Document ID: SEC-2012-1336-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Fixed Income Clearing Corp.
Posted Date: 2012-08-14T04:00Z

[Federal Register Volume 77, Number 157 (Tuesday, August 14, 2012)]
[Notices]
[Pages 48572-48576]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-19884]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67621; File No. SR-FICC-2012-05]

Self-Regulatory Organizations; Fixed Income Clearing Corporation; 
Order Approving Proposed Rule Change To Amend the Rules Regarding the 
GCF Repo Service To Adopt Changes Recommended by the Tri-Party Repo 
Infrastructure Reform Task Force

August 8, 2012.

I. Introduction

    On June 8, 2012, the Fixed Income Clearing Corporation (``FICC'') 
filed with the Securities and Exchange Commission (``Commission'') the 
proposed rule change SR-FICC-2012-05 pursuant to Section 19(b)(1) of 
the Securities Exchange Act of 1934 (``Act'').\1\ The proposed rule 
change was published for comment in the Federal Register on June 26, 
2012.\2\ The Commission received no comment letters. For the reasons 
discussed below, the Commission is granting approval of the proposed 
rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ Securities Exchange Act Release No. 34-67277 (June 20, 
2012), 77 FR 38108 (June 26, 2012).
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II. Description

    On July 12, 2011, FICC submitted a proposed rule change filing to 
the Commission (SR-FICC-2011-05) proposing to make certain changes to 
its GCF Repo service in order to comply

[[Page 48573]]

with the recommendations that had been made by the Tri-Party Repo 
Infrastructure Reform Task Force (``TPR''), an industry group formed 
and sponsored by the Federal Reserve Bank of New York.\3\ Because the 
GCF Repo service operates as a tri-party mechanism, FICC was requested 
to incorporate changes to the GCF Repo service to align the service 
with the other TPR recommended changes for the overall tri-party repo 
market.
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    \3\ The main purpose of the TPR was to develop recommendations 
to address the risk presented by tri-party repo transactions due to 
the current morning reversal or ``unwind'' process and to move to a 
process by which tri-party repo transactions are collateralized all 
day.
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    The rule change described in SR-FICC-2011-05 was proposed to be run 
as a pilot program (``Pilot Program'') for one year starting from the 
date on which the Commission approved the filing.\4\ During this past 
year, FICC implemented a portion of the rule changes that were included 
in SR-FICC-2011-05 and wishes to continue to have these aspects of the 
GCF Repo service continue as part of the renewed Pilot Program. FICC 
also wishes to make certain modifications to the Pilot Program as noted 
below.
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    \4\ Securities Exchange Act Release No. 34-65213 (August 29, 
2011), 76 FR 54824 (September 2, 2011).
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A. Background: Description of the GCF Repo Service and History

