83 FR 6914 - Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Designation of Longer Period for Commission Action on Proceedings To Determine Whether To Approve or Disapprove a Proposed Rule Change, as Modified by Amendment No. 2, To List and Trade Shares of ProShares QuadPro Funds Under NYSE Arca Rule 8.200-E

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 83, Issue 32 (February 15, 2018)

Page Range		6914-6915
FR Document		2018-03113

Federal Register, Volume 83 Issue 32 (Thursday, February 15, 2018)

[Federal Register Volume 83, Number 32 (Thursday, February 15, 2018)]
[Notices]
[Pages 6914-6915]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-03113]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82684; File No. SR-NYSEArca-2017-69]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of 
Designation of Longer Period for Commission Action on Proceedings To 
Determine Whether To Approve or Disapprove a Proposed Rule Change, as 
Modified by Amendment No. 2, To List and Trade Shares of ProShares 
QuadPro Funds Under NYSE Arca Rule 8.200-E

February 9, 2018.
    On July 31, 2017, NYSE Arca, Inc. (``Exchange'' or ``NYSE Arca'') 
filed with the Securities and Exchange Commission (``Commission''), 
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to 
list and trade shares of ProShares QuadPro U.S. Large Cap, ProShares 
QuadPro Short U.S. Large Cap, ProShares QuadPro U.S. Small Cap, and 
ProShares QuadPro Short U.S. Small Cap under NYSE Arca Rule 8.200-E. 
The proposed rule change was published for comment in the Federal 
Register on August 18, 2017.\3\ On September 28, 2017, pursuant to 
Section 19(b)(2) of the Act,\4\ the Commission designated a longer 
period within which to approve the proposed rule change, disapprove the 
proposed rule change, or institute proceedings to determine whether to 
disapprove the proposed rule change.\5\ On September 29, 2017, the 
Exchange filed Amendment No. 1 to the proposed rule change, which 
amended and superseded the proposed rule change as originally filed. On 
November 14, 2017, the Exchange filed

[[Page 6915]]

Amendment No. 2 to the proposed rule change, which amended and 
superseded the proposed rule change as modified by Amendment No. 1.\6\ 
On November 16, 2017, the Commission published notice of Amendment No. 
2 and instituted proceedings under Section 19(b)(2)(B) of the Act \7\ 
to determine whether to approve or disapprove the proposed rule change, 
as modified by Amendment No. 2.\8\ The Commission has received no 
comments on the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 81388 (August 14, 
2017), 82 FR 39477.
    \4\ 15 U.S.C. 78s(b)(2).
    \5\ See Securities Exchange Act Release No. 81746, 82 FR 46315 
(October 4, 2017). The Commission designated November 16, 2017, as 
the date by which the Commission shall either approve or disapprove, 
or institute proceedings to determine whether to disapprove, the 
proposed rule change.
    \6\ Amendment No. 2 is available at https://www.sec.gov/comments/sr-nysearca-2017-69/nysearca201769-2688277-161489.pdf.
    \7\ 15 U.S.C. 78s(b)(2)(B).
    \8\ See Securities Exchange Act Release No. 82105, 82 FR 55699 
(November 22, 2017).
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    Section 19(b)(2) of the Act \9\ provides that, after initiating 
disapproval proceedings, the Commission shall issue an order approving 
or disapproving the proposed rule change not later than 180 days after 
the date of publication of notice of filing of the proposed rule 
change. The Commission may extend the period for issuing an order 
approving or disapproving the proposed rule change by not more than 60 
days if the Commission determines that a longer period is appropriate 
and publishes the reasons for such determination. The proposed rule 
change was published for notice and comment in the Federal Register on 
August 18, 2017. February 14, 2018 is 180 days from that date, and 
April 15, 2018 is 240 days from that date.
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    \9\ 15 U.S.C. 78s(b)(2).
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    The Commission finds it appropriate to designate a longer period 
within which to issue an order approving or disapproving the proposed 
rule change so that it has sufficient time to consider the proposed 
rule change, as modified by Amendment No. 2. Accordingly, the 
Commission, pursuant to Section 19(b)(2) of the Act,\10\ designates 
April 15, 2018 as the date by which the Commission shall either approve 
or disapprove the proposed rule change (File No. SR-NYSEArca-2017-69), 
as modified by Amendment No. 2.
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    \10\ Id.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(57).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-03113 Filed 2-14-18; 8:45 am]
BILLING CODE 8011-01-P

