Self-Regulatory Organizations; Fixed Income Clearing Corporation; Notice of Filing of a Proposed Rule Change To Modify the Assessment Process for Late Submissions of Collateral Made Through the GCF Repo Service and To Increase the Types of Securities Available To Satisfy Collateral Allocation Obligations, 15960-15962 [E5-1382]
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15960
Federal Register / Vol. 70, No. 59 / Tuesday, March 29, 2005 / Notices
Under the proposed rule change, a
violation of a minimum financial
requirement by an MBSD clearing
participant will result in the imposition
on such member of a margin premium
equal to the greater of (a) 25 percent of
the member’s unadjusted 3 Participants
Fund requirement or (b) $1,000,000
which will begin on the day the
participant fell below its minimum
financial requirement and will continue
for ninety calendar days after the later
of (i) the member’s return to compliance
with its applicable minimum financial
standards or (ii) FICC’s discovery of the
violation.4 In addition, such violation
will result in (1) a report of the violation
to the FICC Membership and Risk
Management Committee at its next
regularly scheduled meeting or sooner if
deemed appropriate by FICC staff and
(2) the placement of such member on
FICC’s watch list subjecting it to
frequent and thorough monitoring. None
of these consequences will preclude
FICC from imposing any other margin
consequences permitted by the MBSD
rules.
2. Failure To Submit Requisite Financial
Reports on a Timely Basis
Certain members that are required to
provide monthly or quarterly financial
data to FICC at times have violated
MBSD’s membership requirements by
not providing such financial data in a
timely manner. In such instances,
management contacts the offending
member and follows up with a letter.
Failure to receive required
information in a timely manner hinders
FICC’s ability to appropriately assess the
financial condition of such members
and as a result creates risk to FICC. To
encourage timely submission of
required financial data, FICC has
established a mechanism to fine
delinquent participants.5 FICC is now
proposing two additional measures to
enforce timely filing of financial
information.
First, FICC will subject delinquent
participants to a more stringent
Participants Fund requirement.
Specifically, FICC will now
automatically impose a margin premium
equal to the greater of (1) 25 percent of
the member’s unadjusted Participants
Fund requirement or (2) $1,000,000. The
margin premium will be applied until
appropriate financial data is submitted
to FICC and reviewed for compliance
purposes. In addition, delinquent
members will be precluded from taking
back any excess Participants Fund
collateral to which they might
ordinarily be entitled.
Second, participants that fail to
submit requisite financial reports on a
timely basis will also automatically be
placed on FICC’s watch list and subject
to frequent and thorough monitoring.
III. Discussion
Section 17A(b)(3)(F) of the Act
requires that the rules of a clearing
agency be designed to facilitate the
safeguarding of securities and funds
which are in its custody or control or for
which it is responsible.6 The
Commission finds that FICC’s proposed
rule change is consistent with this
requirement because it assures the
safeguarding of such securities and
funds by incentivizing participants to
maintain their minimum financial
standards and to submit their required
financial reports on a timely basis. As a
result, FICC’s ability to monitor its
participants and to maintain a
financially sound participant base
should be enhanced.
IV. Conclusion
On the basis of the foregoing, the
Commission finds that the proposed
rule change is consistent with the
requirements of the Act and in
particular section 17A of the Act and
the rules and regulations thereunder.
It is therefore ordered, pursuant to
section 19(b)(2) of the Act, that the
proposed rule change (File No. SR–
FICC–2004–13) be and hereby is
approved.
For the Commission by the Division of
Market Regulation, pursuant to delegated
authority.7
J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E5–1381 Filed 3–28–05; 8:45 am]
BILLING CODE 8010–01–P
3 ‘‘Unadjusted’’ means the standard calculation
before any additional assessments.
4 The required clearing fund deposit premium
that will be assessed for violation of applicable
minimum financial standards will be effective
beginning on the day of the violation but will begin
to be assessed on the date FICC becomes aware of
the violation.
