Document ID: SEC-2018-0279-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Fixed Income Clearing Corp.
Posted Date: 2018-02-14T05:00Z

[Federal Register Volume 83, Number 31 (Wednesday, February 14, 2018)]
[Notices]
[Pages 6654-6660]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-02985]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82672; File No. SR-FICC-2018-002]

Self-Regulatory Organizations; Fixed Income Clearing Corporation; 
Notice of Filing of Proposed Rule Change To Amend the By-Laws and Make 
Other Changes

February 8, 2018.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on February 2, 2018, 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. 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.
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I. Clearing Agency's Statement of the Terms of Substance of the 
Proposed Rule Change

    The proposed rule change would amend the FICC By-Laws (``By-Laws'') 
to (i) revise titles or offices and the powers and duties of the Board 
of Directors (``Board'') and certain designated officers of FICC, (ii) 
revise the section describing compensation of officers, and (iii) make 
certain technical changes and corrections.\3\ The GSD Rules and the 
MBSD Rules would also be amended to incorporate by reference the By-
Laws and the Restated Certificate of Incorporation.\4\
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    \3\ The By-Laws and the Restated Certificate of Incorporation 
would each be incorporated by reference into the FICC Government 
Securities Division Rulebook (``GSD Rules'') and the FICC Mortgage-
Backed Securities Division Rulebook (``MBSD Rules'').
    \4\ The GSD Rules and the MBSD Rules are available at http://www.dtcc.com/legal/rules-and-procedures. The By-Laws and the 
Restated Certificate of Incorporation would be available at http://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
    In FICC's review of the By-Laws, FICC has identified and is 
proposing the following changes to the By-Laws: (i) Revising certain 
Board and designated officer titles or offices and updating the related 
powers and duties, (ii) revising the section describing the 
compensation of officers and (iii) making certain technical changes and 
corrections. Specifically, regarding the proposed changes to the Board 
and designated officer titles or offices and updating the related 
powers and duties, FICC is proposing to: (1) Change the title of 
Chairman of the Board to Non-Executive Chairman of the Board and update 
the related powers and duties associated with that role due to 
personnel changes in FICC's management, (2) add the office of the Chief 
Executive Officer (``CEO''), combine the office of the President and 
the office of the Chief Executive Officer into one office (President 
and Chief Executive Officer) and update the related powers and duties 
to reflect that the two positions are now combined and are held by one 
individual, (3) add the office of the Chief Financial Officer (``CFO'') 
and delete the office of the Comptroller, (4) delete the office of the 
Chief Operating Officer (``COO''), (5) change the title of Vice 
President to Executive Director and update the related powers and 
duties, and (6) make other changes related to certain powers and duties 
of the Board and various officers, including Managing Directors, the 
Vice Chairman of the Corporation, the Treasurer and the Assistant 
Treasurer, as described in greater detail below. FICC is proposing to 
make these changes to the By-Laws so that the By-Laws remain consistent 
and accurate and FICC's governance documents accurately reflect its 
management and organizational structure and the responsibilities within 
the purview of certain roles. FICC believes these changes would 
facilitate the efficient governance and operation of FICC.
    The GSD Rules and MBSD Rules would also be amended to incorporate 
by reference the Restated Certificate of Incorporation and the By-Laws, 
as further described below. The current Certificate of Incorporation 
would be restated to streamline this document, which FICC believes 
would enhance clarity and transparency. The following describes the 
proposed changes to the By-Laws, the Certificate of Incorporation, the 
GSD Rules, and the MBSD Rules.

Proposed Changes to the By-Laws \5\
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    \5\ FICC last submitted a rule filing regarding changes to the 
By-Laws in 2006. See Securities Exchange Act Release No. 54173 (July 
19, 2006), 71 FR 42890 (July 28, 2006) (SR-DTC-2006-10, SR-FICC-
2006-09, and SR-NSCC-2006-08).
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A. Changes to Certain FICC Board and Designated Officer Titles or 
Offices and Updates to the Related Powers and Duties

    FICC proposes to revise the titles or offices and update the 
related powers and duties of various designated officers and the Board, 
as further described below.
1. Change the Title of Chairman of the Board to Non-Executive Chairman 
of the Board; Update the Powers and Duties of the Non-Executive 
Chairman of the Board
    FICC proposes to replace the title of Chairman of the Board with 
the title Non-Executive Chairman of the Board (``Non-Executive Chairman 
of the Board''). This change in title reflects that this position is 
now held by an individual who is not part of FICC's management (i.e., a 
non-executive). In 2016, FICC made personnel changes. As part of these 
personnel changes, the individual who was serving as Chairman of the 
Board and who was part of FICC's management at that time became a non-
executive. FICC believed that it would be beneficial and desirable

