Self-Regulatory Organizations; Fixed Income Clearing Corporation; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Allow CCIT Members To Elect To Pay Their Funds-Only Settlement Amount Debits Using a Different Process, 53339-53341 [2018-22906]
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Federal Register / Vol. 83, No. 204 / Monday, October 22, 2018 / Notices
change could encourage market
participants to submit orders that offset
imbalances in constituent option series,
thereby reducing the likelihood that a
constituent option series will fail to
open due to an order imbalance. By
reducing the likelihood that constituent
option series will fail to open, the
proposal is reasonably designed to
facilitate an orderly opening for
volatility index derivatives.
Nevertheless, the Commission remains
mindful of the potential for disruptive
or manipulative trading to occur in
connection with the opening process in
constituent options series on exercise
settlement value determination days for
volatility index options. The
Commission believes that the proposal
provides narrowly tailored guidance to
market participants to promote
participation in the modified HOSS
opening procedure on exercise
settlement value determination days in
a manner that is reasonably designed to
support orderly trading in a free and
open market, which can benefit
investors in those constituent options
series and the volatility index
derivatives.
Further, the Commission notes that
TPHs will continue to be subject to
Exchange Rules 4.1 (Just and Equitable
Principles of Trade), 4.7 (Manipulation),
and 4.18 (Prevention of the Misuse of
Material, Nonpublic Information).22 In
addition, the Exchange will continue to
conduct surveillance to monitor trading
in the constituent option series,23 which
the Commission believes is essential to
protect investors and the public interest.
IV. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,24 that the
proposed rule change (SR–CBOE–2018–
062) is approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.25
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018–22907 Filed 10–19–18; 8:45 am]
daltland on DSKBBV9HB2PROD with NOTICES
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–84439; File No. SR–
NASDAQ–2018–070]
Self-Regulatory Organizations; The
Nasdaq Stock Market LLC; Notice of
Designation of a Longer Period for
Commission Action on Proposed Rule
Change To List and Trade Corporate
Non-Convertible Bonds on Nasdaq
53339
approve or disapprove, or institute
proceedings to determine whether to
disapprove, the proposed rule change
(File No. SR–NASDAQ–2018–070).
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.7
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018–22910 Filed 10–19–18; 8:45 am]
BILLING CODE 8011–01–P
October 16, 2018.
On August 27, 2018, 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
list and trade corporate non-convertible
bonds on Nasdaq. The proposed rule
change was published for comment in
the Federal Register on September 6,
2018.3 On October 12, 2018, the
Exchange filed Amendment No. 1 to the
proposed rule change.4 The Commission
has received no comments on the
proposal.
Section 19(b)(2) of the Act 5 provides
that within 45 days of the publication of
notice of the filing of a proposed rule
change, or within such longer period up
to 90 days as the Commission may
designate if it finds such longer period
to be appropriate and publishes its
reasons for so finding, or as to which the
self-regulatory organization consents,
the Commission shall either approve the
proposed rule change, disapprove the
proposed rule change, or institute
proceedings to determine whether the
proposed rule change should be
disapproved. The 45th day after
publication of the notice for this
proposed rule change is October 21,
2018. The Commission is extending the
45-day time period for Commission
action on the proposed rule change.
The Commission finds it appropriate
to designate a longer period within
which to take action on the proposed
rule change so that it has sufficient time
to consider this proposed rule change
and Amendment No. 1 thereto.
Accordingly, the Commission, pursuant
to Section 19(b)(2) of the Act,6
designates December 5, 2018, as the date
by which the Commission shall either
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 84001
(August 30, 2018), 83 FR 45289.
4 Amendment No. 1 is available at: https://
www.sec.gov/comments/sr-nasdaq-2018-070/
srnasdaq2018070-4514560-176013.pdf.
5 15 U.S.C. 78s(b)(2).
6 Id.
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–84435; File No. SR–FICC–
2018–011]
Self-Regulatory Organizations; Fixed
Income Clearing Corporation; Notice of
Filing and Immediate Effectiveness of
a Proposed Rule Change To Allow
CCIT Members To Elect To Pay Their
Funds-Only Settlement Amount Debits
Using a Different Process
October 16, 2018.