5 Securites Exchange Act Release No. 49947 [June
30, 2004), 69 FR 41316 (File No. SR–FICC–2003–
01].
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17:01 Mar 28, 2005
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PO 00000
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–51413; File No. SR–FICC–
2004–17]
Self-Regulatory Organizations; Fixed
Income Clearing Corporation; Notice of
Filing of a Proposed Rule Change To
Modify the Assessment Process for
Late Submissions of Collateral Made
Through the GCF Repo Service and To
Increase the Types of Securities
Available To Satisfy Collateral
Allocation Obligations
March 23, 2005.
Pursuant to section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 notice is hereby given that on
August 13, 2004, the Fixed Income
Clearing Corporation (‘‘FICC’’) filed
with the Securities and Exchange
Commission (‘‘Commission’’) and on
March 14, 2005, amended the proposed
rule change 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 parties.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
FICC is seeking to amend the rules of
the Government Securities Division
(‘‘GSD’’) of FICC to modify the
assessment process for late submissions
of collateral allocations made through
its GCF Repo service and to increase the
types of securities that can be used by
a member in satisfaction of collateral
obligations.2
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),
1 15
U.S.C. 78s(b)(1).
proposed rule change also amends GSD’s
rules to clarify that where a collateral allocation
obligation is satisfied by the posting of U.S.
Treasury Bills, notes, or bonds, such securities must
mature in a time frame no greater than that of the
securities that have been traded except where such
traded securities are U.S. Treasury Bills, such
obligations must be satisfied with the posting of
‘‘comparable securities’’ and/or cash only.
2 The
6 15
7 17
U.S.C. 78q–1(b)(3)(F).
CFR 200.30–3(a)(12).
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Federal Register / Vol. 70, No. 59 / Tuesday, March 29, 2005 / Notices
and (C) below, of the most significant
aspects of these statements.3
(A) Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Assessment Process for Late
Submissions of Collateral Allocations
Made Through the GCF Repo Service
On October 30, 1998, the Commission
granted approval to FICC’s predecessor,
the Government Securities Clearing
Corporation, to implement its GCF Repo
service, which is a significant
alternative financing vehicle to the
delivery versus payment and tri-party
repo markets. That approval included a
fine schedule for failure to adhere to
relevant timeframes.4 The fine schedule
was not implemented because of certain
events.5 More recently, FICC has shifted
the service from an interbank service to
an intrabank service in order to address
certain payment system risk issues that
have arisen and that have resulted in
decreased volumes.6 FICC believes,
given the lower volumes and likely
forthcoming changes to the service to
address the payment system risk issues,
that the original fine schedule should be
replaced.
Specifically, FICC is proposing to
implement a late fee schedule to replace
the late fine schedule. FICC believes
that late fee schedules are appropriate in
situations where the member’s lateness
causes an operational burden but does
not result in risk to FICC or its
members.7 In addition, in order to
encourage members to make their
collateral allocations on a timely basis,
there would be one late fee targeted to
the most significant timeframe
surrounding the service. Specifically, if
a dealer does not make the required
collateral allocation by the later of 4:30
p.m. (New York time) or 1 hour after the
actual close of Fedwire GCF repo
reversals, the dealer will be subject to a
late fee of $500.00. Finally, in order to
alleviate the potential operational and
3 The Commission has modified the text of the
summaries prepared by FICC.
4 Securities Exchange Act Release No. 40623
(October 30, 1998), 63 FR 59831 (November 5, 1998)
[File No. SR–GSCC–98–02].
5 As a new and complex service, members had
difficulty adhering to the timeframes. In addition,
the initial rate of participation was very poor, and
there was a consequent need to encourage growth
in the service.
6 Securities Exchange Act Release No. 48006
(June 10, 2003), 68 FR 35745 (June 16, 2003) [SR–
FICC–2003–04].
7 In a GCF Repo transaction, a borrower does not
receive the funds borrowed until it makes the
required collateral allocation. The lender maintains
control of the funds until the allocation is made.
