Document ID: SEC-2012-0440-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Fixed Income Clearing Corp.
Posted Date: 2012-03-16T04:00Z

[Federal Register Volume 77, Number 52 (Friday, March 16, 2012)]
[Notices]
[Pages 15822-15824]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-6384]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-66574; File No. SR-FICC-2012-02]

Self-Regulatory Organizations; Fixed Income Clearing Corporation; 
Notice of Filing of Proposed Rule Change To Remove Functionality in the 
Government Securities Division's Rules That Is No Longer Utilized by 
Participants

March 12, 2012.
    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 February 29, 2012, the Fixed Income Clearing Corporation (``FICC'') 
filed with the Securities and Exchange Commission (``Commission'') the 
proposed change as

[[Page 15823]]

described in Items I and II below, which Items have been prepared 
primarily by FICC. The Commission is publishing this notice to solicit 
comments on the proposed change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The proposed rule change consists of modifications to certain rules 
of the Government Securities Division (``GSD'') of the Fixed Income 
Clearing Corporation (``FICC'') that refer to functions or 
classifications that are either technologically obsolete or no longer 
used by participants.

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 these 
statements.\3\
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    \3\ The Commission has modified the text of the summaries 
prepared by FICC.
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(A) Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    The purpose of this filing is to revise the GSD rules to eliminate 
references to functions or classifications that are either 
technologically obsolete or no longer utilized by GSD's participants. 
Reflected below are descriptions of the proposed changes to the rules.
1. ``Non-Conversion Participants''/``Conversion Participants''
    When first implemented, the DVP System required all participants 
that submitted when issued trades to resubmit those trades with final 
money calculations on the night of Auction Date, after the Treasury 
Auction results were announced. Subsequent to the initial 
implementation, enhancements were incorporated such that the DVP System 
recalculated trades (repriced) based on auction results. FICC also 
incorporated an option whereby participants could decide if they wanted 
to resubmit their trades (participants who elected this option were 
known as ``Non-Conversion Participants'') or take FICC's repricing 
notification (participants who elected this option were known as 
``Conversion Participants''). With the implementation of Interactive 
Messaging in 2000, the few remaining Non-Conversion Participants agreed 
to take FICC's calculations, rather than resubmit their trades to FICC. 
As such, FICC proposes to remove references in the rules to Non-
Conversion Participants. Given that all participants who submit when-
issued transactions for matching/netting are subject to accepting 
FICC's calculations for their trades based on Treasury Auction Results, 
the proposed rule changes replace references to ``Conversion 
Participants'' with ``Participants.''
2. Auction Priority Delivery Requests and Customer Delivery Requests 
(CDRs)
    Auction Priority Delivery Requests, also known as Customer Delivery 
Requests (CDRs), were originally built for FICC's batch file transfer, 
which was the initial proprietary method that participants used to 
submit trade activity to FICC. This functionality allowed the dealer to 
instruct FICC to withhold certain auction trades from the net to ensure 
that a priority client received their auction allotment so the trade 
could not be netted out during FICC's end of day netting process. 
However, when Interactive Messaging was implemented in 2000, this 
instruction type was not supported as it was no longer used. As a 
result, FICC proposes to remove references in the rules to Auction 
Priority Delivery Requests and Customer Delivery Requests (CDRs).
3. Repo Substitution Criteria
    GSD initially provided optional fields for Repo Substitution 
Criteria for trade submissions. However, over the years, participants 
generally have not used these fields. Because the fields were provided 
as an informational courtesy that has not been used by participants, 
the new system will not contain them. From a rules perspective this 
entails the deletion of references to those fields in related schedule.
    In addition to the above-referenced changes which relate to the DVP 
System, FICC proposes to make the following additional technical 
corrections to the GSD rules:

--Terminal interfaces and video display terminals are currently 
referenced in the rules. The terminals became obsolete when FICC 
replaced them with a web browser interface. Because the terminals are 
no longer in existence, FICC proposes to remove references to these 
methods from the GSD rules.
--Currently, the ``Schedule of Required and Other Data Submission Items 
from GCF Repo Transactions'' refers to ``Reverse dealer Exec. Id'' and 
a ``Repo dealer Exec Id.'' When FICC began using the GSD RTTM web 
format, these fields were eliminated because they did not have any 
significance for GCF repo trades. As a result, FICC proposes to remove 
these references from the rules.

FICC believes the proposed change is consistent with Section 17A of the 
Act and the rules and regulations thereunder because it facilitates the 
prompt and accurate clearance and settlement of securities by ensuring 
that FICC's rules are accurate.

(B) Self-Regulatory Organization's Statement on Burden on Competition

    FICC does not believe that the proposed rule change would 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

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period up to 90 days (i) as the 
Commission may designate if it finds such longer period to be 
appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) by order approve or disapprove the proposed rule change; or
    (B) institute proceedings to determine whether the proposed rule 
change should be disapproved.

Electronic Comments

     Use the Commissions 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-2012-02 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

[[Page 15824]]

All submissions should refer to File Number SR-FICC-2012-02. 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 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 Web site viewing and 
printing in the Commission's Public Reference Section, 100 F Street 
NE., Washington, DC 20549, on official business days between the hours 
of 10 a.m. and 3 p.m. Copies of such filing also will be available for 
inspection and copying at the principal office of FICC and on FICC's 
Web site at http://www.dtcc.com/downloads/legal/rule_filings/2012/ficc/SR_FICC_2012_02.pdf.
    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 submissions should refer to File Number SR-FICC-2012-02 
and should be submitted on or before April 6, 2012.
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    \4\ 17 CFR 200.30-3(a)(12).

    For the Commission by the Division of Trading and Markets, 
pursuant to delegated authority.\4\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-6384 Filed 3-15-12; 8:45 am]
BILLING CODE 8011-01-P