Self-Regulatory Organizations; The Depository Trust Company; Order Granting Approval of a Proposed Rule Change Relating to the Wind-Down of a Participant, 10579-10580 [E7-4056]

Download as PDF Federal Register / Vol. 72, No. 45 / Thursday, March 8, 2007 / Notices In Amendment No. 2, CBOE: (i) Amended Section 1.7 to clarify the role of CBOE, as the SRO, for the activities of CBSX LLC; (ii) amended Section 5.7 to add a reference to CBOE; (iii) amended Section 6.14 to clarify that any transfer of Series A Voting Shares would require a rule filing under Section 19 of the Exchange Act, subject to approval by the Commission; (iv) amended Section 6.15 by, among other things, revising paragraphs (c) and (d) to indicate that those paragraphs are inapplicable in the case of CBOE and its respective officers, directors, agents and employees for so long as CBSX LLC is a facility of CBOE and to clarify the application of these paragraphs in the case of the agents and employees of CBSX LLC and its Owners whose principal place of business and residence is outside of the United States; and (v) amended various sections of the Operating Agreement to refer to CBOE rather than ‘‘Regulatory Services Provider.’’ Amendment No. 2 also updated Exhibit A–1 of the Operating Agreement. Amendment No. 3 amended Section 6.15(c) to clarify the U.S. agent for service of process. The Commission believes that Amendment Nos. 2 and 3 serve to clarify and enhance the proposal and that publication of its provisions would needlessly delay the implementation of the proposal. The Commission therefore finds good cause exists to accelerate approval of Amendment Nos. 2 and 3, pursuant to Section 19(b)(2) of the Act.31 IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether Amendment Nos. 2 and 3 are consistent with the Act. Comments may be submitted by any of the following methods: sroberts on PROD1PC70 with NOTICES Electronic Comments • Use the Commission’s Internet comment form (http://www.sec.gov/ rules/sro.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File Number SR–CBOE–2006–110 on the subject line. All submissions should refer to File Number SR–CBOE–2006–110. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s Internet Web site (http://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission’s Public Reference Room. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. 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 Amendment Nos. 2 and 3 of File Number SR–CBOE– 2006–110 and should be submitted on or before March 29, 2007. V. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,32 that the proposed rule change (SR–CBOE–2006– 110), as modified by Amendment No. 1, be, and it hereby is approved and Amendment Nos. 2 and 3 are approved on an accelerated basis. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.33 Florence E. Harmon, Deputy Secretary. [FR Doc. E7–4125 Filed 3–7–07; 8:45 am] BILLING CODE 8010–01–P Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, Station Place, 100 F Street, NE., Washington, DC 20549–1090. SECURITIES AND EXCHANGE COMMISSION [Release No. 34–55365; File No. SR–DTC– 2006–07] Self-Regulatory Organizations; The Depository Trust Company; Order Granting Approval of a Proposed Rule Change Relating to the Wind-Down of a Participant February 27, 2007. I. Introduction On March 28, 2006, The Depository Trust Company (‘‘DTC’’) filed with the Securities and Exchange Commission (‘‘Commission’’) and on September 29, 2006, amended proposed rule change SR–DTC–2006–07 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 December 20, 2006.2 No comment letters were received. For the reasons discussed below, the Commission is granting approval of the proposed rule change as modified by Amendment No. 1. II. Description The proposed rule change would add a new Rule 32, Wind-Down of a Participant, to DTC’s Rules to address a situation where a participant notifies DTC that it intends to wind down its activities, and DTC determines in its discretion that it must take special action in order to protect itself and its participants.3 The proposed rule change would allow DTC to make a determination that a participant is a wind-down participant and would set forth the conditions DTC using its discretion may place on a wind-down participant and the actions DTC using its discretion may take with respect to a wind-down participant to protect itself and its participants. Such actions may include restricting or modifying the wind-down participant’s use of any or all of DTC’s services and requiring the wind-down participant to post increased participants fund deposits. DTC will retain all of its other rights set forth in its rules and participant agreements, including the right to cease to act for the wind-down participant. The rule is designed to ensure that DTC has the needed flexibility to appropriately manage the risks 1 15 U.S.C. 78s(b)(1). Exchange Act Release No. 54927 (December 13, 2006), 71 FR 76397. 3 Similar proposed rule changes have been filed by the Fixed Income Clearing Corporation [File No. SR–FICC–2006–05] and the National Securities Clearing Corporation [File No. SR–NSCC–2006–05]. 2 Securities proposed rule change, or amendment thereto, prior to the thirtieth day after the date of publication of the notice thereof, unless the Commission finds good cause for so doing. 31 15 U.S.C. 78s(b)(2). VerDate Aug<31>2005 18:53 Mar 07, 2007 Jkt 211001 32 15 33 17 PO 00000 U.S.C. 78s(b)(2). CFR 200.30–3(a)(12). Frm 00091 Fmt 4703 Sfmt 4703 10579 E:\FR\FM\08MRN1.SGM 08MRN1 10580 Federal Register / Vol. 72, No. 45 / Thursday, March 8, 2007 / Notices presented by an entity in crisis that remains a participant of DTC. This is particularly important to preserve orderly settlement in the marketplace and to minimize the risk of loss to DTC and its participants. The rule sets forth in a single rule DTC’s rights and the actions it may take in such a situation. Currently, these rights and actions are either permitted elsewhere in DTC’s rules or are permitted pursuant to DTC’s emergency authority. By placing DTC’s rights in a single rule, however, the proposed rule change should provide clarity and a clear legal basis for DTC’s rights or actions taken with respect to a wind-down participant. DTC also believes that the rule is designed to minimize the need for rule waivers. