Federal Register / Vol. 75, No. 192 / Tuesday, October 5, 2010 / Notices 61533 

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

indication of a violation or potential 

violation of civil or criminal law or 

regulation. 

3. For Congressional Inquiry—To 

provide information to a congressional 

office from the record of an individual 

in response to an inquiry from that 

congressional office made at the request 

of that individual. 

4. For Judicial/Administrative 

Proceedings—To disclose information to 

another Federal agency, to a court, or a 

party in litigation before a court or in an 

administrative proceeding being 

conducted by a Federal agency, when 

the Government is a party to the judicial 

or administrative proceeding. In those 

cases where the Government is not a 

party to the proceeding, records may be 

disclosed if a subpoena has been signed 

by a judge. 

5. For National Archives and Records 

Administration—To disclose 

information to the National Archives 

and Records Administration for use in 

records management inspections. 

6. Within OPM for Statistical/ 

Analytical Studies—By OPM in the 

production of summary descriptive 

statistics and analytical studies in 

support of the function for which the 

records are collected and maintained, or 

for related workforce studies. While 

published studies do not contain 

individual identifiers, in some instances 

the selection of elements of data 

included in the study may be structured 

in such a way as to make the data 

individually identifiable by inference. 

7. For Litigation—To disclose 

information to the Department of Justice 

or in a proceeding before a court, 

adjudicative body, or other 

administrative body before which OPM 

is authorized to appear, when: 

(1) OPM, or any component thereof; 

or 

(2) Any employee of OPM in his or 

her official capacity; or 

(3) Any employee of OPM in his or 

her individual capacity where the 

Department of Justice or OPM has 

agreed to represent the employee; or 

(4) The United States, when OPM 

determines that litigation is likely to 

affect OPM or any of its components; is 

a party to litigation or has an interest in 

such litigation, and the use of such 

records by the Department of Justice or 

OPM is deemed by OPM to be relevant 

and necessary to the litigation provided, 

however, that the disclosure is 

compatible with the purpose for which 

records were collected. 

The routine uses listed below are 

specific to this system of records only: 

1. To disclose to program and policy 

staff at the Office of Personnel 

Management to compile and analyze 

claims utilization data to identify 

sources of benefit and utilization costs 

and other information and to formulate 

health care program changes and 

enhancements to reduce cost increases, 

improve outcomes, improve efficiency 

in program administration and for other 

purposes. 

2. To disclose to researchers and 

analysts inside and outside the Federal 

Government for the purpose of 

conducting research on health care and 

health insurance trends and topical 

issues. 

POLICIES AND PRACTICES OF STORING, 

RETRIEVING, SAFEGUARDING, RETAINING, AND

DISPOSING OF RECORDS IN THE SYSTEM: 

STORAGE: 

These records will be maintained in 

electronic systems. 

RETRIEVABILITY: 

These records are retrieved by a 

combination of name and social security 

number of the individual on whom they 

are maintained. 

SAFEGUARDS: 

OPM restricts access to the records on 

the databases to employees who have 

the appropriate clearance and need-toknow to perform their official duties. 

Computerized records are located in a 

secured database on a secured system. 

RETENTION AND DISPOSAL: 

We maintain the records for 7 years. 

Computer records are destroyed by 

electronic erasure. A records retention 

schedule is currently being established 

with NARA. 

SYSTEM MANAGER AND ADDRESS: 

Gary A. Lukowski, Ph.D., Manager, 

Data Analysis, U. S. Office of Personnel 

Management, 1900 E Street, NW., Room 

7439, Washington, DC 20415. 

NOTIFICATION AND RECORD ACCESS PROCEDURE: 

Individuals wishing to determine 

whether this system of records contains 

information about them may do so by 

writing to the U.S. Office of Personnel 

Management, FOIA Requester Service 

Center, 1900 E Street, NW., Room 5415, 

Washington, DC 20415–7900 or by emailing foia@opm.gov. 

Individuals must furnish the 

following information for their records 

to be located: 

1. Full name. 

2. Date and place of birth. 

3. Social Security Number. 

4. Signature. 

5. Available information regarding the 

type of information requested. 

