Self-Regulatory Organizations; Fixed Income Clearing Corporation; Order Approving Proposed Rule Change To Make a Technical Correction to the Rule Relating to the Calculation of Funds-Only Settlement Amounts for Repo Brokers, 22827-22828 [2012-9142]

Download as PDF Federal Register / Vol. 77, No. 74 / Tuesday, April 17, 2012 / Notices accurate clearance and settlement of derivative agreements, contracts, and transactions.5 In its filing, CME requested that the Commission approve this proposed rule change prior to the thirtieth day after the date of publication of the notice of the filing. CME has articulated three reasons for so granting approval. One, the products covered by this filing and CME’s operations as a derivatives clearing organization for such products are regulated by the CFTC under the CEA. Two, the proposed rule change relates solely to IRS products and therefore relate solely to CME’s swaps clearing activities and do not significantly relate to CME’s functions as a clearing agency for security-based swaps. Three, not approving this request on an accelerated basis will have a significant impact on the swap clearing business of CME as a designated clearing organization. The Commission finds good cause for granting approval of the proposed rule change prior to the thirtieth day after publication of the notice of its filing because: (i) The proposed rule change does not significantly affect any securities clearing operations of the clearing agency (whether in existence or contemplated by its rules) or any related rights or obligations of the clearing agency or persons using such service; (ii) the clearing agency has indicated that not providing accelerated approval would have a significant impact on its IRS clearing business as a designated clearing organization; and (iii) the activity relating to the non-security clearing operations of the clearing agency for which the clearing agency is seeking approval is subject to regulation by another federal regulator. V. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act, that the proposed rule change (SR–CME–2012– 10) is approved on an accelerated basis. wreier-aviles on DSK5TPTVN1PROD with NOTICES For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.6 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2012–9143 Filed 4–16–12; 8:45 am] BILLING CODE 8011–01–P 5 15 6 17 U.S.C. 78q–1(b)(3)(F). CFR 200.30–3(a)(12). VerDate Mar<15>2010 14:27 Apr 16, 2012 Jkt 226001 SECURITIES AND EXCHANGE COMMISSION [Release No. 34–66785; File No. SR–FICC– 2012–01] Self-Regulatory Organizations; Fixed Income Clearing Corporation; Order Approving Proposed Rule Change To Make a Technical Correction to the Rule Relating to the Calculation of Funds-Only Settlement Amounts for Repo Brokers April 11, 2012. I. Introduction On February 14, 2012, the Fixed Income Clearing Corporation (‘‘FICC’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change SR–FICC–2012– 01 pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 2 thereunder. The proposed rule change was published for comment in the Federal Register on March 5, 2012.3 The Commission received no comment letters regarding the proposal. For the reasons discussed below, the Commission is granting approval of the proposed rule change. II. Description The proposed rule change consists of modifications to Rule 19, Section 4 of the rules of the Government Securities Division (‘‘GSD’’) of FICC. The purpose of the rule change is to make technical corrections to GSD Rule 19 (Special Provisions For Brokered Repo Transactions), Section 4 (Calculations of Funds-Only Settlement Amounts for Repo Brokers) as described below. GSD Rule 19, Section 4 states that FICC may retain any amount of a Credit Forward Mark Adjustment Payment that is in excess of the Cap 4 and that interest earned on such amount shall be paid to the Repo Broker on the subsequent business day. The second part of this sentence is incorrectly stated because FICC pays interest to those who were debited forward mark adjustment amounts not those who were credited 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 Securities Exchange Act Release No. 34–66485 (February 28, 2012), 77 FR 13164 (March 5, 2012). In its filing with the Commission, FICC included statements concerning the purpose of and basis for the proposed rule change. The text of these statements is incorporated into the discussion of the proposed rule change in Section II below. 4 The GSD rules define ‘‘Cap’’ as any Debit Forward Mark Adjustment Payment or Credit Forward Mark Adjustment Payment up to a dollar amount, as determined by FICC from time to time, that is automatically collected from or paid to the Repo Broker, as applicable. 2 17 PO 00000 Frm 00073 Fmt 4703 Sfmt 4703 22827 such amounts. On the following day (i.e., the day after the broker received the Credit Forward Mark Adjustment Payment) when the broker is debited the interest for the use of funds it received as a credit, the broker will be debited the interest on the amount that it actually received as a credit (i.e., it will not be debited interest for the amount of Credit payment withheld above the Cap). The rule is also revised to state that Repo Brokers with more than one Segregated Repo Account must aggregate Debit Forward Mark Adjustments and Credit Forward Mark Adjustment Payments in those accounts for purposes of the Cap. The Repo Brokers currently comply with this correction and the revision reflects current practice. III. Discussion Section 19(b)(2)(B) of the Act 5 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. In particular, Section 17A(b)(3)(F) 6 of the Act requires, among other things, that the rules of a clearing agency be designed to promote the prompt and accurate clearance and settlement of securities transactions and to assure the safeguarding of securities and funds which are in the custody or control of such clearing agency or for which it is responsible. Because the proposed change would align FICC’s rulebook with its practices and provide transparency in its processes, the Commission believes that the proposed rule change is consistent with FICC’s obligations under the Act. 