
[Federal Register Volume 78, Number 74 (Wednesday, April 17, 2013)]
[Notices]
[Pages 22923-22925]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-08924]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-69362; File No. 600-23]


Self-Regulatory Organizations; Fixed Income Clearing Corporation; 
Notice of Filing of Amended Application for Registration as a Clearing 
Agency

April 11, 2013.

I. Introduction

    On April 5, 2013, the Fixed Income Clearing Corporation (``FICC'') 
filed with the Securities and Exchange Commission (``Commission'') an 
amended Form CA-1 \1\ seeking permanent registration as a clearing 
agency under Section 17A of the Securities Exchange Act of 1934 \2\ 
(``Act'') and Rule 17Ab2-1 thereunder.\3\ The Commission is publishing 
this notice to solicit comments from interested persons regarding this 
amended Form CA-1.\4\ The Commission will consider any comments it 
receives in making its determination whether to grant FICC's request 
for permanent registration as a clearing agency. The Commission will 
grant FICC permanent registration only if it concludes that

[[Page 22924]]

FICC has satisfied all requirements of the Act.\5\
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    \1\ See Letter from Donaldine Temple, Senior Associate Counsel 
and Corporate Secretary, FICC, to Joseph P. Kamnik, Assistant 
Director, Division of Trading and Markets (April 4, 2013). The 
amendment filed by FICC updates all of the information required by 
Form CA-1 and incorporates by reference all information submitted in 
connection with FICC's prior application and amendments thereto, to 
the extent this previously submitted information remains accurate.
    \2\ 15 U.S.C. 78q-1.
    \3\ 17 CFR 240.17Ab2-1(a).
    \4\ The descriptions set forth in this notice regarding the 
structure and operations of FICC have been largely derived from 
information contained in FICC's amended Form CA-1 application and 
publicly available sources. The application and non-confidential 
exhibits thereto are available on the Commission's Web site.
    \5\ See 15 U.S.C. 78q-1(b)(3).
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II. Background

