Self-Regulatory Organizations; Fixed Income Clearing Corporation; Notice of Filing and Immediate Effectiveness of Proposed Rule To Interpret Rule 5 Section 6 of the Government Securities Division Rules, 10277-10278 [E7-3932]

Download as PDF Federal Register / Vol. 72, No. 44 / Wednesday, March 7, 2007 / Notices designated time limit of Chapter VI, Section 6(b)(ii)–(iii); and in Section 2(i) for Inter-Market Linkage trade-through violations of Chapter XII, Section 3(a). The sanctions imposed would include the application of a fine for each violation and an increased fine amount for repeat violations. In the instance of a trade-through violation, the rule proposal would also allow BOX Regulation to require the Options Participant 3 to disgorge any gains from transactions in violation of the tradethrough rules. The Exchange believes that the proposed rule changes would strengthen its ability to carry out its oversight responsibilities as a self-regulatory organization and reinforce its surveillance and enforcement functions. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act,4 in general, and furthers the objectives of Section 6(b)(5) of the Act,5 in particular, in that it would promote just and equitable principles of trade, facilitate transactions in securities, remove impediments to and perfect the mechanisms of a free and open market and a national market system, and protect investors and the public interest. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change would impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received from Members, Participants, or Others The Exchange has neither solicited nor received comments on the proposed rule change. sroberts on PROD1PC70 with NOTICES 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: 3 See BOX Rule Chapter I, Section 1(a)(40) for definition of ‘‘Options Participants.’’ 4 15 U.S.C. 78f(b). 5 15 U.S.C. 78f(b)(5). VerDate Aug<31>2005 18:25 Mar 06, 2007 Jkt 211001 10277 (A) By order approve such proposed rule change, or (B) institute proceedings to determine whether the proposed rule change should be disapproved. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.6 Florence E. Harmon, Deputy Secretary. [FR Doc. E7–4041 Filed 3–6–07; 8:45 am] IV. Solicitation of Comments BILLING CODE 8010–01–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: Electronic Comments • Use the Commission’s Internet comment form (http://www.sec.gov/ rules/sro.shtml); or • Send e-mail to rule-comments@sec.gov. Please include File Number SR–BSE–2006–11 on the subject line. SECURITIES AND EXCHANGE COMMISSION [Release No. 34–55370; File No. SR–FICC– 2007–01] Self-Regulatory Organizations; Fixed Income Clearing Corporation; Notice of Filing and Immediate Effectiveness of Proposed Rule To Interpret Rule 5 Section 6 of the Government Securities Division Rules February 28, 2007. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 notice is hereby given that on Paper Comments January 22, 2007, the Fixed Income Clearing Corporation (‘‘FICC’’) filed • Send paper comments in triplicate with the Securities and Exchange to Nancy M. Morris, Secretary, Commission (‘‘Commission’’) the Securities and Exchange Commission, proposed rule change described in Items 10 F Street, NE., Washington, DC I, II, and III below, which items have 20549–1090. been prepared primarily by FICC. FICC All submissions should refer to File filed the proposal pursuant to Section Number SR–BSE–2006–11. This file 19(b)(3)(A)(i) of the Act 2 and Rule 19b– number should be included on the 4(f)(1) 3 thereunder so that the proposal subject line if e-mail is used. To help the was effective upon filing with the Commission process and review your Commission. The Commission is comments more efficiently, please use publishing this notice to solicit only one method. The Commission will comments on the rule change from post all comments on the Commission’s interested parties. Internet Web site (http://www.sec.gov/ I. Self-Regulatory Organization’s rules/sro.shtml). Copies of the Statement of the Terms of Substance of submission, all subsequent the Proposed Rule Change amendments, all written statements The purpose of the rule change is to with respect to the proposed rule interpret Rule 5, Section 6 of the change that are filed with the Government Securities Division Commission, and all written (‘‘GSD’’) rules.4 communications relating to the proposed rule change between the II. Self-Regulatory Organization’s Commission and any person, other than Statement of the Purpose of, and those that may be withheld from the Statutory Basis for, the Proposed Rule public in accordance with the Change provisions of 5 U.S.C. 552, will be In its filing with the Commission, available for inspection and copying in FICC included statements concerning the Commission’s Public Reference Room. Copies of such filing also will be the purpose of and basis for the proposed rule change and discussed any available for inspection and copying at comments it received on the proposed the principal office of the BSE. All rule change. The text of these statements comments received will be posted may be examined at the places specified without change; the Commission does not edit personal identifying 6 17 CFR 200.30–3(a)(12). information from submissions. You 1 15 U.S.C. 78s(b)(1). should submit only information that 2 15 U.S.C. 78s(b)(3)(A)(i). you wish to make available publicly. 