[Federal Register Volume 80, Number 81 (Tuesday, April 28, 2015)]
[Notices]
[Pages 23618-23625]
[FR Doc No: 2015-09841]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74794; File No. 600-34]

Self-Regulatory Organizations; SS&C Technologies, Inc.; Notice of
Filing of Application for Exemption From Registration as a Clearing
Agency

April 23, 2015.

I. Introduction

    On April 15, 2013, SS&C Technologies, Inc. (``SS&C'') filed with
the Securities and Exchange Commission (``Commission'') an application
on Form CA-1 for exemption from registration as a clearing agency
pursuant to Section 17A of the Securities Exchange Act of 1934
(``Exchange Act'') and Rule 17Ab2-1 thereunder. SS&C amended its
application on August 12, 2013, December 23, 2014, and March 30, 2015.
SS&C is requesting an exemption from clearing agency registration in
connection with its proposal to offer an electronic trade confirmation
(``ETC'') service and a matching service. The Commission is publishing
this notice in order to solicit comments from interested persons on the
exemption request.\1\ The Commission will consider any comments it
receives in making its determination whether to grant SS&C's request
for an exemption from clearing agency registration.
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    \1\ The descriptions set forth in this notice regarding the
structure and operations of SS&C have been largely derived from
information contained in SS&C's amended Form CA-1 application and
publicly available sources. The application and non-confidential
exhibits thereto are available on the Commission's Web site.
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II. Background

A. SS&C Organization

    SS&C was incorporated in the State of Delaware on March 29, 1996.
SS&C's headquarters are in Windsor, Connecticut, with offices in 20
locations across the United States. SS&C has additional offices in
Toronto and other locations throughout the world, and is a global
provider of financial services-related solutions to investment
management, banking, and other financial sector clients. All control
and direction over SS&C is vested in SS&C Technologies Holdings, Inc.,
SS&C's parent company and a public holding company listed on NASDAQ
(symbol SSNC).\2\
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    \2\ See Form CA-1 at p. 111 (Exhibit C, providing a graphic
description of SS&C's organizational structure).
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    SS&C proposes to provide ETC services and matching services for
fixed-income and equity trades as described

in its Form CA-1 application. An overview of SS&C's proposed matching
service is presented in Part III below. All matching service activities
would be performed by SS&C's subsidiary, SS&C Technologies Canada Corp.
(``SS&C Canada''). The policies and operations of SS&C Canada are
overseen by its officers and directors, and are subject to control by
SS&C's parent, SS&C Technologies Holdings, Inc. SS&C Canada will
perform the matching services in Mississauga, Canada, through its
software-enabled service, SSCNet, which is a global trade network
linking investment managers, broker-dealers, clearing agencies,
custodians, and interested parties. Client support for these services
will be rendered through SS&C's offices in the United States, the
United Kingdom, and Australia. SS&C will coordinate support activity,
which includes help desk facilities and call and issue tracking through
a shared client call database, and relationship management. SS&C and
SS&C Canada will maintain an intercompany agreement setting forth
respective services and obligations.
    In addition to the conditions set forth in this notice, SS&C has
made the following representations regarding its operations: (i) SS&C
shall obtain contractual commitments from its customers permitting it
to provide information to the Ontario Securities Commission, the
Commission, and other third parties; (ii) SS&C shall make available
SS&C Canada employees in Canada or the United States for interview by
the Commission subject to reasonable notice, provided that such action
does not impose unreasonable hardship under applicable immigration law
on such employees; (iii) as set forth in the intercompany agreement,
SS&C shall provide the Commission access to information related to
SS&C's matching system and ETC services, including those documents it
receives from its service provider, SS&C Canada (the ``Business
Activities Information''); (iv) SS&C Canada shall provide on the same
business day to SS&C at its headquarters in Windsor, Connecticut
electronically generated Business Activities Information, in whatever
form SS&C shall specify, including regularly and automatically
generated and ad hoc reports, books and records, correspondence,
memoranda, papers, notices, accounts and other such records; and (v)
SS&C Canada shall send to SS&C at its headquarters in Windsor,
Connecticut all manually generated Business Activities Information, in
whatever form SS&C shall specify, no later than the business day on
which the record is granted. Further, SS&C has confirmed with external
counsel that implementation of the intercompany agreement would not
violate the Canadian Personal Information Protection and Electronic
Documents Act or the Ontario Business Records Protection Act.\3\ This
would allow for the disclosure of personal information by SS&C Canada
to SS&C (U.S.).
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    \3\ As the draft intercompany agreement is governed by
Connecticut law, and as external counsel are not qualified to
practice in Connecticut, in providing these opinions they have
assumed that the provisions of the Agreement have the same meaning
under Connecticut law as they would under Ontario and Canadian law.
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    SS&C's directors and officers maintain direct control over SS&C and
will oversee the business of SS&C's proposed matching service. The
board of directors includes a standing audit committee and, from time
to time, special committees formed to address specific issues.\4\ SS&C
is owned principally by public shareholders, including William C.
Stone, who controls approximately 20% of the shares and has indirect
control of SS&C.\5\
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    \4\ For example, SS&C maintains an Information Security Policy
as well as a Confidentiality and Privacy Policy to ensure customer
information is protected. The SS&C Board of Directors and executive
officers are ultimately responsible for Information Security. The
Vice President of Security coordinates the Information Security
activities within SS&C.
    \5\ See Form CA-1 at p. 112 (Exhibit D).
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B. Matching as a Clearing Agency Function