    On December 13, 1986, the Mortgage Backed Securities Clearing 
Corporation (``MBSCC'') filed with the Commission a Form CA-1 \6\ 
seeking registration as a clearing agency. The Commission granted MBSCC 
a temporary registration on February 2, 1987,\7\ and extended this 
temporary registration on several occasions thereafter.\8\ On October 
16, 1987, the Government Securities Clearing Corporation (``GSCC''), 
filed with the Commission a Form CA-1 \9\ seeking registration as a 
clearing agency. The Commission granted GSCC a temporary registration 
on May 24, 1988,\10\ and extended this temporary registration on 
several occasions thereafter.\11\ GSCC filed an amended Form CA-1 on 
November 15, 2002, in which it explained that it intended to acquire 
MBSCC.\12\ On January 1, 2003, GSCC acquired MBSCC and named the 
resulting entity FICC.\13\ At the time of the merger, both GSCC and 
MBSCC were operating under temporary registrations with the Commission, 
and FICC has operated under a temporary registration since that time. 
The temporary registrations granted to MBSCC and GSCC exempted them 
from certain requirements imposed by Section 17A of the Act.\14\ 
Specifically, both MBSCC and GSCC were exempted from compliance with 
the Act's fair representation requirement,\15\ and GSCC was further 
exempted from the Act's participation requirements.\16\ The exemptions 
granted to MBSCC and GSCC have since been removed because the 
Commission determined that both clearing agencies satisfied the 
statutory requirements from which the entities were previously 
exempted.\17\ Thus, FICC is now subject to all requirements applicable 
to registered clearing agencies.
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    \6\ Securities Exchange Act Release No. 23929 (December 23, 
1986), 52 FR 373-01 (January 5, 1987) (File No. 600-22).
    \7\ Securities Exchange Act Release No. 24046 (February 2, 
1987), 52 FR 4218-01 (February 10, 1987) (File No. 600-22).
    \8\ Securities Exchange Act Release No. 25957 (August 2, 1988), 
53 FR 29537-01 (August 2, 1988) (File No. 600-19); Securities 
Exchange Act Release No. 27079 (July 31, 1989), 54 FR 32412-01 
(August 7, 1989) (File No. 600-22); Securities Exchange Act Release 
No. 28492 (September 28, 1990), 55 FR 41148-03 (October 9, 1990) 
(File No. 600-19); Securities Exchange Act Release No. 29751 
(September 27, 1991), 56 FR 50602-01 (October 7, 1991) (File Nos. 
600-19 and 600-22); Securities Exchange Act Release No. 31750 
(January 21, 1993), 58 FR 6424-02 (January 28, 1993) (File Nos. 600-
19 and 600-22) (noting that, ``[d]ue to an inadvertent 
administrative error by MBSCC,'' MBSCC failed to request an 
extension of its temporary registration prior to the expiration of 
its last extension on September 30, 1992); Securities Exchange Act 
Release No. 33348 (December 15, 1993), 58 FR 68183-01 (December 23, 
1993) (File Nos. 600-19 and 600-22); Securities Exchange Act Release 
No. 35132 (December 21, 1994), 59 FR 67743-01 (December 30, 1994) 
(File Nos. 600-19 and 600-22); Securities Exchange Act Release No. 
37372 (June 26, 1996), 61 FR 35281-02 (July 5, 1996) (File No. 600-
22); Securities Exchange Act Release No. 38784 (June 27, 1997), 62 
FR 36587-01 (July 8, 1997) (File No. 600-22); Securities Exchange 
Act Release No. 39776 (March 20, 1998), 63 FR 14740-02 (March 26, 
1998) (File No. 600-22); Securities Exchange Act Release No. 42568 
(March 23, 2000), 65 FR 16980-01 (March 30, 2000) (File No. 600-22); 
Securities Exchange Act Release No. 44089 (March 21, 2001), 66 FR 
16961-02 (March 28, 2001) (File No. 600-22); Securities Exchange Act 
Release No. 44831 (September 21, 2001), 66 FR 49728-01 (September 
28, 2001) (File No. 600-22); Securities Exchange Act Release No. 
45607 (March 20, 2002), 67 FR 14755-01 (March 27, 2002) (File No. 
600-22); Securities Exchange Act Release No. 46136 (June 27, 2002), 
67 FR 44655-01 (July 3, 2002) (File No. 600-22).
    \9\ Securities Exchange Act Release No. 25129 (November 16, 
1987), 52 FR 44659-01 (November 20, 1987) (File No. 600-23).
    \10\ Securities Exchange Act Release No. 25740 (May 24, 1988), 
53 FR 19839 (May 24, 1987) (File No. 600-23).
    \11\ Securities Exchange Act Release No. 29236 (May 24, 1991), 
56 FR 24852 (May 31, 1991) (File No. 600-23); Securities Exchange 
Act Release No. 32385 (June 3, 1993), 58 FR 32405 (June 9, 1993) 
(File No. 600-23); Securities Exchange Act Release No. 35787 (May 
31, 1995), 60 FR 30324 (June 8, 1995) (File No. 600-23); Securities 
Exchange Act Release No. 36508 (November 27, 1995), 60 FR 61719 
