Self-Regulatory Organizations; The Depository Trust Company, Fixed Income Clearing Corporation, and National Securities Clearing Corporation; Notice of Filing of Proposed Rule Changes To Establish a Fine for Members Failing To Conduct Connectivity Testing, 42122-42123 [E5-3871]
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<![CDATA[
42122
Federal Register / Vol. 70, No. 139 / Thursday, July 21, 2005 / Notices
The Commission notes the objections
of certain commenters to the $5 million
minimum equity requirement. The
Commission believes that the
requirement circumscribes the number
of accounts able to participate and adds
safety in that such accounts are more
likely to be of significant financial
means and investment sophistication.
Finally, the Commission notes that
several commenters recommended
expanding the products eligible for
portfolio margining. The Exchange’s
proposed rule limits the instruments
eligible for portfolio margining to listed
products based on broad-based US
securities indices, which tend to be less
volatile than narrow-based indices and
non-index equities. The Commission
believes this limitation is appropriate
for the pilot program, which should
serve as a first step toward the possible
expansion of portfolio margining to
other classes of securities.
V.Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,45 that the
proposed rule change (File No. SR–
CBOE–2002–03), as amended, is
approved on a pilot basis to expire on
July 31, 2007.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.46
J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E5–3870 Filed 7–20–05; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–52043; File Nos. SR–DTC–
2005–04, SR–FICC–2005–10, and SR–
NSCC–2005–05]
Self-Regulatory Organizations; The
Depository Trust Company, Fixed
Income Clearing Corporation, and
National Securities Clearing
Corporation; Notice of Filing of
Proposed Rule Changes To Establish a
Fine for Members Failing To Conduct
Connectivity Testing
July 15, 2005.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 notice is hereby given that on
May 13, 2005, The Depository Trust
Company (‘‘DTC’’), on May 3, 2005, the
Fixed Income Clearing Corporation
12, 1997) (discussing in Part II.A. the use of TIMS
versus other pricing models).
45 15 U.S.C. 78s(b)(2).
46 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
VerDate jul<14>2003
19:42 Jul 20, 2005
Jkt 205001
(‘‘FICC’’), and on May 4, 2005, the
National Securities Clearing Corporation
(‘‘NSCC’’) filed with the Securities and
Exchange Commission (‘‘Commission’’)
the proposed rule changes described in
Items I, II, and III below, which items
have been prepared primarily by DTC,
FICC, and NSCC. On June 7, 2005,
NSCC amended its proposed rule
change.2 The Commission is publishing
this notice to solicit comments on the
proposed rule changes from interested
parties.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
DTC, FICC, and NSCC are seeking to
establish a fine for members who fail to
conduct connectivity testing for
business continuity purposes.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission,
DTC, FICC, and NSCC included
statements concerning the purpose of
and basis for the proposed rule changes
and discussed any comments they
received on the proposed rule changes.
The text of these statements may be
examined at the places specified in Item
IV below. DTC, FICC, and NSCC have
prepared summaries, set forth in
sections (A), (B), and (C) below, of the
most significant aspects of such
statements.3
(A) Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
The purpose of these filings is to
modify the rules of DTC, FICC, and
NSCC to provide that DTC, FICC, and
NSCC may impose a fine on any
member that is required to conduct
connectivity testing for business
continuity purposes and fails to do so.
In the aftermath of September 11,
2001, and in conjunction with a
financial industry white paper, DTC,
FICC, and NSCC require connectivity
testing for critical (‘‘Top Tier’’)
members.4 The criteria used by DTC,
2 The NSCC amendment proposes to amend
NSCC Rule 48, Section 1, to increase the maximum
disciplinary fine for a single offense from $10,000
to $20,000.
3 The Commission has modified the text of the
summaries prepared by DTC, FICC, and NSCC.
