Document ID: SEC-2023-0758-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Fixed Income Clearing Corp.
Posted Date: 2023-07-19T04:00Z

[Federal Register Volume 88, Number 137 (Wednesday, July 19, 2023)]
[Notices]
[Pages 46293-46313]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-15265]

[[Page 46293]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-97897; File No. SR-FICC-2023-009]

Self-Regulatory Organizations; Fixed Income Clearing Corporation; 
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change 
To Modify the GSD Rules, MBSD Rules, and EPN Rules

July 13, 2023.
    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 July 6, 2023, 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 by the clearing agency. FICC filed the 
proposed rule change pursuant to Section 19(b)(3)(A) 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(6).
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I. Clearing Agency's Statement of the Terms of Substance of the 
Proposed Rule Change

    The proposed rule change consists of modifications to the FICC 
Government Securities Division (``GSD'') Rulebook (``GSD Rules''), the 
FICC Mortgage-Backed Securities Division (``MBSD'') Clearing Rules 
(``MBSD Rules'') and the FICC MBSD EPN Rules (``EPN Rules,'' and 
together with the GSD Rules and the MBSD Rules, the ``Rules'') \5\ in 
order to make certain corrections, clarifications, and technical 
changes to the Rules, each as described in more detail below.
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    \5\ Capitalized terms used herein and not defined shall have the 
meanings assigned to such terms in the GSD Rules, MBSD Rules and EPN 
Rules, as applicable, available at https://www.dtcc.com/legal/rules-and-procedures.
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II. Clearing Agency's Statement of the Purpose of, and Statutory Basis 
for, the Proposed Rule Change

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

(A) Clearing Agency's Statement of the Purpose of, and Statutory Basis 
for, the Proposed Rule Change

1. Purpose
    FICC is proposing to make certain corrections, clarifications, and 
technical changes to the Rules, each as described in more detail below.
A. Corrections
1. Correct Uses of Defined Terms
Proposed Changes To Reflect Existing Defined Terms
    FICC is proposing to correct the following references to reflect 
the existing defined terms:
     In GSD Rule 6C, Section 12, FICC proposes to revise ``GCF 
Inter-Dealer Broker'' to ``GCF-Authorized Inter-Dealer Broker.''
     In GSD Rule 11, Section 14, FICC proposes to revise 
references from ``defaulting Member'' to ``Defaulting Member.''
     In GSD Rule 12, Section 4, FICC proposes to revise 
``Actual Settlement Day'' to ``Actual Settlement Date.''
     In GSD Rule 12, Section 4 and GSD Rule 14, Section 3, FICC 
proposes to revise ``Scheduled Settlement Day'' to ``Scheduled 
Settlement Date.''
     In GSD Rule 18, Section 3, FICC proposes to revise the 
reference from ``Generic CUSIP'' to ``Generic CUSIP Number.''
     In the Schedule of Timeframes in the GSD Rules, FICC 
proposes to revise ``long position'' to ``Net Long Position'' in the 
description of the 9:15 a.m. timeframe.
     In the definition of Current Haircut in GSD Rule 1, FICC 
proposes to revise ``Close Leg'' to ``End Leg.''
     In the Schedule of Required and Other Data Submission 
Items for GCF Repo Transactions, FICC proposes to revise ``Close Leg'' 
to ``End Leg.''
    In addition, in Section IV.B.4 of the Fee Structure of the GSD 
Rules, FICC is proposing to remove specific references to ``The Bank of 
New York Mellon'' and/or ``BNY,'' and to replace them with references 
to either ``the Corporation's Clearing Agent Bank'' or ``the 
Corporation's GCF Clearing Agent Bank,'' as applicable. FICC is 
proposing this change to use the defined terms rather than the specific 
name and/or acronym of the current Clearing Agent Bank and GCF Clearing 
Agent Bank if there are other Clearing Agent Banks or GCF Clearing 
Agent Banks in the future.
    In the section entitled Late Fee Related to GCF Repo Transactions 
in Section IX of the Fee Structure of the GSD Rules, FICC is also 
proposing to correct the reference from ``GCF Repo Clearing Agent 
Bank'' to ``GCF Clearing Agent Bank'' to reflect the existing defined 
term.
    FICC also proposes to revise a reference from ``members'' to 
``Netting Members'' in the description of the 9:15 a.m. timeframe in 
the Schedule of Timeframes in the GSD Rules to reflect the existing 
defined term.
    FICC is also proposing to capitalize the following words to reflect 
the existing defined terms in the GSD Rules: (i) ``security'' in GSD 
Rule 22A; (ii) ``members'' in the description of the 8:00 p.m. 
timeframe in the Schedule of Timeframes; (iii) ``mark'' in the last 
sentence of the definition of ``Net Fail Mark Adjustment Payment'' in 
GSD Rule 1; (iv) ``collateral allocation obligations'' in GSD Rule 20, 
Section 5; (v) ``transactions'' in the Schedule of Required Match Data; 
and (vi) ``repo transactions'' in the Schedule of Money Tolerances.
    FICC is also proposing to make the following terms lowercase 
because they are not defined terms in the GSD Rules: (i) 
``Obligations'' in GSD Rule 16; and (ii) ``Positions'' in GSD Rule 17, 
Section 4.
Proposed Changes To Correct References to Titles of Certain Schedules 
and Rules
    In GSD Rule 6C, Section 5, FICC is proposing to revise the 
reference from Schedule of Data Items for GCF Repo Transactions to 
Schedule of Required and Other Data Submission Items for GCF Repo 
Transactions. In addition, in GSD Rule 3B, Section 13(d), FICC proposes 
to revise the reference from invoicing process to Bills Rendered.
Proposed Changes To Correct References to Terms Not Defined
    In GSD Rule 1, FICC would remove the defined term ``Non-Conversion 
Participating Member'' because this defined term is not used in the GSD 
Rules.
    In addition, FICC proposes to revise the term ``Conversion 
Participating Member'' to ``Member'' in GSD Rule 9, Section 2 because 
Conversion Participating Member is not a type of member and is also not 
defined in the GSD Rules.
Proposed Changes To Replace References With Correct Defined Terms
    In GSD Rule 13, Section 1, FICC proposes to correct the reference 
from Positions to transactions because Credit Forward Mark Adjustment 
Payments are

[[Page 46294]]

associated with transactions and not Positions.
    Current GSD Rule 12, Section 8 states that if FICC deems it 
appropriate, in its sole discretion, in order to obtain financing 
necessary for the provision of the securities settlement services 
contemplated by the GSD Rules, including, without limitation, fail 
financing of securities Positions arising out of the delivery by 
Netting Members to FICC of Eligible Netting Securities, FICC may create 
security interests in Eligible Netting Securities in favor of any 
entity it deems necessary or desirable to obtain and maintain financing 
and/or enter into repurchase transactions involving Eligible Netting 
Securities with any Netting Member or Clearing Agent Bank. FICC 
proposes to correct the reference from ``securities Positions'' to ``an 
outstanding Receive Obligation or Receive Obligations'' in current GSD 
Rule 12, Section 8 to enhance accuracy, and thereby enhance clarity.
Proposed Changes Related to CCIT Transactions
    The ``CCIT Service'' or the ``Centrally Cleared Institutional 
Triparty Service'' is the service offered by FICC to clear 
institutional triparty repurchase agreement transactions.\6\ A CCIT 
Transaction is a transaction that is processed by FICC in the CCIT 
Service. Because the CCIT Service leverages the infrastructure and 
processes of the GCF Repo Service, a CCIT Transaction must be: (i) in a 
Generic CUSIP Number approved for the GCF Repo Service and (ii) between 
a CCIT Member and a Netting Member who participates in the GCF Repo 
Service where the CCIT Member is the cash lender in the transaction.\7\
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    \6\ GSD Rule 1, supra note 5.
    \7\ Id.
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    In GSD Rule 1, FICC proposes to correct the definition of Start Leg 
to include references to CCIT Transactions as these references were 
inadvertently omitted. Specifically, in the first sentence of the 
definition of Start Leg, FICC would clarify that it is as regards a 
Repo Transaction other than a GCF Repo Transaction or a CCIT 
Transaction as applicable. In addition, in the second sentence of the 
definition, FICC would clarify that it is as regards a GCF Repo 
Transaction or a CCIT Transaction as applicable. FICC is proposing to 
add these references to CCIT Transactions because the CCIT Service 
leverages the infrastructure and processes of the GCF Repo Service, and 
these provisions currently reference GCF Repo Transactions.
    In GSD Rule 1, FICC also proposes to correct the definition of 
Generic CUSIP Number to include CCIT Transactions in the second 
sentence. Currently, the sentence states that FICC shall use separate 
Generic CUSIP Numbers for General Collateral Repo Transactions, GCF 
Repo Transactions and Sponsored GC Trades. FICC proposes to revise this 
second sentence to state that FICC shall use separate Generic CUSIP 
Numbers for General Collateral Repo Transactions, GCF Repo 
Transactions, CCIT Transactions and Sponsored GC Trades. FICC is 
proposing this change because one of the requirements for a CCIT 
Transaction is that it must be in a Generic CUSIP Number approved for 
the GCF Repo Service because the CCIT Service leverages the 
infrastructure and processes of the GCF Repo Service.
    FICC would also clarify the Schedule of Required Match Data in the 
GSD Rules by adding that this schedule does not apply to CCIT 
Transactions in addition to Netting-Eligible Auction Purchases and GCF 
Repo Transactions. Currently, the Schedule of Required Match Data 
states that this schedule does not apply to Netting-Eligible Auction 
Purchases and GCF Repo Transactions. Because the CCIT Service leverages 
the infrastructure and processes of the GCF Repo Service, FICC proposes 
to clarify that this Schedule of Required Match Data in the GSD Rules 
also does not apply to CCIT Transactions.
    Similarly, in the Schedule of Required and Accepted Data Submission 
Items for New Securities Collateral and in the Schedule of Required and 
Accepted Data Submission Items for a Substitution, FICC would clarify 
that these schedules also do not apply to CCIT Transactions.
2. Remove ``Foreign Affiliates'' and ``Foreign Affiliate Trade''
    Currently, GSD Rule 3, Section 2 states that on an annual basis, 
Netting Members must report information on their Foreign Affiliate 
Trades to FICC, and this reporting will be submitted to FICC containing 
the information, in the format and within the timeframes specified by 
guidelines issued by FICC from time to time. It also states that this 
reporting requirement does not apply Foreign Affiliate Trades of a 
Foreign Affiliate that has executed less than an average of 30 Foreign 
Affiliate Trades per business day per month within the prior twelve-
month period. FICC is proposing to remove this annual reporting 
requirement for Foreign Affiliate Trades. Given that non-U.S. firms may 
apply for membership with GSD and no longer need to submit trading 
activity to FICC for clearing through their U.S. affiliates, the 
information provided in this reporting, which is time consuming for 
participants to complete, is no longer useful to FICC from a risk 
management perspective. Therefore, FICC does not believe that it should 
continue to require this reporting and is proposing to remove it from 
the GSD Rules.
    In addition, FICC proposes to remove the defined terms ``Foreign 
Affiliate'' and ``Foreign Affiliate Trade'' in GSD Rule 1.
3. Correct Outdated Provisions and Reflect Current Practice
Proposed Changes To Remove Fail Net Settlement Position, Fail Net Short 
Position and Fail Net Long Position
    FICC is proposing to remove references to Fail Net Settlement 
Position, Fail Net Short Position, and Fail Net Long Position because 
fails are no longer separately netted, and therefore these defined 
terms are outdated. Specifically, FICC would remove the defined terms 
``Fail Net Settlement Position,'' ``Fail Net Short Position,'' and 
``Fail Net Long Position'' from GSD Rule 1.
    As such, FICC also proposes to revise the definition of ``Fail 
Deliver Obligation'' in GSD Rule 1, which currently states that it 
means a Deliver Obligation with respect to a Fail Net Short Position; 
FICC would revise this definition to state that a Fail Deliver 
Obligation means a Deliver Obligation that does not settle on its 
original Scheduled Settlement Date. Similarly, FICC would revise the 
definition of ``Fail Receive Obligation'' in GSD Rule 1, which 
currently states that it means a Receive Obligation with respect to a 
Fail Net Long Position; FICC would revise this definition to state that 
a Fail Receive Obligation means a Receive Obligation that does not 
settle on its original Scheduled Settlement Date.
    FICC would also revise the definitions of Coupon Adjustment 
Payment, Credit Coupon Adjustment Payment and Debit Coupon Adjustment 
Payment in GSD Rule 1 by replacing the phrases ``or a Fail Net 
Settlement Position'' and ``or a fail Net Settlement Position'' with 
``Fail Deliver Obligation or Fail Receive Obligation.'' FICC would also 
revise the definition of Net Unsettled Positions to remove the phrase 
``and Fail Net Settlement Positions.''
    In GSD Rule 3A, FICC would (i) remove the reference to ``Fail Net 
Settlement Position'' in Section 8; (ii) remove the references to Fail 
Net Settlement Position and replace them with references to Fail 
Deliver

[[Page 46295]]

Obligation and Fail Receive Obligation in Section 7(a)(iii); and (iii) 
remove the references to Fail Net Settlement Positions because this 
defined term would be deleted from GSD Rule 1, in Section 18(b).
    In GSD Rule 22A, Section 2(b), FICC proposes to remove the 
reference to Fail Net Settlement Positions as well as replace the 
phrase ``those that arise from Fail Net Settlement Positions'' with 
``Fail Deliver Obligations and Fail Receive Obligations.''
    The Fail Mark Adjustment Payment is the mark-to-market on failing 
obligations. It is calculated as the difference between the last 
Settlement Value of the obligation that failed to settle and the new 
Settlement Value of such obligation. For example, if on April 4, there 
is an obligation to receive, which has a Settlement Value of $10 (this 
Settlement Value is based on the price in the system at the end of the 
day on April 3), and this obligation to receive failed to settle on 
April 4, then, at the end of the day on April 4, a new Settlement Value 
for this obligation will be generated based on the price in the system 
at the end of the day on April 4. In this example, the new Settlement 
Value that is generated for this obligation at the end of the day on 
April 4 is $11 and the Fail Mark Adjustment Payment is $1 for this 
obligation. The Fail Mark Adjustment Payment is the difference between 
the Settlement Value of the obligation based on the price from the end 
of day (in this example, on April 3) and the new Settlement Value based 
on the price from the end of day (in this example, on April 4).
    FICC is not proposing any changes to how the Fail Mark Adjustment 
Payment is currently calculated. Rather, FICC is proposing to clarify 
the definition of ``Fail Mark Adjustment Payment'' in GSD Rule 1 by 
removing the phrase ``that constitutes a Fail Net Settlement Position'' 
and making other conforming changes because, as described above, fails 
are no longer separately netted, and therefore this defined term is 
outdated. Currently, Fail Mark Adjustment Payment means the absolute 
value of the dollar difference between the Settlement Value of a Fail 
Deliver Obligation or a Fail Receive Obligation that constitutes all or 
part of a Fail Net Settlement Position on the current Business Day and 
the previous Settlement Value of such Fail Deliver Obligation or Fail 
Receive Obligation on the immediately previous Business Day. FICC would 
revise this definition to state that Fail Mark Adjustment Payment would 
mean the absolute value of the dollar difference between the current 
Settlement Value of a Fail Deliver Obligation or a Fail Receive 
Obligation on the current Business Day, and the previous Settlement 
Value of such Deliver Obligation or Receive Obligation.
    In GSD Rule 11, Section 1, FICC also proposes to remove the 
references to Fail Net Settlement Positions because, as described 
above, this defined term would be deleted from GSD Rule 1.
    Similarly, in GSD Rule 11, Sections 4 and 5, FICC proposes to 
remove the phrase ``or Fail Net Settlement Position, as applicable,'' 
in the first sentence of each section. In addition, in GSD Rule 11, 
Section 4, FICC proposes to remove the phrase ``, including Fail Net 
Settlement Positions,'' in the last sentence, and in GSD Rule 11, 
Section 5, FICC proposes to remove the phrase ``or Fail Net Settlement 
Position'' in the third sentence.
    In GSD Rule 11, Section 4, FICC would also add references to Fail 
Deliver Obligations and Fail Receive Obligations in the first sentence 
to enhance clarity. The first sentence would state that on each 
Business Day, for each Eligible Netting Security with a separate CUSIP 
number, except as otherwise provided in GSD Rule 14 with respect to 
Forward Trades that comprise one or more Forward Net Settlement 
Positions, FICC will establish a Net Settlement Position for trades, 
and Fail Deliver Obligations and Fail Receive Obligations of a Netting 
Member that have not previously been settled, by comparing the 
aggregate par value of each Long Transaction and/or Fail Receive 
Obligation in an Eligible Netting Security by the Netting Member 
(hereinafter, the ``Long Total'') and each Short Transaction and/or 
Fail Deliver Obligation in an Eligible Netting Security by the Netting 
Member (hereinafter, the ``Short Total'').
    Current GSD Rule 11, Section 8 states that on each Business Day, 
from their Scheduled Date, Fail Net Settlement Positions shall, 
pursuant to GSD Rule 13, be marked to market, taking into account 
accrued interest, until the Actual Settlement Date for such Positions. 
Notwithstanding the above, FICC, in its sole discretion in order to 
promote an orderly settlement process, may elect to not mark to market, 
pursuant to GSD Rule 13, a Fail Net Long Position where the Eligible 
Netting Securities that comprise such Position have been appropriately 
delivered to FICC pursuant to the GSD Rules and FICC has not re-
delivered such Eligible Netting Securities, and as a result, has held 
them overnight, Fail Deliver Obligations and Fail Receive Obligations 
shall be netted with any other Receive Obligations and Deliver 
Obligations.
    In GSD Rule 11, Section 8, FICC would (i) revise the reference from 
Fail Net Settlement Positions to Fail Deliver Obligations and Fail 
Receive Obligations in the title of the section, (ii) revise the 
reference from Fail Net Settlement Positions to Fail Deliver 
Obligations and Fail Receive Obligations, as applicable, in the first 
sentence, (iii) revise the reference from Fail Net Long Position to 
Fail Receive Obligation in the second sentence, (iv) as a conforming 
change, in the first sentence, revise Positions to Fail Deliver 
Obligations and Fail Receive Obligations, and (v) as a conforming 
change, in the second sentence, revise Position to Fail Receive 
Obligation.
    In GSD Rule 12, Section 1, FICC would revise the phrase ``a Fail 
Net Settlement Position'' to ``either a Fail Deliver Obligation or Fail 
Receive Obligation, as the context requires.'' In GSD Rule 12, Section 
4, FICC would revise the title of the section and the references in the 
section from ``Fail Net Settlement Positions'' to ``Fail Deliver 
Obligations and Fail Receive Obligations'' and from ``Fail Net 
Settlement Position'' to ``Fail Deliver Obligation and Fail Receive 
Obligation.'' In GSD Rule 12, Section 5, FICC would revise Fail Net 
Settlement Position to Fail Deliver Obligation.
    In GSD Rule 12, Section 1, FICC would also (i) correct the 
reference from ``Netting Member's Fail Deliver Obligations and Fail 
Receive Obligations'' to ``Netting Member's outstanding Deliver 
Obligations and outstanding Receive Obligations,'' and (ii) correct the 
reference from ``applicable Fail Deliver Obligations and Fail Receive 
Obligations'' to ``applicable Deliver Obligations and Receive 
Obligations.''
    In GSD Rule 13, Section 1(a), FICC would remove the phrase ``either 
a Fail Net Settlement Position or.''
    In GSD Rule 13, Section 1(f), FICC would (i) revise Fail Net 
Settlement Position to Fail Deliver Obligation and Fail Receive 
Obligation, (ii) revise the reference from Fail Net Short Position to 
Fail Deliver Obligation, and (iii) revise the reference from Fail Net 
Long Position to Fail Receive Obligation. As such, GSD Rule 13, Section 
1(f) would state that with regard to every Fail Deliver Obligation and 
Fail Receive Obligation on a coupon payment date for the Eligible 
Netting Securities that comprise such Fail Deliver Obligation and Fail 
Receive Obligation: (1) if the Member has a Fail Deliver Obligation, it 
will pay to FICC a Debit Coupon Adjustment Payment, and (2) if the

