[Federal Register: September 3, 2010 (Volume 75, Number 171)]
[Proposed Rules]
[Page 54059-54063]
[DOCID:fr03se10-25]

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SECURITIES AND EXCHANGE COMMISSION

17 CFR Part 232

[Release No. 33-9137; File No. S7-18-10]
RIN 3235-AK70

Extension of Filing Accommodation for Static Pool Information in
Filings With Respect to Asset-Backed Securities

AGENCY: Securities and Exchange Commission.

ACTION: Proposed rule.

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SUMMARY: The Commission proposes to further extend the temporary filing
accommodation in Rule 312 of Regulation S-T that allows static pool
information required to be disclosed in a prospectus of an asset-backed
issuer to be provided on an Internet Web site under certain conditions.
Under this rule, such information is deemed to be included in the
prospectus included in the registration statement for the asset-backed
securities. This rule currently applies to filings with respect to
asset-backed securities filed on or before December 31, 2010. We
propose to amend this rule to extend its application for an additional
eighteen months. Under the proposed extension, the rule would apply to
filings with respect to asset-backed securities filed on or before June
30, 2012.

DATES: Comments should be received on or before October 4, 2010.

ADDRESSES: Comments may be submitted by any of the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://
www.sec.gov/rules/proposed.shtml);
     Send an e-mail to rule-comments @sec.gov. Please include
File Number S7-18-10 on the subject line; or
     Use the Federal Rulemaking Portal (http://
www.regulations.gov). Follow the instructions for submitting comments.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.

All submissions should refer to File Number S7-18-10. This file number
should be included on the subject line if e-mail is used. To help us
process and review your comments more efficiently, please use only one
method. The Commission will post all comments on the Commission's
Internet Web site (http://www.sec.gov/rules/proposed.shtml). Comments
are also 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 a.m. and 3
p.m. All comments received will be posted without change; we do not
edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly.

FOR FURTHER INFORMATION CONTACT: Jay Knight, Attorney-Adviser, Division
of Corporation Finance, at<PHONE_NUMBER>, U.S. Securities and Exchange
Commission, 100 F Street, NE., Washington, DC 20549-3720.

SUPPLEMENTARY INFORMATION: We are proposing an amendment to Rule 312
\1\ of Regulation S-T.\2\

