Federal Register / Vol. 85, No. 236 / Tuesday, December 8, 2020 / Notices 79051 

17 15 U.S.C. 78s(b)(3)(A). 

18 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

4(f)(6)(iii) requires a self-regulatory organization to 

give the Commission written notice of its intent to 

file the proposed rule change, along with a brief 

description and text of the proposed rule change, 

at least five business days prior to the date of filing 

of the proposed rule change, or such shorter time 

as designated by the Commission. The Exchange 

has satisfied this requirement. 

19 17 CFR 240.19b–4(f)(6). 

20 17 CFR 240.19b–4(f)(6)(iii). 

21For purposes only of waiving the 30-day 

operative delay, the Commission also has 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

15 U.S.C. 78c(f). 

22 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b-4. 

3On November 19, 2020, FICC filed this proposed 

rule change as an advance notice (SR–FICC–2020– 

803) with the Commission pursuant to Section 

806(e)(1) of Title VIII of the Dodd-Frank Wall Street 

Reform and Consumer Protection Act entitled the 

Payment, Clearing, and Settlement Supervision Act 

Continued 

believes that its proposal enhances fair 

competition between markets by 

providing for additional listing venues 

for Funds and UITs that hold options to 

utilize the in-kind transfers proposed 

herein. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were solicited 

or received with respect to the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Because the foregoing proposed rule 

change does not: (i) Significantly affect 

the protection of investors or the public 

interest; (ii) impose any significant 

burden on competition; and (iii) become 

operative for 30 days from the date on 

which it was filed, or such shorter time 

as the Commission may designate, it has 

become effective pursuant to Section 

19(b)(3)(A) of the Act 17 and Rule 19b– 

4(f)(6) thereunder.18

A proposed rule change filed 

pursuant to Rule 19b–4(f)(6) under the 

Act 19 normally does not become 

operative for 30 days after the date of its 

filing. However, Rule 19b–4(f)(6)(iii) 20

permits the Commission to designate a 

shorter time if such action is consistent 

with the protection of investors and the 

public interest. The Exchange has 

requested that the Commission waive 

the 30-day operative delay so that the 

proposed rule change may become 

operative upon filing. The Exchange 

states that waiver of the operative delay 

is consistent with the protection of 

investors and the public interest 

because it will ensure fair competition 

among the options exchanges by 

allowing the Exchange implement 

without delay proposed Rule 6.78A–O, 

which is substantially identical to Cboe 

Options Rule 6.9 and Cboe BZX Rule 

21.12, except that the Exchange’s 

proposed Rule 6.78A–O(b) is more 

restrictive in that it requires OTP 

Holders to provide to the Exchange 

information related to the transfers. For 

this reason, and because the proposal 

does not raise any novel regulatory 

issues, the Commission believes that 

waiver of the 30-day operative delay is 

consistent with the protection of 

investors and the public interest. 

Accordingly, the Commission hereby 

waives the operative delay and 

designates the proposed rule change 

operative upon filing.21

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. If the 

Commission takes such action, the 

Commission shall institute proceedings 

to determine whether the proposed rule 

change should be approved or 

disapproved. 

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– 

NYSEArca–2020–102 on the subject 

line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–NYSEArca–2020–102. 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 the Exchange. 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–NYSEArca–2020–102 and 

should be submitted on or before 

December 29, 2020. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.22

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2020–26896 Filed 12–7–20; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–90551; File No. SR–FICC– 

2020–015) 

Self-Regulatory Organizations; Fixed 

Income Clearing Corporation; Notice of 

Filing of Proposed Rule Change To 

Include Same-Day Settling Trades in 

the Risk Management, Novation, 

Guarantee, and Settlement Services of 

the Government Securities Division’s 

Delivery-Versus-Payment Service, and 

Make Other Changes 

December 2, 2020. 

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 

19, 2020, 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.3 The 


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of 2010, 12 U.S.C. 5465(e)(1), and Rule 19b4(n)(1)(i) under the Act, 17 CFR 240.19b-4(n)(1)(i). 

A copy of the advance notice is available at http:// 

www.dtcc.com/legal/sec-rule-filings.aspx. 

4Capitalized terms not defined herein are defined 

in the Rules, available at http://www.dtcc.com/ 

legal/rules-and-procedures. 

5The initial timeframe would be after 3:01 p.m. 

If the FRB announces an extension of the Fedwire 

Securities Service, FICC would match the duration 

of the extension. All times herein are ET. 

6 In addition to the DVP Service, GSD also 

provides such services in its GCF Repo® Service 

and CCIT Service. The GCF Repo Service and the 

CCIT Service are not part of this proposal. The GCF 

Repo Service is primarily governed by Rule 20 and 

enables Netting Members to trade general collateral 

finance repurchase agreement transactions based on 

rate, term, and underlying product throughout the 

day with Repo Brokers on a blind basis. The CCIT 

Service is governed by Rule 3B and enables tri-party 

repurchase agreement transactions in GCF Repo 

Securities between Netting Members that 

participate in the GCF Repo Service and 

institutional cash lenders (other than investment 

companies registered under the Investment 

Company Act of 1940, as amended). Rule 20 and 

Rule 3B, supra note 4. 

7See Rule 19, Section 5, supra note 4. A sameday starting Repo Transaction consists of a Start Leg 

and End Leg where the initial Scheduled Settlement 

Date of the Start Leg is scheduled to settle on the 

Business Day on which it is submitted to GSD 

(typically referred to in the industry as a same-day 

settling start leg). 

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 

amendments to the FICC Government 

Securities Division (‘‘GSD’’) Rulebook 

(the ‘‘Rules’’) 4 in order to (i) include 

Same-Day Settling Trades (as defined 

below) in the risk management, 

Novation, guarantee, and settlement 

services of GSD’s delivery-versuspayment service (‘‘DVP Service’’), (ii) 

provide that FICC would attempt to 

settle, on a reasonable efforts basis, any 

Same-Day Settling Trades that are 

compared in the timeframe specified by 

FICC in notices made available to 

Members from time to time 5 to the 

extent described below, (iii) introduce 

an optional service that would allow 

GSD to systematically pair-off certain 

Members’ failed Securities Settlement 

Obligations between approximately 3:32 

p.m. and 4:00 p.m., (iv) change the time 

of intraday funds-only settlement 

(‘‘FOS’’) processing from 3:15 p.m. to 

4:30 p.m., and (v) make certain 

technical changes, as described in 

further detail below. 

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 

The proposed rule change would 

amend the Rules in order to (i) include 

Same-Day Settling Trades (as defined 

below) in the risk management, 

Novation, guarantee, and settlement 

services of GSD’s DVP Service, (ii) 

provide that FICC would attempt to 

settle, on a reasonable efforts basis, any 

Same-Day Settling Trades that are 

compared in the timeframe specified by 

FICC in notices made available to 

Members from time to time to the extent 

described below, (iii) introduce an 

optional service that would allow GSD 

to systematically pair-off certain 

Members’ failed Securities Settlement 

Obligations between approximately 3:32 

p.m. and 4:00 p.m., (iv) change the time 

of intraday FOS processing from 3:15 

p.m. to 4:30 p.m., and (v) make certain 

technical changes, as described in 

further detail below. 

(i) Proposed Change To Include SameDay Settling Trades in the Risk 

Management, Novation, Guarantee, and 

Settlement Services of GSD’s DVP 

Service. 

GSD provides comparison, risk 

management, Novation, netting, 

guarantee, and settlement of nettingeligible trades executed by its Netting 

Members and Sponsored Members in 

the U.S. government securities market. 

In GSD’s DVP Service, GSD provides 

these services for Repo Transactions.6

The DVP Service encompasses all nonGCF Repo activity (both repo and buysell activity). All delivery obligations 

are made against full payment. 

Currently, with respect to same-day 

starting Repo Transactions, GSD only 

risk manages, novates, nets, and settles 

the End Leg, except in instances where 

GSD assumes the fail on the Start Leg of 

a Brokered Repo Transaction.7 If a sameday starting Repo Transaction is a 

Brokered Repo Transaction and the Start 

Leg of such transaction fails to settle on 

its original Scheduled Settlement Date, 

FICC will assume responsibility for 

settlement of such Start Leg from the 

Repo Broker on the evening of the day 

the Start Leg was due to settle. This may 

involve the receipt of securities from the 

repo dealer for redelivery to the reverse 

dealer, or the settlement of the Start Leg 

may be effected by netting of the 

settlement obligations arising from the 

Start Leg against the settlement 

obligations arising from the End Leg of 

the same or another repo. FICC does so 

in these instances (and has been doing 

so since the inception of its blind 

brokered repo service) in order to 

decrease settlement risk by centralizing 

the settlement of these failed Start Legs 

and including them in the netting 

process with the End Legs (which 

already settle at FICC). The Repo Broker 

acts as an intermediary and expects to 

net out of every transaction and not 

have a settlement position from the 

settlement process. By assuming the fail, 

FICC replaces the Repo Broker so that 

FICC becomes the central counterparty 

for settlement of these transactions and 

thereby, FICC decreases settlement risk. 

