73364 Federal Register / Vol. 79, No. 237 / Wednesday, December 10, 2014 / Notices 

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 17 CFR 240.19b–4. 

3Securities Exchange Act Release No. 73391 

(October 20, 2014), 79 FR 63657 (October 24, 2014) 

(SR–FICC–2014–07). 

4The FCUA defines ‘‘Insured credit unions’’ as 

‘‘any credit union the member accounts of which 

are insured in accordance with the provisions of 

Title II of [FCUA] . . .’’ According to FICC, the term 

‘‘insured credit union’’ includes all credit unions 

chartered by the National Credit Union 

Administration (‘‘NCUA’’), the independent federal 

agency that regulates charters and supervises 

federal credit unions, because Title II of the FCUA 

requires all credit unions that are chartered by the 

NCUA to have insured accounts. Furthermore, FICC 

has stated that the term ‘‘insured credit unions’’ 

also includes both federally-insured state credit 

unions and federally-insured credit unions 

operating under the jurisdiction of the Department 

of Defense because Title II of the FCUA permits the 

NCUA Board to insure those types of credit unions. 

5 15 U.S.C. 78s(b)(2)(C). 

6 15 U.S.C. 78q–1(b)(3)(F). 

7 15 U.S.C. 78q–1(b)(3)(F). 

structure for the NYSE Exchanges that is 

designed 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. Furthermore, the 

termination of the Delaware trust may 

remove impediments to the operation of 

the NYSE exchanges by eliminating 

certain expenses and administrative 

burdens as well as the potential for 

uncertainty among analysts and 

investors as to the practical implications 

of the Delaware trust on the exchanges. 

IV. Conclusion 

It is therefore ordered, pursuant to 

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

proposed rule changes (SR–NYSE– 

2014–53; SR–NYSEMKT–2014–83; SR– 

NYSEArca–2014–112), as modified by 

Amendment No. 1, be, and hereby are, 

approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.21

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2014–28878 Filed 12–9–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73735; File No. SR–FICC– 

2014–07] 

Self-Regulatory Organizations; Fixed 

Income Clearing Corporation; Order 

Approving Proposed Rule Change To 

Amend the Clearing Rules of the 

Mortgage-Backed Securities Division 

To Establish a Membership Category 

and Minimum Financial Requirements 

for Insured Credit Unions 

December 4, 2014. 

I. Introduction 

On October 15, 2014, the Fixed 

Income Clearing Corporation (‘‘FICC’’) 

filed with the Securities and Exchange 

Commission (‘‘Commission’’) proposed 

rule change SR–FICC–2014–07 pursuant 

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

Exchange Act of 1934 (‘‘Act’’) 1 and Rule 

19b–4 thereunder.2 The proposed rule 

change was published for comment in 

the Federal Register on October 24, 

2014.3 The Commission received no 

comment letters in response to the 

proposed rule change. For the reasons 

discussed below, the Commission is 

approving the proposed rule change. 

II. Description 

Pursuant to this filing, FICC proposed 

to amend the clearing rules of the 

Mortgage-Backed Securities Division 

(‘‘MBSD’’) of FICC in order to establish 

a membership category and minimum 

financial requirements for ‘‘insured 

credit unions,’’ as such term is defined 

in the Federal Credit Union Act 

(‘‘FCUA’’).4 Specifically, FICC proposed 

to revise MBSD Rule 2A, Section 1, to 

create a membership category for 

insured credit unions that are in good 

standing with their primary regulators 

(‘‘Insured Credit Union Clearing 

Member’’). For loss allocation purposes, 

Insured Credit Union Clearing Members 

would be designated as ‘‘Tier One 

Clearing Members’’ in accordance with 

MBSD Rule 4, Section 7. In addition, 

FICC has proposed to add a provision to 

MBSD Rule 2A, Section 2, which would 

require an applicant applying to become 

an Insured Credit Union Clearing 

Member to have a level of equity capital 

as of the end of the month prior to the 

effective date of their membership of at 

least $100 million and achieve the ‘‘well 

capitalized’’ statutory net worth 

category classification defined by the 

National Credit Union Administration 

(‘‘NCUA’’) under 12 CFR part 702. 

