82 FR 35563 - Self-Regulatory Organizations; National Securities Clearing Corporation; Notice of Filing of a Proposed Rule Change To Expand the Application of the Family-Issued Securities Charge
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 82, Issue 145 (July 31, 2017)
Federal Register Volume 82, Issue 145 (July 31, 2017)
| Page Range | 35563-35566 | |
| FR Document | 2017-15993 |
[Federal Register Volume 82, Number 145 (Monday, July 31, 2017)] [Notices] [Pages 35563-35566] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2017-15993] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-81203; File No. SR-NSCC-2017-010] Self-Regulatory Organizations; National Securities Clearing Corporation; Notice of Filing of a Proposed Rule Change To Expand the Application of the Family-Issued Securities Charge July 25, 2017. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that on July 10, 2017, National Securities Clearing Corporation (``NSCC'') filed with the Securities and Exchange Commission (``Commission'') the proposed rule change as described in Items I, II and III below, which Items have been prepared by the clearing agency.\3\ The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. \3\ On July 10, 2017, NSCC filed this proposed rule change as an advance notice (SR-NSCC-2017-804) with the Commission pursuant to Section 806(e)(1) of the Dodd-Frank Wall Street Reform and Consumer Protection Act entitled the Payment, Clearing, and Settlement Supervision Act of 2010, 12 U.S.C. 5465(e)(1), and Rule 19b- 4(n)(1)(i) of the Act, 17 CFR 240.19b-4(n)(1)(i). A copy of the advance notice is available at http://www.dtcc.com/legal/sec-rule-filings.aspx. --------------------------------------------------------------------------- I. Clearing Agency's Statement of the Terms of Substance of the Proposed Rule Change The proposed change consists of amendments to the NSCC Rules and Procedures (``Rules'') \4\ in order to (i) expand the application of NSCC's existing family-issued securities charge \5\ to apply to all Members, as described below, and (ii) include a definition of ``Family- Issued Security'' as a security that was issued by a Member or by an affiliate of that Member, as described in greater detail below. --------------------------------------------------------------------------- \4\ Terms not defined herein are defined in the Rules, available at www.dtcc.com/~/media/Files/Downloads/legal/rules/nscc_rules.pdf. \5\ The family-issued securities charge is currently described in Procedure XV, Section I.(B)(1) of the Rules, supra note 4. --------------------------------------------------------------------------- II. Clearing Agency's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the clearing agency included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The clearing agency has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. (A) Clearing Agency's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose Currently, in calculating its Members' required deposits to the Clearing Fund, NSCC excludes positions in Family-Issued Securities of certain Members from its parametric volatility Clearing Fund component (``VaR Charge''), and instead charges an amount calculated by multiplying the absolute value of the long, net unsettled positions in that Member's Family-Issued Securities by a percentage that is no less than 40 percent (``FIS Charge''). The FIS Charge is currently only applied to Members that are rated 5, 6, or 7 on the Credit Risk Rating Matrix (``CRRM''). The proposed change would expand the application of the FIS Charge to the positions in Family-Issued Securities of all Members to help NSCC cover the specific wrong-way risk posed by Family- Issued Securities, as described further below.\6\ Therefore, NSCC is proposing to amend (i) Rule 1 (Definitions and Descriptions) to add a definition of ``Family-Issued Security,'' and (ii) Procedure XV (Clearing Fund Formula and Other Matters) to expand the application of the FIS Charge to all Members by moving the description of FIS Charge from Section I.(B)(1) to Sections I.(A)(1) and I.(A)(2) in order to make clear that the FIS Charge would be included as a component of the Clearing Fund formula calculated for all Members. --------------------------------------------------------------------------- \6\ Members that do not trade in Family-Issued Securities would not be subject to the FIS Charge. --------------------------------------------------------------------------- As a central counterparty, NSCC occupies an important role in the securities settlement system by interposing itself between counterparties to financial transactions and thereby reducing the risk faced by participants and contributing to global financial stability. The effectiveness of a central counterparty's risk controls and the adequacy of its