Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Order Granting Accelerated Approval of Proposed Rule Change To Extend the Implementation of FINRA Rule 4240 (Margin Requirements for Credit Default Swaps), 14848-14850 [2012-5986]

Download as PDF 14848 Federal Register / Vol. 77, No. 49 / Tuesday, March 13, 2012 / Notices connection will provide Members the ability to increase data transmission and reduce latency, thereby enhancing their operations. The Exchange believes the proposed fees for this new connection to the Exchange are reasonable because the fees charged will allow the Exchange to cover the hardware, installation, testing and connection costs to maintain and manage the enhanced connection. The proposed fees will allow the Exchange to recoup costs associated with providing the low latency 10 GB connection and provide the Exchange a profit while providing Members the possibility of reducing the number of their connections to the Exchange. The Exchange believes the proposed fees are reasonable in that they are lower than the fees charged by other trading venues for similar connectivity services.5 The Exchange also believes the proposed 10 GB fee for connectivity to the Exchange is equitably allocated in that all Exchange Members that voluntarily select this service option will be charged the same amount to maintain and manage the enhanced connection. All Exchange Members have the option to select this voluntary network connection. The Exchange also believes the proposed 10 GB fee for connectivity to the Exchange is not unfairly discriminatory in that all Exchange Members will have the option of selecting the 10 GB connection to the Exchange, and there is no differentiation among Members with regard to the fees charged for this option. B. Self-Regulatory Organization’s Statement on Burden on Competition The proposed rule change does not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Exchange Act. mstockstill on DSK4VPTVN1PROD with NOTICES C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others The Exchange has not solicited, and does not intend to solicit, comments on this proposed rule change. The Exchange has not received any unsolicited written comments from members or other interested parties. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change has become effective pursuant to Section 5 NYSE charges $10,000 per month for 10Gb LCN (Liquidity Center Network) Connection. See https:// usequities.nyx.com/sites/usequities.nyx.com/files/ nyse_arca_marketplace_fees_1.3.2012.pdf, page 13. VerDate Mar<15>2010 18:29 Mar 12, 2012 Jkt 226001 19(b)(3)(A)(ii) of the Exchange Act.6 At any time within 60 days of the filing of such proposed rule change, the Commission summarily may temporarily suspend such rule change 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, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Exchange Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rulecomments@sec.gov. Please include File Number SR–ISE–2012–09 on the subject line. Paper Comments • Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–ISE–2012–09. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s Internet Web site (https://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission’s Public Reference Room, 100 F Street NE., Washington, DC 20549, on official business days between the hours of 10 a.m. and 3 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–ISE– 2012–09 and should be submitted on or before April 3, 2012. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.7 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2012–5984 Filed 3–12–12; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–66528; File No. SR–FINRA– 2012–014] Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Order Granting Accelerated Approval of Proposed Rule Change To Extend the Implementation of FINRA Rule 4240 (Margin Requirements for Credit Default Swaps) March 7, 2012. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 notice is hereby given that on February 23, 2012, Financial Industry Regulatory Authority, Inc. (‘‘FINRA’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) the proposed rule change as described in Items I and II, below, which Items have been substantially prepared by FINRA. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. For the reasons discussed below, the Commission is granting accelerated approval of the proposed rule change. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change FINRA is proposing to extend to July 17, 2012 the implementation of FINRA Rule 4240, retroactively from January 17, 2012. FINRA Rule 4240 implements an interim pilot program with respect to margin requirements for certain transactions in credit default swaps. The text of the proposed rule change is available on FINRA’s Web site at 7 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 6 15 PO 00000 U.S.C. 78s(b)(3)(A)(ii). Frm 00125 Fmt 4703 Sfmt 4703 E:\FR\FM\13MRN1.SGM 13MRN1 Federal Register / Vol. 77, No. 49 / Tuesday, March 13, 2012 / Notices https://www.finra.org, at the principal office of FINRA and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, FINRA included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item III below. FINRA has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose mstockstill on DSK4VPTVN1PROD with NOTICES On May 22, 2009, the Commission approved FINRA Rule 4240,3 which implements an interim pilot program (‘‘Interim Pilot Program’’) with respect to margin requirements for certain transactions in credit default swaps (‘‘CDS’’). On July 11, 2011, FINRA extended the implementation of Rule 4240 to January 17, 2012.4 As explained in the Approval Order,5 FINRA Rule 4240, coterminous with certain Commission actions,6 is 3 See Securities Exchange Act Release No. 59955 (May 22, 2009), 74 FR 25586 (May 28, 2009) (Notice of Filing and Order Granting Accelerated Approval of Proposed Rule Change, as Modified by Amendment No. 1 [File No. SR–FINRA–2009–012]) (‘‘Approval Order’’). 