 3, 2014), 79 FR 66423. 

5See Letters from Shawn Leary, dated August 24, 

2014; Tony BenBrahim, dated August 24, 2014; 

John Richardson, dated August 26, 2014; Arthur T. 

Ling, dated August 26, 2014; Dan Blecha, dated 

August 26, 2014; Tom Sosnoff, dated August 27, 

2014; Michael Choffy, dated August 28, 2014; 

Joseph Runsdorf, dated August 29, 2014; Tony J. 

Gagliano, dated September 1, 2014; Howard L. 

Greenblatt, dated September 2, 2014; Ernest 

Callipari, dated September 2, 2014 ; Ali Bangura, 

dated September 3, 2014; Tony J. Gagliano, dated 

September 3, 2014; Theodore R. Lazo, Managing 

Director and Associate General Counsel of SIFMA, 

dated September 9, 2014; John C. Nagel, Managing 

Director and Sr. Deputy General Counsel of Citadel, 

LLC, dated September 12, 2014; Christopher Nagy, 

CEO, and Dave Lauer, President, KOR Group LLC, 

dated September 15, 2014; Stuart J. Kaswell, 

Executive Vice President & Managing Director, 

1. In light of the passage of time since 

the adoption of the Omgeo Exemptive 

Order, developments in technology, and 

enhancements in market practices, are 

the proposed conditions to the 

exemptive order appropriate? 

Specifically, are all of the conditions 

designed to facilitate interoperability 

necessary? Could the Commission 

continue to promote the purposes of 

section 17A of the Exchange Act by 

additional modification or elimination 

of some or all of the conditions? If so, 

which conditions should be modified or 

eliminated? 

2. What, if any, effect will moving 

from a single provider to two or more 

providers have on the efficiency of the 

trade settlement process? 

3. What, if any, impact will the 

introduction of a second provider have 

on pricing, quality of service, and 

innovation? 

4. Will the introduction of one or 

more additional providers increase or 

reduce risk in the marketplace? 

5. Does BSTP’s application for 

exemption from registration help 

achieve the underlying policy objectives 

of the Exchange Act? Why or why not? 

In particular, please address whether 

granting an exemption from registration 

does or does not further the goals of 

promoting investor protection and the 

integrity of the securities markets. 

6. Are the proposed conditions to the 

exemptive order sufficient to promote 

the purposes of section 17A of the 

Exchange Act and to allow the 

Commission to adequately monitor the 

effects of BSTP’s proposed activities on 

the national system for the clearance 

and settlement of securities 

transactions? Why or why not? 

7. Would the links and interfaces with 

other matching services as described in 

BSTP’s application have a positive or 

negative effect on other matching 

services that are registered with the 

Commission or that receive from the 

Commission an exemption from clearing 

agency registration? Why or why not? 

Should the proposed condition to 

develop an interface with another 

matching service provider be made 

mandatory, rather than only upon 

request from another provider? 

8. Would the links and interfaces with 

other matching services as described in 

BSTP’s application have a positive or 

negative effect on end-user clients of all 

matching services, regardless of which 

matching service completes trade 

matching prior to settlement? Why or 

why not? 

Comments may be submitted by any 

of the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

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

rules/proposed.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number 

600–33 on the subject line; or 

Paper Comments 

• Send paper comments in triplicate 

to Brent J. Fields, Secretary, Securities 

and Exchange Commission, 100 F Street 

NE., Washington, DC 20549–1090. All 

submissions should refer to File 

Number 600–33. 

To help us 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/other.shtml). 

Copies of the submission, all 

subsequent amendments, all written 

statements with respect to the 

application that are filed with the 

Commission, and all written 

communications relating to the 

application 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 Section, 

100 F Street NE., Washington, DC 20549 

on official business days between the 

hours of 10:00 a.m. and 3:00 p.m. 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 600–33 and should be 

submitted on or before April 6, 2015. 

For the Commission by the Division of 

Trading and Markets, pursuant to delegated 

authority.25

Jill M. Peterson, 

Assistant Secretary. 

[FR Doc. 2015–05053 Filed 3–4–15; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–74388; File No. 4–657] 

Joint Industry Plan; Notice of 

Designation of a Longer Period for 

Commission Action on the Proposed 

National Market System Plan To 

Implement a Tick Size Pilot Program 

on a One-Year Pilot Basis by BATS 

Exchange, Inc., BATS Y-Exchange, 

Inc., Chicago Stock Exchange, Inc., 

EDGA Exchange, Inc., EDGX 

Exchange, Inc., Financial Industry 

Regulatory Authority, Inc., NASDAQ 

OMX BX, Inc., NASDAQ OMX PHLX 

LLC, The Nasdaq Stock Market LLC, 

New York Stock Exchange LLC, NYSE 

MKT LLC, and NYSE Arca, Inc. 

February 26, 2015. 

On August 25, 2014, NYSE Group, 

Inc., on behalf of BATS Exchange, Inc., 

BATS Y-Exchange, Inc., Chicago Stock 

Exchange, Inc., EDGA Exchange, Inc., 

EDGX Exchange, Inc., Financial 

Industry Regulatory Authority, Inc., 

NASDAQ OMX BX, Inc., NASDAQ 

OMX PHLX LLC, and The Nasdaq Stock 

Market LLC and New York Stock 

Exchange LLC, NYSE MKT LLC, NYSE 

Arca, Inc. (collectively, the 

‘‘Participants’’), filed with the Securities 

and Exchange Commission 

(‘‘Commission’’), pursuant to Section 

11A of the Securities Exchange Act of 

1934 (‘‘Act’’),1 and Rule 608 of 

Regulation NMS thereunder,2 a 

proposed national market system 

(‘‘NMS’’) Plan to Implement a Tick Size 

Pilot Program On a One-Year Pilot Basis 

(‘‘Plan’’).3 The proposed Plan was 

published for comment in the Federal 

Register on November 7, 2014.4 The 

Commission has received 74 comment 

letters on the proposed Plan.5

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