80 FR 23618 - Self-Regulatory Organizations; SS&C Technologies, Inc.; Notice of Filing of Application for Exemption From Registration as a Clearing Agency
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 80, Issue 81 (April 28, 2015)
Federal Register Volume 80, Issue 81 (April 28, 2015)
| Page Range | 23618-23625 | |
| FR Document | 2015-09841 |
[Federal Register Volume 80, Number 81 (Tuesday, April 28, 2015)] [Notices] [Pages 23618-23625] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2015-09841] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-74794; File No. 600-34] Self-Regulatory Organizations; SS&C Technologies, Inc.; Notice of Filing of Application for Exemption From Registration as a Clearing Agency April 23, 2015. I. Introduction On April 15, 2013, SS&C Technologies, Inc. (``SS&C'') filed with the Securities and Exchange Commission (``Commission'') an application on Form CA-1 for exemption from registration as a clearing agency pursuant to Section 17A of the Securities Exchange Act of 1934 (``Exchange Act'') and Rule 17Ab2-1 thereunder. SS&C amended its application on August 12, 2013, December 23, 2014, and March 30, 2015. SS&C is requesting an exemption from clearing agency registration in connection with its proposal to offer an electronic trade confirmation (``ETC'') service and a matching service. The Commission is publishing this notice in order to solicit comments from interested persons on the exemption request.\1\ The Commission will consider any comments it receives in making its determination whether to grant SS&C's request for an exemption from clearing agency registration. --------------------------------------------------------------------------- \1\ The descriptions set forth in this notice regarding the structure and operations of SS&C have been largely derived from information contained in SS&C's amended Form CA-1 application and publicly available sources. The application and non-confidential exhibits thereto are available on the Commission's Web site. --------------------------------------------------------------------------- II. Background A. SS&C Organization SS&C was incorporated in the State of Delaware on March 29, 1996. SS&C's headquarters are in Windsor, Connecticut, with offices in 20 locations across the United States. SS&C has additional offices in Toronto and other locations throughout the world, and is a global provider of financial services-related solutions to investment management, banking, and other financial sector clients. All control and direction over SS&C is vested in SS&C Technologies Holdings, Inc., SS&C's parent company and a public holding company listed on NASDAQ (symbol SSNC).\2\ --------------------------------------------------------------------------- \2\ See Form CA-1 at p. 111 (Exhibit C, providing a graphic description of SS&C's organizational structure). --------------------------------------------------------------------------- SS&C proposes to provide ETC services and matching services for fixed-income and equity trades as described [[Page 23619]] in its Form CA-1 application. An overview of SS&C's proposed matching service is presented in Part III below. All matching service activities would be performed by SS&C's subsidiary, SS&C Technologies Canada Corp. (``SS&C Canada''). The policies and operations of SS&C Canada are overseen by its officers and directors, and are subject to control by SS&C's parent, SS&C Technologies Holdings, Inc. SS&C Canada will perform the matching services in Mississauga, Canada, through its software-enabled service, SSCNet, which is a global trade network linking investment managers, broker-dealers, clearing agencies, custodians, and interested parties. Client support for these services will be rendered through SS&C's offices in the United States, the United Kingdom, and Australia. SS&C will coordinate support activity, which includes help desk facilities and call and issue tracking through a shared client call database, and relationship management. SS&C and SS&C Canada will maintain an intercompany agreement setting forth respective services and obligations. In addition to the conditions set forth in this notice, SS&C has made the following representations regarding its operations: (i) SS&C shall obtain contractual commitments from its customers permitting it to provide information to the Ontario Securities Commission, the Commission, and other third parties; (ii) SS&C shall make available SS&C Canada employees in Canada or the United States for interview by the Commission subject to reasonable notice, provided that such action does not impose unreasonable hardship under applicable immigration law on such employees; (iii) as set forth in the intercompany agreement, SS&C shall provide the Commission access to information related to SS&C's matching system and ETC services, including those documents it receives from its service provider, SS&C Canada (the ``Business Activities Information''); (iv) SS&C Canada shall provide on the same business day to SS&C at its headquarters in Windsor, Connecticut electronically generated Business Activities Information, in whatever form SS&C shall specify, including regularly and automatically generated and ad hoc reports, books and records, correspondence, memoranda, papers, notices, accounts and other such records; and (v) SS&C Canada shall send to SS&C at its headquarters in Windsor, Connecticut all manually generated Business Activities Information, in whatever form SS&C shall specify, no later than the business day on which the record is granted. Further, SS&C has confirmed with external counsel that implementation of the intercompany agreement would not violate the Canadian Personal Information Protection and Electronic Documents Act or the Ontario Business Records Protection Act.\3\ This would allow for the disclosure of personal information by SS&C Canada to SS&C (U.S.). --------------------------------------------------------------------------- \3\ As the draft intercompany agreement is governed by Connecticut law, and as external counsel are not qualified to practice in Connecticut, in providing these opinions they have assumed that the provisions of the Agreement have the same meaning under Connecticut law as they would under Ontario and Canadian law. --------------------------------------------------------------------------- SS&C's directors and officers maintain direct control over SS&C and will oversee the business of SS&C's proposed matching service. The board of directors includes a standing audit committee and, from time to time, special committees formed to address specific issues.\4\ SS&C is owned principally by public shareholders, including William C. Stone, who controls approximately 20% of the shares and has indirect control of SS&C.\5\ --------------------------------------------------------------------------- \4\ For example, SS&C maintains an Information Security Policy as well as a Confidentiality and Privacy Policy to ensure customer information is protected. The SS&C Board of Directors and executive officers are ultimately responsible for Information Security. The Vice President of Security coordinates the Information Security activities within SS&C. \5\ See Form CA-1 at p. 112 (Exhibit D). --------------------------------------------------------------------------- B. Matching as a Clearing Agency Function On April 6, 1998, the Commission issued an interpretive release regarding matching services \6\ (the ``Matching Release'').\7\ In the Matching Release, the Commission concluded that matching constitutes a clearing agency function, specifically the ``comparison of data respecting the terms of settlement of securities transactions,'' within the meaning of Section 3(a)(23)(A) of the Exchange Act.\8\ Therefore, any person providing independent matching services must either register with the Commission as a clearing agency or obtain an exemption from registration pursuant to Section 17A of the Exchange Act and Rule 17Ab2-1 thereunder.\9\ In 2001, the Commission granted an exemption from registration as a clearing agency to Omgeo, a subsidiary of The Depository Trust and Clearing Corporation (``DTCC'') and Thomson Financial, to conduct ETC and matching services.\10\ SS&C has applied for a similar exemption from registration as a clearing agency to provide ETC and matching services. --------------------------------------------------------------------------- \6\ The term ``matching service'' as used here means an electronic service to centrally match trade information between a broker-dealer and its institutional customer. \7\ See Confirmation and Affirmation of Securities Trades; Matching, Exchange Act Release No. 34-39829 (Apr. 6, 1998), 63 FR 17943 (Apr. 13, 1998). \8\ In addition, on July 1, 2011, the Commission published a conditional temporary exemption from clearing agency registration for entities that perform for security-based swap transactions certain post-trade processing services, including matching services. See Exchange Act Release No. 34-64796 (Jul. 1, 2011), 76 FR 39963 (Jul. 7, 2011) (providing an exemption from registration under Section 17A(b) of the Exchange Act, and stating that ``[t]he Commission is using its authority under section 36 of the Exchange Act to provide a conditional temporary exemption, until the compliance date for the final rules relating to registration of clearing agencies that clear security-based swaps pursuant to sections 17A(i) and (j) of the Exchange Act, from the registration requirement in section 17A(b)(1) of the Exchange Act to any clearing agency that may be required to register with the Commission solely as a result of providing Collateral Management Services, Trade Matching Services, Tear Up and Compression Services, and/or substantially similar services for security-based swaps''). The order facilitated the Commission's identification of entities that operate in that area and that accordingly may fall within the clearing agency definition. \9\ See 15 U.S.C. 78q-1 and 17 CFR 240.17Ab2-1. \10\ See Global Joint Venture Matching Services--US, LLC; Order Granting Exemption From Registration as a Clearing Agency, Exchange Act Release No. 34-44188 (Apr. 17, 2001), 66 FR 20494 (Apr. 23, 2001) (``Omgeo Exemptive Order''). On July 24, 2013, DTCC announced that it had entered into an agreement with Thomson Financial to acquire full ownership of Omgeo. --------------------------------------------------------------------------- III. SS&C's Proposed Matching Service In its application for exemption from registration as a clearing agency, SS&C states it will provide ETC and matching services for broker-dealers and institutional customers that will allow such entities to streamline communications and process allocation and post- trade information for fixed-income and equity trades for depository eligible U.S. securities.