In all cases where FICC assumes a fail 

from a Repo Broker, the counterparty 

remains responsible to FICC for its 

obligations with respect to the 

transaction. 

The DVP Service did not include 

settlement of the Start Leg of same-day 

starting Repo Transactions at its 

inception, and these transactions have 

always been settled between the parties 

(i.e., outside of FICC). Recently, 

participants have expressed an interest 

in being able to settle the Start Leg of 

their same-day starting Repo 

Transactions through GSD. FICC 

believes that expanding its DVP Service 

in this way (hereinafter, ‘‘Same-Day 

Settling Service’’) could reduce market 

risk because the Start Legs as well as the 

End Legs of eligible Repo Transactions 

would be risk managed, novated, 

guaranteed, and settled through FICC. 

FICC also believes that the expansion of 

its DVP Service in this way could 

potentially reduce fails in the market by 

centralizing the settlement of the 

applicable Start Legs with FICC. FICC 

believes that this expansion of its DVP 

Service could increase settlement 

efficiencies and decrease settlement risk 

in the market and decrease operational 

risk with respect to Members. FICC 

believes that the Same-Day Settling 

Service could increase settlement 

efficiencies and decrease settlement risk 

because it would reduce the number of 

securities movements between Members 

by centralizing the settlement of the 

Start Legs with FICC even though the 

Start Legs are not netted. It would 

eliminate the number of bilateral 

movements because the Start Legs 


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8Rule 12, Section 7, supra note 4. 

9Rule 21 and Rule 22A, supra note 4. 

10FICC has added As-Of Trades in this proposal 

in order to reasonably include as many variations 

of Same-Day Settling Trades as possible. This 

addition of As-Of Trades in this proposal covers 

scenarios in which a Member submits a DVP repo 

transaction for comparison on the day after the 

Scheduled Settlement Date for the Start Leg (i.e., 

where a trade compares on the day after the 

Scheduled Settlement Date of the Start Leg). 

Members may occasionally need to submit As-Of 

Trades due to human or operational errors. 

Although this scenario is not frequently observed, 

FICC believes that inclusion of these transactions in 

the Novation and settlement process under this 

proposal would provide Members with consistent 

processing in terms of settlement of their FICCcleared DVP Repo Transactions, irrespective of 

whether those transactions are submitted as As-Of 

Trades or Same-Day Settling Trades. 

Under this proposal, from an operational and risk 

management perspective, As-Of Trades would be 

risk managed and settled in the same manner as all 

other eligible Same-Day Settling Trades. FICC 

would settle both the Start Leg and the End Leg of 

an As-Of Trade on a bilateral basis between FICC 

Continued 

would settle through FICC. FICC also 

believes that the Same-Day Settling 

Service could decrease operational risk 

because FICC believes it could decrease 

the number of fails of the Start Legs as 

there would be fewer counterparties 

involved in the settlement of the Start 

Legs. 

For example, assuming the following 

two Brokered Repo Transactions are 

executed on the same day: (i) Broker 1 

executes an overnight same-day starting 

repo transaction with Dealer A and 

Dealer B (‘‘Brokered Repo 1’’) and (ii) 

Broker 2 executes an overnight sameday starting repo transaction with 

Dealer A and Dealer B (‘‘Brokered Repo 

2’’). 

• Brokered Repo 1 involves: (a) A 

repo transaction in CUSIP XYZ with a 

par and principal of $50 million with 

Dealer A and (b) a reverse repo 

transaction in the same CUSIP with a 

par and principal of $50 million with 

Dealer B. 

• Brokered Repo 2 involves: (a) A 

repo transaction in CUSIP XYZ with a 

par of $50 million and principal of $51 

million with Dealer B and (b) a reverse 

repo transaction in CUSIP XYZ with a 

par of $50 million and principal of $51 

million with Dealer A. 

Today, the Start Leg of both 

Transactions would settle away from 

FICC. Specifically, with respect to 

Brokered Repo 1, today, Dealer A would 

deliver securities with a par of $50 

million to Broker 1, and Dealer A would 

receive $50 million in principal (cash) 

from the Broker 1. Broker 1 would then 

deliver securities with a par of $50 

million to Dealer B, and Broker 1 would 

receive from Dealer B $50 million in 

principal (cash). With respect to 

Brokered Repo 2, today, Dealer B would 

deliver to Broker 2 securities with a par 

of $50 million and Dealer B would 

receive $51 million in principal (cash). 

Broker 2 would then deliver securities 

with a par of $50 million to Dealer A, 

and Broker 2 would receive $51 million 

in principal (cash) from Dealer A. 

Today, Brokered Repo 1 and Brokered 

Repo 2 are submitted to FICC upon 

execution. The Start Leg and the End 

Leg of each of Brokered Repo 1 and 

Brokered Repo 2 are submitted for 

Demand Comparison to FICC by the 

Repo Brokers, who are considered 

Demand Trade Sources. Upon receipt of 

the trade data from the Demand Trade 

Source, FICC deems the trades 

compared. The dealer counterparties 

also submit matching trade data to FICC. 

Today, on the Start Date, settlement of 

the Start Leg would occur over Fedwire 

(or on the books of the Clearing Bank(s) 

between the four counterparties 

referenced above). This has the potential 

to cause fails in the marketplace if one 

or more counterparties fail to meet their 

settlement obligations at any point in 

the process. As previously stated, on the 

evening of the day the Start Leg was due 

to settle, FICC would assume the Start 

Leg(s) if they failed versus the Repo 

Broker. These broker fails would go into 

that night’s netting cycle and be 

marked-to-market. Because both 

Brokered Repo Transactions are 

overnight trades, the Close Leg of each 

trade would also be included in that 

night’s netting cycle. 

With this proposed expansion of the 

DVP Service, on Start Date, the Start Leg 

of each Brokered Repo Transaction 

would settle versus FICC upon 

submission of the trade data from the 

Demand Trade Source. The Repo 

Brokers would be removed from the 

settlement process. The settlement of 

the Start Leg of each Brokered Repo 

Transaction would settle over Fedwire 

(or on the books of FICC’s Clearing 

Agent Bank (The Bank of New York 

Mellon) between the two dealer 

counterparties and FICC (acting as the 

central counterparty)). 

Specifically, with the proposed 

expansion of the DVP Service, with 

respect to Brokered Repo 1, Dealer A 

would deliver securities in CUSIP XYZ 

of $50 million par to FICC, and Dealer 

A would receive $50 million in 

principal (cash) from FICC. FICC would 

then deliver to Dealer B securities in 

CUSIP XYZ of $50 million par, and 

FICC would receive $50 million in 

principal (cash) from Dealer B. With 

respect to Brokered Repo 2, Dealer B 

would deliver securities in CUSIP XYZ 

with a par of $50 million to FICC, and 

Dealer B would receive $51 million in 

principal (cash) from FICC. FICC would 

then deliver to Dealer A securities in 

CUSIP XYZ with a par of $50 million, 

and FICC would receive from Dealer A 

principal (cash) of $51 million. 

If these same-day settling Securities 

Settlement Obligations failed to settle 

on their original Scheduled Settlement 

Date, and Dealer A and Dealer B have 

chosen to opt into the proposed Pair-Off 

Service (as described below), FICC 

would pair-down the failed Securities 

Settlement Obligations, resulting in a 

net money difference of $1 million debit 

to Dealer A and $1 million credit to 

Dealer B. To complete the settlement 

process on the same day that the SameDay Settling Trade is executed, the 

money differences would settle through 

intraday funds-only settlement (FOS). If 

the dealer parties have not opted into 

the proposed Pair-Off Service, the failed 

same-day settling Securities Settlement 

Obligations would go into the night’s 

net and the collection of any money 

differences would occur on the 

following Business Day through the start 

of day FOS. 

