
[Federal Register Volume 77, Number 243 (Tuesday, December 18, 2012)]
[Notices]
[Pages 74891-74894]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-30427]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-68419; File No. TP 13-05]


Order Granting Exemptions From Certain Rules of Regulation SHO 
Related to Hurricane Sandy

December 12, 2012.

I. Introduction

    Hurricane Sandy made landfall along the mid-Atlantic Coast on 
October 29, 2012. The Depository Trust & Clearing Corporation 
(``DTCC'') reported that its headquarters location in lower Manhattan 
sustained significant water damage as a result of storm flooding. In 
particular, DTCC reported that significant flooding and water damage 
occurred throughout DTCC's vault at 55 Water Street (the ``Vault''), 
used as part of DTCC's Custody Service for the safekeeping of physical 
certificates. DTCC has stated that restoration of the physical 
certificates will take some time, possibly months. As a result, the 
physical certificates are considered inaccessible.\1\ However, DTCC and 
The Securities Transfer Association, Inc. (``STA'') have recently 
announced an agreement on a protocol for the replacement and transfer 
of shares represented by the currently inaccessible physical 
certificates that were held in the Vault at the time Hurricane Sandy 
made landfall, facilitating DTCC's ability to continue physical 
processing.\2\ Sales of owned securities, represented by physical 
certificates that were located in the Vault at the time Hurricane Sandy 
made landfall, whose settlement is dependent on the delivery of such 
physical certificates (or documentation with equivalent effect) (sales 
of ``Vault Securities''), may experience settlement delays as a result 
of the inaccessibility of such physical certificates.\3\ Such 
settlement delays have implications for compliance with Regulation SHO 
under the Securities Exchange Act of 1934 (the ``Exchange Act'').\4\ 
SIFMA has requested relief from certain provisions of Regulation SHO in 
connection with the inaccessible physical certificates that were in the 
Vault at the time Hurricane Sandy made landfall.\5\
---------------------------------------------------------------------------

    \1\ See ``DTCC Statement on Condition of Securities Vault,'' 
DTCC Press Release (Nov. 14, 2012) at http://www.dtcc.com/news/press/releases/2012/statement_vault.php.
    \2\ See ``DTCC and STA Agree on Protocol for Presentment of 
Physical Securities,'' DTCC Press Release (Nov. 20, 2012) at http://www.dtcc.com/news/press/releases/2012/sta_statement.php.
    \3\ As a result of Hurricane Sandy, DTCC did not receive any 
courier or mail shipments after October 26, 2012, and, as of 
November 1, 2012, made arrangements for all receipted packages to be 
routed to DTCC's recovery facility in Brooklyn, New York. In 
addition, processing of physical certificates was suspended between 
October 30, 2012, and November 2, 2012. Accordingly, the term 
``Vault Securities'' does not include physical certificates 
submitted to DTCC for custody on or after October 29, 2012, because 
the settlement of sales of such securities is not dependent on the 
delivery of physical certificates that were located in the Vault at 
the time Hurricane Sandy made landfall. See ``DTCC Client Update on 
Superstorm Sandy--Current and Ongoing Operations as Markets Re-Open; 
Physical Certificates,'' Important Notice to All DTC, FICC and NSCC 
Participants (Oct. 30, 2012) at http://www.dtcc.com/downloads/legal/imp_notices/2012/dtcc/z0033.pdf; ``DTCC Client Update on Superstorm 
Sandy--Physical Processing and Custody Services,'' Important Notice 
to All DTC and NSCC Participants (Nov. 1, 2012) at http://www.dtcc.com/downloads/legal/imp_notices/2012/dtcc/z0035.pdf; 
``DTCC Client Update on Superstorm Sandy,'' Important Notice to All 
DTC, FICC and NSCC Participants (Nov. 2, 2012) at http://www.dtcc.com/downloads/legal/imp_notices/2012/dtcc/z0036.pdf.
    \4\ 17 CFR 242.200 et seq.
    \5\ See letter from Ira Hammerman, General Counsel, Securities 
Industry and Financial Markets Association, dated Dec. 12, 2012. In 
its letter, SIFMA requests relief from the close-out requirement of 
Rule 204 of Regulation SHO and seeks ``clarification'' with respect 
to order marking under Rule 200 and the short sale price test 
restriction under Rule 201. Further, the letter from SIFMA seeks 
``confirmation'' that a short sale order of a Vault Security that a 
person is deemed to own would qualify for ``short exempt'' marking 
under Rule 201(d)(1) and would meet the terms of the exception to 
the ``locate'' requirement in Rule 203(b)(2)(ii). However, as 
discussed in this Exemptive Order, absent relief, a sale of a Vault 
Security would not necessarily qualify for ``short exempt'' marking 
under Rule 201(d)(1) or for the exception to the ``locate'' 
requirement under Rule 203(b)(2)(ii). See infra notes 12 to 15 and 
accompanying text. Thus, we are treating SIFMA's request for 
``confirmation'' as a request for relief from the ``locate'' 
requirement under Rule 203(b), the ``short exempt'' marking 
requirement under Rule 200(g)(2), and the close-out requirement 
under Rule 204.
---------------------------------------------------------------------------