3 17 CFR 240.19b–4(f)(1). 4 Rule 5, Section 6 of the GSD rules states in All submissions should refer to File pertinent part, ‘‘Each Comparison generated by the Number SR–BSE–2006–11 and should Corporation * * * shall evidence a valid, binding, be submitted on or before March 28, and enforceable contract in respect of such 2007. Compared Trade.’’ PO 00000 Frm 00166 Fmt 4703 Sfmt 4703 E:\FR\FM\07MRN1.SGM 07MRN1 10278 Federal Register / Vol. 72, No. 44 / Wednesday, March 7, 2007 / Notices in Item IV below. FICC has prepared summaries, set forth in sections (A), (B), and (C) below, of the most significant aspects of these statements.5 (A) Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change sroberts on PROD1PC70 with NOTICES Rule 5, Section 6 of the GSD rules states in pertinent part that each comparison generated by GSD evidences a valid, binding, and enforceable contract with respect to such compared trade. This provision confirms the terms and conditions of the trade and the parties’ agreement thereto and authorizes FICC to take further action with respect to the compared trade if required. GSD members are always subject to all of the rights and obligations that arise under GSD’s rules with respect to trades they submit to GSD. For example, if a trade is submitted for comparisononly processing, the submitting members, whether or not they executed the trade, are subject to the obligation to pay applicable fees and to other obligations that arise under the rules.6 If a trade is submitted for netting, the submitting members, whether or not they executed the trade, are subject to the obligation to pay applicable fees, to post clearing fund collateral, and to satisfy funds-only, securities settlement, and other obligations that arise under the rules. The submitting members, and not the entity for which they are submitting trades, also have all the rights against FICC for novated settlement obligations. However, GSD’s rules do not alter rights and obligations between a member and its customer outside of the clearing process. For example, a hedge fund that is not a member of GSD executes a trade with a dealer (‘‘Dealer A’’) that is a GSD netting member. The hedge fund then notifies its prime broker (‘‘Prime Broker’’) that is also a GSD netting member about the trade that the Prime Broker is to settle on the hedge fund’s behalf. Both Dealer A and the Prime Broker submit the trade to GSD. While Dealer A and Prime Broker are subject to all of the rights and obligations that arise under GSD’s rules with respect to that trade, GSD’s rules do not eliminate any rights and obligations that arise between Prime Broker and the hedge 5 The Commission has modified the text of the summaries prepared by FICC. 6 Members that submit trades for comparison-only processing are not subject to clearing fund, fundsonly settlement, and securities settlement obligations under FICC’s rules with respect to such comparison-only trades. VerDate Aug<31>2005 18:25 Mar 06, 2007 Jkt 211001 fund or Dealer A and the hedge fund outside of the clearing process. The proposed rule change is consistent with Section 17A of the Act,7 as amended, because it constitutes an interpretation with respect to the meaning of an existing rule. (B) Self-Regulatory Organization’s Statement on Burden on Competition FICC does not believe that the proposed rule change will have any impact or impose any burden on competition. (C) Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Written comments relating to the propos ed 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 The foregoing proposed rule change has become effective upon filing pursuant to Section 19(b)(3)(A)(i) of the Act 8 and Rule 19b–4(f)(1) 9 thereunder because the rule constitutes an interpretation with respect to the meaning of an existing rule. At any time within sixty days of the filing of the proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. 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: Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–FICC–2007–01. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s Internet Web site (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 filings also will be available for inspection and copying at the principal office of FICC and on FICC’s Web site at http:// www.ficc.com/commondocs/rule.filings/ rule.filing.07-01.pdf. 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– 2007–01 and should be submitted on or before March 28, 2007. For the Commission by the Division of Market Regulation, pursuant to delegated authority.10 Florence E. Harmon, Deputy Secretary. [FR Doc. E7–3932 Filed 3–6–07; 8:45 am] BILLING CODE 8010–01–P 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–2007–01 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, 7 15 U.S.C. 78q–1. U.S.C. 78s(b)(3)(A)(i). 9 17 CFR 240.19b–4(f)(1). 8 15 PO 00000 Frm 00167 Fmt 4703 Sfmt 4703 10 17 E:\FR\FM\07MRN1.SGM CFR 200.30–3(a)(12). 07MRN1

