Amendment to Rule Filing Requirements for Dually-Registered Clearing Agencies, 41056-41063 [2011-17524]

Download as PDF 41056 Federal Register / Vol. 76, No. 134 / Wednesday, July 13, 2011 / Rules and Regulations hereby amends Chapter 1 of Title 17 of the Code of Federal Regulations as follows: PART 1—GENERAL REGULATIONS UNDER THE COMMODITY EXCHANGE ACT 1. The authority citation for Part 1 is revised to read as follows: ■ Appendix 1—Commission Voting Summary On this matter, Chairman Gensler and Commissioners Dunn, Sommers, O’Malia and Chilton voted in the affirmative; no Commissioner voted in the negative Appendix 2—Statement of Chairman Gary Gensler Authority: 7 U.S.C. 1a, 2, 5, 6, 6a–6p, 7, 7a, 7b, 7b–3, 8, 9, 12, 12a, 12c, 13a, 13a–1, 16, 16a, 19, 21, 23 and 24, unless otherwise noted. 2. Section 1.3 is amended by adding paragraph (zz) to read as follows: I support the final rulemaking that defines the term, ‘‘agricultural commodity.’’ The Dodd-Frank Act requires that agricultural commodities be defined. In a separate rulemaking, the Commission will determine the requirements that apply to swaps on agricultural commodities. [FR Doc. 2011–17626 Filed 7–12–11; 8:45 am] ■ BILLING CODE P § 1.3 Definitions. * * * * * (zz) Agricultural commodity. This term means: (1) The following commodities specifically enumerated in the definition of a ‘‘commodity’’ found in section 1a of the Act: Wheat, cotton, rice, corn, oats, barley, rye, flaxseed, grain sorghums, mill feeds, butter, eggs, Solanum tuberosum (Irish potatoes), wool, wool tops, fats and oils (including lard, tallow, cottonseed oil, peanut oil, soybean oil and all other fats and oils), cottonseed meal, cottonseed, peanuts, soybeans, soybean meal, livestock, livestock products, and frozen concentrated orange juice, but not onions; (2) All other commodities that are, or once were, or are derived from, living organisms, including plant, animal and aquatic life, which are generally fungible, within their respective classes, and are used primarily for human food, shelter, animal feed or natural fiber; (3) Tobacco, products of horticulture, and such other commodities used or consumed by animals or humans as the Commission may by rule, regulation or order designate after notice and opportunity for hearing; and (4) Commodity-based indexes based wholly or principally on underlying agricultural commodities. * * * * * mstockstill on DSK4VPTVN1PROD with RULES Issued in Washington, DC, on July 7, 2011, by the Commission. David A. Stawick, Secretary of the Commission. Appendices to Agricultural Commodity Definition—Commission Voting Summary and Statements of Commissioners Note: The following appendices will not appear in the Code of Federal Regulations VerDate Mar<15>2010 16:32 Jul 12, 2011 Jkt 223001 SECURITIES AND EXCHANGE COMMISSION 17 CFR Parts 240 and 249 [Release No. 34–64832; File No. S7–29–11] RIN 3235–AL18 Amendment to Rule Filing Requirements for Dually-Registered Clearing Agencies Securities and Exchange Commission. ACTION: Interim final rule; request for comment. AGENCY: The Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) is adopting an interim final rule to amend Rule 19b–4 under the Securities Exchange Act of 1934 (‘‘Exchange Act’’). The amendment expands the list of categories that qualify for summary effectiveness under Section 19(b)(3)(A) of the Exchange Act to include any matter effecting a change in an existing service of a clearing agency registered with the Commission (‘‘Registered Clearing Agency’’) that both primarily affects the futures clearing operations of the clearing agency with respect to futures that are not security futures and does not significantly affect any securities clearing operations of the clearing agency or any related rights or obligations of the clearing agency or persons using such service. The Commission also is making a corresponding technical modification to the General Instructions for Form 19b– 4 under the Exchange Act. The amendments to Rule 19b–4 and Form 19b–4 are intended to streamline the rule filing process in areas involving certain activities concerning nonsecurity products that may be subject to overlapping regulation as a result of, in part, certain provisions under Section 763(b) of the Dodd-Frank Wall Street SUMMARY: PO 00000 Frm 00016 Fmt 4700 Sfmt 4700 Reform and Consumer Protection Act of 2010 (‘‘Dodd-Frank Act’’) that would deem some clearing agencies to be registered with the Commission as of July 16, 2011. DATES: Effective Date: July 15, 2011. Comment Date: Comments on the interim final rule should be submitted on or before September 15, 2011. ADDRESSES: Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s Internet comment form (http://www.sec.gov/ rules/proposed.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File Number S7–29–11 on the subject line; or • Use the Federal eRulemaking Portal (http://www.regulations.gov). Follow the instructions for submitting comments. Paper Comments • Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F St., NE., Washington, DC 20549– 1090. All submissions should refer to File Number S7–29–11. This file number should be included on the subject line if e-mail is used. To help us 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/ proposed.shtml). Comments are also available for Web site viewing and printing in the Commission’s Public Reference Room, 100 F St., NE., Washington, DC 20549 on official business days between the hours of 10 a.m. and 3 p.m. 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. FOR FURTHER INFORMATION CONTACT: Jeffrey S. Mooney, Assistant Director; Joseph P. Kamnik, Senior Special Counsel; and Andrew R. Bernstein, Attorney-Adviser, Office of Clearance and Settlement, Division of Trading and Markets, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549–7010 at (202) 551–5710. SUPPLEMENTARY INFORMATION: The Commission is adopting an amendment to Rule 19b–4 under the Exchange Act as an interim final rule to expand the list of categories that qualify for E:\FR\FM\13JYR1.SGM 13JYR1 Federal Register / Vol. 76, No. 134 / Wednesday, July 13, 2011 / Rules and Regulations summary effectiveness under Section 19(b)(3)(A) of the Exchange Act. The Commission also is making a corresponding technical modification to the General Instructions for Form 19b– 4 under the Exchange Act. We will carefully consider the comments that we receive and intend to respond as necessary or appropriate. I. Introduction A. Background on Commission Process for Proposed Rule Changes Section 19(b)(1) of the Exchange Act 1 requires each self-regulatory organization (‘‘SRO’’), including any Registered Clearing Agency,2 to file with the Commission copies of any proposed rule or any proposed change in, addition to, or deletion from the rules of such SRO (collectively, ‘‘Proposed Rule Change’’),3 which must be submitted on Form 19b–4 4 in accordance with the General Instructions thereto. Once a Proposed Rule Change has been filed, the Commission is required to publish it in the Federal Register to provide an opportunity for public comment.5 A Proposed Rule Change generally may not take effect unless the Commission approves it,6 or it is otherwise permitted 1 15 U.S.C. 78s(b)(1). Section 3(a)(26) of the Exchange Act, 15 U.S.C. 78c(a)(26) (defining the term ‘‘self-regulatory organization’’ to mean any national securities exchange, registered securities association, registered clearing agency, and, for purposes of Section 19(b) and other limited purposes, the Municipal Securities Rulemaking Board) (emphasis added). 3 15 U.S.C. 78s(b)(1). Section 3(a)(27) of the Exchange Act defines ‘‘rules’’ to include ‘‘the constitution, articles of incorporation, bylaws, and rules, or instruments corresponding to the foregoing * * * and such of the stated policies, practices, and interpretations of such exchange, association, or clearing agency as the Commission, by rule, may determine to be necessary or appropriate in the public interest or for the protection of investors to be deemed to be rules of such exchange, association, or clearing agency.’’ 15 U.S.C. 78c(a)(27). Rule 19b–4(b) under the Exchange Act defines ‘‘stated policy, practice, or interpretation’’ to mean, in part, ‘‘[a]ny material aspect of the operation of the facilities of the self-regulatory organization’’ or ‘‘[a]ny statement made generally available’’ that ‘‘establishes or changes any standard, limit, or guideline’’ with respect to the ‘‘rights, obligations, or privileges’’ of persons or the ‘‘meaning, administration, or enforcement of an existing rule.’’ 17 CFR 240.19b–4(b). 4 See 17 CFR 249.819. 5 See 15 U.S.C. 78s(b)(1). The SRO is required to prepare the notice of its Proposed Rule Change on Exhibit 1 of Form 19b–4 that the Commission then publishes in the Federal Register. 6 See 15 U.S.C. 78s(b)(2). However, as provided in Section 19(b)(2)(D) of the Exchange Act, 15 U.S.C. 78s(b)(2)(D), a Proposed Rule Change may be ‘‘deemed to have been approved by the Commission’’ if the Commission fails to take action on a proposal that is subject to Commission approval within the statutory time frames specified in Section 19(b)(2). mstockstill on DSK4VPTVN1PROD with RULES 2 See VerDate Mar<15>2010 16:32 Jul 12, 2011 Jkt 223001 to become effective under Section 19(b).7 Section 19(b)(2) of the Exchange Act sets forth the standards and time periods for Commission action either to approve, disapprove or institute proceedings to determine whether the Proposed Rule Change should be disapproved.8 The Commission must approve a Proposed Rule Change if it finds that the underlying rule change is consistent with the requirements of the Exchange Act and the rules and regulations thereunder applicable to the SRO proposing the rule change.9 The SRO rule filing process for Registered Clearing Agencies serves two important policy goals. First, the notice and comment requirement helps assure that interested persons have an opportunity to provide input on proposed actions by Registered Clearing Agencies that could have a significant impact on the market, market participants (both professionals and individual investors) and others.10 Second, the rule filing process allows the Commission to review Registered Clearing Agencies’ Proposed Rule Changes to determine whether they are consistent with the Exchange Act, including the goals of prompt and accurate clearance and settlement of securities transactions and the safeguarding of investors’ securities and funds.11 At the same time, Section 19(b)(3)(A) of the Exchange Act provides that a Proposed Rule Change may become effective upon filing with the Commission, without notice and opportunity for hearing, if it is appropriately designated by the SRO as: (i) Constituting a stated policy, practice or interpretation with respect to the meaning, administration, or enforcement of an existing rule of the SRO; (ii) establishing or changing a due, fee, or other charge imposed by the SRO (on any person, whether or not the person is a member of the SRO) or (iii) concerned solely with the administration of the SRO.12 The Commission has the power summarily to temporarily suspend the change in rules of the SRO within sixty days of its e.g., 15 U.S.C. 78s(b)(3)(A). 15 U.S.C. 78s(b)(2). 9 15 U.S.C. 78s(b)(2). 10 See Securities Exchange Act Release No. 49505 (Mar. 30, 2004), 69 FR 17864 (Apr. 4, 2004) (Proposed Rules Regarding Proposed Rule Changes of Self-Regulatory Organizations) (noting that SROs ‘‘exercise certain quasi-governmental powers over members through their ability to impose disciplinary sanctions, deny membership, and require members to cease doing business entirely or in specified ways.’’). 11 See 15 U.S.C. 78q–1(a)(1). 12 15 U.S.C. 78s(b)(3)(A). PO 00000 7 See, 8 See Frm 00017 Fmt 4700 Sfmt 4700 41057 filing if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Exchange Act.13 If the Commission takes such action, it is then required to institute proceedings to determine whether the Proposed Rule Change should be approved or disapproved.14 In addition to the matters expressly set forth in the statute, Section 19(b)(3)(A) also provides the Commission with the authority, by rule and consistent with the public interest, to designate other types of Proposed Rule Changes that may be effective upon filing with the Commission.15 The Commission has previously utilized this authority to designate, under Rule 19b– 4 of the Exchange Act, certain rule changes that qualify for summary effectiveness under Section 19(b)(3)(A).16 B. Clearing Agencies Deemed Registered Under the Dodd-Frank Act Section 763(b) of the Dodd-Frank Act 17 provides that (i) A depository institution registered with the Commodity Futures Trading 13 15 U.S.C. 78s(b)(3)(C). Temporary suspension of a Proposed Rule Change and any subsequent action to approve or disapprove such change shall not affect the validity or force of the rule change during the period it was in effect and shall not be reviewable under Section 25 of the Exchange Act, nor shall it be deemed to be ‘‘final agency action’’ for purposes of 5 U.S.C. 704. 15 15 U.S.C. 78s(b)(3)(A). 16 For example, Rule 19b–4(f) under the Exchange Act currently permits SROs to declare rule changes to be immediately effective pursuant to Section 19(b)(3)(A) if properly designated by the SRO as: (i) Effecting a change in an existing service of a Registered Clearing Agency that: (A) Does not adversely affect the safeguarding of securities or funds in the custody or control of the clearing agency or for which it is responsible; and (B) does not significantly affect the respective rights or obligations of the clearing agency or persons using the service; (ii) effecting a change in an existing order-entry or trading system of a SRO that: (A) Does not significantly affect the protection of investors or the public interest; (B) does not impose any significant burden on competition; and (C) does not have the effect of limiting the access to or availability of the system or (iii) effecting a change that: (A) Does not significantly affect the protection of investors or the public interest; (B) does not impose any significant burden on competition and (C) by its terms, does not become operative for 30 days after the date of the filing, or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest; provided that the SRO has given the Commission written notice of its intent to file the Proposed Rule Change, along with a brief description and text of the Proposed Rule Change, at least five business days prior to the date of filing of the Proposed Rule Change, or such shorter time as designated by the Commission. See 17 CFR 240.19b–4(f). 17 The Dodd-Frank Wall Street Reform and Consumer Protection Act, Public Law 111–203, 124 Stat. 1376 (2010). 