[Federal Register Volume 79, Number 111 (Tuesday, June 10, 2014)]
[Notices]
[Pages 33244-33247]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-13450]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-72305; File No. SR-FICC-2014-03]
Self-Regulatory Organizations; Fixed Income Clearing Corporation;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Modify the Government Securities Division Fee Schedule, the Mortgage-
Backed Securities Division Fee Schedule for Dealers and the Mortgage-
Backed Securities Division EPN Fee Schedule
June 4, 2014.
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 21, 2014, 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 by the clearing agency. FICC filed the
proposal pursuant to Section 19(b)(3)(A)(ii) of the Act \3\ and Rule
19b-4(f)(2) thereunder \4\ so that the proposal was effective upon
filing with the Commission. 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)(ii).
\4\ 17 CFR 240.19b-4(f)(2).
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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 Fee Schedule
in the Mortgage-Backed Securities Division (``MBSD'') Clearing Rules
(the ``MBSD Clearing Rules''), the MBSD EPN Rules (the ``EPN Rules'',
together with the MBSD Clearing Rules, the ``MBSD Rules'') and the
Government Securities Division (``GSD'') Rulebook (the ``GSD Rules''),
as applicable.
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 such statements.
(A) Clearing Agency's Statement of the Purpose of, and Statutory Basis
for, the Proposed Rule Change
(i) The purpose of this filing is to modify the GSD Fee Schedule,
the MBSD Fee Schedule for dealers, and the MBSD EPN Fee Schedule. The
fee changes are effective as of July 1, 2014.
To guard against fluctuations in trading volume and size, FICC is
proposing a revised GSD fee structure which reduces its fees associated
with comparison and netting and increases the fee for obligation par, a
revenue category deemed to be more stable. The proposed changes in
their totality are revenue neutral.
With respect to MBSD, over the last 18 months, FICC has experienced
a significant decrease in the volume of transactions that MBSD
processes. FICC believes that this decrease represents a fundamental
shift in the MBS market. FICC's discussions with member firms indicate
that the change in the mortgage-backed securities market will be more
long term than originally anticipated. As a result, FICC is proposing
to increase the MBSD fees.
FICC has discussed the proposed fee changes with the majority of
the GSD, MBSD and MBSD EPN members. FICC will discuss the proposed
changes with
[[Page 33245]]
the remainder of its members over the next several weeks.
The proposed changes to the GSD Fee Schedule, the MBSD Fee Schedule
for dealers, and the MBSD EPN Fee Schedule are outlined below.
GSD Fee Schedule
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Current charge New charge per
Current tiers per submission New breakpoint schedule submission
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TRADE SUBMISSION SCHEDULE
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(Charge is applied to all
submissions if breakpoint is
reached).
Per submission for up to 50,000 per month... $0.27 Per submission for total $0.250
monthly submissions up to
49,999.
Per submission for 50,001 to 100,000 per 0.15 Per submission for total 0.200
month. monthly submissions between
50,000 to 99,999.
Per submission for 100,001 or greater per 0.01 Per submission for total 0.150
month. monthly submissions between
100,000 to 249,999.
Per submission for total 0.125
monthly submissions between
250,000 to 399,999.
Per submission for total 0.100
monthly submissions between
400,000 to 499,999.
Per submission for total 0.085
monthly submissions 500,000
and greater.
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Current charge New charge per
Current charge per side New breakpoint schedule side
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NETTING SCHEDULE
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(Charge is applied to all
sides if breakpoint is
reached).
Per side that is netted..................... 0.18 Per side for total monthly 0.150
sides up to 49,999.
Per side for total monthly 0.125
sides between 50,000 to
99,999.
Per side for total monthly 0.125
sides between 100,000 to
249,999.
Per side for total monthly 0.100
sides between 250,000 to
399,999.
Per side for total monthly 0.050
sides between 400,000 to
999,999.
Per side for total monthly 0.035
sides that are 1MM and
greater.
Current charge per 1 MM of par value that is 0.018 per MM New charge per 1 MM of par 0.015 per MM
Netted. value that is Netted.
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OBLIGATION SCHEDULE
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Current charge per 1 MM of Obligation par 0.15 per MM New charge per 1 MM of 0.17 per MM
value. Obligation par value.
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MBSD Fee Schedule for Dealers
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Fee description Current charge Measurement New charge Measurement
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CLEARING FEES
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Account Maintenance Fee (dealer)
Primary/Secondary Account
$350.00 Per account..................... $0.00........................... N/A.
Account Maintenance Fee (dealer)
Investment Manager Accounts
350.00 1 account....................... 0.00............................ N/A.
185.00 2-3 accounts.................... 0.00............................ N/A.
150.00 4-7 accounts.................... 0.00............................ N/A.
130.00 8-10 accounts................... 0.00............................ N/A.
120.00 Greater than 10 accounts........ 0.00............................ N/A.
SBO Destined Processing--Trade
Creates (dealer)
1.68/MM 01-2,500........................ 1.93/MM......................... 01-2,500.
1.54/MM 2,501-5,000..................... 1.77/MM......................... 2,501-5,000.
1.39/MM 5,001-7,500..................... 1.60/MM......................... 5,001-7,500.
