Self-Regulatory Organizations; Fixed Income Clearing Corporation; Notice of Filing of a Proposed Rule Change Relating to Timely Notification of Significant Events That Effect a Change in Control of a Member or Could Have a Substantial Impact on a Member's Business or Financial Condition, 24665-24666 [E5-2240]

Download as PDF Federal Register / Vol. 70, No. 89 / Tuesday, May 10, 2005 / Notices change, as amended, 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 inspection and copying in the Commission’s Public Reference Room. Copies of the filing also will be available for inspection and copying at the principal office of the CBOE. 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–CBOE–2005–34 and should be submitted on or before May 31, 2005. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.16 Margaret H. McFarland, Deputy Secretary. [FR Doc. E5–2239 Filed 5–9–05; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–51643; File No. SR–FICC– 2005–01] Self-Regulatory Organizations; Fixed Income Clearing Corporation; Notice of Filing of a Proposed Rule Change Relating to Timely Notification of Significant Events That Effect a Change in Control of a Member or Could Have a Substantial Impact on a Member’s Business or Financial Condition May 2, 2005. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 notice is hereby given that on January 6, 2005, 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. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The proposed rule change would require certain FICC members to notify FICC when they experience an event that would effect a change in control of such member or could have a substantial impact on such member’s business or financial condition. 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 such statements.2 A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change Currently, FICC’s Government Securities Division’s (‘‘GSD’’) rules require a member to ‘‘promptly’’ inform FICC when they experience a ‘‘material change in control or financial condition.’’ 3 FICC’s Mortgage-Backed Securities Division’s (‘‘MBSD’’) rules do not contain any similar requirements. FICC believes that the GSD rule does not cover a broad-enough scope of events that FICC should be aware of in order to properly manage the risks that such events might pose to FICC and its membership. In addition, FICC believes that the current rule is not effectively enforceable because the terms ‘‘promptly’’ and ‘‘material change in control or financial condition’’ are not adequately defined. Under the proposed rule change, GSD netting members and MBSD clearing members would be required to provide oral and written notification to FICC upon experiencing a ‘‘Reportable Event.’’ The term ‘‘Reportable Event’’ would be defined as an event that would effect a change in control of a GSD netting member or an MBSD clearing member or an event that could have a substantial impact on those types of member’s business or financial condition including, but not limited to: (a) Material organizational changes including mergers, acquisitions, changes 2 The Commission has modified the text of the summaries prepared by FICC. 3 GSD Rule 3, Section 4. 16 17 1 15 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). VerDate jul<14>2003 16:17 May 09, 2005 Jkt 205001 PO 00000 Frm 00168 Fmt 4703 Sfmt 4703 24665 in corporate form, name changes, changes in the ownership of a netting or clearing member or its affiliates, and material changes in management; (b) material changes in business lines, including new business lines undertaken; and (c) status as a defendant in litigation which could reasonably impact the netting or clearing member’s financial condition or ability to conduct business.4 In order to provide FICC with enough time to analyze the implications of a Reportable Event and to determine an appropriate course of action, FICC believes that it is important for it to learn of a Reportable Event as soon as possible. As such, a netting or clearing member must submit written notice to FICC at least 90 calendar days prior to the effective date of such Reportable Event unless the member demonstrates that it could not have reasonably done so and also provides oral and written notice to FICC as soon as possible. Failure to so notify FICC would result in a $5,000 fine. FICC believes that the proposed rule change is consistent with the requirements of Section 17A of the Act and the rules and regulations thereunder because it should enhance FICC’s ability to collect and evaluate the type of information that it needs to be aware of in order to properly manage risks and enforce its rules, thereby assuring the safeguarding of securities and funds for which FICC is in control. 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 it receives. 