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 October
15, 2018, 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)(4) thereunder 4 so that the
proposal was effective upon filing with
the Commission. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Clearing Agency’s Statement of the
Terms of Substance of the Proposed
Rule Change
The proposed rule change consists of
proposed modifications to the FICC
Government Securities Division
(‘‘GSD’’) Rulebook (‘‘Rules’’) 5 that
would to allow CCIT Members to elect
to pay their Funds-Only Settlement
Amount debits using a process for debit
payments that is different than the
current required process described in
Section 5 of Rule 13. Under this
1 15
2 17
22 See
Notice, supra note 3, at 46236.
id.
24 15 U.S.C. 78s(b)(2).
25 17 CFR 200.30–3(a)(12).
23 See
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18:12 Oct 19, 2018
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7 17
CFR 200.30–3(a)(31).
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)(4).
5 Capitalized terms not defined herein are defined
in the Rules, available at https://dtcc.com/legal/
rules-and-procedures.
1 15
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53340
Federal Register / Vol. 83, No. 204 / Monday, October 22, 2018 / Notices
proposal, CCIT Members’ Funds-Only
Settlement Amount credits would
continue to be processed pursuant to
Section 5 of Rule 13.
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
daltland on DSKBBV9HB2PROD with NOTICES
(i) Background on the CCIT Service
FICC received approval from the
Commission to implement its CCIT
Service in May 2017.6 The CCIT Service
enables tri-party repurchase agreement
transactions in GCF Repo Securities
between Netting Members that
participate in the GCF Repo Service and
institutional cash lenders (other than
investment companies registered under
the Investment Company Act of 1940, as
amended) (called ‘‘CCIT Members’’).7
The CCIT Service is governed by Rule
3B, which includes provisions on the
processing of Funds-Only Settlement
Amount obligations of CCIT Members,
which are the subject of the present
filing.8 Under Section 13 of Rule 3B,
CCIT Members are subject to the Invoice
Amount,9 the Miscellaneous
Adjustment Amount,10 and CCIT Repo
Daily Interest.11
6 See Securities Exchange Act Release No. 80574
(May 2, 2017), 82 FR 21439 (May 8, 2017) (SR–
FICC–2017–005) (‘‘CCIT Approval Order’’). See
Rule 3B, Section 13(a), supra note 5.
7 See CCIT Approval Order, supra note 2. See
Rule 3B, Section 13(a), supra note 5.
8 See Rule 3B, supra note 5.
9 See id. ‘‘Invoice Amount’’ means all fee amounts
due and owing from a Netting Member or CCIT
Member, as applicable, to FICC on a particular
Business Day. See Rule 1, supra note 5.
10 See Rule 3B, supra note 5. ‘‘Miscellaneous
Adjustment Amount’’ means the net total of all
miscellaneous funds-only amounts that, on a
particular Business Day, are required to be paid by
a Netting Member or CCIT Member, as applicable,
to FICC and/or are entitled to be collected by a
Member (including a CCIT Member, as applicable)
from FICC. See Rule 1, supra note 5.
11 See Rule 3B, supra note 5. The term ‘‘CCIT
Daily Repo Interest’’ means the interest amount that
is collected from or paid to a Netting Member, as
applicable, and collected from or paid to a CCIT
Member, as applicable, on a daily basis resulting
from a CCIT Transaction. See Rule 1, supra note 5.
VerDate Sep<11>2014
18:12 Oct 19, 2018
Jkt 247001
(ii) Proposed Change to Rule 3B, Section
13 (Funds-Only Settlement)
Currently, CCIT Members are required
to satisfy their Funds-Only Settlement
Amount obligations (both debits and
credits) using the same process that
Netting Members are required to use for
the same purpose.12 This process is
described in Rule 13.13 CCIT Members
are required to appoint a Funds-Only
Settling Bank to process their FundsOnly Settlement Amount obligations.
FICC understands that some
prospective CCIT Members do not have
business relationships established with
Funds-Only Settling Banks that would
permit the Funds-Only Settling Banks to
settle such prospective CCIT Members’
Funds-Only Settlement Amount debits.
Therefore, such prospective CCIT
Members are currently unable to
participate in the CCIT Service unless
an alternative mechanism for them to
satisfy their Funds-Only Settlement
Amount debits directly with FICC,
rather than through a Funds-Only
Settling Bank, is permitted by FICC.