[[Page 46296]]

Member has a Fail Receive Obligation, it will collect from FICC a 
Credit Coupon Adjustment Payment.
    In GSD Rule 13, Section 1(b), FICC would revise the word ``every'' 
to ``certain'' so it would state that with regard to certain Deliver 
Obligations and Receive Obligations, either pay to FICC a Debit 
Delivery Differential Adjustment Payment or collect from FICC a Credit 
Delivery Differential Adjustment Payment. This proposed change would 
enhance accuracy and reflect current practice because this payment only 
applies to certain obligations and not every obligation. This proposed 
change would not impact the rights and obligations of Members.
Proposed Changes To Remove References to Open Net Long Position and 
Open Net Short Position
    Although Open Net Long Position and Open Net Short Position are 
capitalized in the GSD Rules, these terms are not defined in the GSD 
Rules. As such, FICC proposes to replace the references to Open Net 
Long Positions and Open Net Short Position or Positions in GSD Rule 11, 
Section 13, and make other related changes, as further described below.
    Specifically, in GSD Rule 11, Section 13, FICC would revise the 
reference from ``an Open Net Long Position'' to ``a Fail Receive 
Obligation'' and make a conforming change to revise ``Allocated Net 
Long Position'' (which is currently defined in the same section) to 
``Allocated Fail Receive Obligation.'' Similarly, FICC would revise the 
reference from ``an Open Net Short Position or Positions'' to ``a Fail 
Deliver Obligation or Fail Deliver Obligations'' and make a conforming 
change to revise ``Allocated Net Short Position'' to ``Allocated Fail 
Deliver Obligation.''
Proposed Changes To Remove Submission Size Alternatives
    Currently, GSD Rule 5, Section 4 states that FICC shall establish 
procedures governing the manner in which FICC shall compare Full-Sized 
Trades to trades submitted in pieces and the order in which such 
comparison shall occur, and that FICC will inform Members of these 
procedures by notice prior to their implementation. FICC is proposing 
to remove this description regarding procedures governing the 
comparison of Full-Sized Trades to trades submitted in pieces because 
currently Full-Sized Trades can only be submitted as executed. FICC no 
longer intends to implement a process to compare Full-Sized Trades to 
trades submitted in pieces. Therefore, procedures governing the 
comparison of Full-Sized Trades to trades submitted in pieces would no 
longer be applicable.
Proposed Changes To Remove Reference to an Additional Fee
    GSD Rule 18, Section 2 currently states that if FICC determines 
that a Netting Member has, without good cause, violated its obligations 
pursuant to this section, such Netting Member may be, among other 
things, subject to an additional fee. FICC proposes to remove the 
reference to an additional fee because this reference is outdated and 
FICC does not charge an additional fee.
Proposed Changes To Update the Definition of ``Report''
    Currently, the definition of ``Report'' in GSD Rule 1 means any 
document, record, or other output prepared by FICC and made available 
to a Member in any format (including, but not limited to, machine-
readable and print image formats) or medium (including, but not limited 
to, print copy, magnetic tape, and CPU-to-CPU interface formats) that 
provides information to such Member with regard to the services 
provided by, or the operations of, FICC. FICC proposes to update the 
definition of ``Report'' by stating such output would be available in 
any format or medium prescribed by FICC, and by removing the 
parentheticals which contain some descriptions of outdated formats. 
Specifically, FICC would revise the definition of ``Report'' to state 
that it means any document, record, or other output prepared by FICC 
and made available to a Member in a format or medium prescribed by 
FICC, that provides information to such Member with regard to the 
services provided by, or the operations of, FICC.
    Similarly, FICC proposes to update GSD Rule 11, Section 10 to 
remove the examples of the types of formats and mediums that a Report 
may be provided in, as some of these examples are outdated. The current 
provision in GSD Rule 11, Section 10 states that a Netting Member is 
obligated to accept Reports from FICC in any format and in any medium 
usable by such Member, including, but not limited to, print copy, 
magnetic tape, and CPU-to-CPU (either real-time or otherwise) media. 
FICC proposes to revise this description to be more general by stating 
that a Netting Member is obligated to accept Reports from FICC in at 
least one of the formats or mediums prescribed by FICC that is usable 
by the Member.
    In addition, FICC proposes to remove the defined term ``CPU'' from 
GSD Rule 1.
Proposed Changes To Remove References to FICC Facilities and Offices
    GSD Rule 31 describes distribution facilities that can be 
established by FICC. Specifically, GSD Rule 31 states that if deemed 
necessary, FICC will establish distribution facilities from time to 
time to be used by Members for the distribution of papers, documents 
and other materials incidental to the ordinary course of business. It 
also states that FICC assumes no responsibility for the form or control 
of any papers, documents or other material (other than items prepared 
by it) placed in boxes in its distribution facilities assigned to each 
Member or handled by FICC and that FICC does not assume any 
responsibility for any improper or unauthorized removal from such boxes 
or from FICC's facilities of any such papers, documents or other 
materials. It also states that each Member must send an authorized 
representative to FICC's distribution facilities to pick up material 
made available by FICC and that FICC's distribution facilities will 
remain open on Business Days during the hours specified by FICC and 
that FICC will admit authorized persons holding valid passes at other 
hours.
    Because GSD Rule 31 is outdated as there are no such distribution 
facilities, FICC proposes to delete GSD Rule 31 and replace the 
description to state that this Rule is reserved for future use, as well 
as revise the title to ``Reserved.''
    FICC also proposes to remove Article V, Rule 13 of the EPN Rules. 
FICC would delete the current description and revise the title of this 
Rule to state ``Reserved for Future Use.'' This Rule currently states 
that reports will be available to, and business with FICC shall be 
transacted by, EPN Users at FICC's offices in New York, New York and 
also at such other locations as FICC from time to time may designate. 
It also states that each EPN User shall make arrangement satisfactory 
to FICC for receipt of reports and the transaction of other business 
with FICC at one or more of such locations. FICC is proposing to remove 
this description because it is outdated as reports and the transaction 
of other business with FICC by EPN Users occur through various 
electronic means, such as machine-readable output, rather than in a 
physical location.
Proposed Changes to GSD Rule 11, Section 5 To Reflect Current Practice
    GSD Rule 11, Section 5 states that a single Deliver Obligation may 
be bound by FICC to more than one Receive Obligation, and vice versa. 
FICC proposes to remove this description

[[Page 46297]]

because it is inaccurate and is not supported by the current system. 
Specifically, because FICC must maintain a matched book of obligations, 
there cannot be a single Deliver Obligation that is bound to more than 
one Receive Obligation and vice versa. The current system only supports 
a single Deliver Obligation being bound to one Receive Obligation.
Proposed Changes To Revise Provisions Regarding Network Fees
    Beginning in 2003, FICC periodically informed Members of the need 
to migrate their telecommunications connectivity from the Securities 
Industry Automation Corporation (``SIAC'')'s legacy-based Broker and 
Access networks to DTCC's \8\ Securely Managed and Reliable Technology 
(``SMART'') system or SIAC's Secure Financial Transaction 
Infrastructure (``SFTI'') networks. The SMART system is DTCC's 
centralized, end-to-end managed communications infrastructure, which 
provides connectivity support for all post-trade clearance and 
settlement processing. A related fee was implemented because while most 
FICC Members complied with the stated migration requirements, several 
Members continued to access FICC through legacy networks, which was 
imposing significant unnecessary costs on FICC for continued support of 
these systems.\9\ Today, there are no longer any such legacy network 
connections, and therefore FICC is proposing to remove this fee from 
the Rules.
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    \8\ The Depository Trust & Clearing Corporation (``DTCC'') is 
FICC's parent company.
    \9\ Securities Exchange Act Release No. 52655 (October 24, 
2005), 70 FR 62154 (October 28, 2005) (SR-FICC-2005-15) (``SMART 
Filing'').
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    Specifically, in (a) Section III of the Fee Structure in the GSD 
Rules, (b) the Schedule of Charges in the EPN Rules, (c) the Schedule 
of Charges Broker Account Group in the MBSD Rules, and (d) the Schedule 
of Charges Dealer Account Group in the MBSD Rules, FICC would delete 
the fee for failure to migrate from legacy networks to SMART and/or 
SFTI. The Rules currently state that the entire cost of supporting the 
legacy network connections will be allocated among remaining users pro 
rata. FICC would also make a related change to revise the title of 
Section III of the Fee Structure in the GSD Rules to state that it is 
reserved.
    In addition, in Section X of the Fee Structure in the GSD Rules, 
FICC would clarify that FICC will charge network fees related to SMART 
connectivity. Similarly, in (a) the Schedule of Charges in the EPN 
Rules, (b) the Schedule of Charges Broker Account Group in the MBSD 
Rules, and (c) the Schedule of Charges Dealer Account Group in the MBSD 
Rules, FICC would revise the title of the ``Communication Fees'' 
section to ``Administrative Fees'' and add a description stating that 
FICC will charge network fees related to SMART connectivity. Fees 
related to SMART connectivity are currently charged to Members if 
Members select SMART network as their means of connectivity to FICC. 
FICC believes it would enhance clarity to specifically describe this 
administrative fee that is currently charged to Members in the Rules 
and, as such, FICC does not believe this proposed clarification would 
impact the rights and obligations of Members.
Proposed Changes To Revise Description of Substitution of New 
Securities Collateral
    FICC proposes to clarify the description regarding substitution of 
New Securities Collateral in GSD Rule 18, Section 3(f) to reflect 
current practice. FICC would add that upon receipt of a request for 
such substitution where the information regarding the New Securities 
Collateral has not been provided to FICC, a Generic CUSIP Number would 
be applied to the substitution until the information regarding the New 
Securities Collateral has been provided. FICC also proposes to clarify 
the second sentence of GSD Rule 18, Section 3(f) by revising it to 
state that until such time as FICC has been notified of the 
substitution of the New Securities Collateral to be substituted, FICC 
shall base margining with respect to the New Securities Collateral on 
the applicable Generic CUSIP Number using the methodology that is used 
for securities whose volatility is less amenable to statistical 
analysis set forth in Section 1b of GSD Rule 4. FICC believes these 
proposed changes would enhance clarity as they describe current 
practice. Specifically, if a Member elects to substitute existing 
securities collateral but does not know at the time of the notification 
to FICC what the New Securities Collateral is, the Member is allowed to 
enter the notification in the system, with the existing securities 
collateral, and FICC will use a Generic CUSIP Number as placeholder for 
the New Securities Collateral. It is the expectation that the Member 
will then (on same Business Day and within established timeframes) 
update the notification with the specific CUSIP Number and other 
substitution-related details.
    GSD Rule 18, Section 3(f) currently states that upon receipt of a 
request for such substitution and until information regarding New 
Securities Collateral is provided to FICC for purposes of calculating 
the Required Fund Deposit of the Repo Party, FICC shall assign to the 
transaction a Contract Value which is 150 percent of the Contract Value 
of the original securities collateral. FICC implemented this as one of 
the measures to address the risk presented to it by the failure of a 
party to submit in a timely manner information regarding replacement 
collateral to FICC.\10\ In the 2005 Filing, FICC increased the clearing 
fund calculation of the repo dealer and allowed margining with respect 
to replacement collateral based on applicable Generic CUSIP Numbers 
only, and FICC assigned a value of 150 percent of the contract value of 
the original securities collateral to a repo transaction where FICC has 
not received information regarding the replacement collateral.\11\ The 
application of the 150 percent for clearing fund purposes applied to 
both the receive/deliver and repo volatility components of the clearing 
fund calculation. FICC also applied the highest applicable margin 
factor in its Rules in connection with the repo transaction.\12\ In 
2006, FICC replaced the current clearing fund methodology used at GSD, 
which used haircuts and offsets, with a yield-driven value-at-risk 
(``VaR'') methodology.\13\ The 2006 Filing states that this VaR 
methodology will necessitate a change to FICC's risk management 
consequences of the late allocation of repo substitution collateral 
because offset classes and margin rates will no longer be present in 
the revised GSD Rules.\14\ The 2006 Filing also states that FICC will 
base margining for such Generic CUSIP Number on the same calculation as 
that used for securities whose volatility is less amenable to 
statistical analysis.\15\ In 2007, FICC added language to GSD Rule 18 
(the rule that covers repo collateral substitution) to refer to the 
margining approach that was described in the narrative of the 2006 
Filing, so that Members reviewing the repo substitution rule (GSD Rule 
18) will have a point of reference.\16\ As such, FICC should have 
removed the language stating that ``[u]pon receipt of

[[Page 46298]]

a request for such substitution and until information regarding the New 
Securities Collateral is provided to FICC for purposes of calculating 
the Required Fund Deposit of the Repo Party, FICC shall assign to the 
transaction a Contract Value which is 150 percent of the Contract Value 
of the original securities collateral'' in the 2006 Filing, which 
implemented the VaR methodology. FICC is proposing to remove the first 
sentence of GSD Rule 18, Section 3(f) because this sentence should have 
been removed in the 2006 Filing and does not reflect current practice.
---------------------------------------------------------------------------