financial resources [[Page 35564]] are critical to achieving these risk-reducing goals. In that context, NSCC continuously reviews its margining methodology in order to ensure the reliability of its margining in achieving the desired coverage. In order to be most effective, NSCC must take into consideration the risk characteristics specific to certain securities when margining those securities. Among the various risks that NSCC considers when evaluating the effectiveness of its margining methodology are its counterparty risks and identification and mitigation of ``wrong-way'' risk, particularly specific wrong-way risk, defined as the risk that an exposure to a counterparty is highly likely to increase when the creditworthiness of that counterparty deteriorates.\7\ NSCC has identified an exposure to specific wrong-way risk when it acts as central counterparty to a Member with respect to positions in Family-Issued Securities. In the event that a Member with unsettled long positions in Family-Issued Securities defaults, NSCC would close out those positions following a likely drop in the credit-worthiness of the issuer, possibly resulting in a loss to NSCC. --------------------------------------------------------------------------- \7\ See Principles for financial market infrastructures, issued by the Committee on Payment and Settlement Systems and the Technical Committee of the International Organization of Securities Commissions 47 n.65 (April 2012), available at http://www.bis.org/publ/cpss101a.pdf. --------------------------------------------------------------------------- In 2015, NSCC proposed to address its exposure to specific wrong- way risk in two ways.\8\ First, NSCC proposed to apply the FIS Charge to its Members that are rated a 5, 6, or 7 on the CRRM (i.e., Members on the Watch List).\9\ Today, following implementation of the FIS Phase 1 Rule Change, the FIS Charge is applied by excluding positions in Family-Issued Securities of those Members from NSCC's VaR Charge, and instead charging an amount calculated by multiplying the absolute value of the long net unsettled positions in that Member's Family-Issued Securities by a percentage.\10\ That percentage is no less than 40 percent and up to 100 percent, and is determined by NSCC based on the Member's rating on the CRRM and on the type of Family-Issued Securities submitted to NSCC. As such, under Procedure XV (1) fixed income securities that are Family-Issued Securities are charged a haircut rate of no less than 80 percent for Members that are rated 6 or 7 on the CRRM, and no less than 40 percent for Members rated 5 on the CRRM; and (2) equity securities that are Family-Issued Securities are charged a haircut rate of 100 percent for Members that are rated 6 or 7 on the CRRM, and no less than 50 percent for Members that are rated 5 on the CRRM. Members that have a rating on the CRRM of 1 through 4 are not currently subject to the FIS Charge. As stated above, Family-Issued Securities present NSCC with specific wrong-way risk such that, in the event that a Member with unsettled long positions in Family-Issued Securities defaults, NSCC would close out those positions following a likely drop in the credit-worthiness of the issuer, possibly resulting in a loss to NSCC. Therefore, the FIS Charge is applied to the unsettled long positions in Family-Issued Securities, which are the positions that NSCC would close out following a Member default, as opposed to the short positions in net unsettled securities. The haircut rates were calibrated based on historical corporate issue recovery rate data, and address the risk that the Family-Issued Securities of a Member would be devalued in the event of that Member's default. --------------------------------------------------------------------------- \8\ See Securities Exchange Act Release No. 76077 (October 5, 2015), 80 FR 61256 (October 9, 2015), (SR-NSCC-2015-003) (``FIS Phase 1 Rule Change''). \9\ As part of its ongoing monitoring of its membership, NSCC utilizes the CRRM to rate its risk exposures to its Members based on a scale from 1 (the strongest) to 7 (the weakest). Members that fall within the higher risk rating categories (i.e., 5, 6, and 7) are placed on NSCC's ``Watch List,'' and may be subject to enhanced surveillance or additional margin charges, as permitted under the Rules. See Rule 2B, Section 4 and Procedure XV, Section I.(B)(1) of the Rules, supra note 4. See also Securities Exchange Act Release No. 80734 (May 19, 2017), 82 FR 24174 (May 25, 2017), (SR-DTC-2017- 002, SR-FICC-2017-006, SR-NSCC-2017-002) (approving proposed changes to the CRRM methodology). \10\ Procedure XV (Clearing Fund Formula and Other Matters), Section I.