Federal Register / Vol. 74, No. 74 / Monday, April 20, 2009 / Notices 18013 

11 15 U.S.C. 78k–1(a)(1)(C)(iii). 12Trading may be halted because of market 

conditions or for reasons that, in the view of the 

Exchange, make trading in Trust Certificates 

inadvisable. These may include: (1) The extent to 

which trading is not occurring in the underlying 

securities; or (2) whether other unusual conditions 

or circumstances detrimental to the maintenance of 

a fair and orderly market are present. 13S&P is a division of The McGraw-Hill 

Companies, Inc. 

14The Commission notes that the foregoing 

criteria relating to the issuance and the issuer are 

substantially similar to the requirements applicable 

to Index-Linked Securities. See NYSE Arca Equities 

Rule 5.2(j)(6)(A). 

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

16See Securities Exchange Act Release No. 59051 

(December 4, 2008), 73 FR 75155 (December 10, 

2008) (SR–NYSEArca–2008–123) (order approving 

NYSE Arca Equities Rule 5.2(j)(7) and listing on the 

Exchange of 14 issues thereunder). 

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

18 17 CFR 200.30–3(a)(12). 

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

Section 11A(a)(1)(C)(iii) of the Act,11

which sets forth Congress’ finding that 

it is in the public interest and 

appropriate for the protection of 

investors and the maintenance of fair 

and orderly markets to assure the 

availability to brokers, dealers, and 

investors of information with respect to 

quotations for and transactions in 

securities. The Exchange will 

disseminate quotation and last-sale data 

information via the Consolidated Tape. 

The value of the Index is calculated on 

at least a 15-second basis and is widely 

disseminated by major market data 

vendors and financial publications. 

The Commission further believes that 

the proposal to list and trade the 

Certificates is reasonably designed to 

promote fair disclosure of information 

that may be necessary to price the 

Certificates. If the value of the Index is 

not being disseminated as required, the 

Exchange may halt trading during the 

day on which the interruption first 

occurs. If such interruption persists past 

the trading day in which it occurred, the 

Exchange will halt trading no later than 

the beginning of the trading day 

following the interruption. The 

Exchange may consider all relevant 

factors in exercising its discretion to 

halt or suspend trading in Trust 

Certificates.12 Standard & Poor’s 

(‘‘S&P’’),13 which publishes the Index, is 

not a registered broker-dealer, and 

Citigroup Funding, Inc. is not affiliated 

with S&P. With respect to any index 

upon which the value of an issue of 

Trust Certificates is based and that is 

maintained by a broker-dealer, the 

Exchange would require that such 

broker-dealer erect a ‘‘firewall’’ around 

personnel responsible for the 

maintenance of such index or who have 

access to information concerning 

adjustments to the index, and the index 

would be required to be calculated by a 

third party who is not a broker-dealer. 

In addition, the Exchange states that it 

has a general policy prohibiting the 

distribution of material, non-public 

information by its employees. 

The Certificates will be subject to the 

requirements of NYSE Arca Equities 

Rule 5.2(j)(7), including the continued 

listing criteria. Additionally, NYSE Arca 

states that: (1) At least one million 

publicly held trading units will be 

issued prior to listing and trading on the 

Exchange, with at least 400 public 

beneficial holders; (2) the issuer, 

Citigroup Funding, Inc., has total assets 

of at least $100 million and a net worth 

of at least $10 million; and (3) the issuer 

will be required to have either (a) a 

minimum tangible net worth of 

$250,000,000, or (b) a minimum tangible 

net worth of $150,000,000 and the 

original issue price of the Certificates, 

combined with all of the issuer’s other 

Trust Certificates listed on a national 

securities exchange or otherwise 

publicly traded in the United States, 

must not be greater than 25% of the 

issuer’s tangible net worth at the time of 

issuance.14

Further, the Exchange has represented 

that the Certificates are equity securities 

subject to the Exchange’s rules 

governing the trading of equity 

securities, including the Exchange’s 

equity margin rules. In support of this 

proposal, the Exchange has made the 

following representations: 

(1) The Exchange’s surveillance 

procedures are adequate to properly 

monitor Exchange trading of the 

Certificates in all trading sessions and to 

deter and detect violations of Exchange 

rules and applicable federal securities 

laws. The Exchange may obtain 

information via the Intermarket 

Surveillance Group (‘‘ISG’’) from other 

exchanges who are members of the ISG. 

(2) Prior to the commencement of 

trading, the Exchange will inform its 

ETP Holders in an Information Bulletin 

of the special characteristics and risks 

associated with trading the Certificates. 