Specifically, FICC is proposing to allow
prospective CCIT Members to satisfy
their Funds-Only Settlement Amount
debits with FICC through the invoicing
process applicable to Comparison-Only
Members under Rule 25 (the ‘‘invoicing
process’’).14 Prospective CCIT Members
would elect, as part of their onboarding
process, to settle their Funds-Only
Settlement Amount debits through the
Funds-Only Settling Banks or the
invoicing process. Furthermore, CCIT
Members would also be permitted to
change their initial election with respect
to Funds-Only Settlement Amount
debits after the onboarding process is
completed. The proposal would not
affect the calculation of the Funds-Only
Settlement Amount obligations of CCIT
Members, and all other requirements set
forth in Rule 13 would remain. In
addition, Funds-Only Settlement
Amount credits would continue to be
processed through Funds-Only Settling
Banks and the current process described
in Rule 13.15
In order to effectuate the proposed
rule change, FICC proposes to revise
Rule 3B, Section 13 to describe that a
CCIT Member may elect to pay its
Funds-Only Settlement Amount debits
using the invoicing process applicable
to Comparison-Only Members under
Rule 25 in lieu of the process described
in Section 5 of Rule 13. In addition,
Rule 3B, Section 13 would be revised to
state that, if the CCIT Member elects the
Rule 3B, Section 13, supra note 5.
Rule 13, supra note 5.
14 See Rule 25, supra note 5.
15 See Rules 3B and 13, supra note 5.
invoicing process, the CCIT Member’s
Funds-Only Settling Bank shall no
longer be responsible for processing
Funds-Only Settlement Amounts that
are debits for such CCIT Member.
2. Statutory Basis
FICC believes that the proposed rule
change is consistent with the
requirements of the Act and the rules
and regulations thereunder applicable to
a registered clearing agency. In
particular, FICC believes that the
proposed rule change is consistent with
Section 17A(b)(3)(F) of the Act.16
Section 17A(b)(3)(F) of the Act requires,
in part, that the Rules be designed to
remove impediments to and perfect the
mechanism of a national system for the
prompt and accurate clearance and
settlement of securities transactions.17
FICC believes that the proposed rule
change described above to allow CCIT
Members to elect to use the invoicing
process to pay their Funds-Only
Settlement Amount debits would
remove an impediment for prospective
CCIT Members to join the CCIT Service.
Specifically, some prospective CCIT
Members cannot join because they are
unable to settle Funds-Only Settlement
Amount debits under the current
process because they do not have
business relationships established with
Funds-Only Settling Banks that would
permit the Funds-Only Settling Banks to
settle such prospective CCIT Members’
Funds-Only Settlement Amount debits.
The proposed rule change would
remove this impediment by allowing
CCIT Members to elect the invoicing
process for settling their Funds-Only
Settlement Amount debits and thereby
would enable more entities to become
CCIT Members and use the CCIT
Service. As such, the proposed rule
change would remove impediments to
and perfect the mechanism of a national
system for the prompt and accurate
clearance and settlement of securities
transactions, consistent with Section
17A(b)(3)(F) of the Act.18
(B) Clearing Agency’s Statement on
Burden on Competition
FICC believes this proposed rule
change to enable CCIT Members to elect
the invoicing process to pay their
Funds-Only Settlement Amount debits
in connection with their CCIT
Transactions could have an impact on
competition. FICC believes that the
proposed rule change could promote
competition. At this time, there are
entities that have expressed an interest
12 See
13 See
PO 00000
Frm 00135
Fmt 4703
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16 15
U.S.C. 78q–1(b)(3)(F).
17 Id.
18 Id.
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Federal Register / Vol. 83, No. 204 / Monday, October 22, 2018 / Notices
in becoming CCIT Members but cannot
do so, as discussed above. The proposed
rule change would allow such entities to
join the CCIT Service. By enabling more
entities to join the CCIT Service, the
proposed rule change would promote
competition by having more entities in
central clearing.
FICC does not believe that not
providing the alternative mechanism to
Netting Members would create a burden
on competition. Netting Members, as
full-service Members, are able to avail
themselves of the existing Funds-Only
Settling Bank process for Funds-Only
Settlement Amount debits and credits.
This existing process is automated and
efficient, and FICC does not believe that
Netting Members would desire to switch
to an invoicing process nor would FICC
allow them do so given their ability to
participate in the current Funds-Only
Settling Bank process.
