Notice Pursuant to Rule 15c3-3a, Note H(b)(3) Regarding Application of the Customer Protection Rule Reserve Computations With Respect to U.S. Treasury Securities, 94801-94802 [2024-28058]
Download as PDF
<![CDATA[
Federal Register / Vol. 89, No. 230 / Friday, November 29, 2024 / Notices
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the 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 Act.
Comments may be submitted by any of
the following methods:
khammond on DSK9W7S144PROD with NOTICES
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–
NYSEARCA–2024–100 on the subject
line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to file
number SR–NYSEARCA–2024–100.
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 website (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 website 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. Do not include personal
identifiable information in submissions;
you should submit only information
that you wish to make available
publicly. We may redact in part or
withhold entirely from publication
submitted material that is obscene or
subject to copyright protection. All
VerDate Sep<11>2014
21:22 Nov 27, 2024
Jkt 265001
submissions should refer to file number
SR–NYSEARCA–2024–100 and should
be submitted on or before December 20,
2024.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.60
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024–27995 Filed 11–27–24; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–101729]
Notice Pursuant to Rule 15c3–3a, Note
H(b)(3) Regarding Application of the
Customer Protection Rule Reserve
Computations With Respect to U.S.
Treasury Securities
Securities and Exchange
Commission.
ACTION: Notice.
AGENCY:
The Securities and Exchange
Commission (‘‘Commission’’) is
publishing notice that broker-dealers
may include a debit in the customer
protection rule reserve computations
when depositing cash, U.S. Treasury
securities, and/or qualified customer
securities to meet a margin requirement
of the Fixed Income Clearing
Corporation (‘‘FICC’’) resulting from
positions in U.S. Treasury securities of
the customers of the broker-dealer.
FOR FURTHER INFORMATION CONTACT:
Randall W. Roy, Deputy Associate
Director; Raymond Lombardo, Assistant
Director; or Sheila Dombal Swartz,
Senior Special Counsel, at (202) 551–
5500, Office of Broker-Dealer Finances,
Division of Trading and Markets;
Securities and Exchange Commission,
100 F Street NE, Washington, DC
20549–7010.
SUPPLEMENTARY INFORMATION:
SUMMARY:
I. Background
On December 13, 2023, the
Commission adopted rules under the
Securities Exchange Act of 1934
(‘‘Exchange Act’’) to amend the
standards applicable to covered clearing
agencies for U.S. Treasury securities
(‘‘U.S. Treasury securities CCAs’’) to
enhance risk management practices for
central counterparties in the U.S.
Treasury market and facilitate
additional clearing of U.S. Treasury
securities transactions.1 The
60 17
CFR 200.30–3(a)(12).
Standards for Covered Clearing Agencies for
U.S. Treasury Securities and Application of the
Broker-Dealer Customer Protection Rule With
1 See
PO 00000
Frm 00101
Fmt 4703
Sfmt 4703
94801
Commission also amended the formula
for computing reserve account
requirements under the broker-dealer
customer protection rule.2 The
amendments to the formula—which are
set forth in Rule 15c3–3a—permit
margin required and on deposit with a
U.S. Treasury securities CCA to be
included as a debit when computing
reserve requirements with respect to
customers and proprietary accounts of
broker-dealers (‘‘PAB’’), subject to
certain conditions.3 In particular, the
amendments added Item 15 to the
customer and PAB reserve computations
on which to record the value of the
debit and prescribed conditions—set
forth in Note H to Item 15—for
including the debit in the formulas.4
Each of the conditions in Note H needs
to be met for a broker-dealer to include
a debit equal to the amount of customer
or PAB account holder margin required
and on deposit at the U.S. Treasury
securities CCA.5
Certain of the conditions in Note H
require the broker-dealer to take a
number of steps with respect to the
customer and PAB account holder
margin in its custody.6 Other conditions
provide that the U.S. Treasury securities
CCA that will receive the customer or
PAB account holder margin from the
broker-dealer must have adopted rules—
approved by the Commission—that
require it to take certain steps with
respect to calculating margin
requirements and handling customer
and PAB account holder margin
received from the broker-dealer.7 The
requirements of Note H are designed to
permit the inclusion of the debit in the
customer and PAB reserve computations
Respect to U.S. Treasury Securities, Exchange Act
Release No. 99149 (Dec. 13, 2023), 89 FR 2714 (Jan.