14 Id. E:\FR\FM\13JYR1.SGM 13JYR1 41058 Federal Register / Vol. 76, No. 134 / Wednesday, July 13, 2011 / Rules and Regulations Commission (‘‘CFTC’’) that cleared swaps as a multilateral clearing organization prior to the date of enactment of the Dodd-Frank Act and (ii) a derivatives clearing organization (‘‘DCO’’) registered with the CFTC that cleared swaps pursuant to an exemption from registration as a clearing agency prior to the date of enactment of the Dodd-Frank Act will be deemed registered with the Commission as a clearing agency solely for the purpose of clearing security-based swaps (‘‘Deemed Registered Provision’’).18 The Deemed Registered Provision, along with other general provisions under Title VII of the Dodd-Frank Act, becomes effective on July 16, 2011.19 Once a clearing agency is deemed to be a Registered Clearing Agency, it will be required to comply with all requirements of the Exchange Act, and the rules and regulations thereunder, applicable to Registered Clearing Agencies to the extent it clears security-based swaps after the effective date of the Deemed Registered Provision, including, for example, the obligation to file Proposed Rule Changes under Section 19(b) of the Exchange Act.20 Clearing of futures and options on futures is generally regulated by the CFTC in connection with its oversight and supervision of DCOs. DCOs are generally permitted to implement rule changes by self-certifying that the new rule complies with the Commodity Exchange Act (‘‘CEA’’) and the CFTC’s regulations.21 The change effected by this interim final rule is intended to eliminate any burdens resulting from delays that could arise due to the differences between the Commission’s rule filing process and the CFTC’s selfcertification process, which generally allows rule changes to become effective mstockstill on DSK4VPTVN1PROD with RULES 18 See Section 763(b) of the Dodd-Frank Act (adding new Section 17A(l) to the Exchange Act, 15 U.S.C. 78q–1(1)). Under this Deemed Registered Provision, each of the Chicago Mercantile Exchange Inc. (‘‘CME’’), ICE Clear Europe Limited (‘‘ICE Clear Europe’’) and ICE Trust US LLC, or a successor entity of ICE Trust (‘‘ICE Trust’’) will become Registered Clearing Agencies solely for the purpose of clearing security-based swaps. 19 Section 774 of the Dodd-Frank Act states, ‘‘[u]nless otherwise provided, the provisions of this subtitle shall take effect on the later of 360 days after the date of the enactment of this subtitle or, to the extent a provision of this subtitle requires a rulemaking, not less than 60 days after publication of the final rule or regulation implementing such provision of this subtitle.’’ 20 The Commission anticipates that as of July 16, 2011, OCC (formerly known as The Options Clearing Corporation), CME and ICE Clear Europe will be the only Registered Clearing Agencies that will be subject to new Rule 19b–4(f)(4)(ii). Although it also will be a dually-registered clearing agency, ICE Trust does not have an existing futures clearing business for which it would file Proposed Rule Changes. 21 See 7 U.S.C. 7a–2(c) and 17 CFR 40.6. VerDate Mar<15>2010 16:32 Jul 12, 2011 Jkt 223001 immediately upon or shortly after filing.22 The Commission has limited time to act without exposing certain dually registered clearing agencies to potential legal uncertainty and market disruption caused by delays that could result from the requirement that the Commission undertake a full review of Proposed Rule Changes related to a Registered Clearing Agency’s futures clearing operations before these Proposed Rule Changes may be made effective. Specifically, and as discussed in greater detail in Section IV, the Commission only recently received urgent requests for the relief to be provided by the interim final rule. Accordingly, and in the interest of adopting the changes to Rule 19b–4 and the General Instructions for Form 19b–4 prior to effective date of the Deemed Registered Provision of the Dodd-Frank Act on July 16, 2011, the Commission finds that it has good cause to adopt the interim final rule immediately and without the notice and public comment procedures that would ordinarily apply to this type of rulemaking. II. Interim Final Rule A. Amendment to Rule 19b–4 The Commission is amending Rule 19b–4 to expand the list of categories that qualify for summary effectiveness under Section 19(b)(3)(A) of the Exchange Act to include Proposed Rule Changes made by Registered Clearing Agencies with respect to certain futures clearing operations.23 Specifically, new Rule 19b–4(f)(4)(ii) will allow a Proposed Rule Change concerning futures clearing operations filed by a Registered Clearing Agency to take effect upon filing with the Commission pursuant to Section 19(b)(3)(A) so long as it is properly designated by the Registered Clearing Agency as effecting a change in a service of the Registered 7 U.S.C. 7a–2(c) and 17 CFR 40.6. an SRO submits a Proposed Rule Change to the Commission pursuant to Section 19(b)(3)(A) of the Exchange Act, the Commission still reviews the filing and has the power summarily to temporarily suspend the change in rules of the SRO within sixty days of its filing if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Exchange Act. If the Commission takes such action, it is then required to institute proceedings to determine whether the Proposed Rule Change should be approved or disapproved. Temporary suspension of a Proposed Rule Change and any subsequent action to approve or disapprove such change shall not affect the validity or force of the rule change during the period it was in effect and shall not be reviewable under Section 25 of the Exchange Act, nor shall it be deemed to be ‘‘final agency action’’ for purposes of 5 U.S.C. 704. See 15 U.S.C. 78s(b)(3)(A). PO 00000 22 See 23 When Frm 00018 Fmt 4700 Sfmt 4700 Clearing Agency that meets two conditions.24 The first condition, contained in new Rule 19b– 4(f)(4)(ii)(A), is that the Proposed Rule Change primarily affects the futures clearing operations of the clearing agency with respect to futures that are not security futures.25 For purposes of this requirement, a Registered Clearing Agency’s ‘‘futures clearing operations’’ would generally include any activity that would require the Registered Clearing Agency to register with the CFTC as a DCO in accordance with the CEA.26 In addition, to ‘‘primarily affect’’ such futures clearing operations would mean that the Proposed Rule Change is targeted to affect matters related to the clearing of futures specifically and that any effect on other clearing operations would be incidental in nature and not significant in extent.27 However, because a security futures product is a security for purposes of the Exchange Act,28 a Registered Clearing Agency will not be permitted to file Proposed Rule Changes related to its security futures business pursuant to Section 19(b)(3)(A) of the Exchange Act in reliance on new Rule 19b–4(f)(ii). Instead, such clearing agency will continue to be required to file Proposed Rule Changes with the Commission related to its respective security futures operations in accordance with Section 19(b)(1) of the Exchange Act, which the Commission will review in accordance with Section 19(b)(2), unless there is another basis for the Proposed Rule Change to be filed under Section 19(b)(3)(A). The second condition, contained in new Rule 19b–4(f)(4)(ii)(B), is that the Proposed Rule Change does not significantly affect any securities clearing operations of the clearing 24 17 CFR 240.19b–4(f)(4)(ii) (as amended by this interim final rule). 25 17 CFR 240.19b–4(f)(4)(ii)(A) (as amended by this interim final rule). 26 See 7 U.S.C. 7a–1 (providing that it shall be unlawful for a DCO, unless registered with the CFTC, directly or indirectly to make use of the mails or any means or instrumentality of interstate commerce to perform the functions of a DCO (as described in 7 U.S.C. 1a(9)) with respect to a contract of sale of a commodity for future delivery (or option on such a contract) or option on a commodity, in each case unless the contract or option is (i) Otherwise excluded from registration in accordance with certain sections of the CEA or (ii) a security futures product cleared by a Registered Clearing Agency). 27 For example, rules of general applicability that would apply equally to securities clearing operations, including security-based swaps, would not be considered to primarily affect such futures clearing operations. In addition, changes to general provisions in the constitution, articles, or bylaws of the Registered Clearing Agency that address the operations of entire clearing agency would not be considered to primarily affect such futures clearing operations. 28 15 U.S.C. 78c(a)(10). E:\FR\FM\13JYR1.SGM 13JYR1 Federal Register / Vol. 76, No. 134 / Wednesday, July 13, 2011 / Rules and Regulations mstockstill on DSK4VPTVN1PROD with RULES agency or any related rights or obligations of the clearing agency or persons using such service.29 The Commission notes that the phrase ‘‘significantly affect’’ currently is used elsewhere in Rule 19b–4 in the context of defining other categories of Proposed Rule Changes that qualify for summary effectiveness under Section 19(b)(3)(A) of the Exchange Act.30 Accordingly, ‘‘significantly affect’’ has the same meaning and interpretation as that phrase has in Rules 19b–4(f)(4)(i) (as amended by this interim final rule), 19b–4(f)(5) and 19b–4(f)(6). Also for purposes of this requirement, a Registered Clearing Agency’s ‘‘securities clearing operations * * * or any related rights or obligations of the clearing agency or persons using such service’’ would generally include any activity that would require the Registered Clearing Agency to register as a clearing agency in accordance with the Exchange Act. The Commission believes that permitting clearing agencies to submit Proposed Rule Changes that meet the two conditions referenced above (i.e., (A) Primarily affects the futures clearing operations of the clearing agency with respect to futures that are not security futures and (B) does not significantly affect any securities clearing operations of the clearing agency or any related rights or obligations of the clearing agency or persons using such service) for immediate effectiveness pursuant to Section 19(b)(3)(A) of the Exchange Act is consistent with the public interest and the purposes of the Exchange Act. 29 17 CFR 240.19b–4(f)(4)(ii)(A) (as amended by this interim final rule). 30 See e.g., 17 CFR 240.19b–4(f)(4)(i) (as amended by this interim final rule) (in respect of a Proposed Rule Change in an existing service of a Registered Clearing Agency that: (1) Does not adversely affect the safeguarding of securities or funds in the custody or control of the clearing agency or for which it is responsible and (2) does not significantly affect the respective rights or obligations of the clearing agency or persons using the service); 17 CFR 240.19b–4(f)(5) (in respect of a Proposed Rule Change in an existing order-entry or trading system of a SRO that: (1) Does not significantly affect the protection of investors or the public interest; (2) does not impose any significant burden on competition; and (3) does not have the effect of limiting the access to or availability of the system); and 17 CFR 240.19b–4(f)(6) (in respect of a Proposed Rule Change that (1) Does not significantly affect the protection of investors or the public interest; (2) does not impose any significant burden on competition; and (3) by its terms, does not become operative for 30 days after the date of the filing, or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest; provided that the SRO has given the Commission written notice of its intent to file the Proposed Rule Change, along with a brief description and text of the Proposed Rule Change, at least five business days prior to the date of filing of the Proposed Rule Change, or such shorter time as designated by the Commission). VerDate Mar<15>2010 16:32 Jul 12, 2011 Jkt 223001 In particular, this approach should help limit the potential for delays by providing a streamlined process for allowing rule changes to become effective that primarily concern the futures clearing operations of a clearing agency which, unless such operations were linked to securities clearing operations, would not be subject to regulation by the Commission. In addition, the information provided to the Commission by the Registered Clearing Agency in a filing made pursuant to Section 19(b)(1) of the Exchange Act is virtually identical to the information required to be included in a filing made pursuant to Section 19(b)(3)(A). At the same time, the Commission would retain the power summarily to temporarily suspend the change in rules of the Registered Clearing Agency within sixty days of its filing if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Exchange Act.31 Finally, and as discussed more fully in Section IV of this release, changes to a clearing agency’s futures clearing operations will continue to be subject to the CFTC’s normal process for reviewing rule changes. B. Amendment to the General Instructions for Form 19b–4 In order to accommodate the amendment to Rule 19b–4 being adopted today, the Commission also is making a corresponding technical modification to the General Instructions for Form 19b–4 under the Exchange Act. Specifically, the Commission is amending Item 7(b) of the General Instructions for Form 19b–4 (Information to be Included in the Completed Form), which requires the respondent SRO to cite to the statutory basis for filing a Proposed Rule Change pursuant to Section 19(b)(3)(A) in accordance with the existing provisions of Rule 19b–4(f). This amendment would revise Item 7(b)(iv) to include the option to file the form in accordance with new Rule 19b–4(f)(4)(ii), which provides for situations where a Registered Clearing Agency is effecting a change in an existing service that both (i) Primarily affects the futures clearing operations of the clearing agency with respect to futures that are not security futures and (ii) does not significantly affect any securities clearing operations 31 15 U.S.C. 78s(b)(3)(C). If the Commission takes such action, it is then required to institute proceedings to determine whether the Proposed Rule Change should be approved or disapproved. PO 00000 Frm 00019 Fmt 4700 Sfmt 4700 41059 of the clearing agency or any related rights or obligations of the clearing agency or persons using such service. C. Effective Date The amendments to Rule 19b–4 and to the General Instructions for Form 19b–4 will be effective as of July 15, 2011. III. Request for Comment We are requesting comments from all members of the public. We will carefully consider the comments that we receive. We seek comment generally on all aspects of the interim final rule. In addition, we seek comment on the following: 1. Do the amendments contemplated by this interim final rule adequately address concerns regarding the application of the Commission’s process for reviewing Proposed Rule Changes once the Deemed Registered Provision becomes effective? 2. Given that the objectives and statutory authority of the CFTC differ from the Commission’s, does the degree to which the interim final rule uses a process that is similar to the CFTC’s process for reviewing rule changes by a Registered Clearing Agency that primarily affect its futures clearing operations and do not significantly affect its securities clearing operations provide for sufficient protection for investors and the securities markets? Why or why not? 3. Are there other amendments the Commission should consider making to Rule 19b–4, such as further expanding the list of categories that qualify for summary effectiveness under Section 19(b)(3)(A) of the Exchange Act? If so, please describe any amendments the Commission should consider and reasons why. 4. Should any additional restrictions be placed on the ability of a Registered Clearing Agency to file Proposed Rule Changes under Exchange Act Section 19(b)(3)(A)? IV. Other Matters The Administrative Procedure Act (‘‘APA’’) 32 generally requires an agency to publish, before adopting a rule, notice of a proposed rulemaking in the Federal Register.33 This requirement does not apply, however, if the agency ‘‘for good cause finds * * * that notice and public procedure are impracticable, unnecessary, or contrary to the public interest.’’ 