61536 Federal Register / Vol. 75, No. 192 / Tuesday, October 5, 2010 / Notices 

17See NASD Rule 2320. 

18See ISE Rule 616. 

19See ISE Rule 610. See also ISE Rulebook 

Chapter Six for rules designed to protect public 

customer trading that shall apply to the trading of 

options on the Mini DAX. 

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

21 17 CFR 200.30–3(a)(12). 

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

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

3 17 CFR 240.19b–4(f)(4). 

4Securities and Exchange Act Release No. 57813 

(May 12, 2008), 73 FR 28539 (May 16, 2008). 

5NSCC Rule 53 defines an AIP Manufacturer as 

an AIP Member acting on behalf of or under 

authority of the sponsor, general partner, or any 

other party responsible for the creation or 

manufacturing of an Eligible AIP Product. 

6NSCC Rule 53 defines an AIP Distributor as an 

AIP Member acting on behalf of or under authority 

of a customer or other investor in an Eligible AIP 

Product, or otherwise as the contra-side to an AIP 

Manufacturer in a transaction (including 

information processing) with an AIP Manufacturer. 

execution obligations and FINRA 

rules.17 Applicable exchange rules also 

require that customers receive 

appropriate disclosure before trading 

Mini DAX options.18 Furthermore, 

brokers opening accounts and 

recommending options transactions 

must comply with relevant customer 

suitability standards.19

The trading of options on the Mini 

DAX will be subject to the same rules 

that currently govern the trading of 

Exchange index options, as will the 

trading of long-term Mini DAX options. 

The Commission believes that the 

listing rules proposed by ISE are 

consistent with the Act. One point strike 

price intervals for Mini DAX options 

should provide investors with flexibility 

in the trading of Mini DAX options and 

further the public interest by allowing 

investors to establish positions that are 

better tailored to meet their investment 

objectives. The listing of options on a 

reduced value should provide an 

opportunity for investors to hedge, or 

speculate on, the market risk associated 

with the stocks comprising the DAX 

Index, and with the reduction in the 

value of the DAX Index, investors will 

be able to use this trading vehicle while 

extending a smaller outlay of capital. 

This may attract additional investors, 

and, in turn, create a more active and 

liquid trading environment. 

The Commission notes that index 

levels for options on the Mini DAX will 

be calculated by DBAG, or its agent, and 

updated on a real time basis, and will 

be disseminated by ISE at 15-second 

intervals to market information vendors 

via OPRA. 

The Commission believes that the 

Exchange’s proposed position and 

exercise limits for Mini DAX Options 

are appropriate and consistent with the 

Act. The Commission also notes that ISE 

has represented that it has an adequate 

surveillance program to monitor trading 

of Mini DAX Options and intends to 

apply its existing surveillance program 

to support the trading for these options. 

Finally, the Commission believes that 

the proposal strikes a reasonable 

balance between the Exchange’s desire 

to offer a wider array of products with 

the need to avoid unnecessary 

proliferation of options series and the 

corresponding increase in quotes. In 

approving the proposed rule change, the 

Commission has relied on the 

Exchange’s representation that it has the 

necessary systems capacity to support 

the new options series that will be listed 

under this proposal. This approval order 

is conditioned on ISE’s adherence to 

this representation. The Commission 

expects the Exchange to continue to 

monitor for options with little or no 

open interest and trading activity and to 

act promptly to delist such options. In 

addition, the Commission expects that 

ISE will monitor the trading volume 

associated with the additional options 

series listed as a result of this proposal 

and the effect of these additional series 

on market fragmentation and on the 

capacity of the Exchange’s, OPRA’s, and 

vendors’ automated systems. 

IV. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,20 that the 

proposed rule change (SR–ISE–2010–81) 

be, and hereby is, approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.21

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–24882 Filed 10–4–10; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63005; File No. SR–NSCC– 

2010–10] 

Self-Regulatory Organizations; 

National Securities Clearing 

Corporation; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To clarify Its Rules & 

Procedures Regarding Its Alternative 

Investment Product Service 

September 29, 2010. 

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

Securities Exchange Act of 1934 

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

September 20, 2010, the National 

Securities Clearing Corporation 

(‘‘NSCC’’) 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 primarily by NSCC. 

NSCC filed the proposed rule change 

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

the Act 2 and Rule 19b–4(f)(4) 

thereunder 3 so that the proposal was 

effective upon filing with the 

Commission. 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 proposed rule change amends 

NSCC’s rules to clarify that an 

Alternative Investment Product (‘‘AIP’’) 

Service prospective member is not 

required to designate a settling bank in 

order to become an AIP member. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, 

NSCC 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. NSCC 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. AIP Service 

