Self-Regulatory Organizations; Fixed Income Clearing Corporation; Notice of Filing of a Proposed Rule Change Relating to Clearing Fund Deficiency Calls, 70817-70818 [E6-20658]

Download as PDF Federal Register / Vol. 71, No. 234 / Wednesday, December 6, 2006 / Notices PWALKER on PRODPC60 with NOTICES 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 will apportion the entirety of any such liability to the MBSD clearing participant or clearing participants for whom the cash settling bank to which the indemnity claim relates is acting. This allocation will be done in proportion to the amount of each MBSD clearing participant’s cash settlement amount on the business day in question. If for any reason such allocation is not sufficient to fully satisfy the Federal Reserve Bank’s indemnity claim, then the remaining loss will be allocated among all MBSD 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 is 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. III. Discussion The Commission previously approved a proposed rule change to FICC’s GSD’s rules to require funds-only settlement at GSD to be made through the NSS.7 In the order granting approval of the GSD proposal, the Commission found that the rule change was designed to promote the prompt and accurate clearance and settlement of securities transactions and to assure the safeguarding of securities in FICC’s possession or control or for which FICC is responsible under Section 17A(b)(3)(F) of the Act because the rule was designed to improve the efficiency of GSD’s funds-only settlement process without affecting the responsibility of GSD’s members to make their fundsonly settlement payments on time. The proposed rule change to Article II, Rule 8 of FICC’s MBSD’s Rules is essentially the same as the previously approved proposed rule change to GSD Rule 13. The new provisions to MBSD Rule 8 regarding the NSS, the new limited membership category for ‘‘cash settling banks,’’ and the procedures for processing payments through NSS are 7 Securities Exchange Act Release No. 52853 (November 29, 2005), 70 FR 72682 (December 6, 2005) [File No. SR–FICC–2005–14]. VerDate Aug<31>2005 16:03 Dec 05, 2006 Jkt 211001 virtually identical to the provisions that are currently in GSD Rule 13. Accordingly, for the same reason we approved GSD Rule 13 we are approving MBSD Rule 8. Namely, that the NSS offered by the Federal Reserve System is a reliable and proven service that should promote the efficiency of cash settlement at MBSD and that the changes to MBSD Rule 8 with respect to membership financial requirements, transaction processing, and loss allocation are designed to prevent any risk of loss to MBSD or to its members. As a result, we find that the proposed rule change is designed to promote the prompt and accurate clearance and settlement of securities transactions under Section 17A(b)(3)(F) of the Act and should not affect FICC’s obligation under Section 17A(b)(3)(F) to assure the safeguarding of securities and funds in its possession or under its control or for which it is responsible.8 IV. Conclusion On the basis of the foregoing, the Commission finds that the proposed rule change is consistent with the requirements of the Act and in particular Section 17A of the Act and the rules and regulations thereunder. It is therefore ordered, pursuant to Section 19(b)(2) of the Act, that the proposed rule change (File No. SR– FICC–2006–13) be and hereby is approved. For the Commission by the Division of Market Regulation, pursuant to delegated authority.9 Nancy M. Morris, Secretary. [FR Doc. E6–20626 Filed 12–5–06; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–54819; File No. SR–FICC– 2006–17] Self-Regulatory Organizations; Fixed Income Clearing Corporation; Notice of Filing of a Proposed Rule Change Relating to Clearing Fund Deficiency Calls November 27, 2006. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 notice is hereby given that on October 16, 2006, the Fixed Income Clearing Corporation (‘‘FICC’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the 8 15 U.S.C. 78q–1(b)(3)(F). CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). 9 17 PO 00000 Frm 00084 Fmt 4703 Sfmt 4703 70817 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 adjust the deadline for satisfying a clearing fund deficiency call from 10:30 a.m. to 9:30 a.m. in the Schedule of Timeframes in FICC’s Government Securities Division (‘‘GSD’’) rulebook. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, FICC included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. FICC has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.2 A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change The purpose of this rule filing is to amend GSD’s rules to change the time when clearing fund deficiency calls are due from netting members. In 2005, the Commission approved a FICC rule filing that established the Federal Reserve’s National Settlement System (‘‘NSS’’) as the method by which GSD netting members could satisfy their funds-only settlement amounts.3 FICC believes that this rule filing improved GSD’s fundsonly settlement process because it created a more automated and centralized payment system for the satisfaction of funds-only settlement debits and credits. Through NSS, the GSD funds-only settlement debit and credit process is run by 10 a.m.4 each business day. Currently, clearing fund deficiency call payments are due from GSD netting members at 10:30 a.m. In addition, clearing fund deficiencies due to FICC from netting members must be satisfied prior to the release of funds-only 2 The Commission has modified the text of the summaries prepared by FICC. 3 Securities Exchange Act Release No. 52853 (Nov. 29, 2005), 70 FR 72682 (Dec. 6, 2005) [SR– FICC–2005–14]. 