78904 Federal Register / Vol. 85, No. 235 / Monday, December 7, 2020 / Notices 

50 15 U.S.C. 78s(b)(3)(A). 

51 17 CFR 240.19b–4(f). 

52 17 CFR 200.30–3(a)(12). 

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)(2). 

5Capitalized terms not defined herein are defined 

in the GSD Rules and the MBSD Rules, as 

applicable, available at http://www.dtcc.com/legal/ 

rules-and-procedures. 

III. Date of Effectiveness of the 

Proposed Rule Change, as Modified by 

Amendment No. 1, and Timing for 

Commission Action 

The foregoing rule change has become 

effective pursuant to Section 

19(b)(3)(A) 50 of the Act and paragraph 

(f) 51 of Rule 19b–4 thereunder. At any 

time within 60 days of the filing of the 

proposed rule change, as modified by 

Amendment No. 1, 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, as modified by Amendment No. 

1, 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– 

DTC–2020–014 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–DTC–2020–014. 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, as modified by Amendment No. 

1, that are filed with the Commission, 

and all written communications relating 

to the proposed rule change, as 

modified by Amendment No. 1, 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 DTC 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–DTC– 

2020–014 and should be submitted on 

or before December 28, 2020. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.52

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2020–26787 Filed 12–4–20; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–90544; File No. SR–FICC– 

2020–014] 

Self-Regulatory Organizations; Fixed 

Income Clearing Corporation; Notice of 

Filing and Immediate Effectiveness of 

a Proposed Rule Change, as Modified 

by Amendment No. 1, To Modify the 

Clearance Maintenance Fee, Reduce 

the End of Day Position Fee of the 

Government Securities Division, and 

Describe the Current Rebate Policy 

December 1, 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 

16, 2020, Fixed Income Clearing 

Corporation (‘‘FICC’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change. On November 30, 2020, FICC 

filed Amendment No. 1 to the proposed 

rule change, which revised a portion of 

the rule text and corresponding 

description in the notice relating to 

FICC’s current policy regarding the 

issuance of rebates to its members. FICC 

filed the proposed rule change, as 

modified by Amendment No. 1, 

pursuant to Section 19(b)(3)(A) of the 

Act 3 and Rule 19b–4(f)(2) thereunder.4

The proposed rule change, as modified 

by Amendment No. 1 is hereinafter 

referred to as the ‘‘Proposed Rule 

Change.’’ The Proposed Rule Change is 

described in Items I, II, and III below, 

which Items have been prepared 

primarily by FICC. The Commission is 

publishing this notice to solicit 

comments on the Proposed Rule Change 

from interested persons. 

I. Clearing Agency’s Statement of the 

Terms of Substance of the Proposed 

Rule Change 

The Proposed Rule Change consists of 

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

Clearing Rules (‘‘MBSD Rules’’) and 

Government Securities Division 

(‘‘GSD’’) Rulebook (‘‘GSD Rules’’ and 

together with the MBSD Rules, the 

‘‘Rules’’) in order to (i) modify the 

respective Clearing Fund Maintenance 

Fee (‘‘Maintenance Fee’’) of GSD and 

MBSD, (ii) reduce the end of day 

position fee of GSD, and (iii) include a 

description of FICC’s current policy 

regarding the issuance of rebates to GSD 

Members and MBSD Clearing Members, 

as described in greater detail 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 is proposing to amend the 

MBSD Rules and the GSD Rules in order 

to (i) modify the respective Maintenance 

Fee of GSD and MBSD, (ii) reduce the 

end of day position fee of GSD, and (iii) 

include a description of FICC’s current 

policy regarding the issuance of rebates 

to GSD Members and MBSD Clearing 

Members, as described in greater detail 

below. 


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6Securities Exchange Act Release No. 78529 

(August 10, 2016), 81 FR 54626 (August 16, 2016) 

(SR–FICC–2016–004). 

7Securities Exchange Act Release No. 83401 

(June 8, 2018), 83 FR 27812 (June 14, 2018) (SR– 

FICC–2018–003). 

8The Depository Trust & Clearing Corporation 

(‘‘DTCC’’) is the parent company of DTC, NSCC, 

and FICC. DTCC operates on a shared services 

model for DTC, NSCC, and FICC. Most corporate 

functions are established and managed on an 

enterprise-wide basis pursuant to intercompany 

agreements under which it is generally DTCC that 

provides a relevant service to DTC, NSCC, or FICC. 