34 Further, the APA also generally requires that an agency 32 5 U.S.C. 551 et seq. 5 U.S.C. 553(b). 34 Id. 33 See E:\FR\FM\13JYR1.SGM 13JYR1 41060 Federal Register / Vol. 76, No. 134 / Wednesday, July 13, 2011 / Rules and Regulations publish a rule in the Federal Register 30 days before the rule becomes effective.35 This requirement, however, does not apply if the agency finds good cause for making the rule effective sooner.36 The Commission finds that it has good cause to have these rules take effect on July 15, 2011, on an interim final basis and that notice and solicitation of comment before the effective date of the proposed amendments to Rule 19b–4 and to the General Instructions for Form 19b–4 is impracticable, unnecessary, or contrary to the public interest. Specifically, Section 763(b) of the Dodd-Frank Act provides that both (i) A depository institution registered with the CFTC that cleared swaps as a multilateral clearing organization prior to the date of enactment of the DoddFrank Act and (ii) a DCO registered with the CFTC that cleared swaps pursuant to an exemption from registration as a clearing agency prior to the date of enactment of the Dodd-Frank Act will be deemed registered with the Commission as a clearing agency solely for the purpose of clearing securitybased swaps.37 The Deemed Registered Provision, along with other general provisions under Title VII of the DoddFrank Act, becomes effective on July 16, 2011.38 The Commission recognizes that the differences between the Commission’s rule filing process for Registered Clearing Agencies and the CFTC’s process for reviewing rule changes by DCOs could result in additional burdens on certain clearing agencies subject to the Deemed Registered Provision, which are discussed in greater detail below.39 Specifically, DCOs are generally permitted to implement new rules or rule amendments by filing with the CFTC a certification that the new rule or rule amendment complies with the CEA and the CFTC’s regulations.40 35 See 5 U.S.C. 553(d). mstockstill on DSK4VPTVN1PROD with RULES 36 Id. 37 See Section 763(b) of the Dodd-Frank Act (adding new Section 17A(l) to the Exchange Act, 15 U.S.C. 78q–1(1)). 38 Section 774 of the Dodd-Frank Act states, ‘‘[u]nless otherwise provided, the provisions of this subtitle shall take effect on the later of 360 days after the date of the enactment of this subtitle or, to the extent a provision of this subtitle requires a rulemaking, not less than 60 days after publication of the final rule or regulation implementing such provision of this subtitle.’’ 39 The CFTC’s requirements and procedures for self-certification filings and approval requests for new and amended rules and the clearing of new products are set forth in 17 CFR 40.6, 17 CFR 40.5 and 17 CFR 40.2. 40 See 7 U.S.C. 7a–2(c). Unless designated by the DCO as an emergency rule certification, rule changes submitted to the CFTC pursuant to the selfcertification process may take effect immediately so VerDate Mar<15>2010 16:32 Jul 12, 2011 Jkt 223001 Alternatively, DCOs may request direct CFTC approval of a rule or amendment thereunder after it has been filed with the CFTC pursuant either to its selfcertification process or as a request for direct approval of a rule or amendment.41 Because of the differences between the CFTC’s process and the Commission’s rules for reviewing Proposed Rule Changes, a rule or rule amendment proposed by a dually-registered clearing agency related exclusively to its futures clearing operations could be delayed by the Commission’s rule filing process despite being permitted to become effective by the CFTC immediately upon or shortly after filing.42 This interim final rule takes effect on July 15, 2011. For several reasons, including those discussed above, we have acted on an interim final basis. Specifically, affected clearing agencies requested action with respect to Registered Clearing Agencies’ obligations under Section 19(b) of the Exchange Act only shortly before the effective date of the Deemed Registered Provision. Based on discussions with these affected clearing agencies, the Commission understands that market participants believe that the Commission needs to provide relief prior to the effective date of the Deemed Registered Provision of the Dodd-Frank Act on July 16, 2011 in order to avoid operational problems, legal uncertainty and market disruptions. Specifically, one clearing agency subject to the Deemed Registered long as the CFTC receives the submission by the open of business on the business day preceding implementation of the rule. See 17 CFR 40.6. However, Section 745 of the Dodd-Frank Act amended Section 5c(c) of the CEA to include a new 10-day certification review period for all rules and rule amendments submitted to the CFTC and to permit the CFTC to stay the certification of rules or rule amendments that, among other things, present novel or complex issues that require additional time to analyze. Pursuant to Section 754 of the DoddFrank Act, this change to the timing of the selfcertification process takes effect on the later of 360 days after the date of the enactment of the statute or not less than 60 days after publication of the final rule or regulation implementing such provision. 41 See 7 U.S.C. 7a–2(c) and 17 CFR 40.5. 42 During 2010, CME self-certified 11 rule changes with the CFTC related to its activities as a DCO. ICE Clear Europe, which became a registered DCO on January 22, 2010, did not self-certify any rule changes during 2010, but has self-certified 11 rule changes with the CFTC since January 1, 2011. Currently, OCC, which is registered with the Commission as a clearing agency with respect to its clearing services for options and security futures listed and traded on its participant exchanges, also is registered with the CFTC as a DCO with respect to its clearing services for transactions in futures and options on futures. During 2010, OCC filed 19 Proposed Rule Changes with the Commission and 19 rule changes with the CFTC, of which 15 were resolved through the CFTC’s self-certification process and four were resolved or are pending pursuant to the CFTC’s direct approval process. PO 00000 Frm 00020 Fmt 4700 Sfmt 4700 Provision contacted staff in late April 2011 to alert the Commission that it had determined that, absent the approach set out in the interim final rule we are adopting today, the clearing agency would encounter a number of negative consequences.43 For example, delays resulting from the requirement that the Commission undertake a full review of Proposed Rule Changes related to a Registered Clearing Agency’s futures clearing operations before these Proposed Rule Changes may be made effective could impair a clearing agency’s ability to bring beneficial enhancements or other changes into the futures markets, such as those related to improving the operational efficiency of its futures clearing business. These delays could also lead to legal uncertainty regarding the status of Proposed Rule Changes after they have been self-certified with the CFTC but prior to the date on which the Commission makes a final determination in accordance with Section 19(b) of the Exchange Act. As a result, both the clearing agency and market participants could potentially be required to develop contingency plans with alternative approaches related to the clearing of futures which would likely result in substantial operational burdens and increased costs. As a result, the clearing agency requested that the Commission provide relief on the basis that subjecting Proposed Rule Changes that relate primarily to its futures clearing operations to the routine Commission approval process would needlessly delay effectiveness of these Proposed Rule Changes and could affect the clearing agency’s operations as well as ability to provide enhancements that promote efficiencies with respect to its futures related activities. In May 2011, another clearing agency contacted the Commission to convey the need for urgent rulemaking by the Commission to address these same issues. Notwithstanding the limited amount of time before the Deemed Registered Provision becomes effective, and therefore the limited time the Commission has to act, these clearing agencies expressed their strong view that the Commission should provide relief immediately in order to prevent the above-described potential operational problems, legal uncertainty 43 The Commission’s staff discussed with this clearing agency in late February 2011, among other things, the regulatory requirements for Registered Clearing Agencies under the Exchange Act in light of the Deemed Registered Provision including with respect to Proposed Rule Changes. Subsequently, in late April 2011, that clearing agency articulated an urgent need for relief prior to the effectiveness of the Deemed Registered Provision. E:\FR\FM\13JYR1.SGM 13JYR1 Federal Register / Vol. 76, No. 134 / Wednesday, July 13, 2011 / Rules and Regulations and market disruptions from manifesting into actual issues for Registered Clearing Agencies once the Deemed Registered Provision becomes effective on July 16, 2011. In light of the concerns raised by these clearing agencies, the Commission believes that adopting an interim final rule to immediately amend Rule 19b–4 in the manner as set forth above would benefit the public interest by eliminating any undue delays and operational inefficiencies that could result from the requirement that the Commission review changes to rules primarily concerning futures clearing operations before they become effective. This could potentially benefit market participants (including investors) by, among other things, preventing delays to beneficial enhancements within the futures markets. Accordingly, the Commission finds that there is good cause to have the rule effective as an interim final rule on July 15, 2011, and that notice and public procedure in advance of effectiveness of the interim final rule are impracticable, unnecessary and contrary to the public interest.44 The Commission is requesting comments on the interim final rule and will carefully consider any comments received and respond to them as necessary or appropriate. mstockstill on DSK4VPTVN1PROD with RULES V. Paperwork Reduction Act The Commission does not believe that the amendments to Rule 19b–4 and to the General Instructions for Form 19b– 4 adopted pursuant to the interim final rule contain any ‘‘collection of information’’ requirements as defined by the Paperwork Reduction Act of 1995, as amended (‘‘PRA’’).45 The interim final rule amends Rule 19b–4 under the Exchange Act to expand the list of categories that qualify for summary effectiveness under Section 19(b)(3)(A) of the Exchange Act to include any matter effecting a change in an existing service of a Registered Clearing Agency that both primarily affects the futures clearing operations of the clearing agency with respect to futures that are not security futures and does not significantly affect any securities clearing operations of the clearing agency or any related rights or obligations of the clearing agency or persons using such service. The interim 44 This finding also satisfies the requirements of 5 U.S.C. 808(2), allowing the rules to become effective notwithstanding the requirement of 5 U.S.C. 801 (if a federal agency finds that notice and public comment are ‘‘impractical, unnecessary or contrary to the public interest,’’ a rule ‘‘shall take effect at such time as the federal agency promulgating the rule determines.’’) 45 44 U.S.C. 3501, et seq. VerDate Mar<15>2010 16:32 Jul 12, 2011 Jkt 223001 final rule also makes a corresponding technical modification to the General Instructions for Form 19b–4 under the Exchange Act. The Commission does not believe that these amendments would require any new or additional collection of information, as such term is defined in the PRA.46 VI. Cost-Benefit Analysis As noted above, the Deemed Registered Provision, along with other general provisions under Title VII of the Dodd-Frank Act, becomes effective on July 16, 2011. At such time, the Commission expects that there will be three Registered Clearing Agencies that maintain a futures clearing business regulated by the CFTC.47Accordingly, these entities will be required to file Proposed Rule Changes with the Commission under Section 19(b) of the Exchange Act, and to comply separately with the CFTC’s process for selfcertification or direct approval of rules or rule amendments. The Commission is sensitive to the increased burdens these obligations will impose and agrees that it is in the public interest to eliminate any potential inefficiencies and undue delays that could result from the requirement that the Commission review changes to rules primarily concerning futures clearing operations before they may be considered effective. A. Benefits New Rule 19b–4(f)(4)(ii) will eliminate the requirement for Registered Clearing Agencies to submit a significant number of Proposed Rule Changes that primarily affect their futures clearing operations with the Commission for pre-approval pursuant to Section 19(b)(1) of the Exchange Act. As a result, the rule would eliminate any potential inefficiencies and undue delays that could result from the requirement that the Commission review the Proposed Rule Change before it may be considered effective. At the 46 The PRA defines a ‘‘collection of information’’ as ‘‘the obtaining, causing to be obtained, soliciting or requiring the disclosure to third parties or the public, of facts or opinions by or for an agency, regardless of form or format, calling for * * * answers to identical questions posed to, or identical reporting or recordkeeping requirements imposed on, ten or more persons * * * ’’ 44 U.S.C. 3502(3)(A). The Commission preliminarily does not believe that the reporting and recordkeeping provisions in this interim final rule contain ‘‘collection of information requirements’’ within the meaning of the PRA because fewer than ten persons are expected to rely on Rule 19b–4(f)(4)(ii). Based on discussions with market participants, the Commission believes that only three Registered Clearing Agencies will maintain a futures clearing business regulated by the CFTC as of the effective date of the Deemed Registered Provision. 