(C) Clearing Agency’s Statement on
Comments on the Proposed Rule
Change Received From Members,
Participants, or Others
Written comments relating to this
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 19 and paragraph (f) of Rule
19b–4 thereunder.20 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:
daltland on DSKBBV9HB2PROD with NOTICES
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–2018–011 on the subject line.
19 15
20 17
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f).
VerDate Sep<11>2014
18:12 Oct 19, 2018
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–FICC–2018–011. 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 website (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 website 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 FICC’s website
(https://dtcc.com/legal/sec-rulefilings.aspx). All comments received
will be posted without change. Persons
submitting comments are cautioned that
we do not redact or edit personal
identifying information from comment
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–FICC–
2018–011 and should be submitted on
or before November 13, 2018.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.21
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018–22906 Filed 10–19–18; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
33273; File No. 812–14772]
Procure Active ETF Trust, et al.
October 17, 2018.
Securities and Exchange
Commission (‘‘Commission’’).
AGENCY:
21 17
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CFR 200.30–3(a)(12).
Frm 00136
Fmt 4703
Sfmt 4703
ACTION:
53341
Notice.
Notice of an application for an order
under section 6(c) of the Investment
Company Act of 1940 (the ‘‘Act’’) for an
exemption from sections 2(a)(32),
5(a)(1), 22(d), and 22(e) of the Act and
rule 22c–1 under the Act, under
sections 6(c) and 17(b) of the Act for an
exemption from sections 17(a)(1) and
17(a)(2) of the Act, and under section
12(d)(1)(J) for an exemption from
sections 12(d)(1)(A) and 12(d)(1)(B) of
the Act. The requested order would
permit (a) actively-managed series of
certain open-end management
investment companies (‘‘Funds’’) to
issue shares redeemable in large
aggregations only (‘‘Creation Units’’); (b)
secondary market transactions in Fund
shares to occur at negotiated market
prices rather than at net asset value
(‘‘NAV’’); (c) certain Funds to pay
redemption proceeds, under certain
circumstances, more than seven days
after the tender of shares for
redemption; (d) certain affiliated
persons of a Fund to deposit securities
into, and receive securities from, the
Fund in connection with the purchase
and redemption of Creation Units; (e)
certain registered management
investment companies and unit
investment trusts outside of the same
group of investment companies as the
Funds (‘‘Funds of Funds’’) to acquire
shares of the Funds; and (f) certain
Funds (‘‘Feeder Funds’’) to create and
redeem Creations Units in-kind in a
master-feeder structure.
Applicants: Procure Active ETF Trust
(the ‘‘Trust’’), a Delaware statutory trust
that will register under the Act as an
open-end management investment
company with multiple series,
ProcureAM, LLC (the ‘‘Initial Adviser’’),
a Delaware limited liability company
that will be registered as an investment
adviser under the Investment Advisers
Act of 1940, and Quasar Distributors
LLC (the ‘‘Distributor’’), a Delaware
limited liability company and brokerdealer registered under the Securities
Exchange Act of 1934 (‘‘Exchange Act’’).
Filing Dates: The application was
filed on May 10, 2017 and amended on
February 15, 2018, May 29, 2018,
August 2, 2018, and October 15, 2018.
Hearing or Notification of Hearing: An
order granting the requested relief will
be issued unless the Commission orders
a hearing. Interested persons may
request a hearing by writing to the
Commission’s Secretary and serving
applicants with a copy of the request,
personally or by mail. Hearing requests
should be received by the Commission
by 5:30 p.m. on November 6, 2018, and
should be accompanied by proof of
E:\FR\FM\22OCN1.SGM
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]]>Agencies
[Federal Register Volume 83, Number 204 (Monday, October 22, 2018)]
[Notices]
[Pages 53339-53341]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-22906]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-84435; File No. SR-FICC-2018-011]
Self-Regulatory Organizations; Fixed Income Clearing Corporation;
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change
To Allow CCIT Members To Elect To Pay Their Funds-Only Settlement
Amount Debits Using a Different Process
October 16, 2018.
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 October 15, 2018, 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)(4) thereunder \4\ so that the proposal was effective upon
filing with the Commission. 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.
\3\ 15 U.S.C. 78s(b)(3)(A).
\4\ 17 CFR 240.19b-4(f)(4).