16, 2024) (‘‘Treasury Clearing Release’’).
2 See Treasury Clearing Release, 89 FR at 2760–
68. See also 17 CFR 240.15c3–3a (the formula for
computing reserve requirements under the
customer protection rule) (‘‘Rule 15c3–3a’’); 17 CFR
240.15c3–3 (the customer protection rule) (‘‘Rule
15c3–3’’). Rule 15c3–3 requires a broker-dealer to
compute the net amount of cash owed to customers
and PAB account holders under a formula in Rule
15c3–3a (‘‘customer and PAB reserve
computations’’). Generally, broker-dealers must
perform their customer and PAB reserve
computations and make any required deposits in a
special reserve account at a bank weekly. See
paragraph (e)(3) to Rule 15c3–3.
3 See Treasury Clearing Release, 89 FR at 2760–
68.
4 See id. The amendments also modified Note B
to Item 2 of the customer and PAB reserve
computations to provide that this item in the
reserve computations must include as a credit the
market value of customers’ and PAB account
holders’ securities on deposit at a U.S. Treasury
CCA. See id. at 2761.
5 See Treasury Clearing Release, 89 FR at 2760–
68.
6 See Rule 15c3–3a, Note H(a) and (b)(1).
7 See Rule 15c3–3a, Note H(b)(2).
E:\FR\FM\29NON1.SGM
29NON1
94802
Federal Register / Vol. 89, No. 230 / Friday, November 29, 2024 / Notices
under conditions that ‘‘provide
maximum protection’’ to the brokerdealer’s customers and PAB account
holders and that do not diminish the
customer protection objectives of Rules
15c3–3 and 15c3–3a.8
Paragraph (b)(3) to Note H sets forth
the final condition: that the Commission
has approved rules of the U.S. Treasury
securities CCA that meet the conditions
of Note H and has published (and not
subsequently withdrawn) a notice that
broker-dealers may include a debit in
the customer and/or PAB reserve
computations when depositing cash,
U.S. Treasury securities, and/or
qualified customer securities to meet a
margin requirement of the U.S. Treasury
securities CCA resulting from positions
in U.S. Treasury securities of the
customers or PAB account holders of
the broker-dealer.9 The Commission
stated that its staff would analyze the
U.S. Treasury securities CCA’s approved
rules and practices regarding the
treatment of customer position margin
and make a recommendation as to
whether they adequately implement the
customer protection objectives of the
conditions set forth in Note H.10 If
satisfied with the staff’s
recommendation, the Commission
stated it will publish a positive notice.
II. Notice
On November 21, 2024, the Division
of Trading and Markets, pursuant to
delegated authority, approved proposed
rule change SR–FICC–2024–007 (‘‘FICC
rule change’’).11 The FICC rule change,
among other things, modifies FICC’s
Government Securities Division
Rulebook to address the conditions of
Note H of the customer and PAB reserve
computations set forth in Rule 15c3–3a.
FICC expects to implement the FICC
rule change by no later than March 31,
2025, and will announce the effective
date of the FICC rule change by an
Important Notice posted to FICC’s
website.12 The staff has analyzed the
FICC rule change and made a
recommendation to the Commission
that it adequately implements the
8 See
Treasury Clearing Release, 89 FR at 2760.
Rule 15c3–3a, Note H(b)(3).
10 See Treasury Clearing Release, 89 FR at 2768.
11 See Exchange Act Release No. 101695 (Nov. 21,
2024). FICC also filed this proposed rule change as
an Advance Notice (File No. SR–FICC–2024–802)
with the Commission pursuant to Section 806(e)(1)
of Title VIII of the Dodd-Frank Wall Street Reform
and Consumer Protection Act entitled the Payment,
Clearing, and Settlement Supervision Act of 2010,
12 U.S.C. 5465(e)(1), and Rule 19b–4(n)(1)(i) under
the Exchange Act, 17 CFR 240.19b–4(n)(1)(i). On
Nov. 21, 2024, the Commission issued a Notice of
No Objection to Advance Notice SR–FICC–2024–
802.