9See File No. SR–DTC–2020–014 and File No. 

SR–NSCC–2020–018 available at https://

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

(i) Background 

FICC operates a cost plus low margin 

pricing model and has in place 

procedures to control costs and to 

regularly review pricing levels against 

costs of operation. It reviews pricing 

levels against its costs of operation 

typically during the annual budget 

process. The budget is approved 

annually by the Board. FICC’s fees are 

cost-based plus a markup as approved 

by the Board or management (pursuant 

to authority delegated by the Board), as 

applicable. This markup or ‘‘low 

margin’’ is applied to recover 

development costs and operating 

expenses and to accumulate capital 

sufficient to meet regulatory and 

economic requirements. 

a. Maintenance Fee 

FICC implemented the Maintenance 

Fee in 2016 in order to (i) diversify 

FICC’s revenue sources, mitigating its 

dependence on revenues driven by 

settlement volumes, and (ii) add a stable 

revenue source that would contribute to 

FICC’s operating margin by offsetting 

increasing costs and expenses.6 The 

Maintenance Fees for MBSD and GSD 

are effectively the same and charged to 

MBSD Clearing Members and GSD 

Netting Members (collectively, 

‘‘Members’’) in proportion to the 

Member’s deposit in their respective 

MBSD or GSD Clearing Fund 

(collectively, ‘‘Clearing Fund’’), as 

described below. 

The Maintenance Fee is calculated 

monthly, in arrears, as the product of 

(A) 0.25 percent and (B) the average of 

the Member’s cash deposit balance in 

the Clearing Fund as of the end of each 

day, for the month, multiplied by the 

number of days in that month and 

divided by 360. However, by its terms, 

the fee is waived if the monthly rate of 

return on FICC’s investment of the cash 

deposit balance of the Clearing Fund is 

less than 0.25 percent for the month 

(‘‘Waiver Provision’’). 

The Waiver Provision was included 

for the benefit of Members. FICC 

believed that if its monthly rate of 

return on the investment of the cash 

deposit balance in the Clearing Fund 

was less than 0.25 percent, then 

Members would likely be experiencing 

similarly low interest income on their 

deposits, including excess reserves, if 

applicable; in which case, FICC would 

waive the fee. Although this approach 

exposed FICC to the risk of not receiving 

revenue from the Maintenance Fee, 

FICC did not believe that such an 

exposure would be common, significant, 

or long-term. 

b. End of Day Position Fee 

Currently, the Fee Structure of the 

GSD Rules includes the end of day 

position fee, which is a position 

management fee. FICC implemented the 

end of day position fee in 2018.7 The 

current end of day position fee is $0.115 

per million par value. This end of day 

position fee is calculated for a GSD 

Member each Business Day based on the 

end of day gross position of the GSD 

Member (including positions of any 

GSD Non-Member that the GSD Member 

is clearing for) that Business Day. FICC 

determines the end of day gross position 

of a GSD Member by netting the par 

value of all compared buy/sell 

transactions, Repo Transactions, and 

unsettled obligations of the GSD 

Member (including any such activity 

submitted by the GSD Member for a 

GSD Non-Member that the GSD Member 

is clearing for) at the end of the Business 

Day by CUSIP Number and taking the 

sum of the absolute par value of each 

such CUSIP Number. 

The end of day position fee aims to 

align pricing with the costs of services 

provided by FICC because the end of 

day position fee is driven by position 

management. The end of day position 

fee aims to reflect the costs associated 

with end of day processing, overnight 

position management, and various risk 

and operational activities required to 

assure the ability of FICC to continue to 

provide a dependable, stable and 

efficient clearing and settlement service 

for GSD Members. 

c. Rebate 

FICC is also proposing to amend 

Section XII of the Fee Structure of the 

GSD Rules, the Important Note under 

Section I of the FICC MBSD Schedule of 

Charges Broker Account Group 

(‘‘Schedule of Charges Broker Account 

Group’’) of the MBSD Rules and Section 

I of the FICC MSBD Schedule of Charges 

Dealer Account Group (‘‘Schedule of 

Charges Dealer Account Group’’) of the 

MBSD Rules. The Proposed Rule 

Change would replace a current 

description of FICC’s policy on 

providing GSD Members and MBSD 

Clearing Members with a discount or 

surcharge with a description of its 

current policy regarding the issuance of 

rebates to GSD Members and MBSD 

Clearing Members. In connection with 

this change, the Proposed Rule Change 

would also change the title of Section 

XII of the Fee Structure of the GSD 

Rules from ‘‘Capital Base, Pricing and 

Rebate Policy’’ to ‘‘Rebate Policy’’ to 

better describe the policy described in 

this section. 

