[Federal Register: October 28, 2005 (Volume 70, Number 208)]
[Notices]
[Page 62154-62155]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr28oc05-80]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-52655; File No. SR-FICC-2005-15]
Self-Regulatory Organizations; Fixed Income Clearing Corporation;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
Relating to Charges for Communications Fees To Continue Operating
Legacy Communication Networks
October 24, 2005.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on September 9, 2005, the
Fixed Income Clearing Corporation (``FICC'') filed with the Securities
and Exchange Commission (``Commission'') the proposed rule change
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 parties.
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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 would revise the fees charged to members
that fail to migrate their communications systems from legacy networks
to The Depository Trust & Clearing Corporation's (``DTCC's'') Securely
Managed and Reliable Technology (``SMART'') system \2\ or to the
Securities Industry Automation Corporation's (``SIAC's'') Secure
Financial Transaction Infrastructure (``SFTI'') networks.
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\2\ SMART is DTCC's centralized, end-to-end managed
communications infrastructure that provides connectivity support for
all post-trade clearance and settlement processing. Most of the
services offered by DTCC's subsidiaries, The Depository Trust
Company, the National Securities Clearing Corporation, and FICC are
accessible through SMART. SMART is interoperable with SFTI.
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II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, 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 these
statements.\3\
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\3\ The Commission has modified the text of the summaries
prepared by FICC.
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(A) Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
Beginning in 2003, FICC has periodically informed members of the
need to migrate their telecommunications connectivity from SIAC's
legacy based Broker and Access networks to DTCC's SMART system or
SIAC's SFTI.\4\ While several advantages exist in having all members
successfully migrate, FICC's main objective in insourcing these
services into its own data processing operations is to provide
consistent business continuity planning capabilities across all FICC
services. In the event of a large-scale regional disruption, any member
accessing FICC through a legacy network will not have the benefits
provided by the other communications vehicles which could create
exposure to these members and their counterparties.\5\
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\4\ DTCC Important Notices Z0008, Z0009, and
Z0010.
\5\ SMART is designed to withstand catastrophic disaster
scenarios and is set up to operate in DTCC's multiple remote sites
to ensure its operability in the event of disruption. Legacy network
connections are not automatically configured to ``fail over'' to
DTCC's remote processing sites and therefore do not provide members
using these networks with the resilience that would be needed in the
event of a large-scale regional disruption.
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While most FICC members have complied with stated migration
requirements, several members continue to access FICC through legacy
networks, which is imposing significant unnecessary costs on FICC for
continued support of these systems. In order to encourage these members
to migrate and in order to equitably allocate costs among its members,
FICC intends to allocate its costs for continued support of legacy
networks among the members using such systems on a pro rata basis. FICC
plans to soon issue an important notice to members specifying the date
such fees will become effective.\6\
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\6\ FICC expects that the migration deadline will be set for the
end of 2005.
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In order to avoid bearing these costs, members currently using
legacy systems are required to take the following actions: (i) As soon
as possible, ensure adequate communications connectivity through SMART
and/or SFTI, (ii) successfully complete testing through the newly-
established pathways, (iii) complete full conversion of all input/
output for applicable FICC applications directly to/from FICC through
SMART and/or SFTI, and (iv) cancel the legacy network connections.
The proposed change is consistent with Section 17A of the Act \7\
and the rules and regulations thereunder applicable to FICC because it
will enable FICC to equitably allocate costs among its members.
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\7\ 15 U.S.C. 78q-1.
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(B) Self-Regulatory Organization's Statement on Burden on Competition
FICC does not believe that the proposed rule change will have any
impact or impose any burden on competition.
(C) Self-Regulatory Organization's Statement on Comments on the
Proposed Rule Change Received from Members, Participants, or Others
Written comments relating to the proposed rule change have not yet
been solicited or 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 upon filing pursuant
to Section
[[Page 62155]]
19(b)(3)(A)(ii) of the Act \8\ and Rule 19b-4(f)(2) \9\ thereunder
because the proposed rule establishes or changes a due, fee, or other
charge. 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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\8\ 15 U.S.C. 78s(b)(3)(A)(ii).
\9\ 17 CFR 240.19b-4(f)(2).
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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. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml.
) or Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-FICC-2005-15 on the subject line.
Paper Comments
Send paper comments in triplicate to Jonathan G. Katz,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-9303.
All submissions should refer to File Number SR-FICC-2005-15. This
file number should be included on the subject line if e-mail is used.
To help the Commission process and review your comments more
efficiently, please use only one method. The Commission will post all
comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml
). Copies of the submission, all subsequent amendments,
all written statements with respect to the proposed rule change that
are filed with the Commission, and all written communications relating
to the proposed rule change between the Commission and any person,
other than those that may be withheld from the public in accordance
with the provisions of 5 U.S.C. 552, will be available for inspection
and copying in the Commission's Public Reference Section, 100 F Street,
NE., Washington, DC 20549. Copies of such filing also will be available
for inspection and copying at the principal office of FICC and on
FICC's Web site at http://www.ficc.com. All comments received will be
posted without change; the Commission does not edit personal
identifying information from submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-FICC-2005-15 and should be submitted on
or before November 18, 2005.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\10\
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\10\ 17 CFR 200.30-3(a)(12).
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Jonathan G. Katz,
Secretary.
[FR Doc. E5-5971 Filed 10-27-05; 8:45 am]
BILLING CODE 8010-01-P