\11\ According to SS&C, users of its services will gain access to a matching utility that is affordable, flexible in handling either part or all of the trade matching cycle, and easily interfaced with other matching utilities. Its matching service allows users to route an order to a broker, receive an execution notice from the broker, and enter trade details and allocations so that SS&C's matching service can generate a matched confirmation and send an affirmed confirmation to the depository at the Depository Trust Company (``DTC'')--the full lifecycle of a trade. --------------------------------------------------------------------------- \11\ See Form CA-1 at p. 129 (Exhibit S). --------------------------------------------------------------------------- SS&C's matching service will offer both block level matching and detail level matching.\12\ The block level matching, also known as trade level matching, is an optional first step that requires a broker- dealer to submit a final cumulative notice of execution (``NOE'') [[Page 23620]] on the trade date, which will be matched against the aggregated totals of the corresponding allocations submitted on the trade date by the investment manager.\13\ During import of the trade data, the matching service validates key fields, and if errors are found, the trade is placed in a reprocess queue and displayed within a reprocess blotter to allow for manual data correction or resubmission. The matching service will allow the investment manager and the broker-dealer to configure a match agreement to determine whether to require block level matching, which instrument types are eligible for block level matching, and which fields are eligible as well. For example, the counterparties may choose to match proceeds based on gross or net amounts. The investment manager is allowed to set tolerances against certain fields (such as accrued, commission, fees, price, or settlement amount) on either an actual or percentage basis, and if the details submitted by the broker-dealer fall within the accepted tolerance range, the details are deemed to be accepted by the investment manager. SS&C's matching service considers all matches within tolerance to be partially matched, with exact matches to be fully matched, and matches outside of the tolerance (or submitted details without a corresponding entry by the counterparty) to be unmatched. --------------------------------------------------------------------------- \12\ See id. at p. 118 (Exhibit J). \13\ See id. --------------------------------------------------------------------------- Detail level matching occurs either at once or after the block level matching process is complete. Upon receipt of an allocation, a broker-dealer can generate a confirmation for delivery to the investment manager and capture within SS&C's matching service. The confirmation is subject to validation of its key fields, and any errors are returned to the broker-dealer through a reprocess blotter. Like the block level matching process, the detail level matching process allows the investment manager to determine which fields must be matched, and within what tolerance such matches should be set. The same partially matched, exact match and unmatched results apply to the detail level matching process as they do in the block level matching process. However, because additional time is required to prepare and submit allocations or confirmations, there is a ``Waiting to be Matched'' period that can be established by the investment manager, which allows trades to be matched within this period (approximately thirty minutes), with other trades appearing as unmatched.\14\ Trades can be released to custodian or interested parties that are direct members of SS&C's network SSCNet once the trade enters the network, or after the match. If a custodian is responsible for affirming a trade, it can be released to them immediately. --------------------------------------------------------------------------- \14\ See id. --------------------------------------------------------------------------- Standing instructions are provided through the Delivery Instruction Database (``DIDB''), which is fully integrated into SSCNet, and provides a repository for settlement instructions across asset classes, including foreign exchange and term deposits. Rather than requiring users to attach instructions to portfolios directly, or maintaining portfolios within the DIDB, a cross-referencing mechanism is used to ensure portfolios are synchronized with the proper set of instructions. In addition, local cross-referencing allows each user to maintain its own set of currency codes, transaction type identifiers, counterparty codes, and portfolio identifiers, ensuring that the responsibility for maintenance rests with each user.\15\ SSCNet is also integrated into the Society for Worldwide Interbank Financial Telecommunication (``SWIFT'') Network, allowing users to communicate with parties outside the SSCNet platform.\16\ For example, some users desire receiving transactions from a batch facility, rather than SSCNet's real-time message system. Users can select the output format for batch communications (SSCNet proprietary, SWIFT, ISITC, or DTC affirmation format), as well as when the batch should be submitted. Once a transaction is exported from SSCNet, it is marked in the audit trail. --------------------------------------------------------------------------- \15\ See id. at p. 119 (Exhibit J). \16\ See id. --------------------------------------------------------------------------- Finally, central time stamping and a full audit trail are available for all transactions, with transaction histories maintained online for a minimum of 45 days and accessible in an online archive for up to 10 years.\17\ --------------------------------------------------------------------------- \17\ See id. --------------------------------------------------------------------------- Other than the above matching service, SS&C's Form CA-1 application indicates that it will not perform any other functions of a clearing agency requiring registration under Section 17A of the Exchange Act,\18\ such as net settlement, maintaining a balance of open positions between buyers and sellers, marking securities to the market, or handling funds or securities. --------------------------------------------------------------------------- \18\ See id. at p. 118 (Exhibit J). --------------------------------------------------------------------------- IV. SS&C's Request for an Exemption A. Introduction In its Form CA-1 application, SS&C notes that it has engaged in ETC and settlement services for over 20 years. During that time, SS&C states that it has maintained open interoperability conditions and has provided the assurance to participants and regulators abroad of a secure, reliable service.\19\ Its SSCNet utility offers a post-trade, pre-settlement ETC and affirmation service for all constituents in the institutional trade process, including investment managers, broker- dealers, custodians, and other interested parties.\20\ --------------------------------------------------------------------------- \19\ See id. at p. 129 (Exhibit S). \20\ See id. at p. 118 (Exhibit J). --------------------------------------------------------------------------- In sum, SS&C believes that users of its service in the United States will ``gain access to a matching utility that is affordable, a utility that will strengthen the industry-wide business continuity efforts in the institutional trading area and will allow users to choose the best matching process for their purposes.'' \21\ SS&C also believes that the flexibility offered by its SSCNet service ``will allow easy interfacing with other matching utilities and therefore offer market participants a greater choice in selecting their matching provider.'' \22\ --------------------------------------------------------------------------- \21\ See id. at p. 129 (Exhibit S). \22\ See id. --------------------------------------------------------------------------- B. Conditions to Exemption From Registration SS&C represents in its Form CA-1 that it would comply with the list of conditions found below regarding its operations and interoperability with other matching providers.\23\ The Commission preliminarily believes that the conditions are important tools to facilitate effective systems interoperability. By establishing a framework that allows the customers of multiple service providers to conduct transactions without having to join each matching provider, the Commission preliminarily believes that the interoperability conditions help [[Page 23621]] facilitate the linking of clearance and settlement facilities.\24\ --------------------------------------------------------------------------- \23\ See id. In addition, on November 19, 2014, the Commission adopted Regulation Systems Compliance and Integrity (``Reg SCI''), which would require ``SCI entities'' to comply with requirements for policies and procedures with respect to their automated systems that support the performance of their regulated activities. See Exchange Act Release No. 34-73639 (Nov. 19, 2014), 79 FR 72251, 72271 (Dec. 5, 2014). Rule 1000(a) of Reg SCI would define an ``SCI entity'' to include, among other things, a registered clearing agency and an exempt clearing agency subject to the Commission's Automation Review Policies (``ARP''). In particular, the term ``exempt clearing agency subject to ARP'' includes ``an entity that has received from the Commission an exemption from registration as a clearing agency under Section 17A of the Exchange Act, and whose exemption contains conditions that relate to the Commission's [ARP] Policies, or any Commission regulation that supersedes or replaces such policies.'' The Commission notes that the below conditions would meet the definition described in Rule 1000(a) of Reg SCI, requiring an exempt clearing agency subject to ARP to meet the applicable requirements set forth in Reg SCI. \24\ See 15 U.S.C. 78q-1(a)(1)(D). --------------------------------------------------------------------------- C.1. Operational Conditions (1) Before beginning the commercial operation of its matching service, SS&C shall provide the Commission with an audit report that addresses all the areas discussed in the Commission's Automation Review Policies (``ARP'').