(ii) Proposed Changes 

a. Proposed Modification to the 

Maintenance Fee 

Due to the coronavirus global 

pandemic and overall reaction by the 

financial markets, the rate of return on 

FICC’s investment of the cash deposit 

balance in the Clearing Fund has fallen 

below 0.25 percent, triggering the 

Waiver Provision. However, application 

of the Waiver Provision in this instance 

has proven to be longer and more 

significant than what FICC originally 

contemplated when drafting the 

provision, resulting in a drop in FICC’s 

revenues. If unaddressed, FICC’s 

revenue could continue to deteriorate 

and negatively impact FICC’s long-term 

financial health. 

To address this issue, FICC is 

removing the Waiver Provision so that 

FICC would be able to generate revenue 

from the Maintenance Fee even if FICC’s 

monthly rate of return on the 

investment of the cash deposit balance 

in the Clearing Fund is less than 0.25 

percent. The ability to generate such 

revenue under such circumstances is 

important in helping FICC offset its 

costs and expenses in many economic 

environments. Additionally, the 

Proposed Rule Change would help 

provide consistent pricing between 

FICC and its affiliate clearing agencies, 

National Securities Clearing Corporation 

(‘‘NSCC’’) and The Depository Trust 

Company (‘‘DTC’’),8 as both NSCC and 

DTC have filed proposed rule changes 

concurrently with this filing that would 

result in the same calculation of their 

respective Maintenance Fee.9

To effectuate the proposed change 

described above, the Waiver Provision 

would be removed from (i) the 

Maintenance Fee in Section I (Fees) of 

the Schedule of Charges Broker Account 

Group in the MBSD Rules, (ii) the 

Maintenance Fee of Section 1(Fees) of 

the Schedule of Charges Dealer Account 

Group in the MBSD Rules, and (iii) 

Section XIII (Clearing Fund 


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10FICC manages its general business risk by 

holding sufficient liquid net assets funded by equity 

to cover potential general business losses so it can 

continue operations and services as going concerns 

if those losses materialize, in compliance with the 

requirements of Rule 17Ad–22(e)(15). 17 CFR 

240.17Ad–22(e)(15). FICC maintains a Clearing 

Agency Policy on Capital Requirements which 

defines the amount of capital it must maintain for 

this purpose and sets forth the manner in which 

this amount is calculated. See Securities Exchange 

Act Release No. 89363 (July 21, 2020), 85 FR 45276 

(July 27, 2020) (SR–FICC–2020–008) (amending 

original filing). 

Maintenance Fee) of the Fee Structure 

in the GSD Rules. 

b. Proposed Reduction of End of Day 

Position Fee 

FICC is proposing to reduce the end 

of day position fee from $0.115 per 

million par value to $0.105 per million 

par value. 

FICC believes that this proposed 

reduction in the end of day position fee 

would be consistent with FICC’s cost 

plus low-margin pricing model. As 

described above, FICC regularly reviews 

pricing levels against its costs of 

operation typically during the annual 

budget process. FICC determined during 

the 2020 annual budget process that the 

proposed reduction in the end of day 

position fee would help better align 

costs to revenue and be consistent with 

its cost plus low-margin pricing model. 

In addition, FICC believes a proposed 

reduction in one fee (rather than in a 

number of fees) is a more simple and 

clear way for FICC to continue to 

generate sufficient revenues to cover its 

operating costs plus generate a low net 

income operating margin (i.e., to be 

consistent with its pricing model). 

Furthermore, FICC believes that, with 

the proposed reduction in the end of 

day position fee, all GSD Members 

would benefit from a lower end of day 

position fee while, as described above, 

still enabling FICC to continue to 

generate sufficient revenues to cover its 

operating costs plus generate a low net 

income operating margin. As described 

above, because the end of day position 

fee is calculated based on the gross 

position of the GSD Members, GSD 

Members that generate higher levels of 

activity and make greater use of FICC’s 

services would generally be subject to a 

higher overall amount in terms of the 

end of day position fee (similar to the 

Maintenance Fee described above). 