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 4 A similar requirement was added as Addendum T to the National Securities Clearing Corporation’s rules in 1998. Securities Exchange Act Release No. 40582 (Oct. 20, 1998), 63 FR 57346 (Oct. 27, 1998). E:\FR\FM\10MYN1.SGM 10MYN1 24666 Federal Register / Vol. 70, No. 89 / Tuesday, May 10, 2005 / Notices 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. submissions should refer to File Number SR–FICC–2005–01 and should be submitted on or before May 31, 2005. 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: BILLING CODE 8010–01–P 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–2005–01 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–2005–01. 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 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://ficc.com/gov/gov. docs.jsp?NSquery=. 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 VerDate jul<14>2003 16:17 May 09, 2005 Jkt 205001 For the Commission by the Division of Market Regulation, pursuant to delegated authority.5 Margaret H. McFarland, Deputy Secretary. [FR Doc. E5–2240 Filed 5–9–05; 8:45 am] SECURITIES AND EXCHANGE COMMISSION [Release No. 34–51649; File No. SR–NSCC– 2005–04] Self-Regulatory Organizations; National Securities Clearing Corporation; Notice of Filing of a Proposed Rule Change To Establish a Confirmation and Matching Service for Over-The-Counter U.S. Equity Options Transactions May 3, 2005. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 notice is hereby given that on April 29, 2005, the National Securities Clearing Corporation (‘‘NSCC’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change described in Items I, II, and III below, which items have been prepared primarily by NSCC. The Commission is publishing this notice to solicit comments from interested parties. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change NSCC is seeking permanent approval to add Addendum M to its Rules and Procedures to establish a confirmation and matching service for over-thecounter (‘‘OTC’’) U.S. equity options transactions (‘‘NSCC Equity Options Service’’).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, NSCC 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 CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). 2 The Commission approved NSCC’s Equity Options Service on a temporary basis through May 31, 2005, so that NSCC could evaluate the operations of the service and report its findings to the Commission. Securities Exchange Act Release No. 50652 (November 17, 2004), 69 FR 67377. PO 00000 5 17 Frm 00169 Fmt 4703 Sfmt 4703 may be examined at the places specified in Item IV below. NSCC has prepared summaries, set forth in sections (A), (B), and (C) below, of the most significant aspects of such statements.3 (A) Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change Currently, confirmation of trade details among dealers and the dealers’ buy-side customers in the OTC equity options industry is supported largely by faxes and telephone communication. It is widely acknowledged by the industry that this current operational infrastructure, which depends upon nonstandard and manual processing, results in excessive processing costs, delays, and errors. The industry is seeking to reduce the attendant operational risks associated with OTC equity options processing by automating the trade confirmation process for OTC equity options. In response to similar conditions prevailing in the credit default swaps industry, The Depository Trust & Clearing Corporation (‘‘DTCC’’), the corporate parent of NSCC, created a subsidiary, DTCC Deriv/SERV LLC (‘‘Deriv/SERV’’), in 2003. Deriv/SERV currently offers a confirmation and matching service for OTC credit default swaps transactions and their associated cash flows. This service is now used by approximately 75 entities including all of the largest OTC credit default swaps dealers. Deriv/SERV has developed a confirmation and matching service for OTC equity options transactions and their associated cash flows (‘‘Deriv/ SERV Equity Options Service’’). The Deriv/SERV Equity Options Service provides for confirmation and matching either between two OTC equity options dealers or between an OTC equity options dealer and its buy-side customer. Where either the buyer or the seller of an equity option is a U.S. person and the equity option is issued by a U.S. issuer (‘‘U.S. Equity Option Transaction’’), NSCC provides confirmation and matching services (‘‘NSCC Equity Options Service’’) to Deriv/SERV pursuant to the NSCC/ DTCC Deriv/SERV Service Agreement (‘‘Service Agreement’’).4 In connection 3 The Commission has modified the text of the summaries prepared by NSCC. 4 DTC has represented that the continued processing of Deriv/SERV’s transactions will not be a strain on the capacity of DTC’s systems. The host computer and other automated facilities associated with the NSCC Equity Options Service are provided by DTC pursuant to service agreements between NSCC and DTCC and between DTCC and DTC. E:\FR\FM\10MYN1.SGM 10MYN1