I. Background
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    \1\ 17 CFR 232.312.
    \2\ 17 CFR 232.10 et seq.
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    In December 2004, we adopted new and amended rules and forms to
address the registration, disclosure and reporting requirements for
asset-backed securities (``ABS'') under the Securities Act of 1933 \3\
(the ``Securities Act'') and the Securities Exchange Act of 1934 \4\
(the ``Exchange Act'').\5\ As part of this rulemaking, we adopted
Regulation AB,\6\ a new principles-based set of disclosure items
forming the basis for disclosure with respect to ABS in both Securities
Act registration statements and Exchange Act reports. Compliance with
the revised rules was phased in; full compliance with the revised rules
became effective January 1, 2006. One of the significant features of
Regulation AB is Item 1105, which requires, to the extent material,
static pool information to be provided in the prospectus included in
registration statements for ABS offerings.\7\ While the disclosure
required by Item 1105 depends on factors such as the type of underlying
asset and materiality, the information required to be disclosed can be
extensive. For example, a registrant may be required to disclose
multiple performance metrics in periodic increments for prior
securitized pools of the sponsor for the same asset type in the last
five years.\8\
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    \3\ 15 U.S.C. 77a et seq.
    \4\ 15 U.S.C. 78a et seq.
    \5\ See Asset-Backed Securities, Release No. 33-8518 (Dec. 22,
2004) [70 FR 1506] (adopting release related to Regulation AB and
other new rules and forms related to asset-backed securities)
(hereinafter, the ``2004 Adopting Release'').
    \6\ 17 CFR 229.1100 et seq.
    \7\ See Form S-1 (17 CFR 239.11) and Form S-3 (17 CFR 239.13)
under the Securities Act. Static pool information indicates how
groups, or static pools, of assets, such as those originated at
different intervals, are performing over time. By presenting
comparisons between originations at similar points in the assets'
lives, the data allows the detection of patterns that may not be
evident from overall portfolio numbers and thus may reveal a more
informative picture of material elements of portfolio performance
and risk.
    \8\ 17 CFR 229.1105.
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    As described in the 2004 Adopting Release, in response to the
Commission's proposal to require material static pool information in
prospectuses for ABS offerings, many commentators representing both
asset-backed issuers and investors requested flexibility in the
presentation of such information. In particular, commentators noted
that the required static pool information could include a significant
amount of statistical information that would be difficult to file
electronically on EDGAR as it existed at that time and difficult for
investors to use in that format. Commentators accordingly requested the
flexibility for asset-backed issuers to provide static pool information
on an Internet Web site rather than as part of an EDGAR filing.\9\ In
response to these comments, we adopted Rule 312 of Regulation S-T,
which permits, but does not require, the posting of the static pool
information required by Item 1105 on an Internet Web site under the
conditions set forth in the rule.\10\ We recognized at the time that a
Web-based approach might allow for the provision of the required
information in a more efficient, dynamic and useful format than was
currently feasible on the EDGAR system. At the same time, we explained
that we continued to believe at some point for future transactions the
information should also be submitted with the Commission in some
fashion, provided investors continue to receive the information in the
form they have requested. Accordingly, we adopted Rule 312 as a
temporary filing accommodation applicable to filings filed on or before
December 31, 2009.\11\ We explained that we were directing our staff to
consult with the EDGAR contractor, EDGAR filing agents, issuers,
investors and other market participants to consider how static pool
information could be filed with the Commission in a cost-effective
manner without undue burden or expense that still allows issuers to
provide the information in a desirable format. We also noted, however,
that it might be necessary, among other things, to extend the
accommodation.\12\
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    \9\ See 2004 Adopting Release, Section III.B.4.b.
    \10\ 17 CFR 232.312(a). Instead of relying on Rule 312, an
issuer can include information required by Item 1105 of Regulation
AB physically in the prospectus or, if permitted, through
incorporation by reference from an Exchange Act report.
    \11\ 17 CFR 232.312(a); see also 2004 Adopting Release, Section
III.B.4.b.
    \12\ 2004 Adopting Release, Section III.B.4.b.
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    On October 19, 2009, we proposed to extend the temporary filing
accommodation until December 31, 2010.\13\ We received four comment
letters that addressed the proposed extension.\14\ Two commentators
expressed support for the Rule 312 filing accommodation and the
proposed extension.\15\ The ASF cited the strong preference among both
its issuer and investor members for Web-based presentation of static
pool information due to its efficiency, utility and effectiveness and
the current lack of an adequate filing alternative.\16\ The ABA
Committees expressed their belief that the accommodation has been
highly successful and of great value to investors.\17\ Neither the ASF
nor the ABA Committees was aware of any difficulties that investors or
other market participants had locating, accessing, viewing or analyzing
static pool information disclosed on a Web site.\18\ For these reasons,
among others, both the ASF and the ABA Committees requested that the
filing accommodation be made permanent or, in the alternative, extended
for a longer period of time.\19\ Two commentators, in contrast, did not
support the extension and suggested the Commission should require
structured disclosure using an industry standard computer language.\20\
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    \13\ Extension of Filing Accommodation for Static Pool
Information in Filings With Respect to Asset-Backed Securities,
Release No. 33-9074 (Oct. 19, 2009) [74 FR 54767] (the ``2009 Static
Pool Extension Proposing Release'').
    \14\ The public comments we received are available online at
http://www.sec.gov/comments/s7-23-09/s72309.shtml.
    \15\ See letters from the American Securitization Forum (the
``ASF'') and the Committee on Federal Regulation of Securities and
the Committee on Securitization and Structured Finance of the
Section of Business Law of the American Bar Association (the ``ABA
Committees'').
    \16\ See letter from ASF.
    \17\ See letter from ABA Committees.
    \18\ See letters from ASF and ABA Committees.
    \19\ Id. The ASF requested a five-year extension if the rule
could not be made permanent and the ABA Committees requested an 18
to 24 month extension in such a case. Both the ASF and the ABA
Committees expressed the belief that a permanent or longer extension
would encourage continued use of the Web-based presentation by
providing more of an incentive for issuers to make investments in
developing and innovating Web sites for static pool disclosure. A
longer extension would also, the ASF noted, give the Commission
adequate time to consider alternatives.
    \20\ See letters from Paul Wilkinson and EDGAR Online (noting
they prefer immediately requiring static pool data be required in
eXtensible Business Reporting Language (XBRL)). Subsequent to the
2009 Static Pool Extension Adopting Release (as defined below), we
issued a comprehensive ABS proposal that included a proposed
requirement to include asset-level information according to proposed
standards and in a tagged data format using eXtensible Markup
Language (XML). Additionally, we requested comment in the release as
to whether static pool data should be required in an offering if
there is an ongoing reporting requirement of asset-level data
applicable to other pools of the sponsor of the same asset class.
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    On December 15, 2009, we adopted the proposed one-year extension of
the filing accommodation.\21\ In the adopting release for the extension
(``2009 Static Pool Extension Adopting Release''), we noted the staff's
experience with the rule and that a vast majority of