\25\ --------------------------------------------------------------------------- \25\ See Exchange Act Release Nos. 34-27445 (Nov. 16, 1989), 54 FR 48703 (Nov. 24, 1989) (``ARP I''), and 34-29185 (May 9, 1991), 56 FR 22490 (May 15, 1991) (``ARP II''); see also Memorandum from the Securities and Exchange Commission Division of Market Regulation to SROs and NASDAQ (June 1, 2001) (``Guidance for Systems Outages and System Change Notifications''), available at http://www.sec.gov/divisions/marketreg/sro-guidance-for-systems-outage-06-01-2001.pdf. --------------------------------------------------------------------------- (2) SS&C shall provide the Commission with annual reports and any associated field work prepared by competent, independent audit personnel that are generated in accordance with the annual risk assessment of the areas set forth in the ARP. SS&C shall provide the Commission (beginning in its first year of operation) with annual audited financial statements prepared by competent independent audit personnel. (3) SS&C shall report all significant systems outages to the Commission. If it appears that the outage may extend for thirty minutes or longer, SS&C shall report the systems outage immediately. If it appears that the outage will be resolved in less than thirty minutes, SS&C shall report the systems outage within a reasonable time after the outage has been resolved. (4) SS&C shall provide the Commission with 20 business days advance notice of any material changes that SS&C makes to the matching service or ETC service. These changes will not require the Commission's approval before they are implemented. (5) SS&C shall respond and require its service providers to respond to requests from the Commission for additional information relating to the matching service and ETC service, and provide access to the Commission to conduct on-site inspections of all facilities (including automated systems and systems environment), records, and personnel related to the matching service and the ETC service. The requests for information shall be made and the inspections shall be conducted solely for the purpose of reviewing the matching service's and the ETC service's operations and compliance with the federal securities laws and the terms and conditions in any exemptive order issued by the Commission with respect to SS&C's matching service and the ETC service. (6) SS&C shall supply the Commission or its designee with periodic reports regarding the affirmation rates for institutional transactions effected by institutional investors that utilize its matching service and ETC service.\26\ --------------------------------------------------------------------------- \26\ DTC submits monthly affirmation/confirmation reports to the appropriate self-regulatory organizations. The Commission anticipates a similar schedule for SS&C. --------------------------------------------------------------------------- (7) SS&C shall preserve a copy or record of all trade details, allocation instructions, central trade matching results, reports and notices sent to customers, service agreements, reports regarding affirmation rates that are sent to the Commission or its designee, and any complaint received from a customer, all of which pertain to the operation of its matching service and ETC service. SS&C shall retain these records for a period of not less than five years, the first two years in an easily accessible place. (8) SS&C shall not perform any clearing agency function (such as net settlement, maintaining a balance of open positions between buyers and sellers, or marking securities to the market) other than as permitted in an exemption issued by the Commission. (9) Before beginning the commercial operation of its matching service, SS&C shall provide the Commission with copies of the intercompany agreement between SS&C and SS&C Canada and shall notify the Commission of any material changes to the service agreement. C.2. Interoperability Conditions (1) SS&C shall develop, in a timely and efficient manner, fair and reasonable linkages between SS&C's matching service and other matching services that are registered with the Commission or that receive or have received from the Commission an exemption from clearing agency registration that, at a minimum, allow parties to trades that are processed through one or more matching services to communicate through one or more appropriate effective interfaces with other matching services. (2) SS&C shall devise and develop interfaces with other matching services that enable end-user clients or any service that represents end-user clients to SS&C (``end-user representative'') to gain a single point of access to SS&C and other matching services. Such interfaces must link with each other matching service so that an end-user client of one matching service can communicate with all end-user clients of all matching services, regardless of which matching service completes trade matching prior to settlement. (3) If any intellectual property proprietary to SS&C is necessary to develop, build, and operate links or interfaces to SS&C's matching service, as described in these conditions, SS&C shall license such intellectual property to other matching services seeking linkage to SS&C on fair and reasonable terms for use in such links or interfaces. (4) SS&C shall not engage in any activity inconsistent with the purposes of Section 17A(a)(2) of the Exchange Act,\27\ which section seeks the establishment of linked or coordinated facilities for clearance and settlement of transactions. In particular, SS&C will not engage in activities that would prevent any other matching service from operating a matching service that it has developed independently from SS&C's matching service. --------------------------------------------------------------------------- \27\ 15 U.S.C. 78q-1(a)(2)(A)(ii). --------------------------------------------------------------------------- (5) SS&C shall support industry standards in each of the following categories: Communication protocols (e.g., TCP/IP, SNA); message and file transfer protocols and software (e.g., FIX, WebSphere MQ, SWIFT); message format standards (e.g., FIX); and message languages and metadata (e.g., XML). However, SS&C need not support all existing industry standards or those listed above by means of example. Within three months of regulatory approval, SS&C shall make publicly known those standards supported by SS&C's matching service. To the extent that SS&C decides to support other industry standards, including new and modified standards, SS&C shall make these standards publicly known upon making such decision or within three months of updating its system to support such new standards, whichever is sooner. Any translation to/ from these published standards necessary to communicate with SS&C's system shall be performed by SS&C without any significant delay or service degradation of the linked parties' services. (6) SS&C shall make all reasonable efforts to link with each other matching service in a timely and efficient manner, as specified below. Upon written request, SS&C shall negotiate with each other matching service to develop and build an interface that allows the two to link matching services (``interface''). SS&C shall involve neutral industry participants in all negotiations to build or develop interfaces and, to the extent feasible, incorporate input from such participants in determining the specifications and architecture of such [[Page 23622]] interfaces. Absent adequate business or technological justification,\28\ SS&C and the requesting other matching service shall conclude negotiations and reach a binding agreement to develop and build an interface within 120 calendar days of SS&C's receipt of the written request. This 120-day period may be extended upon the written agreement of both SS&C and the other matching service engaged in negotiations. For each other matching service with whom SS&C reaches a binding agreement to develop and build an interface, SS&C shall begin operating such interface within 90 days of reaching a binding agreement and receiving all the information necessary to develop and operate it. This 90-day period may be extended upon the written agreement of both SS&C and the other matching service. For each interface and within the same time SS&C must negotiate and begin operating each interface, SS&C and the other matching service shall agree to ``commercial rules'' for coordinating the provision of matching services through their respective interfaces, including commercial rules: (A) Allocating responsibility for performing matching services; and (B) allocating liability for service failures. SS&C shall also involve neutral industry participants in negotiating applicable commercial rules and, to the extent feasible, take input from such participants into account in agreeing to commercial rules. At a minimum, each interface shall enable SS&C and the other matching service to transfer between them all trade and account information necessary to fulfill their respective matching responsibilities as set forth in their commercial rules (``trade and account information''). Absent an adequate business or technological justification, SS&C shall develop and operate each interface without imposing conditions that negatively impact the other matching service's ability to innovate its matching service or develop and offer other value-added services relating to its matching service or that negatively impact the other matching service's ability to compete effectively against SS&C. --------------------------------------------------------------------------- \28\ The failure of neutral industry participants to be available or to submit their input within the 120 day or 90 day time periods set forth in this paragraph shall not constitute an adequate business or technological justification for failing to adhere to the requirements set forth in this paragraph. --------------------------------------------------------------------------- (7) In order to facilitate fair and reasonable linkages between SS&C and other matching services, SS&C shall publish or make available to any other matching service the specifications for any interface and its corresponding commercial rules that are in operation within 20 days of receiving a request for such specifications and commercial rules. Such specifications shall contain all the information necessary to enable any other matching services not already linked to SS&C through an interface to establish a linkage with SS&C through an interface or a substantially similar interface. SS&C shall link to any other matching service, if the other matching service so