Self-Regulatory Organizations; Fixed Income Clearing Corporation; Order Approving Proposed Rule Change To Amend the Rules of Its Mortgage-Backed Securities Division Regarding Membership Requirements for Unregistered Investment Pools, 1252-1253 [E7-158]
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1252
Federal Register / Vol. 72, No. 6 / Wednesday, January 10, 2007 / Notices
5. At all times, a majority of the Board
will be Independent Trustees, and the
nomination of new or additional
Independent Trustees will be placed
within the discretion of the thenexisting Independent Trustees.
6. When a Sub-Adviser change is
proposed for a Fund with an Affiliated
Sub-Adviser, the Board, including a
majority of the Independent Trustees,
will make a separate finding, reflected
in the applicable Board minutes, that
such change is in the best interests of
such Fund and its shareholders and
does not involve a conflict of interest
from which the Manager or the
Affiliated Sub-Adviser derives an
inappropriate advantage.
7. The Manager will provide general
management services to each Fund,
including overall supervisory
responsibility for the general
management and investment of the
Fund’s assets and, subject to review and
approval of the Board, will: (i) Set each
Fund’s overall investment strategies; (ii)
evaluate, select and recommend SubAdvisers to manage all or a part of the
Fund’s assets; (iii) when appropriate,
allocate and reallocate the Fund’s assets
among multiple Sub-Advisers; (iv)
monitor and evaluate the investment
performance of the Sub-Advisers; and
(v) implement procedures reasonably
designed to ensure compliance by the
Sub-Advisers with the Fund’s
investment objectives, policies and
restrictions.
8. No trustee or officer of the Trust,
or director or officer of the Manager will
own directly or indirectly (other than
through a pooled investment vehicle
that is not controlled by such person)
any interest in a Sub-Adviser except for:
(i) Ownership of interests in the
Manager or any entity that controls, is
controlled by, or is under common
control with the Manager; or (ii)
ownership of less than 1% of the
outstanding securities of any class of
equity or debt of any publicly traded
company that is either a Sub-Adviser or
an entity that controls, is controlled by,
or is under common control with a SubAdviser.
9. Each Fund will disclose in its
registration statement the Aggregate Fee
Disclosure.
10. Independent legal counsel, as
defined in rule 0–1(a)(6) under the Act,
will be engaged to represent the
Independent Trustees. The selection of
such counsel will be within the
discretion of the then-existing
Independent Trustees.
11. The Manager will provide the
Board, no less frequently than quarterly,
with information about the profitability
of the Manager on a per-Fund basis. The
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14:22 Jan 09, 2007
Jkt 211001
information will reflect the impact on
profitability of the hiring or termination
of any Sub-Adviser during the
applicable quarter.
12. Whenever a Sub-Adviser is hired
or terminated, the Manager will provide
the Board with information showing the
expected impact on the profitability of
the Manager.
13. The requested order will expire on
the effective date of rule 15a–5 under
the Act, if adopted.
For the Commission, by the Division of
Investment Management, under delegated
authority.
Nancy M. Morris,
Secretary.
[FR Doc. E7–161 Filed 1–9–07; 8:45 am]
At times, changes in Commission
priorities require alterations in the
scheduling of meeting items.
For further information and to
ascertain what, if any, matters have been
added, deleted or postponed, please
contact:
The Office of the Secretary at (202)
551–5400.
Dated: January 4, 2007.
Nancy M. Morris,
Secretary.
[FR Doc. 07–62 Filed 1–5–07; 4:15 pm]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
BILLING CODE 8011–01–P
[Release No. 34–55037; File No. SR–FICC–
2006–10]
SECURITIES AND EXCHANGE
COMMISSION
Self-Regulatory Organizations; Fixed
Income Clearing Corporation; Order
Approving Proposed Rule Change To
Amend the Rules of Its MortgageBacked Securities Division Regarding
Membership Requirements for
Unregistered Investment Pools
Sunshine Act Meeting
Notice is hereby given, pursuant to
the provisions of the Government in the
Sunshine Act, Public Law 94–409, that
the Securities and Exchange
Commission will hold the following
meeting during the week of January 8,
2007:
A Closed Meeting will be held on
Thursday, January 11, 2007 at 2 p.m.