4 See Securities Exchange Act Release No. 64892 (July 14, 2011), 76 FR 43360 (July 20, 2011) (Notice of Filing and Order Granting Accelerated Approval of Proposed Rule Change [File No. SR–FINRA– 2011–034]). 5 See supra note 3, at 25588–89. 6 In early 2009, the Commission enacted interim final temporary rules providing enumerated exemptions under the federal securities laws for certain CDS to facilitate the operation of one or more central clearing counterparties in such CDS. See Securities Act Release No. 8999 (January 14, 2009), 74 FR 3967 (January 22, 2009) (Temporary Exemptions for Eligible Credit Default Swaps To Facilitate Operation of Central Counterparties To Clear and Settle Credit Default Swaps); Securities Act Release No. 9063 (September 14, 2009), 74 FR 47719 (September 17, 2009) (Extension of Temporary Exemptions for Eligible Credit Default Swaps to Facilitate Operation of Central Counterparties to Clear and Settle Credit Default Swaps); Securities Act Release No. 9158 (November 19, 2010), 75 FR 72660 (November 26, 2010) (Extension of Temporary Exemptions for Eligible Credit Default Swaps to Facilitate Operation of Central Counterparties to Clear and Settle Credit Default Swaps). See also Securities Exchange Act Release No. 59578 (March 13, 2009), 74 FR 11781 (March 19, 2009) (Order Granting Temporary Exemptions in Connection with Request of Chicago Mercantile Exchange Inc. and Citadel Investment VerDate Mar<15>2010 18:29 Mar 12, 2012 Jkt 226001 intended to address concerns arising from counterparty credit risk posed by CDS, including, among other things, risks to the financial system arising from credit risk resulting from bilateral CDS transactions and from a concentration of credit risk to a central counterparty that clears and settles CDS. On July 21, 2010, President Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act (‘‘Dodd-Frank Act’’),7 Title VII of which established a comprehensive new regulatory framework for swaps and security-based swaps,8 including certain CDS. The new legislation was intended among other things to enhance the authority of regulators to implement new rules designed to reduce risk, increase transparency, and promote market integrity with respect to such products. FINRA believes it is appropriate to extend the Interim Pilot Program for a limited period, to July 17, 2012, in light of the continuing development of the CDS business within the framework of the Dodd-Frank Act. In addition, in a separate filing, FINRA is proposing revisions to FINRA Rule 4240 to limit the application of the rule at this time to certain transactions in credit default swaps that are security-based swaps and to make other revisions to update the rule.9 FINRA has requested the Commission to find good cause pursuant to Section 19(b)(2) of the Act 10 for approving the proposed rule change prior to the 30th day after its publication in the Federal Register, such that FINRA can prevent FINRA Rule 4240 from lapsing and implement the proposed rule change retroactively from January 17, 2012. Without the proposed rule change, Group, L.L.C. Related to Central Clearing of Credit Default Swaps, and Request for Comments); Securities Exchange Act Release No. 59165 (December 24, 2008), 74 FR 133 (January 2, 2009) (Order Pursuant to Section 36 of the Securities Exchange Act of 1934 Granting Temporary Exemptions from Sections 5 and 6 of the Exchange Act for Broker-Dealers and Exchanges Effecting Transactions in Credit Default Swaps). 7 Pub. L. 111–203, 124 Stat. 1376 (2010). 8 The terms ‘‘swap’’ and ‘‘security-based swap’’ are defined in Sections 721 and 761 of the DoddFrank Act. The Commission and the CFTC jointly have proposed to further define these terms. See Securities Exchange Act Release No. 64372 (Apr. 29, 2011), 76 FR 29818 (May 23, 2011) (Further Definition of ‘‘Swap,’’ ‘‘Security-Based Swap,’’ and ‘‘Security-Based Swap Agreement’’; Mixed Swaps; Security-Based Swap Agreement Recordkeeping); Securities Exchange Act Release No. 63452 (Dec. 7, 2010), 75 FR 80174 (Dec. 21, 2010) (Further Definition of ‘‘Swap Dealer,’’ ‘‘Security-Based Swap Dealer,’’ ‘‘Major Swap Participant,’’ ‘‘Major Security-Based Swap Participant’’ and ‘‘Eligible Contract Participant’’). 9 See SR–FINRA–2012–015. 10 15 U.S.C. 78s(b)(2). PO 00000 Frm 00126 Fmt 4703 Sfmt 4703 14849 FINRA Rule 4240 would have expired on January 17, 2012. 2. Statutory Basis FINRA believes that the proposed rule change is consistent with the provisions of Section 15A(b)(6) of the Act,11 which requires, among other things, that FINRA rules must be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, and, in general, to protect investors and the public interest. FINRA believes that the proposed rule change will further the purposes of the Act because, consistent with the goals set forth by the Commission when it adopted the interim final temporary rules with respect to the operation of central counterparties to clear and settle CDS, and pending the final implementation of new CFTC and SEC rules pursuant to Title VII of the Dodd-Frank Act, the margin requirements set forth by the proposed rule change will help to stabilize the financial markets. B. Self-Regulatory Organization’s Statement on Burden on Competition FINRA does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others Written comments were neither solicited nor received. III. Solicitation of Comments Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rulecomments@sec.gov. Please include File Number SR–FINRA–2012–014 on the subject line. Paper Comments • Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. 