(B)(1), supra note 4. --------------------------------------------------------------------------- The FIS Charge is currently applied only to Members on the Watch List because these Members present a heightened credit risk to NSCC or have demonstrated higher risk related to their ability to meet settlement, and, as such, at the time the FIS Phase 1 Rule Change was proposed, NSCC believed there was a clear and more urgent need to address NSCC's exposure to specific wrong-way risk presented by these Members' positions in Family-Issued Securities. Second, NSCC proposed to further evaluate its exposure to wrong-way risk presented by positions in Family-Issued Securities by reviewing the impact of expanding the application of the FIS Charge to positions in Family-Issued Securities of all Members.\11\ Following its evaluation, NSCC has determined that the risk characteristics to be considered when margining Family-Issued Securities extend beyond Members' creditworthiness. More specifically, exposure to specific wrong-way risk is based on the correlation to the default of the issuer Member, and NSCC may face this risk with respect to positions in Family-Issued Securities of all of its Members, not only those Members on the Watch List. As such, in order to more effectively mitigate its exposure to specific wrong-way risk, NSCC is proposing to apply the FIS Charge to positions in Family-Issued Securities of all Members. --------------------------------------------------------------------------- \11\ FIS Phase 1 Rule Change, supra note 8. --------------------------------------------------------------------------- In order to implement this proposal, NSCC would amend Procedure XV to move the FIS Charge from Section I.(B)(1), where it is currently described as an additional deposit for Members on surveillance, to Sections I.(A)(1) and (2), to include the FIS Charge as a component of the Clearing Fund formula that is calculated for each Member.\12\ Under the proposed change, the calculation of the FIS Charge would not change as applied to Members that are rated 5, 6, or 7 on the CRRM. NSCC is proposing to revise the description of the FIS Charge to include Members that are rated 1 through 4 on the CRRM.\13\ Specifically, NSCC is proposing to amend the description of the FIS Charge in Procedure XV such that (1) fixed-income securities that are Family-Issued Securities would be charged a haircut rate of no less than 80 percent for Members that are rated 6 or 7 on the CRRM, and no less than 40 percent for Members that are rated 1 through 5 on the CRRM; and (2) equities that are Family-Issued Securities would be charged a haircut rate of 100 percent for Members rated 6 or 7 on the CRRM, and no less than 50 percent for Members that are rated 1 through 5 on the CRRM. --------------------------------------------------------------------------- \12\ Procedure XV, Sections I.(A)(1) and (2) and I.(B), supra note 4. \13\ Members that are not rated on the CRRM are not subject to the FIS Charge and would not be subject to the FIS Charge under the proposed change. --------------------------------------------------------------------------- The proposed change would also amend NSCC Rule 1 (Definitions and Descriptions) to include a definition of Family-Issued Securities in order to provide more clarity to the Rules. Under the proposed change, ``Family-Issued Security'' would be defined as a security that was issued by a Member or an affiliate of that Member. 2. Statutory Basis NSCC believes that the proposed change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a registered clearing agency. In particular, NSCC believes that the proposed change is consistent with Section 17A(b)(3)(F) of the Act,\14\ and Rules 17Ad-22(e)(4)(i), and (6)(i) and [[Page 35565]] (v),\15\ each promulgated under the Act, for the reasons described below. --------------------------------------------------------------------------- \14\ 15 U.S.C. 78q-1(b)(3)(F). \15\ 17 CFR 240.17Ad-22(e)(4) and (e)(6). --------------------------------------------------------------------------- Section 17A(b)(3)(F) of the Act requires, in part, that the Rules be designed to promote the prompt and accurate clearance and settlement of securities transactions and to protect investors and the public interest.