Commissioners, Counsels to the
Commissioners, the Secretary to the
Commission, and recording secretaries
will attend the Closed Meeting. Certain
staff members who have an interest in
the matters may also be present.
The General Counsel of the
Commission, or his designee, has
certified that, in his opinion, one or
more of the exemptions set forth in 5
U.S.C. 552b(c)(3), (4), (5), (7), (8), (9)(B)
and (10) and 17 CFR 200.402(a) (3), (4),
(5), (7), (8), (9)(ii), and (10) permit
consideration of the scheduled matters
at the Closed Meeting.
Commissioner Nazareth, as duty
officer, voted to consider the items
listed for the closed meeting in closed
session.
The subject matters of the Closed
Meeting scheduled for Thursday,
January 11, 2007 will be:
Formal orders of investigation;
Institution and settlement of injunctive
actions;
Institution and settlement of
administrative proceedings of an
enforcement nature;
An adjudicatory matter;
A regulatory matter regarding a financial
institution;
Amicus consideration; and
Other matters relating to enforcement
proceedings.
PO 00000
Frm 00041
Fmt 4703
Sfmt 4703
January 3, 2007.
I. Introduction
On June 9, 2006, the Fixed Income
Clearing Corporation (‘‘FICC’’) filed
with the Securities and Exchange
Commission (‘‘Commission’’) proposed
rule change SR–FICC–2006–10 pursuant
to Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Act’’).1 Notice
of the proposal was published in the
Federal Register on November 24,
2006.2 No comment letters were
received. For the reasons discussed
below, the Commission is approving the
proposed rule change.
II. Description
FICC is proposing to amend the rules
of its Mortgage-Backed Securities
Division (‘‘MBSD’’) regarding the
membership requirements of
‘‘Unregistered Investment Pools.’’ 3
Currently, unregistered investment
pools have essentially the same
membership standards as other MBSD
non-broker clearing members.4 The size
1 15
U.S.C. 78s(b)(1).
Exchange Act Release No. 54769
(November 16, 2006), 71 FR 67946.
3 As noted below, the term ‘‘Unregistered
Investment Pool’’ is a newly-defined term in the
MBSD’s Rules.
4 Currently, a clearing applicant or participant
that is an unregistered investment pool and whose
financial statements are prepared in accordance
with U.S. generally accepted accounting principles
(‘‘GAAP’’) must satisfy a minimum financial
requirement of $10 million in net asset value. In
this filing, FICC is making a technical change to
replace the term ‘‘net asset value’’ with the term
2 Securities
E:\FR\FM\10JAN1.SGM
10JAN1
Federal Register / Vol. 72, No. 6 / Wednesday, January 10, 2007 / Notices
mstockstill on PROD1PC61 with NOTICES
of the unregistered investment pool
industry has grown, and Unregistered
Investment Pools and their advisers
have become significant participants in
the industry. FICC reexamined its
treatment of participants that are
Unregistered Investment Pools and has
determined it is necessary to enhance
the clearing membership standards
applicable to these entities.
FICC is proposing to adopt a
definition for Unregistered Investment
Pool, which will identify the entities
that would become subject to the
enhanced membership requirements for
such entities. Under the new
membership requirements, an
Unregistered Investment Pool is an
entity that holds a pool of securities
and/or other assets that meets the
following criteria: (i) It is not registered
as an investment company under the
Investment Company Act of 1940, (ii) it
does not register its securities offerings
under the Securities Act of 1933, and
(iii) it has an investment advisor that is
registered with the Commission under
the Investment Advisers Act of 1940, or
if the investment adviser is not
registered, the Unregistered Investment
Pool has a lock-up period of two (2)
years or greater.
Entities that meet the definition of
Unregistered Investment Pool will be
eligible to apply to become MBSD
clearing participants only if they meet
the new membership criteria set forth
below.5 The MBSD’s current
participants that fall within the
definition of Unregistered Investment
Pool will have one year from the date
of approval of this rule filing in which
to conform to the new minimum
financial and qualitative rating
requirements.
