Self-Regulatory Organizations; Fixed Income Clearing Corporation; Notice of Filing of a Proposed Rule Change Relating to the Federal Reserve's National Settlement Service, 62632-62634 [E6-17913]
Download as PDF
<![CDATA[
62632
Federal Register / Vol. 71, No. 207 / Thursday, October 26, 2006 / Notices
each of the transfer agents listed in the
Appendix. In some cases, the
Commission was unable to locate the
transfer agent, and in other cases, the
Commission learned that the transfer
agent had ceased doing business as a
transfer agent. Therefore, based on the
facts it has, the Commission believes
that the transfer agents listed in the
Appendix are no longer in existence or
have ceased doing business as transfer
agents.
Any transfer agent listed in the
Appendix that believes its registration
should not be cancelled must notify the
Commission in writing prior to
November 27, 2006. Written
notifications may be mailed to:
Catherine Moore, Division of Market
Regulation, Securities and Exchange
Commission, 100 F Street, NE.,
Washington, DC 20459–6628. Written
notifications may also be e-mailed to:
marketreg@sec.gov to the attention of
Catherine Moore, with the phrase
‘‘Notice of Intention to Cancel Transfer
Agent Registration’’ in the subject line.
Registration
No.
Name
84–5847 ......
84–5872 ......
Financial Strategies, LLC.
D-Lanz Development Group,
Inc.
CBIZ Retirement Services,
Inc.
Sovereign Depository Corporation.
Newport Stock Transfer Agency, Inc.
U.S. Corporate Support Services, Inc.
Femis Kerger & Company
Transfer Agent & Registrar.
Touch America.
Merge Media, Inc.
Chapman Capital Management, Inc.
First Financial Escrow &
Transfer, Inc.
Pharmacy Buying Association,
Inc.
Street Transfer & Registrar
Agency.
Brown Brothers Harriman &
Co.
Brookhill Stock Transfer Business Trust.
Certified Water Systems, Inc.
Lauries Happy Thoughts, Inc.
Fidelity Custodian Services,
Inc.
Carolyn Plant.
Encompass Corporate Services.
84–5873 ......
84–5885 ......
84–5897 ......
84–5899 ......
84–5912 ......
84–6019 ......
84–6032 ......
84–6034 ......
84–6039 ......
84–6045 ......
84–6059 ......
84–6077 ......
84–6092 ......
84–6097 ......
84–6101 ......
84–6126 ......
For the Commission by the Division of
Market Regulation, pursuant to delegated
authority.2
Nancy M. Morris,
Secretary.
84–6131 ......
84–6157 ......
Appendix
Registration
No.
84–0019
84–0548
84–0711
84–0904
84–1257
84–1663
......
......
......
......
......
......
84–1735 ......
84–1737 ......
84–1828 ......
84–1923 ......
84–5494 ......
84–5550
84–5606
84–5647
84–5694
84–5720
......
......
......
......
......
84–5727 ......
84–5754 ......
84–5755 ......
ycherry on PROD1PC64 with NOTICES
84–5756 ......
84–5773 ......
84–5812 ......
84–5816 ......
84–5820 ......
84–5826 ......
2 17
BILLING CODE 8011–01–P
LG & E Energy Corp.
American Bancservices Inc.
Niagara Mohawk Power Corp.
Pfizer Inc.
BNY Clearing Services LLC.
Merrill Lynch Investment Partners Inc.
Alpha Tech Stock Transfer
Trust.
Declaration Service Company.
Consumers Financial Corp.
WOC Stock Transfer Company, Inc.
Metropolitan Mortgage and
Securities Co., Inc.
Cinergy Service, Inc.
Sunstates Corporation.
Penn Street Advisors, Inc.
Khan Funds.
Bulto Transfer Agency, Limited Liability Company.
Impact Administrative Service,
Inc.
Alpine Fiduciary Services, Inc.
River Oaks Partnership Services, Inc.
IDM Corporation.
RVM Industries, Inc.
Stock Transfer of America,
Inc.
Wasatch Stock Transfer, Inc.
Gerdine & Associates.
Lewis, Corey L.
CFR 200.30–3(a)(22).