Under Section 7 of Rule 12, if FICC 

has delivered Eligible Netting Securities 

to a Netting Member with a Net Long 

Position (Dealer B in our example), such 

Member shall be obligated to accept 

delivery of all such securities at the 

Settlement Value for the Receive 

Obligation or Receive Obligations that 

comprise such Position. If such Member 

fails to do so, it shall be obligated to 

pay, or to reimburse FICC for, all costs, 

expenses, and charges incurred by FICC 

as the result thereof, and it may be 

subject to a fine by FICC if FICC, in its 

sole discretion, determines that such 

failure to accept securities was done 

without good cause.8

In addition, in the event Dealer B’s 

failure to pay the principal amount is 

due to financial difficulties, FICC would 

also have the right to suspend a Member 

from any service provided by FICC 

either with respect to a particular 

transaction or transactions or with 

respect to transactions generally, or 

prohibit or limit such Member with 

respect to access to services offered by 

FICC and/or to cease to act for such 

Member.9

FICC proposes to include the 

following transactions in the risk 

management, Novation, guarantee, and 

settlement services of GSD’s DVP 

Service: (i) A Start Leg of a Netting 

Member’s Repo Transaction where the 

Scheduled Settlement Date of the Start 

Leg is the current Business Day, (ii) an 

As-Of Trade of a Netting Member where 

the Scheduled Settlement Date of the 

Start Leg is the previous Business Day 

and the End Leg is the current Business 

Day or thereafter,10 and (iii) a Sponsored 


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and the Member that submitted the trade. The End 

Leg of an As-Of Trade would not be netted unless 

the Scheduled Settlement Date of the End Leg is 

later than the current Business Day that the trade 

was submitted. 

For purposes of clarity, Securities Settlement 

Obligations generated for the purposes of settlement 

of the Start Leg and End Leg of an As-Of Trade that 

is eligible for settlement under this proposal would 

be generated based on the Scheduled Settlement 

Date (i.e. contractual settlement date) for each leg 

of the As-Of Trade. However, the generation of such 

obligation(s) on the Scheduled Settlement Date for 

each leg of an As-Of Trade does not mean that such 

obligation(s) would actually settle on such date. 

Today, the Start Leg of an As-Of Trade settles 

outside of FICC, and if the Scheduled Settlement 

Date of the End Leg is the current Business Day, the 

End Leg would also settle outside of FICC. 

Under this proposal, if an As-Of Trade is an 

overnight repo that is submitted on the current 

Business Day (so the Start Date would be as of the 

prior Business Day) and the Scheduled Settlement 

Date of its End Leg is the current Business Day, then 

FICC would settle each leg independently at 

Contract Value with the Member. 

If an As-Of Trade is a term repo that is submitted 

on the current Business Day (so the Start Leg would 

be as of the prior Business Day) and the Scheduled 

Settlement Date of the End Leg is the next Business 

Day or thereafter, then the End Leg would go into 

the netting process and would settle at System 

Value. For As-Of Trades that are term repos, FICC 

would settle the Start Legs at Contract Value. 

11Rule 11, Section 14, supra note 4. 

12Repo Brokers submit a side for each of their 

two counterparties. Therefore, if a Repo Broker 

participates in the proposed Same-Day Settling 

Service, then FICC would settle the two trades (i.e., 

a Receive Obligation and a Deliver Obligation with 

the two counterparties). However, if a Repo Broker 

does not participate in the proposed Same-Day 

Settling Service, the two trades would settle away 

from FICC as they do today (except in the instance 

of a broker fail where FICC would assume the 

broker fails). 

Member Trade within the meaning of 

section (b) of that definition that meets 

the requirements of either (i) or (ii) 

above (hereinafter, collectively, ‘‘SameDay Settling Trades’’). Same-Day 

Settling Trades would not go through 

FICC’s netting process. This is because 

GSD netting occurs the night before the 

Scheduled Settlement Date for such 

transactions, and these Same-Day 

Settling Trades would not be submitted 

for settlement until after this time. 

Same-Day Settling Trades would 

settle on a trade-for-trade basis at 

Contract Value unless such Same-Day 

Settling Trades fail to settle. Because 

Same-Day Settling Trades are not 

netted, they would settle at Contract 

Value (not at System Value). In the 

event that such Same-Day Settling 

Trades fail to settle, they would be 

netted for settlement on the next 

Business Day as is the case for current 

Securities Settlement Obligations that 

fail to settle. If such Same-Day Settling 

Trades fail to settle, the trade would be 

netted at Contract Value versus System 

Value, which all other Fail Deliver 

Obligations and Fail Receive 

Obligations would be netted at. SameDay Settling Trades that fail to settle are 

netted with other transactions that fail 

in that security (i.e., the process for 

netting fails of Same-Day Settling 

Trades would remain the same). Those 

obligations that fail to settle would be 

subject to the fails charge (either a debit 

or a credit), the accrual of which would 

be included in the Member’s monthly 

invoice.11

The Start Leg of an As-Of Trade 

(overnight and term) and a same-day 

starting repo (overnight and term) 

would settle at Contract Value. The End 

Leg of an As-Of Trade that is an 

overnight repo would settle at Contract 

Value. Both the Start Leg and End Leg 

of an As-Of Trade that is an overnight 

repo are Same-Day Settling Trades and, 

therefore, would settle at the Contract 

Value. Similarly, the Start Leg of a 

same-day starting repo (overnight or 

term) is also a Same-Day Settling Trade 

and would settle at Contract Value. 

The End Leg of an As-Of Trade that 

is a term repo, same-day starting repo 

that is an overnight repo, and same-day 

starting repo that is a term repo would 

settle at System Value. The End Leg of 

an As-Of Trade that is a term repo, the 

End Legs of a same-day starting repo 

(overnight and term), and the Start Legs 

and End Legs of a forward starting repo 

(overnight and term) would settle at 

System Value because these legs would 

go through FICC’s netting process. 

Below is a chart that describes 

whether the Start Legs and End Legs of 

As-Of Trades, same-day starting repos, 

and forward starting repos would settle 

at Contract Value or System Value: 

Trade type Start leg settles at End leg settles at 

As-of Overnight Trade ............................................................................................................................ Contract Value ....... Contract Value. 

As-Of Term Trade ................................................................................................................................... Contract Value ....... System Value. 

Same-Day Starting Overnight Repo ....................................................................................................... Contract Value ....... System Value. 

Same-Day Starting Term Repo .............................................................................................................. Contract Value ....... System Value. 

Forward Starting Overnight Repo ........................................................................................................... System Value ........ System Value. 

Forward Starting Term Repo .................................................................................................................. System Value ......... System Value. 

The proposed Same-Day Settling 

Service would be voluntary for InterDealer Broker Netting Members and 

Non-IDB Repo Brokers with Segregated 

Repo Accounts (collectively, ‘‘Repo 

Brokers’’). Because Repo Brokers tend to 

provide a suite of services to their 

clients where facilitating the settlement 

of a Same-Day Settling Trade is one of 

those services, FICC did not want to 

cause any disruption to Repo Brokers 

and their clients by bifurcating the 

existing set of services whereby FICC 

does the settlement of the Same-Day 

Settling Trade and the Repo Broker 

continues to provide the rest of their 

existing services to their clients. FICC 

believes that providing optionality will 

allow Repo Brokers and their clients to 

determine how and when a Repo Broker 

should participate in the proposed 

Same-Day Settling Service. GSD would 

discontinue assuming fails for Repo 

Brokers who choose to participate in 

this proposed Same-Day Settling 

Service, because such assumption 

would be replaced by the FICC Novation 

that would occur upon comparison of 

the Same-Day Settling Trades. As 

described above, today, FICC assumes 

the fails for Repo Brokers (and has been 

doing so since the inception of its blind 

brokered repo service) in order to 

decrease risk. By assuming the fail, FICC 

removes the Repo Broker, who acts as 

an intermediary and who expects to net 

out of every transaction and not have a 

settlement position, from the settlement 

process. In all cases where FICC 

assumes a fail from a Repo Broker, the 

counterparty remains responsible for its 

obligations with respect to the 

transaction. 