47 These include OCC, CME and ICE Clear Europe. PO 00000 Frm 00021 Fmt 4700 Sfmt 4700 41061 same time, the Commission would retain the power summarily to temporarily suspend the change in rules of the Registered Clearing Agency within sixty days of its filing if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Exchange Act.48 As a result, the Commission would be providing the Registered Clearing Agency with the ability to declare the Proposed Rule Change immediately effective, thereby limiting potential delays to activities related to its futures operations that may be beneficial to both the clearing agency and market participants, in a manner that does not impair the Commission’s ability to review the filing and to determine whether it would be necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Exchange Act, to conduct a more thorough analysis of the issues. B. Costs As noted above, the amendments to Rule 19b–4 would expand the list of categories that qualify for summary effectiveness under Section 19(b)(3)(A) of the Exchange Act. These amendments will not materially increase or decrease the costs of complying with Rule 19b– 4, nor will they modify an SRO’s obligation to submit a Proposed Rule Change to the Commission; rather, the amendments will change the statutory basis under which a rule change is filed. As a result, new Rule 19b–4(f)(4)(ii) would impose minimal, if any, costs on a Registered Clearing Agency, which would consist solely of the time spent determining whether a Proposed Rule Change qualifies for summary effectiveness pursuant to new Rule 19b– 4(f)(4)(ii). The Commission requests that commenters provide views and supporting information regarding the costs and benefits associated with the proposals. The Commission seeks estimates of these costs and benefits, as well as any costs and benefits not already identified. 48 15 U.S.C. 78s(b)(3)(C). If the Commission takes such action, it is then required to institute proceedings to determine whether the Proposed Rule Change should be approved or disapproved. E:\FR\FM\13JYR1.SGM 13JYR1 41062 Federal Register / Vol. 76, No. 134 / Wednesday, July 13, 2011 / Rules and Regulations mstockstill on DSK4VPTVN1PROD with RULES VII. Consideration of Burden on Competition and Promotion of Efficiency, Competition and Capital Formation Section 23(a) 49 of the Exchange Act requires the Commission, when making rules and regulations under the Exchange Act, to consider the impact a new rule would have on competition. Section 23(a)(2) of the Exchange Act prohibits the Commission from adopting any rule that would impose a burden on competition not necessary or appropriate in furtherance of the purposes of the Exchange Act. Section 3(f) of the Exchange Act 50 requires the Commission, when engaging in rulemaking that requires it to consider whether an action is necessary or appropriate in the public interest, to consider, in addition to the protection of investors, whether the action would promote efficiency, competition, and capital formation. As discussed above, the amendment to Rule 19b–4 will expand the list of categories that qualify for summary effectiveness under Section 19(b)(3)(A) of the Exchange Act to include any matter that both (i) Primarily affects the futures clearing operations of the clearing agency with respect to futures that are not security futures and (ii) does not significantly affect any securities clearing operations of the clearing agency or any related rights or obligations of the clearing agency or persons using such service. Specifically, new Rule 19b–4(f)(4)(ii) is intended to avoid undue delays that could result from the requirement that the Commission review changes to rules primarily concerning futures clearing operations before they may be considered effective. Without new Rule 19b–4(f)(4)(ii), certain clearing agencies would be required to submit a significant number of Proposed Rule Changes to the Commission for consideration and approval pursuant to Section 19(b)(1) that relate primarily to their futures clearing operations. Accordingly, the Commission believes such changes would not result in any burden to competition and would instead contribute to a better capital formation and more efficient markets by limiting the potential for any undue delays for services or changes that may benefit market participants. VIII. Regulatory Flexibility Certification The Regulatory Flexibility Act (‘‘RFA’’) 51 requires the Commission, in 49 15 U.S.C. 78w(a). U.S.C. 78c(f). 51 5 U.S.C. 601 et seq. 50 15 VerDate Mar<15>2010 16:32 Jul 12, 2011 Jkt 223001 promulgating rules, to consider the impact of those rules on small entities. Section 603(a) of the APA,52 as amended by the RFA, generally requires the Commission to undertake a regulatory flexibility analysis of all proposed rules to determine the impact of such rulemaking on ‘‘small entities.’’ 53 Section 605(b) of the RFA states that this requirement shall not apply to any proposed rule which, if adopted, would not have a significant economic impact on a substantial number of small entities.54 For the purposes of Commission rulemaking in connection with the RFA, a small entity includes, when used with reference to a clearing agency, a clearing agency that: (i) Compared, cleared and settled less than $500 million in securities transactions during the preceding fiscal year; (ii) had less than $200 million of funds and securities in its custody or control at all times during the preceding fiscal year (or at any time that it has been in business, if shorter) and (iii) is not affiliated with any person (other than a natural person) that is not a small business or small organization.55 Under the standards adopted by the Small Business Administration, small entities in the finance industry include the following: (i) For entities engaged in investment banking, securities dealing and securities brokerage activities, entities with $6.5 million or less in annual receipts; (ii) for entities engaged in trust, fiduciary and custody activities, entities with $6.5 million or less in annual receipts and (iii) funds, trusts and other financial vehicles with $6.5 million or less in annual receipts.56 The amendments to Rule 19b–4 and to the General Instructions for Form 19b–4 would apply to all Registered Clearing Agencies. As of July 16, 2011, there likely will be seven clearing agencies with active operations registered with the Commission. Of the seven Registered Clearing Agencies with active operations, three currently maintain a futures clearing business. Based on the Commission’s existing information about these three Registered Clearing Agencies, as well as on the entities likely to register with the Commission in the future, the Commission preliminarily believes that U.S.C. 603(a). 601(b) of the RFA permits agencies to formulate their own definitions of ‘‘small entities.’’ The Commission has adopted definitions for the term ‘‘small entity’’ for the purposes of rulemaking in accordance with the RFA. These definitions, as relevant to this proposed rulemaking, are set forth in Rule 0–10, 17 CFR 240.0–10. 54 See 5 U.S.C. 605(b). 55 17 CFR 240.0–10(d). 56 13 CFR 121.201, Sector 52. PO 00000 52 5 53 Section Frm 00022 Fmt 4700 Sfmt 4700 such entities will not be small entities, but rather part of large business entities that exceed the thresholds defining ‘‘small entities’’ set out above. For the reasons stated above, the Commission certifies that the proposed amendments to Rule 19b–4 and to the General Instructions for Form 19b–4 would not have a significant economic impact on a substantial number of small entities for the purposes of the RFA. The Commission encourages written comments regarding this certification. The Commission requests that commenters describe the nature of any impact on small entities, including clearing agencies, and provide empirical data to support the extent of the impact. IX. Statutory Basis and Text of Amendments Pursuant to the Exchange Act, and particularly Section 19(b) thereof, 15 U.S.C. 78s(b), the Commission proposes to amend Rule 19b–4 as set forth below. List of Subjects in 17 CFR Parts 240 and 249 Brokers, Reporting and recordkeeping requirements, Securities. Text of Rule In accordance with the foregoing, Title 17, chapter II of the Code of Federal Regulations is amended as follows: PART 240—GENERAL RULES AND REGULATIONS, SECURITIES EXCHANGE ACT OF 1934 1. The general authority citation for part 240 continues to read as follows: ■ Authority: 15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z–2, 77z–3, 77eee, 77ggg, 77nnn, 77sss, 77ttt, 78c, 78d, 78e, 78f, 78g, 78i, 78j, 78j–1, 78k, 78k–1, 78l, 78m, 78n, 78n–1, 78o, 78o–4, 78p, 78q, 78s, 78u–5, 78w, 78x, 78ll, 78mm, 80a–20, 80a–23, 80a–29, 80a–37, 80b– 3, 80b–4, 80b–11, and 7210 et seq., 18 U.S.C. 1350, and 12 U.S.C. 5221(e)(3), unless otherwise noted. * * * * * 2. Amend § 240.19b–4 by: ■ a. Adding the word ‘‘either’’ before the colon in the introductory text in paragraph (f)(4); ■ b. Redesignating paragraph (f)(4)(i) as paragraph (f)(4)(i)(A); ■ c. Redesignating paragraph (f)(4)(ii) as paragraph (f)(4)(i)(B); ■ d. Adding the word ‘‘or’’ after the semicolon after newly designated paragraph (f)(4)(i)(B); ■ e. Adding new paragraph (f)(4)(ii)(A); and ■ f. Adding new paragraph (f)(4)(ii)(B). ■ 3. The additions read as follows: ■ E:\FR\FM\13JYR1.SGM 13JYR1 Federal Register / Vol. 76, No. 134 / Wednesday, July 13, 2011 / Rules and Regulations § 240.19b–4 Filings with respect to proposed rule changes by self-regulatory organizations. * * * * * (f) * * * (4) * * * (ii)(A) Primarily affects the futures clearing operations of the clearing agency with respect to futures that are not security futures; and (B) Does not significantly affect any securities clearing operations of the clearing agency or any related rights or obligations of the clearing agency or persons using such service; * * * * * PART 249—FORMS, SECURITIES EXCHANGE ACT OF 1934 respect to futures that are not security futures and (2) does not significantly affect any securities clearing operations of the clearing agency or any related rights or obligations of the clearing agency or persons using such service, and set forth the basis on which such designation is made, * * * * * Dated: July 7, 2011. By the Commission. Cathy H. Ahn, Deputy Secretary. [FR Doc. 2011–17524 Filed 7–12–11; 8:45 am] BILLING CODE 8011–01–P DEPARTMENT OF DEFENSE 4. The general authority citation for part 249 continues to read in part as follows: Office of the Secretary Authority: 15 U.S.C. 78a et seq. and 7201 et seq.; and 18 U.S.C. 1350, unless otherwise noted. [DoD–2009–HA–0151; 0720–AB37] ■ 32 CFR Part 199 * * * * * ■ 5. Amend Form 19b–4 (referenced in § 249.819) by: ■ a. Amending paragraph (b)(iv) in Item 7 of the General Instructions (Information to be Included in the Completed Form (‘‘Form 19b–4 Information’’)) as follows: Note: The text of Form 19b–4 does not, and the amendments will not, appear in the Code of Federal Regulations. Form 19b–4 * * * * * GENERAL INSTRUCTIONS FOR FORM 19b–4 * * * * * Information to be Included in the Completed Form (‘‘Form 19b–4 Information’’) * * * * * 7. Basis for Summary Effectiveness Pursuant to Section 19(b)(3) or for Accelerated Effectiveness Pursuant to Section 19(b)(2) or Section 19(b)(7)(D) mstockstill on DSK4VPTVN1PROD with RULES * * * * * (b) * * * (iv) effects a change in an existing service of a registered clearing agency that either (A)(1) does not adversely affect the safeguarding of securities or funds in the custody or control of the clearing agency or for which it is responsible and (2) does not significantly affect the respective rights or obligations of the clearing agency or persons using the service or (B)(1) primarily affects the futures clearing operations of the clearing agency with VerDate Mar<15>2010 16:32 Jul 12, 2011 Jkt 223001 Civilian Health and Medical Program of the Uniformed Services (CHAMPUS)/ TRICARE: Inclusion of Retail Network Pharmacies as Authorized TRICARE Providers for the Administration of TRICARE Covered Vaccines Office of the Secretary, Department of Defense (DoD). ACTION: Final rule. AGENCY: This final rule allows a TRICARE retail network pharmacy to be an authorized provider for the administration of TRICARE-covered vaccines in the retail pharmacy setting. The value of vaccines lies in the prevention of disease and reduced healthcare costs in the long term. When vaccines are made more readily accessible, a broader section of the population will receive them. DATES: Effective Date: This final rule is effective August 12, 2011. FOR FURTHER INFORMATION CONTACT: RADM Thomas McGinnis, TRICARE Management Activity, telephone (703) 681–2890. SUPPLEMENTARY INFORMATION: SUMMARY: A. Background The value of vaccines lies in the prevention of disease and reduced healthcare costs in the long term. Vaccines are highly effective in preventing death and disability, and save billions of dollars in health costs annually. When vaccines are made more readily accessible, a broader section of the population will receive them. In the last 5 years, registered pharmacists have played an increasing role in providing clinical services through the retail PO 00000 Frm 00023 Fmt 4700 Sfmt 4700 41063 pharmacy venue. In 50 states, registered pharmacists are authorized to administer vaccines in a retail pharmacy setting, vastly increasing the accessibility of many vaccines. State Boards of Pharmacy are responsible for the training, oversight, and stipulating the conditions under which a pharmacist may administer a vaccine. The Department of Defense (DoD) regulation implementing the TRICARE Pharmacy Benefit Program was written prior to this recent development. Therefore, although vaccines are covered under the TRICARE medical benefit, if administered by a pharmacist in a pharmacy the service is not currently covered by TRICARE except as provided for by the interim final rule published December 10, 2009 at 74 FR 65436. Inclusion of vaccines under the pharmacy benefit when provided by a TRICARE retail network pharmacy in accordance with state law, including when administered by a registered pharmacist, is the purpose of this regulation. TRICARE recognizes that registered pharmacists are increasingly providing vaccine administration services in retail pharmacies. Although vaccines are a covered TRICARE medical benefit, when administered by a pharmacist claims cannot be adjudicated because vaccines are not covered under the pharmacy benefit and pharmacies are not recognized by regulation as authorized providers for the administration of vaccines except as provided for by the interim final rule. Currently, TRICARE beneficiaries who receive a vaccine administered by a pharmacist cannot be reimbursed for any out-of-pocket expenses except as provided for by the interim final rule. TRICARE would like to include vaccines under the pharmacy benefit when provided by a TRICARE retail network pharmacy when functioning within the scope of their state laws, including when administered by a registered pharmacist, to enable claims processing and reimbursement for services. Adding immunizations to the pharmacy benefits program is an important public health initiative for TRICARE, making immunizations more readily available to beneficiaries. It is especially important as part of the Nation’s public health preparations for a potential pandemic, such as was threatened last fall and winter by a novel H1N1 virus strain. Ensuring that TRICARE beneficiaries have ready access to vaccine supplies allocated to private sector pharmacies will facilitate making vaccines appropriately available to high risk groups of TRICARE E:\FR\FM\13JYR1.SGM 13JYR1

