Document ID: SEC-2005-0159-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: Fixed Income Clearing Corporation
Posted Date: 2005-10-28T04:00Z

[Federal Register: October 28, 2005 (Volume 70, Number 208)]
[Notices]               
[Page 62154-62155]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr28oc05-80]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52655; File No. SR-FICC-2005-15]

 
Self-Regulatory Organizations; Fixed Income Clearing Corporation; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Relating to Charges for Communications Fees To Continue Operating 
Legacy Communication Networks

October 24, 2005.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on September 9, 2005, the 
Fixed Income Clearing Corporation (``FICC'') filed with the Securities 
and Exchange Commission (``Commission'') the proposed rule change 
described in Items I, II, and III below, which items have been prepared 
primarily by FICC. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested parties.
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    \1\ 15 U.S.C. 78s(b)(1).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The proposed rule change would revise the fees charged to members 
that fail to migrate their communications systems from legacy networks 
to The Depository Trust & Clearing Corporation's (``DTCC's'') Securely 
Managed and Reliable Technology (``SMART'') system \2\ or to the 
Securities Industry Automation Corporation's (``SIAC's'') Secure 
Financial Transaction Infrastructure (``SFTI'') networks.
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    \2\ SMART is DTCC's centralized, end-to-end managed 
communications infrastructure that provides connectivity support for 
all post-trade clearance and settlement processing. Most of the 
services offered by DTCC's subsidiaries, The Depository Trust 
Company, the National Securities Clearing Corporation, and FICC are 
accessible through SMART. SMART is interoperable with SFTI.
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II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, FICC included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. FICC has prepared summaries, set forth in sections (A), 
(B), and (C) below, of the most significant aspects of these 
statements.\3\
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    \3\ The Commission has modified the text of the summaries 
prepared by FICC.
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(A) Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    Beginning in 2003, FICC has periodically informed members of the 
need to migrate their telecommunications connectivity from SIAC's 
legacy based Broker and Access networks to DTCC's SMART system or 
SIAC's SFTI.\4\ While several advantages exist in having all members 
successfully migrate, FICC's main objective in insourcing these 
services into its own data processing operations is to provide 
consistent business continuity planning capabilities across all FICC 
services. In the event of a large-scale regional disruption, any member 
accessing FICC through a legacy network will not have the benefits 
provided by the other communications vehicles which could create 
exposure to these members and their counterparties.\5\
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    \4\ DTCC Important Notices Z0008, Z0009, and 
Z0010.
    \5\ SMART is designed to withstand catastrophic disaster 
scenarios and is set up to operate in DTCC's multiple remote sites 
to ensure its operability in the event of disruption. Legacy network 
connections are not automatically configured to ``fail over'' to 
DTCC's remote processing sites and therefore do not provide members 
using these networks with the resilience that would be needed in the 
event of a large-scale regional disruption.
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    While most FICC members have complied with stated migration 
requirements, several members continue to access FICC through legacy 
networks, which is imposing significant unnecessary costs on FICC for 
continued support of these systems. In order to encourage these members 
to migrate and in order to equitably allocate costs among its members, 
FICC intends to allocate its costs for continued support of legacy 
networks among the members using such systems on a pro rata basis. FICC 
plans to soon issue an important notice to members specifying the date 
such fees will become effective.\6\
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    \6\ FICC expects that the migration deadline will be set for the 
end of 2005.
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    In order to avoid bearing these costs, members currently using 
legacy systems are required to take the following actions: (i) As soon 
as possible, ensure adequate communications connectivity through SMART 
and/or SFTI, (ii) successfully complete testing through the newly-
established pathways, (iii) complete full conversion of all input/
output for applicable FICC applications directly to/from FICC through 
SMART and/or SFTI, and (iv) cancel the legacy network connections.
    The proposed change is consistent with Section 17A of the Act \7\ 
and the rules and regulations thereunder applicable to FICC because it 
will enable FICC to equitably allocate costs among its members.
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    \7\ 15 U.S.C. 78q-1.
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(B) Self-Regulatory Organization's Statement on Burden on Competition

    FICC does not believe that the proposed rule change will have any 
impact or impose any burden on competition.

(C) Self-Regulatory Organization's Statement on Comments on the 
Proposed Rule Change Received from Members, Participants, or Others

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

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

    The foregoing rule change has become effective upon filing pursuant 
to Section

[[Page 62155]]

19(b)(3)(A)(ii) of the Act \8\ and Rule 19b-4(f)(2) \9\ thereunder 
because the proposed rule establishes or changes a due, fee, or other 
charge. At any time within sixty days of the filing of the proposed 
rule change, the Commission may summarily abrogate 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.
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    \8\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \9\ 17 CFR 240.19b-4(f)(2).
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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 e-mail to rule-comments@sec.gov. Please include 

File Number SR-FICC-2005-15 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-9303.
    All submissions should refer to File Number SR-FICC-2005-15. This 
file number should be included on the subject line if e-mail 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 inspection 
and copying in the Commission's Public Reference Section, 100 F Street, 
NE., Washington, DC 20549. Copies of such filing also will be available 
for inspection and copying at the principal office of FICC and on 
FICC's Web site at http://www.ficc.com. 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-2005-15 and should be submitted on 
or before November 18, 2005.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Jonathan G. Katz,
Secretary.
[FR Doc. E5-5971 Filed 10-27-05; 8:45 am]

BILLING CODE 8010-01-P