Specifically, the Information Bulletin 

will discuss the following: (a) The 

procedures for purchases and exchanges 

of Trust Certificates; (b) NYSE Arca 

Equities Rule 9.2(a), which imposes a 

duty of due diligence on its ETP Holders 

to learn the essential facts relating to 

every customer prior to trading an issue 

of Trust Certificates; (c) trading hours; 

and (d) trading information. In addition, 

the Information Bulletin will reference 

that an issue of Trust Certificates is 

subject to various fees and expenses 

described in the applicable prospectus. 

This approval order is based on the 

Exchange’s representations. 

III. Accelerated Approval 

The Commission finds good cause, 

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

Act,15 for approving the proposal prior 

to the thirtieth day after the date of 

publication of the Notice in the Federal 

Register. The Commission notes that it 

has previously approved for listing and 

trading on the Exchange other issues of 

Trust Certificates issued by Citigroup 

Funding, Inc. based on the Index that 

have similar characteristics and payout 

provisions to the Certificates.16 In 

addition, no comments were received 

on the proposed rule change during the 

21-day comment period, and the 

Commission believes that the 

Exchange’s proposal to list and trade the 

Certificates under NYSE Arca Equities 

Rule 5.2(j)(7) does not present any novel 

or significant regulatory issues. The 

Commission believes that accelerating 

approval of this proposal should benefit 

investors by creating, without undue 

delay, additional competition in the 

market for Trust Certificates. 

IV. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,17 that the 

proposed rule change (SR–NYSEArca– 

2009–20) be, and it hereby is, approved 

on an accelerated basis. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.18

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–8961 Filed 4–17–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–59763; File No. SR–OCC– 

2009–06] 

Self-Regulatory Organizations; The 

Options Clearing Corporation; Notice 

of Filing and Immediate Effectiveness 

of Proposed Rule Change To 

Accommodate the Clearance and 

Settlement of Metals Futures and 

Options on Metals Futures Traded on 

NYSE Liffe 

April 14, 2009. 

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

Securities Exchange Act of 1934 

(‘‘Act’’),1 notice is hereby given that on 

March 25, 2009, The Options Clearing 

Corporation (‘‘OCC’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change described in Items I, II, and III 

below, which items have been prepared 


rmajette on PRODPC74 with NOTICES
18014 Federal Register / Vol. 74, No. 74 / Monday, April 20, 2009 / Notices 

2 15 U.S.C. 78s(b)(3)(A)(iii). 

3 17 CFR 240.19b–4(f)(4). 

4The Commission has modified the text of the 

summaries prepared by OCC. 

5The proposed amendments are also designed to 

accommodate cash-settled futures that NYSE Liffe 

intends to introduce shortly after the transition of 

clearing services to OCC. 

primarily by OCC. OCC filed the 

proposal pursuant to Section 

19(b)(3)(A)(iii) of the Act 2 and Rule 

19b–4(f)(4) 3 thereunder so that the 

proposal was effective upon filing with 

the Commission. The Commission is 

publishing this notice to solicit 

comments on the rule change from 

interested parties. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The purpose of the rule change is to 

accommodate the clearance and 

settlement of: (i) 100 oz. gold futures, 

5,000 oz. silver futures, ‘‘mini’’ gold 

futures, and ‘‘mini’’ silver futures 

(collectively, ‘‘Metals Futures’’) and (ii) 

options on 100 oz. gold futures and on 

5,000 oz. silver futures (collectively, 

‘‘Options on Metals Futures’’) traded on 

NYSE Liffe. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, 

OCC 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. OCC has prepared 

summaries, set forth in sections (A), (B), 

and (C) below, of the most significant 

aspects of these statements.4

(A) Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Metals Futures 

The primary purpose of this proposed 

rule change is to revise OCC’s By-Laws 

and Rules (collectively, the ‘‘Rules’’) to 

accommodate the clearance and 

settlement of Metals Futures and 

Options on Metals Futures traded by 

NYSE Liffe.5 Delivery of the metals 

underlying the Metals Futures will be 

made through the facilities of NYSE 

Liffe by delivery of ‘‘vault receipts’’ (or, 

in the case of the ‘‘mini’’ futures 

contracts, through delivery of electronic 

‘‘warehouse depository receipts’’) 

representing the underlying metals. 

Delivery is required upon maturity of 

any Metals Future that has not been 

closed out in an exchange transaction 

prior to the close of trading on the last 

trading day for the contract. In addition, 

delivery may be made, at the election of 

the seller of a Metals Future, on any 

business day during the delivery month. 