Agencies

[Federal Register Volume 76, Number 134 (Wednesday, July 13, 2011)]
[Rules and Regulations]
[Pages 41056-41063]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-17524]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

17 CFR Parts 240 and 249

[Release No. 34-64832; File No. S7-29-11]
RIN 3235-AL18


Amendment to Rule Filing Requirements for Dually-Registered 
Clearing Agencies

AGENCY: Securities and Exchange Commission.

ACTION: Interim final rule; request for comment.

-----------------------------------------------------------------------

SUMMARY: The Securities and Exchange Commission (``SEC'' or 
``Commission'') is adopting an interim final rule to amend Rule 19b-4 
under the Securities Exchange Act of 1934 (``Exchange Act''). The 
amendment expands the list of categories that qualify for summary 
effectiveness under Section 19(b)(3)(A) of the Exchange Act to include 
any matter effecting a change in an existing service of a clearing 
agency registered with the Commission (``Registered Clearing Agency'') 
that both primarily affects the futures clearing operations of the 
clearing agency with respect to futures that are not security futures 
and does not significantly affect any securities clearing operations of 
the clearing agency or any related rights or obligations of the 
clearing agency or persons using such service. The Commission also is 
making a corresponding technical modification to the General 
Instructions for Form 19b-4 under the Exchange Act. The amendments to 
Rule 19b-4 and Form 19b-4 are intended to streamline the rule filing 
process in areas involving certain activities concerning non-security 
products that may be subject to overlapping regulation as a result of, 
in part, certain provisions under Section 763(b) of the Dodd-Frank Wall 
Street Reform and Consumer Protection Act of 2010 (``Dodd-Frank Act'') 
that would deem some clearing agencies to be registered with the 
Commission as of July 16, 2011.

DATES: Effective Date: July 15, 2011.
    Comment Date: Comments on the interim final rule should be 
submitted on or before September 15, 2011.

ADDRESSES: Comments may be submitted by any of the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/proposed.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number S7-29-11 on the subject line; or
     Use the Federal eRulemaking Portal (http://www.regulations.gov). Follow the instructions for submitting comments.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F St., NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number S7-29-11. This file number 
should be included on the subject line if e-mail is used. To help us 
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/proposed.shtml). Comments 
are also available for Web site viewing and printing in the 
Commission's Public Reference Room, 100 F St., NE., Washington, DC 
20549 on official business days between the hours of 10 a.m. and 3 p.m. 
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.

FOR FURTHER INFORMATION CONTACT: Jeffrey S. Mooney, Assistant Director; 
Joseph P. Kamnik, Senior Special Counsel; and Andrew R. Bernstein, 
Attorney-Adviser, Office of Clearance and Settlement, Division of 
Trading and Markets, Securities and Exchange Commission, 100 F Street, 
NE., Washington, DC 20549-7010 at (202) 551-5710.

SUPPLEMENTARY INFORMATION: The Commission is adopting an amendment to 
Rule 19b-4 under the Exchange Act as an interim final rule to expand 
the list of categories that qualify for

[[Page 41057]]

summary effectiveness under Section 19(b)(3)(A) of the Exchange Act. 
The Commission also is making a corresponding technical modification to 
the General Instructions for Form 19b-4 under the Exchange Act. We will 
carefully consider the comments that we receive and intend to respond 
as necessary or appropriate.

I. Introduction

A. Background on Commission Process for Proposed Rule Changes

    Section 19(b)(1) of the Exchange Act \1\ requires each self-
regulatory organization (``SRO''), including any Registered Clearing 
Agency,\2\ to file with the Commission copies of any proposed rule or 
any proposed change in, addition to, or deletion from the rules of such 
SRO (collectively, ``Proposed Rule Change''),\3\ which must be 
submitted on Form 19b-4 \4\ in accordance with the General Instructions 
thereto. Once a Proposed Rule Change has been filed, the Commission is 
required to publish it in the Federal Register to provide an 
opportunity for public comment.\5\ A Proposed Rule Change generally may 
not take effect unless the Commission approves it,\6\ or it is 
otherwise permitted to become effective under Section 19(b).\7\
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ See Section 3(a)(26) of the Exchange Act, 15 U.S.C. 
78c(a)(26) (defining the term ``self-regulatory organization'' to 
mean any national securities exchange, registered securities 
association, registered clearing agency, and, for purposes of 
Section 19(b) and other limited purposes, the Municipal Securities 
Rulemaking Board) (emphasis added).
    \3\ 15 U.S.C. 78s(b)(1). Section 3(a)(27) of the Exchange Act 
defines ``rules'' to include ``the constitution, articles of 
incorporation, bylaws, and rules, or instruments corresponding to 
the foregoing * * * and such of the stated policies, practices, and 
interpretations of such exchange, association, or clearing agency as 
the Commission, by rule, may determine to be necessary or 
appropriate in the public interest or for the protection of 
investors to be deemed to be rules of such exchange, association, or 
clearing agency.'' 15 U.S.C. 78c(a)(27). Rule 19b-4(b) under the 
Exchange Act defines ``stated policy, practice, or interpretation'' 
to mean, in part, ``[a]ny material aspect of the operation of the 
facilities of the self-regulatory organization'' or ``[a]ny 
statement made generally available'' that ``establishes or changes 
any standard, limit, or guideline'' with respect to the ``rights, 
obligations, or privileges'' of persons or the ``meaning, 
administration, or enforcement of an existing rule.'' 17 CFR 
240.19b-4(b).
    \4\ See 17 CFR 249.819.
    \5\ See 15 U.S.C. 78s(b)(1). The SRO is required to prepare the 
notice of its Proposed Rule Change on Exhibit 1 of Form 19b-4 that 
the Commission then publishes in the Federal Register.
    \6\ See 15 U.S.C. 78s(b)(2). However, as provided in Section 
19(b)(2)(D) of the Exchange Act, 15 U.S.C. 78s(b)(2)(D), a Proposed 
Rule Change may be ``deemed to have been approved by the 
Commission'' if the Commission fails to take action on a proposal 
that is subject to Commission approval within the statutory time 
frames specified in Section 19(b)(2).
    \7\ See, e.g., 15 U.S.C. 78s(b)(3)(A).
---------------------------------------------------------------------------

    Section 19(b)(2) of the Exchange Act sets forth the standards and 
time periods for Commission action either to approve, disapprove or 
institute proceedings to determine whether the Proposed Rule Change 
should be disapproved.\8\ The Commission must approve a Proposed Rule 
Change if it finds that the underlying rule change is consistent with 
the requirements of the Exchange Act and the rules and regulations 
thereunder applicable to the SRO proposing the rule change.\9\
---------------------------------------------------------------------------

    \8\ See 15 U.S.C. 78s(b)(2).
    \9\ 15 U.S.C. 78s(b)(2).
---------------------------------------------------------------------------

    The SRO rule filing process for Registered Clearing Agencies serves 
two important policy goals. First, the notice and comment requirement 
helps assure that interested persons have an opportunity to provide 
input on proposed actions by Registered Clearing Agencies that could 
have a significant impact on the market, market participants (both 
professionals and individual investors) and others.\10\ Second, the 
rule filing process allows the Commission to review Registered Clearing 
Agencies' Proposed Rule Changes to determine whether they are 
consistent with the Exchange Act, including the goals of prompt and 
accurate clearance and settlement of securities transactions and the 
safeguarding of investors' securities and funds.\11\
---------------------------------------------------------------------------

    \10\ See Securities Exchange Act Release No. 49505 (Mar. 30, 
2004), 69 FR 17864 (Apr. 4, 2004) (Proposed Rules Regarding Proposed 
Rule Changes of Self-Regulatory Organizations) (noting that SROs 
``exercise certain quasi-governmental powers over members through 
their ability to impose disciplinary sanctions, deny membership, and 
require members to cease doing business entirely or in specified 
ways.'').
    \11\ See 15 U.S.C. 78q-1(a)(1).
---------------------------------------------------------------------------

    At the same time, Section 19(b)(3)(A) of the Exchange Act provides 
that a Proposed Rule Change may become effective upon filing with the 
Commission, without notice and opportunity for hearing, if it is 
appropriately designated by the SRO as: (i) Constituting a stated 
policy, practice or interpretation with respect to the meaning, 
administration, or enforcement of an existing rule of the SRO; (ii) 
establishing or changing a due, fee, or other charge imposed by the SRO 
(on any person, whether or not the person is a member of the SRO) or 
(iii) concerned solely with the administration of the SRO.\12\ The 
Commission has the power summarily to temporarily suspend the change in 
rules of the SRO within sixty days of its filing if it appears to the 
Commission that such action is necessary or appropriate in the public 
interest, for the protection of investors, or otherwise in furtherance 
of the purposes of the Exchange Act.\13\ If the Commission takes such 
action, it is then required to institute proceedings to determine 
whether the Proposed Rule Change should be approved or disapproved.\14\
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 15 U.S.C. 78s(b)(3)(C).
    \14\ Id. Temporary suspension of a Proposed Rule Change and any 
subsequent action to approve or disapprove such change shall not 
affect the validity or force of the rule change during the period it 
was in effect and shall not be reviewable under Section 25 of the 
Exchange Act, nor shall it be deemed to be ``final agency action'' 
for purposes of 5 U.S.C. 704.
---------------------------------------------------------------------------

    In addition to the matters expressly set forth in the statute, 
Section 19(b)(3)(A) also provides the Commission with the authority, by 
rule and consistent with the public interest, to designate other types 
of Proposed Rule Changes that may be effective upon filing with the 
Commission.\15\ The Commission has previously utilized this authority 
to designate, under Rule 19b-4 of the Exchange Act, certain rule 
changes that qualify for summary effectiveness under Section 
19(b)(3)(A).\16\
---------------------------------------------------------------------------

    \15\ 15 U.S.C. 78s(b)(3)(A).
    \16\ For example, Rule 19b-4(f) under the Exchange Act currently 
permits SROs to declare rule changes to be immediately effective 
pursuant to Section 19(b)(3)(A) if properly designated by the SRO 
as: (i) Effecting a change in an existing service of a Registered 
Clearing Agency that: (A) Does not adversely affect the safeguarding 
of securities or funds in the custody or control of the clearing 
agency or for which it is responsible; and (B) does not 
significantly affect the respective rights or obligations of the 
clearing agency or persons using the service; (ii) effecting a 
change in an existing order-entry or trading system of a SRO that: 
(A) Does not significantly affect the protection of investors or the 
public interest; (B) does not impose any significant burden on 
competition; and (C) does not have the effect of limiting the access 
to or availability of the system or (iii) effecting a change that: 
(A) Does not significantly affect the protection of investors or the 
public interest; (B) does not impose any significant burden on 
competition and (C) by its terms, does not become operative for 30 
days after the date of the filing, or such shorter time as the 
Commission may designate if consistent with the protection of 
investors and the public interest; provided that the SRO has given 
the Commission written notice of its intent to file the Proposed 
Rule Change, along with a brief description and text of the Proposed 
Rule Change, at least five business days prior to the date of filing 
of the Proposed Rule Change, or such shorter time as designated by 
the Commission. See 17 CFR 240.19b-4(f).
---------------------------------------------------------------------------

B. Clearing Agencies Deemed Registered Under the Dodd-Frank Act

    Section 763(b) of the Dodd-Frank Act \17\ provides that (i) A 
depository institution registered with the Commodity Futures Trading

[[Page 41058]]

