Self-Regulatory Organizations; Fixed Income Clearing Corporation; Notice of Filing of Proposed Rule Change To Establish the Minimum Financial Requirements for the Existing Membership Category of Registered Investment Company Netting Members in the Government Securities Division, 71702-71704 [2013-28569]

Download as PDF 71702 Federal Register / Vol. 78, No. 230 / Friday, November 29, 2013 / Notices fees, and other charges among its members and issuers and other persons using its facilities.’’ • Section 6(b)(5) of the Act,23 which requires that the rules of a national securities exchange be designed to, among other things, ‘‘remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest’’ and not be ‘‘designed to permit unfair discrimination between customers, issuers, brokers, or dealers.’’ • Section 6(b)(8) of the Act,24 which requires that the rules of a national securities exchange ‘‘not impose any burden on competition not necessary or appropriate’’ in furtherance of the Act. VI. Commission’s Solicitation of Comments The Commission requests written views, data, and arguments with respect to the concerns identified above as well as other relevant concerns. Such comments should be submitted by December 20, 2013. Rebuttal comments should be submitted by January 3, 2014. Although there do not appear to be any issues relevant to approval or disapproval which would be facilitated by an oral presentation of views, data, and arguments, the Commission will consider, pursuant to Rule 19b–4, any request for an opportunity to make an oral presentation.25 The Commission asks that commenters address the sufficiency and merit of the Exchange’s statements in support of the proposal, in addition to any other comments they may wish to submit about the proposed rule change. Interested persons are invited to submit written data, views, and arguments concerning the proposed rule change, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s Internet comment form (http://www.sec.gov/ rules/sro.shtml ); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– Phlx–2013–113 on the subject line. sroberts on DSK5SPTVN1PROD with NOTICES 23 15 U.S.C. 78f(b)(5). U.S.C. 78f(b)(8). 25 15 U.S.C. 78s(b)(2). Section 19(b)(2) of the Act grants the Commission flexibility to determine what type of proceeding—either oral or notice and opportunity for written comments—is appropriate for consideration of a particular proposal by a selfregulatory organization. See Securities Act Amendments of 1975, Senate Comm. on Banking, Housing & Urban Affairs, S. Rep. No. 75, 94th Cong., 1st Sess. 30 (1975). 24 15 VerDate Mar<15>2010 17:56 Nov 27, 2013 Jkt 232001 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 SR–Phlx–2013–113. 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. The Commission will post all comments on the Commission’s Internet Web site (http://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for 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 publicly available. All submissions should refer to File Number SR–Phlx– 2013–113 and should be submitted on or before December 20, 2013. Rebuttal comments should be submitted by January 3, 2014. Conclusion It is therefore ordered, pursuant to Section 19(b)(3)(C) of the Act,26 that File Number SR–Phlx–2013–113, be and hereby is, temporarily suspended. In addition, the Commission is instituting proceedings to determine whether the proposed rule changes should be approved or disapproved. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.27 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2013–28724 Filed 11–27–13; 8:45 am] BILLING CODE 8011–01–P 26 15 27 17 PO 00000 U.S.C. 78s(b)(3)(C). CFR 200.30–3(a)(57) and (58). Frm 00142 Fmt 4703 Sfmt 4703 SECURITIES AND EXCHANGE COMMISSION [Release No. 34–70925; File No. SR–FICC– 2013–10] Self-Regulatory Organizations; Fixed Income Clearing Corporation; Notice of Filing of Proposed Rule Change To Establish the Minimum Financial Requirements for the Existing Membership Category of Registered Investment Company Netting Members in the Government Securities Division November 22, 2013. 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 November 12, 2013, the Fixed Income Clearing Corporation (‘‘FICC’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by FICC. 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 purpose of this rule filing is to amend the Rulebook (the ‘‘Rules’’) of the Government Securities Division (the ‘‘GSD’’) of FICC to establish the minimum financial requirements for the existing membership category of Registered Investment Company Netting Members (‘‘RICs’’).3 II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, FICC included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. FICC has prepared summaries, set forth in sections (A), (B) and (C) below, of the most significant aspects of such statements. 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 Pursuant to the GSD Rules, the term ‘‘Registered Investment Company Netting Member’’ is an Investment Company (1) that is registered with the Commission, (2) admitted to membership in GSD’s Netting System pursuant to the GSD Rules, and (3) whose membership in the Netting System has not been terminated. 