    \10\ Securities Exchange Act Release No. 53534 (March 21, 2006), 
71 FR 15781 (March 29, 2006) (SR-FICC-2005-18) (``2005 Filing'').
    \11\ Id.
    \12\ Id.
    \13\ Securities Exchange Act Release No. 55217 (January 31, 
2007), 72 FR 5774 (February 7, 2007) (SR-FICC-2006-16) (``2006 
Filing'').
    \14\ Id.
    \15\ Id.
    \16\ Securities Exchange Act Release No. 55616 (April 11, 2007), 
72 FR 19561 (April 18, 2007) (SR-FICC-2007-03).
---------------------------------------------------------------------------

Proposed Changes Regarding Requirements Applicable to Certain Repo 
Brokers With Segregated Repo Accounts
    GSD Rule 19, Section 2 describes the responsibilities of Repo 
Brokers \17\ and the conditions that have to be met in order for a Repo 
Broker to submit to FICC data on a Brokered Repo Transaction. 
Currently, it states that a Repo Broker may submit to FICC data on a 
Brokered Repo Transaction only upon written agreement, and compliance, 
with certain conditions. FICC proposes to revise ``may'' to ``shall'' 
to enhance accuracy and consistency as well as reflect current practice 
because Repo Brokers must submit this data to FICC, and Repo Brokers 
are doing this today. Furthermore, this proposed change would enhance 
accuracy and consistency because GSD Rule 3, Section 8(e) states that 
an Inter-Dealer Broker Netting Member shall limit its business to 
acting exclusively as a Broker and conduct all of its business in Repo 
Transactions with Netting Members. FICC does not believe this proposed 
change would impact the rights and obligations of Members because GSD 
Rule 3, Section 8(e) states that an Inter-Dealer Broker Netting Member 
shall conduct all of its business in Repo Transactions with Netting 
Members, and this proposed change would align GSD Rule 19, Section 2 
with this provision.
---------------------------------------------------------------------------

    \17\ The term ``Repo Broker'' is defined in GSD Rule 1, supra 
note 5.
---------------------------------------------------------------------------

    GSD Rule 19, Section 2 lists the following conditions that have to 
be met in order for a Repo Broker to submit to FICC data on a Brokered 
Repo Transaction: (a) Repo Broker has established a separate account, 
with a separate Fedwire address, at a clearing bank that will be used 
exclusively for the settlement by the parties to the transaction of the 
Start Leg, and (b) the Repo Broker has granted the necessary 
permissions to allow this account to be subject to review by FICC. FICC 
proposes to add language that was inadvertently omitted. Specifically, 
FICC would add language stating that these requirements will not apply 
to Repo Brokers with Segregated Repo Accounts that elect to settle 
their Same-Day Settling Trades with FICC. In 2021, FICC began to settle 
the Start Leg of Same-Day Settling Trades.\18\ Prior to this, the Start 
Leg of Same-Day Settling Trades was settled outside of FICC, and a 
separate account was needed for the settlement of the Start Leg. 
Therefore, if a Repo Broker has opted to settle Same-Day Settling 
Trades, then such Repo Broker would no longer need to maintain a 
separate settlement account for the Start Leg of the Same-Day Settling 
Trade because FICC settles the Start Leg and End Leg. As such, FICC 
believes that this proposed change to correct an inadvertent omission 
would not have any impact on the rights and obligations of Members.
---------------------------------------------------------------------------

    \18\ Securities Exchange Act Release No. 90948 (January 19, 
2021), 86 FR 7159 (January 26, 2021) (SR-FICC-2020-015).
---------------------------------------------------------------------------

Proposed Changes To Update Description of Trade Date Information
    Currently, GSD Rule 10, Section 5 states that if the data on a 
trade do not compare because information submitted regarding trade date 
does not match, FICC may, in its discretion, compare the trade based on 
a presumption that the earlier trade date submitted is the correct 
trade date. FICC would correct this provision to clarify that FICC does 
not have discretion.
    Specifically, FICC would state that if the data on a trade do not 
compare because information submitted regarding the trade date does not 
match, FICC shall compare the trade based on a presumption that the 
earlier trade date submitted is the correct trade date, because FICC 
does not have discretion as the system is not coded in a way to provide 
FICC with such discretion. FICC would also remove the second sentence 
in the first paragraph in GSD Rule 10, Section 5 that describes what 
occurs when exercising this discretion.
    In addition, in GSD Rule 10, Section 5, FICC would clarify that 
notwithstanding the first paragraph in this section, if the First 
Member submits a side of a buy/sell transaction to FICC, and the Second 
Member as a contra-party submits more than one side of a buy/sell 
transaction with similar trade data to FICC where the trade date does 
not match, FICC will compare the side of the buy/sell transaction 
submitted by the First Member with a side of a buy/sell transaction 
submitted by the Second Member where the trade date on the Second 
Member's buy/sell transaction is closest in date range to the trade 
date submitted by the First Member. This proposed change would enhance 
accuracy with respect to how a side of a buy/sell transaction is 
compared when the contra-party submits multiple sides of a buy/sell 
transaction and the trade dates do not match.
    FICC would also add that the enhanced comparison process referenced 
in GSD Rule 10, Section 5 does not apply to Repo Transactions when this 
process is performed at the end of the day. Currently, GSD Rule 10, 
Section 5 states that this section does not apply to Repo Transactions. 
FICC believes this proposed change would enhance clarity with respect 
to the current process.
Proposed Changes to Regarding FICC's Authority To Act on Behalf of a 
GCF-Authorized Inter-Dealer Broker
    FICC proposes to remove Section 6 from GSD Rule 20. Currently, this 
section states that if, as the result of a data submission error, a 
GCF-Authorized Inter-Dealer Broker has a GCF Net Settlement Position, 
FICC will have the authority to borrow cash and/or securities and/or 
enter into repurchase transactions for cash or securities with a 
Netting Member or Clearing Agent Bank to fulfill the obligations of 
such GCF-Authorized Inter-Dealer Broker attendant to the incurring of 
such Position. This section also states that if FICC takes such action, 
such GCF-Authorized Inter-Dealer Broker will be liable to it for any 
costs incurred. FICC proposes to delete Section 6 of GSD Rule 20 
because it is outdated and the system no longer allows for FICC to act 
on the GCF-Authorized Inter-Dealer's behalf if the GCF-Authorized 
Inter-Dealer incurs a Position.
Proposed Changes to GSD Rule 11, Section 5 To Reflect Current Practice
    Currently, GSD Rule 11, Section 5 states that a single Deliver 
Obligation may be bound by FICC to more than one Receive Obligation, 
and vice versa. FICC proposes to remove this sentence from GSD Rule 11, 
Section 5 because it does not reflect the current netting system. 
Currently, all Deliver Obligations and Receive Obligations must be 
equal and opposite out of the net.
4. Correct References to Incorrect Fees
    Section I.C of the Fee Structure of the GSD Rules states that the 
charge to a Member for the entry of a request by such Member to modify 
or cancel a side of a GCF Repo Transaction or a CCIT

[[Page 46299]]

Transaction is $0.05 per 50 million of par value. This fee is incorrect 
and the system does not contain this fee. As such, FICC proposes to 
remove this fee from Section I.C of the Fee Structure.
    Section X of the Fee Structure of the GSD Rules states that on any 
Business Day, a Repo Broker will be assessed an administrative fee of 
$50 for each instance where FICC determines to finance a Debit Forward 
Mark Adjustment Payment in excess of the Cap, as set forth in Section 4 
of GSD Rule 19. It also states that this administrative fee will be in 
addition to any costs incurred by FICC in arranging the financing for 
which the Repo Broker maintains responsibility and must reimburse FICC 
pursuant to that section. FICC proposes to remove this administrative 
fee and the related descriptions because FICC believes it would be too 
administratively burdensome to charge this small administrative fee.
5. Include Eligibility Requirements for Settling Same-Day Settling 
Trades
    GSD Rule 12, Section 11(ii) describes the requirements that a Same-
Day Settling Trade would have to meet to be eligible for settlement 
with FICC. Currently, the requirements are as follows: (a) the Same-Day 
Settling Trade is a Compared Trade; (b) the data on the Same-Day 
Settling Trade are listed on a Report that has been made available to 
Netting Members; (c) (i) the End Leg of the Same-Day Settling Trade 
means the eligibility requirements for netting in GSD Rule 11 or (ii) 
the Repo Transaction is an As-Of Trade and its End Leg settles on the 
current Business Day or thereafter; and (d) the underlying securities 
are Eligible Netting Securities. FICC proposes to add a requirement 
regarding submission size requirements to the current list of 
requirements described above. Specifically, FICC would add that 
regarding the form and manner in which Same-Day Settling Trades are 
submitted to FICC, the Same-Day Settling Trade must be submitted in 
equal and identical size and shapes between Netting Members. FICC would 
also add that for avoidance of doubt, ``identical size and shapes'' 
means that each counterparty must submit trade data reflecting equal 
par amounts and number of sides. FICC currently requires that Same-Day 
Settling Trades are submitted in equal and identical size and shapes 
between Netting Members. As such, FICC believes that this proposed 
change to expressly describe what must be submitted in terms of the 
form and manner in which Same-Day Settling Trades are submitted to FICC 
would enhance clarity with respect to the requirements for eligibility 
for settlement for Same-Day Settling Trades. Furthermore, this proposed 
change describes how Members currently process transactions. As such, 
because this proposed change reflects current practice, FICC does not 
believe that this proposed change will impact Members.
    In addition, GSD Rule 12, Section 11(ii) states that 
notwithstanding the above, FICC may, in its sole discretion, exclude 
any Same-Day Settling Trade or Same-Day Settling Trades from the 
Comparison System, by Netting Member or by Eligible Netting Security. 
FICC would add that this includes cancelling any Same-Day Settling 
Trade that does not meet the eligibility requirements set forth in GSD 
Rule 12.
6. Correct Schedule of Timeframes
    FICC proposes to make certain corrections to the Schedule of 
Timeframes in the GSD Rules, including adding two timeframes and 
revising a current timeframe. Specifically, FICC proposes to add a 7:00 
a.m. timeframe and a 7:05 a.m. timeframe. FICC also proposes to revise 
the 10:30 p.m. to 2:00 a.m. timeframe in the Schedule of Timeframes in 
the GSD Rules.
    The 7:00 a.m. timeframe in the Schedule of Timeframes would be 
described as the timeframe by which FICC begins processing trade data 
for the current Business Day. This would align with the Schedule of GCF 
Repo Timeframes, which currently lists a 7:00 a.m. timeframe, and is 
described as the timeframe when FICC begins accepting data on GCF Repo 
Transactions. As such, FICC believes it would enhance clarity and 
consistency to have both schedules describe the time by which FICC 
begins processing trade data. FICC believes these proposed changes 
would help enhance Members' understanding of when FICC begins 
processing trade data and reflects current practice. As such, FICC does 
not believe this proposed change would have an impact on the rights and 
obligations of Members.
    Additionally, FICC proposes to add a 7:05 a.m. timeframe, which 
would be described as the time by which FICC's margining output is made 
available to Netting Members.
    FICC would also update the reference to margining output that is in 
the current 10:30 p.m. to 2:00 a.m. timeframe. Currently, the 
description of this timeframe states this is the time during which 
FICC's comparison, netting, settlement and margining output is made 
available to Members. FICC would revise the description to state this 
is the time by which FICC's comparison, netting, and settlement output 
is made available to Members. FICC does not believe these proposed 
changes would impact the rights and obligations of Members because 
these proposed changes to the Schedule of Timeframes reflect current 
practice and, therefore, would enhance accuracy and clarity.
    In addition, FICC would revise the current 10:30 p.m. to 2:00 a.m. 
timeframe to only state 2:00 a.m. to be consistent with the other 
timeframes in the Schedule of Timeframes, which are not listed as 
ranges. FICC believes this proposed change would enhance consistency, 
and thereby enhance accuracy, and as such, would not impact the rights 
and obligations of Members.
    FICC would also remove the phrase ``for Netting Members'' in the 
4:30 p.m. timeframe to be consistent with the 10:00 a.m. timeframe. 
Both these timeframes describe when funds-only settlement debits and 
credits are executed via the Federal Reserve's National Settlement 
Service. FICC does not believe this proposed change to enhance 
consistency and clarity would impact the rights and obligations of 
Members.
7. Correct Schedule of GCF Repo Timeframes
    FICC also proposes to make certain corrections to the Schedule of 
GCF Repo Timeframes in the GSD Rules. Specifically, FICC would revise 
the 7:00 a.m. timeframe, and remove the 10:00 a.m., 10:30 a.m., and 
1:00 p.m. timeframes because the 10:00 a.m., 10:30 a.m. and 1:00 p.m. 
timeframes are outdated.
    Currently, the 7:00 a.m. timeframe states that FICC begins to 
accept from GCF Authorized Inter-Dealer Brokers data on GCF Repo 
Transactions, and GCF Authorized Inter-Dealer Brokers must submit data 
on a GCF Repo Transaction that they are a party to within five minutes 
of executions of such transaction. FICC would revise this 7:00 a.m. 
timeframe to state that Netting Members must begin affirming or 
cancelling GCF Repo Transactions upon receipt of data on such GCF Repo 
Transactions from FICC.
    Additionally, FICC proposes to remove the 10:00 a.m. 10:30 a.m. and 
1:00 p.m. timeframes. The 10:00 a.m. timeframe states that this is the 
time Netting Members must begin affirming or disaffirming GCF Repo 
Transactions within one half hour of receipt of data on such 
transactions from FICC. The 10:30 a.m. timeframe currently states that 
this is the deadline for dealer affirmation or disaffirmation of all 
GCF

[[Page 46300]]

Repo Transactions that they are a party to that are executed prior to 
10 a.m. The 1:00 p.m. timeframe currently states that for GCF Repo 
Transactions executed after 1:00 p.m., Netting Members must affirm or 
disaffirm GCF Repo Transactions within ten minutes of their receipt of 
data on such transactions from FICC.
    FICC believes these proposed changes to remove outdated timeframes 
and clarify the 7:00 a.m. timeframe described above would enhance 
consistency and accuracy, and thereby make it clear that Members must 
begin affirming or cancelling their trades when the system opens at 
7:00 a.m. FICC does not believe these proposed changes would impact the 
rights and obligations of Members because these proposed changes would 
more accurately describe current practice.
8. Correct References From ``Disaffirm'' To ``Cancel''
    FICC proposes to revise the references from disaffirm to cancel in 
GSD Rule 6C, Section 12. This section describes the affirmation, 
cancellation and modification requirements for Data on GCF Repo 
Transactions.
    FICC would also revise the references from ``disaffirmation'' to 
``cancellation'' in the 3:00 p.m. timeframe in the Schedule of GCF Repo 
Timeframes in the GSD Rules to be consistent with the proposed changes 
to the 7:00 a.m. timeframe described above. The 3:00 p.m. timeframe 
currently states this is the cutoff for GCF Repo Transaction data 
submission from GCF Authorized Inter-Dealer Brokers to FICC including 
dealer trade affirmation or disaffirmation--all unaffirmed trades 
automatically affirmed by FICC.
9. Correct Description of Acknowledgement and Refusal Messages
    FICC proposes to make certain corrections to GSD Rule 13, Section 
5(h) to enhance accuracy. Currently, GSD Rule 13, Section 5(h) states 
that a Funds-Only Settling Bank that cannot send an acknowledgment or 
refusal message to FICC due to an operational issue may telephone its 
instructions to the Settlement Agent. FICC proposes to revise GSD Rule 
13, Section 5(h) to correct that a Funds-Only Settling Bank that cannot 
send an acknowledgement or refusal message to the Settlement Agent due 
to an operational issue may instruct the Settlement Agent to act on its 
behalf. FICC believes these proposed changes would clarify that the 
acknowledgement or refusal message is sent to the Settlement Agent 
(rather than FICC) and that replacing ``telephone its instructions to'' 
with ``instruct'' would clarify that the Funds-Only Settling Bank may 
telephone its instructions or provide its instructions in another way.
10. Correct Definition of ``Repo Start Date''
    FICC proposes to correct the definition of Repo Start Date in GSD 
Rule 1 to state that it means the settlement date for the Start Leg of 
a Repo Transaction. The current definition states that it means the 
settlement date for the start date of a Repo Transaction.
11. Make Corrections to Certain GSD Schedules
    In the (i) Schedule of Required and Accepted Data Submission Items 
for a Substitution and (ii) Schedule of Required and Accepted Data 
Submission Items for New Securities Collateral in the GSD Rules, FICC 
proposes to add ``or Generic CUSIP Number'' to Item 1 in each schedule, 
which was inadvertently omitted. Currently, Item 1 in each schedule 
only lists Specific CUSIP Number for the Existing Securities Collateral 
or New Securities Collateral, as applicable. However, FICC must receive 
either the Specific CUSIP Number or Generic CUSIP Number for the 
Existing Securities Collateral or New Securities Collateral, as 
applicable, in order to process a substitution of Existing Securities 
Collateral or New Securities Collateral, as applicable.
    In the Schedule of Required and Other Data Submission Items for GCF 
Repo Transactions in the GSD Rules, FICC proposes to correct the 
reference from ``Trade Reference Number'' to ``Broker Reference 
Number'' to enhance accuracy. Currently, Broker Reference Number in 
this schedule is described as the GCF-Authorized Inter-Dealer Broker's 
unique reference number for the GCF Repo Transaction. As such, FICC 
believes it would enhance accuracy and clarity to refer to this item as 
the Broker Reference Number rather than the Trade Reference Number.

