Self-Regulatory Organizations; Fixed Income Clearing Corporation; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Fees in the Mortgage-Backed Securities Division Clearing Rules and the EPN Rules, 36165-36168 [2017-16297]

Download as PDF Federal Register / Vol. 82, No. 148 / Thursday, August 3, 2017 / Notices Product Change—Priority Mail and First-Class Package Service Negotiated Service Agreement 2017, 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 the clearing agency. FICC filed the proposed rule change pursuant to Section 19(b)(3)(A) of the Act 3 and Rule 19b–4(f)(2) thereunder.4 The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. Postal ServiceTM. ACTION: Notice. I. Clearing Agency’s Statement of the Terms of Substance of the Proposed Rule Change www.prc.gov, Docket Nos. MC2017–162, CP2017–227. Stanley F. Mires, Attorney, Federal Compliance. [FR Doc. 2017–16321 Filed 8–2–17; 8:45 am] BILLING CODE 7710–12–P POSTAL SERVICE AGENCY: The Postal Service gives notice of filing a request with the Postal Regulatory Commission to add a domestic shipping services contract to the list of Negotiated Service Agreements in the Mail Classification Schedule’s Competitive Products List. DATES: Date of notice required under 39 U.S.C. 3642(d)(1): August 3, 2017. FOR FURTHER INFORMATION CONTACT: Elizabeth A. Reed, 202–268–3179. SUPPLEMENTARY INFORMATION: The United States Postal Service® hereby gives notice that, pursuant to 39 U.S.C. 3642 and 3632(b)(3), on July 27, 2017, it filed with the Postal Regulatory Commission a Request of the United States Postal Service to Add Priority Mail & First-Class Package Service Contract 48 to Competitive Product List. Documents are available at www.prc.gov, Docket Nos. MC2017–160, CP2017–225. SUMMARY: Stanley F. Mires, Attorney, Federal Compliance. [FR Doc. 2017–16317 Filed 8–2–17; 8:45 am] BILLING CODE 7710–12–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–81255; File No. SR–FICC– 2017–018] mstockstill on DSK30JT082PROD with NOTICES Self-Regulatory Organizations; Fixed Income Clearing Corporation; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Fees in the Mortgage-Backed Securities Division Clearing Rules and the EPN Rules July 28, 2017. 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 July 28, 1 15 2 17 U.S.C. 78s(b)(1). CFR 240.19b–4. VerDate Sep<11>2014 16:35 Aug 02, 2017 Jkt 241001 On July 31, 2017, FICC will implement proposed rule change SR– FICC–2017–012 (‘‘Rule Filing 2017– 012’’).5 Rule Filing 2017–012 will amend the Mortgage-Backed Securities Division Clearing Rules (the ‘‘MBSD Rules’’) to (1) move the time that FICC novates and treats itself as the settlement counterparty for certain transactions, (2) guarantee and novate trades with stipulations (‘‘Stipulated Trades’’), and (3) establish new processes that promote operational efficiencies for Clearing Members.6 In connection with Rule Filing 2017–012, FICC is proposing with this filing to amend the fees in the MBSD Rules and the EPN Rules (the ‘‘EPN Rules’’) as further described below.7 The changes proposed in this filing would become effective on August 1, 2017, as described below. II. Clearing Agency’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the clearing agency 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 clearing agency has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. 3 15 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(2). 5 Securities Exchange Act Release No. 81051 (June 29, 2017), 82 FR 31378 (July 6, 2017) (SR– FICC–2017–012) (‘‘Approval Order’’). 6 Id. In connection with the changes in Rule Filing 2017–012, FICC will implement new processes that promote operational efficiencies for Clearing Members. The full text of Rule Filing 2017–012 may be obtained by visiting DTCC’s Web site at https://www.dtcc.com/legal/sec-rule-filings. 7 Capitalized terms not defined herein are defined in the MBSD Rules and the EPN Rules, available at https://www.dtcc.com/legal/rules-and-procedures. 4 17 PO 00000 Frm 00052 Fmt 4703 Sfmt 4703 36165 (A) Clearing Agency’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose On July 31, 2017, FICC will amend the MBSD Rules to (1) move the time that FICC novates and treats itself as the settlement counterparty for certain transactions, (2) guarantee and novate trades with stipulations (‘‘Stipulated Trades’’), and (3) establish new processes that promote operational efficiencies for Clearing Members.8 In connection with Rule Filing 2017–012, FICC is proposing with this filing to amend the fees in the MBSD Rules and the EPN Rules as further described below. The changes proposed in this filing would become effective on August 1, 2017, as described below. I. Proposed Changes to the MBSD Rules FICC is proposing to amend the fees in the MBSD Rules’ Schedule of Charges Broker Account Group as listed below. 1. The Account Maintenance section would be amended to eliminate the ‘‘Option Account’’ fee. This change is being proposed because FICC will eliminate the Broker ‘‘give-up’’ process from the MBSD Rules in connection with Rule Filing 2017–012.9 Because the submission of Broker Give-Up Trades (which includes Option Contracts) will be eliminated, the associated account maintenance fee for Option Accounts will be eliminated. 2. The Trade Processing section would be amended to change the name of the ‘‘Give-Up Trade Creates’’ fee to the ‘‘Trade Creates’’ fee. This change is being proposed because FICC will eliminate the Broker ‘‘give-up’’ process from the MBSD Rules in connection with Rule Filing 2017–012.10 3. The Processing Fees section would be amended to increase the ‘‘Trade Input Non-Compliance’’ fee to $1,000 a month per Account from $500 a month per Account. This change is being proposed in order to encourage Clearing Members to submit transactions into FICC’s Real-Time Trade Matching (‘‘RTTM’’) system in a timely manner. The timely submission of transactions is especially important because FICC will novate and become the settlement counterparty to all transactions (other than Option Contracts) pursuant to Rule Filing 2017–012.11 FICC is proposing to amend the fees in the MBSD Rules’ Schedule of Charges Dealer Account Group as listed below. 