Self-Regulatory Organizations; Fixed Income Clearing Corporation; Notice of Filing of Amended Application for Registration as a Clearing Agency, 22923-22925 [2013-08924]
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Federal Register / Vol. 78, No. 74 / Wednesday, April 17, 2013 / Notices
exhibit to or quoted in the application.
Any amendment to the application must
contain a similar statement as to the
applicability of the original statement of
authorization. When any application or
amendment is signed by an agent or
attorney, rule 0–4 requires that the
power of attorney evidencing his
authority to sign shall state the basis for
the agent’s authority and shall be filed
with the Commission. Every application
subject to rule 0–4 must be verified by
the person executing the application by
providing a notarized signature in
substantially the form specified in the
rule. Each application subject to rule 0–
4 must state the reasons why the
applicant is deemed to be entitled to the
action requested with a reference to the
provisions of the Act and rules
thereunder, the name and address of
each applicant, and the name and
address of any person to whom any
questions regarding the application
should be directed. Rule 0–4 requires
that a proposed notice of the proceeding
initiated by the filing of the application
accompany each application as an
exhibit and, if necessary, be modified to
reflect any amendment to the
application.
The requirements of rule 0–4 are
designed to provide Commission staff
with the necessary information to assess
whether granting the orders of
exemption are necessary and
appropriate in the public interest and
consistent with the protection of
investors and the intended purposes of
the Act.
Applicants for orders under the
Advisers Act can include registered
investment advisers, affiliated persons
of registered investment advisers, and
entities seeking to avoid investment
adviser status, among others.
Commission staff estimates that it
receives up to 9 applications per year
submitted under rule 0–4 of the Act
seeking relief from various provisions of
the Advisers Act and, in addition, up to
7 applications per year submitted under
Advisers Act rule 206(4)-5, which
addresses certain ‘‘pay to play’’
practices and also provides the
Commission the authority to grant
applications seeking relief from certain
of the rule’s restrictions. Although each
application typically is submitted on
behalf of multiple applicants, the
applicants in the vast majority of cases
are related entities and are treated as a
single respondent for purposes of this
analysis. Most of the work of preparing
an application is performed by outside
counsel and, therefore, imposes no
hourly burden on respondents. The cost
outside counsel charges applicants
depends on the complexity of the issues
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covered by the application and the time
required. Based on conversations with
applicants and attorneys, and recent
analyses by the Commission,1 the cost
for applications ranges from
approximately $12,800 for preparing a
well-precedented, routine (or otherwise
less involved) application to
approximately $200,000 to prepare a
complex or novel application. We
estimate that the Commission receives 2
of the most time-consuming
applications annually, 4 applications of
medium difficulty, and 10 of the least
difficult applications subject to rule 0–
4.2 This distribution gives a total
estimated annual cost burden to
applicants of filing all applications of
$702,000 [(2x$200,000) + (4x$43,500) +
(10x$12,800)]. The estimate of annual
cost burden is made solely for the
purposes of the Paperwork Reduction
Act, and is not derived from a
comprehensive or even representative
survey or study of the costs of
Commission rules and forms.
The requirements of this collection of
information are required to obtain or
retain benefits. Responses will not be
kept confidential. An agency may not
conduct or sponsor, and a person is not
required to respond to a collection of
information unless it displays a
currently valid control number.
Written comments are invited on: (a)
Whether the proposed collection of
information is necessary for the proper
performance of the functions of the
agency, including whether the
information will have practical utility;
(b) the accuracy of the agency’s estimate
of the burden of the collection of
information; (c) ways to enhance the
quality, utility, and clarity of the
information collected; and (d) ways to
minimize the burden of the collection of
information on respondents, including
1 See Family Offices, Investment Advisers Act
Release No. 3220 (June 22, 2011), at section IV.A
(‘‘We estimate that a typical family office will incur
legal fees of $200,000 on average to engage in the
exemptive order application process, including
preparation and revision of an application and
consultations with Commission staff.’’) Although
the Commission may receive fewer exemptive
applications from family offices in light of rule
202(a)(11)(G)-1, which defines family offices that
are now excluded from regulation under the
Advisers Act, the costs to prepare family office
applications may be representative of the costs
required to prepare other more complex and novel
applications. See also Political Contributions by
Certain Investment Advisers, Investment Advisers
Act Release No. 3043 (July 1, 2010), at section V.D.
(estimating that applications filed under Advisers
Act rule 206(4)-5 ‘‘will cost approximately
$12,800’’).
2 The estimated 10 least difficult applications
include the estimated 7 applications per year
submitted under Advisers Act rule 206(4)-5. The
Commission previously estimated that these
applications will cost approximately $12,800 each.
Id.
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22923
through the use of automated collection
techniques or other forms of information
technology. Consideration will be given
to comments and suggestions submitted
in writing within 60 days of this
publication.