The proposed Same-Day Settling 

Service would be mandatory for all 

other Netting Members and for 

Sponsored Members who execute 

transactions with Netting Members 

other than their Sponsoring Member 

because GSD must have a balanced set 

(both a Repo and a Reverse Repo) on all 

transactions. Specifically, if a Member 

(other than a Repo Broker 12) that is a 

party to a Same-Day Settling Trade 

could choose to opt out of the Same-Day 

Settling Service, FICC would not be able 

to create equal and opposite Securities 

Settlement Obligations for the two 

counterparties, which would require 

them to settle away from FICC. This 


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13 ‘‘Sponsored Member Trade’’ means a 

transaction that satisfies the requirements of 

Section 5 of Rule 3A and that is (a) between a 

Sponsored Member and its Sponsoring Member or 

(b) between a Sponsored Member and a Netting 

Member. Rule 1, supra note 4. 14Rule 8, Section 1, supra note 4. 

would create uncertainty among 

Members as to who to settle their 

transactions with (i.e., FICC or 

bilaterally outside of FICC). By requiring 

these Members to participate, Members 

would have certainty that their 

compared transactions would settle 

with FICC as their settlement 

counterparty. 

To implement these changes, FICC is 

proposing to revise Rule 1 by: (1) 

Adding a new definition for ‘‘Same-Day 

Settling Trade’’ and (2) revising the 

definitions of ‘‘Deliver Obligation,’’ 

‘‘Receive Obligation,’’ ‘‘Settlement 

Value,’’ and ‘‘System Value.’’ 

‘‘Same-Day Settling Trade’’ would 

mean (i) a Start Leg of a Netting 

Member’s Repo Transaction where the 

Scheduled Settlement Date of the Start 

Leg is the current Business Day, (ii) an 

As-Of Trade of a Netting Member where 

the Scheduled Settlement Date of the 

Start Leg is the previous Business Day 

and the End Leg is the current Business 

Day or thereafter, or (iii) a Sponsored 

Member Trade within the meaning of 

subsection (b) of that definition 13 that 

meets the requirements of either (i) or 

(ii) above. 

The definitions of Deliver Obligation 

and Receive Obligation would be 

amended to include references to SameDay Settling Trades. Similarly, the 

definition of Settlement Value would be 

amended to specify that, with respect to 

a Deliver Obligation or a Receive 

Obligation for a Same-Day Settling 

Trade, Settlement Value means the 

Contract Value for such obligation. In 

addition, FICC would amend the 

definition of System Value to exclude 

Same-Day Settling Trades because 

Same-Day Settling Trades would settle 

at the Contract Value (not the System 

Value). Members are currently settling 

their Same-Day Settling Trades at the 

Contract Value, so FICC would not be 

changing the way such Members are 

settling these transactions, consistent 

with what is occurring today. 

FICC would revise Section 8(c) of 

Rule 3A to reference new Section 11 of 

Rule 12 (described below). 

In addition, FICC would amend 

Section 5 of Rule 5 to provide that 

settlement of Same-Day Settling Trades 

would be processed as per new Section 

11 of Rule 12. This proposed addition 

is needed in that provision of Rule 5 

because the prior sentence (that is, the 

current last sentence of that section) 

addresses the current process where 

trades that are not netted and settled 

with FICC are settled between the 

parties to the trades; with this proposal, 

Same-Day Settling Trades would be 

settled with FICC even though they are 

not netted. 

FICC would revise Section 8 of Rule 

5 to address the Novation and guaranty 

of Same-Day Settling Trades in a new 

subsection (b). Specifically, language 

would be added that each Same-Day 

Settling Trade that becomes a Compared 

Trade and was entered into in good faith 

would be novated to FICC, and that 

FICC would guarantee the settlement of 

each such Compared Trade at the time 

at which the comparison of such trade 

occurs pursuant to Rules 6A and 6B, as 

applicable. Such Novation would 

consist of the termination of the deliver, 

receive, and related payment obligations 

between the Netting Members and their 

replacement with identical obligations 

to and from FICC in accordance with the 

Rules. 

FICC would amend Section 2 of Rule 

11 to state that Same-Day Settling 

Trades would not be netted. As 

explained above, in GSD’s DVP Service 

netting takes place the night before the 

Scheduled Settlement Date; Same-Day 

Settling Trades would settle after the net 

is run (unless a settlement fail occurs). 

Because they will not be netted, SameDay Settling Trades would settle on a 

trade-for-trade basis at Contract Value 

with FICC on their Scheduled 

Settlement Date unless such Same-Day 

Settling Trades fail to settle. If a SameDay Settling Trade fails to settle, such 

Same-Day Settling Trade would be 

netted for settlement on the next 

Business Day as is the current process 

for Securities Settlement Obligations 

that fail to settle. Those that fail to settle 

would be subject to the fails charge. 

FICC would amend Rule 11B to add 

a new subsection that would describe 

that FICC would guarantee the 

settlement of any Same-Day Settling 

Trade provided that certain 

requirements are met. Specifically, the 

data on such Same-Day Settling Trade 

must be submitted for Bilateral or 

Demand Comparison at the time that the 

comparison of such trade occurs 

pursuant to Rules 6A or 6B, 

respectively. Rules 6A and 6B discuss 

Bilateral Comparison and Demand 

Comparison, respectively. In order for 

FICC to settle the trades, the trades must 

be novated. In order to novate the 

trades, they must first be compared. 

FICC would amend Rule 12 to add a 

section (new Section 11) stating that 

Same-Day Settling Trades must also 

meet the requirements of new Section 

11(ii) of Rule 12 (which is a proposed 

section pursuant to this filing) and the 

trade must have been entered into in 

good faith. Proposed Section 11(ii) 

would state that a Same-Day Settling 

Trade would be eligible for settlement 

with FICC if it meets all of the following 

requirements: (a) The Same-Day Settling 

Trade is a Compared Trade, (b) the data 

on the Same-Day Settling Trade are 

listed on a Report that has been made 

available to Netting Members, (c) (i) the 

End Leg of the Same-Day Settling Trade 

meets the eligibility requirements for 

netting in Rule 11, or (ii) the Repo 

Transaction is an As-Of Trade and its 

End Leg settles on the current Business 

Day or thereafter, and (d) the underlying 

securities are Eligible Netting Securities. 

In addition, notwithstanding the 

above, a Same-Day Settling Trade 

eligible for settlement to which an 

Executing Firm is a party, the data on 

which has been submitted to FICC on 

behalf of such Executing Firm by a 

Submitting Member that is a Netting 

Member, would not be settled if the 

Submitting Member has provided FICC 

with notice that it does not wish to have 

trades submitted by it on behalf of that 

Executing Firm be settled through the 

Comparison System. Also 

notwithstanding the above, a trade 

would not be settled if either Submitting 

Member had submitted data on a side of 

the trade on behalf of an Executing Firm 

whose trades it had provided FICC with 

notice pursuant to the Rules that it did 

not wish to be settled. Pursuant to 

Section 1 of Rule 8, a Submitting 

Member must submit to FICC for 

comparison and/or netting data on any 

transaction calling for the delivery of 

Eligible Securities between an Executing 

Firm on whose behalf it is acting 

pursuant to these Rules and either 

another Member of the Netting System, 

Comparison System or another 

Executing Firm on whose behalf it or 

another Member is acting pursuant to 

these Rules. Therefore, a Same-Day 

Settling Trade submitted by such 

Submitting Member will be eligible to 

settle through the proposed Same-Day 

Settling Service unless the Submitting 

Member has provided notice to FICC in 

advance that it does not wish to have 

such trades settled through the 

Comparison System. This provision in 

proposed Section 11 of Rule 12 that 

discusses the eligibility for settlement 

through the Same-Day Settling Service 

would also align with FICC’s current 

rule on the eligibility for netting in 

Section 2 of Rule 11.14

Proposed Section 11 of Rule 12 would 

also state that, notwithstanding the 

above, FICC may, in its sole discretion, 

exclude any Same-Day Settling Trade or 


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15Section 6 (Financing Costs) addresses 

situations where if a Netting Member with a Net 

Short Position delivers eligible Netting Securities to 

FICC and FICC is unable, because the delivery was 

made near the close of Fedwire or for any other 

reason, to redeliver such securities on the same 

Business Day to a Netting Member or Members with 

Net Long Positions in such securities and, as a 

result, FICC incurs costs, expenses, or charges 

related to financing such securities (the ‘‘financing 

costs’’), then the Netting Members, as a group, shall 

be obligated to pay, or to reimburse FICC, for such 

financing costs. Section 7 (Obligation to Receive 

Securities) covers the obligation of Members to 

accept delivery of securities regarding their Receive 

Obligations. Section 8 (Obligation to Facilitate 

Financing) sets forth FICC’s ability to obtain 

financing necessary for the provision of securities 

settlement services contemplated by the Rules. 