residential mortgage-backed security issuers and a significant portion
of ABS issuers in other asset classes have relied on the accommodation
provided by the rule to disclose static pool information on an Internet
Web site. We also noted that the staff of the Division of Corporation
Finance was, at the time, engaged in a broad review of the Commission's
regulation of ABS including disclosure, offering process, and reporting
of ABS issuers and that along with this review, the staff of the
Division of Corporation Finance was continuing to explore whether it
was feasible to provide a filing mechanism for static pool information
that fulfills the Commission's objectives. We also stated our belief
that a proposal for a longer-term solution for providing static pool
disclosure would be better considered together with other proposals on
the regulations relating to the offer and sale of ABS.
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    \21\ Extension of Filing Accommodation for Static Pool
Information in Filings With Respect to Asset-Backed Securities,
Release No. 33-9087 (Dec. 15, 2009) [74 FR 67812] (the ``2009 Static
Pool Extension Adopting Release''); see also 2009 Static Pool
Extension Proposing Release.
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    On April 7, 2010, we proposed significant revisions to Regulation
AB and other rules regarding the offering process, disclosure and
reporting for asset-backed securities (the ``2010 ABS Proposals'').\22\
In that release, we proposed to revise Rule 312 to remove the temporary
accommodation set to expire on December 31, 2010 for asset-backed
securities to post the static pool information required by Item 1105 on
an Internet Web site under conditions set forth in Regulation AB. In
lieu thereof, under the proposal, ABS issuers would be required to file
all static pool information on EDGAR; however, we proposed to allow
that such information be filed in Portable Document Format (PDF).\23\
Also, in lieu of providing the static pool information in the
prospectus, we proposed to allow issuers to file the disclosure on Form
8-K and incorporate it by reference. The comment period for the 2010
ABS Proposals expired on August 2, 2010.
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    \22\ Asset-Backed Securities, Release No. 33-9117 (Apr. 7, 2010)
[75 FR 23328] (the ``2010 ABS Proposing Release'').
    \23\ Portable Document Format (PDF) is a file format created by
Adobe Systems in 1993 for document exchange. PDF captures formatting
information from a variety of desktop publishing applications,
making it possible to send formatted documents and have them appear
on the recipient's monitor or printer for free as they were
intended. To view a file in PDF format, you need Adobe Reader, an
application distributed by Adobe Systems.
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II. Discussion of Proposed Amendment

    We believe it is appropriate to further extend the filing
accommodation provided by Rule 312, which is currently set to expire on
December 31, 2010. As we stated in the 2009 Static Pool Extension
Adopting Release, we believe a proposal for a long-term solution for
providing static pool disclosure would be better considered together
with other proposals to revise the regulations governing the offer and
sale of ABS. On July 21, 2010, President Obama signed the Dodd-Frank
Wall Street Reform and Consumer Protection Act (the ``Act'').\24\ Among
other things, the Act mandates a number of significant changes to the
regulation of ABS offerings. In order to provide ample time for the
Commission and its staff to give proper consideration to comments
received on the 2010 ABS Proposals and in light of the changes to the
regulations of ABS offerings that are mandated by the Act, we are
proposing to extend the temporary filing accommodation set forth in
Rule 312 of Regulation S-T for an additional eighteen months so that it
would apply to filings with respect to ABS filed on or before June 30,
2012. Although we are proposing an eighteen-month extension of Rule
312, we may take action on the 2010 ABS Proposals, including the static
pool proposal, at any time before the expiration of the proposed
extension.
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    \24\ Public Law 111-203, 124 Stat. 1376 (July 21, 2010).
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    Under our proposed extension, the temporary filing accommodation
set forth in Rule 312 of Regulation S-T would apply to filings with
respect to ABS filed on or before June 30, 2012. During the proposed
extension, the existing requirements of Rule 312 would continue to
apply. Pursuant to these requirements, the registrant must disclose its
intention to provide static pool information through a Web site in the
prospectus included in the registration statement at the time of
effectiveness and provide the specific Internet address where the
static pool information is posted in the prospectus filed pursuant to
Rule 424.\25\ The registrant must maintain such information on the Web
site unrestricted and free of charge for a period of not less than five
years, indicate the date of any updates or changes to the information,
undertake to provide any person without charge, upon request, a copy of
the information as of the date of the prospectus if a subsequent update
or change is made to the information and retain all versions of the
information provided on the Web site for a period of not less than five
years in a form that permits delivery to an investor or the Commission.
In addition, the registration statement for the ABS must contain an
undertaking pursuant to Item 512(l) of Regulation S-K \26\ that the
information provided on the Web site pursuant to Rule 312 is deemed to
be part of the prospectus included in the registration statement.\27\
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    \25\ 17 CFR 230.424.
    \26\ 17 CFR 229.512(l).
    \27\ 17 CFR 232.312. As we indicated in the 2004 Adopting
Release, if the conditions of Rule 312 are satisfied, then the
information will be deemed to be part of the prospectus included in
the registration statement and thus subject to all liability
provisions applicable to prospectuses and registration statements,
including Section 11 of the Securities Act [15 U.S.C. 77k]. 2004
Adopting Release, Section III.B.4.b.
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Request for Comment

