80_FR_56700 80 FR 56519 - Order Pursuant to Sections 15F(b)(6) and 36 of the Securities Exchange Act of 1934 Extending Certain Temporary Exemptions and a Temporary and Limited Exception Related to Security-Based Swaps

80 FR 56519 - Order Pursuant to Sections 15F(b)(6) and 36 of the Securities Exchange Act of 1934 Extending Certain Temporary Exemptions and a Temporary and Limited Exception Related to Security-Based Swaps

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 181 (September 18, 2015)

Page Range56519-56522
FR Document2015-23464

Federal Register, Volume 80 Issue 181 (Friday, September 18, 2015)
[Federal Register Volume 80, Number 181 (Friday, September 18, 2015)]
[Notices]
[Pages 56519-56522]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-23464]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75919]


Order Pursuant to Sections 15F(b)(6) and 36 of the Securities 
Exchange Act of 1934 Extending Certain Temporary Exemptions and a 
Temporary and Limited Exception Related to Security-Based Swaps

September 15, 2015.

I. Introduction

    On June 15, 2011, the Securities and Exchange Commission 
(``Commission'') issued an order granting temporary exemptions and 
exceptions from compliance with certain provisions of

[[Page 56520]]

the Securities Exchange Act of 1934 (``Exchange Act'') \1\ applicable 
to security-based swaps (``SB swaps''), that were amended or added by 
the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 
(``Dodd-Frank Act'').\2\ The Temporary Exemptions Order provided, among 
other things, a temporary exemption from Section 3E(f) of the Exchange 
Act for security-based swap dealers and major security-based swap 
participants (together, ``SBS Entities''), a temporary and limited 
exception from Section 15F(b)(6) of the Exchange Act with respect to 
persons then currently associated with SBS Entities, and temporary 
exemptions from Section 29(b) of the Exchange Act with respect to 
violations of Sections 3E(f) and 15F(b)(6) in connection with SB swap 
contracts entered into on or after July 16, 2011. The Commission is 
extending the exemption from Section 3E(f) and exception from Section 
15F(b)(6) until the compliance date of rules we have adopted to 
establish a process by which SBS Entities can register (and withdraw 
from registration) with the Commission.\3\ In addition, the Commission 
is specifying when the related exemption for Section 29(b) with respect 
to SB swap contracts that involve violations of Sections 3E(f) or 
15F(b)(6) will expire.
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    \1\ 15 U.S.C. 78a et seq.
    \2\ See Temporary Exemptions and Other Temporary Relief, 
Together With Information on Compliance Dates for New Provisions of 
the Securities Exchange Act of 1934 Applicable to Security-Based 
Swaps, Exchange Act Release No. 64678 (June 15, 2011), 76 FR 36287 
(June 22, 2011) (``Temporary Exemptions Order'').
    \3\ See Registration Process for Security-Based Swap Dealers and 
Major Security-Based Swap Participants, Exchange Act Release No. 
75611 (Aug. 5, 2015), 80 FR 48964 (Aug.14, 2015) (``Registration 
Adopting Release'').
---------------------------------------------------------------------------

II. Background

    Title VII of the Dodd-Frank Act amended the Exchange Act to 
establish a new regulatory framework for the security-based swap 
markets. The provisions of Title VII generally were effective as of 
July 16, 2011, unless a rulemaking or other Commission action is 
required. The Temporary Exemptions Order provided guidance with respect 
to the compliance dates of Exchange Act provisions added by Title VII. 
It also identified those provisions with which compliance was required 
by the effective date of the Title VII amendments to the Exchange Act 
and those with which compliance is triggered by registration, adoption 
of final rules, or other action by the Commission.\4\ Where compliance 
was required by the effective date of Title VII, the Temporary 
Exemptions Order granted certain temporary exemptions and exceptions 
where necessary or appropriate in the public interest, and consistent 
with the protection of investors.\5\ The Temporary Exemptions Order 
included temporary exemptions from Sections 3E(f) and 29(b), and a 
temporary and limited exception from Section 15F(b)(6).\6\
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    \4\ See Temporary Exemptions Order.
    \5\ See id.
    \6\ Section 36(c) of the Exchange Act, 15 U.S.C. 78mm(c), limits 
the Commission's exemptive authority with respect to certain 
provisions of the Exchange Act added by Title VII, including Section 
15F. However, Section 15F(b)(6) expressly authorizes the Commission 
to establish exceptions to this provision by rule, regulation, or 
order.
---------------------------------------------------------------------------

    Section 3E of the Exchange Act, added by Section 763(d) of the 
Dodd-Frank Act, regulates the collection and handling of collateral for 
SB swaps, and sets out certain rights of the counterparties who deliver 
such collateral.\7\ Section 3E(f) requires SBS Entities to segregate 
initial margin amounts delivered by their counterparties in uncleared 
SB swap transactions if requested to do so by such counterparties.\8\ 
The statutory compliance date for Section 3E(f) was July 16, 2011. As 
explained in the Temporary Exemptions Order, the segregation required 
under Section 3E(f) will require expenditures of resources and time, 
such as the establishment of accounts and the adoption of policies and 
procedures setting forth the proper collection and maintenance of 
collateral. The Commission found that a temporary exemption from 
Section 3E(f) for SBS Entities was necessary or appropriate in the 
public interest, and was consistent with the protection of investors 
because it would allow persons to register as an SBS Entity in 
accordance with the applicable registration requirements, once 
established, prior to expending resources to comply with the provisions 
of Section 3E(f), and because it would give SBS Entities additional 
time to establish the necessary accounts and adopt the policies and 
procedures required by Section 3E(f).\9\ Under the Temporary Exemption 
Order, the temporary exemption from Section 3E(f) would expire on the 
date upon which the rules adopted by the Commission to register SBS 
Entities become effective.
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78c-5.
    \8\ 15 U.S.C. 78c-5(f).
    \9\ See Temporary Exemptions Order n. 98 (providing that, 
``Notwithstanding the exemption granted, market participants in 
uncleared SB swaps may continue to voluntarily negotiate for and 
receive similar protections to those provided in section 3E(f) of 
the Exchange Act, 15 U.S.C. 78c-5(f), until compliance with such 
section 3E(f) is required.'').
---------------------------------------------------------------------------