[[Page 6655]]

to continue to have this individual serve as chairman of the Board even 
though he is no longer part of FICC's management. Therefore, FICC 
proposes to change the title of this position in the By-Laws to Non-
Executive Chairman of the Board to reflect that this position is held 
by a non-executive. FICC believes this proposed change would accurately 
reflect this organizational change. Furthermore, FICC proposes to 
revise the By-Laws to enumerate the powers and duties of the Non-
Executive Chairman of the Board. To implement this proposed change, 
FICC would revise the By-Laws as described below.
    Certain references to either Chairman or Chairman of the Board 
would be revised to Non-Executive Chairman of the Board in the sections 
of the By-Laws that would continue to apply to the Non-Executive 
Chairman of the Board. Specifically, the following changes would be 
made:
    a. In current Section 1.2 (Special Meetings), the references to 
Chairman would be revised to Non-Executive Chairman of the Board by 
adding the word ``Non-Executive'' before the second reference to 
Chairman in the first sentence and the phrase ``of the Board'' after 
such reference. In addition, the phrase ``by the Chairman'' in the 
first sentence of current Section 1.2 (Special Meetings) would be 
deleted because it would be repetitive to the language that is 
currently included later in this section.
    b. In current Section 1.8 (Presiding Officer and Secretary), 
current Section 2.6 (Meetings), and current Section 5.1 (Certificates 
for Shares), the word ``Non-Executive'' would be added before each 
reference to the Chairman of the Board.
    Certain references to Chairman of the Board in the By-Laws would be 
deleted because such references are in the sections of the By-Laws that 
only apply to members of FICC management. Because the Non-Executive 
Chairman of the Board would not be a management position, such sections 
of the By-Laws would no longer be applicable. Specifically, the 
following changes would be made:
    a. In current Section 3.1 (General Provisions), Chairman of the 
Board would be removed from the list of designated officers of FICC.
    b. In current Section 3.12 (Compensation of Officers), the 
references to the Chairman of the Board would also be deleted because 
the Non-Executive Chairman of the Board does not receive compensation 
and because, as further described below, this section would be revised 
to only address the setting of compensation for the President.
    Current Section 3.2 (Powers and Duties of the Chairman of the 
Board) would be deleted and replaced by proposed Section 2.8 (Non-
Executive Chairman of the Board). Specifically, the following changes 
would be made:
    a. Certain powers and duties prescribed to the Chairman of the 
Board in current Section 3.2 (Powers and Duties of the Chairman of the 
Board) would remain with the Non-Executive Chairman of the Board. Such 
powers and duties include (i) presiding over the meetings of the 
stockholders and of the Board at which he is present and (ii) such 
other powers and duties as the Board may designate. This would be set 
forth in proposed Section 2.8 (Non-Executive Chairman of the Board). 
Furthermore, as is similarly stated in current Section 3.2 (Powers and 
Duties of the Chairman of the Board), proposed Section 2.8 (Non-
Executive Chairman of the Board) would also state that the 
``performance of any such duty by the Non-Executive Chairman of the 
Board shall be conclusive evidence of his power to act.''
    b. FICC would also expressly include in proposed Section 2.8 (Non-
Executive Chairman of the Board) that the Non-Executive Chairman of the 
Board has general supervision over the Board and its activities and 
would provide overall leadership to the Board. Consistent with his 