4 The Federal Reserve, Office of the Comptroller
of the Currency, and the Commission issued
‘‘Interagency Paper on Sound Practices to
Strengthen the Resilience of the U.S. Financial
System.’’ [68 FR 17809 (April 11, 2003)]. This
document provided guidelines that required core
clearing and settlement organizations, such as DTC,
PO 00000
Frm 00099
Fmt 4703
Sfmt 4703
FICC, and NSCC to identify their
respective Top Tier members were
revenues, clearing fund contributions,
settlement amounts, and trading
volumes. Connectivity testing for the
Top Tier members was initiated on
January 1, 2004. Due to the critical
importance of being able to assess
whether a Top Tier member has
sufficient operational capabilities, DTC,
FICC, and NSCC have determined that
they need the ability to fine any Top
Tier member that does not test.5
Currently, each member of DTC, FICC,
and NSCC that is designated as Top Tier
is advised of this status and is provided
with information on the testing
requirements. Under DTC, FICC, and
NSCC’s current procedures, if testing is
not completed by a Top Tier member by
the end of June, a reminder notice is
sent to the member. Thereafter, another
reminder notice is sent in October and,
if necessary, again in December.
The reminder notice sent in December
would advise that if testing is not
completed by December 31, a fine of
$10,000 will be imposed. These fines
would be collected from members in
January of the following year. The
Membership and Risk Management
Committee would be notified of all
members that were fined for failing to
complete connectivity testing.
In the event that any member fails to
complete connectivity testing for two
successive years, the fine that would be
imposed at that time would be $20,000.
Failure to complete testing for more
than two successive years would result
FICC, and NSCC, and others in the financial
industry to manage business continuity capabilities.
DTC, FICC, and NSCC developed their testing of
Top Tier firms based on the guidelines outlined in
the white paper.
5 Pursuant to DTC Rule 2, ‘‘Participants and
Pledgees,’’ participants must furnish, upon DTC’s
request, information sufficient to demonstrate
operational capability. In addition, DTC Rule 21,
‘‘Disciplinary Sanctions,’’ allows DTC to impose
fines on participants for any error, delay or other
conduct detrimental to the operations of DTC.
Pursuant to GSD Rule 3, ‘‘Responsibility,
Operational Capability, and Other Membership
Standards of Comparison-Only Members and
Netting Members,’’ the GSD may require members
to fulfill operational testing requirements as the
GSD may at any time deem necessary. Pursuant to
MBSD Rule 1, Section 3 of Article III, all MBSD
applicants and members agree to fulfill operational
testing requirements and related reporting
requirements that may be imposed to ensure the
continuing operational capability of the applicant.
Pursuant to NSCC Rule 15, ‘‘Financial
Responsibility and Operational Capability,’’
members must furnish to NSCC adequate
assurances of their financial responsibility and
operational capability as NSCC may at any time
deem necessary. In addition, NSCC Rule 48,
‘‘Disciplinary Procedures’’, allows NSCC to impose
a fine on participants for any error, delay, or other
conduct that is determined to be detrimental to the
operations of NSCC.
E:\FR\FM\21JYN1.SGM
21JYN1
Federal Register / Vol. 70, No. 139 / Thursday, July 21, 2005 / Notices
in disciplinary action, including
potential termination of membership.
DTC, FICC, and NSCC believe that the
proposed rule changes are consistent
with the requirements of Section 17A of
the Act 6 and the rules and regulations
thereunder because the implementation
of the proposals should help DTC, FICC,
and NSCC to enforce compliance with
their connectivity testing rules for
business continuity purposes and as a
result should better enable them to
ensure the safeguarding of securities
and funds which are in their custody or
control.
(B) Self-Regulatory Organization’s
Statement on Burden on Competition
DTC, FICC, and NSCC do not believe
that the proposed rule changes 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
DTC, FICC, and NSCC have not
solicited or received any written
comments on these proposals. DTC,
FICC, and NSCC will notify the
Commission of any written comments
they receive.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within thirty-five days of the date of
publication of this notice in the Federal
Register or within such longer period (i)
as the Commission may designate up to
ninety days of such date if it finds such
longer period to be appropriate and
publishes its reasons for so finding or
(ii) as to which the self-regulatory
organization consents, the Commission
will:
(A) By order approve such proposed
rule change or
(B) Institute proceedings to determine
whether the proposed rule change
should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
changes are consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml) or
• Send an E-mail to rulecomments@sec.gov. Please include File
6 15
Number SR–DTC–2005–04, SR–FICC–
2005-10, and SR–NSCC–2005–05 on the
subject line.