Please direct your written comments
to Thomas Bayer, Chief Information
Officer, Securities and Exchange
Commission, c/o Remi Pavlik-Simon,
6432 General Green Way, Alexandria,
VA 22312; or send an email to:
PRA_Mailbox@sec.gov.
Dated: April 11, 2013.
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2013–08975 Filed 4–16–13; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–69362; File No. 600–23]
Self-Regulatory Organizations; Fixed
Income Clearing Corporation; Notice of
Filing of Amended Application for
Registration as a Clearing Agency
April 11, 2013.
I. Introduction
On April 5, 2013, the Fixed Income
Clearing Corporation (‘‘FICC’’) filed
with the Securities and Exchange
Commission (‘‘Commission’’) an
amended Form CA–1 1 seeking
permanent registration as a clearing
agency under Section 17A of the
Securities Exchange Act of 1934 2
(‘‘Act’’) and Rule 17Ab2–1 thereunder.3
The Commission is publishing this
notice to solicit comments from
interested persons regarding this
amended Form CA–1.4 The Commission
will consider any comments it receives
in making its determination whether to
grant FICC’s request for permanent
registration as a clearing agency. The
Commission will grant FICC permanent
registration only if it concludes that
1 See Letter from Donaldine Temple, Senior
Associate Counsel and Corporate Secretary, FICC, to
Joseph P. Kamnik, Assistant Director, Division of
Trading and Markets (April 4, 2013). The
amendment filed by FICC updates all of the
information required by Form CA–1 and
incorporates by reference all information submitted
in connection with FICC’s prior application and
amendments thereto, to the extent this previously
submitted information remains accurate.
2 15 U.S.C. 78q–1.
3 17 CFR 240.17Ab2–1(a).
4 The descriptions set forth in this notice
regarding the structure and operations of FICC have
been largely derived from information contained in
FICC’s amended Form CA–1 application and
publicly available sources. The application and
non-confidential exhibits thereto are available on
the Commission’s Web site.
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Federal Register / Vol. 78, No. 74 / Wednesday, April 17, 2013 / Notices
FICC has satisfied all requirements of
the Act.5
II. Background
On December 13, 1986, the Mortgage
Backed Securities Clearing Corporation
(‘‘MBSCC’’) filed with the Commission
a Form CA–1 6 seeking registration as a
clearing agency. The Commission
granted MBSCC a temporary registration
on February 2, 1987,7 and extended this
temporary registration on several
occasions thereafter.8 On October 16,
1987, the Government Securities
Clearing Corporation (‘‘GSCC’’), filed
with the Commission a Form CA–1 9
seeking registration as a clearing agency.
The Commission granted GSCC a
temporary registration on May 24,
1988,10 and extended this temporary
registration on several occasions
thereafter.11 GSCC filed an amended
5 See
15 U.S.C. 78q–1(b)(3).
Exchange Act Release No. 23929
(December 23, 1986), 52 FR 373–01 (January 5,
1987) (File No. 600–22).
7 Securities Exchange Act Release No. 24046
(February 2, 1987), 52 FR 4218–01 (February 10,
1987) (File No. 600–22).
8 Securities Exchange Act Release No. 25957
(August 2, 1988), 53 FR 29537–01 (August 2, 1988)
(File No. 600–19); Securities Exchange Act Release
No. 27079 (July 31, 1989), 54 FR 32412–01 (August
7, 1989) (File No. 600–22); Securities Exchange Act
Release No. 28492 (September 28, 1990), 55 FR
41148–03 (October 9, 1990) (File No. 600–19);
Securities Exchange Act Release No. 29751
(September 27, 1991), 56 FR 50602–01 (October 7,
1991) (File Nos. 600–19 and 600–22); Securities
Exchange Act Release No. 31750 (January 21, 1993),
58 FR 6424–02 (January 28, 1993) (File Nos. 600–
19 and 600–22) (noting that, ‘‘[d]ue to an
inadvertent administrative error by MBSCC,’’
MBSCC failed to request an extension of its
temporary registration prior to the expiration of its
last extension on September 30, 1992); Securities
Exchange Act Release No. 33348 (December 15,
1993), 58 FR 68183–01 (December 23, 1993) (File
Nos. 600–19 and 600–22); Securities Exchange Act
Release No. 35132 (December 21, 1994), 59 FR
67743–01 (December 30, 1994) (File Nos. 600–19
and 600–22); Securities Exchange Act Release No.
37372 (June 26, 1996), 61 FR 35281–02 (July 5,
1996) (File No. 600–22); Securities Exchange Act
Release No. 38784 (June 27, 1997), 62 FR 36587–
01 (July 8, 1997) (File No. 600–22); Securities
Exchange Act Release No. 39776 (March 20, 1998),
63 FR 14740–02 (March 26, 1998) (File No. 600–22);
Securities Exchange Act Release No. 42568 (March
23, 2000), 65 FR 16980–01 (March 30, 2000) (File
No. 600–22); Securities Exchange Act Release No.
