[Federal Register Volume 78, Number 74 (Wednesday, April 17, 2013)]
[Notices]
[Pages 22923-22925]
From the Federal Register Online via the Government Publishing 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
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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.
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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 [email protected]. 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