    The Commission is providing certain exemptions from the ``locate,'' 
short sale price test, and close-out requirements of Regulation SHO for 
sales of Vault Securities. Absent further action by the Commission, 
these exemptions will expire on February 1, 2013.

II. Regulation SHO

A. Marking, ``Locate,'' and Short Sale Price Test Requirements Under 
Rules 200, 203, and 201 of Regulation SHO

    Rule 200(g) of Regulation SHO \6\ provides that broker-dealers must 
mark all sell orders of any equity security as ``long,'' ``short,'' or 
``short exempt.'' Under Rule 200(g)(1), a broker-dealer may mark an 
order to sell ``long'' only if the seller is deemed to own the security 
being sold pursuant to paragraphs (a) through (f) of Rule 200 and 
either: (1) The security to be delivered is in the physical possession 
or control of the broker-dealer; or (2) it

[[Page 74892]]

is reasonably expected that the security will be in the physical 
possession or control of the broker-dealer no later than the settlement 
of the transaction.
---------------------------------------------------------------------------

    \6\ 17 CFR 242.200(g).
---------------------------------------------------------------------------

    Pursuant to Rule 203(b) of Regulation SHO,\7\ a broker-dealer may 
not accept a short sale order in an equity security from another 
person, or effect a short sale in an equity security for its own 
account, unless the broker-dealer has: (1) Borrowed the security, or 
entered into a bona fide arrangement to borrow the security; or (2) 
reasonable grounds to believe that the security can be borrowed so that 
it can be delivered on the date delivery is due. This ``locate'' 
requirement must be met and documented prior to effecting a short 
sale.\8\
---------------------------------------------------------------------------

    \7\ 17 CFR 242.203(b).
    \8\ There are certain exceptions to the ``locate'' requirement 
in Rule 203(b)(2). See 17 CFR 242.203(b)(2).
---------------------------------------------------------------------------

    Rule 201 of Regulation SHO \9\ establishes a short sale-related 
circuit breaker that, if triggered, imposes a restriction on the price 
at which a covered security \10\ may be sold short (``short sale price 
test''). Paragraphs (c) and (d) of Rule 201 permit broker-dealers to 
mark certain short sale orders as ``short exempt,'' and trading 
centers' policies and procedures must be reasonably designed to permit 
the execution or display of orders marked ``short exempt'' without 
regard to whether the order is at a permissible price under the short 
sale price test.\11\
---------------------------------------------------------------------------

    \9\ 17 CFR 242.201.
    \10\ The term ``covered security'' is defined as any NMS stock 
as defined in Rule 600(b)(47) of Regulation NMS. See 17 CFR 
242.201(a)(1); 17 CFR 242.600(b)(47).
    \11\ See 17 CFR 242.201(c), (d), (b)(1)(iii)(B). Under Rule 
200(g)(2), a sale order shall be marked ``short exempt'' only if the 
provisions of Rule 201(c) or (d) are met. See 17 CFR 242.200(g)(2).
---------------------------------------------------------------------------