Paper Comments
• Send paper comments in triplicate
to Jonathan G. Katz, Secretary,
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–0609.
All submissions should refer to File
Number SR–DTC–2005–04, SR–FICC–
2005–10, and SR–NSCC–2005–05.
These file numbers 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
(https://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent
amendments, all written statements
with respect to the proposed rule
changes that are filed with the
Commission, and all written
communications relating to the
proposed rule changes 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
Section, 100 F Street, NE, Washington,
DC 20549. Copies of such filings also
will be available for inspection and
copying at the principal offices of DTC,
FICC, and NSCC and on DTC’s Web site
at https://www.dtc.org, and on FICC’s
Web site at https://www.ficc.com, and on
NSCC’s Web site at https://
www.nscc.com. 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–DTC–2005–04, SR–FICC–
2005–10, and SR–NSCC–2005–05 and
should be submitted on or before
August 5, 2005.
For the Commission by the Division of
Market Regulation, pursuant to delegated
authority.7
J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E5–3871 Filed 7–20–05; 8:45 am]
BILLING CODE 8010–01–P
U.S.C. 78q–1.
VerDate jul<14>2003
19:42 Jul 20, 2005
7 17
Jkt 205001
PO 00000
CFR 200.30-3(a)(12).
Frm 00100
Fmt 4703
Sfmt 4703
42123
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–52045; File No. SR–NASD–
2005–023]
Self-Regulatory Organizations;
National Association of Securities
Dealers, Inc.; Notice of Filing of
Proposed Rule Change and
Amendment No. 1 Thereto Relating to
Representation in Arbitration and
Mediation
July 15, 2005.
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 the National
Association of Securities Dealers, Inc.
(‘‘NASD’’), through its wholly owned
subsidiary, NASD Dispute Resolution,
Inc. (‘‘NASD Dispute Resolution’’), filed
with the Securities and Exchange
Commission (‘‘SEC’’ or ‘‘Commission’’),
on February 9, 2005 and on July 8, 2005
(Amendment No. 1), the proposed rule
change as described in items I, II, and
III below, which items have been
prepared by NASD Dispute Resolution.
The Commission is publishing this
notice to solicit comments on the
proposed rule change from interested
persons.
1. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
NASD Dispute Resolution is
proposing to amend Rule 10316 and to
adopt Rule 10408 of the NASD Code of
Arbitration Procedure (‘‘Code’’), to
address attorney representation in
arbitration and mediation.3 Below is the
text of the proposed rule change.
Proposed new language is in italics;
proposed deletions are in brackets.
*
*
*
*
*
10316. Representation in Arbitration [by
Counsel]
(a) Representation by a Party
Parties may represent themselves in
an arbitration held in a United States
hearing location. A member of a
partnership may represent the
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 These provisions will be renumbered as
appropriate following Commission approval of the
following proposed rule changes published on June
23, 2005: Revision of Customer Portion of Code of
Arbitration Procedure, Exchange Act Rel. No. 51856
(June 15, 2005), 70 FR 36442 (June 23, 2005) (SR–
NASD–2003–1580); Revision of Industry Portion of
Code of Arbitration Procedure, Exchange Act Rel.
No. 51857 (June 15, 2005), 70 FR 36430 (June 23,
2005) (SR–NASD–2004–011); and the NASD
Arbitration Rules for Mediation Proceedings,
Exchange Act Rel. No. 51855 (June 15, 2005), 70 FR
36440 (June 23, 2005) (SR–NASD–2004–013).
