Federal Register / Vol. 83, No. 240 / Friday, December 14, 2018 / Notices 64415 

8See supra note 3. 

9The Commission notes that on November 30, 

2018, the Exchange has filed a separate proposed 

rule change to extend the pilot period, which is 

currently set to expire on December 31, 2018, until 

June 30, 2019. See SR–NYSE–2018–59. 

10 15 U.S.C. 78s(b)(2). 

11 17 CFR 200.30–3(a)(57). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3 15 U.S.C. 78s(b)(3)(A). 

4 17 CFR 240.19b–4(f)(4). 

5Available at http://www.dtcc.com/legal/rulesand-procedures. Capitalized terms used herein and 

not otherwise defined shall have the meaning 

assigned to such terms in the Rules. 

6Earlier this year, FICC implemented changes to 

the fee structure of GSD in connection with this 

initiative. See Securities Exchange Act Release No. 

83401 (June 8, 2018), 83 FR 27812 (June 14, 2018) 

(SR–FICC–2018–003). FICC’s affiliates, The 

Depository Trust Company and National Securities 

Clearing Corporation, are also proposing changes to 

their respective fees. 

7Supra note 5. 

8See Securities Exchange Act Release No. 53061 

(January 5, 2006), 71 FR 2078 (January 12, 2006) 

(SR–FICC–2005–20). 

9See Broker Schedule and Dealer Schedule, 

supra note 5. 

10Where Clearing Members previously submitted 

trades to FICC either once or multiple times during 

the day in batches (referred to as ‘‘batch 

submission’’), interactive messaging through RTTM 

Web involves the submission of trades to FICC on 

a real-time basis and allows Clearing Members to, 

for example, receive trade status messages and 

cancel or modify trades. 

reasons for such determination. The 

proposed rule change was published for 

notice and comment in the Federal 

Register on June 21, 2018.8 December 

18, 2018 is 180 days from that date, and 

February 16, 2019 is 240 days from that 

date. The Commission finds it 

appropriate to designate a longer period 

within which to issue an order 

approving or disapproving the proposed 

rule change so that it has sufficient time 

to consider the proposed rule change.9

Accordingly, the Commission, 

pursuant to Section 19(b)(2) of the 

Act,10 designates February 16, 2019 as 

the date by which the Commission 

should either approve or disapprove the 

proposed rule change (File No. SR– 

NYSE–2018–28). 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.11

Eduardo A. Aleman, 

Deputy Secretary. 

[FR Doc. 2018–27076 Filed 12–13–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–84769; File No. SR–FICC– 

2018–012] 

Self-Regulatory Organizations; Fixed 

Income Clearing Corporation; Notice of 

Filing and Immediate Effectiveness of 

a Proposed Rule Change To Remove 

Certain Fees From the MortgageBacked Securities Division Clearing 

Rules and Electronic Pool Notification 

Rules 

December 10, 2018. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’) 1 and Rule 19b–4 thereunder,2

notice is hereby given that on November 

26, 2018, 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 

by the clearing agency. FICC filed the 

proposed rule change pursuant to 

Section 19(b)(3)(A) of the Act 3 and Rule 

19b–4(f)(2) thereunder.4 The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Clearing Agency’s Statement of the 

Terms of Substance of the Proposed 

Rule Change 

The proposed rule change consists of 

modifications to the FICC’s MortgageBacked Securities Division (‘‘MBSD’’) 

Clearing Rules (‘‘Clearing Rules’’) and 

the MBSD electronic pool notification 

(‘‘EPN’’) Rules (‘‘EPN Rules,’’ and 

together with the Clearing Rules, 

‘‘Rules’’) to remove certain fees, as 

described below.5

II. Clearing Agency’s Statement of the 

Purpose of, and Statutory Basis for, the 

Proposed Rule Change 

In its filing with the Commission, the 

clearing agency 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. The 

clearing agency has prepared 

summaries, set forth in sections A, B, 

and C below, of the most significant 

aspects of such statements. 

(A) Clearing Agency’s Statement of the 

Purpose of, and Statutory Basis for, the 

Proposed Rule Change 

1. Purpose 

FICC recently completed a strategic 

review of its revenue and pricing 

strategy. The goal of the review was to 

enhance pricing for the Clearing 

Members and EPN Users (collectively 

referred to herein as ‘‘participants’’) of 

MBSD and participants of FICC’s 

Government Securities Division 

(‘‘GSD’’).6 This effort was intended to 

align fees for services with the cost of 

providing those services, reduce the 

complexity of fee structures, and 

increase the overall transparency of the 

fees charged for services. 