Delivery will be initiated by the 

submission to NYSE Liffe by the 

clearing member with a short position 

in the Metals Future of a notice of an 

Intent to Deliver. Obligations to take 

delivery of the underlying metal which 

is the subject of an Intent to Deliver will 

be assigned by NYSE Liffe to clearing 

members with long positions in the 

same Metals Future, and NYSE Liffe 

will notify OCC of the delivery and 

payment obligations of clearing 

members resulting from Intents to 

Deliver. Delivery of the vault receipts 

will be made through NYSE Liffe’s 

facilities on the second day after 

submission of the Intent to Deliver or on 

maturity date, as applicable. Payment 

will be made through OCC’s systems on 

this same date. Although delivery of the 

vault receipts is not made through 

OCC’s systems, the Clearance and 

Settlement Services Agreement between 

OCC and NYSE Liffe (‘‘Clearing 

Agreement’’) provides that NYSE Liffe is 

deemed to represent to OCC in 

connection with its notification to OCC 

of an Intent to Deliver that it holds vault 

receipts sufficient to satisfy the delivery 

obligation of the clearing member 

submitting the Intent to Deliver. This 

provision is intended to ensure that 

delivery has been made by the 

delivering clearing member before OCC 

credits the purchase price to this 

clearing member. In addition, OCC will 

have a lien on the vault receipts from 

the time the Intent to Deliver has been 

submitted until physical delivery 

against payment has been made. OCC 

will collect initial margin and pay and 

collect variation margin for Metals 

Futures as in the case of any other 

futures contract. 

The last trading day for Metals 

Futures is the third to last business day 

of the maturity month. The trading day 

for Metals Futures is 22 hours long and 

spans two calendar days. As a result, a 

clearing member may sell a Metals 

Future to offset a long position before an 

assignment is made or after an 

assignment has been made but before 

the clearing member learns of it. In this 

situation, the sale will be deemed to 

have created a new short position rather 

than closing out the long position. 

However, clearing members in this 

situation will be able to ‘‘retender’’ the 

underlying metals in satisfaction of their 

delivery obligations with respect to the 

short position. 

OCC proposes to expand Chapter 13 

of the Rules to accommodate: (i) The 

settlement of Metals Futures by physical 

delivery; (ii) the granting of requests for 

offsets between full-sized and minisized Metals Futures in the same 

contract month and year; (iii) the 

retendering of a delivery in the event a 

clearing member is assigned an Intent to 

Deliver with respect to a long position 

that the clearing member has closed out; 

and (iv) the procedures to be followed 

in the event a clearing member fails to 

make physical delivery or payment at 

delivery settlement. Rule 1308 provides 

that, in the event of such a failure, OCC 

will make payment to the nondefaulting clearing member in an 

amount equal to the damages, as 

determined by OCC, incurred by the 

non-defaulting clearing member from 

such failure. The amount of the damages 

is charged by OCC to the defaulting 

clearing member. 

2. Options on Metals Futures 

Options on Metals Futures are 

American style. The last trading day for 

Options on Metals Futures is normally 

the fifth business day prior to the first 

calendar day of the delivery month for 

the underlying future. Submission of 

exercise notices at expiration and at 

other than expiration will be governed 

by existing OCC Rules, as supplemented 

by proposed Rule 1305. At expiration, 

OCC will apply exercise-by-exception 

(‘‘Ex-by-Ex’’) processing procedures to 

expiring Options on Metals Futures. 

Under Ex-by-Ex processing procedures, 

a clearing member is deemed to have 

submitted exercise notices for options 

that are in the money by a specified 

amount (i.e., exercise threshold amount) 

unless the clearing member instructs 

OCC otherwise. The exercise threshold 

amount for Options on Metal Futures 

will be set at $.001. Article XII, Section 

9 of the By-Laws would be amended to 

provide that the expiration time for 

futures and commodity options traded 

on NYSE Liffe will be 7 p.m. Central 

Time, which is different from the 

expiration time for other such options. 

OCC is also proposing to amend Rule 

801 to permit clearing members to 

submit exercise notices for Options on 

Metals Futures on the business day 

prior to expiration. In light of the 22- 

hour trading day for the Metals 

Contracts, filing, revoking, or modifying 

exercise notices, or submitting contrary 

exercise instructions in connection with 

Ex-by-Ex processing for Options on 

Metal Futures and certain other classes 

of contracts identified by OCC after 

applicable deadlines will be prohibited. 