The new membership requirements
for Unregistered Investment Pools are as
follows:
(1) SEC Registration: The investment
advisor of the Unregistered Investment
Pool must: (i) be registered with the
Commission under the Investment
Advisers Act of 1940 or (ii) if it is not
registered with the Commission, the
Unregistered Investment Pool that the
investment adviser advises must have
an initial lock-up period of two (2) years
or greater.
(2) Minimum Net Assets: The
Unregistered Investment Pool will be
required to have and to maintain net
‘‘net assets’’ to more accurately state the financial
requirement.
5 It is important to note that entities that meet the
MBSD’s definition of Unregistered Investment Pool
will be treated as such by the MBSD regardless of
whether the entity considers itself to be an
Unregistered Investment Pool.
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14:22 Jan 09, 2007
Jkt 211001
assets of $250 million or greater.6 If the
Unregistered Investment Pool does not
meet the $250 million net asset
requirement but the Unregistered
Investment Pool has net assets of at least
$50 million 7 or greater, the
Unregistered Investment Pool will be
eligible for MBSD clearing membership
if its investment advisor has assets
under management of at least $1.5
billion and advises an existing MBSD
clearing participant.
(3) Qualitative Rating: The MBSD will
require an Unregistered Investment Pool
to obtain a minimum required rating of
‘‘above average’’ as a result of an FICC
internal qualitative assessment. FICC
believes it is important to consider
qualitative factors in order to assess
both Unregistered Investment Pool
applicants and members.8
III. Discussion
Section 17A(b)(3)(F) of the Act
requires that the rules of a clearing
agency be designed to assure the
safeguarding of securities and funds
which are in its custody or control.9 The
Commission finds that FICC’s proposed
rule change is consistent with this
requirement because by enhancing
membership requirements for
Unregistered Investment Pools, FICC
should be better able to mitigate
financial risk to itself and to its
6 The
$250 million net assets requirement is the
requirement that will be applicable to Unregistered
Investment Pools whose financial statements are
prepared in accordance with U.S. GAAP. Those
Unregistered Investment Pools whose financial
statements are prepared using other types of GAAP
will be subject to the higher minimum requirements
as determined by Article III, Rule 1, Section 2 of
the MBSD’s Rules.
7 The $50 million net assets requirement is the
requirement that will be applicable to Unregistered
Investment Pools whose financial statements are
prepared in accordance with U.S. GAAP. Those
Unregistered Investment Pools whose financial
statements are prepared using other types of GAAP
will be subject to the higher minimum requirements
as determined by Article III, Rule 1, Section 2 of
the MBSD’s Rules.
8 Staff in the MBSD’s Risk Division will
determine a qualitative rating for each Unregistered
Investment Pool applicant and will review
qualitative ratings of Unregistered Investment Pool
members on an annual basis. The assessment will
include consideration of factors deemed relevant by
the Risk Division, including management, capital,
strategy and risk profile, and internal controls.
(Because responsibility for these factors with
respect to a particular Unregistered Investment Pool
may be with the Unregistered Investment Pool, with
the investment advisor, with some other entity (i.e.,
a third party service provider), or with some
combination of these, Risk staff will perform the
assessment for each factor with the entity or entities
it deems appropriate.) The assessment will assess
the strengths and weaknesses of these factors and
will assign a qualitative rating to the Unregistered
Investment Pool. In order to qualify for
membership, Unregistered Investment Pools must
meet a qualitative rating of at least ‘‘above average’’
as determined by the Risk Division’s staff.
9 15 U.S.C. 78q–1(b)(3)(F).
PO 00000
Frm 00042
Fmt 4703
Sfmt 4703
1253
members and therefore should be better
able to assure the safeguarding of
securities and funds that are in its
custody or control 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
requirements of Section 17A of the
Act 10 and the rules and regulations
thereunder.
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act, that the
proposed rule change (File No. SR–
FICC–2006–10) be and hereby is
approved.11
For the Commission by the Division of
Market Regulation, pursuant to delegated
authority.12
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7–158 Filed 1–9–07; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–55033; File No. SR–
NYSEArca-2006–75]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing and Order
Granting Accelerated Approval of
Proposed Rule Change and
Amendment Nos. 1 and 2 Relating to
Trading Claymore MACROshares Oil
Up Tradeable Shares and Claymore
MACROshares Oil Down Tradeable
Shares Pursuant to Unlisted Trading
Privileges
December 29, 2006.