Conversely, GSD Members that generate 

lower levels of activity and use FICC’s 

services less would generally be subject 

to smaller overall amount in terms of 

their end of day position fee. Therefore, 

some GSD Members may see a greater 

reduction in the overall amount of the 

fee given that it is based on the level of 

their activity. The described change 

would not adjust that allocation. 

To effectuate the proposed change 

described above, FICC would revise the 

end of day position fee from $0.115 per 

million par value to $0.105 per million 

par value in Section II.B of the Fee 

Structure of the GSD Rules. 

c. Proposed Changes to the Rebate 

Policy 

FICC is also proposing to amend 

Section XII of the Fee Structure of the 

GSD Rules, the Important Note under 

Section I of the Schedule of Charges 

Broker Account Group of the MBSD 

Rules and the Important Note under 

Section I of the Schedule of Charges 

Dealer Account Group of the MBSD 

Rules. The Proposed Rule Change 

would replace a current description of 

FICC’s policy on providing GSD 

Members and MBSD Clearing Members 

with a discount or surcharge with a 

description of its current policy 

regarding the issuance of rebates to GSD 

Members and MBSD Clearing Members. 

Currently, Section XII of the Fee 

Structure of the GSD Rules, the 

Important Note under Section I of the 

Schedule of Charges Broker Account 

Group of the MBSD Rules and the 

Important Note under Section I of the 

Schedule of Charges Dealer Account 

Group of the MBSD Rules all include an 

outdated description of FICC’s policy to 

adjust GSD Members’ and MBSD 

Clearing Members’ invoices based on 

FICC’s revenues. This description states 

that FICC may adjust invoices down in 

the form of a discount or up in the form 

of a surcharge, based on its revenues. 

FICC did historically provide GSD 

Members and MBSD Clearing Members 

with a discount on their invoices, but it 

does not have any record of adjusting 

invoices up, in the form of a surcharge, 

in the past. 

FICC views its practice of providing a 

rebate to GSD Members and MBSD 

Clearing Members as a corporate 

function, and not related to its operation 

as a self-regulatory organization. An 

FICC rebate is essentially a return of the 

revenue that FICC collects through the 

fees it charges GSD Members and MBSD 

Clearing Members for its services (as set 

forth in the Fee Structure of the GSD 

Rules, the Schedule of Charges Broker 

Account Group of the MBSD Rules and 

Schedule of Charges Dealer Account 

Group of the MBSD Rules). Rebates are 

not related to the amounts GSD 

Members and MBSD Clearing Members 

deposit with FICC as their Required 

Fund Deposits, which are made up of 

risk-based margin charges. The 

determination to provide a rebate is 

made at the corporation-level, based on 

a number of factors and considerations, 

as described below, and is not a separate 

determination made for each individual 

GSD Member and MBSD Clearing 

Member. 

Following the financial recession of 

2008, FICC ceased providing such 

discounts in connection with the 

implementation of a financial strategy to 

strengthen its financial position and 

health. As a result of that strategy and 

improved financial markets, in 2019, 

FICC determined to reinstitute its 

practice of discounting GSD Members’ 

and MBSD Clearing Members’ invoices, 

in the form of a rebate, based on its 

financial performance. In connection 

with this decision, FICC is proposing to 

replace the language regarding 

adjustment of invoices in Section XII of 

the Fee Structure of the GSD Rules, the 

Important Note under Section I of the 

Schedule of Charges Broker Account 

Group of the MBSD Rules and the 

Important Note under Section I of the 

Schedule of Charges Dealer Account 

Group of the MBSD Rules to describe its 

current rebate practice. This proposed 

change would not change FICC’s current 

rebate practice but would provide GSD 

Members and MBSD Clearing Members 

with transparency into this practice and 

the governance around rebates. 

First, the Proposed Rule Change 

would change the title of Section XII of 

the Fee Structure of the GSD Rules from 

‘‘Capital Base, Pricing and Rebate 

Policy’’ to ‘‘Rebate Policy’’ to better 

describe the policy described in this 

section. 

Second, the proposed language would 

describe that FICC may provide GSD 

Members and MBSD Clearing Members 

with a rebate of excess net income, and 

would define excess net income as 

income of either FICC or related to one 

business line of FICC after application 

of expenses, capitalization costs, and 

applicable regulatory requirements. The 

language would also state that a rebate 

is discretionary, to make it clear that 

FICC is not obligated to provide a 

rebate. 