8 See 9 See Approval Order, supra note 5. Approval Order, 82 FR at 31382. 10 Id. 11 See E:\FR\FM\03AUN1.SGM Approval Order, supra note 5. 03AUN1 36166 Federal Register / Vol. 82, No. 148 / Thursday, August 3, 2017 / Notices 1. The Trade Processing section would be amended to modify the tiering levels and the associated fees assigned to each tier for SBO-Destined Trades.12 In connection with Rule Filing 2017– 012, MBSD’s processing cost will not Current charge $1.93/MM $1.77/MM $1.60/MM $1.49/MM $1.32/MM $1.14/MM ............................. ............................. ............................. ............................. ............................. ............................. Total par amount traded per month 1,000,000–2,500,000,000 ....................... 2,501,000,000–5,000,000,000 ................ 5,001,000,000–7,500,000,000 ................ 7,501,000,000–10,000,000,000 .............. 10,001,000,000–12,500,000,000 ............ 12,501 and over. mstockstill on DSK30JT082PROD with NOTICES 2. The Trade Processing section would be amended to increase the fee for ‘‘TBA Netting Balance Orders’’ to $1.00/MM from $0.75/MM. In connection with Rule Filing 2017–012, MBSD’s processing cost will not change; however, MBSD’s operational cost will increase because of MBSD’s new allocation department. As a result, this proposed fee change would offset the loss of revenue attributed to the decrease in transaction volumes processed through the Pool Netting System and the EPN Service due to the introduction of the DNA process and the removal of the Notification of Settlement process. FICC is also proposing to amend this section to eliminate the applicability of this fee to SBOO Trades because this trade type will be eliminated in connection with Rule Filing 2017–012.14 3. The Trade Processing section would be amended to establish fees for Stipulated Trades, which will be a new trade type eligible for processing at MBSD pursuant to Rule Filing 2017– 012.15 The fees for Stipulated Trades would be the same fees that are in place for the processing of Trade-for-Trade Transactions 16 and Specified Pool Trades.17 FICC would amend the heading of this section to clarify that the fees would be applicable to Trade-for Trade-Transactions, Specified Pool Trades and Stipulated Trades. 4. The Trade Processing section would be amended to increase the ‘‘Trade Creates’’ fee for Trade-for-Trade Transactions and Specified Pool Trades to $1.16/MM from $1.00/MM. This increased fee would also apply to Stipulated Trades. In connection with 12 Pursuant to the MBSD Rules, the term ‘‘SBODestined Trade’’ means a TBA transaction in the Clearing System intended for TBA Netting in accordance with the provisions of the MBSD Rules. See MBSD Rule 1, supra note 7. 13 The MBSD allocations department will monitor the transmission of pool information that is used to satisfy to-be-announced transactions. The team will also handle any exception processing that occurs. 14 See Approval Order, 82 FR at 31380. VerDate Sep<11>2014 change; however, MBSD’s operational cost will increase because of MBSD’s new allocation department.13 As a result, these proposed fee changes would offset the loss of revenue attributed to the decrease in transaction 16:35 Aug 02, 2017 Jkt 241001 Proposed charge $2.00/MM $1.58/MM $1.39/MM $1.19/MM $1.16/MM 15 See Approval Order, 82 FR at 31381. to the MBSD Rules, the term ‘‘Tradefor-Trade Transaction’’ means a TBA Transaction submitted to MBSD not intended for TBA Netting in accordance with the provisions of the MBSD Rules. See MBSD Rule 1, supra note 7. 17 Pursuant to the MBSD Rules, the term ‘‘Specified Pool Trade’’ means a trade in which all required pool data, including the pool number to be delivered on the Contractual Settlement Date, are 16 Pursuant Frm 00053 Fmt 4703 Sfmt 4703 Total par amount traded per month ............................ ............................ ............................ ............................ ............................ Rule Filing 2017–012, MBSD’s processing cost will not change; however, MBSD’s operational cost will increase because of MBSD’s new allocation department. As a result, this proposed fee change would offset the loss of revenue attributed to the decrease in transaction volumes processed through the Pool Netting System and the EPN Service due to the introduction of the DNA process and the removal of the Notification of Settlement process. 5. FICC is proposing to include two new fees in connection with the proposed Do Not Allocate (‘‘DNA’’) process.18 One fee would be in the amount of $1.25/MM per transaction in connection with a Clearing Member’s request to include eligible trades in the DNA process (such request would be referred to as a ‘‘DNA Request’’). The second fee would be in the amount of $4.00 per transaction in connection with a Clearing Member’s request to cancel its DNA Request (such cancellation would be referred to as a ‘‘DNA Request Cancel’’). 6. The Pool Netting Fees section would be amended to increase the fee for ‘‘Matched Pool Instructs’’ to $1.00 per side from $0.60 per side. In connection with Rule Filing 2017–012, MBSD’s processing cost will not change; however, MBSD’s operational cost will increase because of MBSD’s new allocation department. As a result, this proposed fee change would offset the loss of revenue attributed to the decrease in transaction volumes processed through the Pool Netting System and the EPN Service due to the introduction of the DNA process and the PO 00000 volumes processed through the Pool Netting System and the EPN Service due to the introduction of the DNA process and the removal of the Notification of Settlement process. 01–2,500,000,000. 2,500,000,001–7,500,000,000. 7,500,000,001–12,500,000,000. 12,500,000,001–300,000,000,000. 300,000,000,001 and over. removal of the Notification of Settlement process. 