

[Federal Register: April 18, 2007 (Volume 72, Number 74)]
[Notices]               
[Page 19561-19562]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr18ap07-102]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55616; File No. SR-FICC-2007-03]

 
Self-Regulatory Organizations; Fixed Income Clearing Corporation; 
Notice of Filing and Order Granting Accelerated Approval of a Proposed 
Rule Change To Clarify the Government Securities Division Rules With 
Respect to Repo Collateral Substitution Requests

April 11, 2007.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on March 23, 2007, 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 and order to solicit 
comments from interested parties and to grant accelerated approval of 
the proposal.
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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 purpose of the proposed rule change is to add a final deadline 
to the repo collateral substitution process of FICC's Government 
Securities Division (``GSD'').

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.\2\
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    \2\ 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

    Currently, the GSD's rules provide that repo collateral 
substitution requests for which the notification itself or the 
information regarding new securities collateral is received after 12:30 
p.m. will be processed by the GSD on a good faith basis only.\3\ FICC 
is proposing to impose a final deadline for this process after which 
FICC will not process a repo collateral substitution until the 
following business day. This final deadline will be 1 p.m. and will be 
extended by one hour on days that FICC or the Securities Industry and 
Financial Markets Association (``SIFMA'') determine are ``high volume'' 
days. In situations where FICC receives a notification or information 
regarding the new securities collateral information after the 1 p.m. 
deadline, the submitting member will be required to resubmit its 
substitution information on the following business day for 
processing.\4\ FICC will continue to process substitution requests when 
notification

[[Page 19562]]

or new securities collateral information is received between 12:30 p.m. 
and 1 p.m. on a good faith basis only. In situations where FICC has 
been notified of a substitution but the new securities collateral has 
not yet been reported to FICC, FICC will continue to employ the risk 
management measures that were instituted by FICC in prior rule 
filings.\5\
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    \3\ All times referred to herein are New York times. This 
deadline is extended by one hour on ``high volume'' days as 
described in the GSD's rules.
    \4\ In situations where FICC receives a notification but not the 
new securities collateral information before the 1 p.m. deadline, 
the submitting member will be required to resubmit its substitution 
information on the following business day for processing.
    \5\ Securities Exchange Act Release No. 53534 (March 21, 2006), 
71 FR 15781 (March 29, 2006) [File No. SR-FICC-2005-18], as amended 
by Securities Exchange Act Release No. 55217 (January 31, 2007), 72 
FR 5774 (February 7, 2007) [File No. SR-FICC-2006-16].
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    FICC believes that imposition of the final deadline will encourage 
members to submit their repo collateral substitution notification 
requests and required information on a timely basis and will alleviate 
the operational burdens associated with late receipt of this 
information.
    The proposed rule change is consistent with Section 17A of the 
Act,\6\ as amended, because it encourages members to submit repo 
collateral substitution requests and required information associated 
therewith on a timely basis. As such, it will support the prompt and 
accurate clearance and settlement of securities transactions.
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    \6\ 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

    Section 17A(b)(3)(F) \7\ of the Act requires that the rules of a 
clearing agency be designed to promote the prompt and accurate 
clearance and settlement of securities transactions. The Commission 
finds that FICC's proposed rule change is consistent with FICC's 
obligation under the Act because it encourages FICC's members to submit 
repo collateral substitution requests and required information 
associated therewith on a timely basis.\8\
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    \7\ 15 U.S.C. 78q-1(b)(3)(F).
    \8\ 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).
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    The Commission finds good cause for approving the proposed rule 
change prior to the thirtieth day after the date of publication of 
notice of filing in the Federal Register because doing so will allow 
FICC to implement the proposed rule change in April in accordance with 
its system change implementation schedule.

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-2007-03 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.
    All submissions should refer to File Number SR-FICC-2007-03. 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 filings 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/commondocs/rule.filings/rule.filing.07-03.pdf.
 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-2007-03 and should be submitted on or before May 9, 2007.

V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\9\ that the proposed rule change (File No. SR-FICC-2007-03) be and 
hereby is approved.
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    \9\ 15 U.S.C. 78s(b)(2).
    \10\ 17 CFR 200.30-3(a)(12).

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\10 \
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-7322 Filed 4-17-07; 8:45 am]

BILLING CODE 8010-01-P
