1278 Federal Register / Vol. 78, No. 5 / Tuesday, January 8, 2013 / Notices 

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

2 17 CFR 240.19b–4. 

3Securities Exchange Act Release No. 68245 

(November 15, 2012), 77 FR 69913 (November 21, 

2012). 

4A Pool Instruct is an input used by a member 

to submit pool details directly into the Real-Time 

Trade Matching ® (‘‘RTTM®’’) system for bilateral 

matching and assignment to a corresponding open 

TBA position as a prerequisite to the pool netting 

process. 

5See MBSD Rule 8 Section 3. 

6See MBSD Rule 1, Definitions. 

7 ‘‘Purchase and Sale Report’’ is defined as the 

report furnished by the Corporation reflecting a 

member’s Compared Trades in Eligible Securities.’’ 

See MBSD Rule 1, Definitions. 

8 ‘‘Open Commitment Report’’ is defined as the 

report furnished by the Corporation to members 

reflecting such member’s open commitments in the 

Clearing System. See MBSD Rule 1, Definitions. 

SUMMARY: The Postal Service gives 

notice of filing a request with the Postal 

Regulatory Commission to add Global 

Expedited Package Services—NonPublished Rates 4 (GEPS–NPR 4) to the 

Competitive Products List. 

DATES: Effective date: January 8, 2013. 

FOR FURTHER INFORMATION CONTACT: 

Patricia A. Fortin, 202–268–8785. 

SUPPLEMENTARY INFORMATION: The 

United States Postal Service® hereby 

gives notice that, pursuant to 39 U.S.C. 

3642, on December 21, 2012, it filed 

with the Postal Regulatory Commission 

a Request of the United States Postal 

Service to add Global Expedited 

Package Services—Non-Published Rates 

4 (GEPS–NPR 4) to the Competitive 

Products List and Notice of Filing 

GEPS–NPR 4 Model Contract and 

Application for Non-public Treatment 

of Materials Filed Under Seal. 

Documents are available at 

www.prc.gov, Docket Nos. MC2013–27 

and CP2013–35. 

Stanley F. Mires, 

Attorney, Legal Policy & Legislative Advice. 

[FR Doc. 2013–00074 Filed 1–7–13; 8:45 am] 

BILLING CODE 7710–12–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–68533; File No. SR–NYSE– 

2012–74] 

Self-Regulatory Organizations; New 

York Stock Exchange LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change Extending the 

Bond Trading License and the Bond 

Liquidity Provider Pilot Program 

December 21, 2012. 

Correction 

In notice document 2012–31260, 

appearing on pages 77166–77167 in the 

issue of Monday, December 31, 2012, 

make the following correction: 

On page 77166, in the second column, 

the Release No. and the File No., are 

corrected to read as set forth above. 

[FR Doc. C1–2012–31260 Filed 1–7–13; 8:45 am] 

BILLING CODE 1505–01–D 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–68555; File No. SR–FICC– 

2012–07] 

Self-Regulatory Organizations; Fixed 

Income Clearing Corporation; Order 

Approving Proposed Rule Change 

Relating to Enhancements That the 

Mortgage-Backed Securities Division 

Intends To Implement to its Services 

and Certain Other Clarifications and 

Corrections to Its Rules 

January 2, 2013. 

I. Introduction 

On November 6, 2012, the Fixed 

Income Clearing Corporation (‘‘FICC’’ or 

the ‘‘Corporation’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) proposed rule change 

SR–FICC–2012–07 pursuant to Section 

19(b)(1) of the Securities Exchange Act 

of 1934 (‘‘Act’’) 1 and Rule 19ba–4 

thereunder.2 The proposed rule change 

was published for comment in the 

Federal Register on November 21, 

2012.3 No comments letters were 

received on the proposed rule change. 

This order approves the proposed rule 

change. 

II. Description 

The proposed rule change relates to 

certain enhancements that the MortgageBacked Securities Division (‘‘MBSD’’) of 

FICC intends to implement to its 

services. In addition, FICC proposes to 

make certain corrections and 

clarifications to the MBSD Rules. As 

noted below, some of the proposed 

changes do not require revisions to the 

MBSD Rules. 