7. The Processing Fees section would be amended to increase the ‘‘Trade Input Non-Compliance’’ fee to $1,000 a month per Account from $500 a month per Account. This change is being proposed in order to encourage Clearing Members to submit transactions into FICC’s RTTM system in a timely manner. The timely submission of transactions is especially important because FICC will novate and become the settlement counterparty to all transactions (other than Option Contracts) pursuant to Rule Filing 2017– 012.19 8. The Notification of Settlement fees would be eliminated because FICC will eliminate the Notification of Settlement process from the MBSD Rules in connection with Rule Filing 2017– 012.20 II. Proposed Changes to the EPN Rules FICC is proposing to amend the ‘‘Message Processing Fees’’ in the EPN Schedule of Charges as listed below. In connection with Rule Filing 2017–012, MBSD’s processing cost will not change; however, MBSD’s operational cost will increase because of MBSD’s new allocation department. As a result, these proposed fee changes would offset the loss of revenue attributed to the decrease in transaction volumes processed through the Pool Netting System and the EPN Service due to the introduction of the DNA process and the removal of the Notification of Settlement process. agreed upon by Members at the time of execution. See MBSD Rule 1, supra note 7. 18 As described in Rule Filing 2017–012, the DNA process will permit offsets among SBON Trades and Trade-for-Trade Transactions. See Approval Order, 82 FR at 31381. 19 See Approval Order, supra note 5. 20 See Approval Order, 82 FR at 31381. E:\FR\FM\03AUN1.SGM 03AUN1 Federal Register / Vol. 82, No. 148 / Thursday, August 3, 2017 / Notices 36167 EPN FEE SCHEDULE Fee descriptions Current charge Message submission times New charge Message submission times Messaging Processing Fees ON Send ................... $0.17 0.86 1.73 1.44 ON Receive ............... 0.46 0.23 0.23 Cancel/Correct Send 0.17 0.86 1.73 0.17 Per MM Current Face (opening of business to 1:00 p.m.). Per MM Current Face (1:00 p.m. to 2:00 p.m.). Per MM Current Face (2:00 p.m. to 3:00 p.m.). Per MM Current Face (3:00 p.m. to close of business). Per MM Current Face (opening of business to 1:00 p.m.). Per MM Current Face (1:00 p.m. to 2:00 p.m.). Per MM Current Face (2:00 p.m. to 3:00 p.m.). Per MM Current Face (opening of business to 11:00 a.m.). Per MM Current Face (11:00 a.m. to 12:00 p.m.). Per MM Current Face (12:00 p.m. to 12:15 p.m.). Per MM Current Face (12:15 p.m. to end of day). III. Delayed Implementation of the Proposed Rule Change The proposed changes would become effective on August 1, 2017.21 Upon FICC’s submission of this proposed rule change to the Commission, FICC would add a legend to the MBSD Rules and the EPN Rules, as applicable, to state that the specified changes have been filed with the Commission for immediate effectiveness, however, such changes are not yet implemented and to provide the date such changes would become implemented. The legend would also include the file number of the proposed rule change and would state that once implemented, the legend would automatically be removed from the MBSD Rules and EPN Rules as applicable. mstockstill on DSK30JT082PROD with NOTICES 2. Statutory Basis Section 17A(b)(3)(D) of the Act requires that the MBSD Rules and the EPN Rules provide for the equitable allocation of reasonable dues, fees, and other charges among its participants.22 FICC believes that the proposed (1) changes to the MBSD Trade Processing fees, MBSD Pool Netting fees and the EPN Message Processing fees (collectively, the ‘‘Processing Fees’’), and (2) new fees for Stipulated Trades submissions and the DNA process 21 FICC will implement Rule Filing 2017–012 on July 31, 2017, however, the proposed fee changes would be implemented on August 1, 2017 because the billing cycle begins on the first day of each month. 22 15 U.S.C. 78q–1(b)(3)(D). VerDate Sep<11>2014 16:35 Aug 02, 2017 Jkt 241001 $0.19 0.95 1.90 1.58 0.51 0.26 0.26 0.19 0.95 1.90 0.19 (collectively, the ‘‘New Fees’’) are equitably allocated among Clearing Members and EPN Users, as applicable, because the fees would continue to be based on each Clearing Member’s utilization of MBSD’s services. Specifically, each Clearing Member or EPN User would be charged based on the volume of transactions and/or messages submitted to MBSD. FICC believes that the proposed changes to the Processing Fees and the New Fees are reasonable because the proposed fee changes would offset the loss of revenue attributed to the decrease in transaction volumes processed through the Pool Netting System and the EPN Service due to the introduction of the DNA process and the removal of the Notification of Settlement process. Additionally, MBSD’s new allocation department will increase MBSD’s operational cost. FICC believes that the proposed fee changes are reasonable because the fees would align with the cost of providing the benefits associated with the implementation of Rule Filing 2017– 012.23 23 These benefits include the following: (1) The submission of Pool Instructs by Clearing Members will become optional because FICC would be permitted to submit on behalf Clearing Members; (2) Clearing Members will no longer be required to fulfill Notification of Settlement obligations because transactions (except Option Contracts) would settle with FICC; (3) Clearing Members will have the ability to exclude TBA Obligations from the pool allocation process, netting, and securities settlement through the DNA process; (4) Clearing Members will have the ability to net their pools via the Expanded Pool Netting process in the event that PO 00000 Frm 00054 Fmt 4703 Sfmt 4703 Per MM Current Face (opening of business to 1:00 p.m.). Per MM Current Face (1:00 p.m. to 2:00 p.m.). Per MM Current Face (2:00 p.m. to 3:00 p.m.). Per MM Current Face (3:00 p.m. to close of business). Per MM Current Face (opening of business to 1:00 p.m.). Per MM Current Face (1:00 p.m. to 2:00 p.m.). Per MM Current Face (2:00 p.m. to 3:00 p.m.). Per MM Current Face (opening of business to 11:00 a.m.). Per MM Current Face (11:00 a.m. to 12:00 p.m.). Per MM Current Face (12:00 p.m. to 12:15 p.m.). Per MM Current Face (12:15 p.m. to end of day). FICC believes that its proposal to increase the Trade Input NonCompliance fee for Brokers and