(1) Creation of the GCF Repo Service
    The GCF Repo service allows Government Securities Division 
(``GSD'') dealer members to trade general collateral repos \5\ 
throughout the day without requiring intra-day, trade-for-trade 
settlement on a delivery-versus-payment (DVP) basis. The service allows 
the dealers to trade such general collateral repos, based on rate and 
term, throughout the day with inter-dealer broker netting members on a 
blind basis. Standardized, generic CUSIP numbers have been established 
exclusively for GCF Repo processing and are used to specify the 
acceptable type of underlying Fedwire book-entry eligible collateral, 
which includes Treasuries, Agencies, and certain mortgage-backed 
securities.\6\
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    \5\ A general collateral repo is a repo in which the underlying 
securities collateral is nonspecific, general collateral whose 
identification is at the option of the seller. This is in contrast 
to a specific collateral repo.
    \6\ In 2009, the Commission approved FICC rule filing 2009-04 to 
add debt securities issued under the Debt Guaranty Program component 
of the Federal Deposit Insurance Corporation's (``FDIC'') Temporary 
Liquidity Guarantee Program (``TLGP'') to the GCF Repo service. See 
Securities Exchange Act Release No. 34-59558 (March 11, 2009), 74 FR 
11385 (March 17, 2009). The TLGP, one of the steps taken by the U.S. 
Government to stabilize the credit markets and stimulate lending, 
was designed to allow banks to issue FDIC-insured debt, ensuring 
that the banks would be able to roll over any debt coming due in the 
coming months. The guarantee consists of timely payment of principal 
and interest. The expiration of the FDIC's guarantee is the earlier 
of either the maturity date of the issued debt or June 2012.
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    The GCF Repo service was developed as part of a collaborative 
effort among the Government Securities Clearing Corporation (``GSCC'') 
(GSD's predecessor), its two clearing banks (The Bank of New York 
Mellon (``BNY'') and JPMorgan Chase Bank, National Association 
(``Chase'')), and industry representatives. GSCC introduced the GCF 
Repo service on an intra-clearing bank basis in 1998.\7\ Under the 
intrabank service, dealers could only engage in GCF Repo transactions 
with other dealers that cleared at the same clearing bank.
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    \7\ See Securities Exchange Act Release No. 34-40623 (October 
30, 1998), 63 FR 59831 (November 5, 1998).
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(2) Creation of the Interbank Version of the GCF Repo Service
    In 1999, GSCC expanded the GCF Repo service to permit dealer 
participants to engage in GCF Repo trading on an interbank basis, 
meaning that dealers using different clearing banks could enter into 
GCF Repo transactions (on a blind brokered basis).\8\ Because dealer 
members that participate in the GCF Repo service do not all clear at 
the same clearing bank, introducing the service as an interbank service 
necessitated the establishment of a mechanism to permit after-hours 
movements of securities between the two clearing banks to deal with the 
fact that GSCC would likely have unbalanced net GCF securities and cash 
positions within each clearing bank (that is, it is likely that at the 
end of GCF Repo processing each business day, the dealers in one 
clearing bank will be net funds borrowers, while the dealers at the 
other clearing bank will be net funds lenders). To address this issue, 
GSCC and its clearing banks established, and the Commission approved, a 
legal mechanism by which securities would ``move'' across the clearing 
banks without the use of the Fedwire Securities Service (``Fedwire 
Securities'').\9\ (Movements of cash do not present the same issue 
because the Fedwire Funds Service (``Fedwire Funds'') is open later 
than Fedwire Securities). Therefore, at the end of the day, after the 
GCF net results are produced, securities are pledged via a tri-party-
like mechanism and the interbank cash component is moved via Fedwire 
Funds. In the morning, the pledges are unwound, that is, funds are 
returned to the net funds lenders and securities are returned to the 
net funds borrowers.
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    \8\ See Securities Exchange Act Release No. 34-41303 (April 16, 
1999), 64 FR 20346 (April 26, 1999).
    \9\ See id. for a detailed description of the clearing bank and 
FICC accounts needed to effect the after-hour movement of 
securities.
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(3) Issues With Morning Unwind Process
    In 2003, FICC shifted the GCF Repo service back to intrabank status 
only.\10\ By that time, the service had grown significantly in 
participation and volume. However, with the increase in use of the 
interbank service, certain payments systems risk issues arose from the 
inter-bank funds settlements related to the service, namely, the large 
interbank funds movement in the morning. FICC shifted the service back 
to intrabank status to enable management to study the issues presented 
and identify a satisfactory solution for bringing the service back to 
interbank status.
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    \10\ See Securities Exchange Act Release No. 34-48006 (June 10, 
2003), 68 FR 35745 (June 16, 2003).
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(4) The NFE Filing and Restoration of Service to Interbank Status
    In 2007, FICC submitted to the Commission a proposed rule change to 
address the issues raised by the interbank morning funds movement and 
return the GCF Repo service to interbank status (``2007 NFE 
Filing'').\11\ The 2007 NFE Filing addressed these issues by using a 
hold against a dealer's ``net free equity'' (``NFE'') at the clearing 
bank to collateralize its GCF Repo cash obligation to FICC on an 
intraday basis.\12\
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    \11\ See Securities Exchange Act Release No. 34-57652 (April 11, 
2008), 73 FR 20999 (April 17, 2008).
    \12\ NFE is a methodology that clearing banks use to determine 
whether an account holder (such as a dealer) has sufficient 
collateral to enter into a specific transaction. NFE allows the 
clearing bank to place a limit on its customer's activity by 
calculating a value on the customer's balances at the bank. Bank 
customers have the ability to monitor their NFE balance throughout 
the day.
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    The 2007 NFE Filing replaced the Day 2 morning unwind process with 
an alternate process, which is currently in effect. Specifically, in 
lieu of making funds payments, the interbank dealers grant to FICC a 
security interest in their NFE-related collateral equal to their 
prorated share of the total interbank funds amount. FICC, in turn, 
grants to the other clearing bank (that was due to receive the funds) a 
security interest in the NFE-related collateral to support the debit in 
the FICC account at the clearing bank. The debit in the FICC account

