
[Federal Register Volume 77, Number 191 (Tuesday, October 2, 2012)]
[Notices]
[Page 60165]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-24171]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67931; File No. SR-FICC-2012-06]


Self-Regulatory Organizations; Fixed Income Clearing Corporation; 
Order Approving Proposed Rule Change to Move the Time at Which the 
Mortgage-Backed Securities Division Runs Its Daily Morning Pass

September 26, 2012.

I. Introduction

    On August 6, 2012, the Fixed Income Clearing Corporation (``FICC'') 
filed with the Securities and Exchange Commission (``Commission'') 
proposed rule change SR-FICC-2012-06 pursuant to Section 19(b)(1) of 
the Securities Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4 
thereunder.\2\ The proposed rule change was published for comment in 
the Federal Register on August 20, 2012.\3\ The Commission received no 
comment letters regarding the proposal. 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\ 17 CFR 240.19b-4.
    \3\ Securities Exchange Act Release No. 67653 (August 14, 2012), 
77 FR 50198 (August 20, 2012).
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II. Description

    FICC proposes to move the time at which its Mortgage-Backed 
Securities Division (``MBSD'') runs its first processing pass of the 
day from 2:00 p.m. to 4:00 p.m. Eastern Standard Time. The proposed 
change does not require revisions to MBSD's rules because those rules 
do not address the times of MBSD's processing passes.
    MBSD currently runs its first processing pass of the day 
(historically referred to as the ``AM Pass'') at 2:00 p.m. Eastern 
Standard Time. MBSD also executes an evening pass (referred to as the 
``PM Pass'') at 8:00 p.m. Eastern Standard Time, which will remain 
unchanged. On days when MBSD executes its to-be-announced netting 
cycle, this cycle immediately follows the completion of the first pass 
of the day. The proposed change to 4:00 p.m. for the first pass of the 
day will allow more trades to be included in the to-be-announced net, 
which will assist in reducing both the amount of fails in the market 
and the related operational risk. The proposed change is being made at 
the request of the Securities Industry and Financial Markets 
Association (``SIFMA'') MBS Operations Committee. MBSD advised members 
of the proposed change via an Important Notice dated August 1, 2012.

III. Discussion

    Section 19(b)(2)(C) of the Act \4\ directs the Commission to 
approve a self-regulatory organization's proposed rule change if it 
determines that the proposed rule change is consistent with the 
requirements of the Act and the rules and regulations thereunder 
applicable to such organization. Section 17A(b)(3)(F) of the Act \5\ 
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 to assure the safeguarding of securities and 
funds that are in the custody or control of such clearing agency, or 
for which it is responsible.
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    \4\ 15 U.S.C. 78s(b)(2)(C).
    \5\ 15 U.S.C. 78q-1(b)(3)(F).
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    The Commission concludes that the proposed rule change is 
consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to FICC. The proposed rule change 
will help to maximize the number of trades that are included in the to-
be-announced netting process. This, in turn, should reduce the number 
of trades that ultimately fail, and will temper the attendant 
operational risk, as well. The proposed change will therefore foster 
the prompt and accurate clearance and settlement of security 
transactions, and assure the safeguarding of securities and funds in 
FICC's custody or control, or for which FICC is responsible.

IV. Conclusion

    On the basis of the foregoing, the Commission finds that the 
proposal is consistent with the requirements of the Act, in particular 
with the requirements of Section 17A of the Act \6\ and the rules and 
regulations thereunder.
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    \6\ 15 U.S.C. 78q-1.
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    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\7\ that the proposed rule change (File No. SR-FICC-2012-06) be and 
hereby is APPROVED.\8\
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    \7\ 15 U.S.C. 78s(b)(2).
    \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).

    For the Commission by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-24171 Filed 10-1-12; 8:45 am]
BILLING CODE 8011-01-P