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 October
10, 2006, NYSE Arca, Inc. (the
‘‘Exchange’’), through its wholly owned
subsidiary NYSE Arca Equities, Inc.
(‘‘NYSE Arca Equities’’), filed with the
Securities and Exchange Commission
(the ‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been
substantially prepared by the Exchange.
On November 9, 2006, the Exchange
filed Amendment No. 1 to the proposed
10 15
U.S.C. 78q–1.
approving the proposed rule change, the
Commission considered efficiency, competition and
capital formation. 15 U.S.C. 78c(f).
12 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
11 In
E:\FR\FM\10JAN1.SGM
10JAN1
]]>Agencies
[Federal Register Volume 72, Number 6 (Wednesday, January 10, 2007)]
[Notices]
[Pages 1252-1253]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-158]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-55037; File No. SR-FICC-2006-10]
Self-Regulatory Organizations; Fixed Income Clearing Corporation;
Order Approving Proposed Rule Change To Amend the Rules of Its
Mortgage-Backed Securities Division Regarding Membership Requirements
for Unregistered Investment Pools
January 3, 2007.
I. Introduction
On June 9, 2006, the Fixed Income Clearing Corporation (``FICC'')
filed with the Securities and Exchange Commission (``Commission'')
proposed rule change SR-FICC-2006-10 pursuant to Section 19(b)(1) of
the Securities Exchange Act of 1934 (``Act'').\1\ Notice of the
proposal was published in the Federal Register on November 24, 2006.\2\
No comment letters were received. For the reasons discussed below, the
Commission is approving the proposed rule change.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ Securities Exchange Act Release No. 54769 (November 16,
2006), 71 FR 67946.
---------------------------------------------------------------------------
II. Description
FICC is proposing to amend the rules of its Mortgage-Backed
Securities Division (``MBSD'') regarding the membership requirements of
``Unregistered Investment Pools.'' \3\ Currently, unregistered
investment pools have essentially the same membership standards as
other MBSD non-broker clearing members.\4\ The size
[[Page 1253]]
of the unregistered investment pool industry has grown, and
Unregistered Investment Pools and their advisers have become
significant participants in the industry. FICC reexamined its treatment
of participants that are Unregistered Investment Pools and has
determined it is necessary to enhance the clearing membership standards
applicable to these entities.
---------------------------------------------------------------------------
\3\ As noted below, the term ``Unregistered Investment Pool'' is
a newly-defined term in the MBSD's Rules.
\4\ Currently, a clearing applicant or participant that is an
unregistered investment pool and whose financial statements are
prepared in accordance with U.S. generally accepted accounting
principles (``GAAP'') must satisfy a minimum financial requirement
of $10 million in net asset value. In this filing, FICC is making a
technical change to replace the term ``net asset value'' with the
term ``net assets'' to more accurately state the financial
requirement.
---------------------------------------------------------------------------
FICC is proposing to adopt a definition for Unregistered Investment
Pool, which will identify the entities that would become subject to the
enhanced membership requirements for such entities. Under the new
membership requirements, an Unregistered Investment Pool is an entity
that holds a pool of securities and/or other assets that meets the
following criteria: (i) It is not registered as an investment company
under the Investment Company Act of 1940, (ii) it does not register its
securities offerings under the Securities Act of 1933, and (iii) it has
an investment advisor that is registered with the Commission under the
Investment Advisers Act of 1940, or if the investment adviser is not
registered, the Unregistered Investment Pool has a lock-up period of
two (2) years or greater.
Entities that meet the definition of Unregistered Investment Pool
will be eligible to apply to become MBSD clearing participants only if
they meet the new membership criteria set forth below.\5\ The MBSD's
current participants that fall within the definition of Unregistered
Investment Pool will have one year from the date of approval of this
rule filing in which to conform to the new minimum financial and
qualitative rating requirements.
---------------------------------------------------------------------------
\5\ It is important to note that entities that meet the MBSD's
definition of Unregistered Investment Pool will be treated as such
by the MBSD regardless of whether the entity considers itself to be
an Unregistered Investment Pool.