6914 Federal Register / Vol. 83, No. 32 / Thursday, February 15, 2018 / Notices

the defaulting member’s behalf). default of the participant family that Supervision Act,28 that the Commission
Reducing the risk of loss contagion would generate the largest aggregate does not object to the Advance Notice
during a member default, in turn, payment of obligation for the covered (SR–NSCC–2017–807) and that NSCC is
enhances the ability of NSCC and its clearing agency in extreme but plausible authorized to implement the proposed
clearing members to continue to provide conditions.’’ change as of the date of this notice.
stability and safety to the financial As described above, the proposed By the Commission.
markets that they serve. Therefore, by expansion of the authorized amount
Eduardo A. Aleman,
enhancing NSCC’s ability to address under NSCC’s Prefunded Liquidity
Assistant Secretary.
losses and liquidity pressures that Program would increase the readily-
available liquidity resources available to [FR Doc. 2018–03094 Filed 2–14–18; 8:45 am]
otherwise might cause financial distress
NSCC to continue to meet its liquidity BILLING CODE 8011–01–P
to NSCC or its clearing members, the
Advance Notice promotes safety and obligations in a timely fashion in the
soundness. event of a member default. The
Consistent with the conclusions increased funds could thereby help SECURITIES AND EXCHANGE
discussed above, the Commission also maintain sufficient liquidity resources COMMISSION
believes that NSCC’s proposal is to effect same-day settlement of [Release No. 34–82684; File No. SR–
consistent with reducing systemic risks payment obligations with a high degree NYSEArca–2017–69]
and supporting the stability of the of confidence under a wide range of
broader financial system. Reducing the foreseeable stress scenarios. Self-Regulatory Organizations; NYSE
risk of loss contagion would attenuate Additionally, the increased size of the Arca, Inc.; Notice of Designation of
the transmission of financial shocks Prefunded Liquidity Program is Longer Period for Commission Action
from defaulting members to non- designed to help ensure that NSCC has on Proceedings To Determine Whether
defaulting members. Accordingly, the sufficient, readily-available qualifying To Approve or Disapprove a Proposed
proposed changes would support the liquid resources to meet the cash Rule Change, as Modified by
stability of the broader financial system. settlement obligations of its largest Amendment No. 2, To List and Trade
Thus, the Commission believes that the family of affiliated members. Therefore, Shares of ProShares QuadPro Funds
proposal contained in the Advance the Commission finds that the proposal Under NYSE Arca Rule 8.200–E
Notice is consistent with the stated is consistent with Rule 17Ad–22(e)(7)(i). February 9, 2018.
objectives and principles of Section Rule 17Ad–22(e)(7)(ii) under the On July 31, 2017, NYSE Arca, Inc.
805(b) of the Clearing Supervision Act. Exchange Act requires each covered (‘‘Exchange’’ or ‘‘NYSE Arca’’) filed
clearing agency to establish, implement, with the Securities and Exchange
B. Consistency With Rules 17Ad– maintain and enforce written policies
22(e)(7)(i) and (ii) Commission (‘‘Commission’’), pursuant
and procedures reasonably designed to to Section 19(b)(1) of the Securities
The Commission believes that the ‘‘effectively measure, monitor, and Exchange Act of 1934 (‘‘Act’’) 1 and Rule
changes proposed in the Advance manage the liquidity risk that arises in 19b–4 thereunder,2 a proposed rule
Notice are consistent with the or is borne by [it], including measuring,
requirements of Rules 17Ad–22(e)(7) change to list and trade shares of
monitoring, and managing its settlement
under the Exchange Act. Rule 17Ad– ProShares QuadPro U.S. Large Cap,
and funding flows on an ongoing and
22(e)(7) requires NSCC to establish, ProShares QuadPro Short U.S. Large
timely basis, and its use of intraday
implement, maintain and enforce Cap, ProShares QuadPro U.S. Small
liquidity by . . . holding qualifying
written policies and procedures Cap, and ProShares QuadPro Short U.S.
liquid resources sufficient’’ to satisfy
reasonably designed to effectively Small Cap under NYSE Arca Rule
payment obligations owed to clearing
measure, monitor, and manage liquidity 8.200–E. The proposed rule change was
members. Rule 17Ad–22(a)(14) under
risk that arises in or is borne by NSCC, published for comment in the Federal
the Exchange Act defines ‘‘qualifying
including measuring, monitoring, and Register on August 18, 2017.3 On
liquid resources’’ to include, among
managing its settlement and funding September 28, 2017, pursuant to Section
other things, cash held either at the
flows on an ongoing and timely basis, 19(b)(2) of the Act,4 the Commission
central bank of issue or at creditworthy
and its use of intraday liquidity, as designated a longer period within which
commercial banks.
specified in the rule. As described above, the proposed to approve the proposed rule change,
In particular, Rule 17Ad–22(e)(7)(i) expansion of the authorized amount disapprove the proposed rule change, or
under the Exchange Act requires that under NSCC’s Prefunded Liquidity institute proceedings to determine
each covered clearing agency establish, Program would enable NSCC to hold whether to disapprove the proposed
implement, maintain and enforce additional cash proceeds from the rule change.5 On September 29, 2017,
written policies and procedures issuance of the Notes in a cash deposit the Exchange filed Amendment No. 1 to
reasonably designed to ‘‘effectively account at the Federal Reserve Bank of the proposed rule change, which
measure, monitor, and manage the New York or a bank counterparty that amended and superseded the proposed
liquidity risk that arises in or is borne has been approved pursuant to the rule change as originally filed. On
by [it], including measuring, Clearing Agency Investment Policy. November 14, 2017, the Exchange filed
monitoring, and managing its settlement Because the funds would be held at the 28 12 U.S.C. 5465(e)(1)(I).
and funding flows on an ongoing and Federal Reserve Bank of New York or a 1 15 U.S.C. 78s(b)(1).
timely basis, and its use of intraday bank counterparty, they would qualify 2 17 CFR 240.19b–4.
liquidity by . . . [m]aintaining
sradovich on DSK3GMQ082PROD with NOTICES