    We request and encourage any interested person to submit comments
regarding the proposed amendment described above. In particular, we
solicit comment on the following questions:
     Is a further extension of the filing accommodation
appropriate? What would be the consequences if the accommodation lapsed
on December 31, 2010 and static pool information was required in an
EDGAR filing beginning January 1, 2011?
     Should we consider proposed changes to static pool
disclosure together with the other proposals outlined in the 2010 ABS
Proposing Release? If not, why should we separate the static pool
disclosure proposal from the rest of the ABS related proposals?
     Would the proposed eighteen-month extension present
particular problems for investors? Would a shorter or more narrowly
tailored extension address those concerns?
     Is an eighteen-month extension the appropriate length for
an extension? Are there reasons for a shorter (12 month) or longer (24
month) extension?

III. Paperwork Reduction Act

    Rule 312 of Regulation S-T was adopted along with other new and
amended rules and forms to address the registration, disclosure and
reporting requirements for ABS under the Securities Act and the
Exchange Act. In connection with this prior rulemaking, we submitted a
request for approval of the ``collection of information'' requirements
contained in the amendments and rules to the Office of Management and
Budget (``OMB'') in accordance with the Paperwork Reduction Act of 1995
(``PRA'').\28\ OMB approved these requirements.\29\
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    \28\ 44 U.S.C. 3501 et seq.
    \29\ The collections of information to which Rule 312 of
Regulation S-T relates are ``Form S-1'' (OMB Control No. 3235-0065)
and ``Form S-3'' (OMB Control No. 3235-0073).
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    Item 1105 of Regulation AB \30\ requires certain static pool
information, to the extent material, to be provided in prospectuses
included in registration

statements for ABS offerings.\31\ Rule 312 is a temporary filing
accommodation that permits the posting of the static pool information
required by Item 1105 on an Internet Web site under the conditions set
forth in the rule.\32\ The proposed amendment to Rule 312 further
extends the existing temporary filing accommodation provided by the
rule for an additional eighteen months. As is the case today, issuers
may choose whether or not to take advantage of the accommodation. The
conditions of Rule 312 remain otherwise unchanged. The disclosure
requirements themselves, which are contained in Forms S-1 and S-3 under
the Securities Act and require the provision of the information set
forth in Item 1105 of Regulation AB, also remain unchanged. Therefore,
the proposed amendment, if adopted, will not result in an increase or
decrease in the costs and burdens imposed by the ``collection of
information'' requirements previously approved by the OMB.
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    \30\ 17 CFR 229.1105.
    \31\ See Form S-1 and Form S-3 under the Securities Act.
    \32\ 17 CFR 232.312(a).
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IV. Benefit-Cost Analysis

    In this section, we examine the benefits and costs of our proposed
amendment. We request that commentators provide views and supporting
information as to the benefits and costs associated with the proposal.
We seek estimates of these costs and benefits, as well as any costs and
benefits not already identified.