VerDate Aug<31>2005
[FR Doc. E6–17928 Filed 10–25–06; 8:45 am]
Name
15:21 Oct 25, 2006
Jkt 211001
SECURITIES AND EXCHANGE
COMMISSION
[File No. 500–1]
In the Matter of Conversion Solutions
Holdings Corp.; Order of Suspension
of Trading
October 24, 2006.
It appears to the Securities and
Exchange Commission that there is a
lack of current and accurate information
concerning the securities of Conversion
Solutions Holding Corp.
(‘‘Conversion’’), a Delaware Corporation
located in Kennesaw, Georgia, which
trades in the over-the-counter market
under the symbol ‘‘CSHD’’.
Questions have arisen regarding the
accuracy and completeness of
information contained in Conversion’s
press releases and public filings with
the Commission concerning, among
other things, (1) The company’s
purported ownership and control of two
bond issuances, in the face amount of
÷5 billion and $500 million, issued by
the Republic of Venezuela, and (2) the
company’s purported contractual
relationship with Deutsche Bank.
PO 00000
Frm 00052
Fmt 4703
Sfmt 4703
The Commission is of the opinion that
the public interest and the protection of
investors require a suspension of trading
in the securities of the above-listed
company.
Therefore, it is ordered, pursuant to
section 12(k) of the Securities Exchange
Act of 1934, that trading in the abovelisted company is suspended for the
period from 9:30 a.m. EDT, October 24,
2006, through 11:59 p.m. EST, on
November 6, 2006.
By the Commission.
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 06–8939 Filed 10–24–06; 11:15 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–54622; File No. SR–FICC–
2006–13]
Self-Regulatory Organizations; Fixed
Income Clearing Corporation; Notice of
Filing of a Proposed Rule Change
Relating to the Federal Reserve’s
National Settlement Service
October 18, 2006.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 notice is hereby given that on
July 11, 2006, Fixed Income Clearing
Corporation (‘‘FICC’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) and on August 4, 2006,
amended, 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
amend the rules of FICC’s MortgageBacked Securities Division (‘‘MBSD’’) to
require clearing participants to satisfy
their cash settlement amounts
ultimately through the Federal Reserve’s
National Settlement Service (‘‘NSS’’).2
1 15
U.S.C. 78s(b)(1).
Commission previously approved a
proposed rule change filed by FICC to make a
similar amendment to the rules of its Government
Securities Division (‘‘GSD’’). Securities Exchange
Act No. 52853 (November 29, 2005), 70 FR 72682
(December 6, 2005) [File No. SR–FICC–2005–14].
FICC’s affiliates, The Depository Trust Company
(‘‘DTC’’) and the National Securities Clearing
Corporation (‘‘NSCC’’) also use NSS in their funds
settlement processes. However, DTC and NSCC do
not currently use NSS for the payment of credit.
FICC is proposing to have the MBSD process both
2 The
E:\FR\FM\26OCN1.SGM
26OCN1
Federal Register / Vol. 71, No. 207 / Thursday, October 26, 2006 / Notices
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.3
ycherry on PROD1PC64 with NOTICES
(A) Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
Currently, the MBSD cash settlement
process, which is contained in Rule 8 of
Article II of the MBSD’s rules, works as
follows. On a daily basis, FICC
computes a cash balance, which is
either a debit amount or a credit
amount, per participant account and
nets the cash balances across aggregated
accounts. Unlike at GSD where cash
settlement occurs on a daily basis, at
MBSD there are specific dates on which
debits and credits are required to be
made. Settlement dates at MBSD are
based upon the settlement dates of the
different classes of MBSD-eligible
securities. There is a time deadline for
the payment of debits to FICC as
announced by the MBSD from time to
time. All payments of cash settlement
amounts by a clearing participant to
FICC and all collections of cash
settlement amounts by a clearing
participant from FICC are done through
depository institutions that are
designated by MBSD participant and by
FICC to act on their behalf with regard
to such payments and collections. All
payments are made by fund wires from
one depository institution to the other.
