Self-Regulatory Organizations; Fixed Income Clearing Corporation and National Securities Clearing Corporation; Notice of Filing of Proposed Rule Changes To Institute a Clearing Fund Premium Based Upon a Member's Clearing Fund Requirement To Excess Regulatory Capital Ratio, 21060-21062 [E6-6066]

Download as PDF 21060 Federal Register / Vol. 71, No. 78 / Monday, April 24, 2006 / Notices public notice of such determination. The Commission believes that the proposal will better inform issuers of the requirements for voluntary delisting of their securities under CBOE rules and federal securities laws. The proposal also sets forth a new requirement not in amended SEC Rule 12d2–2 that would require the issuer to notify the Exchange that it has filed Form 25 with the Commission contemporaneously with such filing. The Commission believes that this requirement will allow the Exchange to be fully informed of the filing of a Form 25 and prepared to take timely action in accordance with the filing of the Form. In addition, CBOE proposes to amend CBOE Rule 31.94(G)(h) to state that in appropriate circumstances, when the Exchange is considering delisting because a company no longer meets the requirements for continued listing, a company may, with the consent of the Exchange, file a Form 25 with the SEC, provided that it follows the requirements set forth in SEC Rule 12d2–2(c) and discloses that it is no longer eligible for continued listing on the Exchange in its written notice to the Exchange and public press release, and if it has a publicly accessible Web site, posts such notice on that Web site.17 The Commission believes that this requirement will allow shareholders to be informed and aware that the issuer has failed to meet Exchange listing standards and is voluntarily delisting with the consent of the Exchange. Issuers will therefore not be permitted to delist voluntarily without public disclosure of their noncompliance with Exchange listing standards. IV. Conclusion It is therefore ordered, pursuant to section 19(b)(2) of the Act,18 that the proposed rule change (File No. SR– CBOE–2005–87), as amended, is approved. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.19 Nancy M. Morris, Secretary. [FR Doc. E6–6074 Filed 4–21–06; 8:45 am] SECURITIES AND EXCHANGE COMMISSION [Release No. 34–53664; File No. SR–CHX– 2006–03] Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; Order Granting Approval to Proposed Rule Change Relating to the Prohibition of Trade Shredding April 17, 2006. I. Introduction On January 24, 2006, the Chicago Stock Exchange, Inc. (‘‘CHX’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a proposed rule change relating to trade shredding. The proposed rule change was published for comment in the Federal Register on March 16, 2006.3 The Commission received no comments on the proposal. This order approves the proposed rule change. II. Description of the Proposal The Exchange proposed to amend its rules to prohibit its participants from breaking customer orders into smaller multiple orders for the primary purpose of maximizing rebates or other payments to the participant without regard for the customer’s interest. III. Discussion and Commission Findings The Commission has reviewed carefully the proposed rule change and finds that it is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange,4 particularly Section 6(b)(5) of the Act which, among other things, requires that the rules of a national securities exchange be designed to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in regulating securities transactions, to remove impediments to and to perfect the mechanism of a free and open market and a national market system and, in general, to protect investors and the public interest.5 The Commission BILLING CODE 8010–01–P rmajette on PROD1PC67 with NOTICES 1 15 17 See Amendment No. 2, supra note 4. 18 Id. 19 17 CFR 200.30–3(a)(12). VerDate Aug<31>2005 14:56 Apr 21, 2006 Jkt 208001 U.S.C. 78s(b)(l). 2 17 CFR 240. 19b–4. 3 See Securities Exchange Act Release No. 53441 (March 8, 2006), 71 FR 13642. 4 In approving this proposed rule change, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 5 15 U.S.C. 78f(b)(5). PO 00000 Frm 00092 Fmt 4703 Sfmt 4703 believes that the proposed rule change should help eliminate the distortive practice of trade shredding, and, therefore, promote just and equitable principles of trade. IV. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,6 that the proposed rule change (File No. SR– CHX–2006–03), be and hereby is, approved. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.7 Nancy M. Morris, Secretary. [FR Doc. E6–6070 Filed 4–21–06; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–53671; File Nos. SR–FICC– 2006–03 and SR–NSCC–2006–03] Self-Regulatory Organizations; Fixed Income Clearing Corporation and National Securities Clearing Corporation; Notice of Filing of Proposed Rule Changes To Institute a Clearing Fund Premium Based Upon a Member’s Clearing Fund Requirement To Excess Regulatory Capital Ratio April 18, 2006. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 notice is hereby given that on February 22, 2006, the Fixed Income Clearing Corporation (‘‘FICC’’) and the National Securities Clearing Corporation (‘‘NSCC’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule changes described in Items I, II, and III below, which items have been primarily prepared by FICC and NSCC. The Commission is publishing this notice to solicit comments on the proposed rule changes from interested parties. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Changes FICC and NSCC are seeking to institute a clearing fund premium on their members based on a member’s clearing fund requirement to excess regulatory capital ratio. 6 15 U.S.C. 78s(b)(2). CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). 7 17 E:\FR\FM\24APN1.SGM 24APN1 Federal Register / Vol. 71, No. 78 / Monday, April 24, 2006 / Notices II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Changes In its filing with the Commission, FICC and NSCC included statements concerning the purpose of and basis for the proposed rule changes and discussed any comments they received on the proposed rule changes. The text of these statements may be examined at the places specified in Item IV below. FICC and NSCC have prepared summaries, set forth in sections (A), (B), and (C) below, of the most significant aspects of these statements.2 (A) Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Changes 1. FICC Clearing Fund Premium The degree to which the collateral requirement of a clearing agency member compares to the member’s excess regulatory capital is an important indicator of the potential risk that the member presents to the clearing agency. In 2002, the Government Securities Clearing Corporation (‘‘GSCC’’), the predecessor to the Government Securities Division (‘‘GSD’’) of FICC, received Commission approval to impose a collateral premium on netting members whose clearing fund requirement exceeds their excess regulatory capital.3 Specifically, the GSD currently imposes a 25 percent collateral premium when a member’s ratio of clearing fund requirement to excess net capital, excess liquid capital, excess regulatory capital, or excess adjusted capital is greater than 1.0. The 25 percent premium is applied to the amount by which the member’s clearing fund requirement exceeds the member’s excess regulatory capital. In order to more effectively manage the risk posed by a GSD member whose activity causes it to have a clearing fund requirement that is greater than its excess regulatory capital, FICC now proposes to strengthen the abovementioned risk management tool by applying a clearing fund premium that is equal to the member’s ratio of clearing fund requirement to excess regulatory capital in place of the current flat premium of 25 percent.4 The premium rmajette on PROD1PC67 with NOTICES 2 The Commission has modified the text of the summaries prepared by FICC and NSCC. 3 Securities Exchange Act Release No. 45647 (March 26, 2002), 67 FR 15438 (April 1, 2002) [File No. SR–GSCC–2001–15]. ‘‘Excess regulatory capital’’ for purposes of GSD’s collateral premium included excess net capital, excess liquid capital, or excess adjusted capital. 