The transaction does not produce a risk of loss to
FICC, the lender, or other members.
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17:01 Mar 28, 2005
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15961
administrative burdens caused by late
collateral allocations, FICC is proposing
to amend the GCF Repo rules to provide
that FICC will process collateral
allocation obligations that are received
after 6 p.m. on a good faith basis only.
This 6 p.m. deadline will replace the 7
p.m. final cutoff for dealer allocations of
collateral to satisfy obligations.
(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 yet been
solicited or received. FICC will notify
the Commission of any written
comments received by FICC.
2. Types of Collateral Used to Satisfy
Collateral Allocation Obligations
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within thirty-five days of the date of
publication of this notice in the Federal
Register or within such longer period (i)
as the Commission may designate up to
ninety days of such date 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 such proposed
rule change or
(B) Institute proceedings to determine
whether the proposed rule change
should be disapproved.
Currently, GSD Rule 20 provides that
a collateral allocation obligation may be
satisfied with ‘‘comparable securities,’’
Treasury securities, and/or cash.
‘‘Comparable securities’’ are defined to
include any securities that are
represented by the same generic CUSIP
number as the securities in question.
Therefore, in the event that a member
does not have enough of the collateral
securities or the Comparable Securities,
the only collateral that can be used is
Treasury securities and/or cash.
GSD members have approached FICC
and asked that the rules be amended to
add additional collateral options as set
forth below:
(a) Ginnie Mae adjustable-rate
mortgage obligations could be satisfied
with Ginnie Mae fixed-rate mortgage
backed securities and
(b) Fannie Mae and Freddie Mac
adjustable-rate mortgage obligations
could be satisfied with: (i) Fannie Mae
and Freddie Mac fixed-rate mortgagebacked securities, (ii) Ginnie Mae fixedrate mortgage-backed securities, and (iii)
Ginnie Mae adjustable-rate mortgage
obligations.8
FICC believes that the proposed rule
change is consistent with the
requirements of section 17A of the Act 9
and the rules and regulations
thereunder applicable to FICC because it
is designed to promote the prompt and
accurate clearance and settlement of
securities transactions by allowing
FICC’s members additional collateral
options with which to meet GCF
collateral allocation obligations and by
implementing a fee schedule that
should incentivize members to allocate
collateral on a timely basis.
(B) Self-Regulatory Organization’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.
8 The industry recognizes fixed-rate securities as
an acceptable substitute for adjustable-rate
securities as collateral for mortgage-backed repo
trades.
9 15 U.S.C. 78q–1.
PO 00000
Frm 00145
Fmt 4703
Sfmt 4703
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 (https://www.sec.gov/
rules/sro.shtml) or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–FICC–2004–17 on the
subject line.
Paper Comments
• Send paper comments in triplicate
to Jonathan G. Katz, Secretary,
Securities and Exchange Commission,
450 Fifth Street, NW., Washington, DC
20549–0609. All submissions should
refer to File Number SR–FICC–2004–17.
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 (https://
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
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15962
Federal Register / Vol. 70, No. 59 / Tuesday, March 29, 2005 / Notices
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 inspection and copying in
the Commission’s Public Reference
Section, 450 Fifth Street, NW.,
Washington, DC 20549. Copies of such
filing also will be available for
inspection and copying at the principal
office of FICC and on FICC’s Web site
at https://www.ficc.com/gov/
gov.docs.jsp?NS-query. 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–2004–17 and should
be submitted on or before April 19,
2005.
For the Commission by the Division of
Market Regulation, pursuant to delegated
authority.10
J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E5–1382 Filed 3–28–05; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–51410; File No. SR–ISE–
2004–27]
Self-Regulatory Organizations; Notice
of Filing of Proposed Rule Change and
Amendments No. 1 and No. 2 by the
International Securities Exchange, Inc.,
Relating to Trading Options on
Reduced Values of the NYSE U.S. 100
Index, the NYSE International 100
Index, the NYSE World Leaders Index,
and the NYSE TMT Index, Including
Long-Term Options
March 22, 2005.
