[Federal Register Volume 89, Number 203 (Monday, October 21, 2024)]
[Notices]
[Pages 84211-84213]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-24205]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-101340; File No. SR-FICC-2024-009]


Self-Regulatory Organizations; Fixed Income Clearing Corporation; 
Notice of Filing of Partial Amendment No. 1 to Proposed Rule Change To 
Modify the GSD Rules Relating to the Adoption of a Trade Submission 
Requirement

October 15, 2024.
    On June 12, 2024, Fixed Income Clearing Corporation (``FICC'') 
filed with the Securities and Exchange Commission (``Commission'') the 
proposed rule change SR-FICC-2024-009 (``Proposed Rule Change'') 
pursuant to Section 19(b) of the Securities Exchange Act of 1934 
(``Exchange Act'') \1\ and Rule 19b-4 \2\ thereunder to modify FICC's 
Government Securities Division (``GSD'') Rulebook (``GSD Rules'') as it 
relates to the adoption of a requirement for its direct participants to 
submit for clearance and settlement all eligible secondary market 
transactions in U.S. Treasury securities to which such direct 
participant is a counterparty. The Proposed Rule Change was published 
for comment in the Federal Register on July 1, 2024.\3\ The Commission 
has received comments regarding the substance of the changes proposed 
in the Proposed Rule Change.\4\
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Securities Exchange Act Release No. 100417 (June 25, 2024), 
89 FR 54602 (July 1, 2024) (File No. SR-FICC-2024-009) (``Notice of 
Filing'').
    \4\ Comments on the Proposed Rule Change are available at 
https://www.sec.gov/comments/sr-ficc-2024-009/srficc2024009.htm.
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    On August 16, 2024, pursuant to Section 19(b)(2) of the Exchange 
Act,\5\ the Commission designated a longer period within which to 
approve, disapprove, or institute proceedings to determine whether to 
approve or disapprove the Proposed Rule Change.\6\
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    \5\ 15 U.S.C. 78s(b)(2).
    \6\ Securities Exchange Act Release No. 100693 (Aug. 12, 2024), 
89 FR 66746 (Aug. 16, 2024) (File No. SR-FICC-2024-009).
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    On September 26, 2024, pursuant to Section 19(b)(2)(B) of the 
Exchange Act,\7\ the Commission instituted proceedings to determine 
whether to approve or disapprove the Proposed Rule Change.\8\
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    \7\ 15 U.S.C. 78s(b)(2).
    \8\ Securities Exchange Act Release No. 101194 (Sep. 26, 2024), 
89 FR 80296 (Oct. 02, 2024) (File No. SR-FICC-2024-009).
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    On September 24, 2024, FICC filed Partial Amendment No. 1 to the 
Proposed Rule Change.\9\ Pursuant to Section 19(b)(1) of the Act \10\ 
and Rule 19b-4 thereunder,\11\ the Commission is publishing notice of 
this Partial Amendment No.1 to the Proposed Rule Change as described in 
Item I below. The Commission is publishing this notice to solicit 
comment on Partial Amendment No. 1 from interested persons.
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    \9\ Text of the proposed changes made by the Partial Amendment 
No. 1 to the Proposed Rule Change is available at https://www.sec.gov/comments/sr-ficc-2024-009/srficc2024009-524075-1504142.pdf. The GSD Rules are available at https://www.dtcc.com/~/
media/Files/Downloads/legal/rules/ficc_gov_rules.pdf. Terms not 
otherwise defined herein are defined in the GSD Rules or in the 
Proposed Rule Change.
    \10\ 15 U.S.C. 78s(b)(1).
    \11\ 17 CFR 240.19b-4.
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I. Summary of the Terms of Substance of Partial Amendment No. 1 to the 
Proposed Rule Change

    FICC filed Partial Amendment No. 1 to its previously submitted 
Proposed Rule Change, which would make several changes to FICC's GSD 
Rules to (1) adopt a membership requirement that all Netting Members 
submit to FICC for clearance and settlement eligible secondary market 
transactions to which they are a counterparty and defines the scope of 
such trade submission requirement; (2) adopt ongoing membership 
requirements to enable FICC to identify and monitor Netting

[[Page 84212]]