A. Benefits

    We adopted the filing accommodation provided by Rule 312 of
Regulation S-T because commentators requested flexibility in the
presentation of required static pool information. Given the large
amount of statistical information involved, commentators argued for a
Web-based approach that would allow issuers to present the information
in an efficient manner and with greater functionality and utility than
might have been available if an EDGAR filing was required. We believe
this greater functionality and utility has enhanced an investor's
ability to access and analyze the static pool information because
investors have been able to access static pool information in more
user-friendly formats than was initially capable with filings on EDGAR
and also removed the burden on issuers of duplicating the information
in each prospectus as well as easing the burdens of updating such
information.\33\ As we discussed in the 2004 Adopting Release, since
the information is deemed to be part of the prospectus included in the
registration statement, the rule is designed to give investors access
to accurate and reliable information.
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    \33\ See Section I above and 2004 Adopting Release, Section V.D.
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    By further extending the accommodation provided by Rule 312, these
benefits to both issuers and investors would continue to apply. As
noted in the 2009 Static Pool Extension Adopting Release, based on the
staff's experience since Rule 312 became effective in 2006, the vast
majority of residential mortgage-backed security issuers and a
significant portion of ABS issuers in other asset classes have relied
on the accommodation provided by the rule to disclose static pool
information on an Internet Web site.\34\ If we do not further extend
the accommodation provided by Rule 312, static pool information would
be required in EDGAR filings beginning on January 1, 2011. We believe
this would result in costs for issuers as they attempt to adjust their
procedures in a short period of time in order to present the
information in a format acceptable to the EDGAR system and could result
in costs to investors if the information filed on EDGAR was presented
in a less useful format.
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    \34\ See Section I of the 2009 Static Pool Extension Adopting
Release.
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    As indicated above, on April 7, 2010, we issued a release proposing
to require the filing of static pool information on EDGAR at the same
time we proposed other amendments addressing the disclosure, offering
process and reporting of asset-backed issuers.\35\ We believe that the
proposed eighteen-month extension to the temporary filing accommodation
contained in Rule 312 will benefit both investors and issuers by
maintaining a consistent approach to the filing of static pool
information while we and our staff consider comments received on the
proposed amendment to static pool filing together with our other
proposals regarding the offering and sale of asset-backed securities
and in light of the changes to the regulations of ABS offerings that
are mandated by the Dodd-Frank Act.
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    \35\ See 2010 ABS Proposing Release.
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B. Costs

    We do not believe an eighteen-month extension of the Rule 312
accommodation would impose any new or increased costs on issuers. In
the Cost-Benefit Analysis section of the 2004 Adopting Release, we
noted that asset-backed issuers electing the Web-based accommodation
provided by Rule 312 would incur costs related to the maintenance and
retention of static pool information posted on a Web site and might
also incur start-up costs.\36\ While it is likely that certain of those
costs would continue to impact asset-backed issuers that elect the Web-
based approach during the extension period, we do not believe our
proposed amendment would impose any new or increased costs for asset-
backed issuers because it does not change any other conditions to the
accommodation or the underlying filing and disclosure obligations. As a
result of the proposed extension of the accommodation, asset-backed
issuers would be able to continue their current practices for an
additional eighteen months.
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    \36\ See 2004 Adopting Release, Section V.D.
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    For investors, there may be costs associated with the static pool
information not being electronically filed with the Commission. For
example, when information is electronically filed with the Commission,
investors and staff can access the information from a single,
permanent, and centralized location, the EDGAR Web site. We think these
costs are mitigated by the fact that ABS issuers relying on the Rule
312 accommodation must ensure that the prospectus for the offering
contains the Internet Web site address where the static pool
information is posted, the Web site must be unrestricted and free of
charge, such information must remain on the Internet Web site for five
years with any changes clearly indicated and the issuer must undertake
to provide the information to any person free of charge, upon request,
if a subsequent update or change is made. Furthermore, because the
information is deemed included in the prospectus under Rule 312, it is
subject to all liability provisions applicable to prospectuses and
registration statements.
    Investors and issuers may have incurred costs to adjust their
processes in anticipation of the lapse of the Rule 312 accommodation
and potential reversion to a requirement to file static pool
information on EDGAR. In this case, benefits to investors or issuers of
not having to change their procedures regarding static pool reporting
in a short time frame would be diminished by any costs already incurred
in anticipation of the change. We believe such anticipatory action and
any associated costs are minimal.
    We request comment on the amount of any additional costs issuers or
investors may incur as a result of the proposed amendment.