[[Page 48574]]

(``Interbank Cash Amount Debit'') occurs because the dealers who are 
due to receive funds in the morning must receive those funds at that 
time in return for their release of collateral. The debit in the FICC 
account at the clearing bank gets satisfied during the end of day GCF 
Repo settlement process. Specifically, that day's new activity yields a 
new interbank funds amount that will move at end of day--however, this 
amount gets netted with the amount that would have been due in the 
morning, thus further reducing the interbank funds movement. The NFE 
holds are released when the interbank funds movement is made at end of 
day. The 2007 NFE Filing did not involve any changes to the after-hours 
movement of securities occurring at the end of the day on Day 1.
    As part of the 2007 NFE Filing, FICC imposed certain additional 
risk management measures with respect to the GCF Repo service. First, 
FICC imposed a collateral premium (``GCF Premium Charge'') on the GCF 
Repo portion of the Clearing Fund deposits of all GCF participants to 
further protect FICC in the event of an intra-day default of a GCF Repo 
participant. FICC requires GCF Repo participants to submit a quarterly 
``snapshot'' of their holdings by asset type to enable risk management 
staff to determine the appropriate Clearing Fund premium. As with all 
other instances of late submissions of required information, members 
who do not submit this required information by the deadlines 
established by FICC are subject to a fine and an increased Clearing 
Fund premium.
    Second, the 2007 NFE Filing addressed the situation where FICC 
becomes concerned about the volume of interbank GCF Repo activity. Such 
a concern might arise, for example, if market events were to cause 
dealers to turn to the GCF Repo service for increased funding at levels 
beyond normal processing. The 2007 NFE Filing provides FICC with the 
discretion to institute risk mitigation and appropriate disincentive 
measures in order to bring GCF Repo levels to a comfortable level from 
a risk management perspective.\13\
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    \13\ Specifically, the 2007 NFE Filing introduced the term ``GCF 
Repo Event,'' which will be declared by FICC if either of the 
following occurs: (i) The GCF interbank funds amount exceeds five 
times the average interbank funds amount over the previous ninety 
days for three consecutive days; or (ii) the GCF interbank funds 
amount exceeds fifty percent of the amount of GCF Repo collateral 
pledged for three consecutive days. FICC reviews these figures on a 
semi-annual basis to determine whether they remain adequate. FICC 
also has the right to declare a GCF Repo Event in any other 
circumstances where it is concerned about GCF Repo volumes and 
believes it is necessary to declare a GCF Repo Event in order to 
protect itself and its members. FICC will inform its members about 
the declaration of the GCF Repo Event via important notice. FICC 
will also inform the Commission about the declaration of the GCF 
Repo Event.
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B. Changes to the GCF Repo Service to Implement the TPR's 
Recommendations