Under the proposal, the required
payment mechanism for the satisfaction
of cash settlement amounts would be
the NSS. FICC would appoint The
Depository Trust Company (‘‘DTC’’) as
its settlement agent for purposes of
interfacing with the NSS.4
In order to satisfy their cash
settlement obligations through the NSS
process, each MBSD clearing participant
would have to appoint a ‘‘cash settling
bank.’’ An MBSD clearing participant
the debits and credits of its cash settlement process
through the NSS, as is the case for the GSD.
For a description of NSS, refer to
www.frbservices.org/Wholesale/natsettle.html.
3 The Commission has modified parts of these
statements.
4 DTC currently performs this service for the GSD
and NSCC.
VerDate Aug<31>2005
15:21 Oct 25, 2006
Jkt 211001
that qualifies may act as its own cash
settling bank.
The MBSD would establish a limited
membership category for the cash
settling banks. Banks or trust companies
that are DTC settling banks (as defined
in DTC’s rules and procedures), GSD
funds-only settling bank members (as
defined in the GSD’s rules), or clearing
participants with direct access to a
Federal Reserve Bank and NSS would
be eligible to become MBSD cash
settling bank participants by executing
the requisite membership agreements
for this purpose. Banks or trust
companies that do not fall into these
categories and that desire to become
MBSD cash settling bank participants
would need to apply to FICC. Such
banks or trust companies would also
need to have direct access to a Federal
Reserve Bank and the NSS as well as
satisfy the financial responsibility
standards and operational capability
imposed by FICC from time to time.
Initially, these applicants would be
required to meet and to maintain a Tier
1 capital ratio of 6 percent.5
In addition to the membership
agreement, each MBSD participant and
the cash settling bank it has selected
would be required to execute an
agreement whereby the participant
would appoint the bank to act on its
behalf for cash settlement purposes. The
bank would also be required to execute
any agreements that may be required by
the Federal Reserve Bank for
participation in the NSS for FICC’s cash
settlement process.
The cash settling banks would be
required to follow the procedures for
cash settlement payment processing set
forth in the proposed rule changes. This
would include, for example, providing
FICC or its settlement agent with the
requisite acknowledgement of the
bank’s intention to settle the cash
settlement amounts of the clearing
participant(s) it represents on a timely
basis and to participate in the NSS
process. Cash settling banks would have
the right to refuse to settle for a
particular participant and would also be
able to opt out of NSS for one business
day if they were experiencing
extenuating circumstances.6 In such a
situation, the clearing participant would
be responsible for ensuring that its cash
settlement debit was wired to the
5 This is the same financial requirement for GSD
funds-only settling banks that fall into a similar
category. As with the GSD, FICC would retain the
authority and discretion to change this financial
criterion by providing advanced notice to the
settling banks and the netting members through an
important notice.
6 These procedures are consistent with the GSD,
NSCC, and DTC procedures in this respect.
PO 00000
Frm 00053
Fmt 4703
Sfmt 4703
62633
depository institution designated by
FICC to receive such payments by the
payment deadline. The proposed rule
change makes clear that the obligation
of a clearing participant to fulfill its
cash settlement would remain at all
times with the clearing participant.
As FICC’s settlement agent, DTC
would submit instructions to have the
Federal Reserve Bank accounts of the
cash settlement banks charged for the
debit amounts and credited for the
credit amounts. Utilization of NSS
would eliminate the need for the
initiation of wire transfers in
satisfaction of MBSD settlement
amounts, and FICC believes that it
would therefore reduce the risk that the
clearing participant that designated the
bank would incur a late payment fine
due to delay in wiring funds. The
proposal would also reduce operational
burden for the operations staff of FICC
and of the participants.
The NSS is governed by the Federal
Reserve’s Operating Circular No. 12
(‘‘Circular’’). Under the Circular, DTC,
as FICC’s settlement agent, has certain
responsibilities with respect to an
indemnity claim made by a relevant
Federal Reserve Bank as a result of the
NSS process. FICC would apportion the
entirety of any such liability to the
clearing participant or clearing
participants for whom the cash settling
bank to which the indemnity claim
relates is acting. This allocation would
be done in proportion to the amount of
each participants’ cash settlement
amounts on the business day in
question. If for any reason such
allocation would not be sufficient to
fully satisfy the Federal Reserve Bank’s
indemnity claim, then the remaining
loss would be allocated among all
clearing participants in proportion to
their relative usage of the facilities of
the MBSD based on fees for services
during the period in which loss is
incurred.