opts, through an interface substantially similar to any interface and its corresponding commercial rules that SS&C is currently operating. SS&C shall begin operating such substantially similar interface and commercial rules with the other matching service within 90 days of receiving all the information necessary to operate that link. This 90-day period may be extended upon the written agreement of both SS&C and the other matching service that plans to use that link. (8) SS&C and respective other matching services shall bear their own costs of building and maintaining an interface, unless otherwise negotiated by the parties. (9) SS&C shall provide to all other matching services and end-user representatives that maintain linkages with SS&C sufficient advance notice of any material changes, updates, or revisions to its interfaces to allow all parties who link to SS&C through affected interfaces to modify their systems as necessary and avoid system downtime, interruption, or system degradation. (10) SS&C and each other matching service shall negotiate fair and reasonable charges and terms of payment for the use of their interface with respect to the sharing of trade and account information (``interface charges''). In any fee schedule adopted under conditions C.2(10), C.2(11), or C.2(12) herein, SS&C's interface charges shall be equal to the interface charges of the respective other matching service. (11) If SS&C and the other matching service cannot reach agreement on fair and reasonable interface charges within 60 days of receipt of the written request, SS&C and the other matching service shall submit to binding arbitration under the rules promulgated by the American Arbitration Association. The arbitration panel shall have 60 days to establish a fee schedule. The arbitration panel's establishment of a fee schedule shall be binding on SS&C and the other matching service unless and until the fee schedule is subsequently modified or abrogated by the Commission or SS&C and the other matching service mutually agree to renegotiate. (12)(A) The following parameters shall be considered in determining fair and reasonable interface charges: (i) The variable cost incurred for forwarding trade and account information to other matching services; (ii) the average cost associated with the development of links to end-users and end-user representatives; and (iii) SS&C's interface charges to other matching services. (B) The following factors shall not be considered in determining fair and reasonable interface charges: (i) The respective cost incurred by SS&C or the other matching service in creating and maintaining interfaces; (ii) the value that SS&C or the other matching service contributes to the relationship; (iii) the opportunity cost associated with the loss of profits to SS&C that may result from competition from other matching services; (iv) the cost of building, maintaining, or upgrading SS&C's matching service; or (v) the cost of building, maintaining, or upgrading value added services to SS&C's matching service. (C) In any event, the interface charges shall not be set at a level that unreasonably deters entry or otherwise diminishes price or non-price competition with SS&C by other matching services. (13) SS&C shall not charge its customers more for use of its matching service when one or more counterparties are customers of other matching services than SS&C charges its customers for use of its matching service when all counterparties are customers of SS&C. SS&C shall not charge customers any additional amount for forwarding to or receiving trade and account information from other matching services called for under applicable commercial rules. (14) SS&C shall maintain its quality, capacity, and service levels in the interfaces with other matching services (``matching services linkages'') without bias in performance relative to similar transactions processed completely within SS&C's service. SS&C shall preserve and maintain all raw data and records necessary to prepare reports tabulating separately the processing and response times on a trade-by-trade basis for (A) completing its matching service when all counterparties are customers of SS&C; (B) completing its matching service when one or more counterparties are customers of other matching services; or (C) forwarding trade information to other matching services called for under applicable commercial rules. SS&C shall retain the data and records for a period not less than six years. Sufficient information shall be maintained to demonstrate that the requirements of condition C.2(15) below are being met. SS&C and its service providers shall provide the [[Page 23623]] Commission with reports regarding the time it takes SS&C to process trades and forward information under various circumstances within 30 days of the Commission's request for such reports. However, SS&C shall not be responsible for identifying the specific cause of any delay in performing its matching service where the fault for such delay is not attributable to SS&C. (15) SS&C shall process trades or facilitate the processing of trades by other matching services on a first-in-time priority basis. For example, if SS&C receives trade and account information that SS&C is required to forward to other matching services under applicable commercial rules (``pass-through information'') prior to receiving trade and account information from SS&C's customers necessary to provide matching services for a trade in which all parties are customers of SS&C (``intra-hub information''), SS&C shall forward the pass-through information to the designated other matching service prior to processing the intra-hub information. If, on the other hand, the information were to come in the reverse order, SS&C shall process the intra-hub information before forwarding the pass-through information. (16) SS&C shall sell access to its databases, systems or methodologies for transmitting settlement instructions (including settlement instructions from investment managers, broker-dealers, and custodian banks) and/or transmitting trade and account information to and receiving authorization responses from settlement agents on fair and reasonable terms to other matching services and end-user representatives. Such access shall permit other matching services and end-user representatives to draw information from those databases, systems, and methodologies for transmitting settlement instructions and/or transmitting trade and account information to and receiving authorization responses from settlement agents for use in their own matching services or end-user representatives' services. The links necessary for other matching services and end-user representatives to access SS&C's databases, systems or methodologies for transmitting settlement instructions and/or transmitting trade and account information to and receiving authorization responses from settlement agents will comply with conditions C.2(3), C.2(5), C.2(9), C.2(14) and C.2(15) above. (17) For the first five years from the date of an exemptive order issued by the Commission with respect to SS&C's matching service, SS&C shall provide the Commission with reports every six months sufficient to document SS&C's adherence to the obligations relating to interfaces set forth in conditions C.2(6) through C.2(13) and C.2(16) above. SS&C shall incorporate into such reports information including but not limited to (A) all other matching services linked to SS&C; (B) the time, effort, and cost required to establish each link between SS&C and other matching services; (C) any proposed links between SS&C and other matching services as well as the status of such proposed links; (D) any failure or inability to establish such proposed links or fee schedules for interface charges; (E) any written complaint received from other matching services relating to its established or proposed links with SS&C; and (F) if SS&C failed to adhere to any of the obligations relating to interfaces set forth in conditions C.2(6) through C.2(13) and C.2(16) above, its explanation for such failure. The Commission shall treat information submitted in accordance with this condition as confidential, non-public information, subject to the provisions of applicable law. If any other matching service seeks to link with SS&C more than five years after issuance of an exemptive order issued by the Commission with respect to SS&C's matching service, SS&C shall notify the Commission of the other matching service's request to link with SS&C within ten days of receiving such request. In addition, SS&C shall provide reports to the Commission in accordance with this paragraph commencing six months after the initial request for linkage is made until one year after SS&C and the other matching service begin operating their interface. The Commission reserves the right to request reports from SS&C at any time. SS&C shall provide the Commission with such updated reports within thirty days of the Commission's request. (18) SS&C shall also publish or make available upon request to any end-user representative the necessary specifications, protocols, and architecture of any interface created by SS&C for any end-user representative. V. Statutory Standards A. Statutory Process for Registering or Exempting Clearing Agencies Section 17A(b)(1) of the Exchange Act requires all clearing agencies to register with the Commission before performing any of the functions of a clearing agency.\29\ However, Section 17A(b)(1) also states that, upon its own motion or upon a clearing agency's application, the Commission may conditionally or unconditionally exempt said clearing agency from any provisions of Section 17A or the rules or regulations thereunder if the Commission finds that such exemption is consistent with the public interest, the protection of investors, and the purposes of Section 17A, including the prompt and accurate clearance and settlement of securities transactions and the safeguarding of securities and funds. --------------------------------------------------------------------------- \29\ See 15 U.S.C. 78q-1(b) and 17 CFR 240.17Ab2-1. --------------------------------------------------------------------------- In the Matching Release, the Commission stated that an entity that limited its clearing agency functions to providing matching services might not have to be subject to the full range of clearing agency regulation. The Matching Release stated that the Commission anticipated that an entity seeking an exemption from clearing agency registration for matching would be required to: (1) Provide the Commission with information on its matching services and notice of material changes to its matching services; (2) establish an electronic link to a registered clearing agency that provides for the settlement of its matched trades; (3) allow the Commission to inspect its facilities and records; and (4) make periodic disclosures to the Commission regarding its operations. In 2001, the Commission approved an application by Omgeo, then a joint venture between DTCC and Thomson Financial, for an exemption from registration as a clearing agency to provide matching services.