Document ID: SEC-2016-2232-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Fixed Income Clearing Corp.
Posted Date: 2016-12-19T05:00Z

[Federal Register Volume 81, Number 243 (Monday, December 19, 2016)]
[Notices]
[Pages 91964-91965]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-30388]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79535; File No. SR-FICC-2016-008]

Self-Regulatory Organizations; Fixed Income Clearing Corporation; 
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change 
To Modify the MBSD Schedule of Charges Dealer Account Group

December 13, 2016.
    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 December 2, 2016, 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Clearing Agency's Statement of the Terms of Substance of the 
Proposed Rule Change

    The proposed rule change consists of an amendment to the Mortgage-
Backed Securities Division (``MBSD'') Clearing Rules (the ``MBSD 
Rules'') to include an additional fee in the ``Schedule of Charges 
Dealer Account Group,'' as described in greater detail below.\3\ The 
proposed fee would be implemented as of January 1, 2017.
---------------------------------------------------------------------------

    \3\ Capitalized terms used herein and not otherwise defined 
shall have the meaning assigned to such terms in the MBSD Rules, 
available at http://www.dtcc.com/legal/rules-and-procedures.
---------------------------------------------------------------------------

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 amend the MBSD ``Schedule of Charges Dealer 
Account Group'' to include an additional fee. The proposed rule change 
would allow FICC to pass through any daylight overdraft (``DOD'') fees 
that MBSD incurs from The Bank of New York Mellon (``BNY'') in 
connection with the settlement of Clearing Members' securities 
obligations. FICC would pass through these BNY DOD fees to Clearing 
Members who settle their securities obligations at BNY.\4\
---------------------------------------------------------------------------

    \4\ This proposed rule change would be consistent with the fee 
schedule in FICC's Government Securities Division Rulebook, 
available at http://www.dtcc.com/legal/rules-and-procedures.
---------------------------------------------------------------------------

    In October 2016, FICC began to incur the cost of the BNY DOD fees. 
FICC is proposing to amend the MBSD ``Schedule of Charges Dealer 
Account Group'' to allow FICC to pass through the BNY DOD fees to 
Clearing Members who settle their securities obligations at BNY.\5\ 
Specifically, each Clearing Member who settles securities obligations 
at BNY would be charged a pass-through fee, calculated as a percentage 
of the total of all such costs incurred by MBSD. This percentage would 
be calculated on a monthly basis as follows:
---------------------------------------------------------------------------

    \5\ The proposed fee would not be applicable to Brokers because 
Brokers do not have securities settlement obligations.

(Total dollar value of Pool Deliver Obligations and Pool Receive 
Obligations of such Clearing Member at BNY)
-----------------------------------------------------------------------

(Total dollar value of Pool Deliver Obligations and Pool Receive 
Obligations in all Dealer Accounts at BNY)
2. Statutory Basis
    Section 17A(b)(3)(D) of the Securities Exchange Act of 1934, as 
amended (``Act'') requires, in part, that the rules of the clearing 
agency provide for the equitable allocation of reasonable dues, fees 
and other charges among its participants.\6\ The proposed rule change 
would allow FICC to recover the costs of providing securities 
settlement services to Clearing Members by passing the BNY DOD fees 
incurred by MBSD to Clearing Members who settle their securities 
obligations at BNY. FICC believes that the proposed rule change is 
consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to FICC, in particular Section 
17A(b)(3)(D), because the proposed fee would be allocated among all 
Clearing Members who settle their securities obligations at BNY, 
calculated as a percentage of the total of such costs incurred by MBSD 
in connection with the services that FICC provide provides for such 
Clearing Members.\7\
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78q-1(b)(3)(D).
    \7\ Id.
---------------------------------------------------------------------------

(B) Clearing Agency's Statement on Burden on Competition

    FICC believes that the proposed rule change could have an impact on 
competition because the proposed rule change would impose an additional 
fee on Clearing Members who settle their securities obligations at BNY. 
FICC believes, however, that any burden on competition that would be 
created by the proposed rule change would be necessary and appropriate 
in furtherance of the Act. Specifically, the proposed rule change is 
necessary to allow FICC to recover the cost of providing services to 
Clearing Members by passing through the BNY DOD fees to Clearing 
Members who settle their securities obligations at BNY. The proposed 
rule change is appropriate because, as stated, it would only apply to 
Clearing Members who settle their securities obligations at BNY, which 
is the third party that is charging the fees being incurred by MBSD to 
provide FICC's services.

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

    Written comments related to the proposed rule change have not been 
solicited or received. FICC will notify the Commission of any written 
comments received by FICC.

[[Page 91965]]

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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A) \8\ of the Act and paragraph (f) of Rule 19b-4 \9\ 
thereunder. 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 investors, or 
otherwise in furtherance of the purposes of the Act.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f).
---------------------------------------------------------------------------

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 rule-comments@sec.gov. Please include 
File Number SR-FICC-2016-008 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-2016-008. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference 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 Web site (http://dtcc.com/legal/sec-rule-filings.aspx). All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-FICC-2016-008 and should be 
submitted on or before January 9, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
---------------------------------------------------------------------------

    \10\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2016-30388 Filed 12-16-16; 8:45 am]
 BILLING CODE 8011-01-P