    In SR-FICC-2011-05, FICC proposed the following rule changes with 
respect to the GCF Repo service to address the TPR's Recommendations:
    1. (a) To move the Day 2 unwind from 7:30 a.m. to 3:30 p.m.; (b) to 
move the NFE process \14\ from morning to a time established by FICC as 
announced by notice to all members; \15\ (c) to move the cut-off time 
of GCF Repo submissions from 3:35 p.m. to 3:00 p.m.; and (d) to move 
the cut-off time for dealer affirmation or disaffirmation from 3:45 
p.m. to 3:00 p.m.; and
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    \14\ No other changes are being proposed to the NFE process that 
was in place by the 2007 NFE Filing; the risk management measures 
that were put in place by the 2007 NFE Filing remain in place with 
the present proposal.
    \15\ SR-FICC-2011-05 noted that the possible time range would be 
between 8:00 a.m. and 1:00 p.m. to coincide with the collateral 
substitution mechanism that was being developed between FICC and its 
clearing banks. FICC wishes to clarify that the 8:00 a.m. to 1:00 
p.m. proposed time range in SR-FICC-2011-05 referred to the clearing 
bank hold on the FICC interest in the NFE (i.e., as part of the NFE 
process, FICC grants to the other clearing bank (that was due to 
receive the funds) a security interest in the NFE--related 
collateral to support the debit in the FICC account at the clearing 
bank). With respect to the NFE hold on the dealers, please see 
footnote 17 below.
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    2. To establish rules for intraday GCF Repo collateral 
substitutions (i.e., SR-FICC-2011-05 stated that with respect to 
interbank GCF Repo transactions, the substitution process would only 
permit cash as an initial matter to accommodate current processing 
systems).
    FICC has implemented the proposed changes referred to in 
subsections 1(c) and 1(d) above. FICC has not yet implemented the 
proposed changes referred to in subsections 1(a), 1(b) and 2 above. 
FICC is seeking the Commission's approval to extend the Pilot Program 
for all of these changes for an additional year as noted above. FICC is 
working with its clearing banks with respect to the implementation of 
the changes that have not yet been implemented.
(1) Change Regarding the Morning Unwind and Related Rule Changes
    The TPR has recommended that the Day 2 unwind for all tri-party 
transactions be moved from the morning to 3:30 p.m. The TPR has made 
this recommendation in order to reduce the clearing banks' intraday 
credit exposure to the dealers. As previously stated, because the GCF 
Repo service is essentially a tri-party repo mechanism, FICC has also 
been requested by the TPR to accommodate this time change. For the GSD 
rules, this extends the change to the GSD's ``Schedule of GCF 
Timeframes'' (``Schedule'') implemented during the initial Pilot 
Program. Specifically, the 7:30 a.m. time in the Schedule was deleted 
and the language therein moved to a new time of 3:30 p.m.
    The change to the time of the intrabank unwind also extends the 
change implemented during the initial Pilot Program to the cut-off time 
for GCF Repo trade submissions, which was 3:35 p.m. in the Schedule 
prior to the initial Pilot Program. FICC amended the Schedule to change 
the cut-off time to 3:00 p.m. to allow FICC to submit files to the 
clearing banks which, in turn, will provide files to the dealers by 
3:30 p.m.; this will permit the dealers to have a complete picture of 
their positions as the unwind occurs at 3:30 p.m. The 3:45 p.m. cutoff 
for dealer affirmation or disaffirmation that was in the Schedule prior 
to the implementation of the initial Pilot Program was moved to 3:00 
p.m. so that the new 3:00 p.m. cutoff for submissions is also the 
cutoff for dealer affirmations and disaffirmations.\16\
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    \16\ This change updates the current Schedule to provide that 
the cutoff for submissions and dealer affirmations/disaffirmations 
is at the same time; the current practice is inconsistent with the 
current Schedule and the proposed rule change would remedy this 
inconsistency.
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    Because the Day 2 unwind is moving from the morning to 3:30 p.m. 
and because the NFE process established by the 2007 NFE Filing is tied 
to the moment of the interbank unwind, the NFE process will also move 
to the time established by FICC as announced by notice to all 
members.\17\ Because the NFE process is a legal process and not an 
operational process, it is not reflected on the Schedule. FICC is 
deleting the reference to the ``morning'' timeframe on Day 2 with 
respect to the NFE process in Section 3 of Rule 20 and adding language 
referencing ``at the time established by the Corporation.''
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    \17\ Currently, the NFE hold is from the time the collateral is 
returned to the repo dealer (approximately 7:30 a.m.) until the time 
the funds move between the two clearing banks (approximately 5:00 
p.m.). When the systems processing for the tri-party reform effort 
continues on the part of the clearing banks, the unwind will move to 
3:30 p.m. and the funds will continue to move between the two 
clearing banks at 5:00 p.m.; when this occurs, the NFE hold which 
applies to dealers will be between 3:30 p.m. and 5:00 p.m.
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(2) Change Regarding Intraday GCF Repo Securities Collateral 
Substitutions
    As a result of the time change of the unwind (i.e., the reversal on 
Day 2 of