44089 (March 21, 2001), 66 FR 16961–02 (March 28,
2001) (File No. 600–22); Securities Exchange Act
Release No. 44831 (September 21, 2001), 66 FR
49728–01 (September 28, 2001) (File No. 600–22);
Securities Exchange Act Release No. 45607 (March
20, 2002), 67 FR 14755–01 (March 27, 2002) (File
No. 600–22); Securities Exchange Act Release No.
46136 (June 27, 2002), 67 FR 44655–01 (July 3,
2002) (File No. 600–22).
9 Securities Exchange Act Release No. 25129
(November 16, 1987), 52 FR 44659–01 (November
20, 1987) (File No. 600–23).
10 Securities Exchange Act Release No. 25740
(May 24, 1988), 53 FR 19839 (May 24, 1987) (File
No. 600–23).
11 Securities Exchange Act Release No. 29236
(May 24, 1991), 56 FR 24852 (May 31, 1991) (File
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Form CA–1 on November 15, 2002, in
which it explained that it intended to
acquire MBSCC.12 On January 1, 2003,
GSCC acquired MBSCC and named the
resulting entity FICC.13 At the time of
the merger, both GSCC and MBSCC
were operating under temporary
registrations with the Commission, and
FICC has operated under a temporary
registration since that time. The
temporary registrations granted to
MBSCC and GSCC exempted them from
certain requirements imposed by
Section 17A of the Act.14 Specifically,
both MBSCC and GSCC were exempted
from compliance with the Act’s fair
representation requirement,15 and GSCC
was further exempted from the Act’s
participation requirements.16 The
exemptions granted to MBSCC and
GSCC have since been removed because
the Commission determined that both
clearing agencies satisfied the statutory
requirements from which the entities
No. 600–23); Securities Exchange Act Release No.
32385 (June 3, 1993), 58 FR 32405 (June 9, 1993)
(File No. 600–23); Securities Exchange Act Release
No. 35787 (May 31, 1995), 60 FR 30324 (June 8,
1995) (File No. 600–23); Securities Exchange Act
Release No. 36508 (November 27, 1995), 60 FR
61719 (December 1, 1995) (File No. 600–23);
Securities Exchange Act Release No. 37983
(November 25, 1996), 61 FR 64183 (December 3,
1996) (File No. 600–23); Securities Exchange Act
Release No. 38698 (May 30, 1997), 62 FR 30911
(June 5, 1997) (File No. 600–23); Securities
Exchange Act Release No. 39696 (February 24,
1998), 63 FR 10253 (March 2, 1998) (File No. 600–
23); Securities Exchange Act Release No. 41104
(February 24, 1999), 64 FR 10510 (March 4, 1999)
(File No. 600–23); Securities Exchange Act Release
No. 41805 (August 27, 1999), 64 FR 48682
(September 7, 1999) (File No. 600–23); Securities
Exchange Act Release No. 42335 (January 12, 2000),
65 FR 3509 (January 21, 2000) (File No. 600–23);
Securities Exchange Act Release No. 43089 (July 28,
2000), 65 FR 48032 (August 4, 2000) (File No. 600–
23); Securities Exchange Act Release No. 43900
(January 29, 2001), 66 FR 8988 (February 5, 2001)
(File No. 600–23); Securities Exchange Act Release
No. 44553 (July 13, 2001), 66 FR 37714 (July 19,
2001) (File No. 600–23); Securities Exchange Act
Release No. 45164 (December 18, 2001), 66 FR
66957 (December 27, 2001) (File No. 600–23); and
Securities Exchange Act Release No. 46135 (June
27, 2002), 67 FR 44655 (July 3, 2002) (File No. 600–
23).
12 See Letter from Jeffrey F. Ingber, Managing
Director, General Counsel and Secretary, FICC (Nov.
15, 2002).
13 Securities Exchange Act Release No. 47015
(December 17, 2002), 67 FR 78531 (December 24,
2002) (File Nos. SR–GSCC–2002–07 and SR–
MBSCC–2002–01).
14 Pursuant to Rule 17Ab2–1(c)(1), the
Commission may grant registration to a clearing
agency while exempting it from one or more of the
requirements of paragraphs (A) through (I) of
section 17A(b)(3) of the Act. See 17 C.F.R.
240.17Ab2–1(c)(1).
15 Securities Exchange Act Release No. 24046
(February 2, 1987), 52 FR 4218–01 (February 10,
1987) (File No. 600–22); Securities Exchange Act
Release No. 25740 (May 24, 1988), 53 FR 19839–
01 (May 31, 1988) (File No. 600–23).
16 Securities Exchange Act Release No. 25740
(May 24, 1988), 53 FR 19839–01 (May 31, 1988)
(File No. 600–23).
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were previously exempted.17 Thus,
FICC is now subject to all requirements
applicable to registered clearing
agencies.
