Federal Register / Vol. 75, No. 174 / Thursday, September 9, 2010 / Notices 54929 

8 17 CFR 240.19b–4(f)(2). 

9 17 CFR 200.30–3(a)(12). 

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

2Securities Exchange Act Release No. 62478 (July 

9, 2010), 75 FR 41908 (July 19, 2010). 

3 DTC and NSCC already classify U.S. branches or 

agencies of foreign banks as domestic Members. 

This is reflected in Section 2 of DTC’s Policy 

Statements on the Admission of Participants and in 

Addendum O of NSCC’s Rules titled ‘‘Admission of 

Non-U.S. Entities as Direct NSCC Members.’’ 

4 In the United States, ‘‘ring-fencing’’ refers to the 

procedure for dealing with branches or agencies of 

insolvent foreign banks in the United States 

pursuant to which the federal or state regulator, as 

applicable, will seize and administer the local 

assets of an insolvent institution, with a preference 

for local creditors in a liquidation that is separate 

from the liquidation of the parent foreign bank as 

a whole. 

5Such members will no longer be required to 

submit annual updates to their foreign legal 

opinions as currently required by FICC rules for 

non-U.S. entities unless FICC deems it necessary to 

address legal risk. Applicants in this category will 

however continue to be required to submit an initial 

foreign legal opinion on their home country law 

with their membership application. 

6 15 U.S.C. 78q–1. 

7 15 U.S.C. 78q–1(b)(3)(F). 

subparagraph (f)(2) of Rule 19b–4 8

thereunder, because it establishes a due, 

fee, or other charge imposed by the 

NYSE. 

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission summarily may 

temporarily suspend 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–NYSE–2010–63 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Elizabeth M. Murphy, Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–1090. 

All submissions should refer to File 

Number SR–NYSE–2010–63. 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 

website (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 website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street, NE., 

Washington, DC 20549, on official 

business days between the hours of 10 

a.m. and 3 p.m. Copies of the filing will 

also be available for inspection and 

copying at the principal office of the 

Exchange. 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–NYSE– 

2010–63 and should be submitted on or 

before September 30, 2010. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.9

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–22447 Filed 9–8–10; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–62828; File No. SR–FICC– 

2010–02] 

Self-Regulatory Organizations; Fixed 

Income Clearing Corporation; Order 

Approving Proposed Rule Change To 

Amend the Rules of the Government 

Securities Division and the MortgageBacked Securities Division To Change 

the Classification of U.S. Branches or 

Agencies of Non-U.S. Banks From 

Foreign to U.S. Members 

September 2, 2010. 

I. Introduction 

On June 24, 2010, Fixed Income 

Clearing Corporation (‘‘FICC’’) filed with 

the Securities and Exchange 

Commission (‘‘Commission’’) proposed 

rule change SR–FICC–2010–02 pursuant 

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

Exchange Act of 1934 (‘‘Act’’).1 The 

proposed rule change was published for 

comment in the Federal Register on July 

19, 2010.2 No comment letters were 

received on the proposal. This order 

approves the proposal. 

II. Description 

FICC will amend the Rules of its 

Government Securities Division (‘‘GSD’’) 

and Mortgage Backed Securities 

Division (‘‘MBSD’’) to classify as U.S. 

Members those Members of the GSD and 

MBSD that are U.S. Branches or 

agencies of non-U.S. Banks (‘‘U.S. 

Branches’’). GSD and MBSD Rules 

currently classify the membership of 

such U.S. Branches as ‘‘Foreign.’’ 

The classification of U.S. Branches as 

U.S. Members harmonizes FICC’s Rules 

with the other clearing agency 

subsidiaries of The Depository Trust 

and Clearing Corporation, The 

Depository Trust Company (‘‘DTC’’) and 

the National Securities Clearing 

Corporation (‘‘NSCC’’).3 FICC also 

believes the rule change is appropriate 

because it reflects that U.S. Branches are 

regulated by a U.S. regulator or a state 

regulator. This means that the 

appropriate domestic regulator treats 

U.S. Branches as U.S. entities for most 

significant matters, and consequently an 

insolvency of such a member would be 

determined by applicable domestic 

‘‘ring-fence’’ laws.4 Under the Rule 

changes, such members will be treated 

as domestic members for all purposes 

under FICC’s Rules and Procedures 

unless FICC states otherwise in its 

Rules.5

III. Discussion 

The Commission finds that the 

proposed rule change is consistent with 

the requirements of the Act 6 and the 

rules and regulations thereunder 

applicable to FICC. In particular, the 

Commission believes that the 

amendments FICC is making to its Rules 

to will provide consistent treatment to 

all its Members that are regulated by a 

U.S. or state regulator and that are 

subject to a domestic insolvency regime 

are consistent with FICC’s obligations 

under Section 17A(b)(3)(F),7 which 

requires, among other things, that the 

rules of a clearing agency are designed 

to assure the safeguarding of securities 

and funds which are in the custody or 

control of the clearing agency or for 

which it is responsible. 

IV. Conclusion 

On the basis of the foregoing, the 

Commission finds that the proposal is 

consistent with the requirements of the 

Act and in particular with the 

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54930 Federal Register / Vol. 75, No. 174 / Thursday, September 9, 2010 / Notices 

8 15 U.S.C. 78q–1. 

9 15 U.S.C. 78s(b)(2). 

10 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). 