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.7 Florence E. Harmon, Deputy Secretary. [FR Doc. E7–4056 Filed 3–7–07; 8:45 am] III. Discussion Section 17A(b)(3)(F) of the Act provides that the rules of a clearing agency should be designed to safeguard securities and funds which are in the custody or control of the clearing agency or for which it is responsible.4 The sudden or unanticipated financial or operational difficulties of a participant or the termination of its trading activities may create uncertainty among industry participants about DTC’s ability to meet its settlement obligations on time and concern about the risk to the assets of the clearing agency or of its participants. The proposed rule change clarifies that DTC has discretionary power in a wind-down situation to take certain actions to assure the ongoing operations of itself and to protect the securities and funds of DTC and of its participants. By making clear in a single rule the authority DTC has under its rules to facilitate the orderly wind down of a participant’s activities, the proposed rule change is designed to assure the safeguarding of securities or funds which are in DTC’s control or for which it is responsible.5 February 27, 2007. sroberts on PROD1PC70 with NOTICES IV. Conclusion On the basis of the foregoing, the Commission finds that the proposed rule change is consistent with the requirements of the Act and in particular Section 17A of the Act and the rules and regulations thereunder.6 It is therefore ordered, pursuant to Section 19(b)(2) of the Act, that the proposed rule change (File No. SR– DTC–2006–07), as modified by Amendment No. 1, be, and hereby is approved. BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–55364; File No. SR–FICC– 2006–05] Self-Regulatory Organizations; Fixed Income Clearing Corporation; Order Granting Approval of a Proposed Rule Change Relating to the Wind-Down of a Participant I. Introduction On March 28, 2006, Fixed Income Clearing Corporation (‘‘FICC’’) filed with the Securities and Exchange Commission (‘‘Commission’’) and on September 28, 2006 and October 13, 2006, amended proposed rule change SR–FICC–2006–15 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 December 20, 2006.2 No comment letters were received. For the reasons discussed below, the Commission is granting approval of the proposed rule change as modified by Amendment Nos. 1 and 2. II. Description The rule change adds new Rule 21A, Wind-Down of a Netting Member, to the Rules of FICC’s Government Securities Division (‘‘GSD’’) and new Rule 2A, Wind-Down of a Participant, to the Rules of FICC’s Mortgage-Backed Securities Division (‘‘MBSD’’) to address a situation where a member or participant notifies FICC that it intends to wind down its activities, and FICC determines, in its discretion, that it must take special action in order to protect itself and its members and participants.3 The new rules allow FICC to determine that a participant is a winddown member or wind-down participant and sets forth the conditions FICC using its discretion may place on a wind-down member or participant and 7 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 Securities Exchange Act Release No. 54929, (December 13, 2006), 71 FR 76398. 3 Similar proposed rule changes have been filed by The Depository Trust Company [File No. SR– DTC–2006–07] and the National Securities Clearing Corporation [File No. SR–NSCC–2006–05]. 1 15 4 15 U.S.C. 78q–1(b)(3)(F). U.S.C. 78q–1(b)(3)(F). 6 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). 5 15 VerDate Aug<31>2005 18:53 Mar 07, 2007 Jkt 211001 PO 00000 Frm 00092 Fmt 4703 Sfmt 4703 the actions FICC using its discretion may take with respect to a wind-down member or participant to protect itself and its members or participants. Such actions may include restricting or modifying the wind-down member or participant’s use of any or all of FICC’s services and may include requiring the wind-down member or participant to post increased clearing fund deposits. FICC will retain all of its other rights set forth in its rules and membership and participant agreements, including the right to declare the wind-down member or participant insolvent, if applicable, and to cease to act for it. The rules are designed to ensure that FICC has the needed flexibility to appropriately manage the risks presented by an entity in crisis that remains a participant of FICC. This is particularly important to preserve orderly settlement in the marketplace and to minimize the risk of loss to FICC and its members and participants. Each rule sets forth in a single rule FICC’s rights and the actions it may take in such a situation. Currently, these rights and actions are either permitted elsewhere in FICC’s rules or are permitted pursuant to FICC’s emergency authority. By placing FICC’s rights in a single rule for each division, however, the rule change should provide clarity and a clear legal basis for FICC’s rights or actions taken with respect to a winddown member or participant. FICC also believes that the rules are designed to minimize the need for rule waivers. III. Discussion Section 17A(b)(3)(F) of the Act provides that the rules of a clearing agency should be designed to safeguard securities and funds which are in the custody or control of the clearing agency or for which it is responsible.4 The sudden or unanticipated financial or operational difficulties of a clearing member or participant or the termination of its trading activities may create uncertainty among industry participants about FICC’s ability to meet its settlement obligations on time and concern about the risk to the assets of the clearing agency or of its members or participants. The proposed rule change clarifies that FICC has discretionary power in a wind-down situation to take certain actions to assure the ongoing operations of itself and to protect the securities and funds of FICC and of its members and participants. By making clear in a single rule of each of its divisions the authority FICC has under its rules to facilitate the orderly wind down of a member or participant’s 4 15 U.S.C. 78q–1(b)(3)(F). E:\FR\FM\08MRN1.SGM 08MRN1