Section 9 (Relationship with Clearing Banks) makes 

clear that no improper or unauthorized action, or 

failure to act, by a clearing bank acting on behalf 

of a Netting Member shall excuse or otherwise 

affect the obligations of a Netting Member to FICC 

pursuant to the Rules. Rule 12, supra note 4. 

16As described above, if the FRB announces an 

extension of the Fedwire Securities Service, FICC 

would match the duration of the extension. 

17 Initially, this would apply to Same-Day Settling 

Trades that are compared after 3:01 p.m. until 5 

p.m. 

18 Initially, this time would be after 3:01 p.m. 

until 3:30 p.m. If the FRB announces an extension 

for the reversal period of the Fedwire Securities 

Service, FICC would match the duration of the 

extension for the reversal period. The Fedwire 

Securities Services closes at 3:30 p.m. for transfer 

reversals. See Fedwire® and National Securities 

Service, Federal Reserve Bank of New York (March 

2015), available at https://www.newyorkfed.org/

aboutthefed/fedpoint/fed43.html and Fedwire 

Securities Service, Board of Governors of the 

Federal Reserve System (July 31, 2014), available at 

https://www.federalreserve.gov/paymentsystems/

fedsecs_about.htm. 

Same-Day Settling Trades from the 

Comparison System, by Netting Member 

or by Eligible Netting Security. For 

example, if a trade was submitted to the 

Comparison System because of an 

operational error or technological error 

and the client is unable to delete such 

trade, then FICC may exclude such trade 

from the Comparison System. In 

addition, with respect to Repo 

Transactions, if the Start Leg is 

excluded, then the corresponding End 

Leg would also be excluded. This 

provision of the new Section 11 of Rule 

12 that discusses the eligibility for 

settlement through the Same-Day 

Settling Service would also align with 

FICC’s current rule on the eligibility for 

netting in Section 2 of Rule 11. 

In addition to the above, in the new 

Section 11 of Rule 12, FICC would 

describe the settlement of Same-Day 

Settling Trades with FICC, including 

eligibility requirements for settlement 

and how the Deliver Obligations and 

Receive Obligations related to such 

transactions must be satisfied. FICC 

would also describe that if a novated 

Same-Day Settling Trade becomes 

uncompared or is cancelled pursuant to 

the Rules, the Novation and FICC’s 

guaranty of settlement of such 

transaction would no longer apply, 

cancelling the deliver, receive, and 

related payment obligations between 

FICC and the applicable Members, 

created by such Novation. Furthermore, 

FICC would state that in the event that 

such transaction is cancelled after the 

satisfaction of the deliver, receive, and 

related payment obligations between 

FICC and the applicable Netting 

Members, FICC would establish reverse 

Securities Settlement Obligations in the 

form of a Receive Obligation or a Deliver 

Obligation for the amount of the 

Contract Value of the Same-Day Settling 

Trades that have become uncompared or 

cancelled between FICC and the 

applicable Members. If such Receive 

Obligation or Deliver Obligation fails to 

settle, then such obligations would be 

netted at Contract Value for settlement 

on the next Business Day. Those that 

fail to settle would be subject to the fails 

charge (either a debit or credit), the 

accrual of which would be included in 

the Member’s monthly invoice. 

FICC would make clear that Sections 

6 (Finance Costs), 7 (Obligation to 

Receive Securities), 8 (Obligation to 

Facilitate Financing) and 9 

(Relationship with Clearing Banks) of 

Rule 12 would be applicable in 

connection with the settlement of SameDay Settling Trades with FICC.15 These 

sections are part of GSD’s securities 

settlement rule and do not require any 

changes to accommodate the settlement 

of Same-Day Settling Trades. 

Furthermore, because the proposed 

Same-Day Settling Service would be 

voluntary for Repo Brokers, FICC would 

amend Section 5 of Rule 19 and 

Sections IV.A.5, IV.A.6, and IV.B.3 of 

the Fee Structure to state that the 

applicable section would only apply to 

Repo Brokers that do not elect to settle 

Same-Day Settling Trades with FICC. 

This is because these sections address 

the assumption of certain Start Legs by 

GSD that would be replaced by GSD’s 

Novation, guaranty, and settlement of 

Same-Day Settling Trades of those Repo 

Brokers that elect to participate in the 

proposed service. 

(ii) Proposed Change To Provide That 

FICC Would Attempt To Settle SameDay Settling Trades That Are Compared 

in the Timeframe Specified by FICC in 

Notices Made Available to Members 

From Time to Time on a Reasonable 

Efforts Basis 

Today, Members occasionally execute 

Same-Day Settling Trades after the close 

of the Fedwire Securities Service. These 

Same-Day Settling Trades are settled 

between the Members (outside of FICC) 

as long as both parties to the trade settle 

such trades within the same Clearing 

Bank. 

In order to accommodate this practice, 

FICC proposes to provide the proposed 

Same-Day Settling Service to late-day 

compared Same-Day Settling Trades 

(i.e., those Same-Day Settling Trades 

that are compared after 3:01 p.m.16). 

FICC would attempt to settle, on a 

reasonable efforts basis, such trades that 

are compared in the timeframe specified 

by FICC in notices made available to 

Members from time to time, provided (i) 

FICC is able to contact the 

counterparties to the trade and FICC’s 

Clearing Agent Bank and (ii) FICC’s 

Clearing Agent Bank and the 

counterparties to the trade agree to settle 

such trade. The foregoing sentence 

would only apply to Same-Day Settling 

Trades of Members that clear at FICC’s 

Clearing Agent Bank. Reasonable efforts 

basis would mean that FICC would 

attempt to contact the counterparties to 

the trade and FICC’s Clearing Agent 

Bank to confirm they agree to settle such 

trade. Specifically, FICC would 

continue to process securities 

movements between FICC’s account at 

FICC’s Clearing Agent Bank and 

Members’ accounts at FICC’s Clearing 

Agent Bank, on a reasonable efforts 

basis, in the timeframe specified by 

FICC in notices made available to 

Members from time to time, provided 

that (i) FICC is able to contact FICC’s 

Clearing Agent Bank and (ii) FICC’s 

Clearing Agent Bank and the 

counterparties to the trade agree to settle 

such trade.17

For those Members that do not have 

accounts at FICC’s Clearing Agent Bank, 

FICC would attempt to settle, on a 

reasonable efforts basis, Same-Day 

Settling Trades that are compared after 

the time specified by FICC in notices 

made available to Members from time to 

time during the reversal period of the 

Fedwire Securities Service,18 provided 

(i) FICC is able to contact FICC’s 

Clearing Agent Bank, (ii) FICC is able to 

contact the counterparties to the trade to 

confirm that they agree to settle the 

trade, and (iii) FICC’s Clearing Agent 

Bank, the Member’s Clearing Agent 

Bank, and the Federal Reserve Bank of 

New York each permit settlement of the 

trade (Fedwire must be open for 

settlement). Reasonable efforts basis 

would mean that FICC would attempt to 

contact the counterparties to the trade 

and FICC’s Clearing Agent Bank to 

confirm that they agree to settle such 

trade. 

To implement this proposed rule 

change, FICC would include provisions 

in newly added Section 11 of Rule 12. 


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19Fails occur because one party does not have the 

inventory to settle with the other party on the 

scheduled date. 

20Supra note 3. 

21 15 U.S.C. 78q–1(b)(3)(F). 

(iii) Proposed Change To Introduce an 

Optional Service That Would Allow 

GSD to Systematically Pair-Off Certain 

Members’ Failed Securities Settlement 

Obligations Between Approximately 

3:32 p.m. and 4:00 p.m. 

FICC also proposes to introduce an 

optional service for Netting Members 

(other than Repo Brokers) and for 

Sponsored Member Trades (other than 

those between the Sponsored Member 

and its Sponsoring Member) whereby 

GSD would systematically pair-off such 

Members’ failed Securities Settlement 

Obligations between approximately 3:32 

p.m. and 4:00 p.m. 

The failed Securities Settlement 

Obligations could include (i) Receive 

Obligations and Deliver Obligations 

resulting from the previous night’s net 

and (ii) obligations that were created 

intraday in order to settle a Right of 

Substitution or a Same-Day Settling 

Trade. Fails that occur go into the net 

that evening.19

GSD would look at each Member’s 

failing activity on a per CUSIP basis and 

pair-off their Receive Obligations and 

Deliver Obligations irrespective of the 

settlement amounts on those 

obligations; this could result in money 

differences. This proposed process 

would be structured so that the net par 

result of the pair-offs would be zero. 