(December 1, 1995) (File No. 600-23); Securities Exchange Act 
Release No. 37983 (November 25, 1996), 61 FR 64183 (December 3, 
1996) (File No. 600-23); Securities Exchange Act Release No. 38698 
(May 30, 1997), 62 FR 30911 (June 5, 1997) (File No. 600-23); 
Securities Exchange Act Release No. 39696 (February 24, 1998), 63 FR 
10253 (March 2, 1998) (File No. 600-23); Securities Exchange Act 
Release No. 41104 (February 24, 1999), 64 FR 10510 (March 4, 1999) 
(File No. 600-23); Securities Exchange Act Release No. 41805 (August 
27, 1999), 64 FR 48682 (September 7, 1999) (File No. 600-23); 
Securities Exchange Act Release No. 42335 (January 12, 2000), 65 FR 
3509 (January 21, 2000) (File No. 600-23); Securities Exchange Act 
Release No. 43089 (July 28, 2000), 65 FR 48032 (August 4, 2000) 
(File No. 600-23); Securities Exchange Act Release No. 43900 
(January 29, 2001), 66 FR 8988 (February 5, 2001) (File No. 600-23); 
Securities Exchange Act Release No. 44553 (July 13, 2001), 66 FR 
37714 (July 19, 2001) (File No. 600-23); Securities Exchange Act 
Release No. 45164 (December 18, 2001), 66 FR 66957 (December 27, 
2001) (File No. 600-23); and Securities Exchange Act Release No. 
46135 (June 27, 2002), 67 FR 44655 (July 3, 2002) (File No. 600-23).
    \12\ See Letter from Jeffrey F. Ingber, Managing Director, 
General Counsel and Secretary, FICC (Nov. 15, 2002).
    \13\ Securities Exchange Act Release No. 47015 (December 17, 
2002), 67 FR 78531 (December 24, 2002) (File Nos. SR-GSCC-2002-07 
and SR-MBSCC-2002-01).
    \14\ Pursuant to Rule 17Ab2-1(c)(1), the Commission may grant 
registration to a clearing agency while exempting it from one or 
more of the requirements of paragraphs (A) through (I) of section 
17A(b)(3) of the Act. See 17 C.F.R. 240.17Ab2-1(c)(1).
    \15\ Securities Exchange Act Release No. 24046 (February 2, 
1987), 52 FR 4218-01 (February 10, 1987) (File No. 600-22); 
Securities Exchange Act Release No. 25740 (May 24, 1988), 53 FR 
19839-01 (May 31, 1988) (File No. 600-23).
    \16\ Securities Exchange Act Release No. 25740 (May 24, 1988), 
53 FR 19839-01 (May 31, 1988) (File No. 600-23).
    \17\ Securities Exchange Act Release No. 26729 (April 14, 1989), 
54 FR 16438-G-01 (April 24, 1989) (SR-MBSS-89-2) (lifting MBSCC's 
exemption from the Act's fair representation requirements); 
Securities Exchange Act Release No. 36508 (November 27, 1995), 60 FR 
61719-02 (December 1, 1995) (File No. 600-23) (lifting GSCC's 
exemption from the Act's participation requirements); Securities 
Exchange Act Release No. 39372 (November 28, 1997), 62 FR 64415 
(December 5, 1997) (SR-GSCC-97-01) (lifting GSCC's exemption from 
the Act's fair representation requirements).
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    Following GSCC's acquisition of MBSCC, the Commission extended 
FICC's temporary registration on several occasions.\18\ The Commission 
most recently extended FICC's temporary registration on June 20, 
2011.\19\ At that time, the Commission explained that it would consider 
whether to grant FICC permanent registration after the Commission acted 
upon FICC's proposal to introduce central counterparty and guarantee 
settlement services to FICC's Mortgage-Backed Securities Division. The 
Commission approved FICC's request to allow its Mortgage-Backed 
Securities Division to act as a central counterparty and settlement 
guarantor on March 9, 2012.\20\ FICC's temporary registration expires 
on June 30, 2013.\21\
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    \18\ Securities Exchange Act Release No. 48116 (July 1, 2003), 
68 FR 41031 (July 9, 2003) (File No. 600-23); Securities Exchange 
Act Release No. 49940 (June 29, 2004), 69 FR 40695 (July 5, 2004) 
(File No. 600-23); Securities Exchange Act Release No. 51911 (June 
23, 2005), 70 FR 37878 (June 30, 2005) (File No. 600-23); Securities 
Exchange Act Release No. 54056 (June 28, 2006), 71 FR 38193 (July 5, 
2006) (File No. 600-23); Securities Exchange Act Release No. 55920 
(June 18, 2007), 72 FR 35270 (June 27, 2007) (File No. 600-23); and 
Securities Exchange Act Release No. 57949 (June 11, 2008), 73 FR 
34808 (June 18, 2008) (File No. 600-23).
    \19\ Securities Exchange Act Release No. 64707 (June 20, 2011), 
76 FR 37165 (June 24, 2011) (File No. 600-23).
    \20\ Securities Exchange Act Release No. 66550 (March 9, 2012), 
77 FR 15155 (March 14, 2012) (File No. 600-23).
    \21\ Securities Exchange Act Release No. 64707 (June 20, 2011), 
76 FR 37165 (June 24, 2011) (File No. 600-23).
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III. Overview of FICC