\30\ Omgeo's exemption from clearing agency registration was subject to conditions that were substantially similar to the conditions set forth in Part IV.C above. --------------------------------------------------------------------------- \30\ See supra note 10. --------------------------------------------------------------------------- B. SS&C's Compliance With Statutory Standards SS&C's matching service would be the only clearing agency function that it would perform under an exemptive order. SS&C believes that the undertakings it has proposed as a condition of obtaining an exemption from clearing agency registration are consistent with the public interest, the protection of investors, and the purposes of Section 17A of the Exchange Act. SS&C represents in its Form CA-1 that it will comply with all of the conditions described in Part IV.C above. Preliminarily, the Commission does not believe, however, that SS&C, in the absence of performing the functions of a clearing agency other than the matching service described here, raises [[Page 23624]] the same concerns as an entity that performs a wider range of clearing agency functions. For example, SS&C would not be operating as a self- regulatory organization with the powers to enforce its rules against its members. Accordingly, the Commission preliminarily believes it may not be necessary to require SS&C to satisfy all of the standards for registrants under Section 17A of the Exchange Act because the proposed conditions should establish a sufficiently robust regulatory framework. Further, the Commission preliminarily believes that granting SS&C an exemption from registration as a clearing agency would be consistent with the Commission's past practice, and that additional matching service providers should promote innovation and reduce costs for investors. In evaluating SS&C's application, the Commission intends to consider whether SS&C is so organized and has the capacity to be able to facilitate prompt and accurate matching services. Subject to the specific operational, interoperability and access conditions to which it has agreed, the Commission preliminarily believes this to be the case. Because the service is flexible in handling part or all of the trade matching cycle, SS&C states that its proposed service ``will allow easy interfacing with other matching utilities and therefore offer market participants a greater choice in selecting their matching provider.'' SS&C also states that the proposed matching service will provide improved and automated verification which eliminates obstacles to settlement as well as losses created by input and data errors, and further states that its proposed matching service will strengthen industry-wide business continuity efforts in the institutional trading space.\31\ SS&C believes that market participants seek flexibility and choice in selecting their matching provider and the resulting improvements to reliability and stability in the post-trade space would flow from its service offering. --------------------------------------------------------------------------- \31\ See Form CA-1 at p. 129 (Exhibit S). --------------------------------------------------------------------------- The Commission requests comment on whether the conditions are sufficient to promote the purposes of Section 17A of the Exchange Act and to allow the Commission to adequately monitor the effects of SS&C's proposed activities on the national system for the clearance and settlement of securities transactions. In addition, the Commission invites commenters to address whether granting SS&C an exemption from clearing agency registration would impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of Section 17A of the Exchange Act. VI. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed exemption is consistent with the public interest, the protection of investors, and the purposes of Section 17A of the Exchange Act. To the extent possible, commenters are requested to provide empirical data and other factual support for their views. In addition, the Commission seeks comment generally on the following issues: 1. In light of the passage of time since the adoption of the Omgeo Exemptive Order, developments in technology and enhancements in market practices, are the proposed conditions to the exemptive order appropriate? Specifically, are all of the conditions designed to facilitate interoperability necessary? Could the Commission continue to promote the purposes of Section 17A of the Exchange Act by additional modification or elimination of some or all of the conditions? If so, which conditions should be modified or eliminated? 2. What, if any, effect will moving from a single provider to two or more providers have on the efficiency of the trade settlement process? 3. What, if any, impact will the introduction of a second provider have on pricing, quality of service, and innovation? 4. Will the introduction of one or more additional providers increase or reduce risk in the marketplace? 5. Does SS&C's application for exemption from registration help achieve the underlying policy objectives of the Exchange Act? Why or why not? In particular, please address whether granting an exemption from registration does or does not further the goals of promoting investor protection and the integrity of the securities markets. 6. Are the proposed conditions to the exemptive order sufficient to promote the purposes of Section 17A of the Exchange Act and to allow the Commission to adequately monitor the effects of SS&C's proposed activities on the national system for the clearance and settlement of securities transactions? Why or why not? 7. Would the links and interfaces with other matching services as described in SS&C's application have a positive or negative effect on other matching services that are registered with the Commission or that receive from the Commission an exemption from clearing agency registration? Why or why not? Should the proposed condition to develop an interface with another matching service provider be made mandatory, rather than only upon request from another provider? 8. Would the links and interfaces with other matching services as described in SS&C's application have a positive or negative effect on end-user clients of all matching services, regardless of which matching service completes trade matching prior to settlement? Why or why not? Comments may be submitted by any of the following methods: Electronic CommentsUse the Commission's Internet comment form (http://www.sec.gov/rules/proposed.shtml); or Send an email to [email protected]. Please include File Number 600-34 on the subject line; or Paper Comments Send paper comments in triplicate to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090. All submissions should refer to File Number 600-34. 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/other.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the application that are filed with the Commission, and all written communications relating to the application 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 Section, 100 F Street NE., Washington, DC 20549 on official business days between the hours of 10:00 a.m. and 3:00 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. All submissions should refer to File Number 600-34 and should be submitted on or before May 28, 2015. [[Page 23625]] For the Commission by the Division of Trading and Markets, pursuant to delegated authority.\32\ --------------------------------------------------------------------------- \32\ 17 CFR 200.30-3(a)(16). --------------------------------------------------------------------------- Brent J. Fields, Secretary. [FR Doc. 2015-09841 Filed 4-27-15; 8:45 am] BILLING CODE 8011-01-P
![23618 Federal Register / Vol. 80, No. 81 / Tuesday, April 28, 2015 / Notices
All submissions should refer to File and Exchange Commission SECURITIES AND EXCHANGE
Number SR–BX–2015–021. This file (‘‘Commission’’), pursuant to Section COMMISSION
number should be included on the 19(b)(1) of the Securities Exchange Act
[Release No. 34–74794; File No. 600–34]
subject line if email is used. To help the of 1934 (‘‘Act’’) 1 and Rule 19b–4
Commission process and review your thereunder,2 a proposed rule change to Self-Regulatory Organizations; SS&C
comments more efficiently, please use amend the Exchange’s rules relating to Technologies, Inc.; Notice of Filing of
only one method. The Commission will equipment and communication devices Application for Exemption From
post all comments on the Commission’s used on the Exchange’s trading floor. Registration as a Clearing Agency
Internet Web site (http://www.sec.gov/ The proposed rule change was
rules/sro.shtml). Copies of the published for comment in the Federal April 23, 2015.
submission, all subsequent Register on March 10, 2015.3 The I. Introduction
amendments, all written statements Commission received no comment
with respect to the proposed rule On April 15, 2013, SS&C
letters on this proposal.
change that are filed with the Technologies, Inc. (‘‘SS&C’’) filed with
Commission, and all written Section 19(b)(2) of the Act 4 provides the Securities and Exchange
communications relating to the that within 45 days of the publication of Commission (‘‘Commission’’) an
proposed rule change between the notice of the filing of a proposed rule application on Form CA–1 for
Commission and any person, other than change, or within such longer period up exemption from registration as a
those that may be withheld from the to 90 days as the Commission may clearing agency pursuant to Section 17A
public in accordance with the designate if it finds such longer period of the Securities Exchange Act of 1934
provisions of 5 U.S.C. 552, will be to be appropriate and publishes its (‘‘Exchange Act’’) and Rule 17Ab2–1
available for Web site viewing and reasons for so finding or as to which the thereunder. SS&C amended its
printing in the Commission’s Public self-regulatory organization consents, application on August 12, 2013,
Reference Room, 100 F Street NE., the Commission shall either approve the December 23, 2014, and March 30, 2015.