Agencies

[Federal Register Volume 70, Number 89 (Tuesday, May 10, 2005)]
[Notices]
[Pages 24665-24666]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E5-2240]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-51643; File No. SR-FICC-2005-01]


Self-Regulatory Organizations; Fixed Income Clearing Corporation; 
Notice of Filing of a Proposed Rule Change Relating to Timely 
Notification of Significant Events That Effect a Change in Control of a 
Member or Could Have a Substantial Impact on a Member's Business or 
Financial Condition

May 2, 2005.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on January 6, 2005, 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The proposed rule change would require certain FICC members to 
notify FICC when they experience an event that would effect a change in 
control of such member or could have a substantial impact on such 
member's business or financial condition.

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 such statements.\2\
---------------------------------------------------------------------------

    \2\ 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

    Currently, FICC's Government Securities Division's (``GSD'') rules 
require a member to ``promptly'' inform FICC when they experience a 
``material change in control or financial condition.'' \3\ FICC's 
Mortgage-Backed Securities Division's (``MBSD'') rules do not contain 
any similar requirements.
---------------------------------------------------------------------------

    \3\ GSD Rule 3, Section 4.
---------------------------------------------------------------------------

    FICC believes that the GSD rule does not cover a broad-enough scope 
of events that FICC should be aware of in order to properly manage the 
risks that such events might pose to FICC and its membership. In 
addition, FICC believes that the current rule is not effectively 
enforceable because the terms ``promptly'' and ``material change in 
control or financial condition'' are not adequately defined.
    Under the proposed rule change, GSD netting members and MBSD 
clearing members would be required to provide oral and written 
notification to FICC upon experiencing a ``Reportable Event.'' The term 
``Reportable Event'' would be defined as an event that would effect a 
change in control of a GSD netting member or an MBSD clearing member or 
an event that could have a substantial impact on those types of 
member's business or financial condition including, but not limited to: 
(a) Material organizational changes including mergers, acquisitions, 
changes in corporate form, name changes, changes in the ownership of a 
netting or clearing member or its affiliates, and material changes in 
management; (b) material changes in business lines, including new 
business lines undertaken; and (c) status as a defendant in litigation 
which could reasonably impact the netting or clearing member's 
financial condition or ability to conduct business.\4\
---------------------------------------------------------------------------

    \4\ A similar requirement was added as Addendum T to the 
National Securities Clearing Corporation's rules in 1998. Securities 
Exchange Act Release No. 40582 (Oct. 20, 1998), 63 FR 57346 (Oct. 
27, 1998).
---------------------------------------------------------------------------

    In order to provide FICC with enough time to analyze the 
implications of a Reportable Event and to determine an appropriate 
course of action, FICC believes that it is important for it to learn of 
a Reportable Event as soon as possible. As such, a netting or clearing 
member must submit written notice to FICC at least 90 calendar days 
prior to the effective date of such Reportable Event unless the member 
demonstrates that it could not have reasonably done so and also 
provides oral and written notice to FICC as soon as possible. Failure 
to so notify FICC would result in a $5,000 fine.
    FICC believes that the proposed rule change is consistent with the 
requirements of Section 17A of the Act and the rules and regulations 
thereunder because it should enhance FICC's ability to collect and 
evaluate the type of information that it needs to be aware of in order 
to properly manage risks and enforce its rules, thereby assuring the 
safeguarding of securities and funds for which FICC is in control.

 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 it receives.

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

[[Page 24666]]

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-2005-01 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-2005-01. 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 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://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-2005-01 
and should be submitted on or before May 31, 2005.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\5\
---------------------------------------------------------------------------

    \5\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5-2240 Filed 5-9-05; 8:45 am]
BILLING CODE 8010-01-P
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