Commission (``CFTC'') that cleared swaps as a multilateral clearing 
organization prior to the date of enactment of the Dodd-Frank Act and 
(ii) a derivatives clearing organization (``DCO'') registered with the 
CFTC that cleared swaps pursuant to an exemption from registration as a 
clearing agency prior to the date of enactment of the Dodd-Frank Act 
will be deemed registered with the Commission as a clearing agency 
solely for the purpose of clearing security-based swaps (``Deemed 
Registered Provision'').\18\ The Deemed Registered Provision, along 
with other general provisions under Title VII of the Dodd-Frank Act, 
becomes effective on July 16, 2011.\19\ Once a clearing agency is 
deemed to be a Registered Clearing Agency, it will be required to 
comply with all requirements of the Exchange Act, and the rules and 
regulations thereunder, applicable to Registered Clearing Agencies to 
the extent it clears security-based swaps after the effective date of 
the Deemed Registered Provision, including, for example, the obligation 
to file Proposed Rule Changes under Section 19(b) of the Exchange 
Act.\20\ Clearing of futures and options on futures is generally 
regulated by the CFTC in connection with its oversight and supervision 
of DCOs. DCOs are generally permitted to implement rule changes by 
self-certifying that the new rule complies with the Commodity Exchange 
Act (``CEA'') and the CFTC's regulations.\21\ The change effected by 
this interim final rule is intended to eliminate any burdens resulting 
from delays that could arise due to the differences between the 
Commission's rule filing process and the CFTC's self-certification 
process, which generally allows rule changes to become effective 
immediately upon or shortly after filing.\22\
---------------------------------------------------------------------------

    \17\ The Dodd-Frank Wall Street Reform and Consumer Protection 
Act, Public Law 111-203, 124 Stat. 1376 (2010).
    \18\ See Section 763(b) of the Dodd-Frank Act (adding new 
Section 17A(l) to the Exchange Act, 15 U.S.C. 78q-1(1)). Under this 
Deemed Registered Provision, each of the Chicago Mercantile Exchange 
Inc. (``CME''), ICE Clear Europe Limited (``ICE Clear Europe'') and 
ICE Trust US LLC, or a successor entity of ICE Trust (``ICE Trust'') 
will become Registered Clearing Agencies solely for the purpose of 
clearing security-based swaps.
    \19\ Section 774 of the Dodd-Frank Act states, ``[u]nless 
otherwise provided, the provisions of this subtitle shall take 
effect on the later of 360 days after the date of the enactment of 
this subtitle or, to the extent a provision of this subtitle 
requires a rulemaking, not less than 60 days after publication of 
the final rule or regulation implementing such provision of this 
subtitle.''
    \20\ The Commission anticipates that as of July 16, 2011, OCC 
(formerly known as The Options Clearing Corporation), CME and ICE 
Clear Europe will be the only Registered Clearing Agencies that will 
be subject to new Rule 19b-4(f)(4)(ii). Although it also will be a 
dually-registered clearing agency, ICE Trust does not have an 
existing futures clearing business for which it would file Proposed 
Rule Changes.
    \21\ See 7 U.S.C. 7a-2(c) and 17 CFR 40.6.
    \22\ See 7 U.S.C. 7a-2(c) and 17 CFR 40.6.
---------------------------------------------------------------------------

    The Commission has limited time to act without exposing certain 
dually registered clearing agencies to potential legal uncertainty and 
market disruption caused by delays that could result from the 
requirement that the Commission undertake a full review of Proposed 
Rule Changes related to a Registered Clearing Agency's futures clearing 
operations before these Proposed Rule Changes may be made effective. 
Specifically, and as discussed in greater detail in Section IV, the 
Commission only recently received urgent requests for the relief to be 
provided by the interim final rule. Accordingly, and in the interest of 
adopting the changes to Rule 19b-4 and the General Instructions for 
Form 19b-4 prior to effective date of the Deemed Registered Provision 
of the Dodd-Frank Act on July 16, 2011, the Commission finds that it 
has good cause to adopt the interim final rule immediately and without 
the notice and public comment procedures that would ordinarily apply to 
this type of rulemaking.

II. Interim Final Rule

A. Amendment to Rule 19b-4

    The Commission is amending Rule 19b-4 to expand the list of 
categories that qualify for summary effectiveness under Section 
19(b)(3)(A) of the Exchange Act to include Proposed Rule Changes made 
by Registered Clearing Agencies with respect to certain futures 
clearing operations.\23\ Specifically, new Rule 19b-4(f)(4)(ii) will 
allow a Proposed Rule Change concerning futures clearing operations 
filed by a Registered Clearing Agency to take effect upon filing with 
the Commission pursuant to Section 19(b)(3)(A) so long as it is 
properly designated by the Registered Clearing Agency as effecting a 
change in a service of the Registered Clearing Agency that meets two 
conditions.\24\ The first condition, contained in new Rule 19b-
4(f)(4)(ii)(A), is that the Proposed Rule Change primarily affects the 
futures clearing operations of the clearing agency with respect to 
futures that are not security futures.\25\ For purposes of this 
requirement, a Registered Clearing Agency's ``futures clearing 
operations'' would generally include any activity that would require 
the Registered Clearing Agency to register with the CFTC as a DCO in 
accordance with the CEA.\26\ In addition, to ``primarily affect'' such 
futures clearing operations would mean that the Proposed Rule Change is 
targeted to affect matters related to the clearing of futures 
specifically and that any effect on other clearing operations would be 
incidental in nature and not significant in extent.\27\ However, 
because a security futures product is a security for purposes of the 
Exchange Act,\28\ a Registered Clearing Agency will not be permitted to 
file Proposed Rule Changes related to its security futures business 
pursuant to Section 19(b)(3)(A) of the Exchange Act in reliance on new 
Rule 19b-4(f)(ii). Instead, such clearing agency will continue to be 
required to file Proposed Rule Changes with the Commission related to 
its respective security futures operations in accordance with Section 
19(b)(1) of the Exchange Act, which the Commission will review in 
accordance with Section 19(b)(2), unless there is another basis for the 
Proposed Rule Change to be filed under Section 19(b)(3)(A).
---------------------------------------------------------------------------

    \23\ When an SRO submits a Proposed Rule Change to the 
Commission pursuant to Section 19(b)(3)(A) of the Exchange Act, the 
Commission still reviews the filing and has the power summarily to 
temporarily suspend the change in rules of the SRO within sixty days 
of its filing if it appears to the Commission that such action is 
necessary or appropriate in the public interest, for the protection 
of investors, or otherwise in furtherance of the purposes of the 
Exchange Act. If the Commission takes such action, it is then 
required to institute proceedings to determine whether the Proposed 
Rule Change should be approved or disapproved. Temporary suspension 
of a Proposed Rule Change and any subsequent action to approve or 
disapprove such change shall not affect the validity or force of the 
rule change during the period it was in effect and shall not be 
reviewable under Section 25 of the Exchange Act, nor shall it be 
deemed to be ``final agency action'' for purposes of 5 U.S.C. 704. 
See 15 U.S.C. 78s(b)(3)(A).
    \24\ 17 CFR 240.19b-4(f)(4)(ii) (as amended by this interim 
final rule).
    \25\ 17 CFR 240.19b-4(f)(4)(ii)(A) (as amended by this interim 
final rule).
    \26\ See 7 U.S.C. 7a-1 (providing that it shall be unlawful for 
a DCO, unless registered with the CFTC, directly or indirectly to 
make use of the mails or any means or instrumentality of interstate 
commerce to perform the functions of a DCO (as described in 7 U.S.C. 
1a(9)) with respect to a contract of sale of a commodity for future 
delivery (or option on such a contract) or option on a commodity, in 
each case unless the contract or option is (i) Otherwise excluded 
from registration in accordance with certain sections of the CEA or 
(ii) a security futures product cleared by a Registered Clearing 
Agency).
    \27\ For example, rules of general applicability that would 
apply equally to securities clearing operations, including security-
based swaps, would not be considered to primarily affect such 
futures clearing operations. In addition, changes to general 
provisions in the constitution, articles, or bylaws of the 
Registered Clearing Agency that address the operations of entire 
clearing agency would not be considered to primarily affect such 
futures clearing operations.
    \28\ 15 U.S.C. 78c(a)(10).
---------------------------------------------------------------------------

    The second condition, contained in new Rule 19b-4(f)(4)(ii)(B), is 
that the Proposed Rule Change does not significantly affect any 
securities clearing operations of the clearing

[[Page 41059]]

agency or any related rights or obligations of the clearing agency or 
persons using such service.\29\ The Commission notes that the phrase 
``significantly affect'' currently is used elsewhere in Rule 19b-4 in 
the context of defining other categories of Proposed Rule Changes that 
qualify for summary effectiveness under Section 19(b)(3)(A) of the 
Exchange Act.\30\ Accordingly, ``significantly affect'' has the same 
meaning and interpretation as that phrase has in Rules 19b-4(f)(4)(i) 
(as amended by this interim final rule), 19b-4(f)(5) and 19b-4(f)(6). 
Also for purposes of this requirement, a Registered Clearing Agency's 
``securities clearing operations * * * or any related rights or 
obligations of the clearing agency or persons using such service'' 
would generally include any activity that would require the Registered 
Clearing Agency to register as a clearing agency in accordance with the 
Exchange Act.
---------------------------------------------------------------------------

    \29\ 17 CFR 240.19b-4(f)(4)(ii)(A) (as amended by this interim 
final rule).
    \30\ See e.g., 17 CFR 240.19b-4(f)(4)(i) (as amended by this 
interim final rule) (in respect of a Proposed Rule Change in an 
existing service of a Registered Clearing Agency that: (1) Does not 
adversely affect the safeguarding of securities or funds in the 
custody or control of the clearing agency or for which it is 
responsible and (2) does not significantly affect the respective 
rights or obligations of the clearing agency or persons using the 
service); 17 CFR 240.19b-4(f)(5) (in respect of a Proposed Rule 
Change in an existing order-entry or trading system of a SRO that: 
(1) Does not significantly affect the protection of investors or the 
public interest; (2) does not impose any significant burden on 
competition; and (3) does not have the effect of limiting the access 
to or availability of the system); and 17 CFR 240.19b-4(f)(6) (in 
respect of a Proposed Rule Change that (1) Does not significantly 
affect the protection of investors or the public interest; (2) does 
not impose any significant burden on competition; and (3) by its 
terms, does not become operative for 30 days after the date of the 
filing, or such shorter time as the Commission may designate if 
consistent with the protection of investors and the public interest; 
provided that the SRO has given the Commission written notice of its 
intent to file the Proposed Rule Change, along with a brief 
description and text of the Proposed Rule Change, at least five 
business days prior to the date of filing of the Proposed Rule 
Change, or such shorter time as designated by the Commission).
---------------------------------------------------------------------------

    The Commission believes that permitting clearing agencies to submit 
Proposed Rule Changes that meet the two conditions referenced above 
(i.e., (A) Primarily affects the futures clearing operations of the 
clearing agency with respect to futures that are not security futures 
and (B) does not significantly affect any securities clearing 
operations of the clearing agency or any related rights or obligations 
of the clearing agency or persons using such service) for immediate 
effectiveness pursuant to Section 19(b)(3)(A) of the Exchange Act is 
consistent with the public interest and the purposes of the Exchange 
Act. In particular, this approach should help limit the potential for 
delays by providing a streamlined process for allowing rule changes to 
become effective that primarily concern the futures clearing operations 
of a clearing agency which, unless such operations were linked to 
securities clearing operations, would not be subject to regulation by 
the Commission. In addition, the information provided to the Commission 
by the Registered Clearing Agency in a filing made pursuant to Section 
19(b)(1) of the Exchange Act is virtually identical to the information 
required to be included in a filing made pursuant to Section 
19(b)(3)(A). At the same time, the Commission would retain the power 
summarily to temporarily suspend the change in rules of the Registered 
Clearing Agency within sixty days of its filing if it appears to the 
Commission that such action is necessary or appropriate in the public 
interest, for the protection of investors, or otherwise in furtherance 
of the purposes of the Exchange Act.\31\ Finally, and as discussed more 
fully in Section IV of this release, changes to a clearing agency's 
futures clearing operations will continue to be subject to the CFTC's 
normal process for reviewing rule changes.
---------------------------------------------------------------------------

    \31\ 15 U.S.C. 78s(b)(3)(C). If the Commission takes such 
action, it is then required to institute proceedings to determine 
whether the Proposed Rule Change should be approved or disapproved.
---------------------------------------------------------------------------

B. Amendment to the General Instructions for Form 19b-4

    In order to accommodate the amendment to Rule 19b-4 being adopted 
today, the Commission also is making a corresponding technical 
modification to the General Instructions for Form 19b-4 under the 
Exchange Act. Specifically, the Commission is amending Item 7(b) of the 
General Instructions for Form 19b-4 (Information to be Included in the 
Completed Form), which requires the respondent SRO to cite to the 
statutory basis for filing a Proposed Rule Change pursuant to Section 
19(b)(3)(A) in accordance with the existing provisions of Rule 19b-
4(f). This amendment would revise Item 7(b)(iv) to include the option 
to file the form in accordance with new Rule 19b-4(f)(4)(ii), which 
provides for situations where a Registered Clearing Agency is effecting 
a change in an existing service that both (i) Primarily affects the 
futures clearing operations of the clearing agency with respect to 
futures that are not security futures and (ii) does not significantly 
affect any securities clearing operations of the clearing agency or any 
related rights or obligations of the clearing agency or persons using 
such service.