1.30/MM 7,501-10,000.................... 1.49/MM......................... 7,501-10,000.
1.15/MM 10,001-12,500................... 1.32/MM......................... 10,001-12,500.
0.99/MM 12,501 and over................. 1.14/MM......................... 12,501 and over.
[[Page 33246]]
TBA Netting Balance Orders (SBON
and SBOO) (dealer)
0.00 N/A............................. 0.75............................ Per MM Par value.
Trade-for-Trade (including TBA and
SPT)--Trade Creates (dealer)
0.50 Per side........................ 1.00............................ Per MM par value.
Option Trade Creates (dealer)
2.25 Per side........................ 1.00............................ Per MM par value.
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POOL NETTING FEES
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Matched Pool Instructs (dealer)
0.20 Per side........................ 0.60............................ Per side.
Pool Obligations (dealer)
0.50 Per side........................ 0.00............................ N/A.
Clearance Pool vs. FICC (dealer)
1.25 Per pool........................ 0.00............................ N/A.
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MBSD Bank Allocation
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0.00 N/A............................. Calculated monthly.............. Calculated monthly based on MBSD
bank clearance fees.
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EPN Fee Schedule
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Fee Description Current charge Measurement New charge Measurement
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Account Maintenance Fee Direct
Account
$250.00 Month (per account).. $1,000.00 Month (per account).
Account Maintenance Fee Investment
Manager Accounts
0.00 N/A.................. 1,000.00 Month/per account.
0.00 N/A.................. 530.00 2-3 accounts/mo./
each.
0.00 N/A.................. 430.00 4-7 accounts/mo./
each.
0.00 N/A.................. 370.00 8-10 accounts/mo./
each.
0.00 N/A.................. 340.00 Greater than 10
accounts/mo./each.
Message Processing Fee ON Send
0.15 Per MM current face 0.17 Per MM current face
Opening of Business Opening of Business
to 1:00 PM. to 1:00 PM.
0.75 Per MM current face 0.86 Per MM current face
1:00 PM to 2:00 PM. 1:00 PM to 2:00 PM.
1.50 Per MM current face 1.73 Per MM current face
2:00 PM to 3:00 PM. 2:00 PM to 3:00 PM.
1.25 Per MM current face 1.44 Per MM current face
3:00 PM to Close of 3:00 PM to Close of
Business. Business.
Message Processing Fee ON Receive
0.40 Per MM current face 0.46 Per MM current face
Opening of Business Opening of Business
to 1:00 PM. to 1:00 PM.
0.20 Per MM current face 0.23 Per MM current face
1:00 PM to 2:00 PM. 1:00 PM to 2:00 PM.
0.20 Per MM current face 0.23 Per MM current face
2:00 PM to 3:00 PM. 2:00 PM to 3:00 PM.
0.00 Per MM current face 0.00 3:00 PM to Close of
3:00 PM to Close of Business.
Business.
Cancel/Correct Send
0.15 Per MM current face 0.17 Per MM current face
Opening of Business Opening of Business
to 11:00 AM. to 11:00 AM.
0.75 Per MM current face 0.86 Per MM current face
11:00 AM to 12:00 PM. 11:00 AM to 12:00
PM.
1.50 Per MM current face 1.73 Per MM current face
12:00 PM to 12:15 PM. 12:00 PM to 12:15
PM.
0.15 Per MM current face 0.17 Per MM current face
12:15 PM to End of 12:15 PM to End of
Day. Day.
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[[Page 33247]]
(ii) The proposed rule change will align the GSD fees and the MBSD
fees with the costs of delivering services. Therefore, FICC believes
the proposed rule change is consistent with the requirements of the
Securities Exchange Act of 1934, as amended (``Act'') and the rules and
regulations thereunder applicable to FICC, in particular Section
17A(b)(3)(D) of the Act \5\, which requires that the GSD Rules and the
MBSD Rules provide for the equitable allocation of reasonable dues,
fees, and other charges among its members, respectively.
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\5\ 5 U.S.C. 78q-1(b)(3)(D) [sic].
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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
impact, or impose any burden, on competition. As stated above, the
proposed changes will align the fees in the GSD Rules and the MBSD
Rules with the costs of delivering services to its members.
(C) Clearing Agency's Statement on Comments on the Proposed Rule Change
Received From Members, Participants, or Others
FICC has discussed the proposed fee changes with the majority of
the GSD, MBSD and MBSD EPN members. FICC will discuss the proposed
changes with the remainder of its members over the next several weeks.
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
The forgoing rule change has become effective pursuant to Section
19(b)(3)(A)(ii) of the Act \6\ and Rule 19b-4(f)(2) \7\ 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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\6\ 15 U.S.C. 78s(b)(3)(A)(ii).
\7\ 17 CFR 240.19b-4(f)(2).
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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 [email protected]. Please include
File Number SR-FICC-2014-03 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-FICC-2014-03. 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 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 the filing also will be available
for inspection and copying at the principal office of FICC. 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-2014-03 and should be
submitted on or before July 1, 2014.
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\8\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
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pursuant to delegated authority.\8\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-13450 Filed 6-9-14; 8:45 am]
BILLING CODE 8011-01-P