[Federal Register Volume 85, Number 41 (Monday, March 2, 2020)]
[Notices]
[Pages 12353-12357]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-04186]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-88277; File No. SR-FICC-2020-001]


Self-Regulatory Organizations; Fixed Income Clearing Corporation; 
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change 
To Adopt the Interpretive Guidance With Respect to Settlement Finality

February 25, 2020.
    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 February 13, 2020, 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 primarily by the clearing agency. FICC filed 
the proposed rule change pursuant to Section 19(b)(3)(A) \3\ of the Act 
and subparagraph (f)(1) \4\ of Rule 19b-4 thereunder. The Commission is 
publishing this notice to solicit comments on the proposed rule change 
from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(1).
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I. Clearing Agency's Statement of the Terms of Substance of the 
Proposed Rule Change

    The proposed rule change of Fixed Income Clearing Corporation 
(``FICC'') is annexed [sic] hereto as Exhibit 5. The proposed rule 
change would amend the FICC Government Securities Division (``GSD'') 
Rulebook (the ``GSD Rules'') and the FICC Mortgage-Backed Securities 
Division (``MBSD'') Clearing Rules (``MBSD Rules'' and collectively 
with the GSD Rules, the ``Rules'') in order to adopt the Interpretive 
Guidance with respect to Settlement Finality (``Interpretive 
Guidance''), which would provide greater transparency to FICC Members 
regarding settlement finality in the Rules, as described in greater 
detail below.\5\
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    \5\ Capitalized terms used herein and not otherwise defined 
shall have the meaning assigned to such terms in the GSD Rules or 
the MBSD Rules, as applicable, available at http://www.dtcc.com/legal/rules-and-procedures.
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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

[[Page 12354]]