Dealers are reasonable because doubling the existing fee would be sufficient to encourage Clearing Members to submit transactions in a timely manner. This is especially important because FICC will novate and become the settlement counterparty to all transactions (except Option Contracts) at trade comparison pursuant to Rule Filing 2017–012. FICC believes that the proposal to increase the Trade Input NonCompliance fee for Brokers and Dealers are equitably allocated because the same fee would be applicable to the Accounts of all Clearing Members who do not submit transactions on a timely basis. Therefore, FICC believes the proposed fees are consistent with the requirements of Section 17A(b)(3)(D) of the Act. (B) Clearing Agency’s Statement on Burden on Competition FICC believes that the proposed (1) changes to the Processing Fees and (2) new fee for Stipulated Trades may impose a burden on competition. However, FICC believes any burden on competition that may result from the proposed fees increases would be such Clearing Members miss the established deadline for the initial Pool Netting process; (5) Dealer Netting Members will remain anonymous with the elimination of the ‘‘give-up’’ process for Brokered Transactions; (6) Clearing Members will be allowed to submit SBO-Destined Trades in all trade sizes; and (7) Clearing Members will be allowed to submit Stipulated Trades as a new trade type. See Approval Order, 82 FR at 31378. E:\FR\FM\03AUN1.SGM 03AUN1 36168 Federal Register / Vol. 82, No. 148 / Thursday, August 3, 2017 / Notices necessary and appropriate in furtherance of the purposes of the Act, as permitted by Section 17A(b)(3)(I) of the Act.24 Specifically, FICC believes that the proposed (1) changes to the Processing Fees and (2) new fee for Stipulated Trades are necessary because the fees would provide FICC with the ability to achieve and maintain its operating margin. FICC believes that the proposed fee increases and the new fee for Stipulated Trades are appropriate because the fees would provide FICC with the ability to recover the cost of providing the services described in Rule Filing 2017–012. As discussed above, in connection with Rule Filing 2017–012, MBSD’s processing cost will not change; however, MBSD’s operational cost will increase because of MBSD’s new allocation department. As a result, these proposed fee changes would offset the loss of revenue attributed to the decrease in transaction volumes processed through the Pool Netting System and the EPN Service due to the introduction of the DNA process and the removal of the Notification of Settlement process. FICC believes that the proposed changes to increase the Trade Input Non-Compliance fee for Brokers and Dealers will not impact competition because Clearing Members could avoid these fees by submitting their transactions on a timely basis in accordance with the MBSD Rules. FICC believes that the proposed change to eliminate the Option Account fees for Brokers and the Notification of Settlement fees will not impact competition because these fees are associated with processes that will be eliminated pursuant to Rule Filing 2017–012. FICC believes that the proposed new fee for the DNA process will not impact competition because the DNA process is voluntary and Clearing Members could elect not to submit their transactions through the DNA process. mstockstill on DSK30JT082PROD with NOTICES (C) Clearing Agency’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Written comments relating to the proposed rule change have not been solicited or received. FICC will notify the Commission of any written comments received by FICC. 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) of the Act 25 and paragraph (f) of Rule 19b–4 thereunder.26 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 rule-comments@ sec.gov. Please include File Number SR– FICC–2017–018 on the subject line. Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549. All submissions should refer to File Number SR–FICC–2017–018. 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 (https://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for 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. Copies of the filing also will be available for 25 15 24 15 U.S.C. 78q–1(b)(3)(I). VerDate Sep<11>2014 16:35 Aug 02, 2017 26 17 Jkt 241001 PO 00000 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f). Frm 00055 Fmt 4703 Sfmt 4703 inspection and copying at the principal office of FICC and on DTCC’s Web site (https://dtcc.com/legal/sec-rulefilings.aspx). 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– 2017–018 and should be submitted on or before August 24, 2017. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.27 Brent J. Fields, Secretary. [FR Doc. 2017–16297 Filed 8–2–17; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–81256; File No. SR– NASDAQ–2017–077] Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Alter the Exchange’s Fee Schedule for the Short Interest Report July 28, 2017. 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 July 25, 2017, The NASDAQ Stock Market LLC (‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange.3 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 the Substance of the Proposed Rule Change The Exchange proposes to alter the Exchange’s fee schedule for the Short Interest Report at Rule 7022. The text of the proposed rule change is available on the Exchange’s Web site at https://nasdaq.cchwallstreet.com, at the principal office of the Exchange, and 27 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 The Commission notes that Nasdaq initially filed this proposal as SR–NASDAQ–2017–064 on June 29, 2017. Nasdaq withdrew that filing on July 13, 2017 and replaced it with SR–NASDAQ–2017– 071. On July 25, 2017, Nasdaq withdrew that filing and replaced it with this filing. 1 15 E:\FR\FM\03AUN1.SGM 03AUN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 82, Number 148 (Thursday, August 3, 2017)]
[Notices]
[Pages 36165-36168]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-16297]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-81255; File No. SR-FICC-2017-018]