1. Expansion of Pool Netting To Include 

Pool Instructs From the Previous 

Settlement Months 

MBSD proposed to further extend 

pool netting benefits to its members by 

capturing Pool Instructs 4 submitted for 

allocations made after the traded pool’s 

settlement month has passed. The 

proposed changes allow more activity 

into the pool net which results in fewer 

settlements. 

Currently, MBSD’s pool netting 

process only nets Pool Instructs for the 

current delivery date if their 

corresponding contractual settlement 

dates (‘‘CSD’’) are also in the current 

month.5 For example, with respect to a 

delivery date of August 14, 2012, 

MBSD’s pool netting process would 

only net Pool Instructs having a CSD 

ranging from August 1, 2012 through 

August 14, 2012 and having a delivery 

date of August 14, 2012. As such, only 

Pool Instructs having a CSD in the 

current month will be included in pool 

netting. 

The proposed new process will net 

Pool Instructs from previous settlement 

months that are submitted for delivery 

dates in the current month. For 

example, if we assume that today is 

August 13, 2012, and a member submits 

multiple Pool Instructs all having a CSD 

equal to July 12, 2012 and a delivery 

date equal to August 14, 2012, on the 

evening of August 13th, these Pool 

Instructs would be netted against each 

other to arrive at a single pool net 

settlement position for the July 12, 2012 

CSD and August 14th delivery date. 

The proposed changes do not require 

revisions to the text of the MBSD Rules. 

2. Notification of Settlement for 

Specified Pool Trades 

A Notification of Settlement (‘‘NOS’’) 

is an instruction submitted to the 

Corporation by a purchasing or selling 

clearing member which reflects the 

settlement of a Settlement Balance 

Order Trade, Trade-for-Trade 

Transaction or Specified Pool Trade 

(‘‘SPT’’).6 MBSD is proposing to change 

the manner in which NOS processing 

occurs for SPTs so that it follows similar 

processing rules as those applied to 

NOS for Settlement Balance Order 

Trades and Trade-for-Trade 

Transactions. 

Currently, MBSD Rule 10 Section 2 

states that the trade details for a NOS 

submitted by both parties of a SPT must 

fully match in order for the clearance of 

the SPTs to be reflected on the 

member’s Purchase and Sale Report 7 or 

both parties must submit a cancellation 

of the transaction in order for the 

transaction to be deleted from each 

party’s respective Open Commitment 

Report.8

MBSD proposed to enhance the NOS 

for SPTs by no longer requiring the 

current face value submitted on each 


srobinson on DSK4SPTVN1PROD with 
Federal Register / Vol. 78, No. 5 / Tuesday, January 8, 2013 / Notices 1279 

9See MBSD Rule 1, Definitions. 

10Securities Exchange Act Release No. 66550 

(March 9, 2012); 77 FR 15155 (March 14, 2012). 

11 15 U.S.C. 78s(b)(2)(C). 

12 15 U.S.C. 78q–1(b)(3)(F). 

13 15 U.S.C. 78q–1(b)(3)(F). 

14 15 U.S.C. 78q–1. 

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

16 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). 

member’s NOS to exactly match the 

current face value of the SPT. Instead, 

members will have the ability to submit 

and match multiple NOS to reduce the 

SPT current face until it is fully settled. 

For example, if a SPT has a current face 

value of $125MM and the pool number 

of the trade has a factor of 0.975, FICC 

will accept either (a) one piece of NOS 

for $125,000,000 or (b) three pieces of 

NOS for $48,750,000, $48,750,000 and 

$27,500,000. The current face values 

equal an original face settlement value 

of $50,000,000, $50,000,000 and 

$28,205,128. 

In addition to the above, MBSD will 

apply a tolerance of +/¥ $1 when 

matching buy and sell NOS for SPT 

trades to account for differences in 

rounding conventions used by members 

to convert original face to current face 

on their NOS. 

The proposed changes will make NOS 

for SPTs similar to NOS for Settlement 

Balance Order Trades and Trade-forTrade Transactions whereby matching is 

permitted within a tolerance and 

multiple NOS may be submitted and 

matched separately until the trade is 

fully settled. 

The proposed changes require 

revisions to the text of the MBSD Rules. 