Third, the proposed language would 

state that a rebate would be approved by 

the Board. The proposed language 

would also state that, in determining 

whether a rebate is appropriate, the 

Board would consider one or more of 

the following, as appropriate: FICC’s 

regulatory capital requirements,10

anticipated expenses, investment needs, 

anticipated future expenses with respect 

to improvement or maintenance of 

FICC’s operations, cash balances, 

financial projections, and appropriate 

level of shareholders’ equity. 

Fourth, the proposed language would 

state that, if the Board determined to 


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11 15 U.S.C. 78q–1(b)(3)(D). 

12 17 CFR.17Ad–22(e)(23)(ii). 

13 15 U.S.C. 78q–1(b)(3)(D). 

14 Id. 

15See Rule 4, GSD Rules and Rule 4, MBSD 

Rules, supra note 5. 

16 Id. 

17See supra note 9. 

18 15 U.S.C. 78q–1(b)(3)(D). 

issue a rebate, it would set a rebate 

period and a rebate payment date, both 

of which are used to determine which 

GSD Members and MBSD Clearing 

Members are eligible for a rebate. The 

proposed language would state that GSD 

Members and MBSD Clearing Members 

that maintain their membership during 

all or a portion of the rebate period and 

on the rebate payment date are eligible 

for a rebate. 

Finally, the proposed language would 

describe how rebates are applied to the 

invoices of eligible GSD Members and 

MBSD Clearing Members. The proposed 

language would state that rebates are 

applied to all eligible GSD Members and 

MBSD Clearing Members on a pro-rata 

basis based on such GSD Members’ and 

MBSD Clearing Members’ gross fees 

paid to FICC within the applicable 

rebate period, excluding pass-through 

fees and interest earned on cash 

deposits to the Clearing Fund. The 

proposed language would also state that 

rebates are applied to eligible Members’ 

invoices on the rebate payment date as 

either a reduction in fees owed or, if 

fees owed are lower than the allocated 

rebate amount, a payment of such 

difference. The proposed language 

would also note that rebate amounts 

may be adjusted for miscellaneous 

charges and discounts. 

(iii) Expected Member Impact 

The Proposed Rule Change is 

expected to increase FICC’s annual 

revenue by approximately $14.5 

million. 

In general, FICC anticipates that the 

proposal would result in fee decreases 

for approximately 27% of impacted 

affiliated family of Members and fee 

increases for approximately 73% of 

impacted affiliated family of Members. 

Of the impacted affiliated family of 

Members that may have their fees 

decrease, 100% of those affiliated family 

of Members would have a decrease 

between $1,000 and $100,000 per year. 

Of the impacted affiliated family of 

Members that may have their fees 

increase, approximately 2% of those 

impacted affiliated family of Members 

would have an increase of less than 

$1,000 per year, approximately 60% of 

those impacted affiliated family of 

Members would have an increase of 

$1,000 to $100,000 per year, 

approximately 32% of those impacted 

affiliated family of members would have 

an increase of $100,000 to $1 million 

per year, and approximately 6% of those 

impacted affiliated family of Members 

would have an increase of $1 million or 

greater per year. 

(iv) Member Outreach 

FICC has conducted ongoing outreach 

to each Member in order to provide 

them with notice of the proposed 

changes and the anticipated impact for 

the Member. 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, 2021. As proposed, a 

legend would be added to the Fee 

Structure of the GSD Rules, the 

Schedule of Charges Broker Account 

Group of the MBSD Rules and the 

Schedule of Charges Dealer Account 

Group of the MBSD Rules, as 

appropriate, stating there are changes 

that became effective upon filing with 

the Commission but have not yet been 

implemented. The proposed legend 

would include the date on which such 

changes would be implemented and the 

file number of this proposal, and state 

that once this proposal is implemented, 

the legend would automatically be 

removed. 

2. Statutory Basis 

FICC believes this proposal is 

consistent with the requirements of the 

Act, and the rules and regulations 

thereunder applicable to a registered 

clearing agency. Specifically, FICC 

believes the proposed changes to (i) 

modify the respective Maintenance Fee 

of GSD and MBSD and (ii) reduce the 

end of day position fee of GSD are 

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

the Act 11 and the Proposed Rule Change 

to include a description of FICC’s 

current policy regarding the issuance of 

rebates to GSD Members and MBSD 

Clearing Members is consistent with 

Rule 17Ad–22(e)(23)(ii),12 as 

promulgated under the Act, for the 

reasons described below. 