\16\ By enhancing the margin methodology applied to Family- Issued Securities of all Members, the proposal will assist NSCC in collecting margin that more accurately reflects NSCC's exposure to a Member that clears Family-Issued Securities and will assist NSCC in its continuous efforts to improve the reliability and effectiveness of its risk-based margining methodology by taking into account specific wrong- way risk. As such, the proposal will help NSCC, as a central counterparty, promote robust risk management, and thus promote the prompt and accurate clearance and settlement of securities transactions, as well as, in general, protect investors and the public interest, consistent with the requirements of Section 17A(b)(3)(F) of the Act. --------------------------------------------------------------------------- \16\ 15 U.S.C. 78q-1(b)(3)(F). --------------------------------------------------------------------------- Rule 17Ad-22(e)(4)(i) under the Act requires, in part, that each covered clearing agency establish, implement, maintain and enforce written policies and procedures reasonably designed to effectively identify, measure, monitor, and manage its credit exposures to participants and those arising from its payment, clearing, and settlement processes, including by maintaining sufficient financial resources to cover its credit exposure to each participant fully with a high degree of confidence.\17\ The specific wrong-way risk presented by Family-Issued Securities is the risk that, in the event that a Member with unsettled long positions in Family-Issued Securities defaults, NSCC would close out those positions following a likely drop in the credit-worthiness of the issuer, possibly resulting in a loss to NSCC. The haircut rates of the FIS Charge more accurately reflect this risk because they were calibrated based on historical corporate issue recovery rate data, and, therefore, address the risk that the Family- Issued Securities of a Member would be devalued in the event of that Member's default. In this way, NSCC has determined that the margining methodology used in calculating the FIS Charge more accurately reflects the risk characteristics of Family-Issued Securities than applying its VaR Charge, and would permit NSCC to more accurately identify, measure, monitor and manage its credit exposures to those Members with positions in Family-Issued Securities. Further, by expanding the application of the FIS Charge to all Members, the proposed change would assist NSCC in collecting and maintaining financial resources that reflect its credit exposures to those Members. Therefore, NSCC believes the proposed change is consistent with Rule 17Ad-22(e)(4)(i). --------------------------------------------------------------------------- \17\ 17 CFR 240.17Ad-22(e)(4)(i). --------------------------------------------------------------------------- Rule 17Ad-22(e)(6)(i) under the Act requires, in part, that each covered clearing agency that provides central counterparty services establish, implement, maintain and enforce written policies and procedures reasonably designed to cover its credit exposures to its participants by establishing a risk-based margin system that, at a minimum, considers, and produces margin levels commensurate with, the risks and particular attributes of each relevant product, portfolio, and market.\18\ Rule 17Ad-22(e)(6)(v) under the Act requires, in part, that each covered clearing agency that provides central counterparty services establish, implement, maintain and enforce written policies and procedures reasonably designed to cover its credit exposures to its participants by establishing a risk-based margin system that, at a minimum, uses an appropriate method for measuring credit exposure that accounts for relevant product risk factors and portfolio effects across products.\19\ --------------------------------------------------------------------------- \18\ 17 CFR 240.17Ad-22(e)(6)(i). \19\ 17 CFR 240.17Ad-22(e)(6)(v). --------------------------------------------------------------------------- As stated above, Family-Issued Securities present NSCC with specific wrong-way risk that, in the event that a Member with unsettled long positions in Family-Issued Securities defaults, NSCC would close out those positions following a likely drop in the credit-worthiness of the issuer, possibly resulting in a loss to NSCC. Therefore, the haircut rates were calibrated based on historical corporate issue recovery rate data, and address the risk that the Family-Issued Securities of a Member would be devalued in the event of that Member's default, and would more accurately reflect the risk characteristics of Family-Issued Securities than applying its VaR Charge. In this way, the proposal would assist NSCC in maintaining a risk-based margin system that considers, and produces margin levels commensurate with, the risks and particular attributes of Family-Issued Securities. Additionally, NSCC believes application of the FIS Charge to positions in Family- Issued Securities of all Members is an appropriate method for measuring its credit exposures, because the FIS Charge accounts for the risk factors presented by these securities, i.e. the risk that these securities would be devalued in the event of a Member default. Therefore, NSCC believes the proposed change is consistent with Rule 17Ad-22(e)(6)(i) and (v). (B) Clearing Agency's Statement on Burden on Competition By expanding the application of the FIS Charge to all Members, and, therefore, increasing the amount of margin that Members may be charged under the Rules, the proposed change may impose a burden on competition. However, because the FIS Charge would be imposed on all Members on an individualized basis in an amount reasonably calculated to mitigate the risks posed to NSCC by those Members' positions in Family-Issued Securities, NSCC does not believe any burden on competition imposed by the proposed change would be significant. Further, NSCC believes that any burden on competition imposed by the proposed change would be both necessary and appropriate in furtherance of the Act.