V. Small Business Regulatory Enforcement Fairness Act

    For purposes of the Small Business Regulatory Enforcement Fairness
Act of 1996, or ``SBREFA,'' \37\ we solicit data to determine whether
the proposal constitutes a ``major'' rule. Under SBREFA, a rule is
considered ``major'' where, if adopted, it results or is likely to
result in:
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    \37\ 5 U.S.C. 603.
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     An annual effect on the economy of $100 million or more
(either in the form of an increase or a decrease);
     A major increase in costs or prices for consumers or
individual industries; or
     Significant adverse effects on competition, investment or
innovation.
    We request comment on the potential impact of the proposed
amendment on the U.S. economy on an annual basis, any potential
increase in costs or prices for consumers or individual industries, and
any potential effect on competition, investment or innovation.
Commentators are requested to provide empirical data and other factual
support for their views if possible.

VI. Consideration of Impact on the Economy, Burden on Competition and
Promotion of Efficiency, Competition and Capital Formation

    Section 2(b) of the Securities Act requires us, when engaging in
rulemaking where we are required to consider or determine whether an
action is necessary or appropriate in the public interest, to also
consider whether the action will promote efficiency, competition, and
capital formation.
    As discussed in greater detail above, Rule 312 of Regulation S-T
was adopted as a temporary filing accommodation so that issuers of ABS
could present static pool information on an Internet Web site. The
proposed amendment to Rule 312 of Regulation S-T further extends its
application for eighteen months. We are not proposing changes to the
conditions of Rule 312 or to the disclosure obligations to which it
applies. We do not believe that an eighteen-month extension would
impose a burden on competition. We also believe the extension of the
filing accommodation would continue to promote efficiency and capital
formation by permitting ABS issuers to disclose static pool information
in a format that is more useful to investors and cost-effective and not
unduly burdensome for asset-backed issuers.
    We request comment on whether the proposed amendment, if adopted,
would promote efficiency, competition, and capital formation.
Commentators are requested to provide empirical data and other factual
support for their view to the extent possible.

VII. Regulatory Flexibility Act Certification

    The Commission hereby certifies pursuant to 5 U.S.C. 605(b) that
the proposed amendment contained in this release, if adopted, would not
have a significant economic impact on a substantial number of small
entities. The proposal relates to the disclosure requirements for ABS
in Securities Act registration statements. Securities Act Rule 157 \38\
defines an issuer, other than an investment company, to be a ``small
business'' or ``small organization'' if it had total assets of $5
million or less on the last day of its most recent fiscal year. As the
depositor and issuing entity are most often limited purpose entities in
an ABS transaction, we focused on the sponsor in analyzing the
potential impact of the proposal under the Regulatory Flexibility Act.
Based on our data, we only found one sponsor that could meet the
definition of a small broker-dealer for purposes of the Regulatory
Flexibility Act.\39\ In addition, even if additional sponsors are small
entities, the proposed amendment to Rule 312 would not have a
significant economic impact on any such entities because it only
extends a temporary filing accommodation that is currently in effect.
Accordingly, the Commission does not believe that the extension, if
adopted, would have a significant economic impact on a substantial
number of small entities.
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    \38\ 17 CFR 230.157.
    \39\ This is based on data from Asset-Backed Alert. See Section
IX of the 2010 ABS Proposing Release.
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    We encourage written comments on the Certification. Commentators
are asked to describe the nature of any impact on small entities and
provide empirical data to support the extent of the impact.

VIII. Statutory Authority and Text of the Proposed Amendment

    The amendment described is being proposed under the authority set
forth in Sections 6, 7, 10, 19 and 28 of the Securities Act of 1933 (15
U.S.C. 77f, 77g, 77j, 77s and 77z-3).

List of Subjects in 17 CFR Part 232

    Reporting and recordkeeping requirements, Securities.

Text of the Proposed Amendment

    For the reasons set out in the preamble, the Commission proposes to
amend title 17, chapter II, of the Code of Federal Regulations as
follows:

PART 232--REGULATION S-T--GENERAL RULES AND REGULATIONS FOR
ELECTRONIC FILINGS

    1. The authority citation for part 232 continues to read, in part,
as follows:

    Authority: 15 U.S.C. 77f, 77g, 77h, 77j, 77s(a), 77z-3,
77sss(a), 78c(b), 78l, 78m, 78n, 78o(d), 78w(a), 78ll, 80a-6(c),
80a-8, 80a-29, 80a-30, 80a-37, and 7201 et seq.; and 18 U.S.C. 1350.
* * * * *
    2. Amend Sec.  232.312 paragraph (a) introductory text by removing
``December 31, 2010'' and in its place adding ``June 30, 2012'' in the
first sentence.