12 See File No. SR–FICC–2024–007.
khammond on DSK9W7S144PROD with NOTICES
9 See
VerDate Sep<11>2014
21:22 Nov 27, 2024
Jkt 265001
customer protection objectives of the
conditions set forth in Note H.
Accordingly, the Commission is
publishing this notice to advise brokerdealers that they may include a debit in
their customer and/or PAB reserve
computations when depositing cash,
U.S. Treasury securities, and/or
qualified customer securities to meet a
margin requirement of FICC resulting
from positions in U.S. Treasury
securities of the customers of the brokerdealer.13 Any changes to the relevant
FICC rules and practices that would
undermine these customer protection
objectives could result in the
Commission withdrawing this notice, at
which point a broker-dealer could no
longer include the debit in the customer
and/or PAB reserve computations.
By the Commission.
Dated: November 25, 2024.
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024–28058 Filed 11–27–24; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–101715; File No. SR–
CboeEDGX–2024–077]
Self-Regulatory Organizations; Cboe
EDGX Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change To List Options
on Certain Bitcoin ETFs
November 22, 2024
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 November
21, 2024, Cboe EDGX Exchange, Inc.
(‘‘Exchange’’ or ‘‘EDGX Options’’) filed
with the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I and II below, which Items have
been prepared by the Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Cboe EDGX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘EDGX Options’’)
proposes to amend Rule 19.3. The text
of the proposed rule change is provided
in Exhibit 5.
13 See supra note 5 and accompanying text
(discussing Note H conditions).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
PO 00000
Frm 00102
Fmt 4703
Sfmt 4703
The text of the proposed rule change
is also available on the Exchange’s
website (https://markets.cboe.com/us/
options/regulation/rule_filings/edgx/),
at the Exchange’s Office of the
Secretary, 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, the
Exchange 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. The
Exchange 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
The Exchange proposes to amend
Rule 19.3 regarding the criteria for
underlying securities. Specifically, the
Exchange proposes to amend Rule
19.3(i)(4) to allow the Exchange to list
and trade options on shares or other
securities (‘‘Fund Shares’’) that are
principally traded on a national
securities exchange and are defined as
an ‘‘NMS stock’’ under Rule 600 of
Regulation NMS and that represent
interests in the Fidelity Wise Origin
Bitcoin Fund (the ‘‘Fidelity Fund’’) and
the ARK 21Shares Bitcoin ETF (the
‘‘ARK 21 Fund’’ and, with the Fidelity
Fund, the ‘‘Bitcoin Funds’’).3 Current
Rule 19.3(i) provides that, subject to
certain other criteria set forth in that
Rule, securities deemed appropriate for
options trading include Fund Shares
that represent certain types of interests,4
3 See Securities Exchange Act Release No. 99306
(January 10, 2024), 89 FR 3008, 3009 (January 17,
2024) (SR–NYSEArca–2021–90; SR–NYSEArca–
2023–44; SR–NYSEArca–2023–58; SR–NASDAQ–
2023–016; SR–NASDAQ–2023–019; SR–CboeBZX–
2023–028; SR–CboeBZX–2023–038; SR–CboeBZX–
2023–040; SR–CboeBZX–2023–042; SR–CboeBZX–
2023–044; and SR–CboeBZX–2023–072) (Order
Granting Accelerated Approval of Proposed Rule
Changes, as Modified by Amendments Thereto, to
List and Trade Bitcoin-Based Commodity-Based
Trust Shares and Trust Units) (‘‘Bitcoin ETP
Approval Order’’).
4 See Rule 19.3(i) which permits options trading
on Fund Shares that (1) represent interests in
registered investment companies (or series thereof)
organized as open-end management investment
companies, unit investment trusts or similar
entities, and that hold portfolios of securities
comprising or otherwise based on or representing
E:\FR\FM\29NON1.SGM
29NON1
]]>Agencies
[Federal Register Volume 89, Number 230 (Friday, November 29, 2024)]
[Notices]
[Pages 94801-94802]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-28058]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-101729]
Notice Pursuant to Rule 15c3-3a, Note H(b)(3) Regarding
Application of the Customer Protection Rule Reserve Computations With
Respect to U.S. Treasury Securities
AGENCY: Securities and Exchange Commission.