In 2007, NSCC filed a rule change 

with the Commission that established 

the AIP Service, which is a processing 

platform for alternative investment 

products such as hedge funds, fund of 

hedge funds, commodities pools, 

managed futures, and real estate 

investment trusts.4 The AIP Service 

provides for settlement of related 

payments (‘‘AIP Payments’’) such as 

subscriptions and redemptions, activity, 

distributions, and commissions for 

AIPs. The AIP Service also supports 

communication of information and 

settlement of AIP Payments between the 

AIP Manufacturer 5 and the AIP 

Distributor 6 to facilitate processing of 

subscriptions and purchases, tenders 

and redemptions, dividends and 

distributions, commissions and fees, 

positions reporting, product 

information, account maintenance, 

automated transmission of imaged 

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Federal Register / Vol. 75, No. 192 / Tuesday, October 5, 2010 / Notices 61537 

7NSCC Rule 53 provides that ‘‘AIP Data 

transmitted through the AIP Service may include 

data relating to subscriptions and purchases; 

redemptions, withdrawals and tender offers; 

commissions and other fees; distributions; exchange 

transactions; transfers; position reporting; product 

information; account maintenance, valuation, and 

activity and such other data as may be established 

by the Corporation from time to time.’’ 8 15 U.S.C. 78–1(b)(3)(F). 

9Above note 2. 

10Above note 3. 

documents, and such other services as 

NSCC may determine from time to time. 

AIP Members may transmit data in 

connection with transactions for which 

the payments are made outside of NSCC 

or are made through NSCC at their 

option. 

2. AIP Settlement 

Prior to this rule change, NSCC Rule 

53, Section 7, paragraph (h), provided 

that unless ‘‘otherwise permitted by 

[NSCC], each AIP Member shall appoint 

an AIP Settling Bank for the purpose of 

settling with [NSCC] on behalf of the 

AIP Member pursuant to an AIP Settling 

Bank Agreement.’’ This settlement bank 

provision was implemented in the 

initial AIP Service rule filing to 

accommodate the stringent settlement 

rules implemented for the AIP Service. 

AIP settlement is segregated from all 

other NSCC settlement obligations and 

is settled on a gross debit/gross credit 

basis. In other words, each AIP Service 

participant must fully fund its debits 

before receiving its credit. In the event 

of a failure, NSCC does not fund the 

credits but rather begins the AIP 

reversal process. The AIP Service’s 

prefunded settlement mitigates NSCC’s 

risk. This settling bank provision was 

also included in the original AIP Service 

filing because participants were initially 

required to settle all NSCC invoices 

with their settlement obligation. 

3. Clarification of Settling Bank 

Provision in Rule 53 

Since the implementation of the AIP 

Service, a significant number of 

prospective participants view its 

reporting functionality as a key first step 

in use of the AIP Service. These AIP 

prospects have expressed their interest 

in becoming AIP members in order to 

participate in the transmission of AIP 

Data but not the settling functions of the 

AIP Service.7

In response to this feedback, NSCC 

has developed a functionality that can 

designate AIP Service members as ‘‘nonsettling’’ members that use the AIP 

Service for messaging only. Position and 

Activity-Distribution and Commission 

are typically ‘‘non-settling,’’ and strictly 

reporting functions. Requiring these 

prospective participants to designate a 

settling bank simply for payment of 

NSCC bills is a hindrance to product 

adoption and is cost prohibitive. 

Additionally, the current list of NSCC 

settling banks accepting new clients is 

limited, and those settling banks willing 

to accept new settlement business have 

requested large monthly fees from the 

AIP prospects. 

The AIP Service has now been 

appropriately configured to allow for 

prospective members to apply for 

membership without designating a 

settling bank. If a participant is 

established by NSCC’s Account 

Administration department on the 

Entity Master File (‘‘EMF’’) without a 

settling bank’s ABA number, EMF 

notifies the AIP Service that the 

participant is non-settling. The AIP 

Service retains a table of the nonsettling participants and validates all 

settlement files created by the 

application against the table. If a 

participant without a settling bank 

erroneously indicates settlement, no 

settlement file will be created or sent to 

settlement. The transaction will 

continue through normal AIP processing 

as non-settling. 

AIP Service participants that do not 

intend to use its settling function will 

no longer be required to settle their 

NSCC invoices in their settlement 

obligations. Those participants that are 

designated ‘‘non-settling’’ members will 

be permitted to use alternative means of 

payment as designated from time to 

time by NSCC. Current methods of 

payment include DTCC ePayment for 

NSCC Invoices (which allows 

participants without a settling bank to 

authorize payment of NSCC Invoices 

through debit to an ACH-accessible 

commercial account at a U.S. bank) or 

credit card. 

4. Implementation Time Frame 

NSCC will advise its members of the 

changes to the Rule 53 clarification that 

settling bank designation is not a 

requirement for AIP Service 

membership through the issuance of an 

NSCC Important Notice. 

NSCC states that Section 17A(b)(3)(F) 

of the Act 8 requires, among other 

things, that the rules of a clearing 

agency be designed to remove 

impediments to and perfect the 

mechanism of a national system for 

prompt and accurate clearance and 

settlement of securities transactions. 

