Federal Register / Vol. 74, No. 41 / Wednesday, March 4, 2009 / Notices 9455 

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

2 17 CFR 240.19b–4. 

3The NY ring-fence law is Section 606, 

subsection 4, of the NYBL. Currently, FICC has an 

Illinois branch of a foreign bank as a member. FICC 

represents that the Illinois ring fence law is 

identical to New York’s ring fence law. 

4See Sections 403 and 404 of the Federal Deposit 

Insurance Corporation Improvement Act, 12 U.S.C. 

4403(a) and 4404(a) (confirming the enforceability 

of bilateral netting contracts and clearing 

organization netting contracts, notwithstanding 

other provisions of federal law, by ensuring that 

parties can exercise termination, liquidation, and 

acceleration rights, as well as netting rights, under 

a netting contract). 

5FICC believes that Section 561 of the bankruptcy 

code makes it clear that the bankruptcy code’s safe 

harbor provisions now apply to ‘‘ancillary 

proceedings.’’ Ancillary proceedings, discussed in 

Chapter 15 of the bankruptcy code, refer to an 

attempt by a foreign liquidator to present itself in 

a U.S. court to institute proceedings to attempt to 

apply adverse foreign law to determine the 

disposition of the estate of a non-U.S. entity. 

6Historically, FICC’s concern centered on 

ancillary proceedings that might be brought by a 

foreign liquidator in a U.S. bankruptcy court 

seeking to apply foreign law to the disposition of 

an insolvent foreign member’s assets. The U.S. 

Bankruptcy Code has been amended to provide that 

the safe harbors are available in such a proceeding, 

which was not that case prior to the recent 

amendments of the bankruptcy code. 

7The Commission has approved similar rule 

filings submitted by The Depository Trust Company 

and the National Securities Clearing Corporation. 

Securities Exchange Act Release Nos. 58345 (Aug. 

12, 2008), 73 FR 48411 (Aug. 19, 2008) [File No. 

SR–DTC–2007–16] and 58344 (Feb. 27, 2008), 73 FR 

12485 (Mar. 7, 2008) [File No. SR–NSCC–2007–15]. 

8 GSD’s rules state that if an applicant is a foreign 

entity that is applying to become a ‘‘foreign netting 

member’’, it must satisfy the minimum financial 

requirements (defined by reference to regulatory 

capital as defined by the applicant’s home country 

regulator) that are applicable to the netting system 

membership category that the FICC determines 

would be applicable to the foreign firm if it were 

organized or established under U.S. law. 

9 15 U.S.C. 78q–1. 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–59463; File No. SR–FICC– 

2009–02] 

Self-Regulatory Organizations; Fixed 

Income Clearing Corporation; Notice of 

Filing and Order Granting Accelerated 

Approval of a Proposed Rule Change 

To Allow for Direct Membership for 

Non-Domestic Entities 

February 26, 2009. 

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

Securities Exchange Act of 1934 

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

notice is hereby given that on February 

19, 2009, the Fixed Income Clearing 

Corporation (‘‘FICC’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) a proposed rule change 

as described in Items I and II below, 

which Items have been prepared 

primarily by FICC. The Commission is 

publishing this notice and order to 

solicit comments on the proposed rule 

change from interested persons and to 

approve the proposed rule change on an 

accelerated basis. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The proposed rule change allows 

direct membership for non-U.S. entities 

in FICC’s Government Securities 

Division (‘‘GSD’’). 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, 

FICC 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. FICC 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 

Currently, GSD Rule 2 (‘‘Members’’) 

includes a broad category for ‘‘foreign 

netting members.’’ GSD Rule 2A 

(‘‘Initial Membership Requirements’’) 

sets forth membership criteria for these 

firms and includes, among other 

requirements, that the entity be 

regulated in its home country by a 

financial regulatory authority and that it 

be in compliance with the financial 

reporting and responsibility standards 

set by its home country regulator. 

FICC has designed its rules and 

various membership agreements to 

minimize the risks posed by the 

admission of non-domestic entities by 

availing itself of the benefits and 

protections of various U.S. state and 

federal bankruptcy rules and 

regulations. With this approach, FICC 

has historically accepted only foreign 

banks with U.S. branches or agencies 

into the ‘‘foreign netting member’’ 

category of GSD membership. While this 

is not technically a requirement in 

GSD’s current rules, FICC imposed this 

limitation because of various state and 

federal bankruptcy law ‘‘safe harbors’’ 

that would apply to a U.S. branch’s 

assets should a non-domestic member 

become insolvent. These safe harbors 

include ‘‘ring fencing’’ provisions that 

would set aside a U.S. branch’s assets 

for distribution to the branch’s 

creditors 3 and procedures designed to 

protect creditors in the case of a foreign 

entity’s default, including recognizing 

security interests and netting 

agreements, and rights to access 

member-posted collateral.4

Recently, U.S. bankruptcy laws have 

expanded the reach of federal safe 

harbors to non-U.S. entities without a 

U.S. branch or agency.5 FICC believes 

that these statutory changes strengthen 

FICC’s ability to access and secure 

collateral posted at FICC by an insolvent 

non-U.S. member without a domestic 

branch by providing protection similar 

to that which applies to a U.S. member 

or branch or agency of a non-U.S. 

member.6

This rule filing will remove references 

in GSD’s rules to domestic branches or 

agencies with respect to foreign 

members, thereby facilitating ‘‘direct’’ 

membership for these entities at GSD.7

Non-U.S. applicants will still be 

required to meet the minimum financial 

requirements set forth in GSD Rule 2A 

for foreign netting members 8 and those 

entities accepted into membership will 

be required to comply with all rule 

provisions applicable to foreign netting 

members. 

