[Federal Register Volume 85, Number 167 (Thursday, August 27, 2020)]
[Notices]
[Pages 53054-53056]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-18832]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-89631; File No. SR-FICC-2020-011]


Self-Regulatory Organizations; Fixed Income Clearing Corporation; 
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change 
To Clarify the Government Securities Division Schedule of Timeframes 
and Schedule of GCF Repo[supreg] Timeframes and Make Other Changes

August 21, 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 August 18, 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 by the clearing agency. FICC filed the 
proposed rule change pursuant to Section 19(b)(3)(A) of the Act \3\ and 
Rule 19b-4(f)(4) thereunder.\4\ 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)(4).
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I. Clearing Agency's Statement of the Terms of Substance of the 
Proposed Rule Change

    The proposed rule change consists of amendments to the FICC 
Government Securities Division (``GSD'') Rulebook (``Rules'') \5\ in 
order to (i) clarify that all times set forth in the Schedule of 
Timeframes and the Schedule of GCF Repo Timeframes may be extended as 
needed by FICC to (a) address operational or other delays that would 
reasonably prevent members or FICC from meeting the deadline or 
timeframe, as applicable or (b) allow FICC time to operationally 
exercise its existing rights under the Rules, (ii) revise specific 
references to times in Section 6 of Rule 13 to reference the Schedule 
of Timeframes, and (iii) make certain technical and conforming changes, 
as further described below.
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    \5\ Capitalized terms not defined herein are defined in the 
Rules, 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 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 purpose of the proposed rule change is to (i) clarify that all 
times set forth in the Schedule of Timeframes and the Schedule of GCF 
Repo Timeframes may be extended as needed by FICC to (a) address 
operational or other delays that would reasonably prevent members or 
FICC from meeting the deadline or timeframe, as applicable or (b) allow 
FICC time to operationally exercise its existing rights under the 
Rules, (ii) revise specific references to times in Section 6 of Rule 13 
to reference the Schedule of Timeframes, and (iii) make certain 
technical and conforming changes, as further described below.

(i) Clarify that all times set forth in the Schedule of Timeframes and 
the Schedule of GCF Repo Timeframes may be extended as needed by FICC 
to (a) address operational or other delays that would reasonably 
prevent members or FICC from meeting the deadline or timeframe, as 
applicable or (b) allow FICC time to operationally exercise its 
existing rights under the Rules


[[Page 53055]]


    Currently, there are footnotes (one denoted by an asterisk and 
another denoted by two asterisks) in the Schedule of Timeframes that 
state that a particular deadline may be extended by FICC on days on 
which there are operational or systems difficulties that would 
reasonably prevent members from satisfying this deadline. Currently, in 
the Schedule of Timeframes, the footnote denoted by one asterisk 
applies to the 9:30 a.m. and 2:45 p.m. timeframes, and the footnote 
denoted by two asterisks applies to the 12:00 p.m., 12:30 p.m., and 
1:00 p.m. timeframes. The 9:30 a.m. and 2:45 p.m. timeframes are the 
deadlines for satisfaction of a Clearing Fund deficiency call. The 
12:00 p.m., 12:30 p.m. and 1:00 p.m. timeframes are the deadlines for 
the submission of information regarding New Securities Collateral.
    The 4:30 p.m. timeframe in the Schedule of GCF Repo Timeframes 
applies to Netting Member allocation of collateral, and it has a 
footnote (which is denoted by an asterisk) providing that the stated 
deadline of 4:30 p.m. may be one hour after the close of the Fedwire 
Securities Service reversals, if later than 4:30 p.m.
    FICC proposes to clarify that all times set forth in the Schedule 
of Timeframes and the Schedule of GCF Repo Timeframes may be extended 
as needed by FICC to (a) address operational or other delays that would 
reasonably prevent members or FICC from meeting the deadline or 
timeframe, as applicable or (b) allow FICC time to operationally 
exercise its existing rights under the Rules.\6\ FICC would also 
clarify that the times applicable to FICC are standards and not 
deadlines and that actual processing times may vary slightly, as 
necessary.\7\ FICC believes these proposed changes would enhance 
members' understanding that these timeframes may be extended in certain 
circumstances and that the times applicable to FICC may also vary 
slightly.
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    \6\ For example, pursuant to Section 6 of Rule 13, on any 
Business Day on which a Netting Member is notified by FICC that it 
must increase the amount of its Required Fund Deposit and the 
Netting Member has a Funds-Only Settlement Amount due to it from 
FICC, in lieu of paying the Funds-Only Settlement Amount to the 
Netting Member, FICC may retain the lesser of the requested increase 
in the Required Fund Deposit or such Funds-Only Settlement Amount 
and apply such amount against the Netting Member's obligation to 
increase its Required Fund Deposit. If FICC determines to exercise 
this provision, it is possible that the applicable time set forth in 
the Schedule of Timeframes for the processing of funds-only 
settlement debits and credits (10:00 a.m. or 3:15 p.m.) could be 
delayed due to the operational process necessary to recalculate the 
funds-only settlement amounts.
    \7\ For example, the Schedule of GCF Repo Timeframes currently 
states that the system opens at 7:00 a.m. Typically, however, the 
system opens two minutes earlier than 7:00 a.m.
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    FICC proposes to effectuate these proposed changes by adding a new 
footnote denoted by an asterisk to the headings ``Schedule of 
Timeframes'' and ``Schedule of GCF Repo Timeframes.'' In addition, in 
the Schedule of Timeframes, FICC proposes to delete the current 
asterisks with respect to the 9:30 a.m., 2:45 p.m., 12:00 p.m., 12:30 
p.m. and 1:00 p.m. timeframes because, with the addition of the new 
proposed footnote to the heading of the ``Schedule of Timeframes,'' 
these current footnotes would be redundant. FICC proposes a similar 
change in the Schedule of GCF Repo Timeframes to delete the current 
asterisk with respect to the 4:30 p.m. deadline for the same reason.