[[Page 48575]]

collateral allocations established by FICC for each netting member's 
GCF net funds borrower positions and GCF net funds lender positions on 
Day 1) to 3:30 p.m., the provider of GCF Repo securities collateral in 
a GCF Repo transaction on Day 1 will no longer have access to such 
securities at the beginning of Day 2. Therefore, during Day 2 prior to 
the unwind of the Day 1 collateral allocations, the provider of GCF 
Repo securities collateral needs a substitution mechanism for the 
return of its posted GCF Repo securities collateral in order to make 
securities deliveries for utilization of such securities in its 
business activities. FICC is establishing a substitution process for 
this purpose in conjunction with its clearing banks. The language for 
the substitution mechanism is being added to Section 3 of GSD Rule 20. 
The rule change provides that all requests for substitution for the GCF 
Repo securities collateral must be submitted by the provider of the GCF 
Repo securities collateral by the applicable deadline on Day 2 (the 
``substitution deadline'').\18\
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    \18\ FICC will establish such deadline prior to the 
implementation of the changes to this service in conjunction with 
the clearing banks and the Federal Reserve in light of market 
circumstances. The initial substitution deadline is anticipated to 
be 1:00 p.m.; however, this will be finalized with the Federal 
Reserve and the clearing banks. The possible time range will be 
between 8:00 a.m. and 1:00 p.m. FICC will provide members advanced 
notice of the substitution deadline and any future changes thereto 
by important notice.
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(3) Substitutions on Intrabank GCF Repos
    If the GCF Repo transaction is between dealer counterparties 
effecting the transaction through the same clearing bank, on Day 2 such 
clearing bank will process each substitution request of the provider of 
GCF Repo securities collateral submitted prior to the substitution 
deadline promptly upon receipt of such request. The return of the GCF 
Repo securities collateral in exchange for cash and/or eligible 
securities of equivalent value can be accomplished by simple debits and 
credits to the accounts of the GCF Repo dealer counterparties at the 
clearing agent bank. Eligible securities for this purpose will be the 
same as those currently permitted under the GSD rules for collateral 
allocations, namely, Comparable Securities,\19\ (ii) Other Acceptable 
Securities,\20\ or (iii) U.S. Treasury bills, notes or bonds maturing 
in a time frame no greater than that of the securities that have been 
traded (except where such traded securities are U.S. Treasury bills, 
substitution may be with Comparable Securities and/or cash only).
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    \19\ The GSD rules define ``Comparable Securities'' as follows: 
The term ``Comparable Securities'' means, with respect to a security 
or securities that are represented by a particular Generic CUSIP 
Number, any other security or securities that are represented by the 
same Generic CUSIP Number.
    \20\ The GSD rules define ``Other Acceptable Securities'' as 
follows: The term ``Other Acceptable Securities'' means, with 
respect to: (An) adjustable-rate mortgage-backed security or 
securities issued by Ginnie Mae, any fixed-rate mortgage-backed 
security or securities issued by Ginnie Mae, or (an) adjustable-rate 
mortgage-backed security or securities issued by either Fannie Mae 
or Freddie Mac: (a) Any fixed-rate mortgage-backed security or 
securities issued by Fannie Mae and Freddie Mac, (b) any fixed-rate 
mortgage-backed security or securities issued by Ginnie Mae, or (c) 
any adjustable-rate mortgage-backed security or securities issued by 
Ginnie Mae.
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(4) Substitutions on Interbank GCF Repos
    For a GCF Repo that was processed on an interbank basis and to 
accommodate a potential substitution request, FICC will initiate a 
debit of the securities in the account of the lender through the FICC 
GCF Repo accounts at the clearing bank of the lender and the FICC GCF 
Repo account at the clearing bank of the borrower (``Interbank 
Movement''). This Interbank Movement is being done so that a borrower 
who elects to substitute collateral will have access to the collateral 
for which it is substituting. The Interbank Movement is expected to 
occur in the morning, though the clearing banks and FICC have the 
capability to have the Interbank Movement occur at any point during the 
day up until 2:30 p.m. During the Pilot Program, FICC and the clearing 
banks will unwind the intrabank GCF Repo transactions at 3:30 p.m. FICC 
and the clearing banks will determine the most appropriate timeframe 
for the Interbank Movement process to occur.
    GCF Repo securities collateral will be debited from the securities 
account of the receiver of the collateral at its clearing bank and from 
a FICC account at the same clearing bank. If a substitution request is 
received by the clearing bank of the provider of GCF Repo securities 
collateral, prior to the substitution deadline at a time specified in 
FICC's procedures,\21\ that clearing bank will process the substitution 
request by releasing the GCF Repo securities collateral from the FICC 
GCF Repo account at such clearing bank and crediting it to the account 
of the provider of GCF Repo securities collateral. All cash and/or 
securities substituted for the GCF Repo securities collateral being 
released will be credited to FICC's GCF Repo account at the clearing 
bank of the provider of the GCF Repo securities collateral.
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    \21\ This timeframe will also be established in consultation 
with the clearing banks and the Federal Reserve. The parties are 
considering whether to have the substitution process be accomplished 
in two batches during the day depending upon the time of submission 
of the notifications for substitution. In any event, substitution 
requests will be subject to the substitution deadline. The details 
of the batches, if applied, will be announced to members by 
important notice. The deadline for submission of GCF Repo 
substitution requests will be the same for intrabank and interbank 
processing.
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    Simultaneously, with the debit of the GCF Repo securities 
collateral from the account at the clearing bank of the original 
receiver of GCF Repo securities collateral, such clearing bank will 
effect a cash debit equal to the value of the securities collateral in 
FICC's GCF Repo account at such clearing bank and will credit the 
account of the original receiver of securities collateral at such 
clearing bank with such cash amount in order to make payment to the 
original receiver of securities collateral. (This is because when the 
original receiver of securities collateral is debited the securities, 
it must receive the funds.) In order to secure FICC's obligation to 
repay the balance in FICC's GCF Repo account at the clearing bank of 
the original receiver of the GCF Repo securities collateral, FICC will 
grant to such clearing bank a security interest in the cash and/or 
securities substituted for the GCF securities collateral in FICC's GCF 
repo account at the other clearing bank.
    For substitutions that occur with respect to GCF Repo transactions 
that were processed on an inter-clearing bank basis, FICC and the 
clearing banks will permit cash substitutions as noted in SR-FICC-2011-
05. However, as discussions have developed between FICC and its 
clearing banks, it has been determined that cash and securities may be 
used for substitutions. The rule change provides FICC with flexibility 
in this regard by referring to FICC's procedures. When interbank 
securities substitutions begin to be permitted, FICC will announce this 
to members by important notice.
Other Rule Changes
    FICC is also making technical clean-up changes to Section 7 of GSD 
Rule 20, which relate to the GCF Repo collateral process. Specifically, 
FICC is changing reference to the defined term ``Security'' to 
``security'' to conform to the use of ``security'' throughout the rule. 
The rule change also introduces a term that previously had not been 
included in the rules inadvertently, ``GCF Collateral Excess Account.'' 
This term is defined as ``the account established by a GCF Custodian 
Bank in the name of the Corporation to hold securities it credits to 
the GCF Securities Account the

