[Federal Register Volume 77, Number 74 (Tuesday, April 17, 2012)]
[Notices]
[Pages 22827-22828]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-9142]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-66785; File No. SR-FICC-2012-01]


Self-Regulatory Organizations; Fixed Income Clearing Corporation; 
Order Approving Proposed Rule Change To Make a Technical Correction to 
the Rule Relating to the Calculation of Funds-Only Settlement Amounts 
for Repo Brokers

April 11, 2012.

I. Introduction

    On February 14, 2012, the Fixed Income Clearing Corporation 
(``FICC'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change SR-FICC-2012-01 pursuant to 
Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act'') \1\ 
and Rule 19b-4 \2\ thereunder. The proposed rule change was published 
for comment in the Federal Register on March 5, 2012.\3\ The Commission 
received no comment letters regarding the proposal. For the reasons 
discussed below, the Commission is granting approval of the proposed 
rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Securities Exchange Act Release No. 34-66485 (February 28, 
2012), 77 FR 13164 (March 5, 2012). In its filing with the 
Commission, FICC included statements concerning the purpose of and 
basis for the proposed rule change. The text of these statements is 
incorporated into the discussion of the proposed rule change in 
Section II below.
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II. Description

    The proposed rule change consists of modifications to Rule 19, 
Section 4 of the rules of the Government Securities Division (``GSD'') 
of FICC. The purpose of the rule change is to make technical 
corrections to GSD Rule 19 (Special Provisions For Brokered Repo 
Transactions), Section 4 (Calculations of Funds-Only Settlement Amounts 
for Repo Brokers) as described below. GSD Rule 19, Section 4 states 
that FICC may retain any amount of a Credit Forward Mark Adjustment 
Payment that is in excess of the Cap \4\ and that interest earned on 
such amount shall be paid to the Repo Broker on the subsequent business 
day. The second part of this sentence is incorrectly stated because 
FICC pays interest to those who were debited forward mark adjustment 
amounts not those who were credited such amounts. On the following day 
(i.e., the day after the broker received the Credit Forward Mark 
Adjustment Payment) when the broker is debited the interest for the use 
of funds it received as a credit, the broker will be debited the 
interest on the amount that it actually received as a credit (i.e., it 
will not be debited interest for the amount of Credit payment withheld 
above the Cap). The rule is also revised to state that Repo Brokers 
with more than one Segregated Repo Account must aggregate Debit Forward 
Mark Adjustments and Credit Forward Mark Adjustment Payments in those 
accounts for purposes of the Cap. The Repo Brokers currently comply 
with this correction and the revision reflects current practice.
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    \4\ The GSD rules define ``Cap'' as any Debit Forward Mark 
Adjustment Payment or Credit Forward Mark Adjustment Payment up to a 
dollar amount, as determined by FICC from time to time, that is 
automatically collected from or paid to the Repo Broker, as 
applicable.
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III. Discussion

    Section 19(b)(2)(B) of the Act \5\ directs the Commission to 
approve a proposed rule change of a self-regulatory organization if it 
finds that such proposed rule change is consistent with the 
requirements of the Act and the rules and regulations thereunder 
applicable to such organization. In particular, Section 17A(b)(3)(F) 
\6\ of the Act requires, among other things, that the rules of a 
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 which are in the custody or 
control of such clearing agency or for which it is responsible. Because 
the proposed change would align FICC's rulebook with its practices and 
provide transparency in its processes, the Commission believes that the 
proposed rule change is consistent with FICC's obligations under the 
Act.
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    \5\ 15 U.S.C. 78s(b)(2)(B).
    \6\ 15 U.S.C. 78q-1(b)(3)(F).
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IV. Conclusion

    On the basis of the foregoing, the Commission finds that the 
proposed rule change is consistent with the requirements of the Act and 
in particular with the requirements of Section 17A of the Act and the 
rules and regulations thereunder.
    It is therefore ordered, pursuant to Section 19(b)(2) \7\ of the 
Act, that the proposed rule change (File No. SR-FICC-2012-01) be, and 
hereby is, approved.\8\
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    \7\ 15 U.S.C. 78s(b)(2).
    \8\ In approving the proposed rule change, the Commission 
considered the proposal's impact on efficiency, competition and 
capital formation. 15 U.S.C. 78c(f).


[[Page 22828]]


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    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary .
[FR Doc. 2012-9142 Filed 4-16-12; 8:45 am]
BILLING CODE 8011-01-P