[Federal Register Volume 78, Number 107 (Tuesday, June 4, 2013)]
[Notices]
[Pages 33456-33457]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-13108]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-69653; File No. SR-FICC-2013-05]
Self-Regulatory Organizations; Fixed Income Clearing Corporation;
Notice of Filing Proposed Rule Change to Include trueEX LLC as a
Designated Locked-In Trade Source Pursuant to the Rulebook of the
Government Securities Division
May 29, 2013.
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 May 15, 2013, the 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 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. Clearing Agency's Statement of the Terms of Substance of the
Proposed Rule Change
The proposed rule change would amend the Rulebook of the Government
Securities Division (``GSD'') to include trueEX LLC (``trueEX'') as one
of the GSD's designated locked-in trade sources.
II. Clearing Agency'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) Clearing Agency's Statement of the Purpose of, and Statutory Basis
for, the Proposed Rule Change
(i) The GSD Rulebook (``Rules'') provides for the submission of
``locked-in trades'' (i.e., trades that are deemed compared when the
data on the trade is received from a single source) \4\ by a locked-in
trade source \5\ on behalf of a GSD Member. Currently, the GSD's
designated locked-in trade sources are the following entities: (i)
Federal Reserve Banks (as fiscal agents of the United States); (ii) the
Federal Home Loan Mortgage Corporation (``Freddie Mac''); (iii) GCF-
Authorized Inter-Dealer Brokers; \6\ (iv) the U.S. Department of the
Treasury; and (v) New York Portfolio Clearing, LLC. FICC is proposing
to add trueEX as a designated locked-in trade source.
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\4\ The GSD Rulebook defines the term ``Locked-In Trade'' as ``a
trade involving Eligible Securities that is deemed a compared trade
once the data on such trade is received from a single, designated
source and meets the requirements for submission of data on a
locked-in trade pursuant to GSD's rules, without the necessity of
matching the data regarding the trade with data provided by each
member that is or is acting on behalf of an original counterparty to
the trade.'' GSD Rulebook, Rule 1.
\5\ The GSD Rulebook defines the term ``Locked-in Trade Source''
as ``a source of data on Locked-In Trades that the Corporation has
so designated, subject to such terms and conditions as to which the
Locked-In Trade Source and the Corporation may agree.'' GSD
Rulebook, Rule 1.
\6\ The GSD Rulebook defines the term ``GCF-Authorized Inter-
Dealer Broker'' as ``an Inter-Dealer Broker Netting Member that the
Corporation has designated as eligible to submit to the Corporation
data on GCF Repo Transactions on a Locked-In Basis.'' GSD Rulebook,
Rule 1.
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trueEX is an exchange for interest rate swaps, and has been
designated a contract market by the Commodity Futures Trading
Commission. trueEX will offer electronic execution of interest-rate
swaps, which will be cleared by a clearing house other than FICC. For
the delivery vs. payment (``DVP'') \7\ leg of these transactions,
trueEX will offer its members, who are also members of GSD, the ability
to have such transactions submitted to the GSD as netting-eligible
transactions (e.g., as Treasury DVP transactions). In its capacity as a
designated locked-in trade source, trueEX will transmit transactions to
the GSD throughout the day by submitting single tickets in a batch
format. Once trueEX transmits a locked-in trade to the GSD, the GSD
will process the trade normally from the point of guarantee through
settlement with the respective GSD member's current DVP trades. Because
the single ticket submitted by trueEX lists trueEX as the submitter on
behalf of two FICC counterparties, the single-ticket format guarantees
that the parties to the trade will not know each other's identity, and
ensures that trueEX will not have a resulting settlement obligation.\8\
Subject to the Commission's approval of this rule filing, trueEX will
be the first designated contract market (``DCM'') \9\ to act as a
locked-in trade source for the GSD.\10\
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\7\ Delivery vs. payment is a settlement procedure in which the
buyer's cash payment for the securities it has purchased is due at
the time the securities are delivered.
\8\ In its capacity as a locked-in trade source, trueEX will
initially not be subject to any fees pursuant to the existing GSD
Rules. FICC may, however, consider imposing a fee on certain locked-
in trade sources in the future based on volumes and processing
costs.
\9\ Designated contract markets (DCMs) are exchanges that may
list for trading futures or option contracts based on all types of
commodities and that may allow access to their facilities by all
types of traders, including retail customers.
\10\ During the onboarding phase, trueEX will be subject to
FICC's existing due diligence process, including testing trueEX's
trade input and receipt of output capabilities prior to the go-live
date.
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As is the case with other locked-in trade submissions accepted by
FICC, GSD members will be required to execute appropriate documentation
evidencing to FICC their authorization of trueEX to submit trades on
their behalf. FICC will notify members of the availability of this
documentation via Important Notice.
(ii) FICC believes that the proposed rule change is consistent with
Section 17A of the Act \11\ and the rules and regulations promulgated
thereunder
[[Page 33457]]
because it will provide operational efficiencies in the marketplace,
and will therefore support the prompt and accurate clearance and
settlement of securities transactions.
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\11\ 15 U.S.C. 78q-1.
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(B) Clearing Agency's Statement on Burden on Competition
FICC does not believe that the proposed rule change will have any
negative impact, or impose any burden, on competition that is not
necessary or appropriate in furtherance of the purposes of the Act.
(C) Clearing Agency's Statement on Comments on the Proposed Rule Change
Received From Participants, Members, or Others
Written comments relating to the proposed rule change have not yet
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 change, or
(B) institute proceedings to determine whether the proposed 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 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 [email protected]. Please include
File No. SR-FICC-2013-05 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 No. SR-FICC-2013-05. 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 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 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. Copies of such filings also will be
available for inspection and copying at the principal office of FICC
and on FICC's Web site at http://dtcc.com/downloads/legal/rule_filings/2013/ficc/SR_FICC_2013_05.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 No. SR-FICC-2013-05 and
should be submitted on or before June 25, 2013.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
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\12\ 17 CFR 300.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-13108 Filed 6-3-13; 8:45 am]
BILLING CODE 8011-01-P