    On April 6, 1998, the Commission issued an interpretive release
regarding matching services \6\ (the ``Matching Release'').\7\ In the
Matching Release, the Commission concluded that matching constitutes a
clearing agency function, specifically the ``comparison of data
respecting the terms of settlement of securities transactions,'' within
the meaning of Section 3(a)(23)(A) of the Exchange Act.\8\ Therefore,
any person providing independent matching services must either register
with the Commission as a clearing agency or obtain an exemption from
registration pursuant to Section 17A of the Exchange Act and Rule
17Ab2-1 thereunder.\9\ In 2001, the Commission granted an exemption
from registration as a clearing agency to Omgeo, a subsidiary of The
Depository Trust and Clearing Corporation (``DTCC'') and Thomson
Financial, to conduct ETC and matching services.\10\ SS&C has applied
for a similar exemption from registration as a clearing agency to
provide ETC and matching services.
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    \6\ The term ``matching service'' as used here means an
electronic service to centrally match trade information between a
broker-dealer and its institutional customer.
    \7\ See Confirmation and Affirmation of Securities Trades;
Matching, Exchange Act Release No. 34-39829 (Apr. 6, 1998), 63 FR
17943 (Apr. 13, 1998).
    \8\ In addition, on July 1, 2011, the Commission published a
conditional temporary exemption from clearing agency registration
for entities that perform for security-based swap transactions
certain post-trade processing services, including matching services.
See Exchange Act Release No. 34-64796 (Jul. 1, 2011), 76 FR 39963
(Jul. 7, 2011) (providing an exemption from registration under
Section 17A(b) of the Exchange Act, and stating that ``[t]he
Commission is using its authority under section 36 of the Exchange
Act to provide a conditional temporary exemption, until the
compliance date for the final rules relating to registration of
clearing agencies that clear security-based swaps pursuant to
sections 17A(i) and (j) of the Exchange Act, from the registration
requirement in section 17A(b)(1) of the Exchange Act to any clearing
agency that may be required to register with the Commission solely
as a result of providing Collateral Management Services, Trade
Matching Services, Tear Up and Compression Services, and/or
substantially similar services for security-based swaps''). The
order facilitated the Commission's identification of entities that
operate in that area and that accordingly may fall within the
clearing agency definition.
    \9\ See 15 U.S.C. 78q-1 and 17 CFR 240.17Ab2-1.
    \10\ See Global Joint Venture Matching Services--US, LLC; Order
Granting Exemption From Registration as a Clearing Agency, Exchange
Act Release No. 34-44188 (Apr. 17, 2001), 66 FR 20494 (Apr. 23,
2001) (``Omgeo Exemptive Order''). On July 24, 2013, DTCC announced
that it had entered into an agreement with Thomson Financial to
acquire full ownership of Omgeo.
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III. SS&C's Proposed Matching Service

    In its application for exemption from registration as a clearing
agency, SS&C states it will provide ETC and matching services for
broker-dealers and institutional customers that will allow such
entities to streamline communications and process allocation and post-
trade information for fixed-income and equity trades for depository
eligible U.S. securities.\11\ According to SS&C, users of its services
will gain access to a matching utility that is affordable, flexible in
handling either part or all of the trade matching cycle, and easily
interfaced with other matching utilities. Its matching service allows
users to route an order to a broker, receive an execution notice from
the broker, and enter trade details and allocations so that SS&C's
matching service can generate a matched confirmation and send an
affirmed confirmation to the depository at the Depository Trust Company
(``DTC'')--the full lifecycle of a trade.
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    \11\ See Form CA-1 at p. 129 (Exhibit S).
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    SS&C's matching service will offer both block level matching and
detail level matching.\12\ The block level matching, also known as
trade level matching, is an optional first step that requires a broker-
dealer to submit a final cumulative notice of execution (``NOE'')