authority to supervise and lead the Board, FICC proposes to assign the 
responsibility for carrying out the policies of the Board of Directors 
to the Non-Executive Chairman of the Board rather than the President 
(as is provided in current Section 3.3 (Powers and Duties of the 
President)). Furthermore, in current Section 3.6 (Powers and Duties of 
the Secretary), the power to assign additional powers and duties to the 
Secretary would be revised to replace the reference to President with 
Non-Executive Chairman of the Board. FICC believes this is an 
appropriate responsibility for the Non-Executive Chairman of the Board 
to have as part of his general supervision of the Board.
    c. In addition, proposed Section 2.8 (Non-Executive Chairman of the 
Board) would state that, in the absence of the Non-Executive Chairman 
of the Board, the presiding director, as elected by the Board, shall 
preside at all meetings of the stockholders and of the Board at which 
he or she is present. Current Section 3.3 (Powers and Duties of the 
President) provides that, in the absence or in ability of the Chairman 
of the Board, the President shall preside at all meetings of 
shareholders and all meetings of the Board of Directors at which he is 
present. Pursuant to the Board of Directors of The Depository Trust & 
Clearing Corporation (``DTCC''), The Depository Trust Company 
(``DTC''), FICC and National Securities Clearing Corporation (``NSCC'') 
Mission Statement and Charter (``Board Mission Statement and 
Charter''), FICC annually elects a presiding director to preside at 
meetings when the Non-Executive Chairman of the Board is absent. As 
such, FICC believes the proposed language described above would enhance 
accuracy by correcting the inconsistency between the By-Laws and the 
Board Mission Statement and Charter.
    d. As further described below, in proposed Section 3.2 (Powers and 
Duties of the President and Chief Executive Officer), the Non-Executive 
Chairman of the Board would have the authority to designate powers and 
duties to the President and CEO. FICC believes this authority to 
designate powers and duties to the President and CEO is within the 
scope of the supervisory role of the Non-Executive Chairman of the 
Board and therefore proposes to revise the By-Laws to expressly state 
that the Non-Executive Chairman has this authority.
    e. In current Section 3.5 (Powers and Duties of Vice Presidents and 
Managing Directors), FICC would add the Non-Executive Chairman of the 
Board to the list of individuals who have the power to assign powers 
and duties to Managing Directors as well as make conforming changes. 
FICC believes this is an appropriate responsibility for the Non-
Executive Chairman of the Board to have because he has general 
supervision over the Board.
2. Add the Office of the CEO and Combine the Office of the President 
and the Office of the CEO Into the Office of the President and CEO; 
Update the Related Powers and Duties
    FICC proposes to add the office of the CEO and combine the office 
of the President and the office of the CEO into one office (President 
and CEO) because one individual is the President and CEO. FICC proposes 
to revise the By-Laws to reflect that one individual holds the office 
of the President and CEO, including revising the list of designated 
officers in current Section 3.1 (General Provisions) to include the 
President and CEO. While current Section 3.3 (Powers and Duties of the 
President) provides that the President shall be the chief executive 
officer, current Section 3.1 (General Provisions) does not include CEO 
in the list of designated officer positions (President is currently 
included in this list). As such, FICC would revise certain references 
in the By-Laws from President to President