4 All times referenced herein are New York times. E:\FR\FM\06DEN1.SGM 06DEN1 70818 Federal Register / Vol. 71, No. 234 / Wednesday, December 6, 2006 / Notices settlement credits. When a netting member has not satisfied its clearing fund deficiency payment by approximately 9:50 a.m., GSD must remove that member from the automated NSS process and settle with them manually outside the NSS system. Such manual processing results in administrative burdens for FICC staff and undermines the efficiencies FICC sought to achieve by using the NSS system. For this reason, FICC proposes to change the timing of GSD clearing fund deficiency calls to 9:30 a.m. from 10:30 a.m.5 Doing so would enable GSD to resolve any unsatisfied deficiencies with netting members well in advance of the 10 a.m. funds-only settlement process that takes place through NSS and would allow GSD to better utilize the automated NSS process. GSD intends to implement the new timeframe for clearing fund deficiency calls on January 1, 2007. As is currently the case in its rules, FICC will reserve the right to extend this deadline on days on which there are operational or systems difficulties that would reasonably prevent members from satisfying a deficiency call by 9:30 a.m. FICC believes that the proposed rule change is consistent with the requirements of Section 17A of the Act 6 and the rules and regulations thereunder because it will improve the efficiency of FICC’s margining and settlement processes and therefore will help FICC to safeguard securities and funds in its possession or for which it is responsible. A. Self-Regulatory Organization’s Statement on Burden on Competition FICC does not believe that the proposed rule change will have any impact or impose any burden on competition. PWALKER on PRODPC60 with NOTICES C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others FICC has not solicited or received written comments relating to the proposed rule change. FICC will notify the Commission of any written comments it receives. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within thirty-five days of the date of publication of this notice in the Federal 5 This rule filing does not affect a netting member’s obligation to make its funds-only settlement payment to FICC on time. 6 15 U.S.C. 78q–1. VerDate Aug<31>2005 16:03 Dec 05, 2006 Jkt 211001 Register or within such longer period (i) as the Commission may designate up to ninety days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the self-regulatory organization consents, the Commission will: (A) By order approve such proposed rule change or (B) Institute proceedings to determine whether the proposed rule change should be disapproved. not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submission should refer to File No. SR– FICC–2006–17 and should be submitted on or before December 27, 2006. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change, as amended, is consistent with the Act. Comments may be submitted by any of the following methods: BILLING CODE 8011–01–P Electronic Comments • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File No. SR–FICC–2006–17 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 No. SR–FICC–2006–17. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s Internet Web site (https://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the 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 FICC’s principal office and on FICC’s Web site at https://ficc.com/gov/ gov.docs.jsp?NS-query=#rf. All comments received will be posted without change; the Commission does PO 00000 Frm 00085 Fmt 4703 Sfmt 4703 For the Commission by the Division of Market Regulation, pursuant to delegated authority.7 Nancy M. Morris, Secretary. [FR Doc. E6–20658 Filed 12–5–06; 8:45 am] SECURITIES AND EXCHANGE COMMISSION [Release No. 34–54825; File No. SR– NASDAQ–2006–047] Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing of Proposed Rule Change To Clarify the Process Surrounding a Reverse Merger November 28, 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 November 13, 2006, The NASDAQ Stock Market LLC (‘‘Nasdaq’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by Nasdaq. 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 the Substance of the Proposed Rule Change Nasdaq proposes to clarify the process an issuer must follow when applying for initial listing in connection with a transaction that is a reverse merger. Nasdaq would implement the proposed rule immediately upon approval. The text of the proposed rule change is below. Proposed new language is in italic; proposed deletions are in [brackets].3 * * * * * 4340. Application for Re-Listing by Listed Issuers (a) Reverse Mergers. An issuer must apply for initial listing [following] in 7 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 Changes are marked to the rule text that appears in the electronic manual of Nasdaq found at http: //www.complinet.com/nasdaq. 1 15 E:\FR\FM\06DEN1.SGM 06DEN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 71, Number 234 (Wednesday, December 6, 2006)]
[Notices]
[Pages 70817-70818]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-20658]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54819; File No. SR-FICC-2006-17]