Section 17A(b)(3)(D) of the Act 

requires that the rules of a clearing 

agency, such as FICC, provide for the 

equitable allocation of reasonable dues, 

fees, and other charges among its 

participants.13 FICC believes that the 

proposed changes to the Maintenance 

Fee and the end of day position fee are 

consistent with this provision of the 

Act.14

As described above, the proposal 

would modify the Maintenance Fee to 

remove the Waiver Provision. Because 

the proposed change would not alter 

how the Maintenance Fee is currently 

allocated (i.e., charged) to Members, 

FICC believes the fee would continue to 

be equitably allocated. More 

specifically, as mentioned above, the 

Maintenance Fee is and would continue 

to be charged to all Members in 

proportion to the Member’s cash deposit 

balance in the Clearing Fund. As such, 

and as is currently the case, Members 

that make greater use of FICC’s services 

would generally be subject to a larger 

Maintenance Fee because such Member 

would typically be required to maintain 

a larger Clearing Fund deposit pursuant 

to the respective MBSD Rules or GSD 

Rules.15 Conversely, Members that use 

FICC’s services less would generally be 

subject to a smaller Maintenance Fee 

because such Members would typically 

be required to maintain a smaller 

Clearing Fund deposit pursuant to the 

respective MBSD Rules or GSD Rules.16

The described change would not adjust 

that allocation. For this reason, FICC 

believes the Maintenance Fee would 

continue to be equitably allocated 

among Members. 

Similarly, FICC believes that the 

Maintenance Fee would continue to be 

a reasonable fee under the proposed 

change described above. Although 

removal of the Waiver Provision means 

that Members could be assessed a 

Maintenance Fee at times when they 

may not otherwise have been assessed 

the fee, the removal of the provision 

would enable FICC to collect needed 

revenue from the fee even in a difficult 

economic environment. Additionally, 

the proposed change would help 

establish consistent pricing between 

FICC and its affiliates, NSCC and DTC, 

regarding each of their respective 

Maintenance Fees, as concurrent 

proposals by NSCC and DTC would 

result in the same calculation.17 For this 

reason, FICC believes the Maintenance 

Fee would continue to be reasonable. 

In addition, FICC believes the 

proposed change to reduce the end of 

day position fee in the GSD Rules is 

consistent with Section 17A(b)(3)(D).18

The proposal would provide for the 

equitable allocation of fees among 

participants because the proposal would 

apply to all participants, such that all 

Members would be subject to this 

proposed reduction of the end of the 

day position fee following the 

implementation of the proposed change. 

The end of day position fee is and 


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78908 Federal Register / Vol. 85, No. 235 / Monday, December 7, 2020 / Notices 

19 Id. 

20 17 CFR 240.17Ad–22(e)(23)(ii). 

21 Id. 

22 15 U.S.C. 78q–1(b)(3)(I). 23 15 U.S.C. 78s(b)(3)(A). 

would continue to be charged to all GSD 

Members. 

Because these proposed changes 

would not alter how the end of day 

position fee is currently allocated (i.e., 

charged) to Members, FICC believes 

these fees would continue to be 

equitably allocated. More specifically, 

as mentioned above, the end of day 

position fee is and would continue to be 

charged to all GSD Members based on 

their end of day gross positions. As 

such, and is currently the case, GSD 

Members that have more activity and 

make greater use of FICC’s services 

would generally be subject to a greater 

overall amount in terms of their end of 

day position fee. Conversely, GSD 

Members that generate lower levels of 

activity and use FICC’s services less 

would generally be subject to smaller 

overall amount in terms of their end of 

day position fee. For this reason, FICC 

believes the end of day position fee 

would continue to be equitably 

allocated among GSD Members. 

Similarly, FICC believes that the end 

of day position fee would continue to be 

a reasonable fee under the proposed 

change described above. The proposed 

reduction of the end of the day position 

fee would be consistent with FICC’s cost 

plus low-margin pricing model. With 

the proposed reduction of the end of 

day position fee, FICC believes it would 

still be able to continue to generate 

sufficient revenues to cover its operating 

costs plus generate a low net income 

operating margin while also enabling all 

GSD Members to benefit from a lower 

end of day position fee. For this reason, 

FICC believes the end of day position 

fee would continue to be reasonable. 