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 July 23,
2004, the International Securities
Exchange, Inc. (‘‘ISE’’ or ‘‘Exchange’’)
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 ISE. The ISE
submitted Amendments No. 1 and No.
2 to the proposal on January 5, 2005,3
10 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 Amendment No. 1 set forth a list of the
underlying components of the NYSE Indexes.
1 15
VerDate jul<14>2003
17:01 Mar 28, 2005
Jkt 205001
and March 1, 2005, respectively.4 The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The ISE is proposing to amend its
rules to trade options on three broadbased indexes and one narrow-based
index, whose components currently
trade on the New York Stock Exchange,
Inc (‘‘NYSE’’). The NYSE U.S. 100
Index, the NYSE International 100 Index
and the NYSE World Leaders Index are
all broad-based indexes. The NYSE
TMT Index is a narrow-based index.
Options on these indexes would be
cash-settled and would have Europeanstyle exercise provisions.
The text of the proposed rule change
is available on the ISE’s Web site
(https://www.iseoptions.com), at the
ISE’s Office of the Secretary, and at the
Commission.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
ISE included statements concerning the
purpose of, and basis for, the proposed
rule change and discussed any
comments it received on the proposed
rule change, as amended. The text of
these statements may be examined at
the places specified in Item IV below.
The ISE has prepared summaries, set
forth in sections A, B and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend its
rules to provide for the listing and
trading on the Exchange of cash-settled,
European-style, index options on the
NYSE U.S. 100 Index, the NYSE
International 100 Index, and the NYSE
World Leaders Index (the ‘‘Broad Based
NYSE Indexes’’) and the NYSE TMT
Index (the ‘‘Narrow Based NYSE
Index’’) (collectively, the ‘‘NYSE
Indexes’’).5 Specifically, the Exchange
4 Amendment No. 2 replaced the original filing in
its entirety, proposed a reduce number of contracts
for position and exercise limits, addressed one of
the events that the Exchange will monitor on an
annual basis, and made other technical corrections
to the filing.
5 A description of each of the NYSE Indexes can
be found on the NYSE’s Web site at https://
www.nyseindexes.com.
PO 00000
Frm 00146
Fmt 4703
Sfmt 4703
proposes to list options based upon (i)
one-tenth of the value of the NYSE
Indexes (‘‘Mini Index Options’’) and (ii)
one one-hundredth of the value of the
NYSE Indexes (‘‘Micro Index Options’’).
In Amendment No. 2, which replaced
the original filing in its entirety, the ISE
proposed a reduced number of contracts
for position and exercise limits,
addressed one of the events that the
Exchange will monitor on an annual
basis, and made other technical
corrections to the filing.
Index Design and Composition
The NYSE Indexes are designed to be
a comprehensive representation of the
investable United States equity market.
Each NYSE Index is a float-adjusted
capitalization-weighted index,6 whose
components are all traded on the NYSE.
NYSE U.S. 100 Index
The NYSE U.S. 100 Index tracks the
top 100 U.S. stocks trading on the
NYSE. The companies represented have
a market capitalization of $5.95 trillion,
which covers 47% of the entire market
capitalization of U.S. companies and
over 62% of U.S. companies listed on
the NYSE. Additionally, these
companies are major market
participants, most of which are wellknown household names. This fact,
along with the NYSE’s significant U.S.
market penetration, ensures that this
index will closely track the entire U.S.
market. This index is designed to assist
investors looking to track the U.S.
market across 10 industry sectors, as
defined by Dow Jones & Company
(‘‘Dow Jones’’).
The NYSE U.S. 100 Index is
calculated using a rules-based
methodology that is fully transparent.
Its original selection pool includes all
U.S. stocks listed on the NYSE. The
entire index universe is ranked in
descending order by unadjusted market
capitalization. If a component has
multiple share classes, the most liquid
issue for that company is included.