    Certain types of Vault Security sales necessarily involve 
processing delays, notwithstanding the current inaccessibility of 
physical certificates that were held in the Vault at the time Hurricane 
Sandy made landfall. For example, this could include the sale of 
formerly restricted securities pursuant to Rule 144 of the Securities 
Act of 1933, where the security may not be capable of being delivered 
on the settlement date due to processing delays to remove the 
restricted legend. Further, processing delays could arise where a 
convertible security, option, or warrant has been tendered for 
conversion or exchange, such that the underlying security is not 
reasonably expected to be received by settlement date. Under these 
circumstances, a broker-dealer generally would not have a reasonable 
expectation that the securities would be in its physical possession or 
control by the settlement date. These types of sell orders cannot be 
marked ``long'' and must be marked ``short'' or ``short exempt.'' \12\ 
The Commission has provided specific exceptions from the ``locate'' 
requirement and the short sale price test requirement of Regulation SHO 
for sales of securities that the person is deemed to own pursuant to 
Rule 200 of Regulation SHO, provided that the person intends to deliver 
the securities as soon as all restrictions on delivery have been 
removed.\13\ In providing such exceptions, the Commission emphasized 
that these sales are treated as short sales solely because the seller 
is unable to deliver the security that it owns to its broker-dealer 
prior to settlement, based on circumstances outside the seller's 
control and through no fault of the seller or the broker-dealer.\14\
---------------------------------------------------------------------------

    \12\ See Exchange Act Release No. 50103 (July 28, 2004), 69 FR 
48008, 48012, 48015 (Aug. 6, 2004) (``Regulation SHO Adopting 
Release'').
    \13\ See 17 CFR 242.203(b)(2)(ii); 242.201(d)(1); Regulation SHO 
Adopting Release, 69 FR at 48015; Exchange Act Release No. 61595 
(Feb. 26, 2010), 75 FR 11232, 11266 (Mar. 10, 2010) (``Rule 201 
Adopting Release''). Under Rule 201(d)(1), a broker-dealer may mark 
a short sale order ``short exempt'' if the broker-dealer has a 
reasonable basis to believe that the short sale order is by a person 
that is deemed to own the covered security pursuant to Rule 200 of 
Regulation SHO, provided that the person intends to deliver the 
security as soon as all restrictions on delivery have been removed. 
See 17 CFR 242.201(d)(1).
    \14\ See Regulation SHO Adopting Release, 69 FR at 48015; Rule 
201 Adopting Release, 75 FR at 11266.
---------------------------------------------------------------------------

    In addition, due to the inaccessibility of physical certificates in 
the Vault as a result of flooding from Hurricane Sandy, other sell 
orders for Vault Securities also may not qualify for ``long'' marking 
under Rule 200(g)(1).\15\ In particular, a broker-dealer may not have a 
reasonable expectation that these Vault Securities will be in the 
physical possession or control of the broker-dealer by the settlement 
date. Absent relief, solely because the seller is unable to deliver the 
owned security to its broker-dealer prior to settlement due to the 
unusual circumstances of Hurricane Sandy that resulted in the current 
inaccessibility of physical certificates in the Vault, sales of these 
owned securities must be marked ``short'' or ``short exempt'' and may 
be subject to the ``locate'' and short sale price test requirements. As 
a result, we believe that the relief from the ``locate'' and short sale 
price test requirements of Regulation SHO provided by this Exemptive 
Order is appropriate in the public interest and consistent with the 
protection of investors.
---------------------------------------------------------------------------

    \15\ Depending on the circumstances, certain sell orders of 
Vault Security may be marked ``long.'' Consistent with Rule 
200(g)(1) of Regulation SHO, a broker-dealer may mark a sell order 
of a Vault Security ``long'' if the broker-dealer has a reasonable 
expectation that the Vault Securities will be in the physical 
possession or control of the broker-dealer by the settlement date.
---------------------------------------------------------------------------

    Accordingly, it is ordered, pursuant to Section 36 of the Exchange 
Act,\16\ that a broker-dealer is exempt from the ``locate'' requirement 
of Rule 203(b), including the delivery requirement of Rule 
203(b)(2)(ii),\17\ with respect to a short sale order in a Vault 
Security, and is exempt from Rule 200(g)(2) with respect to such order, 
and thus may mark such order ``short exempt'' for purposes of the short 
sale price test of Rule 201 without meeting the requirements of Rule 
201(c) or (d),\18\ subject to the following conditions:
---------------------------------------------------------------------------