(ii) Revise specific references to times in Section 6 of Rule 13 to 
reference the Schedule of Timeframes

    Currently, Sections 6(b) and 6(c) of Rule 13 set forth specific 
times for the payment of a Funds-Only Settlement Amount. Specifically, 
Section 6(b) of Rule 13 states that a Netting Member that has an 
obligation to pay the Funds-Only Settlement Amount to FICC shall make 
such payment by no later than 10:00 a.m. New York Time. Section 6(c) of 
Rule 13 states that when a Netting Member is entitled to collect a 
Funds-Only Settlement Amount from FICC, FICC shall cause the payment to 
be made by 11:00 a.m. New York Time.
    FICC proposes to replace the specific references to times in 
Section 6(b) and Section 6(c) of Rule 13 with references to the 
Schedule of Timeframes. Because the Schedule of Timeframes addresses 
these two payments and their specific timeframes, FICC believes the 
references to specific times in these subsections of Rule 13 are 
unnecessary and that it would enhance clarity to reference the Schedule 
of Timeframes instead of specific times.

(iii) Make certain technical and conforming changes

    FICC would also make certain technical and conforming changes.
    FICC proposes to make a conforming change to Section 6(b) of Rule 
13 by deleting the phrase ``Except as otherwise provided in Section 2 
with respect to intraday collections.'' Because FICC proposes to 
reference the Schedule of Timeframes instead of specific times (as 
described in Item II(A)1(ii) above), FICC believes this exception is no 
longer necessary and, therefore, proposes to delete it. The Schedule of 
Timeframes covers the intraday collection of Funds-Only Settlement 
Amounts.
    FICC proposes to make a technical change to capitalize ``a'' before 
``Netting Member'' in Section 6(b) of Rule 13. Because the exception 
clause would be deleted (as described above), this would be the 
beginning of the sentence. In addition, in Section 6(b) of Rule 13, 
FICC proposes to make another technical change to revise the semi-colon 
to a period in order to be consistent with the other subsections in 
Section 6 of Rule 13.
2. Statutory Basis
    Section 17A(b)(3)(F) of the Act requires, in part, that the Rules 
be designed to promote the prompt and accurate clearance and settlement 
of securities transactions.\8\ The proposed changes to (i) clarify that 
all times set forth in the Schedule of Timeframes and the Schedule of 
GCF Repo Timeframes may be extended as needed by FICC to (a) address 
operational or other delays that would reasonably prevent members or 
FICC from meeting the deadline or timeframe, as applicable or (b) allow 
FICC time to operationally exercise its existing rights under the 
Rules, (ii) revise specific references to times in Section 6 of Rule 13 
to reference the Schedule of Timeframes, and (iii) make certain 
technical and conforming changes to the Rules would help to ensure that 
the Rules are accurate and clear to participants. When members better 
understand their rights and obligations regarding the Rules, such 
members are more likely to act in accordance with the Rules, which FICC 
believes would promote the prompt and accurate clearance and settlement 
of securities transactions. As such, FICC believes that the proposed 
changes would be consistent with Section 17A(b)(3)(F) of the Act.\9\
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    \8\ 15 U.S.C. 78q-1(b)(3)(F).
    \9\ Id.
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(B) Clearing Agency's Statement on Burden on Competition

    FICC does not believe the proposed rule changes to (i) clarify that 
all times set forth in the Schedule of Timeframes and the Schedule of 
GCF Repo Timeframes may be extended as needed by FICC to (a) address 
operational or other delays that would reasonably prevent members or 
FICC from meeting the deadline or timeframe, as applicable or (b) allow 
FICC time to operationally exercise its existing rights under the 
Rules, (ii) revise specific references to times in Section 6 of Rule 13 
to reference the Schedule of Timeframes, and (iii) make certain 
technical and conforming changes to the Rules would impact competition. 
The proposed rule

[[Page 53056]]

changes would help to ensure that the Rules remain clear and accurate. 
In addition, the changes would facilitate members' understanding of the 
Rules and their obligations thereunder. As such, FICC believes the 
proposed rule changes would not have any impact on competition.

(C) Clearing Agency'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 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 pursuant to Section 
19(b)(3)(A) \10\ of the Act and paragraph (f) \11\ 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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    \10\ 15 U.S.C 78s(b)(3)(A).
    \11\ 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 form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-FICC-2020-011 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-2020-011. 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-2020-011 and should be submitted on 
or before September 17, 2020.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-18832 Filed 8-26-20; 8:45 am]
BILLING CODE 8011-01-P