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 with the requirements of Section 17A of the Act and the rules and regulations thereunder. It is therefore ordered, pursuant to Section 19(b)(2) 7 of the Act, that the proposed rule change (File No. SR– FICC–2012–01) be, and hereby is, approved.8 5 15 U.S.C. 78s(b)(2)(B). U.S.C. 78q–1(b)(3)(F). 7 15 U.S.C. 78s(b)(2). 8 In approving the proposed rule change, the Commission considered the proposal’s impact on efficiency, competition and capital formation. 15 U.S.C. 78c(f). 6 15 E:\FR\FM\17APN1.SGM 17APN1 22828 Federal Register / Vol. 77, No. 74 / Tuesday, April 17, 2012 / Notices For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.9 Kevin M. O’Neill, Deputy Secretary . [FR Doc. 2012–9142 Filed 4–16–12; 8:45 am] the most significant aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, Proposed Rule Change BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–66781; File No. SR–CBOE– 2012–036 Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Fees Schedule April 11, 2012. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on April 2, 2012, the Chicago Board Options Exchange, Incorporated (the ‘‘Exchange’’ or ‘‘CBOE’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I, II, and III 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. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend its Fees Schedule. The text of the proposed rule change is available on the Exchange’s Web site (https:// www.cboe.com/AboutCBOE/ CBOELegalRegulatoryHome.aspx), at the Exchange’s Office of the Secretary, and at the Commission. wreier-aviles on DSK5TPTVN1PROD with 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, 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 IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1. Purpose The Exchange proposes to amend its Fees Schedule. Specifically, the Exchange proposes to exclude executions related to contracts that are routed to one or more exchanges in connection with the Options Order Protection and Locked/Crossed Market Plan referenced in CBOE Rule 6.80 (‘‘Linkage’’) from counting towards the Exchange’s Volume Incentive Program (the ‘‘Program’’), through which Trading Permit Holders (‘‘TPHs’’) are credited increasing per contract amounts for electronically executing increasing numbers of public customer contracts in multiply-listed classes. The Exchange does not benefit from transactions revenue resulting from the execution of public customer contracts that are routed to other exchanges through Linkage,3 so providing a credit for such executions means that the Exchange is paying out monies for such executions without taking in any net revenue. The Exchange cannot continue to subsidize Linkage-related transactions in this manner, and therefore proposes to exclude such transactions from the Program. 2. Statutory Basis The Exchange believes the proposed rule change is consistent with the Act and the rules and regulations thereunder applicable to the Exchange and, in particular, the requirements of Section 6(b) of the Act.4 Specifically, the Exchange believes the proposed rule change is consistent with Section 6(b)(4) of the Act,5 which provides that Exchange rules may provide for the equitable allocation of reasonable dues, fees, and other charges among its Trading Permit Holders and other persons using its facilities. The proposed change to exclude Linkagerelated executions from the Program is reasonable because the Exchange does not generally take in revenue for such customer transactions, and therefore it is not currently economically logical to provide a credit for such executions. This change is equitable and not unfairly discriminatory for similar reasons; it is certainly equitable to not provide a credit in circumstances wherein the Exchange does not collect 9 17 4 15 B. Self-Regulatory Organization’s Statement on Burden on Competition CBOE does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange neither solicited nor received comments on 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 pursuant to Section 19(b)(3)(A) 6 of the Act and paragraph (f) of Rule 19b–4 7 thereunder. At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend 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: Electronic Comments • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rulecomments@sec.gov. Please include File Number SR–CBOE–2012–036 on the subject line. Paper Comments • Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549. All submissions should refer to File Number SR–CBOE–2012–036. This file number should be included on the subject line if email is used. To help the 3 See 1 15 a fee (otherwise, the recipients of said credits would be collecting ‘‘free money’’ from the Exchange), and it is not unfairly discriminatory as this exclusion applies to all parties to whom the Program applies. VerDate Mar<15>2010 14:27 Apr 16, 2012 Exchange Fees Schedule, Section 20.I. U.S.C. 78f(b). 5 15 U.S.C. 78f(b)(4). Jkt 226001 PO 00000 Frm 00074 Fmt 4703 Sfmt 4703 6 15 7 17 E:\FR\FM\17APN1.SGM U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f). [sic] 17APN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 77, Number 74 (Tuesday, April 17, 2012)]
[Notices]
[Pages 22827-22828]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-9142]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-66785; File No. SR-FICC-2012-01]