    \16\ Section 36 of the Exchange Act authorizes the Commission, 
by rule, regulation or order, to exempt, either conditionally or 
unconditionally, any person, security or transaction, or any class 
or classes of persons, securities or transactions, from any 
provision or provisions of the Exchange Act or any rule or 
regulation thereunder, to the extent that such exemption is 
necessary or appropriate in the public interest, and is consistent 
with the protection of investors. 15 U.S.C. 78mm(a).
    \17\ The exception to the ``locate'' requirement in Rule 
203(b)(2)(ii) provides that if the seller has not delivered the 
security that it is deemed to own pursuant to Rule 200 of Regulation 
SHO within 35 days after the trade date, the broker-dealer that 
effected the sale must borrow securities or close out the short 
position by purchasing securities of like kind and quantity. See 17 
CFR 242.203(b)(2)(ii). As discussed above, certain sell orders of 
Vault Securities may qualify for the exception from the ``locate'' 
requirement under Rule 203(b)(2)(ii). See supra notes 12 to 14 and 
accompanying text.
    \18\ We remind broker-dealers that, as a general matter, the 
``short exempt'' marking provided by Rule 200(g)(2) is used to 
represent a short sale order that qualifies for an exception to the 
short sale price test requirement in Rule 201(d) or that meets the 
terms of the broker-dealer provision in Rule 201(c). The ``short 
exempt'' marking may not be used to represent that an exception to 
the ``locate'' requirement applies to the short sale order, unless 
the order can be marked ``short exempt'' pursuant to Rule 200(g)(2). 
See Rule 201 Adopting Release, 75 FR at 11266 n.472 (``To the extent 
that an exception to Regulation SHO's `locate' requirement applies 
to a short sale order, such order must be marked `short' in 
accordance with Rule 200(g) of Regulation SHO unless the order can 
be marked `short exempt' pursuant to Rule 200(g)(2) of Regulation 
SHO.'').
---------------------------------------------------------------------------

    (a) The broker-dealer determines, prior to accepting such short 
sale order from another person, or effecting such short sale for its 
own account, that the sale is a sale of a Vault Security \19\ that the 
seller is deemed to own pursuant to Rule 200 of Regulation SHO; \20\ 
and
---------------------------------------------------------------------------

    \19\ A Vault Security sale would include situations where the 
security to be sold, a security convertible into or exchangeable for 
it, or a right or warrant to subscribe to it, is represented by a 
physical certificate that was held in the Vault at the time 
Hurricane Sandy made landfall. Such determination could be based, 
for example, on records indicating that the sale involves a physical 
certificate custodied at DTCC and that the physical certificate was 
submitted to DTCC for custody on or before October 26, 2012. See 
supra note 3.
    \20\ 17 CFR 242.200.

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

[[Page 74893]]

    (b) The broker-dealer documents the determination made pursuant to 
condition (a) above.

B. Close-Out Requirements Under Rule 204 of Regulation SHO

    Rule 204(a) of Regulation SHO \21\ generally requires that 
participants of a registered clearing agency (``Participants'') close 
out fail to deliver positions at a registered clearing agency \22\ in 
any equity security for a sale transaction in that equity security by 
no later than the beginning of trading on the next settlement day after 
a fail to deliver resulting from a short sale (generally T+4), and no 
later than the beginning of trading on the third settlement day after a 
fail to deliver resulting from a long sale or a sale resulting from 
bona fide market making activities at the time of the sale (generally 
T+6). A close out is effected by purchasing or borrowing shares of like 
kind and quantity.
---------------------------------------------------------------------------

    \21\ 17 CFR 242.204(a).
    \22\ The term ``registered clearing agency'' means a clearing 
agency, as defined in Section 3(a)(23)(A) of the Exchange Act, that 
is registered as such pursuant to Section 17A of the Exchange Act. 
See 15 U.S.C. 78c(a)(23)(A); 15 U.S.C. 78q-1. The majority of equity 
trades in the United States are cleared and settled through systems 
administered by clearing agencies registered with the Commission. 
The National Securities Clearing Corporation (``NSCC'') clears and 
settles the majority of equity securities trades conducted on the 
exchanges and in the over-the-counter market. NSCC clears and 
settles trades through the Continuous Net Settlement (``CNS'') 
system, which nets the securities delivery and payment obligations 
of all of its members. See Exchange Act Release No. 60388 (July 27, 
2009), 74 FR 38266, 38268 n.35 (July 31, 2009) (``Rule 204 Adopting 
Release'').
---------------------------------------------------------------------------

    Rule 204(a)(2) provides an extended close-out timeframe (T+35) for 
fail to deliver positions at a registered clearing agency in any equity 
security resulting from a sale of a security that a person is deemed to 
own,\23\ similar to the exceptions to the ``locate'' requirement and 
short sale price test requirement discussed above.\24\ Thus, fails to 
deliver resulting from certain sales of Vault Securities would 
currently be eligible for the extended close-out timeframe provided by 
Rule 204(a)(2).\25\
---------------------------------------------------------------------------