NSCC believes that this proposed rule 

change, which seeks to clarify NSCC 

Rule 53, will remove an impediment to 

the AIP Service membership process. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

NSCC 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 

NSCC has not solicited or received 

written comments relating to the 

proposed rule change. NSCC will notify 

the Commission of any written 

comments it receives. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing rule change has become 

effective pursuant to Section 

19(b)(3)(A)(iii) of the Act 9 and Rule 

19b–4(f)(4) 10 thereunder because it 

effects a change in an existing service of 

a registered clearing agency that does 

not adversely affect the safeguarding of 

securities and funds in the custody or 

control of the clearing agency or for 

which it is responsible and does not 

significantly affect the respective rights 

or obligations of the clearing agency or 

persons using the service. At any time 

within 60 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 

No. SR–NSCC–2010–10 on the subject 

line. 

Paper Comments 

• Send paper comments in triplicate 

to Elizabeth M. Murphy, Secretary, 

Securities and Exchange Commission, 

mstockstill on DSKH9S0YB1PROD with NOTICES

61538 Federal Register / Vol. 75, No. 192 / Tuesday, October 5, 2010 / Notices 

11 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

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

4 17 CFR 240.19b–4(f)(1). 

5See Rule 8.3A.01. 

6CBOE’s President has determined that this 

increase would be appropriate, in part, due to the 

relocation of several option classes, including VIX, 

to a larger trading station on the trading floor which 

may enhance the liquidity offered in the option 

class. E-mail dated September 28, 2010, from 

Patrick Sexton, Associate General Counsel, CBOE. 

7 15 U.S.C. 78f(b). 

8 15 U.S.C. 78f(b)(5). 

Station Place, 100 F Street, NE., 

Washington, DC 20549–1090. 

All submissions should refer to File No. 

SR–NSCC–2010–10. 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 Web site viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street, NE., 

Washington, DC 20549, on official 

business days between the hours of 10 

a.m. and 3 p.m. Copies of such filing 

also will be available for inspection and 

copying at NSCC’s principal office and 

on NSCC’s Web site at http:// 

www.dtcc.com/legal/rule_filings/nscc/ 

2010.php. 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 No. SR–NSCC– 

2010–10 and should be submitted on or 

before October 26, 2010. 

For the Commission by the Division of 

Trading and Markets, pursuant to delegated 

authority.11

Florence E. Harmon, 

Deputy Secretary . 

[FR Doc. 2010–24884 Filed 10–4–10; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63001; File No. SR–CBOE– 

2010–85] 

Self-Regulatory Organizations; 

Chicago Board Options Exchange, 

Incorporated; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Increase the Class 

Quoting Limit in One Option Classes 

September 28, 2010. 

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

Securities Exchange Act of 1934 (the 

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

notice is hereby given that on 

September 16, 2010, the Chicago Board 

Options Exchange, Incorporated 

(‘‘CBOE’’ or ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I and II, 

which Items have been prepared by the 

CBOE. The Exchange has designated 

this proposal as one constituting a 

stated policy, practice, or interpretation 

with respect to the meaning, 

administration, or enforcement of an 

existing rule under Section 

19(b)(3)(A)(i) of the Act,3 and Rule 19b– 

4(f)(1) thereunder,4 which renders the 

proposal effective upon filing with the 

Commission. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to increase 

the class quoting limit in one option 

class. The text of the proposed rule 

change is available on CBOE’s Web site 

(http://www.cboe.org/legal), at the 

CBOE’s Office of the Secretary, and at 

the Commission’s public reference 

room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

forth in sections (A), (B), and (C) below, 

of the most significant parts of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

CBOE Rule 8.3A, Maximum Number 

of Market Participants Quoting 

Electronically per Product, establishes 

class quoting limits (‘‘CQLs’’) for each 

class traded on the Hybrid Trading 

System.5 A CQL is the maximum 

number of quoters that may quote 

electronically in a given product and 

Rule 8.3A, Interpretation .01(a) provides 

that the current levels are generally 

established at 50. 

In addition, Rule 8.3A, Interpretation 

.01(b) provides a procedure by which 

the President of the Exchange may 

increase the CQL for an existing or new 

product. In this regard, the President of 

the Exchange may increase the CQL in 

a particular product when he deems it 

appropriate. The effect of an increase in 

the CQL is procompetitive in that it 

increases the number of market 

participants that may quote 

electronically in a product. The purpose 

of this filing is to increase the CQL in 

options on the CBOE Volatility Index 

(VIX) from its current limit of 50 to 60, 

which CBOE’s President has determined 

would be appropriate.6 Increasing the 

CQL also may enhance the liquidity 

offered in the option class. Lastly, CBOE 

represents that it has the systems 

capacity to support this increase in the 

CQL. 

2. Statutory Basis 

CBOE believes the proposed rule 

change is consistent with the Act and 

the rules and regulations under the Act 

applicable to a national securities 

exchange and, in particular, the 

requirements of section 6(b) of the Act.7

Specifically, the Exchange believes the 

proposed rule change is consistent with 

the Section 6(b)(5) 8 requirements that 

the rules of an exchange be designed to 

promote just and equitable principles of 

trade, to prevent fraudulent and 

manipulative acts and, in general, to 

protect investors and the public interest. 

As indicated above, the Exchange 

believes that increasing the CQL in this 

mstockstill on DSKH9S0YB1PROD with NOTICES