Based on the forgoing, FICC believes 

the Proposed Rule Change is consistent 

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

Rule 17Ad–22(e)(23)(ii) under the Act 

requires that FICC establish, implement, 

maintain and enforce written policies 

and procedures reasonably designed to 

provide sufficient information to enable 

participants to identify and evaluate the 

risks, fees, and other material costs they 

incur by participating in the covered 

clearing agency.20 The Proposed Rule 

Change would replace an outdated 

description of FICC’s past practice of 

adjusting GSD Members’ and MBSD 

Clearing Members’ invoices, with an 

updated description of its current rebate 

practice, which, when applicable, 

results in a reduction to the amount of 

fees a GSD Member and MBSD Clearing 

Member owes to FICC. By updating 

Section XII of the Fee Structure of the 

GSD Rules, the Important Note under 

Section I of the Schedule of Charges 

Broker Account Group of the MBSD 

Rules and the Important Note under 

Section I of the Schedule of Charges 

Dealer Account Group of the MBSD 

Rules with a clear, transparent 

description of FICC’s current rebate 

practice, the Proposed Rule Change 

would provide GSD Members and 

MBSD Clearing Members with sufficient 

information to evaluate the fees they 

may incur by participating in FICC. 

Therefore, FICC believes the Proposed 

Rule Change would be consistent with 

the requirements of Rule 17Ad– 

22(e)(23)(ii).21

(B) Clearing Agency’s Statement on 

Burden on Competition 

FICC does not believe that the 

Proposed Rule Changes to (i) modify the 

Maintenance Fee of GSD and MBSD and 

(ii) update and enhance the 

transparency of FICC’s policy regarding 

the issuance of rebates to GSD Members 

and MBSD Clearing Members in the 

GSD Rules and MBSD Rules would have 

any impact, or impose any burden, on 

competition among its Members for the 

reasons described below. FICC believes 

that the proposed change to reduce the 

end of day position fee could promote 

competition among GSD Members for 

the reasons described below. 

FICC does not believe that the 

proposed change to the Maintenance 

Fee would have an impact on 

competition among its Members. As 

described above, the Maintenance Fee is 

charged ratably based on Members’ use 

of FICC’s services, as reflected in 

Members’ cash deposit balances to the 

Clearing Fund. Thus, the fee is designed 

to be reflective of each Member’s 

individual activity at FICC. 

Nevertheless, if removal of the Waiver 

Provision, and the resulting imposition 

of the Maintenance Fee at a time when 

a Member would not have otherwise 

been assessed the fee, would create a 

competitive burden for a Member, FICC 

believes such a burden would not be 

significant, given that the amount 

assessed would be the same but for 

application of the Waiver Provision. 

Moreover, FICC believes that any such 

burden would be necessary and 

appropriate in furtherance of the 

purposes of the Act, as permitted by 

Section 17A(b)(3)(I) of the Act.22

The burden would be necessary 

because it is essential that FICC offset 

some of its costs and expenses with 

stable revenue generated from the 

Maintenance Fee, regardless of the 

economic environment. As described 

above, not doing so could adversely 

affect FICC’s financial health. The 

burden would be appropriate because, 

as described above, the Maintenance 

Fee is calculated, using a balanced 

formula, to assess a fee that is reflective 

of the Member’s use of FICC’s services, 

so that FICC can defray some of its costs 

and expenses in providing those 

services. 

FICC believes that the proposed 

reduction of the end of day position fee 

could promote competition among GSD 

Members by potentially reducing GSD 

Members’ operating costs. As described 

above, the proposed reduction of the 

end of day position fee would apply 

equally to all GSD Members. 

In addition, FICC does not believe the 

Proposed Rule Change to describe its 

current rebate practice would have any 

impact, or impose any burden, on 

competition among its Members. As 

described above, this Proposed Rule 

Change would replace information 

currently in Section XII of the Fee 

Structure of the GSD Rules, the 

Important Note under Section I of the 

Schedule of Charges Broker Account 

Group of the MBSD Rules and Section 

I of the Schedule of Charges Dealer 

Account Group of the MBSD Rules, with 

a description of FICC’s current rebate 

practice. As described in the proposed 

language, under its current practice, 

rebates are allocated to eligible Members 

on a pro-rata basis based on such 

Members’ gross fees paid to FICC within 

the applicable rebate period. Therefore, 

the current practice is applied equally to 

all eligible Members. The Proposed Rule 

Change to provide Members with 

transparency into this practice would 

not cause any increase or decrease in 

the rebates Members may receive. 

Therefore, this Proposed Rule Change 

would not have any impact, or impose 

any burden, on competition among 

Members. 