    Section 15F of the Exchange Act, added by Section 764(a) of the 
Dodd-Frank Act, establishes the regulatory framework for SBS 
Entities.\10\ Section 15F(b)(6) provides that ``except to the extent 
otherwise provided by rule, regulation or order of the Commission,'' it 
shall be unlawful for an SBS Entity to permit an associated person who 
is subject to a statutory disqualification to effect or be involved in 
effecting security-based swaps on its behalf, if the SBS Entity knew or 
should have known of the statutory disqualification.\11\ In the 
Temporary Exemptions Order, the Commission exercised its authority 
under Section 15F(b)(6) to provide a temporary and limited exception 
for SBS Entities from the application of the prohibition in that 
section. Specifically, the Temporary Exemptions Order provides that 
persons subject to a statutory disqualification who were, as of July 
16, 2011, associated with an SBS Entity and who effected or were 
involved in effecting security-based swaps on behalf of such SBS Entity 
could continue to be associated with an SBS Entity until the date upon 
which rules adopted by the Commission to register SBS Entities become 
effective. In providing this exception, the Commission explained that 
it intended to separately consider issues related to how an associated 
person that is subject to a statutory disqualification may be involved 
in the security-based swap business of the SBS Entity.\12\ The 
Commission also noted that existing business relationships and market 
activity could be unnecessarily disrupted if market participants were 
required to comply with Section 15F(b)(6) before the Commission 
considers, through notice and comment rulemaking, whether to adopt a 
procedure for potential modifications of the effect of statutory 
disqualifications under Title VII of the Dodd-Frank Act for SBS 
Entities and what any such procedure would require.\13\
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78o-10.
    \11\ 15 U.S.C. 78o-10(b)(6).
    \12\ See Temporary Exemptions Order at 36301.
    \13\ See id.
---------------------------------------------------------------------------

    Section 29(b) of the Exchange Act generally provides that contracts 
made in violation of any provision of the Exchange Act, or the rules 
thereunder, shall be void ``(1) as regards the rights of any person 
who, in violation of any such provision, . . . shall have made or 
engaged in the performance of any such contract, and (2) as regards the 
rights of any person who, not being a party to such contracts, shall 
have acquired any right thereunder with actual knowledge of the facts 
by reason of which the

[[Page 56521]]

making or performance of such contracts in violation of any such 
provision . . . .'' \14\ In the Temporary Exemptions Order, the 
Commission temporarily exempted any SB swap contract entered into on or 
after July 16, 2011 from being void or considered voidable by reason of 
Section 29(b) because any person that is a party to a contract violated 
a provision of the Exchange Act that was amended or added by Title VII 
of Dodd-Frank and for which the Commission has taken the view that 
compliance will be triggered by registration of a person or by adoption 
of final rules by the Commission, or has provided an exception or 
exemption in the Temporary Exemptions Order, until such date as the 
Commission specifies. The temporary exemption from Section 29(b) 
applies to contracts that would otherwise involve violations of, among 
other provisions, Sections 3E(f) or 15F(b)(6) of the Exchange Act.
---------------------------------------------------------------------------

    \14\ 15 U.S.C. 78cc(b).
---------------------------------------------------------------------------

    The Commission received several comments in response to the 
Temporary Exemptions Order.\15\ Although none of the commenters 
specifically referred to Sections 3E(f), 15F(b)(6), or 29(b), one 
commenter noted that the Temporary Exemptions Order was, in general, 
reasonable in terms of its scope and duration.\16\ In particular, the 
commenter stated that the exemption from specific requirements under 
the Dodd-Frank Act was appropriate where the Commission had not 
completed ``other steps, such as finalizing rules, setting up the 
registration regime, or establishing infrastructure.'' \17\ Another 
commenter urged the Commission ``to align the implementation of the 
self-operative provisions with the provisions that are dependent on 
rulemaking to ensure a coherent realization of the new swaps regulatory 
regime.'' \18\
---------------------------------------------------------------------------

    \15\ See Letter from American Bankers Association, Financial 
Services Roundtable, Futures Industry Association, Institute of 
International Bankers, International Swaps and Derivatives 
Association, Investment Company Institute, Securities Industry and 
Financial Markets Association, and U.S. Chamber of Commerce, (June 
10, 2011); Letter from Jir[iacute] Kr[oacute]l, Alternative 
Investment Management Association Limited (July 1, 2011); Letter 
from Bruce C. Bennett, Covington and Burling LLP (July 1, 2011); 
Letter from Dennis M. Kelleher, Stephen W. Hall, Better Markets, 
Inc. (July 6, 2011); Letter from Jeff Gooch, MarkitSERV (July 15, 
2011); Letter from Kevin Gould, Markit North America, Inc. (July 26, 
2011), available at http://www.sec.gov/comments/s7-24-11/s72411.shtml.
    \16\ See Letter from Dennis M. Kelleher, Stephen W. Hall, Better 
Markets, Inc. (July 6, 2011), at 2, available at http://www.sec.gov/comments/s7-24-11/s72411-3.pdf.
    \17\ See id.
    \18\ See Letter from American Bankers Association, Financial 
Services Roundtable, Futures Industry Association, Institute of 
International Bankers, International Swaps and Derivatives 
Association, Investment Company Institute, Securities Industry and 
Financial Markets Association, and U.S. Chamber of Commerce (June 
10, 2011).
---------------------------------------------------------------------------

III. Discussion

    In August, 2015, the Commission adopted rules to establish a 
process by which SBS Entities can register (and withdraw from 
registration) with the Commission (``Registration Rules'').\19\ These 
rules will become effective October 13, 2015, but compliance with the 
Registration Rules will not be required until the later of: Six months 
after the date of publication in the Federal Register of final rules 
establishing capital, margin and segregation requirements for SBS 
Entities; \20\ the compliance date of final rules establishing 
recordkeeping and reporting requirements for SBS Entities; \21\ the 
compliance date of final rules establishing business conduct 
requirements under Sections 15F(h) and 15F(k) of the Exchange Act; \22\ 
or the compliance date for final rules establishing a process for a 
registered SBS Entity to make an application to the Commission to allow 
an associated person who is subject to a statutory disqualification to 
effect or be involved in effecting security-based swaps on the SBS 
Entity's behalf (``Registration Compliance Date''). At the same time, 
the Commission also proposed rules that would, if adopted, establish a 
process for an SBS Entity to make an application to the Commission to 
allow an associated person subject to statutory disqualification to 
effect or be involved in effecting security-based swaps on behalf of 
the SBS Entity.\23\
---------------------------------------------------------------------------

