Self-Regulatory Organizations; Fixed Income Clearing Corporation; Order Approving Proposed Rule Change To Require Demand Processing for Blind-Brokered Repo Trades, 38013-38014 [E8-14975]
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Federal Register / Vol. 73, No. 128 / Wednesday, July 2, 2008 / Notices
B. Self-Regulatory Organization’s
Statement on Burden on Competition
DTC 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
DTC has not solicited or received
written comments relating to the
proposed rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective upon filing pursuant to Section
19(b)(3)(A)(iii) of the Act 5 and Rule
19b–4(f)(4) 6 thereunder because the
proposed rule effects a change in an
existing service of DTC that (i) does not
adversely affect the safeguarding of
securities or funds in the custody or
control of DTC or for which it is
responsible and (ii) does not
significantly affect the respective rights
or obligations of DTC or persons using
the Regular Custody Services. At any
time within 60 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:
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
Room, 100 F Street, NE., Washington,
DC 20549, on official business days
between the hours of 10 a.m. to 3 p.m.
Copies of such filing also will be
available for inspection and copying at
DTC’s principal office and on DTC’s
Web site at (https://www.dtcc.com/legal/
rule_filings/dtc/2008.php). 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 No.
DTC–2008–02 and should be submitted
on or before July 23, 2008.
For the Commission by the Division of
Trading and Markets, pursuant to delegated
authority.7
Florence E. Harmon,
Acting Secretary.
[FR Doc. E8–14984 Filed 7–1–08; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
jlentini on PROD1PC65 with NOTICES
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml) or
• Send an e-mail to rulecomment@sec.gov. Please include File
No. SR–DTC–2008–02 on the subject
line.
[Release No. 34–58025; File No. SR–FICC–
2008–02]
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street, NE.,
Washington, DC 20549–1090.
All submissions should refer to File No.
SR–DTC–2008–02. This file number
June 25, 2008.
5 15
6 17
Self-Regulatory Organizations; Fixed
Income Clearing Corporation; Order
Approving Proposed Rule Change To
Require Demand Processing for BlindBrokered Repo Trades
I. Introduction
On April 9, 2008, the Fixed Income
Clearing Corporation (‘‘FICC’’) filed
with the Securities and Exchange
Commission (‘‘Commission’’) proposed
rule change SR–FICC–2008–02 pursuant
to Section 19(b)(1) of the Securities
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(4).
VerDate Aug<31>2005
18:51 Jul 01, 2008
7 17
Jkt 214001
PO 00000
CFR 200.30–3(a)(12).
Frm 00086
Fmt 4703
Sfmt 4703
38013
Exchange Act of 1934 (‘‘Act’’).1 On May
14, 2008, the Commission published
notice of the proposed rule change to
solicit comments from interested
parties.2 The Commission received no
comment letters in response to the
proposed rule change as filed. For the
reasons discussed below, the
Commission is approving the proposed
rule change.
II. Description
1. Background
In 2001, the Government Securities
Clearing Corporation (‘‘GSCC’’), the
GSD’s predecessor, redesigned its
comparison rules and procedures soon
after the introduction of the real-time
trade matching system. At that time,
GSCC also moved the timing of its
settlement guaranty from the point of
netting to the point of comparison,
which was much earlier in the day. In
designing these changes, GSCC’s goal
was to provide straight through
processing by providing for easy
identification and resolution of
uncompared trades intraday in order to
achieve 100 percent comparison. These
changes reduced risk by ensuring that
more transactions were compared and
guaranteed by the clearing corporation
earlier in the day so that intraday credit
exposure to counterparties was
minimized.
As part of the redesign of the GSCC
comparison rules, GSCC introduced
Demand Comparison, which was a new
type of comparison that was created to
provide members with flexibility and
control over the comparison process for
trades executed via intermediaries.3
Demand Comparison strikes a balance
between ‘‘bilateral comparison’’ (the
traditional form of comparison), where
each member is required to submit trade
data to the clearing agency in order for
the clearing agency to compare the
trade, and ‘‘locked-in comparison,’’
where the trade is submitted as a
compared trade to the clearing agency
by one side or by one intermediary.4
Demand Comparison entails
submission of trade data by approved
intermediaries (e.g., brokers) called
‘‘Demand Trade Sources.’’ FICC deems
a trade submitted for Demand
Comparison to be compared upon
FICC’s receipt of the trade data from the
Demand Trade Source. However, if a
1 15
U.S.C. 78s(b)(1).