    \23\ See 17 CFR 242.204(a)(2); see also Rule 204 Adopting 
Release, 74 FR at 38277 n.141. Under Rule 204(a)(2), a Participant 
that has a fail to deliver position resulting from a sale of a 
security that a person is deemed to own pursuant to Rule 200 of 
Regulation SHO and that such person intends to deliver as soon as 
all restrictions on delivery have been removed must, by no later 
than the beginning of regular trading hours on the thirty-fifth 
consecutive calendar day following the trade date for the 
transaction, immediately close out the fail to deliver position by 
purchasing or borrowing securities of like kind and quantity. See 17 
CFR 242.204(a)(2).
    \24\ See supra notes 12 to 14 and accompanying text.
    \25\ See Rule 204 Adopting Release, 74 FR at 38277-38278.
---------------------------------------------------------------------------

    Pursuant to Rule 204(b) of Regulation SHO,\26\ a Participant that 
has not closed out a fail to deliver position in an equity security in 
accordance with Rule 204(a), and any broker-dealer from which the 
Participant receives trades for clearance and settlement, may not 
accept a short sale order in the equity security from another person or 
effect a short sale in the equity security for its own account, without 
first borrowing the security or entering into a bona fide arrangement 
to borrow the security, until the Participant closes out the fail to 
deliver position by purchasing securities of like kind and quantity and 
that purchase has cleared and settled at a registered clearing agency 
(the ``Penalty Box'').
---------------------------------------------------------------------------

    \26\ 17 CFR 242.204(b).
---------------------------------------------------------------------------

    SIFMA has stated that there may be situations where, in connection 
with the inaccessibility of the physical certificates that were located 
in the Vault following flooding from Hurricane Sandy, Vault Security 
sales may result in a CNS fail to deliver, such that Participants would 
be required to close out the fail to deliver position pursuant to Rule 
204(a) \27\ and, if they did not, would be subject to the Penalty Box.
---------------------------------------------------------------------------

    \27\ 17 CFR 242.204(a).
---------------------------------------------------------------------------

    Rule 204 is intended to help reduce fails to deliver and address 
potentially abusive ``naked'' short selling.\28\ In providing an 
extended close-out timeframe for sales of deemed to own securities, the 
Commission stated that additional time is warranted for these sales and 
such additional time would not undermine the goal of reducing fails to 
deliver because ``these are sales of owned securities that cannot be 
delivered by settlement date due solely to processing delays outside 
the seller's or broker-dealer's control. Moreover, delivery will be 
made on such sales as soon as all restrictions on delivery have been 
removed.'' \29\ We believe that, due to the inaccessibility of physical 
certificates that were held in the Vault at the time Hurricane Sandy 
made landfall, sales of Vault Securities raise similar policy 
considerations at this time. We do not believe that the fails to 
deliver that may occur as a result of Vault Security sales, due to the 
unusual and exigent circumstances of Hurricane Sandy, raise the 
concerns that Rule 204 was designed to address. Thus, we believe that 
the relief from the close-out requirement of Regulation SHO provided by 
this Exemptive Order is appropriate in the public interest and 
consistent with the protection of investors.
---------------------------------------------------------------------------

    \28\ See Rule 204 Adopting Release, 74 FR at 38267-38269.
    \29\ Id.
---------------------------------------------------------------------------

    Accordingly, it is further ordered, pursuant to Section 36 of the 
Exchange Act,\30\ that a Participant is exempt from the close-out 
requirement of Rule 204(a) \31\ and the Penalty Box of Rule 204(b) \32\ 
of Regulation SHO with respect to a fail to deliver position resulting 
from the sale of a Vault Security,\33\ subject to the following 
conditions:
---------------------------------------------------------------------------

    \30\ See supra note 16.
    \31\ 17 CFR 242.204(a).
    \32\ 17 CFR 242.204(b).
    \33\ Rule 203(b)(3) of Regulation SHO provides that if a 
Participant has a fail to deliver position at a registered clearing 
agency in a threshold security, as defined by Rule 203(c)(6), for 
thirteen consecutive settlement days, the Participant shall 
immediately thereafter close out the fail to deliver position by 
purchasing securities of like kind and quantity. If the sale of a 
Vault Security resulted in a fail to deliver position in a threshold 
security and that fail to deliver position persisted for thirteen 
consecutive settlement days because the close-out date applicable 
under this Exemptive Order had not yet arrived, Rule 203(b)(3) would 
nonetheless require the Participant to close out the fail to deliver 
position. Accordingly, Participants are exempt from the close-out 
requirements of Rule 203(b)(3) with respect to fail to deliver 
positions in threshold securities resulting from Vault Security 
sales, provided that the Participants close out the fail to deliver 
positions in compliance with this Exemptive Order. See 17 CFR 
242.203(b)(3).
---------------------------------------------------------------------------