3. Comparison of Dummy Pool Number 

to Valid Pool Number 

FICC supports the submission of a 

defined generic or ‘‘dummy’’ pool 

number on NOS instead of a valid pool 

number. A dummy pool is a standard 

convention used by members when the 

actual pool number is not readily 

available to some members. Currently, 

the pool number is a matching criterion 

on NOS. Consequently, if one member 

submits a dummy pool number and the 

other enters a valid pool number the 

NOS will not compare even though all 

of the other matching criteria are the 

same. In an effort to address this, FICC 

is proposing to change its processing in 

order to allow matching of NOS when 

all mandatory terms compare and one 

member submits a dummy pool number 

and the other member submits a valid 

pool. 

The proposed changes do not require 

revisions to the text of the MBSD Rules. 

4. Automatically Marking Certain Open 

TBA Trades as Fully Settled 

Mortgage-backed securities trades 

settle with an industry-accepted 

variance of 0.01% (i.e., $100 per 

$1MM). When FICC applies NOS to 

open trades, it does so using the upper 

limit of the variance to ensure that 

trades are not marked as fully settled 

until all NOS have been received and 

processed by FICC. However, because 

trades may settle using any value within 

the variance, FICC’s processing may 

leave residual trade amounts open on its 

books for trades that have actually been 

fully settled. To address this, FICC is 

proposing to automatically generate 

internal NOS which will mark the 

residual trade as fully settled. The FICC 

generated NOS will occur on the last 

business day of each month, in every 

instance where a member has a To-BeAnnounced (‘‘TBA’’) trade with an open 

par that falls below an established 

threshold. The threshold is initially 

contemplated to be $1000 par, however, 

this may be modified following member 

feedback. All changes to the threshold 

will be provided in advance to members 

via Important Notice. 

The proposed changes require 

revisions to the text of the MBSD Rules. 

5. Corrections and Clarification to the 

MBSD Rules 

The MBSD Rules define the term 

‘‘Fully Compared’’ as ‘‘* * * trade 

input submitted by a Broker matches 

trade input submitted by each Dealer on 

whose behalf the Broker is acting the 

Net Position Match Mode.’’ 9 The phrase 

‘‘in accordance with’’ was inadvertently 

deleted from this definition when it was 

revised in connection with Amendment 

No. 1 to SR–FICC–2008–01.10 FICC 

proposes to restore this phrase so that 

the definition states the following: 

‘‘* * * trade input submitted by a 

Broker matches trade input submitted 

by each Dealer on whose behalf the 

Broker is acting in accordance with the 

Net Position Match Mode.’’ 

In the second to last paragraph of 

MBSD Rule 2A Section 1, there is a 

sentence which states that the 

Corporation will determine whether the 

applicants in ‘‘categories (g and i)’’ of 

the referenced Section will be 

designated as tier one or tier two 

members. FICC proposes to correct the 

typographical error in the crossreference so that it instead references 

‘‘categories (g) and (i).’’ 

Implementation 

FICC proposes to implement the 

proposed changes relating to the MBSD 

enhancements during the second 

quarter of 2013 pending rule filing 

approval from the Securities and 

Exchange Commission. The proposed 

changes relating to the clarifications and 

corrections of the referenced rules will 

be effective immediately upon receipt of 

rule filing approval. 

III. Discussion 

Section 19(b)(2)(C) of the Act 11

directs the Commission to approve a 

proposed rule change of a selfregulatory 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. Section 

17A(b)(3)(F) of the Act 12 requires, 

among other things, that the rules of the 

clearing agency are designed to promote 

the prompt and accurate clearance and 

settlement of securities transactions. 

The proposed changes to FICC’s Rules 

are consistent with promoting the 

prompt and accurate clearance and 

settlement of securities transactions in 

the following ways: (1) The expansion 

of the pool netting system extends the 

netting benefits to clearing members by 

capturing allocations made after the 

traded pools current settlement month, 

(2) the change in NOS processing for 

SPTs creates efficiency through the 

standardization of NOS processing for 

TBA trades, (3) automatically marking 

certain TBA trades as fully settled 

improves the monitoring and reporting 

of trade settlement status and (4) 

allowing the comparison of dummy 

Pool number to valid pool number 

provides for timelier matching of NOS. 