    \19\ See Registration Adopting Release.
    \20\ The Commission previously has proposed rules to establish 
capital, margin and segregation requirements for SBS Entities. See 
Capital, Margin, and Segregation Requirements for Security-Based 
Swap Dealers and Major Security-Based Swap Participants and Capital 
Requirements for Broker-Dealers, Exchange Act Release No. 68071 
(Oct. 18, 2012), 77 FR 70213 (Nov. 23, 2012).
    \21\ The Commission previously has proposed rules to establish 
recordkeeping and reporting requirements for SBS Entities. See 
Recordkeeping and Reporting Requirements for Security-Based Swap 
Dealers, Major Security-Based Swap Participants, and Broker-Dealers; 
Capital Rule for Certain Security-Based Swap Dealers, Exchange Act 
Release No. 71958 (Apr. 17, 2014), 79 FR 25193 (May 2, 2014).
    \22\ The Commission previously has proposed rules to establish 
business conduct standards for SBS Entities. See Business Conduct 
Standards for Security-Based Swap Dealers and Major Security-Based 
Swap Participants, Exchange Act Release No. 64766 (June 29, 2011), 
76 FR 42395 (July 18, 2011).
    \23\ Applications by Security-Based Swap Dealers or Major 
Security-Based Swap Participants for Consent for Associated Persons 
to Effect or Be Involved in Effecting Security-Based Swaps, Exchange 
Act Release No. 75612 (Aug. 5, 2105), 80 FR 51683 (Aug. 25, 2015) 
(proposing new Rule of Practice 194).
---------------------------------------------------------------------------

    Under the terms of the Temporary Exemptions Order, the temporary 
exemption from Section 3E(f) of the Exchange Act and exception from 
Section 15F(b)(6) of the Exchange Act will expire when rules adopted by 
the Commission to register SBS Entities become effective. Accordingly, 
absent an extension, the temporary exemption from the segregation 
requirements in Section 3E(f) and exception from the prohibition in 
Section 15F(b)(6) in the Temporary Exemptions Order will expire upon 
the effective date of the Registration Rules, even though SBS Entities 
would not be required to register until the Registration Compliance 
Date. As stated in the Temporary Exemptions Order, the Commission 
continues to believe that persons should be able to register in 
accordance with the applicable registration requirements prior to 
expending resources to comply with Section 3E(f). Therefore, the 
Commission is extending the temporary exemption from the requirements 
of Section 3E(f) until the Registration Compliance Date.\24\
---------------------------------------------------------------------------

    \24\ The Commission also notes that this extension will allow 
persons to have the ability to review the final capital, margin and 
segregation rules before being required to comply with the 
requirements of Section 3E(f), as the compliance date of the 
Registration Rules will occur no earlier than six months after the 
date of publication in the Federal Register of final rules 
establishing capital, margin and segregation requirements for SBS 
Entities.
---------------------------------------------------------------------------

    The Commission also continues to believe that existing business 
relationships and market activity may be unnecessarily disrupted if 
market participants were required to comply with Section 15F(b)(6) of 
the Exchange Act before the Commission considered, through notice and 
comment rulemaking, whether to adopt a procedure for potential 
modifications of the effect of statutory disqualifications under Title 
VII for SBS Entities, and what any such procedure would require.\25\ As 
noted above, the Commission has proposed rules relating to the 
requirements of Section 15F(b)(6). The Registration Compliance Date 
will occur no earlier than final rules establishing a process for a 
registered

[[Page 56522]]

SBS Entity to make an application to the Commission to allow an 
associated person who is subject to a statutory disqualification to 
effect or be involved in effecting security-based swaps on the SBS 
Entity's behalf. Accordingly, the Commission is extending the temporary 
and limited exception from the requirements of Section 15F(b)(6) until 
the Registration Compliance Date.
---------------------------------------------------------------------------

    \25\ See supra note 23. The Commission has provided guidance in 
the Registration Adopting Release regarding the dates on which SBS 
Entities will become subject to registration requirements based on 
their status as either a SBS Dealer or Major SBS Participant. See 
Registration Adopting Release, 80 FR at 48988. In accordance with 
this guidance, we do not believe that any entity will have the 
status of an SBS Entity prior to the Registration Compliance Date. 
However, for the avoidance of doubt and possible legal uncertainty, 
the Commission is extending the previously granted temporary 
exemption from Section 3E(f) and the temporary and limited exception 
from Section 15F(b)(6) until the Registration Compliance Date.
---------------------------------------------------------------------------

    As discussed in the Temporary Exemptions Order, the Commission does 
not believe that Section 29(b) of the Exchange Act would apply to the 
provisions of Title VII for which the Commission has taken the view 
that compliance will either be triggered by registration of a person or 
by adoption of final rules by the Commission, or for which the 
Commission has provided an exception or exemption in that order. For 
the avoidance of doubt and to avoid possible legal uncertainty or 
market disruption, the Temporary Exemptions Order granted a temporary 
exemption from Section 29(b) until such date as the Commission 
specifies.\26\ The Commission believes that the exemption from Section 
29(b) provided under the Temporary Exemptions Order with respect to 
Sections 3E(f) and 15F(b)(6) of the Exchange Act will continue to apply 
during the period of time covered by the extensions in this Order. 
However, to avoid any doubt or possible legal uncertainty regarding the 
continuing availability of the temporary exemption from Section 29(b) 
with respect to Sections 3E(f) and 15(b)(6), the Commission is 
exercising its authority under Section 36 of the Exchange Act to 
continue the exemption from Section 29(b) with respect to Sections 
3E(f) and 15(b)(6) until the Registration Compliance Date.
---------------------------------------------------------------------------

    \26\ See Temporary Exemptions Order at 36305-06.
---------------------------------------------------------------------------

IV. Conclusion

    It is hereby ordered, pursuant to Section 36 of the Exchange Act, 
that SBS Entities are exempt from the requirements of Section 3E(f) of 
the Exchange Act until the Registration Compliance Date.
    It is hereby further ordered, pursuant to Section 15F(b)(6) of the 
Exchange Act, that SBS Entities are temporarily excepted from the 
prohibition of Section 15F(b)(6) with respect to persons subject to a 
statutory disqualification who were associated with an SBS Entity as of 
July 16, 2011, and who effect or are involved in effecting SB swaps on 
behalf of such SBS Entity until the Registration Compliance Date.
    It is hereby further ordered, pursuant to Section 36 of the 
Exchange Act, that no SB swap contract entered into on or after July 
16, 2011 shall be void or considered voidable by reason of Section 
29(b) of the Exchange Act because any person that is a party to the 
contract violated Section 3E(f) of the Exchange Act prior to the 
Registration Compliance Date.
    It is hereby further ordered, pursuant to Section 36 of the 
Exchange Act, that no SB swap contract entered into on or after July 
16, 2011 shall be void or considered voidable by reason of Section 
29(b) of the Exchange Act because any person that is a party to the 
contract violated Section 15F(b)(6) of the Exchange Act prior to the 
Registration Compliance.