11 15 E:\FR\FM\13MRN1.SGM U.S.C. 78o–3(b)(6). 13MRN1 14850 Federal Register / Vol. 77, No. 49 / Tuesday, March 13, 2012 / Notices mstockstill on DSK4VPTVN1PROD with NOTICES All submissions should refer to File Number SR–FINRA–2012–014. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s Internet Web site (https://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission’s Public Reference Room, 100 F Street NE., Washington, DC 20549, on official business days between the hours of 10 a.m. and 3 p.m. Copies of such filing also will be available for inspection and copying at the principal office of FINRA. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–FINRA–2012–014 and should be submitted on or before April 3, 2012. IV. Commission’s Findings and Order Granting Accelerated Approval of a Proposed Rule Change FINRA has requested that the Commission find good cause pursuant to Section 19(b)(2) of the Act for approving the proposed rule change prior to the 30th day after publication in the Federal Register.12 After careful consideration, the Commission finds that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities association.13 In particular, the Commission finds that the proposed rule change is consistent with Section 15A(b)(6) of the Act, which requires, among other things, that FINRA rules be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, and, in general, to protect investors and the 12 15 U.S.C. 78s(b)(2). 13 In approving this rule change, the Commission notes that it has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). VerDate Mar<15>2010 18:29 Mar 12, 2012 Jkt 226001 public interest.14 The accelerated approval will, consistent with the goals set forth by the Commission when it adopted the interim final temporary rules with respect to the operation of central counterparties to clear and settle CDS, and pending the final implementation of new CFTC and SEC rules pursuant to Title VII of the DoddFrank Act, help to stabilize the financial markets by setting forth margin requirements for certain transactions in CDS. The Commission also finds good cause, pursuant to Section 19(b)(2) of the Act,15 for approving the proposed rule change prior to the 30th day after the date of publication of notice in the Federal Register. This accelerated approval will allow the existing pilot program to be effective retroactively to January 17, 2012, and extended through July 17, 2012, to permit the pilot program to continue without interruption and extend the benefits of a pilot program that the Commission has previously approved and extended. V. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,16 that the proposed rule change (SR–FINRA– 2012–014), be, and it hereby is, approved on an accelerated basis to July 17, 2012. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.17 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2012–5986 Filed 3–12–12; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–66527; File No. SR–FINRA– 2012–015] Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Order Granting Accelerated Approval of Proposed Rule Change To Amend FINRA Rule 4240 (Margin Requirements for Credit Default Swaps) March 7, 2012. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 14 15 U.S.C. 78o–3(b)(6). U.S.C. 78s(b)(2). 16 15 U.S.C. 78s(b)(2). 17 17 CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 15 15 PO 00000 Frm 00127 Fmt 4703 Sfmt 4703 notice is hereby given that on February 23, 2012, Financial Industry Regulatory Authority, Inc. (‘‘FINRA’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) the proposed rule change as described in Items I and II, below, which Items have been substantially prepared by FINRA. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. For the reasons discussed below, the Commission is granting accelerated approval of the proposed rule change. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change FINRA is proposing to amend FINRA Rule 4240 (Margin Requirements for Credit Default Swaps) to limit the application of the rule at this time to certain transactions in credit default swaps that are security-based swaps and to make other revisions to update the rule. FINRA Rule 4240 implements an interim pilot program with respect to margin requirements for certain transactions in credit default swaps. The text of the proposed rule change is available on FINRA’s Web site at https://www.finra.org, at the principal office of FINRA and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, FINRA included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. FINRA has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose On May 22, 2009, the Commission approved FINRA Rule 4240,3 which implements an interim pilot program (‘‘Interim Pilot Program’’) with respect to margin requirements for certain transactions in credit default swaps (‘‘CDS’’). FINRA has filed a proposed 3 See Securities Exchange Act Release No. 59955 (May 22, 2009), 74 FR 25586 (May 28, 2009) (Notice of Filing and Order Granting Accelerated Approval of Proposed Rule Change, as Modified by Amendment No. 1 [File No. SR–FINRA–2009–012]) (‘‘Approval Order’’). E:\FR\FM\13MRN1.SGM 13MRN1

