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 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 (http://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 (http://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for 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]


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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 (http://
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 (http://www.sec.gov/rules/
sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for 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