on the trade date, which will be matched against the aggregated totals
of the corresponding allocations submitted on the trade date by the
investment manager.\13\ During import of the trade data, the matching
service validates key fields, and if errors are found, the trade is
placed in a reprocess queue and displayed within a reprocess blotter to
allow for manual data correction or resubmission. The matching service
will allow the investment manager and the broker-dealer to configure a
match agreement to determine whether to require block level matching,
which instrument types are eligible for block level matching, and which
fields are eligible as well. For example, the counterparties may choose
to match proceeds based on gross or net amounts. The investment manager
is allowed to set tolerances against certain fields (such as accrued,
commission, fees, price, or settlement amount) on either an actual or
percentage basis, and if the details submitted by the broker-dealer
fall within the accepted tolerance range, the details are deemed to be
accepted by the investment manager. SS&C's matching service considers
all matches within tolerance to be partially matched, with exact
matches to be fully matched, and matches outside of the tolerance (or
submitted details without a corresponding entry by the counterparty) to
be unmatched.
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    \12\ See id. at p. 118 (Exhibit J).
    \13\ See id.
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    Detail level matching occurs either at once or after the block
level matching process is complete. Upon receipt of an allocation, a
broker-dealer can generate a confirmation for delivery to the
investment manager and capture within SS&C's matching service. The
confirmation is subject to validation of its key fields, and any errors
are returned to the broker-dealer through a reprocess blotter. Like the
block level matching process, the detail level matching process allows
the investment manager to determine which fields must be matched, and
within what tolerance such matches should be set. The same partially
matched, exact match and unmatched results apply to the detail level
matching process as they do in the block level matching process.
However, because additional time is required to prepare and submit
allocations or confirmations, there is a ``Waiting to be Matched''
period that can be established by the investment manager, which allows
trades to be matched within this period (approximately thirty minutes),
with other trades appearing as unmatched.\14\ Trades can be released to
custodian or interested parties that are direct members of SS&C's
network SSCNet once the trade enters the network, or after the match.
If a custodian is responsible for affirming a trade, it can be released
to them immediately.
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    \14\ See id.
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    Standing instructions are provided through the Delivery Instruction
Database (``DIDB''), which is fully integrated into SSCNet, and
provides a repository for settlement instructions across asset classes,
including foreign exchange and term deposits. Rather than requiring
users to attach instructions to portfolios directly, or maintaining
portfolios within the DIDB, a cross-referencing mechanism is used to
ensure portfolios are synchronized with the proper set of instructions.
In addition, local cross-referencing allows each user to maintain its
own set of currency codes, transaction type identifiers, counterparty
codes, and portfolio identifiers, ensuring that the responsibility for
maintenance rests with each user.\15\ SSCNet is also integrated into
the Society for Worldwide Interbank Financial Telecommunication
(``SWIFT'') Network, allowing users to communicate with parties outside
the SSCNet platform.\16\ For example, some users desire receiving
transactions from a batch facility, rather than SSCNet's real-time
message system. Users can select the output format for batch
communications (SSCNet proprietary, SWIFT, ISITC, or DTC affirmation
format), as well as when the batch should be submitted. Once a
transaction is exported from SSCNet, it is marked in the audit trail.
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    \15\ See id. at p. 119 (Exhibit J).
    \16\ See id.
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    Finally, central time stamping and a full audit trail are available
for all transactions, with transaction histories maintained online for
a minimum of 45 days and accessible in an online archive for up to 10
years.\17\
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    \17\ See id.
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    Other than the above matching service, SS&C's Form CA-1 application
indicates that it will not perform any other functions of a clearing
agency requiring registration under Section 17A of the Exchange
Act,\18\ such as net settlement, maintaining a balance of open
positions between buyers and sellers, marking securities to the market,
or handling funds or securities.
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    \18\ See id. at p. 118 (Exhibit J).
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IV. SS&C's Request for an Exemption

A. Introduction

    In its Form CA-1 application, SS&C notes that it has engaged in ETC
and settlement services for over 20 years. During that time, SS&C
states that it has maintained open interoperability conditions and has
provided the assurance to participants and regulators abroad of a
secure, reliable service.\19\ Its SSCNet utility offers a post-trade,
pre-settlement ETC and affirmation service for all constituents in the
institutional trade process, including investment managers, broker-
dealers, custodians, and other interested parties.\20\
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    \19\ See id. at p. 129 (Exhibit S).
    \20\ See id. at p. 118 (Exhibit J).
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    In sum, SS&C believes that users of its service in the United
States will ``gain access to a matching utility that is affordable, a
utility that will strengthen the industry-wide business continuity
efforts in the institutional trading area and will allow users to
choose the best matching process for their purposes.'' \21\ SS&C also
believes that the flexibility offered by its SSCNet service ``will
allow easy interfacing with other matching utilities and therefore
offer market participants a greater choice in selecting their matching
provider.'' \22\
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    \21\ See id. at p. 129 (Exhibit S).
    \22\ See id.
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B. Conditions to Exemption From Registration

    SS&C represents in its Form CA-1 that it would comply with the list
of conditions found below regarding its operations and interoperability
with other matching providers.\23\ The Commission preliminarily
believes that the conditions are important tools to facilitate
effective systems interoperability. By establishing a framework that
allows the customers of multiple service providers to conduct
transactions without having to join each matching provider, the
Commission preliminarily believes that the interoperability conditions
help

facilitate the linking of clearance and settlement facilities.\24\
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    \23\ See id. In addition, on November 19, 2014, the Commission
adopted Regulation Systems Compliance and Integrity (``Reg SCI''),
which would require ``SCI entities'' to comply with requirements for
policies and procedures with respect to their automated systems that
support the performance of their regulated activities. See Exchange
Act Release No. 34-73639 (Nov. 19, 2014), 79 FR 72251, 72271 (Dec.
5, 2014). Rule 1000(a) of Reg SCI would define an ``SCI entity'' to
include, among other things, a registered clearing agency and an
exempt clearing agency subject to the Commission's Automation Review
Policies (``ARP''). In particular, the term ``exempt clearing agency
subject to ARP'' includes ``an entity that has received from the
Commission an exemption from registration as a clearing agency under
Section 17A of the Exchange Act, and whose exemption contains
conditions that relate to the Commission's [ARP] Policies, or any
Commission regulation that supersedes or replaces such policies.''
The Commission notes that the below conditions would meet the
definition described in Rule 1000(a) of Reg SCI, requiring an exempt
clearing agency subject to ARP to meet the applicable requirements
set forth in Reg SCI.
    \24\ See 15 U.S.C. 78q-1(a)(1)(D).
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C.1. Operational Conditions