[[Page 6656]]

and Chief Executive Officer. Specifically, FICC proposes to make the 
changes to the By-Laws that are described below.
    a. In current Section 1.2 (Special Meetings), current Section 1.8 
(Presiding Officer and Secretary), current Section 2.6 (Meetings), 
current Section 3.1 (General Provisions), current Section 3.5 (Powers 
and Duties of Vice Presidents and Managing Directors), current Section 
3.7 (Powers and Duties of the Treasurer), and current Section 3.12 
(Compensation of Officers), the words ``and Chief Executive Officer'' 
would be added after each reference to President.
    b. In current Section 5.1 (Certificates for Shares), the words 
``the President'' would be deleted and replaced by the words 
``President and Chief Executive Officer.''
    c. Additionally, in current Section 1.2 (Special Meetings), the 
phrase ``, or by the President,'' in the first sentence would be 
deleted because FICC believes it is repetitive to language that appears 
later in the section.
    Furthermore, except as otherwise described below, the 
responsibilities, duties and powers granted to the President that are 
currently described in the By-Laws would continue to remain with the 
President and CEO. FICC proposes to make the following changes to the 
By-Laws to reflect the updated responsibilities and powers and duties 
that are granted to the President and CEO:
    a. A portion of current Section 3.3 (Powers and Duties of the 
President) would be deleted and replaced with proposed Section 3.2 
(Powers and Duties of the President and Chief Executive Officer). The 
remaining portion of current Section 3.3 (Powers and Duties of the 
President) would be included in proposed Section 3.2 (Powers and Duties 
of the President and Chief Executive Officer).
    b. Current Section 3.3 (Powers and Duties of the President) states 
that the President will have general supervision over the business and 
affairs of FICC subject to the direction of the Board. Additionally, 
current Section 3.3 (Powers and Duties of the President) states that 
the President may employ and discharge employees and agents of FICC, 
except such as shall be elected or appointed by the Board, and he may 
delegate these powers. Similarly, proposed Section 3.2 (Powers and 
Duties of the President and Chief Executive Officer) would state that 
the President and Chief Executive Officer would have general 
supervision over the overall business strategy, business operations, 
systems, customer outreach, and risk management, control and staff 
functions, subject to the direction of the Board and the Non-Executive 
Chairman of the Board. FICC believes the additional detail provided in 
proposed Section 3.2 (Powers and Duties of the President and CEO) would 
add clarity to the powers and duties associated with the role of 
President and Chief Executive Officer and would be consistent with the 
combined role. In addition, because the office of the COO would be 
eliminated (as described further below), the responsibility of general 
supervision over the operations of FICC, which is designated to the COO 
role in current Section 3.4 (Powers and Duties of the Chief Operating 
Officer), would be assigned to the President and CEO.
    c. Proposed Section 3.2 (Powers and Duties of the President and 
CEO) would state that the President and CEO would have such other 
powers and perform such other duties as the Board or the Non-Executive 
Chairman of the Board may designate. FICC believes this generally 
aligns with current Section 3.3 (Powers and Duties of the President). 
FICC believes that providing the Non-Executive Chairman of the Board 
with this additional authority to designate powers and duties to the 
President and CEO is within the scope of the supervisory role of the 
Non-Executive Chairman of the Board.
    d. As noted above, certain powers and duties listed in current 
Section 3.3 (Powers and Duties of the President) would be removed or 
assigned to another position. Specifically, as noted above, the 
responsibility for carrying out the policies of the Board would be 
assigned to the Non-Executive Chairman of the Board rather than to the 
President and CEO. Additionally, the statement that ``performance of 
any such duty by the President shall be conclusive evidence of his 
power to act'' that appears in current Section 3.3 (Powers and Duties 
of the President) would be removed as FICC believes it would be best 
practice to document specific designation of powers and/or duties made 
by the Board or Non-Executive Chairman of the Board to the President 
and CEO.
    e. As described above, in current Section 3.6 (Powers and Duties of 
the Secretary), the power to assign additional powers and duties to the 
Secretary would be removed from the President and granted to the Non-
Executive Chairman of the Board. FICC believes this is an appropriate 
responsibility for the Non-Executive Chairman of the Board to have as 
part of his general supervision of the Board.
    f. As described below, the President and Board currently have the 
authority to assign powers and duties to the Comptroller in current 
Section 3.8 (Powers and Duties of the Comptroller). Similarly, proposed 
Section 3.5 (Powers and Duties of the Chief Financial Officer) would 
provide that the CFO would perform such other duties as he may agree 
with the President and CEO and the Board.
3. Add the Office of the CFO; Delete of the Office of the Comptroller
    FICC would add the office of the CFO and assign to the CFO all of 
the powers and duties of the office of the chief financial officer. The 
CFO would, in general, have overall supervision of the financial 
operations of FICC. Furthermore, references to the office of the 
Comptroller would be deleted. FICC does not currently have a 
Comptroller nor does FICC plan to appoint one. Therefore, FICC believes 
it would be more accurate to remove all references to such position in 
the By-Laws. Specifically, FICC would revise the By-Laws as described 
below.
    a. In current Section 3.1 (General Provisions), CFO would be added 
to and Comptroller would be removed from the list of designated 
officers of FICC.
    b. FICC would add proposed Section 3.5 (Powers and Duties of the 
Chief Financial Officer). This proposed section would enumerate the 
powers and duties of the CFO. It would state that the CFO would have 
overall supervision of the financial operations of FICC and upon 
request, would counsel and advise other officers of FICC and perform 
other duties as agreed with the President and CEO or as determined by 
the Board. FICC believes these powers and duties are appropriate for 
the newly created role of CFO. Proposed Section 3.5 (Powers and Duties 
of the Chief Financial Officer) would also state that the CFO would 
report directly to the President and CEO. FICC believes it is 
appropriate for the CFO to report to the President and CEO and to 
specify this clear line of responsibility in the By-Laws.
    c. Furthermore, proposed Section 3.6 (Powers and Duties of the 
Treasurer) would also be revised to state that the Treasurer shall have 
all such powers and duties as generally are incident to the position of 
Treasurer or as the CFO (in addition to the President and CEO and the 
Board) may assign to him. Because the Treasurer directly reports to the 
CFO, FICC believes it is appropriate for the CFO to assign powers and 
duties to the Treasurer.
    d. FICC would delete current Section 3.8 (Powers and Duties of the

[[Page 6657]]