    By the Commission.
Brent J. Fields,
Secretary.
[FR Doc. 2015-23464 Filed 9-17-15; 8:45 am]
BILLING CODE 8011-01-P



                                                                          Federal Register / Vol. 80, No. 181 / Friday, September 18, 2015 / Notices                                                  56519

                                              the benefit of all members that trade                   continually review, and consider                        All submissions should refer to File
                                              complex orders on the Exchange. The                     adjusting, its fees and rebates to remain               Number SR–ISE–2015–27. This file
                                              Exchange also believes that the                         competitive with other exchanges. For                   number should be included on the
                                              corresponding increase to the complex                   the reasons described above, the                        subject line if email is used. To help the
                                              order taker fee and complex order maker                 Exchange believes that the proposed fee                 Commission process and review your
                                              fee for trading against Priority Customer               changes reflect this competitive                        comments more efficiently, please use
                                              orders, as well as the fee for responses                environment.                                            only one method. The Commission will
                                              to complex crossing orders, is                                                                                  post all comments on the Commission’s
                                                                                                      C. Self-Regulatory Organization’s                       Internet Web site (http://www.sec.gov/
                                              reasonable and equitable as the
                                                                                                      Statement on Comments on the                            rules/sro.shtml). Copies of the
                                              proposed fees are set at levels that the
                                                                                                      Proposed Rule Change Received From                      submission, all subsequent
                                              Exchange believes will continue to be
                                                                                                      Members, Participants, or Others                        amendments, all written statements
                                              attractive to market participants that
                                              trade on ISE, and that are competitive                    The Exchange has not solicited, and                   with respect to the proposed rule
                                              with fees charged by other options                      does not intend to solicit, comments on                 change that are filed with the
                                              exchanges.                                              this proposed rule change. The                          Commission, and all written
                                                 The Exchange notes that Priority                     Exchange has not received any                           communications relating to the
                                              Customer orders will continue to                        unsolicited written comments from                       proposed rule change between the
                                              receive complex order rebates,17 while                  members or other interested parties.                    Commission and any person, other than
                                              other market participants will continue                                                                         those that may be withheld from the
                                              to pay a fee. The Exchange does not                     III. Date of Effectiveness of the                       public in accordance with the
                                              believe that this is unfairly                           Proposed Rule Change and Timing for                     provisions of 5 U.S.C. 552, will be
                                              discriminatory as a Priority Customer is                Commission Action                                       available for Web site viewing and
                                              by definition not a broker or dealer in                    The foregoing rule change has become                 printing in the Commission’s Public
                                              securities, and does not place more than                effective pursuant to Section                           Reference Room, 100 F Street NE.,
                                              390 orders in listed options per day on                 19(b)(3)(A)(ii) of the Act 19 and                       Washington, DC 20549 on official
                                              average during a calendar month for its                 subparagraph (f)(2) of Rule 19b–4                       business days between the hours of
                                              own beneficial account(s). This                         thereunder,20 because it establishes a                  10:00 a.m. and 3:00 p.m. Copies of such
                                              limitation does not apply to participants               due, fee, or other charge imposed by                    filing also will be available for
                                              whose behavior is substantially similar                 ISE.                                                    inspection and copying at the principal
                                              to that of market professionals,                           At any time within 60 days of the                    office of the Exchange. All comments
                                              including Professional Customers, who                   filing of such proposed rule change, the                received will be posted without change;
                                              will generally submit a higher number                   Commission summarily may                                the Commission does not edit personal
                                              of orders (many of which do not result                  temporarily suspend such rule change if                 identifying information from
                                              in executions) than Priority Customers.                 it appears to the Commission that such                  submissions. You should submit only
                                              The Exchange also notes that Market                     action is necessary or appropriate in the               information that you wish to make
                                              Maker orders will continue to be eligible               public interest, for the protection of                  available publicly. All submissions
                                              for lower fees than other non-Priority                                                                          should refer to File Number SR–ISE–
                                                                                                      investors, or otherwise in furtherance of
                                              Customer orders. The Exchange does                                                                              2015–27, and should be submitted on or
                                                                                                      the purposes of the Act. If the
                                              not believe that it is unfairly                                                                                 before October 9, 2015.
                                                                                                      Commission takes such action, the
                                              discriminatory provide lower fees to                    Commission shall institute proceedings                    For the Commission, by the Division of
                                              Market Maker orders as Market Makers                    to determine whether the proposed rule                  Trading and Markets, pursuant to delegated
                                              are subject to additional requirements                                                                          authority.21
                                                                                                      should be approved or disapproved.
                                              and obligations (such as quoting                                                                                Brent J. Fields,
                                              requirements) that other market                         IV. Solicitation of Comments                            Secretary.
                                              participants are not.                                     Interested persons are invited to                     [FR Doc. 2015–23398 Filed 9–17–15; 8:45 am]

                                              B. Self-Regulatory Organization’s                       submit written data, views, and                         BILLING CODE 8011–01–P

                                              Statement on Burden on Competition                      arguments concerning the foregoing,
                                                                                                      including whether the proposed rule
                                                In accordance with Section 6(b)(8) of                 change is consistent with the Act.                      SECURITIES AND EXCHANGE
                                              the Act,18 the Exchange does not believe                Comments may be submitted by any of                     COMMISSION
                                              that the proposed rule change will                      the following methods:                                  [Release No. 34–75919]
                                              impose any burden on intermarket or
                                              intramarket competition that is not                     Electronic Comments                                     Order Pursuant to Sections 15F(b)(6)
                                              necessary or appropriate in furtherance                   • Use the Commission’s Internet                       and 36 of the Securities Exchange Act
                                              of the purposes of the Act. The                         comment form (http://www.sec.gov/                       of 1934 Extending Certain Temporary
                                              Exchange believes that the proposed                     rules/sro.shtml); or                                    Exemptions and a Temporary and
                                              complex order fees and rebates remain                     • Send an email to rule-comments@                     Limited Exception Related to Security-
                                              competitive with fees and rebates                       sec.gov. Please include File Number SR–                 Based Swaps
                                              offered on other options exchanges. The                 ISE–2015–27 on the subject line.
                                              Exchange operates in a highly                                                                                   September 15, 2015.
                                              competitive market in which market                      Paper Comments                                          I. Introduction
                                              participants can readily direct their
                                                                                                        • Send paper comments in triplicate
tkelley on DSK3SPTVN1PROD with NOTICES




                                              order flow to competing venues. In such                                                                            On June 15, 2011, the Securities and
                                                                                                      to Brent J. Fields, Secretary, Securities               Exchange Commission (‘‘Commission’’)
                                              an environment, the Exchange must
                                                                                                      and Exchange Commission, 100 F Street                   issued an order granting temporary
                                                17 With the exception of responses to complex
                                                                                                      NE., Washington, DC 20549–1090.                         exemptions and exceptions from
                                              crossing orders where Priority Customers are                                                                    compliance with certain provisions of
                                              charged a fee like other market participants.             19   15 U.S.C. 78s(b)(3)(A)(ii).
                                                18 15 U.S.C. 78f(b)(8).                                 20   17 CFR 240.19b–4(f)(2).                            21   17 CFR 200.30–3(a)(12).