    (1) Before beginning the commercial operation of its matching
service, SS&C shall provide the Commission with an audit report that
addresses all the areas discussed in the Commission's Automation Review
Policies (``ARP'').\25\
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    \25\ See Exchange Act Release Nos. 34-27445 (Nov. 16, 1989), 54
FR 48703 (Nov. 24, 1989) (``ARP I''), and 34-29185 (May 9, 1991), 56
FR 22490 (May 15, 1991) (``ARP II''); see also Memorandum from the
Securities and Exchange Commission Division of Market Regulation to
SROs and NASDAQ (June 1, 2001) (``Guidance for Systems Outages and
System Change Notifications''), available at http://www.sec.gov/divisions/marketreg/sro-guidance-for-systems-outage-06-01-2001.pdf.
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    (2) SS&C shall provide the Commission with annual reports and any
associated field work prepared by competent, independent audit
personnel that are generated in accordance with the annual risk
assessment of the areas set forth in the ARP. SS&C shall provide the
Commission (beginning in its first year of operation) with annual
audited financial statements prepared by competent independent audit
personnel.
    (3) SS&C shall report all significant systems outages to the
Commission. If it appears that the outage may extend for thirty minutes
or longer, SS&C shall report the systems outage immediately. If it
appears that the outage will be resolved in less than thirty minutes,
SS&C shall report the systems outage within a reasonable time after the
outage has been resolved.
    (4) SS&C shall provide the Commission with 20 business days advance
notice of any material changes that SS&C makes to the matching service
or ETC service. These changes will not require the Commission's
approval before they are implemented.
    (5) SS&C shall respond and require its service providers to respond
to requests from the Commission for additional information relating to
the matching service and ETC service, and provide access to the
Commission to conduct on-site inspections of all facilities (including
automated systems and systems environment), records, and personnel
related to the matching service and the ETC service. The requests for
information shall be made and the inspections shall be conducted solely
for the purpose of reviewing the matching service's and the ETC
service's operations and compliance with the federal securities laws
and the terms and conditions in any exemptive order issued by the
Commission with respect to SS&C's matching service and the ETC service.
    (6) SS&C shall supply the Commission or its designee with periodic
reports regarding the affirmation rates for institutional transactions
effected by institutional investors that utilize its matching service
and ETC service.\26\
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    \26\ DTC submits monthly affirmation/confirmation reports to the
appropriate self-regulatory organizations. The Commission
anticipates a similar schedule for SS&C.
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    (7) SS&C shall preserve a copy or record of all trade details,
allocation instructions, central trade matching results, reports and
notices sent to customers, service agreements, reports regarding
affirmation rates that are sent to the Commission or its designee, and
any complaint received from a customer, all of which pertain to the
operation of its matching service and ETC service. SS&C shall retain
these records for a period of not less than five years, the first two
years in an easily accessible place.
    (8) SS&C shall not perform any clearing agency function (such as
net settlement, maintaining a balance of open positions between buyers
and sellers, or marking securities to the market) other than as
permitted in an exemption issued by the Commission.
    (9) Before beginning the commercial operation of its matching
service, SS&C shall provide the Commission with copies of the
intercompany agreement between SS&C and SS&C Canada and shall notify
the Commission of any material changes to the service agreement.

C.2. Interoperability Conditions

    (1) SS&C shall develop, in a timely and efficient manner, fair and
reasonable linkages between SS&C's matching service and other matching
services that are registered with the Commission or that receive or
have received from the Commission an exemption from clearing agency
registration that, at a minimum, allow parties to trades that are
processed through one or more matching services to communicate through
one or more appropriate effective interfaces with other matching
services.
    (2) SS&C shall devise and develop interfaces with other matching
services that enable end-user clients or any service that represents
end-user clients to SS&C (``end-user representative'') to gain a single
point of access to SS&C and other matching services. Such interfaces
must link with each other matching service so that an end-user client
of one matching service can communicate with all end-user clients of
all matching services, regardless of which matching service completes
trade matching prior to settlement.
    (3) If any intellectual property proprietary to SS&C is necessary
to develop, build, and operate links or interfaces to SS&C's matching
service, as described in these conditions, SS&C shall license such
intellectual property to other matching services seeking linkage to
SS&C on fair and reasonable terms for use in such links or interfaces.
    (4) SS&C shall not engage in any activity inconsistent with the
purposes of Section 17A(a)(2) of the Exchange Act,\27\ which section
seeks the establishment of linked or coordinated facilities for
clearance and settlement of transactions. In particular, SS&C will not
engage in activities that would prevent any other matching service from
operating a matching service that it has developed independently from
SS&C's matching service.
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    \27\ 15 U.S.C. 78q-1(a)(2)(A)(ii).
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    (5) SS&C shall support industry standards in each of the following
categories: Communication protocols (e.g., TCP/IP, SNA); message and
file transfer protocols and software (e.g., FIX, WebSphere MQ, SWIFT);
message format standards (e.g., FIX); and message languages and
metadata (e.g., XML). However, SS&C need not support all existing
industry standards or those listed above by means of example. Within
three months of regulatory approval, SS&C shall make publicly known
those standards supported by SS&C's matching service. To the extent
that SS&C decides to support other industry standards, including new
and modified standards, SS&C shall make these standards publicly known
upon making such decision or within three months of updating its system
to support such new standards, whichever is sooner. Any translation to/
from these published standards necessary to communicate with SS&C's
system shall be performed by SS&C without any significant delay or
service degradation of the linked parties' services.
    (6) SS&C shall make all reasonable efforts to link with each other
matching service in a timely and efficient manner, as specified below.
Upon written request, SS&C shall negotiate with each other matching
service to develop and build an interface that allows the two to link
matching services (``interface''). SS&C shall involve neutral industry
participants in all negotiations to build or develop interfaces and, to
the extent feasible, incorporate input from such participants in
determining the specifications and architecture of such