Comptroller), which, with the elimination of the office of the 
Comptroller, would no longer be necessary.
4. Delete the Office of the COO
    FICC would also delete references to the designated office of the 
COO in the By-Laws. FICC believes this change is necessary because FICC 
no longer has a COO nor does FICC plan to appoint one. Specifically, 
FICC would make the changes to the By-Laws described below.
    a. In current Section 3.1 (General Provisions), the COO would be 
removed from the list of designated officers of FICC.
    b. Current Section 3.4 (Powers and Duties of the Chief Operating 
Officer) would be deleted, which, with the elimination of the office of 
the COO, would no longer be necessary. The power and duty prescribed to 
this position (general supervision over the operations of FICC) would 
be assigned to the President and CEO in proposed Section 3.2 (Powers 
and Duties of the President and Chief Executive Officer), as described 
above.
5. Change the Title of Vice President to Executive Director; Update the 
Related Powers and Duties
    FICC proposes to change the title of Vice President to Executive 
Director and update the related powers and duties. FICC believes these 
changes are necessary because FICC has decided that the title of 
Executive Director is more widely used in the financial services 
industry for roles similar to those designated as Vice Presidents. In 
FICC's organizational structure, Executive Directors report to Managing 
Directors. As such, it was decided that Executive Directors do not have 
sufficient seniority to call special meetings of shareholders, to 
preside over shareholder meetings unless specifically designated to do 
so by the Board, or to sign share certificates. FICC proposes to make 
the following changes to the By-Laws to reflect the change in the title 
from Vice President to Executive Director and to update the related 
powers and duties.
    a. In current Section 1.2 (Special Meetings), the proposed rule 
change would remove Vice Presidents from the list of officers 
authorized to call special meetings of shareholders. FICC believes that 
Vice Presidents do not have sufficient seniority to call special 
meetings of shareholders.
    b. In current Section 1.8 (Presiding Officer and Secretary), Vice 
President would be removed. FICC believes that a Vice President should 
not preside over a shareholder meeting unless specifically designated 
to do so by the Board.
    c. In current Section 3.1 (General Provisions), Vice Presidents 
would be removed from the list of designated officers of FICC. As 
described below, a parenthetical phrase would be added explaining that 
the Board's power to appoint other officers includes the power to 
appoint one or more Executive Directors.
    d. In current Section 3.5 (Powers and Duties of Vice Presidents and 
Managing Directors), all references to Vice President would be deleted. 
Section 3.5 (Powers and Duties of Vice Presidents and Managing 
Directors) currently states that Vice Presidents and Managing Directors 
have such powers and perform such duties as the Board or the President 
may assign to them.\6\ Because individuals with the title of Executive 
Director report to Managing Directors, FICC believes the reference to 
Vice President in this section would not be necessary.
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    \6\ With this proposal, this reference to President would be 
revised to President and CEO, and the Non-Executive Chairman of the 
Board would be added so the Non-Executive Chairman of the Board 
would also be able to assign powers and duties to the Managing 
Directors.
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    e. In current Section 5.1 (Certificates for Shares), the reference 
to Vice President would be removed because Vice Presidents are no 
longer authorized to sign share certificates. As described above, FICC 
decided that they do not have sufficient seniority to do so.
6. Other Changes to the Powers and Duties of the Board and Certain 
Other Designated Officers
Managing Directors
    a. In Section 1.8 (Presiding Officer and Secretary), the reference 
to the Managing Director would be removed because FICC believes a 
Managing Director should not preside over a shareholder meeting unless 
specifically designated to do so by the Board.
    b. In current Section 2.6 (Meetings), the proposal would add 
Managing Directors to the list of officers authorized to call special 
meetings of the Board. FICC believes this proposed change would provide 
FICC's management with additional flexibility by enabling additional 
persons within senior management to call special meetings of the Board.
Vice Chairman of the Corporation
    As described below, a parenthetical phrase would be added in 
current Section 3.1 (General Provisions) explaining that the Board's 
power to appoint other offices includes, but is not limited to, the 
power to appoint a Vice Chairman of the Corporation.
Board
    a. In current Section 3.1 (General Provisions), FICC proposes to 
add a parenthetical phrase explaining that the Board's power to appoint 
other offices includes, but is not limited to, the power to appoint a 
Vice Chairman of the Corporation and one or more Executive Directors to 
enhance clarity.
    b. Additionally, in current Section 3.1 (General Provisions), 
regarding the ability of any one person to hold more than one office, 
FICC proposes to enhance and clarify the exception by specifying that 
neither the Secretary nor any Assistant Secretary can hold the 
following offices: (1) Vice Chairman of the Corporation, (2) President, 
or (3) President and CEO. FICC believes this proposed change is 
necessary to ensure that the Secretary and any Assistant Secretary 
would not hold those positions.
Treasurer
    In current Section 5.1 (Certificates for Shares), FICC proposes to 
delete the reference to Treasurer from the list of authorized 
signatories because FICC expects the Secretary or an Assistant 
Secretary (who are each currently listed as authorized signatories) to 
sign any share certificates.
Assistant Treasurer
    In current Section 5.1 (Certificates for Shares), FICC proposes to 
delete the reference to Assistant Treasurer from the list of authorized 
signatories because FICC expects the Secretary or an Assistant 
Secretary (who are each currently listed as authorized signatories) to 
sign any share certificates.
7. Revise Compensation of Officers to Compensation of the President and 
Chief Executive Officer
    Current Section 3.12 (Compensation of Officers) would be revised to 
accurately reflect FICC's compensation setting practices. Current 
Section 3.12 states that: (i) the compensation, if any, of the Chairman 
of the Board, and the President shall be fixed by a majority (which 
shall not include the Chairman of the Board or the President) of the 
entire Board of Directors and (ii) salaries of all other officers shall 
be fixed by the President with the approval of the Board and no officer 
shall be precluded from receiving a salary because he is also a 
director. Current Section 3.12 would be revised to state that the 
Compensation Committee of the Corporation will recommend the 
compensation for the