Each of these enhancements creates a 

more efficient netting system which 

promotes the prompt and accurate 

clearance and settlement for securities 

transactions. Furthermore, the 

clarifications and corrections to the 

MBSD Rules ensure that the Rules are 

accurate. As a result, the proposed rule 

change is consistent with the 

requirements of Section 17A(b)(3)(F) of 

the Act.13

IV. Conclusion 

On the basis of the foregoing, the 

Commission finds that the proposal is 

consistent with the requirements of the 

Act and in particular with the 

requirements of Section 17A of the 

Act 14 and the rules and regulations 

thereunder. 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,15 that the 

proposed rule change, as amended, (File 

No. SR–FICC–2012–07) be, and hereby 

is, approved.16


srobinson on DSK4SPTVN1PROD with 
1280 Federal Register / Vol. 78, No. 5 / Tuesday, January 8, 2013 / Notices 

17 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)(iii). 

4 17 CFR 240.19b–4(f)(6). 

5See Securities Exchange Act Release No. 58877 

(October 29, 2008), 73 FR 65904 (November 5, 2008) 

(SR–NYSE–2008–108) (establishing the SLP Pilot). 

See also Securities Exchange Act Release Nos. 

59869 (May 6, 2009), 74 FR 22796 (May 14, 2009) 

(SR–NYSE–2009–46) (extending the operation of 

the SLP Pilot to October 1, 2009); 60756 (October 

1, 2009), 74 FR 51628 (October 7, 2009) (SR–NYSE– 

2009–100) (extending the operation of the NMM 

and the SLP Pilots to November 30, 2009); 61075 

(November 30, 2009), 74 FR 64112 (December 7, 

2009) (SR–NYSE–2009–119) (extending the 

operation of the SLP Pilot to March 30, 2010); 

61840 (April 5, 2010), 75 FR 18563 (April 12, 2010) 

(SR–NYSE–2010–28) (extending the operation of 

the SLP Pilot to September 30, 2010); 62813 

(September 1, 2010), 75 FR 54686 (September 8, 

2010) (SR–NYSE–2010–62) (extending the 

operation of the SLP Pilot to January 31, 2011); 

63616 (December 29, 2010), 76 FR 612 (January 5, 

2011) (SR–NYSE–2010–86) (extending the 

operation of the SLP Pilot to August 1, 2011); 64762 

(June 28, 2011), 76 FR 39145 (July 5, 2011) (SR– 

NYSE–2011–30) (extending the operation of the 

SLP Pilot to January 31, 2012); 66045 (December 23, 

2011), 76 FR 82342 (December 30, 2011) (SR– 

NYSE–2011–66) (extending the operation of the 

SLP Pilot to July 31, 2012); and 67493 (July 25, 

2012), 77 FR 45388 (July 31, 2012) (SR–NYSE– 

2012–27) (extending the operation of the SLP Pilot 

to January 31, 2013). 

6The information contained herein is a summary 

of the NMM Pilot and the SLP Pilot. See supra note 

5 for a fuller description of those pilots. 

7See Securities Exchange Act Release No. 58845 

(October 24, 2008), 73 FR 64379 (October 29, 2008) 

(SR–NYSE–2008–46). 

8See NYSE Rule 103. 

9See NYSE Rule 107B. The Exchange amended 

the monthly volume requirements to an ADV that 

is a specified percentage of NYSE CADV. See 

Securities Exchange Act Release No. 67759 (August 

20, 2012), 77 FR 54939 (September 6, 2012) (SR– 

NYSEMKT–2012–38). 

10The NMM Pilot was scheduled to expire on 

January 31, 2013. On December 18, 2012 the 

Exchange filed to extend the NMM Pilot until July 

31, 2013. See (SR–NYSE–2012–75). See also 

Securities Exchange Act Release Nos. 67494 (July 

25, 2012), 77 FR 45408 (July 31, 2012) (SR–NYSE– 

2012–26) (extending the operation of the NMM 

Pilot to January 31, 2013); 66046 (December 23, 

2011), 76 FR 82340 (December 30, 2011) (SR– 

NYSE–2011–65) (extending the operation of the 

NMM Pilot to July 31, 2012); 64761 (June 28, 2011) 