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
    The proposed rule change would add the Interpretive Guidance into 
the Rules, which would provide greater transparency to FICC Members 
relating to settlement finality in the Rules.
(i) Background
    FICC is a clearing agency registered with, and under the 
supervision of, the Commission and it is a ``covered clearing agency'' 
under the Commission's Standards for Covered Clearing Agencies.\6\ Rule 
17Ad-22(e)(8) of the Act requires FICC to establish, implement, 
maintain and enforce written policies and procedures reasonably 
designed to define the point at which settlement is final to be no 
later than the end of the day on which the payment or obligation is due 
and, where necessary or appropriate, intraday or in real time.\7\ It is 
FICC's policy to ensure that the point of settlement finality is 
defined in the Rules in compliance with Rule 17Ad-22(e)(8) of the Act 
and that the point of settlement finality is transparent to FICC's 
Members. The proposed rule change would add the Interpretive Guidance 
to the Rules to provide greater transparency regarding settlement 
finality in the Rules.
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    \6\ See Standards for Covered Clearing Agencies, Securities 
Exchange Act Release No. 78961, 81 FR 70786 (Oct. 13, 2016).
    \7\ 17 CFR 240.17Ad-22(e)(8).
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A. FICC Money and Securities Settlement
    Through GSD, FICC processes two types of settlements: (1) The 
funds-only settlement process that consists of the transfer of cash for 
(a) changes in the value of securities when they are marked to market, 
(b) cash adjustments related to securities trades, (c) the pass-through 
of coupon payments for term repurchase agreements (``repos'') or trade 
obligations that cross a coupon date, and (d) other items, such as 
billing invoices and (2) the settlement process associated with 
securities deliveries and related payment obligations.
    Through MBSD, FICC processes two types of settlements: (1) The cash 
settlement process that that consists of the transfer of cash for (a) 
the TBA Transaction Adjustment Payment, (b) Net Pool Transaction 
Adjustment Payment, (c) principal and interest payments for failing net 
pool settlement obligations (to the extent that they are not handled by 
the Fedwire Securities Service Automated Claims Adjustment Process), 
and (d) other items, such as Factor Update Adjustments, CPR Claim 
payments and billing invoices and (2) the settlement associated with 
securities deliveries and related payment obligations.
B. Point of Settlement Finality for GSD Funds-Only Settlement and MBSD 
Cash Settlement
1. Funds-Only/Cash Settlement Processes
    GSD funds-only settlement and MBSD cash settlement are governed by 
GSD Rule 13 and MBSD Rule 11, respectively,\8\ which require the 
settling banks to use the FRB's \9\ National Settlement Service 
(``NSS'') \10\ to complete GSD funds-only settlement and MBSD cash 
settlement.\11\
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    \8\ GSD Rule 13 and MBSD Rule 11, supra note 5.
    \9\ FRB means the Board of Governors of the Federal Reserve 
System and each Federal Reserve Bank, as appropriate. GSD Rule 1 and 
MBSD Rule 1, supra note 5.
    \10\ NSS is a multilateral settlement service owned and operated 
by the FRB. The service is offered to depository institutions that 
settle for participants in clearinghouses, financial exchanges and 
other clearing and settlement groups. Settlement agents, acting on 
behalf of those depository institutions in a settlement arrangement, 
electronically submit settlement files to the FRB. Files are 
processed on receipt, and entries are automatically posted to the 
depository institutions' FRB accounts.
    \11\ GSD Rule 13, Section 5(i) and MBSD Rule 11, Section 9(i), 
supra note 5.
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    GSD funds-only settlement and MBSD cash settlement are each a daily 
process of generating a net credit or debit cash amount for each Member 
and settling those cash amounts between Members and FICC. The GSD 
funds-only settlement and MBSD cash settlement processes are primarily 
cash pass-through processes; i.e., those Members that are in a net 
debit position are obligated to submit payments that are then used to 
pay Members in a net credit position.\12\ Net debits and credits of all 
Members using the same settling bank are further netted and reported 
\13\ to the settling bank which is required to acknowledge the net-net 
debits or credits.\14\ The settling banks then debit or credit the 
Members' accounts for which they settle.\15\
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    \12\ Certain amounts, such as billing amounts owed by Members to 
FICC, are credited and paid to FICC through the funds-only/cash 
settlement processes rather than passed on to other Members.
    \13\ GSD Rule 13, Sections 2 and 5(a) and MBSD Rule 11, Section 
9(a), supra note 5.
    \14\ GSD Rule 13, Section 5(b) and MBSD Rule 11, Section 9(b), 
supra note 5.
    \15\ Each Member is required to enter into a settling bank 
agreement with the settling bank that settles its account. GSD Rule 
13, Section 4 and MBSD Rule 3A, Section (a), supra note 5. In the 
settling bank agreement, the settling bank undertakes to perform 
settlement services on behalf of the Member which would include 
debiting or crediting the Member's account upon settlement.
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    FICC has a settlement interface with its affiliate, The Depository 
Trust Company (``DTC''). DTC acts as Settlement Agent for FICC and for 
the Members' settling banks with respect to GSD funds-only settlement 
and MBSD cash settlement.\16\ In submitting the NSS file, DTC, as 
Settlement Agent, submits instructions to cause the FRB accounts of the 
settling banks to be charged for their net-net debit balances and 
credited with their net-net credit balances. Members are required to 
engage a settling bank that meets FICC's settling bank limited 
membership criteria to effect money settlement via NSS on behalf of the 
Members.\17\ Each settling bank is required to acknowledge the daily 
settlement balances and their intention to settle with FICC by the 
applicable deadlines or its refusal to settle by the applicable 
deadlines.\18\ Once a settling bank has acknowledged the balances and 
its intention to settle, it must settle such amounts pursuant to the 
process set forth in the Rules by the payment deadline established by 
FICC on FICC's posted time schedules.\19\
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    \16\ GSD Rule 13, Section 5(h) and MBSD Rule 11, Section 9(h), 
supra note 5.
    \17\ GSD Rule 13, Section 4(a) and MBSD Rule 3A, Section (a), 
supra note 5.
    \18\ GSD Rule 13, Section 5(b) and MBSD Rule 11, Section 9(b), 
supra note 5.
    \19\ GSD Rule 13, Section 5(g) and MBSD Rule 11, Section 9(g), 
supra note 5.
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    FICC processes GSD funds-only settlement debit and credit payments 
via the NSS twice daily at 10:00 a.m. and 3:15 p.m.\20\ FICC processes 
MBSD cash settlement debits via NSS in the morning at 10:00 a.m. daily 
and settlement credits via NSS in the afternoon at 2:45 p.m. daily.\21\
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    \20\ Schedule of Timeframes in the GSD Rules, supra note 5.
    \21\ The schedule of funds only settlement for MBSD is posted on 
its website at http://www.dtcc.com. See MBSD Rule 11, Section 9(g), 
supra note 5.
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2. Interpretive Guidance With Respect to Settlement Finality--Funds-
Only/Cash Settlement
    The point of finality for GSD funds-only settlement and MBSD cash 
settlement is defined by the Federal Reserve Bank Operating Circular 
12,\22\