[[Page 6658]]

President and Chief Executive Officer to the Board of Directors for 
approval because, pursuant to the DTCC/DTC/FICC/NSCC Compensation and 
Human Resources Committee Charter (``Compensation Committee Charter''), 
this is the process that is followed. In addition, FICC also proposes 
to delete the language stating that salaries of all other officers 
shall be fixed by the President with approval of the Board and no 
officer shall be precluded from receiving a salary because he is also a 
director. FICC believes the proposed changes are appropriate because 
they no longer reflect FICC's compensation setting procedures. In 
addition, as noted above, references to Chairman of the Board would be 
deleted because the Non-Executive Chairman of the Board does not 
receive compensation. Furthermore, the title of this section would be 
revised from Compensation of Officers to Compensation of the President 
and Chief Executive Officer because this section would no longer speak 
to the compensation of officers other than the President and CEO.

B. Technical Changes and Corrections

    FICC has identified the following technical changes and/or 
corrections that it proposes to make to the By-Laws to enhance the 
clarity and readability of the By-Laws.
1. Delete Direct Reference to Statutes and Statutory Requirements
    FICC would delete direct statutory references from the By-Laws as 
set forth below so that the By-Laws remain consistent and accurate 
despite any changes to a specifically cited statute. FICC believes this 
proposed change would also provide FICC with a broad base to act in 
accordance with relevant law without violating the By-Laws and thereby 
also provide FICC with more flexibility. Specifically, FICC proposes to 
make the following changes to the By-Laws:
    a. In current Section 1.2 (Special Meetings), regarding special 
meetings for the election of directors, the reference to the provisions 
of Section 603 of the New York Business Corporation Law would be 
deleted and the phrase ``or as required by law'' would be added.
    b. In current Section 1.4 (Notice of Meetings), regarding the 
composition of notices for shareholder meetings, the reference to the 
specific provisions and requirements of Section 623 of the New York 
Business Corporation Law would be deleted.
2. Other Technical Changes and Corrections
    In addition to the technical changes proposed above, FICC proposes 
to make the additional technical and grammatical changes described 
below.
    a. In the heading for the By-Laws, ``AMENDED AND RESTATED'' would 
be deleted and ``BY-LAWS OF FIXED INCOME CLEARING CORPORATION'' would 
be revised to boldfaced text.
    b. In the headings for Articles I through VIII, (i) each of 
``ARTICLE I,'' ``ARTICLE II,'' ``ARTICLE III,'' ``ARTICLE IV,'' 
``ARTICLE V,'' ``ARTICLE VI,'' ``ARTICLE VII,'' and ``ARTICLE VIII'' 
would be revised to boldfaced text and (ii) each of the article titles 
would be revised to boldfaced text to enhance readability.
    c. In current Sections 1.1 through 2.11 and current Sections 4.1 
through 5.4, the section number and section titles would be revised to 
italicized text to be consistent with current Sections 3.1 through 
3.12.
    d. In current Section 1.2 (Special Meetings), current Section 1.8 
(Presiding Officer and Secretary), current Section 2.6 (Meetings), 
current Section 3.1 (General Provisions), current Section 3.5 (Powers 
and Duties of Vice Presidents and Managing Directors), current Section 
3.6 (Powers and Duties of the Treasurer), current Section 3.12 
(Compensation of Officers), and current Section 5.1 (Certificates for 
Shares), conforming grammatical corrections would be made.
    e. Current Section 2.8 (Executive Committee) through current 
Section 2.11 (Compensation of and Loans to Directors) would be 
renumbered to reflect the addition of proposed Section 2.8 (Non-
Executive Chairman of the Board).
    f. In current Section 2.11 (Compensation of and Loans to 
Directors), ``form'' would be deleted and replaced with ``from'' to 
correct a typographical error.
    g. Current Section 3.5 (Powers and Duties of Vice Presidents and 
Managing Directors) through current Section 3.12 (Compensation of 
Officers) would be renumbered to reflect the addition of proposed 
Section 3.2 (Powers and Duties of the President and Chief Executive 
Officer) and proposed Section 3.5 (Powers and Duties of the Chief 
Financial Officer) and the deletion of current Section 3.2 (Powers and 
Duties of the Chairman of the Board), current Section 3.3 (Powers and 
Duties of the President), current Section 3.4 (Powers and Duties of the 
Chief Operating Officer) and current Section 3.8 (Powers and Duties of 
the Comptroller).
    h. In current Section 4.1 (Directors and Officers), ``corporation'' 
would be deleted and replaced with ``Corporation'' to correct a 
typographical error.
    i. Proposed Article IX (Gender References) would be added to 
clarify that the By-Laws are intended to be gender neutral with any 
reference to one gender deemed to include the other.
Proposed Changes to the Certificate of Incorporation
    The current Certificate of Incorporation is comprised of several 
documents, including amendments that have been made throughout the 
history of FICC. In order to streamline this Certificate of 
Incorporation into one updated document that includes all provisions, 
FICC would restate the current Certificate of Incorporation as proposed 
in Exhibit 5C.
Proposed Changes to the GSD Rules and MBSD Rules
    FICC proposes to add a section entitled ``By-Laws and Restated 
Certificate of Incorporation'' to each of the GSD Rules and MBSD Rules. 
This section would indicate that the Restated Certificate of 
Incorporation and the By-Laws are incorporated by reference.
2. Statutory Basis
    Section 17A(b)(3)(A) of the Act requires, among other things, that 
a clearing agency is so organized to be able to facilitate the prompt 
and accurate clearance and settlement of securities transactions for 
which it is responsible.\7\ FICC believes the (a) proposed changes to 
the By-Laws described above, (b) restatement of the Certificate of 
Incorporation, and (c) incorporation by reference of the By-Laws and 
the Restated Certificate of Incorporation in the GSD Rules and MBSD 
Rules are consistent with this provision. Specifically, FICC believes 
that the (1) change of title from Chairman of the Board to Non-
Executive Chairman of the Board and changes to the related powers and 
duties, (2) addition of the office of the CEO, the combination of the 
offices of the President and CEO and changes to the related powers and 
duties, (3) addition of the office of the CFO and deletion of the 
office of the Comptroller, (4) change of title from Vice President to 
Executive Director and changes to the related powers and duties, (5) 
deletion of the office of the COO, (6) changes to the powers and duties 
of the Board, (7) changes to the powers and duties of Managing 
Directors, (8) changes to the