6. The reason why the individual 

believes this system contains 

information about him/her. 

7. The address to which the 

information should be sent. 

Individuals requesting access must 

also comply with OPM’s Privacy Act 

regulations regarding verification of 

identity and access to records (5 CFR 

297). 

CONTESTING RECORD PROCEDURE: 

Individuals wishing to request 

amendment of records about them 

should write to the Office of Personnel 

Management, ATTN: Gary A. Lukowski, 

Ph.D., Manager, Data Analysis, Room 

7439, Washington, DC 20415, and 

furnish the following information for 

their records to be located: 

1. Full name. 

2. Date and place of birth. 

3. Social Security Number. 

4. City, state and zip code of their 

Federal Agency 

5. Signature. 

6. Precise identification of the 

information to be amended. 

Individuals requesting amendment 

must also follow OPM’s Privacy Act 

regulations regarding verification of 

identity and amendment to records (5 

CFR 297). 

RECORD SOURCE CATEGORIES: 

Information in this system of records 

is obtained from health care providers 

used by the U. S. Office of Personnel 

Management to manage the FEHBP and 

high risk pools. 

SYSTEM EXEMPTIONS: 

None. 

[FR Doc. 2010–24927 Filed 10–4–10; 8:45 am] 

BILLING CODE 6325–46–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63002; File No. SR–ISE– 

2010–81] 

Self-Regulatory Organizations; 

International Securities Exchange, 

LLC; Order Granting Approval of 

Proposed Rule Change Relating to 

Trading Options on a Reduced Value 

of the DAX Index, Including Long-Term 

Options 

September 28, 2010. 

I. Introduction 

On August 3, 2010, the International 

Securities Exchange, Inc. (the 

‘‘Exchange’’ or the ‘‘ISE’’) filed with the 

Securities and Exchange Commission 

(the ‘‘Commission’’), pursuant to Section 

19(b)(1) of the Securities Exchange Act 

of 1934 (the ‘‘Act’’),1 a proposed rule 

mstockstill on DSKH9S0YB1PROD with NOTICES

61534 Federal Register / Vol. 75, No. 192 / Tuesday, October 5, 2010 / Notices 

2See Securities Exchange Act Release No. 62703 

(August 12, 2010), 75 FR 51134. 

3Under ISE Rule 2009(b), ‘‘Long-Term Index 

Options Series,’’ the Exchange may list long-term 

options that expire from 12 to 60 months from the 

date of issuance. 

4Float-adjusted market capitalization (as opposed 

to an unadjusted methodology) refers to the number 

of free-float shares available multiplied by the share 

price. A ‘‘free-float’’ index methodology usually 

excludes shares held by strategic investors by way 

of cross ownership, government ownership, private 

ownership and restricted share ownership. 

5The Exchange shall also disseminate these 

values to its members. 

6A divisor is an arbitrary number chosen at the 

starting date of an index to fix the index starting 

value. The divisor is adjusted periodically when 

capitalization amendments are made to the 

constituents of the index in order to allow the index 

value to remain comparable over time. Without a 

divisor the index value would change when 

corporate actions took place and would not reflect 

the true value of an underlying portfolio based 

upon the index. 

7The DAX Index is published daily and is 

available real-time on ThomsonReuters, Bloomberg, 

and other market information systems which 

disseminate information on a real time basis. 8See Rule ISE 2009(a)(3). 

change to amend its rules to trade 

options on a reduced value DAX Index. 

The proposed rule change was 

published for comment in the Federal 

Register on August 18, 2010.2 The 

Commission received no comment 

letters on the proposed rule change. 

This order approves the proposed rule 

change. 

II. Description 

The Exchange proposes to amend 

certain of its rules to allow the listing 

and trading of options on the Mini DAX, 

which represents 1⁄10 of the full value of 

the DAX Index. In addition to options 

on the Mini DAX, the Exchange 

proposes to list long-term options on the 

Mini DAX (the ‘‘Mini DAX LEAPS’’).3

Options on the Mini DAX will be A.M. 

cash-settled and will have Europeanstyle exercise provisions. 