---------------------------------------------------------------------------
The new membership requirements for Unregistered Investment Pools
are as follows:
(1) SEC Registration: The investment advisor of the Unregistered
Investment Pool must: (i) be registered with the Commission under the
Investment Advisers Act of 1940 or (ii) if it is not registered with
the Commission, the Unregistered Investment Pool that the investment
adviser advises must have an initial lock-up period of two (2) years or
greater.
(2) Minimum Net Assets: The Unregistered Investment Pool will be
required to have and to maintain net assets of $250 million or
greater.\6\ If the Unregistered Investment Pool does not meet the $250
million net asset requirement but the Unregistered Investment Pool has
net assets of at least $50 million \7\ or greater, the Unregistered
Investment Pool will be eligible for MBSD clearing membership if its
investment advisor has assets under management of at least $1.5 billion
and advises an existing MBSD clearing participant.
---------------------------------------------------------------------------
\6\ The $250 million net assets requirement is the requirement
that will be applicable to Unregistered Investment Pools whose
financial statements are prepared in accordance with U.S. GAAP.
Those Unregistered Investment Pools whose financial statements are
prepared using other types of GAAP will be subject to the higher
minimum requirements as determined by Article III, Rule 1, Section 2
of the MBSD's Rules.
\7\ The $50 million net assets requirement is the requirement
that will be applicable to Unregistered Investment Pools whose
financial statements are prepared in accordance with U.S. GAAP.
Those Unregistered Investment Pools whose financial statements are
prepared using other types of GAAP will be subject to the higher
minimum requirements as determined by Article III, Rule 1, Section 2
of the MBSD's Rules.
---------------------------------------------------------------------------
(3) Qualitative Rating: The MBSD will require an Unregistered
Investment Pool to obtain a minimum required rating of ``above
average'' as a result of an FICC internal qualitative assessment. FICC
believes it is important to consider qualitative factors in order to
assess both Unregistered Investment Pool applicants and members.\8\
---------------------------------------------------------------------------
\8\ Staff in the MBSD's Risk Division will determine a
qualitative rating for each Unregistered Investment Pool applicant
and will review qualitative ratings of Unregistered Investment Pool
members on an annual basis. The assessment will include
consideration of factors deemed relevant by the Risk Division,
including management, capital, strategy and risk profile, and
internal controls. (Because responsibility for these factors with
respect to a particular Unregistered Investment Pool may be with the
Unregistered Investment Pool, with the investment advisor, with some
other entity (i.e., a third party service provider), or with some
combination of these, Risk staff will perform the assessment for
each factor with the entity or entities it deems appropriate.) The
assessment will assess the strengths and weaknesses of these factors
and will assign a qualitative rating to the Unregistered Investment
Pool. In order to qualify for membership, Unregistered Investment
Pools must meet a qualitative rating of at least ``above average''
as determined by the Risk Division's staff.
---------------------------------------------------------------------------
III. Discussion
Section 17A(b)(3)(F) of the Act requires that the rules of a
clearing agency be designed to assure the safeguarding of securities
and funds which are in its custody or control.\9\ The Commission finds
that FICC's proposed rule change is consistent with this requirement
because by enhancing membership requirements for Unregistered
Investment Pools, FICC should be better able to mitigate financial risk
to itself and to its members and therefore should be better able to
assure the safeguarding of securities and funds that are in its custody
or control or for which it is responsible.
---------------------------------------------------------------------------
\9\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------
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 requirements of Section 17A of the Act \10\ and the
rules and regulations thereunder.
---------------------------------------------------------------------------
\10\ 15 U.S.C. 78q-1.
---------------------------------------------------------------------------
It is therefore ordered, pursuant to Section 19(b)(2) of the Act,
that the proposed rule change (File No. SR-FICC-2006-10) be and hereby
is approved.\11\
---------------------------------------------------------------------------
\11\ In approving the proposed rule change, the Commission
considered efficiency, competition and capital formation. 15 U.S.C.
78c(f).
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\12\
---------------------------------------------------------------------------
\12\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-158 Filed 1-9-07; 8:45 am]
BILLING CODE 8011-01-P