The proposed rule change also
amends the GSD’s rules regarding the
use of the NSS. An additional category
for eligible funds-only settling banks
would be added to include MBSD cash
settling banks. This means that an
MBSD cash settling bank would be able
to become a GSD funds-only settling
bank by signing the requisite
agreements.
FICC believes that the proposed rule
change is consistent with the
requirements of the Act and the rules
and regulations thereunder because the
proposed rule change would enhance
the current operation of the MBSD’s
cash settlement payment process by
promoting the timely processing of
funds payments and credits. As such,
E:\FR\FM\26OCN1.SGM
26OCN1
62634
Federal Register / Vol. 71, No. 207 / Thursday, October 26, 2006 / Notices
the proposed rule change would support
the prompt and accurate clearance and
settlement of securities transactions.
(B) Self-Regulatory Organization’s
Statement on Burden on Competition
FICC does not believe that the
proposed rule change would 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 35 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
90 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 the proposed
rule change, or
(B) Institute proceedings to determine
whether the proposed rule change
should be disapproved.
IV. Solicitation of Comments
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–2006–13 on the
subject line.
ycherry on PROD1PC64 with NOTICES
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
Number SR–FICC–2006–13. This file
number should be included on the
subject line if e-mail is used. To help the
Commission process and review your
15:21 Oct 25, 2006
Jkt 211001
For the Commission by the Division of
Market Regulation, pursuant to delegated
authority.7
Nancy M. Morris,
Secretary.
[FR Doc. E6–17913 Filed 10–25–06; 8:45 am]
BILLING CODE 8011–01–P
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:
VerDate Aug<31>2005
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, 100 F Street, NE., 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 www.ficc.com. 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–2006–13 and should
be submitted on or before November 16,
2006.
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–54628; File No. SR–
NYSEArca–2006–74]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing and Order
Granting Accelerated Approval of
Proposed Rule Change Relating to the
Vanguard Emerging Markets Stock
Index Fund
October 19, 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 October
10, 2006, NYSE Arca, Inc. (‘‘Exchange’’),
through its wholly owned subsidiary
NYSE Arca Equities, Inc. (‘‘NYSE Arca
Equities’’ or the ‘‘Corporation’’), filed
with the Securities and Exchange
Commission (‘‘Commission’’) the
7 17
CFR 200.3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
PO 00000
Frm 00054
Fmt 4703
Sfmt 4703
proposed rule change as described in
Items I and II below, which Items have
been prepared by the Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons and is
approving the proposal on an
accelerated basis.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange is proposing to
substitute the index tracked by a class
of exchange-traded securities (formerly
referred to as Vanguard Emerging
Market VIPERs, the ‘‘ETF Shares’’)
issued by the Vanguard Emerging
Markets Stock Index Fund (‘‘Fund’’).3
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
Exchange 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 III below. The
Exchange 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
On August 8, 2005, the Commission
approved the Exchange’s filing
proposing to trade the ETF Shares
pursuant to unlisted trading privileges
(‘‘UTP’’).4 The Commission had
previously approved the original listing
and trading of the ETF Shares by the
American Stock Exchange LLC
(‘‘Amex’’).5 The Exchange is filing this
proposal to obtain the Commission’s
approval of the substitution of the index
tracked by the ETF Shares issued by the
3 In addition to the ETF Shares, the Fund offers
a class of shares that are not exchange-traded,
which are referred to as ‘‘Investor Shares.’’
4 See Securities Exchange Act Release No. 34–
52221 (August 8, 2005), 70 FR 48222 (August 16,
2005) (SR–PCX–2005–74) (the ‘‘Approval Order’’).
The Exchange expanded the hours during which
the ETF Shares are eligible to trade on the NYSE
Arca Marketplace (f/k/a the Archipelago Exchange)
in December 2005. See Securities Exchange Act
Release No. 34–52927 (December 8, 2005), 70 FR
74397 (December 15, 2005) (SR–PCX–2005–128).