[[Page 6659]]

powers and duties of Vice Chairman of the Corporation, (9) changes to 
the powers and duties of the Treasurer, and (10) changes to the powers 
and duties of the Assistant Treasurer are designed to facilitate the 
effective and efficient governance and operation of FICC and accurately 
reflect FICC's current Board and management structure. FICC also 
believes the changes to the powers and duties of the Board and 
designated officer positions are appropriate and aligned with each 
role. Furthermore, these proposed changes are intended to promote 
additional clarity as to the responsibilities of the Board and certain 
designated officers. FICC believes the proposed changes to the section 
describing the compensation of officers are designed to accurately 
reflect: (1) The process that is followed for setting compensation 
pursuant to the Compensation Committee Charter and (2) that the Non-
Executive Chairman of the Board does not receive compensation and would 
promote additional clarity as to the setting of compensation of the 
President and CEO and Non-Executive Chairman of the Board. FICC also 
believes (1) the technical changes and corrections to the By-Laws and 
(2) the restatement of the Certificate of Incorporation into a simpler 
document would enhance clarity and transparency in FICC's 
organizational documents. Similarly, FICC believes incorporating the 
By-Laws and the Restated Certificate of Incorporation into the GSD 
Rules and the MBSD Rules would enhance clarity and transparency 
regarding FICC's organizational documents because these organizational 
documents would be expressly identified in the same document as the 
MBSD Rules and GSD Rules to which members are subject. Therefore, FICC 
believes these proposed changes are consistent with the requirement 
that FICC is so organized to facilitate the prompt and accurate 
clearance and settlement of securities transactions for which it is 
responsible.
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78q-1(b)(3)(A).
---------------------------------------------------------------------------

    Rule 17Ad-22(e)(1) under the Act requires a covered clearing agency 
to establish, implement, maintain and enforce written policies and 
procedures reasonably designed to provide for a well-founded, 
transparent and enforceable legal basis for each aspect of its 
activities in all relevant jurisdictions.\8\ FICC believes the (1) 
proposed changes to the titles or offices and the related powers and 
duties of the Board and certain officers and (2) proposed technical 
changes and corrections to the By-Laws are designed to ensure that 
FICC's organizational documents accurately describe FICC's 
organizational structure and that such organizational documents remain 
clear, transparent, and consistent. In addition, FICC believes the 
proposed changes to restate the Certificate of Incorporation to 
simplify this governing document would enhance the clarity, 
transparency, and readability of this governing document. Therefore, 
FICC believes these proposed changes are consistent with Rule 17Ad-
22(e)(1) because they are designed to ensure that FICC's organizational 
documents remain well-founded, transparent and enforceable in all 
relevant jurisdictions.\9\
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    \8\ 17 CFR 240.17Ad-22(e)(1).
    \9\ Id.
---------------------------------------------------------------------------