Agencies

[Federal Register Volume 77, Number 49 (Tuesday, March 13, 2012)]
[Notices]
[Pages 14848-14850]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-5986]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-66528; File No. SR-FINRA-2012-014]


Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing and Order Granting Accelerated 
Approval of Proposed Rule Change To Extend the Implementation of FINRA 
Rule 4240 (Margin Requirements for Credit Default Swaps)

March 7, 2012.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on February 23, 2012, Financial Industry Regulatory Authority, Inc. 
(``FINRA'') filed with the Securities and Exchange Commission (``SEC'' 
or ``Commission'') the proposed rule change as described in Items I and 
II, below, which Items have been substantially prepared by FINRA. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons. For the reasons discussed 
below, the Commission is granting accelerated approval of the proposed 
rule change.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    FINRA is proposing to extend to July 17, 2012 the implementation of 
FINRA Rule 4240, retroactively from January 17, 2012. FINRA Rule 4240 
implements an interim pilot program with respect to margin requirements 
for certain transactions in credit default swaps.
    The text of the proposed rule change is available on FINRA's Web 
site at

[[Page 14849]]

https://www.finra.org, at the principal office of FINRA and at the 
Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, FINRA included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item III below. FINRA has prepared summaries, set forth in sections A, 
B, and C below, of the most significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    On May 22, 2009, the Commission approved FINRA Rule 4240,\3\ which 
implements an interim pilot program (``Interim Pilot Program'') with 
respect to margin requirements for certain transactions in credit 
default swaps (``CDS''). On July 11, 2011, FINRA extended the 
implementation of Rule 4240 to January 17, 2012.\4\
---------------------------------------------------------------------------

    \3\ See Securities Exchange Act Release No. 59955 (May 22, 
2009), 74 FR 25586 (May 28, 2009) (Notice of Filing and Order 
Granting Accelerated Approval of Proposed Rule Change, as Modified 
by Amendment No. 1 [File No. SR-FINRA-2009-012]) (``Approval 
Order'').
    \4\ See Securities Exchange Act Release No. 64892 (July 14, 
2011), 76 FR 43360 (July 20, 2011) (Notice of Filing and Order 
Granting Accelerated Approval of Proposed Rule Change [File No. SR-
FINRA-2011-034]).
---------------------------------------------------------------------------

