Self-Regulatory Organizations; Fixed Income Clearing Corporation; Order Approving Proposed Rule Change To Eliminate Certain Cash Adjustments Currently Processed by the MBSD, 408 [2010-33163]

Download as PDF 408 Federal Register / Vol. 76, No. 2 / Tuesday, January 4, 2011 / Notices added, deleted or postponed, please contact: The Office of the Secretary at (202) 551–5400. Dated: December 29, 2010. Elizabeth M. Murphy, Secretary. [FR Doc. 2010–33261 Filed 12–30–10; 11:15 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–63611; File No. SR–FICC– 2010–08] Self-Regulatory Organizations; Fixed Income Clearing Corporation; Order Approving Proposed Rule Change To Eliminate Certain Cash Adjustments Currently Processed by the MBSD December 28, 2010. I. Introduction On October 28, 2010, the Fixed Income Clearing Corporation (‘‘FICC’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change SR–FICC–2010– 08 pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’).1 The proposed rule change was published for comment in the Federal Register on November 17, 2010.2 No comment letters were received on the proposal. This order approves the proposal. jlentini on DSKJ8SOYB1PROD with NOTICES II. Description FICC is eliminating the cash adjustments that are currently processed by the Mortgage-Backed Securities Division (‘‘MBSD’’) of FICC because they have low monetary impact and the clearance event (‘‘significant variance’’) they were originally designed to address no longer applies.3 Variance was originally established when mortgagebacked securities were physically settled and it was difficult to organize physical pools into $1 million par amounts for delivery. As a result of the netting of To Be Announced (‘‘TBA’’) transactions, a participant may have a settlement obligation to another participant with which it did not trade (‘‘SBON Obligations’’). SBON Obligations are created in multiples of $1 million par amounts and are assigned a uniform delivery price. Since the delivery price 1 15 U.S.C. 78s(b)(1). Exchange Act Release No. 63301 (November 17, 2010), 75 FR 70328. 3 The specific language of the proposed provision can be found at https://www.dtcc.com/downloads/ legal/rule_filings/2010/ficc/2010–08.pdf. 2 Securities VerDate Mar<15>2010 14:35 Jan 03, 2011 Jkt 223001 will differ from the participant’s original trade price, an adjustment is calculated for the difference between the delivery price and the trade price. This adjustment is referred to as the Settlement Balance Order Market Differential (‘‘SBOMD’’). Participants notify the MBSD when they have settled their SBON Obligations with their assigned counterparties through the Notification of Settlement (‘‘NOS’’) process. From the information supplied by both the delivering and receiving participants in their respective NOS, the MBSD determines whether the securities delivered were in $1 million par amounts or in a par amount within acceptable variance (plus or minus $100 per million). In instances where the delivery was completed in $1 million par amounts, the MBSD takes no additional steps. Currently, if the delivery was cleared for a par amount within acceptable variance, the MBSD will calculate a cash adjustment to reconcile the difference between the original SBOMD (based on a $1 million par amount) and what the SBOMD should have been (based on the par amount delivered). As mortgage-backed securities migrated from physical to electronic settlement, acceptable variance has been reduced from an initial $50,000 per million to the current amount of $100 per million. MBSD is eliminating this cash adjustment process. III. Discussion The Commission finds that the proposed rule change is consistent with the requirements of the Act 4 and the rules and regulations thereunder applicable to FICC.5 In particular, the Commission believes that by deleting a rule that covers a process that is no longer needed, FICC is providing its members with certainty and clarity of the clearance process to its members. The proposal is therefore consistent with the requirements of Section 17A(b)(3)(F),6 which requires, among other things, that the rules of a clearing agency are designed to remove impediments to and perfect the mechanism of a national system for the prompt and accurate clearance and settlement of securities transactions. IV. Conclusion On the basis of the foregoing, the Commission finds that the proposal is 4 15 U.S.C. 78q–1. approving this proposed rule change, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 6 15 U.S.C. 78q–1(b)(3)(F). 5 In PO 00000 Frm 00097 Fmt 4703 Sfmt 4703 consistent with the requirements of the Act and in particular with the requirements of Section 17A of the Act 7 and the rules and regulations thereunder. It Is therefore ordered, pursuant to Section 19(b)(2) of the Act,8 that the proposed rule change (File No. SR– FICC–2010–08) be, and hereby is, approved. For the Commission by the Division of Trading and Markets, pursuant to delegated authority.9 Florence E. Harmon, Deputy Secretary. [FR Doc. 2010–33163 Filed 1–3–11; 8:45 am] BILLING CODE 8011–01–P SMALL BUSINESS ADMINISTRATION Reporting and Recordkeeping Requirements Under OMB Review Small Business Administration. Notice of reporting requirements submitted for OMB review. AGENCY: ACTION: Under the provisions of the Paperwork Reduction Act (44 U.S.C. chapter 35), Agencies are required to submit proposed reporting and recordkeeping requirements to OMB for review and approval, and to publish a notice in the Federal Register notifying the public that the agency has made such a submission. DATES: Submit comments on or before February 3, 2011. If you intend to comment but cannot prepare comments promptly, please advise the OMB Review and the Agency Clearance Officer before the deadline. Copies: Request for clearance (OMB 83–1), supporting statement, and other documents submitted to OMB for review may be obtained from the Agency Clearance Officer. ADDRESSES: Address all comments concerning this notice to: Agency Clearance Officer, Jacqueline White, Small Business Administration, 409 3rd Street, SW., 5th Floor, Washington, DC 20416; and OMB Reviewer, Office of Information and Regulatory Affairs, Office of Management and Budget, New Executive Office Building, Washington, DC 20503. FOR FURTHER INFORMATION CONTACT: Jacqueline White. Agency Clearance Officer, (202) 205–7044. SUPPLEMENTARY INFORMATION: Title: Lender Advantage. Frequency: On Occasion. SUMMARY: 7 15 U.S.C. 78q–1. U.S.C. 78s(b)(2). 9 17 CFR 200.30–3(a)(12). 8 15 E:\FR\FM\04JAN1.SGM 04JAN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 76, Number 2 (Tuesday, January 4, 2011)]
[Notices]
[Page 408]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-33163]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63611; File No. SR-FICC-2010-08]