Companies that fail a liquidity test, i.e.,
average trading volume of 100,000
shares for the preceding three months,
are removed. The top 100 companies are
then selected from the remaining
universe, and the index is weighted by
float-adjusted market capitalization.
The index is reviewed quarterly, with
an 80–120 buffer applied to limit
6 The calculation of a float-adjusted, marketweighted index involves taking the summation of
the product of the price of each stock in the index
and the number of shares available to the public for
trading, rather than the total shares oustanding for
each issue. In contrast, a price-weighted index
involves taking the summation of the prices of the
stocks in the index.
E:\FR\FM\29MRN1.SGM
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]]>Agencies
[Federal Register Volume 70, Number 59 (Tuesday, March 29, 2005)]
[Notices]
[Pages 15960-15962]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E5-1382]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-51413; File No. SR-FICC-2004-17]
Self-Regulatory Organizations; Fixed Income Clearing Corporation;
Notice of Filing of a Proposed Rule Change To Modify the Assessment
Process for Late Submissions of Collateral Made Through the GCF Repo
Service and To Increase the Types of Securities Available To Satisfy
Collateral Allocation Obligations
March 23, 2005.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on August 13, 2004, the Fixed
Income Clearing Corporation (``FICC'') filed with the Securities and
Exchange Commission (``Commission'') and on March 14, 2005, amended the
proposed rule change 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 parties.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
FICC is seeking to amend the rules of the Government Securities
Division (``GSD'') of FICC to modify the assessment process for late
submissions of collateral allocations made through its GCF Repo service
and to increase the types of securities that can be used by a member in
satisfaction of collateral obligations.\2\
---------------------------------------------------------------------------
\2\ The proposed rule change also amends GSD's rules to clarify
that where a collateral allocation obligation is satisfied by the
posting of U.S. Treasury Bills, notes, or bonds, such securities
must mature in a time frame no greater than that of the securities
that have been traded except where such traded securities are U.S.
Treasury Bills, such obligations must be satisfied with the posting
of ``comparable securities'' and/or cash only.
---------------------------------------------------------------------------
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),
[[Page 15961]]
and (C) below, of the most significant aspects of these statements.\3\
---------------------------------------------------------------------------
\3\ The Commission has modified the text of the summaries
prepared by FICC.
---------------------------------------------------------------------------
(A) Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Assessment Process for Late Submissions of Collateral Allocations
Made Through the GCF Repo Service
On October 30, 1998, the Commission granted approval to FICC's
predecessor, the Government Securities Clearing Corporation, to
implement its GCF Repo service, which is a significant alternative
financing vehicle to the delivery versus payment and tri-party repo
markets. That approval included a fine schedule for failure to adhere
to relevant timeframes.\4\ The fine schedule was not implemented
because of certain events.\5\ More recently, FICC has shifted the
service from an interbank service to an intrabank service in order to
address certain payment system risk issues that have arisen and that
have resulted in decreased volumes.\6\ FICC believes, given the lower
volumes and likely forthcoming changes to the service to address the
payment system risk issues, that the original fine schedule should be
replaced.
---------------------------------------------------------------------------
\4\ Securities Exchange Act Release No. 40623 (October 30,
1998), 63 FR 59831 (November 5, 1998) [File No. SR-GSCC-98-02].
\5\ As a new and complex service, members had difficulty
adhering to the timeframes. In addition, the initial rate of
participation was very poor, and there was a consequent need to
encourage growth in the service.
\6\ Securities Exchange Act Release No. 48006 (June 10, 2003),
68 FR 35745 (June 16, 2003) [SR-FICC-2003-04].
---------------------------------------------------------------------------
Specifically, FICC is proposing to implement a late fee schedule to
replace the late fine schedule. FICC believes that late fee schedules
are appropriate in situations where the member's lateness causes an
operational burden but does not result in risk to FICC or its
members.\7\ In addition, in order to encourage members to make their
collateral allocations on a timely basis, there would be one late fee
targeted to the most significant timeframe surrounding the service.