2 17 E:\FR\FM\29NON1.SGM 29NON1 Federal Register / Vol. 78, No. 230 / Friday, November 29, 2013 / Notices A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change (i) The purpose of this proposed rule change is to establish financial minimum requirements for RICs. Historically, the GSD has served the ‘‘sell-side’’ community (which primarily consists of entities such as banks and broker-dealers) and excluded RICs, which are key participants in the market served by the GSD. FICC believes the participation of this category as guaranteed service members will contribute to the safety, efficiency, and transparency of the market by allowing FICC to capture a greater part of the activity of its existing members and by introducing activity of current nonmembers to FICC. FICC also believes that RICs will benefit from the GSD netting service and the associated operational efficiencies of a central counterparty service. Currently, RICs are already a permitted category in the GSD Rules, however, the proposed rule change establishes their minimum financial requirements.4 Specifically, Rule 2A (‘‘Initial Membership Requirements’’) of the GSD Rules will provide that the minimum financial requirement for RICs will be $100 million in net asset value. The rules have also been revised to state that the GSD will make its services available to Persons 5 in other categories as FICC may determine, subject to the approval of the Commission. This disclosure is also reflected in the Clearing Rules of the Mortgage-Backed Securities Division (‘‘MBSD’’). Currently, GSD Rule 3, ‘‘Ongoing Membership Requirements,’’ permits GSD to assess a premium against a netting member whose Clearing Fund requirement exceeds its specified regulatory capital figure.6 This premium sroberts on DSK5SPTVN1PROD with NOTICES 4 The membership requirements for RICs will be the same as those proposed for the central counterparty service of the Mortgage-Backed Securities Division. 5 Pursuant to the GSD Rules, the term ‘‘Person’’ means a partnership, Corporation, limited liability corporation or other organization, entity, or individual. 6 By way of example, under the current GSD Rules, if a member has a Clearing Fund requirement of $11.4 million and excess net capital of $10 million, its ‘‘ratio’’ is 1.14 (or 114 percent), and the applicable collateral premium would be 114 percent of $1.4 million (which is equal to the amount by which the member’s Clearing Fund requirement exceeds its excess net capital), or $1,596,000. The current GSD Rules provide that FICC has the right to: (i) Apply a lesser collateral premium (including no premium) based on specific circumstances (such as a member being subject to an unexpected haircut or capital charge that does not fundamentally change its risk profile), and (ii) return all or a portion of the collateral premium VerDate Mar<15>2010 17:56 Nov 27, 2013 Jkt 232001 will now include RICs because they will be netting members. The concept of a ‘‘Tier One Netting Member’’ and a ‘‘Tier Two Netting Member’’ was introduced to the GSD Rules by rule filing SR–FICC–2010–09.7 Tier One Netting Members will be subject to potential loss mutualization, whereas Tier Two Netting Members will not be subject to loss mutualization due to a legal prohibition. Under the present rule filing, the registered investment company members will be Tier Two Netting Members because they are not permitted by law to mutualize loss. In rule filing SR–FICC–2010–09, FICC also introduced an amended loss allocation methodology whereby any loss allocation is first made against the retained earnings of FICC attributable to the GSD (after application of the defaulting member’s Clearing Fund, funds-only settlement amounts and any other collateral on deposit with the GSD and any funds from any cross-margining or cross-guaranty agreements), in an amount up to 25 percent of FICC’s retained earnings or such higher amount as may be approved by the Board of Directors of FICC. If a loss still remains, the GSD will divide the loss between the Tier One Netting Members and the Tier Two Netting Members. Tier One Netting Members will be allocated the loss applicable to them first by assessing the Clearing Fund deposit of each such member in the amount of up to $50,000, equally. If a loss remains, Tier One Netting Members will be assessed ratably, in accordance with the respective amounts of their Required Fund Deposits, based on the average daily amount of the member’s Required Fund Deposit over the prior twelve months. Applicable Tier Two Netting Members will be assigned the Tier Two loss amount using a loss allocation methodology which does not provide for loss mutualization and is based on the activity that the Tier Two Netting Member conducted with the defaulting member.8 As stated above, the RICs will be treated as Tier Two Netting Members under the present proposal.9 amount if it believes that the member’s risk profile does not require the maintenance of that amount. 7 Tier One Members include banks, dealers, futures commission merchants, government securities issuers and registered clearing agencies and Tier Two Members include RICs. See Securities Exchange Act Release No. 34–63986 (Feb. 28, 2011), 76 FR 12144 (Mar. 4, 2011). 8 Please refer to Rule 4 Section 7 for the rules which pertain to the satisfaction of any loss incurred by FICC as a result of the failure of a defaulting member to fulfill its obligations to FICC. 9 The MBSD has the same loss allocation methodology. PO 00000 Frm 00143 Fmt 4703 Sfmt 4703 71703 It should be noted that RICs will not be permitted to utilize the GCF Repo® service. (ii) Statutory Basis. The present filing is consistent with the requirements of the Section 17A(b)(3)(F) of the Act, as amended, and the rules and regulations thereunder applicable to FICC because the proposed rule change (1) establishes a statutory category which is consistent with Rule 17A(b)(3)(B) of the Securities Exchange Act of 1934 and thus prohibits the unfair discrimination in the admission of RICs, (2) permits the participation of RICs, thereby providing these firms with the benefits of central counterparty service, and (3) allows FICC to capture a greater market share of the activity of its existing members and non-members thus promoting the prompt and accurate clearance and settlement of securities transactions. B. Self-Regulatory Organization’s Statement on Burden on Competition Establishing minimum financial requirements for RICs and giving such entities the opportunity to join GSD is consistent with the Rule 17A(b)(3)(B) of the Securities Exchange Act of 1934. This Rule requires clearing agencies to provide access to its services for certain enumerated statutory categories and RICs are reflected as one of the statutory categories. Furthermore, subject to the Commission’s approval of this rule filing, RICs will be subject to the same initial membership requirements and ongoing membership requirements as other GSD members. As a result, FICC does not believe that the proposed rule change will have any impact, or impose any burden, on competition. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Written comments relating to the proposed rule changes have not yet been solicited or received. FICC will notify the Commission of any written comments received by FICC. D. Advance Notices Filed Pursuant to Section 806(e) of the Payment, Clearing and Settlement Supervision Act (a) Not applicable. (b) Not applicable. (c) Not applicable. (d) Not applicable. (e) Not applicable. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 45 days of the date of publication of this notice in the Federal E:\FR\FM\29NON1.SGM 29NON1 71704 Federal Register / Vol. 78, No. 230 / Friday, November 29, 2013 / Notices Register or within such longer period up to 90 days (i) as the Commission may designate if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the self-regulatory organization consents, the Commission will: (A) By order approve or disapprove the proposed rule change, or (B) Institute proceedings to determine whether the proposed rule change should be disapproved. 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: sroberts on DSK5SPTVN1PROD with NOTICES Electronic Comments • Use the Commission’s Internet comment form (http://www.sec.gov/ rules/sro.shtml), or • Send an email to rule-comment@ sec.gov. Please include File Number SR– FICC–2013–10 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 SR–FICC- 2013–10. 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 (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission’s Public Reference Room Section located at 100 F Street NE., Washington, DC 20549– 1090 on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of such filing also will be available for inspection and copying at the principal office of FICC and on FICC’s Web site at http://www.dtcc.com/ downloads/legal/rule_filings/2013/ficc/ SR_FICC_2013_10.pdf. All comments VerDate Mar<15>2010 17:56 Nov 27, 2013 Jkt 232001 received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–FICC– 2013–10 and should be submitted on or before December 20, 2013. For the Commission by the Division of Trading and Markets, pursuant to delegated authority.10 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2013–28569 Filed 11–27–13; 8:45 am] BILLING CODE 8011–01–P SMALL BUSINESS ADMINISTRATION Request for Comments on Draft SBA Strategic Plan for FY 2014–2018 Office of Associate Administrator for Performance Management & Chief Financial Officer, Small Business Administration. ACTION: Request for Comments on Draft SBA Strategic Plan for FY2014–2018. AGENCY: The Small Business Administration (SBA) is seeking public comment on its draft Strategic Plan for fiscal years 2014–2018. The draft plan is available on SBA’s Web site at http:// www.sba.gov/about-sba/sba_ performance/strategic_planning. DATES: Submit comments within two weeks of publication date. ADDRESSES: Written comments can be provided by email, fax or U.S. mail. Email: strategicplan@sba.gov. Fax: (202) 205–7274. Mail: U.S. Small Business Administration, Office of Performance Management & Chief Financial Officer, Attn: Strategic Plan Comments, 409 3rd St SW., Suite 6000, Washington, DC 20416. FOR FURTHER INFORMATION CONTACT: Joshua Bull, Joshua.Bull@sba.gov. SUPPLEMENTARY INFORMATION: The draft Small Business Administration FY2014–2018 Strategic Plan is provided for public input as part of the strategic planning process under the Government Performance and Results Modernization Act of 2010 (GPRA–MA) (Pub. L. 111– 352) to ensure that Agency stakeholders are given an opportunity to comment on this plan. This Strategic Plan provides a framework that will strengthen, streamline, and simplify SBA’s programs while leveraging partnerships across the government and private SUMMARY: 10 17 PO 00000 CFR 200.30–3(a)(12). Frm 00144 Fmt 4703 Sfmt 4703 sector to maximize the tools small business owners and entrepreneurs need to strengthen our economy, drive American innovation, and increase our global competitiveness. The SBA will have three overarching goals for the next five years: (1) Grow businesses and create jobs; (2) Serve as the voice for small business; and, (3) Build an Agency that meets the needs of today’s and tomorrow’s small businesses. Each goal contains objectives which are directly tied to performance both at the individual level and Agency-wide. The FY2014–2018 Strategic Plan contains only slight modifications to the existing FY2011–2016 Strategic Plan. This draft document chiefly refines the language of existing strategic objectives and strategies while adding two new strategic objectives concerning exports and supply chains, respectively. The text of the draft Strategic Plan FY2014– 2018 is available through the SBA’s Web site at http://www.sba.gov/about-sba/ sba_performance/strategic_planning. Jonathan I. Carver, Associate Administrator for Performance Management & Chief Financial Officer. [FR Doc. 2013–28623 Filed 11–27–13; 8:45 am] BILLING CODE 8025–01–P DEPARTMENT OF STATE [Public Notice 8538] 30-Day Notice of Proposed Information Collection: Recording, Reporting and Data Collection Requirements— Student and Exchange Visitor Information System (SEVIS) Notice of request for public comment and submission to OMB of proposed collection of information. ACTION: The Department of State has submitted the information collection described below to the Office of Management and Budget (OMB) for approval. In accordance with the Paperwork Reduction Act of 1995 we are requesting comments on this collection from all interested individuals and organizations. The purpose of this Notice is to allow 30 days for public comment. DATES: Submit comments directly to the Office of Management and Budget up to December 30, 2013. ADDRESSES: Direct comments to the Department of State Desk Officer in the Office of Information and Regulatory Affairs at the Office of Management and Budget (OMB). You may submit comments by the following methods: • Email: oira_submission@ omb.eop.gov. You must include the DS SUMMARY: E:\FR\FM\29NON1.SGM 29NON1