B. Clarifications

    FICC is proposing to make a number of clarifications to the Rules, 
as described in greater detail below. FICC believes that each of these 
proposed changes would improve the clarity of the Rules, for the 
reasons described below, and does not believe that that any of the 
proposed clarifications would impact the rights and obligations of 
Members.
1. Clarify Calculation of the Funds-Only Settlement Amount
    In GSD Rule 13, Section 2, FICC proposes to make certain 
clarifications to the calculation of the Funds-Only Settlement Amounts 
to describe the current calculation of the Funds-Only Settlement 
Amounts more accurately. For GSD, funds-only settlement occurs twice on 
a Business Day, at 10:00 a.m. and 4:30 p.m., and therefore, the Funds-
Only Settlement Amount is calculated twice on a Business Day. 
Specifically, the intraday Funds-Only Settlement Amount is calculated 
and then collected or paid intraday on the same Business Day. The 
Funds-Only Settlement Amount that is collected or paid at the start of 
day on a Business Day is calculated at the end of the previous Business 
Day. For example, the Funds-Only Settlement Amount that is collected or 
paid at 10:00 a.m. on March 2, 2023 is calculated at the end of day on 
March 1, 2023. In addition, these two Funds-Only Settlement Amounts are 
calculated using different components, as further described below.
    Currently, GSD Rule 13, Section 2 states that the Funds-Only 
Settlement Amount of each Netting Member shall be determined by 
calculating the net total, for a particular Business Day of the 
following and then lists the components that are part of the 
calculation of this amount. FICC proposes to revise the reference from 
``for a particular Business Day'' to ``for a particular cycle, if 
applicable,'' to enhance clarity and accuracy. For GSD, as described 
above, currently, funds-only settlement occurs twice on a Business Day 
and therefore, there are two cycles during the Business Day during 
which the Funds-Only Settlement Amount is calculated. As such, FICC 
believes it is more precise and accurate to refer to a particular cycle 
in the description of the calculation of the Funds-Only Settlement 
Amount and as this proposed change would reflect the current 
calculation of the Funds-Only Settlement Amounts, FICC does not believe 
this proposed change would impact the rights or obligations of Members.
    In addition, in GSD Rule 13, Section 2, FICC proposes to add ``the 
return of the previous cycle's Net Forward Mark Adjustment Payment'' as 
a component in the calculation of the Funds-Only Settlement Amount of 
each Netting Member, and this would be added as subsection (d). The Net 
Forward Mark Adjustment Payment is currently listed as a component of 
the Funds-Only Settlement Amount, but FICC believes it

[[Page 46301]]

would enhance clarity to also list the return of the previous cycle's 
Net Forward Mark Adjustment Payment in the description of the 
calculation of the Funds-Only Settlement Amount.\19\ FICC believes this 
proposed change would be a more accurate description of the current 
process. During each cycle, FICC calculates a new Net Forward Mark 
Adjustment Payment and so, also returns the previous cycle's Net 
Forward Mark Adjustment Payment. As described above, funds-only 
settlement occurs twice a day at GSD, so the cycle at 10:00 a.m. may 
include the return of the previous cycle's Net Forward Mark Adjustment 
Payment (the previous cycle would be the cycle that occurred at 4:30 
p.m. the previous Business Day). FICC believes these proposed changes 
enhances clarity by more accurately describing the current process and 
therefore, would not impact the rights or obligations of Members.
---------------------------------------------------------------------------

    \19\ ``Net Forward Mark Adjustment Payment'' is defined in GSD 
Rule 1, supra note 5.
---------------------------------------------------------------------------

    Similarly, in GSD Rule 13, Section 2, FICC proposes to revise the 
first sentence of the third paragraph to refer to a particular cycle 
rather than Business Day and to add the phrase ``if applicable.'' In 
addition, FICC proposes to clarify the components of the Funds-Only 
Settlement Amount that are currently calculated and collected or paid 
intraday by replacing the current description with a list of the 
specific components, which are the Net Forward Mark Adjustment Payment, 
the return of the previous cycle's Net Forward Mark Adjustment Payment 
and the Miscellaneous Adjustment Amount. The current description states 
that FICC will determine an intraday Funds-Only Settlement Amount by 
calculating a net total, for a particular Business Day, of certain of 
the amounts specified in Section 1 of GSD Rule 13 as FICC shall 
announce to Members from time to time. The revised description would 
state that FICC will determine an intraday Funds-Only Settlement Amount 
by calculating a net total, for a particular cycle, if applicable, of 
the following: (a) the Net Forward Mark Adjustment Payment, (b) the 
return of the previous cycle's Net Forward Mark Adjustment Payment, and 
(c) Miscellaneous Adjustment Amount. FICC believes these proposed 
changes to this paragraph in GSD Rule 13, Section 12 would enhance 
clarity with respect to the intraday Funds-Only Settlement Amount. 
Because this proposed change would reflect the current calculation of 
the Funds-Only Settlement Amount that is calculated and collected or 
paid intraday, FICC does not believe this proposed change would impact 
the rights or obligations of Members.
    FICC would also clarify that certain components of the Funds-Only 
Settlement Amount are only applicable to the end of the day cycle, and 
some are only applicable to the intraday cycle. FICC would clarify that 
the components of the Funds-Only Settlement Amount in the second 
paragraph of GSD Rule 13, Section 2, are calculated at the end of the 
day and then collected or paid start of day, as applicable, on the 
following Business Day, are the amounts listed in (a) through (p) of 
this paragraph. Similarly, with respect to the third paragraph of GSD 
Rule 13, Section 2, FICC would clarify that the components of the 
Funds-Only Settlement Amount that are calculated and collected or paid 
intraday, as applicable, are the amounts listed in (a) through (c) of 
this paragraph. Because these proposed changes would reflect the 
current calculation of the Funds-Only Settlement Amounts, FICC does not 
believe these proposed changes would impact the rights or obligations 
of Members.
2. Clarify Definition of ``Account''
Proposed Changes To Clarify Account, Broker Account, and Dealer 
Account, and Netting Member Account
    FICC proposes to make certain clarifications to the definition of 
``Account'' in GSD Rule 1, as further described below. FICC believes 
the proposed changes described below would clarify the various types of 
Accounts that currently exist at FICC.
    The current definition of ``Account'' in GSD Rule 1 means any 
account maintained by FICC on behalf of a Netting Member. FICC proposes 
to revise the definition of ``Account'' to state that it means any 
account maintained by a Member. FICC believes these proposed changes to 
the definition of ``Account'' would enhance consistency, and thereby 
also enhance clarity. Specifically, these proposed changes would revise 
the definition of ``Account'' to be more consistent with the 
definitions for other types of Accounts, such as a Broker Account and a 
Sponsoring Member Omnibus Account.
    As such, because FICC is proposing to revise the definition of 
``Account'' to mean any account maintained by the Member, as described 
above, FICC would also add a definition for ``Netting Member Account'' 
in GSD Rule 1 to specifically describe an account maintained by FICC on 
behalf of a Netting Member. FICC proposes to add that Netting Member 
Account would mean an Account maintained by a Netting Member that 
contains the activity of the Netting Member that is submitted to FICC. 
FICC would also add that a Netting Member may elect to establish one or 
more Netting Member Accounts.
    In addition, the current definition of ``Account'' in GSD Rule 1 
includes definitions for ``Broker Account'' and ``Dealer Account'' and 
also describes that with respect to an applicable Cross-Margining 
Agreement, ``Account'' may include a Market Professional Cross-
Margining Account. FICC proposes to move the definitions of ``Broker 
Account'' and ``Dealer Account'' from the definition of ``Account'' so 
that each of these terms are listed separately and in alphabetical 
order in GSD Rule 1. ``Broker Account'' would mean an Account 
maintained by an Inter-Dealer Broker Netting Member or a Segregated 
Repo Account of a Non-IDB Repo Broker. ``Dealer Account'' would mean an 
Account maintained by a Netting Member that is not a Broker Account. 
FICC believes that separately listing the defined terms ``Broker 
Account'' and ``Dealer Account'' in GSD Rule 1 rather than within 
another defined term in GSD Rule 1 would enhance readability and 
clarity.
    FICC believes the above-described proposed changes in the GSD Rules 
would enhance clarity with respect to the various types of Accounts 
that currently exist. Because these are clarifications of the 
descriptions of the current types of Accounts, FICC does not believe 
that the above-described proposed changes would impact the rights and 
obligations of Members.
Proposed Changes To Capitalize References to Account, Accounts, and 
Account(s)
    FICC would capitalize the references to account, accounts, and 
account(s), as applicable, in the GSD Rules, including, for example, 
(1) in the definitions of ``Market Professional Cross-Margining 
Account'', ``MLA Excess Amount,'' and ``Segregated Repo Account'' in 
GSD Rule 1; (2) GSD Rule 13, Section 5(d); (3) GSD Rule 3, Sections 
11(a), (c), (e), (f); (4) GSD Rule 3A, Sections 10(b) and 11; (5) GSD 
Rule 19, Section 4; and (6) Sections V and VII of the Fee Structure of 
the GSD Rules.
    FICC believes it would enhance clarity and consistency to use the 
defined term ``Account'' by capitalizing the current references, as 
described above. Because these are clarifications of the descriptions 
of the current types of Accounts, FICC does not believe that the above-
described proposed changes

[[Page 46302]]

would impact the rights and obligations of Members.
Proposed Changes To Revise References to Netting Member Account
    Because FICC would add a definition for ``Netting Member Account,'' 
FICC proposes to make the following changes:
     In GSD Rule 3, Sections 11(b) and (d), FICC proposes to 
revise ``netting accounts'' to ``Netting Member Accounts.''
     In GSD Rule 3A, Sections 2(h), 10(b), 11 and 12, FICC 
proposes to revise ``Netting System accounts'' to ``Netting Member 
Accounts.''
     In GSD Rule 3A, Section 18, FICC proposes to revise 
``Netting System Account(s)'' to ``Netting Member Account(s).''
     In GSD Rule 3A, Section 6(c), FICC proposes to revise 
``netting account'' to ``Netting Member Account.''
    FICC believes revising these references to the new defined term 
``Netting Member Account'' would enhance clarity and consistency with 
respect to the current references in the GSD Rules that describe this 
type of account. As such, FICC does not believe that the above-
described proposed changes would impact the rights and obligations of 
Members.
    FICC also proposes to revise the reference from ``participant 
account'' to ``Account'' in GSD Rule 19, Section 2.
3. Clarify Definition of ``Transactions''
    FICC proposes to clarify the definition of Transactions in GSD Rule 
1 by revising a reference from Direct Transactions to Bilateral 
Transactions. FICC would also remove the defined term ``Direct 
Transactions'' from GSD Rule 1. Currently, ``Transactions'' means 
Brokered Transactions and Direct Transactions. In addition, ``Direct 
Transactions'' means any transaction, including a Repo Transaction, 
calling for the delivery of an Eligible Netting Security or the posting 
of cash or an Eligible Netting Security as collateral, the data on 
which has been submitted to FICC by Members, that is not a Brokered 
Transaction.
    FICC would add a definition for Bilateral Transactions in GSD Rule 
1 to enhance clarity. Bilateral Transactions would mean any 
transaction, including a Repo Transaction, the data on which has been 
submitted to FICC by two Members, and is not a Brokered Transaction.
    FICC believes the above-described proposed changes to replace the 
term ``Direct Transactions'' to the more descriptive term ``Bilateral 
Transactions'' and to simply the definition of ``Bilateral 
Transactions'' would enhance clarity. Furthermore, FICC does not 
believe the above-described proposed changes would impact the rights 
and obligations of Members because these are the current types of 
Transactions that are submitted to FICC.
4. Add References to CCIT Transactions
    In the second to last sentence of the definition of End Leg in GSD 
Rule 1, FICC proposes to revise the reference from transaction to GCF 
Repo Transaction or CCIT Transaction, as applicable. In addition, in 
the definition of GCF Transaction Adjustment Payment, FICC proposes to 
revise the reference from transactions to GCF Repo Transactions and 
CCIT Transactions, as applicable.
    FICC believes replacing the word ``transaction'' with the defined 
terms in the above-described definitions would enhance clarity by 
providing consistency and specificity with respect to the transactions 
that are being referenced in these definitions. Furthermore, these 
definitions currently include a reference to GCF Repo Transactions and 
CCIT Transactions. As such, FICC does not believe that these proposed 
changes to enhance clarity would impact the rights and obligations of 
the Members.
5. Revise GSD Rule 18, Sections 2 and 3 To Enhance Clarity
    In GSD Rule 18, Section 2, FICC proposes to clarify that each 
Netting Member that has requested to add the repo netting service 
operated by FICC must submit to FICC, or to either another Registered 
Clearing Agency or Clearing Agency that has been exempted from 
registration as a Clearing Agency by the SEC, for comparison and 
netting, data on all of its Repo Transactions. Currently, GSD Rule 18, 
Section 2 states that each Netting Member that has requested of FICC 
that it provide its Netting System services for such Member's Repo 
Transaction data submissions must submit to FICC, or to either another 
Registered Clearing Agency or Clearing Agency that has been exempted 
from registration as a Clearing Agency by the SEC, for comparison and 
netting, data on all of its Repo Transactions. FICC believes this 
proposed change would enhance clarity and accuracy because it is when 
Netting Members request to add the repo netting service operated by 
FICC that they are required to submit to FICC or another Registered 
Clearing Agency or Clearing Agency that has been exempted from 
registration as a Clearing Agency by the SEC, for comparison and 
netting, the data on all of its Repo Transactions. Furthermore, the 
repo netting service operated by FICC and the Netting System services 
for such Member's Repo Transaction data submissions are different ways 
of describing the same service provided by FICC. As such, FICC does not 
believe that these proposed clarifications would impact the rights and 
obligations of Members.
    In addition, in GSD Rule 18, Section 2, the last sentence of the 
first paragraph and the sixth paragraph both describe collateral 
substitutions pertaining to Repo Transactions and are duplicative. 
Specifically, both sentences state that all collateral substitutions 
pertaining to Repo Transactions must be performed through FICC, and the 
requisite collateral substitution requests must be submitted to FICC in 
accordance with the requirements, procedures and timeframes established 
by FICC from time to time. As such, FICC proposes to remove this 
description from GSD Rule 18, Section 2 and add this description to GSD 
Rule 18, Section 3 because GSD Rule 18, Section 3 contains provisions 
related to collateral substitutions. FICC believes these proposed 
changes would enhance clarity and would not impact the rights and 
obligations of Members.
6. Clarify Descriptions of Novation
Proposed Changes To Revise Defined Term ``Novation'' To Include Uses of 
``Novate''
    In GSD Rule 1, FICC proposes to revise the defined term 
``Novation'' to ``Novation or Novate'' and to add that the term 
``Novate'' shall have a corollary meaning. Novation is currently 
defined as the termination of deliver, receive, and related payment 
obligations between Netting Members and the replacement of such 
obligations with identical obligations to and from FICC, pursuant to 
Section 8 of GSD Rule 5. FICC believes this proposed change to add 
Novate to the current definition of Novation and specify that 
``Novate'' has a corollary meaning would enhance clarity as Novation 
and Novate are both currently used in the GSD Rules to describe the 
termination of deliver, receive, and related payment obligations 
between Netting Members and the replacement of such obligations with 
identical obligations to and from FICC. As such, FICC believes this 
added specificity would enhance clarity and would not impact the rights 
and obligations of Members.
    FICC also proposes to capitalize the references to novate and 
novated in GSD Rule 3A, Sections 2(i), 7(a), 7(b), 14(c), 16(b) and 
18(e); GSD Rule 3B, Section 14(b); GSD Rule 5, Section 8(a), 8(b),