Exchange Act Release No. 57802 (May
8, 2008), 73 FR 27873.
3 Securities Exchange Act Release No. 44946
(October 17, 2001), 66 FR 53816 [File No. SR–
GSCC–2001–01].
4 A Treasury auction take-down trade is a typical
example of a trade submitted for Locked-In
Comparison.
2 Securities
E:\FR\FM\02JYN1.SGM
02JYN1
38014
Federal Register / Vol. 73, No. 128 / Wednesday, July 2, 2008 / Notices
dealer ‘‘does not know’’ a trade
submitted on its behalf by a Demand
Trade Source, the dealer is able to
submit a DK (i.e., ‘‘don’t know’’) to the
GSD. The receipt of a DK by FICC
causes the demand comparison trade to
no longer be deemed compared. In order
to effect comparison for a demand
comparison trade that has been DKed,
the DK must be removed. If the member
that sent the DK determines that it did
so erroneously, the member is able to
remove the DK so that the trade is
compared.5 Modification of a DKed
trade by the Demand Trade Source also
removes the DK so that the trade is
compared.6 The removal of the DK and
modification of a DKed trade are subject
to the prescribed timeframes for
Demand DK processing.
2. Proposal
FICC’s current proposal is to mandate
Demand Comparison for all blindbrokered repo trades that are submitted
by 4 p.m. New York time. The GSD’s
members acting as inter-dealer brokers
for repos will be designated as approved
Demand Trade Sources. Members on
whose behalf the brokers submit trades
will not need to separately authorize the
brokers as their Demand Trade Sources
for GSD’s purposes because GSD’s rules
will do so. After approval of the rule
change, counterparties to blind-brokered
repo trades will still need to submit
their trade data as they do currently.
Dealers will need to monitor the broker
submissions against them in order to
submit DKs where necessary to block
any further processing of the
submission. In order to provide the
dealer counterparties with adequate
time by which to submit their DKs,
especially for trades submitted close to
the 4 p.m. deadline, GSD will create a
30 minute DK window following the 4
p.m. Demand Comparison submission
deadline (until 4:30 p.m.) during which
time the dealer counterparties can DK
previously received demand trades;
however, dealer counterparties will be
able to submit DKs at any time during
the Demand Comparison submission
processing timeframe. Under Demand
Comparison processing, a dealer
counterparty that does not submit a DK
with respect to a blind-brokered repo
trade submitted against it will be
responsible for that trade. Blind-
jlentini on PROD1PC65 with NOTICES
5 Under
this proposal to require Demand
Comparison processing of blind-brokered repo
trades, the cut-off time for removing DKs will be 8
p.m. New York time.
6 Under this proposal to require Demand
Comparison processing of blind-brokered repo
trades, the cut-off time for modifications by
Demand Trade Sources will be 8 p.m. New York
time.
VerDate Aug<31>2005
18:51 Jul 01, 2008
Jkt 214001
brokered repo trades submitted after the
4 p.m. deadline will be treated as trades
submitted for ‘‘bilateral comparison’’
requiring two-sided submission and
matching for comparison to occur.
FICC believes that requiring Demand
Comparison for blind-brokered repo
trades as described above will reduce
risk by promoting earlier comparison
and a higher rate of comparison.
Demand Comparison trade entry will
also encourage members to reconcile
differences on a timely basis.
FICC plans to implement the
proposed changes four months after
submission of this filing to the
Commission (i.e., early August), subject
to approval by the Commission, in order
to provide members with the
opportunity to make any necessary
system changes.
III. Discussion
Section 19(b) of the Act directs the
Commission to approve a proposed rule
change of a self-regulatory organization
if it finds that such proposed rule
change is consistent with the
requirements of the Act and the rules
and regulations thereunder applicable to
such organization. Section 17A(b)(3)(F)
of the Act requires that the rules of a
clearing agency be designed to promote
the prompt and accurate clearance and
settlement of securities transactions.7
The Commission believes that FICC’s
proposed rule change is consistent with
this Section because it should facilitate
the prompt and accurate clearance and
settlement of securities by enabling
earlier comparison and a higher rate of
comparison of blind-brokered repo
transactions.