As a result of this review, FICC is 

proposing to revise the Rules to remove 

the following fees: (1) MBSD’s 

Surcharge for Submission Method 

(‘‘Surcharge’’), which is a percent 

surcharge on post discount trade 

recording fees as recorded on a Clearing 

Member’s monthly bill that is charged to 

Clearing Members that submit trade data 

either on a single batch or multi-batch 

method; (2) MBSD’s account 

maintenance fee ($50 per month for 

each trade assignment account); and (3) 

fees for late payments of EPN bills. 

As described further below, FICC has 

determined that the Surcharge and the 

fees for late payment of EPN bills are no 

longer necessary to encourage 

alternatives to batch processing or 

prompt payment of bills, respectively. 

As also described below, FICC is 

proposing to remove MBSD’s account 

maintenance fee for trade assignment 

accounts does not offer trade assignment 

accounts. 

Each of these proposed changes is 

described below. 

(i) Surcharge for Submission Method 

FICC is proposing to remove the 

Surcharge from the Clearing Rules’ 

Schedule of Charges for the Broker 

Account Group (‘‘Broker Schedule’’) 

and the Schedule of Charges for the 

Dealer Account Group (‘‘Dealer 

Schedule’’).7

In 2006, FICC implemented the 

Surcharge to be imposed on Clearing 

Members that are either single batch 

submitters or multi-batch submitters of 

transaction data.8 The surcharge is (1) 

fifty percent (with a minimum of $500) 

on the post discount trade recording 

fees, as recorded on the monthly bill of 

single batch submitters, and (2) twenty 

percent (with a minimum of $500) on 

the post discount trade recording fees, 

as recorded on the monthly bill of 

multi-batch submitters.9 The Surcharge 

was introduced to encourage Clearing 

Members to submit trades using the 

interactive messaging submission 

method through FICC’s Real-Time Trade 

Matching (‘‘RTTM’’) Web service, 

encourage submission of transaction 

data on a timely basis, and cover the 

costs of batch processing.10 The 

rationale for encouraging the use of 

interactive messaging through RTTM 

Web included mitigating (1) the risk 

associated with the longer time to 

complete trade comparison and 

confirmation in batch processing; and 


amozie on DSK3GDR082PROD with NOTICES1
64416 Federal Register / Vol. 83, No. 240 / Friday, December 14, 2018 / Notices 

11See supra note 8. 

12 Id. at FN 3. 

13Per email instruction from FICC’s legal staff on 

December 7, 2018, Commission staff revised this 

subsection to correct a typographical error, 

changing the number of this subsection from ‘‘(i)’’ 

to ‘‘(ii).’’ 

14Per email instruction from FICC’s legal staff on 

December 7, 2018, Commission staff revised this 

subsection to correct a typographical error, 

changing the number of this subsection from ‘‘(ii)’’ 

to ‘‘(iii).’’ 

15See Securities Exchange Act Release No. 39849 

(April 10, 1998), 63 FR 19546 (April 20, 1998) (SR– 

MBSCC–97–09). 

16See Securities Exchange Act Release No. 50965 

(January 5, 2005), 70 FR 2201 (January 12, 2005) 

(SR–FICC–2004–06). 

17FICC has not charged these fees to any EPN 

Users for at least four years as of the date of this 

filing. 

18 15 U.S.C. 78q–1(b)(3)(D). 

19 Id. 

(2) the operational risk introduced when 

the parties to a trade submit trade data 

through different submission 

methods.11

Since the introduction of the 

Surcharge, the use of the interactive 

trade submission method through 

RTTM Web has expanded. As of May 

2005, thirty-five percent of Clearing 

Members used interactive messaging 

through RTTM Web, representing 

approximately eighty percent of total 

par and seventy-four percent of total 

sides of transactions processed.12 As of 

June 2018, all Clearing Members were 

using interactive messaging through 

RTTM Web for transaction data 

submission and, while some Clearing 

Members submit certain files by batch 

method from time to time, 

approximately ninety-seven percent of 

MBSD’s total par and total sides of 

transactions processed were submitted 

using interactive messaging through 

RTTM Web. Given that all Clearing 

Members have now adopted the 

technology necessary to submit 

transaction data using the interactive 

messaging submission method through 

RTTM Web, FICC does not anticipate 

that Clearing Members will revert to 

using solely a batch submission method. 

Therefore, FICC believes the 

Surcharge is no longer necessary and is 

proposing to remove it from the Clearing 

Rules. In order to implement this 

proposed change, FICC would remove 

the Surcharge from (1) MBSD Clearing 

Rules, Brokers Schedule, ‘‘I. Fees,’’ and 

(2) MBSD Clearing Rules, Dealers 

Schedule, ‘‘I. Fees.’’ 

