[Federal Register: April 1, 2003 (Volume 68, Number 62)]
[Notices]
[Page 15781-15782]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr01ap03-100]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-47569; File No. SR-FICC-2002-13]
Self-Regulatory Organizations; Fixed Income Clearing Corporation;
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change
Relating to FICC's Schedule of Money Tolerances
March 26, 2003.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on December 20, 2002, the
Fixed Income Clearing Corporation (``FICC'') filed with the Securities
and Exchange Commission (``Commission'') the proposed rule change as
described in Items I, II, and III below, which items have been prepared
primarily by FICC. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The proposed rule change amends the schedule of money tolerances
set forth in the rules of the Government Securities Division of FICC.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, FICC 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. FICC has prepared summaries, set forth in sections (A),
(B), and (C) below, of the most significant aspects of such
statements.\2\
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\2\ The Commission has modified parts of these statements.
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(A) Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
The rules of the Government Securities Division of FICC contain a
schedule of money tolerances (``Schedule'') that permits FICC, among
other things, to compare a buy-sell trade with a discrepancy in its
settlement amount of $1 per million in real time.\3\ FICC is proposing
to amend this tolerance to $2 per million in order to increase the
intraday comparison rate of valid trades.
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\3\ Money tolerances are calculated based on the par amount of
the securities. GSCC, FICC's predecessor, recently amended the real-
time money tolerance applicable to the statement amount of repo
transactions from $1 to $0.10. Securities Exchange act Release No.
46658 (October 11, 2002) 67 FR 64943 [SR-GSCC-2002-08]. In making
that rule filing, GSCC inadvertently eliminated the text that was
applicable to the real-time tolerance for the settlement money of
buy-sell transactions, which is the subject of this present rule
filing. This present rule filing therefore reinstates the necessary
language to cover the real time tolerance applicable to buy-sell
transactions and distinguishes it from the language applicable to
repo transactions.
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FICC has found that the current $1 tolerance on the settlement
amount of buy-sell transactions results in increased risk.
Specifically, FICC has found after conducting an analysis that many
valid trades remain uncompared during the day and thus do not receive
the benefit of FICC's guaranty. These trades eventually compare at end
of day, when the applicable tolerance is higher, but they are left
without the FICC guaranty during the day. FICC's analysis has shown
that increasing the real-time money tolerance to $2 per million would
cause more than 1,000 additional trades to compare earlier in the day.
FICC is thus proposing to amend the Schedule to provide for a $2 real-
time tolerance per million for buy-sell transactions.
FICC believes the proposed rule change is consistent with the Act
and the rules and regulations thereunder because it will permit valid
trades to compare earlier in the day and thus will eliminate risk and
will promote the prompt and accurate clearance and settlement of
securities.
(B) Self-Regulatory Organization's Statement on Burden on Competition.
FICC does not believe that the proposed rule change would have an
impact on or impose a burden on competition.
(C) Self-Regulatory Organization's Statement on Comments on the
Proposed Rule Change Received From Members, Participants, or Others
Written comments relating to the proposed rule change have not yet
been solicited nor received. FICC will notify the Commission of any
written comments received by FICC.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to section
19(b)(3)(A)(iii) of the Act \4\ and Rule 19b-4(f)(4) \5\ thereunder
because it
[[Page 15782]]
effects a change in an existing service of OCC that (i) does not
adversely affect the safeguarding of securities or funds in the custody
or control of OCC or for which it is responsible and (ii) does not
significantly affect the respective rights or obligations of OCC or
persons using the service. At any time within sixty days of the filing
of the proposed rule change, the Commission may summarily abrogate such
rule change if it appears to the Commission that such action is
necessary or appropriate in the public interest, for the protection of
investors, or otherwise in furtherance of the purposes of the Act.
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\4\ 15 U.S.C. 78s(b)(3)(A)(iii).
\5\ 17 CFR 240.19b-(f)(4).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Persons making written submissions
should file six copies thereof with the Secretary, Securities and
Exchange Commission, 450 Fifth Street NW., Washington, DC 20549-0609.
Comments may also be submitted electronically at the following e-mail
address: rule-comments@sec.gov. All comment letters should refer to
File No. SR-FICC-2002-13. This file number should be included on the
subject line if e-mail is used. To help us process and review comments
more efficiently, comments should be sent in hardcopy or by e-mail but
not by both methods. 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, 450 Fifth Street NW., Washington, DC 20549. Copies
of such filing will also be available for inspection and copying at the
principal office of FICC. All submissions should refer to the File No.
SR-FICC-2002-13 and should be submitted by April 22, 2003.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\6\
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\6\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-7758 Filed 3-31-03; 8:45 am]
BILLING CODE 8010-01-P