Self-Regulatory Organizations; Fixed Income Clearing Corporation; 
Order Approving Proposed Rule Change To Eliminate Certain Cash 
Adjustments Currently Processed by the MBSD

December 28, 2010.

I. Introduction

    On October 28, 2010, the Fixed Income Clearing Corporation 
(``FICC'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change SR-FICC-2010-08 pursuant to 
Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act'').\1\ 
The proposed rule change was published for comment in the Federal 
Register on November 17, 2010.\2\ No comment letters were received on 
the proposal. This order approves the proposal.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ Securities Exchange Act Release No. 63301 (November 17, 
2010), 75 FR 70328.
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II. Description

    FICC is eliminating the cash adjustments that are currently 
processed by the Mortgage-Backed Securities Division (``MBSD'') of FICC 
because they have low monetary impact and the clearance event 
(``significant variance'') they were originally designed to address no 
longer applies.\3\ Variance was originally established when mortgage-
backed securities were physically settled and it was difficult to 
organize physical pools into $1 million par amounts for delivery.
---------------------------------------------------------------------------

    \3\ The specific language of the proposed provision can be found 
at https://www.dtcc.com/downloads/legal/rule_filings/2010/ficc/2010-08.pdf.
---------------------------------------------------------------------------

    As a result of the netting of To Be Announced (``TBA'') 
transactions, a participant may have a settlement obligation to another 
participant with which it did not trade (``SBON Obligations''). SBON 
Obligations are created in multiples of $1 million par amounts and are 
assigned a uniform delivery price. Since the delivery price will differ 
from the participant's original trade price, an adjustment is 
calculated for the difference between the delivery price and the trade 
price. This adjustment is referred to as the Settlement Balance Order 
Market Differential (``SBOMD'').
    Participants notify the MBSD when they have settled their SBON 
Obligations with their assigned counterparties through the Notification 
of Settlement (``NOS'') process. From the information supplied by both 
the delivering and receiving participants in their respective NOS, the 
MBSD determines whether the securities delivered were in $1 million par 
amounts or in a par amount within acceptable variance (plus or minus 
$100 per million). In instances where the delivery was completed in $1 
million par amounts, the MBSD takes no additional steps.
    Currently, if the delivery was cleared for a par amount within 
acceptable variance, the MBSD will calculate a cash adjustment to 
reconcile the difference between the original SBOMD (based on a $1 
million par amount) and what the SBOMD should have been (based on the 
par amount delivered). As mortgage-backed securities migrated from 
physical to electronic settlement, acceptable variance has been reduced 
from an initial $50,000 per million to the current amount of $100 per 
million. MBSD is eliminating this cash adjustment process.

III. Discussion

    The Commission finds that the proposed rule change is consistent 
with the requirements of the Act \4\ and the rules and regulations 
thereunder applicable to FICC.\5\ In particular, the Commission 
believes that by deleting a rule that covers a process that is no 
longer needed, FICC is providing its members with certainty and clarity 
of the clearance process to its members. The proposal is therefore 
consistent with the requirements of Section 17A(b)(3)(F),\6\ which 
requires, among other things, that the rules of a clearing agency are 
designed to remove impediments to and perfect the mechanism of a 
national system for the prompt and accurate clearance and settlement of 
securities transactions.
---------------------------------------------------------------------------

    \4\ 15 U.S.C. 78q-1.
    \5\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
    \6\ 15 U.S.C. 78q-1(b)(3)(F).
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IV. Conclusion

    On the basis of the foregoing, the Commission finds that the 
proposal is consistent with the requirements of the Act and in 
particular with the requirements of Section 17A of the Act \7\ and the 
rules and regulations thereunder.
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78q-1.
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    It Is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\8\ that the proposed rule change (File No. SR-FICC-2010-08) be, 
and hereby is, approved.
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    \8\ 15 U.S.C. 78s(b)(2).

    For the Commission by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
---------------------------------------------------------------------------

    \9\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-33163 Filed 1-3-11; 8:45 am]
BILLING CODE 8011-01-P

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