Self-Regulatory Organizations; Fixed Income Clearing Corporation; 
Notice of Filing of a Proposed Rule Change Relating to Clearing Fund 
Deficiency Calls

November 27, 2006.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on October 16, 2006, the 
Fixed Income Clearing Corporation (``FICC'') filed with the Securities 
and Exchange Commission (``Commission'') the proposed rule change as 
described in Items I, II, and III below, which Items have been prepared 
primarily by FICC. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

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

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

    The proposed rule change would adjust the deadline for satisfying a 
clearing fund deficiency call from 10:30 a.m. to 9:30 a.m. in the 
Schedule of Timeframes in FICC's Government Securities Division 
(``GSD'') rulebook.

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

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

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

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

    The purpose of this rule filing is to amend GSD's rules to change 
the time when clearing fund deficiency calls are due from netting 
members. In 2005, the Commission approved a FICC rule filing that 
established the Federal Reserve's National Settlement System (``NSS'') 
as the method by which GSD netting members could satisfy their funds-
only settlement amounts.\3\ FICC believes that this rule filing 
improved GSD's funds-only settlement process because it created a more 
automated and centralized payment system for the satisfaction of funds-
only settlement debits and credits. Through NSS, the GSD funds-only 
settlement debit and credit process is run by 10 a.m.\4\ each business 
day.
---------------------------------------------------------------------------

    \3\ Securities Exchange Act Release No. 52853 (Nov. 29, 2005), 
70 FR 72682 (Dec. 6, 2005) [SR-FICC-2005-14].
    \4\ All times referenced herein are New York times.
---------------------------------------------------------------------------

    Currently, clearing fund deficiency call payments are due from GSD 
netting members at 10:30 a.m. In addition, clearing fund deficiencies 
due to FICC from netting members must be satisfied prior to the release 
of funds-only

[[Page 70818]]

settlement credits. When a netting member has not satisfied its 
clearing fund deficiency payment by approximately 9:50 a.m., GSD must 
remove that member from the automated NSS process and settle with them 
manually outside the NSS system. Such manual processing results in 
administrative burdens for FICC staff and undermines the efficiencies 
FICC sought to achieve by using the NSS system.
    For this reason, FICC proposes to change the timing of GSD clearing 
fund deficiency calls to 9:30 a.m. from 10:30 a.m.\5\ Doing so would 
enable GSD to resolve any unsatisfied deficiencies with netting members 
well in advance of the 10 a.m. funds-only settlement process that takes 
place through NSS and would allow GSD to better utilize the automated 
NSS process. GSD intends to implement the new timeframe for clearing 
fund deficiency calls on January 1, 2007.
---------------------------------------------------------------------------

    \5\ This rule filing does not affect a netting member's 
obligation to make its funds-only settlement payment to FICC on 
time.
---------------------------------------------------------------------------

    As is currently the case in its rules, FICC will reserve the right 
to extend this deadline on days on which there are operational or 
systems difficulties that would reasonably prevent members from 
satisfying a deficiency call by 9:30 a.m.
    FICC believes that the proposed rule change is consistent with the 
requirements of Section 17A of the Act \6\ and the rules and 
regulations thereunder because it will improve the efficiency of FICC's 
margining and settlement processes and therefore will help FICC to 
safeguard securities and funds in its possession or for which it is 
responsible.
---------------------------------------------------------------------------

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

A. Self-Regulatory Organization's Statement on Burden on Competition

    FICC does not believe that the proposed rule change will have any 
impact or impose any burden on competition.

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

    FICC has not solicited or received written comments relating to the 
proposed rule change. FICC will notify the Commission of any written 
comments it receives.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within thirty-five days of the date of publication of this notice 
in the Federal Register or within such longer period (i) as the 
Commission may designate up to ninety days of such date if it finds 
such longer period to be appropriate and publishes its reasons for so 
finding or (ii) as to which the self-regulatory organization consents, 
the Commission will:
    (A) By order approve such proposed rule change or
    (B) Institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change, as amended, 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 No. SR-FICC-2006-17 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 No. SR-FICC-2006-17. This file 
number should be included on the subject line if e-mail is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (https://www.sec.gov/rules/
sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the 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 FICC's principal office and on FICC's Web 
site at https://ficc.com/gov/gov.docs.jsp?NS-query=#rf. 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 
submission should refer to File No. SR-FICC-2006-17 and should be 
submitted on or before December 27, 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. E6-20658 Filed 12-5-06; 8:45 am]
BILLING CODE 8011-01-P

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