Following GSCC’s acquisition of
MBSCC, the Commission extended
FICC’s temporary registration on several
occasions.18 The Commission most
recently extended FICC’s temporary
registration on June 20, 2011.19 At that
time, the Commission explained that it
would consider whether to grant FICC
permanent registration after the
Commission acted upon FICC’s proposal
to introduce central counterparty and
guarantee settlement services to FICC’s
Mortgage-Backed Securities Division.
The Commission approved FICC’s
request to allow its Mortgage-Backed
Securities Division to act as a central
counterparty and settlement guarantor
on March 9, 2012.20 FICC’s temporary
registration expires on June 30, 2013.21
III. Overview of FICC
FICC is a wholly owned subsidiary of
the Depository Trust & Clearing
Corporation (‘‘DTCC’’), and is generally
administered as an industry-owned
utility on an at-cost basis. FICC is
comprised of two separate divisions, the
Government Securities Division (‘‘FICC/
GSD’’) and the Mortgage-Backed
Securities Division (‘‘FICC/MBSD’’).
Each Division has its own set of rules
and membership.
FICC/GSD is the sole clearing agency
in the United States acting as a central
counterparty for cash-settled U.S.
17 Securities Exchange Act Release No. 26729
(April 14, 1989), 54 FR 16438–G–01 (April 24,
1989) (SR–MBSS–89–2) (lifting MBSCC’s
exemption from the Act’s fair representation
requirements); Securities Exchange Act Release No.
36508 (November 27, 1995), 60 FR 61719–02
(December 1, 1995) (File No. 600–23) (lifting
GSCC’s exemption from the Act’s participation
requirements); Securities Exchange Act Release No.
39372 (November 28, 1997), 62 FR 64415
(December 5, 1997) (SR–GSCC–97–01) (lifting
GSCC’s exemption from the Act’s fair
representation requirements).
18 Securities Exchange Act Release No. 48116
(July 1, 2003), 68 FR 41031 (July 9, 2003) (File No.
600–23); Securities Exchange Act Release No. 49940
(June 29, 2004), 69 FR 40695 (July 5, 2004) (File No.
600–23); Securities Exchange Act Release No. 51911
(June 23, 2005), 70 FR 37878 (June 30, 2005) (File
No. 600–23); Securities Exchange Act Release No.
54056 (June 28, 2006), 71 FR 38193 (July 5, 2006)
(File No. 600–23); Securities Exchange Act Release
No. 55920 (June 18, 2007), 72 FR 35270 (June 27,
2007) (File No. 600–23); and Securities Exchange
Act Release No. 57949 (June 11, 2008), 73 FR 34808
(June 18, 2008) (File No. 600–23).
19 Securities Exchange Act Release No. 64707
(June 20, 2011), 76 FR 37165 (June 24, 2011) (File
No. 600–23).
20 Securities Exchange Act Release No. 66550
(March 9, 2012), 77 FR 15155 (March 14, 2012) (File
No. 600–23).
21 Securities Exchange Act Release No. 64707
(June 20, 2011), 76 FR 37165 (June 24, 2011) (File
No. 600–23).
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Government and agency securities.
FICC/GSD provides clearing, netting,
settlement, risk management, central
counterparty services and a guarantee of
trade completion for the following
securities: (i) U.S. Treasury bills, notes,
bonds, Treasury inflation-protected
securities (TIPS), and Separate Trading
of Registered Interest and Principal
Securities (STRIPS), and (ii) Federal
agency notes, bonds and zero-coupon
securities that are book-entry, Fedwire
eligible and non-mortgage backed. FICC/
GSD accepts buy-sell transactions,
repurchase and reverse repurchase
agreement transactions (repos), and
Treasury auction purchases in several
types of U.S. Government securities.
FICC/MBSD is the only centralized
clearing facility in the non-private label
mortgage-backed securities market.
FICC/MBSD provides clearing, netting,
settlement, risk management, pool
notification, central counterparty
services and a guarantee of trade
completion for pass-through mortgagebacked securities issued by the
Government National Mortgage
Association (‘‘Ginnie Mae’’), the Federal
Home Loan Mortgage Corporation
(‘‘Freddie Mac’’) and the Federal
National Mortgage Association (‘‘Fannie
Mae’’). FICC/MBSD also processes
options trades for ‘‘to-be-announced’’
transactions.
Additional information concerning
FICC and its operations may be found in
the schedule and non-confidential
exhibits appended to FICC’s amended
Form CA–1.22 Schedule A to FICC’s
amended Form CA–1 includes a
description of the risk management
procedures utilized by FICC/GSD and
FICC/MBSD. Exhibits A and B provide
a list of FICC’s Board of Directors and
its officers and senior managers,
respectively. Exhibit C includes both a
narrative and graphical depiction of
FICC’s organizational structure, and
Exhibit E includes copies of the current
rulebooks for both FICC/GSD and FICC/
MBSD, along with copies of FICC’s
governing documents. Finally, Exhibit J
provides a description of FICC’s services
and functions.