76 FR 39147 (July 5, 2011) (SR–NYSE–2011–29) 

(extending the operation of the NMM Pilot to 

January 31, 2012); 63618 (December 29, 2010) 76 FR 

617 (January 5, 2011) (SR–NYSE–2010–85) 

(extending the operation of the NMM Pilot to 

August 1, 2011); 62819 (September 1, 2010), 75 FR 

54937 (September 9, 2010) (SR–NYSE–2010–61) 

(extending the operation of the NMM Pilot to 

January 31, 2011); 61724 (March 17, 2010), 75 FR 

14221 (SR–NYSE–2010–25) (extending the 

operation of the NMM Pilot to September 30, 2010); 

and 61031 (November 19, 2009), 74 FR 62368 (SR– 

NYSE–2009–113) (extending the operation of the 

NMM Pilot to March 30, 2010). 

For the Commission by the Division of 

Trading and Markets, pursuant to delegated 

authority.17

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2013–00122 Filed 1–7–13; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–68560; File No. SR–NYSE– 

2012–76] 

Self-Regulatory Organizations; New 

York Stock Exchange LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change Extending the 

Operation of its Supplemental Liquidity 

Providers Pilot (Rule 107B) Until the 

Earlier of the Securities and Exchange 

Commission’s Approval To Make Such 

Pilot Permanent or July 31, 2013 

January 2, 2013. 

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

Securities Exchange Act of 1934 (the 

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

notice is hereby given that on December 

18, 2012, New York Stock Exchange 

LLC (the ‘‘Exchange’’ or ‘‘NYSE’’) filed 

with the Securities and Exchange 

Commission (the ‘‘Commission’’) the 

proposed rule change as described in 

Items I and II below, which Items have 

been prepared by the Exchange. The 

Exchange filed the proposal as a ‘‘noncontroversial’’ proposed rule change 

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

the Act 3 and Rule 19b–4(f)(6) 

thereunder.4 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 to extend the 

operation of its Supplemental Liquidity 

Providers Pilot (‘‘SLP Pilot’’ or ‘‘Pilot’’) 

(See Rule 107B), currently scheduled to 

expire on January 31, 2013, until the 

earlier of the Securities and Exchange 

Commission’s (‘‘Commission’’) approval 

to make such Pilot permanent or July 

31, 2013. The text of the proposed rule 

change is available on the Exchange’s 

Web site 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 to extend the 

operation of its SLP Pilot,5 currently 

scheduled to expire on January 31, 

2013, until the earlier of Commission 

approval to make such Pilot permanent 

or July 31, 2013. 

Background 6

In October 2008, the NYSE 

implemented significant changes to its 

market rules, execution technology and 

the rights and obligations of its market 

participants all of which were designed 

to improve execution quality on the 

Exchange. These changes are all 

elements of the Exchange’s enhanced 

market model referred to as the ‘‘New 

Market Model’’ (‘‘NMM Pilot’’).7 The 

SLP Pilot was launched in coordination 

with the NMM Pilot (see Rule 107B). 

As part of the NMM Pilot, NYSE 

eliminated the function of specialists on 

the Exchange creating a new category of 

market participant, the Designated 

Market Maker or DMM.8 Separately, the 

NYSE established the SLP Pilot, which 

established SLPs as a new class of 

market participants to supplement the 

liquidity provided by DMMs.9

The SLP Pilot is scheduled to end 

operation on January 31, 2013 or such 

earlier time as the Commission may 

determine to make the rules permanent. 

The Exchange is currently preparing a 

rule filing seeking permission to make 

the SLP Pilot permanent, but does not 

expect that filing to be completed and 

approved by the Commission before 

January 31, 2013.10

Proposal To Extend the Operation of the 

SLP Pilot 

The NYSE established the SLP Pilot to 

provide incentives for quoting, to 

enhance competition among the existing 

group of liquidity providers, including 

the DMMs, and add new competitive 

market participants. The Exchange 

believes that the SLP Pilot, in 

coordination with the NMM Pilot, 

allows the Exchange to provide its 

market participants with a trading 

venue that utilizes an enhanced market 

structure to encourage the addition of 

liquidity, facilitate the trading of larger 

orders more efficiently and operates to 


srobinson on DSK4SPTVN1PROD with