                                         VerDate Sep<11>2014   18:47 Sep 17, 2015   Jkt 235001   PO 00000    Frm 00083    Fmt 4703   Sfmt 4703   E:\FR\FM\18SEN1.SGM    18SEN1


                                              56520                       Federal Register / Vol. 80, No. 181 / Friday, September 18, 2015 / Notices

                                              the Securities Exchange Act of 1934                     VII, the Temporary Exemptions Order                      Section 15F of the Exchange Act,
                                              (‘‘Exchange Act’’) 1 applicable to                      granted certain temporary exemptions                  added by Section 764(a) of the Dodd-
                                              security-based swaps (‘‘SB swaps’’), that               and exceptions where necessary or                     Frank Act, establishes the regulatory
                                              were amended or added by the Dodd-                      appropriate in the public interest, and               framework for SBS Entities.10 Section
                                              Frank Wall Street Reform and Consumer                   consistent with the protection of                     15F(b)(6) provides that ‘‘except to the
                                              Protection Act of 2010 (‘‘Dodd-Frank                    investors.5 The Temporary Exemptions                  extent otherwise provided by rule,
                                              Act’’).2 The Temporary Exemptions                       Order included temporary exemptions                   regulation or order of the Commission,’’
                                              Order provided, among other things, a                   from Sections 3E(f) and 29(b), and a                  it shall be unlawful for an SBS Entity to
                                              temporary exemption from Section 3E(f)                  temporary and limited exception from                  permit an associated person who is
                                              of the Exchange Act for security-based                  Section 15F(b)(6).6                                   subject to a statutory disqualification to
                                              swap dealers and major security-based                      Section 3E of the Exchange Act,                    effect or be involved in effecting
                                              swap participants (together, ‘‘SBS                      added by Section 763(d) of the Dodd-                  security-based swaps on its behalf, if the
                                              Entities’’), a temporary and limited                    Frank Act, regulates the collection and               SBS Entity knew or should have known
                                              exception from Section 15F(b)(6) of the                 handling of collateral for SB swaps, and              of the statutory disqualification.11 In the
                                              Exchange Act with respect to persons                    sets out certain rights of the                        Temporary Exemptions Order, the
                                              then currently associated with SBS                      counterparties who deliver such                       Commission exercised its authority
                                              Entities, and temporary exemptions                      collateral.7 Section 3E(f) requires SBS               under Section 15F(b)(6) to provide a
                                              from Section 29(b) of the Exchange Act                  Entities to segregate initial margin                  temporary and limited exception for
                                              with respect to violations of Sections                  amounts delivered by their                            SBS Entities from the application of the
                                              3E(f) and 15F(b)(6) in connection with                  counterparties in uncleared SB swap                   prohibition in that section. Specifically,
                                              SB swap contracts entered into on or                    transactions if requested to do so by                 the Temporary Exemptions Order
                                              after July 16, 2011. The Commission is                  such counterparties.8 The statutory                   provides that persons subject to a
                                              extending the exemption from Section                    compliance date for Section 3E(f) was                 statutory disqualification who were, as
                                              3E(f) and exception from Section                        July 16, 2011. As explained in the                    of July 16, 2011, associated with an SBS
                                              15F(b)(6) until the compliance date of                  Temporary Exemptions Order, the                       Entity and who effected or were
                                              rules we have adopted to establish a                    segregation required under Section 3E(f)              involved in effecting security-based
                                              process by which SBS Entities can                       will require expenditures of resources                swaps on behalf of such SBS Entity
                                              register (and withdraw from                             and time, such as the establishment of                could continue to be associated with an
                                              registration) with the Commission.3 In                  accounts and the adoption of policies                 SBS Entity until the date upon which
                                              addition, the Commission is specifying                  and procedures setting forth the proper               rules adopted by the Commission to
                                              when the related exemption for Section                  collection and maintenance of                         register SBS Entities become effective.
                                              29(b) with respect to SB swap contracts                 collateral. The Commission found that a               In providing this exception, the
                                              that involve violations of Sections 3E(f)               temporary exemption from Section 3E(f)                Commission explained that it intended
                                              or 15F(b)(6) will expire.                               for SBS Entities was necessary or                     to separately consider issues related to
                                                                                                      appropriate in the public interest, and               how an associated person that is subject
                                              II. Background                                                                                                to a statutory disqualification may be
                                                                                                      was consistent with the protection of
                                                 Title VII of the Dodd-Frank Act                                                                            involved in the security-based swap
                                                                                                      investors because it would allow
                                              amended the Exchange Act to establish                                                                         business of the SBS Entity.12 The
                                                                                                      persons to register as an SBS Entity in
                                              a new regulatory framework for the                                                                            Commission also noted that existing
                                                                                                      accordance with the applicable
                                              security-based swap markets. The                                                                              business relationships and market
                                                                                                      registration requirements, once
                                              provisions of Title VII generally were                                                                        activity could be unnecessarily
                                                                                                      established, prior to expending
                                              effective as of July 16, 2011, unless a                                                                       disrupted if market participants were
                                                                                                      resources to comply with the provisions
                                              rulemaking or other Commission action                                                                         required to comply with Section
                                                                                                      of Section 3E(f), and because it would
                                              is required. The Temporary Exemptions                                                                         15F(b)(6) before the Commission
                                                                                                      give SBS Entities additional time to
                                              Order provided guidance with respect to                                                                       considers, through notice and comment
                                                                                                      establish the necessary accounts and
                                              the compliance dates of Exchange Act                                                                          rulemaking, whether to adopt a
                                                                                                      adopt the policies and procedures
                                              provisions added by Title VII. It also                                                                        procedure for potential modifications of
                                                                                                      required by Section 3E(f).9 Under the
                                              identified those provisions with which                                                                        the effect of statutory disqualifications
                                              compliance was required by the                          Temporary Exemption Order, the
                                                                                                                                                            under Title VII of the Dodd-Frank Act
                                              effective date of the Title VII                         temporary exemption from Section 3E(f)
                                                                                                                                                            for SBS Entities and what any such
                                              amendments to the Exchange Act and                      would expire on the date upon which
                                                                                                                                                            procedure would require.13
                                              those with which compliance is                          the rules adopted by the Commission to
                                                                                                                                                               Section 29(b) of the Exchange Act
                                              triggered by registration, adoption of                  register SBS Entities become effective.
                                                                                                                                                            generally provides that contracts made
                                              final rules, or other action by the                                                                           in violation of any provision of the
                                                                                                        5 See   id.
                                              Commission.4 Where compliance was                         6 Section
                                                                                                                                                            Exchange Act, or the rules thereunder,
                                                                                                                   36(c) of the Exchange Act, 15 U.S.C.
                                              required by the effective date of Title                 78mm(c), limits the Commission’s exemptive            shall be void ‘‘(1) as regards the rights
                                                                                                      authority with respect to certain provisions of the   of any person who, in violation of any
                                                1 15  U.S.C. 78a et seq.                              Exchange Act added by Title VII, including Section    such provision, . . . shall have made or
                                                2 See  Temporary Exemptions and Other                 15F. However, Section 15F(b)(6) expressly             engaged in the performance of any such
                                              Temporary Relief, Together With Information on          authorizes the Commission to establish exceptions
                                              Compliance Dates for New Provisions of the              to this provision by rule, regulation, or order.      contract, and (2) as regards the rights of
                                              Securities Exchange Act of 1934 Applicable to             7 15 U.S.C. 78c–5.                                  any person who, not being a party to
                                              Security-Based Swaps, Exchange Act Release No.            8 15 U.S.C. 78c–5(f).                               such contracts, shall have acquired any
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                                              64678 (June 15, 2011), 76 FR 36287 (June 22, 2011)        9 See Temporary Exemptions Order n. 98              right thereunder with actual knowledge
                                              (‘‘Temporary Exemptions Order’’).                       (providing that, ‘‘Notwithstanding the exemption
                                                 3 See Registration Process for Security-Based
                                                                                                                                                            of the facts by reason of which the
                                                                                                      granted, market participants in uncleared SB swaps
                                              Swap Dealers and Major Security-Based Swap              may continue to voluntarily negotiate for and           10 15 U.S.C. 78o–10.
                                              Participants, Exchange Act Release No. 75611 (Aug.      receive similar protections to those provided in
                                                                                                                                                              11 15 U.S.C. 78o–10(b)(6).
                                              5, 2015), 80 FR 48964 (Aug.14, 2015) (‘‘Registration    section 3E(f) of the Exchange Act, 15 U.S.C. 78c–
                                              Adopting Release’’).                                    5(f), until compliance with such section 3E(f) is       12 See Temporary Exemptions Order at 36301.
                                                 4 See Temporary Exemptions Order.                    required.’’).                                           13 See id.