    By the Commission.

    Dated: August 30, 2010.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2010-22019 Filed 9-2-10; 8:45 am]
BILLING CODE 8010-01-P


[Federal Register: November 23, 2005 (Volume 70, Number 225)]
[Notices]
[Page 70910-70911]
[DOCID:fr23no05-151]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52783; File No. SR-OCC-2003-13]

Self-Regulatory Organizations; The Options Clearing Corporation;
Notice of Filing of Proposed Rule Change To Establish a Comprehensive
Standard of Care and Limitation of Liability With Respect to Clearing
Members

November 16, 2005.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on November 5, 2003, The
Options Clearing Corporation (``OCC'') filed with the Securities and
Exchange Commission (``Commission'') and on August 18, 2004, amended
\2\ the proposed rule change as described in Items I, II, and III
below, which items have been prepared by OCC. The Commission is
publishing this notice to solicit comments on the proposed rule change
from interested parties.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ Letter from William H. Navin, Executive Vice President,
General Counsel, and Secretary, OCC (August 17, 2005).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    OCC is seeking to establish gross negligence as its comprehensive
standard of care and limitation of liability with respect to its
clearing members.\3\
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    \3\ OCC's proposed rule change would not affect the regulatory
standards (e.g., section 17A of the Act) that apply to OCC or the
way in which OCC conducts its clearing agency operations.
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II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, OCC 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. OCC has prepared summaries, set forth in sections (A),
(B), and (C) below, of the most significant aspects of these
statements.\4\
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    \4\ The Commission has modified the text of the summaries
prepared by OCC.
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(A) Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

    In 1980 in its release setting forth standards for registration of
clearing agencies, the Division of Market Regulation stated that it was
``of the view that clearing agencies should undertake to perform their
obligations with a high degree of care.'' \5\ Later, in 1983 in its
release registering nine clearing agencies, the Commission stated that
it did ``not believe sufficient justification exists at this time to
require a unique federal standard of care for registered clearing
agencies.''\6\ The Commission has left to user-governed clearing
agencies the question of how to allocate losses associated with, among
other things, clearing agency functions. Along this line, in 1986 in
its order approving a proposed rule change of the Midwest Securities
Trust Company (``MSTC'') to clarify the rights and liabilities of the
MSTC and its participants with respect to certain services, the
Commission stated:

    \5\ Securities Exchange Act Release No. 16900 (June 17, 1980),
45 FR 45167 (June 23, 1980).
    \6\ Securities Exchange Act Release No. 20221 (September 23,
1983), 48 FR 45167 (October 3, 1983).
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    The Act does not specify the standard of care that must be
exercised by registered clearing agencies and the Commission has
determined that imposition of a unique Federal standard of care for
registered clearing agencies is not appropriate at this time.
[citing Securities Exchange Act Release No. 20221, supra note 5] For
those reasons the Commission believes that the clearing agency
standard of care and the allocation of rights and responsibilities
between a clearing agency and its participants applicable to
clearing agency services generally may be set by the clearing agency
and its participants. The Commission believes it should review
clearing agency proposed rule changes in this area on a case-by-case
basis and balance the need for a high degree of clearing agency care
with the effect resulting liabilities may have on clearing agency
operations, costs, and safeguarding of securities and funds.\7\