[[Page 12355]]

which governs NSS processing by the FRB. FICC and each Member's 
settling bank is a ``Settler'' and together are in a ``Settlement 
Arrangement'' (each term as defined in Operating Circular 12) for 
purposes of GSD funds-only settlement and MBSD cash settlement.\23\ 
DTC, as the Settlement Agent (as defined in the Rules and in Operating 
Circular 12), provides the Settlement File (as defined in Operating 
Circular 12) to the FRB. Each Settler maintains a Master Account (as 
defined in Operating Circular 12) with the FRB.\24\ The point of 
finality in accordance with Operating Circular 12 is, for debits, the 
time at which the Settler's Master Account is debited by the FRB,\25\ 
and, for credits, the time at which the Settler's Master Account is 
credited by the FRB.\26\
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    \22\ Federal Reserve Bank Operating Circular 12 (Multilateral 
Settlement), Effective June 30, 2016 (``Operating Circular 12''), 
available at https://www.frbservices.org.
    \23\ For purposes of Operating Circular 12, the following 
definitions apply:
    ``Balance'' means the amount listed on a Settlement File that a 
Settler owes (debit Balance) or is due (credit Balance) as a result 
of the clearing activities of the Settlement Arrangement.
    ``Master Account'' means the Master Account (as that term is 
defined in the Reserve Banks' Operating Circular 1, Account 
Relationships) of a Settler on the books of a Reserve Bank.
    ``Settler'' means an entity that has established an account with 
a Reserve Bank and settles its own Balances, settles Balances for 
the account of another Participant, or both.
    ``Settlement Agent'' means the entity authorized to act on 
behalf of the Settlers under Operating Circular 12.
    ``Settlement File'' means the instructions submitted by a 
Settlement Agent showing the debit and credit Balances of the 
Settlers.
    See Section 1.2 of Operating Circular 12, supra note 22. See 
also Federal Reserve Banks Operating Circular 1 (Account 
Relationships), Effective February 1, 2013, available at https://www.frbservices.org.
    \24\ See id.
    \25\ See Section 5.4 of Operating Circular 12, supra note 22.
    \26\ See Section 5.6 of Operating Circular 12, supra note 22.
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    Therefore, the point of finality with respect to settlement for GSD 
funds-only settlement and MBSD cash settlement is the point at which 
each of the Master Accounts for FICC and the settling banks designated 
by each of the Members have been debited and credited through NSS 
pursuant to the Settlement File provided by the Settlement Agent.
C. Point of Finality for GSD and MBSD Settlement of Securities 
Deliveries and Related Payment Obligations
1. Securities Settlement Processes
(a) GSD Securities Settlement/MBSD Securities Settlement
    GSD and MBSD settlement for securities deliveries and related 
payment obligations (other than GCF Repo Transactions and CCIT 
Transactions) are governed by GSD Rule 12 and MBSD Rule 9, 
respectively.\27\ Settlement for securities deliveries and related 
payment obligations occurs on a delivery-versus-payment basis on the 
books of FICC's clearing bank \28\ or via Fedwire Securities Service 
(``Fedwire'').\29\
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    \27\ GSD Rule 12 and MBSD Rule 9, supra note 5.
    \28\ FICC currently uses The Bank of New York Mellon (``BNY 
Mellon'') as its clearing bank for this purpose.
    \29\ Fedwire Securities Service is an electronic securities 
service owned and operated by the FRB that provides issuance, 
maintenance, transfer and settlement services for all marketable 
U.S. Treasury securities, as well as certain securities issued by 
other federal government agencies, government-sponsored enterprises 
and international organizations. See https://frbservices.org/financial-services/securities/index.html.
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    FICC designates a clearing bank to act on its behalf in the 
delivery and receipt of securities to or from the Members for 
securities settlement.\30\ FICC shall notify each GSD Member and MBSD 
Member, as applicable, of the clearing bank or banks that FICC will use 
to deliver eligible securities to Members and to receive eligible 
securities from Members, and by product, the types of securities that 
each such clearing bank will so deliver and receive.\31\ In turn, each 
Member (prior to activating its membership) must notify FICC of the 