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IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning FICC’s amended
Form CA–1, including whether FICC
has satisfied the Act’s requirements for
registration. Comments may be
22 FICC’s amended Form CA–1, including the
exhibits, attachments and the schedule referenced
above, is available online at www.sec.gov/rules/
other.shtml, as well as at the Commission’s Public
Reference Room.
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16:50 Apr 16, 2013
Jkt 229001
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 600–23 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
20549–1090.
All submissions should refer to File
Number 600–23. This file number
should be included on the subject line
if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method of submission. The
Commission will post all comments on
the Commission’s Internet Web site
(https://www.sec.gov/rules/sro.shtml).
Copies of the amended Form CA–1, all
subsequent amendments, all written
statements with respect to FICC’s
amended Form CA–1 that are filed with
the Commission, and all written
communications relating to the
amended Form CA–1 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 Web site viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE.,
Washington, DC 20549, on official
business days between the hours of
10:00 a.m. and 3:00 p.m.
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 600–23 and should be
submitted on or before June 3, 2013.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.23
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2013–08924 Filed 4–16–13; 8:45 am]
BILLING CODE 8011–01–P
23 17
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CFR 200.30–3(a)(12).
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22925
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–69363; File No. SR–
NASDAQ–2012–117]
Self-Regulatory Organizations; The
NASDAQ Stock Market LLC; Notice of
Designation of Longer Period for
Commission Action on Proceedings To
Determine Whether To Approve or
Disapprove a Proposed Rule Change
With Respect to INAV Pegged Orders
for ETFs
April 11, 2013.
On October 2, 2012, The NASDAQ
Stock Market LLC (‘‘NASDAQ’’ or
‘‘Exchange’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’), pursuant to Section
19(b)(1) of the Securities Exchange Act
of 1934 (‘‘Act’’) 1 and Rule 19b–4
thereunder,2 a proposed rule change to
amend NASDAQ Rule 4751(f)(4) to
include a new Intraday Net Asset Value
(‘‘INAV’’) Pegged Order for ExchangeTraded Funds (‘‘ETFs’’) where the
component stocks underlying the ETFs
are U.S. Component Stocks as defined
by Rule 5705(a)(1)(C) and 5705(b)(1)(D).
The proposed rule change was
published for comment in the Federal
Register on October 18, 2012.3 The
Commission received one comment
letter on the proposal.4 On November
21, 2012, pursuant to Section 19(b)(2) of
the Act,5 the Commission extended the
time period for Commission action on
the proposed rule change to January 16,
2013.6 The Commission thereafter
received one response letter from the
Exchange.7 On January 16, 2013, the
Commission instituted proceedings to
determine whether to approve or
disapprove the proposed rule change.8
The Commission thereafter received one
comment letter and one response letter
from the Exchange.9
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 68042
(Oct. 12, 2012), 77 FR 64167.
4 See Letter from Dorothy Donohue, Deputy
General Counsel, Investment Company Institute,
dated Nov. 8, 2012.
5 15 U.S.C. 78s(b)(2).
6 See Securities Exchange Act Release No. 68279,
77 FR 70857 (Nov. 27, 2012).
7 See Letter from Stephen Matthews, Senior
Associate General Counsel, NASDAQ OMX, dated
Jan. 15, 2013.
8 See Securities Exchange Act Release No. 68672,
78 FR 4949 (Jan. 23, 2013).
9 See Letter from Dorothy Donohue, Deputy
General Counsel, Investment Company Institute,
dated Feb. 13, 2013. See Letter from Jeffrey S. Davis,
Vice President and Deputy General Counsel,
NASDAQ OMX, dated Feb. 27, 2013.
2 17
E:\FR\FM\17APN1.SGM
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]]>Agencies
[Federal Register Volume 78, Number 74 (Wednesday, April 17, 2013)]
[Notices]
[Pages 22923-22925]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-08924]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-69362; File No. 600-23]
Self-Regulatory Organizations; Fixed Income Clearing Corporation;
Notice of Filing of Amended Application for Registration as a Clearing
Agency
April 11, 2013.
I. Introduction
On April 5, 2013, the Fixed Income Clearing Corporation (``FICC'')
filed with the Securities and Exchange Commission (``Commission'') an
amended Form CA-1 \1\ seeking permanent registration as a clearing
agency under Section 17A of the Securities Exchange Act of 1934 \2\
(``Act'') and Rule 17Ab2-1 thereunder.\3\ The Commission is publishing
this notice to solicit comments from interested persons regarding this
amended Form CA-1.\4\ The Commission will consider any comments it
receives in making its determination whether to grant FICC's request
for permanent registration as a clearing agency. The Commission will
grant FICC permanent registration only if it concludes that
[[Page 22924]]
FICC has satisfied all requirements of the Act.\5\
---------------------------------------------------------------------------
\1\ See Letter from Donaldine Temple, Senior Associate Counsel
and Corporate Secretary, FICC, to Joseph P. Kamnik, Assistant
Director, Division of Trading and Markets (April 4, 2013). The
amendment filed by FICC updates all of the information required by
Form CA-1 and incorporates by reference all information submitted in
connection with FICC's prior application and amendments thereto, to
the extent this previously submitted information remains accurate.