ACTION: Notice.
-----------------------------------------------------------------------
SUMMARY: The Securities and Exchange Commission (``Commission'') is
publishing notice that broker-dealers may include a debit in the
customer protection rule reserve computations when depositing cash,
U.S. Treasury securities, and/or qualified customer securities to meet
a margin requirement of the Fixed Income Clearing Corporation
(``FICC'') resulting from positions in U.S. Treasury securities of the
customers of the broker-dealer.
FOR FURTHER INFORMATION CONTACT: Randall W. Roy, Deputy Associate
Director; Raymond Lombardo, Assistant Director; or Sheila Dombal
Swartz, Senior Special Counsel, at (202) 551-5500, Office of Broker-
Dealer Finances, Division of Trading and Markets; Securities and
Exchange Commission, 100 F Street NE, Washington, DC 20549-7010.
SUPPLEMENTARY INFORMATION:
I. Background
On December 13, 2023, the Commission adopted rules under the
Securities Exchange Act of 1934 (``Exchange Act'') to amend the
standards applicable to covered clearing agencies for U.S. Treasury
securities (``U.S. Treasury securities CCAs'') to enhance risk
management practices for central counterparties in the U.S. Treasury
market and facilitate additional clearing of U.S. Treasury securities
transactions.\1\ The Commission also amended the formula for computing
reserve account requirements under the broker-dealer customer
protection rule.\2\ The amendments to the formula--which are set forth
in Rule 15c3-3a--permit margin required and on deposit with a U.S.
Treasury securities CCA to be included as a debit when computing
reserve requirements with respect to customers and proprietary accounts
of broker-dealers (``PAB''), subject to certain conditions.\3\ In
particular, the amendments added Item 15 to the customer and PAB
reserve computations on which to record the value of the debit and
prescribed conditions--set forth in Note H to Item 15--for including
the debit in the formulas.\4\ Each of the conditions in Note H needs to
be met for a broker-dealer to include a debit equal to the amount of
customer or PAB account holder margin required and on deposit at the
U.S. Treasury securities CCA.\5\
---------------------------------------------------------------------------
\1\ See Standards for Covered Clearing Agencies for U.S.
Treasury Securities and Application of the Broker-Dealer Customer
Protection Rule With Respect to U.S. Treasury Securities, Exchange
Act Release No. 99149 (Dec. 13, 2023), 89 FR 2714 (Jan. 16, 2024)
(``Treasury Clearing Release'').
\2\ See Treasury Clearing Release, 89 FR at 2760-68. See also 17
CFR 240.15c3-3a (the formula for computing reserve requirements
under the customer protection rule) (``Rule 15c3-3a''); 17 CFR
240.15c3-3 (the customer protection rule) (``Rule 15c3-3''). Rule
15c3-3 requires a broker-dealer to compute the net amount of cash
owed to customers and PAB account holders under a formula in Rule
15c3-3a (``customer and PAB reserve computations''). Generally,
broker-dealers must perform their customer and PAB reserve
computations and make any required deposits in a special reserve
account at a bank weekly. See paragraph (e)(3) to Rule 15c3-3.
\3\ See Treasury Clearing Release, 89 FR at 2760-68.
\4\ See id. The amendments also modified Note B to Item 2 of the
customer and PAB reserve computations to provide that this item in
the reserve computations must include as a credit the market value
of customers' and PAB account holders' securities on deposit at a
U.S. Treasury CCA. See id. at 2761.
\5\ See Treasury Clearing Release, 89 FR at 2760-68.
---------------------------------------------------------------------------
Certain of the conditions in Note H require the broker-dealer to
take a number of steps with respect to the customer and PAB account
holder margin in its custody.\6\ Other conditions provide that the U.S.