clearing bank or banks that the Member has designated to act on its 
behalf in the delivery and receipt of securities to or from FICC.\32\ 
Such designation is subject to FICC's determination that such clearing 
bank (a) has and will maintain access to Fedwire, (b) has and will 
maintain the operational capability to interact satisfactorily with the 
clearing banks that act on behalf of FICC, and (c) has agreed to act on 
behalf of such Member in accordance with the Rules.\33\
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    \30\ GSD Rule 12, Section 2 and MBSD Rule 9, Section 2, supra 
note 5.
    \31\ Id.
    \32\ Id.
    \33\ Id.
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    If the Member's designated clearing bank for securities settlement 
is the same as FICC's clearing bank, obligations for securities 
deliveries and related payment obligations will be settled for a Member 
on the books of FICC's designated clearing bank. If the Member's 
designated clearing bank is not the same as FICC's clearing bank, 
obligations for securities deliveries and related payment obligations 
will be settled between the clearing banks using Fedwire. All 
deliveries are made against full payment.\34\
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    \34\ GSD Rule 12, Section 1 and MBSD Rule 9, Section 1, supra 
note 5.
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(b) GCF Repo[supreg] Service and the CCIT Service Settlement
    Settlement for securities deliveries and related payment 
obligations relating to the GCF Repo[supreg] Service and the CCIT 
Service are governed by GSD Rule 20 and GSD Rule 3B.\35\ FICC and each 
Member settling transactions through the GCF Repo Service and CCIT 
Service maintain accounts at FICC's designated clearing bank for 
settlement of securities deliveries and related payment obligations 
with respect to the GCF Repo Service and the CCIT Service.\36\ 
Settlement for securities deliveries and related payment obligations 
\37\ for the GCF Repo Service and the CCIT Service occurs on the books 
of FICC's designated clearing bank.\38\
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    \35\ The GCF Repo service is primarily governed by GSD Rule 20 
and enables Netting Members to trade general collateral finance 
repurchase agreement transactions based on rate, term, and 
underlying product throughout the day with brokers on a blind basis. 
GSD Rule 20, supra note 5. The CCIT Service is governed by GSD Rule 
3B and enables tri-party repurchase agreement transactions in GCF 
Repo Securities between Netting Members that participate in the GCF 
Repo Service and institutional cash lenders (other than investment 
companies registered under the Investment Company Act of 1940, as 
amended). GSD Rule 3B, supra note 5. Section 11 of GSD Rule 3B 
provides that GSD Rule 20 shall apply to the netting and settlement 
obligations of FICC and each party to a CCIT Transaction in the same 
way in which such provisions apply to GCF Repo Transactions. GSD 
Rule 3B, Section 11, supra note 5.
    \36\ See GSD Rule 3B, Section 9(b), supra note 5 (requiring each 
CCIT Member to maintain two accounts at the GCF Clearing Agent Bank, 
one of which, the CCIT Account, is for the CCIT Member's activity in 
respect of CCIT Transactions).
    \37\ GSD Rule 3B, Section 13 provides that certain payment 
obligations relating to CCIT Transactions are processed pursuant to 
GSD funds-only settlement described in Item II.(A)(1)(i)B. above. 
See GSD Rule 3B, Section 13, supra note 5.
    \38\ The clearing bank for this purpose is defined as the GCF 
Clearing Agent Bank. See GSD Rule 3B and GSD Rule 20, supra note 5. 
FICC currently uses BNY Mellon as the GCF Clearing Agent Bank.
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2. Interpretive Guidance With Respect to Settlement Finality--
Settlement for Securities Deliveries and Related Payment Obligations
    Settlement for securities deliveries and related payment 
obligations occurs (i) on the books of FICC's designated clearing bank 
for each Member whose designated clearing bank for such settlement is 
the same as FICC's designated clearing bank and (ii) through the 
Fedwire system, for each Member whose designated clearing bank for such 
settlement is not the same as FICC's designated clearing bank.
(a) Point of Finality on the Books of FICC's Clearing Bank
    The point of finality relating to settlement of securities 
deliveries and related payment obligations that occurs