4 If FICC imposes this premium on a Netting Member, then it shall be considered included as VerDate Aug<31>2005 14:56 Apr 21, 2006 Jkt 208001 21061 would be determined by multiplying: (a) The amount by which a member’s clearing fund requirement exceeds its capital by (b) the member’s ratio of clearing fund to excess regulatory capital expressed as a percent. This formula would allow the premium to increase or decrease in proportion to changes in the ratio and should allow for risk management that is measured in proportion to the risk presented. For example, if a member has a clearing fund requirement of $11.4 million and excess net capital of $10 million, its ratio is 1.14 (or 114 percent), and the applicable collateral premium would be 114 percent of $1.4 million (i.e., the amount by which the member’s clearing fund requirement exceeds its excess net capital) or $1,596,000. If the same member had a clearing fund requirement of $20 million, its ratio would be 2.0 (or 200 percent), and the applicable collateral premium would be 200 percent of $10 million or $20 million. Currently, the collateral premium applies to members whose excess regulatory capital is measured as excess net capital, excess liquid capital, or excess adjusted net capital. The proposed rule change seeks to also include excess equity capital as regulatory excess capital so that the premium can be applied to bank and trust company netting members whose capital is measured as equity capital. The proposed rule change also seeks an additional change to Rule 4 (Clearing Fund, Watch List and Loss Allocation), Section 3 (Watch List) to remove a provision which states that FICC may require a netting member to adjust its trading activity so that its excess regulatory capital ratio decreases to a satisfactory level. This provision was appropriate under the fixed 25 percent premium but no longer would be appropriate because the proposed rule change would impose a variable premium based on activity which would require members to adjust their trading activity or be subject to the higher premium. regulatory capital premium would be triggered when a member’s ratio of clearing fund requirement to excess regulatory capital is greater than 1.0 and would be determined using the same formula as that proposed by FICC. The new premium would be added to NSCC’s clearing fund formula in Procedure XV (Clearing Fund Formula and Other Matters).5 As a matter of practice, when a FICC or NSCC member’s clearing fund requirement to excess regulatory capital ratio is between .50 and 1.0, a warning notification will be issued which will put the member on notice that a collateral premium will be required if the ratio reaches an amount greater than 1.0. When a member’s ratio exceeds 1.0, it will be notified on that business day that a collateral premium has been calculated and will be collected. FICC and NSCC will reserve the right to: (i) Apply a lesser collateral premium (including no premium) based on specific circumstances (such as a member being subject to an unexpected haircut or capital charge that does not fundamentally change its risk profile) and (ii) return all or a portion of the premium amount if it believes that the member’s risk profile does not require the maintenance of that amount. FICC and NSCC believe that the proposed rule changes are consistent with the requirements of Section 17A of the Act 6 and the rules and regulations thereunder applicable to FICC and NSCC because they should help FICC and NSCC assure the safeguarding of securities and funds which are in their custody or control or for which they are responsible by allowing FICC and NSCC to more effectively manage risk presented by certain members. 2. NSCC Clearing Fund Premium NSCC is proposing to impose a clearing fund premium on Rule 2 (Members) broker/dealer and bank members whose clearing fund requirement exceeds their regulatory excess capital. NSCC’s proposed excess regulatory capital premium would apply to members whose regulatory excess capital is measured as excess net capital or excess equity capital. The excess (C) Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Changes Received From Members, Participants or Others part of the netting member’s ‘‘required fund deposit’’ as defined in the GSD’s rules. PO 00000 Frm 00093 Fmt 4703 Sfmt 4703 (B) Self-Regulatory Organization’s Statement on Burden on Competition FICC and NSCC do not believe that the proposed rule changes would impose any burden on competition. Written comments were not and are not intended to be solicited with respect to the proposed rule changes, and none have been received. 5 This premium would not apply to the Canadian Depository for Securities Limited (‘‘CDS’’) clearing fund requirement that is computed pursuant to Appendix 1 of NSCC’s rules. 