C. Effective Date

    The amendments to Rule 19b-4 and to the General Instructions for 
Form 19b-4 will be effective as of July 15, 2011.

III. Request for Comment

    We are requesting comments from all members of the public. We will 
carefully consider the comments that we receive. We seek comment 
generally on all aspects of the interim final rule. In addition, we 
seek comment on the following:
    1. Do the amendments contemplated by this interim final rule 
adequately address concerns regarding the application of the 
Commission's process for reviewing Proposed Rule Changes once the 
Deemed Registered Provision becomes effective?
    2. Given that the objectives and statutory authority of the CFTC 
differ from the Commission's, does the degree to which the interim 
final rule uses a process that is similar to the CFTC's process for 
reviewing rule changes by a Registered Clearing Agency that primarily 
affect its futures clearing operations and do not significantly affect 
its securities clearing operations provide for sufficient protection 
for investors and the securities markets? Why or why not?
    3. Are there other amendments the Commission should consider making 
to Rule 19b-4, such as further expanding the list of categories that 
qualify for summary effectiveness under Section 19(b)(3)(A) of the 
Exchange Act? If so, please describe any amendments the Commission 
should consider and reasons why.
    4. Should any additional restrictions be placed on the ability of a 
Registered Clearing Agency to file Proposed Rule Changes under Exchange 
Act Section 19(b)(3)(A)?

IV. Other Matters

    The Administrative Procedure Act (``APA'') \32\ generally requires 
an agency to publish, before adopting a rule, notice of a proposed 
rulemaking in the Federal Register.\33\ This requirement does not 
apply, however, if the agency ``for good cause finds * * * that notice 
and public procedure are impracticable, unnecessary, or contrary to the 
public interest.'' \34\ Further, the APA also generally requires that 
an agency

[[Page 41060]]

publish a rule in the Federal Register 30 days before the rule becomes 
effective.\35\ This requirement, however, does not apply if the agency 
finds good cause for making the rule effective sooner.\36\
---------------------------------------------------------------------------

    \32\ 5 U.S.C. 551 et seq.
    \33\ See 5 U.S.C. 553(b).
    \34\ Id.
    \35\ See 5 U.S.C. 553(d).
    \36\ Id.
---------------------------------------------------------------------------

    The Commission finds that it has good cause to have these rules 
take effect on July 15, 2011, on an interim final basis and that notice 
and solicitation of comment before the effective date of the proposed 
amendments to Rule 19b-4 and to the General Instructions for Form 19b-4 
is impracticable, unnecessary, or contrary to the public interest.
    Specifically, Section 763(b) of the Dodd-Frank Act provides that 
both (i) A depository institution registered with the CFTC that cleared 
swaps as a multilateral clearing organization prior to the date of 
enactment of the Dodd-Frank Act and (ii) a DCO registered with the CFTC 
that cleared swaps pursuant to an exemption from registration as a 
clearing agency prior to the date of enactment of the Dodd-Frank Act 
will be deemed registered with the Commission as a clearing agency 
solely for the purpose of clearing security-based swaps.\37\ The Deemed 
Registered Provision, along with other general provisions under Title 
VII of the Dodd-Frank Act, becomes effective on July 16, 2011.\38\
---------------------------------------------------------------------------

    \37\ See Section 763(b) of the Dodd-Frank Act (adding new 
Section 17A(l) to the Exchange Act, 15 U.S.C. 78q-1(1)).
    \38\ Section 774 of the Dodd-Frank Act states, ``[u]nless 
otherwise provided, the provisions of this subtitle shall take 
effect on the later of 360 days after the date of the enactment of 
this subtitle or, to the extent a provision of this subtitle 
requires a rulemaking, not less than 60 days after publication of 
the final rule or regulation implementing such provision of this 
subtitle.''
---------------------------------------------------------------------------

    The Commission recognizes that the differences between the 
Commission's rule filing process for Registered Clearing Agencies and 
the CFTC's process for reviewing rule changes by DCOs could result in 
additional burdens on certain clearing agencies subject to the Deemed 
Registered Provision, which are discussed in greater detail below.\39\ 
Specifically, DCOs are generally permitted to implement new rules or 
rule amendments by filing with the CFTC a certification that the new 
rule or rule amendment complies with the CEA and the CFTC's 
regulations.\40\ Alternatively, DCOs may request direct CFTC approval 
of a rule or amendment thereunder after it has been filed with the CFTC 
pursuant either to its self-certification process or as a request for 
direct approval of a rule or amendment.\41\ Because of the differences 
between the CFTC's process and the Commission's rules for reviewing 
Proposed Rule Changes, a rule or rule amendment proposed by a dually-
registered clearing agency related exclusively to its futures clearing 
operations could be delayed by the Commission's rule filing process 
despite being permitted to become effective by the CFTC immediately 
upon or shortly after filing.\42\
---------------------------------------------------------------------------

    \39\ The CFTC's requirements and procedures for self-
certification filings and approval requests for new and amended 
rules and the clearing of new products are set forth in 17 CFR 40.6, 
17 CFR 40.5 and 17 CFR 40.2.
    \40\ See 7 U.S.C. 7a-2(c). Unless designated by the DCO as an 
emergency rule certification, rule changes submitted to the CFTC 
pursuant to the self-certification process may take effect 
immediately so long as the CFTC receives the submission by the open 
of business on the business day preceding implementation of the 
rule. See 17 CFR 40.6. However, Section 745 of the Dodd-Frank Act 
amended Section 5c(c) of the CEA to include a new 10-day 
certification review period for all rules and rule amendments 
submitted to the CFTC and to permit the CFTC to stay the 
certification of rules or rule amendments that, among other things, 
present novel or complex issues that require additional time to 
analyze. Pursuant to Section 754 of the Dodd-Frank Act, this change 
to the timing of the self-certification process takes effect on the 
later of 360 days after the date of the enactment of the statute or 
not less than 60 days after publication of the final rule or 
regulation implementing such provision.
    \41\ See 7 U.S.C. 7a-2(c) and 17 CFR 40.5.
    \42\ During 2010, CME self-certified 11 rule changes with the 
CFTC related to its activities as a DCO. ICE Clear Europe, which 
became a registered DCO on January 22, 2010, did not self-certify 
any rule changes during 2010, but has self-certified 11 rule changes 
with the CFTC since January 1, 2011. Currently, OCC, which is 
registered with the Commission as a clearing agency with respect to 
its clearing services for options and security futures listed and 
traded on its participant exchanges, also is registered with the 
CFTC as a DCO with respect to its clearing services for transactions 
in futures and options on futures. During 2010, OCC filed 19 
Proposed Rule Changes with the Commission and 19 rule changes with 
the CFTC, of which 15 were resolved through the CFTC's self-
certification process and four were resolved or are pending pursuant 
to the CFTC's direct approval process.
---------------------------------------------------------------------------

    This interim final rule takes effect on July 15, 2011. For several 
reasons, including those discussed above, we have acted on an interim 
final basis. Specifically, affected clearing agencies requested action 
with respect to Registered Clearing Agencies' obligations under Section 
19(b) of the Exchange Act only shortly before the effective date of the 
Deemed Registered Provision. Based on discussions with these affected 
clearing agencies, the Commission understands that market participants 
believe that the Commission needs to provide relief prior to the 
effective date of the Deemed Registered Provision of the Dodd-Frank Act 
on July 16, 2011 in order to avoid operational problems, legal 
uncertainty and market disruptions.
    Specifically, one clearing agency subject to the Deemed Registered 
Provision contacted staff in late April 2011 to alert the Commission 
that it had determined that, absent the approach set out in the interim 
final rule we are adopting today, the clearing agency would encounter a 
number of negative consequences.\43\ For example, delays resulting from 
the requirement that the Commission undertake a full review of Proposed 
Rule Changes related to a Registered Clearing Agency's futures clearing 
operations before these Proposed Rule Changes may be made effective 
could impair a clearing agency's ability to bring beneficial 
enhancements or other changes into the futures markets, such as those 
related to improving the operational efficiency of its futures clearing 
business. These delays could also lead to legal uncertainty regarding 
the status of Proposed Rule Changes after they have been self-certified 
with the CFTC but prior to the date on which the Commission makes a 
final determination in accordance with Section 19(b) of the Exchange 
Act. As a result, both the clearing agency and market participants 
could potentially be required to develop contingency plans with 
alternative approaches related to the clearing of futures which would 
likely result in substantial operational burdens and increased costs. 
As a result, the clearing agency requested that the Commission provide 
relief on the basis that subjecting Proposed Rule Changes that relate 
primarily to its futures clearing operations to the routine Commission 
approval process would needlessly delay effectiveness of these Proposed 
Rule Changes and could affect the clearing agency's operations as well 
as ability to provide enhancements that promote efficiencies with 
respect to its futures related activities. In May 2011, another 
clearing agency contacted the Commission to convey the need for urgent 
rulemaking by the Commission to address these same issues.
---------------------------------------------------------------------------

    \43\ The Commission's staff discussed with this clearing agency 
in late February 2011, among other things, the regulatory 
requirements for Registered Clearing Agencies under the Exchange Act 
in light of the Deemed Registered Provision including with respect 
to Proposed Rule Changes. Subsequently, in late April 2011, that 
clearing agency articulated an urgent need for relief prior to the 
effectiveness of the Deemed Registered Provision.
---------------------------------------------------------------------------

    Notwithstanding the limited amount of time before the Deemed 
Registered Provision becomes effective, and therefore the limited time 
the Commission has to act, these clearing agencies expressed their 
strong view that the Commission should provide relief immediately in 
order to prevent the above-described potential operational problems, 
legal uncertainty

[[Page 41061]]

and market disruptions from manifesting into actual issues for 
Registered Clearing Agencies once the Deemed Registered Provision 
becomes effective on July 16, 2011.
    In light of the concerns raised by these clearing agencies, the 
Commission believes that adopting an interim final rule to immediately 
amend Rule 19b-4 in the manner as set forth above would benefit the 
public interest by eliminating any undue delays and operational 
inefficiencies that could result from the requirement that the 
Commission review changes to rules primarily concerning futures 
clearing operations before they become effective. This could 
potentially benefit market participants (including investors) by, among 
other things, preventing delays to beneficial enhancements within the 
futures markets. Accordingly, the Commission finds that there is good 
cause to have the rule effective as an interim final rule on July 15, 
2011, and that notice and public procedure in advance of effectiveness 
of the interim final rule are impracticable, unnecessary and contrary 
to the public interest.\44\ The Commission is requesting comments on 
the interim final rule and will carefully consider any comments 
received and respond to them as necessary or appropriate.
---------------------------------------------------------------------------

    \44\ This finding also satisfies the requirements of 5 U.S.C. 
808(2), allowing the rules to become effective notwithstanding the 
requirement of 5 U.S.C. 801 (if a federal agency finds that notice 
and public comment are ``impractical, unnecessary or contrary to the 
public interest,'' a rule ``shall take effect at such time as the 
federal agency promulgating the rule determines.'')
---------------------------------------------------------------------------

V. Paperwork Reduction Act

    The Commission does not believe that the amendments to Rule 19b-4 
and to the General Instructions for Form 19b-4 adopted pursuant to the 
interim final rule contain any ``collection of information'' 
requirements as defined by the Paperwork Reduction Act of 1995, as 
amended (``PRA'').\45\ The interim final rule amends Rule 19b-4 under 
the Exchange Act to expand the list of categories that qualify for 
summary effectiveness under Section 19(b)(3)(A) of the Exchange Act to 
include any matter effecting a change in an existing service of a 
Registered Clearing Agency that both primarily affects the futures 
clearing operations of the clearing agency with respect to futures that 
are not security futures and does not significantly affect any 
securities clearing operations of the clearing agency or any related 
rights or obligations of the clearing agency or persons using such 
service. The interim final rule also makes a corresponding technical 
modification to the General Instructions for Form 19b-4 under the 
Exchange Act. The Commission does not believe that these amendments 
would require any new or additional collection of information, as such 
term is defined in the PRA.\46\
---------------------------------------------------------------------------

    \45\ 44 U.S.C. 3501, et seq.
    \46\ The PRA defines a ``collection of information'' as ``the 
obtaining, causing to be obtained, soliciting or requiring the 
disclosure to third parties or the public, of facts or opinions by 
or for an agency, regardless of form or format, calling for * * * 
answers to identical questions posed to, or identical reporting or 
recordkeeping requirements imposed on, ten or more persons * * * '' 
44 U.S.C. 3502(3)(A). The Commission preliminarily does not believe 
that the reporting and recordkeeping provisions in this interim 
final rule contain ``collection of information requirements'' within 
the meaning of the PRA because fewer than ten persons are expected 
to rely on Rule 19b-4(f)(4)(ii). Based on discussions with market 
participants, the Commission believes that only three Registered 
Clearing Agencies will maintain a futures clearing business 
regulated by the CFTC as of the effective date of the Deemed 
Registered Provision.
---------------------------------------------------------------------------