Agencies

[Federal Register Volume 72, Number 45 (Thursday, March 8, 2007)]
[Notices]
[Pages 10579-10580]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-4056]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55365; File No. SR-DTC-2006-07]


Self-Regulatory Organizations; The Depository Trust Company; 
Order Granting Approval of a Proposed Rule Change Relating to the Wind-
Down of a Participant

February 27, 2007.

I. Introduction

    On March 28, 2006, The Depository Trust Company (``DTC'') filed 
with the Securities and Exchange Commission (``Commission'') and on 
September 29, 2006, amended proposed rule change SR-DTC-2006-07 
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 December 20, 2006.\2\ No comment letters were received. For 
the reasons discussed below, the Commission is granting approval of the 
proposed rule change as modified by Amendment No. 1.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ Securities Exchange Act Release No. 54927 (December 13, 
2006), 71 FR 76397.
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II. Description

    The proposed rule change would add a new Rule 32, Wind-Down of a 
Participant, to DTC's Rules to address a situation where a participant 
notifies DTC that it intends to wind down its activities, and DTC 
determines in its discretion that it must take special action in order 
to protect itself and its participants.\3\
---------------------------------------------------------------------------

    \3\ Similar proposed rule changes have been filed by the Fixed 
Income Clearing Corporation [File No. SR-FICC-2006-05] and the 
National Securities Clearing Corporation [File No. SR-NSCC-2006-05].
---------------------------------------------------------------------------

    The proposed rule change would allow DTC to make a determination 
that a participant is a wind-down participant and would set forth the 
conditions DTC using its discretion may place on a wind-down 
participant and the actions DTC using its discretion may take with 
respect to a wind-down participant to protect itself and its 
participants. Such actions may include restricting or modifying the 
wind-down participant's use of any or all of DTC's services and 
requiring the wind-down participant to post increased participants fund 
deposits. DTC will retain all of its other rights set forth in its 
rules and participant agreements, including the right to cease to act 
for the wind-down participant.
    The rule is designed to ensure that DTC has the needed flexibility 
to appropriately manage the risks

[[Page 10580]]

presented by an entity in crisis that remains a participant of DTC. 
This is particularly important to preserve orderly settlement in the 
marketplace and to minimize the risk of loss to DTC and its 
participants. The rule sets forth in a single rule DTC's rights and the 
actions it may take in such a situation. Currently, these rights and 
actions are either permitted elsewhere in DTC's rules or are permitted 
pursuant to DTC's emergency authority. By placing DTC's rights in a 
single rule, however, the proposed rule change should provide clarity 
and a clear legal basis for DTC's rights or actions taken with respect 
to a wind-down participant. DTC also believes that the rule is designed 
to minimize the need for rule waivers.

III. Discussion

    Section 17A(b)(3)(F) of the Act provides that the rules of a 
clearing agency should be designed to safeguard securities and funds 
which are in the custody or control of the clearing agency or for which 
it is responsible.\4\ The sudden or unanticipated financial or 
operational difficulties of a participant or the termination of its 
trading activities may create uncertainty among industry participants 
about DTC's ability to meet its settlement obligations on time and 
concern about the risk to the assets of the clearing agency or of its 
participants. The proposed rule change clarifies that DTC has 
discretionary power in a wind-down situation to take certain actions to 
assure the ongoing operations of itself and to protect the securities 
and funds of DTC and of its participants. By making clear in a single 
rule the authority DTC has under its rules to facilitate the orderly 
wind down of a participant's activities, the proposed rule change is 
designed to assure the safeguarding of securities or funds which are in 
DTC's control or for which it is responsible.\5\
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    \4\ 15 U.S.C. 78q-1(b)(3)(F).
    \5\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------

IV. Conclusion

    On the basis of the foregoing, the Commission finds that the 
proposed rule change is consistent with the requirements of the Act and 
in particular Section 17A of the Act and the rules and regulations 
thereunder.\6\
---------------------------------------------------------------------------

    \6\ 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).
---------------------------------------------------------------------------

    It is therefore ordered, pursuant to Section 19(b)(2) of the Act, 
that the proposed rule change (File No. SR-DTC-2006-07), as modified by 
Amendment No. 1, be, and hereby is approved.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-4056 Filed 3-7-07; 8:45 am]
BILLING CODE 8010-01-P