interfaces. Absent adequate business or technological
justification,\28\ SS&C and the requesting other matching service shall
conclude negotiations and reach a binding agreement to develop and
build an interface within 120 calendar days of SS&C's receipt of the
written request. This 120-day period may be extended upon the written
agreement of both SS&C and the other matching service engaged in
negotiations. For each other matching service with whom SS&C reaches a
binding agreement to develop and build an interface, SS&C shall begin
operating such interface within 90 days of reaching a binding agreement
and receiving all the information necessary to develop and operate it.
This 90-day period may be extended upon the written agreement of both
SS&C and the other matching service. For each interface and within the
same time SS&C must negotiate and begin operating each interface, SS&C
and the other matching service shall agree to ``commercial rules'' for
coordinating the provision of matching services through their
respective interfaces, including commercial rules: (A) Allocating
responsibility for performing matching services; and (B) allocating
liability for service failures. SS&C shall also involve neutral
industry participants in negotiating applicable commercial rules and,
to the extent feasible, take input from such participants into account
in agreeing to commercial rules. At a minimum, each interface shall
enable SS&C and the other matching service to transfer between them all
trade and account information necessary to fulfill their respective
matching responsibilities as set forth in their commercial rules
(``trade and account information''). Absent an adequate business or
technological justification, SS&C shall develop and operate each
interface without imposing conditions that negatively impact the other
matching service's ability to innovate its matching service or develop
and offer other value-added services relating to its matching service
or that negatively impact the other matching service's ability to
compete effectively against SS&C.
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    \28\ The failure of neutral industry participants to be
available or to submit their input within the 120 day or 90 day time
periods set forth in this paragraph shall not constitute an adequate
business or technological justification for failing to adhere to the
requirements set forth in this paragraph.
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    (7) In order to facilitate fair and reasonable linkages between
SS&C and other matching services, SS&C shall publish or make available
to any other matching service the specifications for any interface and
its corresponding commercial rules that are in operation within 20 days
of receiving a request for such specifications and commercial rules.
Such specifications shall contain all the information necessary to
enable any other matching services not already linked to SS&C through
an interface to establish a linkage with SS&C through an interface or a
substantially similar interface. SS&C shall link to any other matching
service, if the other matching service so opts, through an interface
substantially similar to any interface and its corresponding commercial
rules that SS&C is currently operating. SS&C shall begin operating such
substantially similar interface and commercial rules with the other
matching service within 90 days of receiving all the information
necessary to operate that link. This 90-day period may be extended upon
the written agreement of both SS&C and the other matching service that
plans to use that link.
    (8) SS&C and respective other matching services shall bear their
own costs of building and maintaining an interface, unless otherwise
negotiated by the parties.
    (9) SS&C shall provide to all other matching services and end-user
representatives that maintain linkages with SS&C sufficient advance
notice of any material changes, updates, or revisions to its interfaces
to allow all parties who link to SS&C through affected interfaces to
modify their systems as necessary and avoid system downtime,
interruption, or system degradation.
    (10) SS&C and each other matching service shall negotiate fair and
reasonable charges and terms of payment for the use of their interface
with respect to the sharing of trade and account information
(``interface charges''). In any fee schedule adopted under conditions
C.2(10), C.2(11), or C.2(12) herein, SS&C's interface charges shall be
equal to the interface charges of the respective other matching
service.
    (11) If SS&C and the other matching service cannot reach agreement
on fair and reasonable interface charges within 60 days of receipt of
the written request, SS&C and the other matching service shall submit
to binding arbitration under the rules promulgated by the American
Arbitration Association. The arbitration panel shall have 60 days to
establish a fee schedule. The arbitration panel's establishment of a
fee schedule shall be binding on SS&C and the other matching service
unless and until the fee schedule is subsequently modified or abrogated
by the Commission or SS&C and the other matching service mutually agree
to renegotiate.
    (12)(A) The following parameters shall be considered in determining
fair and reasonable interface charges: (i) The variable cost incurred
for forwarding trade and account information to other matching
services; (ii) the average cost associated with the development of
links to end-users and end-user representatives; and (iii) SS&C's
interface charges to other matching services. (B) The following factors
shall not be considered in determining fair and reasonable interface
charges: (i) The respective cost incurred by SS&C or the other matching
service in creating and maintaining interfaces; (ii) the value that
SS&C or the other matching service contributes to the relationship;
(iii) the opportunity cost associated with the loss of profits to SS&C
that may result from competition from other matching services; (iv) the
cost of building, maintaining, or upgrading SS&C's matching service; or
(v) the cost of building, maintaining, or upgrading value added
services to SS&C's matching service. (C) In any event, the interface
charges shall not be set at a level that unreasonably deters entry or
otherwise diminishes price or non-price competition with SS&C by other
matching services.
    (13) SS&C shall not charge its customers more for use of its
matching service when one or more counterparties are customers of other
matching services than SS&C charges its customers for use of its
matching service when all counterparties are customers of SS&C. SS&C
shall not charge customers any additional amount for forwarding to or
receiving trade and account information from other matching services
called for under applicable commercial rules.
    (14) SS&C shall maintain its quality, capacity, and service levels
in the interfaces with other matching services (``matching services
linkages'') without bias in performance relative to similar
transactions processed completely within SS&C's service. SS&C shall
preserve and maintain all raw data and records necessary to prepare
reports tabulating separately the processing and response times on a
trade-by-trade basis for (A) completing its matching service when all
counterparties are customers of SS&C (B) completing its matching
service when one or more counterparties are customers of other matching
services; or (C) forwarding trade information to other matching
services called for under applicable commercial rules. SS&C shall
retain the data and records for a period not less than six years.
Sufficient information shall be maintained to demonstrate that the
requirements of condition C.2(15) below are being met. SS&C and its
service providers shall provide the