Specifically, the proposed pair-off 

process (‘‘Pair-Off Service’’) would 

consist of the matching and the offset of 

a participating Member’s Fail Deliver 

Obligations and Fail Receive 

Obligations in equal par amounts of the 

same Eligible Netting Security. The 

participating Member would receive a 

debit or credit Pair-Off Adjustment 

Amount (which FICC may initially 

collect as a Miscellaneous Adjustment 

Amount), as applicable, of the 

difference in the Settlement Values of 

the applicable Fail Deliver Obligations 

and Fail Receive Obligations in the 

intraday funds-only settlement process. 

The proposed Pair-Off Service would 

start at approximately 3:32 p.m. The 

proposed rule change would provide 

FICC with the discretion to suspend or 

delay the Pair-Off Service in the event 

of an operational or market event. For 

example, FICC may delay the Pair-Off 

Service if the FRB extends Fedwire 

because extending the Fedwire would 

enable trades to potentially settle 

instead of fail. FICC believes that 

suspending the Pair-Off Service would 

not adversely affect Members because 

failed obligations would go into the net 

as they do today, and would continue to 

be risk-managed. 

The proposed Pair-Off Service would 

allow the participating Member to settle 

their cash obligations today; the 

settlement process would be completed 

on the same day (via intraday FOS) 

rather than on the next day (via start of 

day FOS). As noted in the example in 

Item II(A)1(i) above, if these obligations 

failed to settle, and Dealer A and Dealer 

B have chosen to opt into the proposed 

Pair-Off Service, FICC would pair-down 

the failed obligations, resulting in a net 

money difference of $1 million debit to 

Dealer A and $1 million credit to Dealer 

B. To complete the settlement process 

on the same day that the trade is 

executed, the money differences would 

settle through intraday funds-only 

settlement. The alternative to the 

proposed Pair-Off Service is to let the 

failed obligations go into the net and 

collect any money differences on the 

following Business Day through the start 

of day FOS. 

To implement the proposed Pair-Off 

Service, FICC would revise Rules 1, 3A, 

and 12. Specifically, FICC would amend 

Rule 1 by adding two definitions, ‘‘PairOff Service’’ and ‘‘Pair-Off Adjustment 

Payment.’’ FICC would initially collect 

this amount as a Miscellaneous 

Adjustment Amount. Then, following 

development by FICC, this amount 

would be collected as a ‘‘Pair-Off 

Adjustment Payment.’’ 

FICC would also revise Rule 12 to 

describe the proposed Pair-Off Service, 

which would be a voluntary automated 

process. The proposed Pair-Off Service 

would consist of the matching and offset 

of a participating Netting Member’s Fail 

Deliver Obligations and Fail Receive 

Obligations in equal par amounts in the 

same Eligible Netting Security. The 

participating Netting Member would 

receive either a debit or credit Pair-Off 

Adjustment Payment, as applicable, of 

the difference in the Settlement Values 

of the applicable Fail Deliver 

Obligations and Fail Receive 

Obligations in the FOS process under 

Rule 13. Any Securities Settlement 

Obligations remaining after the pair-off 

of eligible obligations would constitute 

a Fail Net Settlement Position. 

Rule 12 would also state that FICC 

would have the discretion to suspend 

the Pair-Off Service on any Business 

Day due to FRB extensions and/or 

system or operational issues. FICC 

would notify Members of any such 

extension. 

FICC would also revise Section 8 of 

Rule 3A to state that with respect to 

Section 1 of Rule 12, the optional PairOff Service would be available to 

Sponsored Member Trades within the 

meaning of section (b) of that definition. 

(iv) Proposed Change To Change the 

Time of Intraday FOS Processing From 

3:15 p.m. to 4:30 p.m. 

FICC proposes to change the time of 

intraday FOS processing from 3:15 p.m. 

to 4:30 p.m. because FICC proposes to 

start the proposed Pair-Off Service at 

approximately 3:32 p.m. and would 

provide Funds-Only Settling Banks with 

their intraday net FOS figures by 4:00 

p.m. for acknowledgment by 4:30 p.m.. 

The proposed rule change would also 

provide that such time may be extended 

due to FRB extensions and/or system or 

operational issues. Moving this 

processing time from 3:15 p.m. to 4:30 

p.m. would enable FICC to settle any net 

money differences that arise from the 

proposed Pair-Off Service. 

To implement this change, FICC 

would amend the Schedule of 

Timeframes by deleting the 3:15 p.m. 

time and the related description, and 

adding a 4:30 p.m. time and a 

description that would state that 

intraday FOS debits and credits would 

be executed via the FRB’s National 

Settlement Service for Netting Members. 

(v) Proposed Technical Changes 

FICC also proposes to make certain 

technical changes. Because a subsection 

would be added to Section 8 of Rule 5 

to describe the comparison, Novation, 

and guarantee of Same-Day Settling 

Trades (as described in detail above), 

FICC would also renumber subsections 

that follow the proposed section for 

consistency and accuracy. 

Implementation Timeframe 

FICC would implement the proposed 

rule changes within 90 days after the 

later of the approval of the proposed 

rule change and no objection to the 

related advance notice 20 by the 

Commission. FICC would announce the 

effective date of the proposed changes 

by Important Notice posted to its 

website. 

2. Statutory Basis 

FICC believes this proposal is 

consistent with the requirements of the 

Act. Specifically, FICC believes this 

proposal is consistent with Section 

17A(b)(3)(F) of the Act,21 which 

requires, in part, that the rules of a 

registered clearing agency be designed 

to promote the prompt and accurate 

clearance and settlement of securities 

transactions, and to assure the 

safeguarding of securities and funds 


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22 Id. 

23 Id. 

24 Id. 

25 Id. 

26 15 U.S.C. 78q–1(b)(3)(I). 

27 Id. 

which are in the custody or control of 

the clearing agency or for which it is 

responsible, for the reasons described 

below. 

FICC believes that the proposed 

changes described in Items II(A)1(i) and 

II(A)1(ii) above would promote the 

prompt and accurate clearance and 

settlement of securities transactions 

because these proposed changes could 

increase settlement efficiencies in most 

instances. FICC believes these proposed 

changes could increase settlement 

efficiencies in most instances because 

Members would have one settlement 

counterparty, FICC, with respect to 

these transactions. As described above, 

specifically, FICC believes that the 

Same-Day Settling Service could 

increase settlement efficiencies and 

decrease settlement risk because it 

would reduce the number of securities 

movements between Members by 

centralizing the settlement of the Start 

Legs with FICC even though the Start 

Legs are not netted. The Same-Day 

Settling Service would eliminate the 

number of bilateral movements because 

the Start Legs would settle through 

FICC. FICC also believes that the SameDay Settling Service could decrease 

operational risk because FICC believes it 

could decrease the number of fails of the 

Start Legs as there would be fewer 

counterparties involved in the 

settlement of the Start Legs. As such, 

FICC believes these proposed changes 

would promote the prompt and accurate 

settlement of securities transactions, 

consistent with Section 17A(b)(3)(F) of 

the Act.22

FICC also believes that the proposed 

changes described in Item II(A)1(iii) 

above to introduce an optional service 

whereby GSD would systematically 

pair-off certain Members’ failed 

Securities Settlement Obligations 

between approximately 3:32 p.m. and 

4:00 p.m. would promote the prompt 

and accurate clearance and settlement of 

securities transactions and would assure 

the safeguarding of securities and funds 

which are in the custody or control of 

the clearing agency or for which it is 

responsible. As described above, each 

day, GSD would pair-off each applicable 

Member’s failing activity (on a per 

CUSIP basis). The pair-off of the Receive 

Obligations and Deliver Obligations 

could result in money differences 

because the pair-off would be 

irrespective of the settlement amounts 

on these Receive Obligations and 

Deliver Obligations. The proposed 

process would be structured so that the 

net par result of the pair-offs would be 

zero. FICC believes that the settlement 

of these failed obligations and the 

corresponding money differences would 

reduce settlement risk to FICC because 

the settlement process would be 

completed on the same day (via intraday 

FOS) rather than on the next day (via 

start of day FOS). As such, because FICC 

believes the proposed changes described 

in Item II(A)1(iii) above would enable 

the settlement process to be completed 

on the same day (via intraday FOS) 

rather than on the next day (via start of 

day FOS) and would reduce settlement 

risk, FICC believes these proposed 

changes would promote the prompt and 

accurate clearance and settlement of 

securities transactions and would assure 

the safeguarding of securities and funds 

which are in the custody or control of 

the clearing agency or for which it is 

responsible., consistent with Section 

17A(b)(3)(F) of the Act.23

FICC believes that the proposed 

changes described in Item II(A)1(iv) 

above to change the time of intraday 

FOS processing from 3:15 p.m. to 4:30 

p.m. would assure the safeguarding of 

securities and funds which are in the 

custody or control of the clearing agency 

or for which it is responsible. 