2 17
E:\FR\FM\21JYN1.SGM
21JYN1
]]>Agencies
[Federal Register Volume 70, Number 139 (Thursday, July 21, 2005)]
[Notices]
[Pages 42122-42123]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E5-3871]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-52043; File Nos. SR-DTC-2005-04, SR-FICC-2005-10, and
SR-NSCC-2005-05]
Self-Regulatory Organizations; The Depository Trust Company,
Fixed Income Clearing Corporation, and National Securities Clearing
Corporation; Notice of Filing of Proposed Rule Changes To Establish a
Fine for Members Failing To Conduct Connectivity Testing
July 15, 2005.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on May 13, 2005, The
Depository Trust Company (``DTC''), on May 3, 2005, the Fixed Income
Clearing Corporation (``FICC''), and on May 4, 2005, the National
Securities Clearing Corporation (``NSCC'') filed with the Securities
and Exchange Commission (``Commission'') the proposed rule changes
described in Items I, II, and III below, which items have been prepared
primarily by DTC, FICC, and NSCC. On June 7, 2005, NSCC amended its
proposed rule change.\2\ The Commission is publishing this notice to
solicit comments on the proposed rule changes from interested parties.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ The NSCC amendment proposes to amend NSCC Rule 48, Section
1, to increase the maximum disciplinary fine for a single offense
from $10,000 to $20,000.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
DTC, FICC, and NSCC are seeking to establish a fine for members who
fail to conduct connectivity testing for business continuity purposes.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, DTC, FICC, and NSCC included
statements concerning the purpose of and basis for the proposed rule
changes and discussed any comments they received on the proposed rule
changes. The text of these statements may be examined at the places
specified in Item IV below. DTC, FICC, and NSCC have prepared
summaries, set forth in sections (A), (B), and (C) below, of the most
significant aspects of such statements.\3\
---------------------------------------------------------------------------
\3\ The Commission has modified the text of the summaries
prepared by DTC, FICC, and NSCC.
---------------------------------------------------------------------------
(A) Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
The purpose of these filings is to modify the rules of DTC, FICC,
and NSCC to provide that DTC, FICC, and NSCC may impose a fine on any
member that is required to conduct connectivity testing for business
continuity purposes and fails to do so.
In the aftermath of September 11, 2001, and in conjunction with a
financial industry white paper, DTC, FICC, and NSCC require
connectivity testing for critical (``Top Tier'') members.\4\ The
criteria used by DTC, FICC, and NSCC to identify their respective Top
Tier members were revenues, clearing fund contributions, settlement
amounts, and trading volumes. Connectivity testing for the Top Tier
members was initiated on January 1, 2004. Due to the critical
importance of being able to assess whether a Top Tier member has
sufficient operational capabilities, DTC, FICC, and NSCC have
determined that they need the ability to fine any Top Tier member that
does not test.\5\
---------------------------------------------------------------------------
\4\ The Federal Reserve, Office of the Comptroller of the
Currency, and the Commission issued ``Interagency Paper on Sound
Practices to Strengthen the Resilience of the U.S. Financial
System.'' [68 FR 17809 (April 11, 2003)]. This document provided
guidelines that required core clearing and settlement organizations,
such as DTC, FICC, and NSCC, and others in the financial industry to
manage business continuity capabilities. DTC, FICC, and NSCC
developed their testing of Top Tier firms based on the guidelines
outlined in the white paper.
\5\ Pursuant to DTC Rule 2, ``Participants and Pledgees,''
participants must furnish, upon DTC's request, information
sufficient to demonstrate operational capability. In addition, DTC
Rule 21, ``Disciplinary Sanctions,'' allows DTC to impose fines on
participants for any error, delay or other conduct detrimental to
the operations of DTC.
Pursuant to GSD Rule 3, ``Responsibility, Operational
Capability, and Other Membership Standards of Comparison-Only
Members and Netting Members,'' the GSD may require members to
fulfill operational testing requirements as the GSD may at any time
deem necessary. Pursuant to MBSD Rule 1, Section 3 of Article III,
all MBSD applicants and members agree to fulfill operational testing
requirements and related reporting requirements that may be imposed
to ensure the continuing operational capability of the applicant.