(ii) Account Maintenance Fee for Trade 

Assignment Accounts 13

FICC is proposing to remove the 

account maintenance fee for ‘‘Trade 

Assignment Accounts’’ from the Dealer 

Schedule. 

While the Dealer Schedule includes 

an account maintenance fee for trade 

assignment accounts, FICC does not 

offer trade assignment accounts, and has 

not been able to identify any records 

relating to the establishment, 

maintenance, or termination of this 

service. Therefore, the proposed change 

to remove the related account 

maintenance fee would merely update 

the Dealer Schedule to reflect current 

services available to Clearing Members. 

In order to implement this proposed 

change, FICC would remove the ‘‘Trade 

Assignment Account’’ fee from MBSD 

Clearing Rules, Dealer Schedule, ‘‘I. 

Fees, Account Maintenance.’’ 

(iii) Fees for Late Payment of EPN 

Bills 14

FICC is proposing to remove the 

‘‘Additional Fees for Late Payment of 

EPN Bills’’ from the EPN Schedule of 

Fees in the EPN Rules. 

In 1998, FICC implemented a 

schedule of fees for late payment of 

financial obligations to FICC in order to 

motivate participants to pay their 

obligations to FICC before the applicable 

deadlines and compensate MBSD for the 

costs associated with monitoring such 

late payments.15 When these fees were 

implemented, they were added to the 

Broker Schedule and Dealer Schedule in 

the Clearing Rules, and to the EPN 

Schedule of Charges in the EPN Rules. 

Within the EPN Rules, these fees range 

from $50 to $500, and are scaled based 

on whether the late payment is a first, 

second, third, or fourth occurrence. 

In 2004, FICC revised the Broker 

Schedule and the Dealer Schedule of the 

Clearing Rules to characterize these fees 

as fines.16 While late payment of 

financial obligations under the Clearing 

Rules could represent late payment of 

margin charges, which create risk to 

FICC, late payments of EPN bills do not 

present FICC with the same risk. 

Therefore, similar changes were not 

made to the EPN Rules in 2004 and 

these fees remained unchanged. In 

connection with its recent review of 

fees, FICC has determined that late 

payment of EPN bills are rarely 

applied.17 In general, EPN users 

promptly pay their EPN bills. FICC has 

determined that it is no longer necessary 

to retain this fee because, as stated 

above, such late payments do not 

present FICC with the same risk as late 

payment of bills under the Clearing 

Rules. Therefore, FICC is proposing to 

remove this fee from the EPN Rules. 

In order to implement this proposed 

change, FICC would remove the 

‘‘ADDITIONAL FEES FOR LATE 

PAYMENT OF EPN BILLS’’ from the 

EPN Rules, EPN Schedule of Charges. 

Member Outreach 

Beginning in June 2018, FICC has 

conducted ongoing outreach to 

participants in order to provide them 

with notice of the proposed changes. As 

of the date of this filing, no written 

comments relating to the proposed 

changes have been received in response 

to this outreach. The Commission will 

be notified of any written comments 

received. 

Implementation Timeframe 

FICC would implement this proposal 

on January 1, 2019. As proposed, a 

legend would be added to the Broker 

Schedule and the Dealer Schedule in 

the Clearing Rules and to the EPN 

Schedule of Charges in the EPN Rules, 

as appropriate, stating there are changes 

that became effective upon filing with 

the Commission but have not yet been 

implemented. The proposed legend also 

would include the date on which such 

changes would be implemented and the 

file number of this proposal, and would 

state that, once this proposal is 

implemented, the legend would 

automatically be removed from each of 

the Broker Schedule, the Dealer 

Schedule, and the EPN Schedule of 

Charges. 

2. Statutory Basis 

FICC believes the proposed changes 

are consistent with the Section 

17A(b)(3)(D) of the Act, which requires, 

in part, that the Rules provide for the 

equitable allocation of reasonable dues, 

fees, and other charges among 

participants.18 The proposed change to 

remove the Surcharge from the Broker 

Schedule and the Dealer Schedule 

would provide for the equitable 

allocation of fees among participants 

because the proposal would apply to all 

participants, such that no Clearing 

Members would be subject to this fee 

following the implementation of the 

proposed change. The proposed change 

to remove the fee for late EPN bills from 

the EPN Schedule of Fees would also 

provide for the equitable allocation of 

fees among participants because this 

proposal would apply to all 

participants, such that no EPN Users 

would be subject to this fee following 

the implementation of the proposed 

change. Further, FICC believes these 

two proposed changes are reasonable 

because they would eliminate two fees 

that are no longer necessary, for the 

reasons described above. Therefore, 

these proposed changes are consistent 

with Section 17A(b)(3)(D).19


amozie on DSK3GDR082PROD with NOTICES1
Federal Register / Vol. 83, No. 240 / Friday, December 14, 2018 / Notices 64417 

20 Id. 

21 17 CFR 240.17Ad–22(e)(21). 