Self-Regulatory Organizations; Fixed Income Clearing Corporation;
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change
To Amend the Fees in the Mortgage-Backed Securities Division Clearing
Rules and the EPN Rules

July 28, 2017.
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 July 28, 2017, 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 the clearing agency. FICC filed the
proposed rule change pursuant to Section 19(b)(3)(A) of the Act \3\ and
Rule 19b-4(f)(2) thereunder.\4\ The Commission is publishing this
notice to solicit comments on the proposed rule change from interested
persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A).
\4\ 17 CFR 240.19b-4(f)(2).
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I. Clearing Agency's Statement of the Terms of Substance of the
Proposed Rule Change

On July 31, 2017, FICC will implement proposed rule change SR-FICC-
2017-012 (``Rule Filing 2017-012'').\5\ Rule Filing 2017-012 will amend
the Mortgage-Backed Securities Division Clearing Rules (the ``MBSD
Rules'') to (1) move the time that FICC novates and treats itself as
the settlement counterparty for certain transactions, (2) guarantee and
novate trades with stipulations (``Stipulated Trades''), and (3)
establish new processes that promote operational efficiencies for
Clearing Members.\6\ In connection with Rule Filing 2017-012, FICC is
proposing with this filing to amend the fees in the MBSD Rules and the
EPN Rules (the ``EPN Rules'') as further described below.\7\ The
changes proposed in this filing would become effective on August 1,
2017, as described below.
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\5\ Securities Exchange Act Release No. 81051 (June 29, 2017),
82 FR 31378 (July 6, 2017) (SR-FICC-2017-012) (``Approval Order'').
\6\ Id. In connection with the changes in Rule Filing 2017-012,
FICC will implement new processes that promote operational
efficiencies for Clearing Members. The full text of Rule Filing
2017-012 may be obtained by visiting DTCC's Web site at https://www.dtcc.com/legal/sec-rule-filings.
\7\ Capitalized terms not defined herein are defined in the MBSD
Rules and the EPN Rules, available at https://www.dtcc.com/legal/rules-and-procedures.
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II. Clearing Agency's Statement of the Purpose of, and Statutory Basis
for, the Proposed Rule Change

In its filing with the Commission, the clearing agency 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 clearing agency has prepared summaries,
set forth in sections A, B, and C below, of the most significant
aspects of such statements.

(A) Clearing Agency's Statement of the Purpose of, and Statutory Basis
for, the Proposed Rule Change

1. Purpose
On July 31, 2017, FICC will amend the MBSD Rules to (1) move the
time that FICC novates and treats itself as the settlement counterparty
for certain transactions, (2) guarantee and novate trades with
stipulations (``Stipulated Trades''), and (3) establish new processes
that promote operational efficiencies for Clearing Members.\8\ In
connection with Rule Filing 2017-012, FICC is proposing with this
filing to amend the fees in the MBSD Rules and the EPN Rules as further
described below. The changes proposed in this filing would become
effective on August 1, 2017, as described below.
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\8\ See Approval Order, supra note 5.
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I. Proposed Changes to the MBSD Rules
FICC is proposing to amend the fees in the MBSD Rules' Schedule of
Charges Broker Account Group as listed below.
1. The Account Maintenance section would be amended to eliminate
the ``Option Account'' fee. This change is being proposed because FICC
will eliminate the Broker ``give-up'' process from the MBSD Rules in
connection with Rule Filing 2017-012.\9\ Because the submission of
Broker Give-Up Trades (which includes Option Contracts) will be
eliminated, the associated account maintenance fee for Option Accounts
will be eliminated.
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\9\ See Approval Order, 82 FR at 31382.
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2. The Trade Processing section would be amended to change the name
of the ``Give-Up Trade Creates'' fee to the ``Trade Creates'' fee. This
change is being proposed because FICC will eliminate the Broker ``give-
up'' process from the MBSD Rules in connection with Rule Filing 2017-
012.\10\
---------------------------------------------------------------------------

\10\ Id.
---------------------------------------------------------------------------

3. The Processing Fees section would be amended to increase the
``Trade Input Non-Compliance'' fee to $1,000 a month per Account from
$500 a month per Account. This change is being proposed in order to
encourage Clearing Members to submit transactions into FICC's Real-Time
Trade Matching (``RTTM'') system in a timely manner. The timely
submission of transactions is especially important because FICC will
novate and become the settlement counterparty to all transactions
(other than Option Contracts) pursuant to Rule Filing 2017-012.\11\
---------------------------------------------------------------------------

\11\ See Approval Order, supra note 5.
---------------------------------------------------------------------------

FICC is proposing to amend the fees in the MBSD Rules' Schedule of
Charges Dealer Account Group as listed below.