Insured credit unions applying for 

membership under this new category 

would be required to meet all other 

applicable financial, credit, and 

operational membership qualifications 

and standards for clearing members that 

are contained in MBSD Rule 2A, Section 

2. In particular, such applicants would 

have to demonstrate an established 

profitable business history of a 

minimum of 6 months or personnel 

with sufficient operational background 

and business experience for the firm to 

conduct its business and to be a member 

(as is required of all other membership 

categories). Insured credit unions 

seeking membership would have to 

demonstrate an ability to communicate 

with FICC, fulfill anticipated 

commitments to and meet the 

operational requirements of FICC with 

necessary promptness and accuracy, 

and conform to any condition and 

requirement that FICC reasonably deems 

necessary for its protection or that of its 

Members. 

FICC believes the participation of 

insured credit unions as guaranteed 

service members will contribute to the 

safety, efficiency, and transparency of 

the market by allowing FICC to capture 

a greater part of the activity of its 

existing members and by introducing 

activity of current non-members to 

FICC. FICC also believes that insured 

credit unions will benefit from the 

MBSD clearing service and the 

associated operational efficiencies of a 

central counterparty service. 

III. Discussion 

Section 19(b)(2)(C) of the Act 5 directs 

the Commission to approve a selfregulatory organization’s proposed rule 

change if the Commission finds that 

such proposed rule change is consistent 

with the requirements of the Act and the 

rules and regulations thereunder 

applicable to such organization. Section 

17A(b)(3)(F) of the Act 6 requires, among 

other things, that the rules of a clearing 

agency are designed to promote the 

prompt and accurate clearance and 

settlement of securities transactions. 

The Commission finds that, as 

proposed, FICC’s rule change to 

establish a membership category and 

minimum financial, credit, and 

operational requirements and standards 

for insured credit unions, as defined in 

FICC’s proposal, is consistent with 

Section 17A(b)(3)(F) of the Act.7 The 

Commissions believes that the proposed 

rule change should promote the prompt 

and accurate clearance and settlement of 

securities transactions, because by 

allowing insured credit unions to 

participate as MBSD members, these 

firms will be able to avail themselves of 

the benefits of central counterparty 

service including, among other things, 

trade comparison, to-be-announced 

netting, electronic pool notification 

allocation, pool comparison, pool 

netting, settlement, and risk 

management for eligible securities. 

Furthermore, the rule change will also 

allow existing FICC members to submit 

eligible trading activity with qualified 

insured credit unions directly to the 

MBSD of FICC, thereby also extending 

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Federal Register / Vol. 79, No. 237 / Wednesday, December 10, 2014 / Notices 73365 

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. 

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

4 17 CFR 240.19b–4(f)(6)(iii). 

5The term ‘‘Market Maker’’ is defined as ‘‘a 

Member that acts as a Market Maker pursuant to 

Chapter XI.’’ See Exchange Rule 1.5(l). 

6The term ‘‘UTP Derivative Security’’ is defined 

as ‘‘[a]ny UTP Security that is a ‘new derivative 

securities product’ as defined in Rule 19b–4(e) 

under the Exchange Act . . . and traded pursuant 

to Rule 19b–4(e) under the Exchange Act.’’ See 

Exchange Rule 14.1(c). 

7See Securities Exchange Act Release No. 67066 

(May 29, 2012), 77 FR 33010 (June 4, 2012) (SR– 

NYSEArca–2012–46) (Notice of Filing and 

Immediate Effectiveness of Proposed Rule Change 

Regarding the Extension of Unlisted Trading 

Privileges to New Derivative Securities Products 

That Are Listed on Another Exchange and to Make 

Other Conforming and Technical Amendments). 

The Commission also waived the 30-day operative 

delay for SR–NYSEArca–2012–46 under Rule 19b– 

4(f)(6) of the Act. Id. 

8See Securities Exchange Act Release No. 69858 

(June 25, 2013), 78 FR 39432 (July 1, 2013) (SR– 

Nasdaq–2013–085) (Notice of Filing and Immediate 

Effectiveness of Proposed Rule Change [sic] Rule 

4630 to Remove a Restriction on a Member Acting 

as a Registered Market Maker in a CommodityRelated Security). 

9See supra note 7. 

10See supra note 8. 