[[Page 12356]]

on the books of FICC's clearing bank is the point at which FICC's 
clearing bank has acted upon a settlement instruction from FICC.
    Pursuant to the agreement between FICC and FICC's clearing bank, a 
settlement instruction is an instruction by FICC to the clearing bank 
in respect of settlement that: (1)(a) Instructs the clearing bank to 
direct delivery, from the FICC account to the Member account(s) 
designated in such settlement instruction, of securities specified for 
each such Member account and (b) specifies the dollar amounts that the 
clearing bank is simultaneously to take collection of from each of the 
respective Member accounts designated in the settlement instruction for 
the FICC account; or (2)(a) instructs the clearing bank to direct 
payment, from the FICC account to the designated Member account(s), of 
the dollar amounts specified in the settlement instruction for each 
such Member account and (b) specifies the securities that the clearing 
bank is simultaneously to take receipt of from each of the Member 
accounts designated in the settlement instruction for the FICC account.
    FICC's clearing bank has acted upon such instructions when the 
clearing bank (i)(a) directs delivery, from the FICC account to the 
Member account(s) designated in such settlement instruction, of 
securities specified for each such Member account and (b) 
simultaneously collects the dollar amounts from each of the respective 
Member accounts designated in the settlement instruction for the FICC 
account; or (ii)(a) directs payment, from the FICC account to the 
designated Member account(s), of the dollar amounts specified in the 
settlement instruction for each such Member account and (b) 
simultaneously takes receipt of securities from each of the Member 
accounts designated in the settlement instruction for the FICC account.
    Therefore, the point of finality of settlement of securities 
deliveries and related payment obligations that occur on the books of 
FICC's clearing bank is when each of the accounts held by FICC and the 
Members at the clearing bank for purposes of securities settlement have 
been debited and credited in accordance with the settlement 
instructions provided by FICC.
(b) Point of Finality on the Fedwire System
    The point of finality relating to settlement of securities 
deliveries and related payment obligations that occurs through the 
Fedwire system is defined by the Federal Reserve Banks Operating 
Circular No. 7,\39\ which governs book entry security account 
maintenance and transfers. FICC's clearing bank and each Member's 
clearing bank is a ``Participant'' and maintains a ``Securities 
Account'' and a ``Master Account'' with the FRB (each term as defined 
in Operating Circular 7).\40\ Operating Circular 7 states that 
``[u]nless a Transfer is rejected in accordance with this Circular, all 
debits and credits in connection with a Transfer become final at the 
time the debits and credits are posted to the Sender's and Receiver's 
Securities Accounts and, in case of Transfer Against Payment, their 
corresponding Master Accounts.'' \41\ For purposes of settlement of 
securities deliveries and related payment obligations, the clearing 
banks designated by FICC and each Member to deliver and receive 
securities and related funds on behalf of FICC and each Member, 
respectively, are the Senders and Receivers described in Operating 
Circular 7. Therefore, the point of finality of settlement of 
securities deliveries and related payment obligations is when each of 
the Securities Accounts and the Master Accounts of the clearing banks 
designated by FICC and each of the Members have been debited and 
credited through the Fedwire system in accordance with the settlement 
instructions provided by FICC.\42\
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    \39\ Federal Reserve Banks Operating Circular 7 (Book-Entry 
Securities Account Maintenance and Transfer Services), Effective 
October 29, 2017 (``Operating Circular 7''), available at https://www.frbservices.org.
    \40\ For purposes of Operating Circular 7, the following 
definitions apply:
    ``Book-Entry Security'' means a marketable security issued in 
electronic form by the United States Government (the ``Treasury''), 
any agency or instrumentality thereof, certain international 
organizations, or others, that the Reserve Banks have determined is 
eligible to be held in a Securities Account and is eligible for 
Transfer.
    ``Free Transfer'' means a Transfer that does not involve any 
credit or debit to a Master Account other than a transaction fee.
    ``Master Account'' means a ``Master Account'' (as defined in the 
Reserve Banks' Operating Circular 1, Account Relationships) on the 
books of a Reserve Bank. A Master Account is a Funds Account for 
purposes of the regulations listed in Appendix A of Operating 
Circular 7. A Master Account does not contain Book-Entry Securities.
    ``Participant'' means an entity that maintains a Securities 
Account with a Reserve Bank in the entity's name.
    ``Receiver'' means the Participant receiving a Book-Entry 
Security as a result of a Transfer.
    ``Securities Account'' means an account at a Reserve Bank 
containing Book-Entry Securities.
    ``Sender'' means the Participant sending a Transfer Message.
    ``Transfer'' means the electronic movement over the 
Fedwire[supreg] Securities Service of a par amount of Book-Entry 
Securities by debit to the designated Securities Account of the 
Sender and by credit to the designated Securities Account of the 
Receiver, or by debit to one Securities Account of a Participant and 
credit to another Securities Account of that same Participant, in 
which case that Participant is both a Sender and a Receiver. A 
Transfer is either a Free Transfer or a Transfer Against Payment.
    ``Transfer Against Payment'' means a Transfer that is effected 
with a credit to the Master Account of the Sender and a debit to the 
Master Account of the Receiver, for the amount of the payment.
    ``Transfer Message'' means an instruction of a Participant to a 
Reserve Bank to effect a Transfer.
    See Operating Agreement Circular 7, Section 3.0, supra note 39.
    \41\ Operating Circular 7, Section 9.1.1, supra note 39. 
Capitalized terms are defined as set forth in Operating Circular 7. 
See supra note 40.
    \42\ Each Business Day, FICC makes available to each Member a 
Report that provides settlement information that FICC deems 
sufficient to enable each such Member to be able to settle its 
securities deliveries and related payment obligations and each 
Member is obligated to provide the appropriate instructions to its 
clearing bank to deliver and/or receive securities and related 
payments as set forth in the Report. GSD Rule 12, Section 3 and MBSD 
Rule 9, Section 3, supra note 5.
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(ii) Description of the Proposed Rule Change
    In order to provide Members greater transparency regarding 
settlement finality, FICC is proposing to amend the Rules to include 
the Interpretive Guidance. The Interpretive Guidance would describe 
settlement finality as set forth above in Items II.(A)(1)(i)B.2. and 
II.(A)(1)(i)C.2. above.
(2) Statutory Basis
    Section 17A(b)(3)(F) of the Act \43\ requires, in part, that the 
Rules be designed to promote the prompt and accurate clearance and 
settlement of securities transactions. The proposed rule change would 
provide additional transparency to FICC Members regarding settlement 
finality with respect to securities transactions processed through 
FICC. Accordingly, the proposed rule change would ensure that the Rules 
are transparent and clear, which would enable all stakeholders to 
readily understand their respective rights and obligations in 
connection with FICC's clearance and settlement of securities 
transactions. Therefore, FICC believes that the proposed rule change 
would promote the prompt and accurate clearance and settlement of 
securities transactions, consistent with Section 17A(b)(3)(F) of the 
Act.\44\
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    \43\ 15 U.S.C. 78q-1(b)(3)(F).
    \44\ Id.
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    Rule 17Ad-22(e)(8) under the Act \45\ requires FICC to establish, 
implement, maintain and enforce written policies and procedures 
reasonably designed to define the point at which settlement is final to 
be no later than the end of the day on which the payment or obligation 
is due and, where necessary or