Members' ongoing compliance with the proposed trade submission 
requirements; (3) amend certain initial qualifications for direct 
membership with GSD and the ongoing membership obligations of Netting 
Members; and (4) makes other revisions to the Rules to clarify, conform 
and enhance the disclosure of the Rules. Partial Amendment No. 1 makes 
several changes within the first three categories above.
    Within category (1) regarding FICC's proposed adoption of a 
membership requirement that all Netting Members submit to FICC for 
clearance and settlement eligible secondary market transactions to 
which they are a counterparty and defines the scope of such trade 
submission requirement, Partial Amendment No. 1 makes the following 
changes. First, as originally proposed, the Proposed Rule Change would 
require all Netting Members to submit to FICC all Eligible Secondary 
Market Transactions for novation as a condition of membership.\12\ 
Partial Amendment No. 1 would revise the Proposed Rule Change to 
clarify that Netting Members would be able to submit Eligible Secondary 
Market Transactions for novation to any Covered Clearing Agency that 
provides central counterparty services for transactions in U.S. 
Treasury securities.\13\ Second, Partial Amendment No. 1 would delete 
text from the existing rule regarding FICC's initial membership 
requirements that currently requires Netting Members to, as part of the 
Membership Agreement, submit to FICC for comparison, pursuant to Rule 
5, data on all eligible trades with other Netting Members. Third, 
Partial Amendment No. 1 would delete certain text from an existing rule 
regarding FICC's Comparison System, to accommodate the changes to the 
trade submission requirement. Specifically, it would text stating that 
a member of FICC's Comparison System must submit to FICC for comparison 
trade data on all of its trades that are of the type processed by FICC 
(including trades executed and settled on the same day), calling for 
delivery of Eligible Securities, between it or an Executing Firm on 
whose behalf it is acting, and another Member or an Executing Firm on 
whose behalf it or another Member is acting, that if FICC determines 
that a Comparison-Only Member has, without good cause, violated its 
obligations pursuant to this section, such Comparison-Only Member may 
be reported to the appropriate regulatory body, placed on the Watch 
List and/or subject to an additional fee, and that, in addition, FICC 
may discipline a Comparison-Only Member for a violation of this section 
of the rule regarding FICC's Comparison System, in accordance with Rule 
48.
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    \12\ Notice of Filing supra note 3.
    \13\ Additionally, Partial Amendment No. 1 would include a 
definition of the term ``Covered Clearing Agency'' which shall have 
the meaning of that term in Rule 17Ad-22(a)(5) under the Exchange 
Act.
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    Within category (2) regarding FICC's proposed adoption of ongoing 
membership requirements to enable FICC to identify and monitor Netting 
Members' ongoing compliance with the proposed trade submission 
requirement, Partial Amendment No. 1 makes the following changes. 
First, with regard to the proposed Annual Trade Submission Requirement, 
Partial Amendment No. 1 would add language that a Netting Member shall 
not be required to submit an Annual Trade Submission Attestation in the 
same calendar year in which it delivers to FICC its required Triennial 
Independent Trade Submission Report. Partial Amendment No. 1 would also 
add language regarding item (iv) of the required attestations in the 
Annual Trade Submission Requirement that the Netting Member has, at all 
times during the 12 months prior to the date of the attestation, 
complied with the trade submission requirement in Rule 5. Specifically, 
it would amend this item to add that this attestation is other than 
with respect to matters that the Netting Member has, of the date of the 
Annual Trade Submission Attestation, disclosed to FICC pursuant to the 
Rules.
    Second, regarding the Triennial Independent Trade Submission Review 
and Report, Partial Amendment No. 1 would add language stating that 
FICC will stagger the years in which Netting Members are required to 
conduct their Triennial Independent Trade Submission Review. 
Additionally, Partial Amendment No. 1 would add language that FICC 
shall make available to Netting Members a list of independent third 
parties that have been approved to conduct a Triennial Independent 
Trade Submission Review, that Netting Members may request that FICC 
include additional third parties to such list, at FICC's sole 
discretion, and that FICC shall make available to Netting Members 
standard frameworks for the completion of the Triennial Independent 
Trade Submission Review and Report.
    Within category (3) regarding FICC's amendment of certain initial 
qualifications for direct membership with GSD and the ongoing 
membership obligations of Netting Members, Partial Amendment No. 1 
makes the following changes. First, Partial Amendment No. 1 would amend 
the ongoing membership requirements to add language that requires 
Members to notify FICC if compliance with any membership requirements 
of FICC would cause a Member to violate an applicable law, rule or 
regulation. The additional language also states that FICC shall work 
with such Member to modify a requirement or request so that compliance 
would not cause such violation.
    Second, Partial Amendment No. 1 would also amend the initial 
membership requirements to add language that a bank or trust company 
shall have one membership and may apply to be a Netting member through 
either its parent bank entity or through a branch of the bank.
    Partial Amendment No. 1 would not change the purpose of, or 
statutory basis for the proposed rule change. All other representations 
in the Initial Filing remain as stated therein and no other changes are 
being made.

II. 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

    <bullet> Use the Commission's internet comment form (https://www.sec.gov/rules-regulations/self-regulatory-organization-rulemaking); 
or
    <bullet> Send an email to <a href="/cdn-cgi/l/email-protection#fd8f889198d09e9290909893898ebd8e989ed39a928b"><span class="__cf_email__" data-cfemail="aedcdbc2cb83cdc1c3c3cbc0daddeeddcbcd80c9c1d8">[email protected]</span></a>. Please include 
file number SR-FICC-2024-009 on the subject line.

Paper Comments

    <bullet> 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-2024-009. 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 (https://www.sec.gov/rules-regulations/self-regulatory-organization-rulemaking). 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

[[Page 84213]]

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 
such filing also will be available for inspection and copying at the 
principal office of FICC and on DTCC's website at (https://dtcc.com/legal/sec-rule-filings.aspx). Do not include personal identifiable 
information in submissions; you should submit only information that you 
wish to make available publicly. We may redact in part or withhold 
entirely from publication submitted material that is obscene or subject 
to copyright protection. All submissions should refer to File Number 
SR-FICC-2024-009 and should be submitted on or before November 12, 
2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(31).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-24205 Filed 10-18-24; 8:45 am]
BILLING CODE 8011-01-P


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