[[Page 46303]]

and 8(d); GSD Rule 11, Section 6; GSD Rule 12, Section 11(iii); GSD 
Rule 14, Section 3; GSD Rule 20, Section 5; and GSD Rule 21A. FICC 
believes these proposed changes to use the defined terms by 
capitalizing the current references to novate and novated in the above-
referenced GSD Rules would enhance clarity and would not impact the 
rights and obligations of Members.
    FICC also proposes to revise the definition of Novation in GSD Rule 
1 to include CCIT Members (or Joint Accounts), which was inadvertently 
omitted. Specifically, FICC proposes to revise this definition to state 
that Novation means the termination of deliver, receive, and related 
payment obligations between Netting Members, or between a CCIT Member 
(or Joint Account) and a Netting Member, and the replacement of such 
obligations with identical obligations to and from FICC, pursuant to 
Section 8 of GSD Rule 5. Currently, GSD Rule 5, Section 8(a) states 
that Novation consists of the termination of the deliver, receive and 
related payment obligations between the Netting Members, or between a 
CCIT Member (or Joint Account) and a Netting Member, with respect to 
the Compared Trade and their replacement with identical obligations to 
and from FICC in accordance with the GSD Rules. As such, FICC believes 
this proposed change to the definition of Novation would enhance 
clarity by correcting an inadvertent omission in the definition of 
Novation and would not impact the rights and obligations of Members.
Proposed Changes To Replace References To Guaranty, Guarantee, and 
Guaranty of Settlement With Novation or Novate
    FICC also proposes to remove references to guaranty, guarantee, and 
Guaranty of settlement and/or replace such references with Novation or 
Novate. FICC believes it would enhance clarity and consistency to 
describe this process in the GSD Rules using the defined term Novation 
or Novate.\20\ Furthermore, FICC believes it would enhance clarity to 
remove duplicative descriptions.
---------------------------------------------------------------------------

    \20\ FICC is proposing to revise the definition of Novation to 
add Novate, as described above.
---------------------------------------------------------------------------

    Specifically, FICC proposes to remove GSD Rule 11B (Guaranty of 
Settlement). GSD Rule 11B, Section (a) currently describes requirements 
that must be satisfied for FICC to guarantee the settlement of that 
trade. Specifically, GSD Rule 11B, Section (a) states that FICC will 
guarantee the settlement of a trade the data on which were submitted 
for Bilateral Comparison, Demand Comparison, or Locked-in Comparison at 
the time the comparison of such trade occurs pursuant to GSD Rules 6A, 
6B, or 6C, respectively, as long as the trade meets the requirements of 
Section 2 of GSD Rule 11 and was entered into good faith. FICC is 
proposing to delete this Section (a) of GSD Rule 11B to enhance clarity 
and consistency because FICC believes this description is duplicative 
in the GSD Rules. Furthermore, FICC believes it would enhance clarity 
to consistently use the one defined term Novation. Currently, GSD Rule 
5, Section 8(a) states that each Compared Trade that meets the 
requirements of Section 2 of GSD Rule 11 and was entered into good 
faith shall be novated to FICC and FICC shall guarantee the settlement 
of each Compared Trade at the time at which comparison of such Compared 
Trade occurs pursuant to GSD Rules 6A, 6B, or 6C.\21\ GSD Rule 5, 
Section 8(a) currently also states that such Novation shall consist of 
the termination of the deliver, receive and related payment obligations 
between the Netting Members, or between a CCIT Member (or Joint 
Account) and a Netting Member, with respect to the Compared Trade 
(including, if such Compared Trade is a Repo Transaction, any Right of 
Substitution established by the parties) and their replacement with 
identical obligations to and from FICC in accordance with these Rules.
---------------------------------------------------------------------------

    \21\ FICC is also proposing to remove the references to guaranty 
in GSD Rule 5, Section 8, as described further below.
---------------------------------------------------------------------------

    GSD Rule 11B, Section (b) describes the guaranty referred to in 
Section (a). Specifically, GSD Rule 11B, Section (b) states that this 
guaranty means FICC's obligation to include the trade in calculating a 
Net Settlement Position and to novate the deliver, receive, and payment 
obligations that were created by the trade pursuant to the GSD Rules. 
It also states that FICC's guaranty of settlement of an individual 
trade applies only to the settlement of the trade as it exists as part 
of a Net Settlement Position. FICC is proposing to remove GSD Rule 11B, 
Section (b) to enhance clarity and consistency. FICC believes this 
section is duplicative and that by using the defined terms Novation or 
Novate instead of Guaranty would enhance clarity and consistency.\22\ 
Novation is currently a defined term in GSD Rule 1 and means the 
termination of deliver, receive, and related payment obligations 
between Netting Members and the replacement of such obligations with 
identical obligations to and from FICC pursuant to Section 8 of Rule 5. 
In addition, GSD Rule 11 describes the Netting System and the 
establishment of Net Settlement Positions. Specifically, GSD Rule 11, 
Section 1 states that the Netting System is a system for aggregating 
and matching offsetting obligations from trades submitted by or on 
behalf of Netting Members in Eligible Netting Securities. GSD Rule 11, 
Section 3 describes the obligation to submit trades to FICC for 
comparison and netting. GSD Rule 11, Section 4 states that on each 
Business Day, for each Eligible Netting Security with a separate CUSIP 
number, with certain exceptions, FICC will establish a Net Settlement 
Position or Fail Net Settlement Position, as applicable.
---------------------------------------------------------------------------

    \22\ FICC is also proposing to clarify the definition of 
``Novation'' to include ``Novate'', as further described above.
---------------------------------------------------------------------------

    GSD Rule 11B, Section (c) describes the circumstances when FICC's 
guaranty described in GSD Rule 11B, Sections (a) and (b) are no longer 
in effect. GSD Rule 11B, Section (c) states that the guaranty referred 
to in subsections (a) and (b) above shall no longer be in effect if the 
trade becomes uncompared, is cancelled, or settles pursuant to the 
Rules. FICC is proposing to remove GSD Rule 11B, Section (c) to enhance 
clarity and consistency by using the terms Novation or Novate instead 
of Guaranty and FICC believes this section is duplicative. GSD Rule 5, 
Section 8(c) and (d) also describes what occurs when a trade becomes 
uncompared or is cancelled pursuant to the GSD Rules.\23\
---------------------------------------------------------------------------

    \23\ FICC is also proposing to clarify the description of what 
occurs if a trade becomes uncompared or is cancelled in GSD Rule 5, 
Section 8(c) pursuant to the GSD Rules, as further described below.
---------------------------------------------------------------------------

    GSD Rule 11B, Section (d) describes the requirements that must be 
satisfied for FICC to guarantee the settlement of Same-Day Settling 
Trades. FICC is proposing to remove GSD Rule 11B, Section (d) to 
enhance clarity and consistency as FICC believes this section is 
duplicative. GSD Rule 5, Section 8(b) currently states that each Same-
Day Settling Trade that becomes a Compared Trade and was entered into 
good faith will be novated to FICC. In addition, the eligibility for 
settlement of Same-Day Settling Trades is currently described in GSD 
Rule 12, Section 11(ii).
    As described above, FICC believes removing GSD Rule 11B would 
enhance clarity and consistency as this rule describes FICC's guaranty 
of settlement and is duplicative, as described above. As such, FICC 
does not believe the proposed change to remove GSD Rule 11B would 
impact the rights and obligations of Members.
    GSD Rule 3A, Section 2(i) currently states that any Sponsored 
Member Trades which have received FICC's

[[Page 46304]]

guaranty of settlement and been novated to FICC shall continue to be 
processed and guaranteed by FICC. FICC proposes to revise GSD Rule 3A, 
Section 2(i) and Rule 3A, Section 16 to state any Sponsored Member 
Trades which have been Novated by FICC shall continue to be processed 
by FICC.
    In addition, GSD Rule 3A, Section 7(a)(iv) states that FICC's 
guaranty of settlement shall apply to Sponsored Member Trades and such 
trades shall be novated in the same manner in which trades of Netting 
Members are novated and settlement is guaranteed pursuant to Section 8 
of GSD Rule 5. FICC proposes to revise GSD Rule 3A, Section 7(a)(iv) to 
state that Sponsored Member Trades shall be Novated in the same manner 
in which trades of Netting Members are Novated pursuant to Section 8 of 
GSD Rule 5. FICC would also revise the title of GSD Rule 3A, Section 7 
from ``The Netting System, Novation and Guaranty of Settlement'' to 
``The Netting System and Novation.'' GSD Rule 3A, Section 14(c) 
currently states that any Sponsored Member Trades which have received 
FICC's guaranty of settlement and been novated to FICC shall continue 
to be processed and guaranteed by FICC. FICC proposes to revise GSD 
Rule 3A, Section 14(c) to state any Sponsored Member Trades which have 
been Novated by FICC shall continue to be processed by FICC.
    FICC also proposes to remove GSD Rule 3B, Section 12, which states 
that GSD Rule 11B (Guaranty of Settlement) shall apply to CCIT 
Transactions that are Compared Trades. FICC also proposes to revise GSD 
Rule 3B, Section 14(b) to remove the phrase ``guaranteed and.'' As 
such, GSD Rule 3B, Section 14(b) would state that once FICC has ceased 
to act for a Netting Member with whom a CCIT Member traded pursuant to 
these GSD Rules, if any portions of such trades, as Novated pursuant to 
these GSD Rules, remain outstanding, then, if FICC determines, in its 
sole discretion, that the procedures below are necessary to address 
certain of FICC's liquidity needs, FICC may initiate transactions under 
the CCIT MRA as provided below.
    FICC also proposes to remove the phrase ``and guarantee the 
settlement of'' from GSD Rule 21A(v).
    In addition, FICC proposes to revise GSD Rule 5, Section 8. FICC 
would remove the phrase ``and Guaranty'' from the title of this 
section. FICC also proposes to remove the phrase ``and the Corporation 
shall guarantee the settlement of each such Compared Trade'' from GSD 
Rule 5, Sections 8(a) and 8(b).
    Furthermore, FICC proposes to clarify GSD Rule 5, Section 8(b) by 
adding a proviso that was inadvertently omitted, so that it would state 
that each Same-Day Settling Trade that becomes a Compared Trade and was 
entered into in good faith shall be Novated to FICC at the time at 
which the comparison of such trade occurs pursuant to GSD Rules 6A or 
6B, as applicable, provided the trade meets the requirements of Section 
11(ii) of GSD Rule 12.
    FICC would also revise GSD Rule 11, Section 14 to enhance clarity. 
Currently, GSD Rule 11, Section 14 states that FICC shall not guaranty 
fails charge proceeds in the event of a default (i.e., if the 
defaulting Member does not pay its fails charge, Members due to receive 
fails charge proceeds will have those proceeds reduced pro-rata by the 
defaulting Member's unpaid amount). FICC proposes to state that FICC 
shall not be under any obligation to pay fails charge proceeds in the 
event of a default (i.e., if the Defaulting Member does not pay its 
fails charge, Members due to receive fails charge proceeds will have 
those proceeds reduced pro-rata by the Defaulting Member's unpaid 
amount) to enhance clarity and accuracy.
7. Clarify Uncompared or Cancelled Trades
    FICC proposes to clarify the descriptions of what occurs to trades 
that become uncompared or are cancelled in the GSD Rules.
    GSD Rule 5, Section 8(c) currently states that if a trade becomes 
uncompared or is cancelled pursuant to these GSD Rules, the Novation 
and FICC's guaranty of settlement of such transaction shall be 
reversed, cancelling the deliver, receive, and related payment 
obligations between FICC and the applicable Netting Members, and, as 
applicable, CCIT Member (or Joint Account), created by such Novation. 
FICC proposes to revise this description in GSD Rule 5, Section 8(c) to 
remove the description stating that Novation and guaranty of settlement 
will be reversed if a trade becomes uncompared or cancelled pursuant to 
the GSD Rules. Specifically, FICC proposes to revise GSD Rule 5, 
Section 8(c) to state that if a trade becomes uncompared or is 
cancelled pursuant to these GSD Rules, the deliver, receive, and 
related payment obligations between FICC and the Netting Members and, 
as applicable, CCIT Member (or Joint Account), created by the Novation 
of such trade shall be terminated and cancelled, and no amounts shall 
be owing between FICC and the Netting Members or CCIT Member (or Joint 
Account) on account of such trade. FICC believes the proposed changes 
would enhance accuracy as to what occurs if a trade becomes uncompared 
or is cancelled pursuant to the GSD Rules, and thereby also enhance 
clarity. FICC is proposing changes to the description in the GSD Rules 
and is not proposing changes to what occurs if a trade becomes 
uncompared or cancelled pursuant to the GSD Rules and as such, FICC 
does not believe that these proposed changes to GSD Rule 5, Section 
8(c) would impact the rights and obligations of Members.
    Similarly, FICC proposes to revise GSD Rule 12, Section 11(iii) to 
describe what occurs if a novated Same-Day Settling Trade becomes 
uncompared or is cancelled to be consistent with the above-described 
proposed changes in GSD Rule 5, Section 8(c) to the description of what 
occurs if a trade becomes uncompared or is cancelled pursuant to the 
GSD Rules. GSD Rule 12, Section 11(iii) currently states that if a 
novated Same-Day Settling Trade becomes uncompared or is cancelled 
pursuant to these GSD Rules, the Novation and FICC's guaranty of 
settlement of such transaction shall no longer apply, cancelling the 
deliver, receive, and related payment obligations between FICC and the 
applicable Netting Members, created by such Novation. FICC proposes to 
revise GSD Rule 12, Section 11(iii) to state that if a Novated Same-Day 
Settling Trade becomes uncompared and is cancelled pursuant to these 
GSD Rules, the deliver, receive, and related payment obligations 
between FICC and the Netting Members created by the Novation of such 
trade shall be terminated and cancelled, and no amounts shall be owing 
between FICC and the Netting Members on account of such trade. FICC 
believes having consistent descriptions of what occurs if a trade or 
Same-Day Settling Trade becomes uncompared or cancelled pursuant to the 
GSD Rules would enhance clarity. FICC is proposing clarifications to 
the description in the GSD Rules and is not proposing changes to what 
occurs if a Same-Day Settling Trade becomes uncompared or cancelled 
pursuant to the GSD Rules and as such, FICC does not believe that these 
proposed changes to GSD Rule 12, Section 11(iii) would impact the 
rights and obligations of Members.
8. Clarify Timing and Cumulative Effect of Presumptions
    Current GSD Rule 10, Section 6 (which would be revised to Section 7 
because FICC is proposing to add a new Section 6, as described below) 
states that notwithstanding anything to the

[[Page 46305]]