Agencies

[Federal Register Volume 78, Number 230 (Friday, November 29, 2013)]
[Notices]
[Pages 71702-71704]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-28569]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-70925; File No. SR-FICC-2013-10]


Self-Regulatory Organizations; Fixed Income Clearing Corporation; 
Notice of Filing of Proposed Rule Change To Establish the Minimum 
Financial Requirements for the Existing Membership Category of 
Registered Investment Company Netting Members in the Government 
Securities Division

November 22, 2013.
    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 November 12, 2013, the Fixed Income Clearing Corporation 
(``FICC'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by FICC. The Commission 
is publishing this notice to solicit comments on the proposed rule 
change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The purpose of this rule filing is to amend the Rulebook (the 
``Rules'') of the Government Securities Division (the ``GSD'') of FICC 
to establish the minimum financial requirements for the existing 
membership category of Registered Investment Company Netting Members 
(``RICs'').\3\
---------------------------------------------------------------------------

    \3\ Pursuant to the GSD Rules, the term ``Registered Investment 
Company Netting Member'' is an Investment Company (1) that is 
registered with the Commission, (2) admitted to membership in GSD's 
Netting System pursuant to the GSD Rules, and (3) whose membership 
in the Netting System has not been terminated.
---------------------------------------------------------------------------

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, FICC included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. FICC has prepared summaries, set forth in sections (A), 
(B) and (C) below, of the most significant aspects of such statements.