Self-Regulatory Organizations; Fixed Income Clearing Corporation; 
Order Approving Proposed Rule Change To Make a Technical Correction to 
the Rule Relating to the Calculation of Funds-Only Settlement Amounts 
for Repo Brokers

April 11, 2012.

I. Introduction

    On February 14, 2012, the Fixed Income Clearing Corporation 
(``FICC'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change SR-FICC-2012-01 pursuant to 
Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act'') \1\ 
and Rule 19b-4 \2\ thereunder. The proposed rule change was published 
for comment in the Federal Register on March 5, 2012.\3\ The Commission 
received no comment letters regarding the proposal. For the reasons 
discussed below, the Commission is granting approval of the proposed 
rule change.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Securities Exchange Act Release No. 34-66485 (February 28, 
2012), 77 FR 13164 (March 5, 2012). In its filing with the 
Commission, FICC included statements concerning the purpose of and 
basis for the proposed rule change. The text of these statements is 
incorporated into the discussion of the proposed rule change in 
Section II below.
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II. Description

    The proposed rule change consists of modifications to Rule 19, 
Section 4 of the rules of the Government Securities Division (``GSD'') 
of FICC. The purpose of the rule change is to make technical 
corrections to GSD Rule 19 (Special Provisions For Brokered Repo 
Transactions), Section 4 (Calculations of Funds-Only Settlement Amounts 
for Repo Brokers) as described below. GSD Rule 19, Section 4 states 
that FICC may retain any amount of a Credit Forward Mark Adjustment 
Payment that is in excess of the Cap \4\ and that interest earned on 
such amount shall be paid to the Repo Broker on the subsequent business 
day. The second part of this sentence is incorrectly stated because 
FICC pays interest to those who were debited forward mark adjustment 
amounts not those who were credited such amounts. On the following day 
(i.e., the day after the broker received the Credit Forward Mark 
Adjustment Payment) when the broker is debited the interest for the use 
of funds it received as a credit, the broker will be debited the 
interest on the amount that it actually received as a credit (i.e., it 
will not be debited interest for the amount of Credit payment withheld 
above the Cap). The rule is also revised to state that Repo Brokers 
with more than one Segregated Repo Account must aggregate Debit Forward 
Mark Adjustments and Credit Forward Mark Adjustment Payments in those 
accounts for purposes of the Cap. The Repo Brokers currently comply 
with this correction and the revision reflects current practice.
---------------------------------------------------------------------------

    \4\ The GSD rules define ``Cap'' as any Debit Forward Mark 
Adjustment Payment or Credit Forward Mark Adjustment Payment up to a 
dollar amount, as determined by FICC from time to time, that is 
automatically collected from or paid to the Repo Broker, as 
applicable.
---------------------------------------------------------------------------

III. Discussion

    Section 19(b)(2)(B) of the Act \5\ 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. In particular, Section 17A(b)(3)(F) 
\6\ of the Act requires, among other things, that the rules of a 
clearing agency be designed to promote the prompt and accurate 
clearance and settlement of securities transactions and to assure the 
safeguarding of securities and funds which are in the custody or 
control of such clearing agency or for which it is responsible. Because 
the proposed change would align FICC's rulebook with its practices and 
provide transparency in its processes, the Commission believes that the 
proposed rule change is consistent with FICC's obligations under the 
Act.
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    \5\ 15 U.S.C. 78s(b)(2)(B).
    \6\ 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 with the requirements of Section 17A of the Act and the 
rules and regulations thereunder.
    It is therefore ordered, pursuant to Section 19(b)(2) \7\ of the 
Act, that the proposed rule change (File No. SR-FICC-2012-01) be, and 
hereby is, approved.\8\
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    \7\ 15 U.S.C. 78s(b)(2).
    \8\ In approving the proposed rule change, the Commission 
considered the proposal's impact on efficiency, competition and 
capital formation. 15 U.S.C. 78c(f).


[[Page 22828]]


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    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary .
[FR Doc. 2012-9142 Filed 4-16-12; 8:45 am]
BILLING CODE 8011-01-P

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