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                                                                          Federal Register / Vol. 80, No. 181 / Friday, September 18, 2015 / Notices                                                   56521

                                              making or performance of such                           III. Discussion                                          Under the terms of the Temporary
                                              contracts in violation of any such                        In August, 2015, the Commission                     Exemptions Order, the temporary
                                              provision . . . .’’ 14 In the Temporary                 adopted rules to establish a process by               exemption from Section 3E(f) of the
                                              Exemptions Order, the Commission                        which SBS Entities can register (and                  Exchange Act and exception from
                                              temporarily exempted any SB swap                        withdraw from registration) with the                  Section 15F(b)(6) of the Exchange Act
                                              contract entered into on or after July 16,              Commission (‘‘Registration Rules’’).19
                                                                                                                                                            will expire when rules adopted by the
                                              2011 from being void or considered                                                                            Commission to register SBS Entities
                                                                                                      These rules will become effective
                                              voidable by reason of Section 29(b)                                                                           become effective. Accordingly, absent
                                                                                                      October 13, 2015, but compliance with
                                              because any person that is a party to a                                                                       an extension, the temporary exemption
                                                                                                      the Registration Rules will not be
                                              contract violated a provision of the                                                                          from the segregation requirements in
                                                                                                      required until the later of: Six months
                                              Exchange Act that was amended or                                                                              Section 3E(f) and exception from the
                                                                                                      after the date of publication in the
                                              added by Title VII of Dodd-Frank and                                                                          prohibition in Section 15F(b)(6) in the
                                                                                                      Federal Register of final rules
                                              for which the Commission has taken the                                                                        Temporary Exemptions Order will
                                                                                                      establishing capital, margin and
                                              view that compliance will be triggered                                                                        expire upon the effective date of the
                                                                                                      segregation requirements for SBS
                                              by registration of a person or by                                                                             Registration Rules, even though SBS
                                                                                                      Entities; 20 the compliance date of final
                                              adoption of final rules by the                                                                                Entities would not be required to
                                              Commission, or has provided an                          rules establishing recordkeeping and                  register until the Registration
                                              exception or exemption in the                           reporting requirements for SBS                        Compliance Date. As stated in the
                                              Temporary Exemptions Order, until                       Entities; 21 the compliance date of final             Temporary Exemptions Order, the
                                              such date as the Commission specifies.                  rules establishing business conduct                   Commission continues to believe that
                                              The temporary exemption from Section                    requirements under Sections 15F(h) and                persons should be able to register in
                                              29(b) applies to contracts that would                   15F(k) of the Exchange Act; 22 or the                 accordance with the applicable
                                              otherwise involve violations of, among                  compliance date for final rules                       registration requirements prior to
                                              other provisions, Sections 3E(f) or                     establishing a process for a registered               expending resources to comply with
                                              15F(b)(6) of the Exchange Act.                          SBS Entity to make an application to the              Section 3E(f). Therefore, the
                                                 The Commission received several                      Commission to allow an associated                     Commission is extending the temporary
                                              comments in response to the Temporary                   person who is subject to a statutory                  exemption from the requirements of
                                              Exemptions Order.15 Although none of                    disqualification to effect or be involved             Section 3E(f) until the Registration
                                              the commenters specifically referred to                 in effecting security-based swaps on the              Compliance Date.24
                                              Sections 3E(f), 15F(b)(6), or 29(b), one                SBS Entity’s behalf (‘‘Registration                     The Commission also continues to
                                              commenter noted that the Temporary                      Compliance Date’’). At the same time,                 believe that existing business
                                              Exemptions Order was, in general,                       the Commission also proposed rules                    relationships and market activity may
                                              reasonable in terms of its scope and                    that would, if adopted, establish a                   be unnecessarily disrupted if market
                                              duration.16 In particular, the commenter                process for an SBS Entity to make an                  participants were required to comply
                                              stated that the exemption from specific                 application to the Commission to allow                with Section 15F(b)(6) of the Exchange
                                              requirements under the Dodd-Frank Act                   an associated person subject to statutory             Act before the Commission considered,