FICC believes that the proposed rule 

filing is consistent with the 

requirements of Section 17A of the Act 9

and the rules and regulations 

thereunder applicable to FICC because it 

does not adversely affect the 

safeguarding of securities or funds in 

FICC’s control or for which it is 

responsible. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

FICC does not believe that the 

proposed rule change will have any 

impact or impose any burden on 

competition. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

FICC has not solicited or received 

written comments relating to the 

proposed rule change. FICC will notify 

the Commission of any written 

comments it receives. 

III. Solicitation of Comments 

Interested persons are invited to 

submit written data, views and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

9456 Federal Register / Vol. 74, No. 41 / Wednesday, March 4, 2009 / Notices 

10 15 U.S.C. 78q–1(b)(3)(A). 

11Supra, note 7. 

12 15 U.S.C. 78s(b). 

13Supra, note 7. 

14 15 U.S.C. 78q–1. 

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

16 In approving the proposed rule change, the 

Commission considered the proposal’s impact on 

efficiency, competition and capital formation. 15 

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

17 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3The Commission notes that while provided in 

Exhibit 5 to the filing, the text of the proposed rule 

change is not attached to this notice but is available 

at the Commission’s Public Reference Room and at 

http://nasdaqomxbx.cchwallstreet.com. 

Electronic Comments 

• Use the Commission’s Internet 

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

rules/sro.shtml); or 

• Send an e-mail to rulecomments@sec.gov. Please include File 

No. SR–FICC–2009–02 on the subject 

line. 

Paper Comments 

• Send paper comments in triplicate 

to Elizabeth M. Murphy, Secretary, 

Securities and Exchange Commission, 

Station Place, 100 F Street, NE., 

Washington, DC 20549–1090. 

All submissions should refer to File No. 

SR–FICC–2009–02. This file number 

should be included on the subject line 

if e-mail 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 inspection and copying in 

the Commission’s Public Reference 

Room, 450 Fifth Street, NW., 

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 FICC’s principal office and 

on FICC’s Web site at http://ficc.com/ 

gov/gov.docs.jsp?NS-query=#rf. 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 

submission should refer to File No. SR– 

FICC–2009–02 and should be submitted 

on or before March 25, 2009. 

IV. Commission’s Findings and Order 

Granting Accelerated Approval of the 

Proposed Rule Change 

The Commission finds that the 

proposed rule change is consistent with 

the requirements of the Act and the 

rules and regulations thereunder 

applicable to FICC. Specifically, the 

Commission finds that the proposed 

rule change is consistent with Section 

17A(b)(3)(A) of the Act,10 which 

requires, among other things, that FICC, 

as a registered clearing agency, be so 

organized and has the capacity to be 

able to safeguard securities and funds in 

its custody or control or for which it is 

responsible. The Commission notes that 

the proposed rule change adopts 

membership standards and safeguards 

that are substantively identical to those 

of the National Securities Clearing 

Corporation and The Depository Trust 

Company, which were published for 

comment in 2008 and generated no 

comments.11 The Commission does not 

believe that this proposal raises new 

regulatory issues. Moreover, the changes 

in U.S. bankruptcy laws cited by FICC 

appear to have strengthened FICC’s 

ability to secure the funds and securities 

pledged as collateral by a non-U.S. 

entity to FICC in the event that such 

entity were to become insolvent. 

Therefore, the proposed rule change 

should enhance FICC’s capacity to 

safeguard securities and funds in its 

custody or control or for which it is 

responsible. 

At FICC’s request, the Commission 

finds good cause to approve the 

proposed rule change prior to the 

thirtieth day after the date of 

publication of notice in the Federal 

Register, pursuant to Section 19(b)(2) of 

the Act.12 The Commission believes that 

accelerating approval of this proposal is 

appropriate in that the proposed rule 

change is substantively identical to 

rules proposed by FICC-affiliated 

clearing agencies and approved by the 

Commission in 2008,13 and that it will 

allow prospective non-U.S. entities that 

wish to avail themselves of FICC’s 

clearance and settlement, cost-savings, 

and risk-management services without 

undue delay. 

V. Conclusion 

On the basis of the foregoing, the 

Commission finds that the proposed 

rule change is consistent with the 

requirements of the Act and in 

particular Section 17A of the Act 14 and 

the rules and regulations thereunder. 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,15 that the 

proposed rule change (SR–FICC–2009– 

02) be and hereby is approved on an 

accelerated basis.16

For the Commission by the Division of 

Trading and Markets pursuant to delegated 

authority.17

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–4603 Filed 3–3–09; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–59452; File No. SR–BX– 

2009–012] 

Self-Regulatory Organizations; 

NASDAQ OMX BX, Inc.; Notice of Filing 

and Immediate Effectiveness of 

Proposed Rule Change To Modify Fees 

for Members Using the NASDAQ OMX 

BX Equities System 

February 25, 2009. 

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

Securities Exchange Act of 1934 

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

notice is hereby given that on February 

19, 2009, NASDAQ OMX BX, Inc. 

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

Exchange Commission (‘‘Commission’’) 

the proposed rule change as described 

in Items I, II, and III below, which Items 

have been prepared by the Exchange. 

The Commission is publishing this 

notice to solicit comments on the 

proposed rule from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

BX proposes to modify pricing for BX 

members using the NASDAQ OMX BX 

Equities System. BX will implement this 

rule change on March 2, 2009. The text 

of the proposed rule change is attached 

as Exhibit 5 3 and is available at http:// 

nasdaqomxbx.cchwallstreet.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, BX 

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. BX has prepared 

summaries, set forth in Sections A, B,