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. In
approving the proposed rule change, the
Commission considered the proposal’s
impact on efficiency, competition and
capital formation.8
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act, that the
proposed rule change (File No. SR–
FICC–2008–02) be and hereby is
approved.
PO 00000
For the Commission by the Division of
Trading and Markets, pursuant to delegated
authority.9
Florence E. Harmon,
Acting Secretary.
[FR Doc. E8–14975 Filed 7–1–08; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–58019; File No. SR–ISE–
2008–49]
Self-Regulatory Organizations;
International Securities Exchange,
LLC; Notice of Filing and Immediate
Effectiveness of Proposed Rule
Change To Extend the Quarterly
Options Series Pilot Program
June 25, 2008.
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 June 23,
2008, the International Securities
Exchange, LLC (‘‘Exchange’’ or ‘‘ISE’’)
filed with the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I and II below, which Items have
been substantially prepared by the
Exchange. The Exchange has designated
this proposal as non-controversial under
Section 19(b)(3)(A)(iii) of the Act 3 and
Rule 19b–4(f)(6) thereunder,4 which
renders the proposed rule change
effective upon filing with the
Commission. 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 Exchange is proposing to extend,
until July 10, 2009, its quarterly options
series pilot program. The text of the
proposed rule change is available on the
Exchange’s Web site (https://
www.ise.com), at the principal office of
the Exchange, and at the Commission’s
Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of, and basis for,
9 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A)(iii).
4 17 CFR 240.19b–4(f)(6).
1 15
7 15
8 15
U.S.C. 78q–1(b)(3)(F).
U.S.C. 78c(f).
Frm 00087
Fmt 4703
Sfmt 4703
E:\FR\FM\02JYN1.SGM
02JYN1
]]>Agencies
[Federal Register Volume 73, Number 128 (Wednesday, July 2, 2008)]
[Notices]
[Pages 38013-38014]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-14975]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-58025; File No. SR-FICC-2008-02]
Self-Regulatory Organizations; Fixed Income Clearing Corporation;
Order Approving Proposed Rule Change To Require Demand Processing for
Blind-Brokered Repo Trades
June 25, 2008.
I. Introduction
On April 9, 2008, the Fixed Income Clearing Corporation (``FICC'')
filed with the Securities and Exchange Commission (``Commission'')
proposed rule change SR-FICC-2008-02 pursuant to Section 19(b)(1) of
the Securities Exchange Act of 1934 (``Act'').\1\ On May 14, 2008, the
Commission published notice of the proposed rule change to solicit
comments from interested parties.\2\ The Commission received no comment
letters in response to the proposed rule change as filed. For the
reasons discussed below, the Commission is approving the proposed rule
change.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ Securities Exchange Act Release No. 57802 (May 8, 2008), 73
FR 27873.
---------------------------------------------------------------------------
II. Description
1. Background
In 2001, the Government Securities Clearing Corporation (``GSCC''),
the GSD's predecessor, redesigned its comparison rules and procedures
soon after the introduction of the real-time trade matching system. At
that time, GSCC also moved the timing of its settlement guaranty from
the point of netting to the point of comparison, which was much earlier
in the day. In designing these changes, GSCC's goal was to provide
straight through processing by providing for easy identification and
resolution of uncompared trades intraday in order to achieve 100
percent comparison. These changes reduced risk by ensuring that more
transactions were compared and guaranteed by the clearing corporation
earlier in the day so that intraday credit exposure to counterparties
was minimized.
As part of the redesign of the GSCC comparison rules, GSCC
introduced Demand Comparison, which was a new type of comparison that
was created to provide members with flexibility and control over the
comparison process for trades executed via intermediaries.\3\ Demand
Comparison strikes a balance between ``bilateral comparison'' (the
traditional form of comparison), where each member is required to
submit trade data to the clearing agency in order for the clearing
agency to compare the trade, and ``locked-in comparison,'' where the
trade is submitted as a compared trade to the clearing agency by one
side or by one intermediary.\4\
---------------------------------------------------------------------------
\3\ Securities Exchange Act Release No. 44946 (October 17,
2001), 66 FR 53816 [File No. SR-GSCC-2001-01].
\4\ A Treasury auction take-down trade is a typical example of a
trade submitted for Locked-In Comparison.