[[Page 71703]]

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    (i) The purpose of this proposed rule change is to establish 
financial minimum requirements for RICs. Historically, the GSD has 
served the ``sell-side'' community (which primarily consists of 
entities such as banks and broker-dealers) and excluded RICs, which are 
key participants in the market served by the GSD. FICC believes the 
participation of this category as guaranteed service members will 
contribute to the safety, efficiency, and transparency of the market by 
allowing FICC to capture a greater part of the activity of its existing 
members and by introducing activity of current non-members to FICC. 
FICC also believes that RICs will benefit from the GSD netting service 
and the associated operational efficiencies of a central counterparty 
service. Currently, RICs are already a permitted category in the GSD 
Rules, however, the proposed rule change establishes their minimum 
financial requirements.\4\ Specifically, Rule 2A (``Initial Membership 
Requirements'') of the GSD Rules will provide that the minimum 
financial requirement for RICs will be $100 million in net asset value. 
The rules have also been revised to state that the GSD will make its 
services available to Persons \5\ in other categories as FICC may 
determine, subject to the approval of the Commission. This disclosure 
is also reflected in the Clearing Rules of the Mortgage-Backed 
Securities Division (``MBSD'').
---------------------------------------------------------------------------

    \4\ The membership requirements for RICs will be the same as 
those proposed for the central counterparty service of the Mortgage-
Backed Securities Division.
    \5\ Pursuant to the GSD Rules, the term ``Person'' means a 
partnership, Corporation, limited liability corporation or other 
organization, entity, or individual.
---------------------------------------------------------------------------

    Currently, GSD Rule 3, ``Ongoing Membership Requirements,'' permits 
GSD to assess a premium against a netting member whose Clearing Fund 
requirement exceeds its specified regulatory capital figure.\6\ This 
premium will now include RICs because they will be netting members.
---------------------------------------------------------------------------

    \6\ By way of example, under the current GSD Rules, if a member 
has a Clearing Fund requirement of $11.4 million and excess net 
capital of $10 million, its ``ratio'' is 1.14 (or 114 percent), and 
the applicable collateral premium would be 114 percent of $1.4 
million (which is equal to the amount by which the member's Clearing 
Fund requirement exceeds its excess net capital), or $1,596,000. The 
current GSD Rules provide that FICC has the right to: (i) Apply a 
lesser collateral premium (including no premium) based on specific 
circumstances (such as a member being subject to an unexpected 
haircut or capital charge that does not fundamentally change its 
risk profile), and (ii) return all or a portion of the collateral 
premium amount if it believes that the member's risk profile does 
not require the maintenance of that amount.
---------------------------------------------------------------------------

    The concept of a ``Tier One Netting Member'' and a ``Tier Two 
Netting Member'' was introduced to the GSD Rules by rule filing SR-
FICC-2010-09.\7\ Tier One Netting Members will be subject to potential 
loss mutualization, whereas Tier Two Netting Members will not be 
subject to loss mutualization due to a legal prohibition. Under the 
present rule filing, the registered investment company members will be 
Tier Two Netting Members because they are not permitted by law to 
mutualize loss.
---------------------------------------------------------------------------

    \7\ Tier One Members include banks, dealers, futures commission 
merchants, government securities issuers and registered clearing 
agencies and Tier Two Members include RICs. See Securities Exchange 
Act Release No. 34-63986 (Feb. 28, 2011), 76 FR 12144 (Mar. 4, 
2011).
---------------------------------------------------------------------------