    (a) The Participant must determine and document that the fail to 
deliver resulted from a sale of a Vault Security \34\ that a person is 
deemed to own pursuant to Rule 200 of Regulation SHO; \35\
---------------------------------------------------------------------------

    \34\ A Vault Security sale would include situations where the 
security sold, a security convertible into or exchangeable for it, 
or a right or warrant to subscribe to it, is represented by a 
physical certificate that was held in the Vault at the time 
Hurricane Sandy made landfall. Such determination could be based, 
for example, on records indicating that the sale involves a physical 
certificate custodied at DTCC and that the physical certificate was 
submitted to DTCC for custody on or before October 26, 2012. See 
supra note 3.
    \35\ 17 CFR 242.200.
---------------------------------------------------------------------------

    (b) The Participant must check DTCC systems on a daily basis to 
determine when a Vault Security, the sale of which resulted in a fail 
to deliver position, is available for settlement; \36\
---------------------------------------------------------------------------

    \36\ We understand that DTCC systems (including the Participant 
Browser System and the Participant Terminal System) enable 
Participants to verify their positions in Vault Securities and issue 
withdrawal instructions. We understand that these systems permit 
Participants, in conjunction with the Participant's own books and 
records, to track when Vault Securities have been debited 
(withdrawn) and sent to the transfer agent and when the Vault 
Securities are available for settlement after they have been 
returned to DTCC and are available for Participant pickup, are 
mailed directly to the customer, or are set up as a Direct 
Registration System account, and that Participants check these 
systems for completed status of physical certificate processing on a 
daily basis.
---------------------------------------------------------------------------

    (c) The Participant must deliver the Vault Security as soon as 
possible, and

[[Page 74894]]

in any event must deliver the Vault Security or close out the fail to 
deliver position resulting from the Vault Security sale by purchasing 
or borrowing securities of like kind and quantity by no later than the 
beginning of regular trading hours on the fourth settlement day 
following the date on which the Participant determines, in accordance 
with condition (b) above, that the Vault Security, the sale of which 
resulted in the fail to deliver position, is available for settlement; 
\37\ and
---------------------------------------------------------------------------

    \37\ For example, a Participant submitted a sale on October 16, 
2012, for clearance and settlement with an original expected 
settlement date of October 19, 2012. The security sold was a 
restricted Vault Security under Rule 144 whose physical certificate 
was located in the Vault. The Participant determines, as a result of 
the daily check of DTCC systems for status of the Vault Securities, 
that the Vault Security is available for settlement on December 12, 
2012. Normally Rule 204(a)(2) would apply and the Participant would 
be required to close out the resulting fail to deliver position 
thirty-five calendar days after trade date, on November 20, 2012. 
Because the Vault Security was not available due to Hurricane Sandy 
on November 20th, the Participant would be able to avail itself of 
the adjusted close-out timeframe provided in condition (c) above. In 
this limited instance, pursuant to this Exemptive Order, the 
Participant would be required to deliver the Vault Security as soon 
as possible, and in any event must deliver the Vault Security or 
close out the fail to deliver position by no later than the 
beginning of regular trading hours on December 18, 2012.
---------------------------------------------------------------------------

    (d) The Participant's books and records must reflect that it made 
delivery of the Vault Security or closed out the fail to deliver 
position resulting from the Vault Security sale within the applicable 
time period, consistent with this Exemptive Order.

III. Modification, Revocation, and Expiration of Exemptions

    The exemptions granted herein are subject to modification or 
revocation if at any time the Commission determines that such action is 
necessary or appropriate in furtherance of the purposes of the Exchange 
Act, and, absent further action by the Commission, will expire on 
February 1, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\38\
---------------------------------------------------------------------------

    \38\ See 17 CFR 200.30-3(a)(11).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-30427 Filed 12-17-12; 8:45 am]
BILLING CODE 8011-01-P