Specifically, if a dealer does not make the required collateral
allocation by the later of 4:30 p.m. (New York time) or 1 hour after
the actual close of Fedwire GCF repo reversals, the dealer will be
subject to a late fee of $500.00. Finally, in order to alleviate the
potential operational and administrative burdens caused by late
collateral allocations, FICC is proposing to amend the GCF Repo rules
to provide that FICC will process collateral allocation obligations
that are received after 6 p.m. on a good faith basis only. This 6 p.m.
deadline will replace the 7 p.m. final cutoff for dealer allocations of
collateral to satisfy obligations.
---------------------------------------------------------------------------
\7\ In a GCF Repo transaction, a borrower does not receive the
funds borrowed until it makes the required collateral allocation.
The lender maintains control of the funds until the allocation is
made. The transaction does not produce a risk of loss to FICC, the
lender, or other members.
---------------------------------------------------------------------------
2. Types of Collateral Used to Satisfy Collateral Allocation
Obligations
Currently, GSD Rule 20 provides that a collateral allocation
obligation may be satisfied with ``comparable securities,'' Treasury
securities, and/or cash. ``Comparable securities'' are defined to
include any securities that are represented by the same generic CUSIP
number as the securities in question. Therefore, in the event that a
member does not have enough of the collateral securities or the
Comparable Securities, the only collateral that can be used is Treasury
securities and/or cash.
GSD members have approached FICC and asked that the rules be
amended to add additional collateral options as set forth below:
(a) Ginnie Mae adjustable-rate mortgage obligations could be
satisfied with Ginnie Mae fixed-rate mortgage backed securities and
(b) Fannie Mae and Freddie Mac adjustable-rate mortgage obligations
could be satisfied with: (i) Fannie Mae and Freddie Mac fixed-rate
mortgage-backed securities, (ii) Ginnie Mae fixed-rate mortgage-backed
securities, and (iii) Ginnie Mae adjustable-rate mortgage
obligations.\8\
---------------------------------------------------------------------------
\8\ The industry recognizes fixed-rate securities as an
acceptable substitute for adjustable-rate securities as collateral
for mortgage-backed repo trades.
---------------------------------------------------------------------------
FICC believes that the proposed rule change is consistent with the
requirements of section 17A of the Act \9\ and the rules and
regulations thereunder applicable to FICC because it is designed to
promote the prompt and accurate clearance and settlement of securities
transactions by allowing FICC's members additional collateral options
with which to meet GCF collateral allocation obligations and by
implementing a fee schedule that should incentivize members to allocate
collateral on a timely basis.
---------------------------------------------------------------------------
\9\ 15 U.S.C. 78q-1.
---------------------------------------------------------------------------
(B) Self-Regulatory Organization'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.
(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 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 thirty-five days of the date of publication of this notice
in the Federal Register or within such longer period (i) as the
Commission may designate up to ninety days of such date 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 such 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 (https://
www.sec.gov/rules/sro.shtml) or
Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-FICC-2004-17 on the subject line.
Paper Comments
Send paper comments in triplicate to Jonathan G. Katz,
Secretary, Securities and Exchange Commission, 450 Fifth Street, NW.,
Washington, DC 20549-0609. All submissions should refer to File Number
SR-FICC-2004-17. 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 (https://
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
[[Page 15962]]
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 inspection and copying in the Commission's Public
Reference Section, 450 Fifth Street, NW., Washington, DC 20549. Copies
of such filing also will be available for inspection and copying at the
principal office of FICC and on FICC's Web site at https://www.ficc.com/
gov/gov.docs.jsp?NS-query. 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-2004-17 and
should be submitted on or before April 19, 2005.
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\10\ 17 CFR 200.30-3(a)(12).
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\10\
J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E5-1382 Filed 3-28-05; 8:45 am]
BILLING CODE 8010-01-P