---------------------------------------------------------------------------
Demand Comparison entails submission of trade data by approved
intermediaries (e.g., brokers) called ``Demand Trade Sources.'' FICC
deems a trade submitted for Demand Comparison to be compared upon
FICC's receipt of the trade data from the Demand Trade Source. However,
if a
[[Page 38014]]
dealer ``does not know'' a trade submitted on its behalf by a Demand
Trade Source, the dealer is able to submit a DK (i.e., ``don't know'')
to the GSD. The receipt of a DK by FICC causes the demand comparison
trade to no longer be deemed compared. In order to effect comparison
for a demand comparison trade that has been DKed, the DK must be
removed. If the member that sent the DK determines that it did so
erroneously, the member is able to remove the DK so that the trade is
compared.\5\ Modification of a DKed trade by the Demand Trade Source
also removes the DK so that the trade is compared.\6\ The removal of
the DK and modification of a DKed trade are subject to the prescribed
timeframes for Demand DK processing.
---------------------------------------------------------------------------
\5\ Under this proposal to require Demand Comparison processing
of blind-brokered repo trades, the cut-off time for removing DKs
will be 8 p.m. New York time.
\6\ Under this proposal to require Demand Comparison processing
of blind-brokered repo trades, the cut-off time for modifications by
Demand Trade Sources will be 8 p.m. New York time.
---------------------------------------------------------------------------
2. Proposal
FICC's current proposal is to mandate Demand Comparison for all
blind-brokered repo trades that are submitted by 4 p.m. New York time.
The GSD's members acting as inter-dealer brokers for repos will be
designated as approved Demand Trade Sources. Members on whose behalf
the brokers submit trades will not need to separately authorize the
brokers as their Demand Trade Sources for GSD's purposes because GSD's
rules will do so. After approval of the rule change, counterparties to
blind-brokered repo trades will still need to submit their trade data
as they do currently. Dealers will need to monitor the broker
submissions against them in order to submit DKs where necessary to
block any further processing of the submission. In order to provide the
dealer counterparties with adequate time by which to submit their DKs,
especially for trades submitted close to the 4 p.m. deadline, GSD will
create a 30 minute DK window following the 4 p.m. Demand Comparison
submission deadline (until 4:30 p.m.) during which time the dealer
counterparties can DK previously received demand trades; however,
dealer counterparties will be able to submit DKs at any time during the
Demand Comparison submission processing timeframe. Under Demand
Comparison processing, a dealer counterparty that does not submit a DK
with respect to a blind-brokered repo trade submitted against it will
be responsible for that trade. Blind-brokered repo trades submitted
after the 4 p.m. deadline will be treated as trades submitted for
``bilateral comparison'' requiring two-sided submission and matching
for comparison to occur.
FICC believes that requiring Demand Comparison for blind-brokered
repo trades as described above will reduce risk by promoting earlier
comparison and a higher rate of comparison. Demand Comparison trade
entry will also encourage members to reconcile differences on a timely
basis.
FICC plans to implement the proposed changes four months after
submission of this filing to the Commission (i.e., early August),
subject to approval by the Commission, in order to provide members with
the opportunity to make any necessary system changes.
III. Discussion
Section 19(b) of the Act directs the Commission to approve a
proposed rule change of a self-regulatory organization if it finds that
such proposed rule change is consistent with the requirements of the
Act and the rules and regulations thereunder applicable to such
organization. Section 17A(b)(3)(F) of the Act requires that the rules
of a clearing agency be designed to promote the prompt and accurate
clearance and settlement of securities transactions.\7\ The Commission
believes that FICC's proposed rule change is consistent with this
Section because it should facilitate the prompt and accurate clearance
and settlement of securities by enabling earlier comparison and a
higher rate of comparison of blind-brokered repo transactions.
---------------------------------------------------------------------------
\7\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------
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. In approving the proposed rule change, the Commission
considered the proposal's impact on efficiency, competition and capital
formation.\8\
---------------------------------------------------------------------------
\8\ 15 U.S.C. 78c(f).
---------------------------------------------------------------------------
It is therefore ordered, pursuant to Section 19(b)(2) of the Act,
that the proposed rule change (File No. SR-FICC-2008-02) be and hereby
is approved.
For the Commission by the Division of Trading and Markets,
pursuant to delegated authority.\9\
---------------------------------------------------------------------------
\9\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-14975 Filed 7-1-08; 8:45 am]
BILLING CODE 8010-01-P