VI. Cost-Benefit Analysis

    As noted above, the Deemed Registered Provision, along with other 
general provisions under Title VII of the Dodd-Frank Act, becomes 
effective on July 16, 2011. At such time, the Commission expects that 
there will be three Registered Clearing Agencies that maintain a 
futures clearing business regulated by the CFTC.\47\Accordingly, these 
entities will be required to file Proposed Rule Changes with the 
Commission under Section 19(b) of the Exchange Act, and to comply 
separately with the CFTC's process for self-certification or direct 
approval of rules or rule amendments. The Commission is sensitive to 
the increased burdens these obligations will impose and agrees that it 
is in the public interest to eliminate any potential inefficiencies and 
undue delays that could result from the requirement that the Commission 
review changes to rules primarily concerning futures clearing 
operations before they may be considered effective.
---------------------------------------------------------------------------

    \47\ These include OCC, CME and ICE Clear Europe.
---------------------------------------------------------------------------

A. Benefits

    New Rule 19b-4(f)(4)(ii) will eliminate the requirement for 
Registered Clearing Agencies to submit a significant number of Proposed 
Rule Changes that primarily affect their futures clearing operations 
with the Commission for pre-approval pursuant to Section 19(b)(1) of 
the Exchange Act. As a result, the rule would eliminate any potential 
inefficiencies and undue delays that could result from the requirement 
that the Commission review the Proposed Rule Change before it may be 
considered effective. At the same time, the Commission would retain the 
power summarily to temporarily suspend the change in rules of the 
Registered Clearing Agency within sixty days of its filing if it 
appears to the Commission that such action is necessary or appropriate 
in the public interest, for the protection of investors, or otherwise 
in furtherance of the purposes of the Exchange Act.\48\
---------------------------------------------------------------------------

    \48\ 15 U.S.C. 78s(b)(3)(C). If the Commission takes such 
action, it is then required to institute proceedings to determine 
whether the Proposed Rule Change should be approved or disapproved.
---------------------------------------------------------------------------

    As a result, the Commission would be providing the Registered 
Clearing Agency with the ability to declare the Proposed Rule Change 
immediately effective, thereby limiting potential delays to activities 
related to its futures operations that may be beneficial to both the 
clearing agency and market participants, in a manner that does not 
impair the Commission's ability to review the filing and to determine 
whether it would be necessary or appropriate in the public interest, 
for the protection of investors, or otherwise in furtherance of the 
purposes of the Exchange Act, to conduct a more thorough analysis of 
the issues.

B. Costs

    As noted above, the amendments to Rule 19b-4 would expand the list 
of categories that qualify for summary effectiveness under Section 
19(b)(3)(A) of the Exchange Act. These amendments will not materially 
increase or decrease the costs of complying with Rule 19b-4, nor will 
they modify an SRO's obligation to submit a Proposed Rule Change to the 
Commission; rather, the amendments will change the statutory basis 
under which a rule change is filed. As a result, new Rule 19b-
4(f)(4)(ii) would impose minimal, if any, costs on a Registered 
Clearing Agency, which would consist solely of the time spent 
determining whether a Proposed Rule Change qualifies for summary 
effectiveness pursuant to new Rule 19b-4(f)(4)(ii).
    The Commission requests that commenters provide views and 
supporting information regarding the costs and benefits associated with 
the proposals. The Commission seeks estimates of these costs and 
benefits, as well as any costs and benefits not already identified.

[[Page 41062]]

VII. Consideration of Burden on Competition and Promotion of 
Efficiency, Competition and Capital Formation

    Section 23(a) \49\ of the Exchange Act requires the Commission, 
when making rules and regulations under the Exchange Act, to consider 
the impact a new rule would have on competition. Section 23(a)(2) of 
the Exchange Act prohibits the Commission from adopting any rule that 
would impose a burden on competition not necessary or appropriate in 
furtherance of the purposes of the Exchange Act. Section 3(f) of the 
Exchange Act \50\ requires the Commission, when engaging in rulemaking 
that requires it to consider whether an action is necessary or 
appropriate in the public interest, to consider, in addition to the 
protection of investors, whether the action would promote efficiency, 
competition, and capital formation.
---------------------------------------------------------------------------

    \49\ 15 U.S.C. 78w(a).
    \50\ 15 U.S.C. 78c(f).
---------------------------------------------------------------------------

    As discussed above, the amendment to Rule 19b-4 will expand the 
list of categories that qualify for summary effectiveness under Section 
19(b)(3)(A) of the Exchange Act to include any matter that both (i) 
Primarily affects the futures clearing operations of the clearing 
agency with respect to futures that are not security futures and (ii) 
does not significantly affect any securities clearing operations of the 
clearing agency or any related rights or obligations of the clearing 
agency or persons using such service. Specifically, new Rule 19b-
4(f)(4)(ii) is intended to avoid undue delays that could result from 
the requirement that the Commission review changes to rules primarily 
concerning futures clearing operations before they may be considered 
effective. Without new Rule 19b-4(f)(4)(ii), certain clearing agencies 
would be required to submit a significant number of Proposed Rule 
Changes to the Commission for consideration and approval pursuant to 
Section 19(b)(1) that relate primarily to their futures clearing 
operations. Accordingly, the Commission believes such changes would not 
result in any burden to competition and would instead contribute to a 
better capital formation and more efficient markets by limiting the 
potential for any undue delays for services or changes that may benefit 
market participants.

VIII. Regulatory Flexibility Certification

    The Regulatory Flexibility Act (``RFA'') \51\ requires the 
Commission, in promulgating rules, to consider the impact of those 
rules on small entities. Section 603(a) of the APA,\52\ as amended by 
the RFA, generally requires the Commission to undertake a regulatory 
flexibility analysis of all proposed rules to determine the impact of 
such rulemaking on ``small entities.'' \53\ Section 605(b) of the RFA 
states that this requirement shall not apply to any proposed rule 
which, if adopted, would not have a significant economic impact on a 
substantial number of small entities.\54\
---------------------------------------------------------------------------

    \51\ 5 U.S.C. 601 et seq.
    \52\ 5 U.S.C. 603(a).
    \53\ Section 601(b) of the RFA permits agencies to formulate 
their own definitions of ``small entities.'' The Commission has 
adopted definitions for the term ``small entity'' for the purposes 
of rulemaking in accordance with the RFA. These definitions, as 
relevant to this proposed rulemaking, are set forth in Rule 0-10, 17 
CFR 240.0-10.
    \54\ See 5 U.S.C. 605(b).
---------------------------------------------------------------------------

    For the purposes of Commission rulemaking in connection with the 
RFA, a small entity includes, when used with reference to a clearing 
agency, a clearing agency that: (i) Compared, cleared and settled less 
than $500 million in securities transactions during the preceding 
fiscal year; (ii) had less than $200 million of funds and securities in 
its custody or control at all times during the preceding fiscal year 
(or at any time that it has been in business, if shorter) and (iii) is 
not affiliated with any person (other than a natural person) that is 
not a small business or small organization.\55\ Under the standards 
adopted by the Small Business Administration, small entities in the 
finance industry include the following: (i) For entities engaged in 
investment banking, securities dealing and securities brokerage 
activities, entities with $6.5 million or less in annual receipts; (ii) 
for entities engaged in trust, fiduciary and custody activities, 
entities with $6.5 million or less in annual receipts and (iii) funds, 
trusts and other financial vehicles with $6.5 million or less in annual 
receipts.\56\
---------------------------------------------------------------------------

    \55\ 17 CFR 240.0-10(d).
    \56\ 13 CFR 121.201, Sector 52.
---------------------------------------------------------------------------

    The amendments to Rule 19b-4 and to the General Instructions for 
Form 19b-4 would apply to all Registered Clearing Agencies. As of July 
16, 2011, there likely will be seven clearing agencies with active 
operations registered with the Commission. Of the seven Registered 
Clearing Agencies with active operations, three currently maintain a 
futures clearing business. Based on the Commission's existing 
information about these three Registered Clearing Agencies, as well as 
on the entities likely to register with the Commission in the future, 
the Commission preliminarily believes that such entities will not be 
small entities, but rather part of large business entities that exceed 
the thresholds defining ``small entities'' set out above.
    For the reasons stated above, the Commission certifies that the 
proposed amendments to Rule 19b-4 and to the General Instructions for 
Form 19b-4 would not have a significant economic impact on a 
substantial number of small entities for the purposes of the RFA. The 
Commission encourages written comments regarding this certification. 
The Commission requests that commenters describe the nature of any 
impact on small entities, including clearing agencies, and provide 
empirical data to support the extent of the impact.

IX. Statutory Basis and Text of Amendments

    Pursuant to the Exchange Act, and particularly Section 19(b) 
thereof, 15 U.S.C. 78s(b), the Commission proposes to amend Rule 19b-4 
as set forth below.

List of Subjects in 17 CFR Parts 240 and 249

    Brokers, Reporting and recordkeeping requirements, Securities.

Text of Rule

    In accordance with the foregoing, Title 17, chapter II of the Code 
of Federal Regulations is amended as follows:

PART 240--GENERAL RULES AND REGULATIONS, SECURITIES EXCHANGE ACT OF 
1934

0
1. The general authority citation for part 240 continues to read as 
follows:

    Authority:  15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z-2, 77z-3, 
77eee, 77ggg, 77nnn, 77sss, 77ttt, 78c, 78d, 78e, 78f, 78g, 78i, 
78j, 78j-1, 78k, 78k-1, 78l, 78m, 78n, 78n-1, 78o, 78o-4, 78p, 78q, 
78s, 78u-5, 78w, 78x, 78ll, 78mm, 80a-20, 80a-23, 80a-29, 80a-37, 
80b-3, 80b-4, 80b-11, and 7210 et seq., 18 U.S.C. 1350, and 12 
U.S.C. 5221(e)(3), unless otherwise noted.
* * * * *

0
2. Amend Sec.  240.19b-4 by:
0
a. Adding the word ``either'' before the colon in the introductory text 
in paragraph (f)(4);
0
b. Redesignating paragraph (f)(4)(i) as paragraph (f)(4)(i)(A);
0
c. Redesignating paragraph (f)(4)(ii) as paragraph (f)(4)(i)(B);
0
d. Adding the word ``or'' after the semicolon after newly designated 
paragraph (f)(4)(i)(B);
0
e. Adding new paragraph (f)(4)(ii)(A); and
0
f. Adding new paragraph (f)(4)(ii)(B).

0
3. The additions read as follows:

[[Page 41063]]

Sec.  240.19b-4  Filings with respect to proposed rule changes by self-
regulatory organizations.

* * * * *
    (f) * * *
    (4) * * *
    (ii)(A) Primarily affects the futures clearing operations of the 
clearing agency with respect to futures that are not security futures; 
and
    (B) Does not significantly affect any securities clearing 
operations of the clearing agency or any related rights or obligations 
of the clearing agency or persons using such service;
* * * * *

PART 249--FORMS, SECURITIES EXCHANGE ACT OF 1934

0
4. The general authority citation for part 249 continues to read in 
part as follows:

    Authority:  15 U.S.C. 78a et seq. and 7201 et seq.; and 18 
U.S.C. 1350, unless otherwise noted.
* * * * *

0
5. Amend Form 19b-4 (referenced in Sec.  249.819) by:
0
a. Amending paragraph (b)(iv) in Item 7 of the General Instructions 
(Information to be Included in the Completed Form (``Form 19b-4 
Information'')) as follows:

    Note:  The text of Form 19b-4 does not, and the amendments will 
not, appear in the Code of Federal Regulations.

Form 19b-4

* * * * *

GENERAL INSTRUCTIONS FOR FORM 19b-4

* * * * *

Information to be Included in the Completed Form (``Form 19b-4 
Information'')

* * * * *

7. Basis for Summary Effectiveness Pursuant to Section 19(b)(3) or for 
Accelerated Effectiveness Pursuant to Section 19(b)(2) or Section 
19(b)(7)(D)

* * * * *
    (b) * * *
    (iv) effects a change in an existing service of a registered 
clearing agency that either (A)(1) does not adversely affect the 
safeguarding of securities or funds in the custody or control of the 
clearing agency or for which it is responsible and (2) does not 
significantly affect the respective rights or obligations of the 
clearing agency or persons using the service or (B)(1) primarily 
affects the futures clearing operations of the clearing agency with 
respect to futures that are not security futures and (2) does not 
significantly affect any securities clearing operations of the clearing 
agency or any related rights or obligations of the clearing agency or 
persons using such service, and set forth the basis on which such 
designation is made,
* * * * *

    Dated: July 7, 2011.

    By the Commission.
Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-17524 Filed 7-12-11; 8:45 am]
BILLING CODE 8011-01-P