Specifically, changing the processing 

time from 3:15 p.m. to 4:30 p.m. would 

facilitate the proposed optional Pair-Off 

Service. The proposed change to move 

the processing time from 3:15 p.m. to 

4:30 p.m. would enable FICC to settle 

any net money differences that arise 

from the proposed optional Pair-Off 

Service on the same day, and facilitate 

the proposed optional Pair-Off Service, 

which, as stated above, could reduce 

market risk to FICC. As such, FICC 

believes the proposed changes described 

in Item II(A)1(iv) above would assure 

the safeguarding of securities and funds 

which are in the custody or control of 

the clearing agency or for which it is 

responsible, consistent with Section 

17A(b)(3)(F) of the Act.24

FICC believes that the proposed 

technical changes described in Item 

II(A)1(v) above would promote the 

prompt and accurate clearance and 

settlement of securities transactions by 

ensuring that the Rules remain clear and 

accurate to Members. Having clear and 

accurate Rules would facilitate 

Members’ understanding of those rules 

and provide Members with increased 

predictability and certainty regarding 

their obligations. As such, FICC believes 

these proposed changes would promote 

the prompt and accurate settlement of 

securities transactions, consistent with 

Section 17A(b)(3)(F) of the Act.25

(B) Clearing Agency’s Statement on 

Burden on Competition 

FICC does not believe that the 

proposed changes described in Items 

II(A)1(i) and II(A)1(ii) above would have 

any impact on competition because 

although FICC does not settle Same-Day 

Settling Trades today (with the 

exception of same-day settling Start 

Legs of Brokered Repo Transactions that 

fail to settle), as described above, such 

Same-Day Settling Trades are still 

required to be settled in the market.26

The proposal would result in a 

settlement instruction change in where 

such trades settle. This would be no 

different than any counterparty 

changing their settlement instructions, 

which is commonplace in the market 

today. In addition, while FICC’s risk 

management, Novation and guarantee 

would apply to Same-Day Settling 

Trades, FICC does not believe that this 

would have any impact on competition 

because the Members are subject to the 

same risk management processes and 

obtain the benefits of Novation and the 

FICC guarantee with their existing 

activity that is submitted to FICC today. 

Furthermore, Repo Brokers would have 

the option to participate in this 

proposed expansion of the DVP Service 

and, as such, would no longer need to 

settle such transactions. Such Repo 

Brokers would not be required to 

participate, and if they choose not to 

participate, they would continue to 

settle such trades outside of GSD. 

Because Repo Brokers tend to provide a 

suite of services to their clients where 

facilitating the settlement of a Same-Day 

Settling Trade is one of those services, 

FICC does not want to cause any 

disruption to Repo Brokers and their 

clients by bifurcating the existing set of 

services whereby FICC does the 

settlement of the Same-Day Settling 

Trade and Repo Brokers continue to 

provide the rest of their existing services 

to their clients. FICC believes that 

providing optionality will allow Repo 

Brokers and their clients to determine 

how and when a Repo Broker should 

participate in the proposed Same-Day 

Settling Service. Therefore, FICC does 

not believe that the proposed changes 

described in Items II(A)1(i) and II(A)1(ii) 

would have any impact on competition. 

FICC does not believe that the 

proposed optional Pair-Off Service 

described in Item II(A)1(iii) above 

would have any impact on competition 

because, as described above, it would be 

voluntary.27 Members who do not wish 

to participate in the proposed Pair-Off 


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Federal Register / Vol. 85, No. 236 / Tuesday, December 8, 2020 / Notices 79059 

28 Id. 

29 Id. 

30 15 U.S.C. 78q–1(b)(3)(F). 

31 Id. 32 15 U.S.C. 78q–1(b)(3)(I). 

Service can choose not to do so; 

Members would be able to determine for 

themselves whether or not to use the 

proposed Pair-Off Service. As such, 

FICC does not believe that the proposed 

optional Pair-Off Service would have 

any impact on competition. 

FICC believes that the proposed 

change described in Item II(A)1(iv) 

above to change the time of intraday 

FOS processing from 3:15 p.m. to 4:30 

p.m. may impose a burden on 

competition 28 because those Members 

who are due to receive credits would 

receive those credits later in the day 

than they do today. However, FICC does 

not believe that the proposed rule 

change would result in a significant 

burden on competition given that a 

Member’s debits and credits vary from 

day to day. Therefore, a Member may be 

owed a credit one day and then may 

have to pay a debit another day. 

Furthermore, with the proposed change, 

while those Members who are due to 

receive credits would receive them later 

in the day than they do today, those 

Members who are due to pay debits 

would be paying such debits later in the 

day. 

Regardless of whether the potential 

burden on competition discussed in the 

previous paragraph is significant, FICC 

believes that any resulting burden on 

competition that may be created by the 

proposed rule change described in Item 

II(A)1(iv) would be necessary and 

appropriate in furtherance of the 

purposes of the Act, as permitted by 

Section 17A(b)(3)(I) of the Act.29

FICC believes that any burden on 

competition that may be created by the 

proposed rule change would be 

necessary in furtherance of the purposes 

of the Act because, as described above, 

the Rules must be designed to assure the 

safeguarding of securities and funds that 

are in FICC’s custody or control or for 

which it is responsible.30 The proposed 

rule change described in Item II(A)1(iv) 

above would facilitate the proposed 

optional Pair-Off Service because it 

would enable FICC to settle any net 

money differences that arise from the 

proposed optional Pair-Off Service on 

the same Business Day. Therefore, the 

proposed rule change is designed to 

assure the safeguarding of securities and 

funds which are in the custody or 

control of the clearing agency or for 

which it is responsible, consistent with 

Section 17A(b)(3)(F) of the Act.31

FICC also believes that any burden on 

competition that may be created by the 

proposed rule change described in Item 

II(A)1(iv) above would be appropriate in 

furtherance of the proposes of the Act.32

FICC believes changing the time of 

intraday FOS processing from 3:15 p.m. 

to 4:30 p.m. is appropriate because, as 

described above, this proposed change 

would facilitate the Pair-Off Service, 

which would run at 3:32 p.m. After the 

Pair-Off Service runs, FICC would need 

time to implement its daily FOS 

procedures, and FICC believes this 

proposed change reflects the shortest 

amount of time in which FICC would be 

able to do so. Specifically, FICC 

proposes to provide the Funds-Only 

Settling Banks with their intraday net 

FOS figures by 4:00 p.m. for 

acknowledgment by 4:30 p.m. As such, 

the proposed change to move the time 

of intraday FOS processing from 3:15 

p.m. to 4:30 p.m. would enable FICC to 

settle any net money differences that 

arise from the proposed optional PairOff Service on the same day and 

facilitate the proposed optional Pair-Off 

Service. 

FICC does not believe that that the 

proposed technical changes described in 

Item II(A)1(v) above would have an 

impact on competition. These proposed 

technical changes would provide 

additional clarity, consistency, and 

accuracy within the Rules and would 

not affect Members’ rights and 

obligations. As such, FICC believes that 

these proposed rule changes would not 

have an impact on competition. 

(C) Clearing Agency’s Statement on 

Comments on the Proposed Rule 

Change Received From Members, 

Participants, or Others 

FICC has not received or solicited any 

written comments relating to this 

proposal. 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 

Within 45 days of the date of 

publication of this notice in the Federal 

Register or within such longer period 

up to 90 days (i) as the Commission may 

designate if it finds such longer period 

to be appropriate and publishes its 

reasons for so finding or (ii) as to which 

the self-regulatory organization 

consents, the Commission will: 

(A) By order approve or disapprove 

such proposed rule change, or 

(B) institute proceedings to determine 

whether the proposed rule change 

should be disapproved. 

The proposal shall not take effect 

until all regulatory actions required 

with respect to the proposal are 

completed. 

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–2020–015 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–2020–015. 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– 

2020–015 and should be submitted on 

or before December 29, 2020. 