\20\ The proposal to expand the application of the FIS Charge to positions in Family-Issued Securities of all Members is necessary for NSCC to limit its credit exposures posed by these securities. Additionally, by permitting NSCC to calculate and collect margin that more accurately reflects the risk characteristics of these securities, the proposed change would assist NSCC in limiting its potential losses from defaults by Members. As stated, the FIS Charge would be imposed on Members on an individualized basis in an amount reasonably calculated to mitigate the risks posed to NSCC by those Members' positions in Family-Issued Securities. In this way, NSCC believes the proposed change would promote the prompt and accurate clearance and settlement of securities transactions and protect investors and the public interest. As such, NSCC believes any burden on competition imposed by the expansion of the application of the FIS Charge to all Members would be necessary and appropriate in furtherance of the Act. --------------------------------------------------------------------------- \20\ 15 U.S.C. 78q-1(b)(3)(I). --------------------------------------------------------------------------- (C) Clearing Agency's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others NSCC has not received or solicited any written comments relating to this proposal. NSCC will notify the [[Page 35566]] Commission of any written comments received by NSCC. III. Date of Effectiveness of the Proposed Rule Change, and Timing for Commission Action Within 45 days of the date of publication of this notice in the Federal Register or within such longer period up to 90 days (i) as the Commission may designate if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the self- regulatory organization consents, the Commission will: (A) By order approve or disapprove such proposed rule change, or (B) institute proceedings to determine whether the proposed rule change should be disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic CommentsUse the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or Send an email to [email protected]. Please include File Number SR-NSCC-2017-010 on the subject line. Paper Comments Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549. All submissions should refer to File Number SR-NSCC-2017-010. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission's Public Reference Room, 100 F Street NE., Washington, DC 20549 on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be available for inspection and copying at the principal office of NSCC and on DTCC's Web site (http://dtcc.com/legal/sec-rule-filings.aspx). All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-NSCC-2017-010 and should be submitted on or before August 21, 2017. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\21\ --------------------------------------------------------------------------- \21\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017-15993 Filed 7-28-17; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 82, No. 145 / Monday, July 31, 2017 / Notices 35563
G. Terms of Access to Transaction By the Commission. II. Clearing Agency’s Statement of the
Reports Brent J. Fields, Purpose of, and Statutory Basis for, the
Not applicable. Secretary. Proposed Rule Change
[FR Doc. 2017–16000 Filed 7–28–17; 8:45 am] In its filing with the Commission, the
H. Identification of Marketplace of
clearing agency included statements
Execution BILLING CODE 8011–01–P
concerning the purpose of and basis for
Not applicable. the proposed rule change and discussed
III. Solicitation of Comments SECURITIES AND EXCHANGE any comments it received on the
COMMISSION proposed rule change. The text of these
The Commission seeks general statements may be examined at the
comments on the Amendments. places specified in Item IV below. The
Interested persons are invited to submit [Release No. 34–81203; File No. SR–NSCC–
clearing agency has prepared
written data, views, and arguments 2017–010]
summaries, set forth in sections A, B,
concerning the foregoing, including and C below, of the most significant
whether the proposed Amendments are Self-Regulatory Organizations;
National Securities Clearing aspects of such statements.