contrary in this Rule, more than one presumption of a match of data may 
be used by FICC to generate a comparison of a trade. FICC would revise 
the first paragraph in this section to state that notwithstanding 
anything contrary in this Rule, FICC may apply more than one 
presumption of a match of data to generate a comparison of a trade. 
FICC believes this proposed change would enhance readability, and 
thereby enhance clarity and would not impact the rights and obligations 
of Members.
    The second paragraph of this section of GSD Rule 10 states that 
FICC will provide Members with prior notice setting forth, with regard 
to each enhanced comparison process, whether it will be performed in 
Real Time or at end of day. FICC proposes to remove this description 
and replace it with more specific language that describes which 
enhanced matching processes occur in Real Time and which occur at the 
end of day. FICC proposes to add a description stating that FICC would 
perform the enhanced comparison processes regarding the presumed match 
of data set forth in Sections 1, 2, 5 and 6 of GSD Rule 10 in Real 
Time, and that FICC would also perform the enhanced comparison 
processes regarding the presumed match of data set forth in Sections 1, 
2, 3, 4, 5 and 6 of GSD Rule 10 at end of day, with the exception that, 
at end of day, Sections 4 and 5 would not apply to Repo Transactions. 
FICC believes these proposed changes that this additional specificity 
in the GSD Rules as to which enhanced matching processes occur at what 
times would enhance clarity and would not impact the rights and 
obligations of Members.
9. Clarify Substitutions of Collateral
    In GSD Rule 20, Section 4, FICC proposes to clarify the 
descriptions relating to substitutions of collateral, which both state 
that all requests for substitutions must be made by the substitution 
deadline established by FICC and announced by to Members by Important 
Notice from time to time. FICC proposes to remove the last sentence 
from the first paragraph and the last sentence from the second 
paragraph, which each contains this description. FICC would add a new 
paragraph to GSD Rule 20, Section 4, which states that for the 
avoidance of doubt, Dealers will be able to substitute any previously 
described collateral during the day and until such time as their new 
Collateral Allocation Obligations for that day are fully satisfied and 
finalized with the GCF Clearing Agent Bank. FICC believes that these 
proposed changes would remove duplicative language and as such, would 
not impact the rights and obligations of Members.
10. Clarify Right of Substitution
    Currently, GSD Rule 11, Section 6 states that notwithstanding 
anything to the contrary in the above paragraph, if a Right of 
Substitution was established by the parties to a Repo Transaction, such 
Right of Substitution shall continue, and be recognized by FICC, after 
the netting of obligations pursuant to the above paragraph. FICC 
proposes to revise GSD Rule 11, Section 6 to state that notwithstanding 
anything to the contrary in the above paragraph, a Right of 
Substitution applicable to a Repo Transaction that constitutes all or 
part of a Net Settlement Position shall be recognized by FICC pursuant 
to these Rules. Parties to a Repo Transaction may agree to a Right of 
Substitution in their bilateral agreements. However, because FICC is 
not a party to such agreements, and therefore does not have a view into 
what was agreed to in these bilateral agreements, FICC proposes to 
revise GSD Rule 11, Section 6 to clarify that FICC recognizes a Right 
of Substitution applicable to a Repo Transaction that constitutes all 
or part of a Net Settlement Position (rather than a Right of 
Substitution established by the parties to a Repo Transaction, which is 
how it is currently described in the GSD Rules), and such Right of 
Substitution would be recognized pursuant to the GSD Rules (rather than 
that the Right of Substitution was established by the parties to a Repo 
Transaction). FICC believes these proposed changes to the description 
of the Right of Substitution with respect to Repo Transactions that 
constitute all or part of a Net Settlement Position would enhance 
accuracy, and thereby enhance clarity and FICC is not proposing changes 
to the Right of Substitution. As such, FICC does not believe this 
proposed change would impact the rights and obligations of Members.
    Furthermore, currently, GSD Rule 5, Section 8(e) states that if a 
Right of Substitution was established by the parties to a Repo 
Transaction, such Right of Substitution shall continue and be 
recognized by FICC after Novation. As such, FICC proposes to remove GSD 
Rule 5, Section 8(e) because the Right of Substitution would be 
described in GSD Rule 11, Section 6, as described above. FICC does not 
believe that this proposed change would impact the rights and 
obligations of Members.
    In addition, FICC proposes to revise GSD Rule 14, Section 3. 
Currently, GSD Rule 14, Section 3 states that notwithstanding another 
to the contrary in the above paragraph, if a Right of Substitution was 
established by the parties to a Repo Transaction, such Right of 
Substitution shall continue, and be recognized by FICC, after the 
netting of obligations pursuant to the above paragraph. FICC would also 
revise GSD Rule 14, Section 3 to state that notwithstanding anything to 
the contrary in the above paragraph, a Right of Substitution applicable 
to a Repo Transaction that constitutes all or part of a Forward Net 
Settlement Position shall be recognized by FICC pursuant to these 
Rules. FICC would revise the description in GSD Rule 14, Section 3 to 
be consistent with the above-described proposed changes to GSD Rule 11, 
Section 6. FICC believes having consistent descriptions of the Right of 
Substitution applicable to Repo Transactions that constitute all or 
part of a Net Settlement Position (as described above) or Forward Net 
Settlement Position would enhance clarity. FICC is proposing 
clarifications to the description in the GSD Rules to enhance accuracy 
and clarity and is not proposing changes to the Right of Substitution 
and as such, FICC does not believe that these proposed changes to GSD 
Rule 14, Section 3 would impact the rights and obligations of Members.
    FICC also proposes to clarify GSD Rule 18, Section 3(f), which 
currently states that FICC will have no obligation to ensure the 
acceptability to the Reverse Repo Party of any New Securities 
Collateral transferred pursuant to this section. FICC proposes to 
clarify this sentence by adding that FICC also will not record, 
authenticate or monitor the number of collateral substitutions 
performed in accordance with the Right of Substitution. FICC believes 
this additional detail would enhance clarity and describes what 
currently happens. As such, FICC does not believe that this proposed 
change to GSD Rule 18, Section 3(f) would impact the rights and 
obligations of Members.
11. Clarify Affiliated Members
    FICC proposes to revise the description relating to Affiliated 
Members in GSD Rule 10, Section 3 to enhance clarity and readability.
    GSD Rule 10, Section 3 describes a situation in which a Member 
submits data on one side of a trade against an incorrect contraparty 
that would have been compared had it been submitted against the correct 
contraparty, and these two contraparties are Affiliates and Members of 
GSD. A Member submits data against the identifying numbers of its 
contraparty. For example, assume Member 2 and Member 3 are Affiliates 
and both are Members of GSD.

[[Page 46306]]

Also, assume that Member 1 submitted data on a side of trade against 
Member 2 (the incorrect contraparty to the trade) and Member 3 
submitted against Member 1. These trades would not compare because the 
counterparties do not match. Member 1 should have submitted the trade 
against Member 3 (the correct contraparty to the trade). However, if 
Member 2 and Member 3 have notified FICC that they are Affiliates and 
that they each wish to be presumed to be the correct contraparty to the 
side of the trade, then FICC has the discretion to compare the trade 
based on Member 1's correct contraparty being Member 3.
    Currently, GSD Rule 10, Section 3 states that if data on a side of 
a trade submitted by a Member (hereinafter, the ``First Member'') 
against another Member (hereinafter, the ``Non-Countraparty Affiliated 
Member'') do not compare as submitted, but would compare if matched 
against data submitted by a third member that is an Affiliate of the 
Non-Contraparty Affiliated Member (hereinafter, the ``Contraparty 
Affiliated Member''), FICC may, in its discretion, if it has received 
notice from the Non-Contraparty Affiliated Member and the Contraparty 
Affiliated Member, in a form and manner satisfactory to FICC (which 
notice may vary on a product-by-product basis), stating that they are 
Affiliates and that each wishes to be presumed to be the correct 
countraparty to a side of a trade submitted with an indication that the 
other is the contraparty, if this would allow the data on the trade to 
match, compare the trade based on the first Member's correct 
contraparty being the Contraparty Affiliated Member.
    FICC proposes to remove the current description in GSD Rule 10, 
Section 3 and replace it with a clearer description. FICC would state 
that Members that are Affiliates may submit written authorization to 
FICC stating that each Affiliate wishes to be presumed to be the 
correct contra-party to a side of a trade, if this presumption would 
allow the data on a trade that has differing contra member identifying 
numbers to match. Such written authorization must be in a form and 
manner satisfactory to FICC and may vary on a product-by-product basis. 
If a trade between two contra-parties (hereinafter, the ``First 
Member'' and ``Second Member'') submitted to FICC does not match 
because the First Member submitted the contra member identifying number 
of the Second Member's Affiliate instead of the Second Member, FICC 
shall compare the trade based on the Second Member's trade submission 
as if the First Member submitted the contra member identifying number 
of the Second Member and FICC has received the written authorization 
referred to in this paragraph from the Second Member and the Second 
Member's Affiliate.
    As described above, to enhance clarity, FICC proposing to revise 
the current description in GSD Rule 10, Section 3 of what occurs when a 
Member submits data on one side of a trade against an incorrect 
contraparty that would have been compared had it been submitted against 
the correct contraparty, and these two contraparties are Affiliates and 
Members of GSD; FICC is not proposing changes to the process. As such, 
FICC does not believe these proposed changes would impact the rights 
and obligations of Members.
12. Clarify Pricing Rate
    Currently, GSD Rule 3B, Section 14(a)(xii) states that the Pricing 
Rate (as defined in the CCIT MRA) in respect of each Transaction shall 
be the rate published on FICC's website at the time FICC initiates such 
Transaction, corresponding to: (A) U.S. Treasury < 30-year maturity 
(CUSIP: 371487AE9) if the Purchased Securities under such Transaction 
are U.S. Treasury bills, notes or bonds, (B) Non-Mortgage Backed U.S. 
Agency Securities (CUSIP: 371487AH2) if the Purchased Securities under 
such Transaction are non-mortgage-backed U.S. agency securities or (C) 
Fannie Mae, Freddie Mac, and UMBS Fixed Rate MBS (CUSIP: 371487AL3) if 
the Purchased Securities under such Transaction are mortgage-backed 
securities, or if the relevant foregoing rate is unavailable, a rate 
that FICC reasonably determines approximates the average daily interest 
rate paid by a seller of the Purchased Securities under a cleared 
repurchase transaction.
    FICC proposes to revise GSD Rule 3B, Section 14(a)(xii) to remove 
the specific references to the General CUSIP Numbers and the related 
descriptions listed in subsections (A), (B), and (C). Specifically, 
FICC proposes to revise this section to state that the Pricing Rate (as 
defined in the CCIT MRA) in respect of each Transaction shall be the 
rate that FICC reasonably determines approximates the average daily 
interest rate paid by a seller of the Purchased Securities under a 
cleared repurchase transaction. There may be changes in the market that 
may affect the rates that correspond to the specific Generic CUSIP 
Numbers that are currently listed in the GSD Rules. As such, these 
proposed changes would provide FICC with more flexibility to respond 
more quickly to changes in the market without a rule filing and better 
enable FICC to use rates that are current and reflect the market while 
at the same time, ensuring that the GSD Rules remain accurate. FICC 
does not believe this proposed change would impact the rights and 
obligations of Members because the GSD Rules currently provide that if 
the rates are unavailable, then the Pricing Rate will be a rate that 
FICC reasonably determines approximates the average daily interest rate 
paid by a seller of the Purchased Securities under a cleared repurchase 
transaction. As such, the GSD Rules currently enable FICC to select 
rates that approximate the average daily interest rate paid by a seller 
of the Purchased Securities under a cleared repurchase transaction.
13. Clarify References to Treasury Department Regulations
    GSD Rule 6C, Section 8 states that in its sole discretion, FICC may 
decline to accept from a Locked-In Trade Source data on the Locked-In 
Trades of a particular Member or Members, including Netting-Eligible 
Auction Purchases (subject to terms and conditions agreed to by FICC 
and the Treasury Department regarding Netting-Eligible Auction 
Purchases).
    GSD Rule 6C, Section 11 states that FICC has the authority, in 
order to correct or avoid an error, to unilaterally modify, add, or 
cancel data on any Netting-Eligible Auction Purchase (subject to terms 
and conditions agreed to by FICC and the Treasury Department regarding 
Auction Purchases). This section also states that in the event a 
security auctioned in a Treasury Department auction is not issued, FICC 
will have the authority to unilaterally modify, add, or cancel data on 
any Netting-Eligible Auction Purchase involving that security (subject 
to terms and conditions agreed to by FICC and the Treasury Department 
regarding Auction Purchases).
    FICC proposes to clarify the above-described references in GSD Rule 
6C, Sections 8 and 11 from the terms and conditions agreed to by FICC 
and the Treasury Department regarding Netting-Eligible Auction 
Purchases or Auction Purchases (as applicable) to the applicable 
Treasury Department regulations regarding Netting-Eligible Auction 
Purchases. FICC would revise these references because FICC believes it 
is more accurate to state that the applicable Treasury Department 
regulations govern the Netting-Eligible Auction Purchases rather than 
describing it as the terms and conditions agreed to by FICC and the 
Treasury Department. FICC and the Treasury

[[Page 46307]]

Department do not have a separate agreement with terms and conditions 
regarding Auction Purchases. As such, FICC believes these proposed 
changes to reference the applicable Treasury Department regulations 
regarding Netting-Eligible Auction Purchases instead of the terms and 
conditions agreed to by FICC and the Treasury Department regarding 
Auction Purchases would enhance accuracy, and thereby enhance clarity. 
FICC does not believe that these proposed clarifications would impact 
the rights and obligations of Members.
14. Clarify References to Federal Reserve Banks Operating Circulars
    FICC proposes to revise the Interpretive Guidance with Respect to 
Settlement Finality in the GSD Rules and MBSD Rules to allow this 
guidance to remain accurate, current and aligned with any future 
revisions to the Federal Reserve Banks Operating Circulars (``Operating 
Circulars'').
    Currently, the Interpretive Guidance with Respect to Settlement 
Finality in the GSD Rules and MBSD Rules (i) reference specific 
sections in the Operating Circulars, (ii) refer to specific dates of 
certain Operating Circulars, and (iii) include direct quotations from 
the Operating Circulars, including specific text and defined terms.
    FICC proposes to revise this guidance to be more general by 
removing specific section references to the Operating Circulars and 
replacing those references with more general descriptions of the 
subjects covered in such sections of the Operating Circulars in the 
event the specific section references change when the Operating 
Circulars are updated or revised. FICC would also remove references to 
specific dates of the Operating Circulars and replace them with 
references to the Operating Circulars ``as promulgated from time to 
time by the FRB.''
    In addition, FICC proposes to remove specific quotations of text 
and defined terms. FICC would replace the direct quotations of defined 
terms with cross-references to the relevant Operating Circulars. FICC 
also proposes to remove the dates at the end of the Interpretative 
Guidance with Respect to Settlement Finality in the GSD Rules and MBSD 
Rules.
    FICC believes that these proposed changes would enhance accuracy by 
allowing the GSD Rules and MBSD Rules to remain accurate, current and 
aligned following any revisions to the Operating Circulars, and thereby 
enhance clarity. FICC does not believe these proposed clarifications 
would impact the rights and obligations of Members.
15. Clarify Uses of Terms ``Written Notice'' and ``Notice''
    FICC proposes to clarify that ``written notice'' in the definition 
of GCF-Authorized Inter-Dealer Broker in GSD Rule 1 and ``notice'' in 
GSD Rule 3B, Section 6 both refer to Important Notices, which are 
posted to the DTCC website. FICC believes revising this reference from 
written notice and notice to the issuance of an Important Notice would 
enhance clarity because the proposed changes provide additional 
specificity. FICC does not believe that this proposed clarification 
would impact the rights and obligations of Members.
16. Clarify Definition of Settlement Agent
    FICC would clarify the definition of Settlement Agent in GSD Rule 1 
and MBSD Rule 1 by adding a parenthetical stating ``and as referenced 
in the Federal Reserve Banks Operating Circular 12.'' As such, because 
the parenthetical would be added to the definition of ``Settlement 
Agent'' in the GSD Rules and MBSD Rules, FICC also proposes to remove 
from GSD Rule 13, Section 5(g) and MBSD Rule 11, Section 9(g), the 
parenthetical stating ``as that term is used in the relevant FRB's 
Operating Circular 12 and in these Rules'' that currently follows the 
references to Settlement Agent.
    FICC believes it would enhance clarity to add the parenthetical to 
the definition of Settlement Agent and this proposed change would not 
impact the rights and obligations of Members.
17. Clarify Money Tolerances
    Currently, the GSD Rules contain a Schedule of Money Tolerances, 
which lists the Money Tolerances that have been established by 
FICC.\24\ FICC proposes to add a new Section 6 to GSD Rule 10, titled 
``Money Tolerances.'' FICC would state in this new section that if the 
data of a Required Match Data item on a trade do not compare because 
the dollar amount(s) submitted by two Members differs, FICC will 
compare the trade if the difference in the Required Match Data item is 
within the tolerance specifications set by FICC in the Schedule of 
Money Tolerances.
---------------------------------------------------------------------------

    \24\ The term ``Money Tolerance'' is defined in GSD Rule 1, 
supra note 5.
---------------------------------------------------------------------------

    FICC believes adding this section in GSD Rule 10 that cross-
references the current Schedule of Money Tolerances would enhance 
clarity with respect to the current practice regarding the comparison 
of a trade where there are differences in the dollar amount(s) 
submitted by two Members. As such, FICC does not believe this proposed 
clarification would impact the rights and obligations of Members.
18. Clarify GSD Rule 11, Section 12
    In GSD Rule 11, Section 12, FICC proposes to delete the sentence 
stating that Netting Members shall inform FICC promptly after the 
occurrence of any event specified earlier in that Section 12 and revise 
the first sentence to state that each Netting Member shall be obligated 
to inform FICC promptly if any referenced events were to occur. FICC 
believes this proposed change would enhance clarity with respect to 
Netting Members' requirement to promptly notify FICC in these 
circumstances by moving the description of that requirement to the 
beginning of the section rather than at the end. As such, FICC does not 
believe this proposed clarification would impact the rights and 
obligations of Members.
19. Clarify GSD Rule 5, Section 6
    Currently GSD Rule 5, Section 6 states that, except as otherwise 
provided in GSD Rule 10, any confirmations, comparison or other 
documentary evidence of any such Compared Trade, other than the 
comparison generated by FICC shall not affect the existence or terms 
and conditions of such a valid, binding and enforceable contract in 
respect of such Compared Trade.
    FICC proposes to clarify GSD Rule 5, Section 6 by removing the 
phrase ``[e]xcept as otherwise provided in Rule 10,'' and instead 
restating the referenced language in GSD Rule 5, Section 6. 
Specifically, FICC proposes to add to GSD Rule 5, Section 6 that, 
notwithstanding the previous sentence, the comparison by FICC of a 
trade involving unmatched commission amounts pursuant to the GSD Rules, 
while evidencing a valid, binding and enforceable contract between the 
parties to the trade to the same degree as if the commission amounts 
matched shall not constitute a final, binding determination by FICC as 
to the correct commission amount owing on such trade. The Broker that 
submitted data on such trade shall have an ongoing obligation to the 
Dealer that submitted data on such trade to respond promptly to such 
Dealer's commission difference inquiries, and to act in good faith to 
promptly resolve any such alleged differences.
    FICC believes this proposed change would enhance readability, and 
thereby enhance clarity and would not impact the rights and obligations 
of Members.