---------------------------------------------------------------------------
I. Clearing Agency's Statement of the Terms of Substance of the
Proposed Rule Change
The proposed rule change consists of proposed modifications to the
FICC Government Securities Division (``GSD'') Rulebook (``Rules'') \5\
that would to allow CCIT Members to elect to pay their Funds-Only
Settlement Amount debits using a process for debit payments that is
different than the current required process described in Section 5 of
Rule 13. Under this
[[Page 53340]]
proposal, CCIT Members' Funds-Only Settlement Amount credits would
continue to be processed pursuant to Section 5 of Rule 13.
---------------------------------------------------------------------------
\5\ Capitalized terms not defined herein are defined in the
Rules, available at https://dtcc.com/legal/rules-and-procedures.
---------------------------------------------------------------------------
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
(i) Background on the CCIT Service
FICC received approval from the Commission to implement its CCIT
Service in May 2017.\6\ The CCIT Service enables tri-party repurchase
agreement transactions in GCF Repo Securities between Netting Members
that participate in the GCF Repo Service and institutional cash lenders
(other than investment companies registered under the Investment
Company Act of 1940, as amended) (called ``CCIT Members'').\7\ The CCIT
Service is governed by Rule 3B, which includes provisions on the
processing of Funds-Only Settlement Amount obligations of CCIT Members,
which are the subject of the present filing.\8\ Under Section 13 of
Rule 3B, CCIT Members are subject to the Invoice Amount,\9\ the
Miscellaneous Adjustment Amount,\10\ and CCIT Repo Daily Interest.\11\
---------------------------------------------------------------------------
\6\ See Securities Exchange Act Release No. 80574 (May 2, 2017),
82 FR 21439 (May 8, 2017) (SR-FICC-2017-005) (``CCIT Approval
Order''). See Rule 3B, Section 13(a), supra note 5.
\7\ See CCIT Approval Order, supra note 2. See Rule 3B, Section
13(a), supra note 5.
\8\ See Rule 3B, supra note 5.
\9\ See id. ``Invoice Amount'' means all fee amounts due and
owing from a Netting Member or CCIT Member, as applicable, to FICC
on a particular Business Day. See Rule 1, supra note 5.
\10\ See Rule 3B, supra note 5. ``Miscellaneous Adjustment
Amount'' means the net total of all miscellaneous funds-only amounts
that, on a particular Business Day, are required to be paid by a
Netting Member or CCIT Member, as applicable, to FICC and/or are
entitled to be collected by a Member (including a CCIT Member, as
applicable) from FICC. See Rule 1, supra note 5.
\11\ See Rule 3B, supra note 5. The term ``CCIT Daily Repo
Interest'' means the interest amount that is collected from or paid
to a Netting Member, as applicable, and collected from or paid to a
CCIT Member, as applicable, on a daily basis resulting from a CCIT
Transaction. See Rule 1, supra note 5.
---------------------------------------------------------------------------
(ii) Proposed Change to Rule 3B, Section 13 (Funds-Only Settlement)
Currently, CCIT Members are required to satisfy their Funds-Only
Settlement Amount obligations (both debits and credits) using the same
process that Netting Members are required to use for the same
purpose.\12\ This process is described in Rule 13.\13\ CCIT Members are
required to appoint a Funds-Only Settling Bank to process their Funds-
Only Settlement Amount obligations.
---------------------------------------------------------------------------
\12\ See Rule 3B, Section 13, supra note 5.
\13\ See Rule 13, supra note 5.
---------------------------------------------------------------------------
FICC understands that some prospective CCIT Members do not have
business relationships established with Funds-Only Settling Banks that
would permit the Funds-Only Settling Banks to settle such prospective
CCIT Members' Funds-Only Settlement Amount debits. Therefore, such
prospective CCIT Members are currently unable to participate in the
CCIT Service unless an alternative mechanism for them to satisfy their
Funds-Only Settlement Amount debits directly with FICC, rather than
through a Funds-Only Settling Bank, is permitted by FICC. Specifically,
FICC is proposing to allow prospective CCIT Members to satisfy their
Funds-Only Settlement Amount debits with FICC through the invoicing
process applicable to Comparison-Only Members under Rule 25 (the
``invoicing process'').\14\ Prospective CCIT Members would elect, as
part of their onboarding process, to settle their Funds-Only Settlement
Amount debits through the Funds-Only Settling Banks or the invoicing
process. Furthermore, CCIT Members would also be permitted to change
their initial election with respect to Funds-Only Settlement Amount
debits after the onboarding process is completed. The proposal would
not affect the calculation of the Funds-Only Settlement Amount
obligations of CCIT Members, and all other requirements set forth in
Rule 13 would remain. In addition, Funds-Only Settlement Amount credits
would continue to be processed through Funds-Only Settling Banks and
the current process described in Rule 13.\15\
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\14\ See Rule 25, supra note 5.