\2\ 15 U.S.C. 78q-1.
\3\ 17 CFR 240.17Ab2-1(a).
\4\ The descriptions set forth in this notice regarding the
structure and operations of FICC have been largely derived from
information contained in FICC's amended Form CA-1 application and
publicly available sources. The application and non-confidential
exhibits thereto are available on the Commission's Web site.
\5\ See 15 U.S.C. 78q-1(b)(3).
---------------------------------------------------------------------------
II. Background
On December 13, 1986, the Mortgage Backed Securities Clearing
Corporation (``MBSCC'') filed with the Commission a Form CA-1 \6\
seeking registration as a clearing agency. The Commission granted MBSCC
a temporary registration on February 2, 1987,\7\ and extended this
temporary registration on several occasions thereafter.\8\ On October
16, 1987, the Government Securities Clearing Corporation (``GSCC''),
filed with the Commission a Form CA-1 \9\ seeking registration as a
clearing agency. The Commission granted GSCC a temporary registration
on May 24, 1988,\10\ and extended this temporary registration on
several occasions thereafter.\11\ GSCC filed an amended Form CA-1 on
November 15, 2002, in which it explained that it intended to acquire
MBSCC.\12\ On January 1, 2003, GSCC acquired MBSCC and named the
resulting entity FICC.\13\ At the time of the merger, both GSCC and
MBSCC were operating under temporary registrations with the Commission,
and FICC has operated under a temporary registration since that time.
The temporary registrations granted to MBSCC and GSCC exempted them
from certain requirements imposed by Section 17A of the Act.\14\
Specifically, both MBSCC and GSCC were exempted from compliance with
the Act's fair representation requirement,\15\ and GSCC was further
exempted from the Act's participation requirements.\16\ The exemptions
granted to MBSCC and GSCC have since been removed because the
Commission determined that both clearing agencies satisfied the
statutory requirements from which the entities were previously
exempted.\17\ Thus, FICC is now subject to all requirements applicable
to registered clearing agencies.
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\6\ Securities Exchange Act Release No. 23929 (December 23,
1986), 52 FR 373-01 (January 5, 1987) (File No. 600-22).
\7\ Securities Exchange Act Release No. 24046 (February 2,
1987), 52 FR 4218-01 (February 10, 1987) (File No. 600-22).
\8\ Securities Exchange Act Release No. 25957 (August 2, 1988),
53 FR 29537-01 (August 2, 1988) (File No. 600-19); Securities
Exchange Act Release No. 27079 (July 31, 1989), 54 FR 32412-01
(August 7, 1989) (File No. 600-22); Securities Exchange Act Release
No. 28492 (September 28, 1990), 55 FR 41148-03 (October 9, 1990)
(File No. 600-19); Securities Exchange Act Release No. 29751
(September 27, 1991), 56 FR 50602-01 (October 7, 1991) (File Nos.
600-19 and 600-22); Securities Exchange Act Release No. 31750
(January 21, 1993), 58 FR 6424-02 (January 28, 1993) (File Nos. 600-
19 and 600-22) (noting that, ``[d]ue to an inadvertent
administrative error by MBSCC,'' MBSCC failed to request an
extension of its temporary registration prior to the expiration of
its last extension on September 30, 1992); Securities Exchange Act
Release No. 33348 (December 15, 1993), 58 FR 68183-01 (December 23,
1993) (File Nos. 600-19 and 600-22); Securities Exchange Act Release
No. 35132 (December 21, 1994), 59 FR 67743-01 (December 30, 1994)
(File Nos. 600-19 and 600-22); Securities Exchange Act Release No.
37372 (June 26, 1996), 61 FR 35281-02 (July 5, 1996) (File No. 600-
22); Securities Exchange Act Release No. 38784 (June 27, 1997), 62
FR 36587-01 (July 8, 1997) (File No. 600-22); Securities Exchange
Act Release No. 39776 (March 20, 1998), 63 FR 14740-02 (March 26,
1998) (File No. 600-22); Securities Exchange Act Release No. 42568
(March 23, 2000), 65 FR 16980-01 (March 30, 2000) (File No. 600-22);
Securities Exchange Act Release No. 44089 (March 21, 2001), 66 FR
16961-02 (March 28, 2001) (File No. 600-22); Securities Exchange Act
Release No. 44831 (September 21, 2001), 66 FR 49728-01 (September
28, 2001) (File No. 600-22); Securities Exchange Act Release No.