Pursuant to NSCC Rule 15, ``Financial Responsibility and
Operational Capability,'' members must furnish to NSCC adequate
assurances of their financial responsibility and operational
capability as NSCC may at any time deem necessary. In addition, NSCC
Rule 48, ``Disciplinary Procedures'', allows NSCC to impose a fine
on participants for any error, delay, or other conduct that is
determined to be detrimental to the operations of NSCC.
---------------------------------------------------------------------------
Currently, each member of DTC, FICC, and NSCC that is designated as
Top Tier is advised of this status and is provided with information on
the testing requirements. Under DTC, FICC, and NSCC's current
procedures, if testing is not completed by a Top Tier member by the end
of June, a reminder notice is sent to the member. Thereafter, another
reminder notice is sent in October and, if necessary, again in
December.
The reminder notice sent in December would advise that if testing
is not completed by December 31, a fine of $10,000 will be imposed.
These fines would be collected from members in January of the following
year. The Membership and Risk Management Committee would be notified of
all members that were fined for failing to complete connectivity
testing.
In the event that any member fails to complete connectivity testing
for two successive years, the fine that would be imposed at that time
would be $20,000. Failure to complete testing for more than two
successive years would result
[[Page 42123]]
in disciplinary action, including potential termination of membership.
DTC, FICC, and NSCC believe that the proposed rule changes are
consistent with the requirements of Section 17A of the Act \6\ and the
rules and regulations thereunder because the implementation of the
proposals should help DTC, FICC, and NSCC to enforce compliance with
their connectivity testing rules for business continuity purposes and
as a result should better enable them to ensure the safeguarding of
securities and funds which are in their custody or control.
---------------------------------------------------------------------------
\6\ 15 U.S.C. 78q-1.
---------------------------------------------------------------------------
(B) Self-Regulatory Organization's Statement on Burden on Competition
DTC, FICC, and NSCC do not believe that the proposed rule changes
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
DTC, FICC, and NSCC have not solicited or received any written
comments on these proposals. DTC, FICC, and NSCC will notify the
Commission of any written comments they receive.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within thirty-five days of the date of publication of this notice
in the Federal Register or within such longer period (i) as the
Commission may designate up to ninety days of such date if it finds
such longer period to be appropriate and publishes its reasons for so
finding or (ii) as to which the self-regulatory organization consents,
the Commission will:
(A) By order approve such proposed rule change or
(B) Institute proceedings to determine whether the proposed rule
change should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
changes are consistent with the Act. Comments may be submitted by any
of the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://
www.sec.gov/rules/sro.shtml) or
Send an E-mail to rule-comments@sec.gov. Please include
File Number SR-DTC-2005-04, SR-FICC-2005-10, and SR-NSCC-2005-05 on the
subject line.
Paper Comments
Send paper comments in triplicate to Jonathan G. Katz,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-0609.
All submissions should refer to File Number SR-DTC-2005-04, SR-
FICC-2005-10, and SR-NSCC-2005-05. These file numbers 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 (https://www.sec.gov/rules/sro.shtml). Copies of the
submission, all subsequent amendments, all written statements with
respect to the proposed rule changes that are filed with the
Commission, and all written communications relating to the proposed
rule changes 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 Section, 100 F Street, NE, Washington, DC
20549. Copies of such filings also will be available for inspection and
copying at the principal offices of DTC, FICC, and NSCC and on DTC's
Web site at https://www.dtc.org, and on FICC's Web site at https://
www.ficc.com, and on NSCC's Web site at https://www.nscc.com. 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-DTC-2005-04, SR-
FICC-2005-10, and SR-NSCC-2005-05 and should be submitted on or before
August 5, 2005.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\7\
J. Lynn Taylor,
Assistant Secretary.
---------------------------------------------------------------------------
\7\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
[FR Doc. E5-3871 Filed 7-20-05; 8:45 am]
BILLING CODE 8010-01-P