\15\ See Rules 3B and 13, supra note 5.
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In order to effectuate the proposed rule change, FICC proposes to
revise Rule 3B, Section 13 to describe that a CCIT Member may elect to
pay its Funds-Only Settlement Amount debits using the invoicing process
applicable to Comparison-Only Members under Rule 25 in lieu of the
process described in Section 5 of Rule 13. In addition, Rule 3B,
Section 13 would be revised to state that, if the CCIT Member elects
the invoicing process, the CCIT Member's Funds-Only Settling Bank shall
no longer be responsible for processing Funds-Only Settlement Amounts
that are debits for such CCIT Member.
2. Statutory Basis
FICC believes that the proposed rule change is consistent with the
requirements of the Act and the rules and regulations thereunder
applicable to a registered clearing agency. In particular, FICC
believes that the proposed rule change is consistent with Section
17A(b)(3)(F) of the Act.\16\ Section 17A(b)(3)(F) of the Act requires,
in part, that the Rules be designed to remove impediments to and
perfect the mechanism of a national system for the prompt and accurate
clearance and settlement of securities transactions.\17\ FICC believes
that the proposed rule change described above to allow CCIT Members to
elect to use the invoicing process to pay their Funds-Only Settlement
Amount debits would remove an impediment for prospective CCIT Members
to join the CCIT Service. Specifically, some prospective CCIT Members
cannot join because they are unable to settle Funds-Only Settlement
Amount debits under the current process because they do not have
business relationships established with Funds-Only Settling Banks that
would permit the Funds-Only Settling Banks to settle such prospective
CCIT Members' Funds-Only Settlement Amount debits. The proposed rule
change would remove this impediment by allowing CCIT Members to elect
the invoicing process for settling their Funds-Only Settlement Amount
debits and thereby would enable more entities to become CCIT Members
and use the CCIT Service. As such, the proposed rule change would
remove impediments to and perfect the mechanism of a national system
for the prompt and accurate clearance and settlement of securities
transactions, consistent with Section 17A(b)(3)(F) of the Act.\18\
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\16\ 15 U.S.C. 78q-1(b)(3)(F).
\17\ Id.
\18\ Id.
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(B) Clearing Agency's Statement on Burden on Competition
FICC believes this proposed rule change to enable CCIT Members to
elect the invoicing process to pay their Funds-Only Settlement Amount
debits in connection with their CCIT Transactions could have an impact
on competition. FICC believes that the proposed rule change could
promote competition. At this time, there are entities that have
expressed an interest
[[Page 53341]]
in becoming CCIT Members but cannot do so, as discussed above. The
proposed rule change would allow such entities to join the CCIT
Service. By enabling more entities to join the CCIT Service, the
proposed rule change would promote competition by having more entities
in central clearing.
FICC does not believe that not providing the alternative mechanism
to Netting Members would create a burden on competition. Netting
Members, as full-service Members, are able to avail themselves of the
existing Funds-Only Settling Bank process for Funds-Only Settlement
Amount debits and credits. This existing process is automated and
efficient, and FICC does not believe that Netting Members would desire
to switch to an invoicing process nor would FICC allow them do so given
their ability to participate in the current Funds-Only Settling Bank
process.
(C) Clearing Agency's Statement on Comments on the Proposed Rule Change
Received From Members, Participants, or Others
Written comments relating to this 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 \19\ and paragraph (f) of Rule 19b-4
thereunder.\20\ 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.
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\19\ 15 U.S.C. 78s(b)(3)(A).
\20\ 17 CFR 240.19b-4(f).
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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 [email protected]. Please include
File Number SR-FICC-2018-011 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number SR-FICC-2018-011. 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 website (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 website 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 FICC's website
(https://dtcc.com/legal/sec-rule-filings.aspx). All comments received
will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-FICC-2018-011 and should be submitted on
or before November 13, 2018.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\21\
Eduardo A. Aleman,
Assistant Secretary.
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\21\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2018-22906 Filed 10-19-18; 8:45 am]
BILLING CODE 8011-01-P