6 15 U.S.C. 78q–1. E:\FR\FM\24APN1.SGM 24APN1 21062 Federal Register / Vol. 71, No. 78 / Monday, April 24, 2006 / Notices III. Date of Effectiveness of the Proposed Rule Changes 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 changes or (B) institute proceedings to determine whether the proposed rule changes 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 changes are consistent with the Act. Comments may be submitted by any of the following methods: rmajette on PROD1PC67 with NOTICES Electronic Comments • Use the Commission’s Internet comment form (http://www.sec.gov/ rules/sro.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File Numbers SR–FICC–2006–03 and SR– NSCC–2006–03 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549–1090. All submissions should refer to File Numbers SR–FICC–2006–03 and SR– NSCC–2006–03. These file numbers 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 (http://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule changes that are filed with the Commission, and all written communications relating to the proposed rule changes 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, 100 F Street, NE., Washington, DC 20549. Copies of such filings also VerDate Aug<31>2005 14:56 Apr 21, 2006 Jkt 208001 will be available for inspection and copying at the principal offices of FICC and NSCC and on FICC’s Web site at http://www.ficc.com/gov/ gov.docs.jsp?NS-query and on NSCC’s Web site at http://www.nscc.com/legal/ 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 Numbers SR–FICC–2006–03 and SR– NSCC–2006–03 and should be submitted on or before May 15, 2006. For the Commission by the Division of Market Regulation, pursuant to delegated authority.7 Nancy M. Morris, Secretary. [FR Doc. E6–6066 Filed 4–21–06; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–53669; File No. SR–NASD– 2006–046] Self-Regulatory Organizations; National Association of Securities Dealers, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Technical Amendments to Rule 3080 (Disclosure to Associated Persons When Signing Form U–4) April 18, 2006. 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 April 13, 2006, the National Association of Securities Dealers, Inc. (‘‘NASD’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by NASD. NASD filed the proposed rule change as a ‘‘noncontroversial’’ rule change under Rule 19b–4(f)(6) under the Act,3 which rendered the proposal effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 7 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 17 CFR 240.19b–4(f)(6). 1 15 PO 00000 Frm 00094 Fmt 4703 Sfmt 4703 I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change NASD proposes to amend NASD Rule 3080 (Disclosure to Associated Persons When Signing Form U–4) to correct the reference to the name of the Form U4 (Uniform Application for Securities Industry Registration or Transfer) and the location of the predispute arbitration clause in the Form U4. The text of the proposed rule change is available on NASD’s Web site, http://www.nasd.com, at NASD’s Office of the Secretary, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, NASD 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. NASD 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 NASD Rule 3080 requires that members disclose to associated persons certain information regarding the nature and process of arbitration proceedings that the associated person agrees to be bound by upon signing a Form U4. The references to the name of the Form and the location of the predispute arbitration clause in the Form are not correct due to prior amendments to the Form.4 Accordingly, the proposed rule change will amend NASD Rule 3080 to eliminate the hyphen in the name of the Form U4 and to indicate that the predispute arbitration clause is in Item 5 of section 15A of the Form U4. The effective date and the implementation date of the proposed rule change will be the date of filing. 2. Statutory Basis NASD believes that the proposed rule change is consistent with section 15A of 4 See Securities Exchange Act Release Nos. 48161 (July 10, 2003), 68 FR 42444 (July 17, 2003) (SR– NASD–2003–57) (which, among other things, changed the name of the Form from ‘‘U–4’’ to ‘‘U4’’) and 45531 (March 11, 2002), 67 FR 11735 (March 15, 2002) (SR–NASD–2002–05) (which, among other things, relocated the predispute arbitration clause to a new Section 15A of the Form U4). E:\FR\FM\24APN1.SGM 24APN1