[[Page 48576]]

Corporation establishes for another GCF Clearing Bank.''

III. Discussion

    Section 17A(b)(3)(F) of the Act \22\ requires, among other things, 
that the rules of a clearing agency be designed to promote the prompt 
and accurate clearance and settlement of security transactions and 
assure the safeguarding of securities and funds which are in the 
custody or control of such clearing agency or for which it is 
responsible.
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    \22\ 15 U.S.C. 78q-1(b)(3)(F).
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    Because the proposed rule change aligns the GCF Repo service with 
recommendations made by the TPR to address risks in the overall tri-
party repo market, it will promote the prompt and accurate clearance 
and settlement of security transactions and assure the safeguarding of 
securities and funds which are in the custody or control of FICC or for 
which it is responsible, and therefore is consistent with the 
requirements of Section 17A(b)(3)(F) of the Act. The proposed rule 
change is not inconsistent with the existing rules of FICC, including 
any other rules proposed to be amended.

IV. Conclusion

    On the basis of the foregoing, the Commission finds that the 
proposal is consistent with the requirements of the Act and in 
particular with the requirements of Section 17A of the Act \23\ and the 
rules and regulations thereunder.
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    \23\ 15 U.S.C. 78q-1.
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    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\24\ that the proposed rule change (File No. SR-FICC-2012-05) be, 
and hereby is, approved.\25\
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    \24\ 15 U.S.C. 78s(b)(2).
    \25\ In approving the proposed rule change, the Commission 
considered the proposal's impact on efficiency, competition and 
capital formation. 15 U.S.C. 78c(f).

    For the Commission by the Division of Trading and Markets, 
pursuant to delegated authority.\26\
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    \26\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-19884 Filed 8-13-12; 8:45 am]
BILLING CODE 8011-01-P