[[Page 36166]]

1. The Trade Processing section would be amended to modify the
tiering levels and the associated fees assigned to each tier for SBO-
Destined Trades.\12\ In connection with Rule Filing 2017-012, MBSD's
processing cost will not change; however, MBSD's operational cost will
increase because of MBSD's new allocation department.\13\ As a result,
these proposed fee changes would offset the loss of revenue attributed
to the decrease in transaction volumes processed through the Pool
Netting System and the EPN Service due to the introduction of the DNA
process and the removal of the Notification of Settlement process.
---------------------------------------------------------------------------

\12\ Pursuant to the MBSD Rules, the term ``SBO-Destined Trade''
means a TBA transaction in the Clearing System intended for TBA
Netting in accordance with the provisions of the MBSD Rules. See
MBSD Rule 1, supra note 7.
\13\ The MBSD allocations department will monitor the
transmission of pool information that is used to satisfy to-be-
announced transactions. The team will also handle any exception
processing that occurs.

--------------------------------------------------------------------------------------------------------------------------------------------------------
Current charge Total par amount traded per month Proposed charge Total par amount traded per month
--------------------------------------------------------------------------------------------------------------------------------------------------------
$1.93/MM...................... 1,000,000-2,500,000,000........................... $2.00/MM......... 01-2,500,000,000.
$1.77/MM...................... 2,501,000,000-5,000,000,000....................... $1.58/MM......... 2,500,000,001-7,500,000,000.
$1.60/MM...................... 5,001,000,000-7,500,000,000....................... $1.39/MM......... 7,500,000,001-12,500,000,000.
$1.49/MM...................... 7,501,000,000-10,000,000,000...................... $1.19/MM......... 12,500,000,001-300,000,000,000.
$1.32/MM...................... 10,001,000,000-12,500,000,000..................... $1.16/MM......... 300,000,000,001 and over.
$1.14/MM...................... 12,501 and over...................................
--------------------------------------------------------------------------------------------------------------------------------------------------------

2. The Trade Processing section would be amended to increase the
fee for ``TBA Netting Balance Orders'' to $1.00/MM from $0.75/MM. In
connection with Rule Filing 2017-012, MBSD's processing cost will not
change; however, MBSD's operational cost will increase because of
MBSD's new allocation department. As a result, this proposed fee change
would offset the loss of revenue attributed to the decrease in
transaction volumes processed through the Pool Netting System and the
EPN Service due to the introduction of the DNA process and the removal
of the Notification of Settlement process. FICC is also proposing to
amend this section to eliminate the applicability of this fee to SBOO
Trades because this trade type will be eliminated in connection with
Rule Filing 2017-012.\14\
---------------------------------------------------------------------------

\14\ See Approval Order, 82 FR at 31380.
---------------------------------------------------------------------------

3. The Trade Processing section would be amended to establish fees
for Stipulated Trades, which will be a new trade type eligible for
processing at MBSD pursuant to Rule Filing 2017-012.\15\ The fees for
Stipulated Trades would be the same fees that are in place for the
processing of Trade-for-Trade Transactions \16\ and Specified Pool
Trades.\17\ FICC would amend the heading of this section to clarify
that the fees would be applicable to Trade-for Trade-Transactions,
Specified Pool Trades and Stipulated Trades.
---------------------------------------------------------------------------

\15\ See Approval Order, 82 FR at 31381.
\16\ Pursuant to the MBSD Rules, the term ``Trade-for-Trade
Transaction'' means a TBA Transaction submitted to MBSD not intended
for TBA Netting in accordance with the provisions of the MBSD Rules.
See MBSD Rule 1, supra note 7.
\17\ Pursuant to the MBSD Rules, the term ``Specified Pool
Trade'' means a trade in which all required pool data, including the
pool number to be delivered on the Contractual Settlement Date, are
agreed upon by Members at the time of execution. See MBSD Rule 1,
supra note 7.
---------------------------------------------------------------------------

4. The Trade Processing section would be amended to increase the
``Trade Creates'' fee for Trade-for-Trade Transactions and Specified
Pool Trades to $1.16/MM from $1.00/MM. This increased fee would also
apply to Stipulated Trades. In connection with Rule Filing 2017-012,
MBSD's processing cost will not change; however, MBSD's operational
cost will increase because of MBSD's new allocation department. As a
result, this proposed fee change would offset the loss of revenue
attributed to the decrease in transaction volumes processed through the
Pool Netting System and the EPN Service due to the introduction of the
DNA process and the removal of the Notification of Settlement process.
5. FICC is proposing to include two new fees in connection with the
proposed Do Not Allocate (``DNA'') process.\18\ One fee would be in the
amount of $1.25/MM per transaction in connection with a Clearing
Member's request to include eligible trades in the DNA process (such
request would be referred to as a ``DNA Request''). The second fee
would be in the amount of $4.00 per transaction in connection with a
Clearing Member's request to cancel its DNA Request (such cancellation
would be referred to as a ``DNA Request Cancel'').
---------------------------------------------------------------------------

\18\ As described in Rule Filing 2017-012, the DNA process will
permit offsets among SBON Trades and Trade-for-Trade Transactions.
See Approval Order, 82 FR at 31381.
---------------------------------------------------------------------------