Agencies

[Federal Register Volume 71, Number 78 (Monday, April 24, 2006)]
[Notices]
[Pages 21060-21062]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-6066]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53671; File Nos. SR-FICC-2006-03 and SR-NSCC-2006-03]


Self-Regulatory Organizations; Fixed Income Clearing Corporation 
and National Securities Clearing Corporation; Notice of Filing of 
Proposed Rule Changes To Institute a Clearing Fund Premium Based Upon a 
Member's Clearing Fund Requirement To Excess Regulatory Capital Ratio

April 18, 2006.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on February 22, 2006, the 
Fixed Income Clearing Corporation (``FICC'') and the National 
Securities Clearing Corporation (``NSCC'') filed with the Securities 
and Exchange Commission (``Commission'') the proposed rule changes 
described in Items I, II, and III below, which items have been 
primarily prepared by FICC and NSCC. The Commission is publishing this 
notice to solicit comments on the proposed rule changes 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 Changes

    FICC and NSCC are seeking to institute a clearing fund premium on 
their members based on a member's clearing fund requirement to excess 
regulatory capital ratio.

[[Page 21061]]

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Changes

    In its filing with the Commission, FICC and NSCC included 
statements concerning the purpose of and basis for the proposed rule 
changes and discussed any comments they received on the proposed rule 
changes. The text of these statements may be examined at the places 
specified in Item IV below. FICC and NSCC have prepared summaries, set 
forth in sections (A), (B), and (C) below, of the most significant 
aspects of these statements.\2\
---------------------------------------------------------------------------

    \2\ The Commission has modified the text of the summaries 
prepared by FICC and NSCC.
---------------------------------------------------------------------------

(A) Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Changes

1. FICC Clearing Fund Premium
    The degree to which the collateral requirement of a clearing agency 
member compares to the member's excess regulatory capital is an 
important indicator of the potential risk that the member presents to 
the clearing agency. In 2002, the Government Securities Clearing 
Corporation (``GSCC''), the predecessor to the Government Securities 
Division (``GSD'') of FICC, received Commission approval to impose a 
collateral premium on netting members whose clearing fund requirement 
exceeds their excess regulatory capital.\3\ Specifically, the GSD 
currently imposes a 25 percent collateral premium when a member's ratio 
of clearing fund requirement to excess net capital, excess liquid 
capital, excess regulatory capital, or excess adjusted capital is 
greater than 1.0. The 25 percent premium is applied to the amount by 
which the member's clearing fund requirement exceeds the member's 
excess regulatory capital.
---------------------------------------------------------------------------

    \3\ Securities Exchange Act Release No. 45647 (March 26, 2002), 
67 FR 15438 (April 1, 2002) [File No. SR-GSCC-2001-15]. ``Excess 
regulatory capital'' for purposes of GSD's collateral premium 
included excess net capital, excess liquid capital, or excess 
adjusted capital.
---------------------------------------------------------------------------

    In order to more effectively manage the risk posed by a GSD member 
whose activity causes it to have a clearing fund requirement that is 
greater than its excess regulatory capital, FICC now proposes to 
strengthen the above-mentioned risk management tool by applying a 
clearing fund premium that is equal to the member's ratio of clearing 
fund requirement to excess regulatory capital in place of the current 
flat premium of 25 percent.\4\ The premium would be determined by 
multiplying: (a) The amount by which a member's clearing fund 
requirement exceeds its capital by (b) the member's ratio of clearing 
fund to excess regulatory capital expressed as a percent. This formula 
would allow the premium to increase or decrease in proportion to 
changes in the ratio and should allow for risk management that is 
measured in proportion to the risk presented. For example, if a member 
has a clearing fund requirement of $11.4 million and excess net capital 
of $10 million, its ratio is 1.14 (or 114 percent), and the applicable 
collateral premium would be 114 percent of $1.4 million (i.e., the 
amount by which the member's clearing fund requirement exceeds its 
excess net capital) or $1,596,000. If the same member had a clearing 
fund requirement of $20 million, its ratio would be 2.0 (or 200 
percent), and the applicable collateral premium would be 200 percent of 
$10 million or $20 million.
---------------------------------------------------------------------------

    \4\ If FICC imposes this premium on a Netting Member, then it 
shall be considered included as part of the netting member's 
``required fund deposit'' as defined in the GSD's rules.
---------------------------------------------------------------------------

