[Federal Register Volume 76, Number 169 (Wednesday, August 31, 2011)]
[Notices]
[Pages 54268-54270]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-22222]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-65198; File No. SR-FICC-2011-06]
Self-Regulatory Organizations; Fixed Income Clearing Corporation;
Notice of Filing of Proposed Rule Change To Eliminate Two Rules of the
Mortgage-Backed Securities Division That FICC Believes Are No Longer
Utilized or Necessary
August 25, 2011.
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 17, 2011, the Fixed Income Clearing
[[Page 54269]]
Corporation (``FICC'') filed with the Securities and Exchange
Commission (``Commission'') the proposed rule change as described in
Items I and II below, which Items have been prepared primarily by FICC.
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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The proposed rule change would eliminate two rules of the Mortgage-
Backed Securities Division (``MBSD'') that FICC believes are no longer
utilized or necessary.
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.\3\
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\3\ 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
The purpose of the proposed rule change is to eliminate two MBSD
rules which FICC believes are no longer utilized or necessary. The
first rule proposed to be eliminated is Article II, Rule 1, Section 3,
which was put in place to stem certain abuses of cash adjustments
taking place in the mid to late 1990s (specifically, traders were
manipulating pricing on their submission of trades in order to maximize
their cash adjustments). Because cash adjustments were deleted from the
rules via the approved rule filing FICC 2010-08,\4\ FICC believes the
rule imposing trade restrictions between accounts is no longer
necessary.
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\4\ See Securities Exchange Act Release No. 34-63611 (December
28, 2010), 76 FR 408 (January 4, 2011) (SR-FICC-2010-08).
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The second rule proposed to be eliminated relates to the ``match
modes'' currently referenced in the MBSD rules. Currently, the rules
provide that dealers may elect to have the comparison of their
transactions governed in either ``Exact Match Mode'' or ``Net Position
Match Mode.'' In Exact Match Mode, trade input that matches in all
other respects will be compared only if the par amount of the eligible
securities reported to have been sold or purchased by the dealer for a
particular transaction is identical to the par amount for a particular
transaction reported by the broker. In a Net Position Match Mode, trade
input that matches in all other respects will be compared only if the
aggregate par amount for one or more transactions in eligible
securities reported to have been sold or purchased by the dealer equals
the aggregate par amount for one or more transactions reported by the
broker. Currently, no participants have elected to have their
transactions governed in Exact Match Mode. FICC believes there is no
need to provide participants with a choice of match mode because MBSD's
system already attempts to find an exact match for trade input and,
only if an exact match is not found, will the system revert to Net
Position Match Mode. This change would require the deletion of subpart
(a) of Article II, Rule 3, Section 4 and conforming changes to the
definitions (in Article I) and in Article II, Rule 3, Sections 3 and 4
to reflect that Net Position Match Mode will be the only available
match mode.
Given that FICC believes these rules have no utility for MBSD's
participants, MBSD proposes to eliminate these rules. FICC believes
elimination of these rules would also promote efficiency. MBSD is
currently undertaking a rewrite of its internal software applications
and operating systems to promote efficiency and streamline its
operations. Approval of the elimination of these rules will allow MBSD
to avoid writing unnecessary coding during the rewrite process.
The effective date of this change will be announced to MBSD
participants via Important Notice.
FICC believes the proposed rule change is consistent with the
requirements of Section 17A of the Act \5\ and the rules and
regulations thereunder because it would facilitate the prompt and
accurate clearance and settlement of securities transactions by
eliminating rules that no longer have utility for participants. FICC
believes this would promote efficiency because the rules would be more
clear and easier to understand once they are revised to remove these
outdated and unnecessary rules and resources would be conserved by
avoiding writing unnecessary code during MBSD's software rewrite
process.
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\5\ 15 U.S.C. 78q-1.
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Self-Regulatory Organization's Statement on Burden on Competition
FICC does not believe that the proposed rule change would 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 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
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period up to 90 days (i) As the
Commission may designate if it finds such longer period to be
appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
(A) By order approve or disapprove the proposed rule change or
(B) institute proceedings to determine whether the proposed rule
change should be disapproved.
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 [email protected]. Please include
File Number SR-FICC-2011-06 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 SR-FICC-2011-06. 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
[[Page 54270]]
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 Web site viewing and printing in the Commission's Public
Reference Section, 100 F Street, NE., Washington, DC 20549, on official
business days between the hours of 10 a.m. and 3 p.m. Copies of such
filings will also be available for inspection and copying at the
principal office of FICC and on FICC's Web site at http://www.dtcc.com/downloads/legal/rule_filings/2011/ficc/2011-06.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-2011-06
and should be submitted on or before September 21, 2011.
For the Commission by the Division of Trading and Markets,
pursuant to delegated authority.\6\
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\6\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-22222 Filed 8-30-11; 8:45 am]
BILLING CODE 8011-01-P