    As explained in the Approval Order,\5\ FINRA Rule 4240, coterminous 
with certain Commission actions,\6\ is intended to address concerns 
arising from counterparty credit risk posed by CDS, including, among 
other things, risks to the financial system arising from credit risk 
resulting from bilateral CDS transactions and from a concentration of 
credit risk to a central counterparty that clears and settles CDS. On 
July 21, 2010, President Obama signed into law the Dodd-Frank Wall 
Street Reform and Consumer Protection Act (``Dodd-Frank Act''),\7\ 
Title VII of which established a comprehensive new regulatory framework 
for swaps and security-based swaps,\8\ including certain CDS. The new 
legislation was intended among other things to enhance the authority of 
regulators to implement new rules designed to reduce risk, increase 
transparency, and promote market integrity with respect to such 
products.
---------------------------------------------------------------------------

    \5\ See supra note 3, at 25588-89.
    \6\ In early 2009, the Commission enacted interim final 
temporary rules providing enumerated exemptions under the federal 
securities laws for certain CDS to facilitate the operation of one 
or more central clearing counterparties in such CDS. See Securities 
Act Release No. 8999 (January 14, 2009), 74 FR 3967 (January 22, 
2009) (Temporary Exemptions for Eligible Credit Default Swaps To 
Facilitate Operation of Central Counterparties To Clear and Settle 
Credit Default Swaps); Securities Act Release No. 9063 (September 
14, 2009), 74 FR 47719 (September 17, 2009) (Extension of Temporary 
Exemptions for Eligible Credit Default Swaps to Facilitate Operation 
of Central Counterparties to Clear and Settle Credit Default Swaps); 
Securities Act Release No. 9158 (November 19, 2010), 75 FR 72660 
(November 26, 2010) (Extension of Temporary Exemptions for Eligible 
Credit Default Swaps to Facilitate Operation of Central 
Counterparties to Clear and Settle Credit Default Swaps). See also 
Securities Exchange Act Release No. 59578 (March 13, 2009), 74 FR 
11781 (March 19, 2009) (Order Granting Temporary Exemptions in 
Connection with Request of Chicago Mercantile Exchange Inc. and 
Citadel Investment Group, L.L.C. Related to Central Clearing of 
Credit Default Swaps, and Request for Comments); Securities Exchange 
Act Release No. 59165 (December 24, 2008), 74 FR 133 (January 2, 
2009) (Order Pursuant to Section 36 of the Securities Exchange Act 
of 1934 Granting Temporary Exemptions from Sections 5 and 6 of the 
Exchange Act for Broker-Dealers and Exchanges Effecting Transactions 
in Credit Default Swaps).
    \7\ Pub. L. 111-203, 124 Stat. 1376 (2010).
    \8\ The terms ``swap'' and ``security-based swap'' are defined 
in Sections 721 and 761 of the Dodd-Frank Act. The Commission and 
the CFTC jointly have proposed to further define these terms. See 
Securities Exchange Act Release No. 64372 (Apr. 29, 2011), 76 FR 
29818 (May 23, 2011) (Further Definition of ``Swap,'' ``Security-
Based Swap,'' and ``Security-Based Swap Agreement''; Mixed Swaps; 
Security-Based Swap Agreement Recordkeeping); Securities Exchange 
Act Release No. 63452 (Dec. 7, 2010), 75 FR 80174 (Dec. 21, 2010) 
(Further Definition of ``Swap Dealer,'' ``Security-Based Swap 
Dealer,'' ``Major Swap Participant,'' ``Major Security-Based Swap 
Participant'' and ``Eligible Contract Participant'').
---------------------------------------------------------------------------

    FINRA believes it is appropriate to extend the Interim Pilot 
Program for a limited period, to July 17, 2012, in light of the 
continuing development of the CDS business within the framework of the 
Dodd-Frank Act. In addition, in a separate filing, FINRA is proposing 
revisions to FINRA Rule 4240 to limit the application of the rule at 
this time to certain transactions in credit default swaps that are 
security-based swaps and to make other revisions to update the rule.\9\
---------------------------------------------------------------------------