Index Design and Composition 

The DAX Index is a capitalizationweighted index where the weight of any 

individual component is proportional to 

its respective share in the total market 

capitalization of all the components. 

The DAX Index consists of the 30 most 

highly liquid and capitalized German 

stocks ranked by float-adjusted market 

capitalization.4 The management board 

of Deutsche Bo ̈rse AG (‘‘DBAG’’) decides 

whether changes are to be made to the 

composition of the index on an annual 

basis in September but also performs 

quarterly reviews of the components’ 

free float. 

Index Calculation and Index 

Maintenance 

Index levels for options on the Mini 

DAX will be calculated by DBAG or its 

agent, and disseminated by ISE every 15 

seconds during the Exchange’s regular 

trading hours to market information 

vendors via the Options Price Reporting 

Authority (‘‘OPRA’’).5 The level of the 

DAX Index reflects the float-adjusted 

market value of the component stocks 

relative to a particular base period and 

is computed by dividing the total 

market value of the companies in each 

index by its respective index divisor.6

The DAX Index is calculated using 

the last traded price of the component 

securities. If a component security does 

not open for trading, the price of that 

security at the close or the index on the 

previous day is used in the calculation.7

The DAX Index is currently updated 

on a real-time basis from 9 a.m. to 5:45 

p.m. (Frankfurt time), which generally 

corresponds to 3 a.m. to 11:45 a.m. 

(New York time). The Exchange, or its 

agent, shall disseminate Mini DAX 

Index values via OPRA or major market 

data vendors between 3 a.m. and 11:45 

a.m. (New York time). After 11:45 a.m. 

(New York time), the Exchange, or its 

agent, shall disseminate a static value of 

the Mini DAX until the close of trading 

each day. 

The DAX Index is monitored and 

maintained by DBAG. DBAG makes all 

necessary adjustments to the indexes to 

reflect component deletions, share 

changes, stock splits, stock dividends 

(other than an ordinary cash dividend), 

and stock price adjustments due to 

restructuring, mergers, or spin-offs 

involving the underlying components. 

The DAX Index is subject to a full 

review and, if necessary, ordinary 

adjustments are made once a year in 

September, where all components are 

screened for eligibility and ranked based 

on liquidity and market capitalization. 

Quarterly reviews are also performed in 

March, June, September and December, 

where components’ free float levels are 

reviewed and extraordinary adjustments 

may be made. If a component company 

is deleted from the DAX Index between 

reviews as a result of a merger, takeover 

or other corporate action, the highest 

ranking company will replace it in the 

index. 

The Exchange has represented that it 

will monitor the DAX Index on a 

quarterly basis. The Exchange will 

notify the staff of the Division of 

Trading and Markets of the Commission 

by filing a proposed rule change 

pursuant to Rule 19b–4 and will cease 

to list any additional series for trading, 

if, with respect to the DAX Index: (i) 

The number of securities in the DAX 

Index drops by 1⁄3 or more; (ii) 10% or 

more of the weight of the DAX Index is 

represented by component securities 

having a market value of less than Ö50 

million; (iii) 10% or more of the weight 

of the DAX Index is represented by 

component securities trading less than 

20,000 shares per day; or (iv) the largest 

component security accounts for more 

than 15% of the weight of the DAX 

Index or the largest five components in 

the aggregate account for more than 

50% of the weight of the DAX Index. 

The Exchange will also notify the staff 

of the Division of Trading and Markets 

of the Commission immediately in the 

event DBAG ceases to maintain and 

calculate the DAX Index, or in the event 

values of the DAX Index are not 

disseminated every 15 seconds by a 

widely available source. In such cases, 

the Exchange will not list any additional 

series for trading and will limit all 

transactions in the options to closing 

transactions for the purpose of 

maintaining a fair and orderly market 

and protecting investors. 

Contract Specifications 

The Mini DAX is a broad-based index. 