NYSE Liffe will require that Metals 

Contracts be held separately from 


rmajette on PRODPC74 with NOTICES
Federal Register / Vol. 74, No. 74 / Monday, April 20, 2009 / Notices 18015 

6 15 U.S.C. 78q–1. 

7 15 U.S.C. 78s(b)(3)(A)(iii). 

8 17 CFR 240.19b–4(f)(4). 9 17 CFR 200.30–3(a)(12). 

contracts traded on other exchanges, 

which OCC understands is intended to 

prevent the offset for margin purposes of 

Metals Contracts against contracts 

traded on other exchanges. OCC is 

proposing to add an interpretation and 

policy to its Rules stating that futures 

markets may impose such a requirement 

and explaining how clearing members 

may satisfy this requirement. OCC will 

provide notice to clearing members that 

NYSE Liffe has such a requirement. 

Additional changes are proposed to 

introduce the terminology necessary to 

support clearance and settlement of 

Metals Contracts, allow for the use of 

cash settlement in the event of a 

shortage of an underlying interest, and 

require that clearing members holding 

positions in Metals Contracts be 

members of the relevant exchange. The 

latter point is necessary because 

delivery is affected through the facilities 

of the exchange. 

OCC assumed the clearing function 

for Metals Contracts traded on NYSE 

Liffe from CME Clearing during the last 

weekend of March 2009. In connection 

therewith, OCC and NYSE Liffe entered 

into the Clearing Agreement, which is 

generally similar to corresponding 

agreements between OCC and other 

futures exchanges but contains specific 

provisions concerning the delivery 

settlement since vault or warehouse 

depository receipts, as applicable, will 

be delivered through the facilities of 

NYSE Liffe. It further contains 

additional commercial terms relative to 

the treatment of trade data. OCC has 

prepared an information memorandum 

specifying the obligations of clearing 

members in connection with such 

transitions. The memorandum will be 

distributed to all clearing members and 

will be considered an OCC rule. 

The proposed rule change is 

consistent with Section 17A of the Act,6

as amended, because it is designed to 

permit OCC to perform clearing services 

for products that are subject to the 

jurisdiction of the Commodity Futures 

Trading Commission without adversely 

affecting OCC’s obligations with respect 

to the prompt and accurate clearance 

and settlement of securities transactions 

or the protection of securities investors 

and the public interest. The proposed 

rule change applies substantially the 

same rules and procedures to 

transactions in Metals Futures and 

Metals Options as OCC applies to 

transactions in security futures and 

securities options. 

(B) Self-Regulatory Organization’s 

Statement on Burden on Competition 

OCC 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 

Written comments relating to the 

proposed rule change have not yet been 

solicited or received. OCC will notify 

the Commission of any written 

comments received by OCC. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing proposed rule change 

has become effective upon filing 

pursuant to Section 19(b)(3)(A)(iii) of 

the Act 7 and Rule 19b–4(f)(4) 8

thereunder because the proposed rule 

change effects a change in an existing 

service of a registered clearing agency 

that: (i) Does not adversely affect the 

safeguarding of securities or funds in 

the custody or control of the clearing 

agency or for which it is responsible and 

(ii) does not significantly affect the 

respective rights or obligations of the 

clearing agency or persons using the 

service. At any time within sixty days 

of the filing of the proposed rule change, 

the Commission may summarily 

abrogate such rule change if it appears 

to the Commission that such action is 

necessary or appropriate in the public 

interest, for the protection of investors, 

or otherwise in furtherance of the 

purposes of the Act. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the 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 e-mail to rulecomments@sec.gov. Please include File 

Number SR–OCC–2009–06 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Elizabeth M. Murphy, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–1090. 

All submissions should refer to File 

Number SR–OCC–2009–06. 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, 100 F Street, NE., Washington, 

DC 20549, on official business days 

between the hours of 10 a.m. and 3 p.m. 

Copies of such filings also will be 

available for inspection and copying at 

the principal office of OCC and on 

OCC’s Web site at http:// 

www.optionsclearing.com/publications/ 

rules/proposed_changes/sr_occ_09_

06.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–2009–06 and should 

be submitted on or before May 11, 2009. 

For the Commission by the Division of 

Trading and Markets, pursuant to delegated 

authority.9

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–8963 Filed 4–17–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–59764; File No. SR–OCC– 

2009–07] 

Self-Regulatory Organizations; The 

Options Clearing Corporation; Notice 

of Filing and Immediate Effectiveness 

of Proposed Rule Change To Revise 

Fee Schedule 

April 14, 2009. 

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

Securities Exchange Act of 1934 


rmajette on PRODPC74 with NOTICES