    FICC is a wholly owned subsidiary of the Depository Trust & 
Clearing Corporation (``DTCC''), and is generally administered as an 
industry-owned utility on an at-cost basis. FICC is comprised of two 
separate divisions, the Government Securities Division (``FICC/GSD'') 
and the Mortgage-Backed Securities Division (``FICC/MBSD''). Each 
Division has its own set of rules and membership.
    FICC/GSD is the sole clearing agency in the United States acting as 
a central counterparty for cash-settled U.S.

[[Page 22925]]

Government and agency securities. FICC/GSD provides clearing, netting, 
settlement, risk management, central counterparty services and a 
guarantee of trade completion for the following securities: (i) U.S. 
Treasury bills, notes, bonds, Treasury inflation-protected securities 
(TIPS), and Separate Trading of Registered Interest and Principal 
Securities (STRIPS), and (ii) Federal agency notes, bonds and zero-
coupon securities that are book-entry, Fedwire eligible and non-
mortgage backed. FICC/GSD accepts buy-sell transactions, repurchase and 
reverse repurchase agreement transactions (repos), and Treasury auction 
purchases in several types of U.S. Government securities.
    FICC/MBSD is the only centralized clearing facility in the non-
private label mortgage-backed securities market. FICC/MBSD provides 
clearing, netting, settlement, risk management, pool notification, 
central counterparty services and a guarantee of trade completion for 
pass-through mortgage-backed securities issued by the Government 
National Mortgage Association (``Ginnie Mae''), the Federal Home Loan 
Mortgage Corporation (``Freddie Mac'') and the Federal National 
Mortgage Association (``Fannie Mae''). FICC/MBSD also processes options 
trades for ``to-be-announced'' transactions.
    Additional information concerning FICC and its operations may be 
found in the schedule and non-confidential exhibits appended to FICC's 
amended Form CA-1.\22\ Schedule A to FICC's amended Form CA-1 includes 
a description of the risk management procedures utilized by FICC/GSD 
and FICC/MBSD. Exhibits A and B provide a list of FICC's Board of 
Directors and its officers and senior managers, respectively. Exhibit C 
includes both a narrative and graphical depiction of FICC's 
organizational structure, and Exhibit E includes copies of the current 
rulebooks for both FICC/GSD and FICC/MBSD, along with copies of FICC's 
governing documents. Finally, Exhibit J provides a description of 
FICC's services and functions.
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    \22\ FICC's amended Form CA-1, including the exhibits, 
attachments and the schedule referenced above, is available online 
at www.sec.gov/rules/other.shtml, as well as at the Commission's 
Public Reference Room.
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning FICC's amended Form CA-1, including whether FICC 
has satisfied the Act's requirements for registration. 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 600-23 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number 600-23. 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 of submission. The Commission will post all 
comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the amended Form CA-1, all subsequent 
amendments, all written statements with respect to FICC's amended Form 
CA-1 that are filed with the Commission, and all written communications 
relating to the amended Form CA-1 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.
    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 600-23 and should 
be submitted on or before June 3, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\23\
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    \23\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-08924 Filed 4-16-13; 8:45 am]
BILLING CODE 8011-01-P