    In rule filing SR-FICC-2010-09, FICC also introduced an amended 
loss allocation methodology whereby any loss allocation is first made 
against the retained earnings of FICC attributable to the GSD (after 
application of the defaulting member's Clearing Fund, funds-only 
settlement amounts and any other collateral on deposit with the GSD and 
any funds from any cross-margining or cross-guaranty agreements), in an 
amount up to 25 percent of FICC's retained earnings or such higher 
amount as may be approved by the Board of Directors of FICC. If a loss 
still remains, the GSD will divide the loss between the Tier One 
Netting Members and the Tier Two Netting Members. Tier One Netting 
Members will be allocated the loss applicable to them first by 
assessing the Clearing Fund deposit of each such member in the amount 
of up to $50,000, equally. If a loss remains, Tier One Netting Members 
will be assessed ratably, in accordance with the respective amounts of 
their Required Fund Deposits, based on the average daily amount of the 
member's Required Fund Deposit over the prior twelve months. Applicable 
Tier Two Netting Members will be assigned the Tier Two loss amount 
using a loss allocation methodology which does not provide for loss 
mutualization and is based on the activity that the Tier Two Netting 
Member conducted with the defaulting member.\8\ As stated above, the 
RICs will be treated as Tier Two Netting Members under the present 
proposal.\9\
---------------------------------------------------------------------------

    \8\ Please refer to Rule 4 Section 7 for the rules which pertain 
to the satisfaction of any loss incurred by FICC as a result of the 
failure of a defaulting member to fulfill its obligations to FICC.
    \9\ The MBSD has the same loss allocation methodology.
---------------------------------------------------------------------------

    It should be noted that RICs will not be permitted to utilize the 
GCF Repo[supreg] service.
    (ii) Statutory Basis.
    The present filing is consistent with the requirements of the 
Section 17A(b)(3)(F) of the Act, as amended, and the rules and 
regulations thereunder applicable to FICC because the proposed rule 
change (1) establishes a statutory category which is consistent with 
Rule 17A(b)(3)(B) of the Securities Exchange Act of 1934 and thus 
prohibits the unfair discrimination in the admission of RICs, (2) 
permits the participation of RICs, thereby providing these firms with 
the benefits of central counterparty service, and (3) allows FICC to 
capture a greater market share of the activity of its existing members 
and non-members thus promoting the prompt and accurate clearance and 
settlement of securities transactions.

B. Self-Regulatory Organization's Statement on Burden on Competition

    Establishing minimum financial requirements for RICs and giving 
such entities the opportunity to join GSD is consistent with the Rule 
17A(b)(3)(B) of the Securities Exchange Act of 1934. This Rule requires 
clearing agencies to provide access to its services for certain 
enumerated statutory categories and RICs are reflected as one of the 
statutory categories. Furthermore, subject to the Commission's approval 
of this rule filing, RICs will be subject to the same initial 
membership requirements and ongoing membership requirements as other 
GSD members. As a result, FICC does not believe that the proposed rule 
change will have any impact, or impose any burden, on competition.

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

    Written comments relating to the proposed rule changes have not yet 
been solicited or received. FICC will notify the Commission of any 
written comments received by FICC.

D. Advance Notices Filed Pursuant to Section 806(e) of the Payment, 
Clearing and Settlement Supervision Act

    (a) Not applicable.
    (b) Not applicable.
    (c) Not applicable.
    (d) Not applicable.
    (e) Not applicable.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 45 days of the date of publication of this notice in the 
Federal

[[Page 71704]]

Register or within such longer period up to 90 days (i) as the 
Commission may designate if it finds such longer period to be 
appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) By order approve or disapprove the proposed rule change, or
    (B) Institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml), or
     Send an email to rule-comment@sec.gov. Please include File 
Number SR-FICC-2013-10 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 SR-FICC- 2013-10. 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 (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, 
all written statements with respect to the proposed rule change that 
are filed with the Commission, and all written communications relating 
to the proposed rule change between the Commission and any person, 
other than those that may be withheld from the public in accordance 
with the provisions of 5 U.S.C. 552, will be available for Web site 
viewing and printing in the Commission's Public Reference Room Section 
located at 100 F Street NE., Washington, DC 20549-1090 on official 
business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of 
such filing also will be available for inspection and copying at the 
principal office of FICC and on FICC's Web site at http://www.dtcc.com/downloads/legal/rule_filings/2013/ficc/SR_FICC_2013_10.pdf. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-FICC-2013-10 and should be 
submitted on or before December 20, 2013.

    For the Commission by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-28569 Filed 11-27-13; 8:45 am]
BILLING CODE 8011-01-P