Washington, DC 20549, on official proposed rule change, disapprove the SS&C is requesting an exemption from
business days between the hours of proposed rule change, or institute clearing agency registration in
10:00 a.m. and 3:00 p.m. Copies of the proceedings to determine whether the connection with its proposal to offer an
filing also will be available for proposed rule change should be electronic trade confirmation (‘‘ETC’’)
inspection and copying at the principal disapproved. The 45th day for this filing service and a matching service. The
office of the Exchange. All comments is April 24, 2015. Commission is publishing this notice in
received will be posted without change; The Commission is extending the 45- order to solicit comments from
the Commission does not edit personal interested persons on the exemption
day time period for Commission action
identifying information from request.1 The Commission will consider
on the proposed rule change. The
submissions. You should submit only any comments it receives in making its
Commission finds that it is appropriate
information that you wish to make determination whether to grant SS&C’s
to designate a longer period within
available publicly. All submissions request for an exemption from clearing
which to take action on the proposed
should refer to File Number SR–BX– agency registration.
rule change so that it has sufficient time
2015–021 and should be submitted on to consider this proposed rule change. II. Background
or before May 19, 2015. The proposed rule change would, A. SS&C Organization
For the Commission, by the Division of among other things, eliminate the
Trading and Markets, pursuant to delegated requirement for members to obtain SS&C was incorporated in the State of
authority.15 approval from the Exchange before Delaware on March 29, 1996. SS&C’s
Brent J. Fields, using any new communication device headquarters are in Windsor,
Secretary. on the trading floor. Connecticut, with offices in 20 locations
[FR Doc. 2015–09764 Filed 4–27–15; 8:45 am]
across the United States. SS&C has
Accordingly, the Commission, additional offices in Toronto and other
BILLING CODE 8011–01–P pursuant to Section 19(b)(2) of the Act,5 locations throughout the world, and is
designates June 8, 2015 as the date by a global provider of financial services-
which the Commission should either related solutions to investment
SECURITIES AND EXCHANGE
approve or disapprove, or institute management, banking, and other
COMMISSION
proceedings to determine whether to financial sector clients. All control and
[Release No. 34–74786; File No. SR–CBOE– disapprove, the proposed rule change direction over SS&C is vested in SS&C
2015–022] (File No. SR–CBOE–2015–022). Technologies Holdings, Inc., SS&C’s
For the Commission, by the Division of parent company and a public holding
Self-Regulatory Organizations;
Trading and Markets, pursuant to delegated company listed on NASDAQ (symbol
Chicago Board Options Exchange,
authority.6 SSNC).2
Incorporated; Notice of Designation of SS&C proposes to provide ETC
a Longer Period for Commission Brent J. Fields,
services and matching services for fixed-
Action on Proposed Rule Change Secretary.
income and equity trades as described
Related to Equipment and [FR Doc. 2015–09766 Filed 4–27–15; 8:45 am]
asabaliauskas on DSK5VPTVN1PROD with NOTICES
Communication on the Exchange’s BILLING CODE 8011–01–P 1 The descriptions set forth in this notice
Trading Floor regarding the structure and operations of SS&C have
1 15 been largely derived from information contained in
April 22, 2015. U.S.C. 78s(b)(1).
2 17
SS&C’s amended Form CA–1 application and
CFR 240.19b–4. publicly available sources. The application and
On February 20, 2015, the Chicago 3 See Securities Exchange Act Release No. 74438
non-confidential exhibits thereto are available on
Board Options Exchange, Incorporated (March 4, 2015), 80 FR 12671. the Commission’s Web site.
(‘‘Exchange’’) filed with the Securities 4 15 U.S.C. 78s(b)(2). 2 See Form CA–1 at p. 111 (Exhibit C, providing
5 15 U.S.C. 78s(b)(2).
a graphic description of SS&C’s organizational
15 17 CFR 200.30–3(a)(12). 6 17 CFR 200.30–3(a)(31). structure).
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![Federal Register / Vol. 80, No. 81 / Tuesday, April 28, 2015 / Notices 23619
in its Form CA–1 application. An record is granted. Further, SS&C has providing independent matching
overview of SS&C’s proposed matching confirmed with external counsel that services must either register with the
service is presented in Part III below. implementation of the intercompany Commission as a clearing agency or
All matching service activities would be agreement would not violate the obtain an exemption from registration
performed by SS&C’s subsidiary, SS&C Canadian Personal Information pursuant to Section 17A of the
Technologies Canada Corp. (‘‘SS&C Protection and Electronic Documents Exchange Act and Rule 17Ab2–1
Canada’’). The policies and operations Act or the Ontario Business Records thereunder.9 In 2001, the Commission
of SS&C Canada are overseen by its Protection Act.3 This would allow for granted an exemption from registration
officers and directors, and are subject to the disclosure of personal information as a clearing agency to Omgeo, a
control by SS&C’s parent, SS&C by SS&C Canada to SS&C (U.S.). subsidiary of The Depository Trust and
Technologies Holdings, Inc. SS&C SS&C’s directors and officers maintain Clearing Corporation (‘‘DTCC’’) and
Canada will perform the matching direct control over SS&C and will Thomson Financial, to conduct ETC and
services in Mississauga, Canada, oversee the business of SS&C’s proposed matching services.10 SS&C has applied
through its software-enabled service, matching service. The board of directors for a similar exemption from registration
SSCNet, which is a global trade network includes a standing audit committee as a clearing agency to provide ETC and
linking investment managers, broker- and, from time to time, special matching services.
dealers, clearing agencies, custodians, committees formed to address specific
issues.4 SS&C is owned principally by III. SS&C’s Proposed Matching Service
and interested parties. Client support for
these services will be rendered through public shareholders, including William In its application for exemption from
SS&C’s offices in the United States, the C. Stone, who controls approximately registration as a clearing agency, SS&C
United Kingdom, and Australia. SS&C 20% of the shares and has indirect states it will provide ETC and matching
will coordinate support activity, which control of SS&C.5 services for broker-dealers and
includes help desk facilities and call B. Matching as a Clearing Agency institutional customers that will allow
and issue tracking through a shared Function such entities to streamline
client call database, and relationship communications and process allocation
On April 6, 1998, the Commission and post-trade information for fixed-
management. SS&C and SS&C Canada
issued an interpretive release regarding income and equity trades for depository
will maintain an intercompany
matching services 6 (the ‘‘Matching eligible U.S. securities.11 According to
agreement setting forth respective
Release’’).7 In the Matching Release, the SS&C, users of its services will gain
services and obligations.
Commission concluded that matching access to a matching utility that is
In addition to the conditions set forth constitutes a clearing agency function,
in this notice, SS&C has made the affordable, flexible in handling either
specifically the ‘‘comparison of data part or all of the trade matching cycle,
following representations regarding its respecting the terms of settlement of
operations: (i) SS&C shall obtain and easily interfaced with other
securities transactions,’’ within the
contractual commitments from its matching utilities. Its matching service
meaning of Section 3(a)(23)(A) of the
customers permitting it to provide allows users to route an order to a
Exchange Act.8 Therefore, any person
information to the Ontario Securities broker, receive an execution notice from
Commission, the Commission, and other 3 As the draft intercompany agreement is
the broker, and enter trade details and
third parties; (ii) SS&C shall make governed by Connecticut law, and as external allocations so that SS&C’s matching
available SS&C Canada employees in counsel are not qualified to practice in Connecticut, service can generate a matched
in providing these opinions they have assumed that confirmation and send an affirmed
Canada or the United States for the provisions of the Agreement have the same
interview by the Commission subject to meaning under Connecticut law as they would
confirmation to the depository at the
reasonable notice, provided that such under Ontario and Canadian law. Depository Trust Company (‘‘DTC’’)—
action does not impose unreasonable 4 For example, SS&C maintains an Information the full lifecycle of a trade.
hardship under applicable immigration Security Policy as well as a Confidentiality and SS&C’s matching service will offer
Privacy Policy to ensure customer information is both block level matching and detail
law on such employees; (iii) as set forth protected. The SS&C Board of Directors and
in the intercompany agreement, SS&C executive officers are ultimately responsible for level matching.12 The block level
shall provide the Commission access to Information Security. The Vice President of matching, also known as trade level
information related to SS&C’s matching Security coordinates the Information Security matching, is an optional first step that
activities within SS&C. requires a broker-dealer to submit a final
system and ETC services, including 5 See Form CA–1 at p. 112 (Exhibit D).
those documents it receives from its 6 The term ‘‘matching service’’ as used here
cumulative notice of execution (‘‘NOE’’)
service provider, SS&C Canada (the means an electronic service to centrally match trade
information between a broker-dealer and its the Exchange Act to any clearing agency that may
‘‘Business Activities Information’’); (iv) be required to register with the Commission solely
institutional customer.