    Currently, the collateral premium applies to members whose excess 
regulatory capital is measured as excess net capital, excess liquid 
capital, or excess adjusted net capital. The proposed rule change seeks 
to also include excess equity capital as regulatory excess capital so 
that the premium can be applied to bank and trust company netting 
members whose capital is measured as equity capital.
    The proposed rule change also seeks an additional change to Rule 4 
(Clearing Fund, Watch List and Loss Allocation), Section 3 (Watch List) 
to remove a provision which states that FICC may require a netting 
member to adjust its trading activity so that its excess regulatory 
capital ratio decreases to a satisfactory level. This provision was 
appropriate under the fixed 25 percent premium but no longer would be 
appropriate because the proposed rule change would impose a variable 
premium based on activity which would require members to adjust their 
trading activity or be subject to the higher premium.
 2. NSCC Clearing Fund Premium
    NSCC is proposing to impose a clearing fund premium on Rule 2 
(Members) broker/dealer and bank members whose clearing fund 
requirement exceeds their regulatory excess capital. NSCC's proposed 
excess regulatory capital premium would apply to members whose 
regulatory excess capital is measured as excess net capital or excess 
equity capital. The excess regulatory capital premium would be 
triggered when a member's ratio of clearing fund requirement to excess 
regulatory capital is greater than 1.0 and would be determined using 
the same formula as that proposed by FICC. The new premium would be 
added to NSCC's clearing fund formula in Procedure XV (Clearing Fund 
Formula and Other Matters).\5\
---------------------------------------------------------------------------

    \5\ This premium would not apply to the Canadian Depository for 
Securities Limited (``CDS'') clearing fund requirement that is 
computed pursuant to Appendix 1 of NSCC's rules.
---------------------------------------------------------------------------

    As a matter of practice, when a FICC or NSCC member's clearing fund 
requirement to excess regulatory capital ratio is between .50 and 1.0, 
a warning notification will be issued which will put the member on 
notice that a collateral premium will be required if the ratio reaches 
an amount greater than 1.0. When a member's ratio exceeds 1.0, it will 
be notified on that business day that a collateral premium has been 
calculated and will be collected.
    FICC and NSCC will reserve the right to: (i) Apply a lesser 
collateral premium (including no premium) based on specific 
circumstances (such as a member being subject to an unexpected haircut 
or capital charge that does not fundamentally change its risk profile) 
and (ii) return all or a portion of the premium amount if it believes 
that the member's risk profile does not require the maintenance of that 
amount.
    FICC and NSCC believe that the proposed rule changes are consistent 
with the requirements of Section 17A of the Act \6\ and the rules and 
regulations thereunder applicable to FICC and NSCC because they should 
help FICC and NSCC assure the safeguarding of securities and funds 
which are in their custody or control or for which they are responsible 
by allowing FICC and NSCC to more effectively manage risk presented by 
certain members.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78q-1.
---------------------------------------------------------------------------

(B) Self-Regulatory Organization's Statement on Burden on Competition

    FICC and NSCC do not believe that the proposed rule changes would 
impose any burden on competition.

(C) Self-Regulatory Organization's Statement on Comments on the 
Proposed Rule Changes Received From Members, Participants or Others

    Written comments were not and are not intended to be solicited with 
respect to the proposed rule changes, and none have been received.

[[Page 21062]]

III. Date of Effectiveness of the Proposed Rule Changes 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 changes or
    (B) institute proceedings to determine whether the proposed rule 
changes 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 
changes are 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 e-mail to rule-comments@sec.gov. Please include 
File Numbers SR-FICC-2006-03 and SR-NSCC-2006-03 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.
    All submissions should refer to File Numbers SR-FICC-2006-03 and 
SR-NSCC-2006-03. These file numbers 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 (http://
www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent 
amendments, all written statements with respect to the proposed rule 
changes that are filed with the Commission, and all written 
communications relating to the proposed rule changes 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, 100 F Street, NE., Washington, DC 20549. Copies of 
such filings also will be available for inspection and copying at the 
principal offices of FICC and NSCC and on FICC's Web site at http://
www.ficc.com/gov/gov.docs.jsp?NS-query and on NSCC's Web site at http:/
/www.nscc.com/legal/ 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 Numbers 
SR-FICC-2006-03 and SR-NSCC-2006-03 and should be submitted on or 
before May 15, 2006.
    For the Commission by the Division of Market Regulation, pursuant 
to delegated authority.\7\
---------------------------------------------------------------------------

    \7\ 17 CFR 200.30-3(a)(12).

Nancy M. Morris,
Secretary.
 [FR Doc. E6-6066 Filed 4-21-06; 8:45 am]
BILLING CODE 8010-01-P