11 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3Rule G–37 defines municipal securities business 

as: (i) The purchase of a primary offering of 

municipal securities from an issuer on other than 

a competitive bid basis; (ii) the offer or sale of a 

primary offering of municipal securities on behalf 

of an issuer; (iii) the provision of financial advisory 

or consultant services to or on behalf of an issuer 

with respect to a primary offering of municipal 

securities in which the dealer was chosen to 

provide such services on other than a competitive 

bid basis; or (iv) the provision of remarketing agent 

services to or on behalf of an issuer with respect 

to a primary offering of municipal securities in 

which the dealer was chosen to provide such 

services on other than a competitive bid basis. 

4The MSRB has previously stated that the matter 

of control depends upon whether or not the dealer 

or the MFP has the ability to direct or cause the 

direction of the management or policies of the PAC 

(MSRB Question & Answer No. IV. 24—Dealer 

Controlled PAC). 

5Rule G–37(d) provides that no broker, dealer or 

municipal securities dealer or any municipal 

finance professional shall, directly or indirectly, 

through or by any other person or means, do any 

act which would result in a violation of sections (b) 

or (c) of the rule. Section (b) relates to the ban on 

business and Section (c) relates to the prohibition 

on soliciting and coordinating contributions. 

requirements of Section 17A of the Act 8

and the rules and regulations 

thereunder. 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,9 that the 

proposed rule change (File No. SR– 

FICC–2010–02) be, and hereby is, 

approved.10

For the Commission by the Division of 

Trading and Markets, pursuant to delegated 

authority.11

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–22448 Filed 9–8–10; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–62830; File No. SR–MSRB– 

2010–07] 

Self-Regulatory Organizations; 

Municipal Securities Rulemaking 

Board; Notice of Filing of Proposed 

Rule Change Relating to Rule G–37, on 

Political Contributions and 

Prohibitions on Municipal Securities 

Business 

September 2, 2010. 

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 August 

25, 2010, the Municipal Securities 

Rulemaking Board (‘‘MSRB’’) filed with 

the Securities and Exchange 

Commission (‘‘Commission’’) the 

proposed rule change as described in 

Items I and II below, which Items have 

been prepared by the MSRB. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The MSRB has filed with the 

Commission a proposed rule change 

which consists of an interpretive notice 

regarding Rule G–37, on political 

contributions and prohibitions on 

municipal securities business (referred 

to hereafter as ‘‘proposed rule change’’). 

The MSRB has requested an effective 

date for the proposed rule change of 

sixty (60) days after Commission 

approval of the proposed rule change. 

The text of the proposed rule change 

is available on the MSRB’s Web site at 

http://www.msrb.org/msrb1/sec.asp, at 

the MSRB’s principal office, and at the 

Commission’s Public Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis For, the Proposed Rule 

Change 

In its filing with the Commission, the 

MSRB included statements concerning 

the purpose of and basis for the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

MSRB has prepared summaries, set 

forth in Sections A, B, and C below, of 

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The proposed rule change consists of 

an interpretive notice regarding Rule G– 

37, on political contributions and 

prohibitions on municipal securities 

business.3 Under Rule G–37, certain 

contributions to elected officials of 

municipal securities issuers made by 

brokers, dealers and municipal 

securities dealers (‘‘dealers’’), municipal 

finance professionals (‘‘MFPs’’) 

associated with dealers, and political 

action committees (‘‘PACs’’) controlled 

by dealers and their MFPs (‘‘dealercontrolled PACs’’) 4 may result in 

prohibitions on dealers from engaging in 

municipal securities business with such 

issuers for a period of two years from 

the date of any triggering contributions. 

Rule G–37 requires dealers to disclose 

certain contributions to issuer officials, 

state or local political parties, and bond 

ballot campaigns, as well as other 

information, on Form G–37 to allow 

public scrutiny of such contributions 

and the municipal securities business of 

a dealer. In addition, dealers and MFPs 

generally are prohibited from soliciting 

others (including affiliates of the dealer 

or any PACs) to make contributions to 

officials of issuers with which the dealer 

is engaging or seeking to engage in 

municipal securities business, or to 

political parties of a state or locality 

where the dealer is engaging or seeking 

to engage in municipal securities 

business. Dealers and MFPs are 

prohibited from circumventing Rule G– 

37 by direct or indirect actions through 

any other persons or means.5

Due to changes in the financial 

markets since the adoption of Rule G– 

37 and recent market turmoil, many 

dealers have become affiliated with a 

broad range of other entities in 

increasingly diverse organizational 

structures. Some of these affiliated 

entities (including but not limited to 

banks, bank holding companies, 

insurance companies and investment 

management companies) have formed or 

otherwise maintain relationships with 

PACs (‘‘affiliated PACs’’) and other 

political organizations, many of which 

may make contributions to issuer 

officials. Such relationships raise 

questions regarding the extent to which 

affiliated PACs may effectively be 

controlled by dealers or their MFPs and 

thereby constitute dealer-controlled 

PACs whose contributions are subject to 

Rule G–37. Further, such relationships 

raise concerns regarding whether the 

contributions of such affiliated PACs, 

even if not viewed as dealer-controlled 

PACs, may be used by dealers or their 

MFPs to circumvent Rule G–37 as 

indirect contributions for the purpose of 

obtaining or retaining municipal 

securities business. As a result, the 

MSRB has filed the proposed rule 

change to provide additional guidance 

with regard to the potential for affiliated 

PACs to be viewed as dealer-controlled 

PACs. 

The proposed rule change sets out 

factors that may result in an affiliated 

PAC being viewed as controlled by a 

dealer or an MFP of a dealer and thereby 

being treated as a dealer-controlled PAC 

for purposes of Rule G–37. The 

proposed rule change would: i) provide 

guidance on when a dealer’s affiliated 

PAC might be viewed as controlled by 

the dealer for purposes of Rule G–37; 

and ii) ensure that the industry is 

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