45607 (March 20, 2002), 67 FR 14755-01 (March 27, 2002) (File No.
600-22); Securities Exchange Act Release No. 46136 (June 27, 2002),
67 FR 44655-01 (July 3, 2002) (File No. 600-22).
\9\ Securities Exchange Act Release No. 25129 (November 16,
1987), 52 FR 44659-01 (November 20, 1987) (File No. 600-23).
\10\ Securities Exchange Act Release No. 25740 (May 24, 1988),
53 FR 19839 (May 24, 1987) (File No. 600-23).
\11\ Securities Exchange Act Release No. 29236 (May 24, 1991),
56 FR 24852 (May 31, 1991) (File No. 600-23); Securities Exchange
Act Release No. 32385 (June 3, 1993), 58 FR 32405 (June 9, 1993)
(File No. 600-23); Securities Exchange Act Release No. 35787 (May
31, 1995), 60 FR 30324 (June 8, 1995) (File No. 600-23); Securities
Exchange Act Release No. 36508 (November 27, 1995), 60 FR 61719
(December 1, 1995) (File No. 600-23); Securities Exchange Act
Release No. 37983 (November 25, 1996), 61 FR 64183 (December 3,
1996) (File No. 600-23); Securities Exchange Act Release No. 38698
(May 30, 1997), 62 FR 30911 (June 5, 1997) (File No. 600-23);
Securities Exchange Act Release No. 39696 (February 24, 1998), 63 FR
10253 (March 2, 1998) (File No. 600-23); Securities Exchange Act
Release No. 41104 (February 24, 1999), 64 FR 10510 (March 4, 1999)
(File No. 600-23); Securities Exchange Act Release No. 41805 (August
27, 1999), 64 FR 48682 (September 7, 1999) (File No. 600-23);
Securities Exchange Act Release No. 42335 (January 12, 2000), 65 FR
3509 (January 21, 2000) (File No. 600-23); Securities Exchange Act
Release No. 43089 (July 28, 2000), 65 FR 48032 (August 4, 2000)
(File No. 600-23); Securities Exchange Act Release No. 43900
(January 29, 2001), 66 FR 8988 (February 5, 2001) (File No. 600-23);
Securities Exchange Act Release No. 44553 (July 13, 2001), 66 FR
37714 (July 19, 2001) (File No. 600-23); Securities Exchange Act
Release No. 45164 (December 18, 2001), 66 FR 66957 (December 27,
2001) (File No. 600-23); and Securities Exchange Act Release No.
46135 (June 27, 2002), 67 FR 44655 (July 3, 2002) (File No. 600-23).
\12\ See Letter from Jeffrey F. Ingber, Managing Director,
General Counsel and Secretary, FICC (Nov. 15, 2002).
\13\ Securities Exchange Act Release No. 47015 (December 17,
2002), 67 FR 78531 (December 24, 2002) (File Nos. SR-GSCC-2002-07
and SR-MBSCC-2002-01).
\14\ Pursuant to Rule 17Ab2-1(c)(1), the Commission may grant
registration to a clearing agency while exempting it from one or
more of the requirements of paragraphs (A) through (I) of section
17A(b)(3) of the Act. See 17 C.F.R. 240.17Ab2-1(c)(1).
\15\ Securities Exchange Act Release No. 24046 (February 2,
1987), 52 FR 4218-01 (February 10, 1987) (File No. 600-22);
Securities Exchange Act Release No. 25740 (May 24, 1988), 53 FR
19839-01 (May 31, 1988) (File No. 600-23).
\16\ Securities Exchange Act Release No. 25740 (May 24, 1988),
53 FR 19839-01 (May 31, 1988) (File No. 600-23).
\17\ Securities Exchange Act Release No. 26729 (April 14, 1989),
54 FR 16438-G-01 (April 24, 1989) (SR-MBSS-89-2) (lifting MBSCC's
exemption from the Act's fair representation requirements);
Securities Exchange Act Release No. 36508 (November 27, 1995), 60 FR
61719-02 (December 1, 1995) (File No. 600-23) (lifting GSCC's
exemption from the Act's participation requirements); Securities
Exchange Act Release No. 39372 (November 28, 1997), 62 FR 64415
(December 5, 1997) (SR-GSCC-97-01) (lifting GSCC's exemption from
the Act's fair representation requirements).
