[Federal Register: November 27, 2007 (Volume 72, Number 227)]
[Notices]
[Page 66213-66214]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr27no07-126]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-56820; File No. SR-FICC-2007-09]
Self-Regulatory Organizations; Fixed Income Clearing Corporation;
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change
Relating to the Correspondent Clearing Service
November 20, 2007.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on August 17, 2007, 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. FICC filed the proposed rule change pursuant to
section 19(b)(3)(A)(i) of the Act \2\ and Rule 19b-4(f)(1) \3\
thereunder so that the proposal was effective upon filing with the
Commission. 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).
\2\ 15 U.S.C. 78s(b)(3)(A)(i).
\3\ 17 CFR 240.19b-4(f)(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 enhances FICC's Government Securities
Division's (``GSD'') correspondent clearing service for netting members
submitting transaction data (``Submitting Members'') on behalf of non-
member firms (``Executing Firms'').
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.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
Currently, GSD's rules provide that a Submitting Member must submit
transaction data to GSD when it acts on behalf of an Executing Firm for
comparison-only processing or for both comparison and netting
processing. The election made by the Submitting Member to submit
Executing Firm transactions for comparison or comparison and netting is
done on a firm level for each Executing Firm on whose behalf the
Submitting Member acts. For example, when Submitting Member A elects to
submit transactions for netting processing on behalf of Executing Firm
B, all trades submitted on behalf of Executing Firm B will proceed to
netting, and the Submitting Member will incur all resulting settlement
and other obligations that arise under GSD's rules with respect to
trade data submitted on behalf of Executing Firm B. Conversely, when
Submitting Member A elects to submit transactions for Executing Firm C
for comparison-only processing, all transactions submitted on behalf of
Executing Firm C will only enter the GSD's comparison system with no
settlement obligations arising for Submitting Member A with respect to
these transactions.
Under the rule change, FICC will allow a Submitting Member to
select for each Executing Firm for which it submits trades those trade
types (i.e., buy-sell or repurchase agreements) that will be
comparison-only transactions and those trade types that will be netting
transactions. For example, Submitting Member A may select to submit
Executing Firm B's repurchase agreement transactions for comparison-
only processing and Executing Firm B's buy-sell transactions for
netting. Members will not be permitted to submit trades for either
comparison-only or netting processing on a trade-by-
[[Page 66214]]
trade basis. Elections made with respect to how transaction types are
processed through FICC must be effected through the applicable FICC
Executing Firm Agreement. As noted above, settlement obligations will
arise for Submitting Member A for each transaction that proceeds to
netting.
Under the proposed changes, Submitting Members will be required to
notify GSD with respect to each Executing Firm for which they submit
data which transactions types that will be processed as comparison-only
transactions and which will proceed to netting. Submitting members must
notify GSD three business days prior to the commencement of the initial
data submission on behalf of an Executing Firm. Any modifications made
to an election will require three business days notice to GSD.
FICC will announce to its members by means of an Important Notice
the effective date of this enhancement. GSD anticipates implementation
to be during the fourth quarter of this year.
FICC believes that the proposed rule change is consistent with the
requirements of section 17A of the Act \4\ and the rules thereunder.
FICC states that this rule change enhances existing capabilities
extended to netting members acting as Submitting Members under GSD's
rules. FICC further states that the proposed changes will not affect
FICC's ability to safeguard the funds and securities in FICC's control
or for which it is responsible.
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\4\ 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 pursuant to section
19(b)(3)(A)(iii) \5\ of the Act and Rule 19b-4(f)(4) \6\ thereunder
because it effects a change in an existing service of FICC that does
not adversely affect the safeguarding of securities or funds in FICC's
control or for which FICC is responsible and does not significantly
affect FICC's or its participants' respective rights or obligations. At
any time within 60 days of the filing of the proposed rule change, the
Commission could have summarily abrogated such rule change if it
appeared to the Commission that such action was 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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\5\ 15 U.S.C. 78s(b)(3)(A)(iii).
\6\ 17 CFR 240.19b-4(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. 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 No. SR-FICC-2007-09 on the subject line.
Paper Comments
Send paper comments in triplicate to Nancy M. Morris,
Secretary, Securities and Exchange Commission, Station Place, 100 F
Street, NE., Washington, DC 20549-1090.
All submissions should refer to File No. FICC-2007-09. 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 Room, 450 Fifth Street,
NW., Washington, DC 20549, on official business days between the hours
of 10a.m. and 3 p.m. Copies of such filing also will be available for
inspection and copying at FICC's principal office and on FICC's Web
site at http://ficc.com/gov/gov.docs.jsp?NS-query=#rf. 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
submission should refer to File No. SR-FICC-2007-09 and should be
submitted on or before December 18, 2007.
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\7\ 17 CFR 200.30-3(a)(12).
For the Commission by the Division of Trading and Markets
pursuant to delegated authority.\7\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-23021 Filed 11-26-07; 8:45 am]
BILLING CODE 8011-01-P