(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 

The foregoing rule change has become 

effective pursuant to Section 

19(b)(3)(A) 23 of the Act and paragraph 


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Federal Register / Vol. 85, No. 235 / Monday, December 7, 2020 / Notices 78909 

24 17 CFR 240.19b–4(f). 25 17 CFR 200.30–3(a)(12). 

(f) 24 of Rule 19b–4 thereunder. 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–2020–014 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–2020–014. 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– 

2020–014 and should be submitted on 

or before December 28, 2020. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.25

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2020–26786 Filed 12–4–20; 8:45 am] 

BILLING CODE 8011–01–P 

SOCIAL SECURITY ADMINISTRATION 

[Docket No. SSA–2020–0026] 

Privacy Act of 1974; System of 

Records 

AGENCY: Office of the General Counsel 

and Office of Hearings Operations, 

Social Security Administration (SSA). 

ACTION: Notice of a modified system of 

records. 

SUMMARY: In accordance with the 

Privacy Act, we are issuing public 

notice of our intent to modify an 

existing system of records entitled, 

Representative Disqualification, 

Suspension, and Non-Recognition File 

(60–0219), last published on May 10, 

2010. This notice publishes details of 

the modified system as set forth below 

under the caption, SUPPLEMENTARY

INFORMATION. 

DATES: The system of records notice 

(SORN) is applicable upon its 

publication in today’s Federal Register, 

with the exception of the new routine 

uses, which are effective January 6, 

2021. We invite public comment on the 

routine uses or other aspects of this 

SORN. In accordance with 5 U.S.C. 

552a(e)(4) and (e)(11), we are providing 

the public a 30-day period in which to 

submit comments. Therefore, please 

submit any comments by January 6, 

2021. 

ADDRESSES: The public, Office of 

Management and Budget (OMB), and 

Congress may comment on this 

publication by writing to the Executive 

Director, Office of Privacy and 

Disclosure, Office of the General 

Counsel, SSA, Room G–401 West High 

Rise, 6401 Security Boulevard, 

Baltimore, Maryland 21235–6401, or 

through the Federal e-Rulemaking Portal 

at http://www.regulations.gov. Please 

reference docket number SSA–2020– 

0026. All comments we receive will be 

available for public inspection at the 

above address and we will post them to 

http://www.regulations.gov. 

FOR FURTHER INFORMATION CONTACT: 

Tristin Dorsey, Government Information 

Specialist, Privacy Implementation 

Division, Office of Privacy and 

Disclosure, Office of the General 

Counsel, SSA, Room G–401 West High 

Rise, 6401 Security Boulevard, 

Baltimore, Maryland 21235–6401, 

telephone: (410) 966–5855, email: 

tristin.dorsey@ssa.gov. 

SUPPLEMENTARY INFORMATION: We are 

modifying the system manager and 

location to clarify the offices responsible 

for maintaining the system and the 

locations of the records within the 

system. We are clarifying that only the 

Office of the General Counsel (OGC) 

may make disclosures to the agencies 

and entities listed in routine uses Nos. 

2, 3, and 4. 

In addition, we are expanding routine 

use No. 4 to include that OGC may make 

disclosures to the subject of an 

investigation or his or her legal counsel, 

for the purposes of identifying the 

representative of record, explaining the 

purpose of the request, and identifying 

and requesting information SSA needs 

to facilitate the investigation of, or 

litigation against, a representative. We 

are clarifying the language in routine 

use Nos. 8 and 17 for easier reading. We 

are also clarifying that we will retrieve 

records by claimant identification 

number and other claimant information 

that is relevant to the investigation. 

Lastly, we are modifying the notice 

throughout to correct miscellaneous 

stylistic formatting and typographical 

errors of the previously published 

notice, and to ensure the language reads 

consistently across multiple systems. 

We are republishing the entire notice for 

ease of reference. 

In accordance with 5 U.S.C. 552a(r), 

we have provided a report to OMB and 

Congress on this modified system of 

records. 

Matthew Ramsey, 

Executive Director, Office of Privacy and 

Disclosure, Office of the General Counsel. 

SYSTEM NAME AND NUMBER: 

Representative Disqualification, 

Suspension, and Non-Recognition 

Information File, 60–0219. 

SECURITY CLASSIFICATION: 

Unclassified. 

SYSTEM LOCATION: 

Social Security Administration, Office 

of the General Counsel, Office of 

General Law, 6401 Security Boulevard, 


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