as qualifying liquid resource. Therefore, 3 See Securities Exchange Act Release No. 81388
sufficient liquid resources at the the Commission believes that the (August 14, 2017), 82 FR 39477.
minimum in all relevant currencies to proposal is consistent with Rule 17Ad– 4 15 U.S.C. 78s(b)(2).

effect same-day . . . settlement of 22(e)(7)(ii). 5 See Securities Exchange Act Release No. 81746,

payment obligations with a high degree 82 FR 46315 (October 4, 2017). The Commission
of confidence under a wide range of III. Conclusion designated November 16, 2017, as the date by
which the Commission shall either approve or
foreseeable stress scenarios that It is therefore noticed, pursuant to disapprove, or institute proceedings to determine
includes, but is not limited to, the Section 806(e)(1)(I) of the Clearing whether to disapprove, the proposed rule change.

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Federal Register / Vol. 83, No. 32 / Thursday, February 15, 2018 / Notices 6915

Amendment No. 2 to the proposed rule SECURITIES AND EXCHANGE the clearing of clients ‘‘self-referencing
change, which amended and superseded COMMISSION transactions’’ on their clearing broker.
the proposed rule change as modified by A ‘‘self-referencing transaction’’ refers
[Release No. 34–82675; File No. SR–LCH
Amendment No. 1.6 On November 16, SA–2018–001] to a single name CDS referencing a
2017, the Commission published notice reference entity which is:
of Amendment No. 2 and instituted Self-Regulatory Organizations; LCH —In the case of a house transaction,
proceedings under Section 19(b)(2)(B) of SA; Notice of Filing of Proposed Rule either the clearing member itself or an
the Act 7 to determine whether to Change, Security-Based Swap affiliate of the clearing member;
approve or disapprove the proposed Submission, or Advance Notice —In the case of a client transaction,
rule change, as modified by Amendment Relating to Self-Referencing either the client itself or an affiliate of
No. 2.8 The Commission has received no Transactions the client, or the clearing broker of the
comments on the proposed rule change. February 9, 2018. client or an affiliate of the clearing
Section 19(b)(2) of the Act 9 provides Pursuant to Section 19(b)(1) of the broker.
that, after initiating disapproval Securities Exchange Act of 1934 Currently, clearing of both house and
proceedings, the Commission shall issue (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 client self-referencing transactions are
an order approving or disapproving the notice is hereby given that on January prohibited by LCH SA whereas clients
proposed rule change not later than 180 31, 2018, Banque Centrale de commonly trade single name CDS
days after the date of publication of Compensation, which conducts referencing banks in the uncleared
notice of filing of the proposed rule business under the name LCH SA (‘‘LCH world (as they face directly their
change. The Commission may extend SA’’), filed with the Securities and counterparty). Not allowing for the
the period for issuing an order Exchange Commission (‘‘Commission’’) clearing of those transactions as a
the proposed rule change described in consequence of the intermediation of a
approving or disapproving the proposed
Items I, II, and III below, which items clearing member required for clients to
rule change by not more than 60 days
have been prepared primarily by LCH clear would thus impact their ability to
if the Commission determines that a SA. The Commission is publishing this continue trading the financial CDS
longer period is appropriate and notice to solicit comments on the single name market, as well as restrict
publishes the reasons for such proposed rule change from interested their choice for clearing brokers.
determination. The proposed rule persons. LCH SA is proposing to allow clients
change was published for notice and self-referencing transactions when the