[[Page 46308]]

20. Clarify Indemnification Provisions
    FICC proposes to clarify the indemnification provisions in 
connection with an FFI Member failing to be FATCA Compliant in the GSD 
Rules and the MBSD Rules. These indemnification provisions are 
described in the provisions relating to the membership application and 
the provisions relating to the ongoing membership requirements in the 
GSD Rules and MBSD Rules. GSD Rule 3 describes the ongoing membership 
requirements. Specifically, current GSD Rule 3, Section 9(iii) states 
that an FFI Member agrees to indemnify FICC, its affiliates, and each 
of their respective shareholders, directors, officers, employees, 
agents and advisors (each, an ``Indemnified Person'') for any loss, 
liability or expense sustained by the Indemnified Party as a result of 
such FFI Member failing to be FATCA Compliant.
    GSD Rule 2A, MBSD Rule 2A and GSD Rule 3B, Section 3 describe the 
membership application requirements. GSD Rule 2A, Section 2(a)(v) and 
MBSD Rule 2A, Section 1 currently state that in addition, as part of 
its membership application, each applicant that shall be an FFI Member 
must agree that it shall indemnify FICC for any loss, liability or 
expense sustained by FICC as a result of its failing to be FATCA 
Compliant. Similarly, GSD Rule 3B, Section 3(c)(i) states that in 
addition, as part of its membership application, such applicant must 
agree that it shall indemnify FICC for any loss, liability or expense 
sustained by FICC as a result of the applicant failing to be FATCA 
Compliant.
    The indemnification in connection with an FFI Member failing to be 
FATCA Compliant is also described in the ongoing membership 
requirements in the GSD Rules and the MBSD Rules. Specifically, MBSD 
Rule 3, Section 8(iii) currently states that an FFI Member will 
indemnify FICC for any loss, liability or expense sustained by FICC as 
a result of such FFI Member failing to be FATCA Compliant. In addition, 
GSD Rule 3B, Section 5(j)(iii) currently states that a CCIT Member that 
is an FFI Member shall indemnify FICC for any loss, liability or 
expense sustained by FICC as a result of such CCIT Member failing to be 
FATCA Compliant.
    In order to enhance consistency, and thereby enhance clarity, FICC 
proposes to revise the indemnification provisions in connection with an 
FFI Member failing to be FATCA Compliant described in GSD Rule 2A, 
Section 2(a)(v), MBSD Rule 2A, Section 1, GSD Rule 3B, Section 3(c)(i), 
MBSD Rule 3, Section 8(iii), and GSD Rule 3B, Section 5(j)(iii) to 
align with the current indemnification provision in connection with an 
FFI Member failing to be FATCA Compliant described in current GSD Rule 
3, Section 9(iii). Specifically, FICC proposes to revise GSD Rule 2A, 
Section 2(a)(v) and MBSD Rule 2A, Section 1 to state that in addition, 
as part of its membership application, each applicant that shall be an 
FFI Member agrees to indemnify each Indemnified Person for any loss, 
liability or expense sustained by the Indemnified Person as a result of 
its failing to be FATCA Compliant.
    Similarly, FICC proposes to revise the indemnification provision in 
connection with an FFI Member failing to be FATCA Compliant in MBSD 
Rule 3, Section 8(iii) to align with the current indemnification 
provision in connection with an FFI Member failing to be FATCA 
Compliant described in current GSD Rule 3, Section 9(iii). 
Specifically, FICC also proposes to revise MBSD Rule 3, Section 8(iii) 
to state that an FFI Member agrees to indemnify FICC, its affiliates, 
and each of their respective shareholders, directors, officers, 
employees, agents and advisors (each, an ``Indemnified Person'') for 
any loss, liability or expense sustained by the Indemnified Person as a 
result of such FFI Member failing to be FATCA Compliant. FICC also 
proposes to revise GSD Rule 3B, Section 5(j)(iii) to state that a CCIT 
Member that is an FFI Member shall indemnify each Indemnified Person 
for any loss, liability or expense sustained by the Indemnified Person 
as a result of such CCIT Member failing to be FATCA Compliant.
    Furthermore, FICC proposes to add Indemnified Person as a new 
defined term to MBSD Rule 1 as a conforming change. Indemnified Person 
would have the meaning given to that term in Section 8 of MBSD Rule 3. 
This proposed change would also be consistent with the GSD Rules, which 
also lists Indemnified Person as a defined term in GSD Rule 1.
    FICC believes that the above-described proposed changes would 
enhance clarity by having consistent indemnification provisions in 
connection with an FFI Member failing to be FATCA Compliant in the MBSD 
Rules and GSD Rules, and the above-described proposed changes would 
align the indemnification described in GSD Rule 2A, Section 2(a)(v), 
MBSD Rule 2A, Section 1, GSD Rule 3B, Section 3(c)(i), MBSD Rule 3, 
Section 8(iii), and GSD Rule 3B, Section 5(j)(iii) with the current 
indemnification described in GSD Rule 3, Section 9(iii). FICC also 
believes it would enhance clarity to list Indemnified Person as a new 
defined term in MBSD Rule 1 and would be consistent with the GSD Rules, 
as described above. FICC does not believe these proposed changes to the 
indemnification provisions for FFI Members failing to be FATCA 
Compliant in the GSD Rules and MBSD Rules described above would have an 
impact on the rights and obligations of Members because these 
indemnification provisions describe the costs of non-compliance and 
FICC's position has always been that the costs of non-compliance would 
be imposed on the FFI Members that fail to be FATCA Compliant.\25\ FICC 
also does not believe that the related proposed change to add 
Indemnified Person as a new defined term in MBSD Rule 1 would impact 
the rights and obligations of Members because it is a conforming 
change.
---------------------------------------------------------------------------

    \25\ Securities Exchange Act Release No. 69740 (June 12, 2013), 
78 FR 36608 (June 18, 2013) (SR-FICC-2013-04).
---------------------------------------------------------------------------

21. Clarify Timeframes and the Schedule of Timeframes
    In GSD Rule 5, Section 5, FICC proposes to revise the reference 
from time schedules to timeframes to enhance consistency, and thereby 
clarity.
    In addition, currently, GSD Rule 11, Section 4 states that all Net 
Settlement Positions will be reported, by CUSIP Number, by FICC in a 
Report issued and made available during the morning of each Business 
Day to each Netting Member. FICC proposes to revise this sentence to 
refer to the Schedule of Timeframes and to remove the phrase ``during 
the morning of each Business Day.''
    Similarly, GSD Rule 14, Section 2 states that each Forward Net 
Settlement Position of a Netting Member will be reported, by CUSIP 
Number, by FICC in a Report issued and made available during the 
morning of each Business Day during the Forward Period applicable to 
such Position to such Member. FICC proposes to remove the phrase ``and 
made available during the morning of'' and instead, replace it with the 
phrase ``by the time stated in the Schedule of Timeframes for.''
    FICC believes these proposed changes would enhance clarity by 
removing more general references to time and directing members to refer 
to the Schedule of Timeframes, which contains specific timeframes. FICC 
does not believe that these proposed clarifications would impact the 
rights and obligations of Members because the Schedule of Timeframes 
currently sets forth specific timeframes.

[[Page 46309]]

22. Clarify References to the Fine Schedule
    In GSD Rule 3B, Section 5(f), FICC proposes to clarify that Members 
should refer to the Fine Schedule in the GSD Rules for the dollar 
amount of the fine by deleting the reference to $1,000 and adding that 
the fine is pursuant to the applicable Fine Schedule in the GSD Rules. 
FICC believes this proposed change would enhance clarity by removing a 
duplicative reference to the amount of the fine and directing Members 
to refer to applicable Fine Schedule, which currently lists the amount 
of the fines. FICC does not believe that this proposed clarification 
would impact the rights and obligations of Members because this 
proposed change does not change the amount of the fines.
23. Other Clarifications to Schedules in the GSD Rules
Proposed Changes to Titles of Certain Schedules
    FICC proposes to clarify the following titles of certain schedules 
in the GSD Rules and make related changes, as described below.
    First, FICC proposes to revise the title from ``Schedule of 
Required and Accepted Data Submission Items for a Substitution'' to 
``Schedule of Required and Accepted Data Submission Items for a 
Substitution of Existing Securities Collateral.'' This schedule sets 
forth the data items that are required to be received by FICC for FICC 
to process a substitution of Existing Securities Collateral. 
Furthermore, FICC would make a conforming change to revise the 
reference to this schedule in GSD Rule 18, Section 3 from ``Schedule of 
Required and Accepted Data Submission Items for a Substitution'' to 
``Schedule of Required and Accepted Data Submission Items for a 
Substitution of Existing Securities Collateral.'' FICC believes adding 
``of Existing Collateral'' to the end of the title ``Schedule of 
Required and Accepted Data Submission Items for a Substitution'' would 
enhance clarity by adding more specificity to the title. Furthermore, 
FICC believes that making conforming changes to the current references 
to this schedule in the GSD Rules would enhance consistency and 
therefore, also enhance clarity. FICC does not believe these proposed 
clarifications would impact the rights and obligations of Members.
    Second, FICC would also revise the title of another schedule from 
``Schedule of Required and Accepted Data Submission Items for New 
Securities Collateral'' to ``Schedule of Required and Accepted Data 
Submission Items for a Substitution for New Securities Collateral.'' 
FICC believes that adding ``for a Substitution'' in the current title 
``Schedule of Required and Accepted Data Submission Items for New 
Securities Collateral'' would enhance clarity by adding more 
specificity to the title. FICC does not believe this proposed 
clarification would impact the rights and obligations of Members.
Proposed Changes to Descriptions in Certain Schedules
    FICC also proposes to clarify the following descriptions in certain 
schedules in the GSD Rules.
    In the Schedule of Required Match Data, FICC proposes to change 
Contra Member identifying information to Contra Member identifying 
number to enhance accuracy, and thereby enhance clarity. FICC believes 
it is more accurate to describe this data item using the word 
``number'' rather than ``information.''
    In the Schedule of Required Data Submission Items, FICC proposes to 
add a description for Trade Date, stating that the date on which the 
trade was executed must be submitted in this field. FICC believes this 
additional detail regarding the meaning of Trade date would enhance 
clarity by adding more specificity.
    In the Schedule of Required and Accepted Data Submission Items for 
New Securities Collateral, FICC proposes to clarify the first paragraph 
by revising ``it'' to ``the Corporation.'' FICC believes this proposed 
change would add more specificity, and thereby enhance clarity.
    In the Schedule of Required and Other Data Submission Items for GCF 
Repo Transactions, FICC proposes to remove (i) Role--Reserved for 
future use and (ii) Transaction--Reserved for future use.
    In the Schedule of Required and Other Data Submission Items for GCF 
Repo Transactions, FICC also proposes to revise the descriptions from 
(i) Participant number of the GCF Counterparty from whom the Broker is 
reversing in securities, and (ii) Participant number of the GCF 
Counterparty to whom the Broker is repoing out securities to (i) Member 
identifying number of the GCF Counterparty from whom the Broker is 
reversing in securities and (ii) Member identifying number of the GCF 
Counterparty to whom the Broker is repoing out securities, 
respectively. FICC believes it is more accurate to use ``Member'' 
rather than ``Participant'' in these descriptions.
    In the Schedule of Required and Other Data Submission Items for GCF 
Repo Transactions, FICC also proposes to revise (i) Participant ID to 
Member ID and (ii) Participant Name to Member Name.
    In the Schedule of Money Tolerances, FICC proposes to clarify the 
current description of the settlement amount in Item 2 by revising it 
to state that it is $40 per $1 million for buy-sell transactions (in 
connection with FICC's presumption of a match of data pursuant to GSD 
Rule 10). FICC is proposing to clarify this sentence to specifically 
state that it applies to buy-sell transactions rather than stating what 
it does not apply to (i.e., it does not apply to Repo Transactions). 
Furthermore, this proposed clarification aligns the wording in this 
Item 2 with the description in Item 1 of the Schedule of Money 
Tolerances, which describes the settlement amount for repo transactions 
and the settlement amount for buy-sell transactions. FICC would also 
move the parenthetical describing that this is in connection with 
FICC's presumption of match data pursuant to GSD Rule 10 to the end of 
the sentence. These proposed changes would not be a change from FICC's 
current process and are only clarifications, so FICC does not believe 
this would impact the rights and obligations of Members.
24. Remove List of Designated Locked-In Trade Sources
    FICC proposes to remove the list of Designed Locked-In Trade 
Sources in the GSD Rules, which currently lists (i) Federal Reserve 
Banks, as fiscal agents of the United States; (ii) GCF-Authorized 
Inter-Dealer Brokers (for GCF Repo Transactions); and (iii) The 
Treasury Department. ``Locked-In Trade Source'' is currently defined in 
GSD Rule 1 as a source of data on Locked-In Trades that FICC has so 
designated, subject to such terms and conditions as to which the 
Locked-In Trade Source and FICC may agree. As such, FICC believes that 
the list of Designated Locked-In Trade Sources can be listed in a 
separate document rather than the GSD Rules. This would provide FICC 
with more flexibility to update the list of designated Locked-In Trade 
Sources from time to time without a rule filing. FICC does not believe 
this proposed change would impact the rights and obligations of Members 
because the list of Designated Locked-In Trade Sources would still be 
listed in a separate document and available to Members.

[[Page 46310]]

25. Clarify Rules Through Uses of Defined Terms
Proposed Changes To Replace ``Position'' and ``position'' With Defined 
Terms
    FICC proposes to clarify certain references to ``Position'' and 
``position'' in the GSD Rules by replacing these references with the 
specific defined term, as further described below. ``Position'' and 
``position'' are currently used in certain descriptions in the GSD 
Rules as a shorthand for the defined term. However, FICC believes it 
would be more accurate to use the defined term in these descriptions 
and is proposing to replace these references with the defined term. For 
example, the current definition of Collateral Mark in GSD Rule 1 states 
that the term ``Collateral Mark'' means, as regards a Forward Net 
Settlement Position, the sum of all Collateral Marks on each of the 
Forward Trades that compose such Position. FICC would revise this 
reference from ``Position'' to ``Forward Net Settlement Position.'' 
FICC believes these proposed changes to use the full defined term 
instead of a shorthand version would add more specificity, and thereby 
would enhance clarity. FICC does not believe these proposed changes to 
add more specificity would impact the rights and obligations of 
Members.
    Specifically, FICC proposes to make the following changes in the 
GSD Rules:
     In the definition of Collateral Mark in GSD Rule 1, FICC 
would revise Position to Forward Net Settlement Position.
     In the definition of Credit Transaction Adjustment Payment 
in GSD Rule 1, FICC would revise the first reference to Position to Net 
Long Position and the second reference to Net Short Position.
     In the definition of Debit Transaction Adjustment Payment 
in GSD Rule 1, FICC would revise the first reference to Position to Net 
Long Position and the second reference to Net Short Position.
     In the definition of Financing Mark in GSD Rule 1, FICC 
would revise position to Forward Net Settlement Position.
     In the definition of Forward Mark Adjustment Payment in 
GSD Rule 1, FICC would revise Position to Forward Net Settlement 
Position.
     In the definition of Forward Net Settlement Position in 
GSD Rule 1, FICC would revise Positions to Forward Net Settlement 
Positions.
     In the definition of Forward Period in GSD Rule 1, FICC 
would revise Positions to Forward Net Settlement Positions.
     In the definition of GCF Forward Starting Interest Rate 
Mark in GSD Rule 1, FICC would revise position to Forward Net 
Settlement Position.
     In the definition of GCF Interest Rate Mark in GSD Rule 1, 
FICC would revise position to GCF Net Settlement Position.
     In the definition of Interest Rate Mark in GSD Rule 1, 
FICC would revise position to Forward Net Settlement Position.
     In the definition of Maturity Value in GSD Rule 1, FICC 
would revise Position to Net Settlement Position.
     In the definition of Net Long Position in GSD Rule 1, FICC 
would revise Position to Net Long Position.
     In the definition of Net Short Position in GSD Rule 1, 
FICC would revise Position to Net Short Position.
     In the definition of Redemption Adjustment Payment in GSD 
Rule 1, FICC would revise position to Net Settlement Position.
     In the definition of Redemption Value in GSD Rule 1, FICC 
would revise position to Net Settlement Position.
     In the definition of System Value in GSD Rule 1, FICC 
would revise Position to Net Settlement Position.
     In GSD Rule 11, Section 6, FICC would revise Positions to 
Net Settlement Positions.
     In the second paragraph of GSD Rule 11, Section 8, FICC 
would revise Position to Net Long Position.
     In GSD Rule 12, Section 5, FICC would revise Positions to 
Net Long Positions.
     In GSD Rule 12, Section 7, FICC would revise Position to 
Net Long Position.
     In GSD Rule 13, Section 1(h), FICC would revise position 
to Net Settlement Position.
     In GSD Rule 14, Section 2, FICC would revise Position to 
Forward Net Settlement Position, and Positions to Forward Net 
Settlement Positions.
     In the first paragraph of GSD Rule 14, Section 3, FICC 
would revise Position to Forward Net Settlement Position, and Positions 
to Forward Net Settlement Positions.
     In the first paragraph of GSD Rule 20, Section 3, FICC 
would revise the first reference to Position to GCF Net Funds Borrower 
Position and would revise the second reference to Position to GCF Net 
Funds Lender Position.
     In the second paragraph of GSD Rule 20, Section 3, FICC 
would revise Position to GCF Net Funds Borrower Position.
     In GSD Rule 20, Section 5, FICC would revise Positions to 
GCF Net Settlement Positions.
     In GSD Rule 22A, Section 2(b), FICC would revise Positions 
to Final Net Settlement Positions.
Proposed Changes To Replace ``Repo Transaction'' With Defined Term
    FICC also proposes to clarify certain references from ``Repo 
Transaction'' in the GSD Rules by replacing these references with the 
specific defined term, ``GCF Repo Transaction,'' as further described 
below. ``Repo Transaction'' is currently used in the definitions of GCF 
Forward Starting Interest Rate Mark and GCF Interest Rate Mark. Because 
these two definitions are with respect to the marks for GCF Repo 
Transactions only, FICC believes it would enhance accuracy to revise 
the references in these definitions from ``Repo Transactions'' to ``GCF 
Repo Transactions.'' FICC does not believe these proposed changes would 
impact the rights and obligations of Members.
    Specifically, FICC proposes to make the following changes:
     In the definition of GCF Forward Starting Interest Rate 
Mark in GSD Rule 1, FICC proposes to revise the references from Repo 
Transaction to GCF Repo Transaction, and from Repo Transaction's to GCF 
Repo Transaction's.
     In the definition of GCF Interest Rate Mark in GSD Rule 1, 
FICC proposes to revise the references from Repo Transaction to GCF 
Repo Transaction, and from Repo Transaction's to GCF Repo 
Transaction's.
Proposed Changes To Replace ``Transaction'' With Defined Terms
    FICC also proposes to clarify certain references to ``Transaction'' 
in the GSD Rules by replacing these references with the specific 
defined term, as further described below. For example, current GSD Rule 
6C, Section 2 states that with regard to GCF Repo Transactions, FICC 
shall not accept data from a GCF-Authorized Inter-Dealer Broker 
regarding any such Transaction unless FICC previously has received 
authorization to do so from each of the two GCF Counterparties to the 
GCF-Authorized Inter-Dealer Broker on such Transaction. FICC is 
proposing to revise GSD Rule 6C, Section 2 to state that with regard to 
GCF Repo Transactions, FICC shall not accept data from a GCF-Authorized 
Inter-Dealer Broker regarding any such GCF Repo Transaction unless FICC 
previously has received authorization to do so from each of the two GCF 
Counterparties to the GCF-Authorized Inter-Dealer Broker on such GCF 
Repo Transaction. FICC believes that these proposed changes would add 
enhance clarity by adding