Options on the Mini DAX are Europeanstyle and A.M. cash-settled. The 

Exchange’s standard trading hours for 

broad-based index options (9:30 a.m. to 

4:15 p.m., New York time), as set forth 

in ISE Rule 2008(a), will apply to the 

trading of options on the Mini DAX. 

The Exchange proposes to list options 

on the Mini DAX in the three 

consecutive near-term expiration 

months, plus up to three successive 

expiration months in the March cycle. 

For example, consecutive expirations of 

January, February, March, plus June, 

September, and December expirations 

would be listed.8

The Exchange proposes to set 

minimum strike price intervals for Mini 

DAX options at 1 point intervals. The 

minimum tick size for series trading 

below $3 shall be $0.05, and for series 

trading at or above $3 shall be $0.10. 

Exercise and Settlement Value 

Options on the Mini DAX will expire 

on the Saturday following the third 

Friday of the expiration month. Trading 

in options on the Mini DAX will 

normally cease at 4:15 p.m. (New York 

time) on the Thursday preceding an 

expiration Saturday. The index value for 

exercise of the Mini DAX options will 

be calculated by DBAG based on the 

Xetra intra-day auction prices for each 

of the component companies. That 

value is also used as the basis for 

mstockstill on DSKH9S0YB1PROD with NOTICES

Federal Register / Vol. 75, No. 192 / Tuesday, October 5, 2010 / Notices 61535 

9The same limits that apply to position limits 

shall apply to exercise limits for these 

products. 

10See ISE Rule 413(c). 

11See ISE Rules 2000 through 2012. 

12See Rule 2009(b)(1). The Exchange is not listing 

reduced value LEAPS on the Mini DAX pursuant 

to Rule 2009(b)(2). 

13Pursuant to ISE Rule 602, Representatives of a 

Member may solicit or accept customer orders for 

FCOs. 

14 In approving this proposed rule change, the 

Commission has considered the proposed rule’s 

impact on efficiency, competition, and capital 

formation. 

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

16 15 U.S.C. 78f(b)(1). 

settlement of DAX Index futures and 

options contracts traded on Eurex. 

The intra-day auction occurs between 

1 p.m. and 1:05 p.m. (German time) on 

the third Friday of the expiration 

month, which generally corresponds to 

7 a.m. to 7:05 a.m. (New York time). 

Therefore, because trading in the 

expiring contract months will normally 

cease on a Thursday at 4:15 p.m. (New 

York time), the index value for exercise 

will be determined the day after trading 

has ceased, i.e., during the Friday 

afternoon Xetra trading session, or 

generally by 7:05 a.m. (New York time). 

If no price is established for a 

component company during the Xetra 

intraday auction, then the next available 

price is used. If no price is available by 

the end of the Xetra trading session then 

the last price available is used for 

calculation. When the auction is 

finished, the index values are 

disseminated as the settlement values. 

The settlement values are widely 

disseminated through major market data 

vendors including ThomsonReuters and 

Bloomberg. 

If the Frankfurt Stock Exchange is 

closed on the Friday before expiration, 

but the ISE remains open, then the last 

trading day for expiring Mini DAX 

options will be moved earlier to 

Wednesday as if the ISE had had a 

Friday holiday. The settlement index 

value used for exercise will be 

calculated during Xetra’s intra-day 

auction on Thursday morning. 

Position Limits 

For options on the Mini DAX, the 

Exchange proposes to establish 

aggregate position limits at 250,000 

contracts on the same side of the 

market, provided no more than 150,000 

of such contracts are in the nearest 

expiration month series. Additionally, 

under ISE Rule 2006, an index option 

hedge exemption for public customers 

may be available which may expand the 

position limit up to an additional 

750,000 contracts.9 Furthermore, 

proprietary accounts of members may 

receive an exemption of up to 500,000 

contracts for the purpose of facilitating 

public customer orders.10

Exchange Rules Applicable 

Exchange rules that are applicable to 

the trading of options on broad-based 

indexes will also apply to the trading of 

Mini DAX options.11 Specifically, the 

trading of Mini DAX options will be 

subject to, among others, Exchange rules 

governing margin requirements and 

trading halt procedures for index 

options. 