11A ‘‘Reference Asset’’ is defined as one or more 

currencies, or commodities, or derivatives based on 

one or more currencies, or commodities, or is based 

on a basket or index comprised of currencies or 

commodities that a UTP Derivative Security derives 

its value from. See Exchange Rule 14.1(c)(5). 

12See supra notes 7 and 8. 

the benefits of the central counterparty 

services to such trading activity. 

IV. Conclusion 

On the basis of the foregoing, the 

Commission concludes that the 

proposal is consistent with the 

requirements of the Act, particularly the 

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–2014–07) be and hereby is 

approved.10

For the Commission by the Division of 

Trading and Markets, pursuant to delegated 

authority.11

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2014–28873 Filed 12–9–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73742; File No. SR–BYX– 

2014–035] 

Self-Regulatory Organizations; BATS 

Y-Exchange, Inc.; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Amend Rule 14.1(c)(5) 

of BATS Y-Exchange, Inc., To Remove 

the Restriction Prohibiting Market 

Makers in UTP Derivative Securities 

From Acting or Registering as a Market 

Maker in Any Reference Asset of That 

UTP Derivative Security or Any 

Derivative Instrument Based on Such 

Reference Asset 

December 4, 2014. 

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 November 

21, 2014, BATS Y-Exchange, Inc. 

(‘‘Exchange’’ or ‘‘BYX’’) 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 Exchange. The Exchange has 

designated this proposal as a ‘‘noncontroversial’’ proposed rule change 

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

Act 3 and Rule 19b–4(f)(6)(iii) 

thereunder,4 which renders it 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 filed a proposal to 

amend Rule 14.1(c)(5) to harmonize its 

restrictions on Market Makers 5 in UTP 

Derivative Securities 6 with NYSE Arca, 

Inc. (‘‘NYSE Arca’’) Rule 5.1(a)(2)(v) 7

and the Nasdaq Stock Market LLC 

(‘‘Nasdaq’’) Rule 4630(e).8

The text of the proposed rule change 

is available at the Exchange’s Web site 

at http://www.batstrading.com/, at the 

principal office of the Exchange, 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 

The Exchange proposes to amend 

Rule 14.1(c)(5) to harmonize its 

restrictions on Market Makers in UTP 

Derivative Securities with NYSE Arca 

Rule 5.1(a)(2)(v) 9 and Nasdaq Rule 

4630(e).10 The purpose of the proposed 

rule change is to permit a Member 

acting as a registered Market Maker in 

a UTP Derivative Security on the 

Exchange the flexibility to act or register 

as a market maker in any Reference 

Asset 11 that a UTP Derivative Security 

derives its value from consistent with 

Commission and Exchange Rules. 

Exchange Rule 14.1(c)(5) prohibits a 

Market Maker in a UTP Derivative 

Security from acting or registering as a 

market maker on another exchange in 

any Reference Asset of that UTP 

Derivative Security, or any derivative 

instrument based on a Reference Asset 

of that UTP Derivative Security. NYSE 

Arca Rule 5.1(a)(2)(v) and Nasdaq Rule 

4630(e) recently amended their 

respective rules to permit market 

makers to trade in securities underlying 

the derivative security so long as that 

market maker discloses to NYSE Arca or 

Nasdaq all accounts within which it 

trades the underlying securities.12 As 

amended, Exchange Rule 14.1(c)(5), 

would similarly remove this 

prohibition, which states that a Market 

Maker in a UTP Derivative Security is 

prohibited from acting or registering as 

a market maker on another exchange in 

any Related Instruments. 

Similar to NYSE Arca Rule 5.1(a)(2)(v) 

and Nasdaq Rule 4630(e), amended Rule 

14.1(c)(5) would require a Member 

acting as a registered Market Maker in 

a UTP Derivative Security to file with 

the Exchange, in a manner prescribed by 

the Exchange, and to keep a current list 

identifying all accounts for trading the 

underlying physical asset or 

commodity, related futures or options 

on futures, or any other related 

derivatives (collectively with Reference 

Assets, ‘‘Related Instruments’’), which 

the Member acting as registered Market 

Maker may have or over which it may 

exercise investment discretion. Rule 

14.1(c)(5) would also prohibit a Member 

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