Agencies

[Federal Register Volume 72, Number 44 (Wednesday, March 7, 2007)]
[Notices]
[Pages 10277-10278]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-3932]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55370; File No. SR-FICC-2007-01]


Self-Regulatory Organizations; Fixed Income Clearing Corporation; 
Notice of Filing and Immediate Effectiveness of Proposed Rule To 
Interpret Rule 5 Section 6 of the Government Securities Division Rules

February 28, 2007.

    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on January 22, 2007, the 
Fixed Income Clearing Corporation (``FICC'') filed with the Securities 
and Exchange Commission (``Commission'') the proposed rule change 
described in Items I, II, and III below, which items have been prepared 
primarily by FICC. FICC filed the proposal pursuant to Section 
19(b)(3)(A)(i) of the Act \2\ and Rule 19b-4(f)(1) \3\ thereunder so 
that the proposal was effective upon filing with the Commission. The 
Commission is publishing this notice to solicit comments on the rule 
change from interested parties.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78s(b)(3)(A)(i).
    \3\ 17 CFR 240.19b-4(f)(1).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The purpose of the rule change is to interpret Rule 5, Section 6 of 
the Government Securities Division (``GSD'') rules.\4\
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    \4\ Rule 5, Section 6 of the GSD rules states in pertinent part, 
``Each Comparison generated by the Corporation * * * shall evidence 
a valid, binding, and enforceable contract in respect of such 
Compared Trade.''
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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

[[Page 10278]]

in Item IV below. FICC has prepared summaries, set forth in sections 
(A), (B), and (C) below, of the most significant aspects of these 
statements.\5\
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    \5\ The Commission has modified the text of the summaries 
prepared by FICC.
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(A) Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    Rule 5, Section 6 of the GSD rules states in pertinent part that 
each comparison generated by GSD evidences a valid, binding, and 
enforceable contract with respect to such compared trade. This 
provision confirms the terms and conditions of the trade and the 
parties' agreement thereto and authorizes FICC to take further action 
with respect to the compared trade if required.
    GSD members are always subject to all of the rights and obligations 
that arise under GSD's rules with respect to trades they submit to GSD. 
For example, if a trade is submitted for comparison-only processing, 
the submitting members, whether or not they executed the trade, are 
subject to the obligation to pay applicable fees and to other 
obligations that arise under the rules.\6\ If a trade is submitted for 
netting, the submitting members, whether or not they executed the 
trade, are subject to the obligation to pay applicable fees, to post 
clearing fund collateral, and to satisfy funds-only, securities 
settlement, and other obligations that arise under the rules. The 
submitting members, and not the entity for which they are submitting 
trades, also have all the rights against FICC for novated settlement 
obligations. However, GSD's rules do not alter rights and obligations 
between a member and its customer outside of the clearing process.
---------------------------------------------------------------------------

    \6\ Members that submit trades for comparison-only processing 
are not subject to clearing fund, funds-only settlement, and 
securities settlement obligations under FICC's rules with respect to 
such comparison-only trades.
---------------------------------------------------------------------------

    For example, a hedge fund that is not a member of GSD executes a 
trade with a dealer (``Dealer A'') that is a GSD netting member. The 
hedge fund then notifies its prime broker (``Prime Broker'') that is 
also a GSD netting member about the trade that the Prime Broker is to 
settle on the hedge fund's behalf. Both Dealer A and the Prime Broker 
submit the trade to GSD. While Dealer A and Prime Broker are subject to 
all of the rights and obligations that arise under GSD's rules with 
respect to that trade, GSD's rules do not eliminate any rights and 
obligations that arise between Prime Broker and the hedge fund or 
Dealer A and the hedge fund outside of the clearing process.
    The proposed rule change is consistent with Section 17A of the 
Act,\7\ as amended, because it constitutes an interpretation with 
respect to the meaning of an existing rule.
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    \7\ 15 U.S.C. 78q-1.
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(B) Self-Regulatory Organization's Statement on Burden on Competition

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

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

    Written comments relating to the propos ed 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

    The foregoing proposed rule change has become effective upon filing 
pursuant to Section 19(b)(3)(A)(i) of the Act \8\ and Rule 19b-4(f)(1) 
\9\ thereunder because the rule constitutes an interpretation with 
respect to the meaning of an existing rule. At any time within sixty 
days of the filing of the proposed rule change, the Commission may 
summarily abrogate such rule change if it appears to the Commission 
that such action is necessary or appropriate in the public interest, 
for the protection of investors, or otherwise in furtherance of the 
purposes of the Act.
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    \8\ 15 U.S.C. 78s(b)(3)(A)(i).
    \9\ 17 CFR 240.19b-4(f)(1).
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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-2007-01 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-2007-01. This file 
number should be included on the subject line if e-mail is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (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 filings also will be 
available for inspection and copying at the principal office of FICC 
and on FICC's Web site at http://www.ficc.com/commondocs/rule.filings/
rule.filing.07-01.pdf. 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-2007-01 and should be submitted on or before March 28, 2007.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-3932 Filed 3-6-07; 8:45 am]
BILLING CODE 8010-01-P