Commission with reports regarding the time it takes SS&C to process
trades and forward information under various circumstances within 30
days of the Commission's request for such reports. However, SS&C shall
not be responsible for identifying the specific cause of any delay in
performing its matching service where the fault for such delay is not
attributable to SS&C.
    (15) SS&C shall process trades or facilitate the processing of
trades by other matching services on a first-in-time priority basis.
For example, if SS&C receives trade and account information that SS&C
is required to forward to other matching services under applicable
commercial rules (``pass-through information'') prior to receiving
trade and account information from SS&C's customers necessary to
provide matching services for a trade in which all parties are
customers of SS&C (``intra-hub information''), SS&C shall forward the
pass-through information to the designated other matching service prior
to processing the intra-hub information. If, on the other hand, the
information were to come in the reverse order, SS&C shall process the
intra-hub information before forwarding the pass-through information.
    (16) SS&C shall sell access to its databases, systems or
methodologies for transmitting settlement instructions (including
settlement instructions from investment managers, broker-dealers, and
custodian banks) and/or transmitting trade and account information to
and receiving authorization responses from settlement agents on fair
and reasonable terms to other matching services and end-user
representatives. Such access shall permit other matching services and
end-user representatives to draw information from those databases,
systems, and methodologies for transmitting settlement instructions
and/or transmitting trade and account information to and receiving
authorization responses from settlement agents for use in their own
matching services or end-user representatives' services. The links
necessary for other matching services and end-user representatives to
access SS&C's databases, systems or methodologies for transmitting
settlement instructions and/or transmitting trade and account
information to and receiving authorization responses from settlement
agents will comply with conditions C.2(3), C.2(5), C.2(9), C.2(14) and
C.2(15) above.
    (17) For the first five years from the date of an exemptive order
issued by the Commission with respect to SS&C's matching service, SS&C
shall provide the Commission with reports every six months sufficient
to document SS&C's adherence to the obligations relating to interfaces
set forth in conditions C.2(6) through C.2(13) and C.2(16) above. SS&C
shall incorporate into such reports information including but not
limited to (A) all other matching services linked to SS&C (B) the
time, effort, and cost required to establish each link between SS&C and
other matching services; (C) any proposed links between SS&C and other
matching services as well as the status of such proposed links; (D) any
failure or inability to establish such proposed links or fee schedules
for interface charges; (E) any written complaint received from other
matching services relating to its established or proposed links with
SS&C and (F) if SS&C failed to adhere to any of the obligations
relating to interfaces set forth in conditions C.2(6) through C.2(13)
and C.2(16) above, its explanation for such failure. The Commission
shall treat information submitted in accordance with this condition as
confidential, non-public information, subject to the provisions of
applicable law. If any other matching service seeks to link with SS&C
more than five years after issuance of an exemptive order issued by the
Commission with respect to SS&C's matching service, SS&C shall notify
the Commission of the other matching service's request to link with
SS&C within ten days of receiving such request. In addition, SS&C shall
provide reports to the Commission in accordance with this paragraph
commencing six months after the initial request for linkage is made
until one year after SS&C and the other matching service begin
operating their interface. The Commission reserves the right to request
reports from SS&C at any time. SS&C shall provide the Commission with
such updated reports within thirty days of the Commission's request.
    (18) SS&C shall also publish or make available upon request to any
end-user representative the necessary specifications, protocols, and
architecture of any interface created by SS&C for any end-user
representative.

V. Statutory Standards

A. Statutory Process for Registering or Exempting Clearing Agencies

    Section 17A(b)(1) of the Exchange Act requires all clearing
agencies to register with the Commission before performing any of the
functions of a clearing agency.\29\ However, Section 17A(b)(1) also
states that, upon its own motion or upon a clearing agency's
application, the Commission may conditionally or unconditionally exempt
said clearing agency from any provisions of Section 17A or the rules or
regulations thereunder if the Commission finds that such exemption is
consistent with the public interest, the protection of investors, and
the purposes of Section 17A, including the prompt and accurate
clearance and settlement of securities transactions and the
safeguarding of securities and funds.
---------------------------------------------------------------------------

    \29\ See 15 U.S.C. 78q-1(b) and 17 CFR 240.17Ab2-1.
---------------------------------------------------------------------------