consistent with the Act. Comments may
be submitted by any of the following Corporation; Notice of Filing of a (A) Clearing Agency’s Statement of the
methods: Proposed Rule Change To Expand the Purpose of, and Statutory Basis for, the
Application of the Family-Issued Proposed Rule Change
Electronic Comments
Securities Charge 1. Purpose
• Use the Commission’s Internet
comment form (http://www.sec.gov/ July 25, 2017. Currently, in calculating its Members’
rules/sro.shtml); or Pursuant to Section 19(b)(1) of the required deposits to the Clearing Fund,
• Send an email to rule-comments@ Securities Exchange Act of 1934 NSCC excludes positions in Family-
sec.gov. Please include File Number SR– Issued Securities of certain Members
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2
CTA/CQ–2017–03 on the subject line. from its parametric volatility Clearing
notice is hereby given that on July 10,
Fund component (‘‘VaR Charge’’), and
Paper Comments 2017, National Securities Clearing
instead charges an amount calculated by
• Send paper comments in triplicate Corporation (‘‘NSCC’’) filed with the multiplying the absolute value of the
to Brent J. Fields, Secretary, Securities Securities and Exchange Commission long, net unsettled positions in that
and Exchange Commission, 100 F Street (‘‘Commission’’) the proposed rule Member’s Family-Issued Securities by a
NE., Washington, DC 20549–1090. change as described in Items I, II and III percentage that is no less than 40
All submissions should refer to File below, which Items have been prepared percent (‘‘FIS Charge’’). The FIS Charge
Number SR–CTA/CQ–2017–03. This file by the clearing agency.3 The is currently only applied to Members
number should be included on the Commission is publishing this notice to that are rated 5, 6, or 7 on the Credit
subject line if email is used. To help the solicit comments on the proposed rule Risk Rating Matrix (‘‘CRRM’’). The
Commission process and review your change from interested persons. proposed change would expand the
comments more efficiently, please use application of the FIS Charge to the
only one method. The Commission will I. Clearing Agency’s Statement of the
positions in Family-Issued Securities of
post all comments on the Commission’s Terms of Substance of the Proposed
all Members to help NSCC cover the
Web site (http://www.sec.gov/rules/ Rule Change
specific wrong-way risk posed by
sro.shtml). Copies of the submission, all Family-Issued Securities, as described
The proposed change consists of
written statements with respect to the further below.6 Therefore, NSCC is
proposed Amendments that are filed amendments to the NSCC Rules and
Procedures (‘‘Rules’’) 4 in order to (i) proposing to amend (i) Rule 1
with the Commission, and all written (Definitions and Descriptions) to add a
communications relating to the expand the application of NSCC’s
existing family-issued securities charge 5 definition of ‘‘Family-Issued Security,’’
proposed Amendments between the and (ii) Procedure XV (Clearing Fund
Commission and any person, other than to apply to all Members, as described
below, and (ii) include a definition of Formula and Other Matters) to expand
those that may be withheld from the the application of the FIS Charge to all
public in accordance with the ‘‘Family-Issued Security’’ as a security
Members by moving the description of
provisions of 5 U.S.C. 552, will be that was issued by a Member or by an
FIS Charge from Section I.(B)(1) to
available for Web site viewing and affiliate of that Member, as described in
Sections I.(A)(1) and I.(A)(2) in order to
printing in the Commission’s Public greater detail below. make clear that the FIS Charge would be
Reference Room, 100 F Street NE., included as a component of the Clearing
Washington, DC 20549, on official 1 15
U.S.C. 78s(b)(1). Fund formula calculated for all
business days between the hours of 2 17
CFR 240.19b–4.
Members.
3 On July 10, 2017, NSCC filed this proposed rule
10:00 a.m. and 3:00 p.m. Copies of the As a central counterparty, NSCC
change as an advance notice (SR–NSCC–2017–804)
filing also will be available for Web site with the Commission pursuant to Section 806(e)(1) occupies an important role in the
viewing and printing at the principal of the Dodd-Frank Wall Street Reform and securities settlement system by
office of the Plans. All comments Consumer Protection Act entitled the Payment, interposing itself between
received will be posted without change; Clearing, and Settlement Supervision Act of 2010,
12 U.S.C. 5465(e)(1), and Rule 19b–4(n)(1)(i) of the counterparties to financial transactions
the Commission does not edit personal
sradovich on DSKBCFCHB2PROD with NOTICES
Act, 17 CFR 240.19b–4(n)(1)(i). A copy of the and thereby reducing the risk faced by
identifying information from advance notice is available at http://www.dtcc.com/ participants and contributing to global
submissions. You should submit only legal/sec-rule-filings.aspx. financial stability. The effectiveness of a
information that you wish to make 4 Terms not defined herein are defined in the
central counterparty’s risk controls and
available publicly. All submissions Rules, available at www.dtcc.com/∼/media/Files/
Downloads/legal/rules/nscc_rules.pdf. the adequacy of its financial resources
should refer to File Number SR–CTA/ 5 The family-issued securities charge is currently
CQ–2017–03 and should be submitted described in Procedure XV, Section I.(B)(1) of the 6 Members that do not trade in Family-Issued
on or before August 21, 2017. Rules, supra note 4. Securities would not be subject to the FIS Charge.