SS&C Canada shall provide on the same 7 See Confirmation and Affirmation of Securities as a result of providing Collateral Management
business day to SS&C at its headquarters Trades; Matching, Exchange Act Release No. 34– Services, Trade Matching Services, Tear Up and
in Windsor, Connecticut electronically 39829 (Apr. 6, 1998), 63 FR 17943 (Apr. 13, 1998). Compression Services, and/or substantially similar
services for security-based swaps’’). The order
generated Business Activities 8 In addition, on July 1, 2011, the Commission
facilitated the Commission’s identification of
Information, in whatever form SS&C published a conditional temporary exemption from
entities that operate in that area and that
clearing agency registration for entities that perform
shall specify, including regularly and for security-based swap transactions certain post-
accordingly may fall within the clearing agency
automatically generated and ad hoc definition.
trade processing services, including matching 9 See 15 U.S.C. 78q–1 and 17 CFR 240.17Ab2–1.
reports, books and records,
asabaliauskas on DSK5VPTVN1PROD with NOTICES
services. See Exchange Act Release No. 34–64796
10 See Global Joint Venture Matching Services—
correspondence, memoranda, papers, (Jul. 1, 2011), 76 FR 39963 (Jul. 7, 2011) (providing
an exemption from registration under Section US, LLC; Order Granting Exemption From
notices, accounts and other such 17A(b) of the Exchange Act, and stating that ‘‘[t]he Registration as a Clearing Agency, Exchange Act
records; and (v) SS&C Canada shall send Commission is using its authority under section 36 Release No. 34–44188 (Apr. 17, 2001), 66 FR 20494
to SS&C at its headquarters in Windsor, of the Exchange Act to provide a conditional (Apr. 23, 2001) (‘‘Omgeo Exemptive Order’’). On
temporary exemption, until the compliance date for July 24, 2013, DTCC announced that it had entered
Connecticut all manually generated into an agreement with Thomson Financial to
the final rules relating to registration of clearing
Business Activities Information, in agencies that clear security-based swaps pursuant to acquire full ownership of Omgeo.
whatever form SS&C shall specify, no sections 17A(i) and (j) of the Exchange Act, from 11 See Form CA–1 at p. 129 (Exhibit S).
later than the business day on which the the registration requirement in section 17A(b)(1) of 12 See id. at p. 118 (Exhibit J).
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![23620 Federal Register / Vol. 80, No. 81 / Tuesday, April 28, 2015 / Notices
on the trade date, which will be direct members of SS&C’s network During that time, SS&C states that it has
matched against the aggregated totals of SSCNet once the trade enters the maintained open interoperability
the corresponding allocations submitted network, or after the match. If a conditions and has provided the
on the trade date by the investment custodian is responsible for affirming a assurance to participants and regulators
manager.13 During import of the trade trade, it can be released to them abroad of a secure, reliable service.19 Its
data, the matching service validates key immediately. SSCNet utility offers a post-trade, pre-
fields, and if errors are found, the trade Standing instructions are provided settlement ETC and affirmation service
is placed in a reprocess queue and through the Delivery Instruction for all constituents in the institutional
displayed within a reprocess blotter to Database (‘‘DIDB’’), which is fully trade process, including investment
allow for manual data correction or integrated into SSCNet, and provides a managers, broker-dealers, custodians,
resubmission. The matching service will repository for settlement instructions and other interested parties.20
allow the investment manager and the across asset classes, including foreign In sum, SS&C believes that users of its
broker-dealer to configure a match exchange and term deposits. Rather than service in the United States will ‘‘gain
agreement to determine whether to requiring users to attach instructions to access to a matching utility that is
require block level matching, which portfolios directly, or maintaining affordable, a utility that will strengthen
instrument types are eligible for block portfolios within the DIDB, a cross- the industry-wide business continuity
level matching, and which fields are referencing mechanism is used to efforts in the institutional trading area
eligible as well. For example, the ensure portfolios are synchronized with and will allow users to choose the best
counterparties may choose to match the proper set of instructions. In matching process for their purposes.’’ 21
proceeds based on gross or net amounts. addition, local cross-referencing allows
SS&C also believes that the flexibility
The investment manager is allowed to each user to maintain its own set of
offered by its SSCNet service ‘‘will
set tolerances against certain fields currency codes, transaction type
allow easy interfacing with other
(such as accrued, commission, fees, identifiers, counterparty codes, and
matching utilities and therefore offer
price, or settlement amount) on either portfolio identifiers, ensuring that the
market participants a greater choice in
an actual or percentage basis, and if the responsibility for maintenance rests
selecting their matching provider.’’ 22
details submitted by the broker-dealer with each user.15 SSCNet is also
fall within the accepted tolerance range, integrated into the Society for B. Conditions to Exemption From
the details are deemed to be accepted by Worldwide Interbank Financial Registration
the investment manager. SS&C’s Telecommunication (‘‘SWIFT’’)
matching service considers all matches Network, allowing users to SS&C represents in its Form CA–1
within tolerance to be partially communicate with parties outside the that it would comply with the list of
matched, with exact matches to be fully SSCNet platform.16 For example, some conditions found below regarding its
matched, and matches outside of the users desire receiving transactions from operations and interoperability with
tolerance (or submitted details without a batch facility, rather than SSCNet’s other matching providers.23 The
a corresponding entry by the real-time message system. Users can Commission preliminarily believes that
counterparty) to be unmatched. select the output format for batch the conditions are important tools to
Detail level matching occurs either at communications (SSCNet proprietary, facilitate effective systems
once or after the block level matching SWIFT, ISITC, or DTC affirmation interoperability. By establishing a
process is complete. Upon receipt of an format), as well as when the batch framework that allows the customers of
allocation, a broker-dealer can generate should be submitted. Once a transaction multiple service providers to conduct
a confirmation for delivery to the is exported from SSCNet, it is marked in transactions without having to join each
investment manager and capture within the audit trail. matching provider, the Commission
SS&C’s matching service. The Finally, central time stamping and a preliminarily believes that the
confirmation is subject to validation of full audit trail are available for all interoperability conditions help
its key fields, and any errors are transactions, with transaction histories
returned to the broker-dealer through a maintained online for a minimum of 45 19 See id. at p. 129 (Exhibit S).
reprocess blotter. Like the block level days and accessible in an online archive 20 See id. at p. 118 (Exhibit J).