                                              was appropriate where the Commission                    disqualification to effect or be involved             through notice and comment
                                              had not completed ‘‘other steps, such as                in effecting security-based swaps on                  rulemaking, whether to adopt a
                                              finalizing rules, setting up the                        behalf of the SBS Entity.23                           procedure for potential modifications of
                                              registration regime, or establishing                                                                          the effect of statutory disqualifications
                                              infrastructure.’’ 17 Another commenter                  International Swaps and Derivatives Association,      under Title VII for SBS Entities, and
                                                                                                      Investment Company Institute, Securities Industry
                                              urged the Commission ‘‘to align the                     and Financial Markets Association, and U.S.           what any such procedure would
                                              implementation of the self-operative                    Chamber of Commerce (June 10, 2011).                  require.25 As noted above, the
                                              provisions with the provisions that are                   19 See Registration Adopting Release.               Commission has proposed rules relating
                                              dependent on rulemaking to ensure a                       20 The Commission previously has proposed rules
                                                                                                                                                            to the requirements of Section 15F(b)(6).
                                              coherent realization of the new swaps                   to establish capital, margin and segregation          The Registration Compliance Date will
                                                                                                      requirements for SBS Entities. See Capital, Margin,
                                              regulatory regime.’’ 18                                 and Segregation Requirements for Security-Based       occur no earlier than final rules
                                                                                                      Swap Dealers and Major Security-Based Swap            establishing a process for a registered
                                                14 15   U.S.C. 78cc(b).                               Participants and Capital Requirements for Broker-
                                                15 See    Letter from American Bankers Association,   Dealers, Exchange Act Release No. 68071 (Oct. 18,        24 The Commission also notes that this extension
                                              Financial Services Roundtable, Futures Industry         2012), 77 FR 70213 (Nov. 23, 2012).                   will allow persons to have the ability to review the
                                              Association, Institute of International Bankers,          21 The Commission previously has proposed rules
                                                                                                                                                            final capital, margin and segregation rules before
                                              International Swaps and Derivatives Association,        to establish recordkeeping and reporting              being required to comply with the requirements of
                                              Investment Company Institute, Securities Industry       requirements for SBS Entities. See Recordkeeping      Section 3E(f), as the compliance date of the
                                              and Financial Markets Association, and U.S.             and Reporting Requirements for Security-Based         Registration Rules will occur no earlier than six
                                              Chamber of Commerce, (June 10, 2011); Letter from       Swap Dealers, Major Security-Based Swap               months after the date of publication in the Federal
                                              Jirı́ Król, Alternative Investment Management          Participants, and Broker-Dealers; Capital Rule for    Register of final rules establishing capital, margin
                                              Association Limited (July 1, 2011); Letter from         Certain Security-Based Swap Dealers, Exchange Act     and segregation requirements for SBS Entities.
                                              Bruce C. Bennett, Covington and Burling LLP (July       Release No. 71958 (Apr. 17, 2014), 79 FR 25193           25 See supra note 23. The Commission has
                                              1, 2011); Letter from Dennis M. Kelleher, Stephen       (May 2, 2014).                                        provided guidance in the Registration Adopting
                                              W. Hall, Better Markets, Inc. (July 6, 2011); Letter      22 The Commission previously has proposed rules
                                                                                                                                                            Release regarding the dates on which SBS Entities
                                              from Jeff Gooch, MarkitSERV (July 15, 2011); Letter     to establish business conduct standards for SBS       will become subject to registration requirements
                                              from Kevin Gould, Markit North America, Inc. (July      Entities. See Business Conduct Standards for          based on their status as either a SBS Dealer or Major
                                              26, 2011), available at http://www.sec.gov/             Security-Based Swap Dealers and Major Security-       SBS Participant. See Registration Adopting Release,
                                              comments/s7-24-11/s72411.shtml.                         Based Swap Participants, Exchange Act Release No.     80 FR at 48988. In accordance with this guidance,
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                                                 16 See Letter from Dennis M. Kelleher, Stephen
                                                                                                      64766 (June 29, 2011), 76 FR 42395 (July 18, 2011).   we do not believe that any entity will have the
                                              W. Hall, Better Markets, Inc. (July 6, 2011), at 2,       23 Applications by Security-Based Swap Dealers      status of an SBS Entity prior to the Registration
                                              available at http://www.sec.gov/comments/s7-24-         or Major Security-Based Swap Participants for         Compliance Date. However, for the avoidance of
                                              11/s72411-3.pdf.                                        Consent for Associated Persons to Effect or Be        doubt and possible legal uncertainty, the
                                                 17 See id.
                                                                                                      Involved in Effecting Security-Based Swaps,           Commission is extending the previously granted
                                                 18 See Letter from American Bankers Association,     Exchange Act Release No. 75612 (Aug. 5, 2105), 80     temporary exemption from Section 3E(f) and the
                                              Financial Services Roundtable, Futures Industry         FR 51683 (Aug. 25, 2015) (proposing new Rule of       temporary and limited exception from Section
                                              Association, Institute of International Bankers,        Practice 194).                                        15F(b)(6) until the Registration Compliance Date.



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                                              56522                         Federal Register / Vol. 80, No. 181 / Friday, September 18, 2015 / Notices