The Exchange proposes to apply 

broad-based index margin requirements 

for the purchase and sale of options on 

the Mini DAX. Accordingly, purchases 

of put or call options with nine months 

or less until expiration must be paid for 

in full. Writers of uncovered put or call 

options must deposit/maintain 100% of 

the option proceeds, plus 15% of the 

aggregate contract value (current index 

level × $100), less any out-of-the-money 

amount, subject to a minimum of the 

option proceeds plus 10% of the 

aggregate contract value for call options 

and a minimum of the option proceeds 

plus 10% of the aggregate exercise price 

amount for put options. 

The trading of options on the Mini 

DAX shall be subject to the same rules 

that presently govern the trading of 

Exchange index options, including sales 

practice rules, margin requirements, 

trading rules, and position and exercise 

limits. In addition, long-term option 

series having up to sixty months to 

expiration may be traded.12 The trading 

of long-term Mini DAX options shall 

also be subject to the same rules that 

govern the trading of all the Exchange’s 

index options, including sales practice 

rules, margin requirements, and trading 

rules. 

Chapter Six of the Exchange’s rules is 

designed to protect public customer 

trading and shall apply to the trading of 

options on the Mini DAX. Specifically, 

ISE Rules 608(a) and (b) prohibit 

Members from accepting a customer 

order to purchase or write an option 

unless such customer’s account has 

been approved in writing by a 

designated Options Principal of the 

Member.13 Additionally, ISE’s Rule 610 

regarding suitability is designed to 

ensure that options are only sold to 

customers capable of evaluating and 

bearing the risks associated with trading 

in this instrument. Further, ISE Rule 

611 permits members to exercise 

discretionary power with respect to 

trading options in a customer’s account 

only if the Member has received prior 

written authorization from the customer 

and the account had been accepted in 

writing by a designated Options 

Principal. ISE Rule 611 also requires 

designated Options Principals or 

Representatives of a Member to approve 

and initial each discretionary order on 

the day the discretionary order is 

entered. Finally, ISE Rule 609, 

Supervision of Accounts, Rule 612, 

Confirmation to Customers, and ISE 

Rule 616, Delivery of Current Options 

Disclosure Documents and Prospectus, 

will also apply to trading in of options 

on the Mini DAX. 

Capacity 

The Exchange has represented that it 

has the necessary systems capacity to 

support new options series that will 

result from the introduction of options 

on the Mini DAX, including LEAPS. 

Surveillance 

The Exchange has represented that it 

has an adequate surveillance program in 

place for options traded on the Mini 

DAX. Index products and their 

respective symbols are integrated into 

the Exchange’s existing surveillance 

system architecture and are thus subject 

to the relevant surveillance processes. 

Further, both ISE and the Frankfurt 

Stock Exchange, operated by DBAG, are 

members of the Intermarket 

Surveillance Group (‘‘ISG’’). Through its 

membership in the ISG, ISE may obtain 

trading information via the ISG from 

other exchanges who are members or 

affiliates of the ISG. 

III. Discussion 

The Commission finds that the 

proposed rule change is consistent with 

the requirements of the Act and the 

rules and regulations thereunder 

applicable to a national securities 

exchange.14 Specifically, the 

Commission finds that the proposal is 

consistent with Section 6(b)(5) of the 

Act,15 which requires, among other 

things, that the rules of a national 

securities exchange be designed to 

prevent fraudulent and manipulative 

acts and practices, to promote just and 

equitable principles of trade, to remove 

impediments to, and perfect the 

mechanism of, a free and open market 

and a national market system and, in 

general, to protect investors and the 

public interest. 

As a national securities exchange, the 

ISE is required, under Section 6(b)(1) of 

the Act,16 to enforce compliance by its 

members, and persons associated with 

its members, with the provisions of the 

Act, Commission rules and regulations 

thereunder, and its own rules. In 

addition, brokers that trade Mini DAX 

options will also be subject to best 

mstockstill on DSKH9S0YB1PROD with NOTICES

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 

mstockstill on DSKH9S0YB1PROD with NOTICES