comment in the Federal Register on I. Clearing Agency’s Statement of the
Terms of Substance of the Proposed reference entity referenced by the single
August 18, 2017. February 14, 2018 is name CDS is either the client’s clearing
180 days from that date, and April 15, Rule Change
broker or an affiliate of the client’s
2018 is 240 days from that date. LCH SA is proposing to amend its clearing broker.
CDS Clearing Supplement and Section 4
The Commission finds it appropriate The risk arising from clients self-
of the CDS Clearing Procedures in order
to designate a longer period within referencing transactions on their
to allow acceptation of client’s self-
which to issue an order approving or clearing broker would be captured by
referencing transactions on their
disapproving the proposed rule change the existing framework and more
clearing broker. The text of the proposed
so that it has sufficient time to consider specifically by the Self-Referencing
rule change has been annexed as Exhibit
the proposed rule change, as modified 5. Margin which charges the minimum
by Amendment No. 2. Accordingly, the between zero and the net Profit and Loss
Commission, pursuant to Section II. Clearing Agency’s Statement of the resulting from a credit event of the self-
19(b)(2) of the Act,10 designates April Purpose of, and Statutory Basis for, the referenced name across all index, single
15, 2018 as the date by which the Proposed Rule Change name and index swaption transactions
Commission shall either approve or In its filing with the Commission, using a Recovery Rate of 0%. The net
disapprove the proposed rule change LCH SA included statements concerning Profit and Loss calculation allows for
the purpose of and basis for the netting of the exposures arising from
(File No. SR–NYSEArca–2017–69), as
proposed rule change and discussed any index, index swaption and single name
modified by Amendment No. 2.
comments it received on the proposed CDS transactions if they reference the
For the Commission, by the Division of rule change. The text of these statements same contractual definition and
Trading and Markets, pursuant to delegated may be examined at the places specified transaction type.
authority.11 in Item IV below. LCH SA has prepared The proposed rule change will consist
Eduardo A. Aleman, summaries, set forth in sections A, B, in amending the following provisions of
Assistant Secretary. and C below, of the most significant the CDS Clearing Supplement and
[FR Doc. 2018–03113 Filed 2–14–18; 8:45 am] aspects of these statements. Section 4 of the Procedures:
BILLING CODE 8011–01–P A. Clearing Agency’s Statement of the —The eligibility requirement in respect
Purpose of, and Statutory Basis for, the of single names in Section 4 of the
Proposed Rule Change Procedures (paragraph
4.1(c)(iii)(B)(11)) to make the
6 Amendment
1. Purpose distinction between house and clients
No. 2 is available at https://
self-referencing transactions so as to
sradovich on DSK3GMQ082PROD with NOTICES

www.sec.gov/comments/sr-nysearca-2017-69/ In connection with the clearing of
nysearca201769-2688277-161489.pdf. single name CDS referencing banks allow clients to clear single name CDS
7 15 U.S.C. 78s(b)(2)(B). which are clearing members of transactions referencing their clearing
8 See Securities Exchange Act Release No. 82105, CDSClear, LCH SA proposes to modify broker or one of their affiliates but
82 FR 55699 (November 22, 2017). its eligibility requirements to allow for neither clients self-referencing
9 15 U.S.C. 78s(b)(2). transactions referencing the client
10 Id. 1 15 U.S.C. 78s(b)(1). itself nor house self-referencing
11 17 CFR 200.30–3(a)(57). 2 17 CFR 240.19b–4. transactions; and

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Document Created: 2018-02-15 00:20:52
Document Modified: 2018-02-15 00:20:52

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		83 FR 6914