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Following GSCC's acquisition of MBSCC, the Commission extended
FICC's temporary registration on several occasions.\18\ The Commission
most recently extended FICC's temporary registration on June 20,
2011.\19\ At that time, the Commission explained that it would consider
whether to grant FICC permanent registration after the Commission acted
upon FICC's proposal to introduce central counterparty and guarantee
settlement services to FICC's Mortgage-Backed Securities Division. The
Commission approved FICC's request to allow its Mortgage-Backed
Securities Division to act as a central counterparty and settlement
guarantor on March 9, 2012.\20\ FICC's temporary registration expires
on June 30, 2013.\21\
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\18\ Securities Exchange Act Release No. 48116 (July 1, 2003),
68 FR 41031 (July 9, 2003) (File No. 600-23); Securities Exchange
Act Release No. 49940 (June 29, 2004), 69 FR 40695 (July 5, 2004)
(File No. 600-23); Securities Exchange Act Release No. 51911 (June
23, 2005), 70 FR 37878 (June 30, 2005) (File No. 600-23); Securities
Exchange Act Release No. 54056 (June 28, 2006), 71 FR 38193 (July 5,
2006) (File No. 600-23); Securities Exchange Act Release No. 55920
(June 18, 2007), 72 FR 35270 (June 27, 2007) (File No. 600-23); and
Securities Exchange Act Release No. 57949 (June 11, 2008), 73 FR
34808 (June 18, 2008) (File No. 600-23).
\19\ Securities Exchange Act Release No. 64707 (June 20, 2011),
76 FR 37165 (June 24, 2011) (File No. 600-23).
\20\ Securities Exchange Act Release No. 66550 (March 9, 2012),
77 FR 15155 (March 14, 2012) (File No. 600-23).
\21\ Securities Exchange Act Release No. 64707 (June 20, 2011),
76 FR 37165 (June 24, 2011) (File No. 600-23).
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III. Overview of FICC
FICC is a wholly owned subsidiary of the Depository Trust &
Clearing Corporation (``DTCC''), and is generally administered as an
industry-owned utility on an at-cost basis. FICC is comprised of two
separate divisions, the Government Securities Division (``FICC/GSD'')
and the Mortgage-Backed Securities Division (``FICC/MBSD''). Each
Division has its own set of rules and membership.
FICC/GSD is the sole clearing agency in the United States acting as
a central counterparty for cash-settled U.S.
[[Page 22925]]
Government and agency securities. FICC/GSD provides clearing, netting,
settlement, risk management, central counterparty services and a
guarantee of trade completion for the following securities: (i) U.S.
Treasury bills, notes, bonds, Treasury inflation-protected securities
(TIPS), and Separate Trading of Registered Interest and Principal
Securities (STRIPS), and (ii) Federal agency notes, bonds and zero-
coupon securities that are book-entry, Fedwire eligible and non-
mortgage backed. FICC/GSD accepts buy-sell transactions, repurchase and
reverse repurchase agreement transactions (repos), and Treasury auction
purchases in several types of U.S. Government securities.
FICC/MBSD is the only centralized clearing facility in the non-
private label mortgage-backed securities market. FICC/MBSD provides
clearing, netting, settlement, risk management, pool notification,
central counterparty services and a guarantee of trade completion for
pass-through mortgage-backed securities issued by the Government
National Mortgage Association (``Ginnie Mae''), the Federal Home Loan
Mortgage Corporation (``Freddie Mac'') and the Federal National
Mortgage Association (``Fannie Mae''). FICC/MBSD also processes options
trades for ``to-be-announced'' transactions.
Additional information concerning FICC and its operations may be
found in the schedule and non-confidential exhibits appended to FICC's
amended Form CA-1.\22\ Schedule A to FICC's amended Form CA-1 includes
a description of the risk management procedures utilized by FICC/GSD
and FICC/MBSD. Exhibits A and B provide a list of FICC's Board of
Directors and its officers and senior managers, respectively. Exhibit C
includes both a narrative and graphical depiction of FICC's
organizational structure, and Exhibit E includes copies of the current
rulebooks for both FICC/GSD and FICC/MBSD, along with copies of FICC's
governing documents. Finally, Exhibit J provides a description of
FICC's services and functions.
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\22\ FICC's amended Form CA-1, including the exhibits,
attachments and the schedule referenced above, is available online
at www.sec.gov/rules/other.shtml, as well as at the Commission's
Public Reference Room.
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning FICC's amended Form CA-1, including whether FICC
has satisfied the Act's requirements for registration. 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 rule-comments@sec.gov. Please include
File Number 600-23 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 20549-1090.
All submissions should refer to File Number 600-23. This file number
should be included on the subject line if email is used. To help the
Commission process and review your comments more efficiently, please
use only one method of submission. The Commission will post all
comments on the Commission's Internet Web site (https://www.sec.gov/rules/sro.shtml). Copies of the amended Form CA-1, all subsequent
amendments, all written statements with respect to FICC's amended Form
CA-1 that are filed with the Commission, and all written communications
relating to the amended Form CA-1 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
Web site viewing and printing in the Commission's Public Reference
Room, 100 F Street NE., Washington, DC 20549, on official business days
between the hours of 10:00 a.m. and 3:00 p.m.
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 600-23 and should
be submitted on or before June 3, 2013.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\23\
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\23\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-08924 Filed 4-16-13; 8:45 am]
BILLING CODE 8011-01-P