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79060 Federal Register / Vol. 85, No. 236 / Tuesday, December 8, 2020 / Notices 

33 17 CFR 200.30–3(a)(12). 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4See Securities Exchange Act Release No. 56041 

(July 11, 2007), 72 FR 39114 (July 17, 2007) (SR– 

NYSEArca–2007–43) (Notice of Filing and Order 

Granting Accelerated Approval of Proposed Rule 

Change to List and Trade Shares of the iShares 

COMEX Gold Trust) (‘‘NYSE Arca Gold Order’’). 

The Commission previously approved listing of 

iShares COMEX Gold Trust on the American Stock 

Exchange LLC. See Securities Exchange Act Release 

No. 51058 (January 19, 2005), 70 FR 3749 (January 

26, 2005) (SR–Amex–2004–38) (granting approval 

to list and trade the Shares on Amex) (‘‘Amex Gold 

Order’’). See also Securities Exchange Act Release 

Nos. 50792 (December 3, 2004), 69 FR 71446 

(December 9, 2004) (SR–Amex–2004–38) (providing 

notice of Amex’s proposal to list and trade shares 

of the Trust) (‘‘Amex Gold Notice’’); 63398 

(November 30, 2010), 75 FR 76056 (December 7, 

2010) (SR–NYSEArca–2010–105) (Notice of Filing 

and Immediate Effectiveness of Proposed Rule 

Change Relating to the Calculation of Net Asset 

Value for the iShares Gold Trust). The following 

information about Shares of the iShares Gold Trust 

currently is required to be available on the iShares 

Gold Trust’s website pursuant to the Amex Gold 

Notice, Amex Gold Order and NYSE Arca Gold 

Order: (a) The prior business day’s NAV per Share; 

(b) Basket Gold Amount; (c) the reported Share 

closing price; (d) the present day’s Indicative Basket 

Gold Amount; (e) the midpoint of the bid-ask price 

in relation to the NAV as of the time the NAV is 

calculated (‘‘Bid-Ask Price’’); (f) calculation of the 

premium or discount of such price against such 

NAV; (g) data in chart form displaying the 

frequency distribution of discounts and premiums 

of the Bid-Ask Price against the NAV, within 

appropriate ranges for each of the four previous 

calendar quarters; (h) the prospectus; and (i) other 

applicable quantitative information, such as 

expense ratios, trading volumes, and the total return 

of the Shares. As stated in the Amex Gold Notice 

and the NYSE Arca Gold Order, the ‘‘Basket Gold 

Amount’’ is the corresponding amount of gold, 

measured in fine ounces, to be exchanged for an 

issuance of a basket of 50,000 Shares for the 

purpose of creating and redeeming the Shares. Also, 

as stated in the Amex Gold Notice and the NYSE 

Arca Gold Order, the ‘‘Indicative Basket Gold 

Amount’’ is the indicative amount of gold to be 

deposited for issuance of the Shares that 

Authorized Participants can use. The NAV per 

Share, Basket Gold Amount, Indicative Basket Gold 

Amount and Indicative Trust Value are available on 

the Trust’s website or through one or more major 

market data vendors, as described above, and are 

not available on the Exchange’s website. In 

addition, investors can access the gold spot price 

and gold futures prices through major market data 

vendors. The Indicative Trust Value also is 

available through one or more major market data 

vendors. 

5See Securities Exchange Act Release No. 58956 

(November 14, 2008), 73 FR 71074 (November 24, 

2008) (SR–NYSEArca–2008–124) (Notice of Filing 

and Order Granting Accelerated Approval of 

Proposed Rule Change to List Shares of iShares 

Silver Trust) (‘‘NYSE Arca Silver Order’’). The 

Commission previously approved listing of iShares 

Silver Trust on the American Stock Exchange LLC. 

See Securities Exchange Act Release No. 53521 

(March 20, 2006), 71 FR 14967 (March 24, 2006) 

(SR–Amex–2005–72) (‘‘Amex Silver Order’’). The 

following information about Shares of the iShares 

Silver Trust currently is required to be available on 

the Trust’s website pursuant to the Amex Silver 

Order and the NYSE Arca Silver Order: (a) The 

prior business day’s NAV and the reported closing 

price; (b) the midpoint of the bid-ask price in 

relation to the NAV as of the time the NAV is 

calculated (the ‘‘Bid-Asked Price’’); (c) calculation 

of the premium or discount of such price against 

such NAV; (d) data in chart form displaying the 

frequency distribution of discounts and premiums 

of the Bid-Ask Price against the NAV, within 

appropriate ranges for each of the four (4) previous 

calendar quarters; (e) the Basket Silver Amount; (f) 

the Indicative Basket Silver Amount; (g) the 

prospectus; and (h) other applicable quantitative 

information. The NAV per Share, Basket Silver 

Amount, Indicative Basket Silver Amount and 

Indicative Trust Value are available on the Trust’s 

website or through one or more major market data 

vendors, as described above, and are not available 

on the Exchange’s website. In addition, investors 

can access the silver spot price and silver futures 

prices through major market data vendors. The 

Indicative Trust Value also is available through one 

or more major market data vendors. 

6See Securities Exchange Act Release No. 56932 

(December 7, 2007), 72 FR 71178 (December 14, 

2007) (SR–NYSEArca–2007–112) (Notice of Filing 

and Order Granting Accelerated Approval of a 

Proposed Rule Change to List and Trade Shares of 

the iShares S&P GSCI Commodity-Indexed Trust) 

(‘‘GSCI Order’’, ’’ together with the Amex Gold 

Order and Amex Silver Order, the ‘‘Orders’’). See 

also, Securities Exchange Act Release No. 54025 

(June 21, 2006), 71 FR 36856 (June 28, 2006) (SR– 

NYSEArca–2006–12) (approving, among other 

things, the trading of the Shares on NYSE Arca 

pursuant to unlisted trading privileges). The 

Commission previously approved listing of the 

iShares S&P GSCI Commodity-Indexed Trust on the 

New York Stock Exchange, Inc. See Securities 

Exchange Act Release No. 54013 (June 16, 2006), 71 

FR 36372 (June 26, 2006) (SR–NYSE–2006–17) 

(approving listing and trading of the Shares on 

NYSE). The following information about Shares of 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.33

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2020–26901 Filed 12–7–20; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–90547; File No. SR– 

NYSEArca–2020–99] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change Regarding the Availability 

of Information for the iShares Gold 

Trust and the iShares Silver Trust 

Under NYSE Arca Rule 8.201–E 

(Commodity-Based Trust Shares) and 

iShares S&P GSCI Commodity-Indexed 

Trust Under Rule 8.203–E (Commodity 

Index Trust Shares) 

December 2, 2020. 

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

Securities Exchange Act of 1934 

(‘‘Act’’) 2 and Rule 19b–4 thereunder,3

notice is hereby given that, on 

November 23, 2020, NYSE Arca, Inc. 

(‘‘NYSE Arca’’ or ‘‘Exchange’’) filed 

with the Securities and Exchange 

Commission (‘‘Commission’’) the 

proposed rule change as described in 

Items I and II below, which Items have 

been prepared by the self-regulatory 

organization. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes certain 

changes regarding the availability of 

information for the iShares Gold Trust 

(formerly the iShares® COMEX Gold 

Trust) and the iShares Silver Trust, 

shares of which are currently listed on 

the Exchange under NYSE Arca Rule 

8.201–E (Commodity-Based Trust 

Shares), and the iShares S&P GSCI 

Commodity-Indexed Trust, shares of 

which currently are listed and traded on 

the Exchange under Rule 8.203–E 

(Commodity Index Trust Shares). The 

proposed rule change is available on the 

Exchange’s website at www.nyse.com, at 

the principal office of the Exchange, and 

at the Commission’s Public Reference 

Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

self-regulatory organization 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 those statements may be examined at 

the places specified in Item IV below. 

The Exchange has prepared summaries, 

set forth in sections A, B, and C below, 

of the most significant parts of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes certain 

changes regarding the dissemination of 

information on the respective websites 

for the iShares Gold Trust (formerly the 

iShares COMEX Gold Trust) 4 and the 

iShares Silver Trust,5 shares of which 

are currently listed on the Exchange 

under NYSE Arca Rule 8.201–E 

(Commodity-Based Trust Shares) and 

the terms of the applicable listing rules 

approved by the Commission, and the 

S&P GSCI Commodity-Indexed Trust, 

shares of which currently are listed and 

traded on the Exchange under Rule 

8.203–E (Commodity Index Trust 

Shares) and the terms of the applicable 

listing rules approved by the 

Commission.6


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