[[Page 12357]]

appropriate, intraday or in real time. The proposed rule change to add 
the Interpretive Guidance would enhance the transparency with respect 
to the point at which settlement is final with respect to transactions 
processed through FICC. Having clear provisions in this regard would 
enable FICC Members to better identify the point at which settlement is 
final with respect to their cash and securities transactions. As such, 
FICC believes the proposed rule change is consistent with Rule 17Ad-
22(e)(8) of the Act.\46\
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    \45\ 17 CFR 240.17Ad-22(e)(8).
    \46\ Id.
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(B) Clearing Agency's Statement on Burden on Competition

    FICC does not believe that the proposed rule change would impact 
competition.\47\ The proposed rule change would provide interpretive 
guidance with respect to settlement finality relating to transactions 
processed through FICC. The proposed rule change would not change 
current practices of FICC and would not affect FICC Members' rights or 
obligations. As such, FICC believes that the proposed rule change would 
not impact FICC Members or have any impact on competition.
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    \47\ 15 U.S.C. 78q-1(b)(3)(I).
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(C) Clearing Agency's Statement on Comments on the Proposed Rule Change 
Received From Members, Participants, or Others

    FICC has not received or solicited any written comments relating to 
this proposal. 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 pursuant to Section 
19(b)(3)(A) \48\ of the Act and paragraph (f) \49\ of Rule 19b-4 
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.
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    \48\ 15 U.S.C. 78s(b)(3)(A).
    \49\ 17 CFR 240.19b-4(f).
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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 for (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-FICC-2020-001 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-2020-001. 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 website (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 website 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 website 
(http://dtcc.com/legal/sec-rule-filings.aspx). All comments received 
will be posted without change. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-FICC-2020-001 and should be submitted on 
or before March 23, 2020.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\50\
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    \50\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-04186 Filed 2-28-20; 8:45 am]
 BILLING CODE 8011-01-P