    In the Matching Release, the Commission stated that an entity that
limited its clearing agency functions to providing matching services
might not have to be subject to the full range of clearing agency
regulation. The Matching Release stated that the Commission anticipated
that an entity seeking an exemption from clearing agency registration
for matching would be required to: (1) Provide the Commission with
information on its matching services and notice of material changes to
its matching services; (2) establish an electronic link to a registered
clearing agency that provides for the settlement of its matched trades;
(3) allow the Commission to inspect its facilities and records; and (4)
make periodic disclosures to the Commission regarding its operations.
    In 2001, the Commission approved an application by Omgeo, then a
joint venture between DTCC and Thomson Financial, for an exemption from
registration as a clearing agency to provide matching services.\30\
Omgeo's exemption from clearing agency registration was subject to
conditions that were substantially similar to the conditions set forth
in Part IV.C above.
---------------------------------------------------------------------------

    \30\ See supra note 10.
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B. SS&C's Compliance With Statutory Standards

    SS&C's matching service would be the only clearing agency function
that it would perform under an exemptive order. SS&C believes that the
undertakings it has proposed as a condition of obtaining an exemption
from clearing agency registration are consistent with the public
interest, the protection of investors, and the purposes of Section 17A
of the Exchange Act.
    SS&C represents in its Form CA-1 that it will comply with all of
the conditions described in Part IV.C above. Preliminarily, the
Commission does not believe, however, that SS&C, in the absence of
performing the functions of a clearing agency other than the matching
service described here, raises

the same concerns as an entity that performs a wider range of clearing
agency functions. For example, SS&C would not be operating as a self-
regulatory organization with the powers to enforce its rules against
its members. Accordingly, the Commission preliminarily believes it may
not be necessary to require SS&C to satisfy all of the standards for
registrants under Section 17A of the Exchange Act because the proposed
conditions should establish a sufficiently robust regulatory framework.
Further, the Commission preliminarily believes that granting SS&C an
exemption from registration as a clearing agency would be consistent
with the Commission's past practice, and that additional matching
service providers should promote innovation and reduce costs for
investors.
    In evaluating SS&C's application, the Commission intends to
consider whether SS&C is so organized and has the capacity to be able
to facilitate prompt and accurate matching services. Subject to the
specific operational, interoperability and access conditions to which
it has agreed, the Commission preliminarily believes this to be the
case. Because the service is flexible in handling part or all of the
trade matching cycle, SS&C states that its proposed service ``will
allow easy interfacing with other matching utilities and therefore
offer market participants a greater choice in selecting their matching
provider.'' SS&C also states that the proposed matching service will
provide improved and automated verification which eliminates obstacles
to settlement as well as losses created by input and data errors, and
further states that its proposed matching service will strengthen
industry-wide business continuity efforts in the institutional trading
space.\31\ SS&C believes that market participants seek flexibility and
choice in selecting their matching provider and the resulting
improvements to reliability and stability in the post-trade space would
flow from its service offering.
---------------------------------------------------------------------------

    \31\ See Form CA-1 at p. 129 (Exhibit S).
---------------------------------------------------------------------------

    The Commission requests comment on whether the conditions are
sufficient to promote the purposes of Section 17A of the Exchange Act
and to allow the Commission to adequately monitor the effects of SS&C's
proposed activities on the national system for the clearance and
settlement of securities transactions. In addition, the Commission
invites commenters to address whether granting SS&C an exemption from
clearing agency registration would impose any burden on competition
that is not necessary or appropriate in furtherance of the purposes of
Section 17A of the Exchange Act.

VI. Solicitation of Comments

    Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed
exemption is consistent with the public interest, the protection of
investors, and the purposes of Section 17A of the Exchange Act. To the
extent possible, commenters are requested to provide empirical data and
other factual support for their views. In addition, the Commission
seeks comment generally on the following issues:
    1. In light of the passage of time since the adoption of the Omgeo
Exemptive Order, developments in technology and enhancements in market
practices, are the proposed conditions to the exemptive order
appropriate? Specifically, are all of the conditions designed to
facilitate interoperability necessary? Could the Commission continue to
promote the purposes of Section 17A of the Exchange Act by additional
modification or elimination of some or all of the conditions? If so,
which conditions should be modified or eliminated?
    2. What, if any, effect will moving from a single provider to two
or more providers have on the efficiency of the trade settlement
process?
    3. What, if any, impact will the introduction of a second provider
have on pricing, quality of service, and innovation?
    4. Will the introduction of one or more additional providers
increase or reduce risk in the marketplace?
    5. Does SS&C's application for exemption from registration help
achieve the underlying policy objectives of the Exchange Act? Why or
why not? In particular, please address whether granting an exemption
from registration does or does not further the goals of promoting
investor protection and the integrity of the securities markets.
    6. Are the proposed conditions to the exemptive order sufficient to
promote the purposes of Section 17A of the Exchange Act and to allow
the Commission to adequately monitor the effects of SS&C's proposed
activities on the national system for the clearance and settlement of
securities transactions? Why or why not?
    7. Would the links and interfaces with other matching services as
described in SS&C's application have a positive or negative effect on
other matching services that are registered with the Commission or that
receive from the Commission an exemption from clearing agency
registration? Why or why not? Should the proposed condition to develop
an interface with another matching service provider be made mandatory,
rather than only upon request from another provider?
    8. Would the links and interfaces with other matching services as
described in SS&C's application have a positive or negative effect on
end-user clients of all matching services, regardless of which matching
service completes trade matching prior to settlement? Why or why not?
    Comments may be submitted by any of the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/proposed.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File Number 600-34 on the subject line; or

Paper Comments

     Send paper comments in triplicate to Brent J. Fields,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090. All submissions should refer to File Number
600-34.
    To help us process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/other.shtml).
    Copies of the submission, all subsequent amendments, all written
statements with respect to the application that are filed with the
Commission, and all written communications relating to the application
between the Commission and any person, other than those that may be
withheld from the public in accordance with the provisions of 5 U.S.C.
552, will be available for Web site viewing and printing in the
Commission's Public Reference Section, 100 F Street NE., Washington, DC
20549 on official business days between the hours of 10:00 a.m. and
3:00 p.m.