6. The Pool Netting Fees section would be amended to increase the
fee for ``Matched Pool Instructs'' to $1.00 per side from $0.60 per
side. In connection with Rule Filing 2017-012, MBSD's processing cost
will not change; however, MBSD's operational cost will increase because
of MBSD's new allocation department. As a result, this proposed fee
change would offset the loss of revenue attributed to the decrease in
transaction volumes processed through the Pool Netting System and the
EPN Service due to the introduction of the DNA process and the removal
of the Notification of Settlement process.
7. The Processing Fees section would be amended to increase the
``Trade Input Non-Compliance'' fee to $1,000 a month per Account from
$500 a month per Account. This change is being proposed in order to
encourage Clearing Members to submit transactions into FICC's RTTM
system in a timely manner. The timely submission of transactions is
especially important because FICC will novate and become the settlement
counterparty to all transactions (other than Option Contracts) pursuant
to Rule Filing 2017-012.\19\
---------------------------------------------------------------------------

\19\ See Approval Order, supra note 5.
---------------------------------------------------------------------------

8. The Notification of Settlement fees would be eliminated because
FICC will eliminate the Notification of Settlement process from the
MBSD Rules in connection with Rule Filing 2017-012.\20\
---------------------------------------------------------------------------

\20\ See Approval Order, 82 FR at 31381.
---------------------------------------------------------------------------

II. Proposed Changes to the EPN Rules
FICC is proposing to amend the ``Message Processing Fees'' in the
EPN Schedule of Charges as listed below. In connection with Rule Filing
2017-012, MBSD's processing cost will not change; however, MBSD's
operational cost will increase because of MBSD's new allocation
department. As a result, these proposed fee changes would offset the
loss of revenue attributed to the decrease in transaction volumes
processed through the Pool Netting System and the EPN Service due to
the introduction of the DNA process and the removal of the Notification
of Settlement process.

[[Page 36167]]

EPN Fee Schedule
----------------------------------------------------------------------------------------------------------------
Message submission Message submission
Fee descriptions Current charge times New charge times
----------------------------------------------------------------------------------------------------------------
Messaging Processing Fees
----------------------------------------------------------------------------------------------------------------
ON Send........................ $0.17 Per MM Current Face $0.19 Per MM Current Face
(opening of business (opening of business
to 1:00 p.m.). to 1:00 p.m.).
0.86 Per MM Current Face 0.95 Per MM Current Face
(1:00 p.m. to 2:00 (1:00 p.m. to 2:00
p.m.). p.m.).
1.73 Per MM Current Face 1.90 Per MM Current Face
(2:00 p.m. to 3:00 (2:00 p.m. to 3:00
p.m.). p.m.).
1.44 Per MM Current Face 1.58 Per MM Current Face
(3:00 p.m. to close of (3:00 p.m. to close
business). of business).
ON Receive..................... 0.46 Per MM Current Face 0.51 Per MM Current Face
(opening of business (opening of business
to 1:00 p.m.). to 1:00 p.m.).
0.23 Per MM Current Face 0.26 Per MM Current Face
(1:00 p.m. to 2:00 (1:00 p.m. to 2:00
p.m.). p.m.).
0.23 Per MM Current Face 0.26 Per MM Current Face
(2:00 p.m. to 3:00 (2:00 p.m. to 3:00
p.m.). p.m.).
Cancel/Correct Send............ 0.17 Per MM Current Face 0.19 Per MM Current Face
(opening of business (opening of business
to 11:00 a.m.). to 11:00 a.m.).
0.86 Per MM Current Face 0.95 Per MM Current Face
(11:00 a.m. to 12:00 (11:00 a.m. to 12:00
p.m.). p.m.).
1.73 Per MM Current Face 1.90 Per MM Current Face
(12:00 p.m. to 12:15 (12:00 p.m. to 12:15
p.m.). p.m.).
0.17 Per MM Current Face 0.19 Per MM Current Face
(12:15 p.m. to end of (12:15 p.m. to end of
day). day).
----------------------------------------------------------------------------------------------------------------

III. Delayed Implementation of the Proposed Rule Change
The proposed changes would become effective on August 1, 2017.\21\
Upon FICC's submission of this proposed rule change to the Commission,
FICC would add a legend to the MBSD Rules and the EPN Rules, as
applicable, to state that the specified changes have been filed with
the Commission for immediate effectiveness, however, such changes are
not yet implemented and to provide the date such changes would become
implemented. The legend would also include the file number of the
proposed rule change and would state that once implemented, the legend
would automatically be removed from the MBSD Rules and EPN Rules as
applicable.
---------------------------------------------------------------------------

\21\ FICC will implement Rule Filing 2017-012 on July 31, 2017,
however, the proposed fee changes would be implemented on August 1,
2017 because the billing cycle begins on the first day of each
month.
---------------------------------------------------------------------------

2. Statutory Basis

Section 17A(b)(3)(D) of the Act requires that the MBSD Rules and
the EPN Rules provide for the equitable allocation of reasonable dues,
fees, and other charges among its participants.\22\ FICC believes that
the proposed (1) changes to the MBSD Trade Processing fees, MBSD Pool
Netting fees and the EPN Message Processing fees (collectively, the
``Processing Fees''), and (2) new fees for Stipulated Trades
submissions and the DNA process (collectively, the ``New Fees'') are
equitably allocated among Clearing Members and EPN Users, as
applicable, because the fees would continue to be based on each
Clearing Member's utilization of MBSD's services. Specifically, each
Clearing Member or EPN User would be charged based on the volume of
transactions and/or messages submitted to MBSD.
---------------------------------------------------------------------------