    \7\ Securities Exchange Act Release No. 22940 (February 24,
1986), 51 FR 7169 (February 28, 1986).
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    Because standards of care represent an allocation of rights and
liabilities between a clearing agency and its users, which are
generally sophisticated financial entities, the Commission has
continued to refrain from establishing a unique federal standard of
care and has allowed clearing agencies and other self-regulatory
organizations and their users to establish their own standards of
care.\8\
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    \8\ See, e.g., Securities Exchange Act Release Nos. 51669 (May
9, 2005), 70 FR 25634 (May 13, 2005) [File No. SR-NSCC-2004-09];
48201 (July 21, 2003), 68 FR 44128 (July 25, 2003) [File No. SR-
GSCC-2002-10]; 37563 (August 14, 1996), 61 FR 43285 (August 21,
1996) [SR-PSE-96-21]; and 37421 (July 11, 1996), 61 FR 37513 (July
18, 1996) [SR-CBOE-96-02].
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    With this proposed rule change, OCC is seeking to establish a
comprehensive gross negligence standard of care and limitation of
liability with respect to its clearing members and makes the following
representations. OCC states in the filing that since its founding in
1973, it has performed its clearing services with an exemplary level of
care. Its record of fulfilling its commitments to its clearing members
for over 30 years reflects OCC's commitment to serving the best
interests of its clearing members. It has comprehensive systems and
operating procedures in place to ensure that its clearing functions are
executed with the highest level of accuracy. In addition to its own
concern for accuracy, it is subject to extensive regulatory oversight
by the Commission. Furthermore, in its amendment to the filing, OCC
states that gross negligence is the standard of care generally used by
other clearing agencies such as the Fixed Income Clearing Corporation,
the decision to apply a gross negligence standard of care to OCC is a
conscious allocation of risk between OCC and its members, the filing
was unanimously approved by OCC's directors, a majority of whom are
officers of clearing members, and the proposed rule change in no way
will affect the very high level of care to which OCC has always held
itself and to which it is held through the regulatory oversight of the
Commission.\9\ As such, OCC believes

that a gross negligence standard of care is appropriate for OCC.\10\
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    \9\ Supra, letter from William H. Navin, n. 2.
    \10\ Specifically, OCC is proposing to amend Article VI of its
By-Laws, ``Clearance of Exchange Transactions,'' by adding new
section 25, ``Limitation of Liability,'' which would state:
    (a) Notwithstanding any other provision in the By-Laws and
Rules, the Corporation will not be liable for any action taken, or
any delay or failure to take any action, under the By-Laws and Rules
or otherwise, to fulfill the Corporation's obligations to its
Clearing Members, other than for losses caused directly by the
Corporation's gross negligence, willful misconduct, or violation of
federal securities laws for which there is a private right of
action. Under no circumstances will the Corporation be liable for
the acts, delays, omissions, bankruptcy, or insolvency of any third
party, including, without limitation, any bank or other depository,
custodian, sub-custodian, clearing or settlement system, data
communication service, or other third party, unless the Corporation
was grossly negligent, engaged in willful misconduct, or was in
violation of federal securities laws for which there is a private
right of action, in selecting such third party; and
    (b) Under no circumstances will the Corporation be liable for
any indirect, consequential, incidental, special, punitive or
exemplary loss or damage (including, but not limited to, loss of
business, loss of profits, trading losses, loss of opportunity and
loss of use) however suffered or incurred, regardless of whether the
Corporation has been advised of the possibility of such damages or
whether such damages otherwise could have been foreseen or
prevented.
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    OCC believes that the proposed rule change is consistent with the
requirements of section 17A of the Act \11\ and the rules and
regulations thereunder applicable to OCC because it will permit the
resources of OCC to be appropriately utilized for promoting the prompt
and accurate clearance and settlement of options transactions and for
providing for the safeguarding of securities and funds in its custody
or control or for which it is responsible.
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    \11\ 15 U.S.C. 78q-1.
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(B) Self-Regulatory Organization's Statement on Burden on Competition

    OCC does not believe that the proposed rule change would impose any
burden on competition.

(C) Self-Regulatory Organization's Statement on Comments on the
Proposed Rule Change Received From Members, Participants or Others

    Written comments were not and are not intended to be solicited with
respect to the proposed rule change, and none have been received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action

    Within thirty-five days of the date of publication of this notice
in the Federal Register or within such longer period (i) as the
Commission may designate up to ninety days of such date 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 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, as amended, is consistent with the Act. Comments may be
submitted by any of the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml.
); or     Send an e-mail to<EMAIL_ADDRESS>Please include

File Number SR-OCC-2003-13 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-9303.
    All submissions should refer to File Number SR-OCC-2003-13. This
file number should be included on the subject line if e-mail 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 inspection
and copying in the Commission's Public Reference Section, 100 F Street,
NE., Washington, DC 20549. Copies of such filing also will be available
for inspection and copying at the principal office of OCC and on OCC's
Web site at http://www.theocc.com. 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-OCC-2003-13 and should be submitted on or before
December 14, 2005.

    For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\12\
Jonathan G. Katz,
Secretary.
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    \12\ 17 CFR 200.30-3(a)(12).
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 [FR Doc. E5-6456 Filed 11-22-05; 8:45 am]

BILLING CODE 8010-01-P