22 Id. 

23 15 U.S.C. 78s(b)(3)(A). 

24 17 CFR 240.19b–4(f). 

25 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

The proposed change to remove the 

account maintenance fee for trade 

assignment accounts from the Dealer 

Schedule would provide for the 

equitable allocation of fees among 

participants because removing this fee, 

which does not relate to a service 

provided by FICC, would improve the 

accuracy of the Dealer Schedule for all 

Clearing Members. FICC believes this 

proposed change is reasonable because, 

following implementation of the 

proposed change, the Dealer Schedule 

would only include fees that relate to 

existing services provided by FICC. 

Therefore, this proposed change is also 

consistent with Section 17A(b)(3)(D).20

Rule 17Ad–22(e)(21) under the Act 

requires, in part, that FICC establish, 

implement, maintain and enforce 

written policies and procedures 

reasonably designed to be efficient and 

effective in meeting the requirements of 

its participants and the markets it 

serves.21 The proposed change to 

eliminate the Surcharge would 

eliminate a fee that is no longer 

necessary to discourage batch 

submission of trades, for the reasons 

described above. The proposed change 

to eliminate the late payment for EPN 

bills would also eliminate a fee that is 

no longer necessary to discourage late 

payment of such bills, for the reasons 

described above. Finally, the proposed 

change to remove the account 

maintenance fee for trade assignment 

accounts from the Dealer Schedule 

would remove a fee from the Dealer 

Schedule that does not relate to a 

service offered by FICC. Each of these 

proposed changes would simplify and 

update the Rules, thereby improving the 

clarity of the Rules and enhancing their 

transparency to participants. By 

removing fees that are no longer 

necessary or do not relate to FICC’s 

services, and improving the clarity of 

the Rules, the proposed changes would 

allow FICC to more efficiently and 

effectively meet the requirements of its 

participants. Therefore, FICC believes 

this proposed rule change is also 

consistent with Rule 17Ad–22(e)(21).22

(B) Clearing Agency’s Statement on 

Burden on Competition 

FICC does not believe that the 

proposed rule changes would have any 

impact, or impose any burden, on 

competition. The proposed changes 

would eliminate fees that are no longer 

necessary, for the reasons described 

above, and would remove a fee from the 

Clearing Rules that does not relate to a 

service provided by FICC. Each of the 

proposed changes would apply equally 

to all participants such that no 

participants would be subject to the 

eliminated fees following the 

implementation of the proposed 

changes, and the Clearing Rules would 

no longer identify a fee that does not 

relate to an FICC service. Therefore, 

FICC does not believe these proposed 

changes would not have any impact on 

competition. 

(C) Clearing Agency’s Statement on 

Comments on the Proposed Rule 

Change Received From Members, 

Participants, or Others 

FICC has not solicited or received any 

written comments relating to this 

proposal. FICC will notify the 

Commission of any written comments 

that it receives. 

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) 

of the Act 23 and paragraph (f) of Rule 

19b–4 thereunder.24 At any time within 

60 days of the filing of the proposed rule 

change, the Commission summarily may 

temporarily suspend 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. 

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 email to rule-comments@

sec.gov. Please include File Number SR– 

FICC–2018–012 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549. 

All submissions should refer to File 

Number SR–FICC–2018–012. This file 

number should be included on the 

subject line if email 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 website (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 website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549 on official 

business days between the hours of 

10:00 a.m. and 3:00 p.m. Copies of the 

filing also will be available for 

inspection and copying at the principal 

office of FICC and on DTCC’s website 

(http://dtcc.com/legal/sec-rulefilings.aspx). All comments received 

will be posted without change. Persons 

submitting comments are cautioned that 

we do not redact or edit personal 

identifying information from comment 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File Number SR–FICC– 

2018–012 and should be submitted on 

or before January 4, 2019. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.25

Eduardo A. Aleman, 

Deputy Secretary. 

[FR Doc. 2018–27079 Filed 12–13–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–84765; File No. SR–Phlx– 

2018–79] 

Self-Regulatory Organizations; Nasdaq 

PHLX LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Update the Trading 

Floor Qualification Examination 

December 10, 2018. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’) 1, and Rule 19b–4 thereunder,2

notice is hereby given that on November 

30, 2018, Nasdaq PHLX LLC (‘‘Phlx’’ or 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission (‘‘SEC’’ or 


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