5 See Securities Exchange Act Release No. 50189
(August 12, 2004), 69 FR 51723 (August 20, 2004)
(SR–Amex–2005–04) (the ‘‘Amex Approval Order’’).
E:\FR\FM\26OCN1.SGM
26OCN1
]]>Agencies
[Federal Register Volume 71, Number 207 (Thursday, October 26, 2006)]
[Notices]
[Pages 62632-62634]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-17913]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-54622; File No. SR-FICC-2006-13]
Self-Regulatory Organizations; Fixed Income Clearing Corporation;
Notice of Filing of a Proposed Rule Change Relating to the Federal
Reserve's National Settlement Service
October 18, 2006.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on July 11, 2006, Fixed
Income Clearing Corporation (``FICC'') filed with the Securities and
Exchange Commission (``Commission'') and on August 4, 2006, amended,
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 amend the rules of FICC's Mortgage-
Backed Securities Division (``MBSD'') to require clearing participants
to satisfy their cash settlement amounts ultimately through the Federal
Reserve's National Settlement Service (``NSS'').\2\
---------------------------------------------------------------------------
\2\ The Commission previously approved a proposed rule change
filed by FICC to make a similar amendment to the rules of its
Government Securities Division (``GSD''). Securities Exchange Act
No. 52853 (November 29, 2005), 70 FR 72682 (December 6, 2005) [File
No. SR-FICC-2005-14]. FICC's affiliates, The Depository Trust
Company (``DTC'') and the National Securities Clearing Corporation
(``NSCC'') also use NSS in their funds settlement processes.
However, DTC and NSCC do not currently use NSS for the payment of
credit. FICC is proposing to have the MBSD process both the debits
and credits of its cash settlement process through the NSS, as is
the case for the GSD.
For a description of NSS, refer to www.frbservices.org/
Wholesale/natsettle.html.
---------------------------------------------------------------------------
[[Page 62633]]
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.\3\
---------------------------------------------------------------------------
\3\ The Commission has modified parts of these statements.
---------------------------------------------------------------------------
(A) Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
Currently, the MBSD cash settlement process, which is contained in
Rule 8 of Article II of the MBSD's rules, works as follows. On a daily
basis, FICC computes a cash balance, which is either a debit amount or
a credit amount, per participant account and nets the cash balances
across aggregated accounts. Unlike at GSD where cash settlement occurs
on a daily basis, at MBSD there are specific dates on which debits and
credits are required to be made. Settlement dates at MBSD are based
upon the settlement dates of the different classes of MBSD-eligible
securities. There is a time deadline for the payment of debits to FICC
as announced by the MBSD from time to time. All payments of cash
settlement amounts by a clearing participant to FICC and all
collections of cash settlement amounts by a clearing participant from
FICC are done through depository institutions that are designated by
MBSD participant and by FICC to act on their behalf with regard to such
payments and collections. All payments are made by fund wires from one
depository institution to the other.
Under the proposal, the required payment mechanism for the
satisfaction of cash settlement amounts would be the NSS. FICC would
appoint The Depository Trust Company (``DTC'') as its settlement agent
for purposes of interfacing with the NSS.\4\
---------------------------------------------------------------------------
\4\ DTC currently performs this service for the GSD and NSCC.
---------------------------------------------------------------------------
In order to satisfy their cash settlement obligations through the
NSS process, each MBSD clearing participant would have to appoint a
``cash settling bank.'' An MBSD clearing participant that qualifies may
act as its own cash settling bank.
The MBSD would establish a limited membership category for the cash
settling banks. Banks or trust companies that are DTC settling banks
(as defined in DTC's rules and procedures), GSD funds-only settling
bank members (as defined in the GSD's rules), or clearing participants
with direct access to a Federal Reserve Bank and NSS would be eligible
to become MBSD cash settling bank participants by executing the
requisite membership agreements for this purpose. Banks or trust
companies that do not fall into these categories and that desire to
become MBSD cash settling bank participants would need to apply to
FICC. Such banks or trust companies would also need to have direct
access to a Federal Reserve Bank and the NSS as well as satisfy the
financial responsibility standards and operational capability imposed
by FICC from time to time. Initially, these applicants would be
required to meet and to maintain a Tier 1 capital ratio of 6
percent.\5\
---------------------------------------------------------------------------
\5\ This is the same financial requirement for GSD funds-only
settling banks that fall into a similar category. As with the GSD,
FICC would retain the authority and discretion to change this
financial criterion by providing advanced notice to the settling
banks and the netting members through an important notice.