21 See id. at p. 129 (Exhibit S).
matching process, the detail level for up to 10 years.17
22 See id.
matching process allows the investment Other than the above matching
23 See id. In addition, on November 19, 2014, the
manager to determine which fields must service, SS&C’s Form CA–1 application
Commission adopted Regulation Systems
be matched, and within what tolerance indicates that it will not perform any Compliance and Integrity (‘‘Reg SCI’’), which would
such matches should be set. The same other functions of a clearing agency require ‘‘SCI entities’’ to comply with requirements
partially matched, exact match and requiring registration under Section 17A for policies and procedures with respect to their
of the Exchange Act,18 such as net automated systems that support the performance of
unmatched results apply to the detail their regulated activities. See Exchange Act Release
level matching process as they do in the settlement, maintaining a balance of No. 34–73639 (Nov. 19, 2014), 79 FR 72251, 72271
block level matching process. However, open positions between buyers and (Dec. 5, 2014). Rule 1000(a) of Reg SCI would define
because additional time is required to sellers, marking securities to the market, an ‘‘SCI entity’’ to include, among other things, a
or handling funds or securities. registered clearing agency and an exempt clearing
prepare and submit allocations or agency subject to the Commission’s Automation
confirmations, there is a ‘‘Waiting to be IV. SS&C’s Request for an Exemption Review Policies (‘‘ARP’’). In particular, the term
Matched’’ period that can be established ‘‘exempt clearing agency subject to ARP’’ includes
A. Introduction
asabaliauskas on DSK5VPTVN1PROD with NOTICES
by the investment manager, which ‘‘an entity that has received from the Commission
an exemption from registration as a clearing agency
allows trades to be matched within this In its Form CA–1 application, SS&C under Section 17A of the Exchange Act, and whose
period (approximately thirty minutes), notes that it has engaged in ETC and exemption contains conditions that relate to the
with other trades appearing as settlement services for over 20 years. Commission’s [ARP] Policies, or any Commission
unmatched.14 Trades can be released to regulation that supersedes or replaces such
policies.’’ The Commission notes that the below
custodian or interested parties that are 15 See id. at p. 119 (Exhibit J). conditions would meet the definition described in
16 See id. Rule 1000(a) of Reg SCI, requiring an exempt
13 See id. 17 See id.
clearing agency subject to ARP to meet the
14 See id. 18 See id. at p. 118 (Exhibit J). applicable requirements set forth in Reg SCI.
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![Federal Register / Vol. 80, No. 81 / Tuesday, April 28, 2015 / Notices 23625
For the Commission by the Division of Exchange Commission, 100 F Street NE., Commission (‘‘SEC’’ or ‘‘Commission’’)
Trading and Markets, pursuant to delegated Washington, DC 20549–1090. the proposed rule change as described
authority.32 All submissions should refer to File No. in Items I and II, below, which Items
Brent J. Fields, 265–29. This file number should be have been prepared by NASDAQ. The
Secretary. included on the subject line if email is Commission is publishing this notice to
[FR Doc. 2015–09841 Filed 4–27–15; 8:45 am] used. To help us process and review solicit comments on the proposed rule
BILLING CODE 8011–01–P your statement more efficiently, please change from interested persons.
use only one method. The Commission
will post all statements on the I. Self-Regulatory Organization’s
SECURITIES AND EXCHANGE Commission’s Internet Web site at Statement of the Terms of Substance of
COMMISSION (http://www.sec.gov/comments/265–29/ the Proposed Rule Change
265–29.shtml). NASDAQ proposes to amend Rule
[Release No. 34–74793; File No. 265–29]
Statements also will be available for 4611, entitled ‘‘Nasdaq Market Center
Equity Market Structure Advisory Web site viewing and printing in the Participant Registration’’ and adopt a
Committee Commission’s Public Reference Room, new Rule 4615, entitled ‘‘Sponsored
100 F Street NE., Room 1580, Participants.’’
AGENCY: Securities and Exchange Washington, DC 20549, on official The text of the proposed rule
Commission. business days between the hours of change is available on the Exchange’s
ACTION: Notice of Meeting. 10:00 a.m. and 3:00 p.m. All statements Web site at http://
received will be posted without change; www.nasdaq.cchwallstreet.com, at the
SUMMARY: The Securities and Exchange we do not edit personal identifying principal office of the Exchange, and at
Commission Equity Market Structure information from submissions. You the Commission’s Public Reference
Advisory Committee is providing notice should submit only information that Room.
that it will hold a public meeting on you wish to make available publicly.
Wednesday, May 13, 2015, in Multi- II. Self-Regulatory Organization’s
FOR FURTHER INFORMATION CONTACT: Statement of the Purpose of, and
Purpose Room LL–006 at the
Arisa Tinaves Kettig, Special Counsel, at Statutory Basis for, the Proposed Rule
Commission’s headquarters, 100 F
(202) 551–5676, Division of Trading and Change
Street NE., Washington, DC The meeting
Markets, Securities and Exchange
will begin at 9:30 a.m. (EDT) and will In its filing with the Commission, the
Commission, 100 F Street NE.,
be open to the public, except for a Exchange included statements
Washington, DC 20549–7010.
period of approximately 90 minutes concerning the purpose of and basis for
when the Committee will meet in an SUPPLEMENTARY INFORMATION: In
the proposed rule change and discussed
administrative work session during accordance with section 10(a) of the
any comments it received on the
lunch. The public portions of the Federal Advisory Committee Act, 5
proposed rule change. The text of these
meeting will be webcast on the U.S.C.-App. 1, and the regulations
statements may be examined at the
Commission’s Web site at www.sec.gov. thereunder, Stephen Luparello,
places specified in Item IV below. The
Persons needing special Designated Federal Officer of the
Exchange has prepared summaries, set
accommodations to take part because of Committee, has ordered publication of
forth in sections A, B, and C below, of
a disability should notify the contact this notice.
the most significant aspects of such
person listed below. The public is Dated: April 23, 2015. statements.
invited to submit written statements to Brent J. Fields,
the Committee. The agenda for the A. Self-Regulatory Organization’s
Committee Management Officer.
meeting was announced on April 17, Statement of the Purpose of, and
[FR Doc. 2015–09792 Filed 4–27–15; 8:45 am]
2015 and will focus on Rule 611 of SEC Statutory Basis for, the Proposed Rule
BILLING CODE 8011–01–P Change
Regulation NMS.
DATES: The public meeting will be held 1. Purpose
on Wednesday, May 13, 2015. Written SECURITIES AND EXCHANGE The purpose of the proposed rule
statements should be received on or COMMISSION change is to amend Rule 4611, entitled
before May 11, 2015. ‘‘Nasdaq Market Center Participant
[Release No. 34–74784; File No. SR–
ADDRESSES: The meeting will be held at NASDAQ–2015–034] Registration’’ to relocate 4611(d),
the Commission’s headquarters, 100 F pertaining to Sponsored Access, to a
Street NE., Washington, DC. Written Self-Regulatory Organizations; The new Rule 4615, entitled ‘‘Sponsored
statements may be submitted by any of NASDAQ Stock Market LLC; Notice of Participants,’’ and adopt rule text
the following methods: Filing and Immediate Effectiveness of similar to other exchanges.3 The
Proposed Rule Change Relating to Exchange does not believe that this
Electronic Statements
NASDAQ Market Center Participant proposed rule change will impact
• Use the Commission’s Internet Registration and Sponsored Access market participants currently accessing
submission form (http://www.sec.gov/ the System pursuant to Rule 4611.
rules/other.shtml); or April 22, 2015.
On January 13, 2010, the Commission
• Send an email message to rule- Pursuant to Section 19(b)(1) of the approved the Exchange’s current rule.4
asabaliauskas on DSK5VPTVN1PROD with NOTICES
comments@sec.gov. Please include File Securities Exchange Act of 1934
Number 265–29 on the subject line; or (‘‘Act’’),1 and Rule 19b–4 thereunder,2 3 The proposed rule text is similar to NASDAQ
notice is hereby given that on April 20, OMX PHLX LLC (‘‘Phlx’’) Rule 1094, the
Paper Statements 2015, The NASDAQ Stock Market LLC International Securities Exchange LLC (‘‘ISE’’) Rule
• Send paper statements to Brent J. (‘‘NASDAQ’’ or ‘‘Exchange’’) filed with 706, the Chicago Board Options Exchange
Incorporated (‘‘CBOE’’) Rule 6.20A and NYSE
Fields, Federal Advisory Committee the Securities and Exchange ARCA, Inc. (‘‘NYSE Arca’’) Rule 7.29.
Management Officer, Securities and 4 Securities Exchange Act Release No. 61345
1 15 U.S.C. 78s(b)(1). (January 13, 2010), 75 FR 3263 (January 20, 2010)
32 17 CFR 200.30–3(a)(16). 2 17 CFR 240.19b–4. Continued
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Document Created: 2015-12-16 08:35:28
Document Modified: 2015-12-16 08:35:28
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Notices | |
| FR Citation | 80 FR 23618 |
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