    \9\ See SR-FINRA-2012-015.
---------------------------------------------------------------------------

    FINRA has requested the Commission to find good cause pursuant to 
Section 19(b)(2) of the Act \10\ for approving the proposed rule change 
prior to the 30th day after its publication in the Federal Register, 
such that FINRA can prevent FINRA Rule 4240 from lapsing and implement 
the proposed rule change retroactively from January 17, 2012. Without 
the proposed rule change, FINRA Rule 4240 would have expired on January 
17, 2012.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78s(b)(2).
---------------------------------------------------------------------------

2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the 
provisions of Section 15A(b)(6) of the Act,\11\ which requires, among 
other things, that FINRA rules must be designed to prevent fraudulent 
and manipulative acts and practices, to promote just and equitable 
principles of trade, and, in general, to protect investors and the 
public interest. FINRA believes that the proposed rule change will 
further the purposes of the Act because, consistent with the goals set 
forth by the Commission when it adopted the interim final temporary 
rules with respect to the operation of central counterparties to clear 
and settle CDS, and pending the final implementation of new CFTC and 
SEC rules pursuant to Title VII of the Dodd-Frank Act, the margin 
requirements set forth by the proposed rule change will help to 
stabilize the financial markets.
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78o-3(b)(6).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    FINRA does not believe that the proposed rule change will result in 
any burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    Written comments were neither solicited nor received.

III. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-FINRA-2012-014 on the subject line.

Paper Comments

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


[[Page 14850]]


All submissions should refer to File Number SR-FINRA-2012-014. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549, on official business days between the hours of 10 
a.m. and 3 p.m. Copies of such filing also will be available for 
inspection and copying at the principal office of FINRA. All comments 
received will be posted without change; the Commission does not edit 
personal identifying information from submissions. You should submit 
only information that you wish to make available publicly. All 
submissions should refer to File Number SR-FINRA-2012-014 and should be 
submitted on or before April 3, 2012.

IV. Commission's Findings and Order Granting Accelerated Approval of a 
Proposed Rule Change

    FINRA has requested that the Commission find good cause pursuant to 
Section 19(b)(2) of the Act for approving the proposed rule change 
prior to the 30th day after publication in the Federal Register.\12\ 
After careful consideration, the Commission finds that the proposed 
rule change is consistent with the requirements of the Act and the 
rules and regulations thereunder applicable to a national securities 
association.\13\
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    \12\ 15 U.S.C. 78s(b)(2).
    \13\ In approving this rule change, the Commission notes that it 
has considered the proposed rule's impact on efficiency, 
competition, and capital formation. See 15 U.S.C. 78c(f).
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    In particular, the Commission finds that the proposed rule change 
is consistent with Section 15A(b)(6) of the Act, which requires, among 
other things, that FINRA rules be designed to prevent fraudulent and 
manipulative acts and practices, to promote just and equitable 
principles of trade, and, in general, to protect investors and the 
public interest.\14\ The accelerated approval will, consistent with the 
goals set forth by the Commission when it adopted the interim final 
temporary rules with respect to the operation of central counterparties 
to clear and settle CDS, and pending the final implementation of new 
CFTC and SEC rules pursuant to Title VII of the Dodd-Frank Act, help to 
stabilize the financial markets by setting forth margin requirements 
for certain transactions in CDS.
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    \14\ 15 U.S.C. 78o-3(b)(6).
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    The Commission also finds good cause, pursuant to Section 19(b)(2) 
of the Act,\15\ for approving the proposed rule change prior to the 
30th day after the date of publication of notice in the Federal 
Register. This accelerated approval will allow the existing pilot 
program to be effective retroactively to January 17, 2012, and extended 
through July 17, 2012, to permit the pilot program to continue without 
interruption and extend the benefits of a pilot program that the 
Commission has previously approved and extended.
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    \15\ 15 U.S.C. 78s(b)(2).
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V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\16\ that the proposed rule change (SR-FINRA-2012-014), be, and it 
hereby is, approved on an accelerated basis to July 17, 2012.
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    \16\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-5986 Filed 3-12-12; 8:45 am]
BILLING CODE 8011-01-P
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