---------------------------------------------------------------------------
In addition to the membership agreement, each MBSD participant and
the cash settling bank it has selected would be required to execute an
agreement whereby the participant would appoint the bank to act on its
behalf for cash settlement purposes. The bank would also be required to
execute any agreements that may be required by the Federal Reserve Bank
for participation in the NSS for FICC's cash settlement process.
The cash settling banks would be required to follow the procedures
for cash settlement payment processing set forth in the proposed rule
changes. This would include, for example, providing FICC or its
settlement agent with the requisite acknowledgement of the bank's
intention to settle the cash settlement amounts of the clearing
participant(s) it represents on a timely basis and to participate in
the NSS process. Cash settling banks would have the right to refuse to
settle for a particular participant and would also be able to opt out
of NSS for one business day if they were experiencing extenuating
circumstances.\6\ In such a situation, the clearing participant would
be responsible for ensuring that its cash settlement debit was wired to
the depository institution designated by FICC to receive such payments
by the payment deadline. The proposed rule change makes clear that the
obligation of a clearing participant to fulfill its cash settlement
would remain at all times with the clearing participant.
---------------------------------------------------------------------------
\6\ These procedures are consistent with the GSD, NSCC, and DTC
procedures in this respect.
---------------------------------------------------------------------------
As FICC's settlement agent, DTC would submit instructions to have
the Federal Reserve Bank accounts of the cash settlement banks charged
for the debit amounts and credited for the credit amounts. Utilization
of NSS would eliminate the need for the initiation of wire transfers in
satisfaction of MBSD settlement amounts, and FICC believes that it
would therefore reduce the risk that the clearing participant that
designated the bank would incur a late payment fine due to delay in
wiring funds. The proposal would also reduce operational burden for the
operations staff of FICC and of the participants.
The NSS is governed by the Federal Reserve's Operating Circular No.
12 (``Circular''). Under the Circular, DTC, as FICC's settlement agent,
has certain responsibilities with respect to an indemnity claim made by
a relevant Federal Reserve Bank as a result of the NSS process. FICC
would apportion the entirety of any such liability to the clearing
participant or clearing participants for whom the cash settling bank to
which the indemnity claim relates is acting. This allocation would be
done in proportion to the amount of each participants' cash settlement
amounts on the business day in question. If for any reason such
allocation would not be sufficient to fully satisfy the Federal Reserve
Bank's indemnity claim, then the remaining loss would be allocated
among all clearing participants in proportion to their relative usage
of the facilities of the MBSD based on fees for services during the
period in which loss is incurred.
The proposed rule change also amends the GSD's rules regarding the
use of the NSS. An additional category for eligible funds-only settling
banks would be added to include MBSD cash settling banks. This means
that an MBSD cash settling bank would be able to become a GSD funds-
only settling bank by signing the requisite agreements.
FICC believes that the proposed rule change is consistent with the
requirements of the Act and the rules and regulations thereunder
because the proposed rule change would enhance the current operation of
the MBSD's cash settlement payment process by promoting the timely
processing of funds payments and credits. As such,
[[Page 62634]]
the proposed rule change would support the prompt and accurate
clearance and settlement of securities transactions.
(B) Self-Regulatory Organization's Statement on Burden on Competition
FICC does not believe that the proposed rule change would 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 35 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 90 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 the 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-2006-13 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 Number SR-FICC-2006-13. 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, 100 F Street,
NE., 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 www.ficc.com. 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-2006-13 and should be submitted on or before
November 16, 2006.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\7\
---------------------------------------------------------------------------
\7\ 17 CFR 200.3(a)(12).
---------------------------------------------------------------------------
Nancy M. Morris,
Secretary.
[FR Doc. E6-17913 Filed 10-25-06; 8:45 am]
BILLING CODE 8011-01-P
