Document ID: SEC-2007-1603-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: Fixed Income Clearing Corp.
Posted Date: 2007-11-27T05:00Z

[Federal Register: November 27, 2007 (Volume 72, Number 227)]
[Notices]               
[Page 66213-66214]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr27no07-126]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56820; File No. SR-FICC-2007-09]

 
Self-Regulatory Organizations; Fixed Income Clearing Corporation; 
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change 
Relating to the Correspondent Clearing Service

November 20, 2007.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on August 17, 2007, the 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 
primarily by FICC. FICC filed the proposed rule change pursuant to 
section 19(b)(3)(A)(i) of the Act \2\ and Rule 19b-4(f)(1) \3\ 
thereunder so that the proposal was effective upon filing with the 
Commission. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78s(b)(3)(A)(i).
    \3\ 17 CFR 240.19b-4(f)(1).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The proposed rule change enhances FICC's Government Securities 
Division's (``GSD'') correspondent clearing service for netting members 
submitting transaction data (``Submitting Members'') on behalf of non-
member firms (``Executing Firms'').

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, FICC 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. FICC has prepared summaries, set forth in sections A, B, 
and C below, of the most significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    Currently, GSD's rules provide that a Submitting Member must submit 
transaction data to GSD when it acts on behalf of an Executing Firm for 
comparison-only processing or for both comparison and netting 
processing. The election made by the Submitting Member to submit 
Executing Firm transactions for comparison or comparison and netting is 
done on a firm level for each Executing Firm on whose behalf the 
Submitting Member acts. For example, when Submitting Member A elects to 
submit transactions for netting processing on behalf of Executing Firm 
B, all trades submitted on behalf of Executing Firm B will proceed to 
netting, and the Submitting Member will incur all resulting settlement 
and other obligations that arise under GSD's rules with respect to 
trade data submitted on behalf of Executing Firm B. Conversely, when 
Submitting Member A elects to submit transactions for Executing Firm C 
for comparison-only processing, all transactions submitted on behalf of 
Executing Firm C will only enter the GSD's comparison system with no 
settlement obligations arising for Submitting Member A with respect to 
these transactions.
    Under the rule change, FICC will allow a Submitting Member to 
select for each Executing Firm for which it submits trades those trade 
types (i.e., buy-sell or repurchase agreements) that will be 
comparison-only transactions and those trade types that will be netting 
transactions. For example, Submitting Member A may select to submit 
Executing Firm B's repurchase agreement transactions for comparison-
only processing and Executing Firm B's buy-sell transactions for 
netting. Members will not be permitted to submit trades for either 
comparison-only or netting processing on a trade-by-

[[Page 66214]]

trade basis. Elections made with respect to how transaction types are 
processed through FICC must be effected through the applicable FICC 
Executing Firm Agreement. As noted above, settlement obligations will 
arise for Submitting Member A for each transaction that proceeds to 
netting.
    Under the proposed changes, Submitting Members will be required to 
notify GSD with respect to each Executing Firm for which they submit 
data which transactions types that will be processed as comparison-only 
transactions and which will proceed to netting. Submitting members must 
notify GSD three business days prior to the commencement of the initial 
data submission on behalf of an Executing Firm. Any modifications made 
to an election will require three business days notice to GSD.
    FICC will announce to its members by means of an Important Notice 
the effective date of this enhancement. GSD anticipates implementation 
to be during the fourth quarter of this year.
    FICC believes that the proposed rule change is consistent with the 
requirements of section 17A of the Act \4\ and the rules thereunder. 
FICC states that this rule change enhances existing capabilities 
extended to netting members acting as Submitting Members under GSD's 
rules. FICC further states that the proposed changes will not affect 
FICC's ability to safeguard the funds and securities in FICC's control 
or for which it is responsible.
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    \4\ 15 U.S.C. 78q-1.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    FICC does not believe that the proposed rule change will have any 
impact or impose any burden on competition.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    Written comments relating to the proposed rule change have not yet 
been solicited or received. 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)(iii) \5\ of the Act and Rule 19b-4(f)(4) \6\ thereunder 
because it effects a change in an existing service of FICC that does 
not adversely affect the safeguarding of securities or funds in FICC's 
control or for which FICC is responsible and does not significantly 
affect FICC's or its participants' respective rights or obligations. At 
any time within 60 days of the filing of the proposed rule change, the 
Commission could have summarily abrogated such rule change if it 
appeared to the Commission that such action was necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act.
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    \5\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \6\ 17 CFR 240.19b-4(f)(4).
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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 e-mail to rule-comments@sec.gov. Please include 

File No. SR-FICC-2007-09 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, Station Place, 100 F 
Street, NE., Washington, DC 20549-1090.
    All submissions should refer to File No. FICC-2007-09. This file 
number should be included on the subject line if e-mail 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 Web site (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 inspection and 
copying in the Commission's Public Reference Room, 450 Fifth Street, 
NW., Washington, DC 20549, on official business days between the hours 
of 10a.m. and 3 p.m. Copies of such filing also will be available for 
inspection and copying at FICC's principal office and on FICC's Web 
site at http://ficc.com/gov/gov.docs.jsp?NS-query=#rf. All comments 

received will be posted without change; the Commission does not edit 
personal identifying information from submissions. You should submit 
only information that you wish to make available publicly. All 
submission should refer to File No. SR-FICC-2007-09 and should be 
submitted on or before December 18, 2007.
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    \7\ 17 CFR 200.30-3(a)(12).

    For the Commission by the Division of Trading and Markets 
pursuant to delegated authority.\7\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-23021 Filed 11-26-07; 8:45 am]

BILLING CODE 8011-01-P