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![35566 Federal Register / Vol. 82, No. 145 / Monday, July 31, 2017 / Notices
Commission of any written comments 10:00 a.m. and 3:00 p.m. Copies of the II. Description of the Proposal, as
received by NSCC. filing also will be available for Modified by Amendment No. 2
inspection and copying at the principal The Exchange proposes to delete the
III. Date of Effectiveness of the
office of NSCC and on DTCC’s Web site entirety of current MRX Rule 701 and
Proposed Rule Change, and Timing for
(http://dtcc.com/legal/sec-rule- replace the current Exchange opening
Commission Action
filings.aspx). All comments received process with an opening process
Within 45 days of the date of will be posted without change; the reflected in proposed MRX Rules 701
publication of this notice in the Federal Commission does not edit personal and 715(t).4 The new opening process is
Register or within such longer period identifying information from similar to the process used by Phlx,5 as
up to 90 days (i) as the Commission may submissions. You should submit only well as the new opening process
designate if it finds such longer period information that you wish to make recently adopted by ISE Gemini, LLC
to be appropriate and publishes its available publicly. All submissions (‘‘ISE Gemini’’) 6 and Nasdaq ISE, LLC
reasons for so finding or (ii) as to which should refer to File Number SR–NSCC– (‘‘ISE’’).7 The Exchange’s current and
the self- regulatory organization 2017–010 and should be submitted on proposed opening processes are
consents, the Commission will: or before August 21, 2017.
(A) By order approve or disapprove described below.8
such proposed rule change, or For the Commission, by the Division of A. Current Exchange Opening Process
(B) institute proceedings to determine Trading and Markets, pursuant to delegated
authority.21 Currently, a Primary Market Maker
whether the proposed rule change (‘‘PMM’’) on MRX initiates the ‘‘trading
should be disapproved. Eduardo A. Aleman,
rotation’’ in a specified options class.9
Assistant Secretary.
IV. Solicitation of Comments The Exchange may direct that one or
[FR Doc. 2017–15993 Filed 7–28–17; 8:45 am] more trading rotations be employed on
Interested persons are invited to
submit written data, views and
BILLING CODE 8011–01–P any business day to aid in producing a
arguments concerning the foregoing, fair and orderly market.10 For each
including whether the proposed rule rotation, except as the Exchange may
SECURITIES AND EXCHANGE direct, rotations are conducted in the
change is consistent with the Act. COMMISSION order and manner the PMM determines
Comments may be submitted by any of
to be appropriate under the
the following methods:
[Release No. 34–81205; File No. SR–MRX– circumstances.11 The PMM, with the
Electronic Comments 2017–01] approval of the Exchange, has the
• Use the Commission’s Internet authority to determine the rotation order
Self-Regulatory Organizations; Nasdaq and manner or deviate from the rotation
comment form (http://www.sec.gov/
MRX, LLC; Order Approving Proposed procedures.12 Such authority may be
rules/sro.shtml); or
• Send an email to rule-comments@ Rule Change, as Modified by exercised before and during a trading
sec.gov. Please include File Number SR– Amendment No. 2, To Amend the rotation.13 Additionally, two or more
NSCC–2017–010 on the subject line. Exchange Opening Process trading rotations may be employed
simultaneously, if the PMM, with the
Paper Comments July 25, 2017.