\22\ 15 U.S.C. 78q-1(b)(3)(D).
---------------------------------------------------------------------------

FICC believes that the proposed changes to the Processing Fees and
the New Fees are reasonable because the proposed fee changes would
offset the loss of revenue attributed to the decrease in transaction
volumes processed through the Pool Netting System and the EPN Service
due to the introduction of the DNA process and the removal of the
Notification of Settlement process. Additionally, MBSD's new allocation
department will increase MBSD's operational cost. FICC believes that
the proposed fee changes are reasonable because the fees would align
with the cost of providing the benefits associated with the
implementation of Rule Filing 2017-012.\23\
---------------------------------------------------------------------------

\23\ These benefits include the following: (1) The submission of
Pool Instructs by Clearing Members will become optional because FICC
would be permitted to submit on behalf Clearing Members; (2)
Clearing Members will no longer be required to fulfill Notification
of Settlement obligations because transactions (except Option
Contracts) would settle with FICC; (3) Clearing Members will have
the ability to exclude TBA Obligations from the pool allocation
process, netting, and securities settlement through the DNA process;
(4) Clearing Members will have the ability to net their pools via
the Expanded Pool Netting process in the event that such Clearing
Members miss the established deadline for the initial Pool Netting
process; (5) Dealer Netting Members will remain anonymous with the
elimination of the ``give-up'' process for Brokered Transactions;
(6) Clearing Members will be allowed to submit SBO-Destined Trades
in all trade sizes; and (7) Clearing Members will be allowed to
submit Stipulated Trades as a new trade type. See Approval Order, 82
FR at 31378.
---------------------------------------------------------------------------

FICC believes that its proposal to increase the Trade Input Non-
Compliance fee for Brokers and Dealers are reasonable because doubling
the existing fee would be sufficient to encourage Clearing Members to
submit transactions in a timely manner. This is especially important
because FICC will novate and become the settlement counterparty to all
transactions (except Option Contracts) at trade comparison pursuant to
Rule Filing 2017-012.
FICC believes that the proposal to increase the Trade Input Non-
Compliance fee for Brokers and Dealers are equitably allocated because
the same fee would be applicable to the Accounts of all Clearing
Members who do not submit transactions on a timely basis.
Therefore, FICC believes the proposed fees are consistent with the
requirements of Section 17A(b)(3)(D) of the Act.

(B) Clearing Agency's Statement on Burden on Competition

FICC believes that the proposed (1) changes to the Processing Fees
and (2) new fee for Stipulated Trades may impose a burden on
competition. However, FICC believes any burden on competition that may
result from the proposed fees increases would be

[[Page 36168]]

necessary and appropriate in furtherance of the purposes of the Act, as
permitted by Section 17A(b)(3)(I) of the Act.\24\
---------------------------------------------------------------------------

\24\ 15 U.S.C. 78q-1(b)(3)(I).
---------------------------------------------------------------------------

Specifically, FICC believes that the proposed (1) changes to the
Processing Fees and (2) new fee for Stipulated Trades are necessary
because the fees would provide FICC with the ability to achieve and
maintain its operating margin. FICC believes that the proposed fee
increases and the new fee for Stipulated Trades are appropriate because
the fees would provide FICC with the ability to recover the cost of
providing the services described in Rule Filing 2017-012. As discussed
above, in connection with Rule Filing 2017-012, MBSD's processing cost
will not change; however, MBSD's operational cost will increase because
of MBSD's new allocation department. As a result, these proposed fee
changes would offset the loss of revenue attributed to the decrease in
transaction volumes processed through the Pool Netting System and the
EPN Service due to the introduction of the DNA process and the removal
of the Notification of Settlement process.
FICC believes that the proposed changes to increase the Trade Input
Non-Compliance fee for Brokers and Dealers will not impact competition
because Clearing Members could avoid these fees by submitting their
transactions on a timely basis in accordance with the MBSD Rules.
FICC believes that the proposed change to eliminate the Option
Account fees for Brokers and the Notification of Settlement fees will
not impact competition because these fees are associated with processes
that will be eliminated pursuant to Rule Filing 2017-012.
FICC believes that the proposed new fee for the DNA process will
not impact competition because the DNA process is voluntary and
Clearing Members could elect not to submit their transactions through
the DNA process.

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

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) of the Act \25\ and paragraph (f) of Rule 19b-4
thereunder.\26\ 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.
---------------------------------------------------------------------------

\25\ 15 U.S.C. 78s(b)(3)(A).
\26\ 17 CFR 240.19b-4(f).
---------------------------------------------------------------------------

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 rule-comments@sec.gov. Please include
File Number SR-FICC-2017-018 on the subject line.

Paper Comments

Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE., Washington, DC 20549.

All submissions should refer to File Number SR-FICC-2017-018. 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 (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for 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. Copies of the filing also will be available
for inspection and copying at the principal office of FICC and on
DTCC's Web site (https://dtcc.com/legal/sec-rule-filings.aspx). 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-2017-018 and should be
submitted on or before August 24, 2017.

For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\27\
---------------------------------------------------------------------------

\27\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Brent J. Fields,
Secretary.
[FR Doc. 2017-16297 Filed 8-2-17; 8:45 am]
BILLING CODE 8011-01-P

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