    Rule 17Ad-22(e)(2) requires that FICC establish, implement, 
maintain and enforce written policies and procedures to provide for 
governance arrangements that, among other things, (1) are clear and 
transparent, (2) support the public interest requirements in Section 
17A of the Act (15 U.S.C. 78q-1) applicable to clearing agencies, and 
the objectives of owners and participants, and (3) specify clear and 
direct lines of responsibility.\10\ FICC believes the (a) proposed 
changes to the By-Laws described above, (b) restatement of the 
Certificate of Incorporation, and (c) incorporation by reference of the 
By-Laws and the Restated Certificate of Incorporation in the GSD Rules 
and MBSD Rules are designed to be consistent with Rule 17Ad-
22(e)(2).\11\ Specifically, FICC believes that the proposed changes to 
the By-Laws regarding the titles or offices and the related powers and 
duties of various officers and the Board would enhance clarity and 
transparency because they would clearly and accurately set forth the 
organizational structure of FICC, including the roles and lines of 
responsibility of various officers and the Board. FICC also believes 
the proposed changes relating to the section describing the 
compensation of officers would enhance clarity and transparency 
regarding its compensation setting procedures by (1) accurately 
reflecting the process that is followed pursuant to the Compensation 
Committee Charter and (2) clarifying that the Non-Executive Chairman of 
the Board does not receive compensation. The proposed technical changes 
and corrections to the By-Laws are also designed to enhance the 
clarity, transparency, and readability of the By-Laws. In addition, the 
proposal to restate the current Certificate of Incorporation is 
designed to enhance the clarity, transparency, and readability of the 
current Certificate of Incorporation by simplifying it into one 
document. FICC also believes that incorporating the By-Laws and the 
Restated Certificate of Incorporation into the GSD Rules and MBSD Rules 
would enhance clarity and transparency as to FICC's organizational 
documents because these organizational documents would be expressly 
identified in the same document as the MBSD Rules and GSD Rules to 
which members are subject. FICC believes that, taken together, these 
proposed changes would facilitate the effective and efficient 
governance and operation of FICC and therefore would enable FICC to 
better serve its members. As such, FICC believes these proposed changes 
would also support the public interest requirements in Section 17A of 
the Act (15 U.S.C. 78q-1) applicable to clearing agencies, and the 
objectives of its owners and participants. Therefore, FICC believes 
these proposed rule changes are consistent with Rule 17Ad-22(e)(2) 
because they are designed to enhance clarity and transparency in FICC's 
governance arrangements, support the public interest requirements in 
Section 17A of the Act (15 U.S.C. 78q-1) applicable to clearing 
agencies, and the objectives of owners and participants, and specify 
clear and direct lines of responsibility for various officer positions 
and the Board within FICC's organizational structure.\12\
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    \10\ 17 CFR 240.17Ad-22(e)(2).
    \11\ Id.
    \12\ Id.
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(B) Clearing Agency's Statement on Burden on Competition

    FICC does not believe that the proposed rule change would have any 
impact on competition. The proposed rule change would amend the By-Laws 
to: (1) Accurately reflect FICC's organizational structure and reflect 
changes to titles or offices and the related powers and duties of the 
Board and various designated officers, (2) accurately reflect (a) the 
process that is followed for setting compensation pursuant to the 
Compensation Committee Charter and (b) that the Non-Executive Chairman 
of the Board does not receive compensation, and (3) enhance the clarity 
and readability of the By-Laws by making technical changes and 
corrections. The proposed change to restate the current Certificate of 
Incorporation would enhance clarity and transparency by simplifying the 
provisions into one document. The proposal to incorporate by reference 
the By-Laws and the Restated Certificate of Incorporation into the GSD 
Rules and the MBSD Rules would further enhance clarity and transparency 
because these

[[Page 6660]]

organizational documents would be expressly identified in the GSD Rules 
and the MBSD Rules to which members are subject. FICC does not believe 
that this proposal would affect any of its current practices regarding 
the rights or obligations of its members. Therefore, FICC believes that 
the proposal would not have any effect on its members and thus, would 
not have any impact or burden on competition.

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

    FICC has not received any written comments relating to this 
proposal. FICC will notify the Commission of any written comments 
received by it.

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

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

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-FICC-2018-002 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-2018-002. 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 (http://www.sec.gov/rules/sro.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for website viewing and printing in 
the Commission's Public Reference Room, 100 F Street NE, Washington, DC 
20549 on official business days between the hours of 10:00 a.m. and 
3:00 p.m. Copies of the filing also will be available for inspection 
and copying at the principal office of FICC and on DTCC's website 
(http://dtcc.com/legal/sec-rule-filings.aspx). All comments received 
will be posted without change. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-FICC-2018-002 and should be submitted on 
or before March 7, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-02985 Filed 2-13-18; 8:45 am]
BILLING CODE 8011-01-P