approval of the Exchange, so
• Send paper comments in triplicate I. Introduction determines.14
to Secretary, Securities and Exchange
Commission, 100 F Street NE., On May 31, 2017, Nasdaq MRX, LLC 4 The Exchange represents that this proposed rule
Washington, DC 20549. (‘‘MRX’’ or ‘‘Exchange’’) filed with the change is being made in connection with a
technology migration to a Nasdaq, Inc. (‘‘Nasdaq’’)
Securities and Exchange Commission supported architecture called INET which is
All submissions should refer to File (‘‘Commission’’), pursuant to Section utilized on The NASDAQ Options Market LLC,
Number SR–NSCC–2017–010. This file 19(b)(1) of the Securities Exchange Act NASDAQ PHLX LLC (‘‘Phlx’’) and NASDAQ BX,
number should be included on the of 1934 (‘‘Act’’),1 and Rule 19b–4 Inc. See id.
subject line if email is used. To help the thereunder,2 a proposed rule change to
5 See Phlx Rule 1017. See also Securities
Commission process and review your Exchange Act Release No. 79274 (November 9,
amend the Exchange’s opening process. 2016), 81 FR 80694 (November 16, 2016) (SR–Phlx–
comments more efficiently, please use On June 14, 2017, the Exchange filed 2016–79).
only one method. The Commission will Amendment No. 1 to the proposal. On 6 See ISE Gemini Rules 701 and 715(t). See also
post all comments on the Commission’s June 14, 2017, the Exchange withdrew Securities Exchange Act Release No. 10952
Internet Web site (http://www.sec.gov/ (February 10, 2017), 82 FR 10952 (February 16,
Amendment No. 1 and filed 2017) (SR–ISEGemini–2016–18).
rules/sro.shtml). Copies of the Amendment No. 2 to the proposal, 7 See ISE Rules 701 and 715(t). See also Securities
submission, all subsequent which replaced and superseded the Exchange Act Release No. 80225 (March 13, 2017),
amendments, all written statements original filing in its entirety. The 82 FR 14243 (March 17, 2017) (SR–ISE–2017–02).
with respect to the proposed rule proposed rule change, as modified by
8 In connection with the new opening process, the
change that are filed with the Exchange proposes to adopt a new ‘‘Definitions’’
Amendment No. 2, was published for section in proposed Rule 701(a), similar to Phlx
Commission, and all written comment in the Federal Register on Rule 1017(a), to define several terms that are used
communications relating to the June 20, 2017.3 The Commission throughout the opening rule. Proposed Rule 701(a)
proposed rule change between the will define: ABBO, ‘‘market for the underlying
received no comment letters on the security,’’ Opening Price, Opening Process,
Commission and any person, other than proposed rule change. This order Potential Opening Price, Pre-Market BBO, Quality
those that may be withheld from the
sradovich on DSKBCFCHB2PROD with NOTICES
approves the proposed rule change, as Opening Market, Valid Width Quote, and Zero Bid
public in accordance with the modified by Amendment No. 2.
Market. For definitions of these terms, see Notice
provisions of 5 U.S.C. 552, will be supra note 3 at 28114.
9 See MRX Rule 701(a).
available for Web site viewing and 21 17 10 See MRX Rule 701(a)(1).
CFR 200.30–3(a)(12).
printing in the Commission’s Public 1 15
U.S.C. 78s(b)(1). 11 See MRX Rule 701(a)(2).
Reference Room, 100 F Street NE., 2 17 CFR 240.19b–4. 12 See MRX Rule 701(a)(3).
Washington, DC 20549 on official 3 See Securities Exchange Act Release No. 80937 13 See MRX Rule 701(a)(3).
business days between the hours of (June 15, 2017), 82 FR 28113 (‘‘Notice’’). 14 See MRX Rule 701(a)(4).
VerDate Sep<11>2014 17:38 Jul 28, 2017 Jkt 241001 PO 00000 Frm 00060 Fmt 4703 Sfmt 4703 E:\FR\FM\31JYN1.SGM 31JYN1](https://thefederalregister.org/doc/82_FR_35708/page/4.svg)
Document Created: 2017-07-29 00:21:16
Document Modified: 2017-07-29 00:21:16
| 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 | 82 FR 35563 |
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