All comments received will be posted without change; the Commission
does not edit personal identifying information from submissions. You
should submit only information that you wish to make available
publicly. All submissions should refer to File Number 600-34 and should
be submitted on or before May 28, 2015.

    For the Commission by the Division of Trading and Markets,
pursuant to delegated authority.\32\
---------------------------------------------------------------------------

    \32\ 17 CFR 200.30-3(a)(16).
---------------------------------------------------------------------------

Brent J. Fields,
Secretary.
[FR Doc. 2015-09841 Filed 4-27-15; 8:45 am]
 BILLING CODE 8011-01-P


[Federal Register Volume 77, Number 162 (Tuesday, August 21, 2012)]
[Notices]
[Page 50492]
[FR Doc No: 2012-20426]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

Notice of Commission Staff Attendance

    The Federal Energy Regulatory Commission hereby gives notice that
members of the Commission's staff may attend the following meetings
related to the transmission planning activities of the Midwest
Independent Transmission System Operator, Inc. (MISO):

Order 1000 Right of First Refusal Task Team--August 13, 2012
Order 1000 Right of First Refusal Task Team--August 23, 2012
Mid-Continent Area Power Pool/MISO Order 1000 Interregional Workshop--
August 30, 2012
Southwest Power Pool, Inc./MISO Order 1000 Interregional Workshop--
September 20, 2012

    The above-referenced meeting will be held at: MISO Headquarters,
720 City Center Drive, Carmel, IN 46032.
    The above-referenced meeting is open to the public.
    Further information may be found at www.misoenergy.org.
    The discussions at the meeting described above may address matters
at issue in the following proceedings:

Docket No. ER09-35-001, Tallgrass Transmission, LLC
Docket No. ER09-36-001, Prairie Wind Transmission, LLC
Docket No. ER09-548-001, ITC Great Plains, LLC
Docket No. ER09-659-002, Southwest Power Pool, Inc.
Docket No. ER10-1791, Midwest Independent Transmission System Operator,
Inc.
Docket No. ER12-1179-000, Southwest Power Pool, Inc.
Docket No. ER11-1844, Midwest Independent Transmission System Operator,
Inc.
Docket No. ER11-2700, Midwest Independent Transmission System Operator,
Inc.
Docket No. ER11-4081, Midwest Independent Transmission System Operator,
Inc.
Docket No. ER11-4105-000, Southwest Power Pool, Inc.
Docket No. ER11-4514, Midwest Independent Transmission System Operator,
Inc.
Docket No. ER12-309, Midwest Independent Transmission System Operator,
Inc.
Docket No. ER12-427, Midwest Independent Transmission System Operator,
Inc.
Docket No. ER12-480, Midwest Independent Transmission System Operator,
Inc.
Docket No. ER12-715, Midwest Independent Transmission System Operator,
Inc.
Docket No. ER12-1401-000, Southwest Power Pool, Inc.
Docket No. ER12-1415-000, Southwest Power Pool, Inc.
Docket No. ER12-1460-000, Southwest Power Pool, Inc.
Docket No. ER12-1586-001, Southwest Power Pool, Inc.
Docket No. ER12-1610-000, Southwest Power Pool, Inc.
Docket No. ER12-1772-000, Southwest Power Pool, Inc.
Docket No. ER12-1779-000, Southwest Power Pool, Inc.
Docket No. ER12-1835, Midwest Independent Transmission System Operator,
Inc.
Docket No. ER12-1928, Midwest Independent Transmission System Operator,
Inc.
Docket No. ER12-2129, Midwest Independent Transmission System Operator,
Inc.
Docket No. ER12-2216, Midwest Independent Transmission System Operator,
Inc. and Ameren Service Company
Docket No. ER12-2242, Midwest Independent Transmission System Operator,
Inc.
Docket No. ER12-2257, Midwest Independent Transmission System Operator,
Inc.
Docket No. ER12-2366-000, Southwest Power Pool, Inc.
Docket No. ER12-2387-000, Southwest Power Pool, Inc.
Docket No. EL11-30, E.ON Climate & Renewables North America, LLC v.
Midwest Independent Transmission System Operator, Inc.
Docket No. EL11-34-001, Midwest Independent Transmission System
Operator, Inc.
Docket No. EL11-56, FirstEnergy Service Company
Docket No. EL12-2-000, Southwest Power Pool, Inc.
Docket No. EL12-35, Midwest Independent Transmission System Operator,
Inc.
Docket No. EL12-60-000, Southwest Power Pool, Inc., et al.
Docket No. OA08-53, Midwest Independent Transmission System Operator,
Inc.

    For more information, contact Jason Strong, Office of Energy
Markets Regulation, Federal Energy Regulatory Commission at (202) 502-
6124 or<EMAIL_ADDRESS>
    Dated: August 10, 2012.
Kimberly D. Bose,
Secretary.
[FR Doc. 2012-20426 Filed 8-20-12; 8:45 am]
BILLING CODE 6717-01-P