Treasury securities CCA that will receive the customer or PAB account
holder margin from the broker-dealer must have adopted rules--approved
by the Commission--that require it to take certain steps with respect
to calculating margin requirements and handling customer and PAB
account holder margin received from the broker-dealer.\7\ The
requirements of Note H are designed to permit the inclusion of the
debit in the customer and PAB reserve computations
[[Page 94802]]
under conditions that ``provide maximum protection'' to the broker-
dealer's customers and PAB account holders and that do not diminish the
customer protection objectives of Rules 15c3-3 and 15c3-3a.\8\
---------------------------------------------------------------------------
\6\ See Rule 15c3-3a, Note H(a) and (b)(1).
\7\ See Rule 15c3-3a, Note H(b)(2).
\8\ See Treasury Clearing Release, 89 FR at 2760.
---------------------------------------------------------------------------
Paragraph (b)(3) to Note H sets forth the final condition: that the
Commission has approved rules of the U.S. Treasury securities CCA that
meet the conditions of Note H and has published (and not subsequently
withdrawn) a notice that broker-dealers may include a debit in the
customer and/or PAB reserve computations when depositing cash, U.S.
Treasury securities, and/or qualified customer securities to meet a
margin requirement of the U.S. Treasury securities CCA resulting from
positions in U.S. Treasury securities of the customers or PAB account
holders of the broker-dealer.\9\ The Commission stated that its staff
would analyze the U.S. Treasury securities CCA's approved rules and
practices regarding the treatment of customer position margin and make
a recommendation as to whether they adequately implement the customer
protection objectives of the conditions set forth in Note H.\10\ If
satisfied with the staff's recommendation, the Commission stated it
will publish a positive notice.
---------------------------------------------------------------------------
\9\ See Rule 15c3-3a, Note H(b)(3).
\10\ See Treasury Clearing Release, 89 FR at 2768.
---------------------------------------------------------------------------
II. Notice
On November 21, 2024, the Division of Trading and Markets, pursuant
to delegated authority, approved proposed rule change SR-FICC-2024-007
(``FICC rule change'').\11\ The FICC rule change, among other things,
modifies FICC's Government Securities Division Rulebook to address the
conditions of Note H of the customer and PAB reserve computations set
forth in Rule 15c3-3a. FICC expects to implement the FICC rule change
by no later than March 31, 2025, and will announce the effective date
of the FICC rule change by an Important Notice posted to FICC's
website.\12\ The staff has analyzed the FICC rule change and made a
recommendation to the Commission that it adequately implements the
customer protection objectives of the conditions set forth in Note H.
---------------------------------------------------------------------------
\11\ See Exchange Act Release No. 101695 (Nov. 21, 2024). FICC
also filed this proposed rule change as an Advance Notice (File No.
SR-FICC-2024-802) with the Commission pursuant to Section 806(e)(1)
of Title VIII of the Dodd-Frank Wall Street Reform and Consumer
Protection Act entitled the Payment, Clearing, and Settlement
Supervision Act of 2010, 12 U.S.C. 5465(e)(1), and Rule 19b-
4(n)(1)(i) under the Exchange Act, 17 CFR 240.19b-4(n)(1)(i). On
Nov. 21, 2024, the Commission issued a Notice of No Objection to
Advance Notice SR-FICC-2024-802.
\12\ See File No. SR-FICC-2024-007.
---------------------------------------------------------------------------
Accordingly, the Commission is publishing this notice to advise
broker-dealers that they may include a debit in their customer and/or
PAB reserve computations when depositing cash, U.S. Treasury
securities, and/or qualified customer securities to meet a margin
requirement of FICC resulting from positions in U.S. Treasury
securities of the customers of the broker-dealer.\13\ Any changes to
the relevant FICC rules and practices that would undermine these
customer protection objectives could result in the Commission
withdrawing this notice, at which point a broker-dealer could no longer
include the debit in the customer and/or PAB reserve computations.
---------------------------------------------------------------------------
\13\ See supra note 5 and accompanying text (discussing Note H
conditions).
---------------------------------------------------------------------------
By the Commission.
Dated: November 25, 2024.
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-28058 Filed 11-27-24; 8:45 am]
BILLING CODE 8011-01-P