[[Page 46311]]

more specificity and would not impact the rights and obligations of 
Members.
    Specifically, FICC is proposing to make the following changes:
     In the definition of Market Value in GSD Rule 1, FICC 
would revise Transaction to GCF Repo Transaction.
     In the definition of Redemption Adjustment Payment in GSD 
Rule 1, FICC would revise Transaction to Repo Transaction.
     In the second sentence of the definition of Start Leg in 
GSD Rule 1, FICC would revise Transaction to GCF Repo Transaction.
     In GSD Rule 13, Section 1(h), FICC would revise 
Transaction to Repo Transaction.
     In GSD Rule 6C, Sections 2, 5, and 12, FICC would revise 
Transaction to GCF Repo Transaction.
     In GSD Rule 6C, Section 12, FICC would revise Repo 
Transaction to GCF Repo Transaction, and Repo Transactions to GCF Repo 
Transactions.
     In the Schedule of Required and Other Data Submission 
Items for GCF Repo Transactions, FICC would revise Transaction to GCF 
Repo Transaction in the first paragraph.
     In the (i) Schedule of Required and Accepted Data 
Submission Items for New Securities Collateral and (ii) Schedule of 
Required and Accepted Data Submission Items for a Substitution, FICC 
would revise the references from Transaction to Repo Transaction.
Proposed Changes To Replace ``Obligation'' and ``obligation'' With 
Defined Terms
    FICC also proposes to clarify certain references to ``Obligation'' 
and ``obligation'' in the GSD Rules by replacing these references with 
the specific defined term, as further described below. For example, 
currently, Maturity Value in GSD Rule 1 means, as regards a Net 
Settlement Position, Deliver Obligation, the Redemption Value of the 
Eligible Netting Securities that comprise such Position or Obligation. 
FICC would revise this definition to state that, as regards a Net 
Settlement Position, Deliver Obligation, the Redemption Value of the 
Eligible Netting Securities that comprise such Net Settlement Position 
or Deliver Obligation. FICC believes that these proposed changes would 
add enhance clarity by adding more specificity and would not impact the 
rights and obligations of Members.
    Specifically, FICC proposes to make the following changes:
     In the definition of Maturity Value in GSD Rule 1, FICC 
would revise Obligation to Deliver Obligation.
     In the definition of Redemption Value in GSD Rule 1, FICC 
would revise the reference from obligation to Deliver Obligation.
     In the definition of System Value in GSD Rule 1, FICC 
would revise the reference from Obligation to Deliver Obligation and 
Receive Obligation.
     In GSD Rule 11, Section 6, FICC would revise the reference 
from Obligations to Deliver Obligations.
     In GSD Rule 20, Section 3, FICC would revise the 
references from Obligation to Collateral Allocation Obligation, and 
Obligations to Collateral Allocation Obligations.
     In GSD Rule 20, Section 5, FICC would revise Obligations 
to Collateral Allocation Obligations.
     In GSD Rule 22A, Section 2(b), FICC would revise 
outstanding deliver and receive obligations to outstanding Deliver 
Obligations and Receive Obligations.
Proposed Changes To Replace Certain References Related Collateral, 
Allocations of Collateral and Entitlements With Respect to Collateral 
With Specific Defined Terms
    FICC also proposes to clarify certain references related to 
Collateral Allocation Obligations with the specific defined term, as 
further described below. FICC believes these proposed changes would 
enhance accuracy by adding more specificity and would not impact the 
rights and obligations of Members.
    Specifically, FICC proposes to make the following changes:
     In GSD Rule 20, Section 3, FICC proposes to revise the 
reference from allocation to Collateral Allocation Obligation.
     In the definition of System Value in GSD Rule 1, FICC 
proposes to revise the reference from Collateral to Existing Securities 
Collateral and New Securities Collateral.
     In GSD Rule 20, Section 5, FICC would revise Entitlements 
to Collateral Allocation Entitlements.
26. Other Clarifications
    FICC proposes to make certain other clarifications to enhance 
accuracy and clarity, as further described below.
    In GSD Rule 3B, Section 13(b), FICC would revise the references 
from ``components'' to ``payments and marks'' when referring to the 
items that comprise the Funds-Only Settlement Amount that are listed in 
GSD Rule 13, Section 1 to enhance accuracy and clarity. Currently, GSD 
Rule 3B, Section 13(b) states that the following components of Section 
1 of GSD Rule 13 will apply to Netting Members with respect to CCIT 
Transactions (such components will apply as they apply to GCF Repo 
Transactions except as noted below). FICC would revise GSD Rule 3B, 
Section 13(b) to state that the following payments and marks of Section 
1 of GSD Rule 13 will apply to Netting Members with respect to CCIT 
Transactions (such payments and marks will apply as they apply to GCF 
Repo Transactions except as noted below). FICC believes it would 
enhance accuracy to describe these as payments and marks because the 
Funds-Only Settlement Amount is comprised of items such as the Credit 
Transaction Adjustment Payment and the Credit Fail Mark Adjustment 
Payment. These proposed changes to GSD Rule 3B would not change the 
substance of this rule and as such, FICC does not believe that these 
proposed changes would impact the rights and obligations of Members.
    In GSD Rule 3B, Section 11(a)(iv), FICC would clarify the phrase 
``GCF Repo Service Generic CUSIP Number'' by revising it to state 
``Generic CUSIP Number approved for the GCF Repo Service.'' Because GCF 
Service Generic CUSIP Number is not a defined term, FICC believes this 
proposed change to use the defined terms ``Generic CUSIP Number'' and 
``GCF Repo Service'' would enhance clarity and accuracy. This proposed 
change would not not change the substance of this rule and as such, 
FICC does not believe that this proposed change would impact the rights 
and obligations of Members.
    In GSD Rule 5, Section 1, FICC would remove ``comparison 
requested'' and make conforming changes to remove the parentheses in 
Item 3 of this section. FICC would also clarify in Item 3 that a 
comparison is requested with regard to an advisory. As such, GSD Rule 
5, Section 1 would state that as trade data are submitted to FICC, FICC 
will generate output indicating that such trade data: (1) is compared, 
(2) is uncompared, (3) comparison is requested with regard to an 
advisory and/or (4) has been deleted from the Comparison System. FICC 
is proposing to make this Item 3 more descriptive of the process that 
occurs when Member 1 submits a trade against Member 2. Specifically, 
when Member 1 submits a trade against Member 2, Member 2 sees an 
advisory. As such, this proposed change is a clarification and would 
not change the substance of the Rule and therefore, FICC does not 
believe that this proposed change would impact the rights and 
obligations of Members.
    In GSD Rule 11, Section 14, FICC would revise ``Government 
Securities Division's services'' to ``Corporation's

[[Page 46312]]

services.'' This proposed change to use the defined term for Fixed 
Income Clearing Corporation, the owner of the Government Securities 
Division would not change the substance of this rule and as such, FICC 
does not believe that this proposed change would impact the rights and 
obligations of Members.
    In GSD Rule 29, Section (f), FICC is proposing to revise the 
references from ``the Securities Industry and Financial Markets 
Association'' and ``The Securities Industry and Financial Markets 
Association'' to ``SIFMA'' to reflect the proposed defined term. This 
proposed change to use the proposed defined term for the Securities 
Industry and Financial Markets Association would not change the 
substance of this rule and as such, FICC does not believe that this 
proposed change would impact the rights and obligations of Members.

C. Technical Changes

    FICC is also proposing to make technical changes to the Rules, 
which include correcting typographical errors, grammar, and making 
conforming changes, as set forth in Exhibit 5 to this filing.
    Examples of correcting typographical errors: FICC would add a 
hyphen between ``one time'' in Sections I.G and I.H of the Fee 
Structure of the GSD Rules, and after the word ``the'' in the 
definition of ``Off-the Market Transaction'' in GSD Rule 1. FICC would 
add a hyphen after the word ``Funds'' in the references to ``Funds Only 
Settlement Amount'' in the third paragraph of GSD Rule 13, Section 2. 
FICC would remove the dashes in the Schedule of Timeframes in the GSD 
Rules to be consistent with the other schedules. FICC would remove a 
comma between the words ``for'' and ``New Securities Collateral'' in 
GSD Rule 18, Section 3(c). FICC would revise the section reference in 
GSD Rule 18, Section 3(c) from Section 4 to Section 3 to correct a 
typographical error. FICC would revise the numbering in GSD Rule 3B 
from Sections 2(d) and 2(e) to Sections 2(b) and 2(c), respectively.
    Examples of grammatical changes: FICC would revise ``insure'' to 
``ensure'' in GSD Rule 40, Section 3, MBSD Rule 5, Section 4, and MBSD 
Rule 31, Section 3. FICC would remove the comma that appears between 
``Collateral'' and ``Forward-Starting Repos'' in the title of GSD Rule 
18, Section 4. FICC would add a comma after the word hereinafter in the 
second paragraph of GSD Rule 3, Section 13, and add a period at the end 
of GSD Rule 3 Section 11(d). FICC would revise deadline to deadlines in 
GSD Rule 18, Section 3(d), and add ``or banks'' and ``bank or'' in the 
second paragraph of GSD Rule 12, Section 2 to clarify that there may be 
one or more clearing banks. FICC would add the word ``their'' before 
the first reference to ``Brokered Repo Transaction'' in GSD Rule 19, 
Section 3.
    Examples of conforming changes: As described above, in GSD Rule 13, 
Section 2, FICC is proposing to add a component as new subsection (d). 
As such, FICC would renumber the current subsections (d), (e), (f), 
(g), (h), (i), (j), (k), (l), (m), (n), and (o) to (e), (f), (g), (h), 
(i), (j), (k), (l), (m), (n), (o), and (p), respectively. FICC would 
add ``hereinafter, the'' or ``hereinafter,'' as applicable, before 
certain defined terms in GSD Rule 3, Sections 7 and 13; GSD Rule 3A, 
Section 18; GSD Rule 3B, Sections 5, 6, 9, 14; GSD Rule 4, Sections 2, 
2a, 7, 7a, 7b; GSD Rule 11, Section 14; GSD Rule 18, Section 2; GSD 
Rule 20, Sections 3 and 3b; GSD Rule 37, Section 2; and Section XIV of 
the Fee Structure in the GSD Rules. FICC would replace the parentheses 
with quotation marks around the letter P in Item 6 of the Schedule of 
Required Data Submission Items in the GSD Rules to be consistent with 
the formatting of the other items listed in Item 6. In the Schedule of 
Money Tolerances in the GSD Rules, FICC would revise ``buy-sell'' to 
``buy/sell.''
2. Statutory Basis
    Section 17A(b)(3)(F) of the Act requires, in part, that the Rules 
be designed to promote the prompt and accurate clearance and settlement 
of securities transactions.\26\
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    \26\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------

    The proposed changes to correct and clarify the Rules and to make 
technical changes to the Rules are designed to make the Rules accurate 
and clearer to Members. When Members better understand their rights and 
obligations as set forth in the Rules, such Members are more likely to 
act in accordance with the Rules, which FICC believes would promote the 
prompt and accurate clearance and settlement of securities 
transactions. As such, FICC believes the proposed changes would be 
consistent with Section 17A(b)(3)(F) of the Act.\27\
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    \27\ Id.
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(B) Clearing Agency's Statement on Burden on Competition

    FICC does not believe the proposed rule changes to correct and 
clarify the Rules and to make technical changes to the Rules, as 
described above, would impact competition. The proposed rule changes 
are designed to make the Rules accurate and clearer to Members. These 
proposed changes would not affect FICC's operations or the rights and 
obligations Members. As such, FICC believes the proposed rule changes 
would not have any impact on competition.

(C) Clearing Agency's Statement on Comments on the Proposed Rule Change 
Received From Members, Participants, or Others

    FICC has not received nor solicited any written comments relating 
to this proposal. If any written comments are received, they will be 
publicly filed as an Exhibit 2 to this filing, as required by Form 19b-
4 and the General Instructions thereto.
    Persons submitting comments are cautioned that, according to 
Section IV (Solicitation of Comments) of the Exhibit 1A in the General 
Instructions to Form 19b-4, the Commission does not edit personal 
identifying information from comment submissions. Commenters should 
submit only information that they wish to make available publicly, 
including their name, email address, and any other identifying 
information.
    All prospective commenters should follow the Commission's 
instructions on how to submit comments, available at https://www.sec.gov/regulatory-actions/how-to-submit-comments. General 
questions regarding the rule filing process or logistical questions 
regarding this filing should be directed to the Main Office of the 
Commission's Division of Trading and Markets at 
[email protected] or 202-551-5777. FICC reserves the right to 
not respond to any comments received.

III. Date of Effectiveness of the Proposed Rule Change, and Timing for 
Commission Action

    Because the foregoing proposed rule change does not:
    (i) significantly affect the protection of investors or the public 
interest;
    (ii) impose any significant burden on competition; and
    (iii) become operative for 30 days from the date on which it was 
filed, or such shorter time as the Commission may designate, it has 
become effective pursuant to Section 19(b)(3)(A) of the Act \28\ and 
Rule 19b-4(f)(6) thereunder.\29\
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    \28\ 15 U.S.C. 78s(b)(3)(A).
    \29\ 17 CFR 240.19b-4(f)(6).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of

[[Page 46313]]

investors, or otherwise in furtherance of the purposes of the Act.

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 (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
file number SR-FICC-2023-009 on the subject line.

Paper Comments

     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-2023-009. 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/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 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 
a.m. and 3 p.m. Copies of the filing also will be available for 
inspection and copying at the principal office of FICC and on DTCC's 
website (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-2023-009 and should be submitted on 
or before August 9, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\30\
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    \30\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2023-15265 Filed 7-18-23; 8:45 am]
BILLING CODE 8011-01-P