                                              SBS Entity to make an application to the                    to a statutory disqualification who were                             by the Exchange. The Commission is
                                              Commission to allow an associated                           associated with an SBS Entity as of July                             publishing this notice to solicit
                                              person who is subject to a statutory                        16, 2011, and who effect or are involved                             comments on the proposed rule change
                                              disqualification to effect or be involved                   in effecting SB swaps on behalf of such                              from interested persons.
                                              in effecting security-based swaps on the                    SBS Entity until the Registration
                                                                                                          Compliance Date.                                                     I. Self-Regulatory Organization’s
                                              SBS Entity’s behalf. Accordingly, the
                                                                                                             It is hereby further ordered, pursuant                            Statement of the Terms of Substance of
                                              Commission is extending the temporary
                                                                                                          to Section 36 of the Exchange Act, that                              the Proposed Rule Change
                                              and limited exception from the
                                              requirements of Section 15F(b)(6) until                     no SB swap contract entered into on or                                  The Exchange proposes to list two
                                              the Registration Compliance Date.                           after July 16, 2011 shall be void or                                 additional products during extended
                                                 As discussed in the Temporary                            considered voidable by reason of                                     trading hours (‘‘ETH’’). The text of the
                                              Exemptions Order, the Commission                            Section 29(b) of the Exchange Act                                    proposed rule change is provided
                                              does not believe that Section 29(b) of                      because any person that is a party to the                            below.
                                              the Exchange Act would apply to the                         contract violated Section 3E(f) of the
                                                                                                          Exchange Act prior to the Registration                               (additions are italicized; deletions are
                                              provisions of Title VII for which the                                                                                            [bracketed])
                                              Commission has taken the view that                          Compliance Date.
                                              compliance will either be triggered by                         It is hereby further ordered, pursuant                            *          *     *        *        *
                                              registration of a person or by adoption                     to Section 36 of the Exchange Act, that                              Chicago Board Options Exchange,
                                              of final rules by the Commission, or for                    no SB swap contract entered into on or                               Incorporated
                                              which the Commission has provided an                        after July 16, 2011 shall be void or                                 Rules
                                              exception or exemption in that order.                       considered voidable by reason of
                                                                                                                                                                               *          *     *        *        *
                                              For the avoidance of doubt and to avoid                     Section 29(b) of the Exchange Act
                                                                                                          because any person that is a party to the                            Rule 6.1A. Extended Trading Hours
                                              possible legal uncertainty or market
                                              disruption, the Temporary Exemptions                        contract violated Section 15F(b)(6) of                                  (a)–(b) No change.
                                              Order granted a temporary exemption                         the Exchange Act prior to the                                           (c) Eligibility. The Exchange may designate
                                                                                                          Registration Compliance.                                             as eligible for trading during Extended
                                              from Section 29(b) until such date as the                                                                                        Trading Hours any exclusively listed index
                                              Commission specifies.26 The                                   By the Commission.                                                 option designated for trading under Rules
                                              Commission believes that the exemption                      Brent J. Fields,                                                     24.2 and 24.9. The following options are
                                              from Section 29(b) provided under the                       Secretary.                                                           approved for trading on the Exchange during
                                              Temporary Exemptions Order with                             [FR Doc. 2015–23464 Filed 9–17–15; 8:45 am]                          Extended Trading Hours:
                                              respect to Sections 3E(f) and 15F(b)(6) of                                                                                          (i) Standard & Poor’s 500 Stock Index
                                                                                                          BILLING CODE 8011–01–P
                                              the Exchange Act will continue to apply                                                                                          (SPX)
                                              during the period of time covered by the                                                                                            (ii) CBOE Volatility Index® (VIX®)
                                              extensions in this Order. However, to                                                                                               (iii) Standard & Poor’s 500 Stock Index
                                                                                                          SECURITIES AND EXCHANGE                                              (P.M.-Settled) (SPXPM)
                                              avoid any doubt or possible legal                           COMMISSION                                                              (iv) Mini-SPX Index (XSP)
                                              uncertainty regarding the continuing                                                                                                Any series in these classes that are
                                              availability of the temporary exemption                     [Release No. 34–75914; File No. SR–CBOE–
                                                                                                          2015–079]                                                            expected to be open for trading during
                                              from Section 29(b) with respect to                                                                                               Regular Trading Hours will be open for
                                              Sections 3E(f) and 15(b)(6), the                            Self-Regulatory Organizations;                                       trading during Extended Trading Hours on
                                              Commission is exercising its authority                      Chicago Board Options Exchange,                                      that same trading day (subject to Rules 6.2B
                                              under Section 36 of the Exchange Act to                                                                                          and 24.13, Interpretation and Policy .03).
                                                                                                          Incorporated; Notice of Filing and                                   FLEX options (pursuant to Chapters XXIVA
                                              continue the exemption from Section                         Immediate Effectiveness of a Proposed
                                              29(b) with respect to Sections 3E(f) and                                                                                         and XXIVB) will not be eligible for trading
                                                                                                          Rule Change To List Two Additional                                   during Extended Trading Hours.
                                              15(b)(6) until the Registration                             Products During Extended Trading                                        (d) No change.
                                              Compliance Date.                                            Hours                                                                   (e) Market-Makers.
                                              IV. Conclusion                                                                                                                      (i) Appointments. A Market-Maker’s
                                                                                                          September 14, 2015.                                                  appointment to a class during Regular
                                                It is hereby ordered, pursuant to                            Pursuant to Section 19(b)(1) of the                               Trading Hours does not apply during
                                              Section 36 of the Exchange Act, that                        Securities Exchange Act of 1934 (the                                 Extended Trading Hours. Market-Makers may
                                              SBS Entities are exempt from the                            ‘‘Act’’),1 and Rule 19b–4 thereunder,2                               request appointments for Extended Trading
                                              requirements of Section 3E(f) of the                        notice is hereby given that on                                       Hours in accordance with Rule 8.3 and this
                                              Exchange Act until the Registration                         September 10, 2015, Chicago Board                                    subparagraph (i). Notwithstanding Rule
                                              Compliance Date.                                            Options Exchange, Incorporated (the                                  8.3(c), a Market-Maker can create a Virtual
                                                                                                                                                                               Trading Crowd (‘‘VTC’’) appointment, which
                                                It is hereby further ordered, pursuant                    ‘‘Exchange’’ or ‘‘CBOE’’) filed with the                             confers the right to quote electronically
                                              to Section 15F(b)(6) of the Exchange                        Securities and Exchange Commission                                   during Extended Trading Hours in the
                                              Act, that SBS Entities are temporarily                      (the ‘‘Commission’’) the proposed rule                               appropriate number of classes selected from
                                              excepted from the prohibition of Section                    change as described in Items I and II                                the Extended Trading Hours tier and related
                                              15F(b)(6) with respect to persons subject                   below, which Items have been prepared                                appointment costs as follows:

                                                                                                                                                                                                                              Appointment
                                                                     Tier                                                                                 Classes                                                                cost
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                                              Extended Trading Hours ............................    •   Options   on   the   CBOE Volatility Index (VIX) ...............................................................           [.5].4
                                                                                                     •   Options   on   the   Standard & Poor’s 500 (SPX) ............................................................              [.5].4
                                                                                                     •   Options   on   the   Standard & Poor’s 500 Stock Index (P.M.-Settled) (SPXPM) ...........                                      .1
                                                                                                     •   Options   on   the   Mini-SPX Index (XSP) ........................................................................             .1


                                                26 See   Temporary Exemptions Order at 36305–06.            1 15   U.S.C. 78s(b)(1).                                               2 17   CFR 240.19b–4.



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Document Created: 2015-12-15 09:27:18
Document Modified: 2015-12-15 09:27:18
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionNotices
FR Citation80 FR 56519 

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